Brazil and Mexico fetch $4.0 billion in cash, but close in late 2027. I still model $13.50 of 2027 operating earnings at 8.7 times, a $117 stock, a market-like return plus the 4.8% yield.
Key points
- $13.50 is my 2027 after-tax adjusted operating EPS after Japan stays shut through January.
- 8.5 times is what $115.27 requires on that $13.50; I use 8.7 times.
- $4.0 billion Brazil and Mexico cash closes in the second half of 2027, after the year that sets this target.
The call
The $115 share needs about $13.25 of 2027 operating earnings at 8.7 times. That already assumes Japan stays closed through January and U.S. segments hold last year’s run rate.
I keep $13.50 because the signed Latin America sale does not close until late 2027 and the October 15 Japan drag is one more quarter of the same halt. Eight-point-seven times that figure is $117, a market return plus the dividend.
2027 after-tax AOI EPS vs what $115 requiresSource: company 8-Ks Aug–Oct 2026; my 2027 estimate
Valuation
| Item | Figure |
|---|
| 2027 after-tax AOI EPS (mine) | $13.50 |
| Multiple on 2027 AOI | 8.7 times |
| Implied value | $117 |
| Recast Q2 2026 after-tax AOI | $3.75 a share |
| Price / 2027 AOI | 8.5 times |
| 12-month target | $117 |
Life insurers with Japan exposure and a 5% yield trade 8 to 9 times forward operating earnings when the 10-year sits near 5.1%. Being right by a dollar of EPS is $9 of stock; a delayed reopen cuts the multiple, not the book. That is a hold.
Japan pretax AOI drag by period ($ millions)Oct 9 order through Jan 31 2027; Oct 15 8-K Q3 estimate
Risks
- FSA keeps POJ or Gibraltar closed past January 2027; watch the November improvement-plan filing.
- Disability claims or PRT mortality reverse the U.S. underwriting gain; watch the Group benefits ratio.
- Credit losses in the general account rise with 5.1% Treasuries; watch quarterly credit-related losses.
What would change my mind
A clean February 1 reopen with POJ sales above 40% of 2025, or 2027 AOI guided above $15 a share.