Here's Why Reinsurance Group (RGA) is Investors' Favorite Now
Reinsurance Group of America, Incorporated’s RGA shares have gained 15.5% in a year, outperforming the industry’s increase of 11.3% and the Finance sector’s rise of 8.5%. With a market capitalization of $11 billion, the average volume of shares traded in the last three months was 0.4 million.
Increase in new business volumes, improved pricing, favorable longevity experience, stronger invested asset base, business expansion in the pension risk transfer market, a solid in-force business and effective capital deployment continue to drive this Zacks Rank #1 (Strong Buy) insurer.
This leading global provider of traditional life and health reinsurance and financial solutions has a decent surprise history, delivering an earnings surprise in the three reported quarters of 2023. Earnings of this insurer increased 5.8% in the last five years, outperforming the industry average of 2.1%.
The Zacks Consensus Estimate for 2024 earnings has moved up 1.1% in the past 60 days, reflecting analysts’ optimism.
Return on equity, reflecting how efficiently a company is utilizing shareholders’ funds, is 17.4%, better than the industry average of 14.8%.
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Will the Bull Run Continue?
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.
The Zacks Consensus Estimate for RGA’s 2024 earnings per share is pegged at $19.02, while the same for revenues is $18.6 billion.
RGA’s solid capital position with excess capital of around $1.1 billion offers sufficient financial flexibility and supports effective capital deployment. The insurer raised its dividend by 6.3% in August 2023. It also has $200 million remaining under its authorization.
The stock is trading at a price-to-book value of 1.4, lower than the industry average of 1.7. It has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B and a Zacks Rank #1 or 2 (Buy) offer better returns.
Other Stocks to Consider
Some other top-ranked stocks from the insurance space are Manulife Financial Corporation MFC, Primerica PRI and Sun Life Financial SLF, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Manulife delivered a trailing four-quarter average earnings surprise of 6.66%. The stock has gained 12.5% in a year. The Zacks Consensus Estimate for MFC’s 2024 earnings has moved 3 cents higher in the past 60 days.
Primerica delivered a trailing four-quarter average earnings surprise of 7.87%. The stock has surged 45% in a year. The Zacks Consensus Estimate for PRI’s 2024 earnings has moved 0.3% higher in the past seven days.
Sun Life delivered a trailing four-quarter average earnings surprise of 3.98%. The stock has lost 5.5% in a year. The Zacks Consensus Estimate for SLF’s 2024 earnings has moved 0.8% higher in the past 30 days.
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Manulife Financial Corp (MFC) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Primerica, Inc. (PRI) : Free Stock Analysis Report
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
