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Hot Stocks: Reinsurance Group of America, Incorporated (NYSE: RGA)

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Reinsurance Group of America, Incorporated (NYSE: RGA), a most important worldwide provider of life reinsurance, declared 3rd-quarter net income of $262.80M, or $4.120 for each diluted share, contrast with $301.20M, or $4.680 for each diluted share, in the prior-year quarter. Adjusted operating income* totaled $256.30M, or $4.020 for each diluted share, contrast with $259.40M, or $4.030 for each diluted share, the year before. Net foreign currency fluctuations had an adverse effect of $0.020 for each diluted share on net income and adjusted operating income as a contrast with the previous year.

  • Earnings for each diluted share: $4.120 from net income, $4.020 from adjusted operating income*
  • ROE 7.60 percent and adjusted operating ROE* 10.70 percent for the trailing twelve months
  • Deployed capital of $150.00M into in-force and other transactions in the quarter

In the 3rd-quarter, merged net premiums totaled $2.80B, up 10.00 percent from previous year’s 3rd-quarter of $2.60B, with adverse net foreign currency effects of $34.90M. Apart From spread-based businesses and the value of associated derivatives, investment income increased 13.00 percent as compared to a year ago, reflecting asset growth of 7.0 percent and higher variable investment income. The average investment yield, apart from spread business, was up 26.0 basis points from the 3rd-quarter of 2k18 to 4.830 percent mainly because of higher variable investment income.

The effective tax rate this quarter was 24.30 percent on pre-tax income. The effective tax rate was 23.50 percent on pre-tax adjusted operating income for the quarter, at the higher end of the expected range of 21.00 percent to 24.00 percent.

“We had another successful quarter with $150.00M of capital deployed into in-force and other transactions, bringing the year-to-date total to $385.00M. We also repurchased $30.00M of common shares throughout the quarter for a year-to-date total of $80.00M. We finished the quarter with an excess capital position of about $1.00B.

The U.S. and Latin America Traditional segment stated pre-tax income of $112.50M, contrast with $116.30M in the 3rd-quarter of 2k18. Pre-tax adjusted operating income totalled $122.10M, contrast with $116.40M the year before, benefiting from favorable experience in the Group business and strong variable investment income, in part offset by unfavorable individual mortality experience. The year-ago duration reflected favorable mortality experience and above-average variable investment income.

Traditional net premiums were up 3.0 percent from the previous year’s 3rd-quarter to $1,404.20M.

Financial Solutions

The Asset-Intensive business stated pre-tax income of $99.70M contrast with $65.50M last year. 3rd-quarter pre-tax adjusted operating income increased to $65.60M, up from $63.80M a year ago, attributable to new business and favourable longevity experience on a block of payout annuities.

The Financial Reinsurance business stated pre-tax income and pre-tax adjusted operating income of $19.20M, down modestly from $21.60M the year before.

Canada

Traditional

The Canada Traditional segment stated pre-tax income of $43.70M, contrast with $21.10M the year before. Pre-tax adjusted operating income more than doubled to $44.30M from $20.00M a year ago, reflecting continued favorable individual mortality experience. The prior-year quarter reflected unfavorable individual mortality experience. Foreign currency exchange rates had an adverse effect of $0.50M on pre-tax income and pre-tax adjusted operating income.

Stated net premiums totaled $270.80M for the quarter, up 11.00 percent over the year-ago duration, mainly because of in-force transactions reached in 2k18. Net foreign currency fluctuations had an adverse effect of $2.90M on net premiums

The EMEA Traditional segment stated pre-tax income of $25.30M contrast with $18.40M in the previous year’s 3rd-quarter. Pre-tax adjusted operating income totalled $25.50M, contrast with $18.40M, attributable mainly to favorable underwriting experience overall, while the year-ago duration reflected modestly favorable underwriting results. Net foreign currency fluctuations adversely affected pre-tax income and pre-tax adjusted operating income by $1.20M for the quarter.

Stated net premiums increased 6.0 percent to $359.40M in the 3rd-quarter. Foreign currency exchange rates adversely affected net premiums by $17.10M.

Financial Solutions

The EMEA Financial Solutions business segment, which consists of longevity, asset-intensive and fee-based transactions, stated 3rd-quarter pre-tax income of $61.20M, contrast with $56.20M in the year-ago duration. Pre-tax adjusted operating income totalled $59.00M, contrast with $56.40M the year before. Both durations were above expectations, reflecting favorable experience in both asset-intensive and longevity business. Net foreign currency fluctuations adversely affected pre-tax income by $3.40M and pre-tax adjusted operating income by $3.30M.

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