REINSURANCE GROUP OF AMERICA INC (RGA) stock intrinsic value fair value estimate & owner earnings analysis

Reinsurance Group of America is one of the largest life and health reinsurers in the world. It takes on mortality, morbidity and longevity risk from primary life insurers, and through its Financial Solutions businesses it reinsures asset-intensive products, pension risk transfer and large in-force blocks. It earns an underwriting margin on the risk it assumes plus investment income on about $130 billion of invested assets backing its reserves. In 2025 roughly half of net premiums came from the U.S. and Latin America, about 22% from Asia Pacific, 19% from Europe, Middle East and Africa and 9% from Canada. How we measured earnings. We start from operating cash flow and remove the large swings caused by reserves building as new business is written, then subtract stock compensation and capital spending. On that basis, owner earnings per share were $4.88 in 2020 and $8.86 in 2021 (pandemic mortality), and $13.26, $16.00, $14.72 and $18.52 in 2022 through 2025. We anchor on the 2022-2025 median of $15.36 because the book, invested assets and capital base are materially larger than they were in 2016-2019 and the pandemic years are charged explicitly in the bear case rather than averaged into the starting level. Owner earnings rose about 26% in 2025; our base case assumes about 9% in year one, well below that. The Equitable block. On July 31, 2025 RGA assumed a 75% quota share of Equitable Holdings' in-force individual life business, about $12 billion of liabilities, adding $68 million of pre-tax income in the five months it was owned. A full year is roughly $163 million; after interest on the $700 million of 6.65% subordinated debentures issued in March 2025 to fund it and after tax, we estimate about $1.40 per share a year, added to the anchor for year one ($16.76). Base case ($285.51). Year one at $16.76, then 2% a year growth through year ten, reflecting the company's long record of writing new treaties that replace run-off of old ones (owner earnings per share rose from about $13.45 in 2016 to $18.52 in 2025, a pace faster than we credit). Year five carries a $3.00 hit for a moderate adverse mortality or assumption-review year, of the kind seen in the 2024 ($194 million) and 2025 ($149 million) annual assumption reviews. Earnings then hold flat at about $20 a share through year 40, supported by the long duration of life reinsurance treaties and the continuing new-business engine; no growth is credited after year ten. About $132 of value comes from the first ten years and $154 from the years after. Bear case ($199.10). No growth beyond the anchor, and the Equitable block's contribution runs off at 7% a year. A pandemic-scale mortality shock in years three and four reproduces 2020-2021, when owner earnings fell about 64% and 34% below normal. A 2008-2010-style credit cycle in years six and seven costs an estimated $7.75 a share each year in investment losses, roughly 1% of invested assets over two years. The story ends after year 30. Even after these losses, shareholders' equity of about $13.7 billion stays well above the $5.8 billion minimum net worth required under the credit facility, so we do not model forced dilution; the tighter constraint is the 35% debt-to-capital covenant, against roughly 29% today. The bear value is below book value of about $207 a share. Bull case ($357.80). Year one at $16.76, then 4% growth through year ten as Asia Pacific traditional business and European and Asian Financial Solutions keep growing at their recent pace (Asia Pacific net premiums rose from $3.0 billion in 2023 to $3.8 billion in 2025), 2% a year in years 11-20, then flat through year 40. Debt. As an insurer, RGA's earnings are measured after interest and no separate debt deduction is made. It had about $5.7 billion of borrowings at June 30, 2026, at an average rate of about 5.3%, with a syndicated credit facility maturing in August 2028. A downgrade below BBB+/Baa1 senior or A-/A3 financial strength would trigger termination rights on most of its derivative agreements, which is a liquidity risk in a severe stress. Margin of safety price: $150. We are reasonably confident in the earnings level: four post-pandemic years have ranged between $13 and $19 a share. The worst plausible outcome is a pandemic or longevity mis-pricing combined with a credit recession, which the bear case models; the structure survives it because capital far exceeds covenant minimums and the business is spread across many ceding companies and countries. What we are most likely wrong about is how much of the Equitable contribution persists, the size of future assumption reviews, and the depth of investment losses in a recession; with Equitable worth nothing beyond what has already been earned and a pandemic shock arriving early, the shares would be worth roughly $175-190. From $150, with a dividend of $3.72 a year (currently $0.93 quarterly), the base case implies about 26% a year over three years, and the bear case implies roughly breaking even with dividends. Previous estimates were built on a different basis and are not comparable.