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RenaissanceRe Holdings Ltd. (RNR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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RenaissanceRe Holdings Ltd. (RNR)

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Intrinsic Value (DCF)

Current$271.89
→
Intrinsic$1,179.95
+334%
$802.32$1,179.95$1,896.64
Market implies 1% growth for 5 years
DCF analysis suggests RNR could have 334% upside at 23% growth — verify assumptions match your view.
At $272, the market prices in only 1% growth — below historical 23%, suggesting low expectations.
Range: Bear $802 → Bull $1897. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →19%21%23%25%
8%$1447$1565$1692$1826
10%$1013$1094$1180$1272
12%$773$833$897$966
14%$621$668$718$772

Bull Case

  • Bull case ($1897) offers 598% upside at 27% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (23%)

Bear Case

  • Bear case ($802) with 18% growth, 12% discount rate
  • Using 23% growth — aggressive, watch for mean reversion
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5-Year Net Income Projection

Year 1$2.30B
Year 2$2.82B
Year 3$3.46B
Year 4$4.25B
Year 5$5.21B
Terminal$76.71B

📐 Model Inputs

Growth Rate22.8%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$1.87BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is RNR stock undervalued or overvalued?
🟢 UNDERVALUED

RNR trades at $271.89 vs. our DCF-derived intrinsic value of $1062.44, implying +291% upside. At a 10.0% WACC and 22.8% projected FCF growth, the market appears to be underpricing the present value of RNR's future cash flows. The bear case ($695.44) still suggests upside, providing margin of safety.

What is RNR's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.87B, projected at 22.8% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $210M net debt and dividing by 0.05B shares: Bear $695.44 | Base $1062.44 | Bull $1602.87. Current price $271.89 implies +291% to base case.

How is RNR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 22.8% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($54.75B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.