- Earnings call transcript Q3 2022

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Operator

Welcome to the Reinsurance Group of America’s Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s prepared remarks, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded today. I would now like to turn the conference over to Todd Larson, Senior Executive Vice President and Chief Financial Officer. ahead. go Please

Todd Larson

Officer; morning. Head conference Good financial this to third reminder Officer; information Chief RGA’s with Jonathan forward-looking Investment Thank Chief about Investor Porter, I And Relations. am measures. XXXX Risk Executive and President call. Manning, Jeff call non-GAAP Barbi, joined quarter Chief Anna Officer; Hopson, you. and RGA’s welcome Leslie of on and morning quick the A

statements. your of the could from Actual cause comments materially yesterday expected differ forward-looking answers of may Some could results. earnings to factors results list important issued results to materially refer questions results. expected our we from for differ a to actual that contain or Please release

provide release, measures. see of reconciliations are a like call may over measures. include Additionally, these to presentation, course earnings posted turn for And and the now, during all the non-GAAP our for on Please comments. we of of her earnings discussion financial Anna terms information this supplement, quarterly website which to GAAP our financial to I’d call,

Anna Manning

and record Good in second our $X.XX, businesses. you, favorable include per of quarter. segments very results many of our call. following adjusted operating thank we and earnings morning you earnings share for Tom. another quarter this quarter strong Last level Thank of night, the joining reported The the performance across

and we underlying Traditional Traditional, Mortality U.S. have favorable In strong America the product segment, impact were Health the and our underlying The underwriting segment, U.S. continues also see very In capabilities favorable see our client-centric include new our and businesses yields. the many region. Individual X.X% constant comfortably experience markets. Group U.S. mortality performance I transactions, in to Individual performed good robust was U.S. Segments million quarter deployment, other to We Asia market premium well. growth to asset-intensive. As experience strength $XXX Reported Traditional putting encouraging, activity and reflecting total production of started earlier. and modest mentioned activity quarter the and and to from a performed mortality was a with on the into COVID-XX. another development Latin Traditional business leadership and well business in-force had Latin America and tangible were business for particular continue FX Asia overall non-COVID-XX we year-to-date new absorbed basis, bringing and The and capital well, costs higher XX.X% million. our of benefits $XXX levels very solidify some claim COVID-XX investment the expertise in strong and from and this

geographies Our transaction momentum and pipelines we expect many good risks and active continue. broad-based across remain very and to this

and our arrangements the RGA’s that of opportunities, reinforced increase earnings in value value in levels the throughout exclusive services as continue. substantial and we are quarter’s and we industry underscore helped additional during combining amplified more our translating them demand the This this execution navigate forward. our to helping with in the few into proposition we value as years believe strategy. I position few These have protection value-added uncertainty. and solutions. worked expect through have results has has the closely great added years client pandemic, last products of continue life insurance as clients, Further, to well strength going pandemic last The this our are partnership through additional we for to a momentum strategy focused proven the have been increasing its efforts power client-centric on

and business we data are issuance underwriting of services recognition policy the Individual from example, U.S. key digital that accelerate in market, in seeing through For new solutions. clients

team capacity valuable with to access Because completed In through addition, reinsurance provides In deep we I expected and of protection the specific enhancing novel market of Italy consumers, team. a work date co-promoted creating that needs our recognition. better to previously to its These and very programs are product, for Asia, distributors new also have this our combined our providing health We with address help closed support, will delivered clients seeing client not of initiatives their an examples partnership expertise within market client’s few In local leadership am global differentiate market available. team, large was RGA’s nice first with the expanded $XX development product large for Italian RGA’s with pleased clients. are growth clients health us, new to client recent manage providing by and value our our million. another visibility develop facultative to that distribution also innovative partnership deal our while ability just our knowledge us reinsurance and a to network, dynamics. underwriting of while of which structure to be efforts, the and largest just over leading in to and the brand a annual example, premiums leveraging experience competitive

we earnings businesses rates Turning for the steady future higher interest of reinvested moving cash had to many see going to can in lever, another biometric than past. higher us over benefits a be interest our at important a growth if forward and been rates us, these and tailwind is continued becoming are a into earnings yields headwind notable many flows years, would investment rates What sustained. positive for expect are measurable rates, higher now in as

have world. positioned the we We around well and are great a franchise

is business Our resilient.

continues elevated periods our uncertainty to of demonstrate strengths. risk successfully managed and many through have this and We quarter

interest the confident and the are I Todd continue your for am results. future, create for the I to encouraged RGA. investors. detailed Thank value to substantial by I industry, hand think about over review I to in underlying we optimistic financial dynamics our will As in the now to life ability it and in our remain you long-term insurance very seeing

Todd Larson

Anna. share, COVID-XX per per quarter strong per Thanks, share. which share adjusted million foreign earnings for of a the adjusted a $X income very this operating operating and of headwind consider We $X.XX reported of share a strength RGA’s be currency demonstrates and power. to the of includes RGA $X.XX pre-tax $XXX per and quarter, impact earnings of

trailing with X.X%. results pleased range are is of underwriting into X.X%, the across investment business metrics operating XX-month was estimated deployed net new impact the returns. as which adjusted We performance production, COVID-XX growth, of return transactions, such on of capital premium equity and The fundamental

various currency X.X% earnings premium Because adjusting for Traditional adverse on EMEA significant reported momentum and up and currency segments. across were after wanted XX.X% presentation. constant increase currency of Premiums Traditional segment in the a quarter, to movements six in highlighting impact increase constant slide I reported business the up to X.X% premiums give in results of our a Turning listed currency increased the Reported good $XXX foreign on basis, million. of summary. Canada of region-by-region an you seven the X.X%. premiums. X.X% of were

XX.X%. However, in constant premiums currency increased

Traditional were and constant currency reported in increase a Asia-Pacific in up XX.X%. premiums X.X%

totaled an Individual was $XX Individual The results the were reserve. The Mortality the experience our U.S. to segment that approximately and had the overall, strong, Health favorable America investment million. life COVID-XX including update Traditional claims turning Variable in both very experience reflecting disabled favorable results. assumption with segment line and modest expectations, below Latin Now business although recent income to U.S. run rate. earnings

spreads. higher above Our Group investment favorable results business results lines experience most and The were business overall as well. performed our reflected expectations asset-intensive U.S.

Solutions Our results mortality business business segment, million. In somewhat and segment reporting with Both other claim Capital Solutions markets. continues expectations quarter. Solutions were expectations. Traditional results perform $X line and in favorable and well reflected U.K. Europe, unfavorable below East claim with expectations, of COVID-XX Financial COVID-XX Financial within to million some our partially Middle for updates. experience, offset cost by the Canada reflecting results business Africa results were EMEA’s the costs the were client $X Traditional in

in our modest Asia Asia-Pacific million the Japan. reflected costs results favorable to $XX results but higher experience in related would of region, the a group primarily reported absorbing Japan Australia absorbing business, new driven in COVID-XX profit by in transactions have quarter Financial million COVID-XX benefits, and sickness $X favorable Traditional due $X claim experience underwriting the Turning business million, of strong been and costs. in-home yields. due The in for impacted claim Asia-Pacific to COVID-XX Solutions claims to medical were quarter across otherwise

expect line Other segment the volume would the a within loss The and to our reported due note heard you we range interest year-to-date on results As going of Jonathan industry, $XX expected will are basis in to I that shortly than a million, from quarterly claims range. these decrease and operating pre-tax higher expected forward. higher and have adjusted expenses our general Corporate of discuss, materially others as expense. in

eight The rate, that some lower rate our much well impacted through in Moving investment earnings for new by X.X%, yield than on income to securities. XX on investments as recent was presentation. variable a positively non-spread floating the quarter rate, benefit was the reflecting was but run higher portfolio money slides to as existing

to to X.XX% The rose money in credit quarter, of benefited in a good the an our time. fourth fairly last For compared risk-free and increase year, short a money new non-spread new in in period X.XX% spreads. the rate of business, from rate increase both rates quarter

variable move is investment fourth have more the were and a portfolio this income, Meanwhile, at the yield, as in impairments of through we uncertain environment. credit Looking a at before economic moved quarter. we year quarter we which is X.XX% last $XX to million X.XX% positioned base believe well from minimal

on deal and and We the which position transactions recent very and capital capital our strong from approximately the we an earnings of deployed other increase to incremental and As $XXX billion, continue debt of slides excess pipelines. see $X.X our quarter shown ended XX million capital hybrid in-force into attractive includes issuance. of with presentation, XX remained

shareholders us attractive returns We and underlying I million call to our continue share believe through over also our now a over and and of clients platform Chief positions to total Jonathan to power will turn global $XX to diversified We our time. of support dividends. Officer. repurchases to Risk earnings well the capital returned shareholders deliver financial our Porter,

Jonathan Porter

$XX deaths underwriting moderate was in million experienced million Mortality, with first from Asia. claims million a down favorable is period at of result contributions Overall, ages This quarter. with U.S. of consistent Individual non-COVID-XX per COVID-XX in an last the quarter Todd. population same U.S. Mortality notable this estimated XX,XXX this is insurance in of significantly our non-COVID-XX positive reported the more experience of overall trend low exposure. $XX favorable $XXX where population the quarter, thumb the U.S. the reflect year. Individual were XX, in strong with claims Thanks, results deaths general Estimated range. proportion impact claim life claim costs below with million Starting there and the end at costs were of COVID-XX $XX of rule declining general continuing large

daily in hospital reduce general which for saw care Turning and between our by to paying this elevated claim the Todd medical the the quarter, COVID-XX-related Asia-Pacific, on supported potential an on of benefit claims million, system. reported cost COVID-XX as of of claims driven case $XX estimate count split This Solutions XXX,XXX medical in government with infections of to the Japanese result with combined combined number industry a Japan population, was pressure mentioned, were practice quarter in policies Traditional segments. unprecedented Financial an at-home average

in we two expect ahead, will for that be claim costs Looking medical materially future reasons. Japan reduced

population at-home have conditions. will only of case Government October. individuals, First, be so significantly preexisting Japan medical the those medical women most with infections And day effective counts subset averaging changed general $XX,XXX in pregnant covered a related in of at-risk for requirements per XXth, with and September claims that COVID-XX the the elderly, new dropped the second,

definition will segment. approximately million, medical questions. about will pandemic We favorable be or costs other manageable. COVID-XX claim optimistic still further businesses with our is future by claims We trends diminish would all nothing the and Total on totaled like of go-forward prepared on to COVID-XX note This expect it open although that by claim that in country for we to now reduce to the this uncertainty impacts believe evolve, concludes will remain two-thirds. $XX remarks. change continue We up costs there material and how

Operator

Bass Instructions] [Operator Erik Please our from ahead. with come will first go Research. Autonomous And here question

Erik Bass

Hi. Thank you.

of should for we earnings historical deploy ROE the of years, is you interest XX% ROE are you reasonable in capital realize delivered the and that the expectation quarters targets think well been of have to now XX% last a with So and moving have about able XX% I lot a row power? two go-forward rates But your are pieces. a couple to given above there where being

Todd Larson

This Erik. No. is Good morning. Hi, Yeah. Todd.

proud achieved are have quarters. of we of results We last the the strong couple

again, that are negative. of momentum of I be it, think execution our -- the some seasonality and would highlights have strategy. some variances do our I we positive both our business positive and and successful

be careful capital earnings been bit to -- the over closer. I’d extrapolate quarters have. couple So last the years, the out a of strong deploy some have the little looking at course just the we able we two simply But given to underlying without power that of

there’s can upward not we from they new would reporting will targets update some some based are. year under what into we deliver the fees. on definitely, next front, as I ROE say, we are going continue are things But the the to what our We pressure if -- on get seeing, of we financial base way

Erik Bass

then a for about hoping may mortality does about sort this normalize get during starting non-COVID more the Thank that could as you question or well down, and a pull-forward And view and are to happened all mortality are Jonathan, pandemic? data, a so talk quarter. inform this COVID little of maybe are And you your cases of more the coming experience you. at change U.S. bit in the seeing trends you claims have as

Jonathan Porter

Yeah. Sure, Erik.

this mean, is contributor. driven the good large experience quarter lower claims, we U.S. see. was So, gains which by for positive, quarter expected lot Mortality as to were it main first, I large so of know, Individual a Mortality, is non-COVID A claims the -- which than great in

for to according As quarter. this a increase in impact didn’t did CDC mortality though, far claims than in and did our as see would been in well. as population, we business, we favorable excess Individual mortality other this data been goes, experience again, claims. a U.S. have translate an U.S. We have numbers, any have amount to excess the note see by material large that Group general One there results favorable point on the into would the more covered experience our in is mortality

point us pull some major though. excess this a it’s mortality, We think the for modest being mortality Thinking I So those likely believe all are of not benefit getting driver quarter. tailwind it a forward this. we to is about from

out and changed So from we view will of over future this it number our a haven’t years. on quarters prior be spread

But, help difficult estimate forward what it’s that pull I some exactly variables to some do involved is will given course, the Of that more of in yeah, create momentum. the think calculations.

evolving think I after still expect COVID a that taking we would about from net we that headwind pull-forward to I if benefit are might even going we see account that think XXXX, seeing. COVID going be into into

Operator

Jefferies. come will question Dan Please next Bergman our go with And from ahead.

Dan Bergman

update results I the mentioned. interest that you annual the Traditional that be would given recent you in and updated growth and earnings businesses, Thanks. how in Health as quantify Individual underwriting to the as I compared any could see U.S. expect Group morning. the including you U.S. would assumption all Traditional from are pieces, benefit help expectations Good and Individual this well hopefully guess run level the you on just if rates thoughts Individual moving some with the And wanted higher in variances premium rate helpful? of seeing quarter, to your Health

Todd Larson

a anyone our relates in we chime one asked Todd. I is I assumptions. calculation up And is can disabled please always I address the guess Individual estimate Health positive I first can assumptions Maybe that think is the look -- resulted will fairly best rates the updates. that normal underlying review this and utilization assumptions and we comprehensive start if ended Maybe and the did the about course, you we assumption income. that, that based at This on in. to that went reserve, and of reserve to adjustment which life to termination in updating

claims quarter. side, period-to-period, in view time create receive the Traditional but the U.S. fairly are they what portion didn’t as guess, about in the variances On both COVID claim in the positive we past, as going I the non-COVID experience, over is of on to the of non-COVID predictable. have we we, large a large and to that the from the volatility And talked amount we some positive related would had

Dan Bergman

And relative it. would you to quantifying, those quarter? maybe a just came normal those terms Got follow-up, in in you in just of expect anything there a can is in how give underwriting of variances, what like, terms

Todd Larson

Yeah.

the We are sort But just this an into comment at year. we the get performing I not will as business, as a positive, quite will overall we be provide some providing targets will but impacts COVID well. is underlying well U.S. overall point, that the next business, new to higher rates new tailwind of the good as rate would interest be certainly, run a excluding Traditional

hopefully we we think positive impacts I So go see forward. should as some

Leslie Barbi

Hey, It’s since rates I -- continue from more had an interest the rise. for and next million the you last months, asked the Leslie. $XX tailwind given certainly in quarter year-to-date rise to rates well thought in and over of as about XX chime I’d Todd. rates income we given estimate

the next So million we or would by that so. XX estimate $XX months up over

$XX we next the $XXX over months So million. current if -- the XX from million so stay call it at another level,

that’s Although, you non-spread the for that asked. overall

Operator

ahead. And with our Krueger KBW. will next Ryan Please question come go from

Ryan Krueger

XX other of Is just the not forward Good it Thanks. comment. $XXX is looking… on kind from like, first next over incremental was million from question months, that is In the a words, lap, follow-up My morning. the last here?

Leslie Barbi

No.

Ryan Krueger

the … months from over next XX from today?

Leslie Barbi

at that so. move, But next the look are additional $XX additional from the so where months… now, over be the incremental or would XX would interest I million The we rate

Ryan Krueger

Got it.

Leslie Barbi

some we yeah, a so quarter that but million, expecting of had been … already ago. -- $XXX

Ryan Krueger

Understood. sense that could Asia favorable where how would question the that results business Understood. -- Then had you expect in any earnings. really business or terms in kind of how you of, give -- earnings this I other you were much of strong was, in rate anything guess, to Can be run quarter?

Todd Larson

Ryan. It’s Hey, Todd.

updating this We are point. at not the run rate

half still I’d million have half very on that variance are to $XX the quarter this the side. a in Asia the was, then about strong contributed and periodic across was impact We of of other that that rate update million regions and different underlying quarter. the We all from about a -- did Traditional a $XX positive experience say favorability, again, on basis, assumptions quarter models variance. and that half we in run a of

about So, experience, half client also updates. updates modeling and half assumption, reporting

Operator

will next O’Neill. Barnidge Please come question Sandler from our And with ahead. John go

John Barnidge

Thank you much. very

are and rate currency dimension block new of constant You Can much business? that versus growth XX% you. in-force transactions. for opportunities seeing how strong is topline you maybe Thank

Todd Larson

the to I would the transactional it come XX% transactional, and -- but most of we that say organic a part relates growth, that from anything done with side it of in-force have would the premiums. of on impact -- any good would some be business both the of transact new

the across products good comfortable various continue that geographies target to in We closely are we product past work with and appetite that the for to momentum overall continuing digits, on protection still with of but we good our opportunities. clients have some the and development single see mid-to-high provided

John Barnidge

it’s headwind earnings question. benefit or we started How impacting on as we hear standpoint? about Thank you talk perspective balance LDTI a earnings are it. you sheet, conceptual about then the Provided from from about lead think a the impact an follow-up very you much. but to Thank on commentary it, very thinking And my you. from it others

Todd Larson

at we adverse do provide I GAAP. are will new and we far But a won’t conceptual numbers including as -- prepared the business, on deviation as as point. add answer from old From it this reserves because be any a for we not when to we Yeah. standpoint, under provisions anymore

current would some of on the for longevity earnings did would eliminate call on business. negative business. new So need We I to the -- reserves positive what a that to transition think sheet balance we be primarily

in time. would those should it’s over income this through say, significant the back We a be come to should positive, expect I DAC impact that at But from time. don’t amortization. again quantify areas other but changes So difficult

Operator

from go with come will Bhullar ahead. question next Please Jimmy JPMorgan. our And

Jimmy Bhullar

Hi. Good morning.

for So, I Todd buybacks. share on a first, had question

Wondering sort it resumed are have the to COVID with You just but are -- in more with few and business? ongoing has modest opportunity uncertainty fairly that the deal the you in is terms growth if reflection or of do activity, you it’s of been of just last pipeline of quarters. a seeing that in

Todd Larson

Yeah. Jimmy. Thanks, Yeah.

that have the in offering. for capital the the primarily got receptivity we we So we out pretty transaction we strong -- but did quarter-after-quarter, September was went hybrid day an excess did back in position increase and that

we a an needed we it decided above refinance to So to upsize bit little existing what security.

was really transactional the increase much dividends the So for income funded why quarter net during and the activity pretty and the The that organic repurchases. quarter. excess growth share and

different an capital been optimistic can our business as as over think you we return would seeing get and pretty have as I we consistent where level our pretty deploying an back of balanced, seen geographies are far transactions I share pipeline support have the appropriate all are and think we now. past, the the transactional right fairly into And think, we I time, in attractive across clients. of been repurchases, the the but we we like have

Anna Manning

us our having directly being arrangements. either exclusive in that compete create are I I for and from demand clients, some And to strategy, pillars with can remarks, if the do strategy, and the see of pipelines pointing pillars to and my strong add. it examples, what deliver. Todd, our shared very what moves new processes, partnership does creating really two do underwriting we what prepared Yeah. working which of it’s is, In products, We to journeys. strong new we of and strong

exclusive, growth is And and in growth session three the growth, come share. the rates, Well, we levers instances growth the are our in you market industry, third the so three life in from about is our really think insurance really growth underlying where on if second just different all we levers. hitting dimensions. in are our is One

clients essentially so business, grow share their XXX% the an because that helping exclusive. getting we market underlying are and we on market We are are grow reinsurance of the

really as right globe the forward. continue expect So momentum go to strong positioned I the we are well around demand, momentum we the we -- and expect

Jimmy Bhullar

maybe Thanks. on it end deaths then of Jonathan of Okay. cases And and obviously, and spike to end COVID for Japan close seen we claims, COVID a through the had because subsided the -- of in in then, the quarter.

As you think some the have and of reporting reporting? component IBNR was about little an hospitalization would there the you up about those, mentioned think, of to in some a tends you -- reporting assume and lag deemed foreign in think that all be of caught countries, you I as your cases, hospitalization bit claims, and a related in in to

Jonathan Porter

Yeah.

reporting So given took to in all Japan you almost medical that was that IBNR the the charge lag we the mentioned. related just quarter IBNR claims -- this primarily

of sort And with and level us up. set comfortable have reason quite are IBNR. actually received that quarter, process We methodology up be we believe subsequent about no some the level that our we statements to of have given concerned the I setting for that to

very there. we that are overall, confident So, with we I estimate the think, have

Operator

go Sachs. Our ahead. question Alex will Scott next [Operator Instructions] Goldman Please from with come

Alex Scott

Hi.

on the just had I question is term expectations. mortality longer First

mortality implications recent COVID. and you an longer having of have I for think quarters talked of ongoing about just term guys in study expectations

update wanted the shifting see or thinking kind that, other could just provide if way one any of any I you there? on of to So your

Jonathan Porter

It’s Alex. Jonathan. Hi, Yeah.

I over claims of favorable So, what about we talked couple continue to quarters. are no in think, views be we quarter, seeing our COVID-XX trends last change we that we last from by in to seen the have the the have encouraged

there’s think of with ahead. I views declining The overall. on underlying -- assumptions for variance think a expert you mortality on range, rate I you also improvement hospitalizations do various at in the waves obviously, but what long-term remain bullish we go as think that a expect do. use to But wide projections we future I around consistent we and infections continue, depending

Alex Scott

Got it.

ask I just you And Thanks. Okay. other the SGUL. on to question wanted is

well I think am you I are sure aware.

the volatility these have some some Life primaries of of Universal We some books. terms from of had in

just any the doing I have you B, there, A, So there? potentially reinsurance level for if exposure right like assumptions appetite place wanted to, and been set any have confirm to

Anna Manning

Yeah. colleagues they have start for Thanks offer then to if and I add. anything will up that to question. my

with So, risk just bid the other ask for you them and both If return risk -- risks other we have when different on reinsurance we we traditional basis. looked have done wide an books we some to or start we watch will so the have pass that to as business we me with really The we no get spread will unfavorable. from profile. past, there are dynamics, on comfortable filter, monitor our at flow then we have discussed right Alex, in-force at now. been I let this with haven’t on a return block able not be will unfavorable And risk haven’t view doesn’t too was our and point we is before, in new basis, out and and a That we the participated. market it’s patient that what changes. least be risk opportunity as to our And will

So we reinsurance of fact, one we global blocks. in because, we in leaders we are reinsurance are can both flow the reinsurer, a A, in-force do and this and have flow

are So and our discipline. that we we aren’t and have pull, patient reliant growth means to levers overly -- we which many

the will we maybe, again, they and dynamics look will at But likely accordingly. and do, are if change, what all it given good as they attractive. whether a check more act frankly, competitive look and at things other also to and move, conditions factors, we we of see then partner risk those like, will Now return we are sell-side the drivers trade-offs

expect from on on you the what risk. us this can So that’s go-forward

risk we these itself, actual protection is. behavior policyholder We mortality provide mortality type But products. on the don’t the you I of YRT have remind On the regular will we associated. have that

Alex Scott

Thank you. Got it.

Operator

conference the question-and-answer This will over I closing our like turn back Manning conclude for to session. to remarks. Anna would

Anna Manning

your questions. the as strength quarter through, this throughout very strong especially two you noted the a last quarters. pleased is Thank was coming we this that in we and have for demonstrated earnings are call, And with

We have a resilient and valuable platform.

are protection address teams pandemic. to bring clients to working by highlighted engaged with the closely Our needs highly solutions the excited, and

substantial end our for ability how in by our and continued Thank investors. to repeating and third create for your call. let concludes interest confident So value continue RGA quarter in you our that optimistic remain I me to long-term

Operator

call. has attending now conference you The concluded. Thank today’s much very for

lines. may your now disconnect You

Reinsurance Group of America (RGA) 4 Nov 222022 Q3 Earnings call transcript