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Reinsurance Group (RGA) Q2 Earnings & Revenues Beat Estimates
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Reinsurance Group of America, Incorporated (RGA - Free Report) reported second-quarter 2022 adjusted operating earnings of $5.78 per share, which beat the Zacks Consensus Estimate by 112.5%. Moreover, the bottom line increased 44.5% from the year-ago quarter’s figure.
Net foreign currency fluctuations had an adverse effect of 16 cents per share on adjusted operating income.
Reinsurance Group witnessed a solid performance in the Asia/Pacific and U.S. and Latin America segments, offset by soft results in Canada and Europe, Middle East and Africa (EMEA).
Reinsurance Group's operating revenues of $4.1 billion beat the Zacks Consensus Estimate by 3.3%. The top line also improved 2.9% year over year on higher net premiums.
Net premiums of $3.2 billion rose 4.3% year over year. Investment income increased 3.6% from the prior-year quarter to $397 million, reflecting a higher average asset balance. The average investment yield remained flat year over year at 4.63%.
Total benefits and expenses at Reinsurance Group decreased 0.6% year over year to $3.6 billion on lower interest credited and interest expense.
Reinsurance Group of America, Incorporated Price, Consensus and EPS Surprise
U.S. and Latin America: Total pre-tax adjusted operating income was $328 million in the quarter under discussion increased 15.9% year over year.
The Traditional segment reported a pre-tax adjusted operating income of $190 million, which increased 41.8% year over year. The results reflected favorable individual mortality experience. Net premiums rose 3.3% from the year-ago quarter to $1.6 billion.
The Asset Intensive segment’s pre-tax adjusted operating income decreased 47.6% to $66 million. The Capital Solutions business reported pre-tax adjusted operating income of $72 million, up threefold year over year.
Canada: Total pre-tax adjusted operating income decreased 26.3% to $28 million.
The traditional segment’s pre-tax adjusted operating income decreased 29.4% year over year to $24 million. The results reflected unfavorable individual life mortality experience due to large claims and COVID-19 claim costs of $4 million. Net premiums increased 4.3% to $314 million. Foreign currency exchange rates had an adverse effect of $13 million on net premiums.
The financial Solutions segment’s pre-tax adjusted operating income remained flat year over year at $4 million.
Europe, Middle East and Africa (EMEA): Total pre-tax adjusted operating income was $68 million, down 4.2% year over year.
Pre-tax adjusted operating income of the traditional segment was $2 million against a pre-tax adjusted operating loss of $12 million in the year-ago quarter, reflecting unfavorable U.K. mortality experience and $5 million of COVID-19 claim costs. It was partially offset by favorable results in other markets. Premiums decreased 1.4% to $427 million in the quarter. Foreign currency exchange rates had an adverse effect of $46 million on net premiums.
The Financial Solutions segment delivered pre-tax adjusted operating income of $66 million, down 20.5% from the year-ago quarter. Foreign currency exchange rates had an adverse effect of $7 million on pre-tax adjusted operating income. Asia/Pacific: Total pre-tax adjusted operating income of $86 million increased more than 10-fold from the prior-year quarter.
The Traditional segment’s pre-tax adjusted operating income was $58 million against the year-ago pre-tax adjusted operating loss of $12 million. Foreign currency exchange rates had an adverse effect of $38 million on net premiums for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income increased 40% to $28 million. Net premiums increased 25% to $60 million.
The results reflected business growth and favorable investment yields, partially offset by $4 million of COVID-19 claim costs. Foreign currency exchange rates had an adverse effect of $1 million on pre-tax adjusted operating income. Corporate and Other: Pre-tax adjusted operating loss was $5 million, narrower than the year-ago loss of $39 million. The lower loss was primarily due to higher net investment income, including limited partnership income.
Financial Update
As of Jun 30, 2022, Reinsurance Group had assets worth $84.6 billion, down 4.8% year over year.
As of Jun 30, 2022, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 1.4% year over year to $140.26.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 3.3%. Reinsurance Group exited the quarter with $1 billion in excess capital.
Capital Deployment
The board of directors increased the quarterly dividend by 9.6% to 80 cents per share. Effective Aug 2, 2022, the increased dividend will be paid out on Aug 30 to shareholders of record as of Aug 16.
Of the insurance industry players that have reported second-quarter results so far, The Hartford Financial Services Group, Inc. (HIG - Free Report) , NMI Holdings (NMIH - Free Report) and American Financial Group, Inc. (AFG - Free Report) beat the respective Zacks Consensus Estimate for earnings.
The Hartford Financial Services Group reported second-quarter 2022 adjusted operating earnings of $2.15 per share, which beat the Zacks Consensus Estimate by 41.5%. The bottom line, however, decreased 8% year over year.
Hartford Financial’s operating revenues amounted to $3,765 million, which improved from $3,568 million in the second quarter of 2022. Also, the top line beat the consensus mark by 1.5%. The total earned premium of $4,810 million beat the consensus mark of $4,776.3 million and increased from $4,460 million a year ago. Net investment income of $541 million declined from $581 million a year ago due to lower annualized return on alternative investments. The reported figure was below the Zacks Consensus Estimate of $564.5 million.
NMI Holdings reported second-quarter 2022 operating net income per share of 86 cents, which beat the Zacks Consensus Estimate by 11.7%. The bottom line increased 28.4% year over year.
NMI Holdings’ total operating revenues of $132.2 million increased 9.5% year over year on higher net premiums earned (up 9%) and net investment income (up 16.4%). Revenues beat the Zacks Consensus Estimate by 1.3%.
Primary insurance-in-force increased 23% to $168.6 billion. Annual persistency was 71.5%, up 1760 basis points year over year. New insurance written was $16.6 billion, down 27% year over year, reflecting a decline in refinancing origination volume year on year.
American Financial Group reported second-quarter 2022 net operating earnings per share of $2.85, which surpassed the Zacks Consensus Estimate by 27.2%. The bottom line improved 19% year over year. Total revenues of $1.6 billion increased 11.1% year over year in the quarter. The growth came on the back of higher P&C insurance net earned premiums, net investment income and other income. The top line missed the Zacks Consensus Estimate by 3.9%.
Net investment income climbed 2.4% year over year to $168 million in the quarter under review driven by strong earnings from alternative investments, with an annualized return of approximately 12.4%. The figure was lower than our estimate of $237.8 million and missed the Zacks Consensus Estimate of $174.26 million.
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Reinsurance Group (RGA) Q2 Earnings & Revenues Beat Estimates
Reinsurance Group of America, Incorporated (RGA - Free Report) reported second-quarter 2022 adjusted operating earnings of $5.78 per share, which beat the Zacks Consensus Estimate by 112.5%. Moreover, the bottom line increased 44.5% from the year-ago quarter’s figure.
Net foreign currency fluctuations had an adverse effect of 16 cents per share on adjusted operating income.
Reinsurance Group witnessed a solid performance in the Asia/Pacific and U.S. and Latin America segments, offset by soft results in Canada and Europe, Middle East and Africa (EMEA).
Reinsurance Group's operating revenues of $4.1 billion beat the Zacks Consensus Estimate by 3.3%. The top line also improved 2.9% year over year on higher net premiums.
Net premiums of $3.2 billion rose 4.3% year over year. Investment income increased 3.6% from the prior-year quarter to $397 million, reflecting a higher average asset balance. The average investment yield remained flat year over year at 4.63%.
Total benefits and expenses at Reinsurance Group decreased 0.6% year over year to $3.6 billion on lower interest credited and interest expense.
Reinsurance Group of America, Incorporated Price, Consensus and EPS Surprise
Reinsurance Group of America, Incorporated price-consensus-eps-surprise-chart | Reinsurance Group of America, Incorporated Quote
Quarterly Segment Update
U.S. and Latin America: Total pre-tax adjusted operating income was $328 million in the quarter under discussion increased 15.9% year over year.
The Traditional segment reported a pre-tax adjusted operating income of $190 million, which increased 41.8% year over year. The results reflected favorable individual mortality experience. Net premiums rose 3.3% from the year-ago quarter to $1.6 billion.
The Asset Intensive segment’s pre-tax adjusted operating income decreased 47.6% to $66 million. The Capital Solutions business reported pre-tax adjusted operating income of $72 million, up threefold year over year.
Canada: Total pre-tax adjusted operating income decreased 26.3% to $28 million.
The traditional segment’s pre-tax adjusted operating income decreased 29.4% year over year to $24 million. The results reflected unfavorable individual life mortality experience due to large claims and COVID-19 claim costs of $4 million. Net premiums increased 4.3% to $314 million. Foreign currency exchange rates had an adverse effect of $13 million on net premiums.
The financial Solutions segment’s pre-tax adjusted operating income remained flat year over year at $4 million.
Europe, Middle East and Africa (EMEA): Total pre-tax adjusted operating income was $68 million, down 4.2% year over year.
Pre-tax adjusted operating income of the traditional segment was $2 million against a pre-tax adjusted operating loss of $12 million in the year-ago quarter, reflecting unfavorable U.K. mortality experience and $5 million of COVID-19 claim costs. It was partially offset by favorable results in other markets. Premiums decreased 1.4% to $427 million in the quarter. Foreign currency exchange rates had an adverse effect of $46 million on net premiums.
The Financial Solutions segment delivered pre-tax adjusted operating income of $66 million, down 20.5% from the year-ago quarter. Foreign currency exchange rates had an adverse effect of $7 million on pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income of $86 million increased more than 10-fold from the prior-year quarter.
The Traditional segment’s pre-tax adjusted operating income was $58 million against the year-ago pre-tax adjusted operating loss of $12 million. Foreign currency exchange rates had an adverse effect of $38 million on net premiums for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income increased 40% to $28 million. Net premiums increased 25% to $60 million.
The results reflected business growth and favorable investment yields, partially offset by $4 million of COVID-19 claim costs. Foreign currency exchange rates had an adverse effect of $1 million on pre-tax adjusted operating income.
Corporate and Other: Pre-tax adjusted operating loss was $5 million, narrower than the year-ago loss of $39 million. The lower loss was primarily due to higher net investment income, including limited partnership income.
Financial Update
As of Jun 30, 2022, Reinsurance Group had assets worth $84.6 billion, down 4.8% year over year.
As of Jun 30, 2022, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 1.4% year over year to $140.26.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 3.3%. Reinsurance Group exited the quarter with $1 billion in excess capital.
Capital Deployment
The board of directors increased the quarterly dividend by 9.6% to 80 cents per share. Effective Aug 2, 2022, the increased dividend will be paid out on Aug 30 to shareholders of record as of Aug 16.
Zacks Rank
Reinsurance Group currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Insurers
Of the insurance industry players that have reported second-quarter results so far, The Hartford Financial Services Group, Inc. (HIG - Free Report) , NMI Holdings (NMIH - Free Report) and American Financial Group, Inc. (AFG - Free Report) beat the respective Zacks Consensus Estimate for earnings.
The Hartford Financial Services Group reported second-quarter 2022 adjusted operating earnings of $2.15 per share, which beat the Zacks Consensus Estimate by 41.5%. The bottom line, however, decreased 8% year over year.
Hartford Financial’s operating revenues amounted to $3,765 million, which improved from $3,568 million in the second quarter of 2022. Also, the top line beat the consensus mark by 1.5%. The total earned premium of $4,810 million beat the consensus mark of $4,776.3 million and increased from $4,460 million a year ago. Net investment income of $541 million declined from $581 million a year ago due to lower annualized return on alternative investments. The reported figure was below the Zacks Consensus Estimate of $564.5 million.
NMI Holdings reported second-quarter 2022 operating net income per share of 86 cents, which beat the Zacks Consensus Estimate by 11.7%. The bottom line increased 28.4% year over year.
NMI Holdings’ total operating revenues of $132.2 million increased 9.5% year over year on higher net premiums earned (up 9%) and net investment income (up 16.4%). Revenues beat the Zacks Consensus Estimate by 1.3%.
Primary insurance-in-force increased 23% to $168.6 billion. Annual persistency was 71.5%, up 1760 basis points year over year. New insurance written was $16.6 billion, down 27% year over year, reflecting a decline in refinancing origination volume year on year.
American Financial Group reported second-quarter 2022 net operating earnings per share of $2.85, which surpassed the Zacks Consensus Estimate by 27.2%. The bottom line improved 19% year over year. Total revenues of $1.6 billion increased 11.1% year over year in the quarter. The growth came on the back of higher P&C insurance net earned premiums, net investment income and other income. The top line missed the Zacks Consensus Estimate by 3.9%.
Net investment income climbed 2.4% year over year to $168 million in the quarter under review driven by strong earnings from alternative investments, with an annualized return of approximately 12.4%. The figure was lower than our estimate of $237.8 million and missed the Zacks Consensus Estimate of $174.26 million.