Goldman to Review its Estimates for Reinsurance Group

Analyst Elizabeth Werner cites presence of adverse mortality claims

Goldman Sachs said it is putting its earnings estimates for Reinsurance Group (RGA ) under review in light of an increase in the reinsurer's "adverse" mortality claims. The company said it sees fourth quarter operating earnings per share in the $0.01 to $0.05 range. Analyst Elizabeth Werner says the preannouncement was below her $0.30 earnings per share estimate. She says she plans to review 2001 estimate of $1.74 and 2002 estimate of $3.05 following a company conference call.

Werner says she thinks growth opportunities for life reinsurers attractive. But she says that at RGA, an increased frequency of adverse mortality claims has occurred and could continue. If this case, she says she may have to cut 2002 EPS by $0.15-$0.30 to reflect at least one quarter of poor claims experience. She says she is also concerned about whether RGA has underwritten its business to achieve adequate returns and about what type of financial controls are in place. She rates the stock a market outperform.

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