Reinsurance Group of America Inc. reported third-quarter 2014
operating income of $2.31 per share, surpassing the Zacks Consensus
Estimate by 10.5% and improving 7.9% year over year. The quarterly
results were driven by strong international earnings from Europe,
Middle East and Africa (EMEA) and the Asia Pacific, along with
continued momentum in Global Financial Solution. 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 also make us optimistic on the stock. Nonetheless, an
underperforming Australia business, currency exchange volatility
and evolving capital requirements are some near-term headwinds. We
thus maintain our Neutral recommendation on the stock.
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
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
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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