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Reinsurance Group (RGA) Q3 Earnings Beat on Higher Premiums
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Reinsurance Group of America, Incorporated (RGA - Free Report) reported third-quarter 2023 adjusted operating earnings of $5.57 per share, which beat the Zacks Consensus Estimate by 30%. Moreover, the bottom line increased 42% from the year-ago quarter’s figure.
Net foreign currency fluctuations had an adverse effect of 1 cent per share on adjusted operating income.
Reinsurance Group witnessed a solid performance in the U.S. and Latin America, Canada and Asia/Pacific segments, offset by soft result in the Europe, Middle East and Africa (EMEA) segment.
RGA's operating revenues of $5.3 billion beat the Zacks Consensus Estimate by 21%. The top line also improved 25.5% year over year due to higher net premiums.
Net premiums of $4.2 billion rose 31% year over year. Investment income increased 19.8% from the prior-year quarter to $922 million. The average investment yield increased to 4.72% in the third quarter from 4.4% in the prior-year period due to higher yields.
Total benefits and expenses at Reinsurance Group increased 15.6% year over year to $4.7 billion on higher claims and other policy benefits, interest credited, policy acquisition and other insurance expenses, other operating costs 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 $239 million in the quarter under discussion, which surged more than eightfold year over year.
The Traditional segment reported a pre-tax adjusted operating income of $103 million against the year-ago quarter’s loss of $77 million. Net premiums rose 6.5% from the year-ago quarter to $1.7 billion.
The Asset Intensive segment’s pre-tax adjusted operating income increased 40.9% to $117 million. The Capital Solutions business reported pre-tax adjusted operating income of $19 million, down 17.4% year over year.
Canada: Total pre-tax adjusted operating income more than doubled year over year to $40 million.
The traditional segment’s pre-tax adjusted operating income decreased 16.7% to $10 million. Net premiums increased 3.1% to $307 million. Foreign currency exchange rates had an adverse effect on net premiums of $8 million for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income surged fivefold year over year to $30 million. Foreign currency exchange rates had an immaterial effect on pre-tax adjusted operating income.
EMEA: Total pre-tax adjusted operating income was $49 million, down 14% year over year.
Pre-tax adjusted operating loss of the traditional segment was $59 million against the year-ago quarter’s income of $5 million. Premiums increased 2.5% to $447 million in the quarter. Foreign currency exchange rates had a favorable effect on net premiums of $20 million for the quarter.
The Financial Solutions’ pre-tax adjusted operating income doubled year over year to $108 million. Foreign currency exchange rates had a favorable effect of $6 million on pre-tax income and $8 million on pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income was $178 million against the prior-year quarter’s loss of $11 million.
The Traditional segment’s pre-tax adjusted operating income was $134 million against the year-ago quarter’s loss of $73 million. Foreign currency exchange rates had an adverse effect on net premiums of $10 million for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income decreased 29% to $44 million. Net premiums decreased 8.7% to $63 million. Results were in line with expectations. Foreign currency exchange rates had a favorable effect of $1 million on pre-tax income and an adverse effect of $2 million on pre-tax adjusted operating income.
Corporate and Other: Pre-tax adjusted operating loss was $25 million, narrower than the year-ago quarter’s loss of $55 million. The lower loss was primarily due to higher investment income.
Financial Update
As of Sep 30, 2023, the company had assets worth $87.4 billion, up 5.5% year over year.
As of Sep 30, 2023, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 9.1% year over year to $142.63.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 14.7%, which expanded 550 basis points year over year.
Capital Deployment
RGA deployed $203 million into in-force and other transactions and bought back shares worth $50 million.
The board of directors declared a quarterly dividend of 85 cents. Effective Aug 1, 2023, the dividend will be paid out on Nov 28 to shareholders of record as of Nov 14.
Voya Financial (VOYA - Free Report) reported third-quarter 2023 adjusted operating earnings of $2.07 per share, which missed the Zacks Consensus Estimate by 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income. Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%.
Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter. Total benefits and expenses were $1.7 billion, up 29.6% from the year-ago quarter. As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
CNA Financial Corporation (CNA - Free Report) reported third-quarter 2023 core earnings of $1.06 per share, which beat the Zacks Consensus Estimate by 15.2%. The bottom line increased 35.9% year over year. Total operating revenues of CNA were $3 billion, up 11.8% year over year due to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.1%. Net written premiums of Property & Casualty Operations increased 6% year over year to $2.2 billion, driven by a retention rate of 83% and renewal premium change of 6%, with a written rate of 6%, exposure change of 1% and new business increase of 4%.
Pretax net investment income increased 31% to $553 million pretax, including a $72 million increase from limited partnerships and common stock to $28 million and a $59 million increase from fixed-income securities and other investments to $525 million. Total claims, benefits and expenses remained almost flat year over year at $3 billion and came in line with our estimate. Catastrophe losses were $94 million, narrower than a loss of $114 million in the year-ago quarter. Underwriting income increased 56% year over year to $131 million. The combined ratio improved 150 bps year over year to 94.3. The Zacks Consensus Estimate was pegged at 95.
Arch Capital Group Ltd. (ACGL - Free Report) reported third-quarter 2023 operating income of $2.31 per share, beating the Zacks Consensus Estimate by 50%. The bottom line increased more than eightfold year over year. Gross premiums written improved 17.2% year over year to $4.5 billion. Net premiums written climbed 35.8% year over year to $3.4 billion. Net premiums beat our estimate of $3 billion.
Net investment income increased 108.5% year over year to $269 million and beat our estimate of $265.3 million. The Zacks Consensus Estimate was pegged at $261 million. Operating revenues of $3.5 billion rose 32.6% year over year, driven by higher net premiums earned and net investment income. It beat the Zacks Consensus Estimate by 1.5%. Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $180 million. Arch Capital’s underwriting income increased more than tenfold year over year to $721 million.
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Reinsurance Group (RGA) Q3 Earnings Beat on Higher Premiums
Reinsurance Group of America, Incorporated (RGA - Free Report) reported third-quarter 2023 adjusted operating earnings of $5.57 per share, which beat the Zacks Consensus Estimate by 30%. Moreover, the bottom line increased 42% from the year-ago quarter’s figure.
Net foreign currency fluctuations had an adverse effect of 1 cent per share on adjusted operating income.
Reinsurance Group witnessed a solid performance in the U.S. and Latin America, Canada and Asia/Pacific segments, offset by soft result in the Europe, Middle East and Africa (EMEA) segment.
RGA's operating revenues of $5.3 billion beat the Zacks Consensus Estimate by 21%. The top line also improved 25.5% year over year due to higher net premiums.
Net premiums of $4.2 billion rose 31% year over year. Investment income increased 19.8% from the prior-year quarter to $922 million. The average investment yield increased to 4.72% in the third quarter from 4.4% in the prior-year period due to higher yields.
Total benefits and expenses at Reinsurance Group increased 15.6% year over year to $4.7 billion on higher claims and other policy benefits, interest credited, policy acquisition and other insurance expenses, other operating costs 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 $239 million in the quarter under discussion, which surged more than eightfold year over year.
The Traditional segment reported a pre-tax adjusted operating income of $103 million against the year-ago quarter’s loss of $77 million. Net premiums rose 6.5% from the year-ago quarter to $1.7 billion.
The Asset Intensive segment’s pre-tax adjusted operating income increased 40.9% to $117 million. The Capital Solutions business reported pre-tax adjusted operating income of $19 million, down 17.4% year over year.
Canada: Total pre-tax adjusted operating income more than doubled year over year to $40 million.
The traditional segment’s pre-tax adjusted operating income decreased 16.7% to $10 million. Net premiums increased 3.1% to $307 million. Foreign currency exchange rates had an adverse effect on net premiums of $8 million for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income surged fivefold year over year to $30 million. Foreign currency exchange rates had an immaterial effect on pre-tax adjusted operating income.
EMEA: Total pre-tax adjusted operating income was $49 million, down 14% year over year.
Pre-tax adjusted operating loss of the traditional segment was $59 million against the year-ago quarter’s income of $5 million. Premiums increased 2.5% to $447 million in the quarter. Foreign currency exchange rates had a favorable effect on net premiums of $20 million for the quarter.
The Financial Solutions’ pre-tax adjusted operating income doubled year over year to $108 million. Foreign currency exchange rates had a favorable effect of $6 million on pre-tax income and $8 million on pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income was $178 million against the prior-year quarter’s loss of $11 million.
The Traditional segment’s pre-tax adjusted operating income was $134 million against the year-ago quarter’s loss of $73 million. Foreign currency exchange rates had an adverse effect on net premiums of $10 million for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income decreased 29% to $44 million. Net premiums decreased 8.7% to $63 million.
Results were in line with expectations. Foreign currency exchange rates had a favorable effect of $1 million on pre-tax income and an adverse effect of $2 million on pre-tax adjusted operating income.
Corporate and Other: Pre-tax adjusted operating loss was $25 million, narrower than the year-ago quarter’s loss of $55 million. The lower loss was primarily due to higher investment income.
Financial Update
As of Sep 30, 2023, the company had assets worth $87.4 billion, up 5.5% year over year.
As of Sep 30, 2023, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 9.1% year over year to $142.63.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 14.7%, which expanded 550 basis points year over year.
Capital Deployment
RGA deployed $203 million into in-force and other transactions and bought back shares worth $50 million.
The board of directors declared a quarterly dividend of 85 cents. Effective Aug 1, 2023, the dividend will be paid out on Nov 28 to shareholders of record as of Nov 14.
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 (VOYA - Free Report) reported third-quarter 2023 adjusted operating earnings of $2.07 per share, which missed the Zacks Consensus Estimate by 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income. Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%.
Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter. Total benefits and expenses were $1.7 billion, up 29.6% from the year-ago quarter. As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
CNA Financial Corporation (CNA - Free Report) reported third-quarter 2023 core earnings of $1.06 per share, which beat the Zacks Consensus Estimate by 15.2%. The bottom line increased 35.9% year over year. Total operating revenues of CNA were $3 billion, up 11.8% year over year due to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.1%.
Net written premiums of Property & Casualty Operations increased 6% year over year to $2.2 billion, driven by a retention rate of 83% and renewal premium change of 6%, with a written rate of 6%, exposure change of 1% and new business increase of 4%.
Pretax net investment income increased 31% to $553 million pretax, including a $72 million increase from limited partnerships and common stock to $28 million and a $59 million increase from fixed-income securities and other investments to $525 million. Total claims, benefits and expenses remained almost flat year over year at $3 billion and came in line with our estimate. Catastrophe losses were $94 million, narrower than a loss of $114 million in the year-ago quarter. Underwriting income increased 56% year over year to $131 million. The combined ratio improved 150 bps year over year to 94.3. The Zacks Consensus Estimate was pegged at 95.
Arch Capital Group Ltd. (ACGL - Free Report) reported third-quarter 2023 operating income of $2.31 per share, beating the Zacks Consensus Estimate by 50%. The bottom line increased more than eightfold year over year. Gross premiums written improved 17.2% year over year to $4.5 billion. Net premiums written climbed 35.8% year over year to $3.4 billion. Net premiums beat our estimate of $3 billion.
Net investment income increased 108.5% year over year to $269 million and beat our estimate of $265.3 million. The Zacks Consensus Estimate was pegged at $261 million. Operating revenues of $3.5 billion rose 32.6% year over year, driven by higher net premiums earned and net investment income. It beat the Zacks Consensus Estimate by 1.5%. Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $180 million. Arch Capital’s underwriting income increased more than tenfold year over year to $721 million.