We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Reinsurance Group (RGA) Up 11.6% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Reinsurance Group (RGA - Free Report) . Shares have added about 11.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Reinsurance Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Reinsurance Group Q4 Earnings & Revenues Top Estimates
Reinsurance Group of America, Incorporated reported fourth-quarter 2020 adjusted operating income of $1.19 per share, which beat the Zacks Consensus Estimate by 7.2%. However, the bottom line declined 65.3% from the year-ago quarter’s figure. Net foreign currency fluctuations had a favorable effect of 4 cents on adjusted operating income.
Reinsurance Group's operating revenues of $4 billion beat the Zacks Consensus Estimate by 5.2%. The top line also improved 7.3% year over year. Net premiums of $3.3 billion rose 9% year over year. Investment income increased 0.7% from the prior-year quarter to $682 million. Average investment yield was down 35 basis points to 4.20% primarily due to an increase in cash and cash equivalents.
Total benefits and expenses at Reinsurance Group increased 14.3% year over year to $3.9 billion. Higher claims and other policy benefits and policy acquisition costs and other insurance expenses
Full-Year Highlights
For 2020, Reinsurance Group delivered adjusted operating income of $7.54 per share, outpacing the Zacks Consensus Estimate by 1%. However, it declined 43.5% year over year as well. Moreover, total operating revenues of $14.6 billion beat the consensus mark by 1.5% and also grew 2.9% year over year.
Quarterly Segment Update
U.S. and Latin America: Total pre-tax income decreased 85.7% to $27 million in the quarter under discussion. The Traditional segment reported pre-tax adjusted operating loss of $89 million against pre-tax adjusted operating income of $83 million in the year-ago quarter due to the negative impact from individual mortality estimated COVID-19-related claim costs of approximately $230 million. It was offset by solid performance of The Group and Individual Health businesses, attributable to favorable claims experience. Net premiums rose 2% from the year-ago quarter to $1.6 billion. Asset Intensive segment’s pre-tax adjusted operating income improved 7.7% to $70 million. Capital Solutions business reported pre-tax adjusted operating income of $23 million, which decreased 11.5% year over year.
Canada: Total pre-tax income increased 28.6% to $45 million. Traditional segment’s pre-tax adjusted operating income increased 29.6% year over year to $35 million. The current period reflected modestly unfavorable individual claims experience, primarily due to the COVID-19 impact. It was offset by favorable underwriting experience in the other lines of business. Moreover, forex had a favorable effect of $1 million on the metric. Net premiums increased 2.9% to $284 million. Foreign currency exchange rates favorably impacted net premiums by $4 million. Financial Solutions segment’s pre-tax adjusted operating income increased 14.3% year over year to $8 million, attributable to favorable longevity experience, while net foreign currency fluctuations had an immaterial effect on pre-tax income and pre-tax adjusted operating income.
Europe, Middle East and Africa (EMEA): Total pre-tax income of $25 million decreased 73.7% from the prior-year quarter’s figure. Pre-tax adjusted operating loss of the traditional segment was $13 million against pre-tax adjusted operating income of $23 million in the year-ago quarter, primarily due to unfavorable underwriting experience, which was partially related to estimated COVID-19 claim costs. Net foreign currency fluctuations had a favorable effect of $2 million on pre-tax adjusted operating loss. Premiums increased 20% to $442 million in the quarter due to growth of new and existing business. Foreign currency exchange rates favorably impacted net premiums by $8 million. Financial Solutions segment delivered pre-tax adjusted operating income of $41 million, down 43.8% from the year-ago quarter. Net foreign currency fluctuations had a favorable effect of $1 million on the metric.
Asia/Pacific: Total pre-tax income of nearly $73 million increased 192% from the prior-year quarter. Traditional segment’s pre-tax adjusted operating income of $25 million was up 108.3% attributable to favorable underwriting experience in Asia, partially offset by a loss in Australia. Net foreign currency fluctuations had an adverse effect of $1 million. Premiums increased 19% to $785 million, reflecting growth of new and existing business. Foreign currency exchange rates had a favorable effect of $20 million on net premiums. Financial Solutions segment’s pre-tax adjusted operating income increased 187.5% to $23 million, attributable to growth and favorable experience on existing business in Asia. Net premiums increased 5% to $40 million, attributable to the addition of new business over the past year.
Corporate and Other: Pre-tax adjusted operating loss was $24 million, narrower than loss of $40 million in the prior-year period. The loss was relatively in line with the average expected run rate.
Financial Update
As of Dec 31, 2020, Reinsurance Group had assets worth $84.6 billion, up 10.3% from the level at 2019 end. As of Dec 31, 2020, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, decreased 2% year over year to $132.33. Adjusted return on equity was 3.6%. The company exited the quarter with $1.3 billion in excess capital.
Capital Deployment
The board of directors approved a dividend of 70 cents per share, unchanged from the prior payout. The dividend will be paid out on Mar 4 to shareholders of record as of Feb 18.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -39.54% due to these changes.
VGM Scores
At this time, Reinsurance Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Reinsurance Group has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Reinsurance Group (RGA) Up 11.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Reinsurance Group (RGA - Free Report) . Shares have added about 11.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Reinsurance Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Reinsurance Group Q4 Earnings & Revenues Top Estimates
Reinsurance Group of America, Incorporated reported fourth-quarter 2020 adjusted operating income of $1.19 per share, which beat the Zacks Consensus Estimate by 7.2%. However, the bottom line declined 65.3% from the year-ago quarter’s figure. Net foreign currency fluctuations had a favorable effect of 4 cents on adjusted operating income.
Reinsurance Group's operating revenues of $4 billion beat the Zacks Consensus Estimate by 5.2%. The top line also improved 7.3% year over year. Net premiums of $3.3 billion rose 9% year over year. Investment income increased 0.7% from the prior-year quarter to $682 million. Average investment yield was down 35 basis points to 4.20% primarily due to an increase in cash and cash equivalents.
Total benefits and expenses at Reinsurance Group increased 14.3% year over year to $3.9 billion. Higher claims and other policy benefits and policy acquisition costs and other insurance expenses
Full-Year Highlights
For 2020, Reinsurance Group delivered adjusted operating income of $7.54 per share, outpacing the Zacks Consensus Estimate by 1%. However, it declined 43.5% year over year as well. Moreover, total operating revenues of $14.6 billion beat the consensus mark by 1.5% and also grew 2.9% year over year.
Quarterly Segment Update
U.S. and Latin America: Total pre-tax income decreased 85.7% to $27 million in the quarter under discussion. The Traditional segment reported pre-tax adjusted operating loss of $89 million against pre-tax adjusted operating income of $83 million in the year-ago quarter due to the negative impact from individual mortality estimated COVID-19-related claim costs of approximately $230 million. It was offset by solid performance of The Group and Individual Health businesses, attributable to favorable claims experience. Net premiums rose 2% from the year-ago quarter to $1.6 billion. Asset Intensive segment’s pre-tax adjusted operating income improved 7.7% to $70 million. Capital Solutions business reported pre-tax adjusted operating income of $23 million, which decreased 11.5% year over year.
Canada: Total pre-tax income increased 28.6% to $45 million. Traditional segment’s pre-tax adjusted operating income increased 29.6% year over year to $35 million. The current period reflected modestly unfavorable individual claims experience, primarily due to the COVID-19 impact. It was offset by favorable underwriting experience in the other lines of business. Moreover, forex had a favorable effect of $1 million on the metric. Net premiums increased 2.9% to $284 million. Foreign currency exchange rates favorably impacted net premiums by $4 million. Financial Solutions segment’s pre-tax adjusted operating income increased 14.3% year over year to $8 million, attributable to favorable longevity experience, while net foreign currency fluctuations had an immaterial effect on pre-tax income and pre-tax adjusted operating income.
Europe, Middle East and Africa (EMEA): Total pre-tax income of $25 million decreased 73.7% from the prior-year quarter’s figure. Pre-tax adjusted operating loss of the traditional segment was $13 million against pre-tax adjusted operating income of $23 million in the year-ago quarter, primarily due to unfavorable underwriting experience, which was partially related to estimated COVID-19 claim costs. Net foreign currency fluctuations had a favorable effect of $2 million on pre-tax adjusted operating loss. Premiums increased 20% to $442 million in the quarter due to growth of new and existing business. Foreign currency exchange rates favorably impacted net premiums by $8 million. Financial Solutions segment delivered pre-tax adjusted operating income of $41 million, down 43.8% from the year-ago quarter. Net foreign currency fluctuations had a favorable effect of $1 million on the metric.
Asia/Pacific: Total pre-tax income of nearly $73 million increased 192% from the prior-year quarter. Traditional segment’s pre-tax adjusted operating income of $25 million was up 108.3% attributable to favorable underwriting experience in Asia, partially offset by a loss in Australia. Net foreign currency fluctuations had an adverse effect of $1 million. Premiums increased 19% to $785 million, reflecting growth of new and existing business. Foreign currency exchange rates had a favorable effect of $20 million on net premiums. Financial Solutions segment’s pre-tax adjusted operating income increased 187.5% to $23 million, attributable to growth and favorable experience on existing business in Asia. Net premiums increased 5% to $40 million, attributable to the addition of new business over the past year.
Corporate and Other: Pre-tax adjusted operating loss was $24 million, narrower than loss of $40 million in the prior-year period. The loss was relatively in line with the average expected run rate.
Financial Update
As of Dec 31, 2020, Reinsurance Group had assets worth $84.6 billion, up 10.3% from the level at 2019 end. As of Dec 31, 2020, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, decreased 2% year over year to $132.33. Adjusted return on equity was 3.6%. The company exited the quarter with $1.3 billion in excess capital.
Capital Deployment
The board of directors approved a dividend of 70 cents per share, unchanged from the prior payout. The dividend will be paid out on Mar 4 to shareholders of record as of Feb 18.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -39.54% due to these changes.
VGM Scores
At this time, Reinsurance Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Reinsurance Group has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.