RGA - Earnings call transcript Q1 2020 | Reinsurance Group of America, Incorporated

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Operator

Good day and welcome to the Reinsurance Group of America First Quarter 2020 Results Conference 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. Please go ahead.

Todd Larson

you. Thank and first first call. working everyone, call XXXX to our and from welcome morning, quarter RGA’s conference Good home conference me Officer; Officer; Relations. the President on Investment our Officer; Officer; this Investor Anna our Chief Hopson, With RGA’s Chief the Porter, Manning, of Risk Leslie call Barbi, and Jeff Néemeh, Alain is Executive Jonathan Chief and Operating Chief morning Head

additional an members call Considering presentation of on management provide our have the exposures, other and unprecedented which the available environment, more global portfolio team referring the among quarter, and this things. included made be to earnings we supplement on information will call investment mortality our we our during to

about and We measures. forward-looking financial will the quick information quarter discuss non-GAAP first results after reminder a

prepared to questions. we’ll take our remarks, happy your be Following

Some answers of may from information and your differ Actual contain expected forward-looking questions materially our results could or statements. results. to comments

earnings the expected for the materially yesterday from release results. issued that to results differ actual factors refer cause important Please to we of list a could

reconciliations discussion Additionally, these this financial we non-GAAP include supplement may presentation, see call, website release, measures. of Please and for during provide financial our and quarterly measures. information terms earnings the to course GAAP earnings of

turn will comments. to the I now Anna And over call for her

Anna Manning

are Todd. loved ones lost have challenging you, pandemic. us, everyone. times for These Good who those and extremely during Thank morning, for particularly all of this

our working the RGA most on our communities, RGA remains support have of these. focused grants around bearing also been with on are burden. companies the rely in all the Our of our through from operating RGA, a the with our of knowing employees the front is of supporting to thoughts clients families. supporting home. Foundation. provide those share At to helping this on we from Like that and families like are them And global with financial COVID-XX who efforts world our employees, our shared responsibilities disproportionate those lines that crisis are response meet insurance and RGA times clients committed others, we

to very pleased teams The accomplished. am what are the have remotely, we proud operations functioning normally. I are have challenge of that of risen and they RGA report working to our

Although pandemic unknowns, of RGA entered many there a position remain in the strength.

a have sheet. strong balance We

Our investment is portfolio defensively positioned.

an We liquidity have approximately ample million. and position capital excess $XXX of

and resilient operating challenges ahead is global a In of well and a industry, product success. record will best life track out we have confident that health the I the geographies, short, this We team brand in I’m global diversified manage have business strong. a platform, risk, come and a team reinsurance through by strong leading believe that and and

our results compared for of Moving $X.XX year were quarter, to ago. operating our a operating first the as below adjusted $X.XX EPS reported we quarter, expectations to

expect this Elevated were claims levels of the negative in low investment of very sources two the after mortality higher-than-expected the the result and of reported to in of turmoil also claims, for GAAP business items comprehensive markets. U.S. the as would quarter, share, loss seasonality of of frequency variance for day our the the smaller adjusting items U.S. reflects a to a We year. results over a impact the In markets that accounting treatment but would $X.XX a biggest leap see on individual directly net attributable were I individual elements, provide per a note stabilize, are our that time. and of largely those more mortality part which financial Todd will in reversal financial of commentary of operating even normal elevated claims in some we variable these our number income.

block outlined ages, the XX has and seasonality As throughout ages was the as difficult pattern to in of our at earnings to Day, the concentrated especially believe briefly release year. above. Investor of our cause days establish, the additional or increased as excess impact recent the in these indirectly been recent which highly of definitive The early discussed of we claim of are might impacts earnings impact And our impacts and pandemic, while death COVID-XX directly years have at that emergence in and earnings some COVID-XX. claims related presentation,

quarter, On segments other deploying $XX performed Throughout Asia better very a than Solutions clients U.S. the business, our The group several and and our segments pipeline EMEA, businesses capital. well side, and lines. product Traditional in quarter, including most Financial and expected the business, in our business our profit. good the of our in positive major performed Canada executed and Australia produced all regions on across million we support to continued and transactions, modest in-force remains the

our on you execute to that Going capabilities forward, advantages. best can transactions that pursuing those will expect attractive with disciplined continue approach we and align our of following

more comment on me broadly. Let COVID-XX

way our this of pandemic, that work as we by as accelerated COVID-XX other to do are exacerbated As or pandemic. see the we expect from causes additional well claims, death through claims

While was the range difficult strength potential scenarios. a that ultimate financial through level stress us positions and we of believe our wide to timing predict, well of claims

give long-term RGA’s the of for us this and will ahead we range effects will manage of safe are the Thank and hope all strong value believe out are that over our promises this, play our remain uncertainties through of Porter, and times position business. talented see ongoing a ongoing in-depth deliver effects that Risk Through recognize our including are financial societal more of RGA, provide will Chief but and we unprecedented We likely will impacts, your on well. we you that and comments that can given earnings we financial creating in our in challenges all and some changes. Our the manageable that call. Officer, in stakeholders. power teams interest I time, me there confidence for demonstrated that Jonathan you later economic global

provide it our hand to will on results. Todd I more that, to detail back with And

Todd Larson

I our a but X%. Anna. organic for premium RGA’s was capital basis review on was results financial growth Reported and Thanks, the and growth the quarter, will discuss X% liquidity. constant-currency

While that X% view have Asia-Pacific. slowdown down that X% attractive in we the the producing we in is as growth X% the current to recently, more given from been

we As million approximately deployed quarter. quarter, repurchased of into region. both Anna of million by by stock. Earlier and $XXX capital completed mentioned, diverse, common $XX we we were transactions transactions in the this product The

We of excess buybacks. have the since period $XXX share We capital million. approximately suspended with ended an position

return this The on primarily equity XX% operating of adjusted earnings. above rate expected X.X%. on XX was tax months range geographical of slightly XX% adjusted to effective Our the the operating pre-tax the for due to was XX.X% quarter, trailing mix income

X Slide primarily unfavorable the will U.S. earnings of higher-than-expected claims America of income. individual of the $XX I comment experience low The traditional you operating frequency investment reported a business presentation. on mortality Now and million, by can see segment, variable Latin which loss due pre-tax non-large levels reflecting results of on very adjusted to and

population provided that as growing vintages. beginning in saw in in anecdotal higher claims the some materials. evidence, about possibly a well We that, years all-cause issue commentary There over age, older further We earnings from as general is year was particularly of March XX from also presentation in have the those sorry and earlier. mortality large concentration

that experience us expect this adverse characteristics the While to definitive indirectly assess of COVID-XX. we of to to it be of sources more get time, is is lead and possible these it difficult to excess information Over directly time, do better going claims related forward. at believe some the to our the assumptions attribution provide or might data define to

of cost $XX income capital than capital markets Our resulted lower asset-intensive the markets The reflecting lease income business annuities of the million acquisition deferred in operating impact and related this lower adjusted run effects. fee reported account from balances. rate, expected lower some on pre-tax quarter, weak

$XXX up X% and which over operating experience relatively Moving in business, but financial fee-based another to million. year asset-intensive, reflecting flat adjusted quarter particularly experience pre-tax $XX period constant-currency prior-year Middle experience, operating reported year, pre-tax with the million, segment favorable EMEA compared quarter while basis. In of million, longevity reflect and unfavorable adjusted some primarily a individual to of reported solutions $XX versus includes the totaled reflecting pre-tax East segment, UK reported a was longevity down basis traditional Reported the income and favorable. had business on year-ago the Africa good underwriting our of income transactions ago this quarter, catch-up $XX mortality adjusted the Europe, Results premiums client prior Canada, income million, a the and XX% up on traditional favorable reporting. operating modestly was

totaled Turning to $XX pre-tax Asia-Pacific operating adjusted traditional million. income our business,

producing expected, Asia-Pacific to were quarter better results the reporting This quarter. catch reflecting client in this in Australia profit one down, ups Asia. the related traditional reflects The slower were than effect negative particularly growth modest premiums slightly client. Reported of

a from corporate expected and average loss of the segment adjusted other of operating clients combining Asia-Pacific Our reported in strong continue lower to broad-based pre-tax financial income product solutions our development primarily new million, business our $XX provide we adjusted in solutions. financial than Asia, business rate, capabilities to where operating The by million, levels. $XX and solutions lower run reported pre-tax reflecting expense

We the loss We seen reconciliation reflective a turmoil adjusted pre-tax and to more of operating presentation. on below the were end some derivatives primarily in related for my Officer, in relates Investment provided Leslie, income credit the March. Chief had X BXX, structured on quarter. reported the have amount than is markets. of quarters on did items portfolio as the Slide primarily to financial our the a funds-withheld markets, what past and of of basis. pre-tax or we less investment investment as spreads We report especially a energy line loss There in and we due toward earnings of net the that a quarter a will significant comments. widening the income from embedded emerging sector modest primarily impairments, of treaties This comment known to after our to loss were

short-term reverse in of effect. the be that accounting volatility net is that stress over with should time there accounting The market, and such minimal during periods in the can volatility

shareholders. stands to capital our sheet report continue with execute million. a is of our to strong, balance position operations, strategy RGA’s our and our We having $XXX and management the to believe We prudent capital capital run goal solid at excess provide sufficient returns ratings on

substantially billion cash billion have March. as and of $X.X at liquidity end of liquidity cash in XXXX to quarter the considerable the at and from the our increased equivalents have increased end We $X.X

stable disintermediation level liquidity risks. I’d RGA’s XX, profile, relative low comfortable with relatively are see targets a leverage limits. and ratios highlight a that Slide liability as to and on to at have we our can you like

although earnings, through a COVID-related it’s manage our confident claims expect current are accurately impact. at environment. some the will difficult time, see position ultimate We We this ongoing the that predict to is do to negatively that RGA in to affect

Given difficult situation, it the fluidity year, simply Clearly, are earnings will intermediate impacted of the achieve to there and be many targets. will be our this unknowns. too

provide will pandemic. as gain ultimate clarity information more We this into more of we impact the

Leslie to provide now Officer, call And like RGA’s additional turn investment comments I the Investment portfolio. over Barbi, would to RGA’s Chief to on

Leslie Barbi

Todd. Thanks,

As RGA’s this across cash well-positioned believe stressful by sectors, asset high-quality time many and Bank markets challenging globally. consequences affected period. companies the to is market. COVID-XX, we economic economic bridge period, addition actions moved of in to diversified launched to and It well to classes, geography. issuance. to significantly record the policy a economy period know, health and weather interruption, is regions Monumental of this is actions and Central Nonetheless, fiscal flatten economies issuers curve a for market the have and portfolio investment have in including for have this been help the We impacted from corporate build

a As XX% investment Slide our quality portfolio highlighted with average subordinated investments. as The of XX, low our of maturity on and A, grade. security equity debt has March amount over portfolio fixed XX, of was and

investment Our an investment. with us energy BBB positioned to underweight and strategy well over-leverage to

of CLO mortgage had loan While ratio AA. an had average an our and XX%, quality our portfolio portfolio of commercial average loan-to-value

liability this with in RGA’s Importantly, process manage financially environment investment we the And strategy impressed defensively bring to enhances through proactively expertise A so meet positioned company. strong and reinsurance portfolio day. management global and the resulted coming of valuable energy a of the and our hold asset they investments XXXX. our into our and engagement the liquidity we ability to profile professionals combination portfolio, are challenging cycle. while people, every I am

seasoned XX can helm averaged how in economic public XX difficult We investors our risk to leaders investment tell risk I investment have projects Our which our the at commitment we management. on our diligence in experience it focus from multiple surveillance. across years principal and estate. collections market have you own my impactful began to of career, deep That process who navigated and successfully years real is over protection downside investment cycles. perspective and drives ongoing in ago,

portfolio a utilized we scenario stress top-down our risk analysis to asset From taking. and total allocation perspective, management inform portfolio

to to investment fixed-income the contribute to as well as disciplined power. that and mission diversification quality investments is by and process. financial RGA’s We and Our higher emphasize approach strength RGA’s deliver capabilities right talent, of risk. We having underwriting and earnings liquidity,

Our of approach, uncompensated focused positioning our ahead was on well defensive of portfolio risk. because in avoiding place management disciplined risk XXXX

BBBs investments energy. examples, respect I with As two of highlight and our to our will longstanding strategies in

pushed of have companies has leverage feature Information traditional been the a this XX. BBB cycle known rating portion that metrics. beyond BBB credit is provided and category a within on of Slide It XX

to BBBS, think strategy. we we some analysis except was where provided In we’re the over-levered our the deck, success Our that we assess strategy slide compensated. have avoid of appropriately demonstrates

of example, agency rating as XX, BBB the on one For had March rating X.X% watch. major negative index universe put of

has outcome. better meaningfully that about that half portfolio amount Our category, a in of

we our indicator, action slice notably a another BBB March. our the than turbulent the index market market not BBB in in BBBs minus lower index in minus proportion, portion the holdings BBB As of only minus of the outperform have

have On prices. our risk the we to oil a assessment energy higher underweight front, previous due the to relative of had long-standing

price-sensitive more This XX% fourth a in As comps. Starting in our The the yield, in volatile versus sector, our investment work. and quarter production was of X.XX%. year less in in start was less was money to money March, our an to related on a focused investment-grade. XX, were market we to holdings over private putting the strong a developments markets, variable total uplift X.XX%. accumulating shown new is on were and quarter, portfolio’s quarter asset of the healthy supported spread outlook COVID, which oil almost rate With regard capital defensive paused first at by primarily from Slide non-spread cash negative half to The holdings given investment difference first income. midstream, on it the was public related economic to so the

The We quarter, will issue. this on is last we In variable income the primarily first is topic had minimal investment VII. timing I comment or believe VII. a

majority of expected time. to expect rate VII We XXXX over catch up run on the our for

into estate in in pushed current market performance typically and conditions, Private portion VII Although sales contributed of meaningful have equity venture of income real over that a could strong be a late the share our XXXX. joint year realizations time. or large

said, favorable when sold and those is assets those That could for on reside participants of existing now those all income the for investment key few market provide managing asset sales a types Those assets. occur. may our features quarter, assets are I understand the market strategies a help portfolio are primarily conditions of better still will first and of With two being realizations hope you portfolio both in in before future those two point our activity positioning investments, focused portfolio. and at in and the of of right be in quarters it markets that few sales

With over it Chief will I Risk to Officer, Porter. hand Jonathan that, our

Jonathan Porter

business RGA’s to the morning, and business that impacts, our This rates Leslie. you, in general why mortality some COVID-XX we including believe I those will our the than provide mortality insights to be into would in global like population. less Thank exposure additional

The Kong, our again, Asia, our geographic United across Canada; region. across a and represent largest multiple in Hong risk are highest individuals is in particularly in a XX% – are France, represent with of largest some review the mortality is X% and profile XX% characteristics balance diversified Spain global the older. to indicating older-aged of total, of take that global XX%; is our the of RGA’s into measured order factor countries. risk. five The Italy, the our global mortality has business XX on represents ages which XX% particular those and excluding account reporting to older. XX% approximately mortality an UK, markets risk Australia; global to The seeing block important these virus EMEA, regions across one-third spread in key multiple in or spread by combined I States, COVID-XX, of countries are XX. clearly excluding the severe extremely multiple mortality COVID-XX. Kong. of XX exposure portfolio X% exposure. reported deaths company’s mortality of any announced Age-specific Emerging rates in at as in in is which of the exposure. Hong assessing and exposure X%, X% the occurring death age on mortality of of The and of will X.X% exposure global more geographic is is the at Slide countries about XX% population data total, in and our much age the XX% in our impact that blocks and of begin aged next the is general In showing UK in The

older and The one-third total, factors than our have also of additional those vast less our disease, Slide pre-existing deaths. of older, diabetes, obesity as is the of problems. is compared one key health that for market that XX% CDC data each be approximately on conditions RGA’s that of Early to data measured for than Emerging and such the these risk would more U.S. cardiovascular up shows individuals materially types general rate exposure, exposures means man of death of we to population. mortality almost expect hypertension COVID-XX bottom this as general the by hospitalizations table country’s indicated U.S. or ages April XX the admissions disease, at XX in XX% co-morbidities, is ages population. lung more portion of majority of What observed make to the business risk, involve population ICU XX right and showing the and and chronic statistics. chronic In with

to an countries. rate when as reported ultimate of process, block estimating well other socioeconomic the on insured lives of those are important is underwriting higher the being as results the in compared all-cause mortality the This results Similar status overall relative in as factor general Evidence two rates seen insurance profile buying of is healthier the population when to healthier an general insurance profile generally the these of between mortality population. comparing groups.

virus, While age that capacity, as term. are a short-term tracing, ultimate these There clear the mortality future in play still will the hospital virus. ultimate of portfolio role circumstances our and is public how too COVID-XX And it will well population COVID-XX in additional have still it we factors experience treatments both impact the how the for and will as of mortality impacting differences, on claims. additional and causes of many are impact the as general testing to managed. all believe and the will not contact the lower accurately vaccine death, status of long and infrastructure both actions such Further, other the including health that private effectiveness to is estimate country-specific due rates course influence is early that or timing significant

I and impact this of similar to X.X COVID-XX, population pre-tax estimate to were general we set additional of population globally, mortality in the calibrate extra apply global of As U.S. we result impacts deaths, which an deaths implies would a is impacts $XXX claims potential lead general million if illustration range XXX,XXX are of lower areas and three to actual underlying we highlight million emphasize experience multiple could to wanted between that particularly $XXX and based to on still see this as that developing emerge. to RGA million. that assumptions want

a deaths which estimate people it will accelerations current these assumes similar developing deaths, died assumes that see the of some It have impact experience from we causes age-adjusted already differently. are this or all be from would of and also claims that who years. marginal future First, that will countries in likely other can comorbid mortality, of from extra additional is

will and in have a both result hit For sub-segments for socioeconomic Kong workers we Australia example, roles, assumes for far, – different facility thus penetration lower markets. impact little insurance and lower is in To within It harder claims in that population and extent very the example, industry emerging overall Hong no also service additional a to material that frontline some had RGA. care long-term and will will mortality be lower data equally those country which residents. RGA are impacted mean the life seeing there insurance this that sub-segments,

of business the is partial The has longevity it also exposure longevity older. a material that Finally, mortality concentrated which that XX acts our with as block risk, a older at for RGA of XX% exposure. is worth our ages approximately ages majority noting hedge of at and

continue decades expect, you and As gained our and significant to would on world’s devote health analyzing data, gathering life we the premier one drawing and experts external of with reinsurers. as of engaging resources to knowledge

management Given to we looking additional will potential we global now and range manage our will and at a level. know scenarios, diversified stress And from risk, focus that be liquidity on stress crisis. below us franchise that allow of capital plans capital one-in-XXX through and our well strong believe COVID-XX what this

over turn back With it Todd to that, I’ll Larson.

Todd Larson

prepared Jonathan. That concludes our Thank you, remarks.

would like now it your up for you to So to we open questions.

Operator

go We from instructions] Please now the ahead. [Operator & you. Humphrey Thank Dowling take Lee Partners. from will first question

Humphrey Lee

the you thank and morning Good for taking question.

and is terms Jonathan the how the In quarter mortality, quarter, claims think U.S. and trended the I many number claims – guess compared you guess see quarter additional about how when the and then did how to into of disclosure that did I for April? I elevated that you that in the the for this But of impact appreciate provided.

Anna Manning

morning, Humphrey. Good

turn Alain Jonathan. will over to that question I think I and

Alain Néemeh

Sure.

is this Humphrey. you, Alain. Thank So

that in we’re end to quarter, appeared related seeing to after COVID-identified claims reporting more in and of of terms some the come have quarter, the quarter started few in the the although In certainly, April. claims in very the there quarter, were

are we one it’s comment COVID. But from idea evidence to we in was don’t think clearly, to that have it all quarter, some time. before, April, So walking impact I with a COVID, but difficult claims. of anyone the I COVID first we at want And back said really month seeing the going as away on did any

Anna Manning

anything add? Jonathan, to

Jonathan Porter

for nothing no, me. No,

Anna Manning

I might aware, is one you’re for add us thing. as lagged. of Humphrey, cause well death always reporting

So our the that addition, and first-quarter there is limited respect will analysis throughout complete. COVID-related the death deaths on in course time cause it coding for of and of of And to to COVID basis, analysis the that take the is early some uncertainty with part of pandemic.

Humphrey Lee

Understood.

and shifting then to So gear capital management.

you see share repurchases. you to you I resuming contemplating buybacks? I factors guess what So currently have start do understand suspended before your

Todd Larson

I’m sorry.

asked buybacks? reinstate factors we at we what would look before You

Humphrey Lee

Yes.

to resume in buybacks? – do you need So to you to see order what for

Todd Larson

sure. So

So talked activity. We, course, past, support back transactional deploy to want we’re pretty consistent. the of to business in capital, into as we the

time, on both from it economies, mortality additional ultimately, mean mean transactions. more capital changed. the hasn’t to like global the we the business different for ultimate, support more around need But all a back as, clarity deploy We’d I it the of think, the does with well path what attractive into message does investment the pandemic, claims that side. specifically, to what still So some as over

we around So to we to this clarity share more where see repurchases. ultimately would we our expect go want some reinstate before

Operator

Andrew from Suisse. question Please go from next Credit the take now Kligerman ahead. will We

Andrew Kligerman

In to United Asia. get of growth were X% States, outlook. historically we everyone. saw growth range. net course, in premium I pressures And X% the in a about in your of premium sense to then, of morning, the there Good X% likely versus traditional more wanted

how growth in part you term insurance? And both will with of respect longer it think demand see be premium second, it U.S. how in be of term, life Part in near buying the So the do A rest you individual of affected the the B world? of the being, to would and do then the the

Anna Manning

Alain over comment. I turn could that to to

Alain Néemeh

Sure. Yes.

I to can pressured. in think you somewhat the think term, expect So certainly growth I premium short be

value elements. result first Asia all, are We of though, talk to U.S. at signs production kinds as of think of but sort of think, in both of in impact of seeing definitely slowing a repercussions, too I’d that with different the fact, the now. those might stay be out gap good right I life to continuing of pandemic. the this that, it’s opportunities we through that to have are bridge markets. able underserved about COVID, in the in fair we a primarily long-term to certainly, it’s Asia markets think then see proven like the early home, And And transactional insurance think I and to like to exist will standpoint, say in I’d from

so And of I there, growth transactions course would of standpoint a year see premium a from continuation certainly, the or either year. the to over expect into next

Andrew Kligerman

the beginning pipeline And transactions maybe as think as it into you mentioned call, at the talk of is tie well. about transactions, could you’re you Langhorne good seeing? I of give what Anna types a little and color the on

Alain Néemeh

cases. in types is things So consistent we’re with the it some such be what doing we’ve asset-intensive, reinsurance I’d that looking transactions of very at the longevity, suggest in are whether past financial been

today. about a times and see that’s this it more there does so take environment, as We talk economic by there what will probably we’re are work think probably out our through some we seeing I And transactions current who plays before prefer may also typically be possible economic quite how and very way that our the varies think true it’s in be fore-sellers, to I but lumpy some of market. people pause – transacting. well just normal

Anna Manning

maybe somewhat in just market, have the U.S. ratios exposure expect year not if in opportunities counterparts, Europe plans so later it to pension had PRT In part And and, America could reasons maybe to are their I the to into to although in two, impacted. in there grow, just relative continue next or perhaps add the we the or a North perhaps, delayed because funding year to the less we comment as equity see for PRT do alluded Europe.

and capital development market, in good a solutions asset-intensive in in Alain the pipeline. would continued little slower for our And As product interest past. than maybe that in say U.S. combined mentioned, recent is very Asia I the the

thinking opportunities aware actively that companies pipeline, are market. some Although bring in and additional are about we there that are blocks preparing to to

about So opportunities the we’ve type as similar overall, pipeline good past. again, spoken in of

Andrew Kligerman

just just is anything Anna, sort does there? into there that of this or Langhorne, different mention fit scenario, And

Anna Manning

and there, No, fits I’ve described. there is nothing different opportunities various asset into the that the

Operator

We will Autonomous from ahead. Erik the now question go Please take Bass from next Research.

Erik Bass

as the you. claims A mortality, reconsider have had straight. different at million-plus adverse assumptions it around what you reset each I base claims of expectations? and But have total think the point drivers thank three your $XX potentially for realize on to bigger straight quarters, need have do Hi, question been variance for quarter. six now been and I in negative a

Anna Manning

will over to to that Jonathan I and comment. Alain turn

Alain Néemeh

in investor We’ve recent over as couple to it’s large of longer we talked Certainly, bit the we’ve a mortality, fixed think and talked at a years in I maybe to this quite Sure. Typically, slowing called Why I’d periods tend is we seen the last about, this number it’s past. time. attributable time different improvement have the also seeing average around U.S. out we in middle start? quarters miss don’t in U.S. little ago. from I which, day volatility, off we’ve the of about straight, a not sure few mortality of on out over what And claim what a we’re ages experience years. years. a I’m younger of say seen but when

over and policies, writing evidence so seeing small we’ve with claims over But we’re we back frequency that go of of older we’re some bit that this see what ages, hospitalizations, seeing and quarter example, reporting, information improvement. slowing of you every mortality on the I claims day that, suggests in ups at together XX-years, we’re on is think seen terms higher XX-years, that the seeing the of fact, little late. for or new a older certainly vintages, in downs and COVID some illness do influenza-like last years XX higher If

XX. been might France report early seen, recently the You’ve I December as think, a diagnosis first that as in have

the Santa weeks or now, Clara in thought. death than earlier in X, which first think, two three I is U.S. previously is The February

comfortable why we’ve beginning to tends that, this think are there to given the And as influenza-like quarter. reasonably indicators book. or impact I on it that point So specific potentially to I’m missed underlying I COVID-like that think

Jonathan Porter

just I’ll globally. question just our maybe mean, mortality reassessing. add the then that just not and I but we the about U.S. to in regularly And Yes. constantly reassess expectations,

a that’s sure our go-forward we with that process comfortable we’re to expectations. through that So go make

Erik Bass

on the do statutory appreciate expect I Could then Thank additional to the portfolio. disclosure. recession? you color a some to maybe you have you. estimate just additional your could look U.S. of what And you in affect scenario? given for any And if potential provide lot capital switch in that do perform outside is And how ratings portfolio downgrades could stress business a like entities? also, the how investment I of impairments a your

Leslie Barbi

– sorry oh, ahead, go it’s Leslie Anna. Hi, I’m

Anna Manning

the turn capital to it was going why I Todd No, then, on with perhaps, and Leslie question? to say start we don’t

Leslie Barbi

I Leslie. love stance. that This is

certainly the difficult is a offsetting this predict period to mandated unusual policy. and shutdowns given So

has forth So the scenarios at impairments, half historical characteristics, and, from to your the of severities variety in some so portfolio our map and and meaning of look cycles loss to approach stress cases, increase migration, stresses. factors a our rating been

can considering moment cases a range So at of we’re the that happen.

is expectation and the in resumes over here, current important somewhat continue is then an that around recovery factor Our second multiple quarters. gradual economic it a activity, quarter which

in really credit top-down could importantly, testing we’ve for of we that they’re loss, on million to our that portfolio. how see our and current building million that central say, deck, those next to into manage all difficult to just $XXX best case, environment. that, in we’re on not several $XXX Given realistically I look, say the over our that note aspects our are based a positioned but And in environment. we But range. bottom-up on did be that I’ll and guidance. dug our take say, so that stress those without before would categories, discussed focused We for I the impairments in the through estimate manage you quarters doing we look, we defensively plan top-down this. have but off we’re know portfolio highlighted level generic apply could this make I I seeing the the more will bottom-up capital point prepared not Todd give assuming problems want would to then that of a to to Based the within we out some and action. are through what And connect all any stresses comment, and portfolio and but even manageable, that’s sure only management impacts very

Todd Larson

And wrap maybe to up. it just

management enterprise, from and the then based agency that basically, and think the rating walk it of just taking viewing overview capital a action very Leslie a the analysis manageable it’s RBC-related impacts perspective, is very very RBC absorb entire ratio. the probably looking manageable capital even of, companies, are On sort gave but it we an the for could an way through at we in We without economic on manageable. scenario. And

Anna Manning

in all rolled the And at guess of look certainly, and there into company. planning I last the the throw thing up been I’ll is, that integrated has

Operator

now next KBW. We Krueger ahead. will take from from Ryan go Please the question

Ryan Krueger

Good morning. thanks. Hi,

versus any or general distribution types age that did Going or back those factors? kind in of for bit particular, U.S. I $XXX million assume it general little can were differences for adjustments to – that? the million insured there population adjustments guess, guess, $XXX made to population did detail or any, make – of not I in the more XXX,XXX provide scenario a the for deaths, you on mortality

Anna Manning

I’ll turn one over this to Jonathan.

Jonathan Porter

the for so Ryan. Thanks yes. Yes. question, Hi,

just specifically, made So of factors. have adjustments both we those for

observed lives. and expectations age status versus taken top for of projection our distribution. done what general also specific of geographic we’ve lives on we’ve layered deaths population adjusted distribution then of and population-related health the differences between insured So it we’ve And and is

give to about XX% of level combined that, Just global you a those both at a a sense impact of of reduction. is the factors

by it vary Now does country.

would exposure in as distributions population. adjustment adjustment are see reporting, as be between insured – our that’s is an difference claims adjustment than geographies for course, with a not lives, an we’ll we cases has different there it less global lower, ultimate and will becoming all higher to clear. those our concentration to with the so across those expect is uniform business lives in still you age of So or population get although example, able unclear younger but to that sorry, be refine because older experience And general And is than older general of ages what population as well. ages

Ryan Krueger

Okay, it. got

adjust whole for guess I does insured distribution. the it? to morbidity age adjusts versus offsets way longevity general offsets. think not it population, it the and population for that So Is right about

Jonathan Porter

Yes, that’s right.

up be that So longevity where of we to amount. our would offset, approximately it XX% estimate – we would

if So exposure. be million into I a longevity that on a $XXX the million. not reduction, that’s you to yes, basis, would net But our built $XXX guess, include

Ryan Krueger

some Can business outlook Got noise this earnings an rate point? it. asset-intensive normal in that And quarter. then there in you at just was updated for this your give run

Anna Manning

one I’ll comment. hand that to over to Todd

Todd Larson

Yes. valid I’ll back some the so provided. went fee we the on accelerated values I it, you the amortization. account and – what that projected the will, lower some primarily DAC mean, portfolio we’ve things down the In have, income, back rate end normal, is albeit the at of given quarter, to, But the turmoil, come that probably future went still annuity run of think I if get Ryan, down, market expected to call probably variable once that

Ryan Krueger

Great. Thank you.

Operator

from Dan ahead. Bergman from The next go comes Citi. question Please

Dan Bergman

other I sources flow, could free the fund impact funding funds issuance, capital normal talk current potential on ends your little up we or that be mean, like you should of in likely any thinking things we Any as would have being sources? debt you of the Hi, bit should a guess, near-term freed a good slower little from cash first, near-term COVID be great. impact excess the more sales about to credit about and main losses? I ultimate the thinking cash severe? be capital Or bit morning. thoughts there are

Todd Larson

Anna, to you me that? take want

Anna Manning

a sorry, am I Yes. question, Todd Todd. is yes, That certainly.

Todd Larson

Yes.

good we’re far As there. very as liquidity, shape in

of of liquidity, are the I over as scenarios even claims some out the paid up have sure that can more few the won’t quarters, several And to mentioned, cover the some additional feel stressful know, as course it last you what will onetime-type be a we weeks, be Over event. we claims built the also, on we side. make

the feel we good very liquidity on side. So

to in on are market, the see in make looking to levels as we position act all well as rating came subsidiary this always of side, forms We a our needs, transactions meet into capital the capital at with we that various maintain On capital. some are as sufficient of well capital. we attractive excess to as capital sure agency

this of when I will execute we forms capital. on, is alternative an at evolves. So look still we see question think, open as various and What we how

Dan Bergman

any bit, in Got going period that results much. on and then there color a weakness? this give updated the little maybe a so what Thanks the you little And in drove profitability with relative trend shifting for it. recent just region improvement Could Australia gears more bit to improvement the a following thoughts just quarter the of forward? outlook on

Anna Manning

Todd? Perhaps, and Alain

Alain Néemeh

very pleased be the say, I’d I’d suggest results. to the hesitant Sure. turnaround obviously, with we’re Look, that But over. is

guessing I’d still year, out. the we engage progressed. to think and rest the very I’m quarters continue rate loss a greater a that couple to with from probably benefiting we’ll of business. quarters guide remedy than terms all to But thought. extent We’re to We the aspects to I see in maybe have and like might increases the in smaller the certainly year of more early, guidance of it’s a But clients for but play

Todd Larson

that Australia comments. nice business agree was in pretty see individual it much and the group with to I well I different would And both Alain’s is the across only perform lines Yes, fairly thing add side.

very be block it that closely. was we need So managing positive but still a to sign,

Dan Bergman

so Thanks much questions. taking for the

Operator

Scott Goldman Alex Please The Sachs. go comes from ahead. next from question

Alex Scott

Hi good morning.

forth, way I change capital laid on capital. When question you through the scenario anything go mean, that your go-forward scenarios the that? had higher of think would measure this the anything experience is about how there through on you you’ve about First kind out, it excess basis? the you and change Is is side I of that there you just view one-in-XXX-year way thinking so and would to on level other sort capitalization a of

Anna Manning

one-in-XXX-type want capital question of that the of levels? you our on first thinking do Jonathan, to part take about

Jonathan Porter

Yes.

that this attached to exposure, with. be within ultimate still think still and see I I over believe just comfortable out will the the time, which We things we mean we’ll pandemic will that of of will ultimate have capital the one-in-XXX assessment well that think, dollar sort I result feel obviously, what result But in level, So the we’re still our X-in-XXX levels. sort pandemic, the capital is. amounts of an very of I in at play middle so looking impact,

we expectation time, at what be. revise have wouldn’t or So this would an would on expectation that I of change total capital that your level

Anna Manning

second question. of that the And Todd, part

Todd Larson

or into too definitive toolkit structure if a forward. overall anything should I different and add through Yes, outlook give see capital early basis, account a – what to go-forward there’s definitive going on too to give bit going this a a beyond on into answer certainly, you you to our answer. mix little capital learning take it’s probably early we that we think are to it’s a we’re But

as historically I mix, early and we’ve here, as a you structure have legal but facilities entities give the answer. enterprises definitive it’s we what the to model think liquidity how will serve in and far various as capital we our forward as us as overall across far change done well too go

Alex Scott

catastrophe pricing, on other what rates side of pricing and if about you it. do and get have would like And going on interested would seeing? just And this and something it be how it? situation and in all maybe that. of helps And and pricing transactions pricing there, you life just a comments you season is the Got are some then it those. where could the you’re any a forward, so side on or not I the talk on at price And there I’d if influence casualty, in-force sometimes question and even maybe impact that property whether

Anna Manning

over turn to that you. Alain, if I can

Alain Néemeh

Sure.

So I there. questions two is set of there think

there’s that very whether about elements. year long here be of into it’s certainly, terms as about impact business to next If to traditional or because mentioned in. over for probably at whether fundamental the Jonathan the months might you in of might year and early business, weeks, Sitting think periods might of adjust the for interest over pandemic, older to in talk people few or maybe little ages they might other future time. I a few something think example, it’s the determine, the too pricing as whether be this passed mortality how mortality set earlier, we’re evolve, bit still the for acceleration months morbidity factors pricing tend have who do an more difficult We a that

early, So basis, be very market typically, tend but certainly to are usual I anti-selection term this I keenly to we looking our applies – a I at what well, certainly P&C industry. of elements guess, think too as reasons think we as it’s in the applying, and sort probably and the certainly then coming On process. transactional as would don’t traditional may drastically transactions move the I why around to to diligence or pricing of

specific also as very by transactional be down, right to whether types pricing those kinds think to up source the assets, of ability the move it’s environment, And it’d might of but so and I impacted economic the questions.

tends little specific it giving to very So but any transaction. not to bit sorry a if am a answer, I clear one be

Jonathan Porter

a and to just from basis heightened selection for sort both and individual larger that to our can of Maybe This more an you a account underwriting, risk on is practices But to. expectations. risk definitely that making in-selection, as transaction perspective, add and we some Jonathan. the on adjustments into well, take profile the cases are alluded to as I

Alain Néemeh

where again, I working that to alright our on health, may and re-priced life business is think fair But we also say way And group now. impacts example, it’s we’re through earlier see there. for annually

Alex Scott

Understood.

thank you. Okay,

Operator

function Please is make question comes mute Evercore. go from Gallagher switched from off. The ahead. your next Please sure Tom

Tom Gallagher

sense million be from give impact, the how Of Yes. million a you for that versus U.S. $XXX us non-U.S.? Sorry. $XXX can the to would much of

Jonathan Porter

Yes.

or split our out what provided of if net of we’re a older that the are it to So to a baseline. than that’s given give point want look have we’ve I impact that that – think you just particular, then the ages would show. minimum uncertainties need a older level. the you a to I more the distribution businesses to, what in time, of have I that slide, our this sense some would you But at slightly factor in would guess would seeing, sort amount of you directional proportion at is would our risk that risk don’t in sort to geographic we at fact – higher skewed just

given give you sense, a too but the some of think to that out directional it’s split So would uncertainties. I early

Tom Gallagher

And it. asked, Could U.S. the XXX,XXX deaths I global. was the sensitivity of you million in reason Got X.X correct so me?

Jonathan Porter

X.X Yes, million global.

a So other per that to and countries across that applying deaths U.S. population what taking the the to XXX,XXX age you about world scenario scenario times adjustment. we’re the effectively doing is applying is we’re U.S., and gives X.X same which thousand then

Tom Gallagher

that some sounds it probably this high, me going given it it to this more at. Globally, fair to point? case reasonable of it be we’re the a U.S. trajectory. underreporting just current to we’re on might given the but This I is based fair there’s at think And and claims, deaths. delay I But base like this but is a Got case seems on And now, it mean, a XQ over I is we’re reporting say where base impact XX,XXX mean, of could actually where lag it. given at there. maybe be say – is

Jonathan Porter

Yes.

into is global it’s about important you think I and take as very business point global, that our the fact in U.S. to all mean, not the that’s I account,

something, and total mentioned, there’s – that’s examples as think there’s countries, I Hong deaths. Kong, between general population couple where right, a in XXX of of two Australia I So those

to would to would in some almost lower some of us. back impact earlier result point Also, I to you comments uncertainty, about be zero of that clearly, may So guess impact overall I us. areas my which

brought don’t number a can we see think you in definitely the we that with in, that a element I say of I will quarter. timing would this combined think be that, sort

I think comes to guess, need see, than this. what I and it we be reporting different in may

Tom Gallagher

are of of – then what assumption kind global able of bit the to exposure the you, mortality you overweight UK-related is very baseline of that, for of this since I sensitivity shed another And kind given, there overall expectation a impact, little sort know it. that your is? within light on big is Got within kind a

Jonathan Porter

I’m glad asked Actually, Yes. you about UK. the

is I an market So mean longevity that’s in have the vast interesting dynamic written. that our most we majority business of is of where

our when the exposure you age depending the not business will So our longevity longevity obviously at is business. see the largely death we’re move on population the rates somewhat and be immunized would the to book we on And ultimate in those ages, largely the older the to because expect in it’s by general losses UK skewed But gains two the offset. in because perfect, would to net offset the on pieces UK, distribution. look things our UK, mortality

Todd Larson

to because wrong, if side, insurance-type the it’s our UK, side share That underlying helps. the primarily tied younger too. correct mortality Jonathan, is But in policy. of me I’m mortgage the on on some

Jonathan Porter

that’s yes, mean, I a Todd. right, that’s point. good Yes,

the age will Another countries mortality much than distribution our claims thing of where the to we point out definitely reduce expectation. is skewed some operate, UK is which younger be other to

Tom Gallagher

Got Thanks, guys. it. helpful. That’s

Operator

the As additional questions, are or back I’ll host to closing remarks. no now call further for there turn any your

Todd Larson

call support you, for our everyone, today continued joining Thank and your Okay. RGA. for of

to we June postponing for COVID-XX. due wanted I X, our that Investor go, that Day mention we Before that are was scheduled to

Jeff. you for more this thank you provide any out And event to information much this rescheduled reach for understanding. later joining your is if Again, a as date. free questions, please Thanks feel very will We for us have to morning.

Operator

That will Thank you for participation. today’s call. your conclude

may disconnect. You now

Reinsurance Group of America (RGA) 11 May 202020 Q1 Earnings call transcript