RenaissanceRe Upgraded To Outperform: Analyst Eyes Potential Gains From AIG Transaction

BMO Capital Markets analyst Michael Zaremski upgraded RenaissanceRe Holdings Ltd RNR to Outperform from Market Perform with an increased rating of $216 from $198.

The analyst is bullish on higher-than-expected expense synergies from the recent acquisition of American International Group's AIG reinsurance business.

In May, RNR disclosed a deal to buy AIG's treaty reinsurance business for $2.985 billion. 

Also, Zaremski expects RNR to benefit from double-digit demand increases for property reinsurance on population and wage growth trends to catastrophe-prone regions, such as Florida and Texas. 

However, the analyst is cautious about the company's flattish reinsurance pricing-power levels in 2024 after around 30% growth in 2023 and several major catastrophes in 2023.

Nevertheless, Zaremski raised EPS estimates to $7.39 (from $6.16 earlier) for Q2, $24.46 (from $22.01) in 2023, and $27.69 (from $26.13) in 2024. 

Price Action: RNR shares are trading higher by 1.7% at $192.50 on the last check Tuesday.