RGA - Reinsurance Group Of America: Favorable Tailwinds Can Support A Higher Valuation
2024-05-28 23:25:52 ET
Summary
- Reinsurance Group of America has generated strong performance, rising over 40% in the past year.
- RGA's unique business mix focused on life and health has differentiated it from other reinsurance companies who have more catastrophe risk.
- The company's recent earnings report showed strong growth in adjusted EPS and net premiums, driven by a large pension-risk transfer deal.
- While shares are 10x earnings, declining mortality costs could enable it to outperform its ROE target, giving shares more upside.
Reinsurance Group of America ( RGA ) has been a strong performer over the past year, rising over 40%. While catastrophe risk has kept me generally cautious on the reinsurance sector as a whole, RGA has a unique business mix, focused in life and health, which has differentiated it. I last covered shares of RGA in January , rating the stock a buy. Since that recommendation, the stock has rallied by about 27%, about double the S&P 500’s return. Shares are now nearly at my $210 upside price target, though earnings are likely to be stronger than I anticipated. Given this rally, now is a good time to re-evaluate my buy recommendation. A key part of investing is knowing when to “stick with winners,” and RGA is a name I continue to like....
Reinsurance Group Of America: Favorable Tailwinds Can Support A Higher Valuation