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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) should continue to benefit from higher new business volumes, favorable longevity experience, stronger invested asset base, improved risk-free rates earned on new investments and a robust balance sheet.
Growth Projections
The Zacks Consensus Estimate for Reinsurance Group’s 2023 earnings is pegged at $18.98 per share, indicating a 31.5% increase from the year-ago reported figure on 8% higher revenues of $18.11 billion.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 4.5% and 1.2% 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 two of the last four quarters while missing in the other two, the average being 18.81%.
Zacks Rank & Price Performance
RGA currently carries a Zacks Rank #3 (Hold). The stock has gained 16.9% in the past year, outperforming the industry’s rise of 9.5%.
Image Source: Zacks Investment Research
Style Score
RGA has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on Equity (ROE)
ROE is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. RGA’s ROE of 17.4% expanded 820 basis points (bps) year over year. In the third quarter of 2023, adjusted operating return on equity (excluding accumulated other comprehensive income) was 14.7%, which expanded 550 bps year over year. 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 third quarter of 2023 with excess capital of around $1.1 billion.
The life insurer has also been managing capital effectively via share buybacks, dividend payments and prudent investments. RGA’s capital deployment highlights a balanced approach to capital management and the ability to deploy capital into transactions and return capital through share repurchases and dividends.
American Equity has a solid track record of beating earnings estimates in two of the last four quarters and missing in the other two, the average being 13.53%. In the past year, AEL’s shares have gained 46.8%.
The Zacks Consensus Estimate for AEL’s 2023 and 2024 earnings per share indicates a year-over-year increase of 86.9% and 2.1%, respectively.
Primerica has a solid track record of beating earnings estimates in each of the last four quarters, the average being 7.84%. In the past year, PRI’s shares have gained 50.1%.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share indicates a year-over-year increase of 39.8% and 9.5%, respectively.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 earnings per share indicates a year-over-year increase of 77.8% and 40.9%, respectively. In the past year, GOCO’s shares have surged 89.1%.
The Zacks Consensus Estimate for GOCO’s 2023 and 2024 revenues indicates a year-over-year increase of 29.9% and 8.5%, respectively.
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Here's Why You Should Hold Reinsurance Group (RGA) Stock Now
Reinsurance Group of America, Incorporated (RGA - Free Report) should continue to benefit from higher new business volumes, favorable longevity experience, stronger invested asset base, improved risk-free rates earned on new investments and a robust balance sheet.
Growth Projections
The Zacks Consensus Estimate for Reinsurance Group’s 2023 earnings is pegged at $18.98 per share, indicating a 31.5% increase from the year-ago reported figure on 8% higher revenues of $18.11 billion.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 4.5% and 1.2% 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 two of the last four quarters while missing in the other two, the average being 18.81%.
Zacks Rank & Price Performance
RGA currently carries a Zacks Rank #3 (Hold). The stock has gained 16.9% in the past year, outperforming the industry’s rise of 9.5%.
Image Source: Zacks Investment Research
Style Score
RGA has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on Equity (ROE)
ROE is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. RGA’s ROE of 17.4% expanded 820 basis points (bps) year over year. In the third quarter of 2023, adjusted operating return on equity (excluding accumulated other comprehensive income) was 14.7%, which expanded 550 bps year over year. 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 third quarter of 2023 with excess capital of around $1.1 billion.
The life insurer has also been managing capital effectively via share buybacks, dividend payments and prudent investments. RGA’s capital deployment highlights a balanced approach to capital management and the ability to deploy capital into transactions and return capital through share repurchases and dividends.
Stocks to Consider
Some better-ranked stocks from the insurance industry are American Equity Investment Life Holding Company (AEL - Free Report) , Primerica, Inc. (PRI - Free Report) and GoHealth, Inc. (GOCO - 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.
American Equity has a solid track record of beating earnings estimates in two of the last four quarters and missing in the other two, the average being 13.53%. In the past year, AEL’s shares have gained 46.8%.
The Zacks Consensus Estimate for AEL’s 2023 and 2024 earnings per share indicates a year-over-year increase of 86.9% and 2.1%, respectively.
Primerica has a solid track record of beating earnings estimates in each of the last four quarters, the average being 7.84%. In the past year, PRI’s shares have gained 50.1%.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share indicates a year-over-year increase of 39.8% and 9.5%, respectively.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 earnings per share indicates a year-over-year increase of 77.8% and 40.9%, respectively. In the past year, GOCO’s shares have surged 89.1%.
The Zacks Consensus Estimate for GOCO’s 2023 and 2024 revenues indicates a year-over-year increase of 29.9% and 8.5%, respectively.