We issued an updated research report on
Reinsurance Group of America Inc
) on Aug 13. The life reinsurer reported second-quarter 2014
operating income of $2.23 per share, significantly ahead of the
Zacks Consensus Estimate of $2.06. In the year-ago quarter, the
company had posted an operating loss of 99 cents per share.
The quarter's results were driven by strong international earnings,
both from Europe, Middle East and Africa (EMEA) and Asia Pacific
along with continued momentum in Global Financial Solutions.
Total revenue of $2.83 billion increased 9.4% year over year but
was slightly below the Zacks Consensus Estimate of $2.86 billion.
The company is a leader in the U.S. Latin America Traditional
market. The company has a successful product line expansion with
market leading services, capabilities, expertise and innovation. In
spite of a difficult insurance market, the company has grown net
premium at a CAGR of 8.2% from 2009 to 2013.
In Canada, the company is market leader with solid growth and
profitability. The company has a sizable in-force business, which
would be a significant source of future earnings. Any new business
is expected to add value.
In Asia, the company has a significant presence in Hong Kong,
Japan, India, Korea and Taiwan. The company believes that economic
growth and demographic trends leading to rapid growth in insurance
market, protection and living benefits present abundant growth
opportunities in this region.
However, the company's Australia business has been underperforming
for quite some time, due to intensely competitive direct and
reinsurance markets, complex product designs and weakening claims
Moreover, evolving capital requirements from Solvency II
regulations, continuing low interest rates and a significant
exposure to foreign exchange can impart earnings volatility.
Nevertheless, the company's intelligent use of capital by way of
regular share buyback and dividend payments have created
value for shareholders.
The company has also witnessed an increase in earnings estimates.
Over the past 30 days, the Zacks Consensus Estimate for 2014 has
gone up 4% to $8.09 and the same for 2015 is up 1.4% to $8.69.
Reinsurance Group of America carries a Zacks Rank #3 (Hold). Other
players worth considering include Lincoln National Corporation (
), Symetra Financial Corporation (
) and Voya Financial, Inc. (
). All these stocks carry a Zacks Rank #2 (Buy).
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