Why You Should Retain Reinsurance Group (RGA) Stock Now

Reinsurance Group of America, Incorporated RGA has been gaining momentum on the back of new business volumes, favorable longevity experience, improving interest rate environment, diversified business and effective capital deployment.

Growth Projections

The Zacks Consensus Estimate for Reinsurance Group’s 2024 earnings per share indicates a year-over-year increase of 3%. The consensus estimate for revenues is pegged at $20.21 billion, implying a year-over-year improvement of 6.1%.

The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 5.2% and 1.8%, respectively, from the corresponding 2024 estimates.

Estimate Revision

The Zacks Consensus Estimate for 2024 and 2025 has moved 5.5% and 1.8% north, respectively, in the past 30 days, reflecting analysts’ optimism on the stock.

Earnings Surprise History

The life insurer delivered a four-quarter average earnings surprise of 19.48%.

Zacks Rank & Price Performance

RGA currently carries a Zacks Rank #3 (Hold). The stock has gained 40.7% in the past year compared with the industry’s growth of 26.2%.

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Style Score

RGA has a VGM Score of A. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.

Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best opportunities in the value investing space.

Return on Equity (ROE)

ROE is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. In the first quarter of 2024, the adjusted operating return on equity (excluding accumulated other comprehensive income) was 14.8%, which expanded 360 basis points year over year. This shows the company’s relative efficiency in managing shareholders’ funds.

Business Tailwinds

Its compelling product portfolio and operational expertise help Reinsurance Group maintain its leadership position in the United States, Latin America and Canada.

Significant value embedded in the in-force business helps generate predictable long-term earnings. Product line expansion not only contributes to risk diversification and matured individual mortality but also provides a base for stable earnings and capital generation.

Reinsurance Group’s longevity insurance provides a source of diversified income and acts as a hedge to a large mortality position. Increasing demand for longevity insurance poises it well for long-term growth.

Life insurers are direct beneficiaries of an improving interest rate environment. Though the Fed has stalled rate increases for some time, it has already made 11 hikes since 2022.

A high-quality investment portfolio and the company’s diversified business across asset classes, sectors, issuers and geography are positives.

RGA’s solid capital position with excess capital of around $0.6 billion offers sufficient financial flexibility and supports effective capital deployment.

Reinsurance Group expects to remain active in deploying capital into attractive growth opportunities in organic flow and in-force block transactions and returning excess capital to shareholders through dividends and share repurchases. On Jan 23, 2024, the company’s board authorized a share repurchase program for up to $500 million of RGA’s outstanding common stock.

The life insurer has an impressive Value Score of A, reflecting an attractive valuation of the stock. The insurer currently has a trailing 12-month P/B ratio of 1.45, lower than the industry range of 1.83.

Stocks to Consider

Some better-ranked stocks from the insurance industry are Arch Capital Group Ltd. ACGL, RLI Corp. RLI and NMI Holdings Inc NMIH. While Arch Capital and RLI Corp. sport a Zacks Rank #1 each, NMI Holdings carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arch Capital has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 28.41%. In the past year, shares of ACGL have climbed 36.3%.

The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings has moved 5.1% and 3.3% north, respectively, in the past 30 days.

RLI Corp. has a solid track record of beating earnings estimates in three of the trailing four quarters and missing in one, the average being 132.39%. In the past year, shares of RLI have gained 13%.

The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 16.1% and 3.2%, respectively.

NMI Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 8.60%. In the past year, shares of NMIH have jumped 33.3%.

The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 9.1% and 8.3%, respectively.

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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.

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