Symetra Financial Q2 Earnings Beat on Solid Underwriting - Analyst Blog

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Symetra Financial Corporation ( SYA ) reported second-quarter 2014 adjusted operating income of 48 cents per share, which outperformed Zacks Consensus Estimate by 11.6% and increased 20% year over year.

The outperformance came on the back of solid underwriting results in the Benefit Segment coupled with sales improvement across all the business divisions.

Symetra Financial Corporation - Earnings Surprise | FindTheBest

Net income per share increased 82% year over year to $71.5 million or 62 cents per share in the reported quarter.

Investor's enthusiasm was reflected in the share price of Symetra Financial that increased 1.74% to close at $22.81 in the last trading session ending Jul 25, 2014.

Operational performance

Total revenue of Symetra Financial declined 0.5% year over year to $521.8 million due to lower premiums. Results also missed the Zacks Consensus Estimate by 0.8%.

Total benefits and expenses climbed 1.2% year over year to $463.9 million mainly due to an increase in the interest credited.

Benefits: Pre-tax operating income increased 22.1%, driven by lower medical stop loss ratio in the reported quarter. Loss ratio improved 530 basis points to 62.7%, reflecting low claims frequency. Both improvements were on a year-over-year basis.

Medical stop-loss, limited benefits medical, and group life and disability income insurance recorded year-over-year sales growth of 22.5%.

Deferred Annuities: Pre-tax operating income remained flat year over year.

Total account values increased 17.2% from the year-ago quarter. FIA account values rose to $2.5 billion from $855 million in the prior-year quarter.

Sales increased 47% year over year due to solid sales and improved interest rate in traditional fixed annuities and FIA.

Income Annuities: Pre-tax operating income declined 65% from the year-ago quarter due to less favorable mortality experience and low interest margin.

Sales increased 95.6% year over year due to better selling strategies and interest rate.

Individual Life: Pre-tax operating income fell 6.2% year over year in the said quarter owing to increased operating expense, partly offset by Classic Universal Life (UL) earnings.

Sales of individual life products increased to $9.1 million from $3.0 million in the year-ago quarter, driven by higher Classic UL sale.

Other: Pre-tax operating loss rose to $6.2 million from $1.3 million in the year-ago quarter due to low net investment income.

Financial Update

Total assets of Symetra Financial were $31.9 million in the second quarter, increasing 6.0% from 2013-end level.

Stockholders equity was $3.4 million as of Jun 30, 2014, up 7.95% year over year.

Book value per share of Symetra Financial at the reported quarter-end was $21.04 rising 2.6% from Mar 2014 end.

Risk-based capital (RBC) ratio for Symetra Financial at the end of second-quarter 2014 was 458%. Statutory capital and surplus, including asset valuation reserve (AVR), was $2.3 billion.

Dividend and Share Repurchase Update

The board of directors of Symetra Financial declared a cash dividend of 10 cents per share.

Symetra Financial repurchased 0.7 million shares in second-quarter 2014 with 6.9 million remaining under its authorization.

2014 Earnings Outlook

Symetra Financial reiterated 2014 adjusted operating income guidance in the range of $1.80-$2.00 per share.

Performance of Other Insurers

Reinsurance Group of America Inc. ( RGA ) reported second-quarter 2014 operating income of $2.23 per share, which surpassed the Zacks Consensus Estimate of $2.06.

ACE Limited ( ACE ) reported second-quarter operating income of $2.42 per share outperforming Zacks Consensus Estimate by 8% and increased 5.7% year over year.

Zacks Rank

Symetra Financial currently carries a Zacks Rank #3 (Hold). However, a better-ranked insurance stock is Voya Financial, Inc. ( VOYA ), having a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: UL , RBC , ACE , RGA , SYA

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