RGA
Reinsurance Group of America, Incorporated
$244.46
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 29.5% below fair value
You pay
$244.46
Bear
$187.50
Fair
$346.57
Bull
$442.02
Bear
$187.50
-23.3%
ROTCE 6.6% → 0.91x TBV
Fair
$346.57
+41.8%
ROTCE 8.8% → 1.69x TBV
Bull
$442.02
+80.8%
ROTCE 10.1% → 2.15x TBV
Adjust Assumptions
8.8%
6.8%
Key Value Driver
ROTCE (8.8%) vs. cost of equity (6.8%)
Implied Market Multiple
1.19x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (23 analysts)
$265.83
Divergence from AlphaVal
30%
Summary
With ROTCE of 8.8% vs. 6.8% cost of equity, fair P/TBV is 1.69x on $205.38 tangible book, implying $346.57 per share. DDM cross-check: $188.91.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $188.91 (45% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $265.83 (from 23 analysts). Our estimate is 30% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly