Is Reinsurance Group of America (RGA) Trading at a Meaningful Discount to Its Intrinsic Value?

The valuation of Reinsurance Group of America (RGA) presents a compelling case study in the tension between short-term market sentiment and long-term intrinsic value. With a current market price of $201.47 per share as of December 2025, RGA appears to trade at a significant discount to its estimated intrinsic value of $329.86, according to the Peter Lynch Fair Value model. This 63.73% gap raises critical questions about whether the market is underappreciating RGA's long-term earnings potential or overcorrecting for near-term risks.

Intrinsic Value: A Case for Long-Term Optimism

RGA's financial performance in 2024 and 2025 underscores its robust fundamentals. The company reported a record operating earnings per share (EPS) of $6.37 and a trailing 12-month return on equity (ROE) of 14.2%. These metrics, combined with an 8.5% year-to-date growth in traditional business premiums, highlight its operational strength across geographies. Analysts and valuation models suggest RGA is undervalued by as much as 69.5% relative to its intrinsic value, a disparity that reflects its disciplined capital deployment strategies.

RGA's capital allocation has been a key driver of value creation. In 2025 alone, the company deployed $1.676 billion into in-force transactions, a record that signals confidence in its ability to generate returns on invested capital. Furthermore, its estimated deployable capital of $3.4 billion provides a buffer against volatility while enabling strategic reinvestment. These factors, coupled with a strong balance sheet, position RGA to deliver on its target of 20%-30% total shareholder returns over the long term.

Short-Term Sentiment: Risks and Market Realities

Despite these fundamentals, RGA's stock price has lagged its intrinsic value estimates, trading at 69.5% below fair value. This dislocation reflects short-term market concerns. For instance, persistent claims volatility and rising medical costs could pressure profit margins, particularly in its healthcare excess segment. According to recent reports, this dynamic may exacerbate near-term earnings pressures. Additionally, the impending retirement of Executive Vice President and Chief Investment Officer Leslie Barbi in April 2026 introduces leadership transition risks.

However, these risks appear manageable. Morgan Stanley analysts recently raised their price target to $208 per share, citing a favorable macroeconomic environment with stable equity markets and lower interest rates. This modest 2% upside from the current price suggests the market is cautiously optimistic about RGA's ability to navigate near-term headwinds. Meanwhile, RGA's global expansion-particularly in Asia- continues to diversify revenue streams and insulate the company from regional downturns.

Valuation Dislocation: A Strategic Opportunity?

The disconnect between RGA's intrinsic value and its market price hinges on the market's prioritization of short-term risks over long-term earnings potential. While the 63.73% upside implied by the Peter Lynch model is substantial, investors must weigh this against near-term uncertainties. For example, the recent Equitable Holdings transaction contributed to pre-tax income in Q3 2025, but its long-term impact remains unproven. Similarly, RGA's healthcare excess segment is expected to accelerate, yet this growth could be delayed by regulatory or economic shifts.

Nevertheless, RGA's historical performance and capital discipline suggest the market may be overcorrecting. Its ability to deploy capital at attractive returns, combined with a conservative balance sheet, provides a margin of safety that many peers lack. As one valuation model notes, RGA is undervalued by as much as 65.6% based on excess returns and intrinsic value estimates, a figure that aligns closely with the Peter Lynch model's findings.

Conclusion

Reinsurance Group of America appears to trade at a meaningful discount to its intrinsic value, with long-term fundamentals far outpacing current market sentiment. While short-term risks such as claims volatility and leadership transitions warrant caution, RGA's capital deployment prowess, global diversification, and strong ROE position it to deliver outsized returns over time. For investors with a multi-year horizon, the current valuation dislocation may represent an attractive entry point-provided they are prepared to weather near-term uncertainties.