Reinsurance Group of America Inc. (RGA): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


Reinsurance Group of America's fourth quarter 2014 operating income surpassed the Zacks Consensus Estimate and also improved year-over-year. Favorable tax adjustments in the quarter benefited earnings by $0.55. Strong international earnings from Europe, Middle East and Africa (EMEA) and the Asia Pacific, along with continued momentum in Global Financial Solution grove the upside. The company holds a niche position in the U.S. and Canada reinsurance markets. Additionally, the company is expanding its international operations to reap the benefits of diversification. Reinsurance Group is also poised to benefit from the changing life reinsurance pricing environment. Disciplined capital management and strong investment grade ratings are other positives. It exited 2014 with near about $1.2 billion of excess capital. It still expects operating EPS to grow between 5% and 8% and operating ROE to grow in 11% to 12% range in near term. Nonetheless, an underperforming Australia business, currency exchange volatility and evolving capital requirements are some near-term headwinds.


Formed in 1992 in Timberlake, Missouri, Reinsurance Group of America Inc. is an insurance holding company that is primarily engaged in traditional individual and group life, asset-intensive, critical illness and financial reinsurance. It conducts the greater portion of its business in North America with the majority of the largest U.S. and Canadian life insurance companies.

Reinsurance Group derives revenues primarily from renewal premiums from existing reinsurance treaties, new business premiums from existing or new reinsurance treaties, income earned on invested assets, and fees earned from financial reinsurance transactions. The company is considered to be one of the leading life reinsurers in the North American market based on premiums and the amount of life reinsurance in force.

On September 12, 2008, MetLife Inc, which used to own 51.7% of Reinsurance Group's shares, divested the majority of its stake, retaining only 4.1% of the latter's stock.

Reinsurance Group reports its financials through four geographic segments: U.S. and Latin America., Canada, Europe, Middle East and Africa and Asia Pacific segment.

U.S. and Latin America The U.S. and Latin America operations are further segmented into traditional and non-traditional businesses. The U.S. and Latin America operations provide individual life, long-term care, group life and health reinsurance, annuity and financial reinsurance products. The U.S. and Latin America operations non-traditional business also issues fee-based synthetic guaranteed investment contracts, which include investment-only, stable-value contracts, to retirement plans.

Canada Operations The Canada operations reinsure traditional life products as well as creditor reinsurance, group life and health reinsurance, non-guaranteed critical illness products and longevity reinsurance.

Europe, Middle East and Africa This segment includes a variety of life and health products, critical illness and longevity business throughout Europe and in South Africa, in addition to other markets the company is developing in.

Asia Pacific segment The principle types of reinsurance in Asia Pacific include life, critical illness, health, disability, superannuation and financial reinsurance.

Corporate and Other Corporate and Other includes results from, among others, RGA Technology Partners, Inc., a wholly owned subsidiary that develops and markets technology solutions for the insurance industry, interest expense related to debt and investment income and expense associated with the company's collateral finance facility.

The company had approximately $2.9 trillion of life reinsurance in force and assets of $39.7 billion as of Dec 31, 2013.

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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, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: RGA

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