RGA Outperforms Industry, Trades at a Discount: Time to Hold?

Shares of Reinsurance Group of America, Incorporated RGA have gained 8.4% in the past month compared with the industry’s growth of 7.9%RGA's recent rally has been driven by first-quarter 2026 strong earnings, favorable mortality experience, growing pension risk transfer business, higher investment…

Shares of Reinsurance Group of America, Incorporated RGA have gained 8.4% in the past month compared with the industry’s growth of 7.9%

RGA's recent rally has been driven by first-quarter 2026 strong earnings, favorable mortality experience, growing pension risk transfer business, higher investment income and its still-attractive valuation, which have strengthened investor sentiment.

Shares of Manulife Financial Corp. MFC, Voya Financial, Inc. VOYA and Sun Life Financial Inc. SLF have gained 5.5%, 12.2% and 8.5%, respectively, in the past month.

RGA’s Average Target Price Suggests Upside

Based on short-term price targets offered by eight analysts, the Zacks average price target is $254.38 per share. The average suggests a potential 18.2% upside from the last closing price.

RGA’s Attractive Valuation

Shares of RGA are trading at a discount to the industry. Its forward price-to-book value of 1.05X is lower than the industry average of 2.18X, the Finance sector’s 4.53X, and the Zacks S&P 500 Composite’s 7.92X. The life insurer has a Value Score of A.

Shares of Manulife Financial and Voya Financial are also trading at a discount, whereas Sun Life Financial is trading at a premium to the industry average.

RGA’s Growth Projection Encourages

The Zacks Consensus Estimate for Reinsurance Group’s 2026 earnings per share (EPS) indicates a year-over-year increase of 18.3%. The consensus estimate for revenues is pegged at $26.89 billion, implying a year-over-year improvement of 12.3%.

The consensus estimate for 2027 EPS and revenues indicates an increase of 6.6% and 6.5%, respectively, from the corresponding 2026 estimates.

Earnings have grown 26.7% over the past five years, outpacing the industry average of 5.9%.

The Zacks Consensus Estimate for 2026 and 2027 has moved 2.3% and 0.8% north, respectively, over the last 60 days.

Key Points to Note for RGA

Reinsurance Group is a leader in the traditional United States and Latin American markets. It has successfully expanded its product line with market-leading services, capabilities, expertise and innovation. Individual mortality has matured, providing a base for stable earnings and capital generation. RGA continues to benefit from favorable mortality trends, particularly in its U.S. individual life business, which has improved underwriting profitability. The significant value embedded in the in-force business is anticipated to generate predictable long-term earnings.

In Canada, Reinsurance Group is a market leader with solid growth and profitability. It has a sizable block of in-force business, which is a significant source of future earnings. Reinsurance Group expects longevity insurance, which is projected to witness steady demand, to experience long-term growth in the Canadian market. While longevity insurance provides a diversified income source, it also acts as a hedge against the company’s large mortality position.

RGA continues to capitalize on robust demand for financial solutions. The company continues to benefit from increasing demand for pension risk transfer transactions, which has become an important long-term growth driver. Its combination of biometric underwriting expertise and asset management capabilities differentiates it from its peers and allows it to capture complex, higher-return transactions.

The company’s net investment income has been improving over the years. It witnessed a CAGR of 17.7% over the five years (2020-2025). Investment income remains supportive as new money yields continue to exceed the existing portfolio yield, improving book yields over time. Management expects variable investment income to be 7% during 2026 despite a subdued real estate environment.

RGA has also been managing capital effectively via share buybacks, dividend payments and prudent investments. As of March 31, 2026, excess capital stood at $2.4 billion, while deployable capital over the next 12 months reached $2.9 billion, providing ample flexibility to fund growth opportunities. RGA expects to return 20-30% of after-tax operating earnings to shareholders over the long term while reducing financial leverage during 2026.

Risks for RGA

Higher total benefits and expenses remain concerns for RGA. In the first quarter of 2026, it increased 23.8% year over year to $6.1 billion due to higher claims and other policy benefits, interest credited, policy acquisition costs and other insurance expenses, which is weighing on margin expansion.

Reinsurance Group, being a multinational company, is exposed to foreign currency risk since exchange rates may be subject to adverse changes over time.

New regulations, including evolving capital and reinsurance requirements in the United States and the U.K., could increase compliance costs or reduce transaction economics.

Conclusion

Favorable mortality experience, strong momentum in financial solutions, a diversified business, disciplined capital deployment and improving investment income should continue to favor RGA over the long term. However, higher expenses, currency exposure and regulatory changes remain risks.

Coupled with solid growth projections, attractive valuations and solid capital position, it is, therefore, wise to retain this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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