Reinsurance Group Set To Grow; Australian Business Concern
Zacks Investment Research | Oct 03, 2016 11:20PM ET
On Oct 3, 2016, we issued an updated research report on Reinsurance Group of America Inc. (NYSE:RGA) .
Reinsurance Group is one of the leading providers of traditional individual and group life, asset-intensive, critical illness and financial reinsurance in the U.S. and Latin America. The insurer is expected to generate long-term earnings on the back of significant value of in-force business.
Its sizable block of in-force business is expected to fuel future earnings in Canada. Reinsurance Group expects longevity insurance, which will likely see steady demand ahead, to experience long-term growth in the Canadian market. The company has been holding a large market share in the Canadian market for the seventh consecutive year now. Solid growth rates of 5–8% for premiums and 8–10% for earnings are expected from this segment by 2016.
Its international presence, including a significant foothold in Hong Kong, Japan, India, Korea and Taiwan, contribute to about one third to Reinsurance Group’s top line.
The Zacks Rank #3 (Hold) life insurer has been able to maintain its financial flexibility, which will allow it to continue with the healthy capital management, thereby boosting its profitability. The company expects to deploy $300 million to $400 million of excess capital, on an average, annually.
Riding on these positives, the Zacks Consensus Estimate for earnings inched up 1.1% to $9.55 in 2016 and 0.6% to $9.88 in 2017. The expected long-term growth rate is currently pegged at 9%.
However, the Australian business, which is presently underperforming due to competitive direct and reinsurance markets, complex product designs, weakening claims experience, imparts volatility to its operational results and will continue to do so in the near future.
Currency exchange fluctuations and evolving capital requirements are other near-term headwinds.
Stocks to Consider
Some better-ranked life insurers include (NASDAQ:HIIQ) , GWG Holdings, Inc (NASDAQ:GWGH) and Genworth Financial, Inc. (NYSE:GNW) .
Health Insurance Innovations, a purchaser of life insurance policies in the secondary market in the U.S., has seen the Zacks Consensus Estimate inch up 1.6% for 2016 and 10.9% for 2017. The insurer sports Zacks Rank #1 (Strong Buy). You can seeZacks Investment Research
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