"Reinsurance pricing has been decidedly poor for two mid-year renewal cycles as well as one Jan. 1 renewal," says analyst Joshua Shanker. cutting RenaissanceRe Holdings (NYSE:RNR) to a Hold. "We believe the contributors to this weak pricing cycle are more likely permanent than transitory."
He notes the reinsurers reported misses nearly across the board in Q2, with RNR missing by the widest margin. That RNR is most exposed to poor pricing in property-catastrophe lines isn't new news, but what's changed is valuation.
Following post-Q2 earnings revisions, RNR now trades at 75% of the S&P 500's multiple, the highest-ever relative valuation for the stock.