Reinsurance Group of America (RGA, Financial)
RGA primarily reinsures life insurance contracts. As the coronavirus spreads throughout the world, the company’s share price collapsed to levels that, in our view, reflected a worst-case scenario. Our discussions with management, as well as our own scenario analysis, further buttressed our assessment, and we established a position at a price well below the company’s tangible book value. RGA also maintains a conservative balance sheet, and we expect it will earn double-digit returns on tangible equity on average over time. We were excited to purchase this stock as it is trading for just a mid-single digit multiple of our estimate of normalized earnings per share.
From Bill Nygren (Trades, Portfolio)'s Oakmark Fund second-quarter 2020 shareholder commentary.
