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Reasons Why You Should Retain Reinsurance Group (RGA) Stock

·4 min read

Reinsurance Group of America, Incorporated RGA should continue to benefit from growth in its invested asset base, organic growth in Asia, higher business volume and a solid capital position.

Growth Projections

The Zacks Consensus Estimate for Reinsurance Group’s 2022 and 2023 earnings per share is pegged at $10.22 and $15.25, indicating a year-over-year increase of 804.4% and 49.3%, respectively.

Estimate Revision

The Zacks Consensus Estimate for 2022 and 2023 has moved 15.9% and 3.2% north, respectively in the past 60 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 7.1% year to date against the industry’s decrease of 11.7%.

Zacks Investment Research
Zacks Investment Research


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 Asia Pacific business is likely to improve on the back of contributions from new single premium asset-intensive transactions, growth in invested asset base and organic growth in Asia. Favorable experience and strong growth in new business are also likely to boost this business segment.

The U.S. Asset-Intensive business should continue to gain from higher transaction and other fees, favorable longevity experience and equity markets as well as higher variable investment income from commercial loan prepayments.

The EMEA segment 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.

In February 2022, Reinsurance Group completed the longevity reinsurance transaction with NN Life, the largest life insurance company in the Netherlands, to enhance the growth of the longevity 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. 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.

Stocks to Consider

Some better-ranked stocks in the insurance industry are HCI Group, Inc. HCI, American Financial Group, Inc. AFG and Brighthouse Financial, Inc. BHF. While HCI Group and American Financial sport a Zacks Rank #1 (Strong Buy), Brighthouse Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 60 days. In the past year, HCI Group’s stock has lost 29.9%.

The Zacks Consensus Estimate for HCI’s 2022 and 2023 earnings per share indicates a year-over-year increase of 280.9% and 75%, respectively.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has gained 12.7%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 60 days.

Brighthouse Financial’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 55.91%. In the past year, BHF's stock has lost 20.9%.

The Zacks Consensus Estimate for BHF’s 2022 and 2023 earnings has moved 4.3% and 0.6% north, respectively, in the past 30 days.


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Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
 
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Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
 
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