Reinsurance Group of America (RGA): Assessing Valuation After Recent Share Price Pullback

Reinsurance Group of America (RGA) has recently experienced a pullback in its stock price, dipping around 1% over the past week. Investors might be curious about whether the current valuation now offers a more attractive entry point for this major player in the insurance sector.

See our latest analysis for Reinsurance Group of America.

While the recent dip may grab attention, it’s worth noting that Reinsurance Group of America’s share price is still navigating a choppy year, with momentum easing off after a long run of gains. Although the year-to-date share price return stands at -10.86%, the company’s long-term record remains robust, as highlighted by a 50% total shareholder return over three years and more than doubling investors’ money over five years. This suggests the recent pullback may simply be a breather in a much bigger story.

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But do these recent declines mean Reinsurance Group of America is undervalued, or has the market already factored in all of the company’s growth potential, leaving little room for upside from here?

Most Popular Narrative: 19% Undervalued

Reinsurance Group of America’s most prominent valuation narrative points to a fair value that is about 19% higher than the latest closing price of $191.99, suggesting plenty of upside ahead if their forecasts pan out. With the market now trading well below this narrative’s calculated target, the gap between sentiment and underlying business momentum has widened, putting future growth assumptions in sharp focus.

RGA is capitalizing on growing insurance demand in Asia and other international markets, as evidenced by robust new business in Hong Kong, Taiwan, Korea, and a record number of asset-intensive transactions across five countries and three continents. This global expansion drives sustained premium growth and strengthens revenue diversification.

Read the complete narrative.

What fuels this high valuation target? The bold narrative leans heavily on the most aggressive projections for international expansion, profitability, and capital deployment. Want to know which projections could justify a valuation leap from here? Only the full narrative reveals what must go right for RGA to reach those heights.

Result: Fair Value of $236.89 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, persistently high claims volatility and rising healthcare costs in key markets could undermine RGA’s profitability and present challenges for even the most optimistic forecasts.

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

Another View: Comparing Multiples

Yet, when looking at current earnings multiples, RGA appears more expensive than its industry and peer group. It trades at 16.5 times earnings, while US insurance peers average around 13.8 and similar companies sit at 14.1. In comparison, a fair ratio of 21.1 suggests that there remains room for the market’s view to shift. Does this premium mean investors are overpaying, or is there untapped value if sentiment catches up?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Reinsurance Group of America Narrative

If you’re looking to take a hands-on approach or want to challenge these assumptions with your own perspective, you can build your own interpretation in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Reinsurance Group of America.

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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.

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