PartnerRe (PRE) Hits New 52-Week High despite CAT Loss - Analyst Blog

Once again this year shares of PartnerRe Ltd. (PRE) have climbed a new 52-week high at $116.98 on Nov 26. Notably, this multi-line insurer and reinsurer's shares rose about 18.2% since the beginning of 2014.

Yesterday's closing price represents a modest six-month return of about 9.6%, against 9.1% clocked by the S&P 500 index. While 167.5K shares exchanged hands in the latest trading session, the average volume of shares traded over the last three months stands at approximately 321.7K.

Despite the macro market challenges and catastrophe losses, PartnerRe's improved core fundamentals are driving the growth momentum. Improved financial performance, prudent enterprise management and effective capital deployment are buoying up investors and analysts' confidence in this Zacks Rank #2 (Buy) stock.

Rationale

PartnerRe has delivered positive earnings surprises in three of the last four quarters with an impressive average beat of 15.6%. Notably, on Oct 27, PartnerRe reported third-quarter operating earnings per share (EPS) of $4.47 that topped the Zacks Consensus Estimate of $3.44 by 29.9%.

Although higher-than-expected underwriting and operating expenses led to the year-over-year earnings fall, top line improved due to higher premiums and improved pricing. Meanwhile, asset base, book value and liquidity positions remained strong.

A benign catastrophic environment, favorable reserve development and diversified portfolio have been augmenting operating leverage. A robust capital and superior risk management further mitigated investment and competitive challenges, and supported expanded share buybacks in September. We also expect an annual dividend hike in the near future.

Peer Take

The Hanover Insurance Group Inc. (THG), Endurance Specialty Holdings Ltd. (ENH) and Validus Holdings Ltd. (VR) are other promising picks that are driven by improved market dynamics inproperty-casualty insurance. All these stocks also scaled new 52-week highs yesterday. Their performance reflects improved fundamentals, which are poised to enhance returns over time.