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Reinsurance Group (RGA) Q1 Earnings Miss, Revenues Beat
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Reinsurance Group of America, Incorporated (RGA - Free Report) reported first-quarter 2021 adjusted operating loss of $1.19 per share against the Zacks Consensus Estimate of earnings of 7 cents. In the year-ago quarter, the company had reported income of $1.41 per share. Results suffered due to the adverse impact of significant level of COVID-19 mortality claims.
Net foreign currency fluctuations had a favorable effect of 1 cent on adjusted operating income.
Reinsurance Group of America, Incorporated Price, Consensus and EPS Surprise
Reinsurance Group's operating revenues of $3.8 billion beat the Zacks Consensus Estimate of $3.7 billion. The top line also improved 9.4% year over year.
Net premiums of $2.9 billion rose 3% year over year. Investment income, net of related expenses, increased 36.7% from the prior-year quarter to $812 million. Average investment yield was up 1590 basis points to 5.67% driven by strong variable investment income from limited partnership investments.
Total benefits and expenses at Reinsurance Group increased 19.2% year over year to $3.9 billion on higher claims and other policy benefits and policy acquisition costs and other insurance expenses.
Quarterly Segment Update
U.S. and Latin America: Total pre-tax loss was $27 million in the quarter against income of $11 million in the year-ago quarter. The Traditional segment reported pre-tax adjusted operating loss of $344 million, wider than the year-ago loss of $55 million due to the negative impact from individual mortality estimated COVID-19-related claim costs of approximately $358 million. Net premiums rose 3.4% from the year-ago quarter to $1.4 billion.
Asset Intensive segment’s pre-tax adjusted operating income improved about 14% to $49 million. Capital Solutions business reported pre-tax adjusted operating income of $23 million, flat year over year.
Canada: Total pre-tax income decreased 25.6% to $29 million.
Traditional segment’s pre-tax adjusted operating income decreased 36.1% year over year to $23 million, reflecting $26 million of COVID-19 claim costs. Net premiums increased 7.7% to $280 million.
Financial Solutions segment’s pre-tax adjusted operating income doubled year over year to $6 million, attributable to favorable longevity experience.
Europe, Middle East and Africa (EMEA): Total pre-tax loss was $26 million against the prior-year quarter’s income of $53 million.
Pre-tax adjusted operating loss of the traditional segment was $68 million against pre-tax adjusted operating income of $17 million in the year-ago quarter, reflecting $98 million of COVID-19 claim costs and unfavorable forex. Premiums increased 12.3% to $48 million in the quarter due to favorable foreign currency exchange.
Financial Solutions segment delivered pre-tax adjusted operating income of $42 million, up 16.7% from the year-ago quarter, reflecting lower than expected COVID-19 impact on longevity experience due to longer reporting lags and favorable forex.
Asia/Pacific: Total pre-tax income of $60 million increased 76.5% from the prior-year quarter.
Traditional segment’s pre-tax adjusted operating income of $41 million was up 70.8% attributable to favorable forex and underwriting experience in Asia, and Australia. Premiums decreased 4.2% to $609 million, reflecting 31% decline in Australia operations.
Financial Solutions segment’s pre-tax adjusted operating income increased 90% to $19 million, driven by organic growth and favorable experience on existing treaties. Net premiums decreased 28.4% to $53 million.
Corporate and Other: Pre-tax adjusted operating income of $94 million, rebounding from the year-ago loss of $19 million in the prior-year period.
Financial Update
As of Mar 31, 2021, Reinsurance Group had assets worth $84.8 billion, up 12.1% from the level at 2020 end.
As of Mar 31, 2021, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 0.8% year over year to $133.67.
Adjusted return on equity was 3.7%. The company exited the quarter with $1.2 billion in excess capital.
Capital Deployment
The board of directors approved a dividend of 70 cents per share to be paid out on Jun 1 to shareholders of record as of May 19.
Zacks Rank
Reinsurance Group currently carries a Zacks Rank #4 (Sell).
First-quarter earnings of Lincoln Financial (LNC - Free Report) and Manulife Financial (MFC - Free Report) beat the Zacks Consensus Estimate while that of American Equity Investment missed estimates.
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Reinsurance Group (RGA) Q1 Earnings Miss, Revenues Beat
Reinsurance Group of America, Incorporated (RGA - Free Report) reported first-quarter 2021 adjusted operating loss of $1.19 per share against the Zacks Consensus Estimate of earnings of 7 cents. In the year-ago quarter, the company had reported income of $1.41 per share. Results suffered due to the adverse impact of significant level of COVID-19 mortality claims.
Net foreign currency fluctuations had a favorable effect of 1 cent on adjusted operating income.
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
Reinsurance Group's operating revenues of $3.8 billion beat the Zacks Consensus Estimate of $3.7 billion. The top line also improved 9.4% year over year.
Net premiums of $2.9 billion rose 3% year over year. Investment income, net of related expenses, increased 36.7% from the prior-year quarter to $812 million. Average investment yield was up 1590 basis points to 5.67% driven by strong variable investment income from limited partnership investments.
Total benefits and expenses at Reinsurance Group increased 19.2% year over year to $3.9 billion on higher claims and other policy benefits and policy acquisition costs and other insurance expenses.
Quarterly Segment Update
U.S. and Latin America: Total pre-tax loss was $27 million in the quarter against income of $11 million in the year-ago quarter. The Traditional segment reported pre-tax adjusted operating loss of $344 million, wider than the year-ago loss of $55 million due to the negative impact from individual mortality estimated COVID-19-related claim costs of approximately $358 million. Net premiums rose 3.4% from the year-ago quarter to $1.4 billion.
Asset Intensive segment’s pre-tax adjusted operating income improved about 14% to $49 million. Capital Solutions business reported pre-tax adjusted operating income of $23 million, flat year over year.
Canada: Total pre-tax income decreased 25.6% to $29 million.
Traditional segment’s pre-tax adjusted operating income decreased 36.1% year over year to $23 million, reflecting $26 million of COVID-19 claim costs. Net premiums increased 7.7% to $280 million.
Financial Solutions segment’s pre-tax adjusted operating income doubled year over year to $6 million, attributable to favorable longevity experience.
Europe, Middle East and Africa (EMEA): Total pre-tax loss was $26 million against the prior-year quarter’s income of $53 million.
Pre-tax adjusted operating loss of the traditional segment was $68 million against pre-tax adjusted operating income of $17 million in the year-ago quarter, reflecting $98 million of COVID-19 claim costs and unfavorable forex. Premiums increased 12.3% to $48 million in the quarter due to favorable foreign currency exchange.
Financial Solutions segment delivered pre-tax adjusted operating income of $42 million, up 16.7% from the year-ago quarter, reflecting lower than expected COVID-19 impact on longevity experience due to longer reporting lags and favorable forex.
Asia/Pacific: Total pre-tax income of $60 million increased 76.5% from the prior-year quarter.
Traditional segment’s pre-tax adjusted operating income of $41 million was up 70.8% attributable to favorable forex and underwriting experience in Asia, and Australia. Premiums decreased 4.2% to $609 million, reflecting 31% decline in Australia operations.
Financial Solutions segment’s pre-tax adjusted operating income increased 90% to $19 million, driven by organic growth and favorable experience on existing treaties. Net premiums decreased 28.4% to $53 million.
Corporate and Other: Pre-tax adjusted operating income of $94 million, rebounding from the year-ago loss of $19 million in the prior-year period.
Financial Update
As of Mar 31, 2021, Reinsurance Group had assets worth $84.8 billion, up 12.1% from the level at 2020 end.
As of Mar 31, 2021, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 0.8% year over year to $133.67.
Adjusted return on equity was 3.7%. The company exited the quarter with $1.2 billion in excess capital.
Capital Deployment
The board of directors approved a dividend of 70 cents per share to be paid out on Jun 1 to shareholders of record as of May 19.
Zacks Rank
Reinsurance Group currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Life Insurers
First-quarter earnings of Lincoln Financial (LNC - Free Report) and Manulife Financial (MFC - Free Report) beat the Zacks Consensus Estimate while that of American Equity Investment missed estimates.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>