Contrasting RenaissanceRe (NYSE:RNR) and Assured Guaranty (NYSE:AGO)

RenaissanceRe (NYSE:RNR) and Assured Guaranty (NYSE:AGO) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, earnings, risk and analyst recommendations.

Earnings & Valuation

This table compares RenaissanceRe and Assured Guaranty”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RenaissanceRe	$12.85 billion	1.13	$2.68 billion	$58.27	6.02
Assured Guaranty	$1.11 billion	2.81	$503.00 million	$7.50	9.44

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

Institutional & Insider Ownership

100.0% of RenaissanceRe shares are held by institutional investors. Comparatively, 92.2% of Assured Guaranty shares are held by institutional investors. 2.3% of RenaissanceRe shares are held by insiders. Comparatively, 5.7% of Assured Guaranty shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations for RenaissanceRe and Assured Guaranty, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RenaissanceRe	1	11	6	0	2.28
Assured Guaranty	0	1	3	0	2.75

RenaissanceRe currently has a consensus price target of $337.50, suggesting a potential downside of 3.74%. Assured Guaranty has a consensus price target of $91.00, suggesting a potential upside of 28.48%. Given Assured Guaranty’s stronger consensus rating and higher probable upside, analysts plainly believe Assured Guaranty is more favorable than RenaissanceRe.

Dividends

RenaissanceRe pays an annual dividend of $1.64 per share and has a dividend yield of 0.5%. Assured Guaranty pays an annual dividend of $1.52 per share and has a dividend yield of 2.1%. RenaissanceRe pays out 2.8% of its earnings in the form of a dividend. Assured Guaranty pays out 20.3% 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 has raised its dividend for 30 consecutive years and Assured Guaranty has raised its dividend for 7 consecutive years.

Volatility and Risk

RenaissanceRe has a beta of 0.12, meaning that its share price is 88% less volatile than the S&P 500. Comparatively, Assured Guaranty has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Profitability

This table compares RenaissanceRe and Assured Guaranty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RenaissanceRe	23.65%	23.10%	4.62%
Assured Guaranty	37.34%	7.11%	3.25%

Summary

RenaissanceRe beats Assured Guaranty on 9 of the 17 factors compared between the two stocks.

About RenaissanceRe

RenaissanceRe Holdings Ltd., together with its subsidiaries, provides reinsurance and insurance products in the United States and internationally. The company operates through Property, and Casualty and Specialty segments. The Property segment writes property catastrophe excess of loss reinsurance and excess of loss reinsurance to insure insurance and reinsurance companies against natural and man-made catastrophes, including hurricanes, earthquakes, typhoons, and tsunamis, as well as winter storms, freezes, floods, fires, windstorms, tornadoes, explosions, and acts of terrorism; and other property class of products, such as proportional reinsurance, property per risk, property reinsurance, binding facilities, and regional U.S. multi-line reinsurance. The Casualty and Specialty segment writes various classes of products, such as directors and officers, medical malpractice, and professional indemnity; automobile and employer’s liability, casualty clash, umbrella or excess casualty, workers’ compensation, and general liability; financial and mortgage guaranty, political risk, surety, and trade credit; and accident and health, agriculture, aviation, cyber, energy, marine, satellite, and terrorism. It distributes products and services primarily through intermediaries. The company invests in and manages funds. RenaissanceRe Holdings Ltd. was founded in 1993 and is headquartered in Pembroke, Bermuda.

About Assured Guaranty

Assured Guaranty Ltd., together with its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. It operates through two segments: Insurance and Asset Management. The company offers financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. It insures and reinsures various debt obligations, including bonds issued by the United States state governmental authorities; and notes issued to finance infrastructure projects. In addition, the company insures and reinsures various the U.S. public finance obligations, such as general obligation, tax-backed, municipal utility, transportation, healthcare, higher education, infrastructure, housing revenue, investor-owned utility, renewable energy, and other public finance bonds. Further, the company involved in insuring and reinsuring of non-U.S. public finance obligations comprising regulated utilities, infrastructure finance, sovereign and sub-sovereign, renewable energy bonds, pooled infrastructure, and other public finance obligations; and the U.S. and non-U.S. Structured finance obligations, including residential mortgage-backed securities, life insurance transactions, consumer receivables securities, subscription finance facilities, pooled corporate obligations, and financial products. Additionally, it offers specialty business, such as real estate properties, insurance securitizations, and aircraft residual value insurance (RVI) transactions; and asset management services comprising investment advisory services. It markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities, as well as to investors in such obligations. Assured Guaranty Ltd. was incorporated in 2003 and is headquartered in Hamilton, Bermuda.