RGA enjoys strong growth; optimistic on pipeline of deals

Life reinsurer Reinsurance Group of America (RGA) enjoyed strong growth and better profits in the first quarter as its CEO said she remains optimistic about the environment and the company’s pipeline of business and deals.

RGA made a profit of $145.5 million in the first quarter compared with $76.5 million in the same period a year earlier. Its operating income reached $122.1 million compared with $120.8 million the year before.

The company’s consolidated net premiums totalled $2.4 billion in the quarter, up 10 percent from last year’s first quarter. Current-period premiums reflected net adverse foreign currency effects of approximately $5.2 million.

Excluding spread-based businesses and the value of associated derivatives, investment income rose 11 percent over year-ago levels, attributable to an increase in average invested assets of approximately 13 percent.

The rise in investment income was offset, in part, by the impact of lower yields on new money and reinvested assets. The average investment yield, excluding spread businesses, was down 5 basis points to 4.41 percent from the first quarter of 2016, reflecting the impact of lower yields on new money and reinvested assets.

Anna Manning, president and chief executive officer, said: “Our EPS and adjusted operating EPS improved versus a year ago, but reflected some increased volatility in our segment results, with the US and Canadian Traditional segments experiencing high seasonal individual mortality claims, and our Asia Pacific and EMEA segments performing very well.

“The broad diversification of earnings that has come with the successful development of our global operating model over time continues to benefit us, even as individual segments or business lines experience periods of natural volatility.

“Premium growth was strong again, up 10 percent on a reported basis and in constant currencies. This reflects solid to strong organic growth across most regions, Asia and EMEA in particular.

“The elevated mortality claims in both the US and Canada were due to a higher number of large claims. We consider this to be random volatility and not attributable to any systemic issue. As we have emphasized in the past, we generally expect short-term claims volatility to moderate over time, and we have not changed our expectations.

“We did not close any significant in-force or other transactions during the quarter, but we remain optimistic about the environment and our pipeline. We ended the quarter with an excess capital position of approximately $1.2 billion. We remain well positioned to continue pursuing a balanced approach to capital management by deploying capital into in-force and other attractive transactions, share repurchases and shareholder dividend increases. Book value per share at March 31 was $115.24 including AOCI, and $94.72 excluding AOCI.

“Looking forward, we remain optimistic about our ability to serve clients, execute on our strategies and deliver attractive financial returns.”