Peers for RenaissanceRe Holdings Ltd. (NYSE:RNR) include ACE Limited (NYSE:ACE), The Chubb Corporation (NYSE:CB), PartnerRe (NYSE:PRE), and XL Group plc (NYSE:XL). ACE Limited (NYSE:ACE) and The Chubb Corporation (NYSE:CB) are also trading at premiums to their book values, and feature higher earnings multiples than RenaisssanceRe as well; specifically, their trailing P/E multiples are in the 12-14 range. However, these companies are considerably larger with market capitalizations of over $20 billion in each case. In addition, their revenue numbers last quarter were closer to flat compared to the first quarter of 2012, with a small increase at ACE Limited (NYSE:ACE). Conditions aren’t that good at PartnerRe: revenue has been down only slightly, but net income dropped 35% in its most recent quarter compared to the same period in the previous year. The sell-side is looking for further weakening on the bottom line, and as a result the forward earnings multiple is 11. XL Group plc (NYSE:XL)’s earnings have been considerably higher in percentage terms, but revenue growth has been more limited and so we’d say that the growth rate of net income is going to come down to match improvements on the top line. That stock’s P/B ratio is 0.8 and its trailing and forward P/E multiples are both 11, however, so it may be the most conventional-looking value play of the lot.
Cohen and his team probably don’t need RenaissanceRe Holdings Ltd. (NYSE:RNR) to grow its earnings in order for this investment to work out- the valuation is actually fairly low when we look at trailing performance. The issue is that business has been declining, and so it’s uncertain whether or not the insurer will be able to preserve its current conditions. The stock does not look too out of place for its industry, but we’d suggest that investors do at least some research on XL Group plc (NYSE:XL) as an alternative before looking at RenaissanceRe Holdings Ltd. (NYSE:RNR).
Disclosure: I own no shares of any stocks mentioned in this article.