Reinsurance Group Trades Below 50-Day SMA: How to Play the Stock?

Core Viewpoint - Reinsurance Group of America (RGA) is currently experiencing a short-term bearish trend as its shares are trading below the 50-day simple moving average (SMA) [1] Group 1: Price Performance - RGA shares have declined by 11.4% year-to-date, contrasting with the industry's gain of 1.3% [2] - The Finance sector and the Zacks S&P 500 Composite have increased by 13.9% and 12.8%, respectively, during the same period [2] Group 2: Valuation Metrics - RGA shares are trading at a price-to-book value of 1.03X, which is lower than the industry average of 1.93X, indicating they are affordable [4] - The company has a market capitalization of $12.5 billion and an average trading volume of 0.4 million shares over the last three months [4] Group 3: Revenue and Earnings Projections - The Zacks Consensus Estimate for RGA's 2025 revenues is $23.5 billion, reflecting a year-over-year growth of 3% [6] - The current-year earnings estimate is $22.40 per share, while the 2026 earnings per share and revenues are projected to increase by 14.6% and 10.5%, respectively, from 2025 estimates [9][10] Group 4: Business Strategy and Growth Drivers - RGA's in-force portfolio and product expansion are expected to support long-term earnings diversification [8] - The company benefits from a balanced mix of organic initiatives and transactional opportunities, with a strong foundation in its individual mortality business [13] - Advancements in product design, underwriting, analytics, and innovation are anticipated to drive growth [14] Group 5: Investment Income and Financial Performance - RGA's net investment income has shown a compound annual growth rate (CAGR) of 17.2% from 2016 to 2024, supported by a larger asset base and higher risk-free rates [15] - In the second quarter, income after expenses rose by 30.1% year-over-year to $1.4 billion, with an average yield increase of 66 basis points [15] Group 6: Debt and Financial Flexibility - RGA's long-term borrowings reached $5.73 billion as of June 30, 2025, marking a 13.7% increase from the end of 2024 [17] - The debt-to-capital ratio for the trailing 12 months stood at 47.22, significantly above the industry average of 16.79, indicating elevated leverage [17] Group 7: Shareholder Value and Dividends - RGA has increased its dividend five times over the past five years, resulting in a five-year annualized growth rate of 6.3% and a current payout ratio of 17% [18] Group 8: Analyst Sentiment - The Zacks Consensus Estimate for 2025 earnings has decreased by 1.5% in the past 30 days, while the estimate for 2026 earnings has increased by 0.4% [10] - The average price target from 10 analysts suggests a potential upside of 22.3% from the last closing price, with a target of $235 per share [12]