Reinsurance Group of America, Inc. RGA is poised for long-term growth on the back of improving top line, geographic expansion, leadership position and prudent capital deployment. The Zacks Rank #2 (Buy) reinsurer carries an impressive VGM Score of B. Back-tested results show that stocks with a Value Score of A or B coupled with a solid Zacks Rank #1 (Strong Buy) and 2 offer the best investment opportunity.
Estimates for Reinsurance Group have been revised upward over the past 30 days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2019 earnings per share has moved up 0.7% north to $13.22 and 0.3% for 2020 to $14.08.
Reinsurance Group boasts a premium position in the U.S. and Latin American traditional market. Its wide product line and market leading services, capabilities, expertise and innovation bode well for growth.
Moreover, Individual mortality has matured and provides a base for stable earnings and capital generation. Significant value embedded in the in-force business is anticipated to generate predictable long-term earnings.
Reinsurance Group’s international operations generate one-third of its total premiums. The company has a significant presence in Hong Kong, Japan, India, Korea and Taiwan. The life insurer noted that economic growth and demographic trends offer ample growth opportunities in these regions.
The company has a strong capital management policy in place that enhances its shareholder value. While the company has made nine consecutive double-digit percentage increases in dividend, its board of directors approved a $400 million share buyback program. Excess capital of about $1 billion at 2018 end will help the company to pursue growth initiatives.
Its valuation looks attractive at the current level as the price-to-book multiple of 1.1 is lower than the industry average of 2. The company has an impressive Value Score of A. Value Score helps to find undervalued stocks.
Shares of this Zacks Rank #2 insurer have gained 4.3% in a year compared with the industry's increase of 22.3%.
The Zacks Consensus Estimate for 2019 earnings is pegged at $13.22 per share, indicating 9.1% year-over-year increase on 4.3% revenue growth. For 2020, the consensus mark for earnings of $14.12 indicates 6.8% year-over-year growth on 4.9% revenue increase.
Other Stocks to Consider
Other top-ranked stocks from the same space include Health Insurance Innovations, Inc. HIIQ, Manulife Financial Corporation MFC and Voya Financial, Inc. VOYA.
Health Insurance Innovations operates as a cloud-based technology platform and distributor of individual and family health insurance plans, and supplemental products in the United States. The stock sports a Zacks Rank #1. The company delivered positive earnings surprise of 27.27% in the last reported quarter.
Voya Financial operates as a retirement, investment, and employee benefits company in the United States. The stock carries a Zacks Rank #2. The company delivered 8.20% positive earnings surprise in the last reported quarter.
Arch Capital Group provides property, casualty and mortgage insurance and reinsurance products worldwide. The stock has a Zacks Rank #2. The company delivered 24.32% positive earnings surprise in the last reported quarter.
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