Here's Why You Should Hold Reinsurance Group (RGA) Stock
Reinsurance Group of America, Incorporated RGA should continue to benefit from new business activity, higher investment income and investment-related gains and a solid capital position
Growth Projections
The Zacks Consensus Estimate for Reinsurance Group’s 2022 and 2023 earnings per share is pegged at $9.76 and $15.25, indicating a year-over-year increase of 763.7% and 56.3%, respectively.
Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 has moved 10.6% and 3.2% north, respectively in the past 30 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Reinsurance Group currently carries a Zacks Rank #3 (Hold). The stock has gained 14.6% year to date against the industry’s decrease of 8.7%.
Image Source: Zacks Investment Research
Business Tailwinds
Solid premium growth at its U.S. and Latin America, Canada operations, Europe, Middle East and Africa (EMEA) and Asia Pacific segments are likely to drive the performance of Reinsurance Group.
The EMEA segment’s business is well poised to gain from an increase in new business activity, higher investments supporting annuity business and an increase in new business volumes of closed longevity business.
Its Asia Pacific business is likely to gain from favorable claims experience, the continued growth of Financial Solutions Reinsurance, higher investment income and investment-related gains. Contributions from recently executed asset-intensive transactions in Asia should benefit the top line of the Asia Pacific business.
The Canada business should continue to gain from higher business volume under existing treaties, increased variable investment income and a higher invested asset base.
Reinsurance Group boasts a solid capital position and sufficient financial flexibility. RGA exited the first quarter of 2022 with a strong balance sheet and excess capital of around $1 billion. As of Mar 31, 2022, RGA maintained an $850 million syndicated revolving credit facility coupled with the committed letter of credit facilities aggregating $929 million.
The life insurer increased its dividend at an eight-year (2015-2022) CAGR of 10.4%. In the first quarter of 2021, the insurer deployed $130 million into in-force and other transactions and returned $74 million to shareholders through dividends and share repurchases. In August 2021, RGA increased the quarterly dividend by 4%.
Stocks to Consider
Some better-ranked stocks in the insurance industry are United Fire Group, Inc. UFCS, RLI Corp. RLI and HCI Group, Inc. HCI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 270.83%. In the past year, UFCS 's stock has increased 7.1%.
The Zacks Consensus Estimate for UFCS’s 2022 earnings has moved 23.5% north in the past seven days.
RLI has a solid track record of beating earnings estimates in each of the last seven quarters. In the past year, RLI stock has increased 16.4%.
The Zacks Consensus Estimate for RLI’s 2022 and 2023 earnings per share is pegged at $4.35 and $4.45, indicating year-over-year increases of 12.4% and 2.3%, respectively.
The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 30 days. In the past year, HCI Group stock has lost 17.9%.
The Zacks Consensus Estimate for 2022 and 2023 earnings per share indicates year-over-year increases of 280.9% and 75%, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
RLI Corp. (RLI) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
United Fire Group, Inc (UFCS) : Free Stock Analysis Report
HCI Group, Inc. (HCI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
