Core Insights - Brown & Brown, Inc. operates in the competitive insurance brokerage industry, alongside peers such as Arthur J. Gallagher & Co. and W. R. Berkley Corporation, with a focus on evaluating Return on Invested Capital (ROIC) against Weighted Average Cost of Capital (WACC) [1] Company Performance - Brown & Brown's ROIC is 4.89%, which is lower than its WACC of 7.00%, resulting in a ROIC to WACC ratio of 0.70, indicating insufficient returns above its cost of capital [2][6] - Arthur J. Gallagher & Co. has a ROIC of 5.29% and a WACC of 6.24%, leading to a ROIC to WACC ratio of 0.85, which also suggests challenges in capital utilization [3] - W. R. Berkley Corporation demonstrates a strong ROIC of 55.96% against a WACC of 5.35%, yielding a ROIC to WACC ratio of 10.46, indicating effective capital management [4][6] - RenaissanceRe Holdings Ltd. leads the industry with a ROIC of 131.46% and a WACC of 4.79%, resulting in a remarkable ROIC to WACC ratio of 27.47, showcasing exceptional capital efficiency [5][6]

Core Viewpoint - The catastrophe bond market has strong long-term structural growth potential, with over ten new bond issuers entering the market this year, creating more opportunities for investors [1] Group 1: Market Growth Potential - The upcoming bond issuers have indicated intentions to renew, which is expected to contribute to growth by 2026 [1] - A strong growth potential is anticipated for the market next year [1] Group 2: Asian Market Insights - The Asian market shows positive momentum, with limited catastrophe bond issuances so far due to strong traditional reinsurance capital and relatively low capital costs for addressing other risks [1] - As potential exposures increase alongside economic growth in Asia, the market's potential is expected to expand [1] Group 3: Hong Kong as an Emerging Market - The company aims to position Hong Kong as an emerging market, with strong support from the Hong Kong SAR government for such assets [1] - There is a belief that investor awareness of these assets will increase, highlighting Hong Kong's significant growth potential as a relatively young market [1]

Core Viewpoint - The comparison between RenaissanceRe (RNR) and Berkshire Hathaway B (BRK.B) indicates that RNR currently offers better value for investors based on various financial metrics and earnings outlook [1][3][7]. Valuation Metrics - RNR has a forward P/E ratio of 8.81, significantly lower than BRK.B's forward P/E of 23.36, suggesting RNR is undervalued relative to its earnings potential [5]. - The PEG ratio for RNR is 2.08, while BRK.B has a PEG ratio of 3.34, indicating RNR may have a more favorable growth outlook relative to its valuation [5]. - RNR's P/B ratio stands at 1.08, compared to BRK.B's P/B of 1.53, further supporting the notion that RNR is more attractively priced based on its book value [6]. Earnings Outlook - RNR is experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model, suggesting a stronger potential for future performance compared to BRK.B [3][7].

Financial Performance - Gross premiums written for Q3 2025 were $2,323,626, a decrease of 3.2% from $2,400,136 in Q3 2024[21] - Net premiums earned for the nine months ended September 30, 2025, were $7,566,740, slightly down from $7,568,194 in the same period of 2024[21] - Total revenues for Q3 2025 were $3,198,182, a decrease of 19.4% compared to $3,973,775 in Q3 2024[21] - Net income attributable to RenaissanceRe for Q3 2025 was $916,510, down 22.5% from $1,182,487 in Q3 2024[21] - Net income for the nine months ended September 30, 2025, was $2,470,139, a decrease from $2,979,753 in the same period of 2024, representing a decline of approximately 17%[30] - Net income available to RenaissanceRe common shareholders for the nine months ended September 30, 2025, was $1.87 billion, compared to $2.00 billion in 2024[195] - Net income available to RenaissanceRe common shareholders for Q3 2025 was $907,667,000, compared to $1,173,644,000 in Q3 2024[201] Assets and Liabilities - Total assets increased to $54.50 billion as of September 30, 2025, compared to $50.71 billion at December 31, 2024, reflecting a growth of approximately 7.0%[20] - The company’s total liabilities increased to $35.53 billion from $33.16 billion, reflecting a rise of approximately 7.1%[20] - Cash and cash equivalents slightly increased to $1.70 billion from $1.68 billion, a growth of about 5.3%[20] - The company held $234.4 million in reverse repurchase agreements as of September 30, 2025, an increase from $169.4 million at December 31, 2024[43] - The total fixed maturity investments trading amounted to $23.77 billion as of September 30, 2025, with U.S. treasuries representing $10.42 billion of this total[53] - The total assets of DaVinci increased to $7.5 billion at September 30, 2025, from $6.1 billion at December 31, 2024, marking a growth of approximately 23%[140] - As of September 30, 2025, Vermeer reported total assets of $2.1 billion and total liabilities of $234.8 million, an increase from $1.9 billion and $93.0 million respectively as of December 31, 2024[152] Investments - Total investments rose to $35.80 billion, up from $32.64 billion, marking an increase of about 9.8%[20] - The company reported a significant increase in equity investments, which rose to $1.47 billion from $117.76 million, a substantial increase of approximately 1145.5%[20] - Net investment income for Q3 2025 was $438,354, an increase of 3.5% from $423,859 in Q3 2024[21] - Net investment income for the nine months ended September 30, 2025, was $1,256,815, up from $1,225,479 in the same period of 2024, reflecting an increase of approximately 2.6%[44] - The company reported a total of $8.8 billion in pledged investments at September 30, 2025, down from $10.3 billion at December 31, 2024[41] - The fair value of the company's other investments at September 30, 2025, was $4.4 billion, reflecting a net unrealized gain of $74.2 million for the three months ended September 30, 2025[91] Claims and Expenses - Reserve for claims and claim expenses increased to $22.71 billion, compared to $21.30 billion, representing a rise of approximately 6.6%[20] - Net claims and claim expenses incurred for Q3 2025 were $878,820, a decrease of 36.0% from $1,373,614 in Q3 2024[21] - The net incurred claims for the current year for the nine months ended September 30, 2025, were $5.51 billion, compared to $4.35 billion for the same period in 2024[111] - Total net claims and claim expenses for large catastrophe events amounted to $(433,836) thousand for the nine months ended September 30, 2025, with significant losses from events in 2024 and 2023[114] - The total net (favorable) adverse development of prior accident years net claims and claim expenses was $845.6 million for the nine months ended September 30, 2025, compared to $497.9 million in 2024[113] Debt and Equity - Debt increased to $2.23 billion from $1.89 billion, reflecting a rise of approximately 18.1%[20] - The company’s total debt as of September 30, 2025, was $2,309,308 thousand, an increase from $1,871,492 thousand at December 31, 2024[124] - The redeemable noncontrolling interests totaled $7.47 billion, an increase from $6.98 billion at December 31, 2024, reflecting a growth of approximately 7%[135] - The noncontrolling economic ownership in DaVinci decreased to 24.3% at September 30, 2025, down from 25.4% at December 31, 2024[136] - The company paid $26.5 million in preference share dividends and $57.3 million in common share dividends during the nine months ended September 30, 2025[192] Derivatives and Foreign Exchange - The company has entered into various derivative instruments to manage foreign currency exposure and hedge risks[204] - The total gain recognized on derivative instruments not designated as hedges for the three months ended September 30, 2025, was $174,597, compared to $127,222 for the same period in 2024, representing an increase of approximately 37.2%[211] - The net foreign exchange losses from foreign currency forward contracts amounted to $(4,027) and $(2,388) for the three months ended September 30, 2025, compared to gains of $16,885 and $12,803 in 2024, indicating a decline in performance[211]

Core Insights - RenaissanceRe Holdings Ltd. (RNR) reported a third-quarter 2025 operating income of $15.62 per share, exceeding the Zacks Consensus Estimate by 64.6% and showing a year-over-year increase of 52.7% [1][10] - Total operating revenues were $2.9 billion, down 4.5% year over year, and missed the consensus mark by 3.7% [1][2] Financial Performance - The quarterly results were supported by a decline in expenses and strong underwriting performance, particularly in the Property segment, while improved net investment income also contributed positively [2] - Total expenses decreased by 23.3% year over year to $1.7 billion, significantly lower than estimates, due to reductions in net claims, acquisition costs, and operational expenses [5] - Net investment income rose to $438.4 million, a 3.4% increase year over year, surpassing the consensus estimate [4] Segment Analysis Property Segment - Gross premiums written in the Property segment fell 7.3% year over year to $733.3 million, missing estimates [7] - Net premiums earned decreased by 5.8% year over year to $936.9 million, also below consensus estimates [7] - Underwriting income for this segment doubled year over year to $791.5 million, with a combined ratio improving to 15.5% [8] Casualty & Specialty Segment - Gross premiums written in the Casualty & Specialty segment dipped 1.2% year over year to $1.6 billion, lower than estimates [11] - Net premiums earned fell 5.7% year over year to $1.5 billion, slightly missing the consensus estimate [11] - The segment incurred an underwriting loss of $21.3 million, widening from the previous year's loss [12] Financial Position - As of September 30, 2025, cash and cash equivalents stood at $1.7 billion, a 1.5% increase from the end of 2024 [13] - Total assets increased by 7.5% year over year to $54.5 billion, while total shareholders' equity rose by 8.8% to $11.5 billion [13] Share Repurchase Activity - RenaissanceRe repurchased common shares worth approximately $205.2 million in the third quarter, with an additional $100 million in repurchases from October 1 to October 24, 2025 [14] Industry Context - Other insurers such as W. R. Berkley Corporation, Chubb Limited, and First American Financial Corporation reported positive results in the same quarter, with operating income exceeding consensus estimates [16]

Financial Data and Key Metrics Changes - The company reported operating income of $734 million for Q3 2025, with an operating return on average common equity of 28% [6][16] - Year-to-date operating income reached nearly $1.3 billion, delivering about a 17% operating return on average common equity [6][16] - Tangible book value per share plus change in accumulated dividends grew by 10% in the quarter and almost 22% year-to-date [6][16] Business Line Data and Key Metrics Changes - Underwriting income for the quarter was $770 million, nearly double from Q3 2024 [16] - Retained net investment income increased to $305 million, up 4% [16] - Fee income rose to $102 million, a 24% increase [16] - The adjusted combined ratio for underwriting was 67%, reflecting disciplined underwriting and low catastrophic losses [20] Market Data and Key Metrics Changes - The property catastrophe portfolio grew from $2 billion in gross written premium in 2022 to around $3.3 billion [7][8] - Gross premiums written in casualty and specialty were roughly flat compared to the previous quarter, with general casualty premiums down 7% [22] - In credit, gross premiums written increased by 19%, driven by additional premium on seasoned mortgage deals [22] Company Strategy and Development Direction - The company aims to prioritize margin over growth, focusing on strong underwriting practices [10][11] - It plans to continue growing tangible book value per share at an attractive pace, leveraging its strong underwriting and investment management capabilities [7][39] - The company is cautious about the anticipated decrease in property catastrophe rates and falling short-term interest rates but believes it can navigate these challenges [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to construct an attractive property portfolio despite expected market reductions [10][12] - The company anticipates continued demand growth in property catastrophe, although at a slower rate than in previous years [10][12] - Management highlighted the importance of maintaining strong customer relationships to capitalize on future growth opportunities [11][12] Other Important Information - The company returned over $1 billion in capital to shareholders year-to-date through share repurchases [9][19] - It has generated $3.2 billion in operating cash flow, facilitating growth in its property catastrophe portfolio [14][19] - The company expects to continue generating profits and cash at an attractive rate, with share repurchases viewed as a highly accretive use of capital [15][19] Q&A Session Summary Question: What are the normal expectations for fee income and net investment income contributions to return in 2026? - Management expects around 11-12% from investment income and over 3% from fees as a starting point for 2026 [42][43] Question: What is the expected ROE on cat business written in 2026? - Management indicated that while rates may decline, the business remains above rate adequacy, and they expect to construct an attractive portfolio [46][48] Question: How is third-party capital influencing pricing in 2026? - Management noted that third-party capital is not the primary driver of pricing; rather, it is about comfort with return levels within property cat [53][54] Question: What is the outlook for casualty and specialty pricing? - Management observed that pricing increases have primarily occurred at the insurer level, benefiting their reinsurance business [65] Question: How does favorable reserve development impact pricing models? - Management stated that favorable reserve development informs both pricing and reserving strategies, contributing to future expectations [88][89]

Financial Data and Key Metrics Changes - The company reported operating income of $734 million for Q3 2025, with an operating return on average common equity of 28% [5] - Year-to-date operating income reached almost $1.3 billion, delivering about a 17% operating return on average common equity [5] - Tangible book value per share plus change in accumulated dividends grew by 10% in the quarter and nearly 22% year-to-date [5][6] - Annualized return on equity was 35% for the quarter, with operating return on equity at 28% [14] Business Line Data and Key Metrics Changes - Underwriting income increased to $770 million, nearly double from Q3 2024, with retained net investment income rising to $305 million, up 4% [15] - Fee income reached $102 million, up 24% [15] - The adjusted combined ratio for underwriting was 67%, reflecting disciplined underwriting and low catastrophe losses [19] - Gross premiums written were $2.3 billion, with net premiums written at $2 billion, slightly down from the comparable quarter [20] Market Data and Key Metrics Changes - The property catastrophe portfolio grew from $2 billion in gross written premium in 2022 to around $3.3 billion in 2025 [7] - The company expects property catastrophe rates to decline by about 10% in 2026, although some accounts may see stable or increased rates due to specific conditions [31][32] - The casualty and specialty segment maintained a combined ratio in the high 90s, with a focus on managing exposure to U.S. general liability [36] Company Strategy and Development Direction - The company aims to prioritize margin over growth, focusing on strong underwriting practices to maintain profitability [9] - It plans to continue growing tangible book value per share at an attractive pace, leveraging its strong underwriting and investment capabilities [6][39] - The company is committed to returning capital to shareholders, having returned over $1 billion so far in 2025 through share repurchases [8][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as decreasing property catastrophe rates and falling short-term interest rates but expressed confidence in overcoming these through disciplined execution [8][39] - The company anticipates continued demand growth in property catastrophe, although at a slower rate than in previous years [9][31] - Management emphasized the importance of maintaining strong customer relationships to capitalize on future growth opportunities [10][36] Other Important Information - The company has returned over $1 billion in capital to shareholders in 2025, reflecting its strong capital position and belief in the value of its shares [8][18] - Retained net investment income is expected to persist and potentially grow as the asset base increases [25] Q&A Session Summary Question: What is the normal expectation for fee income and net investment income contributions to return in 2026? - Management expects around 11-12% from investment income and about 3% from fees as a starting point for 2026 [41] Question: What is the expected ROE on cat business written in 2026? - Management indicated that while rates may decline, the business remains profitable with strong rate adequacy, suggesting continued positive outlook [45][46] Question: How is third-party capital influencing pricing in 2026? - Management noted that third-party capital is not the primary driver of pricing; traditional reinsurers' comfort with return levels is more influential [54][56] Question: Can you provide insights on the casualty and specialty segment's pricing? - Management observed that pricing increases have primarily occurred at the insurer level, benefiting the reinsurance side, and emphasized ongoing optimization of their portfolio [78][80]

RenaissanceRe Holdings Ltd. Contents | | Page | | --- | --- | | Basis of Presentation | i | | Financial Highlights | 1 | | Summary Consolidated Financial Statements | | | a. Consolidated Statements of Operations | 3 | | b. Consolidated Balance Sheets | 4 | | Underwriting and Reserves | | | a. Segment Underwriting Results | 5 | | b. Segment Underwriting Results - Five Quarter Trend | 7 | | c. Property Segment - Catastrophe and Other Property Underwriting Results | 10 | | d. Gross Premiums Written | 12 | | e. ...

Group 1 - The top 50 global property/casualty insurers experienced an overall premium growth of 8.3% in 2024, with four insurers achieving growth rates exceeding 20% [1][2] - Progressive Corp. recorded a significant 20.5% increase in U.S. GAAP-reported gross earned premiums, surpassing $72 billion, and is now ranked fourth among the top 50 global insurers [2][3] - RenaissanceRe Holdings Ltd. achieved the highest growth rate at 31.1%, making its debut on the global list at 44th place with approximately $12 billion in gross earned premiums [4][5] Group 2 - Auto-Owners Insurance Group and Arch Capital Group also reported substantial growth, with increases of 21.7% and 21% respectively, ranking 40th and 29th in the top 50 [5] - The average loss ratio for the top 50 insurers improved to 64.3 in 2024 from 66.8 in 2023, indicating better overall performance in managing claims [7][12] - State Farm retained its first-place ranking despite having the highest loss ratio among large insurers at 78.2, while Progressive's loss ratio was reported at 69.1, placing it 31st in loss ratio rankings [12] Group 3 - The majority of the top 50 insurers reported increased premium levels for 2024 compared to 2023, with only AIG and Nationwide Mutual Group showing declines [17] - Notable shifts in rankings included Allstate moving to eighth place and Liberty Mutual to ninth, while Zurich Insurance Group is now ranked 11th [18] - S&P GMI highlighted that over half of the top 50 global P/C insurers are based in North America, with significant representation from European and Asia Pacific insurers [16]

Core Insights - RenaissanceRe reported revenue of $2.87 billion for the quarter ended September 2025, reflecting a 4.5% decline year-over-year and a surprise of -3.67% compared to the Zacks Consensus Estimate of $2.98 billion [1] - The company's EPS was $15.62, significantly higher than the $10.23 reported in the same quarter last year, resulting in an EPS surprise of +64.59% against the consensus estimate of $9.49 [1] Financial Performance Metrics - Underwriting Expense Ratio for Casualty and Specialty was reported at 33.8%, slightly above the average estimate of 33.5% [4] - Underwriting Expense Ratio for Property was 29.7%, compared to the estimated 25.5% [4] - Combined Ratio for Property was reported at 15.5%, significantly lower than the estimated 80.9% [4] - Net Claims and Claim Expense Ratio for Casualty and Specialty was 67.6%, slightly above the estimate of 66.8% [4] - Overall Combined Ratio was 68.4%, well below the estimated 92.3% [4] - Combined Ratio for Casualty and Specialty was 101.4%, slightly above the estimate of 100.3% [4] Premiums and Investment Income - Net premiums earned in Casualty and Specialty were $1.5 billion, matching the average estimate but showing a year-over-year decline of 5.8% [4] - Net investment income was reported at $438.35 million, exceeding the average estimate of $419.87 million, with a year-over-year increase of 3.4% [4] - Net premiums earned in Property were $936.93 million, below the average estimate of $1.06 billion, also reflecting a year-over-year decline of 5.8% [4] - Revenues from equity in earnings (losses) of other ventures were $12.55 million, significantly higher than the average estimate of $7.37 million, marking a year-over-year increase of 119.5% [4] - Total net premiums earned were $2.43 billion, below the average estimate of $2.56 billion, with a year-over-year decline of 5.8% [4] Stock Performance - RenaissanceRe shares have returned -3.2% over the past month, contrasting with the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]