RGA Shares Drop 0.70% Despite Strong Earnings

Reinsurance Group of America (RGA) shares fell 0.70% today, reflecting a slight downturn in the market sentiment surrounding the company.

The strategy of buying RGA shares after they reached a recent peak and holding for one week yielded moderate returns over the past five years. The annualized return was 16.59%, which surpassed the market average by 2.76 percentage points. This indicates that the strategy capitalized on the company's performance and managed risk effectively. However, the recent short-term performance has been lackluster, with a decline of 5.07% over the last 10 days, suggesting that the market may be experiencing temporary volatility.

RGA's recent financial performance has been robust, with strong adjusted operating earnings of $5.66 per share and an adjusted operating return on equity of 15%. This financial strength is further supported by favorable claims experience across all geographic regions, contributing to positive financial results.

One of the key drivers of RGA's growth is its strategic expansion in Asia. The company's Creation Re strategy has led to significant growth in the region, with the new business embedded value per transaction tripling since 2021. This strategic initiative is expected to continue driving RGA's growth in the coming years.

RGA's capital management has also been a significant factor in its performance. The company deployed $418 million in capital for in-force transactions, including strategic deals in Asia and a significant transaction with Equitable expected to close midyear. RGA maintains a strong capital position with $1.9 billion in excess capital and $1.3 billion in deployable capital, supporting future growth opportunities.

Analysts have also shown positive sentiment towards RGA. Morgan Stanley analyst Bob Huang revised the price target for RGA from $195 to $209, while maintaining an Equal Weight rating. This adjustment is part of a broader review of the Life Insurance sector, with a significant recovery anticipated in the latter half of 2025. Based on analyst forecasts, the average target price for RGA is $240.78, indicating a potential upside of 17.50% from the current price. The consensus recommendation is "Outperform," suggesting positive sentiment among analysts.