UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 22, 2013
REINSURANCE GROUP OF AMERICA, INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
| Missouri | 1-11848 | 43-1627032 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
1370 Timberlake Manor Parkway, Chesterfield, Missouri 63017
(Address of Principal Executive Office)
Registrant’s telephone number, including area code: (636) 736-7000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
As previously reported in Reinsurance Group of America, Incorporated’s Currents Report on Form 8-K furnished on May 20, 2013, the company announced that it will host a conference for institutional investors and analysts at the Grand Hyatt Hotel in New York City on Thursday, May 23, from 8:30 a.m. to 12:30 p.m. Eastern Time. Copies of the slides used in the presentation will be available on the company’s web site at www.rgare.com (through the link on the Investor Relations page) and are attached as Exhibit 99.1 and incorporated herein by reference.
The information in this Item 7.01 and the exhibit attached hereto will not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor will such information or exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits. The following documents are filed as exhibits to this report: |
| 99.1 | Copy of slide presentation for RGA 2013 Investor Day |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| REINSURANCE GROUP OF AMERICA, INCORPORATED | ||||||
| Date: May 22, 2013 | By: | /s/ Jack B. Lay | ||||
| Jack B. Lay | ||||||
| Senior Executive Vice President and Chief Financial Officer | ||||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Copy of slide presentation for RGA 2013 Investor Day | |
Exhibit 99.1
|
|
Partnering for Growth
RGA Investor Day 2013
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
RGA: A Leader in Life Reinsurance
Reinsurance Group of America, Incorporated® (NYSE: RGA) is one of • Capital-motivatedreinsurancetohelpinsurersmeetfinancial
the largest life reinsurers in the world, with approximately $2.9 trillion of objectivesandmanagecapitalmoreefficiently
life reinsurance in force and assets in excess of $40 billion. • E-underwriting and e-commerce solutions that enable rapid,
reliable decisions and streamline processes
From our beginnings in 1973 through 40 years of steady global
expansion, RGA has grown to become one of the world’s largest • Training programs and seminars that provide clients access to
and most highly respected reinsurers, recognized for our superior RGA’s global team of industry experts
risk management and innovative solutions. RGA reinsures one of the Clients appreciate that RGA listens and continually strives to bring
largest in-force blocks in the life insurance industry, and has built an fresh approaches and innovative ideas to help them meet challenges
extensive database of mortality information. This knowledge forms the and achieve success.
basis for RGA’s continued leadership in facultative underwriting and
competitive pricing of risks.
Our teams of actuarial and underwriting professionals draw upon
historical data and experience, developing expert solutions that help
our clients prosper and grow. RGA shares our expertise with clients in RGA Core Products and Services
multiple ways:
• Individual life and health reinsurance
• Superior understanding of mortality and morbidity risks, built on
RGA’s extensive database • Group life reinsurance
• World-class facultative underwriting, specializing in large cases • Livingbenefits(criticalillness,longevity,health,
and substandard risks, enabling insurers to write more policies and long-term care) reinsurance
• Shared medical underwriting knowledge, developed from • Financial reinsurance
leading-edge research and experience • Annuity reinsurance
• Expert claims handling to reduce costs • Facultative and electronic underwriting
• Innovative product development to support business growth • Risk management
• Competitive pricing to transfer mortality risk and reduce
capital requirements • Product development
• Benchmarking studies and seminars that build and leverage
market intelligence
Partnering for Growth 2
|
|
Global Presence
RGA achieves superior stability through geographic operational diversity and a strategic mix of products and services.
Allocation of 2012 net premiums1:
55%
33%
12%
derived from
derived from
derived from
U.S. operations
International operations
Canada
Worldwide Operations
RGA serves clients around the world from operations in 25 countries:
• Australia • Ireland • South Africa
• Barbados • Italy • South Korea
• Bermuda • Japan • Spain
• Canada • Malaysia • Taiwan
• China • Mexico • United Arab Emirates
• France • Netherlands • United Kingdom
• Germany • New Zealand • United States
• Hong Kong • Poland
• India • Singapore
1Excludes Corporate and Other segment
Partnering for Growth 3
|
|
WRatings
Financial Strength Ratings
A+ Superior
A.M. Best Company
RGA Reinsurance Company A1 Good
RGA’s principal operating subsidiary in the United States Moody’s Investors Service
AA- Very Strong
Standard & Poor’s Insurance Rating Service
A+ Superior
RGA Life Reinsurance Company of Canada A.M. Best Company
RGA’s Canadian operating subsidiary AA- Very Strong
Standard & Poor’s Insurance Rating Service
RGA Reinsurance Company of Australia Limited AA- Very Strong
(RGA’s Australian operating subsidiary) Standard & Poor’s Insurance Rating Service
RGA International Reinsurance Company Limited AA- Very Strong
Based in Ireland, supports business operations outside North America Standard & Poor’s Insurance Rating Service
RGA Global Reinsurance Company, Ltd. AA- Very Strong
Based in Bermuda, supports business operations outside North America Standard & Poor’s Insurance Rating Service
Senior Debt Ratings: Reinsurance Group of America, Incorporated
A.M. Best Company a- (Strong)
Moody’s Investors Service Baa1 (Medium)
Standard & Poor’s Insurance Rating Service A- (Strong)
Partnering for Growth 4
|
|
Recent Awards and Recognitions
RGA continues to lead industry rankings in terms of client satisfaction and reputation. Recent awards and recognitions acknowledged during 2012 and 2013 include:
2013 Flaspöhler Cedant Survey
RGA was rated “Best Overall Life Reinsurer” in the 2013 Flaspöhler Survey™ (Direct Writers Evaluate Reinsurers/ Life N. A.)bycedants.ThisisthefifthconsecutivetimeRGAhasbeenratedbestoverallinthisbiennialsurvey.
Best Overall Life Reinsurer
NMG Consulting Studies
In 2012 NMG Consulting studies, RGA was ranked #1 globally, and in national and regional studies in the Asia, Canada, Europe, India, Italy, Japan, Malaysia, Mexico, Singapore, South Africa, Taiwan, U.K. & Ireland, and U.S. (individual mortality) markets, on NMG’s Business Capability Index, measured in feedback from insurance executives across more than 700 companies and 40 countries.
#1 in Business Capability Index
2012 Australian Insurance Industry Awards
RGA was named “Reinsurance Company of the Year” in the 2012 Australian Insurance Industry Awards. The judges were impressed by RGA Australia’s market knowledge and thought leadership, demonstrated through initiatives that benefitedtheindustry.
Reinsurance Company of the Year
2012 Asia Insurance Industry Awards
RGA was named “Life Reinsurer of the Year” in the 2012 Asia Insurance Industry Awards. A distinguished panel of judges recognized RGA for “leveraging its global expertise and local insights to design tailored products and develop advanced underwriting frameworks to support clients.”
Life Reinsurer of the Year
Best’s Review Recognizes RGA Innovation
RGA Reinsurance Company was recognized for its Motor Vehicles Records Study in the Innovation Showcase, published in the January 2013 issue of Best’s Review magazine. The Innovation Showcase is a forum for recognizing forward thinking among insurance organizations.
Innovation Showcase
Partnering for Growth 5
|
|
A. Greig Woodring fsa
PresidentandChiefExecutiveOfficer
Greig Woodring is President and
ChiefExecutiveOfficer,andadirector of Reinsurance Group of America, Incorporated. Prior to becoming President, Greig served as Executive Vice President of General American Life Insurance Company (now GenAmerica Financial L.L.C.), in charge of all reinsurance business.
Greig joined General American in 1979 as an actuary, and assumed responsibility for General American’s reinsurance business in 1986. Prior to joining General American, he was an actuary at United Insurance Company in Chicago, Illinois.
Greig’s leadership and experience have been pivotal in helping to make RGA one of the world’s leading life reinsurance companies, with approximately $2.9 trillion of life reinsurance in force.
Greig is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. He received a Bachelor of Science degree in Mathematics from the University of Michigan, a Master of Science in Mathematics from the University of Illinois and an M.B.A. from Washington University in St. Louis. He serves as a director and officerofmanyRGAsubsidiaries.
Jack B. Lay
Senior Executive Vice President and
ChiefFinancialOfficer
Jack Lay, Senior Executive Vice
PresidentandChiefFinancialOfficer of Reinsurance Group of America, Incorporated, is responsible for RGA’s financialandcapitalmanagement aswellasforitsfinancialreporting functions. These functions include oversightofenterprisefinancial management and controls, including:
long-term corporate planning; capital market issuances by the company;developmentandsubmissionofallfilingsrequiredbythe
Securities and Exchange Commission and other regulatory bodies; andcommunicationofcorporateandfinancialinformationtothe rating and investment communities.
Prior to joining RGA in 1994, Jack spent three years with General American Life Insurance Company. Before that, Jack was a partner in thefinancialinstitutionspracticeofKPMG,initsSt.Louisoffice.
Jack received a Bachelor of Science in Business Administration (B.S.B.A.) degree from the University of Missouri—Columbia.
Partnering for Growth 6
|
|
John P. Laughlin
Executive Vice President Global Financial Solutions President RGA Financial Group, L.L.C.
John P. Laughlin is Executive Vice President of Global Financial Solutions (GFS), a unit of RGA Reinsurance Company, and President of RGA Financial Group, L.L.C., a subsidiary of Reinsurance Group of America, Incorporated.
TheGFSunitisresponsibleforallofRGA’sfinancialreinsurance, asset-intensive reinsurance and bulk longevity business worldwide.
GFSworkscloselywithRGAofficesaroundtheworldtocreate customized reinsurance solutions for annuities and other interest-sensitive products, and to support client capital needs for life, health and annuity products.
John came to RGA in 1995 when the company acquired the joint venture that ultimately became RGA Financial Group, L.L.C. RGA Financial, the unit where RGA’s broker-generated business is also housed, became a full subsidiary of RGA Reinsurance Company in 2000.
He began his insurance career with Liberty Financial Management. In 1979, he joined ITT Financial Corporation, and in 1983 began developing itsfinancialreinsurancemarket.By1985,ITTFinancialwasthelargest provideroffinancialreinsuranceintheU.S.
John received his Bachelor of Science (B.S.) degree in Business Administration and Accounting from the University of Missouri—Columbia, and his Master of Science (M.S.) degree in Finance from Saint Louis University.
Alain P. Néemeh cpa, ca
PresidentandChiefExecutiveOfficer
RGA Life Reinsurance Company of Canada Executive Vice President, Australia and Canada
Alain Néemeh is Executive Vice President, Australia and Canada, Reinsurance Group of America, Incorporated (RGA), and
PresidentandChiefExecutiveOfficer of RGA Life Reinsurance Company of Canada (RGA Canada), a wholly-owned subsidiary of RGA.
AlainjoinedRGACanadain1997,withinitialresponsibilityforthefinance area.HebecameRGACanada’sChiefFinancialOfficerin1998;in2001 itsExecutiveVicePresident,OperationsandChiefFinancialOfficer;and in2006,PresidentandChiefExecutiveOfficer.
He came to RGA Canada after eight years at KPMG where, as a Senior Manager, he oversaw the delivery of audit and other services to a variety ofclientsinthefinancialservices,manufacturing,andretailsectors.
Alain received his Bachelor of Commerce (B.Comm.) degree with a concentration in Accountancy from McGill University in Montreal. He is a member of the Ordre des Comptables Professionnels Agréés du Québec, and is a past chairman of the Board of Directors of the Canadian Life and Health Insurance Association (CLHIA), an industry association counting 99% of Canada’s life and health insurance companies as members.
Partnering for Growth 7
|
|
Anna Manning fsa, fcia
Executive Vice President Head of U.S. Markets
Anna Manning, Executive Vice President and Head of U.S. Markets for Reinsurance Group of America, Incorporated, is responsible for all operations within the United States, including business development, pricing, underwriting, medical, claim, and operations. Until January 2011, Anna was Executive Vice President
andChiefOperatingOfficerforRGAInternationalCorporation, overseeing international operational functions, including pricing, underwriting, claims and administration.
Anna joined RGA in 2007 as Vice President and Actuary, Traditional Products. Prior to her arrival, she was a senior consultant in the
TorontoofficeofTowersPerrin’sTillinghastinsuranceconsulting practice. Through her nearly two decades with Tillinghast, she provided consulting services to insurance companies in the areas of mergersandacquisitions,financialreporting,productdevelopment, and value-added performance measurements.
Before joining Tillinghast, Anna was with Manulife Financial, where she was responsible for overseeing the pricing of the company’s U.S. individual annuity business.
Anna is a Fellow of the Society of Actuaries (FSA) and of the Canadian Institute of Actuaries (FCIA). She received a Bachelor of Science (B.Sc.) degree in Actuarial Science from the University of Toronto.
Allan E. O’Bryant
Executive Vice President Head of International Markets and Operations
Allan E. O’Bryant is Executive Vice President and Head of International Markets and Operations for Reinsurance Group of America, Incorporated.
Prior to joining RGA in 2010, Allan was
PresidentandChiefExecutiveOfficerof YunzeiCapital,L.L.C.,aprivateequityfirm
based in both Seattle and Tokyo. He also served as a Senior Advisor to Lehman Brothers Inc. in Tokyo. Before then, he served as President of
AflacInternationalInc.,DeputyChiefFinancialOfficerofAflac,Inc.,and ChairmanandChiefExecutiveOfficerofseveralofAflac’sinternational subsidiaries.Earlierinhiscareer,hefilledavarietyofroleswithKPMG
Peat Marwick, and was a professor of Accounting and Finance at Sophia University in Tokyo.
Allan received a Masters of Accountancy degree from the Marriott School of Management, Brigham Young University, and a Bachelor of Science (B.S.) degree in Accounting, also from Brigham Young University.
He is Emeritus Chairman of the Board of Directors and a member of the Board of Trustees for the American School in Japan, and is also a member of the board of directors for both Novinium Inc. and Access Technology Solutions Inc.
He also sits on, or is a member of: the Program on International Financial Systems at Harvard Law School; the President’s Leadership Council at Brigham Young University; the National Advisory Council of the Marriott School at Brigham Young University; the American Chamber of Commerce inJapan;andtheAmericanInstituteofCertifiedPublicAccountants.
Partnering for Growth 8
|
|
John Hayden flmi, cpa
Senior Vice President
Controller and Investor Relations
John Hayden is Senior Vice President, Controller of Reinsurance Group of America, Incorporated and of various operating subsidiaries. His responsibilities include ensuring corporate compliance with Securities and Exchange Commission reporting requirements, RGA’s investor relations function and rating agency
relationships, and several accounting functions.
Prior to joining RGA in 2000, John served as Director, Special Projects at General American Life Insurance Company. He began his career at KPMG Peat Marwick in 1989, primarily performing audit services for insurance companies.
JohnisaCertifiedPublicAccountantandaFellowoftheLife
Management Institute. He received a Bachelor of Science degree in Business Administration with an emphasis in accounting from the University of Missouri—St. Louis.
Partnering for Growth 9
|
|
Partnering for Growth
John Hayden
Senior Vice President, Controller and Investor Relations
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
Safe Harbor
This presentation 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 earnings, revenues, income or loss, future financial performance and growth potential of Reinsurance Group of America, Incorporated and its subsidiaries (which we refer to in the following paragraphs as “we,” “us” or “our”). The words “intend,” “expect,” “project,” “estimate,” “predict,” “anticipate,” “should,” “believe,” and other similar expressions also are intended to identify forward-looking statements. Forward-looking statements are inherently 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 capital and credit market conditions and their impact on our liquidity, access to capital, and cost of capital, (2) the impairment of other financial institutions and its effect on our business, (3) requirements to post collateral or make payments due to declines in market value of assets subject to our collateral arrangements, (4) the fact that the determination of allowances and impairments taken on our investments is highly subjective, (5) adverse changes in mortality, morbidity, lapsation, or claims experience, (6) changes in our financial strength and credit ratings and the effect of such changes on our future results of operations and financial condition, (7) inadequate risk analysis and underwriting, (8) general economic conditions or a prolonged economic downturn affecting the demand for insurance and reinsurance in our current and planned markets, (9) the availability and cost of collateral necessary for regulatory reserves and capital, (10) market or economic conditions that adversely affect the value of our investment securities or result in the impairment of all or a portion of the value of certain of our investment securities, (11) market or economic conditions that adversely affect our ability to make timely sales of investment securities, (12) risks inherent in our risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (13) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and realestate markets, (14) adverse litigation or arbitration results, (15) the adequacy of reserves, resources, and accurate information relating to settlements, awards, andterminated and discontinued lines of business, (16) the stability of and actions by governments and economies in the markets in which we operate, including ongoing uncertainties regarding the amount of United States sovereign debt and the credit ratings thereof, (17) competitive factors and competitors’ responses to our initiatives, (18) the success of our clients, (19) successful execution of our entry into new markets, (20) successful development and introduction of new products and distribution opportunities, (21) our ability to successfully integrate and operate reinsurance business that we acquire, (22) action by regulators who have authority over our reinsurance operations in the jurisdictions in which we operate, (23) our dependence on third parties, including those insurance companies and reinsurers to which we cede some reinsurance, third-party investment managers, and others, (24) the threat of natural disasters, catastrophes, terrorist attacks, epidemics, or pandemics anywhere in the world where we or our clients do business, (25) changes in laws, regulations, and accounting standards applicable to us, our subsidiaries, or our business, (26) the effect of our status as an insurance holding company and regulatory restrictions on our ability to pay principal and interest on our debt obligations, and (27) other risks and uncertainties described in this document and in our other filings with the Securities and Exchange Commission.
Forward-looking statements should be evaluated together with the many risks and uncertainties that affect our business, including those mentioned in this document and described in the periodic reports we file with the Securities and Exchange Commission. These forward-looking statements speak only as of the date on which they are made. We do not undertake any obligations to update these forward-looking statements, even though our situation may change in the future. We qualify all of our forward-looking statements by these cautionary statements. For a discussion of the risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to review the risk factors in our most recent Form 10-K.
Partnering for Growth 2
|
|
Capital Allocation
Effective in 1Q 2006, the Company changed its capital allocation methodology from a regulatory -based approach to an economic-based approach. To enhance comparability, all prior period segment results in this presentation have been adjusted to reflect the new methodology. This change in capital allocation does not affect the Company ’s reported consolidated financial results.
Non-GAAP Measures
RGA uses a non-GAAP financial measure called “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 operating income, on a pre-tax and after-tax basis, better measures the ongoing profitability and underlying trends of the company’s continuing operations because that measure excludes the effect of net realized capital gains and losses, changes in the fair value of certain embedded derivatives and related deferred acquisition costs. These items tend to be highly variable primarily due to the credit market and interest rate environment and are not necessarily indicative of the performance of our underlying businesses. Additionally, operating income excludes any net gain or loss from discontinued operations, which management believes is not indicative of the company’s ongoing operations. The definition of operating income can vary by company and is not considered a substitute for GAAP net income.
Additionally, the Company evaluates its stockholder equity position excluding the impact of “Other Comprehensive Income”. This is also considered a non-GAAP measure. The Company believes it is important to evaluate its stockholders’ equity position to exclude the effect of Other Comprehensive Income since the net unrealized gains or losses included in Other Comprehensive Income primarily relate to changes in interest rates, credit spreads on its investment securities and foreign currency fluctuations that are not permanent and can fluctuate significantly from period to period.
Reconciliations of non-GAAP measures to the nearest GAAP measures are provided at the end of this presentation.
Partnering for Growth 3
|
|
Agenda
Opening Remarks John Hayden, Senior Vice President, Controller and Investor Relations
Overview A. Greig Woodring, President, Chief Executive Officer, and Director
Global Financial Solutions John P. Laughlin, Executive Vice President, Global Financial Solutions
Canada & Australia Alain P. Néemeh, President and Chief Executive Officer, RGA Life Reinsurance Company of
Canada; Executive Vice President, Australia and Canada
U.S. Traditional Markets Anna Manning, Executive Vice President and Head of U.S. Markets
20-Minute Break
International Markets Allan E. O’Bryant, Executive Vice President and Head of International Markets and Operations
Financial Overview Jack B. Lay, Senior Executive Vice President and Chief Financial Officer
Closing Remarks A. Greig Woodring, President, Chief Executive Officer, and Director
Q&A Session
Partnering for Growth 4
|
|
RGA 2013 Investor Day
A. Greig Woodring
President and Chief Executive Officer
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
RGA – A Long Track Record of Success
Book Value Per Share (ex-AOCI)1
$70 $64.95
$60 $57.25
$52.80
$50 $45.86
$40.36 $41.01
$40 $36.59
$34.06
$31.08
$30 $27.73
$22.63
$20
$10
$0
4Q02 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12
1Book value excludes other comprehensive income. Periods prior to 4Q06 not restated for 2012 DAC accounting change. Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Continuous increase in value
Investor Day 2
|
|
Some Things Have Changed…
??Slow growth in our largest business, the U.S. mortality market ??Investment income headwinds ??Growth in non-mortality product lines
??Approximately one-third of 2012 pre-tax operating earnings derived from annuities, financial reinsurance, longevity risk and long-term care
??Overall growth still at attractive levels
??2012 premiums up 8%, operating income up 6% ??Intermediate growth expected to be 5%—8% per year
??Significant growth opportunities in Asia and Europe
Investor Day 3
|
|
Performance Overview
% of Total Pre-tax
5-year Avg. 2 Intermediate Segment Operating 2012 ROEC
ROEC2 Growth Outlook
Income1
U.S. 66% 13% 14% Moderate Canada 21% 21% 21% High Asia Pacific 5% 16% 25%3 High
Europe and
8% 10% 7% High South Africa
Total RGA4 13% ROE 12% ROE 11%—12% ROE
1 Excludes Corporate segment. Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
2 Return on Economic Capital (internal company model).
3 Excludes Australia.
4 Operating return on equity. Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Investor Day 4
|
|
Key Messages
Increasing flexibility with respect to capital deployment coming from generation of redundant capital
Well-positioned in our chosen markets
Global build-out virtually complete
Poised to leverage operations and capitalize on growth opportunities
Part of the “solution set” for life companies looking to realign around core businesses
In-force blocks
Financial reinsurance
Investor Day 5
|
|
Overview of Businesses
U.S. Traditional Europe and South Africa
Market leader, premier reinsurer Predominantly driven by U.K. operations
Predictable, long-term, substantial profits Diversification enabling stable growth
Facultative leadership Strengthening presence in continental Europe
Successful product line expansion
Canada Asia
Sustained market leader Recognized leader in Asian markets
Substantial value embedded in in-force Opportunities in key markets to increase
Relatively low lapse rates reinsurance penetration from low levels
Diversification supports solid growth Innovative product development
Australia Global Financial Solutions
Historically solid earnings contributor Strong and growing demand for asset
Currently a turnaround effort intensive products
Industry issues have contributed to recent High-return financial reinsurance business
poor results thriving
Longevity demand exceeds supply
Investor Day 6
|
|
Global Acquisitions
Overview
Launched in 2011, with objective to deploy capital in attractive, closed-block opportunities
Significant opportunities exist in numerous markets that RGA already serves Natural extension of RGA’s strengths and capabilities Considerable variation in competitive offerings by market Building our reputation as a creative, fair and reliable partner for in-force transactions
Investor Day 7
|
|
Global Acquisitions
Results to Date
Five in-force opportunities won since 2011 ??Over $500 million of GAAP capital deployed
$67 million of pre-tax operating income contribution in 2012 (annualized impact of $82 million)
RGA’s existing relationships and brand opening the door to considerable opportunities
Evaluated approximately 70 opportunities in 2011, 90 in 2012 ??Actively pursued around 20 in 2011, 25 in 2012
Each opportunity unique, with different solutions delivered to RGA clients leveraging different RGA teams
Investor Day 8
|
|
Global Acquisitions
Looking Forward
Continuing to expand select capabilities
U.S. and Europe most attractive, with occasional opportunities in other markets ??Strong pipeline continues, with material diversity of sellers, markets, block sizes and product types
Future opportunities challenging to predict due to uncertainty of environment
Investor Day 9
|
|
Looking at 2013
Building on a solid first quarter
Full year of large fixed annuity block acquired in 2012
Australia improvement
Capital deployment
Investor Day 10
|
|
Global Financial Solutions
John Laughlin
Executive Vice President, Global Financial Solutions
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
Global Financial Solutions
Lines of Business Objectives
Financial Reinsurance Provide tailored capital and
Asset Intensive Reinsurance risk solutions to clients
Longevity Reinsurance Generate high-return
business
Provide diversified income
streams
Leverage expertise across
global markets
Global capital and risk solutions
Global Financial Solutions 2
|
|
Financial Reinsurance
Strengths
Pioneers in this business Strong analytical, regulatory, structuring expertise Large client base; long-term, established client relationships Industry credibility with clients and regulators Global expansion allows further financial reinsurance growth
Results
Steady growth in operating income
Successful expansion into international markets
Pre-tax Operating Income1
($ Millions)
$100
$90
$80
$70
$60
$50
$40
$30
$20
$10 Actual Projection
$0
2008 2009 2010 2011 2012—2015
Fin Re U.S. Fin Re International
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Superior strengths lead to outstanding results
Global Financial Solutions 3
|
|
Financial Reinsurance – Summary
Current State Strategies Expected Results
Established expertise Expand strategic 8%—14% intermediate-
Leading presence in accounts in developed term growth in operating
U.S. and Japan markets: U.S., Japan and income
Canada
Pressure on efficient Continued expansion in
capital management ?Health & Group international markets
XXX/AXXX
Deploy RGA-developed
expertise in targeted
markets: U.K., Germany,
France and Taiwan
Global Financial Solutions 4
|
|
Asset Intensive Reinsurance
Characteristics
Doesn’t require distribution force or substantial
fixed administration expenses
Provides diversification to large mortality base
Defined appetite for amount of business allows
selective participation in best opportunities
Valuable review partner to clients
Flexibility as products/markets/economic factors
change
Optimally positioned to deliver profitable growth
Global Financial Solutions 5
|
|
Asset Intensive Reinsurance
Strengths
Clients like RGA’s stability
and credit quality
Long history of client
contacts and relationships
Analytical, investment and
risk management expertise
Well-positioned to support
broad range of products
and risks
Capital
Expertise
Risk management
($ Millions) Pre-tax Operating Income1
$200
$180
$160
$140
$120
$100
$80
$60
$40 Actual Projection
$20
$0
2008 2009 2010 2011 2012—2015
Other FA/BOLI VA EIA
($ Billions) Account Value Reinsured
$25
$20
$15
$10
$5
Actual Projection
$0
2008 2009 2010 2011 2012—2015
Other FA/BOLI VA EIA
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Global Financial Solutions 6
|
|
Asset Intensive Reinsurance
Estimated Interest Rate and Equity Impacts on Pre-tax Operating Income
Interest Rates
($ Millions) +50bps -50bps
$15
$10 3.2
$5 8.4
$0
-$5 -11.1
-$10
-2.6
-$15
-$20
Fixed Indexed Annuity Fixed Annuity/Other
Equity Movements
($ Millions) 10% -10%
$20
$15
$10
$5 6.3
$0 1.7
-1.7
-$5 -7.0
-$10
-$15
-$20
VA Fixed Indexed Annuity
Manageable interest rate and equity sensitivities
Global Financial Solutions 7
|
|
Asset Intensive Reinsurance – Summary
Current State Strategies Expected Results
Established business Reinsure products in 10%—15% intermediate-
in U.S. favorable environments term growth in operating
Strong pricing and risk Target well-designed income
management skills products from quality Balanced portfolio of
Ability to review and direct writers income and risks
support all investment Expand in established
products markets: U.S. and Japan
Deploy resources into
new markets: U.K.,
Germany, France and
Hong Kong
Global Financial Solutions 8
|
|
Longevity
Strengths
Hedge to large mortality position ??Analytical and risk management expertise Strong client contacts Demand for reinsurance exceeds supply ??Defined appetite for amount of business in each market
Results
Significant, diversified income stream Primarily U.K. to date
($ Millions) Pre-tax Operating Income1
$50
$45
$40
$35
$30
$25
$20
$15
$10
$5 Actual Projection
$0
2008 2009 2010 2011 2012—2015
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Global Financial Solutions 9
|
|
Longevity – Summary
Current State Strategies Expected Results
Relatively new line of Expansion into 10%—15% intermediate-
business targeted markets: term growth in operating
Solid expertise U.S. and Netherlands income
Strong current and Continued production,
projected demand profits in established
markets
Organic profits on
in-force business Combine with Asset
Intensive solutions
Global Financial Solutions 10
|
|
Keys to Success
Experience Risk Managemen Brand
Seasoned group Strong analytical Strong RGA history,
dedicated to line of and structuring rating and capital
business; innovation expertise;
across markets conservative
approach to risk
assessment
We Deliver
Consistent growth in profits High-return business Industry credibility with clients and regulators Longest client relationships Financial Reinsurance: 19 years Asset Intensive: 15 years
Global Financial Solutions 11
|
|
Canada
Alain P. Néemeh
President and Chief Executive Officer, RGA Life Reinsurance Company of Canada; Executive Vice President, Australia and Canada
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
Overview
Key Messages
Solid growth and
profitability
Substantial value
embedded in the in-force
Maintaining market
leadership
Diversifying to maintain
growth trajectory
Leveraging global
expertise
($ Millions) Pre-tax Operating Income1
$250
$200
$150
$100
$50
Actual Projection
$0
2008 2009 2010 2011 2012 … 2015
Individual Life Group Creditor Group Life and Health Individual Living Benefits Longevity
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Canada 2
|
|
Canadian Individual Life Market
($CAD Billions)
$250 40%
34.9% 34.4%
33.1% 33.1% 35%
32.1%
$200
30%
Sales
Life $150 25% Share
20%
Individual $100 15% Market
77.0% 70.3%
74.0% 71.3% RGA
65.3% 10%
Ordinary $50
5%
$0 0%
2008 2009 2010 2011 20121
Amount reinsured Amount retained RGA market share
Source: Munich American/Society of Actuaries Reinsurance Surveys 12012 Individual Sales Estimate per CLHIA
Canada 3
|
|
Canadian Net Premiums
($ Millions) Net Premiums
$1,400
$1,200
$1,000
$800
$600
$400
$200
Actual Projection
$0
2008 2009 2010 2011 2012 … 2015
Individual Life Group Creditor Group Life and Health Individual Living Benefits Longevity
Canada 4
|
|
Canadian Individual Life
#1 in the NMG Survey for fourth consecutive time
#1 in new business for sixth consecutive year, with one-third market share
Strong, multilevel client relationships
Facultative underwriting leader
Significant value embedded in the in-force
Canada 5
|
|
Value Embedded in Canadian Life In-force
Actuarial Liabilities – U.S. GAAP vs. Best Estimate
($ Millions)(In-force as of December 31, 2012)
$6,000
$5,000
Considerable
projected future
$4,000 value
$3,000
US GAAP liabilities
Best estimate liabilities
$2,000
$1,000
$0
Canada 6
|
|
Diversification
Recognized industry experts for group and living benefits: #1 in NMG Survey
Leverage global experience
Disrupted Group Life and Health status quo – more treaties now split; more companies coming to market
Currently have one-third of the new Critical Illness reinsurance business (face amount)
Longevity
Increasing interest from both pension plans and insurance companies
Executed Canada’s only longevity reinsurance transaction
Opportunistic transactions responding to regulatory and capital changes
Canada 7
|
|
Summary
Expected growth rates of 7%—9% premium; 10%—12% earnings
Substantial value embedded in the in-force
Strategic and disciplined diversification
Recognized leader across all product lines with strong client relationships at all levels Facultative underwriting leader
Canada 8
|
|
Australia and New Zealand
Alain P. Néemeh
President and Chief Executive Officer, RGA Life Reinsurance Company of Canada;
Executive Vice President, Australia and Canada
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
Overview
Key Messages
Poor financial results in 2011 and 2012
Reserve releases and strengthening have affected results
Repricing initiative underway
New business discipline at expense of revenue growth Investing in infrastructure to better manage results
Modest profitability in 2013
Pre-tax Operating Income1
($ Millions)
$60 $50 $40 $30 $20 $10 $0
-$10
-$20
-$30
Actual Projection
2008 2009 2010 2011 2012 … 2015
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Australia and New Zealand 2
|
|
Net Premiums by Product Line
Net Premiums
($ Millions)
$1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0
Actual Projection
2008 2009 2010 2011 2012 2015
Group Life and TPD1 Group Disability Individual Life, Critical Illness, and TPD1 Individual Disability
1TPD is an acronym for Total Permanent Disability.
Australia and New Zealand 3
|
|
Australian Life Reinsurance Market Overview
Reinsurance Market Size and Trend – Individual and Group Premiums
($ Millions)
Individual New Group Total Reinsured
Reinsured Premiums Premiums
324 1,200
1,098
284
990
923
235
193 696
141
Actual Projection
Actual Projection
2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
No. of Cedants 27 28 32 32 32 No. of Cedants 27 28 32 32 32
NMG Consulting, Life & Health Reinsurance Programme 2012
Australia and New Zealand 4
|
|
Individual
Drivers of Past Performance
Structural growth embedded in the system masking an increasing industry churn problem Generous underwriting limits and fewer requirements Very complex product designs Competitive direct and reinsurance markets
Actions Underway
Disciplined approach to new business Current portfolio being repriced
Discussing with industry participants to promote product change
Australia and New Zealand 5
|
|
Industry-wide Issues
Non-essential product features a risk to profitability
“Comminsure managing director Paul Rayson said the industry had not addressed affordability and pricing issues, which directly affected profitability. ‘We need to get better at pricing and offering products that are appropriate’.”
Financial Observer, March 22, 2013
AMP profit edges up, but life lapse rates rise
“The result reflects the challenging economic environment, with industry lapse rates at their highest in a decade, AMP says.”
Insurance News, February 25, 2013
Suncorp suffers life lapses
“Suncorp has blamed lower life insurance profits on lapses due to tough economic conditions – a problem it says affects the entire industry.” Insurance News, February 25, 2013
Rising insurance claims hit NAB
“Rising disability claims and lapse rates have reduced NAB Wealth’s retained profits and capital in its life insurance business.” Insurance News, February 11, 2013
Australia and New Zealand 6
|
|
Group
Drivers of Past Performance
Very competitive direct and reinsurance markets Generous underwriting limits and fewer requirements Three-year premium guarantees Weakening claims experience Long and lengthening reporting delays Large U.S. GAAP claim reserves on current assumptions
Actions Underway
Strengthened reserves
Disciplined approach to new business Continual repricing of the portfolio Increasing frequency of experience studies
Discussing with industry participants to promote product change
Australia and New Zealand 7
|
|
Australian Group Market
Net Industry Profitability 2009-2012
Net Profit/Premium (%)
14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6%
2009 2010 2011 2012
Life and TPD Disability Income
Quarterly Life Insurance Performance Statistics
Australian Prudential Regulatory Authority. March 2009 to December 2012
Australia and New Zealand 8
|
|
Industry-wide Issues
Why life insurance is tipped to cost more and more
Daily Telegraph, 16 January 2013
Warning on group insurance price pressures
Money Management, 4 December 2012
“An industry report saw average premium increases in group of about 20%, which shows the industry is starting to move before becoming more sustainable.”
Ian Laughlin
Australian Prudential Regulatory Authority,
21 March 2013
Australia and New Zealand 9
|
|
Summary
Significant component of RGA (following appreciation of AUD)
Disappointing financial results since Q4 2010
Steps underway to improve profitability Modest profits expected in the interim
Current challenges in key market segments, but good medium to long-term growth prospects
Australia and New Zealand 10
|
|
U.S. Traditional
Anna Manning
Executive Vice President, Head of U.S. Markets
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
Overview
Key Messages
Stable long-term financial results, some short-term volatility Strong profitability despite an underperforming business era Substantial value embedded in the in-force Measured and disciplined product diversification Premier reinsurer, focused on client needs Facultative leadership Market-leading services, capabilities, expertise and innovation
($ Millions) Pre-tax Operating Income1
$500
$400
$300
$200
$100
Actual Projection
$-
2008 2009 2010 2011 2012 … 2015
Individual Mortality LTC Group
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Solid earnings
U.S. Traditional 2
|
|
Financial Results – U.S. Traditional
Pre-tax Operating Income1
($ Millions) ($ Millions)
$190 $380
$150 $300
$110 $220
Quarterly $70 $140 Annual
$30 $60
($10) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ($20)
2008 2009 2010 2011 2012
Individual Mortality LTC Group Annual (second axis)
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Long-term stability, some short-term volatility
U.S. Traditional 3
|
|
Net Premiums
Strengths
Top-tier market share in all offerings Leader in client satisfaction Strong appetite and capacity for attractive block opportunities Successful product line expansion Consistency in approach to the market
($ Millions) Net Premiums
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
Actual Projection
$-
2008 2009 2010 2011 2012 … 2015
Individual Mortality LTC Group
Moderate growth
U.S. Traditional 4
|
|
U.S. Individual Mortality – Reinsurer Consolidation
Individual Ordinary Recurring New Business – Market Share
100% 80% 60% 40% 20% 0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1st 2nd 3rd 4th 5th 6th All Others
Source: Munich American/Society of Actuaries Reinsurance Surveys
Reinsurer consolidation
U.S. Traditional 5
|
|
U.S. Individual Mortality – Reinsurance Cession Trends
Individual Ordinary Recurring New Business
($ Billions)
$1,000
$900
$800
$700
$600
$500 15%
12% 11%
$400
11%
20%
$300 12% 17%
$200
$100 22% 23% 24%
22% 26% 22% 20%
$0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1st 2nd 3rd 4th 5th All Others
RGA
Source: Munich American/Society of Actuaries Reinsurance Surveys
Pricing discipline in competitive environment
U.S. Traditional 6
|
|
U.S. Individual Mortality
Underperforming Era
1999-2004 business is a shrinking portion of the book Impact of this business on the overall book has reached bottom and is expected to gradually diminish Future impact further tempered by continued new business
Claims Study Experience for 1999-2004 Era Business1
($ Billions)
$1.2
$0.6
Actual Projection
$0.0
2007 2008 2009 2010 2011 … 2017 … 2022
Original Pricing Experience
Premiums by Era
2012
Pre-
1999 1999-
2004
2005+
Projected 2022
Pre-
1999 1999-
2004
2005+
1Experience study results on approximately 85% of era business.
U.S. Traditional 7
|
|
Value Embedded in In-force
Actuarial Liabilities – U.S. GAAP vs. Best
Estimate
($ Millions) (In-force as of December 31, 2012)
$6,000
$5,000 Considerable
projected future
value
$4,000
US GAAP Liabilities
Best Estimate Liabilities
$3,000
$2,000
$1,000
$0
U.S. Traditional 8
|
|
Differentiation from Competition
Relationship Service Innovation Technical Expertise
Client and industry Responsiveness Product offerings Capacity
recognition Competitive offers Underwriting Underwriting
(Flaspöhler, NMG,
Best’s Review) Special programs Services specialties
Strong multilevel Administration Research and Industry participation
client relationships Claims partnership development Actuarial insights
Client outreach Education and Technology
and focus training Use of big data
Consistent
philosophies
U.S. Traditional 9
|
|
Premier Capabilities
Factor Advocate Scores
Medical Underwriting Capabilities 80.3%
24.0%
Financial Value 51.3%
22.9%
Financial Security 76.1%
35.9%
Strong Client Orientation 63.0%
22.2%
Leading Expertise & Market Knowledge 73.3%
21.5%
Leading Actuarial Product Development Expertise 62.4%
11.9%
Timely Service 69.1%
30.1%
High Quality Risk Management Service 60.7%
30.9%
Effective Training Courses and Seminars 66.2%
1.3%
Strong Claims Handling Ability 70.3%
37.1%
Capital Management & Reserve Financing Solutions 57.8%
-0.3%
RGA All Reinsureri s ranceMeanMean
Source: 2013 Flaspöhler Cedant Survey (Life—North America)
RGA outperforms across a range of capabilities
U.S. Traditional 10
|
|
Market Leader in Client Satisfaction
Client Advocate ScoreTM RGA
A
RGA Scores B
2013: 49.1%
2011: 45.6% C
2009: 50.2%
D
E
F
G
H
I
J
K
L
-100.0% -80.0% -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0%
Source: 2013 Flaspöhler Cedant Survey (Life—North America)
RGA ranks Best Overall Life Reinsurer in 5 consecutive surveys
U.S. Traditional 11
|
|
Research
Our research benefits our clients and the industry
U.S. Traditional 12
|
|
Innovation
Market Expansion
Market Innovation Challenge
2012 2013
U.S. Traditional 13
|
|
Summary
Stable financial results over time are expected to
continue, moderate growth 4%—6%
Significant value embedded in the in -force
Pricing discipline and approach is consistent across
product lines
Facultative underwriting leader
Product expansion has better matched our offerings to
our clients’ and will continue to contribute to growth and
risk diversification
Capabilities, expertise and innovative culture are
leveraged to benefit our clients and the industry,
recognizing our success results from theirs
Quality and breadth of these capabilities continue to
differentiate us and are well recognized by clients and
industry groups
U.S. Traditional 14
|
|
International Markets and Operations
Allan O’Bryant
Executive Vice President, Head of International Markets and Operations
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
Overview
Substantial presence in almost every market where our
multinational clients have significant operations Canada
Ireland
United Kingdom
Netherlands
Poland
Germany
France
Italy
United States
China
Japan
South Korea
Spain
Taiwan
Hong Kong
United Arab Emirates
India
Malaysia
Bermuda
Barbados
Australia
New Zealand
Mexico
South Africa
Brazil
Global leader serving multinational and domestic clients in more than 60 countries
International Markets and Operations 2
|
|
Overview
Key Messages
Continued growth from strong mortality
competencies expanding into living
benefits products
Emerging opportunities in existing and
new markets
Growth in segments such as longevity
reinsurance, underwritten annuities, block
acquisitions and nontraditional
reinsurance
Driven to be the most customer-focused
and innovative reinsurer with the largest
market share
Deep, long-term relationships with
multinational clients
Expertise that can be leveraged worldwide
International Markets and Operations 3
|
|
Financial Results—International
Pre-tax Operating Income1
($ Millions) ($ Millions)
$70 $140
$60 $120
$50 $100
$40 $80
Quarterly $30 $60 Annual
$20 $40
$10 $20
$0 $0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2009 2010 2011 2012
ESA Quarterly Asia Quarterly Total International Annual (second axis)
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Excludes Australia.
International Markets and Operations 4
|
|
Distribution of Business
2012 Premium Distribution by Product Type
ESA Asia
18.3% 16.3%
17.0%
13.0%
0.9% 2.3%
57.0%
51.3%
12.4% 11.4%
Individual Life Critical Illness Individual Life Critical Illness
Longevity Individual Living Benefits Individual Living Benefits Group
Group Other
Total Premium: $1,326 million Total Premium: $579 million
Figures exclude premium ceded to IRP; Asia excludes Australia.
International Markets and Operations 5
|
|
Market Growth Potential
Individual Business
12-Month Reinsurance Growth Outlook
40%
36%
35%
32%
30%
25%
22%
20%
16%
15%
15%
12%
11% 11% 11%
10%
10%
5%
0%
Vietnam Indonesia Sri Lanka Gulf Australia Malaysia Netherlands Thailand Philippines India
Corporation
Council
Source: NMG Consulting. Cession grow th. Outlook in local currency in nominal terms.
International Markets and Operations 6
|
|
Market Growth Potential
Group Business
12-Month Reinsurance Growth Outlook
30%
25%
25%
21%
20%
20% 19% 19%
15%
12% 12%
11%
10% 10%
10%
5%
0%
Gulf Vietnam Sri Lanka Malaysia Indonesia U.K. India Scandinavia South Africa Central and
Corporation Eastern Europe
Council
Source: NMG Consulting. Cession grow th. Outlook in local currency in nominal terms.
International Markets and Operations 7
|
|
Asia Operations
International Markets and Operations 8
|
|
Asia1 Operations
Key Messages
Strong profitability from
diverse lines of business Pre-tax Operating Income2
Innovative product ($ Millions)
development a key value $200
creator
Global Financial $150
Solutions opportunities
expanding from Japan
into other Asian markets $100
$50
Actual Projection
$0
2008 2009 2010 2011 2012 2015
1Excludes Australia and Corporate Overhead.
2Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
International Markets and Operations 9
|
|
Asia1 Operations
Key Messages
Leading franchise and
footprint in Asia Net Premiums
($ Millions)
Ranked #1 in NMG
$1,000
survey and named “Life
Reinsurer of the Year” by
the Asia Insurance $800
Industry Awards
Demographic changes $600
and increase in individual
wealth creating the $400
fastest growing insurance
market globally $200
Actual Projection
Advanced e-underwriting
platform meets local $0
market demands for 2008 2009 2010 2011 2012 2015
underwriting expertise
1Excludes Australia.
International Markets and Operations 10
|
|
Asia Operations
2012 Net Premiums 2011/2012 Annual 4-year 2011/2012 Fee
Market ($ Millions) Premium Growth CAGR Income Growth
Japan 151.1 -17.7% -5.6% 16.3%
South Korea 170.4 -3.8% -5.8% —
Hong Kong and
Southeast Asia 177.5 41.5% 21.7% —
Taiwan 78.0 11.0% 4.6% -2.1%
China 2.3 21.1% 36.8% —
TOTAL ASIA 579.3 3.8% 1.2% 13.4%
Australia 771.0 3.4% 14.6% —
TOTAL ASIA PACIFIC 1,350.3 3.5% 7.8% 13.4%
International Markets and Operations 11
|
|
In Focus: Japan Market
International Markets and Operations 12
|
|
Japan
Overview
Second-largest insurance market in the world with
premium in-force of Ą36 trillion1
RGA established in Japan in 1996, and now a
trusted brand
RGA has largest and strongest team based in Japan
Japan historically slow in adopting underwriting,
product and risk management ideas that have been
successful in other Asian markets
Established strong facultative proposition through which
we’ve been able to build partnerships
Insurance market is at turning point regarding use of
reinsurance; gradually opening up to external forces
due to recent IPOs of several large companies and as
they internationalize and expand overseas
RGA’s recent successes position it well for continued
growth in market penetration
1The Life Insurance Association of Japan.
International Markets and Operations 13
|
|
Market Challenges and RGA’s Solutions: Japan
Market RGA’s Solutions
Challenges/Opportunities
Many insurers digitizing Provide e-underwriting to allow customers to instantly
front-end process to remain
competitive issue insurance and reduce costs
Insurers struggling to grow as Develop ideas for living benefit and annuity products that
will help fuel growth; strong capabilities in these products
population ages in Asia and worldwide
Japanese insurers actively Provide expertise and reinsurance structures to assist with
exploring M&A opportunities
overseas M&A activity and leverage knowledge of Asian markets
Interest rates at all-time lows, Offer capital-based solutions that help manage clients’
making savings products difficult risks in this environment
Insurers offering products with Use global knowledge to help clients understand which
long-term guarantees risks are appropriate for long -term guarantees
International Markets and Operations 14
|
|
RGA’s Strengths: Japan
Strengths
Facultative leader in the market, Facultative Cases Received
creating opportunities to increase 60,000
traditional business
Entered into a treaty with one of the 50,000
largest domestic insurers
40,000
Expect to have 10 clients using or
implementing RGA’s e-underwriting 30,000
technology, AURA, by end of 2013;
in exchange for use of technology
and rules expertise, RGA negotiates 20,000
reinsurance
10,000
Largest life reinsurance underwriting
staff in Japan provides support 0
2007 2008 2009 2010 2011 2012
A strong local team filled with innovative ideas
International Markets and Operations 15
|
|
RGA’s Strengths: Japan
Strengths
Great depth of experience in executing
capital-motivated transactions
First transaction was completed in
1996 with consistent growth since
2012 was strongest year in
providing capital solutions;
continued growth projected
Driver of new products in the market
First product development deal of
the year has just been approved by
regulators, and several others are
expected in 2013
Insurers are following the trend in
rest of Asia to use reinsurers for
purposes of product development
International Markets and Operations 16
|
|
Opportunities for Growth: Japan
Opportunities
Global Financial Solutions
Underwriting
Product Development
RGA is best positioned to continue the creation of an emerging reinsurance market
International Markets and Operations 17
|
|
In Focus: Hong Kong and
Southeast Asia Markets
International Markets and Operations 18
|
|
Hong Kong and Southeast Asia
Overview
Hong Kong office opened in 1994 and covers Hong Kong
and the ASEAN region
Fastest-growing RGA operation with increasing margins
Leading market share and leader in NMG BCI index with
the largest client footprint
Facilitating the boom in protection products sold in this
region as insurers seek greater margins
Providing products to the fast-emerging middle class of
ASEAN countries and the fast-growing number of
millionaires in Hong Kong/Singapore and the rest of the
region; continued leadership in the High Net Worth market
Completed first GFS transaction with a strong pipeline for
future transactions
International Markets and Operations 19
|
|
Market Challenges and RGA’s Solutions: Hong Kong and Southeast Asia
Market Challenges/ RGA’s Solutions
Opportunities
Shift from savings products to Provide market-leading product development, capital and
protection products to increase underwriting solutions to help clients launch innovative
margins products through a simple underwriting process
Less available capital support Leveraging our strong team, strong footprint and
relationships, we provide multinationals with innovative
from parent companies capital solutions that differ from what the banks can provide
High Net Worth individuals Pioneer and leading provider of reinsurance to this market
segment, tailoring products and underwriting
Pressure to launch products Leverage regional relationships to ensure more
standardization, economies of scale, and lower system and
more cost-efficiently administration costs
Rapid growth in middle class Provide medical, critical illness and life products with
simplified underwriting processes
Lack of risk management talent GUM underwriting manual and GULF training system to build
relationships and strengthen the industry
International Markets and Operations 20
|
|
RGA’s Strengths: Hong Kong and Southeast Asia
Strengths
The largest and most experienced Local Managing Director responsible for
leadership team in the region driven by all lines of business and solutions,
the RGA culture of client focus differentiating RGA from its competitors
and allowing better packaging of
Strong risk management culture; RGA HK different initiatives to provide better
has the largest underwriting, pricing and solutions
corporate actuarial team of all reinsurers
in HK Strong industry participation in both the
actuarial and underwriting professions,
Largest reinsurer in these markets and ensuring RGA is in tune with and helping
thus RGA has a competitive advantage in to shape regulatory changes for the
terms of availability of client data and betterment of the industry
feeding this back into our pricing process
International Markets and Operations 21
|
|
Opportunities for Growth: Hong Kong and Southeast Asia
HNWI Population, 2007-2011 by Region1
Opportunities CAGR 2007-2011: 2.1%
% Change Total HNWI Population
Product leadership 12.0 10.1 8.6 10.0 10.9 11.0 0.1 2010-2011
0.1
(Millions) 0.1 0.5
High Net Worth 10.0 0.4 0.1 0.1 0.4 0.5 0.4 0.5 Global 0.8%
0.4 0.5
0.4 3.1 3.2 Africa 3.9%
Products for new middle 8.0 3.1 0.4 3.0
Worldwide Middle East 2.7%
class 6.0 2.6 Latin America 5.4%
Tailored to new markets 3.3 3.1 3.4 3.4 Europe 1.1%
HNWI 4.0 2.7
and distribution channels of North America -1.1%
2.0
Leadership in underwriting, 2.8 2.4 3.0 3.3 3.4 Asia Pacific 1.6%
capital and complete client Number 0.0
2007 2008 2009 2010 2011
solutions
Middle-class Spread2
Size of middle class3, m
Indonesia
Philippines
2004
Thailand 2009
20144
Vietnam
1Chart numbers and quoted percentages may not add up due to rounding. Malyasia
1Capgemini Lorenz Curve Analysis, 2012.
2Nomura; World Bank; CEIC. 0 50 100 150
3$3,000 annual household disposable income.
4Forecast.
RGA’s broad product solutions ensure long-term, consistent and fast growth
International Markets and Operations 22
|
|
Europe and South Africa Operations
International Markets and Operations 23
|
|
Europe and South Africa Operations
Key Messages
Stable, long-term ($ Millions) 1
performance from Pre-tax Operating Income
traditional business despite $150
some claims volatility
Mortality lines becoming
highly commoditized
$100
Strategic product and
geographic diversification
$50
Actual Projection
$0
2008 2009 2010 2011 2012 2015
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
International Markets and Operations 24
|
|
Europe and South Africa Operations
Key Messages
Strong client focus Net Premiums
($ Millions)
demonstrated by #1 rank $2,000
in NMG survey
Stable growth resulting
from diversification $1,500
Economic pressures and
uncertainty create capital- $1,000
motivated opportunities
$500
Actual Projection
$0
2008 2009 2010 2011 2012 2015
International Markets and Operations 25
|
|
Europe and South Africa Operations
2012 Net Premiums 2011/2012 Annual 4-year 2011/2012 Fee
Market ($ Millions) Premium Growth CAGR Income Growth
U.K. 803.6 6.4% 10.7% —
Continental Europe 278.0 27.8% 38.8% 5.0%
South Africa 114.5 2.1% 16.8% 22.2%
Middle East 19.1 -23.6% ——
Latin America 34.1 16.0% 16.4% —
India 59.2 7.2% 35.8% —
TOTAL EUROPE AND
SOUTH AFRICA 1,308.5 9.5% 16.6% 13.2%
International Markets and Operations 26
|
|
In Focus: U.K. and Ireland Market
International Markets and Operations 27
|
|
U.K. and Ireland
Overview
Third-largest insurance market in the world; highly
complex and sophisticated
Significant consolidation of direct insurers, with 10 now
representing 95% of new business
RGA established in the U.K. in 1998
RGA’s market position: 2nd for new business, 3rd for
in-force
Insurers on average cede 80% of their mortality and
morbidity risk to reinsurers; percentage likely to remain
at this level
Traditional reinsurance market is highly price-driven
and has become commoditized
Annuity reinsurance market has grown significantly as
pension funds de-risk
Delay in Solvency II creates opportunities for
capital-motivated transactions
International Markets and Operations 28
|
|
Market Challenges and RGA’s Solutions: U.K. and Ireland
Market RGA’s Solutions
Challenges/ Opportunities
Insurers focus attention on AURA provides on-line guaranteed quotes via a web portal
underwritten annuity market for five of the top U.K. insurers
Insurers considering releasing
capital as they prepare for Longevity swap capability and capital release transactions
Solvency II or invest in new
markets
Use of new media and distribution Introducing e-underwriting and predictive modeling to
techniques to sell to new market speed up this purchase cycle and identify those lives who
segments represent the best risks
New “brand assurers” entering the Provision of an “out of the box” solution to provide
insurance underwriting, claims and risk to non-insurance-
market based brands entering the market
Acquire or advise on sale and/or restructuring of
Insurers restructuring companies or closed blocks that are strategically no longer
central to future business models
International Markets and Operations 29
|
|
RGA’s Strengths: U.K. and Ireland
Strengths
Overall “Business Capability Index” is AURA provides a unique e -annuity
best in the U.K. market (#1 NMG 2009, underwriting platform
2010, 2011 and 2012) Global Financial Solutions
Underwriting philosophy, manual and Strong reputation and significant
people are rated #1 (Client Satisfaction deal flow in longevity de-risking of
Survey 2012) insurers
Recognized leader of innovation Since 2009, written over Ł 8 billion
RGA developed impaired and of high-margin longevity swaps, Ł 2
underwritten annuities and is the billion in 2012
market leader Global Acquisitions
Established Innovation Centre Opportunities with insurers, private
Invest in creative products and equity and investment banks in
ideas, such as short-term income solving some of the issues laid bare
protection and leading living benefit by the financial crisis
products, critical illness
International Markets and Operations 30
|
|
Opportunities for Growth: U.K. and Ireland
Opportunities
Underwritten annuities Underwritten Annuity Sales1
(Ł Billion)
Longevity 5
Acquisitions 4.5
4
Group risk
3.5
New products, services 3
and business models
2.5
Financial reinsurance 2
1.5
1
0.5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1Tow ers Watson
International Markets and Operations 31
|
|
International Markets and Operations: Summary
Leverage global expertise and discipline to develop innovative
solutions to meet local needs
Focus on clients leads to strong partnerships that result in
client-centric solutions
Global experience, strength and capabilities are recognized by
clients and industry groups
Continue to build existing and new markets on core actuarial
and underwriting expertise
Product development strengthens relationships with clients and
enhances RGA value allowing for higher margins
Capital-motivated solutions and block acquisition capabilities
meet opportunities generated by changing regulatory and
economic environment
International Markets and Operations 32
|
|
Financial Overview
Jack B. Lay
Senior Executive Vice President and Chief Financial Officer
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
Financial History
Long, consistent track record of producing strong financial results
13% 5-year average 10% premium
operating ROE1 5-year CAGR
6% operating EPS1 10% BVPS (ex-AOCI)1
5-year CAGR 5-year CAGR
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Financial Overview 2
|
|
Intermediate Guidance1
5%— 8% top- and bottom-line annual growth
11% —12% annual operating ROE
Key assumptions
Continued low interest rate environment
Moderate levels of capital deployment
Generation of $200—$300 million excess capital annually
1Reminder of guidance provided January 31, 2013; not intended to be an update to intermediate guidance.
Financial Overview 3
|
|
Consolidated Operating Income per Share1
$10.00
$9.00
$8.00
$7.00
$6.96
$6.00 $6.55
$6.23
$5.69
$5.00 $5.51
$4.00
$3.00
$2.00
$1.00
$-
2008 2009 2010 2011 2012 … 2015
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Financial Overview 4
|
|
Low Interest Rate Environment
Earnings impact is manageable if new money rates
remain constant
Estimated adverse impact of $0.20—$0.30 per share
in 2013
Diminishing effect over next three years
If rates remain low for five years:
No balance sheet charges expected
Capital flexibility maintained
Continued drag on earnings
Financial Overview 5
|
|
Investment Portfolio
Appropriately positioned Average Quarterly Portfolio Yields 1
portfolio 6.00%
5.00%
Stable asset classes
4.00%
No drastic changes to asset 3.00%
profile/mix
2.00%
Average portfolio yields1 1.00%
2011 5.28% 0.00%
2011 2012 2013
2012 4.98%
Q1 2013 4.83%
1Excludes funds w ithheld and other spread related business.
Financial Overview 6
|
|
Capital Management Philosophy
Maintain solvency
Maintain liquidity at holding company and operating companies
Maintain desired rating levels
Credit
Financial strength
Meet regulatory capital requirements of operating companies
Maintain efficient capital base for attractive returns
Optimal mix of debt, equity and hybrid securities
Provide flexibility to take advantage of business opportunities
Financial Overview 7 7
|
|
Five-year Capitalization Trend
(Excluding Other Comprehensive Income)
($ Millions)
$8,000 80%
$7,000 $6,754 70%
$6,617
$719
$719
$6,000 60%
$5,615 Hybrid Capital
$5,249 $319 $1,097 $1,097 Debt
$5,000 $4,722 $478 50% Shareholders’ Equity
$1,096 $4,938 Debt to Total Capital
$478 $4,801
$4,055 $898 Hybrid to Total Capital
$4,000 40%
$558 $897 $4,201
$3,873
$519
$3,000 30%
$3,347
$2,978
$2,000 16.2% 20%
$1,000 10%
10.6 %
$0 0%
2008 2009 2010 2011 2012 1Q13
$492 million Timberlake Notes/collateral finance facility not included in figures above.
Financial Overview 8
|
|
Current Capital Structure1
t is a flexible, yet permanent
Excess Capital
8% onent of RGA’s capital
cture
Hybrid Capital
11% ropriate laddering of debt
urities
Shareholders’ erage and leverage ratios
Debt Equity 65% (ex-AOCI) n target limits
16%
t and hybrid capital within
68%
et limits
proximate capacities
Debt $ 300 million
Hybrids $ 300 million
1Excludes accumulated other comprehensive income. Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation.
Financial Overview 9
|
|
Debt and Hybrid Maturities
Efficient Laddering of Debt and Hybrid Securities
($ Millions)
$450
$400
$350
$300
$250 2022 2022 in 2015
in in
$200
$150 —
rate rate rate —floating floating to floating
to——
—to
$100 Fixed Fixed Fixed Fixed Fixed— Fixed
$50 625% 45% 00% 2% 2% 75%
5 6 5 6 6
$0 6
2017 2018 2019 2020 2021 2042 2065
Senior Notes Hybrid Securities
Financial Overview 10
|
|
Capital Management Status
Excess capital: $500—$600 million
(target cushion roughly
Organic Block/M&A Shareholde Share
$300 million) Growth Transaction Dividends Repurchases
Funds at holding company: $600
million (target minimum approx. Holding Company Liquidity
$300 million)
Typically expect to generate $200—$300 million excess capital annually
Significant shareholder dividend increases over past five years
Continually evaluate dividend levels
Authorization in place to purchase up to $300 million in shares ( $100 million
purchased to date)
Balanced approach, considers opportunities to deploy or return excess capital
Ongoing attention to efficient capital management
Financial Overview 11
|
|
Block and M&A Opportunities
Hard to predict rate of deployment (timing, size)
Large opportunities may require access to
capital markets
Strong track record of ability to raise capital
Transaction capacity potentially up to $1 billion
without raising equity capital
Pricing must reflect current market dynamics
Transactions typically expected to be accretive on
a rational capital basis
Stock buybacks are an alternative use of capital
Financial Overview 12
|
|
2013 Excess Capital Guidance
($ Millions) Excess Capital Roll Forward
$1,400
$1,200
$1,000 ($230)
$550
$800 ($200)
($70) $650
$600
$600
$400
$200
$0
2012 Generated Required Share Shareholder 2013
Capital Capital Repurchases Dividends
Reinsurance Operations Capital Management
Financial Overview 13
|
|
RGA is a Unique Insurance Investment Opportunity
Different risk profile, focus and approach
Strong and stable ROEs
Lower asset leverage
Lower equity and interest rate sensitivity
Mortality focus – more predictable than equity
and interest rate movements
Built-in, long-term, high-quality earnings
Generally, better performance during recent
difficult economic times
Opportunity to diversify within the insurance space
Financial Overview 14
|
|
Consistent, Stable Operating Results
5-year Operating Trend Operating
RGA Stock Income per
Price Share1
$70.00 $ 8.00
$60.00 $ 7.00
$ 6.00
$50.00
$ 5.00
$40.00
$ 4.00
$30.00
$ 3.00
$20.00
$ 2.00
$10.00 $ 1.00
$0.00 $ 0.00
2008 2009 2010 2011 2012
Operating ROE1 14% 13% 13% 12% 12%
RGA stock price 2008 – May 7, 2013 Operating Income per Share1
1Please refer to “Reconciliations of Non-GAAP Measures” at the end of this presentation. 5-year average operating ROE1 13%
Financial Overview 15
|
|
RGA: An Attractive Investment Opportunity
Strong performance track record
Efficient mix of mature and growing businesses
Experienced management team
Balanced capital management strategy
Strong international growth prospects
Footprint virtually complete; leverage operations
going forward
Stable premium and profit flows from a large portfolio
of risks for years to come
Active block transaction environment expected to persist
Financial Overview 16
|
|
Appendix
Reconciliation of Non-GAAP Measures
Reinsurance Group of America, Incorporated | Thursday, May 23, 2013
|
|
Financial Performance
Reconciliation of Pre-tax Income to Pre-tax Operating Income ($ Millions)
U.S. TRADITIONAL OPERATIONS
2008 2009 2010 2011 2012
GAAP Pre-tax Income—Cont Ops 216.2 246.0 377.7 364.0 368.1
Realized Capital (Gains) / Losses 71.9 83.9 (24.8) (41.8) 0.4
Change in MV of Embedded Derivatives (1) ——— (2.4) 2.0
Pre-tax Operating Income 288.1 329.9 352.9 319.8 370.5
ASSET INTENSIVE—U.S. & INTERNATIONAL
2008 2009 2010 2011 2012
GAAP Pre-tax Income—Cont Ops (171.8) 42.3 143.0 37.0 235.6
Realized Capital (Gains) / Losses (1) 5.1 6.4 (4.7) 1.8 (79.8)
Change in MV of Embedded Derivatives (1) 191.1 2.2 (63.2) 31.4 (45.7)
Pre-tax Operating Income 24.4 50.9 75.1 70.2 110.1
FINANCIAL REINSURANCE—U.S. & INTERNATIONAL
2008 2009 2010 2011 2012
GAAP Pre-tax Income—Cont Ops 20.0 32.0 37.0 48.0 64.9
Realized Capital (Gains) / Losses 1.0 ————
Pre-tax Operating Income 21.0 32.0 37.0 48.0 64.9
(1) Net of DAC offset
Appendix 2
|
|
Financial Performance
Reconciliation of Pre-tax Income to Pre-tax Operating Income ($ Millions)
LONGEVITY—U.S. & INTERNATIONAL
2008 2009 2010 2011 2012
GAAP Pre-tax Income—Cont Ops 0.1 7.6 15.6 25.7 27.9
Realized Capital (Gains) / Losses ——— (0.4) 0.6
Pre-tax Operating Income 0.1 7.6 15.6 25.3 28.5
CANADA OPERATIONS
2008 2009 2010 2011 2012
GAAP Pre-tax Income—Cont Ops 97.2 106.2 121.7 165.0 187.0
Realized Capital (Gains) / Losses 5.0 (18.5) (8.7) (21.8) (27.7)
Pre-tax Operating Income 102.2 87.7 113.0 143.2 159.3
EUROPE & SOUTH AFRICA OPERATIONS
2008 2009 2010 2011 2012
GAAP Pre-tax Income—Cont Ops 55.9 38.6 72.1 83.1 73.9
Realized Capital (Gains) / Losses 8.7 (1.3) (2.6) (6.0) (11.5)
Pre-tax Operating Income 64.6 37.3 69.5 77.1 62.4
ASIA PACIFIC OPERATIONS
2008 2009 2010 2011 2012
GAAP Pre-tax Income—Cont Ops 76.6 72.2 73.9 42.2 45.4
Realized Capital (Gains) / Losses 2.7 1.0 (5.0) (3.1) (8.1)
Pre-tax Operating Income 79.3 73.2 68.9 39.1 37.3
(1) Net of DAC offset
Appendix 3
|
|
Financial Performance
Reconciliation of Pre-tax Income to Pre-tax Operating Income ($ Millions)
RGA CONSOLIDATED
2008 2009 2010 2011 2012
GAAP Pre-tax Income—Cont Ops 239.0 540.6 806.2 763.6 919.2
Realized Capital (Gains) / Losses (1) 118.1 69.3 (76.1) (101.5) (129.5)
Change in MV of Embedded Derivatives (1) 206.7 21.4 (30.7) 74.7 (43.7)
Gain on Debt Repurchase — (38.9) — (65.6) —
Loss on Retirement of PIERS ——— 4.4 —
Pre-tax Operating Income 563.8 592.4 699.4 675.6 746.0
2008 2009 2010 2011 2012
GAAP After-tax Income—Cont Ops 160.2 373.0 535.7 546.0 631.9
Realized Capital (Gains) / Losses (1) 77.0 42.5 (50.3) (69.2) (87.1)
Change in MV of Embedded Derivatives (1) 134.4 14.0 (20.0) 48.6 (28.4)
Gain on Debt Repurchase — (25.3) — (42.6) —
Loss on Retirement of PIERS ——— 2.8 —
After-tax Operating Income 371.6 404.2 465.4 485.6 516.4
CONSOLIDATED EPS RECONCILIATION 0.32970711 0.3100259 0.33552468 0.28496595 0.3125544
Per Diluted Share Basis
2008 2009 2010 2011 2012
GAAP Net Income $ 2.45 $ 5.09 $ 7.17 $ 7.37 $ 8.52
Realized Capital (Gains) / Losses (1) 1.19 0.57 (0.67) (0.94) (1.18)
Change in MV of Embedded Derivatives (1) 2.05 0.20 (0.27) 0.65 (0.38)
Gain on Debt Repurchase — (0.35) — (0.57) —
Loss on Retirement of PIERS ——— 0.04 —
Operating EPS from Cont. Operations $ 5.69 $ 5.51 $ 6.23 $ 6.55 $ 6.96
(1) Net of DAC offset
Appendix 4
|
|
Financial Performance
Stockholders’ Equity Reconciliation ($ Millions)
2008 2009 2010 2011 2012
GAAP Stockholders’ Equity $2,435.9 $3,639.8 $4,765.4 $5,818.7 $ 6,910.2
FAS 115 Equity Adjustment (553.4) 104.5 651.4 1419.3 1,877.6
Foreign Currency Adjustment 26.0 204.0 255.3 229.8 267.5
Unrealized Pension (14.7) (16.1) (14.6) (31.0) (36.2)
Equity Excluding OCI $ 2,978.0 $ 3,347.4 $ 3,873.3 $ 4,200.6 $ 4,801.3
GAAP Stockholders’ Average Equity $ 2,728.6 $ 2,963.5 $ 4,254.6 $ 5,140.1 $ 6,328.0
FAS 115 Average Equity Adjustment (76.8) (266.3) 462.4 914.6 1,636.9
Foreign Currency Adjustment 156.4 104.7 218.1 249.1 252.3
Unrealized Pension (9.4) (14.6) (15.7) (17.4) (31.2)
Average Equity Excluding OCI $ 2,658.4 $ 3,139.7 $ 3,589.8 $ 3,993.8 $ 4,470.0
Operating ROE—GAAP Stockholders’ Equity 14% 14% 11% 9% 8%
Operating ROE—Excluding OCI 14% 13% 13% 12% 12%
Book Value per Share Reconciliation
Revised for DAC Restatement (2006—2011 only) 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
Book value per share $ 93.47 $ 79.31 $ 64.96 $ 49.87 $ 33.54 $ 48.70 $ 43.64 $ 41.38 $ 36.50 $ 31.33 $ 24.72
Less: effect of FAS 115 25.40 19.35 8.88 1.43 (7.62) 5.05 5.46 5.92 3.92 2.74 2.08
Less: effect of CTA 3.62 3.13 3.48 2.80 0.35 3.43 1.77 1.40 1.50 0.86 0.01
Less: effect of Pension Benefit (0.50) (0.42) (0.20) (0.22) (0.20) (0.14) (0.18) — —— -
Book value per share excluding OCI $ 64.95 $ 57.25 $ 52.80 $ 45.86 $ 41.01 $ 40.36 $ 36.59 $ 34.06 $ 31.08 $ 27.73 $ 22.63
Periods prior to 2006 not restated for 2012 DAC accounting change.
Appendix 5