UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 27, 2017
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) | ||
16600 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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
r | Emerging growth company |
r | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Item 2.02 | Results of Operations and Financial Condition. |
On April 27, 2017, Reinsurance Group of America, Incorporated issued (1) a press release (the "Press Release") announcing its earnings for the three-month period ended March 31, 2017, and providing certain additional information, a copy of which is furnished with this report as Exhibit 99.1, and (2) a quarterly financial supplement (the "Quarterly Financial Supplement") for the quarter ended March 31, 2017, a copy of which is attached hereto as Exhibit 99.2. The Press Release also notes that a conference call will be held on April 28, 2017 to discuss the financial and operating results for the three-month period ended March 31, 2017. The information set forth in this Current Report on Form 8-K, including the Press Release and Quarterly Financial Supplement, is being furnished and shall not be deemed to be "filed", as described in 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 April 27, 2017 | |
99.2 | Quarterly Financial Supplement for the quarter ended March 31, 2017 | |
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: April 27, 2017 | By: | /s/ Todd C. Larson | ||||
Todd C. Larson | ||||||
Senior Executive Vice President and Chief Financial Officer | ||||||
EXHIBIT INDEX
Exhibit Number | Description | |
99.1 | Press Release dated April 27, 2017 | |
99.2 | Quarterly Financial Supplement for the quarter ended March 31, 2017 | |
Exhibit 99.1
PRESS RELEASE
REINSURANCE GROUP OF AMERICA REPORTS FIRST-QUARTER RESULTS
• | Earnings per diluted share: $2.22 from net income, $1.86 from adjusted operating income* |
• | ROE 10 percent and adjusted operating ROE* 11 percent for the trailing twelve months |
• | Reported net premiums increased 10 percent in the first quarter |
ST. LOUIS, April 27, 2017 - Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global provider of life reinsurance, reported first-quarter net income of $145.5 million, or $2.22 per diluted share, compared with $76.5 million, or $1.17 per diluted share, in the prior-year quarter. Adjusted operating income* totaled $122.1 million, or $1.86 per diluted share, compared with $120.8 million, or $1.85 per diluted share, the year before. Net foreign currency fluctuations had an adverse effect of $0.03 per diluted share on net income, and $0.02 per diluted share on adjusted operating income.
Quarterly Results | ||||||||
($ in thousands, except per share data) | 2017 | 2016 | ||||||
Net premiums | $ | 2,365,696 | $ | 2,157,005 | ||||
Net income | 145,512 | 76,472 | ||||||
Net income per diluted share | 2.22 | 1.17 | ||||||
Adjusted operating income* | 122,065 | 120,750 | ||||||
Adjusted operating income per diluted share* | 1.86 | 1.85 | ||||||
Book value per share | 115.24 | 104.88 | ||||||
Book value per share, excluding accumulated other comprehensive income (AOCI)* | 94.72 | 84.11 | ||||||
Total assets | 53,805,820 | 52,186,624 | ||||||
* | See ‘Use of Non-GAAP Financial Measures’ below |
Beginning with the announcement of first-quarter results, the Company is modifying the labeling of its non-GAAP measure “operating income” to “adjusted operating income.” The definition and calculation of these measures are identical. Only the name of the measure is changing. The Company believes this change provides further clarity that “operating income” is a non-GAAP measure. This modification does not affect previously reported results.
Consolidated net premiums totaled $2.4 billion, up 10 percent from last year’s first quarter. Current-period premiums reflected net adverse foreign currency effects of approximately $5.2 million. Excluding spread-based businesses and the value of associated derivatives, investment income rose 11 percent over year-ago levels, attributable to an increase in average invested assets of approximately 13 percent. The rise in investment income was offset, in part, by the impact of lower yields on new money and reinvested assets. The average investment yield, excluding spread businesses, was down 5 basis points to 4.41 percent from the first quarter of 2016, reflecting the impact of lower yields on new money and reinvested
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assets. The average investment yield was 28 basis points lower than the fourth-quarter yield due primarily to a lower level of variable investment income.
The effective tax rate was approximately 30 percent on both pre-tax GAAP income and adjusted operating income this quarter, below an expected range of 34 to 35 percent. The lower-than-expected income tax rate was primarily due to generating a greater-than-expected portion of earnings in jurisdictions that have lower income tax rates than the U.S. statutory rate.
Anna Manning, president and chief executive officer, commented, “Our EPS and adjusted operating EPS improved versus a year ago, but reflected some increased volatility in our segment results, with the U.S. and Canadian Traditional segments experiencing high seasonal individual mortality claims, and our Asia Pacific and EMEA segments performing very well. The broad diversification of earnings that has come with the successful development of our global operating model over time continues to benefit us, even as individual segments or business lines experience periods of natural volatility.
“Premium growth was strong again, up 10 percent on a reported basis and in constant currencies. This reflects solid to strong organic growth across most regions, Asia and EMEA in particular.
“The elevated mortality claims in both the U.S. and Canada were due to a higher number of large claims. We consider this to be random volatility and not attributable to any systemic issue. As we have emphasized in the past, we generally expect short-term claims volatility to moderate over time, and we have not changed our expectations.
“We did not close any significant in-force or other transactions during the quarter, but we remain optimistic about the environment and our pipeline. We ended the quarter with an excess capital position of approximately $1.2 billion. We remain well positioned to continue pursuing a balanced approach to capital management by deploying capital into in-force and other attractive transactions, share repurchases and shareholder dividend increases. Book value per share at March 31 was $115.24 including AOCI, and $94.72 excluding AOCI.
“Looking forward, we remain optimistic about our ability to serve clients, execute on our strategies and deliver attractive financial returns.”
SEGMENT RESULTS
U.S. and Latin America
Traditional
The U.S. and Latin America Traditional segment reported pre-tax net income of $30.0 million, compared with $51.1 million in the first quarter of 2016. Pre-tax adjusted operating income totaled $28.0 million for the quarter, compared with $53.2 million in last year’s first quarter. Results for the current quarter reflected poor claims experience due to an elevated number of large claims, while the prior-year results were generally in line with expectations.
Traditional net premiums increased 6 percent from last year’s first quarter to $1,304.3 million.
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Financial Solutions
The Asset-Intensive business reported pre-tax net income of $85.8 million compared with pre-tax net losses of $30.8 million last year. First-quarter pre-tax adjusted operating income totaled $51.6 million compared with $45.3 million last year, reflecting favorable interest rate spreads and a positive influence from higher equity markets.
The Financial Reinsurance business reported pre-tax net income and pre-tax adjusted operating income of $17.8 million for the first quarter compared with $15.9 million the year before.
Canada
Traditional
The Canada Traditional segment reported pre-tax net income of $19.3 million, compared with $20.1 million the year before. Pre-tax adjusted operating income totaled $16.8 million, compared with $19.4 million in the first quarter of 2016. Both periods experienced modestly worse-than-expected mortality experience, with current-quarter results attributable primarily to large claims. Foreign currency exchange rates had a favorable effect of $1.2 million on pre-tax net income and $1.1 million on pre-tax adjusted operating income for the quarter.
Reported net premiums totaled $215.8 million for the quarter, relatively level with $215.5 million in the year-ago period. Net foreign currency fluctuations had a favorable effect of $7.6 million on net premiums for the quarter.
Financial Solutions
The Canada Financial Solutions business segment, which consists of longevity and fee-based transactions, reported first-quarter pre-tax net income and pre-tax adjusted operating income of $3.6 million, compared with $0.6 million a year ago, reflecting favorable longevity experience. The effect of net foreign currency fluctuations was immaterial to pre-tax net income and pre-tax adjusted operating income in the quarter.
Europe, Middle East and Africa (EMEA)
Traditional
The EMEA Traditional segment reported pre-tax net income and pre-tax adjusted operating income of $14.0 million, compared with pre-tax net losses and pre-tax adjusted operating losses of $1.1 million in last year’s first quarter. The current-period results reflected solid overall experience across the region. Last year’s first quarter experienced unfavorable mortality. Net foreign currency fluctuations adversely affected pre-tax net income and pre-tax adjusted operating income by $0.7 million.
Reported net premiums increased 10 percent from the prior-year period to $304.7 million, primarily due to the impact of new treaties. Foreign currency exchange rates adversely affected net premiums by $17.9 million.
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Financial Solutions
The EMEA Financial Solutions business segment includes longevity, asset-intensive and fee-based transactions. Pre-tax net income totaled $31.9 million, compared with $25.4 million in the year-ago period. Pre-tax adjusted operating income increased to $27.5 million, compared with $25.6 million the year before. Both periods reflected favorable longevity experience. Net foreign currency fluctuations adversely affected pre-tax net income by $4.7 million and pre-tax adjusted operating income by $4.0 million.
Asia Pacific
Traditional
The Asia Pacific Traditional segment reported pre-tax net income of $41.7 million, compared with $41.2 million in the prior-year period. Pre-tax adjusted operating income totaled $41.7 million, compared with $41.1 million a year ago. Underwriting experience was favorable across Asia, with profitable results in Australia. The year-ago period reflected particularly strong results in Australia and solid results across the rest of Asia. Net foreign currency fluctuations had a favorable effect of $0.9 million on pre-tax net income and pre-tax adjusted operating income.
Reported net premiums rose to $483.3 million from $374.1 million in the prior-year period, with strong growth from new treaties across most of the region. Foreign currency exchange rates had a favorable effect of $11.8 million on net premiums.
Financial Solutions
The Asia Pacific Financial Solutions business segment includes asset-intensive and fee-based transactions. Pre-tax net income totaled $5.9 million, compared with $8.6 million in the prior year period. Pre-tax adjusted operating losses totaled $0.5 million, compared with a pre-tax adjusted operating income of $7.4 million in the prior-year quarter. A previously disclosed treaty in runoff continues to negatively impact results, but the experience this quarter reflected an improvement compared with the recent trend. The effect of net foreign currency fluctuations was immaterial to pre-tax net income and pre-tax adjusted operating income in the quarter.
Corporate and Other
The Corporate and Other segment’s pre-tax net losses totaled $42.1 million, compared with pre-tax net losses of $23.3 million the year before. Pre-tax adjusted operating losses were $26.6 million, versus the year-ago pre-tax adjusted operating loss of $30.3 million. Current-period results were generally in line with the expected run rate when adjusted for seasonal variation.
Dividend Declaration
The board of directors declared a regular quarterly dividend of $0.41, payable May 30 to shareholders of record as of May 9.
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Earnings Conference Call
A conference call to discuss first-quarter results will begin at 11 a.m. Eastern Time on Friday, April 28. Interested parties may access the call by dialing 877-719-9789 (domestic) or 719-325-4904 (international). The access code is 323559. 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 Saturday, May 6 at 888-203-1112 (domestic) or 719-457-0820 (international), access code 323559.
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 adjusted operating income as a basis for analyzing financial results. As discussed above, beginning with the announcement of first-quarter results, the Company is modifying the labeling of its non-GAAP measure “operating income” to “adjusted operating income.” This measure also serves as a basis for establishing target levels and awards under RGA’s management incentive programs. Management believes that adjusted 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, adjusted 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 adjusted operating income can vary by company and is not considered a substitute for GAAP net income.
Reconciliations to GAAP net income are provided in the following tables. Additional financial information can be found in the Quarterly Financial Supplement on RGA’s Investor Relations
website at www.rgare.com in the “Earnings” section.
Book value per share excluding the 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.
Adjusted operating income per diluted share is a non-GAAP financial measure calculated as adjusted operating income divided by weighted average diluted shares outstanding. Adjusted operating return on equity is a non-GAAP financial measure calculated as adjusted operating income divided by average shareholders’ equity excluding AOCI.
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About RGA
Reinsurance Group of America, Incorporated is among the largest global providers of life reinsurance, with operations in Australia, Barbados, Bermuda, Brazil, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Singapore, South Africa, South Korea, Spain, Taiwan, the United Arab Emirates, the United Kingdom and the United States. Worldwide, RGA has assumed approximately $3.1 trillion of life reinsurance in force, and total assets of $53.8 billion.
Cautionary Note 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, ratios, future financial performance and growth potential of Reinsurance Group of America, Incorporated and its subsidiaries (which we refer to in the previous 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
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
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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 Securities and Exchange Commission.
Forward-looking statements should be evaluated together with the many risks and uncertainties that affect our business, including those mentioned in this document and described in the periodic reports we file
with the Securities and Exchange Commission. These forward-looking statements speak only as of the date on which they are made. We do not undertake any obligations to update these forward-looking statements, even though our situation may change in the future. We qualify all of our forward-looking statements by these cautionary statements. For a discussion of the risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to see Item 1A - “Risk Factors” in the 2016 Annual Report.
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 Adjusted Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended March 31, | ||||||
2017 | 2016 | ||||||
Net income | $ | 145,512 | $ | 76,472 | |||
Reconciliation to adjusted operating income: | |||||||
Capital (gains) losses, derivatives and other, included in investment related gains/losses, net | 20,253 | (21,727 | ) | ||||
Capital (gains) losses on funds withheld, included in investment income, net of related expenses | (425 | ) | (3,239 | ) | |||
Embedded derivatives: | |||||||
Included in investment related gains/losses, net | (59,192 | ) | 100,873 | ||||
Included in interest credited | (18,173 | ) | 18,947 | ||||
DAC offset, net | 34,021 | (50,036 | ) | ||||
Investment income on unit-linked variable annuities | (2,673 | ) | (265 | ) | |||
Interest credited on unit-linked variable annuities | 2,673 | 265 | |||||
Non-investment derivatives | 69 | (540 | ) | ||||
Adjusted operating income | $ | 122,065 | $ | 120,750 | |||
Reconciliation of Consolidated Income before Income Taxes to Pre-tax Adjusted Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended March 31, | ||||||
2017 | 2016 | ||||||
Income before income taxes | $ | 207,844 | $ | 107,580 | |||
Reconciliation to pre-tax adjusted operating income: | |||||||
Capital (gains) losses, derivatives and other, included in investment related gains/losses, net | 33,272 | (31,968 | ) | ||||
Capital (gains) losses on funds withheld, included in investment income, net of related expenses | (654 | ) | (4,983 | ) | |||
Embedded derivatives: | |||||||
Included in investment related gains/losses, net | (91,065 | ) | 155,189 | ||||
Included in interest credited | (27,958 | ) | 29,149 | ||||
DAC offset, net | 52,340 | (76,978 | ) | ||||
Investment income on unit-linked variable annuities | (4,113 | ) | (408 | ) | |||
Interest credited on unit-linked variable annuities | 4,113 | 408 | |||||
Non-investment derivatives | 106 | (831 | ) | ||||
Pre-tax adjusted operating income | $ | 173,885 | $ | 177,158 | |||
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Net Income to Pre-tax Adjusted Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended March 31, 2017 | ||||||||||||||
Pre-tax net income (loss) | Capital (gains) losses, derivatives and other, net | Change in value of embedded derivatives, net | Pre-tax adjusted operating income (loss) | ||||||||||||
U.S. and Latin America: | |||||||||||||||
Traditional | $ | 29,960 | $ | — | $ | (1,964 | ) | $ | 27,996 | ||||||
Financial Solutions: | |||||||||||||||
Asset Intensive | 85,770 | 59,470 | (1) | (93,603 | ) | (2) | 51,637 | ||||||||
Financial Reinsurance | 17,816 | — | — | 17,816 | |||||||||||
Total U.S. and Latin America | 133,546 | 59,470 | (95,567 | ) | 97,449 | ||||||||||
Canada Traditional | 19,328 | (2,562 | ) | — | 16,766 | ||||||||||
Canada Financial Solutions | 3,592 | — | — | 3,592 | |||||||||||
Total Canada | 22,920 | (2,562 | ) | — | 20,358 | ||||||||||
EMEA Traditional | 13,976 | (7 | ) | — | 13,969 | ||||||||||
EMEA Financial Solutions | 31,918 | (4,443 | ) | — | 27,475 | ||||||||||
Total EMEA | 45,894 | (4,450 | ) | — | 41,444 | ||||||||||
Asia Pacific Traditional | 41,688 | — | — | 41,688 | |||||||||||
Asia Pacific Financial Solutions | 5,872 | (6,324 | ) | — | (452 | ) | |||||||||
Total Asia Pacific | 47,560 | (6,324 | ) | — | 41,236 | ||||||||||
Corporate and Other | (42,076 | ) | 15,474 | — | (26,602 | ) | |||||||||
Consolidated | $ | 207,844 | $ | 61,608 | $ | (95,567 | ) | $ | 173,885 | ||||||
(1) | Asset Intensive is net of $28,884 DAC offset. |
(2) | Asset Intensive is net of $23,456 DAC offset. |
(Unaudited) | Three Months Ended March 31, 2016 | ||||||||||||||
Pre-tax net income (loss) | Capital (gains) losses, derivatives and other, net | Change in value of embedded derivatives, net | Pre-tax adjusted operating income (loss) | ||||||||||||
U.S. and Latin America: | |||||||||||||||
Traditional | $ | 51,098 | $ | 65 | $ | 2,035 | $ | 53,198 | |||||||
Financial Solutions: | |||||||||||||||
Asset Intensive | (30,830 | ) | (16,082 | ) | (1) | 92,180 | (2) | 45,268 | |||||||
Financial Reinsurance | 15,934 | — | — | 15,934 | |||||||||||
Total U.S. and Latin America | 36,202 | (16,017 | ) | 94,215 | 114,400 | ||||||||||
Canada Traditional | 20,095 | (731 | ) | — | 19,364 | ||||||||||
Canada Financial Solutions | 592 | — | — | 592 | |||||||||||
Total Canada | 20,687 | (731 | ) | — | 19,956 | ||||||||||
EMEA Traditional | (1,116 | ) | (5 | ) | — | (1,121 | ) | ||||||||
EMEA Financial Solutions | 25,424 | 187 | — | 25,611 | |||||||||||
Total EMEA | 24,308 | 182 | — | 24,490 | |||||||||||
Asia Pacific Traditional | 41,160 | (16 | ) | — | 41,144 | ||||||||||
Asia Pacific Financial Solutions | 8,553 | (1,111 | ) | — | 7,442 | ||||||||||
Total Asia Pacific | 49,713 | (1,127 | ) | — | 48,586 | ||||||||||
Corporate and Other | (23,330 | ) | (6,944 | ) | — | (30,274 | ) | ||||||||
Consolidated | $ | 107,580 | $ | (24,637 | ) | $ | 94,215 | $ | 177,158 | ||||||
(1) | Asset Intensive is net of $13,145 DAC offset. |
(2) | Asset Intensive is net of $(90,123) 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 March 31, | ||||||
2017 | 2016 | ||||||
Earnings per share from net income: | |||||||
Basic earnings per share | $ | 2.26 | $ | 1.18 | |||
Diluted earnings per share | $ | 2.22 | $ | 1.17 | |||
Diluted earnings per share from adjusted operating income | $ | 1.86 | $ | 1.85 | |||
Weighted average number of common and common equivalent shares outstanding | 65,671 | 65,217 | |||||
(Unaudited) | At December 31, | ||||||
2017 | 2016 | ||||||
Treasury shares | 14,749 | 15,073 | |||||
Common shares outstanding | 64,389 | 64,065 | |||||
Book value per share outstanding | $ | 115.24 | $ | 104.88 | |||
Book value per share outstanding, before impact of AOCI | $ | 94.72 | $ | 84.11 | |||
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands)
(Unaudited) | Three Months Ended March 31, | ||||||
2017 | 2016 | ||||||
Revenues: | |||||||
Net premiums | $ | 2,365,696 | $ | 2,157,005 | |||
Investment income, net of related expenses | 514,364 | 417,266 | |||||
Investment related gains (losses), net: | |||||||
Other-than-temporary impairments on fixed maturity securities | (17,189 | ) | (33,817 | ) | |||
Other investment related gains (losses), net | 77,712 | (87,069 | ) | ||||
Total investment related gains (losses), net | 60,523 | (120,886 | ) | ||||
Other revenue | 68,157 | 59,183 | |||||
Total revenues | 3,008,740 | 2,512,568 | |||||
Benefits and expenses: | |||||||
Claims and other policy benefits | 2,106,145 | 1,886,764 | |||||
Interest credited | 107,684 | 87,905 | |||||
Policy acquisition costs and other insurance expenses | 379,389 | 233,763 | |||||
Other operating expenses | 158,506 | 157,424 | |||||
Interest expense | 42,402 | 32,807 | |||||
Collateral finance and securitization expense | 6,770 | 6,325 | |||||
Total benefits and expenses | 2,800,896 | 2,404,988 | |||||
Income before income taxes | 207,844 | 107,580 | |||||
Provision for income taxes | 62,332 | 31,108 | |||||
Net income | $ | 145,512 | $ | 76,472 | |||
# # #
Exhibit 99.2
Financial Supplement
First Quarter 2017
(Unaudited)
World Headquarters | Internet Address | Contacts | ||
16600 Swingley Ridge Road | www.rgare.com | Todd C. Larson | ||
Chesterfield, Missouri 63017 U.S.A. | Senior Executive Vice President | |||
and Chief Financial Officer | ||||
Phone: (636) 736-7000 | ||||
e-mail: tlarson@rgare.com | ||||
Jeff Hopson | ||||
Senior 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 dac | AA- | NR | NR | |||
RGA Global Reinsurance Company, Ltd. | 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
1st Quarter 2017
Table of Contents
Page | |
Consolidated | |
Segment Summaries of GAAP Income Statements and Adjusted Operating Income Statements | |
Investments | |
Appendix | |
Reinsurance Group of America, Incorporated
Quarterly Financial Supplement
Non-GAAP Disclosures
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
Beginning with the announcement of first quarter results, the Company is modifying the labeling of its non-GAAP measure, "operating income" to "adjusted operating income."
The definition and calculation of these measures are identical. Only the name of the measure is changing. The Company believes this change provides further clarity that
"operating income" is a non-GAAP measure. This modification does not affect previously reported results.
RGA uses a non-GAAP financial measure called adjusted 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 adjusted 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, adjusted 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 adjusted 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 adjusted operating income before income taxes is presented in the appendix.
RGA evaluates its shareholders' 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.
RGA uses a non-GAAP financial measure called adjusted operating return on equity, which is calculated as adjusted operating income divided by average shareholders’ equity excluding AOCI.
Additionally, RGA uses a non-GAAP financial measure called book value per share excluding the impact of AOCI 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.
| Page 1 | |
Reinsurance Group of America, Incorporated Financial Highlights | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
(USD thousands, except in force & per share data) | March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||
Net premiums | $ | 2,365,696 | $ | 2,493,163 | $ | 2,251,758 | $ | 2,346,945 | $ | 2,157,005 | $ | 208,691 | ||||||||||||
Net income | 145,512 | 190,149 | 198,719 | 236,103 | 76,472 | 69,040 | ||||||||||||||||||
Adjusted operating income | 122,065 | 171,259 | 159,361 | 181,228 | 120,750 | 1,315 | ||||||||||||||||||
Return on equity - annualized | 8.0 | % | 10.1 | % | 10.2 | % | 13.2 | % | 4.8 | % | 3.2 | % | ||||||||||||
Return on equity - trailing 12 months | 10.5 | % | 9.9 | % | 9.7 | % | 8.4 | % | 6.9 | % | 3.6 | % | ||||||||||||
Adjusted operating return on equity (ex AOCI): | ||||||||||||||||||||||||
Annualized | 8.1 | % | 11.7 | % | 11.2 | % | 13.2 | % | 8.9 | % | (0.8 | )% | ||||||||||||
Trailing 12 months | 11.0 | % | 11.2 | % | 11.8 | % | 11.4 | % | 10.6 | % | 0.4 | % | ||||||||||||
Total assets | $ | 53,805,820 | $ | 53,097,879 | $ | 54,832,498 | $ | 53,876,703 | $ | 52,186,624 | $ | 1,619,196 | ||||||||||||
Assumed Life Reinsurance In Force (in billions) | ||||||||||||||||||||||||
U.S. and Latin America Traditional | $ | 1,610.0 | $ | 1,609.3 | $ | 1,603.8 | $ | 1,612.9 | $ | 1,609.3 | $ | 0.7 | ||||||||||||
U.S. and Latin America Financial Solutions | 2.1 | 2.1 | 2.1 | 2.1 | 2.1 | — | ||||||||||||||||||
Canada Traditional | 363.6 | 355.7 | 358.7 | 361.8 | 349.0 | 14.6 | ||||||||||||||||||
Europe, Middle East and Africa Traditional | 642.6 | 603.0 | 612.8 | 608.3 | 624.2 | 18.4 | ||||||||||||||||||
Asia Pacific Traditional | 518.1 | 492.2 | 505.1 | 504.8 | 483.5 | 34.6 | ||||||||||||||||||
Asia Pacific Financial Solutions | 0.4 | 0.2 | 0.3 | 0.4 | 0.3 | 0.1 | ||||||||||||||||||
Total assumed life reinsurance in force | $ | 3,136.8 | $ | 3,062.5 | $ | 3,082.8 | $ | 3,090.3 | $ | 3,068.4 | $ | 68.4 | ||||||||||||
Assumed New Business Production (in billions) | ||||||||||||||||||||||||
U.S. and Latin America Traditional | $ | 26.8 | $ | 33.4 | $ | 19.7 | $ | 32.0 | $ | 41.3 | $ | (14.5 | ) | |||||||||||
Canada Traditional | 10.3 | 9.1 | 9.4 | 8.2 | 8.2 | 2.1 | ||||||||||||||||||
Europe, Middle East and Africa Traditional | 42.1 | 44.3 | 31.7 | 49.1 | 44.7 | (2.6 | ) | |||||||||||||||||
Asia Pacific Traditional | 12.4 | 21.6 | 20.5 | 18.0 | 13.6 | (1.2 | ) | |||||||||||||||||
Total assumed new business production | $ | 91.6 | $ | 108.4 | $ | 81.3 | $ | 107.3 | $ | 107.8 | $ | (16.2 | ) | |||||||||||
Per Share and Shares Data | ||||||||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||||||
Net income | $ | 2.26 | $ | 2.96 | $ | 3.10 | $ | 3.68 | $ | 1.18 | $ | 1.08 | ||||||||||||
Adjusted operating income | $ | 1.90 | $ | 2.67 | $ | 2.48 | $ | 2.83 | $ | 1.87 | $ | 0.03 | ||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||
Net income | $ | 2.22 | $ | 2.92 | $ | 3.07 | $ | 3.64 | $ | 1.17 | $ | 1.05 | ||||||||||||
Adjusted operating income | $ | 1.86 | $ | 2.63 | $ | 2.46 | $ | 2.80 | $ | 1.85 | $ | 0.01 | ||||||||||||
Wgt. average common shares outstanding | ||||||||||||||||||||||||
Basic | 64,353 | 64,251 | 64,146 | 64,126 | 64,568 | (215 | ) | |||||||||||||||||
Diluted | 65,671 | 65,124 | 64,815 | 64,796 | 65,217 | 454 | ||||||||||||||||||
Common shares issued | 79,138 | 79,138 | 79,138 | 79,138 | 79,138 | — | ||||||||||||||||||
Treasury shares | 14,749 | 14,835 | 14,932 | 15,068 | 15,073 | (324 | ) | |||||||||||||||||
Common shares outstanding | 64,389 | 64,303 | 64,206 | 64,070 | 64,065 | 324 | ||||||||||||||||||
Book value per share | $ | 115.24 | $ | 110.31 | $ | 124.50 | $ | 118.32 | $ | 104.88 | $ | 10.36 | ||||||||||||
Per share effect of AOCI | $ | 20.52 | $ | 17.72 | $ | 34.46 | $ | 30.99 | $ | 20.77 | $ | (0.25 | ) | |||||||||||
Book value per share, excluding AOCI | $ | 94.72 | $ | 92.59 | $ | 90.04 | $ | 87.33 | $ | 84.11 | $ | 10.61 | ||||||||||||
Shareholder dividends paid | $ | 26,380.9 | $ | 26,337.3 | $ | 26,288.3 | $ | 23,727.2 | $ | 24,018.6 | $ | 2,362.3 | ||||||||||||
| Page 2 | |
Reinsurance Group of America, Incorporated Consolidated GAAP Income Statements (including Adjusted Operating Income Reconciliations) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
(USD thousands) | March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | ||||||||||||||||||
Revenues: | 2017 | 2016 | 2016 | 2016 | 2016 | Quarter | ||||||||||||||||||
Net premiums | $ | 2,365,696 | $ | 2,493,163 | $ | 2,251,758 | $ | 2,346,945 | $ | 2,157,005 | $ | 208,691 | ||||||||||||
Investment income, net of related expenses | 514,364 | 497,227 | 489,727 | 507,666 | 417,266 | 97,098 | ||||||||||||||||||
Investment related gains (losses), net | ||||||||||||||||||||||||
OTTI on fixed maturity securities | (17,189 | ) | (4,142 | ) | — | (846 | ) | (33,817 | ) | 16,628 | ||||||||||||||
OTTI on fixed maturity securities transferred to OCI | — | 74 | — | — | — | — | ||||||||||||||||||
Other investment related gains (losses), net | 77,712 | 14,261 | 86,624 | 119,110 | (87,069 | ) | 164,781 | |||||||||||||||||
Total investment related gains (losses), net | 60,523 | 10,193 | 86,624 | 118,264 | (120,886 | ) | 181,409 | |||||||||||||||||
Other revenue | 68,157 | 68,715 | 72,468 | 66,193 | 59,183 | 8,974 | ||||||||||||||||||
Total revenues | 3,008,740 | 3,069,298 | 2,900,577 | 3,039,068 | 2,512,568 | 496,172 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 2,106,145 | 2,116,045 | 1,993,064 | 1,997,502 | 1,886,764 | 219,381 | ||||||||||||||||||
Interest credited | 107,684 | 64,089 | 116,848 | 95,849 | 87,905 | 19,779 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 379,389 | 370,134 | 300,962 | 405,681 | 233,763 | 145,626 | ||||||||||||||||||
Other operating expenses | 158,506 | 175,634 | 152,556 | 159,895 | 157,424 | 1,082 | ||||||||||||||||||
Interest expense | 42,402 | 41,422 | 43,063 | 20,331 | 32,807 | 9,595 | ||||||||||||||||||
Collateral finance and securitization expense | 6,770 | 6,431 | 6,484 | 6,587 | 6,325 | 445 | ||||||||||||||||||
Total benefits and expenses | 2,800,896 | 2,773,755 | 2,612,977 | 2,685,845 | 2,404,988 | 395,908 | ||||||||||||||||||
Income before income taxes | 207,844 | 295,543 | 287,600 | 353,223 | 107,580 | 100,264 | ||||||||||||||||||
Provision for income taxes | 62,332 | 105,394 | 88,881 | 117,120 | 31,108 | 31,224 | ||||||||||||||||||
Net income | $ | 145,512 | $ | 190,149 | $ | 198,719 | $ | 236,103 | $ | 76,472 | $ | 69,040 | ||||||||||||
Pre-tax Adjusted Operating Income Reconciliation: | ||||||||||||||||||||||||
Income before income taxes | $ | 207,844 | $ | 295,543 | $ | 287,600 | $ | 353,223 | $ | 107,580 | $ | 100,264 | ||||||||||||
Investment and derivative losses (gains) (1) | 33,272 | 103,944 | (26,958 | ) | (67,100 | ) | (31,968 | ) | 65,240 | |||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (68,702 | ) | (20,374 | ) | (49,078 | ) | (76,966 | ) | 92,249 | (160,951 | ) | |||||||||||||
GMXB embedded derivatives (1) | (22,363 | ) | (90,923 | ) | (7,988 | ) | 28,137 | 62,940 | (85,303 | ) | ||||||||||||||
Funds withheld losses (gains)—investment income | (654 | ) | (8,238 | ) | (3,322 | ) | (11,657 | ) | (4,983 | ) | 4,329 | |||||||||||||
EIA embedded derivatives—interest credited | (27,958 | ) | (39,964 | ) | 42 | (17,364 | ) | 29,149 | (57,107 | ) | ||||||||||||||
DAC offset, net | 52,340 | 27,625 | 31,876 | 64,841 | (76,978 | ) | 129,318 | |||||||||||||||||
Investment income on unit-linked variable annuities | (4,113 | ) | (4,217 | ) | (5,540 | ) | (2,966 | ) | (408 | ) | (3,705 | ) | ||||||||||||
Interest credited on unit-linked variable annuities | 4,113 | 4,217 | 5,540 | 2,966 | 408 | 3,705 | ||||||||||||||||||
Non-investment derivatives | 106 | 289 | (1,705 | ) | 110 | (831 | ) | 937 | ||||||||||||||||
Adjusted operating income before income taxes | $ | 173,885 | $ | 267,902 | $ | 230,467 | $ | 273,224 | $ | 177,158 | $ | (3,273 | ) | |||||||||||
After-tax Adjusted Operating Income Reconciliation: | ||||||||||||||||||||||||
Net Income | $ | 145,512 | $ | 190,149 | $ | 198,719 | $ | 236,103 | $ | 76,472 | $ | 69,040 | ||||||||||||
Investment and derivative losses (gains) (1) | 20,253 | 66,640 | (19,745 | ) | (46,490 | ) | (21,727 | ) | 41,980 | |||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (44,656 | ) | (13,243 | ) | (31,901 | ) | (50,028 | ) | 59,962 | (104,618 | ) | |||||||||||||
GMXB embedded derivatives (1) | (14,536 | ) | (59,100 | ) | (5,192 | ) | 18,289 | 40,911 | (55,447 | ) | ||||||||||||||
Funds withheld losses (gains)—investment income | (425 | ) | (5,355 | ) | (2,159 | ) | (7,577 | ) | (3,239 | ) | 2,814 | |||||||||||||
EIA embedded derivatives—interest credited | (18,173 | ) | (25,977 | ) | 28 | (11,287 | ) | 18,947 | (37,120 | ) | ||||||||||||||
DAC offset, net | 34,021 | 17,957 | 20,719 | 42,147 | (50,036 | ) | 84,057 | |||||||||||||||||
Investment income on unit-linked variable annuities | (2,673 | ) | (2,741 | ) | (3,601 | ) | (1,928 | ) | (265 | ) | (2,408 | ) | ||||||||||||
Interest credited on unit-linked variable annuities | 2,673 | 2,741 | 3,601 | 1,928 | 265 | 2,408 | ||||||||||||||||||
Non-investment derivatives | 69 | 188 | (1,108 | ) | 71 | (540 | ) | 609 | ||||||||||||||||
Adjusted operating income | $ | 122,065 | $ | 171,259 | $ | 159,361 | $ | 181,228 | $ | 120,750 | $ | 1,315 | ||||||||||||
(1) Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
| Page 3 | |
Reinsurance Group of America, Incorporated Consolidated Adjusted Operating Income Statements (USD thousands, except per share data) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 2,365,696 | $ | 2,493,163 | $ | 2,251,758 | $ | 2,346,945 | $ | 2,157,005 | $ | 208,691 | ||||||||||||
Investment income, net of related expenses | 509,597 | 484,772 | 480,865 | 493,043 | 411,875 | 97,722 | ||||||||||||||||||
Investment related gains (losses), net | 2,730 | 2,840 | 2,600 | 2,335 | 2,335 | 395 | ||||||||||||||||||
Other revenue | 68,263 | 69,004 | 70,763 | 66,303 | 58,352 | 9,911 | ||||||||||||||||||
Total revenues | 2,946,286 | 3,049,779 | 2,805,986 | 2,908,626 | 2,629,567 | 316,719 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 2,106,145 | 2,116,045 | 1,993,064 | 1,997,502 | 1,886,764 | 219,381 | ||||||||||||||||||
Interest credited | 131,529 | 99,836 | 111,266 | 110,247 | 58,348 | 73,181 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 327,049 | 342,509 | 269,086 | 340,840 | 310,741 | 16,308 | ||||||||||||||||||
Other operating expenses | 158,506 | 175,634 | 152,556 | 159,895 | 157,424 | 1,082 | ||||||||||||||||||
Interest expense | 42,402 | 41,422 | 43,063 | 20,331 | 32,807 | 9,595 | ||||||||||||||||||
Collateral finance and securitization expense | 6,770 | 6,431 | 6,484 | 6,587 | 6,325 | 445 | ||||||||||||||||||
Total benefits and expenses | 2,772,401 | 2,781,877 | 2,575,519 | 2,635,402 | 2,452,409 | 319,992 | ||||||||||||||||||
Adjusted operating income before income taxes | 173,885 | 267,902 | 230,467 | 273,224 | 177,158 | (3,273 | ) | |||||||||||||||||
Provision for adjusted operating income taxes | 51,820 | 96,643 | 71,106 | 91,996 | 56,408 | (4,588 | ) | |||||||||||||||||
Adjusted operating income | $ | 122,065 | $ | 171,259 | $ | 159,361 | $ | 181,228 | $ | 120,750 | $ | 1,315 | ||||||||||||
Wgt. average common shares outstanding (diluted) | 65,671 | 65,124 | 64,815 | 64,796 | 65,217 | 454 | ||||||||||||||||||
Diluted earnings per share—adjusted operating income | $ | 1.86 | $ | 2.63 | $ | 2.46 | $ | 2.80 | $ | 1.85 | $ | 0.01 | ||||||||||||
Foreign currency effect (1): | ||||||||||||||||||||||||
Net premiums | $ | (5,173 | ) | $ | (35,247 | ) | $ | (21,049 | ) | $ | (45,665 | ) | $ | (70,207 | ) | $ | 65,034 | |||||||
Adjusted operating income before income taxes | $ | (2,266 | ) | $ | (7,911 | ) | $ | (3,236 | ) | $ | (4,247 | ) | $ | (9,762 | ) | $ | 7,496 | |||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 4 | |
Reinsurance Group of America, Incorporated Consolidated Balance Sheets (USD thousands) | ||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 32,694,793 | $ | 32,093,625 | $ | 33,536,419 | $ | 33,160,976 | $ | 31,148,714 | ||||||||||
Mortgage loans on real estate | 3,871,309 | 3,775,522 | 3,607,700 | 3,377,039 | 3,292,496 | |||||||||||||||
Policy loans | 1,402,940 | 1,427,602 | 1,414,963 | 1,445,410 | 1,451,857 | |||||||||||||||
Funds withheld at interest | 5,943,450 | 5,875,919 | 5,922,656 | 5,899,289 | 5,797,183 | |||||||||||||||
Short-term investments | 54,288 | 76,710 | 126,702 | 195,979 | 431,535 | |||||||||||||||
Other invested assets | 1,429,175 | 1,591,940 | 1,777,065 | 1,682,143 | 1,368,544 | |||||||||||||||
Total investments | 45,395,955 | 44,841,318 | 46,385,505 | 45,760,836 | 43,490,329 | |||||||||||||||
Cash and cash equivalents | 1,178,114 | 1,200,718 | 1,379,693 | 1,034,329 | 1,502,082 | |||||||||||||||
Accrued investment income | 360,225 | 347,173 | 391,837 | 368,926 | 364,432 | |||||||||||||||
Premiums receivable and other reinsurance balances | 2,008,409 | 1,930,755 | 1,834,362 | 1,917,844 | 1,886,293 | |||||||||||||||
Reinsurance ceded receivables | 760,715 | 683,972 | 694,906 | 681,425 | 688,491 | |||||||||||||||
Deferred policy acquisition costs | 3,300,548 | 3,338,605 | 3,406,093 | 3,401,935 | 3,490,509 | |||||||||||||||
Other assets | 801,854 | 755,338 | 740,102 | 711,408 | 764,488 | |||||||||||||||
Total assets | $ | 53,805,820 | $ | 53,097,879 | $ | 54,832,498 | $ | 53,876,703 | $ | 52,186,624 | ||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Future policy benefits | $ | 19,832,483 | $ | 19,581,573 | $ | 19,634,157 | $ | 19,605,021 | $ | 19,811,921 | ||||||||||
Interest-sensitive contract liabilities | 14,039,919 | 14,029,354 | 14,217,831 | 14,024,012 | 14,087,081 | |||||||||||||||
Other policy claims and benefits | 4,649,192 | 4,263,026 | 4,304,491 | 4,305,219 | 4,384,072 | |||||||||||||||
Other reinsurance balances | 390,019 | 388,989 | 353,426 | 344,527 | 397,375 | |||||||||||||||
Deferred income taxes | 2,863,744 | 2,770,640 | 3,071,995 | 2,901,264 | 2,483,584 | |||||||||||||||
Other liabilities | 996,288 | 1,041,880 | 1,321,017 | 1,157,252 | 1,106,531 | |||||||||||||||
Long-term debt | 2,788,619 | 3,088,635 | 3,088,710 | 3,088,280 | 2,297,709 | |||||||||||||||
Collateral finance and securitization notes | 825,526 | 840,700 | 847,389 | 870,482 | 899,482 | |||||||||||||||
Total liabilities | 46,385,790 | 46,004,797 | 46,839,016 | 46,296,057 | 45,467,755 | |||||||||||||||
Stockholders’ Equity: | ||||||||||||||||||||
Common stock, at par value | 791 | 791 | 791 | 791 | 791 | |||||||||||||||
Additional paid-in-capital | 1,858,226 | 1,848,611 | 1,842,390 | 1,834,995 | 1,827,646 | |||||||||||||||
Retained earnings | 5,329,464 | 5,199,130 | 5,039,470 | 4,870,711 | 4,668,588 | |||||||||||||||
Treasury stock | (1,089,606 | ) | (1,094,779 | ) | (1,101,495 | ) | (1,111,225 | ) | (1,108,539 | ) | ||||||||||
Accumulated other comprehensive income (AOCI): | ||||||||||||||||||||
Accumulated currency translation adjustment, net of income taxes | (194,754 | ) | (172,541 | ) | (121,709 | ) | (93,476 | ) | (103,418 | ) | ||||||||||
Unrealized appreciation of securities, net of income taxes | 1,558,148 | 1,355,033 | 2,381,473 | 2,126,815 | 1,482,922 | |||||||||||||||
Pension and postretirement benefits, net of income taxes | (42,239 | ) | (43,163 | ) | (47,438 | ) | (47,965 | ) | (49,121 | ) | ||||||||||
Total stockholders’ equity | 7,420,030 | 7,093,082 | 7,993,482 | 7,580,646 | 6,718,869 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 53,805,820 | $ | 53,097,879 | $ | 54,832,498 | $ | 53,876,703 | $ | 52,186,624 | ||||||||||
Total stockholders’ equity, excluding AOCI | $ | 6,098,875 | $ | 5,953,753 | $ | 5,781,156 | $ | 5,595,272 | $ | 5,388,486 | ||||||||||
| Page 5 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Traditional GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 1,304,345 | $ | 1,430,291 | $ | 1,277,491 | $ | 1,307,395 | $ | 1,234,394 | $ | 69,951 | ||||||||||||
Investment income, net of related expenses | 178,995 | 184,674 | 167,898 | 182,238 | 165,023 | 13,972 | ||||||||||||||||||
Investment related gains (losses), net | 1,965 | 2,147 | (3,394 | ) | (882 | ) | (2,100 | ) | 4,065 | |||||||||||||||
Other revenue | 3,198 | 8,119 | 2,922 | 5,252 | 3,500 | (302 | ) | |||||||||||||||||
Total revenues | 1,488,503 | 1,625,231 | 1,444,917 | 1,494,003 | 1,400,817 | 87,686 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 1,225,640 | 1,232,207 | 1,131,507 | 1,149,665 | 1,119,442 | 106,198 | ||||||||||||||||||
Interest credited | 20,289 | 22,156 | 20,628 | 20,845 | 21,400 | (1,111 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 180,810 | 205,358 | 184,766 | 182,285 | 177,078 | 3,732 | ||||||||||||||||||
Other operating expenses | 31,804 | 34,018 | 30,935 | 29,778 | 31,799 | 5 | ||||||||||||||||||
Total benefits and expenses | 1,458,543 | 1,493,739 | 1,367,836 | 1,382,573 | 1,349,719 | 108,824 | ||||||||||||||||||
Income before income taxes | $ | 29,960 | $ | 131,492 | $ | 77,081 | $ | 111,430 | $ | 51,098 | $ | (21,138 | ) | |||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 94.0 | % | 86.2 | % | 88.6 | % | 87.9 | % | 90.7 | % | 3.3 | % | ||||||||||||
Policy acquisition costs and other insurance expenses | 13.9 | % | 14.4 | % | 14.5 | % | 13.9 | % | 14.3 | % | (0.4 | )% | ||||||||||||
Other operating expenses | 2.4 | % | 2.4 | % | 2.4 | % | 2.3 | % | 2.6 | % | (0.2 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | (959 | ) | $ | (1,372 | ) | $ | (1,135 | ) | $ | (2,243 | ) | $ | (867 | ) | $ | (92 | ) | ||||||
Income before income taxes | $ | (160 | ) | $ | 159 | $ | (41 | ) | $ | (189 | ) | $ | (21 | ) | $ | (139 | ) | |||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 6 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Traditional Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | Qtr vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 1,304,345 | $ | 1,430,291 | $ | 1,277,491 | $ | 1,307,395 | $ | 1,234,394 | $ | 69,951 | ||||||||||||
Investment income, net of related expenses | 178,995 | 184,674 | 167,898 | 182,238 | 165,023 | 13,972 | ||||||||||||||||||
Investment related gains (losses), net | 1 | — | — | — | — | 1 | ||||||||||||||||||
Other revenue | 3,198 | 8,119 | 2,922 | 5,252 | 3,500 | (302 | ) | |||||||||||||||||
Total revenues | 1,486,539 | 1,623,084 | 1,448,311 | 1,494,885 | 1,402,917 | 83,622 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 1,225,640 | 1,232,207 | 1,131,507 | 1,149,665 | 1,119,442 | 106,198 | ||||||||||||||||||
Interest credited | 20,289 | 22,156 | 20,628 | 20,845 | 21,400 | (1,111 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 180,810 | 205,358 | 184,766 | 182,285 | 177,078 | 3,732 | ||||||||||||||||||
Other operating expenses | 31,804 | 34,018 | 30,935 | 29,778 | 31,799 | 5 | ||||||||||||||||||
Total benefits and expenses | 1,458,543 | 1,493,739 | 1,367,836 | 1,382,573 | 1,349,719 | 108,824 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 27,996 | $ | 129,345 | $ | 80,475 | $ | 112,312 | $ | 53,198 | $ | (25,202 | ) | |||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 94.0 | % | 86.2 | % | 88.6 | % | 87.9 | % | 90.7 | % | 3.3 | % | ||||||||||||
Policy acquisition costs and other insurance expenses | 13.9 | % | 14.4 | % | 14.5 | % | 13.9 | % | 14.3 | % | (0.4 | )% | ||||||||||||
Other operating expenses | 2.4 | % | 2.4 | % | 2.4 | % | 2.3 | % | 2.6 | % | (0.2 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | (959 | ) | $ | (1,372 | ) | $ | (1,135 | ) | $ | (2,243 | ) | $ | (867 | ) | $ | (92 | ) | ||||||
Income before income taxes | $ | (160 | ) | $ | 159 | $ | (41 | ) | $ | (189 | ) | $ | (21 | ) | $ | (139 | ) | |||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 7 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Financial Solutions - Asset Intensive GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 4,635 | $ | 7,099 | $ | 5,369 | $ | 5,662 | $ | 6,219 | $ | (1,584 | ) | |||||||||||
Investment income, net of related expenses | 187,153 | 161,395 | 167,683 | 177,681 | 117,215 | 69,938 | ||||||||||||||||||
Investment related gains (losses), net | 57,771 | 5,708 | 59,661 | 76,830 | (128,551 | ) | 186,322 | |||||||||||||||||
Other revenue | 23,214 | 22,808 | 23,417 | 24,555 | 22,834 | 380 | ||||||||||||||||||
Total revenues | 272,773 | 197,010 | 256,130 | 284,728 | 17,717 | 255,056 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 17,536 | 23,593 | 18,927 | 19,507 | 19,833 | (2,297 | ) | |||||||||||||||||
Interest credited | 79,157 | 33,511 | 86,742 | 68,436 | 62,558 | 16,599 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 83,653 | 60,306 | 56,497 | 97,078 | (39,656 | ) | 123,309 | |||||||||||||||||
Other operating expenses | 6,657 | 7,339 | 5,232 | 5,728 | 5,812 | 845 | ||||||||||||||||||
Total benefits and expenses | 187,003 | 124,749 | 167,398 | 190,749 | 48,547 | 138,456 | ||||||||||||||||||
Income (loss) before income taxes | $ | 85,770 | $ | 72,261 | $ | 88,732 | $ | 93,979 | $ | (30,830 | ) | $ | 116,600 | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 8 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Financial Solutions - Asset Intensive Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 4,635 | $ | 7,099 | $ | 5,369 | $ | 5,662 | $ | 6,219 | $ | (1,584 | ) | |||||||||||
Investment income, net of related expenses | 186,409 | 153,879 | 165,388 | 167,377 | 112,591 | 73,818 | ||||||||||||||||||
Investment related gains (losses), net | — | — | (1 | ) | 1 | — | — | |||||||||||||||||
Other revenue | 23,214 | 22,808 | 23,417 | 24,555 | 22,834 | 380 | ||||||||||||||||||
Total revenues | 214,258 | 183,786 | 194,173 | 197,595 | 141,644 | 72,614 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 17,536 | 23,593 | 18,927 | 19,507 | 19,833 | (2,297 | ) | |||||||||||||||||
Interest credited | 107,115 | 73,475 | 86,700 | 85,800 | 33,409 | 73,706 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 31,313 | 32,681 | 24,621 | 32,237 | 37,322 | (6,009 | ) | |||||||||||||||||
Other operating expenses | 6,657 | 7,339 | 5,232 | 5,728 | 5,812 | 845 | ||||||||||||||||||
Total benefits and expenses | 162,621 | 137,088 | 135,480 | 143,272 | 96,376 | 66,245 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 51,637 | $ | 46,698 | $ | 58,693 | $ | 54,323 | $ | 45,268 | $ | 6,369 | ||||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 9 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Financial Solutions - Asset Intensive (Continued) (USD millions) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||
Annuity account values: | ||||||||||||||||||||
Fixed annuities (deferred) | $ | 5,072 | $ | 5,091 | $ | 5,130 | $ | 5,189 | $ | 5,210 | ||||||||||
Net interest spread (fixed annuities) | 2.2 | % | 2.4 | % | 2.6 | % | 2.5 | % | 2.1 | % | ||||||||||
Equity-indexed annuities | $ | 4,238 | $ | 4,291 | $ | 4,374 | $ | 4,402 | $ | 4,448 | ||||||||||
Variable annuities account values | ||||||||||||||||||||
No riders | $ | 727 | $ | 731 | $ | 739 | $ | 732 | $ | 753 | ||||||||||
GMDB only | 58 | 58 | 58 | 58 | 60 | |||||||||||||||
GMIB only | 5 | 5 | 5 | 5 | 5 | |||||||||||||||
GMAB only | 29 | 28 | 29 | 29 | 31 | |||||||||||||||
GMWB only | 1,354 | 1,334 | 1,370 | 1,367 | 1,386 | |||||||||||||||
GMDB / WB | 339 | 335 | 342 | 341 | 349 | |||||||||||||||
Other | 20 | 19 | 20 | 20 | 21 | |||||||||||||||
Total variable annuities account values | $ | 2,532 | $ | 2,510 | $ | 2,563 | $ | 2,552 | $ | 2,605 | ||||||||||
Fair value of liabilities associated with living benefit riders | $ | 162 | $ | 185 | $ | 276 | $ | 284 | $ | 255 | ||||||||||
Interest-sensitive contract liabilities associated with: | ||||||||||||||||||||
Guaranteed investment contracts | $ | 675 | $ | 554 | $ | 456 | $ | 354 | $ | 368 | ||||||||||
Bank-owned life insurance (BOLI) | $ | 575 | $ | 571 | $ | 568 | $ | 565 | $ | 562 | ||||||||||
Other asset-intensive business | $ | 64 | $ | 65 | $ | 65 | $ | 66 | $ | 66 | ||||||||||
Future policy benefits associated with: | ||||||||||||||||||||
Payout annuities | $ | 1,950 | $ | 1,964 | $ | 1,974 | $ | 1,978 | $ | 1,949 | ||||||||||
| Page 10 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Financial Solutions - Financial Reinsurance GAAP Income Statements (USD thousands) | |||||||||||||||||||||||||
Three Months Ended | Current | ||||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | ||||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Investment income, net of related expenses | $ | 1,664 | $ | 1,092 | $ | 1,038 | $ | 2,386 | $ | 2,607 | $ | (943 | ) | ||||||||||||
Other revenue | 24,409 | 22,227 | 18,967 | 17,963 | 18,581 | 5,828 | |||||||||||||||||||
Total revenues | 26,073 | 23,319 | 20,005 | 20,349 | 21,188 | 4,885 | |||||||||||||||||||
Benefits and expenses: | |||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 5,941 | 5,505 | 3,492 | 3,085 | 2,568 | 3,373 | |||||||||||||||||||
Other operating expenses | 2,316 | 3,367 | 2,531 | 2,389 | 2,686 | (370 | ) | ||||||||||||||||||
Total benefits and expenses | 8,257 | 8,872 | 6,023 | 5,474 | 5,254 | 3,003 | |||||||||||||||||||
Income before income taxes | $ | 17,816 | $ | 14,447 | $ | 13,982 | $ | 14,875 | $ | 15,934 | $ | 1,882 | |||||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | |||||||||||||||||||||||||
| Page 11 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Financial Solutions - Financial Reinsurance Adjusted Operating Income Statements (USD thousands) | |||||||||||||||||||||||||
Three Months Ended | Current Qtr | ||||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | ||||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Investment income, net of related expenses | $ | 1,664 | $ | 1,092 | $ | 1,038 | $ | 2,386 | $ | 2,607 | $ | (943 | ) | ||||||||||||
Other revenue | 24,409 | 22,227 | 18,967 | 17,963 | 18,581 | 5,828 | |||||||||||||||||||
Total revenues | 26,073 | 23,319 | 20,005 | 20,349 | 21,188 | 4,885 | |||||||||||||||||||
Benefits and expenses: | |||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 5,941 | 5,505 | 3,492 | 3,085 | 2,568 | 3,373 | |||||||||||||||||||
Other operating expenses | 2,316 | 3,367 | 2,531 | 2,389 | 2,686 | (370 | ) | ||||||||||||||||||
Total benefits and expenses | 8,257 | 8,872 | 6,023 | 5,474 | 5,254 | 3,003 | |||||||||||||||||||
Adjusted operating income before income taxes | $ | 17,816 | $ | 14,447 | $ | 13,982 | $ | 14,875 | $ | 15,934 | $ | 1,882 | |||||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | |||||||||||||||||||||||||
| Page 12 | |
Reinsurance Group of America, Incorporated Canada Traditional GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 215,762 | $ | 241,918 | $ | 231,154 | $ | 240,107 | $ | 215,463 | $ | 299 | ||||||||||||
Investment income, net of related expenses | 44,506 | 44,806 | 45,239 | 46,859 | 42,023 | 2,483 | ||||||||||||||||||
Investment related gains (losses), net | 3,843 | 2,771 | 3,832 | 2,285 | 1,640 | 2,203 | ||||||||||||||||||
Other revenue | 164 | 638 | 734 | (339 | ) | (1,126 | ) | 1,290 | ||||||||||||||||
Total revenues | 264,275 | 290,133 | 280,959 | 288,912 | 258,000 | 6,275 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 191,052 | 182,912 | 175,618 | 176,478 | 172,401 | 18,651 | ||||||||||||||||||
Interest credited | 4 | 2 | 8 | 7 | 2 | 2 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 45,682 | 60,074 | 61,019 | 60,021 | 57,138 | (11,456 | ) | |||||||||||||||||
Other operating expenses | 8,209 | 10,119 | 10,039 | 9,097 | 8,364 | (155 | ) | |||||||||||||||||
Total benefits and expenses | 244,947 | 253,107 | 246,684 | 245,603 | 237,905 | 7,042 | ||||||||||||||||||
Income before income taxes | $ | 19,328 | $ | 37,026 | $ | 34,275 | $ | 43,309 | $ | 20,095 | $ | (767 | ) | |||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Loss ratios (creditor business) | 27.1 | % | 22.5 | % | 27.0 | % | 32.2 | % | 25.8 | % | 1.3 | % | ||||||||||||
Loss ratios (excluding creditor business) | 100.7 | % | 92.2 | % | 93.1 | % | 87.4 | % | 98.5 | % | 2.2 | % | ||||||||||||
Claims and other policy benefits / (net premiums + investment income) | 73.4 | % | 63.8 | % | 63.5 | % | 61.5 | % | 67.0 | % | 6.4 | % | ||||||||||||
Policy acquisition costs and other insurance expenses (creditor business) | 66.0 | % | 67.5 | % | 65.7 | % | 64.3 | % | 66.9 | % | (0.9 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses (excluding creditor business) | 12.3 | % | 11.5 | % | 12.6 | % | 11.8 | % | 12.7 | % | (0.4 | )% | ||||||||||||
Other operating expenses | 3.8 | % | 4.2 | % | 4.3 | % | 3.8 | % | 3.9 | % | (0.1 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 7,551 | $ | (108 | ) | $ | 724 | $ | (11,615 | ) | $ | (22,010 | ) | $ | 29,561 | |||||||||
Income before income taxes | $ | 1,187 | $ | (483 | ) | $ | 104 | $ | (2,247 | ) | $ | (3,129 | ) | $ | 4,316 | |||||||||
Creditor reinsurance net premiums | $ | 35,564 | $ | 57,471 | $ | 59,983 | $ | 60,275 | $ | 54,854 | $ | (19,290 | ) | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
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 13 | |
Reinsurance Group of America, Incorporated Canada Traditional Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 215,762 | $ | 241,918 | $ | 231,154 | $ | 240,107 | $ | 215,463 | $ | 299 | ||||||||||||
Investment income, net of related expenses | 44,596 | 44,084 | 44,212 | 45,506 | 41,664 | 2,932 | ||||||||||||||||||
Investment related gains, net | 1,191 | 1,221 | 1,208 | 1,236 | 1,268 | (77 | ) | |||||||||||||||||
Other revenue | 164 | 638 | 734 | (339 | ) | (1,126 | ) | 1,290 | ||||||||||||||||
Total revenues | 261,713 | 287,861 | 277,308 | 286,510 | 257,269 | 4,444 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 191,052 | 182,912 | 175,618 | 176,478 | 172,401 | 18,651 | ||||||||||||||||||
Interest credited | 4 | 2 | 8 | 7 | 2 | 2 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 45,682 | 60,074 | 61,019 | 60,021 | 57,138 | (11,456 | ) | |||||||||||||||||
Other operating expenses | 8,209 | 10,119 | 10,039 | 9,097 | 8,364 | (155 | ) | |||||||||||||||||
Total benefits and expenses | 244,947 | 253,107 | 246,684 | 245,603 | 237,905 | 7,042 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 16,766 | $ | 34,754 | $ | 30,624 | $ | 40,907 | $ | 19,364 | $ | (2,598 | ) | |||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Loss ratios (creditor business) | 27.1 | % | 22.5 | % | 27.0 | % | 32.2 | % | 25.8 | % | 1.3 | % | ||||||||||||
Loss ratios (excluding creditor business) | 100.7 | % | 92.2 | % | 93.1 | % | 87.4 | % | 98.5 | % | 2.2 | % | ||||||||||||
Claims and other policy benefits / (net premiums + investment income) | 73.4 | % | 64.0 | % | 63.8 | % | 61.8 | % | 67.0 | % | 6.4 | % | ||||||||||||
Policy acquisition costs and other insurance expenses (creditor business) | 66.0 | % | 67.5 | % | 65.7 | % | 64.3 | % | 66.9 | % | (0.9 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses (excluding creditor business) | 12.3 | % | 11.5 | % | 12.6 | % | 11.8 | % | 12.7 | % | (0.4 | )% | ||||||||||||
Other operating expenses | 3.8 | % | 4.2 | % | 4.3 | % | 3.8 | % | 3.9 | % | (0.1 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 7,551 | $ | (108 | ) | $ | 724 | $ | (11,615 | ) | $ | (22,010 | ) | $ | 29,561 | |||||||||
Adjusted operating income before income taxes | $ | 1,130 | $ | (505 | ) | $ | 104 | $ | (2,130 | ) | $ | (3,701 | ) | $ | 4,831 | |||||||||
Creditor reinsurance net premiums | $ | 35,564 | $ | 57,471 | $ | 59,983 | $ | 60,275 | $ | 54,854 | $ | (19,290 | ) | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
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 14 | |
Reinsurance Group of America, Incorporated Canada Financial Solutions (1) GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 9,410 | $ | 9,612 | $ | 9,946 | $ | 10,192 | $ | 8,951 | $ | 459 | ||||||||||||
Investment income, net of related expenses | 1,044 | 1,043 | 1,037 | 228 | 384 | 660 | ||||||||||||||||||
Other revenue | 1,353 | 1,386 | 1,376 | 1,434 | 1,349 | 4 | ||||||||||||||||||
Total revenues | 11,807 | 12,041 | 12,359 | 11,854 | 10,684 | 1,123 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 7,619 | 7,270 | 10,567 | 8,834 | 9,604 | (1,985 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 144 | 229 | 285 | 513 | 204 | (60 | ) | |||||||||||||||||
Other operating expenses | 452 | 477 | 347 | 379 | 284 | 168 | ||||||||||||||||||
Total benefits and expenses | 8,215 | 7,976 | 11,199 | 9,726 | 10,092 | (1,877 | ) | |||||||||||||||||
Income before income taxes | $ | 3,592 | $ | 4,065 | $ | 1,160 | $ | 2,128 | $ | 592 | $ | 3,000 | ||||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 436 | $ | (3 | ) | $ | 33 | $ | (491 | ) | $ | (915 | ) | $ | 1,351 | |||||||||
Income before income taxes | $ | 244 | $ | 13 | $ | (9 | ) | $ | (106 | ) | $ | (575 | ) | $ | 819 | |||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Canada Financial Solutions operations includes longevity and financial reinsurance transactions. | ||||||||||||||||||||||||
(2) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 15 | |
Reinsurance Group of America, Incorporated Canada Financial Solutions (1) Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 9,410 | $ | 9,612 | $ | 9,946 | $ | 10,192 | $ | 8,951 | $ | 459 | ||||||||||||
Investment income, net of related expenses | 1,044 | 1,043 | 1,037 | 228 | 384 | 660 | ||||||||||||||||||
Other revenue | 1,353 | 1,386 | 1,376 | 1,434 | 1,349 | 4 | ||||||||||||||||||
Total revenues | 11,807 | 12,041 | 12,359 | 11,854 | 10,684 | 1,123 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 7,619 | 7,270 | 10,567 | 8,834 | 9,604 | (1,985 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 144 | 229 | 285 | 513 | 204 | (60 | ) | |||||||||||||||||
Other operating expenses | 452 | 477 | 347 | 379 | 284 | 168 | ||||||||||||||||||
Total benefits and expenses | 8,215 | 7,976 | 11,199 | 9,726 | 10,092 | (1,877 | ) | |||||||||||||||||
Adjusted operating income before income taxes | $ | 3,592 | $ | 4,065 | $ | 1,160 | $ | 2,128 | $ | 592 | $ | 3,000 | ||||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 436 | $ | (3 | ) | $ | 33 | $ | (491 | ) | $ | (915 | ) | $ | 1,351 | |||||||||
Adjusted operating income before income taxes | $ | 244 | $ | 13 | $ | (9 | ) | $ | (106 | ) | $ | (575 | ) | $ | 819 | |||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Canada Financial Solutions operations includes longevity and financial reinsurance transactions. | ||||||||||||||||||||||||
(2) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 16 | |
Reinsurance Group of America, Incorporated Europe, Middle East and Africa Traditional GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 304,672 | $ | 301,252 | $ | 275,514 | $ | 286,861 | $ | 276,435 | $ | 28,237 | ||||||||||||
Investment income, net of related expenses | 12,720 | 11,745 | 13,067 | 13,321 | 12,168 | 552 | ||||||||||||||||||
Investment related gains (losses), net | 7 | — | — | — | 5 | 2 | ||||||||||||||||||
Other revenue | 687 | 1,806 | 489 | 1,460 | 1,026 | (339 | ) | |||||||||||||||||
Total revenues | 318,086 | 314,803 | 289,070 | 301,642 | 289,634 | 28,452 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 266,401 | 253,663 | 241,763 | 252,336 | 251,243 | 15,158 | ||||||||||||||||||
Interest credited | — | — | — | — | — | — | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 15,163 | 17,383 | 14,133 | 17,550 | 14,782 | 381 | ||||||||||||||||||
Other operating expenses | 22,546 | 27,931 | 24,659 | 24,922 | 24,725 | (2,179 | ) | |||||||||||||||||
Total benefits and expenses | 304,110 | 298,977 | 280,555 | 294,808 | 290,750 | 13,360 | ||||||||||||||||||
Income (loss) before income taxes | $ | 13,976 | $ | 15,826 | $ | 8,515 | $ | 6,834 | $ | (1,116 | ) | $ | 15,092 | |||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 87.4 | % | 84.2 | % | 87.7 | % | 88.0 | % | 90.9 | % | (3.5 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses | 5.0 | % | 5.8 | % | 5.1 | % | 6.1 | % | 5.3 | % | (0.3 | )% | ||||||||||||
Other operating expenses | 7.4 | % | 9.3 | % | 9.0 | % | 8.7 | % | 8.9 | % | (1.5 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | (17,859 | ) | $ | (37,351 | ) | $ | (32,564 | ) | $ | (20,223 | ) | $ | (23,009 | ) | $ | 5,150 | |||||||
Income (loss) before income taxes | $ | (721 | ) | $ | (1,021 | ) | $ | 157 | $ | 45 | $ | (184 | ) | $ | (537 | ) | ||||||||
Critical illness net premiums | $ | 45,976 | $ | 46,455 | $ | 49,531 | $ | 53,805 | $ | 53,643 | $ | (7,667 | ) | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 17 | |
Reinsurance Group of America, Incorporated Europe, Middle East and Africa Traditional Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 304,672 | $ | 301,252 | $ | 275,514 | $ | 286,861 | $ | 276,435 | $ | 28,237 | ||||||||||||
Investment income, net of related expenses | 12,720 | 11,745 | 13,067 | 13,321 | 12,168 | 552 | ||||||||||||||||||
Investment related gains (losses), net | — | — | — | — | — | — | ||||||||||||||||||
Other revenue | 687 | 1,806 | 489 | 1,460 | 1,026 | (339 | ) | |||||||||||||||||
Total revenues | 318,079 | 314,803 | 289,070 | 301,642 | 289,629 | 28,450 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 266,401 | 253,663 | 241,763 | 252,336 | 251,243 | 15,158 | ||||||||||||||||||
Interest credited | — | — | — | — | — | — | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 15,163 | 17,383 | 14,133 | 17,550 | 14,782 | 381 | ||||||||||||||||||
Other operating expenses | 22,546 | 27,931 | 24,659 | 24,922 | 24,725 | (2,179 | ) | |||||||||||||||||
Total benefits and expenses | 304,110 | 298,977 | 280,555 | 294,808 | 290,750 | 13,360 | ||||||||||||||||||
Adjusted operating income (loss) before income taxes | $ | 13,969 | $ | 15,826 | $ | 8,515 | $ | 6,834 | $ | (1,121 | ) | $ | 15,090 | |||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 87.4 | % | 84.2 | % | 87.7 | % | 88.0 | % | 90.9 | % | (3.5 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses | 5.0 | % | 5.8 | % | 5.1 | % | 6.1 | % | 5.3 | % | (0.3 | )% | ||||||||||||
Other operating expenses | 7.4 | % | 9.3 | % | 9.0 | % | 8.7 | % | 8.9 | % | (1.5 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | (17,859 | ) | $ | (37,351 | ) | $ | (32,564 | ) | $ | (20,223 | ) | $ | (23,009 | ) | $ | 5,150 | |||||||
Adjusted operating income (loss) before income taxes | $ | (721 | ) | $ | (1,021 | ) | $ | 157 | $ | 46 | $ | (194 | ) | $ | (527 | ) | ||||||||
Critical illness net premiums | $ | 45,976 | $ | 46,455 | $ | 49,531 | $ | 53,805 | $ | 53,643 | $ | (7,667 | ) | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 18 | |
Reinsurance Group of America, Incorporated Europe, Middle East and Africa Financial Solutions (1) GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 41,995 | $ | 54,163 | $ | 47,018 | $ | 43,484 | $ | 35,606 | $ | 6,389 | ||||||||||||
Investment income, net of related expenses | 29,681 | 29,994 | 33,187 | 33,417 | 28,684 | 997 | ||||||||||||||||||
Investment related gains (losses), net | 4,575 | 4,914 | 8,159 | 1,468 | (1,004 | ) | 5,579 | |||||||||||||||||
Other revenue | 3,738 | 2,962 | 11,388 | 2,608 | 4,470 | (732 | ) | |||||||||||||||||
Total revenues | 79,989 | 92,033 | 99,752 | 80,977 | 67,756 | 12,233 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 35,936 | 38,631 | 45,805 | 44,004 | 36,443 | (507 | ) | |||||||||||||||||
Interest credited | 4,113 | 4,217 | 5,540 | 2,966 | 408 | 3,705 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 289 | (220 | ) | (304 | ) | 723 | (193 | ) | 482 | |||||||||||||||
Other operating expenses | 7,733 | 8,077 | 4,925 | 5,815 | 5,674 | 2,059 | ||||||||||||||||||
Total benefits and expenses | 48,071 | 50,705 | 55,966 | 53,508 | 42,332 | 5,739 | ||||||||||||||||||
Income before income taxes | $ | 31,918 | $ | 41,328 | $ | 43,786 | $ | 27,469 | $ | 25,424 | $ | 6,494 | ||||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | (6,169 | ) | $ | (9,059 | ) | $ | (8,262 | ) | $ | (3,127 | ) | $ | (2,022 | ) | $ | (4,147 | ) | ||||||
Income before income taxes | $ | (4,730 | ) | $ | (9,274 | ) | $ | (6,193 | ) | $ | (1,991 | ) | $ | (1,924 | ) | $ | (2,806 | ) | ||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Europe, Middle East and Africa Financial Solutions operations includes asset intensive, financial reinsurance, capital motivated and longevity closed block business. | ||||||||||||||||||||||||
(2) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 19 | |
Reinsurance Group of America, Incorporated Europe, Middle East and Africa Financial Solutions (1) Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2016 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 41,995 | $ | 54,163 | $ | 47,018 | $ | 43,484 | $ | 35,606 | $ | 6,389 | ||||||||||||
Investment income, net of related expenses | 25,568 | 25,777 | 27,647 | 30,451 | 28,276 | (2,708 | ) | |||||||||||||||||
Other revenue | 3,870 | 3,276 | 9,706 | 2,735 | 3,653 | 217 | ||||||||||||||||||
Total revenues | 71,433 | 83,216 | 84,371 | 76,670 | 67,535 | 3,898 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 35,936 | 38,631 | 45,805 | 44,004 | 36,443 | (507 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 289 | (220 | ) | (304 | ) | 723 | (193 | ) | 482 | |||||||||||||||
Other operating expenses | 7,733 | 8,077 | 4,925 | 5,815 | 5,674 | 2,059 | ||||||||||||||||||
Total benefits and expenses | 43,958 | 46,488 | 50,426 | 50,542 | 41,924 | 2,034 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 27,475 | $ | 36,728 | $ | 33,945 | $ | 26,128 | $ | 25,611 | $ | 1,864 | ||||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | (6,169 | ) | $ | (9,059 | ) | $ | (8,262 | ) | $ | (3,127 | ) | $ | (2,022 | ) | $ | (4,147 | ) | ||||||
Adjusted operating income before income taxes | $ | (4,006 | ) | $ | (8,168 | ) | $ | (4,742 | ) | $ | (1,819 | ) | $ | (1,978 | ) | $ | (2,028 | ) | ||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Europe, Middle East and Africa Financial Solutions operations includes asset intensive, financial reinsurance, capital motivated and longevity closed block business. | ||||||||||||||||||||||||
(2) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 20 | |
Reinsurance Group of America, Incorporated Asia Pacific Traditional GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 483,307 | $ | 448,283 | $ | 404,451 | $ | 454,629 | $ | 374,142 | $ | 109,165 | ||||||||||||
Investment income, net of related expenses | 21,902 | 21,448 | 21,273 | 20,461 | 19,867 | 2,035 | ||||||||||||||||||
Investment related gains (losses), net | — | — | — | — | 14 | (14 | ) | |||||||||||||||||
Other revenue | 21 | 2,002 | 1,923 | 2,481 | 176 | (155 | ) | |||||||||||||||||
Total revenues | 505,230 | 471,733 | 427,647 | 477,571 | 394,199 | 111,031 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 355,439 | 368,091 | 365,115 | 338,447 | 274,298 | 81,141 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 72,857 | 46,604 | 4,157 | 67,908 | 44,367 | 28,490 | ||||||||||||||||||
Other operating expenses | 35,246 | 38,574 | 38,553 | 36,734 | 34,374 | 872 | ||||||||||||||||||
Total benefits and expenses | 463,542 | 453,269 | 407,825 | 443,089 | 353,039 | 110,503 | ||||||||||||||||||
Income before income taxes | $ | 41,688 | $ | 18,464 | $ | 19,822 | $ | 34,482 | $ | 41,160 | $ | 528 | ||||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 73.5 | % | 82.1 | % | 90.3 | % | 74.4 | % | 73.3 | % | 0.2 | % | ||||||||||||
Policy acquisition costs and other insurance expenses | 15.1 | % | 10.4 | % | 1.0 | % | 14.9 | % | 11.9 | % | 3.2 | % | ||||||||||||
Other operating expenses | 7.3 | % | 8.6 | % | 9.5 | % | 8.1 | % | 9.2 | % | (1.9 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 11,810 | $ | 12,575 | $ | 20,095 | $ | (7,741 | ) | $ | (21,627 | ) | $ | 33,437 | ||||||||||
Income before income taxes | $ | 851 | $ | 1,143 | $ | 331 | $ | 506 | $ | (2,735 | ) | $ | 3,586 | |||||||||||
Critical illness net premiums | $ | 141,883 | $ | 85,931 | $ | 100,641 | $ | 113,297 | $ | 98,389 | $ | 43,494 | ||||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 21 | |
Reinsurance Group of America, Incorporated Asia Pacific Traditional Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 483,307 | $ | 448,283 | $ | 404,451 | $ | 454,629 | $ | 374,142 | $ | 109,165 | ||||||||||||
Investment income, net of related expenses | 21,902 | 21,448 | 21,273 | 20,461 | 19,867 | 2,035 | ||||||||||||||||||
Investment related losses, net | — | — | — | — | (2 | ) | 2 | |||||||||||||||||
Other revenue | 21 | 2,002 | 1,923 | 2,481 | 176 | (155 | ) | |||||||||||||||||
Total revenues | 505,230 | 471,733 | 427,647 | 477,571 | 394,183 | 111,047 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 355,439 | 368,091 | 365,115 | 338,447 | 274,298 | 81,141 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 72,857 | 46,604 | 4,157 | 67,908 | 44,367 | 28,490 | ||||||||||||||||||
Other operating expenses | 35,246 | 38,574 | 38,553 | 36,734 | 34,374 | 872 | ||||||||||||||||||
Total benefits and expenses | 463,542 | 453,269 | 407,825 | 443,089 | 353,039 | 110,503 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 41,688 | $ | 18,464 | $ | 19,822 | $ | 34,482 | $ | 41,144 | $ | 544 | ||||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 73.5 | % | 82.1 | % | 90.3 | % | 74.4 | % | 73.3 | % | 0.2 | % | ||||||||||||
Policy acquisition costs and other insurance expenses | 15.1 | % | 10.4 | % | 1.0 | % | 14.9 | % | 11.9 | % | 3.2 | % | ||||||||||||
Other operating expenses | 7.3 | % | 8.6 | % | 9.5 | % | 8.1 | % | 9.2 | % | (1.9 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 11,810 | $ | 12,575 | $ | 20,095 | $ | (7,741 | ) | $ | (21,627 | ) | $ | 33,437 | ||||||||||
Adjusted operating income before income taxes | $ | 851 | $ | 1,144 | $ | 331 | $ | 506 | $ | (2,748 | ) | $ | 3,599 | |||||||||||
Critical illness net premiums | $ | 141,883 | $ | 85,931 | $ | 100,641 | $ | 113,297 | $ | 98,389 | $ | 43,494 | ||||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 22 | |
Reinsurance Group of America, Incorporated Asia Pacific Financial Solutions (1) GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 1,526 | $ | 492 | $ | 743 | $ | (1,493 | ) | $ | 5,686 | $ | (4,160 | ) | ||||||||||
Investment income, net of related expenses | 5,536 | 5,562 | 5,827 | 5,885 | 6,374 | (838 | ) | |||||||||||||||||
Investment related gains (losses), net | 7,185 | (4,886 | ) | 6,108 | 6,527 | 1,687 | 5,498 | |||||||||||||||||
Other revenue | 6,205 | 6,061 | 6,359 | 6,126 | 6,324 | (119 | ) | |||||||||||||||||
Total revenues | 20,452 | 7,229 | 19,037 | 17,045 | 20,071 | 381 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 6,495 | 9,693 | 3,777 | 8,237 | 3,473 | 3,022 | ||||||||||||||||||
Interest credited | 2,997 | 3,322 | 3,308 | 3,136 | 3,030 | (33 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 1,917 | 1,635 | 1,482 | 1,667 | 1,287 | 630 | ||||||||||||||||||
Other operating expenses | 3,171 | 4,545 | 2,921 | 4,078 | 3,728 | (557 | ) | |||||||||||||||||
Total benefits and expenses | 14,580 | 19,195 | 11,488 | 17,118 | 11,518 | 3,062 | ||||||||||||||||||
Income (loss) before income taxes | $ | 5,872 | $ | (11,966 | ) | $ | 7,549 | $ | (73 | ) | $ | 8,553 | $ | (2,681 | ) | |||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 17 | $ | 71 | $ | 60 | $ | (225 | ) | $ | 243 | $ | (226 | ) | ||||||||||
Income (loss) before income taxes | $ | 77 | $ | (464 | ) | $ | 917 | $ | 233 | $ | 778 | $ | (701 | ) | ||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Asia Pacific Financial Solutions operations includes asset intensive, financial reinsurance, and disabled life closed block business. | ||||||||||||||||||||||||
(2) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 23 | |
Reinsurance Group of America, Incorporated Asia Pacific Financial Solutions (1) Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 1,526 | $ | 492 | $ | 743 | $ | (1,493 | ) | $ | 5,686 | $ | (4,160 | ) | ||||||||||
Investment income, net of related expenses | 5,536 | 5,562 | 5,827 | 5,885 | 6,374 | (838 | ) | |||||||||||||||||
Investment related gains, net | 861 | 960 | 825 | 602 | 576 | 285 | ||||||||||||||||||
Other revenue | 6,205 | 6,061 | 6,359 | 6,126 | 6,324 | (119 | ) | |||||||||||||||||
Total revenues | 14,128 | 13,075 | 13,754 | 11,120 | 18,960 | (4,832 | ) | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 6,495 | 9,693 | 3,777 | 8,237 | 3,473 | 3,022 | ||||||||||||||||||
Interest credited | 2,997 | 3,322 | 3,308 | 3,136 | 3,030 | (33 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 1,917 | 1,635 | 1,482 | 1,667 | 1,287 | 630 | ||||||||||||||||||
Other operating expenses | 3,171 | 4,545 | 2,921 | 4,078 | 3,728 | (557 | ) | |||||||||||||||||
Total benefits and expenses | 14,580 | 19,195 | 11,488 | 17,118 | 11,518 | 3,062 | ||||||||||||||||||
Adjusted operating income (loss) before income taxes | $ | (452 | ) | $ | (6,120 | ) | $ | 2,266 | $ | (5,998 | ) | $ | 7,442 | $ | (7,894 | ) | ||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 17 | $ | 71 | $ | 60 | $ | (225 | ) | $ | 243 | $ | (226 | ) | ||||||||||
Adjusted operating income (loss) before income taxes | $ | (102 | ) | $ | 100 | $ | 451 | $ | (113 | ) | $ | 323 | $ | (425 | ) | |||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Asia Pacific Financial Solutions operations includes asset intensive, financial reinsurance, and disabled life closed block business. | ||||||||||||||||||||||||
(2) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 24 | |
Reinsurance Group of America, Incorporated Corporate and Other GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 44 | $ | 53 | $ | 72 | $ | 108 | $ | 109 | $ | (65 | ) | |||||||||||
Investment income, net of related expenses | 31,163 | 35,468 | 33,478 | 25,190 | 22,921 | 8,242 | ||||||||||||||||||
Investment related gains (losses), net | (14,823 | ) | (461 | ) | 12,258 | 32,036 | 7,423 | (22,246 | ) | |||||||||||||||
Other revenue | 5,168 | 706 | 4,893 | 4,653 | 2,049 | 3,119 | ||||||||||||||||||
Total revenues | 21,552 | 35,766 | 50,701 | 61,987 | 32,502 | (10,950 | ) | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 27 | (15 | ) | (15 | ) | (6 | ) | 27 | — | |||||||||||||||
Interest credited | 1,124 | 881 | 622 | 459 | 507 | 617 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | (27,067 | ) | (26,740 | ) | (24,565 | ) | (25,149 | ) | (23,812 | ) | (3,255 | ) | ||||||||||||
Other operating expenses | 40,372 | 41,187 | 32,414 | 40,975 | 39,978 | 394 | ||||||||||||||||||
Interest expense | 42,402 | 41,422 | 43,063 | 20,331 | 32,807 | 9,595 | ||||||||||||||||||
Collateral finance and securitization expense | 6,770 | 6,431 | 6,484 | 6,587 | 6,325 | 445 | ||||||||||||||||||
Total benefits and expenses | 63,628 | 63,166 | 58,003 | 43,197 | 55,832 | 7,796 | ||||||||||||||||||
Income (loss) before income taxes | $ | (42,076 | ) | $ | (27,400 | ) | $ | (7,302 | ) | $ | 18,790 | $ | (23,330 | ) | $ | (18,746 | ) | |||||||
Foreign currency effect (1): | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 448 | $ | 401 | $ | 294 | $ | (1,941 | ) | $ | (1,409 | ) | $ | 1,857 | ||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 25 | |
Reinsurance Group of America, Incorporated Corporate and Other Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 44 | $ | 53 | $ | 72 | $ | 108 | $ | 109 | $ | (65 | ) | |||||||||||
Investment income, net of related expenses | 31,163 | 35,468 | 33,478 | 25,190 | 22,921 | 8,242 | ||||||||||||||||||
Investment related gains, net | 677 | 659 | 568 | 496 | 493 | 184 | ||||||||||||||||||
Other revenue | 5,142 | 681 | 4,870 | 4,636 | 2,035 | 3,107 | ||||||||||||||||||
Total revenues | 37,026 | 36,861 | 38,988 | 30,430 | 25,558 | 11,468 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 27 | (15 | ) | (15 | ) | (6 | ) | 27 | — | |||||||||||||||
Interest credited | 1,124 | 881 | 622 | 459 | 507 | 617 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | (27,067 | ) | (26,740 | ) | (24,565 | ) | (25,149 | ) | (23,812 | ) | (3,255 | ) | ||||||||||||
Other operating expenses | 40,372 | 41,187 | 32,414 | 40,975 | 39,978 | 394 | ||||||||||||||||||
Interest expense | 42,402 | 41,422 | 43,063 | 20,331 | 32,807 | 9,595 | ||||||||||||||||||
Collateral finance and securitization expense | 6,770 | 6,431 | 6,484 | 6,587 | 6,325 | 445 | ||||||||||||||||||
Total benefits and expenses | 63,628 | 63,166 | 58,003 | 43,197 | 55,832 | 7,796 | ||||||||||||||||||
Adjusted operating income (loss) before income taxes | $ | (26,602 | ) | $ | (26,305 | ) | $ | (19,015 | ) | $ | (12,767 | ) | $ | (30,274 | ) | $ | 3,672 | |||||||
Foreign currency effect (1): | ||||||||||||||||||||||||
Adjusted operating income (loss) before income taxes | $ | 498 | $ | 367 | $ | 513 | $ | (442 | ) | $ | (868 | ) | $ | 1,366 | ||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
(1) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 26 | |
Reinsurance Group of America, Incorporated Summary of Segment GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||
U.S. and Latin America: | ||||||||||||||||||||||||
Traditional | $ | 29,960 | $ | 131,492 | $ | 77,081 | $ | 111,430 | $ | 51,098 | $ | (21,138 | ) | |||||||||||
Financial Solutions: | ||||||||||||||||||||||||
Asset Intensive | 85,770 | 72,261 | 88,732 | 93,979 | (30,830 | ) | 116,600 | |||||||||||||||||
Financial Reinsurance | 17,816 | 14,447 | 13,982 | 14,875 | 15,934 | 1,882 | ||||||||||||||||||
Total U.S. and Latin America | 133,546 | 218,200 | 179,795 | 220,284 | 36,202 | 97,344 | ||||||||||||||||||
Canada: | ||||||||||||||||||||||||
Canada Traditional | 19,328 | 37,026 | 34,275 | 43,309 | 20,095 | (767 | ) | |||||||||||||||||
Canada Financial Solutions | 3,592 | 4,065 | 1,160 | 2,128 | 592 | 3,000 | ||||||||||||||||||
Total Canada | 22,920 | 41,091 | 35,435 | 45,437 | 20,687 | 2,233 | ||||||||||||||||||
Europe, Middle East and Africa: | ||||||||||||||||||||||||
Europe, Middle East and Africa Traditional | 13,976 | 15,826 | 8,515 | 6,834 | (1,116 | ) | 15,092 | |||||||||||||||||
Europe, Middle East and Africa Financial Solutions | 31,918 | 41,328 | 43,786 | 27,469 | 25,424 | 6,494 | ||||||||||||||||||
Total Europe, Middle East and Africa | 45,894 | 57,154 | 52,301 | 34,303 | 24,308 | 21,586 | ||||||||||||||||||
Asia Pacific: | ||||||||||||||||||||||||
Asia Pacific Traditional | 41,688 | 18,464 | 19,822 | 34,482 | 41,160 | 528 | ||||||||||||||||||
Asia Pacific Financial Solutions | 5,872 | (11,966 | ) | 7,549 | (73 | ) | 8,553 | (2,681 | ) | |||||||||||||||
Total Asia Pacific | 47,560 | 6,498 | 27,371 | 34,409 | 49,713 | (2,153 | ) | |||||||||||||||||
Corporate and Other | (42,076 | ) | (27,400 | ) | (7,302 | ) | 18,790 | (23,330 | ) | (18,746 | ) | |||||||||||||
Consolidated income before income taxes | $ | 207,844 | $ | 295,543 | $ | 287,600 | $ | 353,223 | $ | 107,580 | $ | 100,264 | ||||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 27 | |
Reinsurance Group of America, Incorporated Summary of Segment Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||
U.S. and Latin America: | ||||||||||||||||||||||||
Traditional | $ | 27,996 | $ | 129,345 | $ | 80,475 | $ | 112,312 | $ | 53,198 | $ | (25,202 | ) | |||||||||||
Financial Solutions: | ||||||||||||||||||||||||
Asset Intensive | 51,637 | 46,698 | 58,693 | 54,323 | 45,268 | 6,369 | ||||||||||||||||||
Financial Reinsurance | 17,816 | 14,447 | 13,982 | 14,875 | 15,934 | 1,882 | ||||||||||||||||||
Total U.S. and Latin America | 97,449 | 190,490 | 153,150 | 181,510 | 114,400 | (16,951 | ) | |||||||||||||||||
Canada: | ||||||||||||||||||||||||
Canada Traditional | 16,766 | 34,754 | 30,624 | 40,907 | 19,364 | (2,598 | ) | |||||||||||||||||
Canada Financial Solutions | 3,592 | 4,065 | 1,160 | 2,128 | 592 | 3,000 | ||||||||||||||||||
Total Canada | 20,358 | 38,819 | 31,784 | 43,035 | 19,956 | 402 | ||||||||||||||||||
Europe, Middle East and Africa: | ||||||||||||||||||||||||
Europe, Middle East and Africa Traditional | 13,969 | 15,826 | 8,515 | 6,834 | (1,121 | ) | 15,090 | |||||||||||||||||
Europe, Middle East and Africa Financial Solutions | 27,475 | 36,728 | 33,945 | 26,128 | 25,611 | 1,864 | ||||||||||||||||||
Total Europe, Middle East and Africa | 41,444 | 52,554 | 42,460 | 32,962 | 24,490 | 16,954 | ||||||||||||||||||
Asia Pacific: | ||||||||||||||||||||||||
Asia Pacific Traditional | 41,688 | 18,464 | 19,822 | 34,482 | 41,144 | 544 | ||||||||||||||||||
Asia Pacific Financial Solutions | (452 | ) | (6,120 | ) | 2,266 | (5,998 | ) | 7,442 | (7,894 | ) | ||||||||||||||
Total Asia Pacific | 41,236 | 12,344 | 22,088 | 28,484 | 48,586 | (7,350 | ) | |||||||||||||||||
Corporate and Other | (26,602 | ) | (26,305 | ) | (19,015 | ) | (12,767 | ) | (30,274 | ) | 3,672 | |||||||||||||
Consolidated adjusted operating income before income taxes | $ | 173,885 | $ | 267,902 | $ | 230,467 | $ | 273,224 | $ | 177,158 | $ | (3,273 | ) | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 28 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Cash and Invested Assets | ||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 32,694,793 | $ | 32,093,625 | $ | 33,536,419 | $ | 33,160,976 | $ | 31,148,714 | ||||||||||
Mortgage loans on real estate | 3,871,309 | 3,775,522 | 3,607,700 | 3,377,039 | 3,292,496 | |||||||||||||||
Policy loans | 1,402,940 | 1,427,602 | 1,414,963 | 1,445,410 | 1,451,857 | |||||||||||||||
Funds withheld at interest | 5,943,450 | 5,875,919 | 5,922,656 | 5,899,289 | 5,797,183 | |||||||||||||||
Short-term investments | 54,288 | 76,710 | 126,702 | 195,979 | 431,535 | |||||||||||||||
Other invested assets | 1,429,175 | 1,591,940 | 1,777,065 | 1,682,143 | 1,368,544 | |||||||||||||||
Cash and cash equivalents | 1,178,114 | 1,200,718 | 1,379,693 | 1,034,329 | 1,502,082 | |||||||||||||||
Total cash and invested assets | $ | 46,574,069 | $ | 46,042,036 | $ | 47,765,198 | $ | 46,795,165 | $ | 44,992,411 | ||||||||||
Investment Income and Yield Summary | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||
Average invested assets at amortized cost (1) | $ | 25,212,377 | $ | 24,621,939 | $ | 24,128,430 | $ | 23,216,459 | $ | 22,379,003 | $ | 2,833,374 | ||||||||||||
Net investment income (1) | $ | 273,208 | $ | 283,484 | $ | 263,111 | $ | 268,747 | $ | 245,299 | $ | 27,909 | ||||||||||||
Annualized investment yield (ratio of net investment income to average invested assets at amortized cost) (1) | 4.41 | % | 4.69 | % | 4.43 | % | 4.71 | % | 4.46 | % | -0.05 | % | ||||||||||||
(1) Excludes spread-related business (e.g. coinsurance of annuities). | ||||||||||||||||||||||||
| Page 29 | |
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) | |||||||||||||||||||||||
March 31, 2017 | |||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | % of Total | Other-than- temporary Impairment in AOCI | ||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||||
Corporate securities | $ | 19,281,539 | $ | 1,037,337 | $ | 157,423 | $ | 20,161,453 | 61.8 | % | $ | — | |||||||||||
Canadian and Canadian provincial governments | 2,601,403 | 1,122,418 | 3,457 | 3,720,364 | 11.4 | % | — | ||||||||||||||||
Residential mortgage-backed securities | 1,281,171 | 34,382 | 11,676 | 1,303,877 | 4.0 | % | — | ||||||||||||||||
Asset-backed securities | 1,379,251 | 14,480 | 13,141 | 1,380,590 | 4.2 | % | 275 | ||||||||||||||||
Commercial mortgage-backed securities | 1,272,020 | 24,353 | 7,035 | 1,289,338 | 3.9 | % | — | ||||||||||||||||
U.S. government and agencies | 1,522,651 | 15,135 | 55,334 | 1,482,452 | 4.5 | % | — | ||||||||||||||||
State and political subdivisions | 566,553 | 40,471 | 11,567 | 595,457 | 1.8 | % | — | ||||||||||||||||
Other foreign government, supranational, and foreign | |||||||||||||||||||||||
government-sponsored enterprises | 2,635,979 | 136,850 | 11,567 | 2,761,262 | 8.4 | % | — | ||||||||||||||||
Total fixed maturity securities | $ | 30,540,567 | $ | 2,425,426 | $ | 271,200 | $ | 32,694,793 | 100.0 | % | $ | 275 | |||||||||||
Non-redeemable preferred stock | $ | 33,656 | $ | 360 | $ | 2,801 | $ | 31,215 | 28.0 | % | |||||||||||||
Other equity securities | 83,473 | 532 | 3,604 | 80,401 | 72.0 | % | |||||||||||||||||
Total equity securities | $ | 117,129 | $ | 892 | $ | 6,405 | $ | 111,616 | 100.0 | % | |||||||||||||
December 31, 2016 | |||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | % of Total | Other-than- temporary Impairment in AOCI | ||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||||
Corporate securities | $ | 18,924,711 | $ | 911,618 | $ | 217,245 | $ | 19,619,084 | 61.1 | % | $ | — | |||||||||||
Canadian and Canadian provincial governments | 2,561,605 | 1,085,982 | 3,541 | 3,644,046 | 11.4 | % | — | ||||||||||||||||
Residential mortgage-backed securities | 1,258,039 | 33,917 | 13,380 | 1,278,576 | 4.0 | % | (375 | ) | |||||||||||||||
Asset-backed securities | 1,443,822 | 9,350 | 23,828 | 1,429,344 | 4.5 | % | 275 | ||||||||||||||||
Commercial mortgage-backed securities | 1,342,440 | 28,973 | 7,759 | 1,363,654 | 4.2 | % | — | ||||||||||||||||
U.S. government and agencies | 1,518,702 | 12,644 | 63,044 | 1,468,302 | 4.6 | % | — | ||||||||||||||||
State and political subdivisions | 566,761 | 37,499 | 12,464 | 591,796 | 1.8 | % | — | ||||||||||||||||
Other foreign government, supranational, and foreign | |||||||||||||||||||||||
government-sponsored enterprises | 2,595,707 | 123,054 | 19,938 | 2,698,823 | 8.4 | % | — | ||||||||||||||||
Total fixed maturity securities | $ | 30,211,787 | $ | 2,243,037 | $ | 361,199 | $ | 32,093,625 | 100.0 | % | $ | (100 | ) | ||||||||||
Non-redeemable preferred stock | $ | 55,812 | $ | 1,648 | $ | 6,337 | $ | 51,123 | 18.6 | % | |||||||||||||
Other equity securities | 229,767 | 1,792 | 7,321 | 224,238 | 81.4 | % | |||||||||||||||||
Total equity securities | $ | 285,579 | $ | 3,440 | $ | 13,658 | $ | 275,361 | 100.0 | % | |||||||||||||
| Page 30 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Corporate Fixed Maturities Securities by Sector (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||
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 | $ | 4,146,996 | $ | 4,274,384 | 21.2 | % | A- | $ | 4,167,029 | $ | 4,255,932 | 21.9 | % | A- | ||||||||||||
Brokerage/asset managers/exchanges | 432,080 | 450,148 | 2.2 | % | A | 403,014 | 413,699 | 2.1 | % | A | ||||||||||||||||
Finance companies | 160,909 | 167,680 | 0.8 | % | BBB+ | 120,782 | 127,327 | 0.6 | % | A- | ||||||||||||||||
Insurance | 1,381,539 | 1,444,176 | 7.2 | % | A- | 1,314,077 | 1,353,008 | 6.9 | % | A- | ||||||||||||||||
REITs | 615,058 | 636,862 | 3.2 | % | BBB+ | 582,157 | 598,366 | 3.0 | % | BBB+ | ||||||||||||||||
Other finance | 126,139 | 130,615 | 0.6 | % | A- | 138,140 | 140,636 | 0.7 | % | A- | ||||||||||||||||
Total financial institutions | $ | 6,862,721 | $ | 7,103,865 | 35.2 | % | $ | 6,725,199 | $ | 6,888,968 | 35.2 | % | ||||||||||||||
Industrials | ||||||||||||||||||||||||||
Basic | $ | 939,177 | $ | 997,950 | 4.9 | % | BBB | $ | 887,179 | $ | 923,839 | 4.7 | % | BBB | ||||||||||||
Capital goods | 1,045,597 | 1,072,524 | 5.3 | % | BBB+ | 998,749 | 1,027,098 | 5.2 | % | BBB+ | ||||||||||||||||
Communications | 1,864,457 | 1,957,809 | 9.7 | % | BBB | 1,841,904 | 1,928,261 | 9.8 | % | BBB | ||||||||||||||||
Consumer cyclical | 1,106,118 | 1,146,543 | 5.7 | % | BBB+ | 1,081,091 | 1,116,933 | 5.7 | % | BBB+ | ||||||||||||||||
Consumer noncyclical | 1,929,744 | 2,040,521 | 10.2 | % | A- | 1,957,052 | 2,050,927 | 10.5 | % | A- | ||||||||||||||||
Energy | 1,860,402 | 1,951,883 | 9.7 | % | BBB+ | 1,867,072 | 1,941,301 | 9.9 | % | BBB+ | ||||||||||||||||
Technology | 670,830 | 691,287 | 3.4 | % | A | 644,474 | 660,200 | 3.4 | % | A | ||||||||||||||||
Transportation | 852,657 | 893,003 | 4.4 | % | A- | 854,681 | 887,911 | 4.5 | % | A- | ||||||||||||||||
Other industrial | 129,566 | 137,665 | 0.7 | % | A | 96,611 | 103,143 | 0.5 | % | A- | ||||||||||||||||
Total industrials | $ | 10,398,548 | $ | 10,889,185 | 54.0 | % | $ | 10,228,813 | $ | 10,639,613 | 54.2 | % | ||||||||||||||
Utilities | ||||||||||||||||||||||||||
Electric | $ | 1,468,750 | $ | 1,559,029 | 7.8 | % | A- | $ | 1,432,641 | $ | 1,498,919 | 7.6 | % | A- | ||||||||||||
Natural gas | 320,726 | 344,463 | 1.7 | % | A- | 316,447 | 338,253 | 1.7 | % | A- | ||||||||||||||||
Other utility | 230,794 | 264,911 | 1.3 | % | A- | 221,611 | 253,331 | 1.3 | % | A- | ||||||||||||||||
Total utilities | $ | 2,020,270 | $ | 2,168,403 | 10.8 | % | $ | 1,970,699 | $ | 2,090,503 | 10.6 | % | ||||||||||||||
Total | $ | 19,281,539 | $ | 20,161,453 | 100.0 | % | BBB+ | $ | 18,924,711 | $ | 19,619,084 | 100.0 | % | BBB+ | ||||||||||||
(1) The Average Credit Rating designations are based on the weighted average ratings from nationally recognized statistical rating organizations (NRSRO), 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 National | ||||||||||||||||||||||||||
Association of Insurance Commissioners (NAIC). | ||||||||||||||||||||||||||
| Page 31 | |
Reinsurance Group of America, Incorporated
Investments
(USD thousands)
Ratings of Fixed Maturity Securities (Excludes Funds Withheld Portfolios) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | December 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | $ | 19,816,139 | $ | 21,521,758 | 65.8 | % | $ | 19,813,653 | $ | 21,369,081 | 66.5 | % | $ | 19,794,556 | $ | 22,594,066 | 67.3 | % | $ | 19,755,011 | $ | 22,392,311 | 67.5 | % | $ | 18,511,837 | $ | 20,516,462 | 65.9 | % | ||||||||||||||||||||||||||
2 | BBB | 9,159,294 | 9,571,666 | 29.3 | % | 8,834,469 | 9,162,483 | 28.5 | % | 8,660,225 | 9,296,652 | 27.7 | % | 8,679,819 | 9,130,971 | 27.5 | % | 8,813,991 | 9,005,192 | 28.9 | % | ||||||||||||||||||||||||||||||||||||
3 | BB | 1,079,371 | 1,109,172 | 3.4 | % | 944,839 | 955,735 | 3.0 | % | 1,010,694 | 1,027,001 | 3.1 | % | 1,012,092 | 1,018,629 | 3.1 | % | 1,096,165 | 1,057,763 | 3.4 | % | ||||||||||||||||||||||||||||||||||||
4 | B | 383,254 | 377,469 | 1.2 | % | 414,087 | 411,138 | 1.3 | % | 451,456 | 441,887 | 1.3 | % | 456,457 | 431,649 | 1.3 | % | 402,872 | 372,795 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
5 | CCC | 91,245 | 105,749 | 0.3 | % | 187,744 | 177,481 | 0.6 | % | 157,857 | 151,182 | 0.5 | % | 143,675 | 135,927 | 0.4 | % | 178,537 | 165,491 | 0.5 | % | ||||||||||||||||||||||||||||||||||||
6 | In or near default | 11,264 | 8,979 | — | % | 16,995 | 17,707 | 0.1 | % | 23,108 | 25,631 | 0.1 | % | 29,830 | 51,489 | 0.2 | % | 31,872 | 31,011 | 0.1 | % | ||||||||||||||||||||||||||||||||||||
Total | $ | 30,540,567 | $ | 32,694,793 | 100.0 | % | $ | 30,211,787 | $ | 32,093,625 | 100.0 | % | $ | 30,097,896 | $ | 33,536,419 | 100.0 | % | $ | 30,076,884 | $ | 33,160,976 | 100.0 | % | $ | 29,035,274 | $ | 31,148,714 | 100.0 | % | |||||||||||||||||||||||||||
(1) Structured securities held by the Company’s insurance subsidiaries that maintain the NAIC statutory basis of accounting that meet the definition of SSAP No. 43R utilize the NAIC rating methodology. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All other securities will continue to utilize the 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 | ||||||||||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | ||||||||||||||||||||||||||||||||||||
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 | $ | 584,067 | $ | 608,066 | $ | 579,686 | $ | 602,549 | $ | 590,881 | $ | 642,041 | $ | 601,728 | $ | 659,526 | $ | 593,662 | $ | 642,617 | ||||||||||||||||||||
Non-agency | 697,104 | 695,811 | 678,353 | 676,027 | 656,796 | 669,651 | 623,990 | 633,252 | 737,232 | 738,280 | ||||||||||||||||||||||||||||||
Total residential mortgage-backed securities | 1,281,171 | 1,303,877 | 1,258,039 | 1,278,576 | 1,247,677 | 1,311,692 | 1,225,718 | 1,292,778 | 1,330,894 | 1,380,897 | ||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 1,272,020 | 1,289,338 | 1,342,440 | 1,363,654 | 1,402,249 | 1,475,033 | 1,441,091 | 1,507,693 | 1,466,500 | 1,508,183 | ||||||||||||||||||||||||||||||
Asset-backed securities | 1,379,251 | 1,380,590 | 1,443,822 | 1,429,344 | 1,388,263 | 1,382,574 | 1,377,736 | 1,356,677 | 1,319,616 | 1,289,381 | ||||||||||||||||||||||||||||||
Total | $ | 3,932,442 | $ | 3,973,805 | $ | 4,044,301 | $ | 4,071,574 | $ | 4,038,189 | $ | 4,169,299 | $ | 4,044,545 | $ | 4,157,148 | $ | 4,117,010 | $ | 4,178,461 | ||||||||||||||||||||
| Page 32 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Gross Unrealized Losses Aging Fixed Maturity Securities | |||||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | |||||||||||||||||||||||||||||||
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% | $ | 245,923 | 88.6 | % | $ | 328,691 | 87.7 | % | $ | 85,446 | 62.2 | % | $ | 148,844 | 74.9 | % | $ | 272,450 | 70.5 | % | |||||||||||||||
20% or more for less than six months | 4,113 | 1.5 | % | 18,733 | 5.0 | % | 12,551 | 9.1 | % | 7,248 | 3.7 | % | 68,067 | 17.6 | % | ||||||||||||||||||||
20% or more for six months or greater | 21,164 | 7.6 | % | 13,775 | 3.7 | % | 32,286 | 23.5 | % | 34,078 | 17.2 | % | 36,949 | 9.6 | % | ||||||||||||||||||||
Total | $ | 271,200 | 97.7 | % | $ | 361,199 | 96.4 | % | $ | 130,283 | 94.8 | % | $ | 190,170 | 95.8 | % | $ | 377,466 | 97.7 | % | |||||||||||||||
Equity Securities | |||||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | |||||||||||||||||||||||||||||||
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% | $ | 5,717 | 2.1 | % | $ | 9,140 | 2.4 | % | $ | 2,588 | 1.9 | % | $ | 1,794 | 0.9 | % | $ | 2,678 | 0.7 | % | |||||||||||||||
20% or more for less than six months | — | 0.0 | % | 705 | 0.2 | % | — | 0.0 | % | 1,685 | 0.8 | % | 1,672 | 0.4 | % | ||||||||||||||||||||
20% or more for six months or greater | 688 | 0.2 | % | 3,813 | 1.0 | % | 4,472 | 3.3 | % | 4,903 | 2.5 | % | 4,714 | 1.2 | % | ||||||||||||||||||||
Total | $ | 6,405 | 2.3 | % | $ | 13,658 | 3.6 | % | $ | 7,060 | 5.2 | % | $ | 8,382 | 4.2 | % | $ | 9,064 | 2.3 | % | |||||||||||||||
| Page 33 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Fixed Maturities and Equity Securities Below Amortized Cost (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||
As of March 31, 2017 | ||||||||||||||||||||||||
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 | $ | 3,658,776 | $ | 89,271 | $ | 412,413 | $ | 33,285 | $ | 4,071,189 | $ | 122,556 | ||||||||||||
Canadian and Canadian provincial governments | 137,014 | 3,457 | — | — | 137,014 | 3,457 | ||||||||||||||||||
Residential mortgage-backed securities | 467,812 | 9,394 | 101,886 | 2,277 | 569,698 | 11,671 | ||||||||||||||||||
Asset-backed securities | 381,219 | 4,213 | 270,456 | 8,248 | 651,675 | 12,461 | ||||||||||||||||||
Commercial mortgage-backed securities | 370,152 | 6,816 | 7,398 | 111 | 377,550 | 6,927 | ||||||||||||||||||
U.S. government and agencies | 1,122,884 | 55,334 | — | — | 1,122,884 | 55,334 | ||||||||||||||||||
State and political subdivisions | 155,720 | 7,963 | 13,086 | 3,604 | 168,806 | 11,567 | ||||||||||||||||||
Other foreign government, supranational, and foreign government-sponsored enterprises | 432,726 | 9,041 | 40,431 | 1,985 | 473,157 | 11,026 | ||||||||||||||||||
Total investment grade securities | $ | 6,726,303 | $ | 185,489 | $ | 845,670 | $ | 49,510 | $ | 7,571,973 | $ | 234,999 | ||||||||||||
Below investment grade securities: | ||||||||||||||||||||||||
Corporate securities | $ | 195,427 | $ | 3,023 | $ | 110,909 | $ | 31,844 | $ | 306,336 | $ | 34,867 | ||||||||||||
Residential mortgage-backed securities | — | — | 122 | 5 | 122 | 5 | ||||||||||||||||||
Asset-backed securities | — | — | 11,463 | 680 | 11,463 | 680 | ||||||||||||||||||
Commercial mortgage-backed securities | 1,891 | 108 | — | — | 1,891 | 108 | ||||||||||||||||||
Other foreign government, supranational, and foreign government-sponsored enterprises | 9,704 | 84 | 14,163 | 457 | 23,867 | 541 | ||||||||||||||||||
Total below investment grade securities | $ | 207,022 | $ | 3,215 | $ | 136,657 | $ | 32,986 | $ | 343,679 | $ | 36,201 | ||||||||||||
Total fixed maturity securities | $ | 6,933,325 | $ | 188,704 | $ | 982,327 | $ | 82,496 | $ | 7,915,652 | $ | 271,200 | ||||||||||||
Equity securities: | ||||||||||||||||||||||||
Non-redeemable preferred stock | $ | — | $ | — | $ | 24,289 | $ | 2,801 | $ | 24,289 | $ | 2,801 | ||||||||||||
Other equity securities | 70,591 | 3,604 | — | — | 70,591 | 3,604 | ||||||||||||||||||
Total equity securities | $ | 70,591 | $ | 3,604 | $ | 24,289 | $ | 2,801 | $ | 94,880 | $ | 6,405 | ||||||||||||
As of December 31, 2016 | ||||||||||||||||||||||||
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 | $ | 4,661,706 | $ | 124,444 | $ | 549,273 | $ | 43,282 | $ | 5,210,979 | $ | 167,726 | ||||||||||||
Canadian and Canadian provincial governments | 101,578 | 3,541 | — | — | 101,578 | 3,541 | ||||||||||||||||||
Residential mortgage-backed securities | 490,473 | 9,733 | 112,216 | 3,635 | 602,689 | 13,368 | ||||||||||||||||||
Asset-backed securities | 563,259 | 12,010 | 257,166 | 9,653 | 820,425 | 21,663 | ||||||||||||||||||
Commercial mortgage-backed securities | 368,465 | 6,858 | 10,853 | 166 | 379,318 | 7,024 | ||||||||||||||||||
U.S. government and agencies | 1,056,101 | 63,044 | — | — | 1,056,101 | 63,044 | ||||||||||||||||||
State and political subdivisions | 187,194 | 9,396 | 13,635 | 3,068 | 200,829 | 12,464 | ||||||||||||||||||
Other foreign government, supranational, and foreign government-sponsored enterprises | 524,236 | 13,372 | 51,097 | 2,981 | 575,333 | 16,353 | ||||||||||||||||||
Total investment grade securities | $ | 7,953,012 | $ | 242,398 | $ | 994,240 | $ | 62,785 | $ | 8,947,252 | $ | 305,183 | ||||||||||||
Below investment grade securities: | ||||||||||||||||||||||||
Corporate securities | $ | 330,757 | $ | 7,914 | $ | 163,152 | $ | 41,605 | $ | 493,909 | $ | 49,519 | ||||||||||||
Residential mortgage-backed securities | — | — | 412 | 12 | 412 | 12 | ||||||||||||||||||
Asset-backed securities | 5,904 | 700 | 12,581 | 1,465 | 18,485 | 2,165 | ||||||||||||||||||
Commercial mortgage-backed securities | 5,815 | 735 | — | — | 5,815 | 735 | ||||||||||||||||||
Other foreign government, supranational, and foreign government-sponsored enterprises | 32,355 | 1,258 | 39,763 | 2,327 | 72,118 | 3,585 | ||||||||||||||||||
Total below investment grade securities | $ | 374,831 | $ | 10,607 | $ | 215,908 | $ | 45,409 | $ | 590,739 | $ | 56,016 | ||||||||||||
Total fixed maturity securities | $ | 8,327,843 | $ | 253,005 | $ | 1,210,148 | $ | 108,194 | $ | 9,537,991 | $ | 361,199 | ||||||||||||
Equity securities: | ||||||||||||||||||||||||
Non-redeemable preferred stock | $ | 10,831 | $ | 831 | $ | 21,879 | $ | 5,506 | $ | 32,710 | $ | 6,337 | ||||||||||||
Other equity securities | 202,068 | 7,020 | 6,751 | 301 | 208,819 | 7,321 | ||||||||||||||||||
Total equity securities | $ | 212,899 | $ | 7,851 | $ | 28,630 | $ | 5,807 | $ | 241,529 | $ | 13,658 | ||||||||||||
| Page 34 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Consolidated Investment Related Gains and Losses | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | ||||||||||||||||||||
Fixed maturity and equity securities avail. for sale: | ||||||||||||||||||||||||
Other-than-temporary impairment losses on fixed maturities | $ | (17,189 | ) | $ | (4,142 | ) | $ | — | $ | (846 | ) | $ | (33,817 | ) | $ | 16,628 | ||||||||
Portion of loss recognized in other comprehensive | ||||||||||||||||||||||||
income (before taxes) | — | 74 | — | — | — | — | ||||||||||||||||||
Net other-than-temporary impairment losses on fixed | ||||||||||||||||||||||||
maturities recognized in earnings | (17,189 | ) | (4,068 | ) | — | (846 | ) | (33,817 | ) | 16,628 | ||||||||||||||
Gain on investment activity | 17,893 | 27,217 | 46,346 | 53,615 | 27,192 | (9,299 | ) | |||||||||||||||||
Loss on investment activity | (12,563 | ) | (6,568 | ) | (9,054 | ) | (22,556 | ) | (11,787 | ) | (776 | ) | ||||||||||||
Net gains (losses) on fixed maturity & equity securities | ||||||||||||||||||||||||
available for sale | (11,859 | ) | 16,581 | 37,292 | 30,213 | (18,412 | ) | 6,553 | ||||||||||||||||
Other impairment losses and change in mortgage loan provision | (99 | ) | (8,895 | ) | (262 | ) | 211 | (2,060 | ) | 1,961 | ||||||||||||||
Other non-derivative gaines (losses), net | 4,712 | 4,987 | 4,754 | 5,123 | 4,057 | 655 | ||||||||||||||||||
Free-standing derivatives: | ||||||||||||||||||||||||
Credit default swaps | 7,358 | 4,564 | 6,672 | 3,518 | 3,346 | 4,012 | ||||||||||||||||||
Interest rate swaps - non-hedged | (2,612 | ) | (100,500 | ) | 4,122 | 41,500 | 62,527 | (65,139 | ) | |||||||||||||||
Interest rate swaps - hedged | (8 | ) | — | — | — | — | (8 | ) | ||||||||||||||||
Foreign currency swaps - hedged (1) | 1,031 | 5,766 | 1,606 | (2,395 | ) | (4,562 | ) | 5,593 | ||||||||||||||||
Futures | (12,775 | ) | (9,957 | ) | (11,677 | ) | (7,557 | ) | (11,051 | ) | (1,724 | ) | ||||||||||||
CPI swaps | (5 | ) | 223 | 76 | (520 | ) | (180 | ) | 175 | |||||||||||||||
Equity options | (17,189 | ) | (8,694 | ) | (13,648 | ) | (3,225 | ) | (2,703 | ) | (14,486 | ) | ||||||||||||
Currency forwards | 904 | (4,954 | ) | 507 | 3,577 | 2,500 | (1,596 | ) | ||||||||||||||||
Bond forwards | — | (225 | ) | 116 | (1,010 | ) | 841 | (841 | ) | |||||||||||||||
Total free-standing derivatives | (23,296 | ) | (113,777 | ) | (12,226 | ) | 33,888 | 50,718 | (74,014 | ) | ||||||||||||||
Embedded derivatives: | ||||||||||||||||||||||||
Modified coinsurance and funds withheld treaties | 68,702 | 20,374 | 49,078 | 76,966 | (92,249 | ) | 160,951 | |||||||||||||||||
GMXB | 22,363 | 90,923 | 7,988 | (28,137 | ) | (62,940 | ) | 85,303 | ||||||||||||||||
Total embedded derivatives | 91,065 | 111,297 | 57,066 | 48,829 | (155,189 | ) | 246,254 | |||||||||||||||||
Net gain (loss) on total derivatives | 67,769 | (2,480 | ) | 44,840 | 82,717 | (104,471 | ) | 172,240 | ||||||||||||||||
Total investment related gains (losses), net | $ | 60,523 | $ | 10,193 | $ | 86,624 | $ | 118,264 | $ | (120,886 | ) | $ | 181,409 | |||||||||||
(1) The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges within net gains (losses) on total derivatives. | ||||||||||||||||||||||||
| Page 35 | |
Appendix | ||||
Reconciliations of GAAP Income Statements to Adjusted Operating Income Statements | ||||
| Page 36 | |
Reinsurance Group of America, Incorporated Reconciliation of GAAP Income Statements to Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
U.S. & Latin America Traditional | ||||||||||||||||||||||||
Income before income taxes | $ | 29,960 | $ | 131,492 | $ | 77,081 | $ | 111,430 | $ | 51,098 | $ | (21,138 | ) | |||||||||||
Investment and derivative gains (losses) (1) | — | (336 | ) | (69 | ) | 1 | 65 | (65 | ) | |||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (1,964 | ) | (1,811 | ) | 3,463 | 881 | 2,035 | (3,999 | ) | |||||||||||||||
Adjusted operating income before income taxes | $ | 27,996 | $ | 129,345 | $ | 80,475 | $ | 112,312 | $ | 53,198 | $ | (25,202 | ) | |||||||||||
U.S. & Latin America Asset Intensive | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 85,770 | $ | 72,261 | $ | 88,732 | $ | 93,979 | $ | (30,830 | ) | $ | 116,600 | |||||||||||
Investment and derivative gains (losses) (1) | 31,330 | 103,778 | 867 | (27,119 | ) | (24,603 | ) | 55,933 | ||||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (66,738 | ) | (18,563 | ) | (52,541 | ) | (77,847 | ) | 90,214 | (156,952 | ) | |||||||||||||
GMXB embedded derivatives (1) | (22,363 | ) | (90,923 | ) | (7,988 | ) | 28,137 | 62,940 | (85,303 | ) | ||||||||||||||
Funds withheld gains (losses) - investment income | (744 | ) | (7,516 | ) | (2,295 | ) | (10,304 | ) | (4,624 | ) | 3,880 | |||||||||||||
EIA embedded derivatives - interest credited | (27,958 | ) | (39,964 | ) | 42 | (17,364 | ) | 29,149 | (57,107 | ) | ||||||||||||||
DAC offset, net | 52,340 | 27,625 | 31,876 | 64,841 | (76,978 | ) | 129,318 | |||||||||||||||||
Adjusted operating income before income taxes | $ | 51,637 | $ | 46,698 | $ | 58,693 | $ | 54,323 | $ | 45,268 | $ | 6,369 | ||||||||||||
U.S. & Latin America Financial Reinsurance | ||||||||||||||||||||||||
Income before income taxes | $ | 17,816 | $ | 14,447 | $ | 13,982 | $ | 14,875 | $ | 15,934 | $ | 1,882 | ||||||||||||
Adjusted operating income before income taxes | $ | 17,816 | $ | 14,447 | $ | 13,982 | $ | 14,875 | $ | 15,934 | $ | 1,882 | ||||||||||||
Total U.S. & Latin America | ||||||||||||||||||||||||
Income before income taxes | $ | 133,546 | $ | 218,200 | $ | 179,795 | $ | 220,284 | $ | 36,202 | $ | 97,344 | ||||||||||||
Investment and derivative gains (losses) (1) | 31,330 | 103,442 | 798 | (27,118 | ) | (24,538 | ) | 55,868 | ||||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (68,702 | ) | (20,374 | ) | (49,078 | ) | (76,966 | ) | 92,249 | (160,951 | ) | |||||||||||||
GMXB embedded derivatives (1) | (22,363 | ) | (90,923 | ) | (7,988 | ) | 28,137 | 62,940 | (85,303 | ) | ||||||||||||||
Funds withheld gains (losses) - investment income | (744 | ) | (7,516 | ) | (2,295 | ) | (10,304 | ) | (4,624 | ) | 3,880 | |||||||||||||
EIA embedded derivatives - interest credited | (27,958 | ) | (39,964 | ) | 42 | (17,364 | ) | 29,149 | (57,107 | ) | ||||||||||||||
DAC offset, net | 52,340 | 27,625 | 31,876 | 64,841 | (76,978 | ) | 129,318 | |||||||||||||||||
Adjusted operating income before income taxes | $ | 97,449 | $ | 190,490 | $ | 153,150 | $ | 181,510 | $ | 114,400 | $ | (16,951 | ) | |||||||||||
(1) Included in "Investment related gains (losses), net" on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
| Page 37 | |
Reinsurance Group of America, Incorporated Reconciliation of GAAP Income Statements to Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Canada Traditional | ||||||||||||||||||||||||
Income before income taxes | $ | 19,328 | $ | 37,026 | $ | 34,275 | $ | 43,309 | $ | 20,095 | $ | (767 | ) | |||||||||||
Investment and derivative gains (losses) (1) | (2,652 | ) | (1,550 | ) | (2,624 | ) | (1,049 | ) | (372 | ) | (2,280 | ) | ||||||||||||
Funds withheld gains (losses) - investment income | 90 | (722 | ) | (1,027 | ) | (1,353 | ) | (359 | ) | 449 | ||||||||||||||
Adjusted operating income before income taxes | $ | 16,766 | $ | 34,754 | $ | 30,624 | $ | 40,907 | $ | 19,364 | $ | (2,598 | ) | |||||||||||
Canada Financial Solutions | ||||||||||||||||||||||||
Income before income taxes | $ | 3,592 | $ | 4,065 | $ | 1,160 | $ | 2,128 | $ | 592 | $ | 3,000 | ||||||||||||
Adjusted operating income before income taxes | $ | 3,592 | $ | 4,065 | $ | 1,160 | $ | 2,128 | $ | 592 | $ | 3,000 | ||||||||||||
Europe, Middle East and Africa Traditional | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 13,976 | $ | 15,826 | $ | 8,515 | $ | 6,834 | $ | (1,116 | ) | $ | 15,092 | |||||||||||
Investment and derivative gains (losses) (1) | (7 | ) | — | — | — | (5 | ) | (2 | ) | |||||||||||||||
Adjusted operating income (loss) before income taxes | $ | 13,969 | $ | 15,826 | $ | 8,515 | $ | 6,834 | $ | (1,121 | ) | $ | 15,090 | |||||||||||
Europe, Middle East and Africa Financial Solutions | ||||||||||||||||||||||||
Income before income taxes | $ | 31,918 | $ | 41,328 | $ | 43,786 | $ | 27,469 | $ | 25,424 | $ | 6,494 | ||||||||||||
Investment and derivative gains (losses) (1) | (4,575 | ) | (4,914 | ) | (8,159 | ) | (1,468 | ) | 1,004 | (5,579 | ) | |||||||||||||
Investment income on unit-linked variable annuities | (4,113 | ) | (4,217 | ) | (5,540 | ) | (2,966 | ) | (408 | ) | (3,705 | ) | ||||||||||||
Interest credited on unit-linked variable annuities | 4,113 | 4,217 | 5,540 | 2,966 | 408 | 3,705 | ||||||||||||||||||
Non-investment derivatives | 132 | 314 | (1,682 | ) | 127 | (817 | ) | 949 | ||||||||||||||||
Adjusted operating income before income taxes | $ | 27,475 | $ | 36,728 | $ | 33,945 | $ | 26,128 | $ | 25,611 | $ | 1,864 | ||||||||||||
Asia Pacific Traditional | ||||||||||||||||||||||||
Income before income taxes | $ | 41,688 | $ | 18,464 | $ | 19,822 | $ | 34,482 | $ | 41,160 | $ | 528 | ||||||||||||
Investment and derivative gains (losses) (1) | — | — | — | — | (16 | ) | 16 | |||||||||||||||||
Adjusted operating income before income taxes | $ | 41,688 | $ | 18,464 | $ | 19,822 | $ | 34,482 | $ | 41,144 | $ | 544 | ||||||||||||
Asia Pacific Financial Solutions | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 5,872 | $ | (11,966 | ) | $ | 7,549 | $ | (73 | ) | $ | 8,553 | $ | (2,681 | ) | |||||||||
Investment and derivative gains (losses) (1) | (6,324 | ) | 5,846 | (5,283 | ) | (5,925 | ) | (1,111 | ) | (5,213 | ) | |||||||||||||
Adjusted operating income (loss) before income taxes | $ | (452 | ) | $ | (6,120 | ) | $ | 2,266 | $ | (5,998 | ) | $ | 7,442 | $ | (7,894 | ) | ||||||||
(1) Included in "Investment related gains (losses), net" on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
| Page 38 | |
Reinsurance Group of America, Incorporated Reconciliation of GAAP Income Statements to Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2017 | 2016 | 2016 | 2016 | 2016 | Quarter | |||||||||||||||||||
Corporate and Other Segment | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | (42,076 | ) | $ | (27,400 | ) | $ | (7,302 | ) | $ | 18,790 | $ | (23,330 | ) | $ | (18,746 | ) | |||||||
Investment and derivative gains (losses) (1) | 15,500 | 1,120 | (11,690 | ) | (31,540 | ) | (6,930 | ) | 22,430 | |||||||||||||||
Non-investment derivatives | (26 | ) | (25 | ) | (23 | ) | (17 | ) | (14 | ) | (12 | ) | ||||||||||||
Adjusted operating income (loss) before income taxes | $ | (26,602 | ) | $ | (26,305 | ) | $ | (19,015 | ) | $ | (12,767 | ) | $ | (30,274 | ) | $ | 3,672 | |||||||
Consolidated | ||||||||||||||||||||||||
Income before income taxes | $ | 207,844 | $ | 295,543 | $ | 287,600 | $ | 353,223 | $ | 107,580 | $ | 100,264 | ||||||||||||
Investment and derivative gains (losses) (1) | 33,272 | 103,944 | (26,958 | ) | (67,100 | ) | (31,968 | ) | 65,240 | |||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (68,702 | ) | (20,374 | ) | (49,078 | ) | (76,966 | ) | 92,249 | (160,951 | ) | |||||||||||||
GMXB embedded derivatives (1) | (22,363 | ) | (90,923 | ) | (7,988 | ) | 28,137 | 62,940 | (85,303 | ) | ||||||||||||||
Funds withheld gains (losses) - investment income | (654 | ) | (8,238 | ) | (3,322 | ) | (11,657 | ) | (4,983 | ) | 4,329 | |||||||||||||
EIA embedded derivatives - interest credited | (27,958 | ) | (39,964 | ) | 42 | (17,364 | ) | 29,149 | (57,107 | ) | ||||||||||||||
DAC offset, net | 52,340 | 27,625 | 31,876 | 64,841 | (76,978 | ) | 129,318 | |||||||||||||||||
Investment income on unit-linked variable annuities | (4,113 | ) | (4,217 | ) | (5,540 | ) | (2,966 | ) | (408 | ) | (3,705 | ) | ||||||||||||
Interest credited on unit-linked variable annuities | 4,113 | 4,217 | 5,540 | 2,966 | 408 | 3,705 | ||||||||||||||||||
Non-investment derivatives | 106 | 289 | (1,705 | ) | 110 | (831 | ) | 937 | ||||||||||||||||
Adjusted operating income before income taxes | $ | 173,885 | $ | 267,902 | $ | 230,467 | $ | 273,224 | $ | 177,158 | $ | (3,273 | ) | |||||||||||
(1) Included in "Investment related gains (losses), net" on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
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