Reinsurance Group (RGA) Up 43.3% in a Year: More Room to Run?

Reinsurance Group of America, Incorporated's RGA shares have rallied 43.3% in a year compared with the industry's growth of 30.7%. The Finance sector and the Zacks S&P 500 index have gained 26.1% and 27.7% in the said time frame, respectively. With a market capitalization of $12.68 billion, the average volume of shares traded in the last three months was 0.3 million.

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The rally was largely driven by new business volumes, favorable longevity experience, stronger invested asset base, business expansion in the pension risk transfer market and effective capital deployment.
This Zacks Rank #3 (Hold) life insurer delivered a four-quarter average earnings surprise of 24.39%.
Reinsurance Group has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Will the Bull Run Continue?

The Zacks Consensus Estimate for Reinsurance Group's 2025 earnings per share indicates a year-over-year increase of 8.8% from the consensus estimate of 2024. The consensus estimate for revenues is pegged at $20.04 billion, implying a year-over-year improvement of 5.5% from the consensus mark of 2024.
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 0.4% and 0.2% north, respectively, in the past 30 days, reflecting analysts' optimism on the stock.
Its compelling product portfolio and operational expertise help Reinsurance Group maintain its leadership position in the United States, Latin America and Canada.
Significant value embedded in the in-force business helps generate predictable long-term earnings. Product line expansion not only contributes to risk diversification and matured individual mortality but also provides a base for stable earnings and capital generation.
Reinsurance Group's longevity insurance provides a source of diversified income and acts as a hedge to a large mortality position. Increasing demand for longevity insurance poises it well for long-term growth.
Life insurers are direct beneficiaries of an improving interest rate environment. Though the Fed has stalled rate increases for some time, it has already made 11 hikes since 2022.
A high-quality investment portfolio and the company's diversified business across asset classes, sectors, issuers and geography are positives.
RGA's solid capital position with excess capital of around $1 billion offers sufficient financial flexibility and supports effective capital deployment.
Reinsurance Group expects to remain active in deploying capital into attractive growth opportunities in organic flow and in-force block transactions and returning excess capital to shareholders through dividends and share repurchases. On Jan 23, 2024, the company's board authorized a share repurchase program for up to $500 million of RGA's outstanding common stock.
ROE is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. In the fourth quarter of 2023, adjusted operating return on equity (excluding accumulated other comprehensive income) was 14.5%, which expanded 400 basis points year over year. This shows the company's relative efficiency in managing shareholders' funds.

Stocks to Consider

Some better-ranked stocks from the life insurance industry are Manulife Financial Corp. MFC, Primerica, Inc. PRI and Sun Life Financial Inc. SLF, each carrying a Zacks Rank #2 (Buy) at present.
Manulife Financial delivered a four-quarter average earnings surprise of 7.01%. In the past year, MFC has gained 34.4%.
The Zacks Consensus Estimate for MFC's 2024 and 2025 earnings implies year-over-year growth of 5.4% and 9.7%, respectively, from the consensus estimate of the corresponding years.
Primerica beat earnings estimates in three of the last four quarters and missed in one, the average being 3.10%. In the past year, PRI has rallied 47.6%.
The Zacks Consensus Estimate for PRI's 2024 and 2025 earnings implies year-over-year growth of 10.4% and 10%, respectively, from the consensus estimate of the corresponding years.
Sun Life beat earnings estimates in three of the last four quarters and matched in one, the average being 3.32%. In the past year, SLF has gained 15.3%.
The Zacks Consensus Estimate for SLF's 2024 and 2025 earnings implies year-over-year growth of 8% and 7.3%, respectively, from the consensus estimate of the corresponding years.

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