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Reinsurance Group of America Reports Third Quarter Results

October 30, 2019 GMT

ST. LOUIS--(BUSINESS WIRE)--Oct 30, 2019--

Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global provider of life reinsurance, reported third quarter net income of $262.8 million, or $4.12 per diluted share, compared with $301.2 million, or $4.68 per diluted share, in the prior-year quarter. Adjusted operating income* totaled $256.3 million, or $4.02 per diluted share, compared with $259.4 million, or $4.03 per diluted share, the year before. Net foreign currency fluctuations had an adverse effect of $0.02 per diluted share on net income and adjusted operating income as compared with the prior year.

 

 

 

Quarterly Results

 

Year-to-Date Results

($ in thousands, except per share data)

 

2019

 

2018

 

2019

 

2018

Net premiums

 

$

2,809,641

 

 

$

2,562,042

 

 

$

8,311,240

 

 

$

7,739,053

 

Net income

 

262,765

 

 

301,199

 

 

634,970

 

 

605,803

 

Net income per diluted share

 

4.12

 

 

4.68

 

 

9.93

 

 

9.30

 

Adjusted operating income*

 

256,291

 

 

259,417

 

 

634,292

 

 

567,217

 

Adjusted operating income per diluted share*

 

4.02

 

 

4.03

 

 

9.92

 

 

8.71

 

Book value per share

 

184.06

 

 

136.29

 

 

 

 

 

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

 

132.02

 

 

123.37

 

 

 

 

 

Total assets

 

75,773,985

 

 

62,972,642

 

 

 

 

 

 

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

 

In the third quarter, consolidated net premiums totaled $2.8 billion, up 10% from last year’s third quarter of $2.6 billion, with adverse net foreign currency effects of $34.9 million. Excluding spread-based businesses and the value of associated derivatives, investment income increased 13% versus a year ago, reflecting asset growth of 7% and higher variable investment income. The average investment yield, excluding spread business, was up 26 basis points from the third quarter of 2018 to 4.83% primarily due to higher variable investment income.

The effective tax rate this quarter was 24.3% on pre-tax income. The effective tax rate was 23.5% on pre-tax adjusted operating income for the quarter, at the higher end of the expected range of 21% to 24%.

Anna Manning, President and Chief Executive Officer, commented, “This was a very good quarter for us in many respects, as bottom-line results, premium growth and capital deployment were all strong. We continue to benefit from earnings diversity that comes from our global operating platform. Outstanding performances by several of our key businesses helped us to deliver strong bottom-line results in spite of earnings variability by segment and ongoing macroeconomic headwinds including lower interest rates and a strong U.S. dollar.

“Highlights for the quarter included strong results in EMEA, Canada and U.S. Asset-Intensive, and the U.S. Group business performed above expectations. Investment results were very good, as alternative investments produced strong returns. These areas of strength more than offset a loss in Australia and unfavorable U.S. Individual Mortality experience.

“We had another successful quarter with $150 million of capital deployed into in-force and other transactions, bringing the year-to-date total to $385 million. We also repurchased $30 million of common shares during the quarter for a year-to-date total of $80 million. We ended the quarter with an excess capital position of approximately $1.0 billion.

“Looking forward, we remain optimistic about the future and our business prospects, as RGA is well positioned in its markets, and we have a proven strategy. Ours is a long-term business and can be best judged by results over longer periods of time. We point to a long track record of successful execution and strong financial results, and we expect to continue to deliver attractive financial returns into the future.”

SEGMENT RESULTS

U.S. and Latin America

Traditional

The U.S. and Latin America Traditional segment reported pre-tax income of $112.5 million, compared with $116.3 million in the third quarter of 2018. Pre-tax adjusted operating income totaled $122.1 million, compared with $116.4 million the year before, benefiting from favorable experience in the Group business and strong variable investment income, in part offset by unfavorable individual mortality experience. The year-ago period reflected favorable mortality experience and above-average variable investment income.

Traditional net premiums were up 3% from last year’s third quarter to $1,404.2 million.

Financial Solutions

The Asset-Intensive business reported pre-tax income of $99.7 million compared with $65.5 million last year. Third quarter pre-tax adjusted operating income increased to $65.6 million, up from $63.8 million a year ago, attributable to new business and favorable longevity experience on a block of payout annuities.

The Financial Reinsurance business reported pre-tax income and pre-tax adjusted operating income of $19.2 million, down modestly from $21.6 million the year before.

Canada

Traditional

The Canada Traditional segment reported pre-tax income of $43.7 million, compared with $21.1 million the year before. Pre-tax adjusted operating income more than doubled to $44.3 million from $20.0 million a year ago, reflecting continued favorable individual mortality experience. The prior-year quarter reflected unfavorable individual mortality experience. Foreign currency exchange rates had an adverse effect of $0.5 million on pre-tax income and pre-tax adjusted operating income.

Reported net premiums totaled $270.8 million for the quarter, up 11% over the year-ago period, primarily due to in-force transactions entered into in 2018. Net foreign currency fluctuations had an adverse effect of $2.9 million on net premiums.

Financial Solutions

The Canada Financial Solutions business segment, which consists of longevity and fee-based transactions, reported third quarter pre-tax income and pre-tax adjusted operating income of $3.1 million, compared with $1.6 million a year ago. The current period reflected favorable longevity experience. 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 of $25.3 million compared with $18.4 million in last year’s third quarter. Pre-tax adjusted operating income totaled $25.5 million, compared with $18.4 million, attributable primarily to favorable underwriting experience overall, while the year-ago period reflected modestly favorable underwriting results. Net foreign currency fluctuations adversely affected pre-tax income and pre-tax adjusted operating income by $1.2 million for the quarter.

Reported net premiums increased 6% to $359.4 million in the third quarter. Foreign currency exchange rates adversely affected net premiums by $17.1 million.

Financial Solutions

The EMEA Financial Solutions business segment, which consists of longevity, asset-intensive and fee-based transactions, reported third quarter pre-tax income of $61.2 million, compared with $56.2 million in the year-ago period. Pre-tax adjusted operating income totaled $59.0 million, compared with $56.4 million the year before. Both periods were above expectations, reflecting favorable experience in both asset-intensive and longevity business. Net foreign currency fluctuations adversely affected pre-tax income by $3.4 million and pre-tax adjusted operating income by $3.3 million.

Asia Pacific

Traditional

The Asia Pacific Traditional segment’s pre-tax income and pre-tax adjusted operating income totaled $21.5 million, compared with $62.0 million in the prior-year period. The current-period results reflected a larger loss than experienced in recent quarters in Australia and modestly unfavorable results in Asia. The year-ago period reflected favorable experience in Asia, which was slightly offset by a loss in Australia. Net foreign currency fluctuations had a favorable effect of $3.1 million on pre-tax income and pre-tax adjusted operating income.

Reported net premiums increased 19% to $655.9 million, reflecting growth on new and existing treaties in Asia, partially offset by a reduction in Australia. Foreign currency exchange rates had an adverse effect of $11.9 million on net premiums.

Financial Solutions

The Asia Pacific Financial Solutions business segment, which consists of asset-intensive and fee-based transactions, reported third quarter pre-tax income of $1.9 million, compared with $0.2 million in the prior-year period. Pre-tax adjusted operating income totaled $4.6 million, compared with $1.3 million the year before, attributable to new business in Asia. Net foreign currency fluctuations had a favorable effect of $0.4 million on pre-tax income and $0.1 million on pre-tax adjusted operating income.

Reported net premiums increased significantly to $30.0 million, attributable to new treaties added in this year. Foreign currency exchange rates had a favorable effect of $0.8 million on net premiums.

Corporate and Other

The Corporate and Other segment’s pre-tax losses totaled $41.0 million, compared with pre-tax losses of $40.3 million the year before. Pre-tax adjusted operating losses totaled $29.9 million, compared with year-ago pre-tax adjusted operating losses of $18.1 million. The current-period loss was higher than the average expected run rate due primarily to costs related to higher incentive based compensation accruals, strategic initiatives and service businesses. The prior-year period benefited from higher variable investment income.

Dividend Declaration

The board of directors declared a regular quarterly dividend of $0.70, payable December 3 to shareholders of record as of November 12.

Earnings Conference Call

A conference call to discuss third quarter results will begin at 11 a.m. Eastern Time on Thursday, October 31. Interested parties may access the call by dialing 800-281-7973 (domestic) or 323-794-2093 (international). The access code is 6756225. 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 $3.4 trillion of life reinsurance in force and assets of $75.8 billion as of September 30, 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 thousands, except per share data)

 

(Unaudited)

Three Months Ended September 30,

 

2019

 

2018

 

 

 

Diluted
Earnings Per
Share

 

 

 

Diluted
Earnings Per
Share

Net income

$

262,765

 

 

$

4.12

 

 

$

301,199

 

 

$

4.68

 

Reconciliation to adjusted operating income:

 

 

 

 

 

 

 

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

(61,098

)

 

(0.95

)

 

41,548

 

 

0.65

 

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

(120

)

 

 

 

485

 

 

0.01

 

Embedded derivatives:

 

 

 

 

 

 

 

Included in investment related gains/losses, net

26,643

 

 

0.42

 

 

(23,741

)

 

(0.37

)

Included in interest credited

28,348

 

 

0.44

 

 

(1,266

)

 

(0.02

)

DAC offset, net

(10,257

)

 

(0.16

)

 

(86

)

 

 

Investment (income) loss on unit-linked variable annuities

(9,414

)

 

(0.15

)

 

(1,898

)

 

(0.03

)

Interest credited on unit-linked variable annuities

9,414

 

 

0.15

 

 

1,898

 

 

0.03

 

Interest expense on uncertain tax positions

6,650

 

 

0.10

 

 

 

 

 

Non-investment derivatives

91

 

 

 

 

(437

)

 

(0.01

)

Uncertain tax positions and other tax related items

3,269

 

 

0.05

 

 

(58,285

)

 

(0.91

)

Adjusted operating income

$

256,291

 

 

$

4.02

 

 

$

259,417

 

 

$

4.03

 

 
 

(Unaudited)

Nine Months Ended September 30,

 

2019

 

2018

 

 

 

Diluted
Earnings Per
Share

 

 

 

Diluted
Earnings Per
Share

Net income

$

634,970

 

 

$

9.93

 

 

$

605,803

 

 

$

9.30

 

Reconciliation to adjusted operating income:

 

 

 

 

 

 

 

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

(68,148

)

 

(1.07

)

 

95,445

 

 

1.47

 

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

4,076

 

 

0.06

 

 

(1,733

)

 

(0.03

)

Embedded derivatives:

 

 

 

 

 

 

 

Included in investment related gains/losses, net

24,046

 

 

0.38

 

 

(65,236

)

 

(1.00

)

Included in interest credited

44,193

 

 

0.69

 

 

(23,384

)

 

(0.36

)

DAC offset, net

(22,573

)

 

(0.35

)

 

18,146

 

 

0.28

 

Investment (income) loss on unit-linked variable annuities

(20,965

)

 

(0.33

)

 

(3,063

)

 

(0.05

)

Interest credited on unit-linked variable annuities

20,965

 

 

0.33

 

 

3,063

 

 

0.05

 

Interest expense on uncertain tax positions

10,915

 

 

0.17

 

 

 

 

 

Non-investment derivatives

440

 

 

0.01

 

 

 

 

 

Uncertain tax positions and other tax related items

6,373

 

 

0.10

 

 

(61,824

)

 

(0.95

)

Adjusted operating income

$

634,292

 

 

$

9.92

 

 

$

567,217

 

 

$

8.71

 

 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES

Reconciliation of Consolidated Effective Income Tax Rates

(Dollars in thousands)

 

(Unaudited)

Three Months Ended September 30, 2019

 

Pre-tax Income

 

Income Taxes

 

Effective Tax
Rate

GAAP income

$

347,090

 

 

$

84,325

 

 

24.3

%

Reconciliation to adjusted operating income:

 

 

 

 

 

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

(77,106

)

 

(16,008

)

 

 

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

(152

)

 

(32

)

 

 

Embedded derivatives:

 

 

 

 

 

Included in investment related gains/losses, net

33,725

 

 

7,082

 

 

 

Included in interest credited

35,883

 

 

7,535

 

 

 

DAC offset, net

(12,983

)

 

(2,726

)

 

 

Investment (income) loss on unit-linked variable annuities

(11,916

)

 

(2,502

)

 

 

Interest credited on unit-linked variable annuities

11,916

 

 

2,502

 

 

 

Interest expense on uncertain tax positions

8,418

 

 

1,768

 

 

 

Non-investment derivatives

115

 

 

24

 

 

 

Uncertain tax positions and other tax related items

 

 

(3,269

)

 

 

Adjusted operating income

$

334,990

 

 

$

78,699

 

 

23.5

%

 

Reconciliation of Consolidated Income before Income Taxes to Pre-tax Adjusted Operating Income

(Dollars in thousands)

 

(Unaudited)

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Income before income taxes

$

347,090

 

 

$

322,661

 

 

$

823,731

 

 

$

707,874

 

Reconciliation to pre-tax adjusted operating income:

 

 

 

 

 

 

 

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

(77,106

)

 

52,455

 

 

(86,042

)

 

121,319

 

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

(152

)

 

614

 

 

5,160

 

 

(2,194

)

Embedded derivatives:

 

 

 

 

 

 

 

Included in investment related gains/losses, net

33,725

 

 

(30,052

)

 

30,438

 

 

(82,577

)

Included in interest credited

35,883

 

 

(1,602

)

 

55,940

 

 

(29,600

)

DAC offset, net

(12,983

)

 

(110

)

 

(28,573

)

 

22,969

 

Investment (income) loss on unit-linked variable annuities

(11,916

)

 

(2,402

)

 

(26,538

)

 

(3,877

)

Interest credited on unit-linked variable annuities

11,916

 

 

2,402

 

 

26,538

 

 

3,877

 

Interest expense on uncertain tax positions

8,418

 

 

 

 

13,817

 

 

 

Non-investment derivatives

115

 

 

(553

)

 

557

 

 

 

Pre-tax adjusted operating income

$

334,990

 

 

$

343,413

 

$

815,028

$

737,791

 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES

Reconciliation of Pre-tax Income to Pre-tax Adjusted Operating Income

(Dollars in thousands)

(Unaudited)

Three Months Ended September 30, 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

$

112,542

 

 

$

(65

)

 

$

9,652

 

 

$

122,129

 

Financial Solutions:

 

 

 

 

 

 

 

Asset-Intensive

99,661

 

 

(104,292

)

(1)

70,215

 

(2)

65,584

 

Financial Reinsurance

19,215

 

 

 

 

 

 

19,215

 

Total U.S. and Latin America

231,418

 

 

(104,357

)

 

79,867

 

 

206,928

 

Canada Traditional

43,684

 

 

614

 

 

 

 

44,298

 

Canada Financial Solutions

3,108

 

 

 

 

 

 

3,108

 

Total Canada

46,792

 

 

614

 

 

 

 

47,406

 

EMEA Traditional

25,342

 

 

179

 

 

 

 

25,521

 

EMEA Financial Solutions

61,246

 

 

(2,276

)

 

 

 

58,970

 

Total EMEA

86,588

 

 

(2,097

)

 

 

 

84,491

 

Asia Pacific Traditional

21,453

 

 

 

 

 

 

21,453

 

Asia Pacific Financial Solutions

1,886

 

 

2,734

 

 

 

 

4,620

 

Total Asia Pacific

23,339

 

 

2,734

 

 

 

 

26,073

 

Corporate and Other

(41,047

)

 

11,139

 

 

 

 

(29,908

)

Consolidated

$

347,090

 

 

$

(91,967

)

 

$

79,867

 

 

$

334,990

 

(1) Asset-Intensive is net of $(23,242) DAC offset.
(2) Asset-Intensive is net of $10,259 DAC offset.

 

(Unaudited)

Three Months Ended September 30, 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

$

116,328

 

 

$

90

 

 

$

(57

)

 

$

116,361

 

Financial Solutions:

 

 

 

 

 

 

 

Asset-Intensive

65,490

 

 

11,080

 

(1)

(12,788

)

(2)

63,782

 

Financial Reinsurance

21,583

 

 

 

 

 

 

21,583

 

Total U.S. and Latin America

203,401

 

 

11,170

 

 

(12,845

)

 

201,726

 

Canada Traditional

21,149

 

 

(1,197

)

 

 

 

19,952

 

Canada Financial Solutions

1,646

 

 

 

 

 

 

1,646

 

Total Canada

22,795

 

 

(1,197

)

 

 

 

21,598

 

EMEA Traditional

18,370

 

 

 

 

 

 

18,370

 

EMEA Financial Solutions

56,205

 

 

226

 

 

 

 

56,431

 

Total EMEA

74,575

 

 

226

 

 

 

 

74,801

 

Asia Pacific Traditional

62,007

 

 

(1

)

 

 

 

62,006

 

Asia Pacific Financial Solutions

206

 

 

1,133

 

 

 

 

1,339

 

Total Asia Pacific

62,213

 

 

1,132

 

 

 

 

63,345

 

Corporate and Other

(40,323

)

 

22,266

 

 

 

 

(18,057

)

Consolidated

$

322,661

 

 

$

33,597

 

 

$

(12,845

)

 

$

343,413

 

(1) Asset-Intensive is net of $(18,919) DAC offset.
(2) Asset-Intensive is net of $18,809 DAC offset.

 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES

Reconciliation of Pre-tax Income to Pre-tax Adjusted Operating Income

(Dollars in thousands)

 

(Unaudited)

Nine Months Ended September 30, 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

$

179,371

 

 

$

(112

)

 

$

20,121

 

 

$

199,380

 

Financial Solutions:

 

 

 

 

 

 

 

Asset-Intensive

237,313

 

 

(139,997

)

(1)

97,272

 

(2)

194,588

 

Financial Reinsurance

56,858

 

 

 

 

 

 

56,858

 

Total U.S. and Latin America

473,542

 

 

(140,109

)

 

117,393

 

 

450,826

 

Canada Traditional

140,222

 

 

(6,137

)

 

 

 

134,085

 

Canada Financial Solutions

8,269

 

 

 

 

 

 

8,269

 

Total Canada

148,491

 

 

(6,137

)

 

 

 

142,354

 

EMEA Traditional

56,887

 

 

 

 

 

 

56,887

 

EMEA Financial Solutions

151,437

 

 

(8,108

)

 

 

 

143,329

 

Total EMEA

208,324

 

 

(8,108

)

 

 

 

200,216

 

Asia Pacific Traditional

92,852

 

 

(3

)

 

 

 

92,849

 

Asia Pacific Financial Solutions

9,887

 

 

1,507

 

 

 

 

11,394

 

Total Asia Pacific

102,739

 

 

1,504

 

 

 

 

104,243

 

Corporate and Other

(109,365

)

 

26,754

 

 

 

 

(82,611

)

Consolidated

$

823,731

 

 

$

(126,096

)

 

$

117,393

 

 

$

815,028

 

(1) Asset-Intensive is net of $(59,588) DAC offset.
(2) Asset-Intensive is net of $31,015 DAC offset.

 

(Unaudited)

Nine Months Ended September 30, 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

$

191,198

 

 

$

141

 

 

$

(5,516

)

 

$

185,823

 

Financial Solutions:

 

 

 

 

 

 

 

Asset-Intensive

173,592

 

 

65,259

 

(1)

(75,668

)

(2)

163,183

 

Financial Reinsurance

63,290

 

 

 

 

 

 

63,290

 

Total U.S. and Latin America

428,080

 

 

65,400

 

 

(81,184

)

 

412,296

 

Canada Traditional

66,661

 

 

1,010

 

 

 

 

67,671

 

Canada Financial Solutions

8,381

 

 

 

 

 

 

8,381

 

Total Canada

75,042

 

 

1,010

 

 

 

 

76,052

 

EMEA Traditional

40,259

 

 

(9

)

 

 

 

40,250

 

EMEA Financial Solutions

160,738

 

 

(8,921

)

 

 

 

151,817

 

Total EMEA

200,997

 

 

(8,930

)

 

 

 

192,067

 

Asia Pacific Traditional

143,756

 

 

(6

)

 

 

 

143,750

 

Asia Pacific Financial Solutions

8,365

 

 

(2,884

)

 

 

 

5,481

 

Total Asia Pacific

152,121

 

 

(2,890

)

 

 

 

149,231

 

Corporate and Other

(148,366

)

 

56,511

 

 

 

 

(91,855

)

Consolidated

$

707,874

 

 

$

111,101

 

 

$

(81,184

)

 

$

737,791

 

(1) Asset-Intensive is net of $(8,024) DAC offset.
(2) Asset-Intensive is net of $30,993 DAC offset.

 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES

Per Share and Shares Data

(In thousands, except per share data)

 

(Unaudited)

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Earnings per share from net income:

 

 

 

 

 

 

 

Basic earnings per share

$

4.19

 

 

$

4.76

 

 

$

10.13

 

 

$

9.47

 

Diluted earnings per share

$

4.12

 

 

$

4.68

 

 

$

9.93

 

 

$

9.30

 

 

 

 

 

 

 

 

 

Diluted earnings per share from adjusted operating income

$

4.02

 

 

$

4.03

 

 

$

9.92

 

 

$

8.71

 

Weighted average number of common and common equivalent shares outstanding

63,789

 

 

64,296

 

 

63,919

 

 

65,130

 

 
 

(Unaudited)

At September 30,

 

2019

 

2018

Treasury shares

16,529

 

 

16,187

 

Common shares outstanding

62,609

 

 

62,951

 

Book value per share outstanding

$

184.06

 

 

$

136.29

 

Book value per share outstanding, before impact of AOCI

$

132.02

 

 

$

123.37

 

 

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

 

(Unaudited)

At September 30,

 

2019

 

2018

Book value per share outstanding

$

184.06

 

 

$

136.29

 

Less effect of AOCI:

 

 

 

Accumulated currency translation adjustments

(2.51

)

 

(1.90

)

Unrealized appreciation of securities

55.46

 

 

15.61

 

Pension and postretirement benefits

(0.91

)

 

(0.79

)

Book value per share outstanding, before impact of AOCI

$

132.02

 

 

$

123.37

 

 

Reconciliation of Stockholders' Average Equity to Stockholders' Average Equity Excluding AOCI

(Dollars in thousands)

 

(Unaudited)

 

Trailing Twelve Months Ended September 30, 2019:

Average Equity

Stockholders' average equity

$

9,786,546

 

Less effect of AOCI:

 

Accumulated currency translation adjustments

(143,038

)

Unrealized appreciation of securities

2,018,265

 

Pension and postretirement benefits

(52,028

)

Stockholders' average equity, excluding AOCI

$

7,963,347

 

 

Reconciliation of Trailing Twelve Months of Consolidated Net Income to Adjusted Operating Income and

Related Return on Equity

(Dollars in thousands)

(Unaudited)

 

 

Return on Equity

Trailing Twelve Months Ended September 30, 2019:

Income

 

Net Income

$

745,009

 

 

7.6

%

Reconciliation to adjusted operating income:

 

 

 

Capital (gains) losses, derivatives and other, net

(27,834

)

 

 

Change in fair value of embedded derivatives

165,291

 

 

 

Deferred acquisition cost offset, net

(32,447

)

 

 

Statutory tax rate changes and subsequent effects

6,024

 

 

 

Adjusted operating income

$

856,043

 

 

10.7

%

 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Dollars in thousands)

 

(Unaudited)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

Revenues:

 

 

 

 

 

 

 

Net premiums

$

2,809,641

 

 

$

2,562,042

 

 

$

8,311,240

 

 

$

7,739,053

 

Investment income, net of related expenses

678,805

 

 

572,742

 

 

1,842,760

 

 

1,617,132

 

Investment related gains (losses), net:

 

 

 

 

 

 

 

Other-than-temporary impairments on fixed maturity securities

(8,539

)

 

(10,705

)

 

(17,992

)

 

(14,055

)

Other investment related gains (losses), net

57,323

 

 

(9,312

)

 

87,036

 

 

(17,004

)

Total investment related gains (losses), net

48,784

 

 

(20,017

)

 

69,044

 

 

(31,059

)

Other revenue

90,335

 

 

112,764

 

 

291,960

 

 

272,020

 

Total revenues

3,627,565

 

 

3,227,531

 

 

10,515,004

 

 

9,597,146

 

Benefits and expenses:

 

 

 

 

 

 

 

Claims and other policy benefits

2,469,981

 

 

2,209,920

 

 

7,493,516

 

 

6,851,614

 

Interest credited

226,262

 

 

143,292

 

 

517,293

 

 

333,068

 

Policy acquisition costs and other insurance expenses

321,855

 

 

310,639

 

 

894,081

 

 

987,817

 

Other operating expenses

209,348

 

 

200,262

 

 

634,330

 

 

586,495

 

Interest expense

45,927

 

 

33,290

 

 

129,383

 

 

107,769

 

Collateral finance and securitization expense

7,102

 

 

7,467

 

 

22,670

 

 

22,509

 

Total benefits and expenses

3,280,475

 

 

2,904,870

 

 

9,691,273

 

 

8,889,272

 

Income before income taxes

347,090

 

 

322,661

 

 

823,731

 

 

707,874

 

Provision for income taxes

84,325

 

 

21,462

 

 

188,761

 

 

102,071

 

Net income

$

262,765

 

 

$

301,199

 

 

$

634,970

 

 

$

605,803

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191030006074/en/

CONTACT: Investor Contact

Reinsurance Group of America, Incorporated

Jeff Hopson

Senior Vice President - Investor Relations

(636) 736-7000

KEYWORD: MISSOURI UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: INSURANCE PROFESSIONAL SERVICES

SOURCE: Reinsurance Group of America, Incorporated

Copyright Business Wire 2019.

PUB: 10/30/2019 04:15 PM/DISC: 10/30/2019 04:15 PM

http://www.businesswire.com/news/home/20191030006074/en