RGA - Earnings call transcript Q3 2017 | Reinsurance Group of America, Incorporated

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Operator

Good day and welcome to the Reinsurance Group of America third quarter 2017 results call. Today's call is being recorded. At this time, I would like to introduce Mr. Todd Larson, Senior Executive Vice President and Chief Financial Officer and Ms. Anna Manning, President and Chief Executive Officer. Mr. ahead, go Please Larson.

Todd Larson

morning call. welcome Good quarter RGA's XXXX conference everyone you. to and third Thank

in Louis and me quick measures. and the Joining St. quarter reminder Chief RGA's Anna third and Executive President about Manning, forward-looking Officer. non-GAAP after Anna results I information discuss this will a morning financial is

subjects that prepared our help be certain and mind better yesterday. A important premiums contain RGA's understand will and is you things, including, factors earnings release RGA in will statements that of take among actual results potential that make call could of or to relating investment results we earnings Following list happy we during issued discuss information, of forward-looking cause performance, certain materially revenue, business, and will differ results to financial remarks, results. expected To your future actual materially this could from we growth other expected questions. projections included Keep and its to the subsidiaries. differ in performance from statements

for I more the and operating our rgare.com. supplement over on measure of better regulations. will that, profitability additional the this refer for believe on addition, be financial information our our comments. to segments. non-GAAP we on the comments Anna may release call financial found make website for Investor in considered adjusted press this income adjusted and under various Please which and of and turn at to These after-tax measure income underlying SEC In trends information will pretax quarterly operating measure a to With her ongoing and call, this income course reconciliations reflects Relations business. during the is business We net documents of the tables

Anna Manning

Thank you and morning. good Todd

strong the in currencies. for $X.XX earnings performance we reported in especially night, strong us was year release $X.XX quarter to ago. robust a operating U.S. at growth business. compared earnings constant a XX% Premium share very or with per last remained of in As our This adjusted indicated XX%

benefit business. solutions have results continue headwinds in XXXX. of a are positive geographic both facing translation, the Highlighting we that product considerable financial and quarter's share segments. and $X.X this effect currency the within per strong our We since noting included been to foreign this U.S. the from diversity very quarter traditional currency And results,

mortality particularly individual good claim quarter well was claims experience this with levels our below Our expectations.

in development the clients support markets. in demand protection and meeting growth income reflects contributing individual our solutions investment momentum In variable segments addition, in-force products region, continue number was to financial our robust run Asia, both for product our EMEA the earnings and in countries positions underwriting segments. In business grow to The average in to Europe, XX% our in and in and to the across and smaller well in premiums through transactions. region. across of this a rate that both the organically Asia-Pacific traditional In us both quarter leadership continue services continuing above the growing good we

for our RGA. other quarter in-force optimistic and deploy be remains ability to continue active about pipelines excellent for time. Our over transactions we an was capital This to and

are our positioned very markets. we ahead, well Looking in

me attractive our to over that, capabilities a track and execution. ability financial let approach about remain have We With of turn proven optimistic continue demonstrated results. back to it We with a long deliver record to Todd.

Todd Larson

income. quarter alternative this and quarter as Variable second points longer yield level to additional to investment bond run higher term variable The investment quarter on investment higher I reflecting than was investment third as information The X.XX% distributions higher above points with was the provide yield Anna. on to gains up management basis our investment of yield, investment prepayments. our spread investment commercial income. investments. was year's capital income strong loan XX Starting investments compared this segment well you results. details certain excluding results, further will business XX rate Thank XXXX, variable average higher average the on due reflecting and and basis

income alternative rate portion to the overall company approximately difficult realizing pattern quarter, be do solutions achieve amount was investments over financial overall million the above we on the meaningful expect investment volatile While in returns most predict. is the portfolio, investment run $XX timing are U.S. to with and of time. total small for relatively of can In and quarter-to-quarter The the a traditional assets return from total for of showing segments. these up this variable the this these

repurchased deploying in to growth, we shares addition million the approximately capital to of support XX quarter. In

expectations excess capital the is The was the quarter. pursue tax at position approximately rate positioned which billion us Our on end $X for adjusted leaves of the our further quarter to opportunities. deployment income XX% operating of within well pretax

segments. our to Turning

variable Latin driven favorable The approximately Premiums reflected variable U.S. rate, operating ongoing million For quarter. million a than pretax traditional and quarter-over-quarter. in experience claims and business $XXX of higher average a by and X% America $XX the lower by with was income adjusted number grew Compared the the This claims $XX.X million overall investment favorable of ago. run the better approximately size an U.S. expectations. added reported experience the income $XX investment claims income. large year versus lower million mortality a segment, of level to

equity this pretax operating payout reported adjusted markets. from business quarter, income above-average intensive annuities, favorable asset million income reflecting and variable investment on experience $XX.X of Our prepayments favorable

the increase income new year an business reported year. pretax ago period, to line of strong this $XX Our activity financial due a recent versus million this operating adjusted reinsurance

segment $XX.X Our million, prior-year Canada the pretax down operating of reported income $XX.X in adjusted million from traditional period.

unfavorable Africa. of period Premiums versus business we this fee-based due longevity basically previously solutions we results East financial $X.X pretax operating period and a down expectations. of income had year This with a loss experience a million experience this that million longevity treaty to that creditor Europe, reflecting to quarter, adjusted from reflecting was favorable experience mentioned. and year which Canada includes prior moderately ago, the in-line $X.X with Switching Middle were mortality ago reported period. transactions, the

traditional results pretax intensive, of operating year. geographies. in continues new Longevity experience. million Our longevity to intensive million, was from income which solutions this million reflecting asset rose prior XX% favorable of a compared by experience year Traditional overall by quarter up adjusted last includes pretax fee-based to the showing $XX.X across with driven claims year's number favorable business favorable Experience with income and premiums business XX% $XX.X $X.X of or experience. million. reported constant asset operating currency financial period be reported transactions, last year's EMEA business $XX.X also last unfavorable

adjusted totaled $XX.X Pretax the million with operating prior Turning to Asia-Pacific our in million year period. $XX.X traditional income compared business.

In quarter in Our year Australia to the strong. results Asia this Asia was expectations. below quarter period. particularly ago for we a in excluding larger compared small The were year loss recorded ago Australia, slightly loss much a

our in expectations. Australia individual with our business disability This performed in-line quarter,

traditional growth Southeast up strong Asia. Asia-Pacific in premiums Kong were particularly XX%, reflecting Hong region, across continued and the

reported from treaty operating was year have The reflects $XX us. runoff operating of million income million a in business quarter. pretax with a solutions for basically in-line Our relatively adjusted Asia-Pacific versus ago pretax $X.X the financial adjusted strong that operating with experience a of quarter results compared in this in-line a with quarter year performance very million we The segment mentioned loss $XX.X for the the Overall, our adjusted that loss corporate with was $X.X our million current expectations. are expectations The previous ago, it pretax of quarter. reported loss quarters.

the With for like adjusted return the will we thank Our and in that, that we RGA would year open is questions. XX and to you on operating an and XXXX. last versus approximately your equity we increase months full of the appreciate for call support over interest XX%,

Operator

Instructions]. [Operator

of We will Jimmy to Bhullar go first JPMorgan.

Jimmy Bhullar

morning. a I questions. few had Good Hi.

First in markets. growth on international

I next it think XX% year extent in driving ex-currency. of momentum Asia those that XX%, regions? you so? in around the close think to can grew What's continue And or do each what over the premiums to Europe

Todd Larson

will start out, Jimmy, I Todd. this Yes. is

treaty especially, really of Southeast So nice the generated Kong that region activities reporting with very to had business we we on catch the on of some of have growth treaty in there. lot some good some basis have Hong continue it I that relates up And and development to And first in during, and new some we in Asia have rate. Hong sort Kong other the the region probably year-over-year as that activity across out product quarter, mentioned, of a Asia, parts Asia. think a see growth we mentioned, and did second increased I

than going elevated So forward. expect we what that would more would

switching XX% the I region Europe. as quarter, again, increase this excluding even is ongoing we added that over going range across rate were a nice to closer probably a as premium XX% see I Asia And the There above more continue So growth we rate some well in-force growth probably we, transactions to region just Australia, to realistic of the looking at quarter-over-quarter. premium then though nicely couple organically small to did forward, itself. the think

Jimmy Bhullar

impact how a based a reserving? from then of business on you towards negative And financial move do reinsurance much expect principles Okay. your

Anna Manning

and focused It Jimmy, capital a our principle as new in-force reserving on reserve redundancies reinsurance well the redundancies. is modest are the only both doesn't to that movement based business. Recall impact. we business on solutions financial expect impact as

decrease think impact. So be overall, will see we a a I believe it don't but will that we material modest

Jimmy Bhullar

for in could space both how deal as the Okay. you just competition well And lastly the and this then pipeline transactions market? annuity comment the block if life that in as looks on

Anna Manning

say of that changed that There Competition matter always strong for are has number of the opportunities. the since since or for prior pipeline these The blocks. a last Sure. would couple I much is active. quarter quarters. remains not

announcement an We we pick the quarter of to the opportunities. will try how We of changed two opportunities business our that, edge. approach the the lumpy. for intensive where two our may the be strengths transactions. part I second and us continue asset the We In-force we of is saw haven't our transactions, spots. results think look and give And in try and with blocks

get forward. I as this go think you we me may of hearing repeat tired

overall, look Jimmy, Things and much movement. these I for opportunities. strong is would not always say, good So competition

Jimmy Bhullar

Thank Okay. you.

Operator

Partners. Lee We & next Dowling of Humphrey will to go

Humphrey Lee

my for you thank taking and morning question. Good

Just to terms are new to in that clients and the that's on I fits in more the those growth are Asia. there premiums competitors? that of products kind all, you And growth of or wondering, by a then your by market of are all, easily taking market developed you so is are Asia. growth understanding share? was business is just friendly Solvency development, in first of My just supported second European the II follow product your up products some that a replicable

Anna Manning

Okay. A that few with in question there. start benefits is market underlying growth. very we are There growth seeing and healthy the the of I will insurance the growth.

development region And say, have we two clients that underlying quarters in the business. capital by where we combined protection along in and spoken what the some the solutions, having of benefits think premium in growth the I reaping success are capital those efforts about this in inefficiencies capital been we I core through additional segment would combining some business the help And solutions traditional mean our framework. growth we with prior have are seeing have manage these insurance product reflect for we the then the development product have solutions I you capabilities had does have products. that in local are

Humphrey Lee

Got of U.S. the then mortality. in just terms it. And

compare definitely number So in largely My quarter. the additional to very this understanding have large cases. first that of when large is it your very lower in have you cases, favorable because of you when results that XX you quarter is,

looking you that of to year-to-date, terms experience So large expectation? in case your relative would where put your

Anna Manning

Yes.

everything think I aligned our much So favor. pretty in this quarter

number But claims as his saw mentioned below had expectations. of claims, we expectations. a came the lower non-large prepared and those of remarks, large in Todd that we on also then below our our the So, were number in that claims also large claims saw non-large the of we size average

a this pretty lined said, where was quarter everything I up. as So much

your are Now look we how on on when are quarters take question ahead, a large combined. basis, we claims? all doing you three a say at that I slightly year-to-date would

Humphrey Lee

Just slightly ahead.

bit expectation? expectation you your than are a or little above So little bit a your better you mean

Anna Manning

Sorry. What that expectations. than I slightly ahead is claims our lower are by mean

I in it issue-eras XXXX say and the and of pretty would also XXs this strong above older the And was So was quarter it's particularly broad a us financial a positive benefit. in ages, It claims. add experience that also and for people based. across in our for brackets was our spread block, their was and across quarter issue-age especially I would this the all very

Humphrey Lee

Got Thank you color. it. for the

Operator

next Erik of will We to go Research. Bass Autonomous

Erik Bass

Hi. Thank you.

in we any discussion as, for And selling market? broadly, opportunities life to wanted potentially you see seeing the are insurance I reinsurance Australia more their am and banks what I So businesses. are in if the maybe of a others transactions? these lot just implications about wondering

Anna Manning

opportunities Recall selling potential more the support. for the would they be in that think I are to RGA franchise. that participate

So these are would interested direct operations be something not that operations. and would insurance be life we in these acquiring. That's

are are the up we markets, many other picked would being and would within opportunities pursue. and also that's certainly However, apply business if there certainly this in interested we

to is insurance this a more I positive think be what insurance question reinsurers. change second about I that organizations for and are bank in a that net your coming might professional from what mean think owned reinsurance? general seeing for Now could we

Erik Bass

That's more solutions activity a could but strong there and in growth the And well? where maybe organic some are there helpful. EMEA, businesses been traditional just bit Thanks. opportunities has you as the inorganic little Okay. you growth premium if then and seeing both financial block about in comment

Anna Manning

Yes.

EMEA, EMEA. may Regulators about hoped. me to opportunities with also are start new Solvency still solutions had in unclear what are approve let financial they somewhat hesitant than are acceptable. develop type to slower So and be II structures we They

longer to than are our Europe like. said, in Now I we taking But solutions and see would with it's continue as interest we for discussions our continuing clients. strong

the business we continent. the the in some although those pipeline opportunities annuity see and strong for particularly the are U.K., On particular business, longevity a in and there on

So that robust. opportunity set, I is would say,

Erik Bass

you. Thank

Operator

Kenneth of to Markets. next go Capital Lee will RBC We

Kenneth Lee

Thanks question. Hi. my taking for

from of want concentrated Just automatic was on mainly Was or the favorable treaty the mortality, the to LatAm follow-up facultative U.S. mortality. this favorable side? most that

Anna Manning

it really generally, automatic, direction. facultative. based. same It where said, was of was the subgroups, various was up all broad As lined I It our across in quarter pretty everything much age, client issue a

Kenneth Lee

the still premium like range Okay. a given single net you of you digits. is normalized Or think the mentioned growth, have recent of strength, do the Great. And is then I being terms in think recent in Obviously that past of more valid? the high strength in more sort sustainable?

Todd Larson

upper single that This range is appropriate still we is No, think Todd. still digit. at

Asia, as here had we again, nice catch-ups that this some But have We quarters year. had some I mentioned, through. flowed in

an appropriate future that's for number intermediate feel still here. we So the

Kenneth Lee

Okay. just Great. And one final question.

in if back, within attractive among Asia? stepping sort of growth are just any Thanks. pretty perspective, which obviously a versus characteristics are EMEA to different key the at were from most RGA mean like Just U.S. differences? looking I versus look at just returns the for of businesses I but LatAm terms the geographies them, returns, the

Anna Manning

start returns We same our all business. by the targeting new for

do on risk type. we or So not differentiate geography either based

either headwinds on box opportunities, different different be starts and lands there tailwinds. business and it the once Now our will to pressures develop, and

look doing, currency will whether So the on segments, how have it of been various large attract behaving how been accumulations if risks yield or has some and we at depends take those environments on depend asset not. a

pretty it's you difficult think to precise I answer. give a

Todd Larson

would our Kenneth, comments opportunities different that Anna's return we we winning think from share the are we I that what pricing given is in we are feel, all of an locations echo and appropriate

Kenneth Lee

Thanks. Great. Okay.

Operator

to Fargo Dargan Sean next Securities. go We will of Wells

Sean Dargan

have reinsurers. of I whom your Thanks. are a many Yes. about catastrophe question competitors, also

they that in significant on the life in of to pricing? did back and catastrophe impact going of health their into time, market in pay Just terms they which in years likes had came how business, claims

Anna Manning

market. in hard connection happening was draw and to I what approach between the a their think it's direct that

We focus their over have increase time decrease in or either certainly a their focus in market a competitors market. seeing

our in doing. happened early us there consequences. approach what's change Given any few the what it's But be think if we much competitors too in keep on tell for based are last our mind, months, will I simply don't to

the pay same focus see using, the And so the have same we been to attention, we same bring and develop. will things will how we continue use approach have to

Sean Dargan

opportunity not if to attractive an maybe this a for if of they trend, become the a seems see is of, It point just like out Met RGA? its when non-U.S. Brighthouse spin back was retail domiciled lot least and from a then, out a take an reinsure life seemed to are business York, landscape, it spun of because company that's going If Brighthouse. be Got opportunity at that up, New out But look written the wondering, there? at step couple Thanks. global foreign, either operations. you there of this MetLife or Okay. as U.S. And to insurance we was it. one, does

Anna Manning

answer be, I situational, spun would and as would on think being in would what it it yes. have then it the But was hypothetical, be indicated, the out. you really be would specific to then depend business

support a limited that are if the Although many, that there some for. sell, risks of we clients have are our appetites not we global risks most, reinsurance

say, the we what would I it see the specific would So have in of yes and to situations contained. to, would then have each hypothetical,

Sean Dargan

Okay.

And for give you at this so annuity risk your point? books appetite can maybe feeling a us for variable just

Anna Manning

Certainly.

quarter have small we will deposits. I think the transaction annuity look some remind and you small they But we average in block the those and of annuities variable transactions pretty vanilla that annuities. that in included I completed we maybe variable a indicated the past, second were very at will had

they right some We to hedge be of continue blocks right And variable big the we markets, characteristics. the much funds. don't especially underlying have variable we will these could if yes, pursue characteristics there generally if annuity price in we blocks, that the the and these the to us, design But then annuity away on type could attractive depends are them. the risks with blocks that all that at believe and find of and

I to would are think, the say, or because risk top it That's very mentioned I variable a are the list. risk I So of appetite. our or do large in even as quarter just we potentially our at why, fit call, size our within really framework block doesn't second unlikely medium annuities not

Sean Dargan

very Thank you. It's it. Got helpful.

Operator

KBW Ryan go will Investments. of to next Krueger We

Ryan Krueger

this from Hi. run was can asset about help quarter we one, as you the but head now? Good very guess benefited intensive U.S. morning. XXXX It into us income. rate the elevated in think I variable investment obviously

you there? run think us if rate could about So the help

Todd Larson

farmers ramp nice ramped have it pretax that is We point but little quarterly It for the for still up range. deal last did think bit. that's we now. that million time a quarters. the the $XX will the in income the a quarter. will few the some continuing still million place be is probably in next feel bounce $XX But we to right being around to hopefully rate up at right about run It But right

Ryan Krueger

always years have charges know do But block guarantee Okay. business? prices if now we deals that's product guess were have in some some you amount Thanks. avoided. in you I over that in-force their a to reserve have happened taken life seller Anna, have universal of the charges fair now I the for primary appetite of aligned And then would anymore that secondary more these have books. seen, a companies last few of

Anna Manning

are you correct. Ryan, Well,

secondary not the participated have guarantee life universal in We products.

or on clients underlying lapse and But limited guarantee have risk. we don't the products. reinsure our risk performance the on mortality these we support the we market So participated

a So use simple we YRT approach.

and at haven't few make this would us at we at a looked the find elements to risk other a product this elements, comfortable. able other the been times product in that a structure have price We

given as us we opportunity many find move present requests prices with It clients itself? at risk and for more our one ask work these annuities, our that like look how these, I approach that at if and business. may. at do And to will perhaps Now the we who us. and the or put look materially, we take from will important would the list But of elements the just for again, risk these wouldn't management the aligning just variable are top

Ryan Krueger

Great. Okay. Thank you.

Operator

of Bergman Citi. Dan to next go will We

Dan Bergman

Hi morning. your some business. was there. there pressure last quarter in I Good higher guess lapses U.S. from

unfavorable So I then to continued how that this or just check experience also U.S. typical back Whether And to more reverted it was group I last quarter. your wanted believe levels? looked quarter?

So quarter? give how just if on detail see the group wanted was on third performed can to that there I in any you

Anna Manning

First, lapses. on on your question

lapses business quarter, nothing it. I little a repricing this but around group on a think that does higher And then were to bounce U.S. bit annual on and the we this bit have note. remember rights business,

a third fine. quarter expectations. behind half slightly where experience follows was the first that our was But So

So on is performance year-to-date expectations. a basis, our of think ahead I that slightly

see fine. We direction, it think overall So that continue will quarters to that nothing each bounces there. business to note where it's in but

Dan Bergman

you. mentioned Thank great. then That's smaller reinsurance block completed of quarter. I couple in think or in-force the a having And had deals you

of you by any color utilized So I aggregate, helpful? give capital would sense just or whether have you be terms give wanted they or if done, to of deals by in can region that see in may type the much were product? that And details on how can any

Todd Larson

deals. it modest few it's Yes. of is amount premium just a to single few EMEA modest. of say, and the million. it's here of It's really fairly transaction capital. did U.K., In ones then in did small million there. But a neighborhood the we $XX $XX the really, a And would a outside range, I there. We smaller

Dan Bergman

Got so it. much. Thanks

Operator

we have at time. And no further questions this

A -Todd Larson

call you And any as morning. this thank please you joining very if to the Louis. us for much. questions, in Well, Thank St. free everyone here always feel you us have for contact Okay. other

Operator

We That for our conference participation. today. does you thank for conclude your

Reinsurance Group of America (RGA) 27 Oct 172017 Q3 Earnings call transcript