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Reinsurance Group of America, Incorporated (RZB) Intrinsic Value

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

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Reinsurance Group of America, Incorporated (RZB)

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Intrinsic Value (DCF)

Current$25.04
→
Intrinsic$177.74
+610%
$113.46$177.74$299.93
Market implies 1% growth for 5 years
DCF analysis suggests RZB could have 610% upside at 9% growth — verify assumptions match your view.
At $25, the market prices in only 1% growth — below historical 9%, suggesting low expectations.
Range: Bear $113 → Bull $300. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →5%7%9%11%
8%$216$238$261$287
10%$147$162$178$195
12%$108$119$131$144
14%$83$92$102$112

Bull Case

  • Bull case ($300) offers 1098% upside at 11% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (9%)

Bear Case

  • Bear case ($113) with 7% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$782.26M
Year 2$853.46M
Year 3$931.14M
Year 4$1.02B
Year 5$1.11B
Terminal$16.31B

📐 Model Inputs

Growth Rate9.1%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 RZB stock undervalued or overvalued?
🟢 UNDERVALUED

RZB trades at $25.04 vs. our DCF-derived intrinsic value of $177.74, implying +300% upside. At a 10.0% WACC and 9.1% projected FCF growth, the market appears to be underpricing the present value of RZB's future cash flows. The bear case ($120.26) still suggests upside, providing margin of safety.

What is RZB's intrinsic value?

Using a 5-year DCF model: Base FCF of $717M, projected at 9.1% 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 $120.26 | Base $177.74 | Bull $255.39. Current price $25.04 implies +300% to base case.

How is RZB's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 9.1% 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 ($13.62B).

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: 19.0x.