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RenaissanceRe Holdings Ltd. (RNR) is a Bermudian catastrophe reinsurer founded in 1993. The outline of this piece is rather simple. RenaissanceRe has had a stellar performance as an underwriter and as a stock. But with the influx of capital in the catastrophe market making catastrophe pricing slightly more perilous (pun intended), and with the strong advance in price of the stock, we are looking at a stock which compares unfavorably with other reinsurers in terms of price and diversification.

Is it a short? Definitely not - due to the fact that (1) the huge cash inflows of reinsurers could support the price through repurchases, (2) the bond portfolio creates a powerful backstop to a share price decline,...

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