On May 9, we issued an updated research report on
Reinsurance Group of America Inc.
). First-quarter 2014 operating income of $1.61 per share missed
the the Zacks Consensus Estimate of $1.97 and decreased 2.4% year
over year. High claim costs in its U.S. and Canadian business were
responsible for the decline.
The company expects business in the U.S. to remain under
pressure given a competitive life insurance market. Moreover, low
interest rates, significant exposure to foreign exchange and an
underperforming Australian business would also not favor the
Reinsurance Group has witnessed declining estimates since the
first-quarter earnings release. After 6 out of 8 downward estimate
revisions over the last 30 days, the Zacks Consensus Estimate for
2014 is pegged at $7.75 per share, up 2.4% year over year. The
Zacks Consensus Estimate for 2015 is $8.52 per share, down 0.8%
year over year, after 2 downward revisions out of 8 estimates over
the same time frame.
Nevertheless, Reinsurance Group is focusing on its underwriting
standards, prompt response on quotes, competitive pricing as well
as capacity and flexibility to meet customer needs, in an attempt
to preserve its position.
Additionally, the company is growing its international
operations to reap the benefits of diversification.
Reinsurance Group is also poised to benefit from the changing
industry trends. As a result of consolidation in recent years
within the life reinsurance industry, there are fewer competitors.
Accordingly, we believe that the life reinsurance pricing
environment will remain attractive for the company.
Also a disciplined capital management strategy will continue to
Reinsurance Group carries a Zacks Rank #4 (Sell).
Some better-ranked stocks -
Symetra Financial Corp.
) with a Zacks Rank #1 (Strong Buy), and
Protective Life Corp.
Sun Life Financial Inc.
) with a Zacks Rank #2 (Buy) are worth considering.
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PROTECTIVE LIFE (PL): Free Stock Analysis
REINSURANCE GRP (RGA): Free Stock Analysis
SUN LIFE FINL (SLF): Free Stock Analysis Report
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