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Reinsurance Group (RGA) Banks on Premiums Amid Cost Woes

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·3 min read
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Reinsurance Group of America, Incorporated RGA is well-poised for growth, driven by favorable limited partnership performance, organic growth, new sales and sufficient liquidity position.

The life insurer’s premium growth is expected to gain from growth in life reinsurance in force, new sales, new individual life business production, increase in in-force business, new in-force block transaction and new asset-intensive transactions in Asia.

The Asia Pacific business is likely to improve on the back of favorable underwriting experience across most of the region, approach to new business, organic growth and favorable experience on existing treaties.

Considering favorable limited partnership investments performance, variable investment income is likely to improve in the long run.

Higher variable investment income and strong equity markets benefited the asset intensive business.

It boasts a strong balance sheet with a stable capital mix. Leverage ratios are well within its targeted ranges. Its excess capital position at first-quarter end was around $1.2 billion. Moreover, it has access to $850 million syndicated credit facility and other sources.

Given its prudent capital management policy, Reinsurance Group undertakes shareholder-friendly moves via dividend hikes and share buybacks. Its dividend payments have witnessed a seven-year CAGR (2014-2021) of 12.9%.

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

However, the company’s expenses escalated over the last several years due to higher claims and other policy benefits and policy acquisition costs and other insurance expenses. A persistent elevation of expenses might weigh on its margins.

Other Insurers

Some other stocks from the life insurance sector include Manulife Financial Corp MFC, Athene Holding Ltd. ATH and Brighthouse Financial, Inc. BHF.

Manulife Financial beat estimates in the trailing four quarters by 13.01%, on average.

Athene beat estimates in the trailing four quarters by 43.49%, on average.

Brighthouse Financial bottom line surpassed estimates in three of the last four quarters and missed in one, the average beat being 16.44%.

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Manulife Financial Corp (MFC) : Free Stock Analysis Report
 
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
 
Athene Holding Ltd. (ATH) : Free Stock Analysis Report
 
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
 
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