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Reinsurance Group (RGA) Q4 Earnings & Revenues Beat, Rise Y/Y
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Reinsurance Group of America (RGA - Free Report) reported fourth-quarter 2023 adjusted operating earnings of $4.73 per share, which beat the Zacks Consensus Estimate by 7.5%. Moreover, the bottom line increased 52.8% from the year-ago quarter’s figure.
Net foreign currency fluctuations had a favorable effect of 4 cents per share on adjusted operating income.
Reinsurance Group witnessed a solid performance in the Middle East and Africa (EMEA) segment, partially offset by soft results in the U.S. and Latin America, Canada, and Asia/Pacific segments. It witnessed continued momentum in organic business activity in the traditional business.
RGA's operating revenues of $5.2 billion beat the Zacks Consensus Estimate by 13.2%. The top line also improved 18.2% year over year due to higher net premiums.
Net premiums of $4.1 billion rose 19.2% year over year. Investment income increased 15.5% from the prior-year quarter to $956 million. The average investment yield increased to 4.86% in the fourth quarter from 4.45% in the prior-year period due to higher yields.
Total benefits and expenses at Reinsurance Group increased 21.8% year over year to $4.8 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 $126 million in the quarter under discussion, down 42.6% from the year-ago quarter.
The Traditional segment reported a pre-tax adjusted operating income of $25 million in the quarter under discussion, down $108 million earned in the year-ago quarter. Net premiums rose 7.5% from the year-ago quarter to $1.9 billion.
The Asset-Intensive segment’s pre-tax adjusted operating income increased 5.2% to $81 million. The Capital Solutions business reported pre-tax adjusted operating income of $20 million, down 16.7% year over year.
Canada: Total pre-tax adjusted operating income plunged 53.6% year over year to $26 million.
The traditional segment’s pre-tax adjusted operating income decreased 57.4% to $20 million. Net premiums increased 1% to $311 million. Foreign currency exchange rates had an adverse effect on net premiums of $1 million in the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income declined 33.3% year over year to $6 million. Foreign currency exchange rates had an adverse effect of $1 million on pre-tax adjusted operating income.
EMEA: Total pre-tax adjusted operating income was $120 million, up 47.9% year over year.
Pre-tax adjusted operating income of the Traditional segment was $8 million, up from $3 million earned in the year-ago quarter. Premiums increased 9.2% to $461 million in the quarter. Foreign currency exchange rates had a favorable effect on net premiums of $14 million for the quarter.
The Financial Solutions’ pre-tax adjusted operating income increased 53.2% year over year to $112 million. Foreign currency exchange rates had a favorable effect of $5 million pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income was $137 million, down 0.7% year over year.
The Traditional segment’s pre-tax adjusted operating income was $71 million, down 29% year over year. Foreign currency exchange rates had an adverse effect on net premiums of $3 million for the quarter. Premiums increased 1.3% to $709 million.
The Financial Solutions segment’s pre-tax adjusted operating income increased 73.7% to $66 million and reflected higher investment spreads, including variable investment income and strong new business. Net premiums decreased 26.6% to $47 million.
Foreign currency exchange rates had a favorable effect of $6 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 $23 million, narrower than the year-ago quarter’s loss of $92 million. The lower loss was primarily due to higher investment income.
Full-Year Highlights
Adjusted operating earnings were $19.88 per share, up 20.4% year over year.
Net premiums of $15.1 billion rose 15.3% year over year and 16.3% on a constant currency basis.
Financial Update
As of Dec 31, 2023, the company had assets worth $87.4 billion, up 5.5% year over year. It had $1 billion of excess capital at year-end.
As of Dec 31, 2023, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 7.3% year over year to $144.01.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 14.4%.
Capital Deployment
RGA deployed $933 million in in-force and other transactions and bought back shares worth $200 million. The insurer also paid $219 million in dividends.
On Jan 23, 2024, the board of directors authorized a share repurchase program for up to $500 million.
The board of directors declared a quarterly dividend of 85 cents. The dividend will be paid out on Feb 27 to shareholders of record as of Feb 13.
The Travelers Companies (TRV - Free Report) reported fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income. Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. TRV witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and lower catastrophe losses.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year.
Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. PGR’s premiums beat our estimate of $14 billion. Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion.
Progressive’s combined ratio improved 520 bps from the prior-year quarter’s level to 88.7.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio remained flat year over year at 88.4.
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Reinsurance Group (RGA) Q4 Earnings & Revenues Beat, Rise Y/Y
Reinsurance Group of America (RGA - Free Report) reported fourth-quarter 2023 adjusted operating earnings of $4.73 per share, which beat the Zacks Consensus Estimate by 7.5%. Moreover, the bottom line increased 52.8% from the year-ago quarter’s figure.
Net foreign currency fluctuations had a favorable effect of 4 cents per share on adjusted operating income.
Reinsurance Group witnessed a solid performance in the Middle East and Africa (EMEA) segment, partially offset by soft results in the U.S. and Latin America, Canada, and Asia/Pacific segments. It witnessed continued momentum in organic business activity in the traditional business.
RGA's operating revenues of $5.2 billion beat the Zacks Consensus Estimate by 13.2%. The top line also improved 18.2% year over year due to higher net premiums.
Net premiums of $4.1 billion rose 19.2% year over year. Investment income increased 15.5% from the prior-year quarter to $956 million. The average investment yield increased to 4.86% in the fourth quarter from 4.45% in the prior-year period due to higher yields.
Total benefits and expenses at Reinsurance Group increased 21.8% year over year to $4.8 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 $126 million in the quarter under discussion, down 42.6% from the year-ago quarter.
The Traditional segment reported a pre-tax adjusted operating income of $25 million in the quarter under discussion, down $108 million earned in the year-ago quarter. Net premiums rose 7.5% from the year-ago quarter to $1.9 billion.
The Asset-Intensive segment’s pre-tax adjusted operating income increased 5.2% to $81 million. The Capital Solutions business reported pre-tax adjusted operating income of $20 million, down 16.7% year over year.
Canada: Total pre-tax adjusted operating income plunged 53.6% year over year to $26 million.
The traditional segment’s pre-tax adjusted operating income decreased 57.4% to $20 million. Net premiums increased 1% to $311 million. Foreign currency exchange rates had an adverse effect on net premiums of $1 million in the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income declined 33.3% year over year to $6 million. Foreign currency exchange rates had an adverse effect of $1 million on pre-tax adjusted operating income.
EMEA: Total pre-tax adjusted operating income was $120 million, up 47.9% year over year.
Pre-tax adjusted operating income of the Traditional segment was $8 million, up from $3 million earned in the year-ago quarter. Premiums increased 9.2% to $461 million in the quarter. Foreign currency exchange rates had a favorable effect on net premiums of $14 million for the quarter.
The Financial Solutions’ pre-tax adjusted operating income increased 53.2% year over year to $112 million. Foreign currency exchange rates had a favorable effect of $5 million pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income was $137 million, down 0.7% year over year.
The Traditional segment’s pre-tax adjusted operating income was $71 million, down 29% year over year. Foreign currency exchange rates had an adverse effect on net premiums of $3 million for the quarter. Premiums increased 1.3% to $709 million.
The Financial Solutions segment’s pre-tax adjusted operating income increased 73.7% to $66 million and reflected higher investment spreads, including variable investment income and strong new business. Net premiums decreased 26.6% to $47 million.
Foreign currency exchange rates had a favorable effect of $6 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 $23 million, narrower than the year-ago quarter’s loss of $92 million. The lower loss was primarily due to higher investment income.
Full-Year Highlights
Adjusted operating earnings were $19.88 per share, up 20.4% year over year.
Net premiums of $15.1 billion rose 15.3% year over year and 16.3% on a constant currency basis.
Financial Update
As of Dec 31, 2023, the company had assets worth $87.4 billion, up 5.5% year over year. It had $1 billion of excess capital at year-end.
As of Dec 31, 2023, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 7.3% year over year to $144.01.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 14.4%.
Capital Deployment
RGA deployed $933 million in in-force and other transactions and bought back shares worth $200 million. The insurer also paid $219 million in dividends.
On Jan 23, 2024, the board of directors authorized a share repurchase program for up to $500 million.
The board of directors declared a quarterly dividend of 85 cents. The dividend will be paid out on Feb 27 to shareholders of record as of Feb 13.
Zacks Rank
RGA 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 Other Insurers
The Travelers Companies (TRV - Free Report) reported fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income. Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. TRV witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and lower catastrophe losses.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year.
Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. PGR’s premiums beat our estimate of $14 billion. Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion.
Progressive’s combined ratio improved 520 bps from the prior-year quarter’s level to 88.7.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio remained flat year over year at 88.4.