Reinsurance Group of America, Incorporated RGA reported third-quarter 2022 adjusted operating earnings of $5.20 per share, which beat the Zacks Consensus Estimate by 76.8%. Moreover, the bottom line rebounded from the year-ago loss of $1.11.

Net foreign currency fluctuations had an adverse effect of 15 cents per share on adjusted operating income.

Reinsurance Group witnessed a solid performance in the Asia/Pacific, Europe, Middle East and Africa (EMEA) and the U.S. and Latin America segments, offset by soft results in Canada.

Reinsurance Group's operating revenues of $4.2 billion beat the Zacks Consensus Estimate by 5%. The top line also improved 5.4% year over year on higher net premiums and other revenues.

Net premiums of $3.2 billion rose 4.9% year over year. Investment income decreased 7.6% from the prior-year quarter to $374 million, reflecting lower variable investment income. Average investment yield decreased 55 basis points year over year to 4.4% in the quarter due to lower variable investment income.

Total benefits and expenses at Reinsurance Group decreased 9.2% year over year to $3.7 billion on lower claims and other policy benefits.

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 $290 million in the quarter under discussion, rebounding from the year-ago quarter loss of $6 million.

The Traditional segment reported a pre-tax adjusted operating income of $196 million, which rebounded from the year-ago quarter loss of $121 million. The results reflected favorable individual mortality experience. It was offset by $45 million of COVID-19 claim costs. Net premiums rose 5.8% from the year-ago quarter to $1.6 billion.

The Asset Intensive segment’s pre-tax adjusted operating income decreased 22.6% to $72 million. The Capital Solutions business reported pre-tax adjusted operating income of $22 million, flat year over year.

Canada: Total pre-tax adjusted operating income decreased 16% to $37 million.

The Traditional segment reported a pre-tax adjusted operating income of $33 million, which decreased 25% year over year. Foreign currency exchange rates had an adverse effect of $1 million on pre-tax adjusted operating income. Net premiums increased 1.4% to $293 million. Foreign currency exchange rates had an adverse effect of $11 million on net premiums.

The financial Solutions segment’s pre-tax adjusted operating income was $4 million.

Europe, Middle East and Africa (EMEA): Total pre-tax adjusted operating income was $50 million, which rebounded from the year-ago quarter loss of $29 million.

Pre-tax adjusted operating income of the traditional segment was $1 million against a pre-tax adjusted operating loss of $91 million in the year-ago quarter, reflecting unfavorable U.K. mortality experience and $5 million of COVID-19 claim costs. It was partially offset by favorable results in other markets. Premiums increased 0.9% to $436 million in the quarter. Foreign currency exchange rates had an adverse effect of $68 million on net premiums.

The Financial Solutions segment delivered pre-tax adjusted operating income of $49 million, down 21% from the year-ago quarter. It reflected the unfavorable impact of client reporting updates. Foreign currency exchange rates had an adverse effect of $8 million on pre-tax adjusted operating income.

Asia/Pacific: Total pre-tax adjusted operating income of $131 million, which rebounded from the year-ago quarter loss of $71 million.

The Traditional segment’s pre-tax adjusted operating income was $118 million against the year-ago pre-tax adjusted operating loss of $96 million. Foreign currency exchange rates had an adverse effect of $7 million on pre-tax adjusted operating income.

The Financial Solutions segment’s pre-tax adjusted operating income decreased 48% to $13 million. Net premiums increased 6.1% to $69 million.

The results reflected unfavorable experience, including $21 million of COVID-19 claim costs related to medical hospitalization claims for at homesickness benefits in Japan. Foreign currency exchange rates had a favorable effect of $2 million on pre-tax adjusted operating income.

Corporate and Other: Pre-tax adjusted operating loss was $56 million, wider than the year-ago loss of $27 million. The higher loss was primarily due to higher general expenses and interest expense.

Financial Update

As of Sep 30, 2022, Reinsurance Group had assets worth $82.7 billion, down 9.6% year over year.

As of Sep 30, 2022, Reinsurance Group’s book value per share, excluding accumulated other comprehensive income, increased 4.6% year over year to $143.91.

The adjusted operating return on equity (excluding accumulated other comprehensive income) was 7.9%, expanded 580 basis points year over year. Reinsurance Group exited the quarter with $1.3 billion in excess capital.

Capital Deployment

Reinsurance Group returned total shareholder capital of $79 million in the reported quarter, out of which it bought back shares worth $25 million and paid shareholder dividends of $54 million.

Effective Nov 1, 2022, the board declared a regular quarterly dividend of 80 cents per share. The dividend will be paid out on Nov 29 to shareholders of record at the close of business as of Nov 15, 2022.

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

Of the insurance industry players that have reported third-quarter results so far, Kinsale Capital Group, Inc. KNSL, Everest Re Group, Ltd. RE and American Financial Group, Inc. AFG beat the respective Zacks Consensus Estimate for earnings.

Kinsale Capital delivered third-quarter 2022 net operating earnings of $1.64 per share, which outpaced the Zacks Consensus Estimate by 15.5%. The bottom line improved 3.1% year over year. Total revenues rose about 31.5% year over year to about $217 million. The top line, however, missed the Zacks Consensus Estimate by 1.4%.

Gross written premiums of $284.1 million rose 43.8% year over year, driven by strong submission flow from brokers and a favorable pricing environment. Net written premiums climbed 38.2% year over year to $235.9 million in the quarter. Net investment income increased 71.2% year over year to $13.9 million in the quarter.

Everest Re Group’s third-quarter 2022 operating loss per share of $5.28 was narrower than the Zacks Consensus Estimate of a loss of $5.89 but wider than the year-ago loss of $1.34. Everest Re’s total operating revenues of $3.2 billion increased 9.5% year over year on higher premiums earned. The top line, however, missed the consensus estimate by 2.2%.

Gross written premiums improved 6.3% year over year to $3.7 billion, largely driven by double-digit growth in the Insurance segment. However, it missed our estimate of $3.9 billion. Net investment income was $151 million, down 48.5% year over year.

American Financial reported third-quarter 2022 net operating earnings per share of $2.24, which surpassed the Zacks Consensus Estimate by 1.8% as well as our estimate of $1.18 per share. The bottom line declined 17.3% year over year. Total revenues of $1.9 billion increased 13% year over year in the quarter. The top line beat the Zacks Consensus Estimate by 17.1%.

Net investment income declined 10.6% year over year to $151 million in the quarter under review. The figure was lower than our estimate of $211.3 million. Total cost and expenses increased 19.3% year over year to $1.8 billion.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
 
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
 
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
 
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research