RGA
Reinsurance Group of America, Incorporated
$255.98
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 27.6% below fair value
You pay
$255.98
Bear
$191.21
Fair
$353.43
Bull
$450.76
Bear
$191.21
-25.3%
ROTCE 6.6% → 0.93x TBV
Fair
$353.43
+38.1%
ROTCE 8.8% → 1.72x TBV
Bull
$450.76
+76.1%
ROTCE 10.1% → 2.19x TBV
Adjust Assumptions
8.8%
6.8%
Key Value Driver
ROTCE (8.8%) vs. cost of equity (6.8%)
Implied Market Multiple
1.25x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (23 analysts)
$273.67
Divergence from AlphaVal
29%
Summary
With ROTCE of 8.8% vs. 6.8% cost of equity, fair P/TBV is 1.72x on $205.38 tangible book, implying $353.43 per share. DDM cross-check: $194.02.
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: $194.02 (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 $273.67 (from 23 analysts). Our estimate is 29% 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