Ambac Financial Group (NYSE:AMBC – Get Free Report) and RenaissanceRe (NYSE:RNR – Get Free Report) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitability, dividends, risk and analyst recommendations.
Volatility & Risk
Ambac Financial Group has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, RenaissanceRe has a beta of 0.25, meaning that its stock price is 75% less volatile than the S&P 500.
Profitability
This table compares Ambac Financial Group and RenaissanceRe’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ambac Financial Group | -215.40% | -3.50% | -0.49% |
| RenaissanceRe | 14.23% | 16.83% | 3.17% |
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ambac Financial Group | $252.94 million | 1.85 | -$556.45 million | ($13.62) | -0.74 |
| RenaissanceRe | $12.10 billion | 1.01 | $1.87 billion | $35.99 | 7.40 |
RenaissanceRe has higher revenue and earnings than Ambac Financial Group. Ambac Financial Group is trading at a lower price-to-earnings ratio than RenaissanceRe, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
84.5% of Ambac Financial Group shares are held by institutional investors. Comparatively, 100.0% of RenaissanceRe shares are held by institutional investors. 6.2% of Ambac Financial Group shares are held by insiders. Comparatively, 1.3% of RenaissanceRe shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Ambac Financial Group and RenaissanceRe, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ambac Financial Group | 1 | 0 | 1 | 0 | 2.00 |
| RenaissanceRe | 1 | 11 | 4 | 0 | 2.19 |
Ambac Financial Group presently has a consensus price target of $10.00, indicating a potential downside of 0.67%. RenaissanceRe has a consensus price target of $283.67, indicating a potential upside of 6.50%. Given RenaissanceRe’s stronger consensus rating and higher probable upside, analysts clearly believe RenaissanceRe is more favorable than Ambac Financial Group.
Summary
RenaissanceRe beats Ambac Financial Group on 11 of the 14 factors compared between the two stocks.
About Ambac Financial Group
Ambac Financial Group, Inc. operates as a financial services holding company. It operates three businesses: Specialty Property and Casualty Insurance, Insurance Distribution, and Legacy Financial Guarantee (LFG) Insurance. The Specialty Property and Casualty Insurance business provides specialty property and casualty program insurance with a focus commercial and personal liability risks. The Insurance Distribution business includes the specialty property and casualty insurance distribution business, which includes managing general agents and underwriters, insurance wholesalers, brokers, and other distribution businesses. The LFG Insurance business offers financial guarantee insurance policies that provide an unconditional and irrevocable guarantee, which protects the holder of a debt obligation against non-payment when due of the principal and interest on the obligations guaranteed. Ambac Financial Group, Inc. was incorporated in 1991 and is headquartered in New York, New York.
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.
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