Reinsurance Group of America (RGA, Financial) reported a first-quarter revenue of $5.26 billion, falling short of the anticipated $5.69 billion. However, the company's book value per share increased significantly to $172.53, compared to $143.92 in the same period last year. RGA described the quarter as a strong start, citing favorable biometric claims experience across all geographic segments as a key driver of success in their Traditional business.
RGA also mentioned a strategic deployment of $418 million into in-force transactions, excluding capital expected to be used later this year for a previously announced deal with subsidiaries of Equitable Holdings, Inc. The company is optimistic about the quality of these investments, anticipating attractive returns. Despite macroeconomic uncertainties, RGA sees a promising pipeline for both organic new business and in-force transactions, maintaining a good balance between the two.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 9 analysts, the average target price for Reinsurance Group of America Inc (RGA, Financial) is $239.44 with a high estimate of $284.00 and a low estimate of $195.00. The average target implies an upside of 28.09% from the current price of $186.94. More detailed estimate data can be found on the Reinsurance Group of America Inc (RGA) Forecast page.
Based on the consensus recommendation from 11 brokerage firms, Reinsurance Group of America Inc's (RGA, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Reinsurance Group of America Inc (RGA, Financial) in one year is $227.04, suggesting a upside of 21.45% from the current price of $186.94. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Reinsurance Group of America Inc (RGA) Summary page.
RGA Key Business Developments
Release Date: February 07, 2025
- Adjusted Operating Earnings: $4.99 per share for Q4 2024.
- Adjusted Operating Return on Equity: 15.4% for the past year, excluding notable items.
- Capital Deployed: $250 million in Q4 2024; nearly $1.7 billion for the full year.
- Record Operating EPS: $22.57 per share for 2024, up 14% from 2023.
- Record Capital Deployment: $1.7 billion in transactions, up 80% from 2023.
- Premium Growth: Reported premiums up 1.2% for Q4 2024; adjusted premiums up 11% excluding US PRT transactions.
- Traditional Business Premium Growth: 9.5% for Q4 2024 on a constant currency basis.
- Effective Tax Rate: 22.5% for Q4 2024 on pretax adjusted operating income.
- Deployable Capital: $1.7 billion at the end of 2024.
- Book Value Per Share: $151.97, with a compounded annual growth rate of 9.9% since the beginning of 2021.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Reinsurance Group of America Inc (RGA, Financial) reported record operating earnings for 2024, with adjusted operating earnings of $4.99 per share and a return on equity of 15.4%.
- The company successfully deployed $1.7 billion into transactions for the year, marking the highest capital deployment in its history.
- RGA increased its intermediate-term operating ROE target to 13% to 15%, reflecting confidence in its business fundamentals.
- The company demonstrated strong growth in its Asia Traditional business, particularly in Mainland China, enhancing asset liability management profiles.
- RGA's strategic platform and disciplined risk management have resulted in a robust pipeline and sustainable business momentum across global markets.
Negative Points
- The US Financial Solutions segment experienced a decline due to the runoff of existing annuity business and slower earnings emergence from new transactions.
- Variable investment income was below plan, impacting overall financial results.
- The company faced unfavorable biometric claims experience, with a financial impact of $58 million in the quarter.
- RGA's deployable capital metric indicates minimal expected share buybacks in the foreseeable future, focusing instead on capital deployment into transactions.
- The company's earnings run rate is sensitive to foreign exchange fluctuations, with a potential $40 million to $50 million impact from recent currency movements.
