Symetra Financial Corporation (SYA) reported second-quarter 2014 adjusted operating income of 48 cents per share, which outperformed Zacks Consensus Estimate by 11.6% and increased 20% year over year.
The outperformance came on the back of solid underwriting results in the Benefit Segment coupled with sales improvement across all the business divisions.
Net income per share increased 82% year over year to $71.5 million or 62 cents per share in the reported quarter.
Investor’s enthusiasm was reflected in the share price of Symetra Financial that increased 1.74% to close at $22.81 in the last trading session ending Jul 25, 2014.
Operational performance
Total revenue of Symetra Financial declined 0.5% year over year to $521.8 million due to lower premiums. Results also missed the Zacks Consensus Estimate by 0.8%.
Total benefits and expenses climbed 1.2% year over year to $463.9 million mainly due to an increase in the interest credited.
Benefits: Pre-tax operating income increased 22.1%, driven by lower medical stop loss ratio in the reported quarter. Loss ratio improved 530 basis points to 62.7%, reflecting low claims frequency. Both improvements were on a year-over-year basis.
Medical stop-loss, limited benefits medical, and group life and disability income insurance recorded year-over-year sales growth of 22.5%.
Deferred Annuities: Pre-tax operating income remained flat year over year.
Total account values increased 17.2% from the year-ago quarter. FIA account values rose to $2.5 billion from $855 million in the prior-year quarter.
Sales increased 47% year over year due to solid sales and improved interest rate in traditional fixed annuities and FIA.
Income Annuities: Pre-tax operating income declined 65% from the year-ago quarter due to less favorable mortality experience and low interest margin.
Sales increased 95.6% year over year due to better selling strategies and interest rate.
Individual Life: Pre-tax operating income fell 6.2% year over year in the said quarter owing to increased operating expense, partly offset by Classic Universal Life (UL) earnings.
Sales of individual life products increased to $9.1 million from $3.0 million in the year-ago quarter, driven by higher Classic UL sale.
Other: Pre-tax operating loss rose to $6.2 million from $1.3 million in the year-ago quarter due to low net investment income.
Financial Update
Total assets of Symetra Financial were $31.9 million in the second quarter, increasing 6.0% from 2013-end level.
Stockholders equity was $3.4 million as of Jun 30, 2014, up 7.95% year over year.
Book value per share of Symetra Financial at the reported quarter-end was $21.04 rising 2.6% from Mar 2014 end.
Risk-based capital (RBC) ratio for Symetra Financial at the end of second-quarter 2014 was 458%. Statutory capital and surplus, including asset valuation reserve (AVR), was $2.3 billion.
Dividend and Share Repurchase Update
The board of directors of Symetra Financial declared a cash dividend of 10 cents per share.
Symetra Financial repurchased 0.7 million shares in second-quarter 2014 with 6.9 million remaining under its authorization.
2014 Earnings Outlook
Symetra Financial reiterated 2014 adjusted operating income guidance in the range of $1.80–$2.00 per share.
Performance of Other Insurers
Reinsurance Group of America Inc. (RGA) reported second-quarter 2014 operating income of $2.23 per share, which surpassed the Zacks Consensus Estimate of $2.06.
ACE Limited (ACE) reported second-quarter operating income of $2.42 per share outperforming Zacks Consensus Estimate by 8% and increased 5.7% year over year.
Zacks Rank
Symetra Financial currently carries a Zacks Rank #3 (Hold). However, a better-ranked insurance stock is Voya Financial, Inc. (VOYA), having a Zacks Rank #2 (Buy).
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