RenaissanceRe Holdings (NYSE: RNR) and Validus Holdings (NYSE:VR) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, institutional ownership, risk and valuation.

Insider and Institutional Ownership

92.8% of RenaissanceRe Holdings shares are owned by institutional investors. Comparatively, 97.8% of Validus Holdings shares are owned by institutional investors. 1.8% of RenaissanceRe Holdings shares are owned by insiders. Comparatively, 2.3% of Validus Holdings shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares RenaissanceRe Holdings and Validus Holdings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RenaissanceRe Holdings $1.77 billion 3.31 $710.24 million $11.74 12.40
Validus Holdings $2.48 billion 1.68 $538.06 million $3.63 14.45

RenaissanceRe Holdings has higher revenue, but lower earnings than Validus Holdings. RenaissanceRe Holdings is trading at a lower price-to-earnings ratio than Validus Holdings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares RenaissanceRe Holdings and Validus Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RenaissanceRe Holdings 28.30% 8.49% 2.92%
Validus Holdings 11.81% 7.75% 2.55%

Dividends

RenaissanceRe Holdings pays an annual dividend of $1.28 per share and has a dividend yield of 0.9%. Validus Holdings pays an annual dividend of $1.52 per share and has a dividend yield of 2.9%. RenaissanceRe Holdings pays out 10.9% of its earnings in the form of a dividend. Validus Holdings pays out 41.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. RenaissanceRe Holdings has raised its dividend for 12 consecutive years and Validus Holdings has raised its dividend for 2 consecutive years.

Volatility and Risk

RenaissanceRe Holdings has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Validus Holdings has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for RenaissanceRe Holdings and Validus Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RenaissanceRe Holdings 0 7 0 0 2.00
Validus Holdings 0 3 1 0 2.25

RenaissanceRe Holdings currently has a consensus target price of $140.83, suggesting a potential downside of 3.24%. Validus Holdings has a consensus target price of $58.25, suggesting a potential upside of 11.04%. Given Validus Holdings’ stronger consensus rating and higher possible upside, analysts plainly believe Validus Holdings is more favorable than RenaissanceRe Holdings.

Summary

RenaissanceRe Holdings beats Validus Holdings on 9 of the 17 factors compared between the two stocks.

About RenaissanceRe Holdings

RenaissanceRe Holdings Ltd. provides reinsurance and insurance coverages and related services to a range of customers. The Company’s products include property, casualty and specialty reinsurance and certain insurance products principally distributed through intermediaries. Its segments include Property; Casualty and Specialty, and Other category. The Property segment consisted of catastrophe and other property reinsurance and insurance written on behalf of its operating subsidiaries and certain joint ventures managed by its ventures unit. The Casualty and Specialty segment consisted of casualty and specialty reinsurance and insurance written on behalf of its operating subsidiaries and certain joint ventures managed by its ventures unit. Its Other category includes its strategic investments, investments unit, corporate expenses, capital servicing. The Casualty and Specialty segment offers certain casualty insurance products through RenaissanceRe Syndicate 1458 (Syndicate 1458).

About Validus Holdings

Validus Holdings, Ltd. is a holding company. The Company operates through four segments: Validus Re, Talbot, Western World and AlphaCat. Validus Re is a Bermuda-based reinsurance segment focused treaty reinsurance. Validus Re concentrates on first-party property and other reinsurance risks. Talbot is a specialty insurance segment operating within the Lloyd’s insurance market through Syndicate 1183. The Talbot segment is focused on a range of marine and energy, political lines, commercial property, financial lines, contingency, accident and health and aviation classes of business. Western World is a specialty excess and surplus lines insurance segment operating within the United States commercial market. AlphaCat is a Bermuda-based investment advisor, managing capital from third parties and the Company in insurance linked securities and other investments in the property catastrophe reinsurance space.

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