REINSURANCE GROUP OF AMERICA INC (RGA): what the price assumes

In the published model solve dated 2026-Q2, anchored at $236.54, REINSURANCE GROUP OF AMERICA INC (RGA) is priced for 10.2% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/RGA

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 9.3% cost of equity with 4% terminal growth over a 10-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.2pp.

How unusual the bet is: within-range

Valuation X-Ray

The price is supported by asset-based and earnings-power value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.0%); the inversion above states its own rate.

Per-Model Detail (n=4)

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

At $210.67, Reinsurance Group of America trades right around tangible book value (price-to-book near 1.04), while the methods place fair value above the price across asset, earnings, and relative lenses. The market is paying about book for a global life reinsurer that has been compounding book value steadily.

The operating quality just stepped up. First-quarter 2026 adjusted operating income rose to $462 million, or $6.97 per share, net premiums grew 14.3 percent to $4.6 billion, and the trailing adjusted operating return on equity reached 15.2 percent.

The model is capital deployment: RGA wins by pricing reinsurance treaties and large transactions well, then compounding the book. The price embeds little of that growth, which is the gap the bull case leans on, while the bear watches whether disciplined pricing holds.

Bull Case

Start with what the market is pricing in, then weigh it against what the business is actually delivering. At $210.67 (June 28, 2026), RGA trades at roughly 1.04 times tangible book value, which for a financial that earns above its cost of capital is close to paying nothing for franchise value. The implied message is a company expected to do little more than tread water. Now look at the fundamentals: the trailing adjusted operating return on equity reached 15.2 percent (16.2 percent excluding notable items), well above the cost of equity near 9.3 percent. A business that consistently earns 15 percent on equity while trading at book value is the kind of mismatch between price and performance that value investors hunt for.

The operating momentum is real and broad-based. First-quarter 2026 adjusted operating income rose to $462 million, or $6.97 per diluted share, up from $5.66 a year earlier, and net income reached $4.98 per share. Consolidated net premiums grew 14.3 percent to $4.6 billion, with results aided by favorable claims experience across regions, robust investment income, and modest currency tailwinds. RGA records its reserves based on treaty terms and historical experience (FY2025 10-K, accession 0000898174-26-000006), and when actual mortality comes in better than the pricing assumed, the favorable variance flows straight to earnings, which is exactly what happened this quarter. Premium growth of 14 percent for a mature reinsurer signals strong demand for its capacity, including large in-force and pension-risk transactions.

The valuation methods agree the price is conservative. The bank-style price-to-tangible-book model lands near $200.82, the excess-return models near $201, relative valuation near $242.88, and the discounted-future-market-cap near $228.79, with the blended X-ray central estimate near $222, all at or above the $210.67 price. RGA returns capital steadily through a growing dividend ($0.93 quarterly) and buybacks, and management frames its targets around growing book value per share. Analysts carry a Buy-to-Outperform consensus with a median target near $251 and several targets above $260. The bull case is a high-ROE global reinsurer compounding book value, trading at book, with the methods pointing higher.

Bear Case

The concern that deserves the most scrutiny is how RGA deploys capital, because the entire model is a bet on pricing reinsurance risk correctly years before the claims arrive. RGA grows by signing treaties and large transactions, and its net income depends on actual mortality, morbidity, and lapse experience matching what it assumed when it priced the deal. The company itself warns that experience less favorable than the rates used in pricing a reinsurance agreement may cause net income to be less than expected (FY2025 10-K, accession 0000898174-26-000006). The favorable claims experience that flattered the first quarter is, by the same logic, reversible: a bad mortality year, an adverse longevity trend on pension-risk transfers, or a mispriced block can swing results the other way. A capital-allocation engine is only as good as the assumptions feeding it, and those assumptions are tested over decades, not quarters.

The second issue is that the reported return on equity flatters the picture relative to the headline accounting. The trailing GAAP ROE the inversion uses is closer to 9.2 percent, near the cost of equity, even as the adjusted operating ROE is 15 percent. The gap between adjusted and GAAP results is where the bears live: notable items, currency effects, and mark-to-market on a large investment portfolio can make adjusted earnings look smoother than the economic reality. A reinsurer carries enormous reserves and a large invested asset base, so credit losses or interest-rate moves can erode book value quickly, and book value is the very thing the price is anchored to at 1.04 times.

Third, the methods are not uniformly bullish, and the price already reflects much of the quality. The bank price-to-tangible-book model lands near $200.82, below the current price, and the earnings-yield method near $199.57, also below, both saying the stock is fairly valued to slightly rich on a conservative read. With the dividend payout modest and buybacks small (only $50 million in the quarter), capital return is steady but not aggressive enough to drive the stock on its own. The bear case is that RGA is a fine business fully valued at book, where the next adverse claims cycle, not the next favorable one, sets the risk.

Valuation

RGA is valued off book value and return on equity, the right frame for a reinsurer, and at $210.67 it trades at roughly 1.04 times tangible book of about $201 per share. The trailing GAAP ROE near 9.2 percent sits right at the cost of equity near 9.3 percent, which on a strict accounting basis justifies trading near book; the adjusted operating ROE of 15 percent is what the bull case argues the methods should credit instead.

The methods cluster around and above the price. The bank price-to-tangible-book model lands near $200.82 (tangible book times a 1.0 multiple on the ROE-to-cost-of-equity read), the simple and two-stage excess-return models near $201, the earnings-yield method near $199.57, relative valuation near $242.88 at a sector P/E around 11 times, the discounted-future-market-cap near $228.79, and the Graham number near $289.24. The blended X-ray central estimate sits near $222, above the price.

The honest framing is that RGA is fairly valued to modestly cheap: the conservative methods bracket the price near book, the relative and growth methods point higher, and the gap is the adjusted-versus-GAAP ROE debate. The number to weigh is the 1.04 times tangible book against a 15 percent adjusted ROE; if the operating ROE is the true economics, the stock is cheap and should trade well above book, and if GAAP near 9 percent is closer to reality, the price near book is right.

Catalysts

First-quarter 2026 results, reported on May 7, were strong. Adjusted operating income rose to $462 million, or $6.97 per diluted share, from $5.66 a year earlier, and net income available to shareholders reached $4.98 per diluted share. Consolidated net premiums grew 14.3 percent to $4.6 billion, with net income of about $330 million, aided by favorable economic claims experience across regions, robust investment income, and modest currency tailwinds. The trailing adjusted operating ROE was 15.2 percent, or 16.2 percent excluding notable items.

Capital return continued: the board declared a regular quarterly dividend of $0.93 per share and the company repurchased $50 million of stock in the quarter. Management highlighted higher book value per share and solid contributions across segments, consistent with its strategy of compounding book value through disciplined transaction pricing.

Near-term catalysts to watch: quarterly claims experience versus pricing assumptions (the swing factor for a reinsurer), the pace and pricing of new treaties and large in-force or pension-risk transactions, investment-portfolio performance and yields, and the cadence of buybacks against book-value growth. Analyst sentiment is a Buy-to-Outperform consensus with a median price target near $251 and several targets above $260, with recent reaffirmations from Wells Fargo and Barclays.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• PRU (PRUDENTIAL FINANCIAL INC)
• FY2025 10-K: As a result, the profitability of our products can fluctuate from period to period. Changes in local tax laws may also affect profitability. Competition The life insurance market in Japan is mature and pricing is competitive. Demographic trends in Japan suggest an increasing opportunity for product innovation, such as…
• FY2025 10-K: …and efficiency of withdrawals for contracts with living benefit features, as well as other assumptions. 5 Table of Contents Competition Institutional Retirement Strategies. We compete with other large, well-established insurance companies, asset managers and diversified financial institutions primarily based on…
• MET (MetLife, Inc.)
• FY2025 10-K: …and asset managers. We compete for individual consumers, employer and other group customers, as well as agents and other distributors of insurance and investment products. Some of our competitors offer a broader array of products, have more competitive pricing or, with respect to other insurance companies, have…
• FY2025 10-K: …players, with benefits resulting in price adjustments to favor customers and reinvestment capacity. They are increasingly seeking alternative sources of revenue focusing on monetization of assets, and fee-based services. They are also looking for opportunities to offer comprehensive solutions which include…
• VOYA (Voya Financial, Inc.)
• FY2025 10-K: …performance, investment philosophy and process, product features and structure and client service. Our principal competitors include insurance-owned asset managers such as Principal Global Investors (Principal Financial Group), Prudential and Ameriprise and bank-owned asset managers such as "pure-play" asset managers…
• FY2025 10-K: ◦ Our ability to increase or maintain our market share in highly competitive markets. ◦ Our ability to achieve the desired results from recent acquisitions. ◦ The complexity of our products and services and our reliance on intermediaries. ◦ A deterioration in our AUM or the alteration or termination of our asset…
• FG (F&G Annuities & Life, Inc.)
• FY2025 10-K: , offer a broader range of products, services or features, assume a greater level of risk, have lower operating or financing costs, or have different profitability expectations than we do. Competition could result in, among other things, lower sales or higher lapses of existing products. Our annuity products compete…
• FY2025 10-K: …financial services affecting (among other things) underwriting of insurance products and regulation of the sale, underwriting and pricing of products, and minimum capitalization and statutory reserve requirements for insurance companies, or the ability of our insurance subsidiaries to make cash distributions to us…
• CNA (CNA FINANCIAL CORP)
• FY2025 10-K: …adverse effect on our business, results of operations and financial condition. 8 Table of Contents Strategic Risks We face intense competition in our industry; we may be adversely affected by the cyclical nature of the property and casualty business and by the evolving landscape of our distribution network. All…
• FY2025 10-K: As such, only Insurance and Reinsurance receivables, Insurance reserves, Deferred acquisition costs, Goodwill and Deferred non-insurance warranty acquisition expense and revenue are readily identifiable for individual segments. Distinct investment portfolios are not maintained for every individual segment;…
• THG (HANOVER INSURANCE GROUP, INC.)
• FY2025 10-K: …at acceptable margins, and we continue to seek rate increases across many lines of business, as appropriate. Personal Lines Personal Lines focuses on working with high quality, value-oriented agencies that deliver consultative selling to customers and stress the importance of total account solutions, which is the…
• FY2025 10-K: …ratings and effective claims handling, among other things. Our competitors include national, international, regional and local companies that sell insurance through various distribution channels, including independent agencies, captive agency forces, brokers, and direct to consumers, through the internet or…
• HIG (The Hartford Insurance Group, Inc.)
• FY2025 10-K: …an increasingly prominent role in influencing customer decisions that also influence selection of the employee benefits insurance provider. Carriers across the industry are increasing automated interfaces and digital workflows to meet distributor and employer expectations and to improve service and claim experiences.…
• FY2025 10-K: …(a) premiums earned for insurance coverage provided to insureds; (b) management fees on mutual fund and ETF assets; (c) net investment income; (d) fees earned for services provided 42 Table of Contents Index to MD&A Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of…
• SIGI (SELECTIVE INSURANCE GROUP, INC)
• FY2025 10-K: …Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." of this Form 10-K. 6 Table of Contents Insurance Operations Overview Our insurance operations generate revenue by selling insurance policies and services in exchange for insurance premiums. Nearly all our sales come from…
• FY2025 10-K: …of the first layer through a 20% co-participation. The 2025 treaty year deposit premium decreased, primarily due to increased retention and co-participation, partially offset by higher projected subject-earned premium due to growth of our book of business. To complement our key reinsurance programs and provide…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.