On Monday, Barclays (LON:BARC) analysts issued a downgrade for RenaissanceRe Holdings (NYSE:NYSE:RNR) stock, moving from Equal Weight to Underweight, alongside setting a new price target to $234.00.
The downgrade reflects concerns over the company's earnings outlook for 2025. Barclays pointed out challenges in the Property Catastrophe (Property Cat) segment, where pricing reductions at the start of the year renewals and higher expected loss ratios in casualty insurance are anticipated.
RenaissanceRe's higher expected loss ratios are linked to an increased loss trend assumption that the company intends to adopt in 2025. This change is projected to lead to a combined ratio in the high 90s, a deterioration from the previously guided mid-90s. The combined ratio is a key measure of profitability in the insurance industry, with figures above 100 indicating losses.
The analyst's outlook suggests that earnings per share (EPS) for RenaissanceRe will trend below the consensus estimates. This bearish view is based on the aforementioned pricing and loss ratio pressures, which are expected to weigh on the company's financial performance.
Barclays' new price target of $234 represents a 6% downside from the firm's previous target, signaling caution to investors regarding RenaissanceRe's near-term prospects.
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