UBS downgraded Reinsurance Group of America (NYSE:RGA) from Buy to Neutral, setting a price target of $216. The downgrade reflects growing concerns that short-term upside may be limited, even as the company aggressively pursues long-term growth.
While UBS acknowledges that RGA’s management is targeting 8–10% annual EPS growth through 2027 by deploying $1.5 billion in capital, this ambitious strategy introduces new layers of execution risk for a company historically recognized for its conservative approach. Much of that deployment — including sidecar partnerships and non-debt financing — is already baked into consensus forecasts, leading analysts to believe near-term returns are largely accounted for.
RGA’s push to capture global reinsurance opportunities is seen as a bold strategic pivot, and UBS doesn’t doubt the company’s ability to hit its targets. However, the reliance on third-party capital and large-scale deals like its recent transaction with EQH could mark a shift from opportunistic growth to growth driven by internal targets, which UBS views as a red flag for risk-conscious investors.
While the long-term fundamentals remain solid, UBS sees the current valuation and the execution demands of RGA’s capital plan as factors that warrant a more cautious stance in the near term.