Wednesday, May 19, 2010

Another Reinsurer that would Rather Invest Their Surplus than Write Business (RNR)

We've covered Berkshire Hathaway's decision to invest in competitors Munich Re and Swiss Re rather than take on more business at current prices. Here's another example, from Zacks:

RenaissanceRe Expands Buyback

In an attempt to return value to its investors, on Tuesday, the board of RenaissanceRe Holdings Ltd. (RNR - Analyst Report) approved the expansion of its stock repurchase program to a total current authorization of approximately $500 million. This authorization includes the remainder amounts available from prior authorizations, whereby repurchases will be based on internal capital requirement and market conditions. However, there is no expiration date for this repurchase program.
Prior to this in May 2008, RenaissanceRe had authorized a $500.0 million share repurchase program. Under this plan, the company bought back its common shares worth $51.0 million in 2009. As of Dec 31, 2009, $331.4 million remained available for repurchase, which are included in the new stock buyback plan.
Though there are some early signs of economic recovery, the pace of improvement is expected to be slow. As a result, it could still be difficult for the insurance companies to raise capital. However, in March 2010, RenaissanceRe initiated an underwritten public offering worth $250 million aggregate principal amount of 5.750% senior notes due 2020. We do not anticipate any additional capital requirement in the near term due to its strong capital position.
RenaissanceRe has been returning capital to its shareholders through share repurchases. The operating subsidiaries of the company also remained well capitalized. With its strong capital position, the company should be able to take advantage of the increased demand for reinsurance....MORE
I sure hope the Florida Hurricane Catastrophe Fund is paying attention.