Reinsurance Group of America Inc. (RGA) reported first quarter 2013 operating earnings of $1.65 per share, exceeding the Zacks Consensus Estimate of $1.61 per share. Results were also ahead of the year-ago earnings by 8.6%.
The earnings beat came on the back of strong performance in the U.S., and Europe & South Africa segments.
Including capital losses, derivatives and other investment related losses of $31.4 million, capital gains on funds withheld of $1.3 million, embedded derivatives of $104.6 million, DAC offset of $42 million and gain on repurchase of collateral finance facility securities of $30.2 million, Reinsurance Group reported net income of $2.49 per share, up 49.1% year over year.
Quarterly Operational Update
Total revenue of Reinsurance Group increased 13.4% year over year to $2.6 billion in the reported quarter, driven by increase in net premiums (up 6.2% year over year), net investment income (up 24.7% year over year) and investment related gains (up 116.8% year over year to $94.4 million). Results also exceeded the Zacks Consensus Estimate of $2.4 billion.
Total benefits and expenses of Reinsurance Group increased 9.9% year over year to $2.3 billion due to higher claims and other policy benefits (up 6.9% year over year), interest credited (up 42.5% year over year), policy acquisition costs and other insurance expenses (up 16.2% year over year), other operating expenses (up 8.5% year over year) and interest expense (up 22.1% year over year).
Quarterly Segment Update
U.S. Operations : Pretax operating income in the Traditional U.S. sub-segment was $69.5 million, up 10% year over year. Net premiums increased 2.4% year over year to $1.05 billion.
Pretax operating income in the U.S. Asset intensive business was $45.6 million, up 86.1% year over year. The improvement came on the back of strong equity markets, which augmented the equity-indexed and variable annuity blocks.
Pretax operating income in the U.S. Financial Reinsurance business was $8 million, up 23.1% year over year.
Canada Operations: Pretax operating income was $32.9 million, down 29.6% year over year. Net premiums increased 12% year over year to $243.3 million, including a $1.6 million adverse foreign currency effect.
Asia Pacific Operations: Pretax operating income was $19.4 million, down 27.9% year over year, including an adverse impact of $1.8 million from foreign currency fluctuations. Net premiums increased 12% year over year to $363.3 million including an $8.1 million adverse foreign currency impact.
Europe & South Africa Operations: Pretax operating earnings of $15.6 million were up 239.1% year over year. Net premiums increased 11% year over year to $323.9 million including an adverse effect of $9.9 million from foreign currency fluctuations.