Reinsurance Group trades lower after Raymond James downgrades on competition concerns

Reinsurance Group of America (NYSE:RGA) was trading lower after Raymond James downgraded the stock on increasing competition and concerns related to pension risk transfers.

Shares were 2.69% down during Friday morning trade to $197.43.

"RGA does not have retail distribution, which means it must compete with 20-25 largely Bermuda-based players for the deals that fuel its growth," said analyst Wilma Burdis in a note to clients.

Burdis also expressed concerns regarding a "temporary" pause in the U.S. pension risk transfers market and increasingly lower returns on U.K. by-in pension risk transfers.

The investment bank cut its recommendation on RGA to Market Perform from Strong Buy.

The rating contradicts the average sell-side analysts and Seeking Alpha authors and the Quant Rating of Buy.

"Over the past year, we have seen RGA undergo something of a strategy shift as it has aggressively deployed capital to grow its business, moving aggressively into pension risk transfer deals for instance," said Seeking Alpha contributor Seeking Profits.

"I have viewed this positively in part because by adding PRT exposure, RGA is naturally hedging some of its existing mortality exposure on life insurance products," added the author.