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Reinsurance Group Q3 Earnings Beat Estimates on Higher Revenues
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Reinsurance Group of America, Incorporated (RGA - Free Report) reported third-quarter 2024 adjusted operating earnings of $6.13 per share, which beat the Zacks Consensus Estimate by 19%. Moreover, the bottom line increased 10% from the year-ago quarter’s figure.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Net foreign currency fluctuations had a favorable effect of 2 cents per share on adjusted operating income.
Reinsurance Group witnessed a solid performance in the Europe, Middle East and Africa (EMEA) and Canada segments, offset by the soft result in the U.S. and Latin America and Asia/Pacific segments.
RGA's operating revenues of $5.7 billion beat the Zacks Consensus Estimate by 13.8%. The top line also improved 8.5% year over year due to higher net premiums.
Net premiums of $4.4 billion rose 3.2% year over year. Investment income increased 28.8% from the prior-year quarter to $1.2 billion. The average investment yield increased to 5.08% in the third quarter from 4.72% in the prior-year period due to higher new money rates.
Total benefits and expenses at Reinsurance Group increased 14% year over year to $5.4 billion on higher claims and other policy benefits, interest credited, policy acquisition costs and other insurance expenses, other operating expenses 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 $159 million in the quarter under discussion, which decreased 33.4% year over year.
The Traditional segment reported a pre-tax adjusted operating income of $79 million, which decreased 23% year over year. Net premiums rose 9.5% from the year-ago quarter to $1.9 billion.
The Financial Solutions segment’s pre-tax adjusted operating income decreased 41% to $80 million due to lower contributions from new business.
Canada: Total pre-tax adjusted operating income decreased 15% year over year to $34 million.
The traditional segment’s pre-tax adjusted operating income surged three-fold year over year to $30 million. Net premiums increased 4% to $314 million. Foreign currency exchange rates had an adverse effect on net premiums of $5 million for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income decreased 87% year over year to $4 million due to the negative impact of a modest one-time item. 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 $68 million, up 38.7% year over year.
Pre-tax adjusted operating loss of the traditional segment was $18 million against the year-ago quarter’s income of $59 million. Premiums increased 16.5% to $521 million in the quarter. Foreign currency exchange rates had a favorable effect on net premiums of $12 million for the quarter.
The Financial Solutions pre-tax adjusted operating income decreased 20% year over year to $86 million. Foreign currency exchange rates had a favorable effect of $2 million on pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income was $71 million, which decreased 60% from the year-ago quarter.
The Traditional segment’s pre-tax adjusted operating income was $11 million, which plunged 92% from the year-ago quarter. Foreign currency exchange rates had a favorable effect of $4 million on pre-tax adjusted operating income.
The Financial Solutions segment’s pre-tax adjusted operating income increased 36.4% to $60 million. Net premiums decreased 1.6% to $62 million. 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 $18 million, narrower than the year-ago quarter’s loss of $25 million. The lower loss was primarily due to higher investment income.
Financial Update
As of Sept. 30, 2024, the company had assets worth $120.2 billion, up 37.5% year over year.
As of Sept. 30, 2024, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 5% year over year to $149.63.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 13.8%, which contracted 90 basis points year over year.
Capital Deployment
RGA deployed $382 million into in-force block transactions.
The board of directors declared a quarterly dividend of 89 cents. Effective Oct. 29, 2024, the dividend will be paid out on Nov. 26 to shareholders of record as of Nov. 12.
Chubb Limited (CB - Free Report) reported third-quarter 2024 core operating income of $5.72 per share, which outpaced the Zacks Consensus Estimate by 16%. The bottom line increased 15.6% year over year. Net premiums written improved 5.5% year over year to $13.8 billion in the quarter. Our estimate and the Zacks Consensus Estimate were both pegged at $14.3 billion. Pre-tax net investment income was $1.5 billion, up 14.7% year over year. The figure matched both the Zacks Consensus Estimate as well as our estimate.
Revenues of $15 billion missed the consensus estimate by 1.5% and improved 6.5% year over year. Property and casualty (P&C) underwriting income was $1.4 billion, up 11.7% year over year. The Zacks Consensus Estimate was pegged at $1.1 billion. Chubb incurred a pre-tax P&C catastrophe loss, net of reinsurance and including reinstatement premiums of $765 million, which was wider than the year-ago catastrophe loss of $670 million.
Kinsale Capital Group (KNSL - Free Report) delivered third-quarter 2024 net operating earnings of $4.20 per share, which outpaced the Zacks Consensus Estimate by 13.5%. The bottom line increased 26.9% year over year. Operating revenues jumped 33.1% year over year to $418 million. The growth can primarily be attributed to a rise in premiums, fee income, higher net investment income and other income. Revenues beat the consensus estimate by 4.2%.
Gross written premiums of $448.6 million rose 18.8% year over year. Our estimate was $475.1 million. Net written premiums climbed 18.9% year over year to $349.9 million in the quarter. Our estimate was pegged at $370.2 million. Net investment income increased 46.4% year over year to $39.6 million in the quarter and beat our estimate of $38.6 million. The Zacks Consensus Estimate was pegged at $37.7 million.
Selective Insurance Group, Inc. (SIGI - Free Report) reported third-quarter 2024 operating income of $1.40 per share, which missed the Zacks Consensus Estimate by 17.1%. The bottom line decreased 7% from the year-ago quarter. Total revenues of $1.2 billion increased 13.9% from the year-ago quarter’s figure. However, the top line missed the Zacks Consensus Estimate by 0.4%.
On a year-over-year basis, net premiums written increased 9% to $1.15 billion. The figure was higher than our estimate of $1.2 billion. Net investment income earned, before-tax, increased 17% year over year to $117.8 million. The figure was higher than our estimate of $117.3 million. The Zacks Consensus Estimate was pegged at $114 million. After-tax net underwriting income was $4.1 million, which plunged 83% year over year.
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Reinsurance Group Q3 Earnings Beat Estimates on Higher Revenues
Reinsurance Group of America, Incorporated (RGA - Free Report) reported third-quarter 2024 adjusted operating earnings of $6.13 per share, which beat the Zacks Consensus Estimate by 19%. Moreover, the bottom line increased 10% from the year-ago quarter’s figure.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Net foreign currency fluctuations had a favorable effect of 2 cents per share on adjusted operating income.
Reinsurance Group witnessed a solid performance in the Europe, Middle East and Africa (EMEA) and Canada segments, offset by the soft result in the U.S. and Latin America and Asia/Pacific segments.
RGA's operating revenues of $5.7 billion beat the Zacks Consensus Estimate by 13.8%. The top line also improved 8.5% year over year due to higher net premiums.
Net premiums of $4.4 billion rose 3.2% year over year. Investment income increased 28.8% from the prior-year quarter to $1.2 billion. The average investment yield increased to 5.08% in the third quarter from 4.72% in the prior-year period due to higher new money rates.
Total benefits and expenses at Reinsurance Group increased 14% year over year to $5.4 billion on higher claims and other policy benefits, interest credited, policy acquisition costs and other insurance expenses, other operating expenses 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 $159 million in the quarter under discussion, which decreased 33.4% year over year.
The Traditional segment reported a pre-tax adjusted operating income of $79 million, which decreased 23% year over year. Net premiums rose 9.5% from the year-ago quarter to $1.9 billion.
The Financial Solutions segment’s pre-tax adjusted operating income decreased 41% to $80 million due to lower contributions from new business.
Canada: Total pre-tax adjusted operating income decreased 15% year over year to $34 million.
The traditional segment’s pre-tax adjusted operating income surged three-fold year over year to $30 million. Net premiums increased 4% to $314 million. Foreign currency exchange rates had an adverse effect on net premiums of $5 million for the quarter.
The Financial Solutions segment’s pre-tax adjusted operating income decreased 87% year over year to $4 million due to the negative impact of a modest one-time item. 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 $68 million, up 38.7% year over year.
Pre-tax adjusted operating loss of the traditional segment was $18 million against the year-ago quarter’s income of $59 million. Premiums increased 16.5% to $521 million in the quarter. Foreign currency exchange rates had a favorable effect on net premiums of $12 million for the quarter.
The Financial Solutions pre-tax adjusted operating income decreased 20% year over year to $86 million. Foreign currency exchange rates had a favorable effect of $2 million on pre-tax adjusted operating income.
Asia/Pacific: Total pre-tax adjusted operating income was $71 million, which decreased 60% from the year-ago quarter.
The Traditional segment’s pre-tax adjusted operating income was $11 million, which plunged 92% from the year-ago quarter. Foreign currency exchange rates had a favorable effect of $4 million on pre-tax adjusted operating income.
The Financial Solutions segment’s pre-tax adjusted operating income increased 36.4% to $60 million. Net premiums decreased 1.6% to $62 million. 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 $18 million, narrower than the year-ago quarter’s loss of $25 million. The lower loss was primarily due to higher investment income.
Financial Update
As of Sept. 30, 2024, the company had assets worth $120.2 billion, up 37.5% year over year.
As of Sept. 30, 2024, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 5% year over year to $149.63.
The adjusted operating return on equity (excluding accumulated other comprehensive income) was 13.8%, which contracted 90 basis points year over year.
Capital Deployment
RGA deployed $382 million into in-force block transactions.
The board of directors declared a quarterly dividend of 89 cents. Effective Oct. 29, 2024, the dividend will be paid out on Nov. 26 to shareholders of record as of Nov. 12.
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
Chubb Limited (CB - Free Report) reported third-quarter 2024 core operating income of $5.72 per share, which outpaced the Zacks Consensus Estimate by 16%. The bottom line increased 15.6% year over year. Net premiums written improved 5.5% year over year to $13.8 billion in the quarter. Our estimate and the Zacks Consensus Estimate were both pegged at $14.3 billion. Pre-tax net investment income was $1.5 billion, up 14.7% year over year. The figure matched both the Zacks Consensus Estimate as well as our estimate.
Revenues of $15 billion missed the consensus estimate by 1.5% and improved 6.5% year over year. Property and casualty (P&C) underwriting income was $1.4 billion, up 11.7% year over year. The Zacks Consensus Estimate was pegged at $1.1 billion. Chubb incurred a pre-tax P&C catastrophe loss, net of reinsurance and including reinstatement premiums of $765 million, which was wider than the year-ago catastrophe loss of $670 million.
Kinsale Capital Group (KNSL - Free Report) delivered third-quarter 2024 net operating earnings of $4.20 per share, which outpaced the Zacks Consensus Estimate by 13.5%. The bottom line increased 26.9% year over year. Operating revenues jumped 33.1% year over year to $418 million. The growth can primarily be attributed to a rise in premiums, fee income, higher net investment income and other income. Revenues beat the consensus estimate by 4.2%.
Gross written premiums of $448.6 million rose 18.8% year over year. Our estimate was $475.1 million. Net written premiums climbed 18.9% year over year to $349.9 million in the quarter. Our estimate was pegged at $370.2 million. Net investment income increased 46.4% year over year to $39.6 million in the quarter and beat our estimate of $38.6 million. The Zacks Consensus Estimate was pegged at $37.7 million.
Selective Insurance Group, Inc. (SIGI - Free Report) reported third-quarter 2024 operating income of $1.40 per share, which missed the Zacks Consensus Estimate by 17.1%. The bottom line decreased 7% from the year-ago quarter. Total revenues of $1.2 billion increased 13.9% from the year-ago quarter’s figure. However, the top line missed the Zacks Consensus Estimate by 0.4%.
On a year-over-year basis, net premiums written increased 9% to $1.15 billion. The figure was higher than our estimate of $1.2 billion. Net investment income earned, before-tax, increased 17% year over year to $117.8 million. The figure was higher than our estimate of $117.3 million. The Zacks Consensus Estimate was pegged at $114 million. After-tax net underwriting income was $4.1 million, which plunged 83% year over year.