Reinsurance Group Poised for Growth with Diverse Operations - Analyst Blog

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We issued an updated research report on Reinsurance Group of America Inc . ( RGA ) 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 experience.

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 ( LNC ), Symetra Financial Corporation ( SYA ) and Voya Financial, Inc. ( VOYA ). All these stocks carry a Zacks Rank #2 (Buy).


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

REINSURANCE GRP (RGA): Free Stock Analysis Report

SYMETRA FINL CP (SYA): Free Stock Analysis Report

VOYA FINANCIAL (VOYA): Free Stock Analysis Report

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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 , Stocks

Referenced Stocks: LNC , RGA , SYA , VOYA

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