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Here's Why You Should Hold Reinsurance Group (RGA) Stock Now
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Reinsurance Group of America, Incorporated (RGA - Free Report) has been benefiting from higher new business volumes, favorable longevity experience, stronger invested asset base, improved risk-free rates earned on new investments and robust balance sheet.
Growth Projections
The Zacks Consensus Estimate for Reinsurance Group’s 2023 earnings is pegged at $18.13 per share, indicating a 25.6% increase from the year-ago reported figure on 4.6% higher revenues of $17.54 billion. The consensus estimate for 2024 earnings is pegged at $18.26 per share, indicating 0.6% growth from the year-ago reported figure on 4.9% higher revenues of $18.41 billion.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 2.6% and 1.3% north, respectively, in the past 30 days, reflecting analysts’ optimism on the stock.
Earnings Surprise History
The life insurer has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 30.5%.
Zacks Rank & Price Performance
Reinsurance Group currently carries a Zacks Rank #3 (Hold). The stock has gained 10.9% in the past year, outperforming the industry’s rise of 6.4%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
ROE is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. RGA’s ROE of 20.4% expanded 1,733 basis points year over year. In the second quarter of 2023, adjusted operating return on equity, excluding accumulated other comprehensive income, was 13%. This shows the company’s relative efficiency in managing shareholders’ funds.
Business Tailwinds
Solid performance at its U.S. and Latin America, Canada, Europe, Middle East and Africa (EMEA) 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 grow from higher transaction and other fees, favorable longevity experience and equity markets as well as higher variable investment income from commercial loan prepayments.
The Canada business should continue to gain from stronger business volume under existing treaties, increased variable investment income and a higher invested asset base.
RGA’s net investment income has been improving over the years. Riding on higher average invested asset base, stronger risk-free rates earned on new investments, improved variable investment income associated with joint venture and limited partnership investments, the metric is likely to increase in the long run. An improving interest rate environment should add to the upside.
Reinsurance Group boasts a strong balance sheet with a stable capital mix. RGA exited the first half of 2023 with excess capital of around $1.2 billion.
The life insurer has also been managing capital effectively via share buybacks, dividend payments and prudent investments. RGA’s capital deployment highlights balanced approach to capital management and ability to deploy capital into transactions and return capital through share repurchases and dividends. In August 2023, it increased the quarterly dividend by 6.3%.
Arch Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 26.83%. In the past year, ACGL has rallied 61.4%.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings per share is pegged at $6.73 and $7.43, indicating a year-over-year increase of 38.1% and 10.4%, respectively.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. In the past year, AXS has gained 1.5%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Kinsale Capital beat estimates in each of the last four quarters, the average being 14.88%. In the past year, KNSL has rallied 46.3%.
The Zacks Consensus Estimate for 2023 and 2024 has moved 8.5% and 7.8% north, respectively, in the past 30 days, reflecting analysts’ optimism.
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Here's Why You Should Hold Reinsurance Group (RGA) Stock Now
Reinsurance Group of America, Incorporated (RGA - Free Report) has been benefiting from higher new business volumes, favorable longevity experience, stronger invested asset base, improved risk-free rates earned on new investments and robust balance sheet.
Growth Projections
The Zacks Consensus Estimate for Reinsurance Group’s 2023 earnings is pegged at $18.13 per share, indicating a 25.6% increase from the year-ago reported figure on 4.6% higher revenues of $17.54 billion. The consensus estimate for 2024 earnings is pegged at $18.26 per share, indicating 0.6% growth from the year-ago reported figure on 4.9% higher revenues of $18.41 billion.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 2.6% and 1.3% north, respectively, in the past 30 days, reflecting analysts’ optimism on the stock.
Earnings Surprise History
The life insurer has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 30.5%.
Zacks Rank & Price Performance
Reinsurance Group currently carries a Zacks Rank #3 (Hold). The stock has gained 10.9% in the past year, outperforming the industry’s rise of 6.4%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
ROE is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. RGA’s ROE of 20.4% expanded 1,733 basis points year over year. In the second quarter of 2023, adjusted operating return on equity, excluding accumulated other comprehensive income, was 13%. This shows the company’s relative efficiency in managing shareholders’ funds.
Business Tailwinds
Solid performance at its U.S. and Latin America, Canada, Europe, Middle East and Africa (EMEA) 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 grow from higher transaction and other fees, favorable longevity experience and equity markets as well as higher variable investment income from commercial loan prepayments.
The Canada business should continue to gain from stronger business volume under existing treaties, increased variable investment income and a higher invested asset base.
RGA’s net investment income has been improving over the years. Riding on higher average invested asset base, stronger risk-free rates earned on new investments, improved variable investment income associated with joint venture and limited partnership investments, the metric is likely to increase in the long run. An improving interest rate environment should add to the upside.
Reinsurance Group boasts a strong balance sheet with a stable capital mix. RGA exited the first half of 2023 with excess capital of around $1.2 billion.
The life insurer has also been managing capital effectively via share buybacks, dividend payments and prudent investments. RGA’s capital deployment highlights balanced approach to capital management and ability to deploy capital into transactions and return capital through share repurchases and dividends. In August 2023, it increased the quarterly dividend by 6.3%.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Arch Capital Group Ltd. (ACGL - Free Report) , Axis Capital Holdings Limited (AXS - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 26.83%. In the past year, ACGL has rallied 61.4%.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings per share is pegged at $6.73 and $7.43, indicating a year-over-year increase of 38.1% and 10.4%, respectively.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. In the past year, AXS has gained 1.5%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Kinsale Capital beat estimates in each of the last four quarters, the average being 14.88%. In the past year, KNSL has rallied 46.3%.
The Zacks Consensus Estimate for 2023 and 2024 has moved 8.5% and 7.8% north, respectively, in the past 30 days, reflecting analysts’ optimism.