Exhibit 99.1
[RGA logo]
For further information, contact
Jack B. Lay
Executive Vice President and
Chief Financial Officer
(636) 736-7439
FOR IMMEDIATE RELEASE
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REINSURANCE GROUP OF AMERICA REPORTS
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FIRST-QUARTER RESULTS
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ST. LOUIS, April 25, 2005 - Reinsurance Group of America,
Incorporated (NYSE:RGA), a leading global provider of life reinsurance,
reported net income for the first quarter of $66.6 million, or $1.04 per
diluted share, compared to net income of $61.7 million, or $0.98 per diluted
share, in the prior-year quarter. RGA uses a non-GAAP financial measure
called operating income as a basis for analyzing financial results. The
definition of operating income and reconciliations to GAAP net income are
provided in the following tables. Operating income increased 16 percent to
$60.4 million from $52.1 million, while diluted operating earnings per share
rose 14 percent to $0.95 from $0.83 in the year-ago quarter. First-quarter
net premiums totaled $901.8 million compared to $813.9 million a year ago.
Net investment income totaled $157.1 million versus $133.6 million the year
before.
A. Greig Woodring, president and chief executive officer,
commented, "On a consolidated basis, bottom-line results were in line with
expectations, with strong results in Canada and some of the international
businesses offsetting poor mortality experience in the U.S. The U.S. segment
reported pre-tax net income of $66.0 million compared with $70.2 million in
the prior-year quarter, while pre-tax operating income decreased to $56.6
million from $65.3 million. An unusually high number of large claims during
the quarter was the primary driver for the mortality experience in the U.S.
Net premiums rose 7 percent to $568.1 million from $532.4 million in the
prior year, slightly behind our expected full-year growth rate of at least
10 percent. The fundamentals in the U.S. market remain strong.
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"For the quarter, our Canada operations reported pre-tax net income
of $24.2 million compared to $15.9 million a year ago. Pre-tax operating
income was up 60 percent to $23.4 million from $14.6 million. Strong premium
levels, favorable mortality and a stronger Canadian dollar contributed to
the results. Net premiums increased $13.7 million, or 23 percent for the
quarter, and totaled $73.8 million. Approximately $5.1 million of the
increase in net premiums and approximately $1.8 million of the increase in
pre-tax operating income were the result of a favorable currency exchange
rate.
"Other International operations, which include our Asia Pacific and
Europe and South Africa segments, reported 18 percent growth in net
premiums, increasing to $259.6 million from $220.7 million. Stronger foreign
currencies contributed approximately $8.1 million to the premium growth.
Pre-tax net income totaled $19.5 million compared to $13.1 million in the
prior-year quarter. Pre-tax operating income for the quarter more than
doubled to $19.6 million from $9.6 million in the prior year, with foreign
currency appreciation contributing approximately $1.3 million to current
quarter pre-tax operating income. Results were strong in Europe and South
Africa while Asia Pacific was adversely affected by large claims in Japan.
During the quarter we strengthened our presence in South Korea when
regulators approved our branch license. We expect our office in China to be
up and running during the second quarter. As previously indicated, quarterly
results in our international operations may be more volatile than our North
American operations due to the smaller size and relative maturity of this
business."
Woodring concluded, "We reported a good quarter, despite the
weakness in the U.S. results. Our segments outside the U.S. combined to
contribute nearly $43 million of the $90 million in consolidated pre-tax
operating income for the quarter, a clear indication that we are creating
diverse sources of mortality-based earnings."
The company also announced that its board of directors declared a
regular quarterly dividend of $0.09, payable May 31 to shareholders of
record as of May 9.
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A conference call to discuss the company's first-quarter results
will begin at 9 a.m. Eastern Time on Tuesday, April 26. Interested parties
may access the call by dialing 800-262-1292 (domestic) or 719-457-2680
(international). The access code is 804742. A live audio webcast of the
conference call will be available on the company's investor relations web
page at www.rgare.com. A replay of the conference call will be available at
the same address for 15 days following the conference call. A replay of the
conference call will also be available via telephone through May 3 at
888-203-1112 (domestic) or 719-457-0820, access code 804742.
Reinsurance Group of America, Incorporated, through its
subsidiaries, is among the largest global providers of life reinsurance. In
addition to its U.S. and Canadian operations, Reinsurance Group of America,
Incorporated has subsidiary companies or offices in Australia, Barbados,
Hong Kong, India, Ireland, Japan, Mexico, South Africa, South Korea, Spain,
Taiwan, and the United Kingdom. Worldwide, the company has approximately
$1.5 trillion of life reinsurance in force, and assets of $14.4 billion.
MetLife, Inc. is the beneficial owner of approximately 51 percent of RGA's
outstanding shares.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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This release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including, among
others, statements relating to projections of the earnings, revenues, income
or loss, future financial performance and growth potential of Reinsurance
Group of America, Incorporated and its subsidiaries (which we refer to in
the following paragraphs as "we," "us" or "our"). The words "intend,"
"expect," "project," "estimate," "predict," "anticipate," "should,"
"believe," and other similar expressions also are intended to identify
forward-looking statements. Forward-looking statements are inherently
subject to risks and uncertainties, some of which cannot be predicted or
quantified. Future events and actual results, performance and achievements
could differ materially from those set forth in, contemplated by or
underlying the forward-looking statements.
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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 changes in mortality,
morbidity or claims experience, (2) changes in our financial strength and
credit ratings or those of MetLife, Inc. ("MetLife"), the beneficial owner
of a majority of our common shares, or its subsidiaries, and the effect of
such changes on our future results of operations and financial condition,
(3) inadequate risk analysis and underwriting, (4) general economic
conditions or a prolonged economic downturn affecting the demand for
insurance and reinsurance in our current and planned markets, (5) the
availability and cost of collateral necessary for regulatory reserves and
capital, (6) market or economic conditions that adversely affect our ability
to make timely sales of investment securities, (7) risks inherent in our
risk management and investment strategy, including changes in investment
portfolio yields due to interest rate or credit quality changes, (8)
fluctuations in U.S. or foreign currency exchange rates, interest rates, or
securities and real estate markets, (9) adverse litigation or arbitration
results, (10) the adequacy of reserves, resources and accurate information
relating to settlements, awards and terminated and discontinued lines of
business, (11) the stability of and actions by governments and economies in
the markets in which we operate, (12) competitive factors and competitors'
responses to our initiatives, (13) the success of our clients, (14)
successful execution of our entry into new markets, (15) successful
development and introduction of new products and distribution opportunities,
(16) our ability to successfully integrate and operate reinsurance business
that we acquire, (17) regulatory action that may be taken by state
Departments of Insurance with respect to us, MetLife, or its subsidiaries,
(18) our dependence on third parties, including those insurance companies
and reinsurers to which we cede some reinsurance, third-party investment
managers and others, (19) the threat of natural disasters or terrorist
attacks anywhere in the world where we or our clients do business, (20)
changes in laws, regulations, and accounting standards applicable to us, our
subsidiaries, or our business, (21) the effect of our status as a holding
company and regulatory restrictions on our ability to pay principal of and
interest on our debt obligations, and (22) other risks and uncertainties
described in this document and in our 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.
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Operating Income
RGA uses a non-GAAP financial measure called operating income as a basis for
analyzing financial results. This measure also serves as a basis for
establishing target levels and awards under RGA's management incentive
programs. Management believes that operating income, on a pre-tax and
after-tax basis, better measures the ongoing profitability and underlying
trends of the company's continuing operations, primarily because that
measure excludes the effect of net realized capital gains and losses, as
well as changes in the fair value of embedded derivatives and related
deferred acquisition costs. These items tend to be highly variable,
primarily due to the credit market and interest rate environment and are not
necessarily indicative of the performance of the company's underlying
businesses. Additionally, operating income excludes any net gain or loss
from discontinued operations and the cumulative effect of any accounting
changes, which management believes are not indicative of the company's
ongoing operations. The definition of operating income can vary by company
and is not considered a substitute for GAAP net income.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Net Income From Continuing Operations
to Operating Income
(Dollars in thousands)
Three Months Ended
March 31,
------------------
2005 2004
---- ----
GAAP net income-continuing operations $67,264 $62,994
Realized investment (gains)/losses (2,732) (12,684)
Change in value of embedded derivatives (14,664) (989)
DAC offsets for embedded derivatives and
realized investment (gains)/losses, net 10,553 2,767
--------------------
Operating income $60,421 $52,088
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Net Income
From Continuing Operations
to Pre-tax Operating Income
(Dollars in thousands)
(Unaudited) Three Months Ended March 31, 2005
Realized Change in
Pre-tax investment value of Pre-tax
net (gains)/ embedded operating
income losses, derivatives, income
(loss) net net (loss)
------- ---------- ------------ --------
U.S. Operations:
Traditional $ 45,076 $ 423 $ -- $45,499
Asset Intensive 17,626 (2,977)(1) (6,853)(2) 7,796
Financial Reinsurance 3,282 -- -- 3,282
--------------------------------------------
Total U.S. 65,984 (2,554) (6,853) 56,577
Canada Operations 24,209 (834) -- 23,375
Asia Pacific Operations 4,772 79 -- 4,851
Europe & South Africa 14,758 (43) -- 14,715
--------------------------------------------
Other Intl Operations 19,530 36 -- 19,566
Corporate & Other (9,188) (100) -- (9,288)
--------------------------------------------
Consolidated $100,535 $(3,452) $(6,853) $90,230
============================================
<FN>
(1) Asset Intensive is net of $527 DAC offset.
(2) Asset Intensive is net of DAC offsets of $15,708 included in change in
deferred acquisition cost associated with change in value of embedded
derivative.
Three Months Ended March 31, 2004
Realized Change in
Pre-tax investment value of Pre-tax
net (gains)/ embedded operating
income losses, derivatives, income
(loss) net net (loss)
------- ---------- ------------ --------
U.S. Operations:
Traditional $64,032 $ (7,558) $ -- $ 56,474
Asset Intensive 3,508 (87)(1) 2,678(2) 6,099
Financial Reinsurance 2,707 -- -- 2,707
--------------------------------------------
Total U.S. 70,247 (7,645) 2,678 65,280
Canada Operations 15,920 (1,309) -- 14,611
Asia Pacific Operations 6,797 (347) -- 6,450
Europe & South Africa 6,260 (3,159) -- 3,101
--------------------------------------------
Other Intl Operations 13,057 (3,506) -- 9,551
Corporate & Other (4,409) (5,899) -- (10,308)
--------------------------------------------
Consolidated $94,815 $(18,359) $2,678 $ 79,134
============================================
<FN>
(1)Asset Intensive is net of $57 DAC offset.
(2)Asset Intensive is net of DAC offsets of $4,200 included in
change in deferred acquisition cost associated with change in value of
embedded derivative.
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
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2005 2004
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Revenues:
Net premiums $901,820 $813,874
Investment income, net of
related expenses 157,053 133,560
Realized investment gains/(losses), net 3,979 18,416
Change in value of embedded derivatives 22,561 1,522
Other revenues 10,803 11,850
-----------------------
Total revenues 1,096,216 979,222
Benefits and expenses:
Claims and other policy benefits 738,053 647,054
Interest credited 55,053 47,018
Policy acquisition costs and other
insurance expenses 143,976 143,068
Change in deferred acquisition cost
associated with change in value of
embedded derivatives 15,708 4,200
Other operating expenses 33,006 33,529
Interest expense 9,885 9,538
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Total benefits and expenses 995,681 884,407
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Income from continuing operations
before income taxes 100,535 94,815
Provision for income taxes 33,271 31,821
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Income from continuing operations 67,264 62,994
Discontinued operations:
Loss from discontinued accident
and health operations, net
of income taxes (707) (894)
Cumulative effect of change in
accounting principle -- (361)
-----------------------
Net income $ 66,557 $ 61,739
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended
(Unaudited) March 31,
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2005 2004
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Earnings per share from continuing
operations:
Basic earnings per share $ 1.08 $ 1.01
Diluted earnings per share $ 1.05 $ 1.00
Diluted earnings before realized
investment gains/(losses), change
in value of embedded derivatives, and
related deferred acquisition costs $ 0.95 $ 0.83
Earnings per share from net income:
Basic earnings per share $ 1.06 $ 0.99
Diluted earnings per share $ 1.04 $ 0.98
Weighted average number of common
and common equivalent shares
outstanding (in thousands) 63,854 62,708
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
At or For the
Three Months Ended
(Unaudited) March 31,
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2005 2004
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Gross life reinsurance in force (in billions)
North American business $1,125.3 $1,003.0
International business $ 366.6 $ 310.5
Gross life reinsurance written (in billions)
North American business $ 42.7 $ 47.3
International business $ 25.2 $ 30.5
Consolidated cash and invested assets
(in millions) $10,963.0 $9,607.7
Invested asset book yield - trailing
three months excluding funds withheld 5.75% 5.83%
Investment portfolio mix
Cash and short-term investments 1.48% 2.88%
Fixed maturity securities 55.94% 50.53%
Mortgage loans 5.60% 5.25%
Policy loans 8.73% 9.40%
Funds withheld at interest 26.27% 29.79%
Other invested assets 1.98% 2.15%
Short-term debt (in millions) $ 55.4 $ --
Long-term debt (in millions) $ 349.7 $ 404.1
Book value per share outstanding $ 36.79 $ 33.11
Book value per share outstanding, before
impact of FAS 115* $ 33.42 $ 29.44
Total stockholder's equity (in millions) 2,303.5 2,060.9
Total stockholder's equity, before
impact of FAS 115* (in millions) 2,092.7 1,832.8
Treasury shares 513,918 883,067
Common stock outstanding 62,614,355 62,245,206
<FN>
* Book value per share outstanding and total stockholders' equity, before
impact of FAS 115, is a non-GAAP financial measure that management believes
is important in evaluating the balance sheet ignoring the effect of
mark-to-market adjustments that primarily relate to changes in interest
rates and credit spreads on investment securities since they were acquired.
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Unaudited) (Dollars in thousands)
Three Months Ended March 31, 2005
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
----------- --------- ----------- ------
Net premiums $566,894 $ 1,224 $ -- $568,118
Investment income, net
of related expenses 55,231 58,272 41 113,544
Realized investment
gains/(losses), net (423) 3,504 -- 3,081
Change in value of
embedded derivatives -- 22,561 -- 22,561
Other revenues 921 1,047 7,304 9,272
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Total revenues 622,623 86,608 7,345 716,576
Benefits and expenses:
Claims and other
policy benefits 483,261 (1,684) 2 481,579
Interest credited 14,007 40,251 -- 54,258
Policy acquisition costs
and other insurance
expenses 71,017 13,369 2,624 87,010
Change in deferred ac-
quisition cost associated
with change in value
of embedded derivatives -- 15,708 -- 15,708
Other operating expenses 9,262 1,338 1,437 12,037
--------------------------------------------
Total benefits
and expenses 577,547 68,982 4,063 650,592
Income before
income taxes $ 45,076 $ 17,626 $ 3,282 $ 65,984
======== ======== ======== ========
Three Months Ended March 31, 2004
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
----------- --------- ----------- ------
Net premiums $531,211 $ 1,182 $ -- $532,393
Investment income, net
of related expenses 54,053 45,467 43 99,563
Realized investment
gains, net 7,558 144 -- 7,702
Change in value of
embedded derivatives -- 1,522 -- 1,522
Other revenues 1,334 1,670 6,380 9,384
---------------------------------------------
Total revenues 594,156 49,985 6,423 650,564
Benefits and expenses:
Claims and other
policy benefits 430,891 (1,021) -- 429,870
Interest credited 12,078 34,494 -- 46,572
Policy acquisition costs
and other insurance
expenses 75,431 7,645 2,294 85,370
Change in deferred ac-
quisition cost associated
with change in value of
embedded derivatives -- 4,200 -- 4,200
Other operating expenses 11,724 1,159 1,422 14,305
--------------------------------------------
Total benefits
and expenses 530,124 46,477 3,716 580,317
Income before
income taxes $ 64,032 $ 3,508 $ 2,707 $ 70,247
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CANADIAN OPERATIONS
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
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2005 2004
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Revenues:
Net premiums $ 73,756 $ 60,148
Investment income, net of related expenses 28,760 23,980
Realized investment gains, net 834 1,309
Other revenues 34 38
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Total revenues 103,384 85,475
Benefits and expenses:
Claims and other policy benefits 68,646 59,366
Interest credited 357 377
Policy acquisition costs and other
insurance expenses 6,713 7,083
Other operating expenses 3,459 2,729
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Total benefits and expenses 79,175 69,555
Income before income taxes $ 24,209 $ 15,920
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Europe & South Africa
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
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2005 2004
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Revenues:
Net premiums $141,358 $117,203
Investment income, net of related expenses 2,555 1,544
Realized investment gains, net 43 3,159
Other revenues 52 438
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Total revenues 144,008 122,344
Benefits and expenses:
Claims and other policy benefits 96,332 81,997
Interest credited 363 --
Policy acquisition costs and other
insurance expenses 26,396 29,031
Other operating expenses 5,660 4,682
Interest expense 499 374
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Total benefits and expenses 129,250 116,084
Income before income taxes $ 14,758 $ 6,260
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Asia Pacific
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
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2005 2004
---- ----
Revenues:
Net premiums $118,207 $103,539
Investment income, net of related expenses 6,228 3,735
Realized investment gains/(losses), net (79) 347
Other revenues (187) 635
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Total revenues 124,169 108,256
Benefits and expenses:
Claims and other policy benefits 90,660 74,845
Policy acquisition costs and other
insurance expenses 23,655 21,530
Other operating expenses 4,674 4,742
Interest expense 408 342
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Total benefits and expenses 119,397 101,459
Income before income taxes $ 4,772 $ 6,797
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CORPORATE AND OTHER
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
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2005 2004
---- ----
Revenues:
Net premiums $ 381 $ 591
Investment income, net of related expenses 5,966 4,738
Realized investment gains, net 100 5,899
Other revenues 1,632 1,355
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Total revenues 8,079 12,583
Benefits and expenses:
Claims and other policy benefits 835 976
Interest credited 75 69
Policy acquisition costs and other
insurance expenses 203 54
Other operating expenses 7,176 7,071
Interest expense 8,978 8,822
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Total benefits and expenses 17,267 16,992
Income before income taxes $ (9,188) $ (4,409)
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