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Reinsurance Group (RGA) Q2 Earnings Beat, Revenues Rise Y/Y
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Reinsurance Group of America, Incorporated (RGA - Free Report) reported second-quarter 2023 adjusted operating earnings of $4.40 per share, which beat the Zacks Consensus Estimate by 6.7%. However, the bottom line decreased 5.7% from the year-ago quarter’s figure.
Net foreign currency fluctuations had an adverse effect of 7 cents per share on adjusted operating income.
Reinsurance Group witnessed solid performance in the Europe, Middle East and Africa (EMEA) and Asia/Pacific segments, offset by soft results in the U.S. and Latin America and Canada segments.
Reinsurance Group of America, Incorporated Price, Consensus and EPS Surprise
RGA's operating revenues of $4.2 billion missed the Zacks Consensus Estimate by 1.5%. The top line, however, improved 3.2% year over year due to higher net premiums.
Net premiums of $3.3 billion rose 3.3% year over year. Investment income increased 13.6% from the prior-year quarter to $857 million. The average investment yield decreased to 4.42% in the second quarter from 4.63% in the prior-year period due to lower variable investment income, partially offset by higher yields.
Total benefits and expenses at Reinsurance Group increased 3.6% year over year to $3.8 billion on higher claims and other policy benefits, interest credited, policy acquisition and other insurance expenses, other operating costs and interest expense.
Quarterly Segment Update
U.S. and Latin America: Total pre-tax adjusted operating income was $172 million in the quarter under discussion, which decreased 18.4% year over year.
The Traditional segment reported a pre-tax adjusted operating income of $63 million, which decreased 11.2% year over year. Net premiums rose 7.3% from the year-ago quarter to $1.7 billion.
The Asset Intensive segment’s pre-tax adjusted operating income increased 29.4% to $88 million. The Capital Solutions business reported pre-tax adjusted operating income of $21 million, down 70.8% year over year.
Canada: Total pre-tax adjusted operating income decreased 7.3% to $38 million.
The traditional segment’s pre-tax adjusted operating income decreased 5.8% to $32 million. Net premiums decreased 2.2% to $307 million. Foreign currency exchange rates had an adverse effect on net premiums of $16 million for the quarter.
The financial Solutions segment’s pre-tax adjusted operating income decreased 14.2% year over year to $6 million.
EMEA: Total pre-tax adjusted operating income was $70 million, up 12.9% year over year.
Pre-tax adjusted operating income of the traditional segment was $4 million, which remained unchanged from the year-ago quarter. Premiums increased 0.4% to $429 million in the quarter. Foreign currency exchange rates had an adverse effect on net premiums of $6 million for the quarter.
The Financial Solutions segment delivered pre-tax adjusted operating income of $66 million, up 13.8% from the year-ago quarter. Foreign currency exchange rates had an immaterial effect on pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income of $151 million increased 52.5% from the prior-year quarter.
The Traditional segment’s pre-tax adjusted operating income was $89 million, which increased 50.8% year over year. Foreign currency exchange rates had an adverse effect on net premiums of $21 million for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income increased 55% to $62 million. Net premiums decreased 27% to $44 million. Results reflected favorable investment spreads and claims experience. Foreign currency exchange rates had an adverse effect of $2 million on pre-tax adjusted operating income.
Corporate and Other: Pre-tax adjusted operating loss was $55 million against the year-ago quarter’s income of $3 million. The loss was primarily due to higher financing costs and the timing of some general expenses.
Financial Update
As of Jun 30, 2023, the company had assets worth $89 billion, up 4.9% year over year.
As of Jun 30, 2023, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 4.9% year over year to $138.99.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 10.9%.
Capital Deployment
RGA deployed $190 million into in-force and other transactions and bought back shares worth $50 million.
The board of directors increased the quarterly dividend by 6.3% to 85 cents per share. Effective Aug 1, 2023, the increased dividend will be paid out on Aug 29 to shareholders of record as of Aug 15.
Voya Financial, Inc. (VOYA - Free Report) reported second-quarter 2023 adjusted operating earnings of $2.31 per share, which beat the Zacks Consensus Estimate by 12.7%. The bottom line increased 38.3% year over year on strong net underwriting results. Adjusted operating revenues amounted to $347 billion, which increased 43.4% year over year. The top line also beat the Zacks Consensus Estimate by 8.8%.
Net investment income declined 6.2% year over year to $545 million. Meanwhile, fee income of $474 million increased 14.8% year over year. Premiums totaled $677 million, up 13.4% from the year-ago quarter. Total benefits and expenses were $1.6 billion, up 17.2% from the year-ago quarter. As of Jun 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $789 million.
Lincoln National Corporation (LNC - Free Report) reported second-quarter 2023 adjusted earnings of $2.02 per share, which outpaced the Zacks Consensus Estimate by 5.2%. However, the bottom line slipped 5.2% year over year. Adjusted operating revenues grew 5.7% year over year to $4,730 million. The top line beat the consensus mark by 2.8%. Total expenses plunged 48.8% year over year to $2,327 million in the quarter under review and remained below our estimate of $3,103.4 million due to the incidence of a significant MRB gain. The Annuities segment recorded an operating income of $271 million, which decreased 8% year over year and missed the estimate by 6.3%. The metric suffered from reduced prepayment income and increased expenses.
Operating income in the Retirement Plan Services segment came in at $47 million, which plunged 14.5% year over year and missed our estimate of $54.1 million due to a decline in prepayment income and an elevated expense level. The Life Insurance segment reported an operating income of $33 million in the quarter under review, falling 47.6% year over year, due to run-rate impact stemming from year-ago annual review of DAC and increased expenses.
Unum Group’s (UNM - Free Report) second-quarter 2023 operating net income of $2.06 per share beat the Zacks Consensus Estimate by 10.2%. The bottom line increased 7.9% year over year. Total operating revenues of Unum Group were $3.1 billion, up 2% year over year, as higher premium income and other income were offset by lower net investment income. The top line beat the Zacks Consensus Estimate by 1.4%.
Premium increased 3.9% from the prior-year quarter to $2.5 billion. Our estimate was $2.6 billion. The Zacks Consensus Estimate was pegged at $2.5 million. UNM expects adjusted operating income per share to increase 20% to 25%.
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Reinsurance Group (RGA) Q2 Earnings Beat, Revenues Rise Y/Y
Reinsurance Group of America, Incorporated (RGA - Free Report) reported second-quarter 2023 adjusted operating earnings of $4.40 per share, which beat the Zacks Consensus Estimate by 6.7%. However, the bottom line decreased 5.7% from the year-ago quarter’s figure.
Net foreign currency fluctuations had an adverse effect of 7 cents per share on adjusted operating income.
Reinsurance Group witnessed solid performance in the Europe, Middle East and Africa (EMEA) and Asia/Pacific segments, offset by soft results in the U.S. and Latin America and Canada segments.
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
RGA's operating revenues of $4.2 billion missed the Zacks Consensus Estimate by 1.5%. The top line, however, improved 3.2% year over year due to higher net premiums.
Net premiums of $3.3 billion rose 3.3% year over year. Investment income increased 13.6% from the prior-year quarter to $857 million. The average investment yield decreased to 4.42% in the second quarter from 4.63% in the prior-year period due to lower variable investment income, partially offset by higher yields.
Total benefits and expenses at Reinsurance Group increased 3.6% year over year to $3.8 billion on higher claims and other policy benefits, interest credited, policy acquisition and other insurance expenses, other operating costs and interest expense.
Quarterly Segment Update
U.S. and Latin America: Total pre-tax adjusted operating income was $172 million in the quarter under discussion, which decreased 18.4% year over year.
The Traditional segment reported a pre-tax adjusted operating income of $63 million, which decreased 11.2% year over year. Net premiums rose 7.3% from the year-ago quarter to $1.7 billion.
The Asset Intensive segment’s pre-tax adjusted operating income increased 29.4% to $88 million. The Capital Solutions business reported pre-tax adjusted operating income of $21 million, down 70.8% year over year.
Canada: Total pre-tax adjusted operating income decreased 7.3% to $38 million.
The traditional segment’s pre-tax adjusted operating income decreased 5.8% to $32 million. Net premiums decreased 2.2% to $307 million. Foreign currency exchange rates had an adverse effect on net premiums of $16 million for the quarter.
The financial Solutions segment’s pre-tax adjusted operating income decreased 14.2% year over year to $6 million.
EMEA: Total pre-tax adjusted operating income was $70 million, up 12.9% year over year.
Pre-tax adjusted operating income of the traditional segment was $4 million, which remained unchanged from the year-ago quarter. Premiums increased 0.4% to $429 million in the quarter. Foreign currency exchange rates had an adverse effect on net premiums of $6 million for the quarter.
The Financial Solutions segment delivered pre-tax adjusted operating income of $66 million, up 13.8% from the year-ago quarter. Foreign currency exchange rates had an immaterial effect on pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income of $151 million increased 52.5% from the prior-year quarter.
The Traditional segment’s pre-tax adjusted operating income was $89 million, which increased 50.8% year over year. Foreign currency exchange rates had an adverse effect on net premiums of $21 million for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income increased 55% to $62 million. Net premiums decreased 27% to $44 million.
Results reflected favorable investment spreads and claims experience. Foreign currency exchange rates had an adverse effect of $2 million on pre-tax adjusted operating income.
Corporate and Other: Pre-tax adjusted operating loss was $55 million against the year-ago quarter’s income of $3 million. The loss was primarily due to higher financing costs and the timing of some general expenses.
Financial Update
As of Jun 30, 2023, the company had assets worth $89 billion, up 4.9% year over year.
As of Jun 30, 2023, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 4.9% year over year to $138.99.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 10.9%.
Capital Deployment
RGA deployed $190 million into in-force and other transactions and bought back shares worth $50 million.
The board of directors increased the quarterly dividend by 6.3% to 85 cents per share. Effective Aug 1, 2023, the increased dividend will be paid out on Aug 29 to shareholders of record as of Aug 15.
Zacks Rank
Reinsurance Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Insurers
Voya Financial, Inc. (VOYA - Free Report) reported second-quarter 2023 adjusted operating earnings of $2.31 per share, which beat the Zacks Consensus Estimate by 12.7%. The bottom line increased 38.3% year over year on strong net underwriting results. Adjusted operating revenues amounted to $347 billion, which increased 43.4% year over year. The top line also beat the Zacks Consensus Estimate by 8.8%.
Net investment income declined 6.2% year over year to $545 million. Meanwhile, fee income of $474 million increased 14.8% year over year. Premiums totaled $677 million, up 13.4% from the year-ago quarter. Total benefits and expenses were $1.6 billion, up 17.2% from the year-ago quarter. As of Jun 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $789 million.
Lincoln National Corporation (LNC - Free Report) reported second-quarter 2023 adjusted earnings of $2.02 per share, which outpaced the Zacks Consensus Estimate by 5.2%. However, the bottom line slipped 5.2% year over year. Adjusted operating revenues grew 5.7% year over year to $4,730 million. The top line beat the consensus mark by 2.8%. Total expenses plunged 48.8% year over year to $2,327 million in the quarter under review and remained below our estimate of $3,103.4 million due to the incidence of a significant MRB gain. The Annuities segment recorded an operating income of $271 million, which decreased 8% year over year and missed the estimate by 6.3%. The metric suffered from reduced prepayment income and increased expenses.
Operating income in the Retirement Plan Services segment came in at $47 million, which plunged 14.5% year over year and missed our estimate of $54.1 million due to a decline in prepayment income and an elevated expense level. The Life Insurance segment reported an operating income of $33 million in the quarter under review, falling 47.6% year over year, due to run-rate impact stemming from year-ago annual review of DAC and increased expenses.
Unum Group’s (UNM - Free Report) second-quarter 2023 operating net income of $2.06 per share beat the Zacks Consensus Estimate by 10.2%. The bottom line increased 7.9% year over year. Total operating revenues of Unum Group were $3.1 billion, up 2% year over year, as higher premium income and other income were offset by lower net investment income. The top line beat the Zacks Consensus Estimate by 1.4%.
Premium increased 3.9% from the prior-year quarter to $2.5 billion. Our estimate was $2.6 billion. The Zacks Consensus Estimate was pegged at $2.5 million. UNM expects adjusted operating income per share to increase 20% to 25%.