Reinsurance Group Q3 Earnings & Revenues Beat, Up Y/Y
Reinsurance Group of America Inc. (RGA) reported third-quarter 2014 operating income of $2.31 per share, surpassing the Zacks Consensus Estimate by 10.5% and improving 7.9% year over year.
The quarterly results were driven by strong international earnings from Europe, Middle East and Africa (:EMEA) and the Asia Pacific, along with continued momentum in Global Financial Solutions.
Reinsurance Group Of America, Incorporated - Earnings Surprise | FindTheBest
Reinsurance Group's total revenue of $2.72 billion increased 13.7% year over year and was higher than the Zacks Consensus Estimate of $2.64 billion.
Total premium of $2.2 billion rose 7% year over year.
Investment income increased 21% from the prior-year quarter to $447.1 million due to rise in the fair value of options contracts underlying equity-indexed annuities.
Total benefits and expense of Reinsurance Group grew 13.6% year over year to $2.48 billion due to higher claims and other policy benefits, interest credited, policy acquisition costs and other insurance expenses, other operating expenses and interest expense.
Moreover, in terms of block transactions, the company announced a mortality transaction with Voya Financial in the reported quarter. Additionally, the acquisition of Aurora National Life Assurance Company boosted its inorganic growth.
Quarterly Segment Update
U.S. Operations: The U.S. Traditional reported pretax operating income of $78.9 million, declining 12.6% year over year due to elevated claims in the reported quarter.
Another sub segment – the U.S. Asset Intensive – reported pretax operating income of $58.0 million, up 52.6% year over year, benefiting from prepayment of commercial mortgage loans related fees, coupled with favorable net interest rate spread performance on fixed annuities and favorable equity markets.
The growing number of financial reinsurance treaties generated strong fee income that led to a 20.0% year-over-year increase in pretax operating income in the U.S. Financial Reinsurance business to $13.8 million.
Canada Operations: Higher-than-expected individual mortality claims, along with a weaker Canadian dollar, led pretax operating income to decline to $25.7 million.
Asia Pacific Operations: Pretax operating income was $27.4 million, against $14.3 million in the year ago quarter.
The EMEA region reported pretax operating income of $44.0 million, up 15% year over year. Favorable claims across the U.K. and South Africa markets, along with GFS transactions and improved net foreign currency fluctuations led to the upside.
Financial Update
As of Sep 30, 2014, Reinsurance Group had assets worth $42.9 billion, up 8.6% year over year.
As of Sep 30, 2014, book value – a measure of the company’s net worth – was $97.28 per share, up 16.4% year over year.
Dividend and Share Buyback
Reinsurance Group’s board of directors declared a quarterly shareholder dividend of 33 cents per share, payable on Nov 28 to shareholders of record on Nov 7.
In the reported quarter, the company repurchased approximately 0.26 million shares for a total cost of $20.9 million. As of Sep 30, 2014, Reinsurance Group had bough back stock worth $197.7 under its current $300 million repurchase authorization.
Performance of Other Insurance Companies
Symetra Financial Corporation (SYA) reported third-quarter 2014 adjusted operating income of 39 cents per share, which lagged the Zacks Consensus Estimate by 11.4% and declined 4.9% year over year.
StanCorp Financial Group Inc. (SFG) posted third-quarter 2014 operating net earnings of $1.73 per share, outperforming the Zacks Consensus Estimate by 31% and improving 19.3% year over year.
Zacks Rank
Reinsurance Group carries a Zacks Rank #3 (Hold). Better-ranked life insurance stocks that are worth reckoning include Fidelity & Guaranty Life Common (FGL), which sports a Zacks Rank #1 (Strong Buy).
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