Markets

Reinsurance Group (RGA): What's in Store for Q2 Earnings? - Analyst Blog

A generic image of a person holding out their hands
Credit: Shutterstock photo

Leading insurer and reinsurer Reinsurance Group of America Inc.RGA is scheduled to report second-quarter results after the market closes on Jul 23. In the last quarter, this company delivered a4.3% negative earnings surprise. Let's see what factors might have influenced the earnings this time.

Factors Influencing Q2 Results

Reinsurance Group's expanded product line along with an increased block of in-force business is expected to have a positive impact on the company's second-quarter results. Additionally, increased premiums and favorable claims experience in Hong Kong, Japan, India, Korea and Taiwan are expected to boost the Asia Pacific segment's bottom line. Moreover, Reinsurance Group's niche position in the U.S. and Canada reinsurance markets is likely to add to the upside.

However, the underperforming Australian business due to very competitive direct and reinsurance markets, complex product designs and a weakening claims experience is expected to limit the upside.

Moreover, foreign exchange volatility from the company's Europe, the Middle East and Africa and the Asia Pacific operations might also be a drag.

Earnings Whispers

Our proven model does not conclusively show that Reinsurance Group is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. But this is not the case here as elaborated below.

Zacks ESP: Reinsurance Group's Most Accurate estimate is pegged at $2.12 per share, which is lower than the Zacks Consensus Estimate of $2.18. The Earnings ESP is thus -2.75%.

Zacks Rank: Reinsurance Group's has a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, the company's ESP of -2.75% makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some other companies from the insurance space which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Primerica, Inc. PRI has an Earnings ESP of +2.15% and a Zacks Rank #2.

Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.80% and a Zacks Rank #2.

Torchmark Corporation TMK has an Earnings ESP of +0.94% and a Zacks Rank #3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TORCHMARK CORP (TMK): Free Stock Analysis Report

REINSURANCE GRP (RGA): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

PRIMERICA INC (PRI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ACGL PRI RGA

Other Topics

Earnings Stocks

Latest Markets Videos