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Reinsurance Group (RGA) Hits 52-Week High: Here’s Why


Shares of Reinsurance Group of America Inc. RGA have been on an uptrend (gaining 13.4%) since the company reported strong third-quarter results last month. In fact, the share price hit a new 52-week high of $122.97 on Nov 25. About 0.3 million shares exchanged hands in the last trading session and the stock finally closed at $122.53, up 0.51%.

Notably, the life insurer has outperformed the Zacks-categorized Life Insurance industry, year to date. Price of the stock appreciated 43.2% as against 1.23% gained by the industry.

Valuation is also attractive at present as the stock is currently trading at a forward P/E of 12.8x, a 9.9% discount to the industry average of 14.2x. On a price-to-book basis, shares are trading at 1.0x compared with the industry average of 1.7x. Reinsurance Group has a trailing 12-month return on equity (ROE) of 9%, substantially higher than the industry average of 7%.

Notably, the Zacks Consensus Estimate for 2016 too gained 1.2% in the last four weeks.

REINSURANCE GRP Price and Consensus


Is it Time to Add the stock to Your Portfolio?

Apart from favorable comparison with the industry and attractive valuation, this Zacks Rank #3 (Hold) life insurer delivered positive surprises in three of the last four quarters with an average beat of 8.6%. Reinsurance Group’s third-quarter operating earnings of $2.46 per share surpassed the Zacks Consensus Estimate by 6.1% and improved 29.5% year over year due to favorable experience in the group and individual health businesses.

Reinsurance Group continues to benefit from a mix of organic and transactional opportunities. This month, the insurers inked a reinsurance agreement with AXA France with commitments of nearly €1.3 billion. The company is poised to benefit from an improving life reinsurance pricing environment.

Reinsurance Group’s niche position in the U.S. and Canadian reinsurance markets and the expansion of its international operations and diversified earnings stream position it well for long-term growth. The expected long-term earnings growth is currently pegged at 9%.

Stocks to Consider

Some better-ranked life insurers are Health Insurance Innovations, Inc HIIQ, Primerica, Inc. PRI and. FBL Financial Group Inc. FFG.

Health Insurance, a developer, distributor, and administrator of cloud-based individual health and family insurance plans, and supplemental products in the U.S., beat estimates in all of the last four quarters with an average positive surprise of 270.8%. The company sports Zacks Rank #1 (Strong Buy). You can see the 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, delivered positive surprises in the trailing four quarters with an average beat of 6.4%. The company has Zacks Rank #2 (Buy).

FBL Financial, a seller of annuity and individual life insurance products, surpassed estimates in two of the last four quarters with an average positive surprise of 3.26%. The company carries Zacks Rank #2.

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