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Here's Why You Should Hold Reinsurance Group (RGA) Stock

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Reinsurance Group of America, Incorporated’s RGA has been witnessing favorable claims experience, higher business volume, organic growth, new sales and effective capital deployment.

Growth Projections

The Zacks Consensus Estimate for Reinsurance Group’s 2022 earnings per share is pegged at $13.49, indicating a year-over-year increase of 250.4%.

Zacks Rank & Price Performance

Reinsurance Group currently carries a Zacks Rank #3 (Hold). The stock has lost 4.9% in the past year, compared with the industry’s decrease of 7.9%.

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Style Score

Reinsurance Group is well poised for progress, as is evident from its favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Its Asia Pacific business is likely to gain from favorable claims experience, 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.

Higher variable investment income from investments in limited partnerships, real estate joint venture sales and new Financial Solutions transactions should benefit earnings before income taxes of U.S. and Latin America Operations. The top line of this segment is likely to gain from organic growth as well as new sales and higher variable investment income associated with investments in limited partnerships and private equity funds.

The EMEA segment business is well-poised to gain from higher business volume on new and existing treaties, increased volumes of closed longevity block business and higher investment income on fixed-income securities and lifetime mortgages.

In December 2021, Reinsurance Group completed the longevity reinsurance transaction with Aegon Netherlands to enhance the growth in the longevity business in continental Europe.

Reinsurance Group boasts a solid capital position and sufficient financial flexibility. RGA’s excess capital position at third-quarter end was around $1 billion. Moreover, the insurer has access to an $850 million syndicated revolving credit facility. Leverage ratios remained well within the targeted range.

Given its prudent capital management policy, Reinsurance Group undertakes shareholder-friendly moves. In the third quarter of 2021, it approved a dividend hike of 4%. RGA deployed $140 million into in-force transactions and repurchased shares for $46 million. Also, the life insurer generated $94 million of capital through an asset-intensive retrocession transaction that enhanced the returns.

The insurer’s global platform, robust balance sheet and effective capital management strategy have played an important role in driving its success and positions it well for profitable growth.

Stocks to Consider

Some better-ranked stocks from the insurance space are Brighthouse Financial BHF, CNO Financial Group CNO and First American Financial FAF, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brighthouse Financial’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 67.61%. In the past year, Brighthouse Financial has surged 37.9%. The Zacks Consensus Estimate for BHF’s 2022 earnings has moved 0.6% north in the past 60 days.

CNO Financial’s earnings surpassed estimates in three of the last four quarters, the average beat being 13.19%. In the past year, CNO has gained 6.4%. The Zacks Consensus Estimate for CNO Financial’s 2022 earnings has moved 2% north in the past 60 days.

First American’s earnings surpassed The Zacks Consensus Estimate in each of the last four quarters, the average beat being 29.19%. In the past year, First American has rallied 44.9%. The Zacks Consensus Estimate for FAF’s 2022 earnings has moved 0.4% north in the past 30 days.


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