Reinsurance Group of America Q2 net income falls, dividend up 4.5%

Overview

• Reinsurance Group of America Q2 net income falls to $180 mln, $2.70 per share
• Adjusted operating income for Q2 declines to $315 mln, $4.72 per share
• Co increases quarterly dividend by 4.5% to $0.93 per share

Outlook

• RGA estimates deployable capital at $3.4 bln
• Company optimistic about future business prospects
• RGA sees strong performance in APAC and EMEA segments

Result Drivers

• CLAIMS VOLATILITY - Second qtr operating results were below expectations due to claims volatility in U.S. Individual Life business, per CEO Tony Cheng
• EXCESS CAPITAL INCREASE - Estimated excess capital rose to $3.8 bln, reflecting additional capital credit from in force business, per CEO Tony Cheng
• REGIONAL PERFORMANCE - Strong results in APAC and EMEA segments, while U.S. Financial Solutions performed well, but U.S. Individual Life and Group business faced higher claims

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 7 "strong buy" or "buy", 4 "hold" and no "sell" or "strong sell"
• The average consensus recommendation for the reinsurance peer group is "buy"
• Wall Street's median 12-month price target for Reinsurance Group of America Inc is $245.50, about 22.4% above its July 30 closing price of $190.51
• The stock recently traded at 8 times the next 12-month earnings vs. a P/E of 8 three months ago