Reinsurance Group of America Inc.
) reported its third quarter 2012 operating earnings of $1.35 per
share, significantly lagging the Zacks Consensus Estimate of
$1.84 per share and also the year-ago quarter's earnings by 28%.
The earnings miss was the result of a higher-than-expected claims
incidence in the U.S. and Australian markets along with an
increase in claims liability in Australia.
Total revenue increased 23% year over year to $2.45 billion, led
by increased net premiums, net investment income along with
investment related gains. Net premiums increased 8% year over
year to $1.91 billion.
Investment income surged 48% year over year to $369.8 million,
primarily due to an increase in the fair value of option
Total benefits and expenses soared 22% year over year to $2.25
billion owing to an increase in claims and other policy benefits,
operating expenses as well as interest expense, partly offset by
a decline in collateral finance facility expense.
EVEREST RE LTD (RE): Free Stock Analysis
REINSURANCE GRP (RGA): Free Stock Analysis
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The U.S. Operations Traditional sub-segment reported pre-tax
operating income of $72.5 million, down 10% year over year.
Premiums improved 8% year over year to $1.05 billion.
The Asset Intensive business reported pre-tax operating income of
$27.1 million, up 18% year over year. Result benefited from
favorable equity market performance and the addition of a large
block of fixed deferred annuities, effective April 1, 2012.
The U.S. Financial Reinsurance business continued to perform well
and reported operating income of $8.3 million, up 30% year over
The Canada segment's premium jumped 23% year over year to $227.9
million. Pre-tax operating income decreased 20% year over
year to $28.1 million.
The Europe & South Africa segment recorded a 6% hike in
premium to $303.1 million. Pre-tax operating income more than
doubled to $25.1 million year over year, primarily due to the
better-than-expected performance across all the markets.
The Asia-Pacific segment reported a pre-tax operating loss of
$20.7 million, in contrast with operating income of $27.3 million
in the prior-year quarter. Premium was up by a modest 0.6% year
over year to $330.4 million.
Adjusted book value per share, a measure of net worth, increased
11.9% year over year to $62.05 per share.
The company announced the payment of its quarterly dividend of 24
cents per share on November 30, 2012.
In the absence of any update on 2012 outlook, we believe that the
company is reiterating its earlier earnings per share guidance
range of $6.70-$7.30.
Everest Re Group Ltd.
) is expected to release its earnings on October 24, 2012.
Reinsurance Group currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. We are also maintaining
our long-term 'Neutral' recommendation on the shares.