Can Reinsurance Group (RGA) Maintain Earnings Streak?

Insurer and reinsurer Reinsurance Group of America Inc. (RGA) is scheduled to report fourth-quarter and full-year 2014 results after the market close on Feb 2.

In the last quarter, this company delivered a 10.53% positive earnings surprise. The average beat for the trailing four quarters is 6.6%.

Will Reinsurance Group deliver a positive earnings surprise this quarter as well? Let's see what factors might have influenced the earnings report this time around.

Factors Influencing Q4 Results

Reinsurance Group earnings will be affected by its Australian business, due to very competitive direct and reinsurance markets there, complex product designs and a weakening claims experience.

Foreign exchange volatility might also be a drag on earnings. Its Corporate segment is also expected to report loss.

Nevertheless,increased business expected from Canada, Europe, Middle-East and Africa regions would limit the earnings downside.

Earnings Whispers

Our proven model does not conclusively show that Reinsurance Group is likely to beat the Zacks Consensus Estimate in the fourth quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.

Zacks ESP: Reinsurance Group’s Most Accurate estimate is pegged at $2.10 per share, which is lower than the Zacks Consensus Estimate of $2.11. The Earnings ESP is thus -0.47%.

Zacks Rank: Reinsurance Group’s has a Zacks Rank #3 (Hold). Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of -0.47% makes surprise prediction difficult.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

PartnerRe Ltd. (PRE) with Earnings ESP of +8.08% and a Zacks Rank #2.

RenaissanceRe Holdings Ltd. (RNR) with Earnings ESP of +2.58% and Zacks Rank #2.

Everest Re Group Ltd. (RE) with Earnings ESP of +1.23% and a Zacks Rank #2.