Reinsurance Group Beats on Earnings; Revs Up - Analyst Blog


Reinsurance Group of America Inc.  ( RGA ) reported third quarter 2013 operating income of $2.14 per share, significantly exceeding the Zacks Consensus Estimate of $1.82 per share. In the year-ago quarter the company had operating earnings of $1.35 per share. Results were helped by higher revenues along with lower share count.

Including capital losses, derivatives and other investment related losses Reinsurance Group reported net loss of $1.93 per share, compared with net income of $1.95 per share in the year-ago quarter.

Quarterly Operational Update

Total revenue of Reinsurance Group increased 6.4% year over year to $2.47 billion in the reported quarter and was also above the Zacks Consensus Estimate of $2.45 billion.

Total benefits and expenses of Reinsurance Group decreased 2.6% year over year to $2.19 billion due to lower interest credited claims and lower policy benefits, interest credited.

Quarterly Segment Update

U.S. Operations : Pre-tax operating income in the Traditional U.S. sub-segment was $84.8 million, up 20.1% year over year. Net premiums increased 6.0% year over year to $1.11 billion.

Improved performance in the equity-indexed and fixed annuity businesses led to an increase in pretax operating income in the U.S. Asset-Intensive business which was $38.0 up 40% year over year.

Pretax operating income in the U.S. Financial Reinsurance business was $11.5 million, up 39.0% year over year.

Canada Operations : Pre-tax operating income was $36.0 million, up 28.0% year over year. Net premiums increased 4% year over year to $236.1 million.

Asia Pacific Operations : Pre-tax operating income was $12.6 million in contrast with operating loss of $16.5 million in the prior year quarter. Net premiums increased 4% year over year to $343.1 million.

Europe & South Africa Operations : Higher fee income in Continental Europe and favorable mortality and morbidity claims experience in the U.K. drove an increase in pre-tax operating earnings to $40.2 million which was up 60.2% year over year. Net premiums increased 9.0% year over year to $329.7 million.

Financial Update

As of Sep 30, 2013, Reinsurance Group had assets worth $39.53 billion, down 1.0% year over year.

As of Sep 30, 2013, book value per share of Reinsurance Group was $67.98, up 9.6% year over year.

Dividend Update

Reinsurance Group declared a regular quarterly dividend of 30 cents per share to be paid on Nov 29, 2013.

Our Take

Results reflected favorable performance from all the segments across the company. Going forward we expect share repurchase to aid bottom-line results.

Reinsurance Group retains a Zacks Rank #3 (Hold).

Other stocks such as StanCorp Financial Group Inc. ( SFG ) with Zacks Rank#1 (Strong Buy), reported third quarter earnings ahead of the Zacks Consensus Estimates, while Lincoln National Corp. ( LNC ) and Sun Life Financial Inc. ( SLF ) both with Zacks Rank #2 (Buy) are  expected to release third quarter earnings on Oct 30 and Nov 7, respectively.

LINCOLN NATL-IN (LNC): Free Stock Analysis Report

REINSURANCE GRP (RGA): Free Stock Analysis Report

STANCORP FNL CP (SFG): Free Stock Analysis Report

SUN LIFE FINL (SLF): Free Stock Analysis Report

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Zacks Investment Research

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: LNC , RGA , SFG , SLF

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