UPDATE: Sterne Agee Downgrades Reinsurance Group of America to Hold

Sterne Agee has published a research report on Reinsurance Group of America

downgrading the company from Buy to Hold. In the report, Sterne Agee writes, "It's a near certainty that RGA's top-line growth will continue to slow in 2012 as cession rates in the U.S. continue to decline and overseas growth likely slows as European and Asian insurers continue to be more focused on hoarding as opposed to deploying capital. For the entirety of RGA's public history, strong organic growth rates have forced the company to be relatively consistent issuers of debt and equity to fund its growth. However, with slower growth now upon us (unless deal activity picks up), management should be in a position to return capital to shareholders from free cash flow. Our 2012/13 estimates include $160/$200m of buybacks, respectively, easily supported by RGA's current excess capital (~$300m) and annual free cash flow generation (~$200m). However, management continues to expect deals could pick up given financial stress in Europe as well as the implementation of Solvency II abroad. As such, risk remains that management could continue to hold significant excess capital as it looks for deals to develop, leaving downside risk to current estimates and growing impatience among investors." Sterne Agee has a $62 price target on Reinsurance Group of America, which is currently trading down $0.89 from Friday's $52.22 closing price.