Reasons Why Reinsurance Group (RGA) Stock is a Solid Pick Now
Reinsurance Group of America, Incorporated RGA has been gaining momentum on the back of solid segmental performance, growth of Financial Solutions Reinsurance, favorable claims experience and higher invested asset base.
Growth Projections
The Zacks Consensus Estimate for Reinsurance Group’s 2023 earnings is pegged at $17.77, indicating a 23.1% increase from the year-ago reported figure on 5.5% higher revenues of $17.70 billion. The consensus estimate for 2024 earnings is pegged at $18.10, indicating a 1.8% increase from the year-ago reported figure on 4.8% higher revenues of $18.55 billion.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.1% and 0.6% north, respectively, in the past 30 days, reflecting analysts’ optimism on the stock.
Earnings Surprise History
The life insurer has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 56.92%.
Zacks Rank & Price Performance
Reinsurance Group currently sports a Zacks Rank #1 (Strong Buy). The stock has increased 15.9% in the past year, outperforming the industry’s rise of 9%.
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Style Score
RGA has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, 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 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. RGA’s ROE of 23.9% expanded 2230 basis points year over year. This shows the company’s relative efficiency in managing shareholders’ funds.
Business Tailwinds
Solid performance at its U.S. and Latin America, Canada, Europe, Middle East and Africa (EMEA) as well as the Asia Pacific segments is likely to drive Reinsurance Group.
The EMEA segment is well-poised to gain from higher investments supporting the annuity business and an increase in new business volumes of the closed longevity business.
The U.S. Asset-Intensive business should continue to grow from higher transaction and other fees, favorable longevity experience and equity markets as well as higher variable investment income from commercial loan prepayments.
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 benefits. 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.
The life insurer boasts a strong balance sheet with a stable capital mix. RGA exited the first quarter of 2023 with excess capital of around $1.4 billion.
Reinsurance Group undertakes shareholder-friendly moves on the back of its solid financial strength. The company increased its dividend at an eight-year (2016-2023) CAGR of 10.1%. In the first quarter of 2023, the insurer deployed $194 million into in-force and other transactions and bought back shares worth $50 million. This quarter highlights the balanced approach to capital management and ability to deploy capital into transactions and return capital through share repurchases and dividends.
Attractive Valuation
RGA shares are trading at a discount than the industry average. Its price-to-book value of 1.19X is lower than the industry average of 1.60X. Before the valuation expands, it is preferable to take a position in the stock.
Reinsurance Group has an impressive Value Score of A. Value stocks have a long history of showing superior returns.
Other Stocks to Consider
Some other top-ranked stocks from the life-insurance industry are Manulife Financial Corp MFC, Primerica, Inc. PRI and GoHealth, Inc. GOCO.
Manulife Financial has a decent track record of beating earnings surprise in three of the last four quarters, while missing once, the average beat being 1.6%. In the past year, MFC’s shares have gained 6.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for 2023 and 2024 earnings per share is pegged at $2.44 and $2.61, indicating an increase of 2.5% and 7.2% year over year, respectively. MFC carries a Zacks Rank #2 at present.
Primerica’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, while missing in one. PRI carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share indicates a year-over-year increase of 34% and 11.5%, respectively. In the past year, PRI’s shares have gained 62.8%.
GoHealth’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters and missed the other two. Currently, GOCO carries a Zacks Rank #2.
The Zacks Consensus Estimate for GOCO’s 2023 and 2024 earnings per share indicates a year-over-year increase of 73.1% and 12.2%, respectively. In the past year, GOCO’s shares have surged 115.2%.
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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
GoHealth, Inc. (GOCO) : Free Stock Analysis Report
