RGA Offers Upside on Strong Growth Prospects - Buy or Hold the Stock?

Reinsurance Group of America RGA is a leading global provider of traditional life and health reinsurance, as well as financial solutions, with operations across the United States, Latin America, Canada, Europe, the Middle East, Africa, Asia and Australia. The company continues to benefit from a mix of organic growth and transactional opportunities.

Based in Chesterfield, MO, Reinsurance Group of America has a market capitalization of $13.2 billion. It is well positioned to benefit from improved pricing and expanding opportunities in the pension risk transfer market. A solid in-force business ensures predictable long-term earnings, while product-line expansion supports greater risk diversification.

RGA’s Price Performance

The company’s shares have gained 8.3% over the past year, outperforming the industry’s average 2.8% gain over the same period.

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Shares of Manulife Financial Corporation MFC have risen 15.2%, those of Sun Life Financial Inc. SLF have gained 13.7%, and those of AIA Group Limited AAGIY have advanced 33.3% over the same time frame.

RGA’s Valuation

Shares of Reinsurance Group are trading at a discount to the Zacks Life Insurance Industry. Its forward price-to-book ratio of 1.0x is lower than the industry average of 1.78x, the broader Finance sector’s 4.02x, and the S&P 500 composite average of 7.79x. The company currently carries a Value Score of A.

Shares of Manulife Financial are also trading at a discount, with a forward price-to-book ratio of 1.74x. Sun Life Financial and AIA Group are trading at premiums to the industry average, with forward price-to-book ratios of 2.12x and 2.72x, respectively.

Average Target Price for RGA

Based on short-term price targets offered by eight analysts, the Zacks average price target is $253.75 per share. The average suggests a potential 25.4% upside from the last closing price.

Consensus Estimate for RGA

The Zacks Consensus Estimate for RGA’s 2026 and 2027 earnings indicates a year-over-year increase of 15.8% and 7.7%, respectively. The consensus estimate for 2026 and 2027 earnings has moved north 2.1% and 1.3%, respectively, in the past 30 days.

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Over the past 30 days, 2026 earnings estimates for Sun Life Financial and Manulife Financial have been revised upward, while those for AIA Group have remained unchanged over the same period.

Growth Factors for RGA

Reinsurance Group continues to expand through diversified life insurance deals. Its transaction with Equitable Holdings, Inc. involves reinsuring a $32 billion in-force life insurance block, with about $1.5 billion of capital deployed. This strengthens client relationships and enhances RGA’s ability to price risk and manage capital efficiently. The company expects adjusted pre-tax operating income of $160-$170 million in 2026, rising to around $200 million annually over time.

Technology partnerships are a key growth driver for RGA. By working with firms like FastTrack and DigitalOwl, the company is improving underwriting, claims processing and overall efficiency. This helps reduce costs, accelerate operations and support long-term profitability.

In Canada, RGA has a sizable block of in-force business which acts as a significant source of future earnings. Reinsurance Group expects longevity insurance, which is projected to see steady demand, to see long-term growth in the Canadian market. While longevity insurance provides a source of diversified income, it also acts as a hedge to a large mortality position.

RGA maintains strong capital management through buybacks, dividends and disciplined investments. It deployed $2.5 billion into in-force transactions in 2025 and ended the year with $2.7 billion in excess capital and $3.4 billion in deployable capital. During 2025, it repurchased shares worth $125 million. On Jan, 2026, the board approved a new share buyback program of up to $500 million.

Reinsurance Group exited 2025 with cash and cash equivalents of $4.2 billion, up 25.3% from 2024. Its return on invested capital (ROIC) has improved consistently to 5.84% over the trailing 12 months, well above the industry average of 0.64%. This leverage indicates that the company is using its investments efficiently and creating more value.

Conclusion

Reinsurance Group of America offers an attractive investment opportunity. It stands to benefit from steady earnings growth and a strong capital position. Its expanding business, improving efficiency through technology, and disciplined capital management support its growth prospects. A VGM Score of B instills confidence.

Given price appreciation and favorable valuation, it is, therefore, prudent to add this Zacks Rank #2 (Buy) stock to portfolio now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Manulife Financial Corp (MFC): Free Stock Analysis Report

Reinsurance Group of America, Incorporated (RGA): Free Stock Analysis Report

Sun Life Financial Inc. (SLF): Free Stock Analysis Report

AIA (AAGIY): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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