Reinsurance Group Stock Rises 41.6% YTD: Will the Rally Last?

Stock Performance and Market Position - RGA shares have rallied 41.6% YTD, outperforming the industry's growth of 31.5%, the Finance sector's return of 20.9%, and the S&P 500's return of 24.5% [1] - The stock is currently priced at $229.17, slightly below its 52-week high of$233.14, with a market capitalization of $15.09 billion [1] - RGA is trading above its 50-day and 200-day simple moving averages of$218.40 and $203.60, respectively, indicating strong upward momentum [4] Earnings and Growth Projections - RGA has beaten earnings estimates in each of the last four quarters, with an average surprise of 17.74$22.36 billion [6] - The expected long-term earnings growth rate is 10.4%, significantly higher than the industry average of 4.6% [7] Business Segments and Market Leadership - RGA has strong momentum in U.S. Traditional, Longevity/PRT, Asia Asset-Intensive, and Asia Traditional segments, supported by solid growth projections [3] - The company is a leader in the U.S. and Latin American traditional markets, with a mature individual mortality business providing stable earnings and capital generation [10] - In Canada, RGA is a market leader with a sizable block of in-force business, and longevity insurance is expected to witness steady demand and long-term growth [11] Capital Management and Technological Advancements - RGA has a return on invested capital (ROIC) of 6.4% in the trailing 12 months, significantly higher than the industry average of 0.6% [8] - The company has maintained a free cash flow conversion rate of over 85% for many quarters, reflecting solid earnings [13] - RGA is well-capitalized, with excess capital of around $0.7 billion at the end of Q2 2024, and actively deploys capital into growth opportunities while returning excess capital to shareholders [15] Analyst Sentiment and Valuation - Two out of six analysts covering RGA have raised estimates for 2024, and three have raised estimates for 2025, with consensus estimates moving 0.6% and 1.1% north, respectively, in the past 30 days [9] - RGA has a VGM Score of A, indicating attractive value, growth, and momentum, and a Zacks Rank 2 (Buy) [14] Industry Comparison - Other top-ranked life insurance companies include Abacus Life, Inc. (ABL), Manulife Financial Corp (MFC), and Primerica, Inc. (PRI), each carrying a Zacks Rank 2 [16] - ABL's 2024 and 2025 earnings are expected to grow by 19.2% and 22.4%, respectively, while MFC's earnings are projected to grow by 6.6% and 9.2% [17][18] - PRI's 2024 and 2025 earnings are expected to grow by 18.9% and 7.9%, respectively, with shares climbing 44.3% YTD [19][20]