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Reinsurance Group (RGA) Q3 Earnings Beat; Revenues Rise
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Reinsurance Group of America Inc.’s (RGA - Free Report) third-quarter 2016 operating income of $2.46 per share beat the Zacks Consensus Estimate of $2.35. The bottom line also improved 29.5% from the year-ago quarter.
The company witnessed improvement in Traditional business in Asia and Global Financial Solutions lines in the U.S. and EMEA in the quarter. However, normal claims volatility in the U.S. Individual Mortality business and seasonal weakness in Australia partially offset the improvement.
Reinsurance Group's operating revenues of $2.8 billion increased 10% year over year.
Net premiums of $2.3 billion rose 7.7% year over year on organic growth and in-force transactions.
Investment income jumped 25.7% from the prior-year quarter to $489.7 million. The average investment yield was down 23 basis points to 4.43%.
Total benefits and expenses of Reinsurance Group increased 13% year over year to $2.6 billion owing to higher claims, interest credited, policy acquisition costs and other insurance expenses, interest expense as well as other operating expenses.
Quarterly Segment Update
U.S. and Latin America: Total pre-tax income increased 25.6% to $153.2 million in the quarter.
The Traditional segment reported pre-tax operating income of $80.5 million, up 47% year over year. The upside was backed by moderately unfavorable claims experience in the Individual Mortality business, partly offset by favorable experience in the Group and Individual Health business lines and weak individual mortality experience. Net premiums grew 11% from the year-ago quarter to $1.3 billion.
The Non-Traditional segment’s pre-tax operating income increased 6.3% to $58.7 million on favorable investment spreads and the addition of new blocks. Financial Reinsurance business reported pre-tax operating income of $14 million compared with $12.1 million in the prior-year quarter, attributable to new business added in 2016.
Canada: Total pre-tax operating income decreased 41% to $31.8 million.
The Traditional segment’s pre-tax operating income declined 19% to $30.6 million. Net premiums increased 16% to $231.2 million.
The Non-Traditional segment’s premiums plunged 64% year over year to $1.21 million.
Asia Pacific: Total pre-tax operating income climbed 14.5% to $22.1 million during the quarter.
The Traditional segment reported a pre-tax income of $19.8 million, up 52% year over year. The improvement was fueled by a strong operational performance in Asia. Premiums were up 1% to $404.5 million.
The Non-Traditional segment’s pre-tax income was $7.5 million, up 39% year over year.
Europe, Middle East and Africa (EMEA): The EMEA region reported pre-tax operating income of approximately $42.5 million, down 4.5% year over year.
The Traditional segment reported pre-tax income of $8.5 million, down 45% year over year, mainly due to an unfavorable claims experience in the U.K. Premiums were down 0.2% to $275.5 million.
The Non-Traditional segment’s pre-tax operating income increased 17.7% to $33.9 million.
Corporate and Other: Pre-tax operating loss was $19 million, narrow than the year-ago loss of $19.7 million.
Financial Update
As of Sep 30, 2016, Reinsurance Group had assets worth $54.8 billion, up 15.1% from year-end 2015.
As of Sep 30, 2016, Reinsurance Group’s book value per share, excluding Accumulated Other Comprehensive Income (AOCI), grew 11% year over year to $90.04.
Dividend Update
The board of directors announced the quarterly dividend of 41 cents, which is payable on Nov 29, to the shareholders on record as of Nov 8, 2016.
Among other players in the insurance industry that have reported their third-quarter earnings so far, earnings at Progressive Corp. (PGR - Free Report) and MGIC Investment Corp. (MTG - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
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Reinsurance Group (RGA) Q3 Earnings Beat; Revenues Rise
Reinsurance Group of America Inc.’s (RGA - Free Report) third-quarter 2016 operating income of $2.46 per share beat the Zacks Consensus Estimate of $2.35. The bottom line also improved 29.5% from the year-ago quarter.
The company witnessed improvement in Traditional business in Asia and Global Financial Solutions lines in the U.S. and EMEA in the quarter. However, normal claims volatility in the U.S. Individual Mortality business and seasonal weakness in Australia partially offset the improvement.
Reinsurance Group's operating revenues of $2.8 billion increased 10% year over year.
Net premiums of $2.3 billion rose 7.7% year over year on organic growth and in-force transactions.
Investment income jumped 25.7% from the prior-year quarter to $489.7 million. The average investment yield was down 23 basis points to 4.43%.
Total benefits and expenses of Reinsurance Group increased 13% year over year to $2.6 billion owing to higher claims, interest credited, policy acquisition costs and other insurance expenses, interest expense as well as other operating expenses.
Quarterly Segment Update
U.S. and Latin America: Total pre-tax income increased 25.6% to $153.2 million in the quarter.
The Traditional segment reported pre-tax operating income of $80.5 million, up 47% year over year. The upside was backed by moderately unfavorable claims experience in the Individual Mortality business, partly offset by favorable experience in the Group and Individual Health business lines and weak individual mortality experience. Net premiums grew 11% from the year-ago quarter to $1.3 billion.
The Non-Traditional segment’s pre-tax operating income increased 6.3% to $58.7 million on favorable investment spreads and the addition of new blocks. Financial Reinsurance business reported pre-tax operating income of $14 million compared with $12.1 million in the prior-year quarter, attributable to new business added in 2016.
Canada: Total pre-tax operating income decreased 41% to $31.8 million.
The Traditional segment’s pre-tax operating income declined 19% to $30.6 million. Net premiums increased 16% to $231.2 million.
The Non-Traditional segment’s premiums plunged 64% year over year to $1.21 million.
Asia Pacific: Total pre-tax operating income climbed 14.5% to $22.1 million during the quarter.
The Traditional segment reported a pre-tax income of $19.8 million, up 52% year over year. The improvement was fueled by a strong operational performance in Asia. Premiums were up 1% to $404.5 million.
The Non-Traditional segment’s pre-tax income was $7.5 million, up 39% year over year.
Europe, Middle East and Africa (EMEA): The EMEA region reported pre-tax operating income of approximately $42.5 million, down 4.5% year over year.
The Traditional segment reported pre-tax income of $8.5 million, down 45% year over year, mainly due to an unfavorable claims experience in the U.K. Premiums were down 0.2% to $275.5 million.
The Non-Traditional segment’s pre-tax operating income increased 17.7% to $33.9 million.
Corporate and Other: Pre-tax operating loss was $19 million, narrow than the year-ago loss of $19.7 million.
Financial Update
As of Sep 30, 2016, Reinsurance Group had assets worth $54.8 billion, up 15.1% from year-end 2015.
As of Sep 30, 2016, Reinsurance Group’s book value per share, excluding Accumulated Other Comprehensive Income (AOCI), grew 11% year over year to $90.04.
Dividend Update
The board of directors announced the quarterly dividend of 41 cents, which is payable on Nov 29, to the shareholders on record as of Nov 8, 2016.
REINSURANCE GRP Price, Consensus and EPS Surprise
REINSURANCE GRP Price, Consensus and EPS Surprise | REINSURANCE GRP Quote
Zacks Rank
Reinsurance Group has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players in the insurance industry that have reported their third-quarter earnings so far, earnings at Progressive Corp. (PGR - Free Report) and MGIC Investment Corp. (MTG - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>