Reinsurance Group Hits 52- Week High on Inorganic Growth
On Aug 18, Reinsurance Group of America Inc. RGA reached a new 52-week high of $98.70 per share driven by inorganic growth and effective capital deployment. With about 0.1 million shares changing hands in the last trading session, the stock closed at $98.41, gaining 0.05%.
The year-to-date return from the stock came in at 12.3%, which was significantly ahead of the S&P’s return of 1.8%.
Reinsurance Group has been consistently boosting its global presence through acquisitions. Recently, the company acquired Elite Sales Processing, Inc. to bolster its underwriting business in the U.S. In April, the company had bought Aurora National Life Assurance Company.
Reinsurance Group’s strong liquidity cushions its inorganic growth initiatives.
A solid operational performance has been helping Reinsurance Group to deploy capital effectively that also enhances its shareholders value. To that end, the board of directors hiked dividend by 12% to 37 cents per share during the second quarter of 2015. Moreover, the board increased the share repurchase program to $450 million from $300 million in the last quarter. A lower share count via share buybacks boosts the bottom line.
With respect to earnings performance, although Reinsurance Group’s second-quarter earnings missed the Zacks Consensus Estimate, the performance of its segments – U.S. and Latin America Operations – improved. Additional earnings from the Aurora International acquisition and favorable performance of net interest spread on fixed annuities supported the segmental improvement. The company delivered positive surprises in the two of the last four quarters with a positive average beat of 9.2%.
Reinsurance Group currently carries a Zacks Rank #3 (Hold).
Stocks To Consider
Some better-ranked stocks from the insurance sector are First American Financial Corporation FAF, Primerica, Inc. PRI and StanCorp Financial Group Inc. SFG. While First American Financial sports a Zacks Rank #1 (Strong Buy), both Primerica and StanCorp Financial hold a Zacks Rank #2 (Buy).
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