On Oct 3, 2016, we issued an updated research report on Reinsurance Group of America Inc. (RGA - Analyst Report) .
Reinsurance Group is one of the leading providers of traditional individual and group life, asset-intensive, critical illness and financial reinsurance in the U.S. and Latin America. The insurer is expected to generate long-term earnings on the back of significant value of in-force business.
Its sizable block of in-force business is expected to fuel future earnings in Canada. Reinsurance Group expects longevity insurance, which will likely see steady demand ahead, to experience long-term growth in the Canadian market. The company has been holding a large market share in the Canadian market for the seventh consecutive year now. Solid growth rates of 5–8% for premiums and 8–10% for earnings are expected from this segment by 2016.
Its international presence, including a significant foothold in Hong Kong, Japan, India, Korea and Taiwan, contribute to about one third to Reinsurance Group’s top line.
The Zacks Rank #3 (Hold) life insurer has been able to maintain its financial flexibility, which will allow it to continue with the healthy capital management, thereby boosting its profitability. The company expects to deploy $300 million to $400 million of excess capital, on an average, annually.
Riding on these positives, the Zacks Consensus Estimate for earnings inched up 1.1% to $9.55 in 2016 and 0.6% to $9.88 in 2017. The expected long-term growth rate is currently pegged at 9%.
However, the Australian business, which is presently underperforming due to competitive direct and reinsurance markets, complex product designs, weakening claims experience, imparts volatility to its operational results and will continue to do so in the near future.
Currency exchange fluctuations and evolving capital requirements are other near-term headwinds.
Stocks to Consider
Some better-ranked life insurers include (HIIQ - Snapshot Report) , GWG Holdings, Inc (GWGH - Snapshot Report) and Genworth Financial, Inc. (GNW - Analyst Report) .
Health Insurance Innovations, a purchaser of life insurance policies in the secondary market in the U.S., has seen the Zacks Consensus Estimate inch up 1.6% for 2016 and 10.9% for 2017. The insurer sports Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Primerica, a distributor of financial products to middle income households in the U.S. and Canada, has seen the Zacks Consensus Estimate increase 4% for 2016 and 2% for 2017. The stock carries Zacks Rank #2 (Buy).
Genworth Financial , a provider of various products in life insurance and lifestyle protection, long-term care insurance, annuities, asset management and mortgage insurance through financial intermediaries, advisors, independent distributors and sales specialists, has seen the Zacks Consensus Estimate gained 8.75% for 2016 and 15% for 2017. The company carries Zacks Rank #2.
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