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Reinsurance Group of America Reports Fourth Quarter Results

January 28, 2020 GMT

ST. LOUIS--(BUSINESS WIRE)--Jan 28, 2020--

Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global provider of life reinsurance, reported fourth quarter net income of $235 million, or $3.68 per diluted share, compared with $110 million, or $1.72 per diluted share, in the prior-year quarter. Adjusted operating income* totaled $219 million, or $3.43 per diluted share, compared with $222 million, or $3.46 per diluted share, the year before. Net foreign currency fluctuations had a favorable effect of $0.01 per diluted share on net income and adjusted operating income as compared with the prior year.

 

 

Quarterly Results

 

Year-to-Date Results

($ in millions, except per share data)

 

2019

 

2018

 

2019

 

2018

Net premiums

 

$

2,986

 

 

$

2,805

 

 

$

11,297

 

 

$

10,544

 

Net income

 

235

 

 

110

 

 

870

 

 

716

 

Net income per diluted share

 

3.68

 

 

1.72

 

 

13.62

 

 

11.00

 

Adjusted operating income*

 

219

 

 

222

 

 

853

 

 

789

 

Adjusted operating income per diluted share*

 

3.43

 

 

3.46

 

 

13.35

 

 

12.12

 

Book value per share

 

185.17

 

 

134.53

 

 

 

 

 

Book value per share, excluding accumulated other comprehensive income (AOCI)*

 

135.10

 

 

124.39

 

 

 

 

 

Total assets

 

76,731

 

 

64,535

 

 

 

 

 

 

* See ‘Use of Non-GAAP Financial Measures’ below

Full-year net income totaled $870 million, or $13.62 per diluted share, compared with $716 million, or $11.00 per diluted share in 2018. Adjusted operating income for the full year totaled $853 million, or $13.35 per diluted share, compared with $789 million, or $12.12 per diluted share the year before. Net foreign currency fluctuations had an adverse effect of $0.18 per diluted share on net income and adjusted operating income for the full year. Net premiums totaled $11.3 billion, increasing 7% in 2019. Full-year premiums reflected adverse foreign currency effects of $179 million.

In the fourth quarter, consolidated net premiums totaled $3.0 billion, up 6% from last year’s fourth quarter, with adverse net foreign currency effects of $5 million. Excluding spread-based businesses and the value of associated derivatives, investment income increased 10% versus a year ago, attributable to asset growth of 8% and higher variable investment income. The average investment yield, excluding spread business, was up 11 basis points from the fourth quarter of 2018 to 4.55%, primarily due to higher variable investment income.

The effective tax rate this quarter was 23.8% on pre-tax income. For the full year, the effective tax rate was 23.1% on pre-tax income. The effective tax rate was 23.1% on pre-tax adjusted operating income for the quarter. For the full year, the effective tax rate was 22.4% on pre-tax adjusted operating income, in line with the expected range of 21% to 24%.

Anna Manning, President and Chief Executive Officer, commented, “Our operating results were modestly below our expectations this quarter, while the full-year results were above our expectations. We can point to strong organic growth and active capital deployment as favorable indicators of the strength of our business, and we continue to benefit from the earnings diversity that comes from our global platform.

“In the quarter, we produced strong overall results in EMEA, excellent results from Financial Solutions across all geographies, and the U.S. Group business performed above expectations. These areas of strength partially offset a loss in Australia and unfavorable U.S. Individual Mortality experience.

“We had an active quarter as we deployed approximately $78 million of capital into in-force and other transactions, bringing the year-to-date total to $465 million. We remain well positioned and optimistic about the environment and our pipeline. We ended the quarter with an excess capital position of approximately $900 million.

“The full year featured numerous highlights, including excellent Financial Solutions results across all geographies, strong overall results in EMEA and Canada, a strong rebound in our U.S. Group operations, vibrant top-line growth and in-line adjusted operating income in Asia.

“Looking forward, we remain optimistic about the future and our business prospects, as RGA is well positioned in its markets and we are executing on our proven strategy. We have a long track record of successful execution and strong financial results, and our intermediate-term financial outlook remains unchanged.”

SEGMENT RESULTS

In the fourth quarter of 2019, the Company changed the name of the Financial Reinsurance business within the U.S. and Latin America Financial Solutions segment to “Capital Solutions”. The name change better describes the product offerings for this part of the U.S. and Latin America Financial Solutions segment. This name change does not affect any previously or future reported results for the U.S. and Latin America Financial Solutions segment.

U.S. and Latin America

Traditional

The U.S. and Latin America Traditional segment reported pre-tax income of $85 million, compared with $95 million in the fourth quarter of 2018. Pre-tax adjusted operating income totaled $83 million, compared with $92 million the year before. Results reflected above average variable investment income and favorable Group experience, offset by adverse individual mortality experience driven by large claims. For the full year, pre-tax income totaled $265 million, compared with $286 million a year ago, and pre-tax adjusted operating income totaled $283 million, compared with $278 million a year ago.

Traditional net premiums were up 4% from last year’s fourth quarter to $1,558 million. Full-year net premiums totaled $5,729 million, up 4% from 2018.

Financial Solutions

The Asset-Intensive business reported pre-tax income of $78 million compared with pre-tax losses of $6 million last year. Fourth quarter pre-tax adjusted operating income increased to $65 million, up from $53 million a year ago. The current-year period results reflected the effects of new and existing business, stable investment spreads, and favorable equity market impacts. The prior-year period was relatively in line with expectations. Full-year pre-tax income totaled $315 million, compared with $168 million in 2018. Pre-tax adjusted operating income for the full year totaled $259 million, compared with $216 million in the prior year.

The Capital Solutions business reported pre-tax income and pre-tax adjusted operating income of $26 million, up from $20 million the year before primarily due to new business. For the full year, pre-tax income and pre-tax adjusted operating income totaled $83 million, unchanged from the year before.

Canada

Traditional

The Canada Traditional segment reported pre-tax income of $28 million, compared with $45 million the year before. Pre-tax adjusted operating income totaled $27 million, compared with $50 million a year ago, reflecting modestly unfavorable individual mortality experience. The year-ago period reflected favorable individual mortality experience, and the contribution of income from in-force transactions written that year. Foreign currency exchange rates had an immaterial effect on pre-tax income and pre-tax adjusted operating income. Pre-tax income for the full year totaled $168 million, up from $112 million the year before and pre-tax adjusted operating income for the full year totaled $161 million, up from $118 million in the year before. Foreign currency exchange rates had an adverse effect of $5 million on pre-tax income and pre-tax adjusted operating income for the full year.

Reported net premiums totaled $276 million for the quarter, up 3% over the year-ago period. Net foreign currency fluctuations had an immaterial effect on net premiums. For the full year, net premiums totaled $1,066 million, up 4% from the prior year. Net foreign currency fluctuations had an adverse effect of $25 million on net premiums for the full year.

Financial Solutions

The Canada Financial Solutions business segment, which consists of longevity and fee-based transactions, reported fourth quarter pre-tax income and pre-tax adjusted operating income of $7 million, compared with $2 million a year ago. The current period reflected income from a new fee-based transaction. Net foreign currency fluctuations had an immaterial effect on pre-tax income and pre-tax adjusted operating income. For the full year, pre-tax income and pre-tax adjusted operating income totaled $15 million, compared with $10 million in 2018. Net foreign currency fluctuations had an immaterial effect on pre-tax income and pre-tax adjusted operating income.

Europe, Middle East and Africa (EMEA)

Traditional

The EMEA Traditional segment reported pre-tax income and pre-tax adjusted operating income of $23 million compared with $15 million in last year’s fourth quarter. The strong results were attributable primarily to favorable underwriting experience across most of the region. Net foreign currency fluctuations adversely affected pre-tax income and pre-tax adjusted operating income by $1 million for the quarter. Full-year pre-tax income and pre-tax adjusted operating income totaled $80 million, compared with $55 million in the prior-year. For the year, foreign currency fluctuations adversely affected pre-tax income and pre-tax adjusted operating income by $5 million.

Reported net premiums increased 4% to $368 million in the fourth quarter. Foreign currency exchange rates adversely affected net premiums by $4 million. For the full year, net premiums totaled $1,442 million, with adverse foreign currency fluctuations of $77 million.

Financial Solutions

The EMEA Financial Solutions business segment, which consists of longevity, asset-intensive and fee-based transactions, reported fourth quarter pre-tax income of $72 million, compared with $36 million in the year-ago period. Pre-tax adjusted operating income totaled $73 million, compared with $45 million the year before. The current-year period reflected favorable longevity experience. Net foreign currency fluctuations had an immaterial effect on pre-tax income and pre-tax adjusted operating income. For the full year, pre-tax income totaled $223 million, compared with $197 million in the year before, and pre-tax adjusted operating income totaled $216 million, compared with $197 million in the year before. Net foreign currency fluctuations had an adverse effect of $9 million on pre-tax income and $8 million on pre-tax adjusted operating income for the year.

Asia Pacific

Traditional

The Asia Pacific Traditional segment’s pre-tax income and pre-tax adjusted operating income totaled $12 million, compared with $34 million in the prior-year period. The current-period results were relatively in line with expectations for Asia, while Australia experienced a loss that was roughly similar to that of the third quarter of this year. Net foreign currency fluctuations had a favorable effect of $2 million on pre-tax income and pre-tax adjusted operating income. For the full year, pre-tax income and pre-tax adjusted operating income totaled $105 million, compared with $178 million in 2018. Net foreign currency fluctuations had a favorable effect of $3 million on pre-tax income and pre-tax adjusted operating income for the full year.

Reported net premiums increased 7% to $659 million, reflecting growth on new and existing treaties in Asia, slightly offset by a reduction in Australia. Foreign currency exchange rates had an adverse effect of $3 million on net premiums. For the full year, reported net premiums totaled $2,568 million, up 12% over the prior year. Foreign currency exchange rates had an adverse effect of $65 million on net premiums for the full year.

Financial Solutions

The Asia Pacific Financial Solutions business segment, which consists of asset-intensive and fee-based transactions, reported fourth quarter pre-tax income of $13 million, compared with pre-tax losses of $14 million in the prior-year period. Pre-tax adjusted operating income totaled $8 million, compared with $2 million the year before, attributable to new business in Asia. Net foreign currency fluctuations had an immaterial effect on pre-tax income and pre-tax adjusted operating income. Full-year pre-tax income totaled $23 million, compared with pre-tax losses of $6 million in the prior year. Full-year pre-tax adjusted operating income totaled $20 million, compared with $7 million in the prior year. Net foreign currency fluctuations had a favorable effect of $1 million on pre-tax income and an immaterial effect on pre-tax adjusted operating income.

Reported net premiums increased significantly to $38 million, attributable to new treaties added in 2019. Foreign currency exchange rates had a favorable effect of $1 million on net premiums. For the full year, reported net premiums totaled $146 million, a significant increase over the prior year. Foreign currency exchange rates had an immaterial effect on net premiums.

Corporate and Other

The Corporate and Other segment’s pre-tax losses for the fourth quarter totaled $36 million, compared with pre-tax losses of $89 million the year before. Pre-tax adjusted operating losses totaled $40 million, compared with year-ago pre-tax adjusted operating losses of $33 million. The current-period loss was higher than the average expected run rate due primarily to higher incentive compensation accruals and higher costs related to strategic initiatives. For the full year, pre-tax losses totaled $145 million, compared with pre-tax losses of $237 million, and pre-tax adjusted operating losses totaled $123 million, compared with pre-tax losses of $124 million in the prior year.

Company Guidance

On an annual basis, the Company provides financial guidance based upon the intermediate term rather than giving a range of annual adjusted operating earnings per share for an upcoming year. This better reflects the long-term nature of the business, as the Company accepts risks over very long periods of time, up to 30 years or longer in some cases. While more predictable over longer-term horizons, the Company’s business is subject to inherent short-term volatility, primarily due to mortality and morbidity experience.

Over the intermediate term, the Company continues to target growth in adjusted operating earnings per share in the 5% to 8% range, and adjusted operating return on equity of 10% to 12%. It is presumed that there are no significant changes in the investment environment from current levels, and the Company will deploy $300 to $400 million of excess capital, on average, annually. These guidance ranges are based upon “normalized” results. The Company currently estimates its effective tax rate on adjusted operating income will be approximately 23% to 24%.

Dividend Declaration

The board of directors declared a regular quarterly dividend of $0.70, payable February 27 to shareholders of record as of February 6.

Earnings Conference Call

A conference call to discuss fourth quarter results will begin at 11 a.m. Eastern Time on Wednesday, January 29. Interested parties may access the call by dialing 800-458-4121 (domestic) or 323-794-2093 (international). The access code is 4275261. A live audio webcast of the conference call will be available on the Company’s Investor Relations website at www.rgare.com. A replay of the conference call will be available at the same address for 90 days following the conference call.

The Company has posted to its website a Quarterly Financial Supplement that includes financial information for all segments as well as information on its investment portfolio. Additionally, the Company posts periodic reports, press releases and other useful information on its Investor Relations website.

Use of Non-GAAP Financial Measures

RGA uses a non-GAAP financial measure called adjusted operating income as a basis for analyzing financial results. This measure also serves as a basis for establishing target levels and awards under RGA’s management incentive programs. Management believes that adjusted operating income, on a pre-tax and after-tax basis, better measures the ongoing profitability and underlying trends of the Company’s continuing operations, primarily because that measure excludes substantially all of the effect of net investment related gains and losses, as well as changes in the fair value of certain embedded derivatives and related deferred acquisition costs. These items can be volatile, primarily due to the credit market and interest rate environment, and are not necessarily indicative of the performance of the Company’s underlying businesses. Additionally, adjusted operating income excludes any net gain or loss from discontinued operations, the cumulative effect of any accounting changes, tax reform and other items that management believes are not indicative of the Company’s ongoing operations. The definition of adjusted operating income can vary by company and is not considered a substitute for GAAP net income.

Book value per share excluding the impact of AOCI is a non-GAAP financial measure that management believes is important in evaluating the balance sheet in order to ignore the effects of unrealized amounts primarily associated with mark-to-market adjustments on investments and foreign currency translation.

Adjusted operating income per diluted share is a non-GAAP financial measure calculated as adjusted operating income divided by weighted average diluted shares outstanding. Adjusted operating return on equity is a non-GAAP financial measure calculated as adjusted operating income divided by average stockholders’ equity excluding AOCI. Similar to adjusted operating income, management believes these non-GAAP financial measures better reflect the ongoing profitability and underlying trends of the Company’s continuing operations, they also serve as a basis for establishing target levels and awards under RGA’s management incentive programs.

Reconciliations from GAAP net income, book value per share, net income per diluted share and average stockholders’ equity are provided in the following tables. Additional financial information can be found in the Quarterly Financial Supplement on RGA’s Investor Relations website at www.rgare.com in the “Financial Information” section.

About RGA

Reinsurance Group of America, Incorporated (RGA), a Fortune 500 company, is among the leading global providers of life reinsurance and financial solutions, with approximately $3.5 trillion of life reinsurance in force and assets of $76.7 billion as of December 31, 2019. Founded in 1973, RGA today is recognized for its deep technical expertise in risk and capital management, innovative solutions, and commitment to serving its clients. With headquarters in St. Louis, Missouri, and operations around the world, RGA delivers expert solutions in individual life reinsurance, individual living benefits reinsurance, group reinsurance, health reinsurance, facultative underwriting, product development, and financial solutions. To learn more about RGA and its businesses, visit the Company’s website at www.rgare.com.

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, among others, statements relating to projections of the future operations, strategies, earnings, revenues, income or loss, ratios, financial performance and growth potential of the Company. Forward-looking statements often contain words and phrases such as “intend,” “expect,” “project,” “estimate,” “predict,” “anticipate,” “should,” “believe” and other similar expressions. Forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements are not a guarantee of future performance and are subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results, performance, and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.

Numerous important factors could cause actual results and events to differ materially from those expressed or implied by forward-looking statements including, without limitation: (1) adverse changes in mortality, morbidity, lapsation or claims experience, (2) inadequate risk analysis and underwriting, (3) adverse capital and credit market conditions and their impact on the Company’s liquidity, access to capital and cost of capital, (4) changes in the Company’s financial strength and credit ratings and the effect of such changes on the Company’s future results of operations and financial condition, (5) the availability and cost of collateral necessary for regulatory reserves and capital, (6) requirements to post collateral or make payments due to declines in market value of assets subject to the Company’s collateral arrangements, (7) action by regulators who have authority over the Company’s reinsurance operations in the jurisdictions in which it operates, (8) the effect of the Company parent’s status as an insurance holding company and regulatory restrictions on its ability to pay principal of and interest on its debt obligations, (9) general economic conditions or a prolonged economic downturn affecting the demand for insurance and reinsurance in the Company’s current and planned markets, (10) the impairment of other financial institutions and its effect on the Company’s business, (11) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (12) market or economic conditions that adversely affect the value of the Company’s investment securities or result in the impairment of all or a portion of the value of certain of the Company’s investment securities, that in turn could affect regulatory capital, (13) market or economic conditions that adversely affect the Company’s ability to make timely sales of investment securities, (14) risks inherent in the Company’s risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (15) the fact that the determination of allowances and impairments taken on the Company’s investments is highly subjective, (16) the stability of and actions by governments and economies in the markets in which the Company operates, including ongoing uncertainties regarding the amount of U.S. sovereign debt and the credit ratings thereof, (17) the Company’s dependence on third parties, including those insurance companies and reinsurers to which the Company cedes some reinsurance, third-party investment managers and others, (18) financial performance of the Company’s clients, (19) the threat of natural disasters, catastrophes, terrorist attacks, epidemics or pandemics anywhere in the world where the Company or its clients do business, (20) competitive factors and competitors’ responses to the Company’s initiatives, (21) development and introduction of new products and distribution opportunities (22) execution of the Company’s entry into new markets, (23) integration of acquired blocks of business and entities, (24) interruption or failure of the Company’s telecommunication, information technology or other operational systems, or the Company’s failure to maintain adequate security to protect the confidentiality or privacy of personal or sensitive data stored on such systems, (25) adverse litigation or arbitration results, (26) the adequacy of reserves, resources and accurate information relating to settlements, awards and terminated and discontinued lines of business, (27) changes in laws, regulations, and accounting standards applicable to the Company or its business, (28) the effects of the Tax Cuts and Jobs Act of 2017 may be different than expected and (29) other risks and uncertainties described in this document and in the Company’s other filings with the Securities and Exchange Commission (“SEC”).

Forward-looking statements should be evaluated together with the many risks and uncertainties that affect the Company’s business, including those mentioned in this document and described in the periodic reports the Company files with the SEC. These forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update these forward-looking statements, even though the Company’s situation may change in the future. For a discussion of these risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to see Item 1A - “Risk Factors” in the 2018 Annual Report.

 
 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Consolidated Net Income to Adjusted Operating Income
(Dollars in millions, except per share data)

 

(Unaudited)

Three Months Ended December 31,

 

2019

 

2018

 

 

 

Diluted

Earnings Per

Share

 

 

 

Diluted

Earnings Per

Share

Net income

$

235

 

 

$

3.68

 

 

$

110

 

 

$

1.72

 

Reconciliation to adjusted operating income:

 

 

 

 

 

 

 

Capital (gains) losses, derivatives and other, included in investment related gains/losses, net

25

 

 

0.40

 

 

25

 

 

0.38

 

Capital (gains) losses on funds withheld, included in investment income, net of related expenses

 

 

 

 

 

 

 

Embedded derivatives:

 

 

 

 

 

 

 

Included in investment related gains/losses, net

(37

)

 

(0.58

)

 

87

 

 

1.36

 

Included in interest credited

(8

)

 

(0.13

)

 

10

 

 

0.15

 

DAC offset, net

(3

)

 

(0.05

)

 

(10

)

 

(0.15

)

Investment (income) loss on unit-linked variable annuities

 

 

 

 

8

 

 

0.13

 

Interest credited on unit-linked variable annuities

 

 

 

 

(8

)

 

(0.13

)

Interest expense on uncertain tax positions

3

 

 

0.05

 

 

 

 

 

Non-investment derivatives

2

 

 

0.03

 

 

 

 

 

Uncertain tax positions and other tax related items

2

 

 

0.03

 

 

 

 

 

Adjusted operating income

$

219

 

 

$

3.43

 

 

$

222

 

 

$

3.46

 

 
 

(Unaudited)

Twelve Months Ended December 31,

 

2019

 

2018

 

 

 

Diluted

Earnings Per

Share

 

 

 

Diluted

Earnings Per

Share

Net income

$

870

 

 

$

13.62

 

 

$

716

 

 

$

11.00

 

Reconciliation to adjusted operating income:

 

 

 

 

 

 

 

Capital (gains) losses, derivatives and other, included in investment related gains/losses, net

(43

)

 

(0.68

)

 

121

 

 

1.85

 

Capital (gains) losses on funds withheld, included in investment income, net of related expenses

4

 

 

0.06

 

 

(2

)

 

(0.03

)

Embedded derivatives:

 

 

 

 

 

 

 

Included in investment related gains/losses, net

(13

)

 

(0.20

)

 

22

 

 

0.34

 

Included in interest credited

36

 

 

0.56

 

 

(14

)

 

(0.21

)

DAC offset, net

(25

)

 

(0.39

)

 

8

 

 

0.13

 

Investment (income) loss on unit-linked variable annuities

(21

)

 

(0.33

)

 

5

 

 

0.08

 

Interest credited on unit-linked variable annuities

21

 

 

0.33

 

 

(5

)

 

(0.08

)

Interest expense on uncertain tax positions

14

 

 

0.22

 

 

 

 

 

Non-investment derivatives

2

 

 

0.03

 

 

 

 

 

Uncertain tax positions and other tax related items

8

 

 

0.13

 

 

(62

)

 

(0.96

)

Adjusted operating income

$

853

 

 

$

13.35

 

 

$

789

 

 

$

12.12

 

 
 
 
 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES

Reconciliation of Consolidated Effective Income Tax Rates

(Dollars in thousands)

 
 

(Unaudited)

Three Months Ended December 31, 2019

 

Pre-tax Income

 

Income Taxes

 

Effective Tax Rate

GAAP income

$

308,131

 

 

$

73,263

 

 

23.8

%

Reconciliation to adjusted operating income:

 

 

 

 

 

Capital (gains) losses, derivatives and other, included in investment related gains/losses, net

29,710

 

 

5,660

 

 

 

Capital (gains) losses on funds withheld, included in investment income, net of related expenses

63

 

 

13

 

 

 

Embedded derivatives:

 

 

 

 

 

Included in investment related gains/losses, net

(46,606

)

 

(9,787

)

 

 

Included in interest credited

(9,553

)

 

(2,006

)

 

 

DAC offset, net

(3,563

)

 

(749

)

 

 

Investment (income) loss on unit-linked variable annuities

291

 

 

61

 

 

 

Interest credited on unit-linked variable annuities

(291

)

 

(61

)

 

 

Interest expense on uncertain tax positions

3,916

 

 

822

 

 

 

Non-investment derivatives

2,241

 

 

471

 

 

 

Uncertain tax positions and other tax related items

 

 

(1,932

)

 

 

Adjusted operating income

$

284,339

 

 

$

65,755

 

 

23.1

%

 
 

Reconciliation of Consolidated Income before Income Taxes to Pre-tax Adjusted Operating Income
(Dollars in millions)

(Unaudited)

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

2019

 

2018

 

2019

 

2018

Income before income taxes

$

308

 

 

$

138

 

 

$

1,132

 

 

$

846

 

Reconciliation to pre-tax adjusted operating income:

 

 

 

 

 

 

 

Capital (gains) losses, derivatives and other, included in investment related gains/losses, net

30

 

 

32

 

 

(56

)

 

153

 

Capital (gains) losses on funds withheld, included in investment income, net of related expenses

 

 

 

 

5

 

 

(2

)

Embedded derivatives:

 

 

 

 

 

 

 

Included in investment related gains/losses, net

(46

)

 

110

 

 

(16

)

 

28

 

Included in interest credited

(10

)

 

13

 

 

46

 

 

(17

)

DAC offset, net

(4

)

 

(13

)

 

(32

)

 

10

 

Investment (income) loss on unit-linked variable annuities

 

 

11

 

 

(26

)

 

7

 

Interest credited on unit-linked variable annuities

 

(11

)

 

26

 

 

(7

)

Interest expense on uncertain tax positions

4

 

 

 

 

18

 

 

 

Non-investment derivatives

2

 

 

 

 

2

 

 

 

Pre-tax adjusted operating income

$

284

 

 

$

280

 

 

$

1,099

 

 

$

1,018

 

 
 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Income to Pre-tax Adjusted Operating Income
(Dollars in millions)

(Unaudited)

Three Months Ended December 31, 2019

 

Pre-tax income

(loss)

 

Capital

(gains) losses,

derivatives

and other, net

 

Change in

value of

embedded

derivatives, net

 

Pre-tax adjusted

operating

income (loss)

U.S. and Latin America:

 

 

 

 

 

 

 

Traditional

$

85

 

 

$

 

 

$

(2

)

 

$

83

 

Financial Solutions:

 

 

 

 

 

 

 

Asset-Intensive

78

 

 

60

 

(1)

(73

)

(2)

65

 

Capital Solutions

26

 

 

 

 

 

 

26

 

Total U.S. and Latin America

189

 

 

60

 

 

(75

)

 

174

 

Canada Traditional

28

 

 

(1

)

 

 

 

27

 

Canada Financial Solutions

7

 

 

 

 

 

 

7

 

Total Canada

35

 

 

(1

)

 

 

 

34

 

EMEA Traditional

23

 

 

 

 

 

 

23

 

EMEA Financial Solutions

72

 

 

1

 

 

 

 

73

 

Total EMEA

95

 

 

1

 

 

 

 

96

 

Asia Pacific Traditional

12

 

 

 

 

 

 

12

 

Asia Pacific Financial Solutions

13

 

 

(5

)

 

 

 

8

 

Total Asia Pacific

25

 

 

(5

)

 

 

 

20

 

Corporate and Other

(36

)

 

(4

)

 

 

 

(40

)

Consolidated

$

308

 

 

$

51

 

 

$

(75

)

 

$

284

 

(1) Asset-Intensive is net of $15 DAC offset.
(2) Asset-Intensive is net of $(19) DAC offset.
 

(Unaudited)

Three Months Ended December 31, 2018

 

Pre-tax income

(loss)

 

Capital

(gains) losses,

derivatives

and other, net

 

Change in

value of

embedded

derivatives, net

 

Pre-tax adjusted

operating

income (loss)

U.S. and Latin America:

 

 

 

 

 

 

 

Traditional

$

95

 

 

$

 

 

$

(3

)

 

$

92

 

Financial Solutions:

 

 

 

 

 

 

 

Asset-Intensive

(6

)

 

7

 

(1)

52

 

(2)

53

 

Capital Solutions

20

 

 

 

 

 

 

20

 

Total U.S. and Latin America

109

 

 

7

 

 

49

 

 

165

 

Canada Traditional

45

 

 

5

 

 

 

 

50

 

Canada Financial Solutions

2

 

 

 

 

 

 

2

 

Total Canada

47

 

 

5

 

 

 

 

52

 

EMEA Traditional

15

 

 

 

 

 

 

15

 

EMEA Financial Solutions

36

 

 

9

 

 

 

 

45

 

Total EMEA

51

 

 

9

 

 

 

 

60

 

Asia Pacific Traditional

34

 

 

 

 

 

 

34

 

Asia Pacific Financial Solutions

(14

)

 

16

 

 

 

 

2

 

Total Asia Pacific

20

 

 

16

 

 

 

 

36

 

Corporate and Other

(89

)

 

56

 

 

 

 

(33

)

Consolidated

$

138

 

 

$

93

 

 

$

49

 

 

$

280

 

(1) Asset-Intensive is net of $61 DAC offset.

(2) Asset-Intensive is net of $(74) DAC offset.
 
 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Income to Pre-tax Adjusted Operating Income
(Dollars in millions)

(Unaudited)

Twelve Months Ended December 31, 2019

 

Pre-tax income

(loss)

 

Capital

(gains) losses,

derivatives

and other, net

 

Change in

value of

embedded

derivatives, net

 

Pre-tax adjusted

operating

income (loss)

U.S. and Latin America:

 

 

 

 

 

 

 

Traditional

$

265

 

 

$

 

 

$

18

 

 

$

283

 

Financial Solutions:

 

 

 

 

 

 

 

Asset-Intensive

315

 

 

(81

)

(1)

25

 

(2)

259

 

Capital Solutions

83

 

 

 

 

 

 

83

 

Total U.S. and Latin America

663

 

 

(81

)

 

43

 

 

625

 

Canada Traditional

168

 

 

(7

)

 

 

 

161

 

Canada Financial Solutions

15

 

 

 

 

 

 

15

 

Total Canada

183

 

 

(7

)

 

 

 

176

 

EMEA Traditional

80

 

 

 

 

 

 

80

 

EMEA Financial Solutions

223

 

 

(7

)

 

 

 

216

 

Total EMEA

303

 

 

(7

)

 

 

 

296

 

Asia Pacific Traditional

105

 

 

 

 

 

 

105

 

Asia Pacific Financial Solutions

23

 

 

(3

)

 

 

 

20

 

Total Asia Pacific

128

 

 

(3

)

 

 

 

125

 

Corporate and Other

(145

)

 

22

 

 

 

 

(123

)

Consolidated

$

1,132

 

 

$

(76

)

 

$

43

 

 

$

1,099

 

(1) Asset-Intensive is net of $(45) DAC offset.

(2) Asset-Intensive is net of $13 DAC offset.

 

(Unaudited)

Twelve Months Ended December 31, 2018

 

Pre-tax income

(loss)

 

Capital

(gains) losses,

derivatives

and other, net

 

Change in

value of

embedded

derivatives, net

 

Pre-tax adjusted

operating

income (loss)

U.S. and Latin America:

 

 

 

 

 

 

 

Traditional

$

286

 

 

$

 

 

$

(8

)

 

$

278

 

Financial Solutions:

 

 

 

 

 

 

 

Asset-Intensive

168

 

 

72

 

(1)

(24

)

(2)

216

 

Capital Solutions

83

 

 

 

 

 

 

83

 

Total U.S. and Latin America

537

 

 

72

 

 

(32

)

 

577

 

Canada Traditional

112

 

 

6

 

 

 

 

118

 

Canada Financial Solutions

10

 

 

 

 

 

 

10

 

Total Canada

122

 

 

6

 

 

 

 

128

 

EMEA Traditional

55

 

 

 

 

 

 

55

 

EMEA Financial Solutions

197

 

 

 

 

 

 

197

 

Total EMEA

252

 

 

 

 

 

 

252

 

Asia Pacific Traditional

178

 

 

 

 

 

 

178

 

Asia Pacific Financial Solutions

(6

)

 

13

 

 

 

 

7

 

Total Asia Pacific

172

 

 

13

 

 

 

 

185

 

Corporate and Other

(237

)

 

113

 

 

 

 

(124

)

Consolidated

$

846

 

 

$

204

 

 

$

(32

)

 

$

1,018

 

(1) Asset-Intensive is net of $53 DAC offset.

(2) Asset-Intensive is net of $(43) DAC offset.

 
 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Per Share and Shares Data
(In millions, except per share data)

(Unaudited)

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

2019

 

2018

 

2019

 

2018

Earnings per share from net income:

 

 

 

 

 

 

 

Basic earnings per share

$

3.75

 

 

$

1.75

 

 

$

13.88

 

 

$

11.25

 

Diluted earnings per share

$

3.68

 

 

$

1.72

 

 

$

13.62

 

 

$

11.00

 

 

 

 

 

 

 

 

 

Diluted earnings per share from adjusted operating income

$

3.43

 

 

$

3.46

 

 

$

13.35

 

 

$

12.12

 

Weighted average number of common and common equivalent shares outstanding

63,774

 

 

64,156

 

 

63,882

 

 

65,094

 

 
 

(Unaudited)

At December 31,

 

2019

 

2018

Treasury shares

16,482

 

 

16,324

 

Common shares outstanding

62,656

 

 

62,814

 

Book value per share outstanding

$

185.17

 

 

$

134.53

 

Book value per share outstanding, before impact of AOCI

$

135.10

 

 

$

124.39

 

 

Reconciliation of Book Value Per Share to Book Value Per Share Excluding AOCI

(Unaudited)

At December 31,

 

2019

 

2018

Book value per share outstanding

$

185.17

 

 

$

134.53

 

Less effect of AOCI:

 

 

 

Accumulated currency translation adjustments

(1.46

)

 

(2.69

)

Unrealized appreciation of securities

52.65

 

 

13.63

 

Pension and postretirement benefits

(1.12

)

 

(0.80

)

Book value per share outstanding, before impact of AOCI

$

135.10

 

 

$

124.39

 

 
 

Reconciliation of Stockholders' Average Equity to Stockholders' Average Equity Excluding AOCI
(Dollars in millions)

(Unaudited)

 

Trailing Twelve Months Ended December 31, 2019:

Average Equity

Stockholders' average equity

$

10,391

 

Less effect of AOCI:

 

Accumulated currency translation adjustments

(137

)

Unrealized appreciation of securities

2,481

 

Pension and postretirement benefits

(56

)

Stockholders' average equity, excluding AOCI

$

8,103

 

 
 

Reconciliation of Trailing Twelve Months of Consolidated Net Income to Adjusted Operating Income and Related Return on Equity
(Dollars in millions)

(Unaudited)

 

 

Return on

Equity

Trailing Twelve Months Ended December 31, 2019:

Income

 

Net Income

$

870

 

 

8.4

%

Reconciliation to adjusted operating income:

 

 

 

Capital (gains) losses, derivatives and other, net

(23

)

 

 

Change in fair value of embedded derivatives

23

 

 

 

Deferred acquisition cost offset, net

(25

)

 

 

Statutory tax rate changes and subsequent effects

8

 

 

 

Adjusted operating income

$

853

 

 

10.5

%

 
 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in millions)

(Unaudited)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

Revenues:

 

 

 

 

 

 

 

Net premiums

$

2,986

 

 

$

2,805

 

 

$

11,297

 

 

$

10,544

 

Investment income, net of related expenses

677

 

 

522

 

 

2,520

 

 

2,139

 

Investment related gains (losses), net:

 

 

 

 

 

 

 

Other-than-temporary impairments on fixed maturity securities

(13

)

 

(14

)

 

(31

)

 

(28

)

Other investment related gains (losses), net

35

 

 

(125

)

 

122

 

 

(142

)

Total investment related gains (losses), net

22

 

 

(139

)

 

91

 

 

(170

)

Other revenue

100

 

 

91

 

 

392

 

 

363

 

Total revenues

3,785

 

 

3,279

 

 

14,300

 

 

12,876

 

Benefits and expenses:

 

 

 

 

 

 

 

Claims and other policy benefits

2,703

 

 

2,468

 

 

10,197

 

 

9,319

 

Interest credited

180

 

 

92

 

 

697

 

 

425

 

Policy acquisition costs and other insurance expenses

310

 

 

335

 

 

1,204

 

 

1,323

 

Other operating expenses

234

 

 

200

 

 

868

 

 

786

 

Interest expense

44

 

 

39

 

 

173

 

 

147

 

Collateral finance and securitization expense

6

 

 

7

 

 

29

 

 

30

 

Total benefits and expenses

3,477

 

 

3,141

 

 

13,168

 

 

12,030

 

Income before income taxes

308

 

 

138

 

 

1,132

 

 

846

 

Provision for income taxes

73

 

 

28

 

 

262

 

 

130

 

Net income

$

235

 

 

$

110

 

 

$

870

 

 

$

716

 

 
 
 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20200128005811/en/

CONTACT: Investor Contact

Jeff Hopson

Senior Vice President - Investor Relations

(636) 736-7000

KEYWORD: UNITED STATES NORTH AMERICA MISSOURI

INDUSTRY KEYWORD: OTHER PROFESSIONAL SERVICES PROFESSIONAL SERVICES INSURANCE

SOURCE: Reinsurance Group of America, Incorporated

Copyright Business Wire 2020.

PUB: 01/28/2020 04:15 PM/DISC: 01/28/2020 04:15 PM

http://www.businesswire.com/news/home/20200128005811/en