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): October 27, 2014
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):
r | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
r | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
r | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
r | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
On October 27, 2014, Reinsurance Group of America, Incorporated (the “Company”) issued (1) a press release (the “Press Release”) announcing its earnings for the three-month period ended September 30, 2014, and providing certain additional information, a copy of which is furnished with this report as Exhibit 99.1, and (2) a Quarterly Financial Supplement for the quarter ended September 30, 2014, a copy of which is attached hereto as Exhibit 99.2. The Press Release also notes that a conference call will be held on October 28, 2014 to discuss the financial and operating results for the three-month period ended September 30, 2014. The Press Release and Quarterly Financial Supplement are furnished and are not filed pursuant to Instruction B.2 of Form 8-K.
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits.
Exhibit No. | Exhibit | |
99.1 | Press Release of Reinsurance Group of America, Incorporated dated October 27, 2014 | |
99.2 | Quarterly Financial Supplement for the quarter ended September 30, 2014 | |
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: October 27, 2014 | By: | /s/ Jack B. Lay | ||||
Jack B. Lay | ||||||
Senior Executive Vice President and Chief Financial Officer | ||||||
EXHIBIT INDEX
Exhibit Number | Description | |
99.1 | Press Release dated October 27, 2014 | |
99.2 | Quarterly Financial Supplement for the quarter ended September 30, 2014 | |
Exhibit 99.1
PRESS RELEASE
REINSURANCE GROUP OF AMERICA REPORTS THIRD-QUARTER RESULTS
• | Earnings per diluted share: operating income* $2.31, net income $2.28 |
• | Net premiums rose seven percent quarter over quarter |
• | Annualized third quarter and trailing 12 months' operating return on equity* 12 percent |
• | EMEA and Asia Pacific operations post strong results; Global Financial Solutions (GFS) businesses continue to contribute meaningful earnings |
• | Recently announced transactions consistent with our global acquisition and capital management strategies |
ST. LOUIS, October 27, 2014 - Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global provider of life reinsurance, reported operating income* of $159.8 million, or $2.31 per diluted share, compared with $152.9 million, or $2.14 per diluted share, in the prior-year quarter. Net income totaled $158.0 million, or $2.28 per diluted share, compared with $138.0 million, or $1.93 per diluted share, in the prior-year quarter. The U.S. dollar was relatively stronger against most foreign currencies this quarter, resulting in a net adverse effect of $0.02 per share.
Quarterly Results | Year-to-Date Results | |||||||||||||||
($ in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Net premiums | $ | 2,168,285 | $ | 2,026,180 | $ | 6,452,082 | $ | 6,041,029 | ||||||||
Net income | 157,996 | 137,955 | 492,956 | 273,878 | ||||||||||||
Net income per diluted share | 2.28 | 1.93 | 7.03 | 3.76 | ||||||||||||
Operating income* | 159,823 | 152,887 | 429,761 | 203,937 | ||||||||||||
Operating income per diluted share* | 2.31 | 2.14 | 6.13 | 2.80 | ||||||||||||
Book value per share | 97.28 | 83.58 | ||||||||||||||
Book value per share (excl. Accumulated Other Comprehensive Income “AOCI”)* | 75.44 | 67.98 | ||||||||||||||
Total assets | 42,910,363 | 39,526,555 | ||||||||||||||
* | See ‘Use of Non-GAAP Financial Measures’ below |
Consolidated net premiums increased seven percent to $2.2 billion with foreign currency fluctuations in the aggregate not having a material effect. Investment income rose 21 percent to $447.1 million from $369.4 million in the year-earlier quarter, benefiting from a $35.9 million increase in the fair value of options contracts underlying equity-indexed annuities.
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Excluding spread-based businesses and the value of associated derivatives, investment income increased 13 percent over year-ago levels, including the effects of certain commercial mortgage loan prepayments
and a growing average invested asset base. The average investment yield was up five basis points to 4.80 percent over a year ago.
The effective tax rate on operating income was 31.9 percent this quarter, similar to last year’s third-quarter rate of 32.3 percent. During the current period, the company recognized income tax benefits associated with income in jurisdictions with lower tax rates than the U.S. statutory rate and other items. The estimated effective tax rate on operating income going forward is approximately 33 percent to 34 percent.
Greig Woodring, president and chief executive officer, commented, “We are pleased to report strong operating results this quarter, as our diversified source of earnings by geography and product line continues to serve us well. Operating income rose to $159.8 million, or $2.31 per diluted share, premiums grew seven percent over the prior-year period and our annualized operating return on equity exceeded 12 percent this quarter. The trends in the quarter and nine months were fairly consistent in that our international segments and the non-traditional business generated by Global Financial Solutions (GFS) produced very strong results, while the North American Traditional business has faced a period of higher claims. The nature of our business is such that we periodically experience volatility in claims in certain lines of business, but our global business model and diversified product base continue to deliver strong overall results. We are encouraged by the results overall and continue to be optimistic about future opportunities. We also are encouraged by the diversification benefits of our global business, which is paying off in terms of both top- and bottom-line results
“Regarding capital management, we have demonstrated a balanced approach toward deploying some excess capital into the business while also returning capital to shareholders. Our business generates sufficient capital to support our organic growth, with excess capital deployed into attractive block transactions and also returned to shareholders through share repurchases and dividends. In terms of block transactions, we announced a mortality transaction with Voya Financial during the quarter, and the acquisition of Aurora National Life Assurance Company last week. We repurchased approximately 263,000 shares for $20.9 million during the quarter, and have repurchased 2.5 million shares year to date, at an average price of $78.11 per share. At September 30, we had repurchased $197.7 million in shares under our current $300 million stock repurchase authorization, leaving $102.3 million of remaining capacity. Our excess capital position exceeds $600 million. Ending book value per share this quarter was $97.28, including AOCI, and increased $1.90 during the third quarter to $75.44, excluding AOCI.”
SEGMENT RESULTS
U.S. and Latin America
Traditional
The U.S. and Latin America Traditional segment reported pre-tax operating income of $78.9 million, a decrease from $90.3 million in the third quarter last year, due to somewhat elevated claims experience versus a more normal period a year ago. In this quarter, individual mortality reported higher frequency and modestly higher large claims, and adverse experience in the group line as well. Traditional net
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premiums rose four percent to $1,171.9 million from $1,124.2 million a year ago, with growth in all
traditional product lines. Pre-tax net income totaled $77.8 million for the quarter, compared with $85.0 million in the third quarter of 2013.
Non-Traditional
The Asset Intensive business reported very strong results with pre-tax operating income totaling $58.0 million compared with $38.0 million last year. The better-than-expected results benefited from prepayment fees of $8.4 million associated with certain commercial mortgage loans, and from favorable net interest rate spread performance, as well as overall experience on fixed and equity-indexed annuities. Pre-tax net income increased to $63.8 million from $9.8 million a year ago, reflecting changes in the fair value of certain embedded derivatives and realized capital gains, net of DAC offsets, as well as favorable effects cited above.
The Financial Reinsurance business continued to benefit from a growing book of treaties and a resulting trend of strong fee generation, and contributed pre-tax operating income of $13.8 million, up from $11.5 million last year. Pre-tax net income totaled $13.7 million this quarter and $11.2 million in the prior-year period.
Canada
Canadian operations reported pre-tax operating income of $25.7 million this quarter, down from $36.0 million in the prior-year period, primarily attributable to adverse individual mortality claims experience, particularly with large claims exceeding $1 million. Additionally, a relatively weaker Canadian dollar adversely affected pre-tax operating income by approximately $1.6 million for the quarter. Reported net premiums increased four percent over the prior-year quarter and totaled $245.1 million. In Canadian dollars, premiums rose nine percent. Pre-tax net income totaled $25.0 million compared with $41.9 million in the third quarter of 2013.
Europe, Middle East and Africa (EMEA)
Pre-tax operating income in EMEA increased 15 percent to $44.0 million versus last year’s $38.3 million, with favorable claims experience in substantially all markets, particularly in the U.K. and South Africa. GFS transactions also contributed significantly to results in both third quarters. Additionally, net foreign currency fluctuations improved pre-tax operating income by approximately $2.1 million. Net reported premiums increased 14 percent and totaled $346.5 million, compared with $303.3 million last year. Original currency premiums increased nine percent over the prior-year level. Pre-tax net income totaled $45.2 million versus $40.0 million in the year-ago quarter.
Asia Pacific
Asia Pacific pre-tax operating income exceeded expectations, totaling $27.4 million, contrasted with $14.3 million in the prior-year quarter. Most regions posted strong operating performances, especially in Hong Kong & Southeast Asia and Japan. Results from operations in Australia were again modestly above breakeven this period. Premiums in Australia were slightly higher compared with the third quarter of 2013, reflecting the net effect of rate increases on certain treaties offset in part by the expiration of others. Segment-wide reported net premiums rose 12 percent to $399.4 million from $357.9 million in the prior-year period, with strong growth in most areas other than Australia.
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Local currency premiums increased 11 percent, mainly due to a continued re-acceleration in Japan
and South Korea. Foreign currency fluctuations adversely affected pre-tax operating income by approximately $1.1 million this quarter. Pre-tax net income totaled $20.4 million compared with $18.8 million in last year’s third quarter. RGA’s primary operating subsidiary, RGA Reinsurance Company, received a long-awaited approval to operate a branch office in Shanghai, China. The company is excited to offer its robust range of services and innovative solutions to the Chinese insurance market.
Corporate and Other
The Corporate and Other segment reported pre-tax operating losses of $13.2 million and $2.7 million for the third quarter of 2014 and 2013, respectively. Current-quarter expenses were higher, primarily due to interest expense associated with senior notes that were issued near the end of the third quarter of 2013 and higher incentive-based compensation expenses. This segment reported a pre-tax net loss of $14.2 million this quarter compared with $4.7 million in the prior-year period.
Dividend Declaration
The board of directors declared a regular quarterly dividend of $0.33, payable November 28 to shareholders of record as of November 7.
Earnings Conference Call
A conference call to discuss third-quarter results will begin at 9 a.m. Eastern Time on Tuesday, October 28. Interested parties may access the call by dialing 877-627-6581 (domestic) or 719-325-4807 (international). The access code is 7868913. 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. A telephonic replay will also be available through November 5 at 888-203-1112 (domestic) or 719-457-0820 (international), access code 7868913.
The company has posted to its website a Quarterly Financial Supplement that includes financial information for all segments as well as information on its investment portfolio. Additionally, the company posts periodic reports, press releases and other useful information on its investor relations website.
Use of Non-GAAP Financial Measures
RGA uses a non-GAAP financial measure called 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, primarily because that measure excludes substantially all of the effect of net investment related gains and losses, as well as changes in the fair value of certain embedded derivatives and related deferred acquisition costs. These items can be volatile, primarily due to the credit market and interest rate environment, and are not necessarily indicative of the performance of the company’s underlying businesses. Additionally, operating income excludes any net gain or loss
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from discontinued operations, the cumulative effect of any accounting changes, and other items that management believes are 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.
Reconciliations to GAAP net income are provided in the following tables. Additional financial information can be found in the Quarterly Financial Supplement on RGA’s Investor Relations
website at www.rgare.com in the “Quarterly Results” tab and in the “Featured Report” section.
Book value per share before impact of AOCI is a non-GAAP financial measure that management believes is important in evaluating the balance sheet in order to ignore the effects of unrealized amounts primarily associated with mark-to-market adjustments on investments and foreign currency translation.
Operating income per diluted share is a non-GAAP financial measure calculated as operating income divided by weighted average diluted shares outstanding. Operating return on equity is a non-GAAP financial measure calculated as operating income divided by average shareholders’ equity excluding AOCI.
About RGA
Reinsurance Group of America, Incorporated is among the largest global providers of life reinsurance, with operations in Australia, Barbados, Bermuda, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Singapore, South Africa, South Korea, Spain, Taiwan, Turkey, the United Arab Emirates, the United Kingdom and the United States. Worldwide, the company has approximately $2.9 trillion of life reinsurance in force, and assets of $42.9 billion.
Cautionary Statement Regarding Forward-looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements relating to projections of the 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 the Company’s liquidity, access to capital and cost
of capital, (2) the impairment of other financial institutions and its effect on the Company’s business,
(3) requirements to post collateral or make payments due to declines in market value of assets subject to the Company’s collateral arrangements, (4) the fact that the determination of allowances and impairments taken on the Company’s investments is highly subjective, (5) adverse changes in mortality, morbidity, lapsation or claims experience, (6) changes in the Company’s financial strength
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and credit ratings and the effect of such changes on the Company’s 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 the Company’s 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 the Company’s investment securities or result in the impairment of all or a portion of the value of certain of the Company’s investment securities, that in turn could affect regulatory capital, (11) market or economic conditions that adversely affect the Company’s ability to make timely sales of investment securities, (12) risks inherent in the Company’s risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (13) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (14) adverse litigation or arbitration results, (15) the adequacy of reserves, resources and accurate information relating to settlements, awards and terminated and discontinued lines of business, (16) the stability of and actions by governments and economies in the markets in which the Company operates, including ongoing uncertainties regarding the amount of United States sovereign debt and the credit ratings thereof, (17) competitive factors and competitors’ responses to the Company’s initiatives, (18) the success of the Company’s clients, (19) successful execution of the Company’s entry into new markets, (20) successful development and introduction of new products and distribution opportunities, (21) the Company’s ability to successfully integrate and operate reinsurance business that the Company acquires, (22) action by regulators who have authority over the Company’s reinsurance operations in the jurisdictions in which it operates, (23) the Company’s dependence on third parties, including those insurance companies and reinsurers to which the Company cedes some reinsurance, third-party investment managers and others, (24) the threat of natural disasters, catastrophes, terrorist attacks, epidemics or pandemics anywhere in the world where the Company or its clients do business, (25) interruption or failure of the Company’s telecommunication, information technology or other operational systems, or the Company’s failure to maintain adequate security to protect the confidentiality or privacy of personal or sensitive data stored on such systems, (26) changes in laws, regulations, and accounting standards applicable to the Company, its subsidiaries, or its business, (27) the effect of the Company’s status as an insurance holding company and regulatory restrictions on its ability to pay principal of and interest on its debt obligations, and (28) other risks and uncertainties described in this document and in the Company’s other filings with the SEC.
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 Annual Report on Form 10-K for the year ended December 31, 2013.
Investor Contact
Jeff Hopson
Senior Vice President - Investor Relations
(636) 736-7000
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Consolidated Net Income to Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
GAAP net income | $ | 157,996 | $ | 137,955 | $ | 492,956 | $ | 273,878 | |||||||
Reconciliation to operating income: | |||||||||||||||
Capital (gains) losses, derivatives and other, included in investment related (gains) losses, net | (5,517 | ) | 19,174 | (49,344 | ) | 74,334 | |||||||||
Capital (gains) losses on funds withheld, included in investment income | (3,576 | ) | 2,252 | (7,699 | ) | (6,694 | ) | ||||||||
Embedded derivatives: | |||||||||||||||
Included in investment related (gains) losses, net | (6,067 | ) | 30,960 | (88,767 | ) | (115,353 | ) | ||||||||
Included in interest credited | (269 | ) | (19,690 | ) | (38 | ) | (53,147 | ) | |||||||
DAC offset, net | 17,238 | (17,764 | ) | 82,635 | 61,148 | ||||||||||
Non-investment derivatives | 18 | — | 18 | — | |||||||||||
Gain on repurchase of collateral finance facility securities | — | — | — | (30,229 | ) | ||||||||||
Operating income | $ | 159,823 | $ | 152,887 | $ | 429,761 | $ | 203,937 | |||||||
Reconciliation of Consolidated Pre-tax Net Income to Pre-tax Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Income before income taxes | $ | 231,815 | $ | 201,695 | $ | 731,790 | $ | 405,764 | |||||||
Reconciliation to pre-tax operating income: | |||||||||||||||
Capital (gains) losses, derivatives and other, included in investment related (gains) losses, net | (8,413 | ) | 30,513 | (72,855 | ) | 116,412 | |||||||||
Capital (gains) losses on funds withheld, included in investment income | (5,501 | ) | 3,465 | (11,844 | ) | (10,299 | ) | ||||||||
Embedded derivatives: | |||||||||||||||
Included in investment related (gains) losses, net | (9,333 | ) | 47,631 | (136,565 | ) | (177,466 | ) | ||||||||
Included in interest credited | (415 | ) | (30,292 | ) | (59 | ) | (81,764 | ) | |||||||
DAC offset, net | 26,521 | (27,330 | ) | 127,132 | 94,074 | ||||||||||
Non-investment derivatives | 28 | — | 28 | — | |||||||||||
Gain on repurchase of collateral finance facility securities | — | — | — | (46,506 | ) | ||||||||||
Pre-tax operating income | $ | 234,702 | $ | 225,682 | $ | 637,627 | $ | 300,215 | |||||||
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Net Income to Pre-tax Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended September 30, 2014 | ||||||||||||||
Pre-tax net income (loss) | Capital (gains) losses, derivatives and other, net | Change in value of embedded derivatives, net | Pre-tax operating income (loss) | ||||||||||||
U.S. and Latin America Operations: | |||||||||||||||
Traditional | $ | 77,833 | $ | 1,414 | $ | (322 | ) | $ | 78,925 | ||||||
Non-Traditional: | |||||||||||||||
Asset Intensive | 63,796 | 54,500 | (1) | (60,320 | ) | (2) | 57,976 | ||||||||
Financial Reinsurance | 13,704 | 100 | — | 13,804 | |||||||||||
Total U.S. and Latin America | 155,333 | 56,014 | (60,642 | ) | 150,705 | ||||||||||
Canada Operations | 25,044 | 692 | — | 25,736 | |||||||||||
Europe, Middle East and Africa | 45,176 | (1,196 | ) | — | 43,980 | ||||||||||
Asia Pacific Operations | 20,413 | 7,031 | — | 27,444 | |||||||||||
Corporate and Other | (14,151 | ) | 988 | — | (13,163 | ) | |||||||||
Consolidated | $ | 231,815 | $ | 63,529 | $ | (60,642 | ) | $ | 234,702 | ||||||
(1) | Asset Intensive is net of $77,415 DAC offset. |
(2) | Asset Intensive is net of $(50,894) DAC offset. |
(Unaudited) | Three Months Ended September 30, 2013 | ||||||||||||||
Pre-tax net income (loss) | Capital (gains) losses, derivatives and other, net | Change in value of embedded derivatives, net | Pre-tax operating income (loss) | ||||||||||||
U.S. and Latin America Operations: | |||||||||||||||
Traditional | $ | 85,038 | $ | 6,492 | $ | (1,243 | ) | $ | 90,287 | ||||||
Non-Traditional: | |||||||||||||||
Asset Intensive | 9,849 | 31,916 | (1) | (3,719 | ) | (2) | 38,046 | ||||||||
Financial Reinsurance | 11,202 | 321 | — | 11,523 | |||||||||||
Total U.S. and Latin America | 106,089 | 38,729 | (4,962 | ) | 139,856 | ||||||||||
Canada Operations | 41,869 | (5,896 | ) | — | 35,973 | ||||||||||
Europe, Middle East and Africa | 39,664 | (1,323 | ) | — | 38,341 | ||||||||||
Asia Pacific Operations | 18,779 | (4,521 | ) | — | 14,258 | ||||||||||
Corporate and Other | (4,706 | ) | 1,960 | — | (2,746 | ) | |||||||||
Consolidated | $ | 201,695 | $ | 28,949 | $ | (4,962 | ) | $ | 225,682 | ||||||
(1) | Asset Intensive is net of $(5,029) DAC offset. |
(2) | Asset Intensive is net of $(22,301) DAC offset. |
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Net Income to Pre-tax Operating Income
(Dollars in thousands)
(Unaudited) | Nine Months Ended September 30, 2014 | ||||||||||||||
Pre-tax net income (loss) | Capital (gains) losses, derivatives and other, net | Change in value of embedded derivatives, net | Pre-tax operating income (loss) | ||||||||||||
U.S. and Latin America Operations: | |||||||||||||||
Traditional | $ | 222,793 | $ | (8,777 | ) | $ | 2,066 | $ | 216,082 | ||||||
Non-Traditional: | |||||||||||||||
Asset Intensive | 216,208 | 12,448 | (1) | (85,648 | ) | (2) | 143,008 | ||||||||
Financial Reinsurance | 39,890 | (51 | ) | — | 39,839 | ||||||||||
Total U.S. and Latin America | 478,891 | 3,620 | (83,582 | ) | 398,929 | ||||||||||
Canada Operations | 80,128 | (1,543 | ) | — | 78,585 | ||||||||||
Europe, Middle East and Africa | 121,703 | (19,066 | ) | — | 102,637 | ||||||||||
Asia Pacific Operations | 81,652 | (223 | ) | — | 81,429 | ||||||||||
Corporate and Other | (30,584 | ) | 6,631 | — | (23,953 | ) | |||||||||
Consolidated | $ | 731,790 | $ | (10,581 | ) | $ | (83,582 | ) | $ | 637,627 | |||||
(1) | Asset Intensive is net of $74,090 DAC offset. |
(2) | Asset Intensive is net of $53,042 DAC offset. |
(Unaudited) | Nine Months Ended September 30, 2013 | ||||||||||||||||||
Pre-tax net income (loss) | Capital (gains) losses, derivatives and other, net | Change in value of embedded derivatives, net | Gain on debt repurchase | Pre-tax operating income (loss) | |||||||||||||||
U.S. and Latin America Operations: | |||||||||||||||||||
Traditional | $ | 254,794 | $ | (3,081 | ) | $ | (2,690 | ) | $ | — | $ | 249,023 | |||||||
Non-Traditional: | |||||||||||||||||||
Asset Intensive | 168,581 | 95,303 | (1) | (140,012 | ) | (2) | — | 123,872 | |||||||||||
Financial Reinsurance | 31,030 | 387 | — | — | 31,417 | ||||||||||||||
Total U.S. and Latin America | 454,405 | 92,609 | (142,702 | ) | — | 404,312 | |||||||||||||
Canada Operations | 113,836 | (13,297 | ) | — | — | 100,539 | |||||||||||||
Europe, Middle East and Africa | 62,576 | (3,535 | ) | — | — | 59,041 | |||||||||||||
Asia Pacific Operations | (250,324 | ) | 5,007 | — | — | (245,317 | ) | ||||||||||||
Corporate and Other | 25,271 | 2,875 | — | (46,506 | ) | (18,360 | ) | ||||||||||||
Consolidated | $ | 405,764 | $ | 83,659 | $ | (142,702 | ) | $ | (46,506 | ) | $ | 300,215 | |||||||
(1) | Asset Intensive is net of $(22,454) DAC offset. |
(2) | Asset Intensive is net of $116,528 DAC offset. |
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Per Share and Shares Data
(In thousands, except per share data)
(Unaudited) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Diluted earnings per share from operating income | $ | 2.31 | $ | 2.14 | $ | 6.13 | $ | 2.80 | |||||||
Earnings per share from net income: | |||||||||||||||
Basic earnings per share | $ | 2.30 | $ | 1.95 | $ | 7.10 | $ | 3.79 | |||||||
Diluted earnings per share | $ | 2.28 | $ | 1.93 | $ | 7.03 | $ | 3.76 | |||||||
Weighted average number of common and common equivalent shares outstanding | 69,335 | 71,391 | 70,101 | 72,840 | |||||||||||
(Unaudited) | At or for the Nine Months Ended September 30, | ||||||
2014 | 2013 | ||||||
Treasury shares | 10,472 | 8,595 | |||||
Common shares outstanding | 68,666 | 70,543 | |||||
Book value per share outstanding | $ | 97.28 | $ | 83.58 | |||
Book value per share outstanding, before impact of AOCI | $ | 75.44 | $ | 67.98 | |||
- more -
Add Ten
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands)
(Unaudited) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues: | |||||||||||||||
Net premiums | $ | 2,168,285 | $ | 2,026,180 | $ | 6,452,082 | $ | 6,041,029 | |||||||
Investment income, net of related expenses | 447,106 | 369,366 | 1,262,088 | 1,238,731 | |||||||||||
Investment related gains (losses), net: | |||||||||||||||
Other-than-temporary impairments on fixed maturity securities | (246 | ) | (391 | ) | (1,419 | ) | (10,396 | ) | |||||||
Other-than-temporary impairments on fixed maturity securities transferred to (from) accumulated other comprehensive income | — | 59 | — | (247 | ) | ||||||||||
Other investment related gains (losses), net | 22,564 | (76,133 | ) | 226,835 | 76,792 | ||||||||||
Total investment related gains (losses), net | 22,318 | (76,465 | ) | 225,416 | 66,149 | ||||||||||
Other revenue | 78,879 | 70,734 | 267,195 | 235,650 | |||||||||||
Total revenues | 2,716,588 | 2,389,815 | 8,206,781 | 7,581,559 | |||||||||||
Benefits and expenses: | |||||||||||||||
Claims and other policy benefits | 1,855,037 | 1,714,899 | 5,540,599 | 5,434,383 | |||||||||||
Interest credited | 120,952 | 59,939 | 347,508 | 303,767 | |||||||||||
Policy acquisition costs and other insurance expenses | 336,411 | 268,081 | 1,100,658 | 995,943 | |||||||||||
Other operating expenses | 133,737 | 111,672 | 372,135 | 344,581 | |||||||||||
Interest expense | 36,065 | 30,831 | 106,360 | 89,235 | |||||||||||
Collateral finance facility expense | 2,571 | 2,698 | 7,731 | 7,886 | |||||||||||
Total benefits and expenses | 2,484,773 | 2,188,120 | 7,474,991 | 7,175,795 | |||||||||||
Income (loss) before income taxes | 231,815 | 201,695 | 731,790 | 405,764 | |||||||||||
Income tax expense | 73,819 | 63,740 | 238,834 | 131,886 | |||||||||||
Net income | $ | 157,996 | $ | 137,955 | $ | 492,956 | $ | 273,878 | |||||||
# # #
Exhibit 99.2
Financial Supplement
Third Quarter 2014
(Unaudited)
World Headquarters | Internet address | Contacts: | ||
1370 Timberlake Manor Parkway | www.rgare.com | Jack B. Lay | ||
Chesterfield, Missouri 63017 U.S.A. | Senior Executive Vice President | |||
and Chief Financial Officer | ||||
Phone: (636) 736-7000 | ||||
e-mail: jlay@rgare.com | ||||
Jeff Hopson | ||||
Sr. Vice President, Investor Relations | ||||
Phone: (636) 300-6106 | ||||
e-mail: jhopson@rgare.com | ||||
Current Ratings | ||||||
Standard & Poor’s | A.M. Best | Moody’s | ||||
Financial Strength Ratings | ||||||
RGA Reinsurance Company | AA- | A+ | A1 | |||
RGA Life Reinsurance Company of Canada | AA- | A+ | NR | |||
RGA International Reinsurance Company Limited | AA- | NR | NR | |||
RGA Global Reinsurance Company Limited | AA- | NR | NR | |||
RGA Reinsurance Company of Australia Limited | AA- | NR | NR | |||
RGA Americas Reinsurance Company, Ltd. | AA- | A+ | NR | |||
RGA Atlantic Reinsurance Company Ltd. | NR | A+ | NR | |||
Senior Debt Ratings | ||||||
Reinsurance Group of America, Incorporated | A- | a- | Baa1 | |||
Our common stock is traded on the New York Stock Exchange under the symbol “RGA”.
Reinsurance Group of America, Incorporated
Financial Supplement
3rd Quarter 2014
Table of Contents
Page | |
Consolidated | |
Segment Pre-tax Operating Income Summaries and Reconciliations to U.S. GAAP | |
Investments | |
Reinsurance Group of America, Incorporated
Financial Supplement
This Financial Supplement is for information purposes only and includes unaudited figures. This report should be read in conjunction with documents filed by Reinsurance Group of America, Incorporated ("RGA") with the SEC.
Non-GAAP Disclosures
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, primarily because that measure excludes substantially all of the effect of net investment related gains and losses, as well as changes in the fair value of certain embedded derivatives and related deferred acquisition costs. These items can be volatile, primarily due to the credit market and interest rate environment and are not necessarily indicative of the performance of the company’s underlying businesses. Additionally, operating income excludes any net gain or loss from discontinued operations, the cumulative effect of any accounting changes, and other items that management believes are 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. A reconciliation of income before income taxes of the operating segments to pre-tax operating income (loss) is presented herein.
RGA evaluates its stockholder equity position excluding the impact of Accumulated Other Comprehensive Income (“AOCI”) since the net unrealized gains or losses included in AOCI 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.
Additionally, RGA uses a non-GAAP financial measure called operating return on equity, which is calculated as operating income divided by average shareholders’
equity excluding AOCI.
| Page 1 | |
Reinsurance Group of America, Incorporated
SEGMENT RESTRUCTURING
The Company realigned certain operations and management responsibilities to better fit within its geographic-based segments. Mexico and Latin America operations were moved from Europe & South Africa to the U.S. segment, which has been renamed U.S. and Latin America. India operations have been moved from Europe & South Africa to the Asia Pacific segment. Europe & South Africa has been renamed Europe, Middle East and Africa. Prior-period figures have been adjusted to conform to the new reporting alignment.
PRIOR PERIOD RECLASSIFICATIONS
The Company has reclassified the presentation of certain prior-period information to conform to the current presentation.
| Page 2 | |
Reinsurance Group of America, Incorporated Financial Highlights (1) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to Date | ||||||||||||||||||||||||||||||||||||
(USD thousands, except inforce & per share data) | Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | |||||||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
Net premiums | $ | 2,168,285 | $ | 2,183,160 | $ | 2,100,637 | $ | 2,212,998 | $ | 2,026,180 | $ | 142,105 | $ | 6,452,082 | $ | 6,041,029 | $ | 411,053 | ||||||||||||||||||||
Net income | 157,996 | 198,296 | 136,664 | 144,959 | 137,955 | 20,041 | 492,956 | 273,878 | 219,078 | |||||||||||||||||||||||||||||
Operating income | 159,823 | 155,131 | 114,807 | 154,509 | 152,887 | 6,936 | 429,761 | 203,937 | 225,824 | |||||||||||||||||||||||||||||
Operating return on equity (ex AOCI) - | ||||||||||||||||||||||||||||||||||||||
annualized | 12.5 | % | 12.4 | % | 9.3 | % | 12.7 | % | 12.9 | % | (0.4 | )% | ||||||||||||||||||||||||||
trailing 12 months | 11.7 | % | 11.8 | % | 7.2 | % | 7.4 | % | 8.1 | % | 3.6 | % | ||||||||||||||||||||||||||
Total assets | 42,910,363 | 43,171,051 | 40,541,581 | 39,674,473 | 39,526,555 | 3,383,808 | ||||||||||||||||||||||||||||||||
Assumed Life Reinsurance in Force (in billions) | ||||||||||||||||||||||||||||||||||||||
U.S. and Latin America Traditional | $ | 1,387.2 | $ | 1,393.1 | $ | 1,393.2 | $ | 1,397.0 | $ | 1,400.4 | $ | (13.2 | ) | |||||||||||||||||||||||||
U.S. and Latin America Non-Traditional | 2.2 | 2.2 | 2.2 | 2.2 | 2.2 | — | ||||||||||||||||||||||||||||||||
Canada | 383.9 | 395.8 | 376.7 | 386.4 | 391.1 | (7.2 | ) | |||||||||||||||||||||||||||||||
Europe, Middle East and Africa | 573.0 | 626.1 | 587.6 | 556.7 | 555.1 | 17.9 | ||||||||||||||||||||||||||||||||
Asia Pacific | 577.2 | 617.2 | 595.6 | 547.6 | 555.0 | 22.2 | ||||||||||||||||||||||||||||||||
Total Life Reinsurance in Force | $ | 2,923.5 | $ | 3,034.4 | $ | 2,955.3 | $ | 2,889.9 | $ | 2,903.8 | $ | 19.7 | ||||||||||||||||||||||||||
Assumed New Business Production (in billions) | ||||||||||||||||||||||||||||||||||||||
U.S. and Latin America Traditional | $ | 16.6 | $ | 21.8 | $ | 20.4 | $ | 21.1 | $ | 22.3 | $ | (5.7 | ) | $ | 58.8 | $ | 74.5 | $ | (15.7 | ) | ||||||||||||||||||
U.S. and Latin America Non-Traditional | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Canada | 11.6 | 10.4 | 12.4 | 10.4 | 11.6 | — | 34.4 | 35.6 | (1.2 | ) | ||||||||||||||||||||||||||||
Europe, Middle East and Africa | 22.5 | 67.7 | 46.5 | 24.6 | 21.4 | 1.1 | 136.7 | 81.6 | 55.1 | |||||||||||||||||||||||||||||
Asia Pacific | 21.1 | 18.5 | 19.6 | 22.8 | 36.3 | (15.2 | ) | 59.2 | 99.8 | (40.6 | ) | |||||||||||||||||||||||||||
Total New Business Production | $ | 71.8 | $ | 118.4 | $ | 98.9 | $ | 78.9 | $ | 91.6 | $ | (19.8 | ) | $ | 289.1 | $ | 291.5 | $ | (2.4 | ) | ||||||||||||||||||
Per Share and Shares Data | ||||||||||||||||||||||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||||||||||||||||||||
Net income | $ | 2.30 | $ | 2.87 | $ | 1.94 | $ | 2.05 | $ | 1.95 | $ | 0.35 | $ | 7.10 | $ | 3.79 | $ | 3.31 | ||||||||||||||||||||
Operating income | $ | 2.33 | $ | 2.25 | $ | 1.63 | $ | 2.19 | $ | 2.16 | $ | 0.17 | $ | 6.19 | $ | 2.82 | $ | 3.37 | ||||||||||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||||||||||||||||
Net income | $ | 2.28 | $ | 2.84 | $ | 1.92 | $ | 2.03 | $ | 1.93 | $ | 0.35 | $ | 7.03 | $ | 3.76 | $ | 3.27 | ||||||||||||||||||||
Operating income | $ | 2.31 | $ | 2.23 | $ | 1.61 | $ | 2.17 | $ | 2.14 | $ | 0.17 | $ | 6.13 | $ | 2.80 | $ | 3.33 | ||||||||||||||||||||
Wgt. average common shares outstanding | ||||||||||||||||||||||||||||||||||||||
(basic) | 68,642 | 69,076 | 70,574 | 70,650 | 70,865 | (2,223 | ) | 69,426 | 72,342 | (2,916 | ) | |||||||||||||||||||||||||||
(diluted) | 69,335 | 69,718 | 71,264 | 71,332 | 71,391 | (2,056 | ) | 70,101 | 72,840 | (2,739 | ) | |||||||||||||||||||||||||||
Common shares issued | 79,138 | 79,138 | 79,138 | 79,138 | 79,138 | — | 79,138 | 79,138 | — | |||||||||||||||||||||||||||||
Treasury shares | 10,472 | 10,328 | 9,624 | 8,370 | 8,595 | 1,877 | 10,472 | 8,595 | 1,877 | |||||||||||||||||||||||||||||
Common shares outstanding | 68,666 | 68,810 | 69,514 | 70,768 | 70,543 | (1,877 | ) | 68,666 | 70,543 | (1,877 | ) | |||||||||||||||||||||||||||
Book value per share | $ | 97.28 | $ | 97.21 | $ | 89.92 | $ | 83.87 | $ | 83.58 | ||||||||||||||||||||||||||||
Per share effect of accumulated other | ||||||||||||||||||||||||||||||||||||||
comprehensive income (AOCI) | $ | 21.84 | $ | 23.67 | $ | 18.41 | $ | 14.21 | $ | 15.60 | ||||||||||||||||||||||||||||
Book value per share, excluding AOCI | $ | 75.44 | $ | 73.54 | $ | 71.51 | $ | 69.66 | $ | 67.98 | ||||||||||||||||||||||||||||
Shareholder dividends paid | $ | 22,632.1 | $ | 20,711.1 | $ | 21,243.6 | $ | 21,177.3 | $ | 21,296.2 | $ | 1,335.9 | $ | 64,586.8 | $ | 56,464.8 | $ | 8,122.0 | ||||||||||||||||||||
(1) The company realigned certain operations and management responsibilities to better fit within its geographic-based segments. Mexico and Latin America operations were moved from Europe & South Africa to the U.S. segment, which has been renamed U.S. and Latin America. India operations have been moved from Europe & South Africa to the Asia Pacific segment. Europe & South Africa has been renamed Europe, Middle East and Africa. Prior-period figures have been adjusted to conform to the new reporting alignment. | ||||||||||||||||||||||||||||||||||||||
| Page 3 | |
Reinsurance Group of America, Incorporated Consolidated GAAP Income Statement (incl. Operating Income Reconciliations) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr | Year-to Date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | vs. PY | Sept. 30, | Sept. 30, | |||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | Quarter | 2014 | 2013 | Change | |||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 2,168,285 | $ | 2,183,160 | $ | 2,100,637 | $ | 2,212,998 | $ | 2,026,180 | $ | 142,105 | $ | 6,452,082 | $ | 6,041,029 | $ | 411,053 | ||||||||||||||||||||
Investment income, net of related expenses | 447,106 | 410,607 | 404,375 | 461,134 | 369,366 | 77,740 | 1,262,088 | 1,238,731 | 23,357 | |||||||||||||||||||||||||||||
Investment related gains (losses), net | ||||||||||||||||||||||||||||||||||||||
OTTI on fixed maturity securities | (246 | ) | (870 | ) | (303 | ) | (2,258 | ) | (391 | ) | 145 | (1,419 | ) | (10,396 | ) | 8,977 | ||||||||||||||||||||||
OTTI on fixed maturity securities transferred | ||||||||||||||||||||||||||||||||||||||
to/from AOCI | — | — | — | — | 59 | (59 | ) | — | (247 | ) | 247 | |||||||||||||||||||||||||||
Other investment related gains (losses), net | 22,564 | 119,397 | 84,874 | 99 | (76,133 | ) | 98,697 | 226,835 | 76,792 | 150,043 | ||||||||||||||||||||||||||||
Total investment related gains (losses), net | 22,318 | 118,527 | 84,571 | (2,159 | ) | (76,465 | ) | 98,783 | 225,416 | 66,149 | 159,267 | |||||||||||||||||||||||||||
Other revenue | 78,879 | 120,726 | 67,590 | 64,821 | 70,734 | 8,145 | 267,195 | 235,650 | 31,545 | |||||||||||||||||||||||||||||
Total revenues | 2,716,588 | 2,833,020 | 2,657,173 | 2,736,794 | 2,389,815 | 326,773 | 8,206,781 | 7,581,559 | 625,222 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 1,855,037 | 1,841,885 | 1,843,677 | 1,869,949 | 1,714,899 | 140,138 | 5,540,599 | 5,434,383 | 106,216 | |||||||||||||||||||||||||||||
Interest credited | 120,952 | 115,962 | 110,594 | 172,747 | 59,939 | 61,013 | 347,508 | 303,767 | 43,741 | |||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 336,411 | 409,374 | 354,873 | 304,837 | 268,081 | 68,330 | 1,100,658 | 995,943 | 104,715 | |||||||||||||||||||||||||||||
Other operating expenses | 133,737 | 127,462 | 110,936 | 122,136 | 111,672 | 22,065 | 372,135 | 344,581 | 27,554 | |||||||||||||||||||||||||||||
Interest expense | 36,065 | 35,211 | 35,084 | 35,072 | 30,831 | 5,234 | 106,360 | 89,235 | 17,125 | |||||||||||||||||||||||||||||
Collateral finance facility expense | 2,571 | 2,591 | 2,569 | 2,563 | 2,698 | (127 | ) | 7,731 | 7,886 | (155 | ) | |||||||||||||||||||||||||||
Total benefits and expenses | 2,484,773 | 2,532,485 | 2,457,733 | 2,507,304 | 2,188,120 | 296,653 | 7,474,991 | 7,175,795 | 299,196 | |||||||||||||||||||||||||||||
Income before income taxes | 231,815 | 300,535 | 199,440 | 229,490 | 201,695 | 30,120 | 731,790 | 405,764 | 326,026 | |||||||||||||||||||||||||||||
Income tax expense | 73,819 | 102,239 | 62,776 | 84,531 | 63,740 | 10,079 | 238,834 | 131,886 | 106,948 | |||||||||||||||||||||||||||||
Net income | $ | 157,996 | $ | 198,296 | $ | 136,664 | $ | 144,959 | $ | 137,955 | $ | 20,041 | $ | 492,956 | $ | 273,878 | $ | 219,078 | ||||||||||||||||||||
Pre-tax Operating Income Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Income before income taxes | 231,815 | 300,535 | 199,440 | 229,490 | 201,695 | 30,120 | 731,790 | 405,764 | 326,026 | |||||||||||||||||||||||||||||
Investment and derivative losses (gains)— | ||||||||||||||||||||||||||||||||||||||
non-operating (1) | (8,413 | ) | (38,136 | ) | (26,306 | ) | 45,090 | 30,513 | (38,926 | ) | (72,855 | ) | 116,412 | (189,267 | ) | |||||||||||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (56,812 | ) | (78,835 | ) | (77,241 | ) | 337 | 67,460 | (124,272 | ) | (212,888 | ) | (70,514 | ) | (142,374 | ) | ||||||||||||||||||||||
GMXB embedded derivatives (1) | 47,479 | 5,183 | 23,661 | (35,098 | ) | (19,829 | ) | 67,308 | 76,323 | (106,952 | ) | 183,275 | ||||||||||||||||||||||||||
Funds withheld losses (gains)—investment income | (5,501 | ) | (5,954 | ) | (389 | ) | (2,540 | ) | 3,465 | (8,966 | ) | (11,844 | ) | (10,299 | ) | (1,545 | ) | |||||||||||||||||||||
EIA embedded derivatives—interest credited | (415 | ) | 6,916 | (6,560 | ) | 2,795 | (30,292 | ) | 29,877 | (59 | ) | (81,764 | ) | 81,705 | ||||||||||||||||||||||||
DAC offset, net | 26,521 | 47,543 | 53,068 | 4,334 | (27,330 | ) | 53,851 | 127,132 | 94,074 | 33,058 | ||||||||||||||||||||||||||||
Non-investment derivatives | 28 | — | — | — | — | 28 | 28 | — | 28 | |||||||||||||||||||||||||||||
Gain on repurchase of collateral finance facility securities | — | — | — | — | — | — | — | (46,506 | ) | 46,506 | ||||||||||||||||||||||||||||
Operating Income Before Income Taxes | $ | 234,702 | $ | 237,252 | $ | 165,673 | $ | 244,408 | $ | 225,682 | $ | 9,020 | $ | 637,627 | $ | 300,215 | $ | 337,412 | ||||||||||||||||||||
After-tax Operating Income Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Net Income | 157,996 | 198,296 | 136,664 | 144,959 | 137,955 | 20,041 | 492,956 | 273,878 | 219,078 | |||||||||||||||||||||||||||||
Investment and derivative losses (gains)— | ||||||||||||||||||||||||||||||||||||||
non-operating (1) | (5,517 | ) | (26,820 | ) | (17,007 | ) | 29,161 | 19,174 | (24,691 | ) | (49,344 | ) | 74,334 | (123,678 | ) | |||||||||||||||||||||||
Change in value of modified coinsurance | ||||||||||||||||||||||||||||||||||||||
and funds withheld embedded derivatives (1) | (36,928 | ) | (51,242 | ) | (50,207 | ) | 219 | 43,849 | (80,777 | ) | (138,377 | ) | (45,834 | ) | (92,543 | ) | ||||||||||||||||||||||
GMXB embedded derivatives (1) | 30,861 | 3,369 | 15,380 | (22,814 | ) | (12,889 | ) | 43,750 | 49,610 | (69,519 | ) | 119,129 | ||||||||||||||||||||||||||
Funds withheld losses (gains)—investment income | (3,576 | ) | (3,870 | ) | (253 | ) | (1,651 | ) | 2,252 | (5,828 | ) | (7,699 | ) | (6,694 | ) | (1,005 | ) | |||||||||||||||||||||
EIA embedded derivatives—interest credited | (269 | ) | 4,495 | (4,264 | ) | 1,817 | (19,690 | ) | 19,421 | (38 | ) | (53,147 | ) | 53,109 | ||||||||||||||||||||||||
DAC offset, net | 17,238 | 30,903 | 34,494 | 2,818 | (17,764 | ) | 35,002 | 82,635 | 61,148 | 21,487 | ||||||||||||||||||||||||||||
Non-investment derivatives | 18 | — | — | — | — | 18 | 18 | — | 18 | |||||||||||||||||||||||||||||
Gain on repurchase of collateral finance facility securities | — | — | — | — | — | — | — | (30,229 | ) | 30,229 | ||||||||||||||||||||||||||||
Operating Income | $ | 159,823 | $ | 155,131 | $ | 114,807 | $ | 154,509 | $ | 152,887 | $ | 6,936 | $ | 429,761 | $ | 203,937 | $ | 225,824 | ||||||||||||||||||||
(1) Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement | ||||||||||||||||||||||||||||||||||||||
| Page 4 | |
Reinsurance Group of America, Incorporated Consolidated Operating Income Statement | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-Date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
(USD thousands, except per share data) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 2,168,285 | $ | 2,183,160 | $ | 2,100,637 | $ | 2,212,998 | $ | 2,026,180 | $ | 142,105 | $ | 6,452,082 | $ | 6,041,029 | $ | 411,053 | ||||||||||||||||||||
Investment income, net of related expenses | 441,605 | 404,653 | 403,986 | 458,594 | 372,831 | 68,774 | 1,250,244 | 1,228,432 | 21,812 | |||||||||||||||||||||||||||||
Investment related gains, net | 4,572 | 6,739 | 4,685 | 8,170 | 1,679 | 2,893 | 15,996 | 5,095 | 10,901 | |||||||||||||||||||||||||||||
Other revenue | 78,907 | 120,726 | 67,590 | 64,821 | 70,734 | 8,173 | 267,223 | 189,144 | 78,079 | |||||||||||||||||||||||||||||
Total revenues | 2,693,369 | 2,715,278 | 2,576,898 | 2,744,583 | 2,471,424 | 221,945 | 7,985,545 | 7,463,700 | 521,845 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 1,855,037 | 1,841,885 | 1,843,677 | 1,869,949 | 1,714,899 | 140,138 | 5,540,599 | 5,434,383 | 106,216 | |||||||||||||||||||||||||||||
Interest credited | 121,367 | 109,046 | 117,154 | 169,952 | 90,231 | 31,136 | 347,567 | 385,531 | (37,964 | ) | ||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 309,890 | 361,831 | 301,805 | 300,503 | 295,411 | 14,479 | 973,526 | 901,869 | 71,657 | |||||||||||||||||||||||||||||
Other operating expenses | 133,737 | 127,462 | 110,936 | 122,136 | 111,672 | 22,065 | 372,135 | 344,581 | 27,554 | |||||||||||||||||||||||||||||
Interest expense | 36,065 | 35,211 | 35,084 | 35,072 | 30,831 | 5,234 | 106,360 | 89,235 | 17,125 | |||||||||||||||||||||||||||||
Collateral finance facility expense | 2,571 | 2,591 | 2,569 | 2,563 | 2,698 | (127 | ) | 7,731 | 7,886 | (155 | ) | |||||||||||||||||||||||||||
Total benefits and expenses | 2,458,667 | 2,478,026 | 2,411,225 | 2,500,175 | 2,245,742 | 212,925 | 7,347,918 | 7,163,485 | 184,433 | |||||||||||||||||||||||||||||
Operating income before income taxes | 234,702 | 237,252 | 165,673 | 244,408 | 225,682 | 9,020 | 637,627 | 300,215 | 337,412 | |||||||||||||||||||||||||||||
Operating income tax expense | 74,879 | 82,121 | 50,866 | 89,899 | 72,795 | 2,084 | 207,866 | 96,278 | 111,588 | |||||||||||||||||||||||||||||
Operating income | $ | 159,823 | $ | 155,131 | $ | 114,807 | $ | 154,509 | $ | 152,887 | $ | 6,936 | $ | 429,761 | $ | 203,937 | $ | 225,824 | ||||||||||||||||||||
Wgt. Average Common Shares Outstanding (Diluted) | 69,335 | 69,718 | 71,264 | 71,332 | 71,391 | (2,056) | 70,101 | 72,840 | (2,739) | |||||||||||||||||||||||||||||
Diluted Earnings Per Share—Operating Income | $ | 2.31 | $ | 2.23 | $ | 1.61 | $ | 2.17 | $ | 2.14 | $ | 0.17 | $ | 6.13 | $ | 2.80 | $ | 3.33 | ||||||||||||||||||||
Foreign currency effect (1): | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 5,906 | $ | (4,964 | ) | $ | (50,225 | ) | $ | (49,448 | ) | $ | (51,810 | ) | $ | 57,716 | $ | (49,283 | ) | $ | (93,091 | ) | $ | 43,808 | ||||||||||||||
Operating income before income taxes | $ | (2,016 | ) | $ | (809 | ) | $ | (6,605 | ) | $ | (8,679 | ) | $ | (4,959 | ) | $ | 2,943 | $ | (9,430 | ) | $ | 5,890 | (15,320 | ) | ||||||||||||||
(1) Compared to comparable prior year period | ||||||||||||||||||||||||||||||||||||||
| Page 5 | |
Reinsurance Group of America, Incorporated Consolidated Balance Sheets | ||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | |||||||||||||||
Assets | ||||||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 24,475,451 | $ | 24,480,396 | $ | 22,157,182 | $ | 21,474,136 | $ | 21,289,108 | ||||||||||
Mortgage loans on real estate | 2,617,091 | 2,555,800 | 2,526,228 | 2,486,680 | 2,488,582 | |||||||||||||||
Policy loans | 1,249,948 | 1,250,635 | 1,296,897 | 1,244,469 | 1,244,878 | |||||||||||||||
Funds withheld at interest | 5,969,006 | 5,940,521 | 5,814,231 | 5,771,467 | 5,739,872 | |||||||||||||||
Short-term investments | 44,437 | 45,596 | 118,789 | 139,395 | 44,192 | |||||||||||||||
Other invested assets | 1,165,021 | 1,128,375 | 1,234,779 | 1,324,960 | 1,116,391 | |||||||||||||||
Total investments | 35,520,954 | 35,401,323 | 33,148,106 | 32,441,107 | 31,923,023 | |||||||||||||||
Cash and cash equivalents | 1,118,745 | 1,378,117 | 1,127,132 | 923,647 | 1,423,235 | |||||||||||||||
Accrued investment income | 305,880 | 279,368 | 233,816 | 267,908 | 262,330 | |||||||||||||||
Premiums receivable and other reinsurance balances | 1,491,993 | 1,559,526 | 1,454,959 | 1,439,528 | 1,252,610 | |||||||||||||||
Reinsurance ceded receivables | 596,704 | 614,203 | 594,794 | 594,515 | 592,948 | |||||||||||||||
Deferred policy acquisition costs | 3,297,616 | 3,368,343 | 3,450,523 | 3,517,796 | 3,533,932 | |||||||||||||||
Other assets | 578,471 | 570,171 | 532,251 | 489,972 | 538,477 | |||||||||||||||
Total assets | $ | 42,910,363 | $ | 43,171,051 | $ | 40,541,581 | $ | 39,674,473 | $ | 39,526,555 | ||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Future policy benefits | $ | 13,541,687 | $ | 13,785,532 | $ | 11,887,951 | $ | 11,866,776 | $ | 11,873,306 | ||||||||||
Interest-sensitive contract liabilities | 12,638,117 | 12,686,025 | 12,809,003 | 12,947,557 | 12,868,425 | |||||||||||||||
Other policy claims and benefits | 3,861,060 | 3,996,737 | 3,899,004 | 3,571,761 | 3,440,371 | |||||||||||||||
Other reinsurance balances | 276,314 | 258,023 | 283,249 | 275,138 | 264,023 | |||||||||||||||
Deferred income taxes | 2,149,076 | 2,232,821 | 2,023,588 | 1,837,577 | 1,975,819 | |||||||||||||||
Other liabilities | 967,303 | 716,157 | 638,967 | 541,035 | 510,079 | |||||||||||||||
Short-term debt | — | 110,000 | 50,000 | — | — | |||||||||||||||
Long-term debt | 2,314,693 | 2,214,705 | 2,214,526 | 2,214,350 | 2,214,170 | |||||||||||||||
Collateral finance facility | 482,115 | 482,092 | 484,747 | 484,752 | 484,712 | |||||||||||||||
Total liabilities | 36,230,365 | 36,482,092 | 34,291,035 | 33,738,946 | 33,630,905 | |||||||||||||||
Stockholders’ Equity: | ||||||||||||||||||||
Common stock, at par value | 791 | 791 | 791 | 791 | 791 | |||||||||||||||
Additional paid-in-capital | 1,784,818 | 1,783,856 | 1,782,838 | 1,777,906 | 1,778,307 | |||||||||||||||
Retained earnings | 4,074,047 | 3,941,777 | 3,772,776 | 3,659,938 | 3,544,632 | |||||||||||||||
Treasury stock | (679,265 | ) | (666,125 | ) | (585,358 | ) | (508,715 | ) | (528,081 | ) | ||||||||||
Accumulated other comprehensive income (AOCI): | ||||||||||||||||||||
Accumulated currency translation adjustment, net of income taxes | 131,936 | 207,043 | 164,400 | 207,083 | 191,677 | |||||||||||||||
Unrealized appreciation of securities, net of income taxes | 1,387,957 | 1,442,324 | 1,136,079 | 820,245 | 942,337 | |||||||||||||||
Pension and postretirement benefits, net of income taxes | (20,286 | ) | (20,707 | ) | (20,980 | ) | (21,721 | ) | (34,013 | ) | ||||||||||
Total stockholders’ equity | 6,679,998 | 6,688,959 | 6,250,546 | 5,935,527 | 5,895,650 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 42,910,363 | $ | 43,171,051 | $ | 40,541,581 | $ | 39,674,473 | $ | 39,526,555 | ||||||||||
Total stockholders’ equity, excluding AOCI | $ | 5,180,391 | $ | 5,060,299 | $ | 4,971,047 | $ | 4,929,920 | $ | 4,795,649 | ||||||||||
| Page 6 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Traditional Segment Pre-tax Operating Income (1) | |||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | |||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | |||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 1,171,916 | $ | 1,189,822 | $ | 1,141,905 | $ | 1,246,137 | $ | 1,124,183 | $ | 47,733 | $ | 3,503,643 | $ | 3,317,353 | $ | 186,290 | |||||||||||||||||||||
Investment income, net of related expenses | 139,272 | 137,404 | 133,376 | 139,281 | 138,464 | 808 | 410,052 | 404,543 | 5,509 | ||||||||||||||||||||||||||||||
Other revenue | 783 | 767 | 642 | 840 | 880 | (97 | ) | 2,192 | 2,866 | (674 | ) | ||||||||||||||||||||||||||||
Total revenues | 1,311,971 | 1,327,993 | 1,275,923 | 1,386,258 | 1,263,527 | 48,444 | 3,915,887 | 3,724,762 | 191,125 | ||||||||||||||||||||||||||||||
Benefits and expenses: | |||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 1,030,525 | 1,045,030 | 1,033,707 | 1,071,733 | 972,786 | 57,739 | 3,109,262 | 2,891,435 | 217,827 | ||||||||||||||||||||||||||||||
Interest credited | 12,993 | 12,818 | 12,272 | 9,886 | 13,659 | (666 | ) | 38,083 | 43,399 | (5,316 | ) | ||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 161,120 | 156,270 | 156,000 | 156,447 | 162,710 | (1,590 | ) | 473,390 | 469,524 | 3,866 | |||||||||||||||||||||||||||||
Other operating expenses | 28,408 | 24,921 | 25,741 | 24,550 | 24,085 | 4,323 | 79,070 | 71,381 | 7,689 | ||||||||||||||||||||||||||||||
Total benefits and expenses | 1,233,046 | 1,239,039 | 1,227,720 | 1,262,616 | 1,173,240 | 59,806 | 3,699,805 | 3,475,739 | 224,066 | ||||||||||||||||||||||||||||||
Operating income before income taxes | 78,925 | 88,954 | 48,203 | 123,642 | 90,287 | (11,362 | ) | 216,082 | 249,023 | (32,941 | ) | ||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | |||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 78,925 | 88,954 | 48,203 | 123,642 | 90,287 | (11,362 | ) | 216,082 | 249,023 | (32,941 | ) | ||||||||||||||||||||||||||||
Investment and derivative (losses) gains - non-operating | (1,092 | ) | 5,034 | 2,769 | (850 | ) | (5,249 | ) | 4,157 | 6,711 | 5,771 | 940 | |||||||||||||||||||||||||||
Income before income taxes | $ | 77,833 | $ | 93,988 | $ | 50,972 | $ | 122,792 | $ | 85,038 | $ | (7,205 | ) | $ | 222,793 | $ | 254,794 | $ | (32,001 | ) | |||||||||||||||||||
Loss and Expense Ratios: | |||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 87.9 | % | 87.8 | % | 90.5 | % | 86.0 | % | 86.5 | % | 1.4 | % | 88.7 | % | 87.2 | % | 1.5 | % | |||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 13.7 | % | 13.1 | % | 13.7 | % | 12.6 | % | 14.5 | % | (0.8 | )% | 13.5 | % | 14.2 | % | (0.7 | )% | |||||||||||||||||||||
Other operating expenses | 2.4 | % | 2.1 | % | 2.3 | % | 2.0 | % | 2.1 | % | 0.3 | % | 2.3 | % | 2.2 | % | 0.1 | % | |||||||||||||||||||||
(1) The company realigned certain operations and management responsibilities to better fit within its geographic-based segments. Mexico and Latin America operations were moved from Europe & South Africa to the U.S. segment, which has been renamed U.S. and Latin America. India operations have been moved from Europe & South Africa to the Asia Pacific segment. Europe & South Africa has been renamed Europe, Middle East and Africa. Prior-period figures have been adjusted to conform to the new reporting alignment. | |||||||||||||||||||||||||||||||||||||||
| Page 7 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Non-Traditional Segment—Asset Intensive Reinsurance Pre-tax Operating Income | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 5,168 | $ | 4,984 | $ | 5,180 | $ | 3,754 | $ | 3,800 | $ | 1,368 | $ | 15,332 | $ | 18,767 | $ | (3,435 | ) | |||||||||||||||||||
Investment income, net of related expenses | 170,608 | 143,927 | 158,619 | 209,847 | 128,563 | 42,045 | 473,154 | 497,578 | (24,424 | ) | ||||||||||||||||||||||||||||
Investment related gains (losses), net | (2 | ) | 1 | — | — | — | (2 | ) | (1 | ) | — | (1 | ) | |||||||||||||||||||||||||
Other revenue | 28,944 | 29,376 | 28,276 | 26,761 | 28,519 | 425 | 86,596 | 87,337 | (741 | ) | ||||||||||||||||||||||||||||
Total revenues | 204,718 | 178,288 | 192,075 | 240,362 | 160,882 | 43,836 | 575,081 | 603,682 | (28,601 | ) | ||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 5,586 | 4,713 | 4,260 | 4,674 | 8,899 | (3,313 | ) | 14,559 | 23,570 | (9,011 | ) | |||||||||||||||||||||||||||
Interest credited | 104,985 | 90,037 | 101,644 | 153,501 | 76,097 | 28,888 | 296,666 | 340,617 | (43,951 | ) | ||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 31,960 | 35,698 | 41,072 | 36,819 | 33,642 | (1,682 | ) | 108,730 | 104,434 | 4,296 | ||||||||||||||||||||||||||||
Other operating expenses | 4,211 | 3,813 | 4,094 | 3,102 | 4,198 | 13 | 12,118 | 11,189 | 929 | |||||||||||||||||||||||||||||
Total benefits and expenses | 146,742 | 134,261 | 151,070 | 198,096 | 122,836 | 23,906 | 432,073 | 479,810 | (47,737 | ) | ||||||||||||||||||||||||||||
Operating income before income taxes | 57,976 | 44,027 | 41,005 | 42,266 | 38,046 | 19,930 | 143,008 | 123,872 | 19,136 | |||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 57,976 | 44,027 | 41,005 | 42,266 | 38,046 | 19,930 | 143,008 | 123,872 | 19,136 | |||||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating (1) | 18,001 | 12,412 | 21,300 | (40,727 | ) | (33,190 | ) | 51,191 | 51,713 | (125,193 | ) | 176,906 | ||||||||||||||||||||||||||
Change in value of modified coinsurance and funds withheld embedded derivatives (1) | 56,490 | 79,768 | 78,696 | 462 | (68,703 | ) | 125,193 | 214,954 | 67,824 | 147,130 | ||||||||||||||||||||||||||||
GMXB embedded derivatives (1) | (47,479 | ) | (5,183 | ) | (23,661 | ) | 35,098 | 19,829 | (67,308 | ) | (76,323 | ) | 106,952 | (183,275 | ) | |||||||||||||||||||||||
Funds withheld gains (losses) - investment income | 4,914 | 5,232 | (217 | ) | 1,797 | (3,755 | ) | 8,669 | 9,929 | 7,436 | 2,493 | |||||||||||||||||||||||||||
EIA embedded derivatives - interest credited | 415 | (6,916 | ) | 6,560 | (2,795 | ) | 30,292 | (29,877 | ) | 59 | 81,764 | (81,705 | ) | |||||||||||||||||||||||||
DAC offset, net | (26,521 | ) | (47,543 | ) | (53,068 | ) | (4,334 | ) | 27,330 | (53,851 | ) | (127,132 | ) | (94,074 | ) | (33,058 | ) | |||||||||||||||||||||
Income before income taxes | $ | 63,796 | $ | 81,797 | $ | 70,615 | $ | 31,767 | $ | 9,849 | $ | 53,947 | $ | 216,208 | $ | 168,581 | $ | 47,627 | ||||||||||||||||||||
(1) Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement | ||||||||||||||||||||||||||||||||||||||
| Page 8 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Non-Traditional Segment—Asset Intensive Reinsurance Pre-tax Operating Income (Cont’d) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(USD millions) | 2014 | 2014 | 2014 | 2013 | 2013 | |||||||||||||||
Annuity account values: | ||||||||||||||||||||
Fixed annuities (deferred) | $ | 4,919 | $ | 5,030 | $ | 5,156 | $ | 5,079 | $ | 5,180 | ||||||||||
Net interest spread (fixed annuities): | 3.2 | % | 2.3 | % | 2.5 | % | 2.3 | % | 2.5 | % | ||||||||||
Equity-indexed annuities | $ | 4,716 | $ | 4,725 | $ | 4,741 | $ | 4,768 | $ | 4,724 | ||||||||||
Variable annuities: | ||||||||||||||||||||
No riders | $ | 899 | $ | 941 | $ | 943 | $ | 961 | $ | 950 | ||||||||||
GMDB only | 79 | 84 | 85 | 86 | 83 | |||||||||||||||
GMIB only | 6 | 6 | 6 | 6 | 6 | |||||||||||||||
GMAB only | 46 | 50 | 51 | 52 | 52 | |||||||||||||||
GMWB only | 1,676 | 1,741 | 1,733 | 1,752 | 1,704 | |||||||||||||||
GMDB / WB | 427 | 462 | 459 | 467 | 459 | |||||||||||||||
Other | 28 | 30 | 30 | 31 | 31 | |||||||||||||||
Total VA account values | $ | 3,161 | $ | 3,314 | $ | 3,307 | $ | 3,355 | $ | 3,285 | ||||||||||
Fair value of liabilities associated with living benefit riders | $ | 106 | $ | 59 | $ | 54 | $ | 30 | $ | 65 | ||||||||||
Interest-sensitive contract liabilities associated with: | ||||||||||||||||||||
Guaranteed investment contracts | $ | 336 | $ | 301 | $ | 301 | $ | 297 | $ | 236 | ||||||||||
Bank-owned life insurance (BOLI) | $ | 544 | $ | 541 | $ | 538 | $ | 534 | $ | 531 | ||||||||||
Other asset-intensive business | $ | 69 | $ | 71 | $ | 71 | $ | 72 | $ | 73 | ||||||||||
| Page 9 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Non-Traditional Segment—Financial Reinsurance Pre-tax Operating Income | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Investment income, net of related expenses | $ | 1,003 | $ | 1,086 | $ | 1,247 | $ | 2,048 | $ | 1,160 | $ | (157 | ) | $ | 3,336 | $ | 2,576 | $ | 760 | |||||||||||||||||||
Other revenue | 23,581 | 21,777 | 19,098 | 16,191 | 15,599 | 7,982 | 64,456 | 44,702 | 19,754 | |||||||||||||||||||||||||||||
Total revenues | 24,584 | 22,863 | 20,345 | 18,239 | 16,759 | 7,825 | 67,792 | 47,278 | 20,514 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 8,458 | 6,944 | 5,742 | 2,501 | 3,228 | 5,230 | 21,144 | 10,270 | 10,874 | |||||||||||||||||||||||||||||
Other operating expenses | 2,322 | 2,310 | 2,177 | 1,462 | 2,008 | 314 | 6,809 | 5,591 | 1,218 | |||||||||||||||||||||||||||||
Total benefits and expenses | 10,780 | 9,254 | 7,919 | 3,963 | 5,236 | 5,544 | 27,953 | 15,861 | 12,092 | |||||||||||||||||||||||||||||
Operating income before income taxes | 13,804 | 13,609 | 12,426 | 14,276 | 11,523 | 2,281 | 39,839 | 31,417 | 8,422 | |||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 13,804 | 13,609 | 12,426 | 14,276 | 11,523 | 2,281 | 39,839 | 31,417 | 8,422 | |||||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | (100 | ) | 68 | 83 | (5 | ) | (321 | ) | 221 | 51 | (387 | ) | 438 | |||||||||||||||||||||||||
Income before income taxes | $ | 13,704 | $ | 13,677 | $ | 12,509 | $ | 14,271 | $ | 11,202 | $ | 2,502 | $ | 39,890 | $ | 31,030 | $ | 8,860 | ||||||||||||||||||||
| Page 10 | |
Reinsurance Group of America, Incorporated Canadian Segment Pre-tax Operating Income | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 245,136 | $ | 253,577 | $ | 230,844 | $ | 243,340 | $ | 236,067 | $ | 9,069 | $ | 729,557 | $ | 718,971 | $ | 10,586 | ||||||||||||||||||||
Investment income, net of related expenses | 49,660 | 49,358 | 46,997 | 51,750 | 49,871 | (211 | ) | 146,015 | 149,495 | (3,480 | ) | |||||||||||||||||||||||||||
Investment related gains (losses), net | 907 | 621 | 1,006 | 1,149 | 866 | 41 | 2,534 | 2,841 | (307 | ) | ||||||||||||||||||||||||||||
Other revenue | 2,329 | 1,263 | 961 | 531 | (196 | ) | 2,525 | 4,553 | 314 | 4,239 | ||||||||||||||||||||||||||||
Total revenues | 298,032 | 304,819 | 279,808 | 296,770 | 286,608 | 11,424 | 882,659 | 871,621 | 11,038 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 201,433 | 203,293 | 194,756 | 187,226 | 185,011 | 16,422 | 599,482 | 571,293 | 28,189 | |||||||||||||||||||||||||||||
Interest credited | 10 | 9 | — | 9 | 19 | (9 | ) | 19 | 37 | (18 | ) | |||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 60,409 | 60,837 | 53,104 | 53,119 | 55,553 | 4,856 | 174,350 | 168,519 | 5,831 | |||||||||||||||||||||||||||||
Other operating expenses | 10,444 | 9,954 | 9,825 | 9,263 | 10,052 | 392 | 30,223 | 31,233 | (1,010 | ) | ||||||||||||||||||||||||||||
Total benefits and expenses | 272,296 | 274,093 | 257,685 | 249,617 | 250,635 | 21,661 | 804,074 | 771,082 | 32,992 | |||||||||||||||||||||||||||||
Operating income before income taxes | 25,736 | 30,726 | 22,123 | 47,153 | 35,973 | (10,237 | ) | 78,585 | 100,539 | (21,954 | ) | |||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 25,736 | 30,726 | 22,123 | 47,153 | 35,973 | (10,237 | ) | 78,585 | 100,539 | (21,954 | ) | |||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | (1,279 | ) | 3,572 | (2,665 | ) | 2,586 | 5,606 | (6,885 | ) | (372 | ) | 10,434 | (10,806 | ) | ||||||||||||||||||||||||
Funds withheld gains (losses) - investment income | 587 | 722 | 606 | 743 | 290 | 297 | 1,915 | 2,863 | (948 | ) | ||||||||||||||||||||||||||||
Income before income taxes | $ | 25,044 | $ | 35,020 | $ | 20,064 | $ | 50,482 | $ | 41,869 | $ | (16,825 | ) | $ | 80,128 | $ | 113,836 | $ | (33,708 | ) | ||||||||||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||||||||||||||||
Loss ratios (creditor business) | 28.0 | % | 27.5 | % | 31.5 | % | 18.3 | % | 30.5 | % | (2.5 | )% | 28.8 | % | 32.1 | % | (3.3 | )% | ||||||||||||||||||||
Loss ratios (excluding creditor business) | 98.7 | % | 96.5 | % | 98.0 | % | 89.4 | % | 92.3 | % | 6.4 | % | 97.7 | % | 93.3 | % | 4.4 | % | ||||||||||||||||||||
Claims and other policy benefits / (net premiums + investment income) | 68.3 | % | 67.1 | % | 70.1 | % | 63.4 | % | 64.7 | % | 3.6 | % | 68.5 | % | 65.8 | % | 2.7 | % | ||||||||||||||||||||
Policy acquisition costs and other insurance expenses (creditor business) | 65.2 | % | 66.6 | % | 58.1 | % | 70.7 | % | 61.3 | % | 3.9 | % | 63.7 | % | 60.6 | % | 3.1 | % | ||||||||||||||||||||
Policy acquisition costs and other insurance expenses (excluding creditor business) | 12.3 | % | 10.8 | % | 13.9 | % | 11.5 | % | 12.5 | % | (0.2 | )% | 12.3 | % | 12.6 | % | (0.3 | )% | ||||||||||||||||||||
Other operating expenses | 4.3 | % | 3.9 | % | 4.3 | % | 3.8 | % | 4.3 | % | 0.0 | % | 4.1 | % | 4.3 | % | (0.2 | )% | ||||||||||||||||||||
Foreign currency effect (1): | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | (11,946 | ) | $ | (16,444 | ) | $ | (21,718 | ) | $ | (14,338 | ) | $ | (10,348 | ) | $ | (1,598 | ) | $ | (50,108 | ) | $ | (15,054 | ) | $ | (35,054 | ) | |||||||||||
Operating income before income taxes | $ | (1,605 | ) | $ | (1,943 | ) | $ | (2,333 | ) | $ | (3,315 | ) | $ | (1,819 | ) | $ | 214 | $ | (5,881 | ) | $ | (2,774 | ) | $ | (3,107 | ) | ||||||||||||
Creditor reinsurance net premiums | $ | 57,412 | $ | 60,013 | $ | 47,344 | $ | 42,558 | $ | 53,021 | $ | 4,391 | $ | 164,769 | $ | 162,753 | $ | 2,016 | ||||||||||||||||||||
Note: The loss ratios on creditor reinsurance business are normally lower than traditional reinsurance, while allowances are normally higher as a percentage of premiums. | ||||||||||||||||||||||||||||||||||||||
(1) Compared to comparable prior year period | ||||||||||||||||||||||||||||||||||||||
| Page 11 | |
Reinsurance Group of America, Incorporated Europe, Middle East and Africa Segment Pre-tax Operating Income (1) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 346,457 | $ | 340,884 | $ | 340,743 | $ | 332,495 | $ | 303,259 | $ | 43,198 | $ | 1,028,084 | $ | 888,248 | $ | 139,836 | ||||||||||||||||||||
Investment income, net of related expenses | 29,191 | 20,671 | 13,369 | 14,122 | 12,860 | 16,331 | 63,231 | 37,912 | 25,319 | |||||||||||||||||||||||||||||
Investment related gains, net | 2,550 | 5,183 | 2,593 | 5,495 | — | 2,550 | 10,326 | — | 10,326 | |||||||||||||||||||||||||||||
Other revenue | 13,518 | 7,939 | 7,923 | 5,347 | 12,409 | 1,109 | 29,380 | 17,912 | 11,468 | |||||||||||||||||||||||||||||
Total revenues | 391,716 | 374,677 | 364,628 | 357,459 | 328,528 | 63,188 | 1,131,021 | 944,072 | 186,949 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 297,992 | 282,546 | 307,341 | 293,181 | 250,965 | 47,027 | 887,879 | 773,666 | 114,213 | |||||||||||||||||||||||||||||
Interest credited | 2,959 | 5,750 | 2,786 | 6,114 | — | 2,959 | 11,495 | — | 11,495 | |||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 16,467 | 11,492 | 13,265 | 17,883 | 13,348 | 3,119 | 41,224 | 34,351 | 6,873 | |||||||||||||||||||||||||||||
Other operating expenses | 30,318 | 30,208 | 27,260 | 28,250 | 25,874 | 4,444 | 87,786 | 77,014 | 10,772 | |||||||||||||||||||||||||||||
Total benefits and expenses | 347,736 | 329,996 | 350,652 | 345,428 | 290,187 | 57,549 | 1,028,384 | 885,031 | 143,353 | |||||||||||||||||||||||||||||
Operating income before income taxes | 43,980 | 44,681 | 13,976 | 12,031 | 38,341 | 5,639 | 102,637 | 59,041 | 43,596 | |||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 43,980 | 44,681 | 13,976 | 12,031 | 38,341 | 5,639 | 102,637 | 59,041 | 43,596 | |||||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | 1,196 | 16,641 | 1,229 | (54 | ) | 1,323 | (127 | ) | 19,066 | 3,535 | 15,531 | |||||||||||||||||||||||||||
Income before income taxes | $ | 45,176 | $ | 61,322 | $ | 15,205 | $ | 11,977 | $ | 39,664 | $ | 5,512 | $ | 121,703 | $ | 62,576 | $ | 59,127 | ||||||||||||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 86.0 | % | 82.9 | % | 90.2 | % | 88.2 | % | 82.8 | % | 3.2 | % | 86.4 | % | 87.1 | % | (0.7 | )% | ||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 4.8 | % | 3.4 | % | 3.9 | % | 5.4 | % | 4.4 | % | 0.4 | % | 4.0 | % | 3.9 | % | 0.1 | % | ||||||||||||||||||||
Other operating expenses | 8.8 | % | 8.9 | % | 8.0 | % | 8.5 | % | 8.5 | % | 0.3 | % | 8.5 | % | 8.7 | % | (0.2 | )% | ||||||||||||||||||||
Foreign currency effect (2): | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 14,441 | $ | 21,204 | $ | 8,690 | $ | 148 | $ | (6,548 | ) | $ | 20,989 | $ | 44,335 | $ | (24,843 | ) | $ | 69,178 | ||||||||||||||||||
Operating income before income taxes | $ | 2,086 | $ | 3,710 | $ | 394 | $ | (164 | ) | $ | (301 | ) | $ | 2,387 | $ | 6,190 | $ | (1,395 | ) | $ | 7,585 | |||||||||||||||||
Critical illness net premiums | $ | 63,303 | $ | 66,257 | $ | 65,678 | $ | 65,082 | $ | 62,404 | $ | 899 | $ | 195,238 | $ | 189,349 | $ | 5,889 | ||||||||||||||||||||
(1) The company realigned certain operations and management responsibilities to better fit within its geographic-based segments. Mexico and Latin America operations were moved from Europe & South Africa to the U.S. segment, which has been renamed U.S. and Latin America. India operations have been moved from Europe & South Africa to the Asia Pacific segment. Europe & South Africa has been renamed Europe, Middle East and Africa. Prior-period figures have been adjusted to conform to the new reporting alignment. | ||||||||||||||||||||||||||||||||||||||
(2) Compared to comparable prior year period | ||||||||||||||||||||||||||||||||||||||
| Page 12 | |
Reinsurance Group of America, Incorporated Asia Pacific Segment Pre-tax Operating Income (1) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 399,422 | $ | 393,687 | $ | 381,750 | $ | 387,803 | $ | 357,867 | $ | 41,555 | $ | 1,174,859 | $ | 1,097,402 | $ | 77,457 | ||||||||||||||||||||
Investment income, net of related expenses | 26,445 | 26,325 | 24,642 | 26,860 | 22,889 | 3,556 | 77,412 | 67,470 | 9,942 | |||||||||||||||||||||||||||||
Investment related gains, net | 646 | 684 | 861 | 1,287 | 576 | 70 | 2,191 | 1,528 | 663 | |||||||||||||||||||||||||||||
Other revenue | 8,950 | 56,874 | 6,123 | 10,472 | 7,804 | 1,146 | 71,947 | 26,093 | 45,854 | |||||||||||||||||||||||||||||
Total revenues | 435,463 | 477,570 | 413,376 | 426,422 | 389,136 | 46,327 | 1,326,409 | 1,192,493 | 133,916 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 319,507 | 306,320 | 303,596 | 313,132 | 297,208 | 22,299 | 929,423 | 1,174,417 | (244,994 | ) | ||||||||||||||||||||||||||||
Interest Credited | 221 | 234 | 246 | 263 | 270 | (49 | ) | 701 | 855 | (154 | ) | |||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 51,852 | 107,909 | 54,289 | 53,267 | 47,284 | 4,568 | 214,050 | 169,541 | 44,509 | |||||||||||||||||||||||||||||
Other operating expenses | 36,439 | 33,780 | 30,587 | 32,819 | 30,116 | 6,323 | 100,806 | 92,997 | 7,809 | |||||||||||||||||||||||||||||
Total benefits and expenses | 408,019 | 448,243 | 388,718 | 399,481 | 374,878 | 33,141 | 1,244,980 | 1,437,810 | (192,830 | ) | ||||||||||||||||||||||||||||
Operating income (loss) before income taxes | 27,444 | 29,327 | 24,658 | 26,941 | 14,258 | 13,186 | 81,429 | (245,317 | ) | 326,746 | ||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) before income taxes | 27,444 | 29,327 | 24,658 | 26,941 | 14,258 | 13,186 | 81,429 | (245,317 | ) | 326,746 | ||||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | (7,031 | ) | 5,601 | 1,653 | (3,282 | ) | 4,521 | (11,552 | ) | 223 | (5,007 | ) | 5,230 | |||||||||||||||||||||||||
Income (loss) before income taxes | $ | 20,413 | $ | 34,928 | $ | 26,311 | $ | 23,659 | $ | 18,779 | $ | 1,634 | $ | 81,652 | $ | (250,324 | ) | $ | 331,976 | |||||||||||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 80.0 | % | 77.8 | % | 79.5 | % | 80.7 | % | 83.0 | % | (3.0 | )% | 79.1 | % | 107.0 | % | (27.9 | )% | ||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 13.0 | % | 27.4 | % | 14.2 | % | 13.7 | % | 13.2 | % | (0.2 | )% | 18.2 | % | 15.4 | % | 2.8 | % | ||||||||||||||||||||
Other operating expenses | 9.1 | % | 8.6 | % | 8.0 | % | 8.5 | % | 8.4 | % | 0.7 | % | 8.6 | % | 8.5 | % | 0.1 | % | ||||||||||||||||||||
Foreign currency effect (2): | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 3,411 | $ | (9,724 | ) | $ | (37,197 | ) | $ | (35,258 | ) | $ | (34,914 | ) | $ | 38,325 | $ | (43,510 | ) | $ | (53,194 | ) | $ | 9,684 | ||||||||||||||
Operating income before income taxes | $ | (1,094 | ) | $ | (1,313 | ) | $ | (2,960 | ) | $ | (5,298 | ) | $ | (2,348 | ) | $ | 1,254 | $ | (5,367 | ) | $ | 10,505 | $ | (15,872 | ) | |||||||||||||
Critical illness net premiums | $ | 67,105 | $ | 71,928 | $ | 60,398 | $ | 66,980 | $ | 74,220 | $ | (7,115 | ) | $ | 199,431 | $ | 180,581 | $ | 18,850 | |||||||||||||||||||
(1) The company realigned certain operations and management responsibilities to better fit within its geographic-based segments. Mexico and Latin America operations were moved from Europe & South Africa to the U.S. segment, which has been renamed U.S. and Latin America. India operations have been moved from Europe & South Africa to the Asia Pacific segment. Europe & South Africa has been renamed Europe, Middle East and Africa. Prior-period figures have been adjusted to conform to the new reporting alignment. | ||||||||||||||||||||||||||||||||||||||
(2) Compared to comparable prior year period | ||||||||||||||||||||||||||||||||||||||
| Page 13 | |
Reinsurance Group of America, Incorporated Corporate and Other Segment Pre-tax Operating Income | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 186 | $ | 206 | $ | 215 | $ | (531 | ) | $ | 1,004 | $ | (818 | ) | $ | 607 | $ | 288 | $ | 319 | ||||||||||||||||||
Investment income, net of related expenses | 25,426 | 25,882 | 25,736 | 14,686 | 19,024 | 6,402 | 77,044 | 68,858 | 8,186 | |||||||||||||||||||||||||||||
Investment related gains, net | 471 | 250 | 225 | 239 | 237 | 234 | 946 | 726 | 220 | |||||||||||||||||||||||||||||
Other revenue | 802 | 2,730 | 4,567 | 4,679 | 5,719 | (4,917 | ) | 8,099 | 9,920 | (1,821 | ) | |||||||||||||||||||||||||||
Total revenues | 26,885 | 29,068 | 30,743 | 19,073 | 25,984 | 901 | 86,696 | 79,792 | 6,904 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | (6 | ) | (17 | ) | 17 | 3 | 30 | (36 | ) | (6 | ) | 2 | (8 | ) | ||||||||||||||||||||||||
Interest credited | 199 | 198 | 206 | 179 | 186 | 13 | 603 | 623 | (20 | ) | ||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | (20,376 | ) | (17,319 | ) | (21,667 | ) | (19,533 | ) | (20,354 | ) | (22 | ) | (59,362 | ) | (54,770 | ) | (4,592 | ) | ||||||||||||||||||||
Other operating expenses | 21,595 | 22,476 | 11,252 | 22,690 | 15,339 | 6,256 | 55,323 | 55,176 | 147 | |||||||||||||||||||||||||||||
Interest expense | 36,065 | 35,211 | 35,084 | 35,072 | 30,831 | 5,234 | 106,360 | 89,235 | 17,125 | |||||||||||||||||||||||||||||
Collateral finance facility expense | 2,571 | 2,591 | 2,569 | 2,563 | 2,698 | (127 | ) | 7,731 | 7,886 | (155 | ) | |||||||||||||||||||||||||||
Total benefits and expenses | 40,048 | 43,140 | 27,461 | 40,974 | 28,730 | 11,318 | 110,649 | 98,152 | 12,497 | |||||||||||||||||||||||||||||
Operating income (loss) before income taxes | (13,163 | ) | (14,072 | ) | 3,282 | (21,901 | ) | (2,746 | ) | (10,417 | ) | (23,953 | ) | (18,360 | ) | (5,593 | ) | |||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) before income taxes | (13,163 | ) | (14,072 | ) | 3,282 | (21,901 | ) | (2,746 | ) | (10,417 | ) | (23,953 | ) | (18,360 | ) | (5,593 | ) | |||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | (960 | ) | (6,125 | ) | 482 | (3,557 | ) | (1,960 | ) | 1,000 | (6,603 | ) | (2,875 | ) | (3,728 | ) | ||||||||||||||||||||||
Non-investment derivatives | (28 | ) | — | — | — | — | (28 | ) | (28 | ) | — | (28 | ) | |||||||||||||||||||||||||
Gain on repurchase of collateral finance facility securities | — | — | — | — | — | — | — | 46,506 | (46,506 | ) | ||||||||||||||||||||||||||||
Income (loss) before income taxes | $ | (14,151 | ) | $ | (20,197 | ) | $ | 3,764 | $ | (25,458 | ) | $ | (4,706 | ) | $ | (9,445 | ) | $ | (30,584 | ) | $ | 25,271 | $ | (55,855 | ) | |||||||||||||
Foreign currency effect (1): | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | $ | (1,403 | ) | $ | (1,263 | ) | $ | (1,706 | ) | $ | 98 | $ | (491 | ) | $ | (912 | ) | $ | (4,372 | ) | $ | (446 | ) | $ | (3,926 | ) | ||||||||||||
(1) Compared to comparable prior year period | ||||||||||||||||||||||||||||||||||||||
| Page 14 | |
Reinsurance Group of America, Incorporated Summary of Pre-tax Segment Operating Income (1) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
U.S. and Latin America: | ||||||||||||||||||||||||||||||||||||||
Traditional | $ | 78,925 | $ | 88,954 | $ | 48,203 | $ | 123,642 | $ | 90,287 | $ | (11,362 | ) | $ | 216,082 | $ | 249,023 | $ | (32,941 | ) | ||||||||||||||||||
Non-Traditional: | ||||||||||||||||||||||||||||||||||||||
Asset Intensive | 57,976 | 44,027 | 41,005 | 42,266 | 38,046 | 19,930 | 143,008 | 123,872 | 19,136 | |||||||||||||||||||||||||||||
Financial Reinsurance | 13,804 | 13,609 | 12,426 | 14,276 | 11,523 | 2,281 | 39,839 | 31,417 | 8,422 | |||||||||||||||||||||||||||||
Total U.S. and Latin America Segment | 150,705 | 146,590 | 101,634 | 180,184 | 139,856 | 10,849 | 398,929 | 404,312 | (5,383 | ) | ||||||||||||||||||||||||||||
Canadian Segment | 25,736 | 30,726 | 22,123 | 47,153 | 35,973 | (10,237 | ) | 78,585 | 100,539 | (21,954 | ) | |||||||||||||||||||||||||||
Europe, Middle East and Africa | 43,980 | 44,681 | 13,976 | 12,031 | 38,341 | 5,639 | 102,637 | 59,041 | 43,596 | |||||||||||||||||||||||||||||
Asia Pacific Segment | 27,444 | 29,327 | 24,658 | 26,941 | 14,258 | 13,186 | 81,429 | (245,317 | ) | 326,746 | ||||||||||||||||||||||||||||
Corporate and Other | (13,163 | ) | (14,072 | ) | 3,282 | (21,901 | ) | (2,746 | ) | (10,417 | ) | (23,953 | ) | (18,360 | ) | (5,593 | ) | |||||||||||||||||||||
Consolidated | $ | 234,702 | $ | 237,252 | $ | 165,673 | $ | 244,408 | $ | 225,682 | $ | 9,020 | $ | 637,627 | $ | 300,215 | $ | 337,412 | ||||||||||||||||||||
(1) The company realigned certain operations and management responsibilities to better fit within its geographic-based segments. Mexico and Latin America operations were moved from Europe & South Africa to the U.S. segment, which has been renamed U.S. and Latin America. India operations have been moved from Europe & South Africa to the Asia Pacific segment. Europe & South Africa has been renamed Europe, Middle East and Africa. Prior-period figures have been restated to conform to the new reporting alignment. | ||||||||||||||||||||||||||||||||||||||
| Page 15 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Cash and Invested Assets | ||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | ||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 24,475,451 | $ | 24,480,396 | $ | 22,157,182 | $ | 21,474,136 | $ | 21,289,108 | ||||||||||
Mortgage loans on real estate | 2,617,091 | 2,555,800 | 2,526,228 | 2,486,680 | 2,488,582 | |||||||||||||||
Policy loans | 1,249,948 | 1,250,635 | 1,296,897 | 1,244,469 | 1,244,878 | |||||||||||||||
Funds withheld at interest | 5,969,006 | 5,940,521 | 5,814,231 | 5,771,467 | 5,739,872 | |||||||||||||||
Short-term investments | 44,437 | 45,596 | 118,789 | 139,395 | 44,192 | |||||||||||||||
Other invested assets | 1,165,021 | 1,128,375 | 1,234,779 | 1,324,960 | 1,116,391 | |||||||||||||||
Cash and cash equivalents | 1,118,745 | 1,378,117 | 1,127,132 | 923,647 | 1,423,235 | |||||||||||||||
Total cash and invested assets | $ | 36,639,699 | $ | 36,779,440 | $ | 34,275,238 | $ | 33,364,754 | $ | 33,346,258 | ||||||||||
Investment Income and Yield Summary | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-Date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
Average invested assets at amortized cost (1) | $ | 20,424,141 | $ | 20,121,261 | $ | 19,726,037 | $ | 18,954,561 | $ | 18,263,880 | $ | 2,160,261 | $ | 19,854,771 | $ | 17,910,062 | $ | 1,944,709 | ||||||||||||||||||||
Net investment income (1) | $ | 240,877 | $ | 236,604 | $ | 229,644 | $ | 217,928 | $ | 213,318 | $ | 27,559 | $ | 707,125 | $ | 638,687 | $ | 68,438 | ||||||||||||||||||||
Annualized investment yield (ratio of net investment income to average invested assets) (1) | 4.80 | % | 4.79 | % | 4.74 | % | 4.68 | % | 4.75 | % | 0.05 | % | 4.78 | % | 4.78 | % | 0.00 | % | ||||||||||||||||||||
(1) Excludes spread-related business (e.g. coinsurance of annuities) | ||||||||||||||||||||||||||||||||||||||
| Page 16 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Amortized cost, gross unrealized gains and losses, and estimated fair values of fixed maturity and equity securities (Excludes Funds Withheld Portfolios) | |||||||||||||||||||||||
September 30, 2014 | |||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | % of Total | Other-than- temporary Impairment in AOCI | ||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||||
Corporate securities | $ | 13,413,102 | $ | 849,695 | $ | 72,341 | $ | 14,190,456 | 58.0 | % | $ | — | |||||||||||
Canadian and Canadian provincial governments | 2,726,064 | 989,925 | 1,651 | 3,714,338 | 15.2 | % | — | ||||||||||||||||
Residential mortgage-backed securities | 964,436 | 46,453 | 10,172 | 1,000,717 | 4.1 | % | (300 | ) | |||||||||||||||
Asset-backed securities | 993,028 | 22,054 | 9,034 | 1,006,048 | 4.1 | % | 354 | ||||||||||||||||
Commercial mortgage-backed securities | 1,404,648 | 85,609 | 8,435 | 1,481,822 | 6.0 | % | (1,609 | ) | |||||||||||||||
U.S. government and agencies | 462,675 | 19,063 | 1,752 | 479,986 | 1.9 | % | — | ||||||||||||||||
State and political subdivisions | 369,631 | 45,211 | 4,778 | 410,064 | 1.7 | % | — | ||||||||||||||||
Other foreign government, supranational, and foreign | |||||||||||||||||||||||
government-sponsored enterprises | 2,119,357 | 82,424 | 9,761 | 2,192,020 | 9.0 | % | — | ||||||||||||||||
Total fixed maturity securities | $ | 22,452,941 | $ | 2,140,434 | $ | 117,924 | $ | 24,475,451 | 100.0 | % | $ | (1,555 | ) | ||||||||||
Non-redeemable preferred stock | 82,236 | 7,051 | 1,698 | 87,589 | 54.1 | % | |||||||||||||||||
Other equity securities | 74,725 | 866 | 1,230 | 74,361 | 45.9 | % | |||||||||||||||||
Total equity securities | $ | 156,961 | $ | 7,917 | $ | 2,928 | $ | 161,950 | 100.0 | % | |||||||||||||
December 31, 2013 | |||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | % of Total | Other-than- temporary Impairment in AOCI | ||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||||
Corporate securities | $ | 11,697,394 | $ | 616,147 | $ | 202,786 | $ | 12,110,755 | 56.4 | % | $ | — | |||||||||||
Canadian and Canadian provincial governments | 2,728,111 | 669,762 | 16,848 | 3,381,025 | 15.7 | % | — | ||||||||||||||||
Residential mortgage-backed securities | 970,434 | 38,126 | 18,917 | 989,643 | 4.6 | % | (300 | ) | |||||||||||||||
Asset-backed securities | 891,751 | 18,893 | 15,812 | 894,832 | 4.2 | % | (2,259 | ) | |||||||||||||||
Commercial mortgage-backed securities | 1,314,782 | 91,651 | 17,487 | 1,388,946 | 6.5 | % | (1,609 | ) | |||||||||||||||
U.S. government and agencies | 489,631 | 16,468 | 4,748 | 501,351 | 2.3 | % | — | ||||||||||||||||
State and political subdivisions | 313,252 | 21,907 | 14,339 | 320,820 | 1.5 | % | — | ||||||||||||||||
Other foreign government, supranational, and foreign | |||||||||||||||||||||||
government-sponsored enterprises | 1,865,379 | 45,347 | 23,962 | 1,886,764 | 8.8 | % | — | ||||||||||||||||
Total fixed maturity securities | $ | 20,270,734 | $ | 1,518,301 | $ | 314,899 | $ | 21,474,136 | 100.0 | % | $ | (4,168 | ) | ||||||||||
Non-redeemable preferred stock | 81,993 | 5,342 | 5,481 | 81,854 | 20.2 | % | |||||||||||||||||
Other equity securities | 327,479 | 618 | 4,220 | 323,877 | 79.8 | % | |||||||||||||||||
Total equity securities | $ | 409,472 | $ | 5,960 | $ | 9,701 | $ | 405,731 | 100.0 | % | |||||||||||||
| Page 17 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Corporate Securities by Sector (Fixed Maturities and Equities) (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||
Amortized Cost | Estimated Fair Value | % of Total | Average Credit Ratings (1) | Amortized Cost | Estimated Fair Value | % of Total | Average Credit Ratings (1) | |||||||||||||||||||
Financial Institutions | ||||||||||||||||||||||||||
Banking | $ | 2,952,859 | $ | 3,071,735 | 21.4 | % | A- | $ | 2,328,148 | $ | 2,408,741 | 19.2 | % | A- | ||||||||||||
Brokerage/Asset Managers/Exchanges | 219,714 | 238,756 | 1.7 | % | A | 206,986 | 218,477 | 1.7 | % | A- | ||||||||||||||||
Finance Comp. | 183,697 | 194,747 | 1.4 | % | A+ | 151,129 | 158,859 | 1.3 | % | A | ||||||||||||||||
Insurance | 693,994 | 753,985 | 5.3 | % | A- | 665,252 | 693,516 | 5.5 | % | A- | ||||||||||||||||
REITs | 543,374 | 571,826 | 4.0 | % | BBB+ | 476,830 | 491,058 | 3.9 | % | BBB+ | ||||||||||||||||
Other Finance | 141,265 | 145,006 | 1.0 | % | A- | 406,613 | 407,106 | 3.3 | % | BBB- | ||||||||||||||||
Total Financial Institutions | $ | 4,734,903 | $ | 4,976,055 | 34.8 | % | $ | 4,234,958 | $ | 4,377,757 | 34.9 | % | ||||||||||||||
Industrials | ||||||||||||||||||||||||||
Basic | 846,577 | 879,723 | 6.1 | % | BBB | 847,764 | 858,886 | 6.9 | % | BBB | ||||||||||||||||
Capital Goods | 594,237 | 628,806 | 4.4 | % | BBB | 574,108 | 596,150 | 4.8 | % | BBB | ||||||||||||||||
Communications | 1,446,646 | 1,549,903 | 10.8 | % | BBB+ | 1,234,343 | 1,278,710 | 10.2 | % | BBB+ | ||||||||||||||||
Consumer Cyclical | 661,416 | 695,899 | 4.8 | % | BBB+ | 631,196 | 649,019 | 5.2 | % | BBB | ||||||||||||||||
Consumer Noncyclical | 1,260,102 | 1,337,574 | 9.3 | % | BBB+ | 1,062,238 | 1,107,972 | 8.9 | % | BBB+ | ||||||||||||||||
Energy | 1,486,982 | 1,576,520 | 11.0 | % | BBB | 1,326,476 | 1,380,762 | 11.0 | % | BBB | ||||||||||||||||
Technology | 475,979 | 494,699 | 3.4 | % | BBB+ | 455,081 | 456,505 | 3.6 | % | BBB+ | ||||||||||||||||
Transportation | 443,648 | 473,323 | 3.3 | % | A- | 365,233 | 380,249 | 3.0 | % | A- | ||||||||||||||||
Other Industrial | 100,429 | 109,534 | 0.7 | % | BBB+ | 114,520 | 119,353 | 1.0 | % | A- | ||||||||||||||||
Total Industrials | $ | 7,316,016 | $ | 7,745,981 | 53.8 | % | $ | 6,610,959 | $ | 6,827,606 | 54.6 | % | ||||||||||||||
Utilities | ||||||||||||||||||||||||||
Electric | 1,170,143 | 1,261,720 | 8.8 | % | BBB+ | 1,077,167 | 1,121,373 | 9.0 | % | BBB+ | ||||||||||||||||
Natural Gas | 213,674 | 222,679 | 1.6 | % | A- | 109,789 | 111,515 | 0.9 | % | A- | ||||||||||||||||
Other Utility | 135,327 | 145,971 | 1.0 | % | A- | 62,768 | 67,471 | 0.5 | % | BBB+ | ||||||||||||||||
Total Utilities | $ | 1,519,144 | $ | 1,630,370 | 11.4 | % | $ | 1,249,724 | $ | 1,300,359 | 10.4 | % | ||||||||||||||
Other Sectors | — | — | 0.0 | % | 11,225 | 10,764 | 0.1 | % | AA | |||||||||||||||||
Total | $ | 13,570,063 | $ | 14,352,406 | 100.0 | % | BBB+ | $ | 12,106,866 | $ | 12,516,486 | 100.0 | % | BBB+ | ||||||||||||
(1) The Average Credit Rating designations are based on the weighted average ratings from nationally recognized rating organizations, primarily those assigned by S&P. In instances where a S&P rating is not available, the Company will reference the rating provided by Moody’s, and in the absence of both the Company will assign equivalent ratings based on information from the NAIC. | ||||||||||||||||||||||||||
| Page 18 | |
Reinsurance Group of America, Incorporated
Investments
(USD thousands)
Ratings of Fixed Maturity Securities (Excludes Funds Withheld Portfolios) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
NAIC Designation (1) | Rating Agency Designation (2) | Amortized Cost | Estimated Fair Value | % of Total | Amortized Cost | Estimated Fair Value | % of Total | Amortized Cost | Estimated Fair Value | % of Total | Amortized Cost | Estimated Fair Value | % of Total | Amortized Cost | Estimated Fair Value | % of Total | |||||||||||||||||||||||||||||||||||||||||
1 | AAA/AA/A | $ | 14,590,478 | $ | 16,236,196 | 66.3 | % | $ | 14,646,888 | $ | 16,304,796 | 66.6 | % | $ | 13,519,276 | $ | 14,859,087 | 67.0 | % | $ | 12,868,061 | $ | 13,867,584 | 64.6 | % | $ | 12,460,380 | $ | 13,643,495 | 64.1 | % | ||||||||||||||||||||||||||
2 | BBB | 6,530,399 | 6,895,202 | 28.2 | % | 6,527,092 | 6,942,290 | 28.3 | % | 5,882,308 | 6,177,731 | 27.9 | % | 6,072,604 | 6,255,451 | 29.1 | % | 6,117,081 | 6,298,628 | 29.6 | % | ||||||||||||||||||||||||||||||||||||
3 | BB | 729,311 | 751,110 | 3.1 | % | 669,569 | 706,926 | 2.9 | % | 637,814 | 666,571 | 3.0 | % | 725,733 | 740,465 | 3.4 | % | 652,300 | 655,000 | 3.1 | % | ||||||||||||||||||||||||||||||||||||
4 | B | 425,094 | 421,100 | 1.7 | % | 362,960 | 364,395 | 1.5 | % | 379,529 | 379,688 | 1.7 | % | 387,687 | 400,775 | 1.9 | % | 499,580 | 512,325 | 2.4 | % | ||||||||||||||||||||||||||||||||||||
5 | CCC | 152,363 | 150,845 | 0.6 | % | 143,292 | 142,805 | 0.6 | % | 60,003 | 60,427 | 0.3 | % | 106,619 | 106,873 | 0.5 | % | 87,364 | 86,644 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
6 | In or near default | 25,296 | 20,998 | 0.1 | % | 23,545 | 19,184 | 0.1 | % | 18,594 | 13,678 | 0.1 | % | 110,030 | 102,988 | 0.5 | % | 100,645 | 93,016 | 0.4 | % | ||||||||||||||||||||||||||||||||||||
Total | $ | 22,452,941 | $ | 24,475,451 | 100.0 | % | $ | 22,373,346 | $ | 24,480,396 | 100.0 | % | $ | 20,497,524 | $ | 22,157,182 | 100.0 | % | $ | 20,270,734 | $ | 21,474,136 | 100.0 | % | $ | 19,917,350 | $ | 21,289,108 | 100.0 | % | |||||||||||||||||||||||||||
(1) Effective January 1, 2014, structured securities held by the Company’s insurance subsidiaries that maintain the National Association of Insurance Commissioners (NAIC) statutory basis of accounting that meet the definition of SSAP No. 43R began utilizing the NAIC rating methodology. All other securities will continue to utilize the Nationally Recognized Statistical Rating Organizations (NRSRO) ratings, as available, or equivalent rating based on information from the NAIC. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) The Rating Agency Designation includes all “+” or “-” at that rating level (e. g. ‘BBB’ includes ‘BBB+’, ‘BBB’, and ‘BBB-’). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Structured Fixed Maturity Securities | ||||||||||||||||||||||||||||||||||||||||
September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | ||||||||||||||||||||||||||||||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | |||||||||||||||||||||||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||||||||||||||||||
Agency | $ | 597,413 | $ | 625,070 | $ | 564,397 | $ | 594,042 | $ | 569,064 | $ | 591,515 | $ | 567,113 | $ | 580,855 | $ | 517,517 | $ | 541,870 | ||||||||||||||||||||
Non-agency | 367,023 | 375,647 | 382,034 | 392,097 | 400,880 | 410,356 | 403,321 | 408,788 | 405,064 | 409,968 | ||||||||||||||||||||||||||||||
Total residential mortgage-backed securities | 964,436 | 1,000,717 | 946,431 | 986,139 | 969,944 | 1,001,871 | 970,434 | 989,643 | 922,581 | 951,838 | ||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 1,404,648 | 1,481,822 | 1,380,622 | 1,474,620 | 1,367,205 | 1,450,503 | 1,314,782 | 1,388,946 | 1,371,473 | 1,453,114 | ||||||||||||||||||||||||||||||
Asset-backed securities | 993,028 | 1,006,048 | 993,116 | 1,008,375 | 933,130 | 944,579 | 891,751 | 894,832 | 883,495 | 885,278 | ||||||||||||||||||||||||||||||
Total | $ | 3,362,112 | $ | 3,488,587 | $ | 3,320,169 | $ | 3,469,134 | $ | 3,270,279 | $ | 3,396,953 | $ | 3,176,967 | $ | 3,273,421 | $ | 3,177,549 | $ | 3,290,230 | ||||||||||||||||||||
| Page 19 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Gross Unrealized Losses Aging Fixed Maturity Securities | |||||||||||||||||||||||||||||||||||
September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | |||||||||||||||||||||||||||||||
Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | ||||||||||||||||||||||||||
Less than 20% | $ | 107,731 | 89.1 | % | $ | 96,330 | 85.8 | % | $ | 157,050 | 87.6 | % | $ | 287,032 | 88.4 | % | $ | 279,211 | 87.6 | % | |||||||||||||||
20% or more for less than six months | 683 | 0.6 | % | 2,479 | 2.2 | % | 163 | 0.1 | % | 6,444 | 2.0 | % | 6,325 | 2.0 | % | ||||||||||||||||||||
20% or more for six months or greater | 9,510 | 7.9 | % | 10,936 | 9.7 | % | 17,771 | 9.9 | % | 21,423 | 6.6 | % | 25,940 | 8.1 | % | ||||||||||||||||||||
Total | $ | 117,924 | 97.6 | % | $ | 109,745 | 97.7 | % | $ | 174,984 | 97.6 | % | $ | 314,899 | 97.0 | % | $ | 311,476 | 97.7 | % | |||||||||||||||
Equity Securities | |||||||||||||||||||||||||||||||||||
September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | |||||||||||||||||||||||||||||||
Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | ||||||||||||||||||||||||||
Less than 20% | $ | 2,926 | 2.4 | % | $ | 2,555 | 2.3 | % | $ | 4,321 | 2.4 | % | $ | 9,699 | 3.0 | % | $ | 7,383 | 2.3 | % | |||||||||||||||
20% or more for less than six months | — | 0.0 | % | — | 0.0 | % | — | 0.0 | % | — | 0.0 | % | — | 0.0 | % | ||||||||||||||||||||
20% or more for six months or greater | 2 | 0.0 | % | 2 | 0.0 | % | 2 | 0.0 | % | 2 | 0.0 | % | 2 | 0.0 | % | ||||||||||||||||||||
Total | $ | 2,928 | 2.4 | % | $ | 2,557 | 2.3 | % | $ | 4,323 | 2.4 | % | $ | 9,701 | 3.0 | % | $ | 7,385 | 2.3 | % | |||||||||||||||
| Page 20 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Fixed Maturities and Equity Securities Below Amortized Cost (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||
As of September 30, 2014 | ||||||||||||||||||||||||
Less than 12 months | Equal to or greater than 12 months | Total | ||||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||||
Investment grade securities: | ||||||||||||||||||||||||
Corporate securities | $ | 1,381,925 | $ | 20,285 | $ | 787,728 | $ | 41,002 | $ | 2,169,653 | $ | 61,287 | ||||||||||||
Canadian and Canadian provincial governments | 53,864 | 427 | 27,870 | 1,224 | 81,734 | 1,651 | ||||||||||||||||||
Residential mortgage-backed securities | 91,041 | 1,139 | 148,006 | 8,672 | 239,047 | 9,811 | ||||||||||||||||||
Asset-backed securities | 234,958 | 2,074 | 121,589 | 4,656 | 356,547 | 6,730 | ||||||||||||||||||
Commercial mortgage-backed securities | 103,327 | 922 | 40,865 | 2,950 | 144,192 | 3,872 | ||||||||||||||||||
U.S. government and agencies | 40,941 | 70 | 71,551 | 1,682 | 112,492 | 1,752 | ||||||||||||||||||
State and political subdivisions | 40,692 | 124 | 45,205 | 4,654 | 85,897 | 4,778 | ||||||||||||||||||
Other foreign government, supranational, and foreign | ||||||||||||||||||||||||
government-sponsored enterprises | 147,718 | 3,160 | 156,858 | 5,746 | 304,576 | 8,906 | ||||||||||||||||||
Investment grade securities | 2,094,466 | 28,201 | 1,399,672 | 70,586 | 3,494,138 | 98,787 | ||||||||||||||||||
Non-investment grade securities: | ||||||||||||||||||||||||
Corporate securities | 428,285 | 8,710 | 31,577 | 2,344 | 459,862 | 11,054 | ||||||||||||||||||
Residential mortgage-backed securities | 19,548 | 206 | 3,477 | 155 | 23,025 | 361 | ||||||||||||||||||
Asset-backed securities | 9,642 | 161 | 9,514 | 2,143 | 19,156 | 2,304 | ||||||||||||||||||
Commercial mortgage-backed securities | — | — | 6,446 | 4,563 | 6,446 | 4,563 | ||||||||||||||||||
Other foreign government, supranational, and foreign government-sponsored enterprises | 15,973 | 855 | — | — | 15,973 | 855 | ||||||||||||||||||
Non-investment grade securities | 473,448 | 9,932 | 51,014 | 9,205 | 524,462 | 19,137 | ||||||||||||||||||
Total fixed maturity securities | $ | 2,567,914 | $ | 38,133 | $ | 1,450,686 | $ | 79,791 | $ | 4,018,600 | $ | 117,924 | ||||||||||||
Non-redeemable preferred stock | 3,765 | 287 | 17,149 | 1,411 | 20,914 | 1,698 | ||||||||||||||||||
Other equity securities | 24,552 | 90 | 28,561 | 1,140 | 53,113 | 1,230 | ||||||||||||||||||
Total Equity securities | $ | 28,317 | $ | 377 | $ | 45,710 | $ | 2,551 | $ | 74,027 | $ | 2,928 | ||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||
Less than 12 months | Equal to or greater than 12 months | Total | ||||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||||
Investment grade securities: | ||||||||||||||||||||||||
Corporate securities | $ | 3,141,179 | $ | 148,895 | $ | 301,303 | $ | 40,548 | $ | 3,442,482 | $ | 189,443 | ||||||||||||
Canadian and Canadian provincial governments | 188,491 | 14,419 | 12,029 | 2,429 | 200,520 | 16,848 | ||||||||||||||||||
Residential mortgage-backed securities | 283,967 | 15,900 | 23,068 | 1,688 | 307,035 | 17,588 | ||||||||||||||||||
Asset-backed securities | 255,656 | 4,916 | 56,668 | 4,983 | 312,324 | 9,899 | ||||||||||||||||||
Commercial mortgage-backed securities | 219,110 | 3,725 | 20,068 | 5,745 | 239,178 | 9,470 | ||||||||||||||||||
U.S. government and agencies | 133,697 | 4,469 | 4,406 | 279 | 138,103 | 4,748 | ||||||||||||||||||
State and political subdivisions | 120,193 | 9,723 | 15,202 | 4,616 | 135,395 | 14,339 | ||||||||||||||||||
Other foreign government, supranational, and foreign government-sponsored enterprises | 665,313 | 21,075 | 36,212 | 2,847 | 701,525 | 23,922 | ||||||||||||||||||
Investment grade securities | 5,007,606 | 223,122 | 468,956 | 63,135 | 5,476,562 | 286,257 | ||||||||||||||||||
Non-investment grade securities: | ||||||||||||||||||||||||
Corporate securities | 283,603 | 9,451 | 38,256 | 3,892 | 321,859 | 13,343 | ||||||||||||||||||
Residential mortgage-backed securities | 62,146 | 1,075 | 3,945 | 254 | 66,091 | 1,329 | ||||||||||||||||||
Asset-backed securities | 28,670 | 415 | 32,392 | 5,498 | 61,062 | 5,913 | ||||||||||||||||||
Commercial mortgage-backed securities | 15,762 | 81 | 10,980 | 7,936 | 26,742 | 8,017 | ||||||||||||||||||
Other foreign government, supranational, and foreign government-sponsored enterprises | 9,403 | 40 | — | — | 9,403 | 40 | ||||||||||||||||||
Non-investment grade securities | 399,584 | 11,062 | 85,573 | 17,580 | 485,157 | 28,642 | ||||||||||||||||||
Total fixed maturity securities | $ | 5,407,190 | $ | 234,184 | $ | 554,529 | $ | 80,715 | $ | 5,961,719 | $ | 314,899 | ||||||||||||
Non-redeemable preferred stock | 51,386 | 5,479 | 1 | 2 | 51,387 | 5,481 | ||||||||||||||||||
Other equity securities | 218,834 | 1,748 | 32,550 | 2,472 | 251,384 | 4,220 | ||||||||||||||||||
Total Equity securities | $ | 270,220 | $ | 7,227 | $ | 32,551 | $ | 2,474 | $ | 302,771 | $ | 9,701 | ||||||||||||
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Reinsurance Group of America, Incorporated Investments (USD thousands) Consolidated Investment Related Gains and Losses | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
Fixed Maturity and Equity Securities: | ||||||||||||||||||||||||||||||||||||||
Other-than-temporary impairment losses on fixed maturities | $ | (246 | ) | $ | (870 | ) | $ | (303 | ) | $ | (2,258 | ) | $ | (391 | ) | $ | 145 | $ | (1,419 | ) | $ | (10,396 | ) | $ | 8,977 | |||||||||||||
Portion of loss recognized in accumulated other comprehensive income (before taxes) | — | — | — | — | 59 | (59 | ) | — | (247 | ) | 247 | |||||||||||||||||||||||||||
Net other-than-temporary impairment losses on fixed maturities recognized in earnings | (246 | ) | (870 | ) | (303 | ) | (2,258 | ) | (332 | ) | 86 | (1,419 | ) | (10,643 | ) | 9,224 | ||||||||||||||||||||||
Gain on investment activity | 8,819 | 34,887 | 8,067 | 12,659 | 21,560 | (12,741 | ) | 51,773 | 70,085 | (18,312 | ) | |||||||||||||||||||||||||||
Loss on investment activity | (6,355 | ) | (6,877 | ) | (6,583 | ) | (12,169 | ) | (30,434 | ) | 24,079 | (19,815 | ) | (48,406 | ) | 28,591 | ||||||||||||||||||||||
Net gain/(loss) on fixed maturity and equity securities | 2,218 | 27,140 | 1,181 | (1,768 | ) | (9,206 | ) | 11,424 | 30,539 | 11,036 | 19,503 | |||||||||||||||||||||||||||
Other impairment losses and change in mortgage loan provision | (2,041 | ) | (5,309 | ) | 1,664 | (5,665 | ) | 233 | (2,274 | ) | (5,686 | ) | (1,268 | ) | (4,418 | ) | ||||||||||||||||||||||
Other non-derivative gain/(loss), net | 2,298 | 9,197 | 8,368 | 10,536 | 4,594 | (2,296 | ) | 19,863 | 16,145 | 3,718 | ||||||||||||||||||||||||||||
Free-standing Derivatives: | ||||||||||||||||||||||||||||||||||||||
Credit Default Swaps | (1,389 | ) | 4,783 | (2,114 | ) | 7,051 | 10,805 | (12,194 | ) | 1,280 | 17,137 | (15,857 | ) | |||||||||||||||||||||||||
Interest Rate Swaps - non-hedged | 9,114 | 22,244 | 29,659 | (15,498 | ) | (8,221 | ) | 17,335 | 61,017 | (68,900 | ) | 129,917 | ||||||||||||||||||||||||||
Interest Rate Swaps - hedged | 8 | 7 | (6 | ) | (5 | ) | (3 | ) | 11 | 9 | 11 | (2 | ) | |||||||||||||||||||||||||
Futures | 6,446 | (7,684 | ) | (1,584 | ) | (3,851 | ) | (1,139 | ) | 7,585 | (2,822 | ) | (7,306 | ) | 4,484 | |||||||||||||||||||||||
CPI Swaps | (274 | ) | 115 | 352 | 85 | (39 | ) | (235 | ) | 193 | (2,027 | ) | 2,220 | |||||||||||||||||||||||||
Equity options | 1,017 | (8,800 | ) | (8,965 | ) | (19,447 | ) | (24,112 | ) | 25,129 | (16,748 | ) | (59,784 | ) | 43,036 | |||||||||||||||||||||||
Currency Forwards | (5,277 | ) | 1,178 | 1,154 | (5,213 | ) | 629 | (5,906 | ) | (2,945 | ) | (7,988 | ) | 5,043 | ||||||||||||||||||||||||
Interest Rate Options | 865 | 2,004 | 1,282 | (3,145 | ) | (2,375 | ) | 3,240 | 4,151 | (8,373 | ) | 12,524 | ||||||||||||||||||||||||||
Total free-standing derivatives | 10,510 | 13,847 | 19,778 | (40,023 | ) | (24,455 | ) | 34,965 | 44,135 | (137,230 | ) | 181,365 | ||||||||||||||||||||||||||
Embedded Derivatives: | ||||||||||||||||||||||||||||||||||||||
Modified coinsurance and funds withheld treaties | 56,812 | 78,835 | 77,241 | (337 | ) | (67,460 | ) | 124,272 | 212,888 | 70,514 | 142,374 | |||||||||||||||||||||||||||
GMXB | (47,479 | ) | (5,183 | ) | (23,661 | ) | 35,098 | 19,829 | (67,308 | ) | (76,323 | ) | 106,952 | (183,275 | ) | |||||||||||||||||||||||
Total embedded derivatives | 9,333 | 73,652 | 53,580 | 34,761 | (47,631 | ) | 56,964 | 136,565 | 177,466 | (40,901 | ) | |||||||||||||||||||||||||||
Net gain/(loss) on total derivatives | 19,843 | 87,499 | 73,358 | (5,262 | ) | (72,086 | ) | 91,929 | 180,700 | 40,236 | 140,464 | |||||||||||||||||||||||||||
Total investment related gains / (losses), net | $ | 22,318 | $ | 118,527 | $ | 84,571 | $ | (2,159 | ) | $ | (76,465 | ) | $ | 98,783 | $ | 225,416 | $ | 66,149 | $ | 159,267 | ||||||||||||||||||
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