The life insurance industry is one filled with a variety of large, middle, and small capitalization companies. Specifically focusing on the mid-cap equities, four 3-5 billion dollar corporations stand out. Three of these companies, Protective Life, Torchmark, and American National Insurance all have solid fundamentals and business strategies to help investors make money. However, the other stock, Reinsurance Group of America (RGA), has superior fundamentals to the aforementioned equities and should be a part of any investor's diversified portfolio.

Narrowing the business strategy a bit further, Reuters claims that Reinsurance, an insurance company, is "primarily engaged in traditional individual life, asset-intensive, critical illness and financial reinsurance." Having a global presence in the United States, Canada, Europe, South Africa, and East Asia, there is tremendous potential for further growth. With life insurance, growth can come from many different areas. Each of these nations has their respective health problems. In Asia, where Reinsurance claims nearly 16% of net premiums, smoking is highly prominent. Since tobacco is highly addictive, and most of the smokers that do continue this practice are usually aware of the potential dangers of its use, they may be more willing to purchase an insurance plan such as the one Reinsurance issues. In other areas like the United States and Canada, which together accounts for 70% of Reinsurance's net premiums, obesity is a high problem. Just like smoking is addictive to the natives of Pacific Asia, fast food is the complement to many areas in North America. As a result these individuals usually will understand the threats associated with their habits and take precautions such as purchasing a life insurance plan. And as more individuals continues these practices into the future, there will be more demand for Reinsurance, which means higher sales numbers, higher EPS figures, and positive sentiment, leading to a higher share price.

Reading these past few sentences, many investors may find that all the companies in this industry have similar goals. This observation is true, but does not extend into the fundamental side of things—an area where Reinsurance is really prospering. Looking over the past year revenue numbers, Reinsurance has had more revenue come in at 5.35 billion dollars, according to Capital IQ, which is more than the other three competitors. Now some investors may argue that over the same time period, according to Reuters, operating margins (8.65%) and net profit margins (5.60) are quite below the industry respective averages at 15.49% and 11.00%, not to mention all three other companies. Nevertheless it is important to understand the facts behind these numbers. Comparing both operating and net profit margins last year to the five year average (8.47% and 5.47% respectively), there is clear indication that Reinsurance is growing every year. This is a statement that cannot be said of some of Reinsurance's competitors like Protective Life which saw lower figures last year compared to its five year average. However, the most important statistic regarding sales figures is the five year growth rate. Reinsurance has seen revenue over this time period increase by 21.42%--over four times the industry average at 5.21%. In fact, the next highest percentage increase when compared to the three other rivals was Protective Life at 10.73%. Such great potential should continue to increase given the business plan mentioned earlier, and high sales figures should be a strong complement to higher earnings.

While some investors may feel optimistic about such high growth potential, these same individuals may feel reluctant about EPS growth. Fortunately, statistics from Reuters show that this company has seen 42.21% growth in this area for five years. While the number is a bit below industry average, it is still quite high compared to similar mid-cap rivals, as only American National Insurance at a rate of 33.16% can even compare to Reinsurance's figure. If this figure can be sustained for the next couple of years, much of this success will translate to a higher share price.

Already sitting at a forward P/E ratio at 11.16 which is below the 13.34 multiple of the industry, some investors may claim that Reinsurance is not only a growing quite nicely but is undervalued given these aforementioned statistics. And looking at evidence to support this claim, there may be some truth to this argument. It is true that all three rivals mentioned are hovering about the 10-12 earnings multiple, but other ratios show that Reinsurance has much more potential for a high share price, even if it is near a 52-week high. If estimates are close to correct, analyst propose that Reinsurance will see over $5.75 billion in revenue in fiscal year 2007. If this figure is accurate, this would mean an enterprise value to revenue of 0.92 and a price to sales figure of 0.63—both numbers below trailing twelve month figures. Comparing this figure to Protective Life's 1.17 same-time price to sales statistic or Torchmark's 1.95 respective figure (which is actually higher than the trailing twelve month average), there is strong evidence to support that the share price for Reinsurance has the potential to further grow. The PEG ratio (five-year growth rate) at 1.12 is below most other competitors, and the trailing twelve month enterprise value to EBITDA at 3.76 is nearly half of all three aforementioned companies. Now, as the company is trading at a range of 60-65, now would be an excellent time to purchase shares of this company, given the undervalued status it seems to have.

Nevertheless, amid all these great numbers, there may be some speculation regarding some of the management ratios. Although, even the great fundamental numbers provided earlier from CEO Greig Woodring and his 978 employees, there still may be some questions about a trailing ROE figure of 11.15%--a number below the industry average at 12.72%. While it would be nice to have a higher number reflecting how management uses shareholder's money, looking at competitors, such as American National which only has a 7.86% ROE, there should not be tremendous concern for a near average number. What Reinsurance should be excited about, however, is a price to book ratio of 1.32 in its most recent quarter which is below industry average and quite important for financial stocks. In addition, it is great to see that Reinsurance has both leveraged and free cash flow in the positive range, which cannot be said about some of its rivals like Protective Life. Overall, while the company does not have perfect fundamental figures, its statistics do illustrate that it is a great purchase for any investor portfolio.

While Reinsurance is trading near its 52-week high, there are still plenty of reasons why it is undervalued. The aforementioned earnings and sales statistics are a good starting point, and looking at the business goal and plan compared to other rivals, is another way to reach this assertion. Except for one cycle, Reinsurance has not had a negative two year range, and should continue to sustain this pace, barring any major economic bullet. The equity also has a dividend yield of 0.59 which is great for any investor. Given all these excellent numbers and information about Reinsurance, there should be no reason for any investor to avoid this company and potentially fail to have this great portfolio asset.