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Reinsurance Group Of America (RGA) Could Be 9% Undervalued Following Its Recent Run

Simply Wall St · 1d ago

Reinsurance Group of America (RGA) has attracted attention after its shares outpaced the S&P 500 by 5.7% over the past six months, helped by solid quarterly results and raising fresh questions about what comes next.

That recent outperformance sits on top of a strong run for Reinsurance Group of America, with an 18.35% 90 day share price return and a 31.44% 1 year total shareholder return pointing to building momentum as investors reassess both growth prospects and risk.

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After a run like this and a share price near US$246.75, the real tension for Reinsurance Group of America is where fair value lies between that level, analyst targets, and much lower intrinsic estimates.

Most Popular Narrative: 9.4% Undervalued

On the most followed view, Reinsurance Group of America screens as modestly undervalued, with a narrative fair value of about $272.33 against the latest close at $246.75, and that gap rests on what analysts think the business can earn over time at a 7.24% discount rate.

Rising life and health insurance penetration fueled by global aging demographics and an expanding middle class, particularly in emerging markets where RGA is gaining market share, positions the company for above-industry long-term revenue and earnings growth.

Recent material improvements in deployable and excess capital, enabled by new in-force value credits and a strong balance sheet, provide RGA with the flexibility to pursue high-return new business, return capital to shareholders via buybacks/dividends, and deploy capital for select accretive acquisitions, all supporting future EPS and ROE uplift.

See why 24 investors see Reinsurance Group of America as 9% undervalued.

Result: Fair Value of $272.33 (UNDERVALUED)

Still, Reinsurance Group of America faces two clear swing factors: persistent earnings volatility in U.S. life claims and pressure from rising healthcare excess costs that could strain profitability.

Find out about the key risks to this Reinsurance Group of America narrative.

Next Steps

Mixed feelings about Reinsurance Group of America after this run. If you want to move fast and ground your own view in data, start by weighing its 4 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.