On Jun 10, 2013, the shares of Reinsurance Group of America Inc. ( RGA) reached a 52-week high of $67.13. The momentum was driven by the company’s first-quarter results, which included a 2.48% positive surprise.
Further, Reinsurance Group of America’s leading market position, diversified product portfolio and strong capital position provide the fundamental strength required to drive share value. With respect to earnings trend, the company delivered positive earnings surprise in 2 of the past 4 quarters, with an average beat of 1.03%.
On Apr 25, 2013, Reinsurance Group of America reported first quarter 2013 net operating earnings of $1.65 per share, exceeding the Zacks Consensus Estimate of $1.61 per share. Results were also ahead of the year-ago earnings by 8.6%.
The earnings beat came on the back of strong performance in the U.S., Europe and South Africa segments.
Total revenue of Reinsurance Group increased 13.4% year over year to $2.6 billion in the reported quarter, driven by increase in net premiums (up 6.2% year over year), net investment income (up 24.7% year over year) and investment related gains (up 116.8% year over year to $94.4 million). Results also exceeded the Zacks Consensus Estimate of $2.4 billion.
Additionally, Reinsurance Group announced a 33.3% hike in its quarterly dividend to 24 cents per share during the first quarter earnings release. The company spent $47.6 million on share repurchases and authorized a $100 million increase to the $200 million share repurchase program authorized in Jan 2013.
However, valuation for Reinsurance Group looks stretched. The shares are trading at a discount to the peer group average on a forward price-to-earnings basis but at premium on a price-to-book basis with return on equity lower than the peer group average. Nevertheless, the 1-year return from the stock came in at 30.5%, above the S&P’s return of 22.7%.
Reinsurance Group of America currently carries a Zacks Rank #3 (Hold). Other carriers worth consideration are Genworth Financial Inc. ( GNW), Stancorp financial Group Inc. ( SFG), Protective Life Corp. ( PL) all with Zacks Rank #2 (Buy).
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