Reinsurance Group (RGA) to Buy Aurora National of Swiss Re - Analyst Blog

Reinsurance Group of America, Inc. (RGA) has announced that it will buy Aurora National Life Assurance Company, a wholly owned life insurance subsidiary of Swiss Re. Financial details of the buyout were not disclosed.

 

The deal will expand Reinsurance Group's U.S. annuities and life insurance business, since the business of Aurora which has approximately 82,000 policies in force comprises two-thirds annuities and one-third interest-sensitive life products. Reinsurance Group already derives more than 50% of its premium from the U.S. market. 

 

Aurora's business, on behalf of Reinsurance Group, will be managed by Alliance-One Services, Inc, a subsidiary of Computer Sciences Corporation.

 

Swiss Re believes that the transaction will free up stranded capital tied up in a low yielding business, and make resources required for strategic initiatives available for redeployment. With this sale, the company can exit the U.S. life and health insurance market and focus on U.K. business expansion, which it is aggressively working on.

 

The sale will be concluded early next year, subject to regulatory approvals. 

 

Reinsurance Group is scheduled to release third-quarter 2014 earnings on Oct 27, after the market close. The company's Earnings ESP, of -0.48% coupled with Zacks Rank #3 (Hold) makes surprise prediction difficult.  

 

The Zacks Consensus estimates earnings per share of $2.09 which translates into a year-over-year decline of 2.6%. In the last reported quarter, the company posted a positive earnings surprise of 12.6%.  

 

Better-ranked stocks include China Life Insurance Co. Ltd. (LFC), Sun Life Financial Inc. (SLF) and Symetra Financial Corp. (SYA). All these stocks carry a Zacks Rank #2 (Buy).