Exhibit 99.1
[RGA logo] REINSURANCE GROUP
OF AMERICA, INCORPORATED(R)
For further information, contact
Jack B. Lay
Senior Executive Vice President
and Chief Financial Officer
(636) 736-7000
FOR IMMEDIATE RELEASE
- ---------------------
REINSURANCE GROUP OF AMERICA REPORTS FIRST-QUARTER RESULTS
----------------------------------------------------------
ST. LOUIS, April 23, 2007 - Reinsurance Group of America,
Incorporated (NYSE:RGA), a leading global provider of life reinsurance,
reported net income for the first quarter of $76.3 million, or $1.19 per
diluted share, compared to $69.1 million, or $1.10 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 20 percent to $82.1 million, or $1.28 per
diluted share, from $68.5 million, or $1.09 per diluted share in the year-ago
quarter, reflecting solid contributions from all segments. First-quarter net
premiums rose 13 percent, to $1,125.5 million, from $992.4 million a year ago.
Net investment income totaled $215.7 million versus $186.9 million the year
before.
A. Greig Woodring, president and chief executive officer, commented,
"We reported solid results across all segments, with notably strong results in
our two largest mortality markets, the U.S. and the UK. The U.S. segment
reported pre-tax net income totaling $93.2 million for the quarter versus
$80.3 million the year before. Pre-tax operating income increased 13 percent
to $93.5 million from $82.5 million the year before. Mortality experience
benefited from a lower-than-expected level of large claims. Net premiums were
up 9 percent to $671.0 million from $613.3 million in the prior-year quarter.
"Our Canada operations reported pre-tax net income of $15.0 million
compared to $8.4 million a year ago. Pre-tax operating income totaled $12.5
million, up 45 percent from $8.6 million a year ago, when claims were
higher-than-expected. Claims flow during the current quarter returned to
expected levels. Net premiums increased 5 percent to $99.5 million from $94.4
million in the prior year. We expect that rate of growth to pick up as the
year progresses.
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Net premiums for the first quarter of 2007 were adversely affected by currency
exchange rates relative to the prior year by approximately $1.5 million, as
the Canadian dollar weakened slightly. The impact of foreign currency
fluctuations on income was not significant.
"Asia Pacific reported pre-tax net income of $10.3 million compared
with $6.6 million in the year-ago quarter. Pre-tax operating income totaled
$10.4 million compared with $6.6 million a year ago. Segment-wide claims
experience was within the expected range for the current quarter, while the
year-ago quarter reflected poor mortality in our South Korean operations. Net
premium flow was good, increasing 34 percent to $186.8 million from $139.2
million. Foreign currency fluctuations favorably affected net premiums by
approximately $5.5 million, primarily due to the strength of the Australian
dollar. The impact of foreign currency fluctuations on operating income was
not significant.
"Europe and South Africa results were exceptionally strong due
primarily to favorable UK claims experience, with pre-tax net income rising to
$21.1 million from $14.8 million a year ago. Pre-tax operating income
increased 44 percent to $21.3 million versus $14.8 million last year, which
was also a strong quarter. Net premiums increased 16 percent to $167.8
million. Foreign currency exchange fluctuations favorably affected reported
net premiums and pre-tax operating income by approximately $9.2 million and
$0.7 million, respectively, due to relatively strong British pound and euro
currencies.
"Net realized investment losses totaled $8.5 million for the quarter
as we recognized a $10.5 million foreign currency translation loss related to
our decision to sell our small direct insurance operation in Argentina. We do
not expect the ultimate sale of that subsidiary to generate a material
financial impact. Interest expense included $4.3 million, pretax, for the
adoption of new reporting guidance on income taxes. That interest expense was
a non-cash item and represented the current-quarter interest expense on
liabilities for various tax positions. The ultimate payment, if any, of this
interest expense will depend on the resolution of these various tax positions.
The initial adoption of this new tax reporting guidance also resulted in a
$22.6 million decrease to shareholders' equity."
Woodring concluded, "We are off to a strong start in 2007, largely
due to favorable claims experience during the quarter. As our history has
shown, mortality results can fluctuate significantly from quarter to quarter
and we don't expect that pattern to change going forward.
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However, when measured over longer periods of time, mortality volatility is
significantly reduced and most importantly, we expect to continue our
long-term track record of producing stable returns on our mortality business."
The company also announced that its board of directors declared a
regular quarterly dividend of $0.09, payable May 25 to shareholders of record
as of May 4.
A conference call to discuss the company's first-quarter results will
begin at 9 a.m. Eastern Time on Tuesday, April 24. Interested parties may
access the call by dialing 800-210-9006 (domestic) or 719-457-2621
(international). The access code is 6320400. 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 three months following the conference call. A replay of the
conference call will also be available via telephone through May 2 at
888-203-1112 (domestic) or 719-457-0820, access code 6320400.
Reinsurance Group of America, Incorporated, through its various
operating subsidiaries, is among the largest global providers of life
reinsurance. Reinsurance Group of America, Incorporated has subsidiary
companies or offices in Australia, Barbados, Bermuda, Canada, China, Germany,
Hong Kong, India, Ireland, Japan, Mexico, Poland, South Africa, South Korea,
Spain, Taiwan, the United Kingdom and the United States. Worldwide, the
company has approximately $2.0 trillion of life reinsurance in force, and
assets of $19.8 billion. MetLife, Inc. is the beneficial owner of
approximately 52 percent of RGA's outstanding shares.
CAUTIONARY STATEMENT 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, 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
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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 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,
catastrophes, terrorist attacks, epidemics or pandemics 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.
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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 investment related 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)
(Unaudited) Three Months Ended
March 31,
-------------------
2007 2006
---- ----
GAAP net income-continuing operations $76,936 $70,580
Investment related (gains)/losses 5,655 (561)
Change in value of embedded derivatives (1,845) (2,959)
DAC offsets for embedded derivatives and
investment related losses, net 1,338 1,394
-------------------
Operating income $82,084 $68,454
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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, 2007
Investment Change in
Pre-tax related value of Pre-tax
net (gains) embedded operating
income losses, derivatives, income
(loss) net net (loss)
-------- ---------- ------------ --------
U.S. Operations:
Traditional $ 86,011 $ 338 $ -- $ 86,349
Asset Intensive 4,462 734(1) (731)(2) 4,465
Financial Reinsurance 2,704 -- -- 2,704
-----------------------------------------------
Total U.S. 93,177 1,072 (731) 93,518
Canada Operations 15,034 (2,526) -- 12,508
Europe & South Africa 21,124 224 -- 21,348
Asia Pacific Operations 10,332 71 -- 10,403
Corporate and Other (20,437) 9,852 -- (10,585)
-----------------------------------------------
Consolidated $119,230 $ 8,693 $ (731) $127,192
===============================================
<FN>
(1) Asset Intensive is net of $(49)DAC offset.
(2) Asset Intensive is net of DAC offsets of $2,107 included in change in
deferred acquisition cost associated with change in value of embedded
derivative.
(Unaudited) Three Months Ended March 31, 2006
Investment Change in
Pre-tax related value of Pre-tax
net (gains)/ embedded operating
income losses, derivatives, income
(loss) net net (loss)
-------- ---------- ------------ --------
U.S. Operations:
Traditional $ 69,399 $ 1,229 $ -- $ 70,628
Asset Intensive 7,283 2,720 (1) (1,795)(2) 8,208
Financial Reinsurance 3,654 -- -- 3,654
-----------------------------------------------
Total U.S. 80,336 3,949 (1,795) 82,490
Canada Operations 8,431 199 -- 8,630
Europe & South Africa 14,797 (34) -- 14,763
Asia Pacific Operations 6,614 (15) -- 6,599
Corporate and Other (1,978) (5,344) -- (7,322)
-----------------------------------------------
Consolidated $108,200 $(1,245) $(1,795) $105,160
===============================================
<FN>
(1) Asset Intensive is net of $(613) DAC offset.
(2) Asset Intensive is net of DAC offsets of $2,757 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,
- -------------------------------------------------------------------
2007 2006
---- ----
Revenues:
Net premiums $1,125,450 $ 992,442
Investment income, net of
related expenses 215,743 186,941
Investment related gains (losses), net (8,484) 632
Change in value of embedded derivatives 2,838 4,552
Other revenues 19,102 14,530
-----------------------
Total revenues 1,354,649 1,199,097
Benefits and expenses:
Claims and other policy benefits 902,810 811,513
Interest credited 61,066 61,529
Policy acquisition costs and other
insurance expenses 180,874 151,804
Change in deferred acquisition cost
associated with change in value of
embedded derivatives 2,107 2,757
Other operating expenses 55,422 46,527
Collateral finance facility expense 12,687 --
Interest expense 20,453 16,767
-----------------------
Total benefits and expenses 1,235,419 1,090,897
-----------------------
Income from continuing operations
before income taxes 119,230 108,200
Provision for income taxes 42,293 37,620
-----------------------
Income from continuing operations 76,937 70,580
Discontinued operations:
Loss from discontinued accident
and health operations, net
of income taxes (685) (1,510)
-----------------------
Net income $ 76,252 $ 69,070
=======================
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended
(Unaudited) March 31,
--------------------------------------------------------------
2007 2006
---- ----
Earnings per share from continuing
operations:
Basic earnings per share $ 1.25 $ 1.15
Diluted earnings per share $ 1.20 $ 1.13
Diluted earnings before investment
related gains/(losses), change
in value of embedded derivatives, and
related deferred acquisition costs $ 1.28 $ 1.09
Earnings per share from net income:
Basic earnings per share $ 1.24 $ 1.13
Diluted earnings per share $ 1.19 $ 1.10
Weighted average number of common
and common equivalent shares
outstanding 63,895 62,617
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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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2007 2006
---- ----
Gross life reinsurance in force (in billions)
U.S. $1,178.5 $1,110.1
Canada $ 164.1 $ 134.1
Europe & South Africa $ 349.7 $ 286.0
Asia Pacific $ 312.0 $ 242.1
Gross life reinsurance written (in billions)
U.S. $ 40.2 $ 47.9
Canada $ 9.8 $ 9.3
Europe & South Africa $ 8.1 $ 20.0
Asia Pacific $ 3.7 $ 3.1
Balance sheet information (in millions,
except share and per share figures)
Consolidated cash and invested assets $15,523.8 $12,708.0
Invested asset book yield - trailing
three months excluding funds withheld 5.93% 5.78%
Investment portfolio mix
Cash and short-term investments 3.31% 3.74%
Fixed maturity securities 56.30% 53.37%
Mortgage loans 4.84% 5.27%
Policy loans 6.54% 7.66%
Funds withheld at interest 27.46% 28.42%
Other invested assets 1.55% 1.54%
Collateral finance facilities $ 850.4 $ --
Short-term debt $ 29.5 $ 100.0
Long-term debt $ 944.1 $ 699.7
Company-obligated mandatorily
redeemable preferred securities
of subsidiary $ 158.7 $ 158.6
Total stockholders' equity $2,889.3 $2,484.9
Less: Accumulated other comprehensive
income "AOCI"* 452.1 330.3
-------- --------
Total stockholders' equity, before
impact of AOCI* $2,437.2 $2,154.6
Treasury shares 1,403,514 1,948,936
Common shares outstanding 61,724,759 61,179,337
Book value per share outstanding $ 46.81 $ 40.62
Book value per share outstanding, before
impact of AOCI* $ 39.49 $ 35.22
<FN>
* Book value per share outstanding and total stockholders' equity, before
impact of AOCI, are non-GAAP financial measures that management believes are
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.
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. Operations
(Unaudited) (Dollars in thousands)
Three Months Ended March 31, 2007
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
----------- --------- ----------- ------
Net premiums $ 669,419 $ 1,626 $ -- $ 671,045
Investment income, net
of related expenses 84,928 67,952 20 152,900
Investment related
losses, net (338) (783) -- (1,121)
Change in value of
embedded derivatives -- 2,838 -- 2,838
Other revenues 106 7,424 5,889 13,419
--------------------------------------------
Total revenues 754,115 79,057 5,909 839,081
Benefits and expenses:
Claims and other
policy benefits 542,586 4,523 1 547,110
Interest credited 14,270 46,158 -- 60,428
Policy acquisition costs
and other insurance
expenses 99,380 20,186 2,194 121,760
Change in deferred ac-
quisition cost associated
with change in value
of embedded derivatives -- 2,107 -- 2,107
Other operating expenses 11,868 1,621 1,010 14,499
--------------------------------------------
Total benefits
and expenses 668,104 74,595 3,205 745,904
Income before
income taxes $ 86,011 $ 4,462 $ 2,704 $ 93,177
========== ========== ======== =========
(Unaudited) Three Months Ended March 31, 2006
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
----------- --------- ----------- ------
Net premiums $ 611,837 $ 1,474 $ -- $ 613,311
Investment income, net
of related expenses 71,042 70,897 (3) 141,936
Investment related
losses, net (1,229) (3,333) -- (4,562)
Change in value of
embedded derivatives -- 4,552 -- 4,552
Other revenues (320) 3,289 7,346 10,315
--------------------------------------------
Total revenues 681,330 76,879 7,343 765,552
Benefits and expenses:
Claims and other
policy benefits 508,146 (869) 1 507,278
Interest credited 11,487 49,537 -- 61,024
Policy acquisition costs
and other insurance
expenses 82,172 16,395 2,334 100,901
Change in deferred ac-
quisition cost associated
with change in value
of embedded derivatives -- 2,757 -- 2,757
Other operating expenses 10,126 1,776 1,354 13,256
--------------------------------------------
Total benefits
and expenses 611,931 69,596 3,689 685,216
Income before
income taxes $ 69,399 $ 7,283 $ 3,654 $ 80,336
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Canada Operations
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
- --------------------------------------------------------------------
2007 2006
---- ----
Revenues:
Net premiums $ 99,492 $ 94,402
Investment income, net of related expenses 26,432 25,305
Investment related gains (losses), net 2,784 (199)
Other revenues 86 --
-------- --------
Total revenues 128,794 119,508
Benefits and expenses:
Claims and other policy benefits 91,148 89,079
Interest credited 186 205
Policy acquisition costs and other
insurance expenses 18,476 17,820
Other operating expenses 3,950 3,973
-------- --------
Total benefits and expenses 113,760 111,077
Income before income taxes $ 15,034 $ 8,431
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Europe & South Africa
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
- --------------------------------------------------------------------
2007 2006
---- ----
Revenues:
Net premiums $167,796 $145,151
Investment income, net of related expenses 5,774 3,392
Investment related gains (losses), net (224) 34
Other revenues 131 91
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Total revenues 173,477 148,668
Benefits and expenses:
Claims and other policy benefits 114,154 105,646
Interest credited 452 190
Policy acquisition costs and other
insurance expenses 26,060 19,257
Other operating expenses 11,687 8,778
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Total benefits and expenses 152,353 133,871
Income before income taxes $ 21,124 $ 14,797
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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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2007 2006
---- ----
Revenues:
Net premiums $186,838 $139,213
Investment income, net of related expenses 8,663 6,496
Investment related gains (losses), net (71) 15
Other revenues 1,827 1,910
-------- --------
Total revenues 197,257 147,634
Benefits and expenses:
Claims and other policy benefits 150,483 110,356
Policy acquisition costs and other
insurance expenses 24,614 22,005
Other operating expenses 11,828 8,659
-------- --------
Total benefits and expenses 186,925 141,020
Income before income taxes $ 10,332 $ 6,614
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Corporate and Other
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
- --------------------------------------------------------------------
2007 2006
---- ----
Revenues:
Net premiums $ 279 $ 365
Investment income, net of related expenses 21,974 9,812
Investment related gains (losses), net (9,852) 5,344
Other revenues 3,639 2,214
-------- --------
Total revenues 16,040 17,735
Benefits and expenses:
Claims and other policy benefits (85) (846)
Interest credited -- 110
Policy acquisition costs and other
insurance expenses (10,036) (8,179)
Other operating expenses 13,458 11,861
Collateral finance facilities expense 12,687 --
Interest expense 20,453 16,767
-------- --------
Total benefits and expenses 36,477 19,713
Loss before income taxes $(20,437) $ (1,978)
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