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Why You Should Hold onto Reinsurance Group (RGA) Stock

Reinsurance Group of America, IncorporatedRGA , is a leader in the U.S. and Latin American traditional markets, primarily deals in reinsurance business and is engaged in life reinsurance and international life and disability insurance.

The life insurer is likely to continue benefiting from a mix of organic and transactional opportunities. Product line expansion, in turn, would facilitate risk diversification in the future.

This apart, Reinsurance Group has carved out a niche in the Canadian market on the back of solid growth and profitability. The company anticipates longevity insurance - a source of diversified income - to experience steady demand and long-term growth in the Canadian market.

Despite a challenging overall operating environment, the company has been witnessing sustained premium growth. This reflects the resilience of the company's operating model and its ability to capitalize on opportunities and gain strong market positions.

In the last reported quarter, the bottom line outperformed the Zacks Consensus Estimate, marking three straight quarters of positive surprises. The company has witnessed 2016 estimates moving north by 0.5% and 2017 estimates increasing 0.3%.

For the intermediate term, the life insurer targets operating income per share growth of 5-8% and operating return on equity in the range of 10% to 12%. The expected long term earnings growth is currently pegged at 9%.

The Zacks Rank #3 (Hold) life insurer has been displaying effective capital management through share buybacks and dividend payments. The new share buyback authorization of up to $400 million will help the company in to lower its share count and provide additional boost to the bottom line.

Shares of Reinsurance Group gained 2.95% since the release of fourth-quarter earnings, significantly underperforming the Life Insurance industry's growth of 6.28%. Nonetheless, we believe that the overall top-line premium improvement, primarily due to solid organic growth and modest contributions from in-force transactions alongside the aforementioned favorable factors, will help the stock to turn around in the near term.

However, exposure to foreign exchange volatility, escalating expenses and evolving capital requirements pose near-term headwinds for the company.

Stocks to Consider

Some better-ranked stocks from the insurance industry include American Equity Investment Life Holding Company AEL , James River Group Holdings, Ltd. JRVR and Primerica, Inc. PRI .

American Equity Investment develops and sells fixed index and fixed rate annuity products in the United States. The company delivered positive surprises in one of the last four quarters but with an average negative surprise of 39.14%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

James River Group offers specialty insurance and reinsurance services in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 3.60%. The company holds a Zacks Rank #2 (Buy).

Primerica distributes financial products to middle income households in the United States and Canada. The company delivered positive surprises in three of the last four quarters with an average beat of 5.61%. The company holds a Zacks Rank #2.

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Primerica, Inc. (PRI): Free Stock Analysis Report

American Equity Investment Life Holding Company (AEL): Free Stock Analysis Report

Reinsurance Group of America, Incorporated (RGA): Free Stock Analysis Report

James River Group Holdings, Ltd. (JRVR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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