UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 2, 2015
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) | ||
16000 Swingley Ridge Road, 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)) |
Explanatory note: This amendment is being filed solely to correct a technical error (i.e., an inadvertent failure to properly code Item 2.02 in the Edgar submission page for the original filing). No text from the original filing or its exhibits has been altered.
Item 2.02 | Results of Operations and Financial Condition. |
On February 2, 2015, Reinsurance Group of America, Incorporated (the “Company”) issued (1) a press release (the “Press Release”) announcing its earnings for the three-month period ended December 31, 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 December 31, 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 February 3, 2015 to discuss the financial and operating results for the three-month period ended December 31, 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 February 2, 2015 | |
99.2 | Quarterly Financial Supplement for the quarter ended December 31, 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: February 3, 2015 | 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 February 2, 2015 | |
99.2 | Quarterly Financial Supplement for the quarter ended December 31, 2014 | |
Exhibit 99.1
PRESS RELEASE
REINSURANCE GROUP OF AMERICA REPORTS FOURTH-QUARTER RESULTS
• | Earnings per diluted share: operating income* $2.99, net income $2.75 |
• | Tax-related adjustments added a total of $0.55 per diluted share in the quarter |
• | Reported premiums increased modestly despite negative effects of the Pacific Life retrocession agreement announced on December 29, as well as a stronger U.S. dollar |
• | Full-year operating return on equity* 12.5 percent |
• | Closed previously announced transaction with Voya Financial |
ST. LOUIS, February 2, 2015 - Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global provider of life reinsurance, reported operating income* of $208.3 million, or $2.99 per diluted share, compared with $154.5 million, or $2.17 per diluted share, in the prior-year quarter. Net income totaled $191.1 million, or $2.75 per diluted share, compared with $145.0 million, or $2.03 per diluted share, the year before. The current period includes favorable tax-related adjustments of approximately $38.5 million, or $0.55 per diluted share, primarily associated with the release of provisions for uncertain tax positions in prior years, along with related accrued interest. A relatively stronger U.S. dollar versus all major foreign currencies resulted in a net adverse effect of $0.09 per share this quarter.
Quarterly Results | Year-to-Date Results | |||||||||||||||
($ in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Net premiums | $ | 2,217,772 | $ | 2,212,998 | $ | 8,669,854 | $ | 8,254,027 | ||||||||
Net income | 191,091 | 144,959 | 684,047 | 418,837 | ||||||||||||
Net income per diluted share | 2.75 | 2.03 | 9.78 | 5.78 | ||||||||||||
Operating income* | 208,288 | 154,509 | 638,049 | 358,446 | ||||||||||||
Operating income per diluted share* | 2.99 | 2.17 | 9.12 | 4.95 | ||||||||||||
Book value per share | 102.13 | 83.87 | ||||||||||||||
Book value per share (excl. Accumulated Other Comprehensive Income “AOCI”)* | 78.03 | 69.66 | ||||||||||||||
Total assets | 44,679,611 | 39,674,473 | ||||||||||||||
* | See ‘Use of Non-GAAP Financial Measures’ below |
Full-year 2014 net income totaled $684.0 million, or $9.78 per diluted share, an increase from $418.4 million, or $5.78 per diluted share, in 2013. Operating income increased to $638.0 million, or $9.12 per diluted share, from $358.4 million, or $4.95 per diluted share, the year before, which included an after-tax increase in Australian claim liabilities of $184 million, or $2.53 per diluted share.
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Excluding that Australian charge, operating income per diluted share in 2014 was up 22 percent over 2013’s level. Net foreign currency fluctuations reduced 2014 operating income per share by $0.17. Reported net premiums rose five percent for the current year. In original currencies, net premiums increased six percent.
For the quarter, consolidated net premiums of $2.2 billion rose slightly from last year’s fourth quarter, while premiums increased three percent in original currencies. Investment income of $451.6 million was two percent lower this period, primarily due to a $63.7 million decrease in the fair value of options contracts underlying equity-indexed annuities.
Excluding spread-based businesses and the value of associated derivatives, investment income increased 15 percent over year-ago levels, including the effects of commercial mortgage loan prepayments, bond make-whole premiums and a growing average invested asset base. The average investment yield was up 26 basis points to 4.94 percent over the fourth quarter of 2013. Enterprise-wide, including spread-based portfolios, the combined favorable effect of mortgage loan prepayments and bond make-whole premiums was above the expected quarterly run rate by approximately $17 million, or $0.16 per diluted share.
The quarter’s results benefited from the release of liabilities established for uncertain tax positions due to the closure with the Internal Revenue Service of tax returns for a recent five-year period. As a result of that release and other adjustments, the tax provision for the period was reduced and accrued interest expense of approximately $43.9 million was reversed. The effect of recognizing the closure of these tax years and other adjustments totaled $33.0 million, after tax, or $0.47 per diluted share. Additionally, Congress retroactively extended the active financing exception legislation during the quarter, which further reduced the tax provision by $5.5 million, or $0.08 per diluted share.
Greig Woodring, president and chief executive officer, commented, “Our very strong operating results this quarter capped off an equally strong full year, as operating income rose to $208.3 million, or $2.99 per diluted share in the quarter. As noted, the result was influenced by favorable tax adjustments, but the underlying results were strong irrespective of those adjustments.
“We continued to see the benefit of our global operating model, as demonstrated by the increased diversity of earnings by geography and product. The quarter was highlighted by excellent results in our core U.S. Traditional business. Our Global Financial Solutions (GFS) and international lines of business, aside from Canada, sustained their recent strong momentum and favorable bottom-line results.
“We are quite pleased with the year as a whole, as we achieved strong operating results and continued to build our brand recognition worldwide. Our operating return on equity exceeded 12 percent, and the balance sheet remains strong. While the macro environment continues to be challenging in certain respects, we have continued to execute collectively across the organization, and we are optimistic about future opportunities.
“We have executed our capital management strategy by supporting solid organic growth and taking a balanced approach with the deployment of excess capital into several attractive in-force blocks as well as a return of capital to shareholders as appropriate. We further demonstrated our commitment to
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capital efficiency in the fourth quarter with an embedded value securitization and an agreement to retrocede a block of lower-margin mortality risk, which should enable us to redeploy capital and enhance future returns. These capital-generating transactions, along with strong earnings, contributed to an increase in our excess capital position to approximately $1.2 billion. Finally, our board recently authorized a $300 million share repurchase program, replacing the previous authorization. ”
SEGMENT RESULTS
U.S. and Latin America
Traditional
The U.S. and Latin America Traditional segment reported pre-tax operating income of $134.1 million, an eight percent increase over $123.6 million in the fourth quarter last year, with both periods benefitting from favorable mortality experience. The current period included the effects of the previously announced Voya Financial in-force block transaction and the Pacific Life retrocession agreement, each of which was retroactive to October 1, 2014. The combined effect of those transactions on pre-tax operating income was insignificant.
Traditional net premiums decreased two percent to $1,221.9 million from $1,246.1 million a year ago, reflecting the lost premiums from the Pacific Life agreement, partially offset by the premiums gained in the Voya Financial transaction. Excluding those transactions, traditional net premiums would have increased six percent over the fourth quarter of 2013, reflecting solid growth in all traditional product lines. For the full year, net premiums increased four percent and totaled $4,725.5 million. Pre-tax net income totaled $128.9 million for the quarter, compared with $122.8 million in last year’s fourth quarter.
Non-Traditional
The Asset Intensive business reported very strong results with pre-tax operating income totaling $56.0 million compared with $42.3 million last year, reflecting an increase in commercial mortgage loan prepayment fees of $12.0 million, as well as favorable net interest rate spread performance. Full-year pre-tax operating income also was very strong at $199.0 million, compared with $166.1 million in 2013. Fourth-quarter pre-tax net income increased to $34.5 million from $31.8 million a year ago.
The Financial Reinsurance business continued to benefit from recent growth in fee-based transactions and posted pre-tax operating income of $12.5 million for the quarter, compared with a strong $14.3 million in last year’s fourth quarter. For the year, pre-tax operating income increased 15 percent to $52.4 million. Pre-tax net income totaled $12.4 million in the fourth quarter and $14.3 million in the prior-year period.
Canada
Canadian operations reported pre-tax operating income of $19.9 million this quarter, down from $47.2 million in the prior-year period. Higher-than-expected large individual mortality claims, those exceeding $1 million, hampered results throughout 2014, including during the fourth quarter.
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Additionally, a relatively weaker Canadian dollar adversely affected pre-tax operating income by approximately $1.9 million for the quarter, and $7.8 million for the year. Reported net premiums increased modestly over the prior-year quarter and totaled $245.0 million. In Canadian dollars,
premiums rose nine percent. For the full year, net premiums increased one percent in reported U.S. dollars and nine percent in Canadian dollars. Fourth-quarter pre-tax net income totaled $21.6 million compared with $50.5 million in the fourth quarter of 2013.
Europe, Middle East and Africa (EMEA)
Pre-tax operating income in EMEA increased significantly, totaling $33.8 million versus last year’s $12.0 million, primarily a result of strong operating performance in the U.K. due to favorable claims experience and the impact of two GFS transactions that closed in 2014. Net foreign currency fluctuations adversely affected pre-tax operating income by approximately $2.4 million. Net reported premiums increased four percent and totaled $345.9 million, compared with $332.5 million last year; original currency premiums increased nine percent over the prior-year level. For the full year, reported net premiums increased 13 percent over 2013 and net premiums on a local currency basis increased 10 percent. Fourth-quarter pre-tax net income totaled $39.9 million versus $12.0 million in the year‑ago quarter.
Asia Pacific
Asia Pacific’s fourth-quarter pre-tax operating income of $25.3 million approached the strong prior-year performance of $26.9 million. Most Asian operations, particularly Japan and India, posted strong results. Australia pre-tax operating income was again modestly positive this period. Segment-wide reported net premiums rose three percent to $400.1 million from $387.8 million in the prior-year period. Local currency premiums increased 10 percent with strong growth in Hong Kong & Southeast Asia. Foreign currency fluctuations adversely affected pre-tax operating income by approximately $3.8 million this quarter. For the year, net premiums were up six percent on a U.S. dollar basis and 11 percent in original currencies. Fourth-quarter pre-tax net income totaled $20.6 million compared with $23.7 million in last year’s fourth quarter.
Corporate and Other
The Corporate and Other segment reported pre-tax operating income of $22.6 million versus a pre-tax operating loss of $21.9 million for the fourth quarter of 2014 and 2013, respectively. Current-quarter results were primarily influenced by the $43.9 million reduction in tax-related interest expense described above. General expenses were higher this period, primarily due to higher incentive-based compensation expenses and new corporate initiatives. This segment reported pre-tax net income of $18.9 million this quarter compared with a pre-tax net loss of $25.5 million in the prior-year period.
Company Guidance
On an annual basis, the company provides financial guidance based upon the intermediate term rather than giving a range of annual earnings per share for an upcoming year. This better reflects the long-term nature of the business and the difficulty in predicting the timing of shorter-term or periodic events such as block
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transactions. The company accepts risks over very long periods of time, up to 30 years or longer in some cases. While more predictable over longer-term horizons, RGA’s business is subject to inherent short-term volatility.
Over the intermediate term, the company targets growth in operating income per share in the five to eight percent range, and operating return on equity of 11 percent to 12 percent; these targets are unchanged from those provided last year at this time. It is presumed that there are no significant changes in the investment environment from current levels and the company will deploy $250 million to $400 million of excess capital, on average, annually. These guidance ranges are based upon “normalized” results.
Dividend Declaration
The board of directors declared a regular quarterly dividend of $0.33, payable March 6 to shareholders of record as of February 13.
Earnings Conference Call
A conference call to discuss fourth-quarter results will begin at 9 a.m. Eastern Time on Tuesday, February 3. Interested parties may access the call by dialing 1-877-681-3375 (domestic) or 719-325-4934 (international). The access code is 9573722. 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 also will be available through February 11 at 888-203-1112 (domestic) or 719-457-0820 (international), access code 9573722.
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 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.
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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 $44.7 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 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
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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 acquired blocks of business and entities, (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 December 31, | Twelve Months Ended December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
GAAP net income | $ | 191,091 | $ | 144,959 | $ | 684,047 | $ | 418,837 | |||||||
Reconciliation to operating income: | |||||||||||||||
Capital (gains) losses, derivatives and other, included in investment related (gains) losses, net | (15,281 | ) | 29,161 | (64,625 | ) | 103,495 | |||||||||
Capital (gains) losses on funds withheld, included in investment income | (891 | ) | (1,651 | ) | (8,590 | ) | (8,345 | ) | |||||||
Embedded derivatives: | |||||||||||||||
Included in investment related (gains) losses, net | 43,826 | (22,595 | ) | (44,941 | ) | (137,948 | ) | ||||||||
Included in interest credited | (236 | ) | 1,817 | (274 | ) | (51,330 | ) | ||||||||
DAC offset, net | (9,914 | ) | 2,818 | 72,721 | 63,966 | ||||||||||
Non-investment derivatives | (307 | ) | — | (289 | ) | — | |||||||||
Gain on repurchase of collateral finance notes | — | — | — | (30,229 | ) | ||||||||||
Operating income | $ | 208,288 | $ | 154,509 | $ | 638,049 | $ | 358,446 | |||||||
Reconciliation of Consolidated Pre-tax Net Income to Pre-tax Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Income before income taxes | $ | 276,743 | $ | 229,490 | $ | 1,008,533 | $ | 635,254 | |||||||
Reconciliation to pre-tax operating income: | |||||||||||||||
Capital (gains) losses, derivatives and other, included in investment related (gains) losses, net | (22,453 | ) | 45,090 | (95,308 | ) | 161,502 | |||||||||
Capital (gains) losses on funds withheld, included in investment income | (1,371 | ) | (2,540 | ) | (13,215 | ) | (12,839 | ) | |||||||
Embedded derivatives: | |||||||||||||||
Included in investment related (gains) losses, net | 67,424 | (34,761 | ) | (69,141 | ) | (212,227 | ) | ||||||||
Included in interest credited | (362 | ) | 2,795 | (421 | ) | (78,969 | ) | ||||||||
DAC offset, net | (15,253 | ) | 4,334 | 111,879 | 98,408 | ||||||||||
Non-investment derivatives | (472 | ) | — | (444 | ) | — | |||||||||
Gain on repurchase of collateral finance notes | — | — | — | (46,506 | ) | ||||||||||
Pre-tax operating income | $ | 304,256 | $ | 244,408 | $ | 941,883 | $ | 544,623 | |||||||
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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 December 31, 2014 | ||||||||||||||
Pre-tax net income | Capital (gains) losses, derivatives and other, net | Change in value of embedded derivatives, net | Pre-tax operating income | ||||||||||||
U.S. and Latin America Operations: | |||||||||||||||
Traditional | $ | 128,852 | $ | 4,235 | $ | 1,033 | $ | 134,120 | |||||||
Non-Traditional: | |||||||||||||||
Asset Intensive | 34,478 | 48,572 | (1) | (27,036 | ) | (2) | 56,014 | ||||||||
Financial Reinsurance | 12,368 | 162 | — | 12,530 | |||||||||||
Total U.S. and Latin America | 175,698 | 52,969 | (26,003 | ) | 202,664 | ||||||||||
Canada Operations | 21,572 | (1,643 | ) | — | 19,929 | ||||||||||
Europe, Middle East and Africa | 39,939 | (6,156 | ) | — | 33,783 | ||||||||||
Asia Pacific Operations | 20,643 | 4,610 | — | 25,253 | |||||||||||
Corporate and Other | 18,891 | 3,736 | — | 22,627 | |||||||||||
Consolidated | $ | 276,743 | $ | 53,516 | $ | (26,003 | ) | $ | 304,256 | ||||||
(1) | Asset Intensive is net of $77,812 DAC offset. |
(2) | Asset Intensive is net of $(93,065) DAC offset. |
(Unaudited) | Three Months Ended December 31, 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 | $ | 122,792 | $ | 51 | $ | 799 | $ | 123,642 | |||||||
Non-Traditional: | |||||||||||||||
Asset Intensive | 31,767 | 35,668 | (1) | (25,169 | ) | (2) | 42,266 | ||||||||
Financial Reinsurance | 14,271 | 5 | — | 14,276 | |||||||||||
Total U.S. and Latin America | 168,830 | 35,724 | (24,370 | ) | 180,184 | ||||||||||
Canada Operations | 50,482 | (3,329 | ) | — | 47,153 | ||||||||||
Europe, Middle East and Africa | 11,977 | 54 | — | 12,031 | |||||||||||
Asia Pacific Operations | 23,659 | 3,282 | — | 26,941 | |||||||||||
Corporate and Other | (25,458 | ) | 3,557 | — | (21,901 | ) | |||||||||
Consolidated | $ | 229,490 | $ | 39,288 | $ | (24,370 | ) | $ | 244,408 | ||||||
(1) | Asset Intensive is net of $(3,262) DAC offset. |
(2) | Asset Intensive is net of $7,596 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) | Twelve Months Ended December 31, 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 | $ | 351,645 | $ | (4,542 | ) | $ | 3,099 | $ | 350,202 | ||||||
Non-Traditional: | |||||||||||||||
Asset Intensive | 250,686 | 61,020 | (1) | (112,684 | ) | (2) | 199,022 | ||||||||
Financial Reinsurance | 52,258 | 111 | — | 52,369 | |||||||||||
Total U.S. and Latin America | 654,589 | 56,589 | (109,585 | ) | 601,593 | ||||||||||
Canada Operations | 101,700 | (3,186 | ) | — | 98,514 | ||||||||||
Europe, Middle East and Africa | 161,642 | (25,222 | ) | — | 136,420 | ||||||||||
Asia Pacific Operations | 102,295 | 4,387 | — | 106,682 | |||||||||||
Corporate and Other | (11,693 | ) | 10,367 | — | (1,326 | ) | |||||||||
Consolidated | $ | 1,008,533 | $ | 42,935 | $ | (109,585 | ) | $ | 941,883 | ||||||
(1) | Asset Intensive is net of $151,902 DAC offset. |
(2) | Asset Intensive is net of $(40,023) DAC offset. |
(Unaudited) | Twelve Months Ended December 31, 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 | $ | 377,586 | $ | (3,030 | ) | $ | (1,891 | ) | $ | — | $ | 372,665 | |||||||
Non-Traditional: | |||||||||||||||||||
Asset Intensive | 200,348 | 130,971 | (1) | (165,181 | ) | (2) | — | 166,138 | |||||||||||
Financial Reinsurance | 45,301 | 392 | — | — | 45,693 | ||||||||||||||
Total U.S. and Latin America | 623,235 | 128,333 | (167,072 | ) | — | 584,496 | |||||||||||||
Canada Operations | 164,318 | (16,626 | ) | — | — | 147,692 | |||||||||||||
Europe, Middle East and Africa | 74,553 | (3,481 | ) | — | — | 71,072 | |||||||||||||
Asia Pacific Operations | (226,665 | ) | 8,289 | — | — | (218,376 | ) | ||||||||||||
Corporate and Other | (187 | ) | 6,432 | — | (46,506 | ) | (40,261 | ) | |||||||||||
Consolidated | $ | 635,254 | $ | 122,947 | $ | (167,072 | ) | $ | (46,506 | ) | $ | 544,623 | |||||||
(1) | Asset Intensive is net of $(25,716) DAC offset. |
(2) | Asset Intensive is net of $124,124 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 December 31, | Twelve Months Ended December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Diluted earnings per share from operating income | $ | 2.99 | $ | 2.17 | $ | 9.12 | $ | 4.95 | |||||||
Earnings per share from net income: | |||||||||||||||
Basic earnings per share | $ | 2.78 | $ | 2.05 | $ | 9.88 | $ | 5.82 | |||||||
Diluted earnings per share | $ | 2.75 | $ | 2.03 | $ | 9.78 | $ | 5.78 | |||||||
Weighted average number of common and common equivalent shares outstanding | 69,550 | 71,332 | 69,962 | 72,461 | |||||||||||
(Unaudited) | At or for the Twelve Months Ended December 31, | ||||||
2014 | 2013 | ||||||
Treasury shares | 10,365 | 8,370 | |||||
Common shares outstanding | 68,773 | 70,768 | |||||
Book value per share outstanding | $ | 102.13 | $ | 83.87 | |||
Book value per share outstanding, before impact of AOCI | $ | 78.03 | $ | 69.66 | |||
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands)
(Unaudited) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues: | |||||||||||||||
Net premiums | $ | 2,217,772 | $ | 2,212,998 | $ | 8,669,854 | $ | 8,254,027 | |||||||
Investment income, net of related expenses | 451,603 | 461,134 | 1,713,691 | 1,699,865 | |||||||||||
Investment related gains (losses), net: | |||||||||||||||
Other-than-temporary impairments on fixed maturity securities | (6,347 | ) | (2,258 | ) | (7,766 | ) | (12,654 | ) | |||||||
Other-than-temporary impairments on fixed maturity securities transferred to (from) accumulated other comprehensive income | — | — | — | (247 | ) | ||||||||||
Other investment related gains (losses), net | (32,876 | ) | 99 | 193,959 | 76,891 | ||||||||||
Total investment related gains (losses), net | (39,223 | ) | (2,159 | ) | 186,193 | 63,990 | |||||||||
Other revenue | 67,261 | 64,821 | 334,456 | 300,471 | |||||||||||
Total revenues | 2,697,413 | 2,736,794 | 10,904,194 | 10,318,353 | |||||||||||
Benefits and expenses: | |||||||||||||||
Claims and other policy benefits | 1,866,042 | 1,869,949 | 7,406,641 | 7,304,332 | |||||||||||
Interest credited | 103,523 | 172,747 | 451,031 | 476,514 | |||||||||||
Policy acquisition costs and other insurance expenses | 290,775 | 304,837 | 1,391,433 | 1,300,780 | |||||||||||
Other operating expenses | 166,280 | 122,136 | 538,415 | 466,717 | |||||||||||
Interest expense | (9,660 | ) | 35,072 | 96,700 | 124,307 | ||||||||||
Collateral finance and securitization expense | 3,710 | 2,563 | 11,441 | 10,449 | |||||||||||
Total benefits and expenses | 2,420,670 | 2,507,304 | 9,895,661 | 9,683,099 | |||||||||||
Income before income taxes | 276,743 | 229,490 | 1,008,533 | 635,254 | |||||||||||
Income tax expense | 85,652 | 84,531 | 324,486 | 216,417 | |||||||||||
Net income | $ | 191,091 | $ | 144,959 | $ | 684,047 | $ | 418,837 | |||||||
# # #
Exhibit 99.2
Financial Supplement
Fourth Quarter 2014
(Unaudited)
World Headquarters | Internet address | Contacts: | ||
16600 Swingley Ridge Road | 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) 736-2068 | ||||
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
4th 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
Financial Supplement
2015 Guidance
On an annual basis, the company provides financial guidance based upon the intermediate term rather than giving a range of annual earnings per share for an upcoming year. This better reflects the long-term nature of the business and the difficulty in predicting the timing of shorter-term or periodic events such as block transactions. The company accepts risks over very long periods of time, up to 30 years or longer in some cases. While more predictable over longer-term horizons, RGA’s business is subject to inherent short-term volatility.
Over the intermediate term, the company targets growth in operating income per share in the five to eight percent range, and operating return on equity of 11 percent to 12 percent; these targets are unchanged from those provided last year at this time. It is presumed that there are no significant changes in the investment environment from current levels and the company will deploy $250 million to $400 million of excess capital, on average, annually. These guidance ranges are based upon “normalized” results.
| Page 2 | |
Reinsurance Group of America, Incorporated
SEGMENT RESTRUCTURING
Effective January 1, 2014, 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. December 2013 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.
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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) | Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
Net premiums | $ | 2,217,772 | $ | 2,168,285 | $ | 2,183,160 | $ | 2,100,637 | $ | 2,212,998 | $ | 4,774 | $ | 8,669,854 | $ | 8,254,027 | $ | 415,827 | ||||||||||||||||||||
Net income | 191,091 | 157,996 | 198,296 | 136,664 | 144,959 | 46,132 | 684,047 | 418,837 | 265,210 | |||||||||||||||||||||||||||||
Operating income | 208,288 | 159,823 | 155,131 | 114,807 | 154,509 | 53,779 | 638,049 | 358,446 | 279,603 | |||||||||||||||||||||||||||||
Operating return on equity (ex AOCI) - | ||||||||||||||||||||||||||||||||||||||
annualized | 15.8 | % | 12.5 | % | 12.4 | % | 9.3 | % | 12.7 | % | 3.1 | % | ||||||||||||||||||||||||||
trailing 12 months | 12.5 | % | 11.7 | % | 11.8 | % | 7.2 | % | 7.4 | % | 5.1 | % | ||||||||||||||||||||||||||
Total assets | 44,679,611 | 42,910,363 | 43,171,051 | 40,541,581 | 39,674,473 | 5,005,138 | ||||||||||||||||||||||||||||||||
Assumed Life Reinsurance in Force (in billions) | ||||||||||||||||||||||||||||||||||||||
U.S. and Latin America Traditional | $ | 1,483.9 | $ | 1,387.2 | $ | 1,393.1 | $ | 1,393.2 | $ | 1,397.0 | $ | 86.9 | ||||||||||||||||||||||||||
U.S. and Latin America Non-Traditional | 1.4 | 2.2 | 2.2 | 2.2 | 2.2 | (0.8 | ) | |||||||||||||||||||||||||||||||
Canada | 402.8 | 383.9 | 395.8 | 376.7 | 386.4 | 16.4 | ||||||||||||||||||||||||||||||||
Europe, Middle East and Africa | 561.1 | 573.0 | 626.1 | 587.6 | 556.7 | 4.4 | ||||||||||||||||||||||||||||||||
Asia Pacific | 494.3 | 577.3 | 617.2 | 595.6 | 547.6 | (53.3 | ) | |||||||||||||||||||||||||||||||
Total Life Reinsurance in Force | $ | 2,943.5 | $ | 2,923.6 | $ | 3,034.4 | $ | 2,955.3 | $ | 2,889.9 | $ | 53.6 | ||||||||||||||||||||||||||
Assumed New Business Production (in billions) | ||||||||||||||||||||||||||||||||||||||
U.S. and Latin America Traditional | $ | 118.1 | (2) | $ | 16.6 | $ | 21.8 | $ | 20.4 | $ | 21.1 | $ | 97.0 | $ | 176.9 | $ | 95.6 | $ | 81.3 | |||||||||||||||||||
U.S. and Latin America Non-Traditional | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Canada | 13.9 | 11.6 | 10.4 | 12.4 | 10.4 | 3.5 | 48.3 | 46.0 | 2.3 | |||||||||||||||||||||||||||||
Europe, Middle East and Africa | 38.5 | 22.5 | 67.7 | 46.5 | 24.6 | 13.9 | 175.2 | 106.2 | 69.0 | |||||||||||||||||||||||||||||
Asia Pacific | 22.4 | 21.1 | 18.5 | 19.6 | 22.8 | (0.4 | ) | 81.6 | 122.6 | (41.0 | ) | |||||||||||||||||||||||||||
Total New Business Production | $ | 192.9 | $ | 71.8 | $ | 118.4 | $ | 98.9 | $ | 78.9 | $ | 114.0 | $ | 482.0 | $ | 370.4 | $ | 111.6 | ||||||||||||||||||||
Per Share and Shares Data | ||||||||||||||||||||||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||||||||||||||||||||
Net income | $ | 2.78 | $ | 2.30 | $ | 2.87 | $ | 1.94 | $ | 2.05 | $ | 0.73 | $ | 9.88 | $ | 5.82 | $ | 4.06 | ||||||||||||||||||||
Operating income | $ | 3.03 | $ | 2.33 | $ | 2.25 | $ | 1.63 | $ | 2.19 | $ | 0.84 | $ | 9.21 | $ | 4.98 | $ | 4.23 | ||||||||||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||||||||||||||||
Net income | $ | 2.75 | $ | 2.28 | $ | 2.84 | $ | 1.92 | $ | 2.03 | $ | 0.72 | $ | 9.78 | $ | 5.78 | $ | 4.00 | ||||||||||||||||||||
Operating income | $ | 2.99 | $ | 2.31 | $ | 2.23 | $ | 1.61 | $ | 2.17 | $ | 0.82 | $ | 9.12 | $ | 4.95 | $ | 4.17 | ||||||||||||||||||||
Wgt. average common shares outstanding | ||||||||||||||||||||||||||||||||||||||
(basic) | 68,718 | 68,642 | 69,076 | 70,574 | 70,650 | (1,932 | ) | 69,248 | 71,917 | (2,669 | ) | |||||||||||||||||||||||||||
(diluted) | 69,550 | 69,335 | 69,718 | 71,264 | 71,332 | (1,782 | ) | 69,962 | 72,461 | (2,499 | ) | |||||||||||||||||||||||||||
Common shares issued | 79,138 | 79,138 | 79,138 | 79,138 | 79,138 | — | 79,138 | 79,138 | — | |||||||||||||||||||||||||||||
Treasury shares | 10,365 | 10,472 | 10,328 | 9,624 | 8,370 | 1,995 | 10,365 | 8,370 | 1,995 | |||||||||||||||||||||||||||||
Common shares outstanding | 68,773 | 68,666 | 68,810 | 69,514 | 70,768 | (1,995 | ) | 68,773 | 70,768 | (1,995 | ) | |||||||||||||||||||||||||||
Book value per share | $ | 102.13 | $ | 97.28 | $ | 97.21 | $ | 89.92 | $ | 83.87 | ||||||||||||||||||||||||||||
Per share effect of accumulated other | ||||||||||||||||||||||||||||||||||||||
comprehensive income (AOCI) | $ | 24.10 | $ | 21.84 | $ | 23.67 | $ | 18.41 | $ | 14.21 | ||||||||||||||||||||||||||||
Book value per share, excluding AOCI | $ | 78.03 | $ | 75.44 | $ | 73.54 | $ | 71.51 | $ | 69.66 | ||||||||||||||||||||||||||||
Shareholder dividends paid | $ | 22,669.4 | $ | 22,632.1 | $ | 20,711.1 | $ | 21,243.6 | $ | 21,177.3 | $ | 1,492.1 | $ | 87,256.2 | $ | 77,642.1 | $ | 9,614.1 | ||||||||||||||||||||
(1) Effective January 1, 2014, 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. December 2013 figures have been adjusted to conform to the new reporting alignment. | ||||||||||||||||||||||||||||||||||||||
(2) Increase in new business production related to the Voya Financial transaction that closed during the 4th quarter. | ||||||||||||||||||||||||||||||||||||||
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Reinsurance Group of America, Incorporated Consolidated GAAP Income Statement (incl. Operating Income Reconciliations) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr | Year-to Date | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | vs. PY | Dec. 31, | Dec. 31, | |||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | Quarter | 2014 | 2013 | Change | |||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 2,217,772 | $ | 2,168,285 | $ | 2,183,160 | $ | 2,100,637 | $ | 2,212,998 | $ | 4,774 | $ | 8,669,854 | $ | 8,254,027 | $ | 415,827 | ||||||||||||||||||||
Investment income, net of related expenses | 451,603 | 447,106 | 410,607 | 404,375 | 461,134 | (9,531 | ) | 1,713,691 | 1,699,865 | 13,826 | ||||||||||||||||||||||||||||
Investment related gains (losses), net | ||||||||||||||||||||||||||||||||||||||
OTTI on fixed maturity securities | (6,347 | ) | (246 | ) | (870 | ) | (303 | ) | (2,258 | ) | (4,089 | ) | (7,766 | ) | (12,654 | ) | 4,888 | |||||||||||||||||||||
OTTI on fixed maturity securities transferred | ||||||||||||||||||||||||||||||||||||||
to/from AOCI | — | — | — | — | — | — | — | (247 | ) | 247 | ||||||||||||||||||||||||||||
Other investment related gains (losses), net | (32,876 | ) | 22,564 | 119,397 | 84,874 | 99 | (32,975 | ) | 193,959 | 76,891 | 117,068 | |||||||||||||||||||||||||||
Total investment related gains (losses), net | (39,223 | ) | 22,318 | 118,527 | 84,571 | (2,159 | ) | (37,064 | ) | 186,193 | 63,990 | 122,203 | ||||||||||||||||||||||||||
Other revenue | 67,261 | 78,879 | 120,726 | 67,590 | 64,821 | 2,440 | 334,456 | 300,471 | 33,985 | |||||||||||||||||||||||||||||
Total revenues | 2,697,413 | 2,716,588 | 2,833,020 | 2,657,173 | 2,736,794 | (39,381 | ) | 10,904,194 | 10,318,353 | 585,841 | ||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 1,866,042 | 1,855,037 | 1,841,885 | 1,843,677 | 1,869,949 | (3,907 | ) | 7,406,641 | 7,304,332 | 102,309 | ||||||||||||||||||||||||||||
Interest credited | 103,523 | 120,952 | 115,962 | 110,594 | 172,747 | (69,224 | ) | 451,031 | 476,514 | (25,483 | ) | |||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 290,775 | 336,411 | 409,374 | 354,873 | 304,837 | (14,062 | ) | 1,391,433 | 1,300,780 | 90,653 | ||||||||||||||||||||||||||||
Other operating expenses | 166,280 | 133,737 | 127,462 | 110,936 | 122,136 | 44,144 | 538,415 | 466,717 | 71,698 | |||||||||||||||||||||||||||||
Interest expense | (9,660 | ) | 36,065 | 35,211 | 35,084 | 35,072 | (44,732 | ) | 96,700 | 124,307 | (27,607 | ) | ||||||||||||||||||||||||||
Collateral finance and securitization expense | 3,710 | 2,571 | 2,591 | 2,569 | 2,563 | 1,147 | 11,441 | 10,449 | 992 | |||||||||||||||||||||||||||||
Total benefits and expenses | 2,420,670 | 2,484,773 | 2,532,485 | 2,457,733 | 2,507,304 | (86,634 | ) | 9,895,661 | 9,683,099 | 212,562 | ||||||||||||||||||||||||||||
Income before income taxes | 276,743 | 231,815 | 300,535 | 199,440 | 229,490 | 47,253 | 1,008,533 | 635,254 | 373,279 | |||||||||||||||||||||||||||||
Income tax expense | 85,652 | 73,819 | 102,239 | 62,776 | 84,531 | 1,121 | 324,486 | 216,417 | 108,069 | |||||||||||||||||||||||||||||
Net income | $ | 191,091 | $ | 157,996 | $ | 198,296 | $ | 136,664 | $ | 144,959 | $ | 46,132 | $ | 684,047 | $ | 418,837 | $ | 265,210 | ||||||||||||||||||||
Pre-tax Operating Income Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Income before income taxes | 276,743 | 231,815 | 300,535 | 199,440 | 229,490 | 47,253 | 1,008,533 | 635,254 | 373,279 | |||||||||||||||||||||||||||||
Investment and derivative losses (gains)— | ||||||||||||||||||||||||||||||||||||||
non-operating (1) | (22,453 | ) | (8,413 | ) | (38,136 | ) | (26,306 | ) | 45,090 | (67,543 | ) | (95,308 | ) | 161,502 | (256,810 | ) | ||||||||||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||||||||||||||||
funds withheld embedded derivatives (1) | 14,523 | (56,812 | ) | (78,835 | ) | (77,241 | ) | 337 | 14,186 | (198,365 | ) | (70,177 | ) | (128,188 | ) | |||||||||||||||||||||||
GMXB embedded derivatives (1) | 52,901 | 47,479 | 5,183 | 23,661 | (35,098 | ) | 87,999 | 129,224 | (142,050 | ) | 271,274 | |||||||||||||||||||||||||||
Funds withheld losses (gains)—investment income | (1,371 | ) | (5,501 | ) | (5,954 | ) | (389 | ) | (2,540 | ) | 1,169 | (13,215 | ) | (12,839 | ) | (376 | ) | |||||||||||||||||||||
EIA embedded derivatives—interest credited | (362 | ) | (415 | ) | 6,916 | (6,560 | ) | 2,795 | (3,157 | ) | (421 | ) | (78,969 | ) | 78,548 | |||||||||||||||||||||||
DAC offset, net | (15,253 | ) | 26,521 | 47,543 | 53,068 | 4,334 | (19,587 | ) | 111,879 | 98,408 | 13,471 | |||||||||||||||||||||||||||
Non-investment derivatives | (472 | ) | 28 | — | — | — | (472 | ) | (444 | ) | — | (444 | ) | |||||||||||||||||||||||||
Gain on repurchase of collateral finance notes | — | — | — | — | — | — | — | (46,506 | ) | 46,506 | ||||||||||||||||||||||||||||
Operating Income Before Income Taxes | $ | 304,256 | $ | 234,702 | $ | 237,252 | $ | 165,673 | $ | 244,408 | $ | 59,848 | $ | 941,883 | $ | 544,623 | $ | 397,260 | ||||||||||||||||||||
After-tax Operating Income Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Net Income | 191,091 | 157,996 | 198,296 | 136,664 | 144,959 | 46,132 | 684,047 | 418,837 | 265,210 | |||||||||||||||||||||||||||||
Investment and derivative losses (gains)— | ||||||||||||||||||||||||||||||||||||||
non-operating (1) | (15,281 | ) | (5,517 | ) | (26,820 | ) | (17,007 | ) | 29,161 | (44,442 | ) | (64,625 | ) | 103,495 | (168,120 | ) | ||||||||||||||||||||||
Change in value of modified coinsurance | ||||||||||||||||||||||||||||||||||||||
and funds withheld embedded derivatives (1) | 9,440 | (36,928 | ) | (51,242 | ) | (50,207 | ) | 219 | 9,221 | (128,937 | ) | (45,615 | ) | (83,322 | ) | |||||||||||||||||||||||
GMXB embedded derivatives (1) | 34,386 | 30,861 | 3,369 | 15,380 | (22,814 | ) | 57,200 | 83,996 | (92,333 | ) | 176,329 | |||||||||||||||||||||||||||
Funds withheld losses (gains)—investment income | (891 | ) | (3,576 | ) | (3,870 | ) | (253 | ) | (1,651 | ) | 760 | (8,590 | ) | (8,345 | ) | (245 | ) | |||||||||||||||||||||
EIA embedded derivatives—interest credited | (236 | ) | (269 | ) | 4,495 | (4,264 | ) | 1,817 | (2,053 | ) | (274 | ) | (51,330 | ) | 51,056 | |||||||||||||||||||||||
DAC offset, net | (9,914 | ) | 17,238 | 30,903 | 34,494 | 2,818 | (12,732 | ) | 72,721 | 63,966 | 8,755 | |||||||||||||||||||||||||||
Non-investment derivatives | (307 | ) | 18 | — | — | — | (307 | ) | (289 | ) | — | (289 | ) | |||||||||||||||||||||||||
Gain on repurchase of collateral finance notes | — | — | — | — | — | — | — | (30,229 | ) | 30,229 | ||||||||||||||||||||||||||||
Operating Income | $ | 208,288 | $ | 159,823 | $ | 155,131 | $ | 114,807 | $ | 154,509 | $ | 53,779 | $ | 638,049 | $ | 358,446 | $ | 279,603 | ||||||||||||||||||||
(1) Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement | ||||||||||||||||||||||||||||||||||||||
| Page 5 | |
Reinsurance Group of America, Incorporated Consolidated Operating Income Statement | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-Date | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
(USD thousands, except per share data) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 2,217,772 | $ | 2,168,285 | $ | 2,183,160 | $ | 2,100,637 | $ | 2,212,998 | $ | 4,774 | $ | 8,669,854 | $ | 8,254,027 | $ | 415,827 | ||||||||||||||||||||
Investment income, net of related expenses | 450,232 | 441,605 | 404,653 | 403,986 | 458,594 | (8,362 | ) | 1,700,476 | 1,687,026 | 13,450 | ||||||||||||||||||||||||||||
Investment related gains (losses), net | 5,748 | 4,572 | 6,739 | 4,685 | 8,170 | (2,422 | ) | 21,744 | 13,265 | 8,479 | ||||||||||||||||||||||||||||
Other revenue | 66,789 | 78,907 | 120,726 | 67,590 | 64,821 | 1,968 | 334,012 | 253,965 | 80,047 | |||||||||||||||||||||||||||||
Total revenues | 2,740,541 | 2,693,369 | 2,715,278 | 2,576,898 | 2,744,583 | (4,042 | ) | 10,726,086 | 10,208,283 | 517,803 | ||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 1,866,042 | 1,855,037 | 1,841,885 | 1,843,677 | 1,869,949 | (3,907 | ) | 7,406,641 | 7,304,332 | 102,309 | ||||||||||||||||||||||||||||
Interest credited | 103,885 | 121,367 | 109,046 | 117,154 | 169,952 | (66,067 | ) | 451,452 | 555,483 | (104,031 | ) | |||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 306,028 | 309,890 | 361,831 | 301,805 | 300,503 | 5,525 | 1,279,554 | 1,202,372 | 77,182 | |||||||||||||||||||||||||||||
Other operating expenses | 166,280 | 133,737 | 127,462 | 110,936 | 122,136 | 44,144 | 538,415 | 466,717 | 71,698 | |||||||||||||||||||||||||||||
Interest expense | (9,660 | ) | 36,065 | 35,211 | 35,084 | 35,072 | (44,732 | ) | 96,700 | 124,307 | (27,607 | ) | ||||||||||||||||||||||||||
Collateral finance and securitization expense | 3,710 | 2,571 | 2,591 | 2,569 | 2,563 | 1,147 | 11,441 | 10,449 | 992 | |||||||||||||||||||||||||||||
Total benefits and expenses | 2,436,285 | 2,458,667 | 2,478,026 | 2,411,225 | 2,500,175 | (63,890 | ) | 9,784,203 | 9,663,660 | 120,543 | ||||||||||||||||||||||||||||
Operating income before income taxes | 304,256 | 234,702 | 237,252 | 165,673 | 244,408 | 59,848 | 941,883 | 544,623 | 397,260 | |||||||||||||||||||||||||||||
Operating income tax expense | 95,968 | 74,879 | 82,121 | 50,866 | 89,899 | 6,069 | 303,834 | 186,177 | 117,657 | |||||||||||||||||||||||||||||
Operating income | $ | 208,288 | $ | 159,823 | $ | 155,131 | $ | 114,807 | $ | 154,509 | $ | 53,779 | $ | 638,049 | $ | 358,446 | $ | 279,603 | ||||||||||||||||||||
Wgt. Average Common Shares Outstanding (Diluted) | 69,550 | 69,335 | 69,718 | 71,264 | 71,332 | (1,782) | 69,962 | 72,461 | (2,499) | |||||||||||||||||||||||||||||
Diluted Earnings Per Share—Operating Income | $ | 2.99 | $ | 2.31 | $ | 2.23 | $ | 1.61 | $ | 2.17 | $ | 0.82 | $ | 9.12 | $ | 4.95 | $ | 4.17 | ||||||||||||||||||||
Foreign currency effect (1): | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | (61,093 | ) | $ | 5,906 | $ | (4,964 | ) | $ | (50,225 | ) | $ | (49,448 | ) | $ | (11,645 | ) | $ | (110,376 | ) | $ | (142,539 | ) | $ | 32,163 | |||||||||||||
Operating income before income taxes | $ | (9,276 | ) | $ | (2,016 | ) | $ | (809 | ) | $ | (6,605 | ) | $ | (8,679 | ) | $ | (597 | ) | $ | (18,706 | ) | $ | (2,789 | ) | (15,917 | ) | ||||||||||||
(1) Compared to comparable prior year period | ||||||||||||||||||||||||||||||||||||||
| Page 6 | |
Reinsurance Group of America, Incorporated Consolidated Balance Sheets | ||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | ||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | |||||||||||||||
Assets | ||||||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 25,480,972 | $ | 24,475,451 | $ | 24,480,396 | $ | 22,157,182 | $ | 21,474,136 | ||||||||||
Mortgage loans on real estate | 2,712,238 | 2,617,091 | 2,555,800 | 2,526,228 | 2,486,680 | |||||||||||||||
Policy loans | 1,284,284 | 1,249,948 | 1,250,635 | 1,296,897 | 1,244,469 | |||||||||||||||
Funds withheld at interest | 5,922,561 | 5,969,006 | 5,940,521 | 5,814,231 | 5,771,467 | |||||||||||||||
Short-term investments | 97,694 | 44,437 | 45,596 | 118,789 | 139,395 | |||||||||||||||
Other invested assets | 1,198,319 | 1,165,021 | 1,128,375 | 1,234,779 | 1,324,960 | |||||||||||||||
Total investments | 36,696,068 | 35,520,954 | 35,401,323 | 33,148,106 | 32,441,107 | |||||||||||||||
Cash and cash equivalents | 1,645,669 | 1,118,745 | 1,378,117 | 1,127,132 | 923,647 | |||||||||||||||
Accrued investment income | 261,096 | 305,880 | 279,368 | 233,816 | 267,908 | |||||||||||||||
Premiums receivable and other reinsurance balances | 1,527,729 | 1,491,993 | 1,559,526 | 1,454,959 | 1,439,528 | |||||||||||||||
Reinsurance ceded receivables | 578,206 | 596,704 | 614,203 | 594,794 | 594,515 | |||||||||||||||
Deferred policy acquisition costs | 3,342,575 | 3,297,616 | 3,368,343 | 3,450,523 | 3,517,796 | |||||||||||||||
Other assets | 628,268 | 578,471 | 570,171 | 532,251 | 489,972 | |||||||||||||||
Total assets | $ | 44,679,611 | $ | 42,910,363 | $ | 43,171,051 | $ | 40,541,581 | $ | 39,674,473 | ||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Future policy benefits | $ | 14,476,637 | $ | 13,541,687 | $ | 13,785,532 | $ | 11,887,951 | $ | 11,866,776 | ||||||||||
Interest-sensitive contract liabilities | 12,591,497 | 12,638,117 | 12,686,025 | 12,809,003 | 12,947,557 | |||||||||||||||
Other policy claims and benefits | 3,824,069 | 3,861,060 | 3,996,737 | 3,899,004 | 3,571,761 | |||||||||||||||
Other reinsurance balances | 306,915 | 276,314 | 258,023 | 283,249 | 275,138 | |||||||||||||||
Deferred income taxes | 2,365,817 | 2,149,076 | 2,232,821 | 2,023,588 | 1,837,577 | |||||||||||||||
Other liabilities | 994,230 | 967,303 | 716,157 | 638,967 | 541,035 | |||||||||||||||
Short-term debt | — | — | 110,000 | 50,000 | — | |||||||||||||||
Long-term debt | 2,314,293 | 2,314,693 | 2,214,705 | 2,214,526 | 2,214,350 | |||||||||||||||
Collateral finance and securitization notes | 782,701 | 482,115 | 482,092 | 484,747 | 484,752 | |||||||||||||||
Total liabilities | 37,656,159 | 36,230,365 | 36,482,092 | 34,291,035 | 33,738,946 | |||||||||||||||
Stockholders’ Equity: | ||||||||||||||||||||
Common stock, at par value | 791 | 791 | 791 | 791 | 791 | |||||||||||||||
Additional paid-in-capital | 1,798,279 | 1,784,818 | 1,783,856 | 1,782,838 | 1,777,906 | |||||||||||||||
Retained earnings | 4,239,647 | 4,074,047 | 3,941,777 | 3,772,776 | 3,659,938 | |||||||||||||||
Treasury stock | (672,394 | ) | (679,265 | ) | (666,125 | ) | (585,358 | ) | (508,715 | ) | ||||||||||
Accumulated other comprehensive income (AOCI): | ||||||||||||||||||||
Accumulated currency translation adjustment, net of income taxes | 81,847 | 131,936 | 207,043 | 164,400 | 207,083 | |||||||||||||||
Unrealized appreciation of securities, net of income taxes | 1,624,773 | 1,387,957 | 1,442,324 | 1,136,079 | 820,245 | |||||||||||||||
Pension and postretirement benefits, net of income taxes | (49,491 | ) | (20,286 | ) | (20,707 | ) | (20,980 | ) | (21,721 | ) | ||||||||||
Total stockholders’ equity | 7,023,452 | 6,679,998 | 6,688,959 | 6,250,546 | 5,935,527 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 44,679,611 | $ | 42,910,363 | $ | 43,171,051 | $ | 40,541,581 | $ | 39,674,473 | ||||||||||
Total stockholders’ equity, excluding AOCI | $ | 5,366,323 | $ | 5,180,391 | $ | 5,060,299 | $ | 4,971,047 | $ | 4,929,920 | ||||||||||
| Page 7 | |
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 | |||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 1,221,862 | $ | 1,171,916 | $ | 1,189,822 | $ | 1,141,905 | $ | 1,246,137 | $ | (24,275 | ) | $ | 4,725,505 | $ | 4,563,490 | $ | 162,015 | ||||||||||||||||||||
Investment income, net of related expenses | 142,753 | 139,272 | 137,404 | 133,376 | 139,281 | 3,472 | 552,805 | 543,824 | 8,981 | ||||||||||||||||||||||||||||||
Other revenue | 1,323 | 783 | 767 | 642 | 840 | 483 | 3,515 | 3,706 | (191 | ) | |||||||||||||||||||||||||||||
Total revenues | 1,365,938 | 1,311,971 | 1,327,993 | 1,275,923 | 1,386,258 | (20,320 | ) | 5,281,825 | 5,111,020 | 170,805 | |||||||||||||||||||||||||||||
Benefits and expenses: | |||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 1,021,046 | 1,030,525 | 1,045,030 | 1,033,707 | 1,071,733 | (50,687 | ) | 4,130,308 | 3,963,168 | 167,140 | |||||||||||||||||||||||||||||
Interest credited | 13,101 | 12,993 | 12,818 | 12,272 | 9,886 | 3,215 | 51,184 | 53,285 | (2,101 | ) | |||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 168,395 | 161,120 | 156,270 | 156,000 | 156,447 | 11,948 | 641,785 | 625,971 | 15,814 | ||||||||||||||||||||||||||||||
Other operating expenses | 29,276 | 28,408 | 24,921 | 25,741 | 24,550 | 4,726 | 108,346 | 95,931 | 12,415 | ||||||||||||||||||||||||||||||
Total benefits and expenses | 1,231,818 | 1,233,046 | 1,239,039 | 1,227,720 | 1,262,616 | (30,798 | ) | 4,931,623 | 4,738,355 | 193,268 | |||||||||||||||||||||||||||||
Operating income before income taxes | 134,120 | 78,925 | 88,954 | 48,203 | 123,642 | 10,478 | 350,202 | 372,665 | (22,463 | ) | |||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | |||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 134,120 | 78,925 | 88,954 | 48,203 | 123,642 | 10,478 | 350,202 | 372,665 | (22,463 | ) | |||||||||||||||||||||||||||||
Investment and derivative (losses) gains - non-operating | (5,268 | ) | (1,092 | ) | 5,034 | 2,769 | (850 | ) | (4,418 | ) | 1,443 | 4,921 | (3,478 | ) | |||||||||||||||||||||||||
Income before income taxes | $ | 128,852 | $ | 77,833 | $ | 93,988 | $ | 50,972 | $ | 122,792 | $ | 6,060 | $ | 351,645 | $ | 377,586 | $ | (25,941 | ) | ||||||||||||||||||||
Loss and Expense Ratios: | |||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 83.6 | % | 87.9 | % | 87.8 | % | 90.5 | % | 86.0 | % | (2.4 | )% | 87.4 | % | 86.8 | % | 0.6 | % | |||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 13.8 | % | 13.7 | % | 13.1 | % | 13.7 | % | 12.6 | % | 1.2 | % | 13.6 | % | 13.7 | % | (0.1 | )% | |||||||||||||||||||||
Other operating expenses | 2.4 | % | 2.4 | % | 2.1 | % | 2.3 | % | 2.0 | % | 0.4 | % | 2.3 | % | 2.1 | % | 0.2 | % | |||||||||||||||||||||
(1) Effective January 1, 2014, 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. December 2013 figures have been adjusted to conform to the new reporting alignment. | |||||||||||||||||||||||||||||||||||||||
| Page 8 | |
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 | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 4,747 | $ | 5,168 | $ | 4,984 | $ | 5,180 | $ | 3,754 | $ | 993 | $ | 20,079 | $ | 22,521 | $ | (2,442 | ) | |||||||||||||||||||
Investment income, net of related expenses | 155,557 | 170,608 | 143,927 | 158,619 | 209,847 | (54,290 | ) | 628,711 | 707,425 | (78,714 | ) | |||||||||||||||||||||||||||
Investment related gains (losses), net | 1 | (2 | ) | 1 | — | — | 1 | — | — | — | ||||||||||||||||||||||||||||
Other revenue | 28,436 | 28,944 | 29,376 | 28,276 | 26,761 | 1,675 | 115,032 | 114,098 | 934 | |||||||||||||||||||||||||||||
Total revenues | 188,741 | 204,718 | 178,288 | 192,075 | 240,362 | (51,621 | ) | 763,822 | 844,044 | (80,222 | ) | |||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 5,289 | 5,586 | 4,713 | 4,260 | 4,674 | 615 | 19,848 | 28,244 | (8,396 | ) | ||||||||||||||||||||||||||||
Interest credited | 86,294 | 104,985 | 90,037 | 101,644 | 153,501 | (67,207 | ) | 382,960 | 494,118 | (111,158 | ) | |||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 36,380 | 31,960 | 35,698 | 41,072 | 36,819 | (439 | ) | 145,110 | 141,253 | 3,857 | ||||||||||||||||||||||||||||
Other operating expenses | 4,764 | 4,211 | 3,813 | 4,094 | 3,102 | 1,662 | 16,882 | 14,291 | 2,591 | |||||||||||||||||||||||||||||
Total benefits and expenses | 132,727 | 146,742 | 134,261 | 151,070 | 198,096 | (65,369 | ) | 564,800 | 677,906 | (113,106 | ) | |||||||||||||||||||||||||||
Operating income before income taxes | 56,014 | 57,976 | 44,027 | 41,005 | 42,266 | 13,748 | 199,022 | 166,138 | 32,884 | |||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 56,014 | 57,976 | 44,027 | 41,005 | 42,266 | 13,748 | 199,022 | 166,138 | 32,884 | |||||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating (1) | 28,086 | 18,001 | 12,412 | 21,300 | (40,727 | ) | 68,813 | 79,799 | (165,920 | ) | 245,719 | |||||||||||||||||||||||||||
Change in value of modified coinsurance and funds withheld embedded derivatives (1) | (13,490 | ) | 56,490 | 79,768 | 78,696 | 462 | (13,952 | ) | 201,464 | 68,286 | 133,178 | |||||||||||||||||||||||||||
GMXB embedded derivatives (1) | (52,901 | ) | (47,479 | ) | (5,183 | ) | (23,661 | ) | 35,098 | (87,999 | ) | (129,224 | ) | 142,050 | (271,274 | ) | ||||||||||||||||||||||
Funds withheld gains (losses) - investment income | 1,154 | 4,914 | 5,232 | (217 | ) | 1,797 | (643 | ) | 11,083 | 9,233 | 1,850 | |||||||||||||||||||||||||||
EIA embedded derivatives - interest credited | 362 | 415 | (6,916 | ) | 6,560 | (2,795 | ) | 3,157 | 421 | 78,969 | (78,548 | ) | ||||||||||||||||||||||||||
DAC offset, net | 15,253 | (26,521 | ) | (47,543 | ) | (53,068 | ) | (4,334 | ) | 19,587 | (111,879 | ) | (98,408 | ) | (13,471 | ) | ||||||||||||||||||||||
Income before income taxes | $ | 34,478 | $ | 63,796 | $ | 81,797 | $ | 70,615 | $ | 31,767 | $ | 2,711 | $ | 250,686 | $ | 200,348 | $ | 50,338 | ||||||||||||||||||||
(1) Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement | ||||||||||||||||||||||||||||||||||||||
| Page 9 | |
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 | ||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | ||||||||||||||||
(USD millions) | 2014 | 2014 | 2014 | 2014 | 2013 | |||||||||||||||
Annuity account values: | ||||||||||||||||||||
Fixed annuities (deferred) | $ | 4,859 | $ | 4,919 | $ | 5,030 | $ | 5,156 | $ | 5,079 | ||||||||||
Net interest spread (fixed annuities): | 3.5 | % | 3.2 | % | 2.3 | % | 2.5 | % | 2.3 | % | ||||||||||
Equity-indexed annuities | $ | 4,695 | $ | 4,716 | $ | 4,725 | $ | 4,741 | $ | 4,768 | ||||||||||
Variable annuities: | ||||||||||||||||||||
No riders | $ | 881 | $ | 899 | $ | 941 | $ | 943 | $ | 961 | ||||||||||
GMDB only | 75 | 79 | 84 | 85 | 86 | |||||||||||||||
GMIB only | 5 | 6 | 6 | 6 | 6 | |||||||||||||||
GMAB only | 44 | 46 | 50 | 51 | 52 | |||||||||||||||
GMWB only | 1,636 | 1,676 | 1,741 | 1,733 | 1,752 | |||||||||||||||
GMDB / WB | 427 | 427 | 462 | 459 | 467 | |||||||||||||||
Other | 27 | 28 | 30 | 30 | 31 | |||||||||||||||
Total VA account values | $ | 3,095 | $ | 3,161 | $ | 3,314 | $ | 3,307 | $ | 3,355 | ||||||||||
Fair value of liabilities associated with living benefit riders | $ | 159 | $ | 106 | $ | 59 | $ | 54 | $ | 30 | ||||||||||
Interest-sensitive contract liabilities associated with: | ||||||||||||||||||||
Guaranteed investment contracts | $ | 336 | $ | 336 | $ | 301 | $ | 301 | $ | 297 | ||||||||||
Bank-owned life insurance (BOLI) | $ | 548 | $ | 544 | $ | 541 | $ | 538 | $ | 534 | ||||||||||
Other asset-intensive business | $ | 69 | $ | 69 | $ | 71 | $ | 71 | $ | 72 | ||||||||||
| Page 10 | |
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 | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Investment income, net of related expenses | $ | 1,155 | $ | 1,003 | $ | 1,086 | $ | 1,247 | $ | 2,048 | $ | (893 | ) | $ | 4,491 | $ | 4,624 | $ | (133 | ) | ||||||||||||||||||
Other revenue | 18,363 | 23,581 | 21,777 | 19,098 | 16,191 | 2,172 | 82,819 | 60,893 | 21,926 | |||||||||||||||||||||||||||||
Total revenues | 19,518 | 24,584 | 22,863 | 20,345 | 18,239 | 1,279 | 87,310 | 65,517 | 21,793 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 4,112 | 8,458 | 6,944 | 5,742 | 2,501 | 1,611 | 25,256 | 12,771 | 12,485 | |||||||||||||||||||||||||||||
Other operating expenses | 2,876 | 2,322 | 2,310 | 2,177 | 1,462 | 1,414 | 9,685 | 7,053 | 2,632 | |||||||||||||||||||||||||||||
Total benefits and expenses | 6,988 | 10,780 | 9,254 | 7,919 | 3,963 | 3,025 | 34,941 | 19,824 | 15,117 | |||||||||||||||||||||||||||||
Operating income before income taxes | 12,530 | 13,804 | 13,609 | 12,426 | 14,276 | (1,746 | ) | 52,369 | 45,693 | 6,676 | ||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 12,530 | 13,804 | 13,609 | 12,426 | 14,276 | (1,746 | ) | 52,369 | 45,693 | 6,676 | ||||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | (162 | ) | (100 | ) | 68 | 83 | (5 | ) | (157 | ) | (111 | ) | (392 | ) | 281 | |||||||||||||||||||||||
Income before income taxes | $ | 12,368 | $ | 13,704 | $ | 13,677 | $ | 12,509 | $ | 14,271 | $ | (1,903 | ) | $ | 52,258 | $ | 45,301 | $ | 6,957 | |||||||||||||||||||
| Page 11 | |
Reinsurance Group of America, Incorporated Canadian Segment Pre-tax Operating Income | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 245,024 | $ | 245,136 | $ | 253,577 | $ | 230,844 | $ | 243,340 | $ | 1,684 | $ | 974,581 | $ | 962,311 | $ | 12,270 | ||||||||||||||||||||
Investment income, net of related expenses | 48,058 | 49,660 | 49,358 | 46,997 | 51,750 | (3,692 | ) | 194,073 | 201,245 | (7,172 | ) | |||||||||||||||||||||||||||
Investment related gains (losses), net | 937 | 907 | 621 | 1,006 | 1,149 | (212 | ) | 3,471 | 3,990 | (519 | ) | |||||||||||||||||||||||||||
Other revenue | 2,001 | 2,329 | 1,263 | 961 | 531 | 1,470 | 6,554 | 845 | 5,709 | |||||||||||||||||||||||||||||
Total revenues | 296,020 | 298,032 | 304,819 | 279,808 | 296,770 | (750 | ) | 1,178,679 | 1,168,391 | 10,288 | ||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 205,071 | 201,433 | 203,293 | 194,756 | 187,226 | 17,845 | 804,553 | 758,519 | 46,034 | |||||||||||||||||||||||||||||
Interest credited | 14 | 10 | 9 | — | 9 | 5 | 33 | 46 | (13 | ) | ||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 60,830 | 60,409 | 60,837 | 53,104 | 53,119 | 7,711 | 235,180 | 221,638 | 13,542 | |||||||||||||||||||||||||||||
Other operating expenses | 10,176 | 10,444 | 9,954 | 9,825 | 9,263 | 913 | 40,399 | 40,496 | (97 | ) | ||||||||||||||||||||||||||||
Total benefits and expenses | 276,091 | 272,296 | 274,093 | 257,685 | 249,617 | 26,474 | 1,080,165 | 1,020,699 | 59,466 | |||||||||||||||||||||||||||||
Operating income before income taxes | 19,929 | 25,736 | 30,726 | 22,123 | 47,153 | (27,224 | ) | 98,514 | 147,692 | (49,178 | ) | |||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 19,929 | 25,736 | 30,726 | 22,123 | 47,153 | (27,224 | ) | 98,514 | 147,692 | (49,178 | ) | |||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | 1,426 | (1,279 | ) | 3,572 | (2,665 | ) | 2,586 | (1,160 | ) | 1,054 | 13,020 | (11,966 | ) | |||||||||||||||||||||||||
Funds withheld gains (losses) - investment income | 217 | 587 | 722 | 606 | 743 | (526 | ) | 2,132 | 3,606 | (1,474 | ) | |||||||||||||||||||||||||||
Income before income taxes | $ | 21,572 | $ | 25,044 | $ | 35,020 | $ | 20,064 | $ | 50,482 | $ | (28,910 | ) | $ | 101,700 | $ | 164,318 | $ | (62,618 | ) | ||||||||||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||||||||||||||||
Loss ratios (creditor business) | 31.3 | % | 28.0 | % | 27.5 | % | 31.5 | % | 18.3 | % | 13.0 | % | 29.5 | % | 29.2 | % | 0.3 | % | ||||||||||||||||||||
Loss ratios (excluding creditor business) | 100.5 | % | 98.7 | % | 96.5 | % | 98.0 | % | 89.4 | % | 11.1 | % | 98.4 | % | 92.3 | % | 6.1 | % | ||||||||||||||||||||
Claims and other policy benefits / (net premiums + investment income) | 70.0 | % | 68.3 | % | 67.1 | % | 70.1 | % | 63.4 | % | 6.6 | % | 68.8 | % | 65.2 | % | 3.6 | % | ||||||||||||||||||||
Policy acquisition costs and other insurance expenses (creditor business) | 65.8 | % | 65.2 | % | 66.6 | % | 58.1 | % | 70.7 | % | (4.9 | )% | 64.2 | % | 62.7 | % | 1.5 | % | ||||||||||||||||||||
Policy acquisition costs and other insurance expenses (excluding creditor business) | 11.7 | % | 12.3 | % | 10.8 | % | 13.9 | % | 11.5 | % | 0.2 | % | 12.1 | % | 12.3 | % | (0.2 | )% | ||||||||||||||||||||
Other operating expenses | 4.2 | % | 4.3 | % | 3.9 | % | 4.3 | % | 3.8 | % | 0.4 | % | 4.1 | % | 4.2 | % | (0.1 | )% | ||||||||||||||||||||
Foreign currency effect (1): | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | (20,210 | ) | $ | (11,946 | ) | $ | (16,444 | ) | $ | (21,718 | ) | $ | (14,338 | ) | $ | (5,872 | ) | $ | (70,318 | ) | $ | (29,392 | ) | $ | (40,926 | ) | |||||||||||
Operating income before income taxes | $ | (1,896 | ) | $ | (1,605 | ) | $ | (1,943 | ) | $ | (2,333 | ) | $ | (3,315 | ) | $ | 1,419 | $ | (7,777 | ) | $ | (6,089 | ) | $ | (1,688 | ) | ||||||||||||
Creditor reinsurance net premiums | $ | 59,451 | $ | 57,412 | $ | 60,013 | $ | 47,344 | $ | 42,558 | $ | 16,893 | $ | 224,220 | $ | 205,311 | $ | 18,909 | ||||||||||||||||||||
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 12 | |
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 | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 345,885 | $ | 346,457 | $ | 340,884 | $ | 340,743 | $ | 332,495 | $ | 13,390 | $ | 1,373,969 | $ | 1,220,743 | $ | 153,226 | ||||||||||||||||||||
Investment income, net of related expenses | 43,898 | 29,191 | 20,671 | 13,369 | 14,122 | 29,776 | 107,129 | 52,034 | 55,095 | |||||||||||||||||||||||||||||
Investment related gains (losses), net | 3,678 | 2,550 | 5,183 | 2,593 | 5,495 | (1,817 | ) | 14,004 | 5,495 | 8,509 | ||||||||||||||||||||||||||||
Other revenue | 8,143 | 13,518 | 7,939 | 7,923 | 5,347 | 2,796 | 37,523 | 23,259 | 14,264 | |||||||||||||||||||||||||||||
Total revenues | 401,604 | 391,716 | 374,677 | 364,628 | 357,459 | 44,145 | 1,532,625 | 1,301,531 | 231,094 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 313,991 | 297,992 | 282,546 | 307,341 | 293,181 | 20,810 | 1,201,870 | 1,066,847 | 135,023 | |||||||||||||||||||||||||||||
Interest credited | 4,076 | 2,959 | 5,750 | 2,786 | 6,114 | (2,038 | ) | 15,571 | 6,114 | 9,457 | ||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 13,392 | 16,467 | 11,492 | 13,265 | 17,883 | (4,491 | ) | 54,616 | 52,234 | 2,382 | ||||||||||||||||||||||||||||
Other operating expenses | 36,362 | 30,318 | 30,208 | 27,260 | 28,250 | 8,112 | 124,148 | 105,264 | 18,884 | |||||||||||||||||||||||||||||
Total benefits and expenses | 367,821 | 347,736 | 329,996 | 350,652 | 345,428 | 22,393 | 1,396,205 | 1,230,459 | 165,746 | |||||||||||||||||||||||||||||
Operating income before income taxes | 33,783 | 43,980 | 44,681 | 13,976 | 12,031 | 21,752 | 136,420 | 71,072 | 65,348 | |||||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | 33,783 | 43,980 | 44,681 | 13,976 | 12,031 | 21,752 | 136,420 | 71,072 | 65,348 | |||||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | 5,644 | 1,196 | 16,641 | 1,229 | (54 | ) | 5,698 | 24,710 | 3,481 | 21,229 | ||||||||||||||||||||||||||||
Non-investment derivatives | 512 | — | — | — | — | 512 | 512 | — | 512 | |||||||||||||||||||||||||||||
Income before income taxes | $ | 39,939 | $ | 45,176 | $ | 61,322 | $ | 15,205 | $ | 11,977 | $ | 27,962 | $ | 161,642 | $ | 74,553 | $ | 87,089 | ||||||||||||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 90.8 | % | 86.0 | % | 82.9 | % | 90.2 | % | 88.2 | % | 2.6 | % | 87.5 | % | 87.4 | % | 0.1 | % | ||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 3.9 | % | 4.8 | % | 3.4 | % | 3.9 | % | 5.4 | % | (1.5 | )% | 4.0 | % | 4.3 | % | (0.3 | )% | ||||||||||||||||||||
Other operating expenses | 10.5 | % | 8.8 | % | 8.9 | % | 8.0 | % | 8.5 | % | 2.0 | % | 9.0 | % | 8.6 | % | 0.4 | % | ||||||||||||||||||||
Foreign currency effect (2): | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | (15,090 | ) | $ | 14,441 | $ | 21,204 | $ | 8,690 | $ | 148 | $ | (15,238 | ) | $ | 29,245 | $ | (24,695 | ) | $ | 53,940 | |||||||||||||||||
Operating income before income taxes | $ | (2,415 | ) | $ | 2,086 | $ | 3,710 | $ | 394 | $ | (164 | ) | $ | (2,251 | ) | $ | 3,775 | $ | (1,559 | ) | $ | 5,334 | ||||||||||||||||
Critical illness net premiums | $ | 62,511 | $ | 63,303 | $ | 66,257 | $ | 65,678 | $ | 65,082 | $ | (2,571 | ) | $ | 257,749 | $ | 254,432 | $ | 3,317 | |||||||||||||||||||
(1) Effective January 1, 2014, 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. December 2013 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 Asia Pacific Segment Pre-tax Operating Income (1) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 400,081 | $ | 399,422 | $ | 393,687 | $ | 381,750 | $ | 387,803 | $ | 12,278 | $ | 1,574,940 | $ | 1,485,205 | $ | 89,735 | ||||||||||||||||||||
Investment income, net of related expenses | 25,049 | 26,445 | 26,325 | 24,642 | 26,860 | (1,811 | ) | 102,461 | 94,330 | 8,131 | ||||||||||||||||||||||||||||
Investment related gains (losses), net | 664 | 646 | 684 | 861 | 1,287 | (623 | ) | 2,855 | 2,815 | 40 | ||||||||||||||||||||||||||||
Other revenue | 8,902 | 8,950 | 56,874 | 6,123 | 10,472 | (1,570 | ) | 80,849 | 36,565 | 44,284 | ||||||||||||||||||||||||||||
Total revenues | 434,696 | 435,463 | 477,570 | 413,376 | 426,422 | 8,274 | 1,761,105 | 1,618,915 | 142,190 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 320,643 | 319,507 | 306,320 | 303,596 | 313,132 | 7,511 | 1,250,066 | 1,487,549 | (237,483 | ) | ||||||||||||||||||||||||||||
Interest Credited | 195 | 221 | 234 | 246 | 263 | (68 | ) | 896 | 1,118 | (222 | ) | |||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 47,058 | 51,852 | 107,909 | 54,289 | 53,267 | (6,209 | ) | 261,108 | 222,808 | 38,300 | ||||||||||||||||||||||||||||
Other operating expenses | 41,547 | 36,439 | 33,780 | 30,587 | 32,819 | 8,728 | 142,353 | 125,816 | 16,537 | |||||||||||||||||||||||||||||
Total benefits and expenses | 409,443 | 408,019 | 448,243 | 388,718 | 399,481 | 9,962 | 1,654,423 | 1,837,291 | (182,868 | ) | ||||||||||||||||||||||||||||
Operating income (loss) before income taxes | 25,253 | 27,444 | 29,327 | 24,658 | 26,941 | (1,688 | ) | 106,682 | (218,376 | ) | 325,058 | |||||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) before income taxes | 25,253 | 27,444 | 29,327 | 24,658 | 26,941 | (1,688 | ) | 106,682 | (218,376 | ) | 325,058 | |||||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | (4,610 | ) | (7,031 | ) | 5,601 | 1,653 | (3,282 | ) | (1,328 | ) | (4,387 | ) | (8,289 | ) | 3,902 | |||||||||||||||||||||||
Income (loss) before income taxes | $ | 20,643 | $ | 20,413 | $ | 34,928 | $ | 26,311 | $ | 23,659 | $ | (3,016 | ) | $ | 102,295 | $ | (226,665 | ) | $ | 328,960 | ||||||||||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 80.1 | % | 80.0 | % | 77.8 | % | 79.5 | % | 80.7 | % | (0.6 | )% | 79.4 | % | 100.2 | % | (20.8 | )% | ||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 11.8 | % | 13.0 | % | 27.4 | % | 14.2 | % | 13.7 | % | (1.9 | )% | 16.6 | % | 15.0 | % | 1.6 | % | ||||||||||||||||||||
Other operating expenses | 10.4 | % | 9.1 | % | 8.6 | % | 8.0 | % | 8.5 | % | 1.9 | % | 9.0 | % | 8.5 | % | 0.5 | % | ||||||||||||||||||||
Foreign currency effect (2): | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | (25,793 | ) | $ | 3,411 | $ | (9,724 | ) | $ | (37,197 | ) | $ | (35,258 | ) | $ | 9,465 | $ | (69,303 | ) | $ | (88,452 | ) | $ | 19,149 | ||||||||||||||
Operating income (loss) before income taxes | $ | (3,769 | ) | $ | (1,094 | ) | $ | (1,313 | ) | $ | (2,960 | ) | $ | (5,298 | ) | $ | 1,529 | $ | (9,136 | ) | $ | 5,207 | $ | (14,343 | ) | |||||||||||||
Critical illness net premiums | $ | 76,231 | $ | 67,105 | $ | 71,928 | $ | 60,398 | $ | 66,980 | $ | 9,251 | $ | 275,662 | $ | 247,561 | $ | 28,101 | ||||||||||||||||||||
(1) Effective January 1, 2014, 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. December 2013 figures have been adjusted to conform to the new reporting alignment. | ||||||||||||||||||||||||||||||||||||||
(2) Compared to comparable prior year period | ||||||||||||||||||||||||||||||||||||||
| Page 14 | |
Reinsurance Group of America, Incorporated Corporate and Other Segment Pre-tax Operating Income | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-Date | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Net premiums | $ | 173 | $ | 186 | $ | 206 | $ | 215 | $ | (531 | ) | $ | 704 | $ | 780 | $ | (243 | ) | $ | 1,023 | ||||||||||||||||||
Investment income, net of related expenses | 33,762 | 25,426 | 25,882 | 25,736 | 14,686 | 19,076 | 110,806 | 83,544 | 27,262 | |||||||||||||||||||||||||||||
Investment related gains (losses), net | 468 | 471 | 250 | 225 | 239 | 229 | 1,414 | 965 | 449 | |||||||||||||||||||||||||||||
Other revenue | (379 | ) | 802 | 2,730 | 4,567 | 4,679 | (5,058 | ) | 7,720 | 14,599 | (6,879 | ) | ||||||||||||||||||||||||||
Total revenues | 34,024 | 26,885 | 29,068 | 30,743 | 19,073 | 14,951 | 120,720 | 98,865 | 21,855 | |||||||||||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||||||||||||
Claims and other policy benefits | 2 | (6 | ) | (17 | ) | 17 | 3 | (1 | ) | (4 | ) | 5 | (9 | ) | ||||||||||||||||||||||||
Interest credited | 205 | 199 | 198 | 206 | 179 | 26 | 808 | 802 | 6 | |||||||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | (24,139 | ) | (20,376 | ) | (17,319 | ) | (21,667 | ) | (19,533 | ) | (4,606 | ) | (83,501 | ) | (74,303 | ) | (9,198 | ) | ||||||||||||||||||||
Other operating expenses | 41,279 | 21,595 | 22,476 | 11,252 | 22,690 | 18,589 | 96,602 | 77,866 | 18,736 | |||||||||||||||||||||||||||||
Interest expense | (9,660 | ) | 36,065 | 35,211 | 35,084 | 35,072 | (44,732 | ) | 96,700 | 124,307 | (27,607 | ) | ||||||||||||||||||||||||||
Collateral finance and securitization expense | 3,710 | 2,571 | 2,591 | 2,569 | 2,563 | 1,147 | 11,441 | 10,449 | 992 | |||||||||||||||||||||||||||||
Total benefits and expenses | 11,397 | 40,048 | 43,140 | 27,461 | 40,974 | (29,577 | ) | 122,046 | 139,126 | (17,080 | ) | |||||||||||||||||||||||||||
Operating income (loss) before income taxes | 22,627 | (13,163 | ) | (14,072 | ) | 3,282 | (21,901 | ) | 44,528 | (1,326 | ) | (40,261 | ) | 38,935 | ||||||||||||||||||||||||
Operating to U.S. GAAP Reconciliation: | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) before income taxes | 22,627 | (13,163 | ) | (14,072 | ) | 3,282 | (21,901 | ) | 44,528 | (1,326 | ) | (40,261 | ) | 38,935 | ||||||||||||||||||||||||
Investment and derivative gains (losses) - non-operating | (3,696 | ) | (960 | ) | (6,125 | ) | 482 | (3,557 | ) | (139 | ) | (10,299 | ) | (6,432 | ) | (3,867 | ) | |||||||||||||||||||||
Non-investment derivatives | (40 | ) | (28 | ) | — | — | — | (40 | ) | (68 | ) | — | (68 | ) | ||||||||||||||||||||||||
Gain on repurchase of collateral finance facility securities | — | — | — | — | — | — | — | 46,506 | (46,506 | ) | ||||||||||||||||||||||||||||
Income (loss) before income taxes | $ | 18,891 | $ | (14,151 | ) | $ | (20,197 | ) | $ | 3,764 | $ | (25,458 | ) | $ | 44,349 | $ | (11,693 | ) | $ | (187 | ) | $ | (11,506 | ) | ||||||||||||||
Foreign currency effect (1): | ||||||||||||||||||||||||||||||||||||||
Operating income before income taxes | $ | (1,196 | ) | $ | (1,403 | ) | $ | (1,263 | ) | $ | (1,706 | ) | $ | 98 | $ | (1,294 | ) | $ | (5,568 | ) | $ | (348 | ) | $ | (5,220 | ) | ||||||||||||
(1) Compared to comparable prior year period | ||||||||||||||||||||||||||||||||||||||
| Page 15 | |
Reinsurance Group of America, Incorporated Summary of Pre-tax Segment Operating Income (1) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-date | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
(USD thousands) | 2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | ||||||||||||||||||||||||||||||
U.S. and Latin America: | ||||||||||||||||||||||||||||||||||||||
Traditional | $ | 134,120 | $ | 78,925 | $ | 88,954 | $ | 48,203 | $ | 123,642 | $ | 10,478 | $ | 350,202 | $ | 372,665 | $ | (22,463 | ) | |||||||||||||||||||
Non-Traditional: | ||||||||||||||||||||||||||||||||||||||
Asset Intensive | 56,014 | 57,976 | 44,027 | 41,005 | 42,266 | 13,748 | 199,022 | 166,138 | 32,884 | |||||||||||||||||||||||||||||
Financial Reinsurance | 12,530 | 13,804 | 13,609 | 12,426 | 14,276 | (1,746 | ) | 52,369 | 45,693 | 6,676 | ||||||||||||||||||||||||||||
Total U.S. and Latin America Segment | 202,664 | 150,705 | 146,590 | 101,634 | 180,184 | 22,480 | 601,593 | 584,496 | 17,097 | |||||||||||||||||||||||||||||
Canadian Segment | 19,929 | 25,736 | 30,726 | 22,123 | 47,153 | (27,224 | ) | 98,514 | 147,692 | (49,178 | ) | |||||||||||||||||||||||||||
Europe, Middle East and Africa | 33,783 | 43,980 | 44,681 | 13,976 | 12,031 | 21,752 | 136,420 | 71,072 | 65,348 | |||||||||||||||||||||||||||||
Asia Pacific Segment | 25,253 | 27,444 | 29,327 | 24,658 | 26,941 | (1,688 | ) | 106,682 | (218,376 | ) | 325,058 | |||||||||||||||||||||||||||
Corporate and Other | 22,627 | (13,163 | ) | (14,072 | ) | 3,282 | (21,901 | ) | 44,528 | (1,326 | ) | (40,261 | ) | 38,935 | ||||||||||||||||||||||||
Consolidated | $ | 304,256 | $ | 234,702 | $ | 237,252 | $ | 165,673 | $ | 244,408 | $ | 59,848 | $ | 941,883 | $ | 544,623 | $ | 397,260 | ||||||||||||||||||||
(1) Effective January 1, 2014, 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. December 2013 figures have been restated to conform to the new reporting alignment. | ||||||||||||||||||||||||||||||||||||||
| Page 16 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Cash and Invested Assets | ||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | ||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | ||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 25,480,972 | $ | 24,475,451 | $ | 24,480,396 | $ | 22,157,182 | $ | 21,474,136 | ||||||||||
Mortgage loans on real estate | 2,712,238 | 2,617,091 | 2,555,800 | 2,526,228 | 2,486,680 | |||||||||||||||
Policy loans | 1,284,284 | 1,249,948 | 1,250,635 | 1,296,897 | 1,244,469 | |||||||||||||||
Funds withheld at interest | 5,922,561 | 5,969,006 | 5,940,521 | 5,814,231 | 5,771,467 | |||||||||||||||
Short-term investments | 97,694 | 44,437 | 45,596 | 118,789 | 139,395 | |||||||||||||||
Other invested assets | 1,198,319 | 1,165,021 | 1,128,375 | 1,234,779 | 1,324,960 | |||||||||||||||
Cash and cash equivalents | 1,645,669 | 1,118,745 | 1,378,117 | 1,127,132 | 923,647 | |||||||||||||||
Total cash and invested assets | $ | 38,341,737 | $ | 36,639,699 | $ | 36,779,440 | $ | 34,275,238 | $ | 33,364,754 | ||||||||||
Investment Income and Yield Summary | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | Year-to-Date | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
Average invested assets at amortized cost (1) | $ | 20,672,245 | $ | 20,424,141 | $ | 20,121,261 | $ | 19,726,037 | $ | 18,954,561 | $ | 1,717,684 | $ | 19,876,715 | $ | 18,124,333 | $ | 1,752,382 | ||||||||||||||||||||
Net investment income (1) | $ | 250,757 | $ | 240,877 | $ | 236,604 | $ | 229,644 | $ | 217,928 | $ | 32,829 | $ | 957,882 | $ | 856,615 | $ | 101,267 | ||||||||||||||||||||
Annualized investment yield (ratio of net investment income to average invested assets) (1) | 4.94 | % | 4.80 | % | 4.79 | % | 4.74 | % | 4.68 | % | 0.26 | % | 4.82 | % | 4.73 | % | 0.09 | % | ||||||||||||||||||||
(1) Excludes spread-related business (e.g. coinsurance of annuities) | ||||||||||||||||||||||||||||||||||||||
| Page 17 | |
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) | |||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | % of Total | Other-than- temporary Impairment in AOCI | ||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||||
Corporate securities | $ | 14,010,604 | $ | 965,523 | $ | 90,544 | $ | 14,885,583 | 58.4 | % | $ | — | |||||||||||
Canadian and Canadian provincial governments | 2,668,852 | 1,196,420 | 7 | 3,865,265 | 15.2 | % | — | ||||||||||||||||
Residential mortgage-backed securities | 991,867 | 52,640 | 6,611 | 1,037,896 | 4.1 | % | (300 | ) | |||||||||||||||
Asset-backed securities | 1,059,660 | 20,301 | 10,375 | 1,069,586 | 4.2 | % | 354 | ||||||||||||||||
Commercial mortgage-backed securities | 1,453,657 | 87,593 | 8,659 | 1,532,591 | 6.0 | % | (1,609 | ) | |||||||||||||||
U.S. government and agencies | 501,352 | 25,014 | 515 | 525,851 | 2.0 | % | — | ||||||||||||||||
State and political subdivisions | 378,457 | 51,117 | 3,498 | 426,076 | 1.7 | % | — | ||||||||||||||||
Other foreign government, supranational, and foreign | |||||||||||||||||||||||
government-sponsored enterprises | 2,041,148 | 110,065 | 13,089 | 2,138,124 | 8.4 | % | — | ||||||||||||||||
Total fixed maturity securities | $ | 23,105,597 | $ | 2,508,673 | $ | 133,298 | $ | 25,480,972 | 100.0 | % | $ | (1,555 | ) | ||||||||||
Non-redeemable preferred stock | 93,540 | 7,350 | 1,527 | 99,363 | 78.3 | % | |||||||||||||||||
Other equity securities | 26,994 | 597 | 94 | 27,497 | 21.7 | % | |||||||||||||||||
Total equity securities | $ | 120,534 | $ | 7,947 | $ | 1,621 | $ | 126,860 | 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 18 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Corporate Securities by Sector (Fixed Maturities and Equities) (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||||
December 31, 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 | $ | 3,114,935 | $ | 3,262,121 | 21.9 | % | A- | $ | 2,328,148 | $ | 2,408,741 | 19.2 | % | A- | ||||||||||||
Brokerage/Asset Managers/Exchanges | 252,260 | 272,847 | 1.8 | % | A | 206,986 | 218,477 | 1.7 | % | A- | ||||||||||||||||
Finance Comp. | 189,159 | 202,297 | 1.3 | % | A+ | 151,129 | 158,859 | 1.3 | % | A | ||||||||||||||||
Insurance | 708,611 | 775,497 | 5.2 | % | A- | 665,252 | 693,516 | 5.5 | % | A- | ||||||||||||||||
REITs | 532,862 | 564,722 | 3.8 | % | BBB+ | 476,830 | 491,058 | 3.9 | % | BBB+ | ||||||||||||||||
Other Finance | 89,972 | 94,504 | 0.6 | % | A- | 406,613 | 407,106 | 3.3 | % | BBB- | ||||||||||||||||
Total Financial Institutions | $ | 4,887,799 | $ | 5,171,988 | 34.6 | % | $ | 4,234,958 | $ | 4,377,757 | 34.9 | % | ||||||||||||||
Industrials | ||||||||||||||||||||||||||
Basic | 893,754 | 921,843 | 6.1 | % | BBB | 847,764 | 858,886 | 6.9 | % | BBB | ||||||||||||||||
Capital Goods | 657,388 | 694,700 | 4.6 | % | BBB | 574,108 | 596,150 | 4.8 | % | BBB | ||||||||||||||||
Communications | 1,448,054 | 1,572,181 | 10.5 | % | BBB+ | 1,234,343 | 1,278,710 | 10.2 | % | BBB+ | ||||||||||||||||
Consumer Cyclical | 665,734 | 709,166 | 4.7 | % | BBB+ | 631,196 | 649,019 | 5.2 | % | BBB | ||||||||||||||||
Consumer Noncyclical | 1,299,879 | 1,397,510 | 9.3 | % | BBB+ | 1,062,238 | 1,107,972 | 8.9 | % | BBB+ | ||||||||||||||||
Energy | 1,661,526 | 1,713,066 | 11.4 | % | BBB | 1,326,476 | 1,380,762 | 11.0 | % | BBB | ||||||||||||||||
Technology | 465,256 | 485,833 | 3.2 | % | BBB+ | 455,081 | 456,505 | 3.6 | % | BBB+ | ||||||||||||||||
Transportation | 453,106 | 486,736 | 3.2 | % | A- | 365,233 | 380,249 | 3.0 | % | A- | ||||||||||||||||
Other Industrial | 108,371 | 118,279 | 0.8 | % | A- | 114,520 | 119,353 | 1.0 | % | A- | ||||||||||||||||
Total Industrials | $ | 7,653,068 | $ | 8,099,314 | 53.8 | % | $ | 6,610,959 | $ | 6,827,606 | 54.6 | % | ||||||||||||||
Utilities | ||||||||||||||||||||||||||
Electric | 1,201,052 | 1,317,907 | 8.8 | % | BBB+ | 1,077,167 | 1,121,373 | 9.0 | % | BBB+ | ||||||||||||||||
Natural Gas | 234,761 | 251,110 | 1.7 | % | A- | 109,789 | 111,515 | 0.9 | % | A- | ||||||||||||||||
Other Utility | 154,458 | 172,124 | 1.1 | % | A- | 62,768 | 67,471 | 0.5 | % | BBB+ | ||||||||||||||||
Total Utilities | $ | 1,590,271 | $ | 1,741,141 | 11.6 | % | $ | 1,249,724 | $ | 1,300,359 | 10.4 | % | ||||||||||||||
Other Sectors | — | — | 0.0 | % | - | 11,225 | 10,764 | 0.1 | % | AA | ||||||||||||||||
Total | $ | 14,131,138 | $ | 15,012,443 | 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 19 | |
Reinsurance Group of America, Incorporated
Investments
(USD thousands)
Ratings of Fixed Maturity Securities (Excludes Funds Withheld Portfolios) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 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 | $ | 14,855,946 | $ | 16,866,777 | 66.1 | % | $ | 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 | % | ||||||||||||||||||||||||||
2 | BBB | 6,880,383 | 7,258,299 | 28.5 | % | 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 | % | ||||||||||||||||||||||||||||||||||||
3 | BB | 750,152 | 760,531 | 3.0 | % | 729,311 | 751,110 | 3.1 | % | 669,569 | 706,926 | 2.9 | % | 637,814 | 666,571 | 3.0 | % | 725,733 | 740,465 | 3.4 | % | ||||||||||||||||||||||||||||||||||||
4 | B | 387,456 | 372,375 | 1.5 | % | 425,094 | 421,100 | 1.7 | % | 362,960 | 364,395 | 1.5 | % | 379,529 | 379,688 | 1.7 | % | 387,687 | 400,775 | 1.9 | % | ||||||||||||||||||||||||||||||||||||
5 | CCC | 212,905 | 208,346 | 0.8 | % | 152,363 | 150,845 | 0.6 | % | 143,292 | 142,805 | 0.6 | % | 60,003 | 60,427 | 0.3 | % | 106,619 | 106,873 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
6 | In or near default | 18,755 | 14,644 | 0.1 | % | 25,296 | 20,998 | 0.1 | % | 23,545 | 19,184 | 0.1 | % | 18,594 | 13,678 | 0.1 | % | 110,030 | 102,988 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
Total | $ | 23,105,597 | $ | 25,480,972 | 100.0 | % | $ | 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 | % | |||||||||||||||||||||||||||
(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 | ||||||||||||||||||||||||||||||||||||||||
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 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 | $ | 639,936 | $ | 677,352 | $ | 597,413 | $ | 625,070 | $ | 564,397 | $ | 594,042 | $ | 569,064 | $ | 591,515 | $ | 567,113 | $ | 580,855 | ||||||||||||||||||||
Non-agency | 351,931 | 360,544 | 367,023 | 375,647 | 382,034 | 392,097 | 400,880 | 410,356 | 403,321 | 408,788 | ||||||||||||||||||||||||||||||
Total residential mortgage-backed securities | 991,867 | 1,037,896 | 964,436 | 1,000,717 | 946,431 | 986,139 | 969,944 | 1,001,871 | 970,434 | 989,643 | ||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 1,453,657 | 1,532,591 | 1,404,648 | 1,481,822 | 1,380,622 | 1,474,620 | 1,367,205 | 1,450,503 | 1,314,782 | 1,388,946 | ||||||||||||||||||||||||||||||
Asset-backed securities | 1,059,660 | 1,069,586 | 993,028 | 1,006,048 | 993,116 | 1,008,375 | 933,130 | 944,579 | 891,751 | 894,832 | ||||||||||||||||||||||||||||||
Total | $ | 3,505,184 | $ | 3,640,073 | $ | 3,362,112 | $ | 3,488,587 | $ | 3,320,169 | $ | 3,469,134 | $ | 3,270,279 | $ | 3,396,953 | $ | 3,176,967 | $ | 3,273,421 | ||||||||||||||||||||
| Page 20 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Gross Unrealized Losses Aging Fixed Maturity Securities | |||||||||||||||||||||||||||||||||||
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 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% | $ | 110,346 | 81.8 | % | $ | 107,731 | 89.1 | % | $ | 96,330 | 85.8 | % | $ | 157,050 | 87.6 | % | $ | 287,032 | 88.4 | % | |||||||||||||||
20% or more for less than six months | 13,698 | 10.1 | % | 683 | 0.6 | % | 2,479 | 2.2 | % | 163 | 0.1 | % | 6,444 | 2.0 | % | ||||||||||||||||||||
20% or more for six months or greater | 9,254 | 6.9 | % | 9,510 | 7.9 | % | 10,936 | 9.7 | % | 17,771 | 9.9 | % | 21,423 | 6.6 | % | ||||||||||||||||||||
Total | $ | 133,298 | 98.8 | % | $ | 117,924 | 97.6 | % | $ | 109,745 | 97.7 | % | $ | 174,984 | 97.6 | % | $ | 314,899 | 97.0 | % | |||||||||||||||
Equity Securities | |||||||||||||||||||||||||||||||||||
December 31, 2014 | September 30, 2014 | June 30, 2014 | March 31, 2014 | December 31, 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% | $ | 1,619 | 1.2 | % | $ | 2,926 | 2.4 | % | $ | 2,555 | 2.3 | % | $ | 4,321 | 2.4 | % | $ | 9,699 | 3.0 | % | |||||||||||||||
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 | $ | 1,621 | 1.2 | % | $ | 2,928 | 2.4 | % | $ | 2,557 | 2.3 | % | $ | 4,323 | 2.4 | % | $ | 9,701 | 3.0 | % | |||||||||||||||
| Page 21 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Fixed Maturities and Equity Securities Below Amortized Cost (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||
As of December 31, 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 | $ | 1,225,767 | $ | 27,784 | $ | 614,294 | $ | 30,040 | $ | 1,840,061 | $ | 57,824 | ||||||||||||
Canadian and Canadian provincial governments | — | — | 1,235 | 7 | 1,235 | 7 | ||||||||||||||||||
Residential mortgage-backed securities | 78,864 | 846 | 135,414 | 5,247 | 214,278 | 6,093 | ||||||||||||||||||
Asset-backed securities | 332,785 | 4,021 | 109,411 | 4,289 | 442,196 | 8,310 | ||||||||||||||||||
Commercial mortgage-backed securities | 78,632 | 564 | 28,375 | 2,461 | 107,007 | 3,025 | ||||||||||||||||||
U.S. government and agencies | 81,317 | 89 | 32,959 | 426 | 114,276 | 515 | ||||||||||||||||||
State and political subdivisions | 13,780 | 17 | 18,998 | 3,438 | 32,778 | 3,455 | ||||||||||||||||||
Other foreign government, supranational, and foreign | ||||||||||||||||||||||||
government-sponsored enterprises | 156,725 | 7,007 | 76,111 | 2,946 | 232,836 | 9,953 | ||||||||||||||||||
Investment grade securities | 1,967,870 | 40,328 | 1,016,797 | 48,854 | 2,984,667 | 89,182 | ||||||||||||||||||
Non-investment grade securities: | ||||||||||||||||||||||||
Corporate securities | 415,886 | 29,316 | 32,567 | 3,404 | 448,453 | 32,720 | ||||||||||||||||||
Residential mortgage-backed securities | 22,836 | 293 | 6,284 | 225 | 29,120 | 518 | ||||||||||||||||||
Asset-backed securities | 12,448 | 274 | 7,108 | 1,791 | 19,556 | 2,065 | ||||||||||||||||||
Commercial mortgage-backed securities | 3,288 | 249 | 5,580 | 5,385 | 8,868 | 5,634 | ||||||||||||||||||
State and political subdivisions | 964 | 43 | — | — | 964 | 43 | ||||||||||||||||||
Other foreign government, supranational, and foreign government-sponsored enterprises | 13,986 | 3,136 | — | — | 13,986 | 3,136 | ||||||||||||||||||
Non-investment grade securities | 469,408 | 33,311 | 51,539 | 10,805 | 520,947 | 44,116 | ||||||||||||||||||
Total fixed maturity securities | $ | 2,437,278 | $ | 73,639 | $ | 1,068,336 | $ | 59,659 | $ | 3,505,614 | $ | 133,298 | ||||||||||||
Non-redeemable preferred stock | 11,619 | 235 | 19,100 | 1,292 | 30,719 | 1,527 | ||||||||||||||||||
Other equity securities | — | — | 3,545 | 94 | 3,545 | 94 | ||||||||||||||||||
Total Equity securities | $ | 11,619 | $ | 235 | $ | 22,645 | $ | 1,386 | $ | 34,264 | $ | 1,621 | ||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
Fixed Maturity and Equity Securities: | ||||||||||||||||||||||||||||||||||||||
Other-than-temporary impairment losses on fixed maturities | $ | (6,347 | ) | $ | (246 | ) | $ | (870 | ) | $ | (303 | ) | $ | (2,258 | ) | $ | (4,089 | ) | $ | (7,766 | ) | $ | (12,654 | ) | $ | 4,888 | ||||||||||||
Portion of loss recognized in accumulated other comprehensive income (before taxes) | — | — | — | — | — | — | — | (247 | ) | 247 | ||||||||||||||||||||||||||||
Net other-than-temporary impairment losses on fixed maturities recognized in earnings | (6,347 | ) | (246 | ) | (870 | ) | (303 | ) | (2,258 | ) | (4,089 | ) | (7,766 | ) | (12,901 | ) | 5,135 | |||||||||||||||||||||
Gain on investment activity | 13,662 | 8,819 | 34,887 | 8,067 | 12,659 | 1,003 | 65,435 | 82,744 | (17,309 | ) | ||||||||||||||||||||||||||||
Loss on investment activity | (11,480 | ) | (6,355 | ) | (6,877 | ) | (6,583 | ) | (12,169 | ) | 689 | (31,295 | ) | (60,575 | ) | 29,280 | ||||||||||||||||||||||
Net gain/(loss) on fixed maturity and equity securities | (4,165 | ) | 2,218 | 27,140 | 1,181 | (1,768 | ) | (2,397 | ) | 26,374 | 9,268 | 17,106 | ||||||||||||||||||||||||||
Other impairment losses and change in mortgage loan provision | 371 | (2,041 | ) | (5,309 | ) | 1,664 | (5,665 | ) | 6,036 | (5,315 | ) | (6,933 | ) | 1,618 | ||||||||||||||||||||||||
Other non-derivative gain/(loss), net | 2,759 | 2,298 | 9,197 | 8,368 | 10,536 | (7,777 | ) | 22,622 | 26,681 | (4,059 | ) | |||||||||||||||||||||||||||
Free-standing Derivatives: | ||||||||||||||||||||||||||||||||||||||
Credit Default Swaps | 2,658 | (1,389 | ) | 4,783 | (2,114 | ) | 7,051 | (4,393 | ) | 3,938 | 24,188 | (20,250 | ) | |||||||||||||||||||||||||
Interest Rate Swaps - non-hedged | 33,812 | 9,114 | 22,244 | 29,659 | (15,498 | ) | 49,310 | 94,829 | (84,398 | ) | 179,227 | |||||||||||||||||||||||||||
Interest Rate Swaps - hedged | 10 | 8 | 7 | (6 | ) | (5 | ) | 15 | 19 | 6 | 13 | |||||||||||||||||||||||||||
Futures | (6,728 | ) | 6,446 | (7,684 | ) | (1,584 | ) | (3,851 | ) | (2,877 | ) | (9,550 | ) | (11,157 | ) | 1,607 | ||||||||||||||||||||||
CPI Swaps | (536 | ) | (274 | ) | 115 | 352 | 85 | (621 | ) | (343 | ) | (1,942 | ) | 1,599 | ||||||||||||||||||||||||
Equity options | (5,724 | ) | 1,017 | (8,800 | ) | (8,965 | ) | (19,447 | ) | 13,723 | (22,472 | ) | (79,231 | ) | 56,759 | |||||||||||||||||||||||
Currency Forwards | (5,746 | ) | (5,277 | ) | 1,178 | 1,154 | (5,213 | ) | (533 | ) | (8,691 | ) | (13,201 | ) | 4,510 | |||||||||||||||||||||||
Interest Rate Options | 11,490 | 865 | 2,004 | 1,282 | (3,145 | ) | 14,635 | 15,641 | (11,518 | ) | 27,159 | |||||||||||||||||||||||||||
Total free-standing derivatives | 29,236 | 10,510 | 13,847 | 19,778 | (40,023 | ) | 69,259 | 73,371 | (177,253 | ) | 250,624 | |||||||||||||||||||||||||||
Embedded Derivatives: | ||||||||||||||||||||||||||||||||||||||
Modified coinsurance and funds withheld treaties | (14,523 | ) | 56,812 | 78,835 | 77,241 | (337 | ) | (14,186 | ) | 198,365 | 70,177 | 128,188 | ||||||||||||||||||||||||||
GMXB | (52,901 | ) | (47,479 | ) | (5,183 | ) | (23,661 | ) | 35,098 | (87,999 | ) | (129,224 | ) | 142,050 | (271,274 | ) | ||||||||||||||||||||||
Total embedded derivatives | (67,424 | ) | 9,333 | 73,652 | 53,580 | 34,761 | (102,185 | ) | 69,141 | 212,227 | (143,086 | ) | ||||||||||||||||||||||||||
Net gain/(loss) on total derivatives | (38,188 | ) | 19,843 | 87,499 | 73,358 | (5,262 | ) | (32,926 | ) | 142,512 | 34,974 | 107,538 | ||||||||||||||||||||||||||
Total investment related gains / (losses), net | $ | (39,223 | ) | $ | 22,318 | $ | 118,527 | $ | 84,571 | $ | (2,159 | ) | $ | (37,064 | ) | $ | 186,193 | $ | 63,990 | $ | 122,203 | |||||||||||||||||
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