Here's Why You Should Buy Reinsurance Group (RGA) For Now

Reinsurance Group of America, Incorporated (NYSE:RGA) remains well poised for growth, banking on changing life reinsurance pricing environment and expanding business in the pension risk transfer market. The Zacks Rank #2 (Buy) life insurer holds immense potential owing to a few good growth drivers.

Growth Projections: The stock has seen the Zacks Consensus Estimate for current-year earnings per share being pegged at $11.07 and for 2018, at $10.83. The consensus mark for 2017 reflects a year-over-year increase of 13.8% though the same for 2018 declined 2.2%.

Revenues are estimated to grow 9.3% and 3.6% year over year for 2017 and 2018, respectively.

The expected long-term earnings growth is pegged at 9%.

Northbound Estimates: The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 8.6% upward and for 2018, 0.7% over the last 30 days.

Price Outperformance: Shares of Reinsurance Group have rallied 25% in a year, outperforming the S&P 500 index’s gain of 18.2% as well as industry’s gain of 24.6%.

Positive Earnings Surprise History: Reinsurance Group has surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 11.77%.

VGM Score: Reinsurance Group carries a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.

Attractive Valuation: Looking at the company’s price-to-book ratio — the best multiple for valuing insurers because of large variations in their earnings results from one quarter to the next — shares are underpriced at the current level. The company has a trailing 12-month P/B ratio of 1.2, falling significantly below the industry average of 2.4. Undervalued shares with growth prospects are best investment bets. Reinsurance Group carries a Value Score of A.

Back-tested results have shown that stocks with a Value Score of A or B when combined with a favorable Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

Growth Drivers in Place

Reinsurance Group is a leader in the U.S. and Latin American traditional market. Its Individual mortality provides a base for stable earnings and capital generation.

The company also boasts market leadership in Canada for the seventh consecutive year. Its sizable block of in-force business in the country acts as a significant source of future earnings. Reinsurance Group expects longevity insurance, which is projected to see steady demand and long-term growth in the Canadian market.

Reinsurance Group is poised to benefit from the changing life reinsurance pricing environment and business expansion in the pension risk transfer market.

A strong capital position aids the company to return value to shareholders through dividend hikes and buybacks. The 22% dividend raise in the last quarter marked the eighth consecutive double-digit percentage increase. On an average, the company expects to deploy $300-$400 million of excess capital annually.

Other Stocks to Consider

Investors interested in life insurers can also look at other top-ranked stocks like Torchmark Corporation (NYSE:TMK) , Primerica, Inc. (NYSE:PRI) and American Equity Investment Life Holding Company (NYSE:AEL) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Torchmark provides various life and health insurance products, and annuities in the United States, Canada and New Zealand. The company delivered an average four-quarter positive surprise of 2.17%. Shares of the company have rallied 20.1% in a year.

Primerica distributes financial products to middle income households in the United States and Canada. The company pulled off an average four-quarter positive surprise of 0.96%. Shares of the company have surged 36.8% in a year.

American Equity Investment develops and sells fixed index and fixed rate annuity products in the United States. The company delivered an average four-quarter positive surprise of 24.26%. Shares of the company have soared 42.7% in a year.

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