Reinsurance Group (RGA) Up 12.6% in a Year: More Room to Run?
Shares of Reinsurance Group of America, Incorporated RGA have gained 34% in a year against the industry's decline of 2.1%. The Zacks S&P 500 composite has decreased 8.5% in the said time frame. With a market capitalization of $9.8 billion, the average volume of shares traded in the last three months was 0.4 million.
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The rally was largely driven by higher new business volumes of closed longevity business, favorable claims experience and a higher invested asset base.
This Zacks Rank #3 (Hold) insurer has a solid track record of beating earnings estimates in three of the last four quarters and missed in one, the average being 87.90%.
Reinsurance Group has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Will the Bull Run Continue?
The Zacks Consensus Estimate for Reinsurance Group’s 2023 earnings is pegged at $15.81, indicating a 9.5% increase from the year-ago reported figure on 3.6% higher revenues of $17.38 billion. The consensus estimate for 2024 earnings is pegged at $17.05, indicating a 7.8% increase from the year-ago reported figure on 4.8% higher revenues of $18.22 billion.
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 gain from the 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 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.
Return on equity is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. Reinsurance Group’s return on equity of 9.2% expanded 1630 basis points year over year.
The life insurer boasts a strong balance sheet with a stable capital mix. RGA exited the fourth quarter of 2022 with excess capital of around $1.2 billion.
Reinsurance Group undertakes shareholder-friendly moves on the back of its solid financial strength. In 2022, it deployed $430 million into in-force and other transactions and returned $280 million of capital to shareholders through share repurchases and dividends. This quarter highlights the balanced approach to capital management and ability to deploy capital into transactions and return capital through share repurchases and dividends. In 2022, RGA repurchased shares for $75 million.
The Zacks Consensus Estimate for 2023 and 2024 has moved 2.1% and 2.3% north, respectively, in the past 60 days, reflecting analysts’ optimism on the stock.
Stocks to Consider
Some better-ranked stocks from the life insurance industry are Brighthouse Financial, Inc. BHF, Manulife Financial Corp MFC and Sun Life Financial Inc. SLF, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Brighthouse Financial’s earnings surpassed estimates in three the last four quarters and missed in one, the average being 2.07%. In the past year, BHF has gained 9%.
The Zacks Consensus Estimate for BHF’s 2023 and 2024 earnings implies a respective year-over-year rise of 24.7% and 12.5%.
The Zacks Consensus Estimate for Manulife Financial’s 2023 and 2024 earnings implies a respective year-over-year rise of 0.8% and 9.27%. In the past year, the insurer has gained 0.1%.
The Zacks Consensus Estimate for MFC’s 2023 and 2024 earnings has moved 1.2% and 1.5% north, respectively, in the past seven days.
Sun Life Financial delivered a trailing four-quarter average earnings surprise of 9.14%. In the past year, SLF has lost 4.9%.
The Zacks Consensus Estimate for SLF’s 2024 earnings implies a year-over-year rise of 11.6%.
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Manulife Financial Corp (MFC) : Free Stock Analysis Report
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