The US stock reinsurance group (NYSE:RGA) is currently trading at $119 per share, about 23% below its pre-Covid-19 high, and offers an excellent investment opportunity. Reinsurance group America, a leader in traditional life and health reinsurance and financial solutions, traded just under $155 in February 2020, just before the pandemic, and is still nearly 23% below that level.
Me. The stock is up 108% compared to the S&P 500, which has nearly doubled during the period from its low in March 2020. While the easing of blocking restrictions and the successful implementation of the vaccine boosted economic activity, about $595 million related to Covid-19 collection fees boosted cost profitability data. company in the first half of 2021.
More than expected in Q1 Adjusted Diluted Stock Operating Income was $1.24 versus $1.41 for the year-ago quarter. In addition, adjusted operating income for the first half of the year was approximately $2.78 per diluted share, roughly the same as last year. This makes investors somewhat suspicious of the stock despite its positive growth. American reinsurance group sales.
Returning to pre-Covid levels means RGA stocks should be up 30% from here. We believe that if they return to pre-Covid-19 levels, life and health claims could improve in the short term. As a result of the impact of the pandemic, the demands on life and health have increased significantly.
Gradual improvement in economic conditions can increase the overall premium. In addition, some return on investment recovery will support net returns. Overall, the steady improvement of the economy can support the RGA’s best line, stimulate the stock’s growth of around 30% in the short term, and make it a good investment choice.
However, pre-Covid levels can only be achieved if normal billing costs and a sudden spike in Covid-19 cases do not hinder the economic recovery. Our conclusion is: “Stocks of American reinsurance groups during the 2008 recession and are now in the scoreboard analysis.
December 12, 2019: First reported coronavirus case in China
January 31, 2020: WHO declares a global health emergency.
February 19, 2020: S&P 500 hits record high with signs of effective containment in China and expectations of major central banks to loosen cash
March 23, 2020: S&P 500 is down 34% from highs observed on February 19, 2020 as COVID-19 cases increase outside China. Doesn’t help oil prices fall in mid-March in Saudi Arabia-led price competition
After March 24, 2020: S&P 500 rebounds 97% from lows seen on March 23, 2020, multi-billion dollar stimulus from the Fed has propelled the economy through long-term blockades and promotion of vaccinations with multiple waves of Covid infections. However, gradually, everything returned to normal.
Presentation of RGA and S&P 500 in crisis 2007-08
We saw that RGA’s stock fell from over $46 in September 2007 (before the crisis) to around $27 in March 2009 (when the market hit its bottom). This means that RGA’s stock is down 41% from its pre-crisis high estimate. After the 2008 crisis, it rebounded to over $48 in early 2010 and was up 75% between March 2009 and January 2010. The S&P500 index fell 51% from 1540 in September 2007 to 757 in March. It then increased by 48% to 1,124 between March 2009 and January 2010.
RGA basics in recent years
Reosurance Group of America revenue increased from $12.5 billion in 2017 to $14.3 billion in 2019, largely due to higher net premiums. However, net profit fell from $1.8 billion to $870 million in the same period. This was mainly due to an increase in operating expenses as a percentage of sales and temporary tax incentives in 2017. This reduced the value of EPS from USD 28.28 to USD -13.88. Additionally, the company’s revenue growth slowed in 2020, capping net premium growth and net return on investment to $14.6 billion. This, along with increased operating costs, resulted in earnings per share falling 54% year over year to $6.35.
Does the RGA have enough cash to meet its obligations during the coronavirus crisis?
The reinsurance group’s total liabilities increased by 2.8 billion. Additionally, the company reported cash flows from investments of $2.7 billion and cash flows from operations of $3.3 million. In general, the company has a strong cash flow from its operations and a comfortable liquidity cushion to meet its short-term obligations.
Covid-19 crisis phase:
Early to mid-March 2020: Fears If the coronavirus epidemic spreads rapidly, in fact, the number of cases is increasing worldwide
After the end of March 2020: Measures for social distancing + blockade
April 2020: Federal Reserve stimulus suppresses near-term survival fears
May-September 2020: restoring demand With the gradual lifting of the blockade, the panic has subsided and many cases appear to have subsided.
October 2020-February 2021: An unprecedented rapid increase in the new blockade of the Covid Force across the country
After March 2021: Ongoing vaccination campaign. With a gradual resumption, demand will increase – market sentiment will improve
Despite the surge in the number of new Covid-19 cases in the US, demand is expected to increase gradually to boost market expectations. Investors are closely watching year-round forecasts for 2021 and 2022 and expect stocks of American reinsurance groups to fully recover once concerns about the Covid pandemic are resolved.