Press release·05/02/2025 16:56:33

Overview

RGA is one of the world’s leading providers of life reinsurance and financial solutions. The company has $4.0 trillion of life reinsurance in force and $128.2 billion in assets. RGA’s main business lines are traditional reinsurance, which includes life, health, and disability insurance, and financial solutions, which includes longevity reinsurance, asset-intensive reinsurance, and capital solutions.

RGA’s profitability depends on managing mortality and morbidity risks in its traditional business, as well as investment performance and longevity risk in its financial solutions business. The company generates revenue from renewal premiums, new business premiums, fee income, and investment income.

Financial Performance

For the first quarter of 2025, RGA reported net income of $288 million, up from $212 million in the same period in 2024. This increase was primarily due to lower investment-related losses and more favorable claims experience across all segments, partially offset by the runoff of some asset-intensive business.

Adjusted operating income before taxes, which excludes certain investment and non-economic items, was $485 million in Q1 2025, down from $516 million in Q1 2024. The decrease was driven by lower variable investment income and a decline in other income, partially offset by growth in investment income and favorable claims experience.

Premiums decreased by 25% year-over-year, mainly due to the completion of some large pension risk transfer transactions in 2024. Excluding these one-time transactions, premiums grew due to new business production and organic growth on existing treaties. Net investment income increased by 28% as a result of a larger invested asset base and higher yields.

Segment Performance

RGA’s operations are divided into geographic-based and business-based segments:

U.S. and Latin America

• The Traditional segment saw a 12% increase in adjusted operating income, driven by new business growth.
• The Financial Solutions segment experienced a 26% decrease in adjusted operating income due to the runoff of asset-intensive business.

Canada

• Adjusted operating income decreased by 19% primarily due to more favorable group business experience in 2024 and unfavorable currency fluctuations.

Europe, Middle East and Africa (EMEA)

• The Traditional segment saw a 32% increase in adjusted operating income from higher premiums and lower acquisition costs.
• The Financial Solutions segment had a 17% increase in adjusted operating income due to growth in net premiums and investment income.

Asia Pacific

• The Traditional segment’s adjusted operating income declined 3% due to less favorable underwriting results and lower variable investment income.
• The Financial Solutions segment’s adjusted operating income was flat year-over-year as new business growth was offset by lower variable investment income.

Strengths and Weaknesses

Key strengths of RGA’s business include:

• Diversified global operations across geographies and product lines
• Strong risk management capabilities in managing mortality, morbidity, and longevity risks
• Ability to generate consistent investment income from a large, high-quality investment portfolio
• Solid financial position with ample liquidity and access to capital markets

Potential weaknesses and risks include:

• Exposure to volatility in claims experience, especially in the shorter-term
• Sensitivity to interest rate movements, particularly in the financial solutions business
• Reliance on the financial strength of ceding companies in reinsurance arrangements
• Integration risks associated with the pending reinsurance transaction with Equitable Holdings

Outlook and Conclusion

Looking ahead, RGA’s management believes the company’s sources of liquidity are sufficient to cover potential claims payments and other obligations. The pending reinsurance transaction with Equitable Holdings represents a significant growth opportunity, but also introduces additional risks and integration challenges that the company will need to manage.

Overall, RGA appears to be a well-diversified, financially strong reinsurance provider that has navigated market volatility effectively. While the company faces some headwinds in the current environment, its global footprint, risk management expertise, and access to capital position it well for the future.