Reinsurance Group of America Reports Fourth Quarter and Full Year Results

Fourth Quarter Results

• Net income available to RGA shareholders of $2.37 per diluted share
• Adjusted operating income* of $4.73 per diluted share
• Premium growth of 19.2% over the prior-year quarter, 18.7% on a constant currency basis¹
• Deployed capital of $346 million into in-force transactions
• Total shareholder capital returns of $106 million: $50 million of share repurchases and $56 million of shareholder dividends

Full Year Results

• Net income available to RGA shareholders of $13.44 per diluted share
• Adjusted operating income* of $19.88 per diluted share
• Premium growth of 15.3% over the prior year, 16.3% on a constant currency basis¹
• ROE of 11.4%, adjusted operating ROE* of 14.5%, and adjusted operating ROE, excluding notable items*² of 14.4% for the trailing twelve months
• Deployed capital of $933 million into in-force transactions
• Total shareholder capital returns of $419 million: $200 million of share repurchases and $219 million of shareholder dividends

¹ Actual amounts reflect impact of currency fluctuations. Constant currency amounts reflect foreign denominated activity translated to U.S. dollars at a constant exchange rate.

² RGA completed its annual actuarial assumption review related to business subject to Long-Duration Targeted Improvements (LDTI) during the third quarter. The impact from the actuarial assumption review is reflected in the results as notable items.

ST. LOUIS–(BUSINESS WIRE)–Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global provider of life and health reinsurance, reported fourth quarter net income available to RGA shareholders of $158 million, or $2.37 per diluted share, compared with $291 million, or $4.30 per diluted share, in the prior-year quarter. Adjusted operating income* for the fourth quarter totaled $316 million, or $4.73 per diluted share, compared with $312 million, or $4.60 per diluted share, the year before. Adjusted operating income, excluding notable items* for the fourth quarter, totaled $316 million, or $4.73 per diluted share, compared with $266 million, or $3.91 per diluted share, the year before. Net foreign currency fluctuations had an adverse effect of $0.01 per diluted share on net income available to RGA shareholders, and a favorable effect of $0.04 per diluted share on adjusted operating income as compared with the prior year.

Full year net income available to RGA shareholders totaled $902 million, or $13.44 per diluted share, compared with $517 million, or $7.64 per diluted share in 2022. Adjusted operating income for the full year totaled $1,334 million, or $19.88 per diluted share, compared with $927 million, or $13.69 per diluted share the year before. Adjusted operating income, excluding notable items for the full year, totaled $1,334 million, or $19.88 per diluted share, compared with $1,111 million, or $16.40 per diluted share, the year before. Net foreign currency fluctuations had an adverse effect of $0.18 per diluted share on net income available to RGA shareholders, and $0.21 per diluted share on adjusted operating income as compared with 2022.

In the fourth quarter, consolidated net premiums totaled $4.1 billion, an increase of 19.2% over the 2022 fourth quarter, with a favorable net foreign currency effect of $18 million. Excluding the net foreign currency effect, consolidated net premiums increased 18.7% in the quarter. Net premiums for the quarter include a $500 million contribution from a single premium pension risk transfer transaction in the U.S. Financial Solutions business. For the full year, net premiums totaled $15.1 billion, an increase of 15.3% from 2022, with an adverse net foreign currency effect of $126 million. Excluding the net foreign currency effect, consolidated net premiums increased 16.3% for the full year. Net premiums for the full year include a $1.5 billion contribution from single premium pension risk transfer transactions in the U.S. Financial Solutions business.

Compared with the year-ago period, excluding spread-based businesses, fourth quarter investment income increased 14.8%, reflecting higher yields. For the full year, investment income, excluding spread-based businesses, increased 4.2%, reflecting higher yields. Average investment yield increased to 4.86% in the fourth quarter from 4.45% in the prior-year period due to higher yields. For the full year, average investment yield was flat at 4.68% compared with the prior-year period of 4.69% due to higher yields that were offset by lower variable investment income.

The effective tax rate for the quarter was 2.2% on pre-tax income, below the expected range of 23% to 24%, primarily due to losses in certain higher tax jurisdictions, tax credits and the release of tax liabilities associated with uncertain tax positions. For the full year, the effective tax rate was 21.8% on pre-tax income, below the expected range of 23% to 24%, due to lower than expected income in certain higher tax jurisdictions, tax credits and the release of tax liabilities associated with uncertain tax positions.

The effective tax rate for the quarter was 18.2% on pre-tax adjusted operating income, below the expected range of 23% to 24%, primarily due to losses in higher tax jurisdictions and tax credits. For the full year, the effective tax rate was 21.5% on pre-tax adjusted operating income, below the expected range of 23% to 24%, due to lower than expected income in higher tax jurisdictions and tax credits.

Tony Cheng, President and Chief Executive Officer, commented, “In the quarter, we saw a continuation of the many positive trends that we experienced in the first nine months, and this helped us produce record results for the year. Our Financial Solutions business continued to deliver very strong results across regions and product lines. We continued to see good momentum in organic business activity in the traditional business, and our in-force transactions were especially strong, with $346 million of capital deployed in the quarter. This brought our annual capital deployment into in-force transactions to $933 million, a record for RGA.

“Additionally, we repurchased $50 million of common shares, bringing the full year total to $200 million. Our balance sheet remains strong, and we ended the quarter with excess capital of approximately $1.0 billion. Based on favorable business conditions and RGA’s global leadership position, we are optimistic about the future and expect to continue to deliver attractive financial results over time.”

SEGMENT RESULTS

Quarterly Results

• Results reflected favorable Group and Individual Health experience and slightly unfavorable experience and client reporting adjustments in Individual Life, which had a larger unfavorable financial impact due to the mix of experience in uncapped and capped cohorts.

Full Year Results

• Results reflected $17 million of unfavorable impacts from assumption updates, which are reflected as notable items.
• Excluding notable items, results reflected favorable in-force management actions, the impact of higher yields and favorable Individual Health and Group experience.
• Individual Life experience was favorable, however, the mix of experience between uncapped and capped cohorts led to unfavorable financial impacts.

Quarterly Results

• Asset-Intensive results reflected strong investment spreads due to higher yields, including those on floating rate securities.
• Capital Solutions results were in line with expectations.

Full Year Results

• Asset-Intensive results reflected $22 million of favorable impacts from assumptions updates, which are reflected as notable items.
• Excluding notable items, Asset-Intensive results reflected strong investment spreads, including those on floating rate securities.
• Capital Solutions results were in line with expectations.

Net Premiums

• Foreign currency exchange rates had an adverse effect on net premiums of $1 million for the quarter and $45 million for the full year.

Quarterly Results

• Results reflected unfavorable claims experience on Group business and unfavorable impacts from a one-time item.
• Foreign currency exchange rates had a favorable effect of $4 million on pre-tax income and $5 million on pre-tax adjusted operating income.

Full Year Results

• Results reflected $13 million of unfavorable impacts from assumptions updates, which are reflected as notable items.
• Excluding notable items, results reflected unfavorable Group claims experience.
• Foreign currency exchange rates had an adverse effect of $1 million on pre-tax income and an immaterial effect on pre-tax adjusted operating income.

Quarterly Results

• Results reflected favorable longevity experience.
• Foreign currency exchange rates had an immaterial effect on pre-tax income and an adverse effect of $1 million on pre-tax adjusted operating income.

Full Year Results

• Results reflected $22 million of favorable impacts from assumption updates, which are reflected as notable items.
• Excluding notable items, results reflected favorable longevity experience.
• Foreign currency exchange rates had an adverse effect of $1 million on pre-tax income and $2 million on pre-tax adjusted operating income.

Net Premiums

• Foreign currency exchange rates had a favorable effect on net premiums of $14 million for the quarter and an adverse effect of $13 million for the full year.

Quarterly Results

• Results reflected unfavorable mortality experience in the U.K., partially offset by new business in Continental Europe.
• Foreign currency exchange rates had a favorable effect of $1 million on pre-tax income and pre-tax adjusted operating income.

Full Year Results

• Results reflected $47 million of unfavorable impacts from assumption updates, primarily in the U.K., which are reflected as notable items.
• Excluding notable items, results reflected unfavorable mortality experience, primarily in the U.K.
• Foreign currency exchange rates had an adverse effect of $3 million on pre-tax income and pre-tax adjusted operating income.

Quarterly Results

• Results reflected favorable longevity and other experience.
• Foreign currency exchange rates had a favorable effect of $5 million on pre-tax income and pre-tax adjusted operating income.

Full Year Results

• Results reflected $34 million of favorable impacts from assumption updates, which are reflected as notable items.
• Excluding notable items, results reflected favorable longevity and other experience.
• Foreign currency exchange rates had a favorable effect of $5 million on pre-tax income and $6 million on pre-tax adjusted operating income.

Net Premiums

• Foreign currency exchange rates had an adverse effect on net premiums of $3 million for the quarter and $67 million for the full year.

Quarterly Results

• Results reflected favorable underlying claims experience.
• Foreign currency exchange rates had an immaterial effect on pre-tax income and a favorable effect of $1 million on pre-tax adjusted operating income.

Full Year Results

• Results reflected $2 million of favorable impacts from assumption updates, which are reflected as notable items.
• Excluding notable items, results reflected favorable claims experience and strong new business.
• Foreign currency exchange rates had an adverse effect of $5 million on pre-tax income and pre-tax adjusted operating income.

Quarterly Results

• Results reflected higher investment spreads including variable investment income and strong new business.
• Foreign currency exchange rates had an adverse effect of $6 million on pre-tax income and $2 million on pre-tax adjusted operating income.

Full Year Results

• Results reflected higher investment spreads and strong new business.
• Foreign currency exchange rates had an adverse effect of $5 million on pre-tax income and $9 million on pre-tax adjusted operating income.

Quarterly Results

• Results were favorable compared to the quarterly average run rate, primarily due to higher investment income.

Full Year Results

• Results were favorable compared to the expected run rate, primarily due to higher investment income.

Repurchase Authorization

On January 23, 2024, the board of directors authorized a share repurchase program for up to $500 million of outstanding common stock. The authorization was effective immediately and does not have an expiration date. In connection with this authorization, the board of directors terminated the stock repurchase authority granted in 2022.

Repurchases would be made in accordance with applicable securities laws and would be made through market transactions, block trades, privately negotiated transactions or other means, or a combination of these methods, with the timing and number of shares repurchased dependent on a variety of factors, including share price, corporate and regulatory requirements, and market and business conditions. Repurchases may be commenced or suspended from time to time without prior notice.

Dividend Declaration

Effective January 30, 2024, the board of directors declared a regular quarterly dividend of $0.85, payable February 27, 2024, to shareholders of record as of February 13, 2024.

Earnings Conference Call

A conference call to discuss fourth quarter results will begin at 10 a.m. Eastern Time on Friday, February 2, 2024. Interested parties may access the call by dialing 1-844-481-2753 (412-317-0669 international) and asking to be joined into the Reinsurance Group of America, Incorporated (RGA) call. 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 an earnings presentation and 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.

Non-GAAP Financial Measures and Other Definitions

Reinsurance Group of America, Incorporated (the “Company”) discloses certain financial measures that are not determined in accordance with U.S. GAAP. The Company principally uses such non-GAAP financial measures in evaluating performance because the Company believes that such measures, when reviewed in conjunction with relevant U.S. GAAP measures, present a clearer picture of our operating performance and assist the Company in the allocation of its resources. The Company believes that these non-GAAP financial measures provide investors and other third parties with a better understanding of the Company’s results of operations, financial statements and the underlying profitability drivers and trends of the Company’s businesses by excluding specified items which may not be indicative of the Company’s ongoing operating performance and may fluctuate significantly from period to period. These measures should be considered supplementary to the Company’s financial results that are presented in accordance with U.S. GAAP and should not be viewed as a substitute for U.S. GAAP measures. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way the Company calculates such measures. Consequently, the Company’s non-GAAP financial measures may not be comparable to similar measures used by other companies.

The following non-GAAP financial measures are used in this document or in other public disclosures made by the Company from time to time:

1. Adjusted operating income, on a pre-tax and after-tax basis, and adjusted operating income per diluted share. The Company uses these measures as a basis for analyzing financial results because the Company believes that such measures better reflect the ongoing profitability and underlying trends of the Company’s continuing operations. Adjusted operating income is calculated as net income available to the Company’s shareholders (or, in the case of pre-tax adjusted operating income, income before income taxes) excluding substantially all of the effect of net investment related gains and losses, changes in the fair value of certain embedded derivatives, and changes in the fair value of contracts that provide market risk benefits, any of which can be volatile and may not reflect the underlying performance of the Company’s businesses. Additionally, adjusted operating income excludes, to the extent applicable, any net gain or loss from discontinued operations, the cumulative effect of any accounting changes, the impact of certain tax-related items, and any other items that the Company believes are not indicative of the Company’s ongoing operations. In addition, adjusted operating income per diluted share is calculated as adjusted operating income divided by weighted average diluted shares outstanding. These measures also serve as a basis for establishing target levels and awards under the Company’s management incentive programs.
2. Adjusted operating income (on a pre-tax and after-tax basis), excluding notable items. Notable items are items the Company believes may not be indicative of its ongoing operating performance which are excluded from adjusted operating income to provide investors and other third parties with a better understanding of the Company’s results. Such items may be unexpected, unknown when the Company prepares its business plan or otherwise. Notable items presented may include the financial impact of the Company’s assumption reviews on business subject to the Financial Accounting Standards Board’s Accounting Standards Update No. 2018-12, “Targeted Improvements to the Accounting for Long-Duration Contracts” and related amendments, reflected in future policy benefits remeasurement gains or losses.
3. Adjusted operating revenue. This measure excludes the effects of net realized capital gains and losses, and changes in the fair value of certain embedded derivatives.
4. Shareholders’ equity position excluding the impact of accumulated other comprehensive income (loss) (“AOCI”), shareholders’ average equity position excluding AOCI, and book value per share excluding the impact of AOCI. The Company believes that these measures provide useful information since such measures exclude AOCI-related items that are not permanent and can fluctuate significantly from period to period, and may not reflect the impact of the underlying performance of the Company’s businesses on shareholders’ equity and book value per share. AOCI primarily relates to changes in interest rates, credit spreads on its investment securities, future policy benefits discount rate measurement gains (losses), market risk benefits instrument-specific credit risk remeasurement gains (losses) and foreign currency fluctuations. The Company also discloses a non-GAAP financial measure called shareholders’ average equity position excluding AOCI and notable items.
5. Adjusted operating return on equity. This measure is calculated as adjusted operating income divided by average shareholders’ equity excluding AOCI. Adjusted operating return on equity also serves as a basis for establishing target levels and awards under the Company’s management incentive programs. The Company also discloses a non-GAAP financial measure called adjusted operating return on equity excluding notable items, which is calculated as adjusted operating income excluding notable items divided by average shareholders’ equity excluding notable items and AOCI.

Reconciliations of the foregoing non-GAAP financial measures (to the extent disclosed in this document) to the most comparable GAAP financial measures are provided in the Appendix at the end of this document.

Contacts

Jeff Hopson

Senior Vice President – Investor Relations

(636) 736-2068

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