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Reinsurance Group (RGA) Gains 28% YTD: More Upside Left?
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Shares of Reinsurance Group of America, Incorporated (RGA - Free Report) have rallied 28.2% year to date compared with the industry’s increase of 13.7%. The Finance sector and the Zacks S&P 500 composite have declined 13.3% and 18%, respectively, in the same time frame. With a market capitalization of $9.4 billion, the average volume of shares traded in the last three months was about 0.4 million.
Better pricing and expanding business in the pension risk transfer market, solid in-force business ensuring predictable long-term earnings and effective capital deployment continue to drive this Zacks Rank #3 (Hold) insurer.
This leading global provider of traditional life and health reinsurance and financial solutions has a decent track record of beating estimates in three of the last four quarters. The Zacks Consensus Estimate for 2022 and 2023 bottom line has moved 4.7% and 0.5% north in the past 30 days, reflecting analyst optimism.
Image Source: Zacks Investment Research
RGA has a VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Can RGA Retain the Momentum?
The Zacks Consensus Estimate for Reinsurance Group’s 2022 earnings is pegged at $14.97, indicating more than the 13-fold increase on 3.8% higher revenues of $16.7 billion. The consensus estimate for 2023 earnings is pegged at $15.49, indicating an increase of 3.4% on 2.9% higher revenues of $17.2 billion. It has a Growth Score of B.
RGA boasts a leadership position in the U.S. and Latin American traditional market. Individual mortality has matured and provided a base for stable earnings and capital generation. Significant value embedded in the in-force business is anticipated to generate predictable long-term earnings. Product line expansion also contributes to risk diversification.
In Canada, Reinsurance Group is a market leader with solid growth and profitability. A sizable block of in-force business ensures a significant source of future earnings. Reinsurance Group expects longevity insurance to see long-term growth in the Canadian market, riding on steady demand. While longevity insurance provides a source of diversified income, it also acts as a hedge to a large mortality position.
Life insurers are direct beneficiaries of an improving interest rate environment. This year, the Fed has already raised six times. RGA’s high-quality investment portfolio is well-positioned as it remains diversified across asset classes, sectors, issuers and geography. Also, the improving interest rate environment should add to the upside.
RGA maintains a solid capital position providing sufficient financial flexibility and supporting effective capital deployment. The company exited the third quarter of 2022 with excess capital of around $1.3 billion. As of Sep 30, 2022, RGA maintained an $850 million syndicated revolving credit facility coupled with the committed letter of credit facilities aggregating $928 million.
While the insurer raised its dividend by 9.6% in August 2022, it bought back shares worth $25 million through the first nine months of 2022.
The bottom line of MGIC Investment surpassed estimates in each of the last four quarters, the average being 36.34%. Year to date, the insurer has lost 7.1%.
The Zacks Consensus Estimate for MTG’s 2022 earnings indicates a year-over-year increase of 49.7%. The expected long-term earnings growth rate is pegged at 5%.
Radian delivered a trailing four-quarter average earnings surprise of 45.10%. Year to date, RDN has lost 9%.
The Zacks Consensus Estimate for Radian’s 2022 earnings indicates a year-over-year increase of 49.5%. The expected long-term earnings growth rate is pegged at 5%.
EverQuote’s earnings surpassed estimates in each of the last four quarters, the average being 40.50%. Year to date, EVER has lost 29.4%.
The Zacks Consensus Estimate for EVER’s 2022 and 2023 earnings has moved 45.5% and 17.6% north in the past 30 days.
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Reinsurance Group (RGA) Gains 28% YTD: More Upside Left?
Shares of Reinsurance Group of America, Incorporated (RGA - Free Report) have rallied 28.2% year to date compared with the industry’s increase of 13.7%. The Finance sector and the Zacks S&P 500 composite have declined 13.3% and 18%, respectively, in the same time frame. With a market capitalization of $9.4 billion, the average volume of shares traded in the last three months was about 0.4 million.
Better pricing and expanding business in the pension risk transfer market, solid in-force business ensuring predictable long-term earnings and effective capital deployment continue to drive this Zacks Rank #3 (Hold) insurer.
This leading global provider of traditional life and health reinsurance and financial solutions has a decent track record of beating estimates in three of the last four quarters. The Zacks Consensus Estimate for 2022 and 2023 bottom line has moved 4.7% and 0.5% north in the past 30 days, reflecting analyst optimism.
Image Source: Zacks Investment Research
RGA has a VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Can RGA Retain the Momentum?
The Zacks Consensus Estimate for Reinsurance Group’s 2022 earnings is pegged at $14.97, indicating more than the 13-fold increase on 3.8% higher revenues of $16.7 billion. The consensus estimate for 2023 earnings is pegged at $15.49, indicating an increase of 3.4% on 2.9% higher revenues of $17.2 billion. It has a Growth Score of B.
RGA boasts a leadership position in the U.S. and Latin American traditional market. Individual mortality has matured and provided a base for stable earnings and capital generation. Significant value embedded in the in-force business is anticipated to generate predictable long-term earnings. Product line expansion also contributes to risk diversification.
In Canada, Reinsurance Group is a market leader with solid growth and profitability. A sizable block of in-force business ensures a significant source of future earnings. Reinsurance Group expects longevity insurance to see long-term growth in the Canadian market, riding on steady demand. While longevity insurance provides a source of diversified income, it also acts as a hedge to a large mortality position.
Life insurers are direct beneficiaries of an improving interest rate environment. This year, the Fed has already raised six times. RGA’s high-quality investment portfolio is well-positioned as it remains diversified across asset classes, sectors, issuers and geography. Also, the improving interest rate environment should add to the upside.
RGA maintains a solid capital position providing sufficient financial flexibility and supporting effective capital deployment. The company exited the third quarter of 2022 with excess capital of around $1.3 billion. As of Sep 30, 2022, RGA maintained an $850 million syndicated revolving credit facility coupled with the committed letter of credit facilities aggregating $928 million.
While the insurer raised its dividend by 9.6% in August 2022, it bought back shares worth $25 million through the first nine months of 2022.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are MGIC Investment Corporation (MTG - Free Report) , Radian Group Inc. (RDN - Free Report) and EverQuote (EVER - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The bottom line of MGIC Investment surpassed estimates in each of the last four quarters, the average being 36.34%. Year to date, the insurer has lost 7.1%.
The Zacks Consensus Estimate for MTG’s 2022 earnings indicates a year-over-year increase of 49.7%. The expected long-term earnings growth rate is pegged at 5%.
Radian delivered a trailing four-quarter average earnings surprise of 45.10%. Year to date, RDN has lost 9%.
The Zacks Consensus Estimate for Radian’s 2022 earnings indicates a year-over-year increase of 49.5%. The expected long-term earnings growth rate is pegged at 5%.
EverQuote’s earnings surpassed estimates in each of the last four quarters, the average being 40.50%. Year to date, EVER has lost 29.4%.
The Zacks Consensus Estimate for EVER’s 2022 and 2023 earnings has moved 45.5% and 17.6% north in the past 30 days.