RenaissanceRe Holdings Ltd. (NYSE: RNR) has announced an agreement to sell 20 million depositary shares in an underwritten public offering. Each share represents 1/1000th interest per share of the 4.2% Series G Preference shares, $1 par value, and liquidation preference of $25,000 per share.
RenaissanceRe expects $500 million from offering
The public offering price per Depositary Share is $25, with the company expecting a total public offering price of $500 million. Subject to standard closing conditions, RenaissanceRe expects to complete the transaction to the underwriters on July 12, 2021. The net proceeds from the transaction will be utilized to redeem all of RenaissanceRe’s existing 5.375% Series E Preference Shares, with any remaining net proceeds going to general corporate purposes.
Suppose a catastrophic or any significant event occurs before the redemption of the 5.375% Series E Preference Shares. In that case, the company may choose to use the net proceeds to bolster its capital base instead of effecting the entire redemption, depending on the circumstances at the time. The Depositary Shares of RenaissanceRe trade on the New York Stock Exchange under the ticker symbol “RNRPRG.”
RenaissanceRe stock up 11% since March 2020 lows
RenaissanceRe stock is up 11% since March 23, 2020 lows, and at the current share price of $146, the stock exudes significant upside potential. In addition, the stock has rallied from $132 in March last year to $146 compared to S&P, which gained 90% during that period. Currently, the stock lags the broader market, and it has dropped 12% YTD.
In the past four quarters, RenaissanceRe has reported revenue increase on a YoY basis, with the top line growing 30% to $5.13 billion YoY. However, the stock dropped 20% in the last 12 months. The mismatch between revenues and stock growth is due to escalating expense levels and a decline in net investment income, which affected profitability.