Reinsurance Group of America Inc.
) reported first-quarter 2014 operating income of $1.61 per
share, significantly below the Zacks Consensus Estimate of $1.97.
Results were also down 2.4% year over year. The company's
earnings suffered from high claim costs in its U.S and Canadian
Total revenue of $2.66 billion increased 2.2% year over year
and was also ahead of the Zacks Consensus Estimate of $2.52
Total premium of $2.1 billion rose 6.0% year over year.
Investment income at Reinsurance Group decreased 5.0%
year over year to $404.4 million, led by a reduction in the fair
value of options contracts underlying equity indexed
Total benefits and expense of Reinsurance Group escalated 5.8%
year over year to $2.46 billion due to higher claims and other
policy benefits, coupled with higher interest expense.
Quarterly Segment Update
: The U.S. Traditional sub-segment net premium written increased
8% year over year to $1.14 billion. However, the segment's
underwriting profitability suffered, as reflected by pre-tax
operating income which declined 33% due to unfavorable mortality
experience relative to the year-ago quarter.
Another sub segment, the U.S. Asset Intensive business,
reported pre-tax operating income of $70.6 million, down 21.1%
year over year due to changes in the fair values of various
Growing number of financial reinsurance treaties generated
strong fee income which led to a 55% year-over-year increase in
pretax operating income in the U.S. Financial Reinsurance
business to $12.4 million.
: Adverse mortality along with a weak Canadian dollar led to a
decline of 33.0% in pre-tax operating income to $12.4
Asia Pacific Operations
: Pre-tax operating income was $27.0 million, up 7% year over
year to $24.7 million, led by strong performance from the Asia
Europe, Middle East and Africa (EMEA)
reported premium written of $340.7 million, up 16% year over year
led by strong results in France. Pre-tax operating income
increased 52.2% year over year to $14.0 million, due to higher
individual mortality claims in the U.K.
As of March 31, 2014, Reinsurance Group had assets worth
$40.54 billion, up slightly 0.8% year over year.
As of March 30, 2014, book value - a measure of the company's
net worth - was $71.51, up 6.1% year over year.
Reinsurance Group announced to pay a regular quarterly
dividend of 30 cents per share to its shareholders on May 30,
Reinsurance Group repurchased approximately 1.45 million
shares for a total cost of $112.6 million
Tight-lipped on 2014 Guidance
Reinsurance Group did not divulge any details regarding its
2014 earnings guidance. During the last reported quarter, the
company had targeted growth in operating income per share in the
5% to 8% range over the medium term, and operating return on
equity in the band of 11% to 12%. The company also expects to
deploy $200 million to $400 million of excess capital, on
average, annually. The company also expects tax rate to decline
to 34% from 35% currently, which reflects a slight shift in
earnings contribution from lower tax rate jurisdictions.
Among other players,
Everest Re Group Ltd.
) reported its first-quarter earnings ahead of the Zacks
Montpelier Re Holdings Ltd.
Protective Life Corp.
) - both with a Zacks Rank #2 (Buy) - are scheduled to report
their first-quarter earnings on April 30 and May 7,
MONTPELIER RE (MRH): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
REINSURANCE GRP (RGA): Free Stock Analysis
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