July 19 (Bloomberg) -- Reinsurance Group of America Inc., the reinsurer formerly owned by MetLife Inc. fell the most since October as it swung to a loss on higher-than-expected costs from disability coverage in Australia.
Reinsurance Group dropped 7.3 percent to 67.95 at 4:15 p.m. in New York. The Chesterfield, Missouri-based company has climbed 27 percent this year.
The second-quarter net loss was $49.6 million, compared with profit of $141.1 million a year earlier, the company said in a statement yesterday. Results included costs of $184 million to increase claims liabilities in Australia. The company had previously said results would be posted on July 25.
“The charge was particularly surprising and disappointing given management’s expectation from the May investor day that Australia would post a modest profit in 2013,” Keefe, Bruyette and Woods analysts led by Jeffrey Schuman said in a research note today. They cut their price target to $74 a share from $81.
Chief Executive Officer Greig Woodring said the company would be “extremely selective” in the Australia group market as it works with insurers to assess the risks. Reinsurers help primary carriers shoulder losses.
“We have just completed a comprehensive claims analysis within the last week, and that analysis indicates a more dramatic deterioration than we previously anticipated,” Woodring said in the statement. “The current environment makes it very difficult to price new business with any degree of confidence.”
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