Yahoo Finance Reinsurance Group (RGA) Up 11.5% in a Year: Will the Rally Last?
Shares of Reinsurance Group of America, Incorporated RGA have gained 11.5% in a year against the industry's decline of 3.2%. The Zacks S&P 500 composite has increased 1% in the said time frame. With a market capitalization of $9.3 billion, the average volume of shares traded in the last three months was 0.4 million.
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The rally was largely driven by continued growth of Financial Solutions Reinsurance, higher variable investment income, favorable longevity experience and financial flexibility.
This Zacks Rank #1 (Strong Buy) insurer has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 56.92%.
Reinsurance Group has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities in the value investing space.
Will the Bull Run Continue?
The Zacks Consensus Estimate for Reinsurance Group’s 2023 earnings is pegged at $17.74, indicating a 22.9% increase from the year-ago reported figure on 5.6% higher revenues of $17.71 billion. The consensus estimate for 2024 earnings is pegged at $17.99, indicating a 1.4% increase from the year-ago reported figure on 4.4% higher revenues of $18.50 billion.
Solid performance at its U.S. and Latin America, Canada, Europe, Middle East and Africa (EMEA) as well as the Asia Pacific 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 gain from higher transaction and other fees, favorable longevity experience and equity markets as well as higher variable investment income from commercial loan prepayments.
Its Asia Pacific business is likely to gain from favorable claims experience, the continued growth of Financial Solutions Reinsurance, higher investment income and investment-related gains. Contributions from recently executed asset-intensive transactions in Asia should benefit the top line of the Asia Pacific business.
The Canada business should continue to gain from higher business volume under existing treaties, increased variable investment income and a higher invested asset base.
Return on equity is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. Reinsurance Group’s return on equity of 23.9% expanded 2230 basis points year over year. This shows the company’s relative efficiency in managing shareholders’ funds.
The life insurer boasts a strong balance sheet with a stable capital mix. RGA exited the first quarter of 2023 with excess capital of around $1.4 billion.
Reinsurance Group undertakes shareholder-friendly moves on the back of its solid financial strength. RGA increased its dividend at an eight-year (2016-2023) CAGR of 10.1%. In the first quarter of 2023, the insurer deployed $194 million into in-force and other transactions and bought back shares worth $50 million. This quarter highlights the balanced approach to capital management and ability to deploy capital into transactions and return capital through share repurchases and dividends.
The Zacks Consensus Estimate for 2023 and 2024 has moved 11.4% and 3.1% north, respectively, in the past 30 days, reflecting analysts’ optimism on the stock.
Reinsurance Group has an impressive Value Score of A, reflecting an attractive valuation of the stock. The insurer currently has a trailing 12-month P/B ratio of 1.21, lower than the industry range of 1.54.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Kinsale Capital Group, Inc. KNSL, RLI Corp. RLI and Axis Capital Holdings Limited AXS. While Kinsale Capital and RLI Corp. sport a Zacks Rank #1, Axis Capital carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.77%. In the past year, KNSL has gained 34.1%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.37 and $12.41, indicating a year-over-year increase of 32.9% and 19.6%, respectively.
RLI Corp.’s earnings surpassed estimates in each of the last trailing four quarters, the average earnings surprise being 43.50%. In the past year, RLI Corp. has gained 2.4%.
The Zacks Consensus Estimate for RLI’s 2023 and 2024 earnings has moved 2.9% and 0.2% north, respectively, in the past 30 days.
Axis Capital beat estimates in three of the last trailing four quarters and missed in one, the average being 6.50%. The Zacks Consensus Estimate for 2023 has moved 0.5% north in the past 30 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.74 and $8.60, indicating a year-over-year increase of 33.2% and 11.1%, respectively. In the past year, AXS has lost 11.5%.
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Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
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