Reinsurance Group of America (RGA) is slated to release first quarter 2010 earnings on April 27, 2010, before the opening bell.
We expect the company’s earnings for 2010 to benefit from the acquisition of ReliaStar, which will further increase the company’s market share in North American Markets. Negatives offsetting the earnings will be unfavorable mortality trends and higher interest obligation due to $400 million of debt issued in November.
Management views a stable life reinsurance environment in 2010 and expects operating income to lie in the range of $6.30 to $6.90 per share, up from $5.98 reported in 2009. Favorable pricing trends and strong international growth potential are expected to fuel consolidated premium growth of approximately 15%, with return on equity (ROE) ranging between 13% and 14%.
Earnings Revision
Reinsurance Group is expected to earn $1.59 per share in the first quarter, as per the Zacks Consensus Estimate. This would be up by 70.7% from the year-ago quarter. The company had a reported profit of 93 cents in the first quarter of 2009 and $1.70 in the last quarter of 2009. According to the Zacks Consensus Estimate, Reinsurance Group is expected to report net earnings of $6.64 per share for the full-year 2010, in contrast to a net profit of $5.98 reported in 2009.
Over the last 30 days, one of the 9 analysts covering the stock have upgraded his or her estimate for the first quarter of 2010, while one other moved in the opposite direction. This indicates no clear directional pressure on the performance of the stock in the near term.
With respect to earnings surprises, the stock has been fairly steady over the last four quarters, posting a positive surprise three times. The average remained positive at 0.72%. This implies that RGA has surpassed the Zacks Consensus Estimate by 0.72% over that period.
The downside potential for the estimate for the first quarter, essentially a proxy for future earnings surprises, currently stands at 1.26% for RGA.
Read the full analyst report on “RGA”
Zacks Investment Research
