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Reasons Why Reinsurance Group (RGA) Stock is a Solid Pick Now
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Reinsurance Group of America, Incorporated’s (RGA - Free Report) has been favored by investors on the back of its higher variable investment income, favorable longevity experience, and sufficient liquidity position.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $9.48 and $14.13, indicating year-over-year increase of 25.7% and 48.98%, respectively.
Estimate Revision
The Zacks Consensus Estimate for 2021 and 2022 has moved 21.5% and 0.8% north, respectively in the past 30 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Reinsurance Group currently carries a Zacks Rank #2 (Buy). The stock has rallied 23.8% in the past year, outperforming the industry’s increase of 2.9%.
Image Source: Zacks Investment Research
Style Score
Reinsurance Group is well poised for progress, as is evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Also, it has an impressive Value Score of A. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space.
Business Tailwinds
Reinsurance Group’s performance has been improving over the past several years, attributable to premium growth at its U.S. and Latin America, Canada operations, Europe, Middle East and Africa and Asia Pacific segments.
Its Asia Pacific business is likely to improve on the back of higher investment income, net and investment related gains, favorable claims experience in Asia, and continued growth of Financial Solutions Reinsurance in Asia.
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 business is well-poised to gain from favorable longevity experience, increase in business volume on new and existing treaties and higher net premiums.
Following the success of the U.K vaccination program and the expectation of low COVID-19 deaths through the rest of the year, Reinsurance Group expects more modest longevity benefits in the future quarters.
With the rollout of the vaccine in all the markets of the United States, the U.K. and Canada, the life insurer expects COVID-19 claims to decline in the second half of the year.
The life insurer boasts a strong balance sheet with a stable capital mix and continued to hold a high level of liquidity with access to $850 million syndicated credit facility and other sources and has excess capital position of $1.2 billion. Leverage ratios were well within their targeted ranges.
Furthermore, in the third quarter of 2021, it approved a dividend hike of 4% and lifted the suspension of the share buybacks as well.
Athene has a trailing four-quarter earnings surprise of 47.47%, on average.
Voya Financial’s earnings surpassed estimates in two of the last four quarters (missing the mark in the other two), the average beat being 9.13%.
Primerica’s bottom line surpassed estimates in three of the last four quarters (missing expectations in the remaining one), the average beat being 7.55%.
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Reasons Why Reinsurance Group (RGA) Stock is a Solid Pick Now
Reinsurance Group of America, Incorporated’s (RGA - Free Report) has been favored by investors on the back of its higher variable investment income, favorable longevity experience, and sufficient liquidity position.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $9.48 and $14.13, indicating year-over-year increase of 25.7% and 48.98%, respectively.
Estimate Revision
The Zacks Consensus Estimate for 2021 and 2022 has moved 21.5% and 0.8% north, respectively in the past 30 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Reinsurance Group currently carries a Zacks Rank #2 (Buy). The stock has rallied 23.8% in the past year, outperforming the industry’s increase of 2.9%.
Image Source: Zacks Investment Research
Style Score
Reinsurance Group is well poised for progress, as is evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Also, it has an impressive Value Score of A. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space.
Business Tailwinds
Reinsurance Group’s performance has been improving over the past several years, attributable to premium growth at its U.S. and Latin America, Canada operations, Europe, Middle East and Africa and Asia Pacific segments.
Its Asia Pacific business is likely to improve on the back of higher investment income, net and investment related gains, favorable claims experience in Asia, and continued growth of Financial Solutions Reinsurance in Asia.
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 business is well-poised to gain from favorable longevity experience, increase in business volume on new and existing treaties and higher net premiums.
Following the success of the U.K vaccination program and the expectation of low COVID-19 deaths through the rest of the year, Reinsurance Group expects more modest longevity benefits in the future quarters.
With the rollout of the vaccine in all the markets of the United States, the U.K. and Canada, the life insurer expects COVID-19 claims to decline in the second half of the year.
The life insurer boasts a strong balance sheet with a stable capital mix and continued to hold a high level of liquidity with access to $850 million syndicated credit facility and other sources and has excess capital position of $1.2 billion. Leverage ratios were well within their targeted ranges.
Furthermore, in the third quarter of 2021, it approved a dividend hike of 4% and lifted the suspension of the share buybacks as well.
Other Key Players
Some other top-ranked players in the multi-line insurance industry are Athene Holding Ltd. , Voya Financial, Inc. (VOYA - Free Report) and Primerica, Inc. (PRI - Free Report) , each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Athene has a trailing four-quarter earnings surprise of 47.47%, on average.
Voya Financial’s earnings surpassed estimates in two of the last four quarters (missing the mark in the other two), the average beat being 9.13%.
Primerica’s bottom line surpassed estimates in three of the last four quarters (missing expectations in the remaining one), the average beat being 7.55%.