On Jun 4, we issued an updated research report on Reinsurance Group of America Inc. RGA.
The company, one of the world’s leading life reinsurers, is recognized for its expertise in risk assessment and capital management, its ability to develop new, highly innovative solutions, and its proven commitment toward its clients.
Reinsurance Group enjoys a leading position in the U.S. Latin America Traditional market. The company has successfully expanded its product line with market leading services, capabilities, expertise and innovation. Equipped with an experienced management team, the company has a strong appetite and capacity for attractive block opportunities, which are expected to generate 4% to 6% growth in the region over the near term.
The company also leads in Canada boasting a solid growth trajectory. Also, the company has a sizable block of in-force business which acts as a significant source of earnings. Strong growth rates of 5–8% for premiums and 8–10% for earnings are expected from this region by 2016.
Reinsurance Group, which derives more than 1/4th of its net premium from international operations, has a significant presence in Hong Kong, Japan, India, Korea and Taiwan. Economic growth and demographic trends in these markets open up abundant growth opportunities for the company. Reinsurance Group expects pre-tax operating income growth of 15–20% and premium growth of 10–15% by 2016.
However, an underperforming Australia business, stringent regulatory requirements pertaining to Solvency II and foreign exchange exposure are some of the headwinds.
Reinsurance Group carries a Zacks Rank #3 (Hold).
Stocks to Consider
Reinsurance Group currently carries a Zacks Rank # 4 (Sell). Better-ranked players in the industry include American Equity Investment Life Holding Co. AEL, Sun Life Financial Inc. (SLF and Manulife Financial Corporation MFC. While American Equity Investment and Sun Life Financial sport a Zacks Rank # 1 (Strong Buy), Manulife Financial carries a Zacks Rank #2 (Buy).
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