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Reinsurance Group of America, Incorporated (RGA) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Reinsurance Group of America, Incorporated (RGA)

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Intrinsic Value (DCF)

Current$196.73
→
Intrinsic$178.79
-9%
$114.16$178.79$301.64
Market implies 11% growth for 5 years
RGA appears fairly valued — current price aligns with our DCF estimate.
At $197, the market prices in 11% annual cash flow growth — a moderate expectation aligned with historical trends (9%).
Range: Bear $114 → Bull $302. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →5%7%9%11%
8%$217$239$263$288
10%$147$163$179$196
12%$109$120$132$145
14%$84$93$102$113

Bull Case

  • Bull case ($302) offers 53% upside at 11% growth, 9% discount
  • Conservative 9% growth assumption is achievable based on track record

Bear Case

  • Bear case ($114) implies 42% downside at 7% growth, 12% discount
  • Price reflects 11% growth expectations vs 9% historical — high bar to clear
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5-Year Net Income Projection

Year 1$782.93M
Year 2$854.92M
Year 3$933.53M
Year 4$1.02B
Year 5$1.11B
Terminal$16.38B

📐 Model Inputs

Growth Rate9.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$717.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is RGA stock undervalued or overvalued?
🟡 FAIRLY VALUED

RGA trades at $196.73, within 10% of our $178.79 intrinsic value estimate. At 10.0% WACC and 9.2% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $120.88 (bear) to $257.08 (bull).

What is RGA's intrinsic value?

Using a 5-year DCF model: Base FCF of $717M, projected at 9.2% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.72B net debt and dividing by 0.07B shares: Bear $120.88 | Base $178.79 | Bull $257.08. Current price $196.73 implies -11% to base case.

How is RGA's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 9.2% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($13.68B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 19.1x.