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 26, 2018
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 26, 2018, Reinsurance Group of America, Incorporated issued (1) a press release (the "Press Release") announcing its earnings for the three-month period ended March 31, 2018, 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, 2018, 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 27, 2018 to discuss the financial and operating results for the three-month period ended March 31, 2018. 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.
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 26, 2018 | By: | /s/ Todd C. Larson | ||||
Todd C. Larson | ||||||
Senior Executive Vice President and Chief Financial Officer | ||||||
Exhibit 99.1
PRESS RELEASE
REINSURANCE GROUP OF AMERICA REPORTS FIRST-QUARTER RESULTS
• | Earnings per diluted share: $1.52 from net income, $1.61 from adjusted operating income* |
• | ROE 21.1 percent and adjusted operating ROE* 10.3 percent for the trailing twelve months |
• | Reported net premiums increased 9 percent in the first quarter |
ST. LOUIS, April 26, 2018 - Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global provider of life reinsurance, reported first-quarter net income of $100.2 million, or $1.52 per diluted share, compared with $145.5 million, or $2.22 per diluted share, in the prior-year quarter. Adjusted operating income* totaled $105.7 million, or $1.61 per diluted share, compared with $122.1 million, or $1.86 per diluted share, the year before. Net foreign currency fluctuations had a favorable effect of $0.09 per diluted share on net income and on adjusted operating income.
Quarterly Results | ||||||||
($ in thousands, except per share data) | 2018 | 2017 | ||||||
Net premiums | $ | 2,582,551 | $ | 2,365,696 | ||||
Net income | 100,230 | 145,512 | ||||||
Net income per diluted share | 1.52 | 2.22 | ||||||
Adjusted operating income* | 105,746 | 122,065 | ||||||
Adjusted operating income per diluted share* | 1.61 | 1.86 | ||||||
Book value per share | 139.64 | 115.24 | ||||||
Book value per share, excluding accumulated other comprehensive income (AOCI)* | 117.49 | 94.72 | ||||||
Total assets | 60,954,823 | 53,805,820 | ||||||
* | See ‘Use of Non-GAAP Financial Measures’ below |
In the first quarter, consolidated net premiums totaled $2.6 billion, up 9 percent from last year’s first quarter of $2.4 billion, with favorable net foreign currency effects of $79.3 million. Excluding spread-based businesses and the value of associated derivatives, investment income increased 9 percent over year-ago levels, due to an increase in average invested assets and higher variable investment income. The average investment yield, excluding spread businesses, was up 5 basis points from the first quarter of 2017 to 4.46 percent, attributable to higher variable investment income. The average investment yield was 8 basis points higher than the fourth-quarter yield due primarily to a higher level of variable investment income.
The Tax Cuts and Jobs Act of 2017 was enacted on December 22, 2017, reducing the statutory federal income tax rate from 35 percent to 21 percent, effective January 1, 2018. Due to generating a greater-than-expected portion of earnings in jurisdictions that have higher income tax rates than the U.S. statutory rate, and the inclusion of U.S. tax related to Global Intangible Low-Taxed Income, the effective tax rate this quarter was higher than the expected range at 27.3 percent on pre-tax income and 26.7 percent on pre-tax adjusted operating income. - more -
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Anna Manning, president and chief executive officer, commented, “Our operating results were below our expectations this quarter, but this reflects normal volatility of claims that is inherent in our business. As we have pointed out in the past, the nature of our business is such that we can experience some volatility of claims, in both directions, in the short term. However, any volatility tends to even out over longer periods, and our diversified global platform has helped mitigate overall relative volatility in recent periods. We tend to see the highest claims in our first quarters when winter weather and influenza seasons can cause higher claims experience.
“In this quarter, the biggest source of variability was in our U.S. Individual Mortality business where we had elevated claims, influenced by a severe influenza season and a difficult winter. We also experienced some volatility in the Asia Pacific Traditional segment, attributable to modest swings in underwriting results in a few different countries. Our operations in EMEA and Canada performed well overall. Again, we view the claims experience in the quarter to be a normal part of our business and not indicative of any systemic issues.
“Reported premium growth was 9 percent, favorably influenced by foreign currency, representing a solid quarter and continued good momentum.
“We had a fairly active quarter as we deployed approximately $90 million of capital into in-force and other transactions, and we remain well positioned and optimistic about the environment and our pipeline. We ended the quarter with an excess capital position of approximately $1.3 billion, down from the previous quarter. We continue to pursue a balanced approach to capital management through deployment of capital into in-force and other attractive transactions, share repurchases and shareholder dividends. Book value per share at March 31 was $139.64 including AOCI, and $117.49 excluding AOCI.
“Although our first-quarter earnings were below our expectations, our view of the underlying business fundamentals and intermediate-term financial outlook remain unchanged. Looking forward, we are excited 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 income of $2.9 million, compared with $30.0 million in the first quarter of 2017. Pre-tax adjusted operating income totaled $1.2 million for the quarter, compared with $28.0 million in last year’s first quarter. Results for the current quarter reflected elevated claims experience in the Individual Mortality business influenced by a particularly severe influenza season, resulting in a higher frequency of non-large claims. The year-ago period reflected unfavorable experience with a higher number of large claims. Additionally, Group results were modestly below expectations this year, compared with strong results a year ago.
Traditional net premiums were slightly down from last year’s first quarter to $1,299.4 million, reflecting the modification of a health treaty that occurred in the fourth quarter, as well as decreased individual health premiums due to lower new business volume in that market.
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Financial Solutions
The Asset-Intensive business reported pre-tax income of $47.3 million compared with $85.8 million last year. First-quarter pre-tax adjusted operating income totaled $49.7 million compared with $51.6 million in the prior-year period. Results were negatively affected by lower prepayment income and, to a modest extent, by the effect of lower equity markets during the period, while the prior-year period benefited from favorable interest rate spreads and higher equity markets.
The Financial Reinsurance business reported pre-tax income and pre-tax adjusted operating income of $20.2 million, up from $17.8 million the year before, due to strong new business volumes in the latter half of 2017.
Canada
Traditional
The Canada Traditional segment reported pre-tax income of $23.7 million, compared with $19.3 million the year before. Pre-tax adjusted operating income increased to $25.6 million, from $16.8 million a year ago, attributable to in-line individual mortality experience, contrasted with modestly unfavorable mortality experience the year before. Foreign currency exchange rates had a favorable effect of $1.4 million on pre-tax income and $1.5 million on pre-tax adjusted operating income.
Reported net premiums totaled $252.7 million for the quarter, up 17 percent over $215.8 million in the year-ago period primarily due to a new transaction. Net foreign currency fluctuations had a favorable effect of $10.8 million on net premiums.
Financial Solutions
The Canada Financial Solutions business segment, which consists of longevity and fee-based transactions, reported first-quarter pre-tax income and pre-tax adjusted operating income of $3.2 million, compared with $3.6 million a year ago, with both periods reflecting favorable longevity experience. Net foreign currency fluctuations favorably affected pre-tax income and pre-tax adjusted operating income by $0.2 million.
Europe, Middle East and Africa (EMEA)
Traditional
The EMEA Traditional segment reported pre-tax income and pre-tax adjusted operating income of $15.4 million, up from $14.0 million in last year’s first quarter. The current-period results were generally in line as unfavorable underwriting results in the U.K. were offset by favorable underwriting results across the rest of the region. Net foreign currency fluctuations favorably affected pre-tax income and pre-tax adjusted operating income by $1.8 million.
Reported net premiums increased 23 percent from the prior-year period to $375.7 million due to the growth of new and existing treaties. Foreign currency exchange rates favorably affected net premiums by $40.3 million.
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Financial Solutions
The EMEA Financial Solutions business segment, which consists of longevity, asset-intensive and fee-based transactions, reported first-quarter pre-tax income of $39.2 million, compared with $31.9 million in the year-ago period. Pre-tax adjusted operating income totaled $35.9 million, compared with $27.5 million the year before, due to underlying business growth and favorable foreign exchange, while both periods reflect favorable longevity experience. Net foreign currency fluctuations favorably affected pre-tax income by $4.3 million and pre-tax adjusted operating income by $4.0 million.
Asia Pacific
Traditional
The Asia Pacific Traditional segment's pre-tax income and pre-tax adjusted operating income declined to $22.9 million, from $41.7 million in the prior-year period, due to unfavorable underwriting experience in Asia and a modest loss in Australia, both attributed to normal volatility. In the prior-year period experience was favorable across Asia, with profitable results in Australia. Net foreign currency fluctuations had a favorable effect of $1.0 million on pre-tax income and $0.9 million on pre-tax adjusted operating income.
Reported net premiums increased 22 percent to $589.5 million, with strong growth across Asia, primarily from new and existing treaties across the region. The strong premium growth in Asia was partially offset by a material reduction in premiums in Australia due to the recapture of several treaties that took place in the fourth quarter of last year. Foreign currency exchange rates had a favorable effect of $21.3 million on net premiums.
Financial Solutions
The Asia Pacific Financial Solutions business segment, which consists of asset-intensive and fee-based transactions, reported first-quarter pre-tax income of $4.0 million, compared with $5.9 million in the prior-year period. Pre-tax adjusted operating income totaled $1.3 million, compared with a pre-tax adjusted operating loss of $0.5 million in the prior-year quarter, attributable to better-than-expected results from a treaty that is in runoff. Net foreign currency fluctuations had a favorable effect of $0.1 million on pre-tax income. Foreign currency exchange rates had an immaterial effect on pre-tax adjusted operating income.
Corporate and Other
The Corporate and Other segment’s pre-tax losses totaled $40.8 million, compared with $42.1 million the year before. Pre-tax adjusted operating losses were $30.9 million versus year-ago pre-tax adjusted operating losses of $26.6 million due to higher project costs and incentive-based compensation expenses. Both revenues and expenses reflected the acquisition of LOGiQ3 Inc., which closed in the first quarter.
Dividend Declaration
The board of directors declared a regular quarterly dividend of $0.50, payable May 29 to shareholders of record as of May 8.
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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 27. Interested parties may access the call by dialing 877-440-5807 (domestic) or 719-325-4821 (international). The access code is 4261076. 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.
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. 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, tax reform 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.
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 stockholders’ equity excluding AOCI. Similar to adjusted operating income, management believes these non-GAAP financial measures better reflect the ongoing profitability and underlying trends of the Company’s continuing operations, they also serve as a basis for establishing target levels and awards under RGA’s management incentive programs.
Reconciliations from GAAP net income, book value per share, net income per diluted share and average stockholders’ equity 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 “Financial Information” section.
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About RGA
Reinsurance Group of America, Incorporated (RGA), a Fortune 500 company, is among the leading global providers of life reinsurance and financial solutions, with approximately $3.4 trillion of life reinsurance in force and assets of $61.0 billion as of March 31, 2018. Founded in 1973, RGA today is recognized for its deep technical expertise in risk and capital management, innovative solutions, and commitment to serving its clients. With headquarters in St. Louis, Missouri, and operations around the world, RGA delivers expert solutions in individual life reinsurance, individual living benefits reinsurance, group reinsurance, health reinsurance, facultative underwriting, product development, and financial solutions. To learn more about RGA and its businesses, visit the company’s website at www.rgare.com.
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
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the Company’s initiatives, (18) the success of the Company’s clients, (19) successful execution of the Company’s entry into new markets, (20) successful development and introduction of new products and distribution opportunities, (21) the Company’s ability to successfully integrate acquired blocks of business and entities, (22) action by regulators who have authority over the Company’s reinsurance operations in the jurisdictions in which it operates, (23) the Company’s dependence on third parties, including those insurance companies and reinsurers to which the Company cedes some reinsurance, third-party investment managers, and others, (24) the threat of natural disasters, catastrophes, terrorist attacks, epidemics, or pandemics anywhere in the world where the Company or its clients do business, (25) interruption or failure of the Company’s telecommunication, information technology, or other operational systems, or the
Company’s failure to maintain adequate security to protect the confidentiality or privacy of personal or
sensitive data stored on such systems, (26) changes in laws, regulations, and accounting standards
applicable to the Company, its subsidiaries, or its business, (27) the benefits or burdens associated with the
Tax Cuts and Jobs Act of 2017 may be different than expected, (28) 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 (29) 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 2017 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, except per share data)
(Unaudited) | Three Months Ended March 31, | ||||||||||||||
2018 | 2017 | ||||||||||||||
Diluted Earnings Per Share | Diluted Earnings Per Share | ||||||||||||||
Net income | $ | 100,230 | $ | 1.52 | $ | 145,512 | $ | 2.22 | |||||||
Reconciliation to adjusted operating income: | |||||||||||||||
Capital (gains) losses, derivatives and other, included in investment related gains/losses, net | 25,477 | 0.39 | 20,253 | 0.31 | |||||||||||
Capital (gains) losses on funds withheld, included in investment income, net of related expenses | 8,131 | 0.12 | (425 | ) | (0.01 | ) | |||||||||
Embedded derivatives: | |||||||||||||||
Included in investment related gains/losses, net | (22,433 | ) | (0.34 | ) | (59,192 | ) | (0.90 | ) | |||||||
Included in interest credited | (22,565 | ) | (0.34 | ) | (18,173 | ) | (0.28 | ) | |||||||
DAC offset, net | 16,846 | 0.26 | 34,021 | 0.52 | |||||||||||
Investment (income) loss on unit-linked variable annuities | 2,095 | 0.03 | (2,673 | ) | (0.04 | ) | |||||||||
Interest credited on unit-linked variable annuities | (2,095 | ) | (0.03 | ) | 2,673 | 0.04 | |||||||||
Non-investment derivatives | 60 | — | 69 | — | |||||||||||
Statutory tax rate changes | — | — | — | — | |||||||||||
Adjusted operating income | $ | 105,746 | $ | 1.61 | $ | 122,065 | $ | 1.86 | |||||||
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Consolidated Effective Income Tax Rates
(Dollars in thousands)
(Unaudited) | Three Months Ended March 31, 2018 | |||||||||
Pre-tax Income | Income Taxes | Effective Tax Rate | ||||||||
GAAP income | $ | 137,925 | $ | 37,695 | 27.3 | % | ||||
Reconciliation to adjusted operating income: | ||||||||||
Capital (gains) losses, derivatives and other, included in investment related gains/losses, net | 31,643 | 6,166 | ||||||||
Capital (gains) losses on funds withheld, included in investment income, net of related expenses | 10,292 | 2,161 | ||||||||
Embedded derivatives: | ||||||||||
Included in investment related gains/losses, net | (28,396 | ) | (5,963 | ) | ||||||
Included in interest credited | (28,563 | ) | (5,998 | ) | ||||||
DAC offset, net | 21,324 | 4,478 | ||||||||
Investment (income) loss on unit-linked variable annuities | 2,652 | 557 | ||||||||
Interest credited on unit-linked variable annuities | (2,652 | ) | (557 | ) | ||||||
Non-investment derivatives | 76 | 16 | ||||||||
Statutory tax rate changes | — | — | ||||||||
Adjusted operating income | $ | 144,301 | $ | 38,555 | 26.7 | % | ||||
Reconciliation of Consolidated Income before Income Taxes to Pre-tax Adjusted Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
Income before income taxes | $ | 137,925 | $ | 207,844 | |||
Reconciliation to pre-tax adjusted operating income: | |||||||
Capital (gains) losses, derivatives and other, included in investment related gains/losses, net | 31,643 | 33,272 | |||||
Capital (gains) losses on funds withheld, included in investment income, net of related expenses | 10,292 | (654 | ) | ||||
Embedded derivatives: | |||||||
Included in investment related gains/losses, net | (28,396 | ) | (91,065 | ) | |||
Included in interest credited | (28,563 | ) | (27,958 | ) | |||
DAC offset, net | 21,324 | 52,340 | |||||
Investment (income) loss on unit-linked variable annuities | 2,652 | (4,113 | ) | ||||
Interest credited on unit-linked variable annuities | (2,652 | ) | 4,113 | ||||
Non-investment derivatives | 76 | 106 | |||||
Pre-tax adjusted operating income | $ | 144,301 | $ | 173,885 | |||
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Income to Pre-tax Adjusted Operating Income
(Dollars in thousands)
(Unaudited) | Three Months Ended March 31, 2018 | ||||||||||||||
Pre-tax 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 | $ | 2,892 | $ | 10 | $ | (1,693 | ) | $ | 1,209 | ||||||
Financial Solutions: | |||||||||||||||
Asset-Intensive | 47,262 | 41,631 | (1) | (39,231 | ) | (2) | 49,662 | ||||||||
Financial Reinsurance | 20,159 | — | — | 20,159 | |||||||||||
Total U.S. and Latin America | 70,313 | 41,641 | (40,924 | ) | 71,030 | ||||||||||
Canada Traditional | 23,707 | 1,850 | — | 25,557 | |||||||||||
Canada Financial Solutions | 3,191 | — | — | 3,191 | |||||||||||
Total Canada | 26,898 | 1,850 | — | 28,748 | |||||||||||
EMEA Traditional | 15,421 | (9 | ) | — | 15,412 | ||||||||||
EMEA Financial Solutions | 39,164 | (3,276 | ) | — | 35,888 | ||||||||||
Total EMEA | 54,585 | (3,285 | ) | — | 51,300 | ||||||||||
Asia Pacific Traditional | 22,887 | (5 | ) | — | 22,882 | ||||||||||
Asia Pacific Financial Solutions | 4,021 | (2,743 | ) | — | 1,278 | ||||||||||
Total Asia Pacific | 26,908 | (2,748 | ) | — | 24,160 | ||||||||||
Corporate and Other | (40,779 | ) | 9,842 | — | (30,937 | ) | |||||||||
Consolidated | $ | 137,925 | $ | 47,300 | $ | (40,924 | ) | $ | 144,301 | ||||||
(1) | Asset-Intensive is net of $5,289 DAC offset. |
(2) | Asset-Intensive is net of $16,035 DAC offset. |
(Unaudited) | Three Months Ended March 31, 2017 | ||||||||||||||
Pre-tax 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. |
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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, | ||||||
2018 | 2017 | ||||||
Earnings per share from net income: | |||||||
Basic earnings per share | $ | 1.55 | $ | 2.26 | |||
Diluted earnings per share | $ | 1.52 | $ | 2.22 | |||
Diluted earnings per share from adjusted operating income | $ | 1.61 | $ | 1.86 | |||
Weighted average number of common and common equivalent shares outstanding | 65,872 | 65,671 | |||||
(Unaudited) | At March 31, | ||||||
2018 | 2017 | ||||||
Treasury shares | 14,625 | 14,749 | |||||
Common shares outstanding | 64,513 | 64,389 | |||||
Book value per share outstanding | $ | 139.64 | $ | 115.24 | |||
Book value per share outstanding, before impact of AOCI | $ | 117.49 | $ | 94.72 | |||
Reconciliation of Book Value Per Share to Book Value Per Share Excluding AOCI
(Unaudited) | At March 31, | ||||||
2018 | 2017 | ||||||
Book value per share outstanding | $ | 139.64 | $ | 115.24 | |||
Less effect of AOCI: | |||||||
Accumulated currency translation adjustments | (1.36 | ) | (3.02 | ) | |||
Unrealized appreciation of securities | 24.29 | 24.20 | |||||
Pension and postretirement benefits | (0.78 | ) | (0.66 | ) | |||
Book value per share outstanding, before impact of AOCI | $ | 117.49 | $ | 94.72 | |||
- more -
Add Eleven
Reconciliation of Stockholders' Average Equity to Stockholders' Average Equity Excluding AOCI
(Dollars in thousands)
(Unaudited) | |||
Trailing Twelve Months: | March 31, 2018 | ||
Stockholders' average equity | $ | 8,413,220 | |
Less effect of AOCI: | |||
Accumulated currency translation adjustments | (124,852 | ) | |
Unrealized appreciation of securities | 1,792,249 | ||
Pension and postretirement benefits | (45,229 | ) | |
Stockholders' average equity, excluding AOCI | $ | 6,791,052 | |
Reconciliation of Trailing Twelve Months of Consolidated Net Income to Adjusted Operating Income and
Related Return on Equity
(Dollars in thousands)
(Unaudited) | Return on Equity | |||||
Trailing Twelve Months: | Income | |||||
Net Income | $ | 1,776,899 | 21.1 | % | ||
Reconciliation to adjusted operating income: | ||||||
Capital gains (losses), derivatives and other, net | 14,153 | |||||
Change in fair value of embedded derivatives | (108,781 | ) | ||||
Deferred acquisition cost offset, net | 53,207 | |||||
Statutory tax rate changes | (1,039,111 | ) | ||||
Adjusted operating income | $ | 696,367 | 10.3 | % | ||
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands)
(Unaudited) | Three Months Ended March 31, | ||||||
2018 | 2017 | ||||||
Revenues: | |||||||
Net premiums | $ | 2,582,551 | $ | 2,365,696 | |||
Investment income, net of related expenses | 516,329 | 514,364 | |||||
Investment related gains (losses), net: | |||||||
Other-than-temporary impairments on fixed maturity securities | — | (17,189 | ) | ||||
Other investment related gains (losses), net | (470 | ) | 77,712 | ||||
Total investment related gains (losses), net | (470 | ) | 60,523 | ||||
Other revenue | 75,297 | 68,157 | |||||
Total revenues | 3,173,707 | 3,008,740 | |||||
Benefits and expenses: | |||||||
Claims and other policy benefits | 2,362,101 | 2,106,145 | |||||
Interest credited | 80,449 | 107,684 | |||||
Policy acquisition costs and other insurance expenses | 356,902 | 379,389 | |||||
Other operating expenses | 191,274 | 158,506 | |||||
Interest expense | 37,454 | 42,402 | |||||
Collateral finance and securitization expense | 7,602 | 6,770 | |||||
Total benefits and expenses | 3,035,782 | 2,800,896 | |||||
Income before income taxes | 137,925 | 207,844 | |||||
Provision for income taxes | 37,695 | 62,332 | |||||
Net income | $ | 100,230 | $ | 145,512 | |||
# # #
Exhibit 99.2
Financial Supplement
First Quarter 2018
(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 2018
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
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, tax reform 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 stockholders' 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 stockholders’ 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. A reconciliation of stockholders' equity before and after the impact of AOCI is presented in the appendix.
| Page 1 | |
Reinsurance Group of America, Incorporated
Financial Supplement
2018 Notes
Effective January 1, 2018, the Company adopted Accounting Standard Update ("ASU") 2016-01 - Recognition and Measurement of Financial Assets and Financial Liabilities. Under the new guidance, all of the Company’s equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in net income. Previous to the adoption, the Company recognized changes in the fair value of its equity securities in other comprehensive income. The changes to disclosure related to the adoption are reflected in the Consolidated Balance Sheets on page 6 and in the Investments section of this quarterly financial supplement beginning on page 30.
| Page 2 | |
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, | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||||||
Net premiums | $ | 2,582,551 | $ | 2,505,186 | $ | 2,489,797 | $ | 2,480,451 | $ | 2,365,696 | $ | 216,855 | ||||||||||||
Net income | 100,230 | 1,216,888 | 227,591 | 232,190 | 145,512 | (45,282 | ) | |||||||||||||||||
Adjusted operating income | 105,746 | 170,899 | 226,048 | 193,674 | 122,065 | (16,319 | ) | |||||||||||||||||
Return on equity - annualized | 4.3 | % | 55.1 | % | 11.3 | % | 12.1 | % | 8.0 | % | (3.7 | )% | ||||||||||||
Return on equity - trailing 12 months | 21.1 | % | 22.7 | % | 10.3 | % | 10.1 | % | 10.5 | % | 10.6 | % | ||||||||||||
Adjusted operating return on equity (ex AOCI): | ||||||||||||||||||||||||
Annualized | 5.6 | % | 9.8 | % | 14.2 | % | 12.5 | % | 8.1 | % | (2.5 | )% | ||||||||||||
Trailing 12 months | 10.3 | % | 11.0 | % | 11.6 | % | 10.9 | % | 11.0 | % | (0.7 | )% | ||||||||||||
Total assets | $ | 60,954,823 | $ | 60,514,818 | $ | 58,694,031 | $ | 58,138,072 | $ | 53,805,820 | $ | 7,149,003 | ||||||||||||
Assumed Life Reinsurance In Force (in billions) | ||||||||||||||||||||||||
U.S. and Latin America Traditional | $ | 1,606.5 | $ | 1,609.8 | $ | 1,610.0 | $ | 1,612.2 | $ | 1,610.0 | $ | (3.5 | ) | |||||||||||
U.S. and Latin America Financial Solutions | 2.1 | 2.1 | 2.1 | 2.1 | 2.1 | — | ||||||||||||||||||
Canada Traditional | 396.8 | 393.9 | 385.1 | 368.7 | 363.6 | 33.2 | ||||||||||||||||||
Europe, Middle East and Africa Traditional | 772.5 | 739.0 | 719.3 | 688.2 | 642.6 | 129.9 | ||||||||||||||||||
Asia Pacific Traditional | 605.7 | 552.3 | 581.0 | 561.5 | 518.1 | 87.6 | ||||||||||||||||||
Asia Pacific Financial Solutions | 0.2 | 0.2 | 0.4 | 0.4 | 0.4 | (0.2 | ) | |||||||||||||||||
Total assumed life reinsurance in force | $ | 3,383.8 | $ | 3,297.3 | $ | 3,297.9 | $ | 3,233.1 | $ | 3,136.8 | $ | 247.0 | ||||||||||||
Assumed New Business Production (in billions) | ||||||||||||||||||||||||
U.S. and Latin America Traditional | $ | 23.3 | $ | 24.3 | $ | 24.8 | $ | 23.5 | $ | 26.8 | $ | (3.5 | ) | |||||||||||
Canada Traditional | 18.3 | 9.1 | 7.7 | 8.5 | 10.3 | 8.0 | ||||||||||||||||||
Europe, Middle East and Africa Traditional | 38.0 | 45.0 | 41.0 | 53.4 | 42.1 | (4.1 | ) | |||||||||||||||||
Asia Pacific Traditional | 17.1 | 12.2 | 17.2 | 37.1 | 12.4 | 4.7 | ||||||||||||||||||
Total assumed new business production | $ | 96.7 | $ | 90.6 | $ | 90.7 | $ | 122.5 | $ | 91.6 | $ | 5.1 | ||||||||||||
Per Share and Shares Data | ||||||||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||||||
Net income | $ | 1.55 | $ | 18.89 | $ | 3.53 | $ | 3.60 | $ | 2.26 | $ | (0.71 | ) | |||||||||||
Adjusted operating income | $ | 1.64 | $ | 2.65 | $ | 3.51 | $ | 3.01 | $ | 1.90 | $ | (0.26 | ) | |||||||||||
Diluted earnings per share | ||||||||||||||||||||||||
Net income | $ | 1.52 | $ | 18.49 | $ | 3.47 | $ | 3.54 | $ | 2.22 | $ | (0.70 | ) | |||||||||||
Adjusted operating income | $ | 1.61 | $ | 2.60 | $ | 3.44 | $ | 2.95 | $ | 1.86 | $ | (0.25 | ) | |||||||||||
Wgt. average common shares outstanding | ||||||||||||||||||||||||
Basic | 64,490 | 64,414 | 64,488 | 64,449 | 64,353 | 137 | ||||||||||||||||||
Diluted | 65,872 | 65,806 | 65,653 | 65,608 | 65,671 | 201 | ||||||||||||||||||
Common shares issued | 79,138 | 79,138 | 79,138 | 79,138 | 79,138 | — | ||||||||||||||||||
Treasury shares | 14,625 | 14,686 | 14,770 | 14,646 | 14,749 | (124 | ) | |||||||||||||||||
Common shares outstanding | 64,513 | 64,452 | 64,368 | 64,492 | 64,389 | 124 | ||||||||||||||||||
Book value per share | $ | 139.64 | $ | 148.48 | $ | 125.79 | $ | 123.60 | $ | 115.24 | $ | 24.40 | ||||||||||||
Per share effect of AOCI | $ | 22.15 | $ | 32.02 | $ | 25.25 | $ | 25.92 | $ | 20.52 | $ | 1.63 | ||||||||||||
Book value per share, excluding AOCI | $ | 117.49 | $ | 116.46 | $ | 100.54 | $ | 97.68 | $ | 94.72 | $ | 22.77 | ||||||||||||
Stockholders' dividends paid | $ | 32,241.1 | $ | 32,205.0 | $ | 32,270.7 | $ | 26,433.9 | $ | 26,380.9 | $ | 5,860.2 | ||||||||||||
| Page 3 | |
Reinsurance Group of America, Incorporated Consolidated GAAP Income Statements (including Adjusted Operating Income Reconciliations) (USD in thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
Revenues: | 2018 | 2017 | 2017 | 2017 | 2017 | Quarter | ||||||||||||||||||
Net premiums | $ | 2,582,551 | $ | 2,505,186 | $ | 2,489,797 | $ | 2,480,451 | $ | 2,365,696 | $ | 216,855 | ||||||||||||
Investment income, net of related expenses | 516,329 | 564,831 | 556,918 | 518,538 | 514,364 | 1,965 | ||||||||||||||||||
Investment related losses, net | ||||||||||||||||||||||||
OTTI on fixed maturity securities | — | (21,659 | ) | (390 | ) | (3,401 | ) | (17,189 | ) | 17,189 | ||||||||||||||
Other investment related gains (losses), net | (470 | ) | 50,068 | 23,043 | 59,696 | 77,712 | (78,182 | ) | ||||||||||||||||
Total investment related gains (losses), net | (470 | ) | 28,409 | 22,653 | 56,295 | 60,523 | (60,993 | ) | ||||||||||||||||
Other revenue | 75,297 | 134,017 | 75,942 | 73,992 | 68,157 | 7,140 | ||||||||||||||||||
Total revenues | 3,173,707 | 3,232,443 | 3,145,310 | 3,129,276 | 3,008,740 | 164,967 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 2,362,101 | 2,147,729 | 2,100,680 | 2,164,363 | 2,106,145 | 255,956 | ||||||||||||||||||
Interest credited | 80,449 | 152,972 | 126,099 | 115,285 | 107,684 | (27,235 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 356,902 | 402,001 | 365,424 | 319,832 | 379,389 | (22,487 | ) | |||||||||||||||||
Other operating expenses | 191,274 | 229,411 | 168,417 | 154,356 | 158,506 | 32,768 | ||||||||||||||||||
Interest expense | 37,454 | 37,435 | 36,836 | 29,352 | 42,402 | (4,948 | ) | |||||||||||||||||
Collateral finance and securitization expense | 7,602 | 7,401 | 7,692 | 6,773 | 6,770 | 832 | ||||||||||||||||||
Total benefits and expenses | 3,035,782 | 2,976,949 | 2,805,148 | 2,789,961 | 2,800,896 | 234,886 | ||||||||||||||||||
Income before income taxes | 137,925 | 255,494 | 340,162 | 339,315 | 207,844 | (69,919 | ) | |||||||||||||||||
Provision for income taxes | 37,695 | (961,394 | ) | 112,571 | 107,125 | 62,332 | (24,637 | ) | ||||||||||||||||
Net income | $ | 100,230 | $ | 1,216,888 | $ | 227,591 | $ | 232,190 | $ | 145,512 | $ | (45,282 | ) | |||||||||||
Pre-tax Adjusted Operating Income Reconciliation: | ||||||||||||||||||||||||
Income before income taxes | $ | 137,925 | $ | 255,494 | $ | 340,162 | $ | 339,315 | $ | 207,844 | $ | (69,919 | ) | |||||||||||
Investment and derivative losses (gains) (1) | 31,643 | 27,908 | (3,113 | ) | (38,098 | ) | 33,272 | (1,629 | ) | |||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (13,611 | ) | (37,870 | ) | (23,044 | ) | (15,108 | ) | (68,702 | ) | 55,091 | |||||||||||||
GMXB embedded derivatives (1) | (14,785 | ) | (15,648 | ) | 6,205 | (360 | ) | (22,363 | ) | 7,578 | ||||||||||||||
Funds withheld losses (gains) - investment income | 10,292 | (3,133 | ) | (7,443 | ) | (4,263 | ) | (654 | ) | 10,946 | ||||||||||||||
EIA embedded derivatives - interest credited | (28,563 | ) | (3,595 | ) | (1,367 | ) | (7,340 | ) | (27,958 | ) | (605 | ) | ||||||||||||
DAC offset, net | 21,324 | 22,230 | 26,845 | 6,865 | 52,340 | (31,016 | ) | |||||||||||||||||
Investment (income) loss on unit-linked variable annuities | 2,652 | (4,781 | ) | (2,475 | ) | 291 | (4,113 | ) | 6,765 | |||||||||||||||
Interest credited on unit-linked variable annuities | (2,652 | ) | 4,781 | 2,475 | (291 | ) | 4,113 | (6,765 | ) | |||||||||||||||
Non-investment derivatives | 76 | 41 | (102 | ) | 58 | 106 | (30 | ) | ||||||||||||||||
Adjusted operating income before income taxes | $ | 144,301 | $ | 245,427 | $ | 338,143 | $ | 281,069 | $ | 173,885 | $ | (29,584 | ) | |||||||||||
(1) Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
| Page 4 | |
Reinsurance Group of America, Incorporated Consolidated GAAP Income Statements (including Adjusted Operating Income Reconciliations) - continued (USD in thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
After-tax Adjusted Operating Income Reconciliation: | ||||||||||||||||||||||||
Net Income | $ | 100,230 | $ | 1,216,888 | $ | 227,591 | $ | 232,190 | $ | 145,512 | $ | (45,282 | ) | |||||||||||
Investment and derivative losses (gains) (1) | 25,477 | 17,806 | (2,255 | ) | (25,419 | ) | 20,253 | 5,224 | ||||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (10,753 | ) | (24,616 | ) | (14,978 | ) | (9,821 | ) | (44,656 | ) | 33,903 | |||||||||||||
GMXB embedded derivatives (1) | (11,680 | ) | (10,171 | ) | 4,033 | (234 | ) | (14,536 | ) | 2,856 | ||||||||||||||
Funds withheld losses (gains) - investment income | 8,131 | (2,036 | ) | (4,838 | ) | (2,771 | ) | (425 | ) | 8,556 | ||||||||||||||
EIA embedded derivatives - interest credited | (22,565 | ) | (2,337 | ) | (888 | ) | (4,771 | ) | (18,173 | ) | (4,392 | ) | ||||||||||||
DAC offset, net | 16,846 | 14,449 | 17,450 | 4,462 | 34,021 | (17,175 | ) | |||||||||||||||||
Investment (income) loss on unit-linked variable annuities | 2,095 | (3,108 | ) | (1,609 | ) | 189 | (2,673 | ) | 4,768 | |||||||||||||||
Interest credited on unit-linked variable annuities | (2,095 | ) | 3,108 | 1,609 | (189 | ) | 2,673 | (4,768 | ) | |||||||||||||||
Non-investment derivatives | 60 | 27 | (67 | ) | 38 | 69 | (9 | ) | ||||||||||||||||
Statutory tax rate changes | — | (1,039,111 | ) | — | — | — | — | |||||||||||||||||
Adjusted operating income | $ | 105,746 | $ | 170,899 | $ | 226,048 | $ | 193,674 | $ | 122,065 | $ | (16,319 | ) | |||||||||||
Wgt. average common shares outstanding (diluted) | 65,872 | 65,806 | 65,653 | 65,608 | 65,671 | 201 | ||||||||||||||||||
Diluted earnings per share - adjusted operating income | $ | 1.61 | $ | 2.60 | $ | 3.44 | $ | 2.95 | $ | 1.86 | $ | (0.25 | ) | |||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 79,348 | $ | 43,226 | $ | 18,343 | $ | (30,464 | ) | $ | (5,173 | ) | $ | 84,521 | ||||||||||
Adjusted operating income before income taxes | $ | 8,325 | $ | 5,988 | $ | 1,970 | $ | (6,057 | ) | $ | (2,266 | ) | $ | 10,591 | ||||||||||
(1) Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
(2) Compared to comparable prior year period. | ||||||||||||||||||||||||
| Page 5 | |
Reinsurance Group of America, Incorporated Consolidated Balance Sheets (USD thousands) | ||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed maturity securities, available-for-sale | $ | 37,945,260 | $ | 38,150,820 | $ | 36,381,742 | $ | 36,345,426 | $ | 32,694,793 | ||||||||||
Equity securities (1) | 103,983 | 100,152 | 112,931 | 104,277 | 111,616 | |||||||||||||||
Mortgage loans on real estate | 4,437,994 | 4,400,533 | 4,322,329 | 4,104,487 | 3,871,309 | |||||||||||||||
Policy loans | 1,346,930 | 1,357,624 | 1,340,146 | 1,406,774 | 1,402,940 | |||||||||||||||
Funds withheld at interest | 6,005,892 | 6,083,388 | 6,020,336 | 5,968,856 | 5,943,450 | |||||||||||||||
Short-term investments | 130,430 | 93,304 | 80,582 | 123,308 | 54,288 | |||||||||||||||
Other invested assets (1) | 1,512,147 | 1,505,332 | 1,419,592 | 1,394,093 | 1,317,559 | |||||||||||||||
Total investments | 51,482,636 | 51,691,153 | 49,677,658 | 49,447,221 | 45,395,955 | |||||||||||||||
Cash and cash equivalents | 1,510,407 | 1,303,524 | 1,204,590 | 1,123,350 | 1,178,114 | |||||||||||||||
Accrued investment income | 408,338 | 392,721 | 420,111 | 388,008 | 360,225 | |||||||||||||||
Premiums receivable and other reinsurance balances | 2,620,515 | 2,338,481 | 2,411,777 | 2,205,631 | 2,008,409 | |||||||||||||||
Reinsurance ceded receivables | 810,554 | 782,027 | 779,118 | 798,365 | 760,715 | |||||||||||||||
Deferred policy acquisition costs | 3,245,851 | 3,239,824 | 3,315,237 | 3,334,094 | 3,300,548 | |||||||||||||||
Other assets | 876,522 | 767,088 | 885,540 | 841,403 | 801,854 | |||||||||||||||
Total assets | $ | 60,954,823 | $ | 60,514,818 | $ | 58,694,031 | $ | 58,138,072 | $ | 53,805,820 | ||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Future policy benefits | $ | 22,645,243 | $ | 22,363,241 | $ | 21,084,562 | $ | 20,665,256 | $ | 19,832,483 | ||||||||||
Interest-sensitive contract liabilities | 16,661,602 | 16,227,642 | 16,370,090 | 16,440,873 | 14,039,919 | |||||||||||||||
Other policy claims and benefits | 5,361,149 | 4,992,074 | 4,899,367 | 4,809,780 | 4,649,192 | |||||||||||||||
Other reinsurance balances | 483,708 | 488,739 | 415,692 | 399,517 | 390,019 | |||||||||||||||
Deferred income taxes | 2,085,631 | 2,198,309 | 3,180,545 | 3,162,666 | 2,863,744 | |||||||||||||||
Other liabilities | 1,167,596 | 1,102,975 | 1,061,352 | 1,077,223 | 996,288 | |||||||||||||||
Long-term debt | 2,788,240 | 2,788,365 | 2,788,480 | 2,788,494 | 2,788,619 | |||||||||||||||
Collateral finance and securitization notes | 753,393 | 783,938 | 796,825 | 823,108 | 825,526 | |||||||||||||||
Total liabilities | 51,946,562 | 50,945,283 | 50,596,913 | 50,166,917 | 46,385,790 | |||||||||||||||
Stockholders’ Equity: | ||||||||||||||||||||
Common stock, at par value | 791 | 791 | 791 | 791 | 791 | |||||||||||||||
Additional paid-in-capital | 1,880,352 | 1,870,906 | 1,865,699 | 1,860,001 | 1,858,226 | |||||||||||||||
Retained earnings | 6,797,545 | 6,736,265 | 5,712,590 | 5,523,622 | 5,329,464 | |||||||||||||||
Treasury stock | (1,098,823 | ) | (1,102,058 | ) | (1,107,719 | ) | (1,085,157 | ) | (1,089,606 | ) | ||||||||||
Accumulated other comprehensive income (AOCI) | ||||||||||||||||||||
Accumulated currency translation adjustment, net of income taxes | (87,510 | ) | (86,350 | ) | (104,456 | ) | (151,189 | ) | (194,754 | ) | ||||||||||
Unrealized appreciation of securities, net of income taxes | 1,567,057 | 2,200,661 | 1,770,903 | 1,864,477 | 1,558,148 | |||||||||||||||
Pension and postretirement benefits, net of income taxes | (51,151 | ) | (50,680 | ) | (40,690 | ) | (41,390 | ) | (42,239 | ) | ||||||||||
Total stockholders’ equity | 9,008,261 | 9,569,535 | 8,097,118 | 7,971,155 | 7,420,030 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 60,954,823 | $ | 60,514,818 | $ | 58,694,031 | $ | 58,138,072 | $ | 53,805,820 | ||||||||||
Total stockholders’ equity, excluding AOCI | $ | 7,579,865 | $ | 7,505,904 | $ | 6,471,361 | $ | 6,299,257 | $ | 6,098,875 | ||||||||||
See appendix for a reconciliation of total stockholders' equity before and after the impact of AOCI. | ||||||||||||||||||||
(1) Effective January 1, 2018, the Company adopted ASU 2016-01. For additional information see the '2018 Notes" section on page 2. | ||||||||||||||||||||
| Page 6 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Traditional GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 1,299,422 | $ | 1,389,479 | $ | 1,327,181 | $ | 1,335,316 | $ | 1,304,345 | $ | (4,923 | ) | |||||||||||
Investment income, net of related expenses | 183,060 | 173,461 | 191,904 | 183,713 | 178,995 | 4,065 | ||||||||||||||||||
Investment related gains (losses), net | 1,683 | (1,414 | ) | (1,503 | ) | (654 | ) | 1,965 | (282 | ) | ||||||||||||||
Other revenue | 5,529 | 6,061 | 3,801 | 4,323 | 3,198 | 2,331 | ||||||||||||||||||
Total revenues | 1,489,694 | 1,567,587 | 1,521,383 | 1,522,698 | 1,488,503 | 1,191 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 1,254,961 | 1,221,236 | 1,118,401 | 1,194,917 | 1,225,640 | 29,321 | ||||||||||||||||||
Interest credited | 20,280 | 20,418 | 20,673 | 20,838 | 20,289 | (9 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 177,640 | 196,860 | 189,291 | 186,375 | 180,810 | (3,170 | ) | |||||||||||||||||
Other operating expenses | 33,921 | 36,705 | 32,506 | 29,974 | 31,804 | 2,117 | ||||||||||||||||||
Total benefits and expenses | 1,486,802 | 1,475,219 | 1,360,871 | 1,432,104 | 1,458,543 | 28,259 | ||||||||||||||||||
Income before income taxes | $ | 2,892 | $ | 92,368 | $ | 160,512 | $ | 90,594 | $ | 29,960 | $ | (27,068 | ) | |||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 96.6 | % | 87.9 | % | 84.3 | % | 89.5 | % | 94.0 | % | 2.6 | % | ||||||||||||
Policy acquisition costs and other insurance expenses | 13.7 | % | 14.2 | % | 14.3 | % | 14.0 | % | 13.9 | % | (0.2 | )% | ||||||||||||
Other operating expenses | 2.6 | % | 2.6 | % | 2.4 | % | 2.2 | % | 2.4 | % | 0.2 | % | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 944 | $ | 386 | $ | 582 | $ | (199 | ) | $ | (959 | ) | $ | 1,903 | ||||||||||
Loss before income taxes | $ | (49 | ) | $ | (114 | ) | $ | (106 | ) | $ | (84 | ) | $ | (160 | ) | $ | 111 | |||||||
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 Traditional Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | Qtr vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 1,299,422 | $ | 1,389,479 | $ | 1,327,181 | $ | 1,335,316 | $ | 1,304,345 | $ | (4,923 | ) | |||||||||||
Investment income, net of related expenses | 183,060 | 173,461 | 191,904 | 183,713 | 178,995 | 4,065 | ||||||||||||||||||
Investment related gains (losses), net | — | — | — | (1 | ) | 1 | (1 | ) | ||||||||||||||||
Other revenue | 5,529 | 6,061 | 3,801 | 4,323 | 3,198 | 2,331 | ||||||||||||||||||
Total revenues | 1,488,011 | 1,569,001 | 1,522,886 | 1,523,351 | 1,486,539 | 1,472 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 1,254,961 | 1,221,236 | 1,118,401 | 1,194,917 | 1,225,640 | 29,321 | ||||||||||||||||||
Interest credited | 20,280 | 20,418 | 20,673 | 20,838 | 20,289 | (9 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 177,640 | 196,860 | 189,291 | 186,375 | 180,810 | (3,170 | ) | |||||||||||||||||
Other operating expenses | 33,921 | 36,705 | 32,506 | 29,974 | 31,804 | 2,117 | ||||||||||||||||||
Total benefits and expenses | 1,486,802 | 1,475,219 | 1,360,871 | 1,432,104 | 1,458,543 | 28,259 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 1,209 | $ | 93,782 | $ | 162,015 | $ | 91,247 | $ | 27,996 | $ | (26,787 | ) | |||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 96.6 | % | 87.9 | % | 84.3 | % | 89.5 | % | 94.0 | % | 2.6 | % | ||||||||||||
Policy acquisition costs and other insurance expenses | 13.7 | % | 14.2 | % | 14.3 | % | 14.0 | % | 13.9 | % | (0.2 | )% | ||||||||||||
Other operating expenses | 2.6 | % | 2.6 | % | 2.4 | % | 2.2 | % | 2.4 | % | 0.2 | % | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 944 | $ | 386 | $ | 582 | $ | (199 | ) | $ | (959 | ) | $ | 1,903 | ||||||||||
Adjusted operating loss before income taxes | $ | (49 | ) | $ | (114 | ) | $ | (106 | ) | $ | (84 | ) | $ | (160 | ) | $ | 111 | |||||||
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 8 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Financial Solutions - Asset Intensive GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 5,192 | $ | 5,497 | $ | 6,423 | $ | 7,128 | $ | 4,635 | $ | 557 | ||||||||||||
Investment income, net of related expenses | 157,912 | 216,646 | 188,176 | 177,957 | 187,153 | (29,241 | ) | |||||||||||||||||
Investment related gains, net | 676 | 41,114 | 12,832 | 32,626 | 57,771 | (57,095 | ) | |||||||||||||||||
Other revenue | 22,959 | 22,458 | 26,899 | 26,211 | 23,214 | (255 | ) | |||||||||||||||||
Total revenues | 186,739 | 285,715 | 234,330 | 243,922 | 272,773 | (86,034 | ) | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 15,945 | 24,449 | 11,959 | 24,503 | 17,536 | (1,591 | ) | |||||||||||||||||
Interest credited | 54,212 | 118,980 | 94,120 | 87,664 | 79,157 | (24,945 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 62,035 | 53,201 | 54,441 | 38,211 | 83,653 | (21,618 | ) | |||||||||||||||||
Other operating expenses | 7,285 | 8,275 | 6,684 | 6,542 | 6,657 | 628 | ||||||||||||||||||
Total benefits and expenses | 139,477 | 204,905 | 167,204 | 156,920 | 187,003 | (47,526 | ) | |||||||||||||||||
Income before income taxes | $ | 47,262 | $ | 80,810 | $ | 67,126 | $ | 87,002 | $ | 85,770 | $ | (38,508 | ) | |||||||||||
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 Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 5,192 | $ | 5,497 | $ | 6,423 | $ | 7,128 | $ | 4,635 | $ | 557 | ||||||||||||
Investment income, net of related expenses | 168,227 | 213,604 | 180,985 | 173,947 | 186,409 | (18,182 | ) | |||||||||||||||||
Other revenue | 22,959 | 22,458 | 26,899 | 26,211 | 23,214 | (255 | ) | |||||||||||||||||
Total revenues | 196,378 | 241,559 | 214,307 | 207,286 | 214,258 | (17,880 | ) | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 15,945 | 24,449 | 11,959 | 24,503 | 17,536 | (1,591 | ) | |||||||||||||||||
Interest credited | 82,775 | 122,575 | 95,487 | 95,004 | 107,115 | (24,340 | ) | |||||||||||||||||
Policy acquisition costs and other insurance expenses | 40,711 | 30,971 | 27,596 | 31,346 | 31,313 | 9,398 | ||||||||||||||||||
Other operating expenses | 7,285 | 8,275 | 6,684 | 6,542 | 6,657 | 628 | ||||||||||||||||||
Total benefits and expenses | 146,716 | 186,270 | 141,726 | 157,395 | 162,621 | (15,905 | ) | |||||||||||||||||
Adjusted operating income before income taxes | $ | 49,662 | $ | 55,289 | $ | 72,581 | $ | 49,891 | $ | 51,637 | $ | (1,975 | ) | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 10 | |
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, | ||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||
Annuity account values: | ||||||||||||||||||||
Fixed annuities (deferred) | $ | 7,165 | $ | 6,607 | $ | 6,692 | $ | 6,762 | $ | 5,072 | ||||||||||
Net interest spread (fixed annuities) | 1.6 | % | 2.3 | % | 2.0 | % | 1.8 | % | 2.2 | % | ||||||||||
Equity-indexed annuities | $ | 4,022 | $ | 4,126 | $ | 4,144 | $ | 4,188 | $ | 4,238 | ||||||||||
Variable annuities account values | ||||||||||||||||||||
No riders | $ | 890 | $ | 950 | $ | 940 | $ | 939 | $ | 727 | ||||||||||
GMDB only | 178 | 182 | 180 | 179 | 58 | |||||||||||||||
GMIB only | 23 | 24 | 23 | 23 | 5 | |||||||||||||||
GMAB only | 16 | 22 | 25 | 28 | 29 | |||||||||||||||
GMWB only | 1,299 | 1,366 | 1,361 | 1,358 | 1,354 | |||||||||||||||
GMDB / WB | 327 | 343 | 340 | 339 | 339 | |||||||||||||||
Other | 28 | 31 | 33 | 35 | 20 | |||||||||||||||
Total variable annuities account values | $ | 2,761 | $ | 2,918 | $ | 2,902 | $ | 2,901 | $ | 2,532 | ||||||||||
Fair value of liabilities associated with living benefit riders | $ | 138 | $ | 152 | $ | 168 | $ | 162 | $ | 162 | ||||||||||
Interest-sensitive contract liabilities associated with: | ||||||||||||||||||||
Guaranteed investment contracts | $ | 882 | $ | 858 | $ | 872 | $ | 825 | $ | 675 | ||||||||||
Bank-owned life insurance (BOLI) | $ | 586 | $ | 584 | $ | 581 | $ | 577 | $ | 575 | ||||||||||
Other asset-intensive business | $ | 61 | $ | 62 | $ | 63 | $ | 64 | $ | 64 | ||||||||||
Future policy benefits associated with: | ||||||||||||||||||||
Payout annuities | $ | 2,255 | $ | 2,271 | $ | 2,284 | $ | 2,287 | $ | 1,950 | ||||||||||
| Page 11 | |
Reinsurance Group of America, Incorporated U.S. and Latin America Financial Solutions - Financial Reinsurance GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Investment income, net of related expenses | $ | 1,822 | $ | 2,040 | $ | 2,984 | $ | 1,853 | $ | 1,664 | $ | 158 | ||||||||||||
Other revenue | 24,791 | 27,631 | 26,856 | 26,201 | 24,409 | 382 | ||||||||||||||||||
Total revenues | 26,613 | 29,671 | 29,840 | 28,054 | 26,073 | 540 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 4,000 | 5,570 | 5,674 | 5,619 | 5,941 | (1,941 | ) | |||||||||||||||||
Other operating expenses | 2,454 | 3,016 | 2,174 | 2,452 | 2,316 | 138 | ||||||||||||||||||
Total benefits and expenses | 6,454 | 8,586 | 7,848 | 8,071 | 8,257 | (1,803 | ) | |||||||||||||||||
Income before income taxes | $ | 20,159 | $ | 21,085 | $ | 21,992 | $ | 19,983 | $ | 17,816 | $ | 2,343 | ||||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 12 | |
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 | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Investment income, net of related expenses | $ | 1,822 | $ | 2,040 | $ | 2,984 | $ | 1,853 | $ | 1,664 | $ | 158 | ||||||||||||
Other revenue | 24,791 | 27,631 | 26,856 | 26,201 | 24,409 | 382 | ||||||||||||||||||
Total revenues | 26,613 | 29,671 | 29,840 | 28,054 | 26,073 | 540 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Policy acquisition costs and other insurance expenses | 4,000 | 5,570 | 5,674 | 5,619 | 5,941 | (1,941 | ) | |||||||||||||||||
Other operating expenses | 2,454 | 3,016 | 2,174 | 2,452 | 2,316 | 138 | ||||||||||||||||||
Total benefits and expenses | 6,454 | 8,586 | 7,848 | 8,071 | 8,257 | (1,803 | ) | |||||||||||||||||
Adjusted operating income before income taxes | $ | 20,159 | $ | 21,085 | $ | 21,992 | $ | 19,983 | $ | 17,816 | $ | 2,343 | ||||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 13 | |
Reinsurance Group of America, Incorporated Canada Traditional GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 252,723 | $ | 238,993 | $ | 225,841 | $ | 221,380 | $ | 215,762 | $ | 36,961 | ||||||||||||
Investment income, net of related expenses | 50,584 | 48,089 | 51,593 | 44,830 | 44,506 | 6,078 | ||||||||||||||||||
Investment related gains, net | (731 | ) | 1,798 | 2,380 | 2,598 | 3,843 | (4,574 | ) | ||||||||||||||||
Other revenue | (257 | ) | (3 | ) | 1,281 | 465 | 164 | (421 | ) | |||||||||||||||
Total revenues | 302,319 | 288,877 | 281,095 | 269,273 | 264,275 | 38,044 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 212,825 | 191,665 | 193,978 | 181,197 | 191,052 | 21,773 | ||||||||||||||||||
Interest credited | 5 | 5 | 6 | 5 | 4 | 1 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 57,032 | 48,881 | 50,023 | 47,597 | 45,682 | 11,350 | ||||||||||||||||||
Other operating expenses | 8,750 | 9,061 | 8,299 | 7,638 | 8,209 | 541 | ||||||||||||||||||
Total benefits and expenses | 278,612 | 249,612 | 252,306 | 236,437 | 244,947 | 33,665 | ||||||||||||||||||
Income before income taxes | $ | 23,707 | $ | 39,265 | $ | 28,789 | $ | 32,836 | $ | 19,328 | $ | 4,379 | ||||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Loss ratios (creditor business) | 27.0 | % | 24.6 | % | 22.8 | % | 27.8 | % | 27.1 | % | (0.1 | )% | ||||||||||||
Loss ratios (excluding creditor business) | 92.2 | % | 90.6 | % | 99.2 | % | 92.8 | % | 100.7 | % | (8.5 | )% | ||||||||||||
Claims and other policy benefits / (net premiums + investment income) | 70.2 | % | 66.8 | % | 69.9 | % | 68.1 | % | 73.4 | % | (3.2 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses (creditor business) | 65.2 | % | 69.2 | % | 66.7 | % | 65.3 | % | 66.0 | % | (0.8 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses (excluding creditor business) | 16.6 | % | 11.3 | % | 12.7 | % | 12.6 | % | 12.3 | % | 4.3 | % | ||||||||||||
Other operating expenses | 3.5 | % | 3.8 | % | 3.7 | % | 3.5 | % | 3.8 | % | (0.3 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 10,846 | $ | 11,467 | $ | 8,992 | $ | (9,540 | ) | $ | 7,551 | $ | 3,295 | |||||||||||
Income (loss) before income taxes | $ | 1,416 | $ | 1,852 | $ | 1,508 | $ | (1,308 | ) | $ | 1,187 | $ | 229 | |||||||||||
Creditor reinsurance net premiums | $ | 31,093 | $ | 37,819 | $ | 39,445 | $ | 37,299 | $ | 35,564 | $ | (4,471 | ) | |||||||||||
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 Traditional Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 252,723 | $ | 238,993 | $ | 225,841 | $ | 221,380 | $ | 215,762 | $ | 36,961 | ||||||||||||
Investment income, net of related expenses | 50,561 | 47,998 | 51,341 | 44,577 | 44,596 | 5,965 | ||||||||||||||||||
Investment related gains, net | 1,142 | 1,242 | 1,204 | 1,203 | 1,191 | (49 | ) | |||||||||||||||||
Other revenue | (257 | ) | (3 | ) | 1,281 | 465 | 164 | (421 | ) | |||||||||||||||
Total revenues | 304,169 | 288,230 | 279,667 | 267,625 | 261,713 | 42,456 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 212,825 | 191,665 | 193,978 | 181,197 | 191,052 | 21,773 | ||||||||||||||||||
Interest credited | 5 | 5 | 6 | 5 | 4 | 1 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 57,032 | 48,881 | 50,023 | 47,597 | 45,682 | 11,350 | ||||||||||||||||||
Other operating expenses | 8,750 | 9,061 | 8,299 | 7,638 | 8,209 | 541 | ||||||||||||||||||
Total benefits and expenses | 278,612 | 249,612 | 252,306 | 236,437 | 244,947 | 33,665 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 25,557 | $ | 38,618 | $ | 27,361 | $ | 31,188 | $ | 16,766 | $ | 8,791 | ||||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Loss ratios (creditor business) | 27.0 | % | 24.6 | % | 22.8 | % | 27.8 | % | 27.1 | % | (0.1 | )% | ||||||||||||
Loss ratios (excluding creditor business) | 92.2 | % | 90.6 | % | 99.2 | % | 92.8 | % | 100.7 | % | (8.5 | )% | ||||||||||||
Claims and other policy benefits / (net premiums + investment income) | 70.2 | % | 66.8 | % | 70.0 | % | 68.1 | % | 73.4 | % | (3.2 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses (creditor business) | 65.2 | % | 69.2 | % | 66.7 | % | 65.3 | % | 66.0 | % | (0.8 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses (excluding creditor business) | 16.6 | % | 11.3 | % | 12.7 | % | 12.6 | % | 12.3 | % | 4.3 | % | ||||||||||||
Other operating expenses | 3.5 | % | 3.8 | % | 3.7 | % | 3.5 | % | 3.8 | % | (0.3 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 10,846 | $ | 11,467 | $ | 8,992 | $ | (9,540 | ) | $ | 7,551 | $ | 3,295 | |||||||||||
Adjusted operating income (loss) before income taxes | $ | 1,512 | $ | 1,820 | $ | 1,433 | $ | (1,232 | ) | $ | 1,130 | $ | 382 | |||||||||||
Creditor reinsurance net premiums | $ | 31,093 | $ | 37,819 | $ | 39,445 | $ | 37,299 | $ | 35,564 | $ | (4,471 | ) | |||||||||||
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 15 | |
Reinsurance Group of America, Incorporated Canada Financial Solutions (1) GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 11,305 | $ | 9,631 | $ | 9,874 | $ | 9,314 | $ | 9,410 | $ | 1,895 | ||||||||||||
Investment income, net of related expenses | 115 | 1,600 | 1,120 | 1,351 | 1,044 | (929 | ) | |||||||||||||||||
Other revenue | 1,357 | 1,467 | 1,436 | 1,338 | 1,353 | 4 | ||||||||||||||||||
Total revenues | 12,777 | 12,698 | 12,430 | 12,003 | 11,807 | 970 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 9,115 | 7,751 | 7,170 | 7,099 | 7,619 | 1,496 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 96 | 218 | 221 | 206 | 144 | (48 | ) | |||||||||||||||||
Other operating expenses | 375 | 575 | 567 | 273 | 452 | (77 | ) | |||||||||||||||||
Total benefits and expenses | 9,586 | 8,544 | 7,958 | 7,578 | 8,215 | 1,371 | ||||||||||||||||||
Income before income taxes | $ | 3,191 | $ | 4,154 | $ | 4,472 | $ | 4,425 | $ | 3,592 | $ | (401 | ) | |||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 501 | $ | 462 | $ | 387 | $ | (403 | ) | $ | 436 | $ | 65 | |||||||||||
Income (loss) before income taxes | $ | 188 | $ | 195 | $ | 159 | $ | (185 | ) | $ | 244 | $ | (56 | ) | ||||||||||
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 Canada Financial Solutions (1) Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 11,305 | $ | 9,631 | $ | 9,874 | $ | 9,314 | $ | 9,410 | $ | 1,895 | ||||||||||||
Investment income, net of related expenses | 115 | 1,600 | 1,120 | 1,351 | 1,044 | (929 | ) | |||||||||||||||||
Other revenue | 1,357 | 1,467 | 1,436 | 1,338 | 1,353 | 4 | ||||||||||||||||||
Total revenues | 12,777 | 12,698 | 12,430 | 12,003 | 11,807 | 970 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 9,115 | 7,751 | 7,170 | 7,099 | 7,619 | 1,496 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 96 | 218 | 221 | 206 | 144 | (48 | ) | |||||||||||||||||
Other operating expenses | 375 | 575 | 567 | 273 | 452 | (77 | ) | |||||||||||||||||
Total benefits and expenses | 9,586 | 8,544 | 7,958 | 7,578 | 8,215 | 1,371 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 3,191 | $ | 4,154 | $ | 4,472 | $ | 4,425 | $ | 3,592 | $ | (401 | ) | |||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 501 | $ | 462 | $ | 387 | $ | (403 | ) | $ | 436 | $ | 65 | |||||||||||
Adjusted operating income (loss) before income taxes | $ | 188 | $ | 195 | $ | 159 | $ | (185 | ) | $ | 244 | $ | (56 | ) | ||||||||||
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 17 | |
Reinsurance Group of America, Incorporated Europe, Middle East and Africa Traditional GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 375,729 | $ | 321,907 | $ | 344,211 | $ | 330,850 | $ | 304,672 | $ | 71,057 | ||||||||||||
Investment income, net of related expenses | 15,764 | 14,479 | 14,727 | 13,585 | 12,720 | 3,044 | ||||||||||||||||||
Investment related gains, net | 9 | 45 | — | — | 7 | 2 | ||||||||||||||||||
Other revenue | 2,280 | 666 | 2,034 | 1,485 | 687 | 1,593 | ||||||||||||||||||
Total revenues | 393,782 | 337,097 | 360,972 | 345,920 | 318,086 | 75,696 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 326,802 | 249,735 | 285,071 | 295,004 | 266,401 | 60,401 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 25,552 | 25,880 | 35,751 | 15,349 | 15,163 | 10,389 | ||||||||||||||||||
Other operating expenses | 26,007 | 31,747 | 24,729 | 24,213 | 22,546 | 3,461 | ||||||||||||||||||
Total benefits and expenses | 378,361 | 307,362 | 345,551 | 334,566 | 304,110 | 74,251 | ||||||||||||||||||
Income before income taxes | $ | 15,421 | $ | 29,735 | $ | 15,421 | $ | 11,354 | $ | 13,976 | $ | 1,445 | ||||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 87.0 | % | 77.6 | % | 82.8 | % | 89.2 | % | 87.4 | % | (0.4 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses | 6.8 | % | 8.0 | % | 10.4 | % | 4.6 | % | 5.0 | % | 1.8 | % | ||||||||||||
Other operating expenses | 6.9 | % | 9.9 | % | 7.2 | % | 7.3 | % | 7.4 | % | (0.5 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 40,308 | $ | 19,482 | $ | 7,297 | $ | (17,249 | ) | $ | (17,859 | ) | $ | 58,167 | ||||||||||
Income (loss) before income taxes | $ | 1,801 | $ | 2,037 | $ | 703 | $ | (522 | ) | $ | (721 | ) | $ | 2,522 | ||||||||||
Critical illness net premiums | $ | 48,898 | $ | 47,322 | $ | 48,985 | $ | 49,211 | $ | 45,976 | $ | 2,922 | ||||||||||||
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 Traditional Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 375,729 | $ | 321,907 | $ | 344,211 | $ | 330,850 | $ | 304,672 | $ | 71,057 | ||||||||||||
Investment income, net of related expenses | 15,764 | 14,479 | 14,727 | 13,585 | 12,720 | 3,044 | ||||||||||||||||||
Other revenue | 2,280 | 666 | 2,034 | 1,485 | 687 | 1,593 | ||||||||||||||||||
Total revenues | 393,773 | 337,052 | 360,972 | 345,920 | 318,079 | 75,694 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 326,802 | 249,735 | 285,071 | 295,004 | 266,401 | 60,401 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 25,552 | 25,880 | 35,751 | 15,349 | 15,163 | 10,389 | ||||||||||||||||||
Other operating expenses | 26,007 | 31,747 | 24,729 | 24,213 | 22,546 | 3,461 | ||||||||||||||||||
Total benefits and expenses | 378,361 | 307,362 | 345,551 | 334,566 | 304,110 | 74,251 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 15,412 | $ | 29,690 | $ | 15,421 | $ | 11,354 | $ | 13,969 | $ | 1,443 | ||||||||||||
Loss and expense ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 87.0 | % | 77.6 | % | 82.8 | % | 89.2 | % | 87.4 | % | (0.4 | )% | ||||||||||||
Policy acquisition costs and other insurance expenses | 6.8 | % | 8.0 | % | 10.4 | % | 4.6 | % | 5.0 | % | 1.8 | % | ||||||||||||
Other operating expenses | 6.9 | % | 9.9 | % | 7.2 | % | 7.3 | % | 7.4 | % | (0.5 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 40,308 | $ | 19,482 | $ | 7,297 | $ | (17,249 | ) | $ | (17,859 | ) | $ | 58,167 | ||||||||||
Adjusted operating income (loss) before income taxes | $ | 1,801 | $ | 2,033 | $ | 704 | $ | (522 | ) | $ | (721 | ) | $ | 2,522 | ||||||||||
Critical illness net premiums | $ | 48,898 | $ | 47,322 | $ | 48,985 | $ | 49,211 | $ | 45,976 | $ | 2,922 | ||||||||||||
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 19 | |
Reinsurance Group of America, Incorporated Europe, Middle East and Africa Financial Solutions (1) GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 47,979 | $ | 43,911 | $ | 39,294 | $ | 38,520 | $ | 41,995 | $ | 5,984 | ||||||||||||
Investment income, net of related expenses | 31,932 | 34,656 | 30,892 | 28,029 | 29,681 | 2,251 | ||||||||||||||||||
Investment related gains (losses), net | 3,352 | (2,738 | ) | 1,192 | 2,458 | 4,575 | (1,223 | ) | ||||||||||||||||
Other revenue | 4,880 | 4,807 | 5,663 | 4,398 | 3,738 | 1,142 | ||||||||||||||||||
Total revenues | 88,143 | 80,636 | 77,041 | 73,405 | 79,989 | 8,154 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 42,471 | 34,415 | 35,648 | 36,797 | 35,936 | 6,535 | ||||||||||||||||||
Interest credited | (2,652 | ) | 4,781 | 2,475 | (291 | ) | 4,113 | (6,765 | ) | |||||||||||||||
Policy acquisition costs and other insurance expenses | 1,080 | 763 | 327 | 454 | 289 | 791 | ||||||||||||||||||
Other operating expenses | 8,080 | 8,939 | 7,638 | 7,540 | 7,733 | 347 | ||||||||||||||||||
Total benefits and expenses | 48,979 | 48,898 | 46,088 | 44,500 | 48,071 | 908 | ||||||||||||||||||
Income before income taxes | $ | 39,164 | $ | 31,738 | $ | 30,953 | $ | 28,905 | $ | 31,918 | $ | 7,246 | ||||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 5,368 | $ | 2,922 | $ | 56 | $ | (4,378 | ) | $ | (6,169 | ) | $ | 11,537 | ||||||||||
Income (loss) before income taxes | $ | 4,318 | $ | 2,108 | $ | 130 | $ | (3,327 | ) | $ | (4,730 | ) | $ | 9,048 | ||||||||||
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 Europe, Middle East and Africa Financial Solutions (1) Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 47,979 | $ | 43,911 | $ | 39,294 | $ | 38,520 | $ | 41,995 | $ | 5,984 | ||||||||||||
Investment income, net of related expenses | 34,584 | 29,875 | 28,417 | 28,320 | 25,568 | 9,016 | ||||||||||||||||||
Other revenue | 4,956 | 4,848 | 5,570 | 4,482 | 3,870 | 1,086 | ||||||||||||||||||
Total revenues | 87,519 | 78,634 | 73,281 | 71,322 | 71,433 | 16,086 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 42,471 | 34,415 | 35,648 | 36,797 | 35,936 | 6,535 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 1,080 | 763 | 327 | 454 | 289 | 791 | ||||||||||||||||||
Other operating expenses | 8,080 | 8,939 | 7,638 | 7,540 | 7,733 | 347 | ||||||||||||||||||
Total benefits and expenses | 51,631 | 44,117 | 43,613 | 44,791 | 43,958 | 7,673 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 35,888 | $ | 34,517 | $ | 29,668 | $ | 26,531 | $ | 27,475 | $ | 8,413 | ||||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 5,368 | $ | 2,922 | $ | 56 | $ | (4,378 | ) | $ | (6,169 | ) | $ | 11,537 | ||||||||||
Adjusted operating income (loss) before income taxes | $ | 3,965 | $ | 2,311 | $ | 136 | $ | (3,043 | ) | $ | (4,006 | ) | $ | 7,971 | ||||||||||
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 21 | |
Reinsurance Group of America, Incorporated Asia Pacific Traditional GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 589,513 | $ | 495,439 | $ | 536,931 | $ | 537,352 | $ | 483,307 | $ | 106,206 | ||||||||||||
Investment income, net of related expenses | 24,600 | 23,570 | 23,858 | 22,345 | 21,902 | 2,698 | ||||||||||||||||||
Investment related gains (losses), net | 8 | (10 | ) | — | — | — | 8 | |||||||||||||||||
Other revenue | 418 | 63,268 | 871 | 1,832 | 21 | 397 | ||||||||||||||||||
Total revenues | 614,539 | 582,267 | 561,660 | 561,529 | 505,230 | 109,309 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 495,194 | 414,637 | 442,358 | 423,294 | 355,439 | 139,755 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 58,782 | 97,575 | 55,891 | 51,259 | 72,857 | (14,075 | ) | |||||||||||||||||
Other operating expenses | 37,676 | 42,843 | 36,847 | 33,654 | 35,246 | 2,430 | ||||||||||||||||||
Total benefits and expenses | 591,652 | 555,055 | 535,096 | 508,207 | 463,542 | 128,110 | ||||||||||||||||||
Income before income taxes | $ | 22,887 | $ | 27,212 | $ | 26,564 | $ | 53,322 | $ | 41,688 | $ | (18,801 | ) | |||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 84.0 | % | 83.7 | % | 82.4 | % | 78.8 | % | 73.5 | % | 10.5 | % | ||||||||||||
Policy acquisition costs and other insurance expenses | 10.0 | % | 19.7 | % | 10.4 | % | 9.5 | % | 15.1 | % | (5.1 | )% | ||||||||||||
Other operating expenses | 6.4 | % | 8.6 | % | 6.9 | % | 6.3 | % | 7.3 | % | (0.9 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 21,345 | $ | 8,512 | $ | 1,030 | $ | 1,321 | $ | 11,810 | $ | 9,535 | ||||||||||||
Income before income taxes | $ | 954 | $ | (1,066 | ) | $ | (954 | ) | $ | (261 | ) | $ | 851 | $ | 103 | |||||||||
Critical illness net premiums | $ | 235,721 | $ | 136,246 | $ | 158,612 | $ | 174,304 | $ | 141,883 | $ | 93,838 | ||||||||||||
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 Traditional Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 589,513 | $ | 495,439 | $ | 536,931 | $ | 537,352 | $ | 483,307 | $ | 106,206 | ||||||||||||
Investment income, net of related expenses | 24,600 | 23,570 | 23,858 | 22,345 | 21,902 | 2,698 | ||||||||||||||||||
Investment related gains, net | 3 | 5 | — | — | — | 3 | ||||||||||||||||||
Other revenue | 418 | 63,268 | 871 | 1,832 | 21 | 397 | ||||||||||||||||||
Total revenues | 614,534 | 582,282 | 561,660 | 561,529 | 505,230 | 109,304 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 495,194 | 414,637 | 442,358 | 423,294 | 355,439 | 139,755 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 58,782 | 97,575 | 55,891 | 51,259 | 72,857 | (14,075 | ) | |||||||||||||||||
Other operating expenses | 37,676 | 42,843 | 36,847 | 33,654 | 35,246 | 2,430 | ||||||||||||||||||
Total benefits and expenses | 591,652 | 555,055 | 535,096 | 508,207 | 463,542 | 128,110 | ||||||||||||||||||
Adjusted operating income before income taxes | $ | 22,882 | $ | 27,227 | $ | 26,564 | $ | 53,322 | $ | 41,688 | $ | (18,806 | ) | |||||||||||
Loss and Expense Ratios: | ||||||||||||||||||||||||
Claims and other policy benefits | 84.0 | % | 83.7 | % | 82.4 | % | 78.8 | % | 73.5 | % | 10.5 | % | ||||||||||||
Policy acquisition costs and other insurance expenses | 10.0 | % | 19.7 | % | 10.4 | % | 9.5 | % | 15.1 | % | (5.1 | )% | ||||||||||||
Other operating expenses | 6.4 | % | 8.6 | % | 6.9 | % | 6.3 | % | 7.3 | % | (0.9 | )% | ||||||||||||
Foreign currency effect on (1): | ||||||||||||||||||||||||
Net premiums | $ | 21,345 | $ | 8,512 | $ | 1,030 | $ | 1,321 | $ | 11,810 | $ | 9,535 | ||||||||||||
Adjusted operating income before income taxes | $ | 916 | $ | (1,059 | ) | $ | (954 | ) | $ | (261 | ) | $ | 851 | $ | 65 | |||||||||
Critical illness net premiums | $ | 235,721 | $ | 136,246 | $ | 158,612 | $ | 174,304 | $ | 141,883 | $ | 93,838 | ||||||||||||
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 23 | |
Reinsurance Group of America, Incorporated Asia Pacific Financial Solutions (1) GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 678 | $ | 325 | $ | 19 | $ | 549 | $ | 1,526 | $ | (848 | ) | |||||||||||
Investment income, net of related expenses | 10,394 | 9,867 | 10,556 | 8,570 | 5,536 | 4,858 | ||||||||||||||||||
Investment related gains, net | 3,467 | 2,413 | 758 | 3,582 | 7,185 | (3,718 | ) | |||||||||||||||||
Other revenue | 5,307 | 5,802 | 5,599 | 5,283 | 6,205 | (898 | ) | |||||||||||||||||
Total revenues | 19,846 | 18,407 | 16,932 | 17,984 | 20,452 | (606 | ) | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 4,468 | 3,850 | 6,110 | 1,565 | 6,495 | (2,027 | ) | |||||||||||||||||
Interest credited | 6,394 | 6,852 | 7,026 | 5,572 | 2,997 | 3,397 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 1,197 | 1,000 | 653 | 1,541 | 1,917 | (720 | ) | |||||||||||||||||
Other operating expenses | 3,766 | 4,595 | 3,372 | 3,929 | 3,171 | 595 | ||||||||||||||||||
Total benefits and expenses | 15,825 | 16,297 | 17,161 | 12,607 | 14,580 | 1,245 | ||||||||||||||||||
Income (loss) before income taxes | $ | 4,021 | $ | 2,110 | $ | (229 | ) | $ | 5,377 | $ | 5,872 | $ | (1,851 | ) | ||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 36 | $ | (5 | ) | $ | (1 | ) | $ | (16 | ) | $ | 17 | $ | 19 | |||||||||
Income (loss) before income taxes | $ | 98 | $ | 242 | $ | 139 | $ | (114 | ) | $ | 77 | $ | 21 | |||||||||||
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 Asia Pacific Financial Solutions (1) Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 678 | $ | 325 | $ | 19 | $ | 549 | $ | 1,526 | $ | (848 | ) | |||||||||||
Investment income, net of related expenses | 10,394 | 9,867 | 10,556 | 8,570 | 5,536 | 4,858 | ||||||||||||||||||
Investment related gains, net | 724 | 1,005 | 742 | 832 | 861 | (137 | ) | |||||||||||||||||
Other revenue | 5,307 | 5,802 | 5,599 | 5,283 | 6,205 | (898 | ) | |||||||||||||||||
Total revenues | 17,103 | 16,999 | 16,916 | 15,234 | 14,128 | 2,975 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 4,468 | 3,850 | 6,110 | 1,565 | 6,495 | (2,027 | ) | |||||||||||||||||
Interest credited | 6,394 | 6,852 | 7,026 | 5,572 | 2,997 | 3,397 | ||||||||||||||||||
Policy acquisition costs and other insurance expenses | 1,197 | 1,000 | 653 | 1,541 | 1,917 | (720 | ) | |||||||||||||||||
Other operating expenses | 3,766 | 4,595 | 3,372 | 3,929 | 3,171 | 595 | ||||||||||||||||||
Total benefits and expenses | 15,825 | 16,297 | 17,161 | 12,607 | 14,580 | 1,245 | ||||||||||||||||||
Adjusted operating income (loss) before income taxes | $ | 1,278 | $ | 702 | $ | (245 | ) | $ | 2,627 | $ | (452 | ) | $ | 1,730 | ||||||||||
Foreign currency effect on (2): | ||||||||||||||||||||||||
Net premiums | $ | 36 | $ | (5 | ) | $ | (1 | ) | $ | (16 | ) | $ | 17 | $ | 19 | |||||||||
Adjusted operating income (loss) before income taxes | $ | (42 | ) | $ | 158 | $ | 181 | $ | (63 | ) | $ | (102 | ) | $ | 60 | |||||||||
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 25 | |
Reinsurance Group of America, Incorporated Corporate and Other GAAP Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 10 | $ | 4 | $ | 23 | $ | 42 | $ | 44 | $ | (34 | ) | |||||||||||
Investment income, net of related expenses | 40,146 | 40,423 | 41,108 | 36,305 | 31,163 | 8,983 | ||||||||||||||||||
Investment related gains (losses), net | (8,934 | ) | (12,799 | ) | 6,994 | 15,685 | (14,823 | ) | 5,889 | |||||||||||||||
Other revenue | 8,033 | 1,860 | 1,502 | 2,456 | 5,168 | 2,865 | ||||||||||||||||||
Total revenues | 39,255 | 29,488 | 49,627 | 54,488 | 21,552 | 17,703 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 320 | (9 | ) | (15 | ) | (13 | ) | 27 | 293 | |||||||||||||||
Interest credited | 2,210 | 1,936 | 1,799 | 1,497 | 1,124 | 1,086 | ||||||||||||||||||
Policy acquisition costs and other insurance income | (30,512 | ) | (27,947 | ) | (26,848 | ) | (26,779 | ) | (27,067 | ) | (3,445 | ) | ||||||||||||
Other operating expenses | 62,960 | 83,655 | 45,601 | 38,141 | 40,372 | 22,588 | ||||||||||||||||||
Interest expense | 37,454 | 37,435 | 36,836 | 29,352 | 42,402 | (4,948 | ) | |||||||||||||||||
Collateral finance and securitization expense | 7,602 | 7,401 | 7,692 | 6,773 | 6,770 | 832 | ||||||||||||||||||
Total benefits and expenses | 80,034 | 102,471 | 65,065 | 48,971 | 63,628 | 16,406 | ||||||||||||||||||
Income (loss) before income taxes | $ | (40,779 | ) | $ | (72,983 | ) | $ | (15,438 | ) | $ | 5,517 | $ | (42,076 | ) | $ | 1,297 | ||||||||
Foreign currency effect (1): | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 156 | $ | 766 | $ | 379 | $ | (734 | ) | $ | 448 | $ | (292 | ) | ||||||||||
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 Corporate and Other Adjusted Operating Income Statements (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net premiums | $ | 10 | $ | 4 | $ | 23 | $ | 42 | $ | 44 | $ | (34 | ) | |||||||||||
Investment income, net of related expenses | 40,146 | 40,423 | 41,108 | 36,305 | 31,163 | 8,983 | ||||||||||||||||||
Investment related gains, net | 908 | 547 | 755 | 695 | 677 | 231 | ||||||||||||||||||
Other revenue | 8,033 | 1,860 | 1,493 | 2,430 | 5,142 | 2,891 | ||||||||||||||||||
Total revenues | 49,097 | 42,834 | 43,379 | 39,472 | 37,026 | 12,071 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Claims and other policy benefits | 320 | (9 | ) | (15 | ) | (13 | ) | 27 | 293 | |||||||||||||||
Interest credited | 2,210 | 1,936 | 1,799 | 1,497 | 1,124 | 1,086 | ||||||||||||||||||
Policy acquisition costs and other insurance income | (30,512 | ) | (27,947 | ) | (26,848 | ) | (26,779 | ) | (27,067 | ) | (3,445 | ) | ||||||||||||
Other operating expenses | 62,960 | 83,655 | 45,601 | 38,141 | 40,372 | 22,588 | ||||||||||||||||||
Interest expense | 37,454 | 37,435 | 36,836 | 29,352 | 42,402 | (4,948 | ) | |||||||||||||||||
Collateral finance and securitization expense | 7,602 | 7,401 | 7,692 | 6,773 | 6,770 | 832 | ||||||||||||||||||
Total benefits and expenses | 80,034 | 102,471 | 65,065 | 48,971 | 63,628 | 16,406 | ||||||||||||||||||
Adjusted operating loss before income taxes | $ | (30,937 | ) | $ | (59,637 | ) | $ | (21,686 | ) | $ | (9,499 | ) | $ | (26,602 | ) | $ | (4,335 | ) | ||||||
Foreign currency effect (1): | ||||||||||||||||||||||||
Adjusted operating income (loss) before income taxes | $ | 34 | $ | 644 | $ | 417 | $ | (667 | ) | $ | 498 | $ | (464 | ) | ||||||||||
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 27 | |
Reinsurance Group of America, Incorporated Summary of Segment GAAP Income (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||||||
U.S. and Latin America: | ||||||||||||||||||||||||
Traditional | $ | 2,892 | $ | 92,368 | $ | 160,512 | $ | 90,594 | $ | 29,960 | $ | (27,068 | ) | |||||||||||
Financial Solutions: | ||||||||||||||||||||||||
Asset Intensive | 47,262 | 80,810 | 67,126 | 87,002 | 85,770 | (38,508 | ) | |||||||||||||||||
Financial Reinsurance | 20,159 | 21,085 | 21,992 | 19,983 | 17,816 | 2,343 | ||||||||||||||||||
Total U.S. and Latin America | 70,313 | 194,263 | 249,630 | 197,579 | 133,546 | (63,233 | ) | |||||||||||||||||
Canada: | ||||||||||||||||||||||||
Canada Traditional | 23,707 | 39,265 | 28,789 | 32,836 | 19,328 | 4,379 | ||||||||||||||||||
Canada Financial Solutions | 3,191 | 4,154 | 4,472 | 4,425 | 3,592 | (401 | ) | |||||||||||||||||
Total Canada | 26,898 | 43,419 | 33,261 | 37,261 | 22,920 | 3,978 | ||||||||||||||||||
Europe, Middle East and Africa: | ||||||||||||||||||||||||
Europe, Middle East and Africa Traditional | 15,421 | 29,735 | 15,421 | 11,354 | 13,976 | 1,445 | ||||||||||||||||||
Europe, Middle East and Africa Financial Solutions | 39,164 | 31,738 | 30,953 | 28,905 | 31,918 | 7,246 | ||||||||||||||||||
Total Europe, Middle East and Africa | 54,585 | 61,473 | 46,374 | 40,259 | 45,894 | 8,691 | ||||||||||||||||||
Asia Pacific: | ||||||||||||||||||||||||
Asia Pacific Traditional | 22,887 | 27,212 | 26,564 | 53,322 | 41,688 | (18,801 | ) | |||||||||||||||||
Asia Pacific Financial Solutions | 4,021 | 2,110 | (229 | ) | 5,377 | 5,872 | (1,851 | ) | ||||||||||||||||
Total Asia Pacific | 26,908 | 29,322 | 26,335 | 58,699 | 47,560 | (20,652 | ) | |||||||||||||||||
Corporate and Other | (40,779 | ) | (72,983 | ) | (15,438 | ) | 5,517 | (42,076 | ) | 1,297 | ||||||||||||||
Consolidated income before income taxes | $ | 137,925 | $ | 255,494 | $ | 340,162 | $ | 339,315 | $ | 207,844 | $ | (69,919 | ) | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 28 | |
Reinsurance Group of America, Incorporated Summary of Segment Adjusted Operating Income (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||||||
U.S. and Latin America: | ||||||||||||||||||||||||
Traditional | $ | 1,209 | $ | 93,782 | $ | 162,015 | $ | 91,247 | $ | 27,996 | $ | (26,787 | ) | |||||||||||
Financial Solutions: | ||||||||||||||||||||||||
Asset Intensive | 49,662 | 55,289 | 72,581 | 49,891 | 51,637 | (1,975 | ) | |||||||||||||||||
Financial Reinsurance | 20,159 | 21,085 | 21,992 | 19,983 | 17,816 | 2,343 | ||||||||||||||||||
Total U.S. and Latin America | 71,030 | 170,156 | 256,588 | 161,121 | 97,449 | (26,419 | ) | |||||||||||||||||
Canada: | ||||||||||||||||||||||||
Canada Traditional | 25,557 | 38,618 | 27,361 | 31,188 | 16,766 | 8,791 | ||||||||||||||||||
Canada Financial Solutions | 3,191 | 4,154 | 4,472 | 4,425 | 3,592 | (401 | ) | |||||||||||||||||
Total Canada | 28,748 | 42,772 | 31,833 | 35,613 | 20,358 | 8,390 | ||||||||||||||||||
Europe, Middle East and Africa: | ||||||||||||||||||||||||
Europe, Middle East and Africa Traditional | 15,412 | 29,690 | 15,421 | 11,354 | 13,969 | 1,443 | ||||||||||||||||||
Europe, Middle East and Africa Financial Solutions | 35,888 | 34,517 | 29,668 | 26,531 | 27,475 | 8,413 | ||||||||||||||||||
Total Europe, Middle East and Africa | 51,300 | 64,207 | 45,089 | 37,885 | 41,444 | 9,856 | ||||||||||||||||||
Asia Pacific: | ||||||||||||||||||||||||
Asia Pacific Traditional | 22,882 | 27,227 | 26,564 | 53,322 | 41,688 | (18,806 | ) | |||||||||||||||||
Asia Pacific Financial Solutions | 1,278 | 702 | (245 | ) | 2,627 | (452 | ) | 1,730 | ||||||||||||||||
Total Asia Pacific | 24,160 | 27,929 | 26,319 | 55,949 | 41,236 | (17,076 | ) | |||||||||||||||||
Corporate and Other | (30,937 | ) | (59,637 | ) | (21,686 | ) | (9,499 | ) | (26,602 | ) | (4,335 | ) | ||||||||||||
Consolidated adjusted operating income before income taxes | $ | 144,301 | $ | 245,427 | $ | 338,143 | $ | 281,069 | $ | 173,885 | $ | (29,584 | ) | |||||||||||
See appendix for reconciliation of GAAP income before income taxes to adjusted operating income before income taxes. | ||||||||||||||||||||||||
| Page 29 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Cash and Invested Assets | ||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||
Fixed maturity securities, available-for-sale (1) | $ | 37,945,260 | $ | 38,150,820 | $ | 36,381,742 | $ | 36,345,426 | $ | 32,694,793 | ||||||||||
Equity securities (2) | 103,983 | 100,152 | 112,931 | 104,277 | 111,616 | |||||||||||||||
Mortgage loans on real estate | 4,437,994 | 4,400,533 | 4,322,329 | 4,104,487 | 3,871,309 | |||||||||||||||
Policy loans | 1,346,930 | 1,357,624 | 1,340,146 | 1,406,774 | 1,402,940 | |||||||||||||||
Funds withheld at interest | 6,005,892 | 6,083,388 | 6,020,336 | 5,968,856 | 5,943,450 | |||||||||||||||
Short-term investments | 130,430 | 93,304 | 80,582 | 123,308 | 54,288 | |||||||||||||||
Other invested assets | 1,512,147 | 1,505,332 | 1,419,592 | 1,394,093 | 1,317,559 | |||||||||||||||
Cash and cash equivalents | 1,510,407 | 1,303,524 | 1,204,590 | 1,123,350 | 1,178,114 | |||||||||||||||
Total cash and invested assets | $ | 52,993,043 | $ | 52,994,677 | $ | 50,882,248 | $ | 50,570,571 | $ | 46,574,069 | ||||||||||
(1) The Company holds the various types of fixed maturity securities available-for-sale and classifies them as corporate securities (“Corporate”), Canadian and Canadian provincial government securities (“Canadian | ||||||||||||||||||||
government”), residential mortgage-backed securities (“RMBS”), asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), U.S. government and agencies (“U.S. government”), state and | ||||||||||||||||||||
political subdivisions, and other foreign government, supernational and foreign government-sponsored enterprises (“Other foreign government”). | ||||||||||||||||||||
(2) Effective January 1, 2018, the Company adopted ASU 2016-01. For additional information see the '2018 Notes" section on page 2. | ||||||||||||||||||||
Investment Income and Yield Summary | ||||||||||||||||||||||||
Three Months Ended | Current Qtr vs. PY Quarter | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||||||
Average invested assets at amortized cost (1) | $ | 27,024,934 | $ | 26,351,089 | $ | 25,887,338 | $ | 25,172,367 | $ | 25,212,377 | $ | 1,812,557 | ||||||||||||
Net investment income (1) | $ | 296,473 | $ | 283,989 | $ | 305,632 | $ | 284,884 | $ | 273,208 | $ | 23,265 | ||||||||||||
Annualized investment yield (ratio of net investment income to average invested assets at amortized cost) (1) | 4.46 | % | 4.38 | % | 4.81 | % | 4.60 | % | 4.41 | % | 0.05 | % | ||||||||||||
(1) Excludes spread-related business (e.g. coinsurance of annuities). | ||||||||||||||||||||||||
| Page 30 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Values of Fixed Maturity Securities (1) (Excludes Funds Withheld Portfolios) | |||||||||||||||||||||||
March 31, 2018 | |||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | % of Total | Other-than- temporary Impairment in AOCI | ||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||||
Corporate | $ | 22,890,985 | $ | 869,867 | $ | 240,383 | $ | 23,520,469 | 61.9 | % | $ | — | |||||||||||
Canadian governments | 2,803,077 | 1,297,817 | 3,040 | 4,097,854 | 10.8 | % | — | ||||||||||||||||
RMBS | 1,791,007 | 23,640 | 27,499 | 1,787,148 | 4.7 | % | — | ||||||||||||||||
ABS | 1,727,810 | 16,383 | 9,471 | 1,734,722 | 4.6 | % | 275 | ||||||||||||||||
CMBS | 1,281,452 | 12,717 | 12,236 | 1,281,933 | 3.4 | % | — | ||||||||||||||||
U.S. government | 1,486,262 | 9,266 | 59,414 | 1,436,114 | 3.8 | % | — | ||||||||||||||||
State and political subdivisions | 672,064 | 49,465 | 8,016 | 713,513 | 1.9 | % | — | ||||||||||||||||
Other foreign government | 3,261,048 | 133,865 | 21,406 | 3,373,507 | 8.9 | % | — | ||||||||||||||||
Total fixed maturity securities | $ | 35,913,705 | $ | 2,413,020 | $ | 381,465 | $ | 37,945,260 | 100.0 | % | $ | 275 | |||||||||||
(1) Effective January 1, 2018, the Company adopted ASU 2016-01. For additional information see the '2018 Notes" section on page 2. | |||||||||||||||||||||||
Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Values of Fixed Maturity and Equity Securities (Excludes Funds Withheld Portfolios) | |||||||||||||||||||||||
December 31, 2017 | |||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | % of Total | Other-than- temporary Impairment in AOCI | ||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||||
Corporate | $ | 21,966,803 | $ | 1,299,594 | $ | 55,429 | $ | 23,210,968 | 60.9 | % | $ | — | |||||||||||
Canadian governments | 2,843,273 | 1,378,510 | 1,707 | 4,220,076 | 11.1 | % | — | ||||||||||||||||
RMBS | 1,695,126 | 36,632 | 11,878 | 1,719,880 | 4.5 | % | — | ||||||||||||||||
ABS | 1,634,758 | 18,798 | 5,194 | 1,648,362 | 4.3 | % | 275 | ||||||||||||||||
CMBS | 1,285,594 | 22,627 | 4,834 | 1,303,387 | 3.4 | % | — | ||||||||||||||||
U.S. government | 1,953,436 | 12,089 | 21,933 | 1,943,592 | 5.1 | % | — | ||||||||||||||||
State and political subdivisions | 647,727 | 59,997 | 4,296 | 703,428 | 1.8 | % | — | ||||||||||||||||
Other foreign government | 3,254,695 | 154,507 | 8,075 | 3,401,127 | 8.9 | % | — | ||||||||||||||||
Total fixed maturity securities | $ | 35,281,412 | $ | 2,982,754 | $ | 113,346 | $ | 38,150,820 | 100.0 | % | $ | 275 | |||||||||||
Non-redeemable preferred stock | $ | 41,553 | $ | 479 | $ | 2,226 | $ | 39,806 | 39.7 | % | |||||||||||||
Other equity securities | 61,288 | 479 | 1,421 | 60,346 | 60.3 | % | |||||||||||||||||
Total equity securities | $ | 102,841 | $ | 958 | $ | 3,647 | $ | 100,152 | 100.0 | % | |||||||||||||
| Page 31 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Corporate Fixed Maturity Securities by Sector (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||
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 | $ | 4,385,123 | $ | 4,465,737 | 19.1 | % | A- | $ | 4,353,995 | $ | 4,549,003 | 19.6 | % | A- | ||||||||||||
Brokerage/asset managers/exchanges | 585,308 | 599,187 | 2.5 | % | A | 529,100 | 556,022 | 2.4 | % | A- | ||||||||||||||||
Finance companies | 216,056 | 214,365 | 0.9 | % | BBB+ | 219,289 | 226,733 | 1.0 | % | BBB+ | ||||||||||||||||
Insurance | 1,984,981 | 2,040,431 | 8.7 | % | A- | 1,864,357 | 1,989,990 | 8.6 | % | A- | ||||||||||||||||
REITs | 719,496 | 727,600 | 3.1 | % | BBB+ | 714,489 | 738,979 | 3.2 | % | BBB+ | ||||||||||||||||
Other finance | 359,717 | 359,717 | 1.5 | % | A- | 296,655 | 302,047 | 1.3 | % | A | ||||||||||||||||
Total financial institutions | $ | 8,250,681 | $ | 8,407,037 | 35.8 | % | $ | 7,977,885 | $ | 8,362,774 | 36.1 | % | ||||||||||||||
Industrials | ||||||||||||||||||||||||||
Basic | $ | 1,219,813 | $ | 1,245,316 | 5.3 | % | BBB | $ | 1,075,380 | $ | 1,137,668 | 4.9 | % | BBB | ||||||||||||
Capital goods | 1,165,409 | 1,170,796 | 5.0 | % | BBB+ | 1,151,629 | 1,202,609 | 5.2 | % | BBB+ | ||||||||||||||||
Communications | 2,034,671 | 2,112,943 | 9.0 | % | BBB | 2,006,383 | 2,133,924 | 9.2 | % | BBB | ||||||||||||||||
Consumer cyclical | 1,249,277 | 1,276,122 | 5.4 | % | A- | 1,249,776 | 1,301,978 | 5.6 | % | A- | ||||||||||||||||
Consumer noncyclical | 2,481,310 | 2,565,564 | 10.9 | % | BBB+ | 2,243,126 | 2,396,115 | 10.3 | % | BBB+ | ||||||||||||||||
Energy | 1,858,469 | 1,934,989 | 8.2 | % | BBB+ | 1,871,898 | 1,994,951 | 8.6 | % | BBB+ | ||||||||||||||||
Technology | 697,037 | 710,311 | 3.0 | % | A | 676,245 | 705,682 | 3.0 | % | A | ||||||||||||||||
Transportation | 1,180,775 | 1,209,226 | 5.1 | % | A- | 1,065,994 | 1,122,892 | 4.8 | % | A- | ||||||||||||||||
Other industrial | 206,273 | 211,913 | 0.9 | % | A- | 194,735 | 203,514 | 0.9 | % | BBB+ | ||||||||||||||||
Total industrials | $ | 12,093,034 | $ | 12,437,180 | 52.8 | % | $ | 11,535,166 | $ | 12,199,333 | 52.5 | % | ||||||||||||||
Utilities | ||||||||||||||||||||||||||
Electric | $ | 1,895,245 | $ | 1,977,401 | 8.4 | % | A- | $ | 1,818,459 | $ | 1,951,774 | 8.4 | % | A- | ||||||||||||
Natural gas | 358,668 | 377,624 | 1.6 | % | A- | 354,958 | 381,873 | 1.6 | % | A- | ||||||||||||||||
Other utility | 293,357 | 321,227 | 1.4 | % | BBB+ | 280,335 | 315,214 | 1.4 | % | BBB+ | ||||||||||||||||
Total utilities | $ | 2,547,270 | $ | 2,676,252 | 11.4 | % | $ | 2,453,752 | $ | 2,648,861 | 11.4 | % | ||||||||||||||
Total | $ | 22,890,985 | $ | 23,520,469 | 100.0 | % | BBB+ | $ | 21,966,803 | $ | 23,210,968 | 100.0 | % | BBB+ | ||||||||||||
(1) The Average Credit Rating designations are based on the ratings from nationally recognized statistical rating organizations (NRSRO), primarily those assigned by Moody's, S&P and Fitch. | ||||||||||||||||||||||||||
| Page 32 | |
Reinsurance Group of America, Incorporated
Investments
(USD thousands)
Ratings of Fixed Maturity Securities (Excludes Funds Withheld Portfolios) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | $ | 23,699,901 | $ | 25,416,105 | 67.0 | % | $ | 23,534,574 | $ | 25,762,103 | 67.5 | % | $ | 22,095,642 | $ | 23,989,873 | 66.0 | % | $ | 22,039,025 | $ | 24,093,110 | 66.4 | % | $ | 19,816,139 | $ | 21,521,758 | 65.8 | % | ||||||||||||||||||||||||||
2 | BBB | 10,502,621 | 10,816,607 | 28.5 | % | 10,115,008 | 10,709,170 | 28.1 | % | 10,233,331 | 10,792,989 | 29.7 | % | 10,097,673 | 10,626,154 | 29.2 | % | 9,159,294 | 9,571,666 | 29.3 | % | ||||||||||||||||||||||||||||||||||||
3 | BB | 1,209,542 | 1,211,330 | 3.2 | % | 1,139,200 | 1,173,639 | 3.1 | % | 1,107,086 | 1,143,449 | 3.1 | % | 1,140,073 | 1,167,968 | 3.2 | % | 1,079,371 | 1,109,172 | 3.4 | % | ||||||||||||||||||||||||||||||||||||
4 | B | 439,444 | 439,736 | 1.2 | % | 408,990 | 420,284 | 1.1 | % | 360,643 | 374,478 | 1.0 | % | 358,668 | 369,794 | 1.0 | % | 383,254 | 377,469 | 1.2 | % | ||||||||||||||||||||||||||||||||||||
5 | CCC | 45,617 | 43,929 | 0.1 | % | 78,143 | 79,747 | 0.2 | % | 86,984 | 74,093 | 0.2 | % | 94,473 | 79,662 | 0.2 | % | 91,245 | 105,749 | 0.3 | % | ||||||||||||||||||||||||||||||||||||
6 | In or near default | 16,580 | 17,553 | — | % | 5,497 | 5,877 | — | % | 6,282 | 6,860 | — | % | 8,422 | 8,738 | — | % | 11,264 | 8,979 | — | % | ||||||||||||||||||||||||||||||||||||
Total | $ | 35,913,705 | $ | 37,945,260 | 100.0 | % | $ | 35,281,412 | $ | 38,150,820 | 100.0 | % | $ | 33,889,968 | $ | 36,381,742 | 100.0 | % | $ | 33,738,334 | $ | 36,345,426 | 100.0 | % | $ | 30,540,567 | $ | 32,694,793 | 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, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | ||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
RMBS | ||||||||||||||||||||||||||||||||||||||||
Agency | $ | 861,908 | $ | 861,214 | $ | 878,559 | $ | 896,977 | $ | 891,508 | $ | 917,589 | $ | 784,648 | $ | 813,463 | $ | 584,067 | $ | 608,066 | ||||||||||||||||||||
Non-agency | 929,099 | 925,934 | 816,567 | 822,903 | 753,871 | 761,716 | 720,826 | 725,836 | 697,104 | 695,811 | ||||||||||||||||||||||||||||||
Total | 1,791,007 | 1,787,148 | 1,695,126 | 1,719,880 | 1,645,379 | 1,679,305 | 1,505,474 | 1,539,299 | 1,281,171 | 1,303,877 | ||||||||||||||||||||||||||||||
CMBS | 1,281,452 | 1,281,933 | 1,285,594 | 1,303,387 | 1,293,296 | 1,313,322 | 1,558,035 | 1,582,028 | 1,272,020 | 1,289,338 | ||||||||||||||||||||||||||||||
ABS | 1,727,810 | 1,734,722 | 1,634,758 | 1,648,362 | 1,680,918 | 1,694,568 | 1,630,499 | 1,641,841 | 1,379,251 | 1,380,590 | ||||||||||||||||||||||||||||||
Total | $ | 4,800,269 | $ | 4,803,803 | $ | 4,615,478 | $ | 4,671,629 | $ | 4,619,593 | $ | 4,687,195 | $ | 4,694,008 | $ | 4,763,168 | $ | 3,932,442 | $ | 3,973,805 | ||||||||||||||||||||
| Page 33 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Gross Unrealized Losses Aging Fixed Maturity Securities | |||||||||||||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | |||||||||||||||||||||||||||||||
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% | $ | 358,873 | 94.1 | % | $ | 110,508 | 94.5 | % | $ | 135,907 | 83.3 | % | $ | 147,319 | 82.4 | % | $ | 245,923 | 88.6 | % | |||||||||||||||
20% or more for less than six months | 20,232 | 5.3 | % | — | — | % | 3,407 | 2.1 | % | 5,051 | 2.8 | % | 4,113 | 1.5 | % | ||||||||||||||||||||
20% or more for six months or greater | 2,360 | 0.6 | % | 2,838 | 2.4 | % | 19,490 | 11.9 | % | 20,073 | 11.2 | % | 21,164 | 7.6 | % | ||||||||||||||||||||
Total | $ | 381,465 | 100.0 | % | $ | 113,346 | 96.9 | % | $ | 158,804 | 97.3 | % | $ | 172,443 | 96.4 | % | $ | 271,200 | 97.7 | % | |||||||||||||||
Equity Securities (1) | ||||||||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | |||||||||||||||||||||||||||||
Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | Gross Unrealized Losses | % of Total | |||||||||||||||||||||||||
Less than 20% | $ | 2,958 | 2.5 | % | $ | 4,406 | 2.7 | % | $ | 3,443 | 1.8 | % | $ | 5,717 | 2.1 | % | ||||||||||||||||
20% or more for less than six months | 689 | 0.6 | % | — | — | % | 2,542 | 1.4 | % | — | — | % | ||||||||||||||||||||
20% or more for six months or greater | — | — | % | — | — | % | 653 | 0.4 | % | 688 | 0.2 | % | ||||||||||||||||||||
Total | $ | 3,647 | 3.1 | % | $ | 4,406 | 2.7 | % | $ | 6,638 | 3.6 | % | $ | 6,405 | 2.3 | % | ||||||||||||||||
(1) Effective January 1, 2018, the Company adopted ASU 2016-01. For additional information see the '2018 Notes" section on page 2. | ||||||||||||||||||||||||||||||||
| Page 34 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Fixed Maturity Securities Below Amortized Cost(1) (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||
As of March 31, 2018 | ||||||||||||||||||||||||
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 | $ | 7,282,079 | $ | 155,541 | $ | 883,699 | $ | 46,908 | $ | 8,165,778 | $ | 202,449 | ||||||||||||
Canadian governments | 39,192 | 390 | 109,552 | 2,536 | 148,744 | 2,926 | ||||||||||||||||||
RMBS | 897,255 | 19,899 | 225,288 | 7,575 | 1,122,543 | 27,474 | ||||||||||||||||||
ABS | 612,053 | 7,001 | 114,605 | 2,423 | 726,658 | 9,424 | ||||||||||||||||||
CMBS | 538,464 | 8,026 | 103,447 | 4,210 | 641,911 | 12,236 | ||||||||||||||||||
U.S. government | 488,095 | 16,856 | 744,844 | 42,558 | 1,232,939 | 59,414 | ||||||||||||||||||
State and political subdivisions | 135,158 | 3,331 | 67,949 | 4,685 | 203,107 | 8,016 | ||||||||||||||||||
Other foreign government | 746,485 | 15,575 | 191,446 | 5,000 | 937,931 | 20,575 | ||||||||||||||||||
Total investment grade securities | $ | 10,738,781 | $ | 226,619 | $ | 2,440,830 | $ | 115,895 | $ | 13,179,611 | $ | 342,514 | ||||||||||||
Below investment grade securities: | ||||||||||||||||||||||||
Corporate | $ | 452,086 | $ | 29,597 | $ | 46,976 | $ | 8,337 | $ | 499,062 | $ | 37,934 | ||||||||||||
Canadian governments | 1,900 | 114 | — | — | 1,900 | 114 | ||||||||||||||||||
RMBS | — | — | 1,272 | 25 | 1,272 | 25 | ||||||||||||||||||
ABS | — | — | 1,173 | 47 | 1,173 | 47 | ||||||||||||||||||
Other foreign government | 57,385 | 662 | 12,045 | 169 | 69,430 | 831 | ||||||||||||||||||
Total below investment grade securities | $ | 511,371 | $ | 30,373 | $ | 61,466 | $ | 8,578 | $ | 572,837 | $ | 38,951 | ||||||||||||
Total fixed maturity securities | $ | 11,250,152 | $ | 256,992 | $ | 2,502,296 | $ | 124,473 | $ | 13,752,448 | $ | 381,465 | ||||||||||||
(1) Effective January 1, 2018, the Company adopted ASU 2016-01. For additional information see the '2018 Notes" section on page 2. | ||||||||||||||||||||||||
| Page 35 | |
Reinsurance Group of America, Incorporated Investments (USD thousands) Fixed Maturity and Equity Securities Below Amortized Cost (Excludes Funds Withheld Portfolios) | ||||||||||||||||||||||||
As of December 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 | $ | 1,886,212 | $ | 17,099 | $ | 1,009,750 | $ | 28,080 | $ | 2,895,962 | $ | 45,179 | ||||||||||||
Canadian governments | 18,688 | 91 | 111,560 | 1,596 | 130,248 | 1,687 | ||||||||||||||||||
RMBS | 566,699 | 5,852 | 224,439 | 6,004 | 791,138 | 11,856 | ||||||||||||||||||
ABS | 434,274 | 2,707 | 168,524 | 2,434 | 602,798 | 5,141 | ||||||||||||||||||
CMBS | 220,401 | 1,914 | 103,269 | 2,920 | 323,670 | 4,834 | ||||||||||||||||||
U.S. government | 800,298 | 6,177 | 767,197 | 15,756 | 1,567,495 | 21,933 | ||||||||||||||||||
State and political subdivisions | 43,510 | 242 | 68,666 | 4,054 | 112,176 | 4,296 | ||||||||||||||||||
Other foreign government | 369,717 | 2,707 | 191,265 | 4,704 | 560,982 | 7,411 | ||||||||||||||||||
Total investment grade securities | $ | 4,339,799 | $ | 36,789 | $ | 2,644,670 | $ | 65,548 | $ | 6,984,469 | $ | 102,337 | ||||||||||||
Below investment grade securities: | ||||||||||||||||||||||||
Corporate | $ | 194,879 | $ | 3,317 | $ | 75,731 | $ | 6,933 | $ | 270,610 | $ | 10,250 | ||||||||||||
Canadian governments | 1,995 | 20 | — | — | 1,995 | 20 | ||||||||||||||||||
RMBS | — | — | 1,369 | 22 | 1,369 | 22 | ||||||||||||||||||
ABS | — | — | 1,489 | 53 | 1,489 | 53 | ||||||||||||||||||
Other foreign government | 28,600 | 113 | 15,134 | 551 | 43,734 | 664 | ||||||||||||||||||
Total below investment grade securities | $ | 225,474 | $ | 3,450 | $ | 93,723 | $ | 7,559 | $ | 319,197 | $ | 11,009 | ||||||||||||
Total fixed maturity securities | $ | 4,565,273 | $ | 40,239 | $ | 2,738,393 | $ | 73,107 | $ | 7,303,666 | $ | 113,346 | ||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Non-redeemable preferred stock | $ | 82 | $ | 1 | $ | 26,471 | $ | 2,225 | $ | 26,553 | $ | 2,226 | ||||||||||||
Other equity securities | 5,820 | 1,023 | 47,251 | 398 | $ | 53,071 | $ | 1,421 | ||||||||||||||||
Total Equity securities | $ | 5,902 | $ | 1,024 | $ | 73,722 | $ | 2,623 | $ | 79,624 | $ | 3,647 | ||||||||||||
| Page 36 | |
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, | ||||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||||||
Fixed maturity securities avail. for sale (1): | ||||||||||||||||||||||||
Other-than-temporary impairment losses on fixed maturities | $ | — | $ | (21,659 | ) | $ | (390 | ) | $ | (3,401 | ) | $ | (17,189 | ) | $ | 17,189 | ||||||||
Gain on investment activity | 10,966 | 18,935 | 19,512 | 54,206 | 17,893 | (6,927 | ) | |||||||||||||||||
Loss on investment activity | (20,380 | ) | (10,751 | ) | (7,593 | ) | (10,297 | ) | (8,687 | ) | (11,693 | ) | ||||||||||||
Net gains (losses) on fixed maturity securities available for sale | (9,414 | ) | (13,475 | ) | 11,529 | 40,508 | (7,983 | ) | (1,431 | ) | ||||||||||||||
Net gains (losses) on equity securities | (5,059 | ) | (530 | ) | (964 | ) | (160 | ) | (3,876 | ) | (1,183 | ) | ||||||||||||
Other impairment losses and change in mortgage loan provision | (312 | ) | (277 | ) | (2,446 | ) | (6,675 | ) | (99 | ) | (213 | ) | ||||||||||||
Other non-derivative gains (losses), net | 5,303 | 3,988 | 9,464 | 5,587 | 4,712 | 591 | ||||||||||||||||||
Free-standing derivatives: | ||||||||||||||||||||||||
Credit default swaps | (402 | ) | 2,744 | 4,137 | 3,879 | 7,358 | (7,760 | ) | ||||||||||||||||
Interest rate swaps - non-hedged | (26,571 | ) | (1,040 | ) | 641 | 14,289 | (2,612 | ) | (23,959 | ) | ||||||||||||||
Interest rate swaps - hedged | (15 | ) | 156 | (9 | ) | (3 | ) | (8 | ) | (7 | ) | |||||||||||||
Foreign currency swaps - hedged (2) | 2,373 | 1,216 | 220 | (487 | ) | 1,031 | 1,342 | |||||||||||||||||
Futures | 129 | (8,053 | ) | (8,890 | ) | (6,442 | ) | (12,775 | ) | 12,904 | ||||||||||||||
CPI swaps | 2,186 | (2,289 | ) | 220 | (4 | ) | (5 | ) | 2,191 | |||||||||||||||
Equity options | 2,593 | (8,196 | ) | (8,295 | ) | (9,273 | ) | (17,189 | ) | 19,782 | ||||||||||||||
Currency forwards | 323 | 14 | 24 | (351 | ) | 904 | (581 | ) | ||||||||||||||||
Bond forwards | — | 633 | 183 | (41 | ) | — | — | |||||||||||||||||
Total free-standing derivatives | (19,384 | ) | (14,815 | ) | (11,769 | ) | 1,567 | (23,296 | ) | 3,912 | ||||||||||||||
Embedded derivatives: | ||||||||||||||||||||||||
Modified coinsurance and funds withheld treaties | 13,611 | 37,870 | 23,044 | 15,108 | 68,702 | (55,091 | ) | |||||||||||||||||
GMXB | 14,785 | 15,648 | (6,205 | ) | 360 | 22,363 | (7,578 | ) | ||||||||||||||||
Total embedded derivatives | 28,396 | 53,518 | 16,839 | 15,468 | 91,065 | (62,669 | ) | |||||||||||||||||
Net gain (loss) on total derivatives | 9,012 | 38,703 | 5,070 | 17,035 | 67,769 | (58,757 | ) | |||||||||||||||||
Total investment related gains (losses), net | $ | (470 | ) | $ | 28,409 | $ | 22,653 | $ | 56,295 | $ | 60,523 | $ | (60,993 | ) | ||||||||||
(1) Effective January 1, 2018, the Company adopted ASU 2016-01. For additional information see the '2018 Notes' section on page 2. | ||||||||||||||||||||||||
(2) 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 37 | |
Appendix | ||||
Reconciliations of GAAP to Non-GAAP Measures | ||||
| Page 38 | |
Reinsurance Group of America, Incorporated Reconciliations of GAAP Income to Adjusted Operating Income (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
U.S. & Latin America Traditional | ||||||||||||||||||||||||
Income before income taxes | $ | 2,892 | $ | 92,368 | $ | 160,512 | $ | 90,594 | $ | 29,960 | $ | (27,068 | ) | |||||||||||
Investment and derivative (gains) losses (1) | 10 | (6 | ) | 8 | (1 | ) | — | 10 | ||||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (1,693 | ) | 1,420 | 1,495 | 654 | (1,964 | ) | 271 | ||||||||||||||||
Adjusted operating income before income taxes | $ | 1,209 | $ | 93,782 | $ | 162,015 | $ | 91,247 | $ | 27,996 | $ | (26,787 | ) | |||||||||||
U.S. & Latin America Asset Intensive | ||||||||||||||||||||||||
Income before income taxes | $ | 47,262 | $ | 80,810 | $ | 67,126 | $ | 87,002 | $ | 85,770 | $ | (38,508 | ) | |||||||||||
Investment and derivative (gains) losses (1) | 26,027 | 13,824 | 5,502 | (16,504 | ) | 31,330 | (5,303 | ) | ||||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (11,918 | ) | (39,290 | ) | (24,539 | ) | (15,762 | ) | (66,738 | ) | 54,820 | |||||||||||||
GMXB embedded derivatives (1) | (14,785 | ) | (15,648 | ) | 6,205 | (360 | ) | (22,363 | ) | 7,578 | ||||||||||||||
Funds withheld (gains) losses- investment income | 10,315 | (3,042 | ) | (7,191 | ) | (4,010 | ) | (744 | ) | 11,059 | ||||||||||||||
EIA embedded derivatives - interest credited | (28,563 | ) | (3,595 | ) | (1,367 | ) | (7,340 | ) | (27,958 | ) | (605 | ) | ||||||||||||
DAC offset, net | 21,324 | 22,230 | 26,845 | 6,865 | 52,340 | (31,016 | ) | |||||||||||||||||
Adjusted operating income before income taxes | $ | 49,662 | $ | 55,289 | $ | 72,581 | $ | 49,891 | $ | 51,637 | $ | (1,975 | ) | |||||||||||
U.S. & Latin America Financial Reinsurance | ||||||||||||||||||||||||
Income before income taxes | $ | 20,159 | $ | 21,085 | $ | 21,992 | $ | 19,983 | $ | 17,816 | $ | 2,343 | ||||||||||||
Adjusted operating income before income taxes | $ | 20,159 | $ | 21,085 | $ | 21,992 | $ | 19,983 | $ | 17,816 | $ | 2,343 | ||||||||||||
Total U.S. & Latin America | ||||||||||||||||||||||||
Income before income taxes | $ | 70,313 | $ | 194,263 | $ | 249,630 | $ | 197,579 | $ | 133,546 | $ | (63,233 | ) | |||||||||||
Investment and derivative (gains) losses (1) | 26,037 | 13,818 | 5,510 | (16,505 | ) | 31,330 | (5,293 | ) | ||||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (13,611 | ) | (37,870 | ) | (23,044 | ) | (15,108 | ) | (68,702 | ) | 55,091 | |||||||||||||
GMXB embedded derivatives (1) | (14,785 | ) | (15,648 | ) | 6,205 | (360 | ) | (22,363 | ) | 7,578 | ||||||||||||||
Funds withheld (gains) losses - investment income | 10,315 | (3,042 | ) | (7,191 | ) | (4,010 | ) | (744 | ) | 11,059 | ||||||||||||||
EIA embedded derivatives - interest credited | (28,563 | ) | (3,595 | ) | (1,367 | ) | (7,340 | ) | (27,958 | ) | (605 | ) | ||||||||||||
DAC offset, net | 21,324 | 22,230 | 26,845 | 6,865 | 52,340 | (31,016 | ) | |||||||||||||||||
Adjusted operating income before income taxes | $ | 71,030 | $ | 170,156 | $ | 256,588 | $ | 161,121 | $ | 97,449 | $ | (26,419 | ) | |||||||||||
(1) Included in "Investment related gains (losses), net" on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
| Page 39 | |
Reinsurance Group of America, Incorporated Reconciliations of GAAP Income to Adjusted Operating Income (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Canada Traditional | ||||||||||||||||||||||||
Income before income taxes | $ | 23,707 | $ | 39,265 | $ | 28,789 | $ | 32,836 | $ | 19,328 | $ | 4,379 | ||||||||||||
Investment and derivative (gains) losses (1) | 1,873 | (556 | ) | (1,176 | ) | (1,395 | ) | (2,652 | ) | 4,525 | ||||||||||||||
Funds withheld (gains) losses - investment income | (23 | ) | (91 | ) | (252 | ) | (253 | ) | 90 | (113 | ) | |||||||||||||
Adjusted operating income before income taxes | $ | 25,557 | $ | 38,618 | $ | 27,361 | $ | 31,188 | $ | 16,766 | $ | 8,791 | ||||||||||||
Canada Financial Solutions | ||||||||||||||||||||||||
Income before income taxes | $ | 3,191 | $ | 4,154 | $ | 4,472 | $ | 4,425 | $ | 3,592 | $ | (401 | ) | |||||||||||
Adjusted operating income before income taxes | $ | 3,191 | $ | 4,154 | $ | 4,472 | $ | 4,425 | $ | 3,592 | $ | (401 | ) | |||||||||||
Europe, Middle East and Africa Traditional | ||||||||||||||||||||||||
Income before income taxes | $ | 15,421 | $ | 29,735 | $ | 15,421 | $ | 11,354 | $ | 13,976 | $ | 1,445 | ||||||||||||
Investment and derivative gains (1) | (9 | ) | (45 | ) | — | — | (7 | ) | (2 | ) | ||||||||||||||
Adjusted operating income before income taxes | $ | 15,412 | $ | 29,690 | $ | 15,421 | $ | 11,354 | $ | 13,969 | $ | 1,443 | ||||||||||||
Europe, Middle East and Africa Financial Solutions | ||||||||||||||||||||||||
Income before income taxes | $ | 39,164 | $ | 31,738 | $ | 30,953 | $ | 28,905 | $ | 31,918 | $ | 7,246 | ||||||||||||
Investment and derivative (gains) losses (1) | (3,352 | ) | 2,738 | (1,192 | ) | (2,458 | ) | (4,575 | ) | 1,223 | ||||||||||||||
Investment (income) loss on unit-linked variable annuities | 2,652 | (4,781 | ) | (2,475 | ) | 291 | (4,113 | ) | 6,765 | |||||||||||||||
Interest credited on unit-linked variable annuities | (2,652 | ) | 4,781 | 2,475 | (291 | ) | 4,113 | (6,765 | ) | |||||||||||||||
Non-investment derivatives | 76 | 41 | (93 | ) | 84 | 132 | (56 | ) | ||||||||||||||||
Adjusted operating income before income taxes | $ | 35,888 | $ | 34,517 | $ | 29,668 | $ | 26,531 | $ | 27,475 | $ | 8,413 | ||||||||||||
Asia Pacific Traditional | ||||||||||||||||||||||||
Income before income taxes | $ | 22,887 | $ | 27,212 | $ | 26,564 | $ | 53,322 | $ | 41,688 | $ | (18,801 | ) | |||||||||||
Investment and derivative (gains) losses (1) | (5 | ) | 15 | — | — | — | (5 | ) | ||||||||||||||||
Adjusted operating income before income taxes | $ | 22,882 | $ | 27,227 | $ | 26,564 | $ | 53,322 | $ | 41,688 | $ | (18,806 | ) | |||||||||||
Asia Pacific Financial Solutions | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 4,021 | $ | 2,110 | $ | (229 | ) | $ | 5,377 | $ | 5,872 | $ | (1,851 | ) | ||||||||||
Investment and derivative (gains) losses (1) | (2,743 | ) | (1,408 | ) | (16 | ) | (2,750 | ) | (6,324 | ) | 3,581 | |||||||||||||
Adjusted operating income (loss) before income taxes | $ | 1,278 | $ | 702 | $ | (245 | ) | $ | 2,627 | $ | (452 | ) | $ | 1,730 | ||||||||||
(1) Included in "Investment related gains (losses), net" on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
| Page 40 | |
Reinsurance Group of America, Incorporated Reconciliations of GAAP Income to Adjusted Operating Income (USD thousands) | ||||||||||||||||||||||||
Three Months Ended | Current Qtr | |||||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | vs. PY | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | Quarter | |||||||||||||||||||
Corporate and Other | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | (40,779 | ) | $ | (72,983 | ) | $ | (15,438 | ) | $ | 5,517 | $ | (42,076 | ) | $ | 1,297 | ||||||||
Investment and derivative (gains) losses (1) | 9,842 | 13,346 | (6,239 | ) | (14,990 | ) | 15,500 | (5,658 | ) | |||||||||||||||
Non-investment derivatives | — | — | (9 | ) | (26 | ) | (26 | ) | 26 | |||||||||||||||
Adjusted operating income (loss) before income taxes | $ | (30,937 | ) | $ | (59,637 | ) | $ | (21,686 | ) | $ | (9,499 | ) | $ | (26,602 | ) | $ | (4,335 | ) | ||||||
Consolidated | ||||||||||||||||||||||||
Income before income taxes | $ | 137,925 | $ | 255,494 | $ | 340,162 | $ | 339,315 | $ | 207,844 | $ | (69,919 | ) | |||||||||||
Investment and derivative (gains) losses (1) | 31,643 | 27,908 | (3,113 | ) | (38,098 | ) | 33,272 | (1,629 | ) | |||||||||||||||
Change in value of modified coinsurance and | ||||||||||||||||||||||||
funds withheld embedded derivatives (1) | (13,611 | ) | (37,870 | ) | (23,044 | ) | (15,108 | ) | (68,702 | ) | 55,091 | |||||||||||||
GMXB embedded derivatives (1) | (14,785 | ) | (15,648 | ) | 6,205 | (360 | ) | (22,363 | ) | 7,578 | ||||||||||||||
Funds withheld (gains) losses - investment income | 10,292 | (3,133 | ) | (7,443 | ) | (4,263 | ) | (654 | ) | 10,946 | ||||||||||||||
EIA embedded derivatives - interest credited | (28,563 | ) | (3,595 | ) | (1,367 | ) | (7,340 | ) | (27,958 | ) | (605 | ) | ||||||||||||
DAC offset, net | 21,324 | 22,230 | 26,845 | 6,865 | 52,340 | (31,016 | ) | |||||||||||||||||
Investment (income) loss on unit-linked variable annuities | 2,652 | (4,781 | ) | (2,475 | ) | 291 | (4,113 | ) | 6,765 | |||||||||||||||
Interest credited on unit-linked variable annuities | (2,652 | ) | 4,781 | 2,475 | (291 | ) | 4,113 | (6,765 | ) | |||||||||||||||
Non-investment derivatives | 76 | 41 | (102 | ) | 58 | 106 | (30 | ) | ||||||||||||||||
Adjusted operating income before income taxes | $ | 144,301 | $ | 245,427 | $ | 338,143 | $ | 281,069 | $ | 173,885 | $ | (29,584 | ) | |||||||||||
(1) Included in "Investment related gains (losses), net" on Consolidated GAAP Income Statement. | ||||||||||||||||||||||||
| Page 41 | |
Reinsurance Group of America, Incorporated Reconciliations of Stockholders' Equity to Stockholders' Equity Excluding AOCI (USD thousands except per share data) | |||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||||
Stockholders' equity | $ | 9,008,261 | $ | 9,569,535 | $ | 8,097,118 | $ | 7,971,155 | $ | 7,420,030 | |||||||||||
Less effect of AOCI: | |||||||||||||||||||||
Accumulated currency translation adjustments | (87,510 | ) | (86,350 | ) | (104,456 | ) | (151,189 | ) | (194,754 | ) | |||||||||||
Unrealized appreciation of securities | 1,567,057 | 2,200,661 | 1,770,903 | 1,864,477 | 1,558,148 | ||||||||||||||||
Pension and postretirement benefits | (51,151 | ) | (50,680 | ) | (40,690 | ) | (41,390 | ) | (42,239 | ) | |||||||||||
Stockholders' equity, excluding AOCI | $ | 7,579,865 | $ | 7,505,904 | $ | 6,471,361 | $ | 6,299,257 | $ | 6,098,875 | |||||||||||
Reconciliation of Book Value Per Share to Book Value Per Share Excluding AOCI | |||||||||||||||||||||
March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||||
Book value per share outstanding | $ | 139.64 | $ | 148.48 | $ | 125.79 | $ | 123.60 | $ | 115.24 | |||||||||||
Less effect of AOCI: | |||||||||||||||||||||
Accumulated currency translation adjustments | (1.36 | ) | (1.34 | ) | (1.62 | ) | (2.34 | ) | (3.02 | ) | |||||||||||
Unrealized appreciation of securities | 24.29 | 34.14 | 27.51 | 28.91 | 24.20 | ||||||||||||||||
Pension and postretirement benefits | (0.78 | ) | (0.78 | ) | (0.64 | ) | (0.65 | ) | (0.66 | ) | |||||||||||
Book value per share outstanding, before impact of AOCI | $ | 117.49 | $ | 116.46 | $ | 100.54 | $ | 97.68 | $ | 94.72 | |||||||||||
| Page 42 | |