• Adjusted Operating Earnings: $5.66 per share.
• Adjusted Operating Return on Equity: 15%, excluding notable items.
• Pretax Adjusted Operating Income: $485 million for the quarter.
• Capital Deployed in In-Force Transactions: $418 million.
• Excess Capital: $1.9 billion before the Equitable transaction.
• Deployable Capital: Estimated at $1.3 billion at the end of the quarter.
• Nonspread Portfolio Yield: 4.9% in Q1, up 10 basis points from the previous quarter.
• Effective Tax Rate: 21.9% on adjusted operating income before taxes.
• Consolidated Net Premiums Growth: Up 13% year-over-year, adjusted for U.S. PRT transactions.
• Traditional Business Premium Growth: 11.2% for the quarter on a constant currency basis.
• Economic Impact of Biometric Claims Experience: Favorable by $196 million.
• Financial Impact of Biometric Claims Experience: Favorable by $58 million.
• Book Value Per Share: Increased to $154.6, with a compounded annual growth rate of 9.8% since 2021.

• Warning! GuruFocus has detected 2 Warning Sign with RGA.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Reinsurance Group of America Inc (NYSE:RGA) reported strong adjusted operating earnings of $5.66 per share, with a 15% adjusted operating return on equity, indicating a robust start to the year.
• The company experienced favorable claims experience across all geographic regions, contributing significantly to the positive financial results.
• RGA's Creation Re strategy has led to substantial growth in Asia, with new business embedded value per transaction tripling since 2021.
• The company successfully deployed $418 million in capital for in-force transactions, including strategic deals in Asia and a significant transaction with Equitable expected to close midyear.
• RGA maintains a strong capital position with $1.9 billion in excess capital and $1.3 billion in deployable capital, supporting future growth opportunities.

Negative Points

• Variable investment income was below expectations by approximately $30 million, primarily due to lower mark-to-market adjustments on limited partnerships and timing of real estate joint venture sales.
• The US Financial Solutions segment performed at the low end of expectations due to lower variable investment income.
• The Corporate and Other segments reported an adjusted operating loss before tax of $70 million, driven by lower-than-expected variable investment income and other smaller onetime items.
• The US PRT market has been less vibrant recently, reflecting market uncertainty and resulting in reduced activity at the upper end of the market.
• Canada's traditional results were impacted by modestly unfavorable lapse experience, although partially offset by favorable claims experience.

Q & A Highlights

Q: Can you explain the strong mortality experience in the US despite the flu season and a large case impacting other companies? A: Axel Andre, CFO, explained that the positive experience was driven by lower-than-expected large claims in the US. While smaller claims were slightly higher due to the flu season, the overall claims process was robust, with extra due diligence performed to ensure all claims were collected. Jonathan Porter, Chief Risk Officer, confirmed that the large case mentioned was reflected in their Q1 results.

Q: How does RGA plan to turn the Equitable deal into a 13% to 15% ROE business despite its challenges? A: Tony Cheng, CEO, stated that the transaction was strategically valuable and priced appropriately. Axel Andre added that RGA benefits from its extensive experience and data, allowing for effective repricing and management of the block. Jonathan Porter noted that synergies in capital, expenses, and assets contribute to the improved returns.

Q: What is the current pipeline of transactions and where are the most opportunities? A: Tony Cheng highlighted that the pipeline is attractive in terms of quality, focusing on long-term partnerships across EMEA, Asia, and North America. The strategy, known as Creation Re, emphasizes repeat exclusive business and leveraging global solutions to address similar needs across different markets.

Q: How do you view the PRT market given current market uncertainties? A: Tony Cheng expressed optimism, viewing the current pause as temporary. He emphasized the long-term derisking trend in the market and noted that RGA is exploring strategies to highlight strengths in other market segments, expecting activity to pick up in the second half of the year.

Q: How are new money rates trending in the second quarter, and what is the outlook for private asset sourcing? A: Leslie Barbi, CIO, stated that new money rates are similar to the first quarter, with opportunities to deploy cash. The private asset sourcing remains favorable, with a broad platform built over 20 years, although market volatility may slow issuance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.