NEW YORK--(BUSINESS WIRE)--The International Insurance Society (IIS) has announced the three finalists for the prestigious 2025 RGA Leaders of Tomorrow award. ...

Core Viewpoint - Reinsurance Group of America (RGA) is currently experiencing a short-term bearish trend as its shares are trading below the 50-day simple moving average (SMA) [1] Group 1: Price Performance - RGA shares have declined by 11.4% year-to-date, contrasting with the industry's gain of 1.3% [2] - The Finance sector and the Zacks S&P 500 Composite have increased by 13.9% and 12.8%, respectively, during the same period [2] Group 2: Valuation Metrics - RGA shares are trading at a price-to-book value of 1.03X, which is lower than the industry average of 1.93X, indicating they are affordable [4] - The company has a market capitalization of $12.5 billion and an average trading volume of 0.4 million shares over the last three months [4] Group 3: Revenue and Earnings Projections - The Zacks Consensus Estimate for RGA's 2025 revenues is $23.5 billion, reflecting a year-over-year growth of 3% [6] - The current-year earnings estimate is $22.40 per share, while the 2026 earnings per share and revenues are projected to increase by 14.6% and 10.5%, respectively, from 2025 estimates [9][10] Group 4: Business Strategy and Growth Drivers - RGA's in-force portfolio and product expansion are expected to support long-term earnings diversification [8] - The company benefits from a balanced mix of organic initiatives and transactional opportunities, with a strong foundation in its individual mortality business [13] - Advancements in product design, underwriting, analytics, and innovation are anticipated to drive growth [14] Group 5: Investment Income and Financial Performance - RGA's net investment income has shown a compound annual growth rate (CAGR) of 17.2% from 2016 to 2024, supported by a larger asset base and higher risk-free rates [15] - In the second quarter, income after expenses rose by 30.1% year-over-year to $1.4 billion, with an average yield increase of 66 basis points [15] Group 6: Debt and Financial Flexibility - RGA's long-term borrowings reached $5.73 billion as of June 30, 2025, marking a 13.7% increase from the end of 2024 [17] - The debt-to-capital ratio for the trailing 12 months stood at 47.22, significantly above the industry average of 16.79, indicating elevated leverage [17] Group 7: Shareholder Value and Dividends - RGA has increased its dividend five times over the past five years, resulting in a five-year annualized growth rate of 6.3% and a current payout ratio of 17% [18] Group 8: Analyst Sentiment - The Zacks Consensus Estimate for 2025 earnings has decreased by 1.5% in the past 30 days, while the estimate for 2026 earnings has increased by 0.4% [10] - The average price target from 10 analysts suggests a potential upside of 22.3% from the last closing price, with a target of $235 per share [12]

Core Insights - Reinsurance Group of America (RGA) shares have declined by 11.1% year-to-date, contrasting with a 2.5% decline in the industry, while the Finance sector and the S&P 500 have gained 10.6% and 9.5%, respectively [1][7] - RGA has a market capitalization of $12.6 billion, with an average trading volume of 0.4 million shares over the last three months [1] Valuation and Market Position - RGA shares are trading at a price-to-book value of 1.03X, which is lower than the industry average of 1.66X, indicating that RGA shares are relatively affordable [4] - The average target price for RGA, based on estimates from 11 analysts, is $239 per share, suggesting a potential upside of 28.3% from the last closing price [5] Financial Performance - In Q2, RGA's net investment income surged by 30.1% to $1.4 billion, with yields increasing by 66 basis points to 5.3% [7][14] - The Zacks Consensus Estimate for RGA's 2025 revenues is $23.4 billion, reflecting a year-over-year improvement of 2.5% [9] - Current-year earnings are estimated at $22.73 per share, up 0.7% from the previous year, while 2026 earnings per share and revenues are projected to increase by 9.8% and 12.5%, respectively, from 2025 estimates [9] Analyst Sentiment and Estimates - Analysts have recently lowered their earnings estimates for RGA for 2025 and 2026 by 1.5% and 0.5%, respectively, over the past 30 days [10] - The adjusted operating return on equity (ROE) for Q2 2025 has decreased by 100 basis points to 14.3%, with trailing 12-month ROE falling by 320 basis points year-over-year to 12.6% [16] Market Leadership and Growth Potential - RGA leads the reinsurance markets in the U.S., Latin America, and Canada, with a strong focus on individual mortality segments that provide stable earnings and capital generation [11][12] - The company benefits from a sizable in-force business that supports steady earnings and has seen long-term growth in net investment income, with a 17.2% compound annual growth rate (CAGR) from 2016 to 2024 [14] Challenges and Financial Health - Rising expenses from higher claims, interest credited, operating costs, and interest expenses could pressure margins [15] - Long-term debt has increased by 13.7% since the end of 2024, reaching $5.73 billion, which has pushed the total debt-to-capital ratio up by 50 basis points to 32.1 [16]

Core Insights - Reinsurance Group of America (RGA) reported second-quarter 2025 adjusted operating earnings of $4.72 per share, missing the Zacks Consensus Estimate by 15.4% and decreasing 13.9% from the previous year [1][9] - Operating revenues reached $5.6 billion, a 9.6% year-over-year increase, but fell short of consensus estimates by 1.1% [2][9] - Total benefits and expenses rose 14.1% year over year to $5.2 billion, driven by higher claims and policy benefits [3][9] Segment Performance - **U.S. and Latin America**: Pre-tax adjusted operating income decreased 59% year over year to $101 million, with net premiums increasing 10.5% to $2 billion [4] - **Canada**: Pre-tax adjusted operating income increased 12.1% year over year to $37 million, with net premiums rising 4% to $339 million [5][6] - **EMEA**: Pre-tax adjusted operating income climbed 57.6% year over year to $134 million, with premiums increasing 15.3% to $573 million [7] - **Asia/Pacific**: Pre-tax adjusted operating income rose 6.5% year over year to $181 million, with premiums increasing 15.3% to $816 million [10] Financial Metrics - Net premiums totaled $4.2 billion, a 5.9% year-over-year increase [3] - Investment income increased 30.1% from the prior year to $1.4 billion, with an average investment yield of 5.3%, up 66 basis points [3] - As of June 30, 2025, total assets were $133.5 billion, a 12.5% increase from the end of 2024, and book value per share rose 5.2% to $155.87 [12] Capital Deployment - RGA deployed $276 million for in-force block transactions and declared a quarterly dividend of 93 cents, payable on August 26, 2025 [13]

Company Overview - Reinsurance Group (RGA) is headquartered in Chesterfield and has experienced a price change of -16.99% this year [3] - The company currently pays a dividend of $0.89 per share, resulting in a dividend yield of 2.01%, which is higher than the Insurance - Life Insurance industry's yield of 1.81% and the S&P 500's yield of 1.49% [3] Dividend Analysis - RGA's current annualized dividend of $3.56 has increased by 2.3% from the previous year [4] - Over the past 5 years, RGA has raised its dividend 4 times, achieving an average annual increase of 6.28% [4] - The company's current payout ratio is 17%, indicating that it pays out 17% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for RGA's earnings in 2025 is $23.10 per share, with an expected increase of 2.35% from the previous year [5] - The company is viewed as a strong dividend play, particularly appealing to income investors [6] Investment Considerations - RGA is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [6]

PART I – FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited financial statements show significant asset growth to $133.5 billion, driven by investments, with a rise in six-month net income despite a slight Q2 decline [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects substantial growth in total assets to $133.5 billion, primarily from increased investments and corresponding liabilities Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Total investments | $109,901 | $98,040 | | Cash and cash equivalents | $5,416 | $3,326 | | **Total assets** | **$133,479** | **$118,675** | | **Liabilities** | | | | Future policy benefits | $63,531 | $53,368 | | Interest-sensitive contract liabilities | $37,158 | $35,095 | | Long-term debt | $5,734 | $5,042 | | **Total liabilities** | **$121,336** | **$107,769** | | **Equity** | | | | Total RGA, Inc. shareholders' equity | $12,053 | $10,816 | | **Total equity** | **$12,143** | **$10,906** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The income statement details a year-over-year increase in six-month net income, despite lower net premiums and a quarterly profit dip Condensed Consolidated Income Statement Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net premiums | $4,151 | $3,920 | $8,170 | $9,296 | | Net investment income | $1,408 | $1,082 | $2,640 | $2,043 | | Total revenues | $5,599 | $4,878 | $10,859 | $11,215 | | Total benefits and expenses | $5,258 | $4,609 | $10,149 | $10,674 | | Income before income taxes | $341 | $269 | $710 | $541 | | Net income available to RGA, Inc. shareholders | $180 | $203 | $466 | $413 | | Diluted earnings per share | $2.70 | $3.03 | $6.97 | $6.19 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements indicate a significant decrease in operating cash flow, offset by lower cash used in investing activities Condensed Consolidated Cash Flow Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,249 | $6,703 | | Net cash used in investing activities | $(2,872) | $(7,176) | | Net cash provided by financing activities | $2,607 | $2,225 | | **Change in cash and cash equivalents** | **$2,090** | **$1,626** | | **Cash and cash equivalents, end of period** | **$5,416** | **$4,596** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes clarify the company's business scope and confirm the financial statements adhere to U.S. GAAP for interim reporting - The Company is an insurance holding company providing traditional reinsurance (life, health, disability, critical illness) and financial solutions (longevity, asset-intensive products, financial reinsurance, capital solutions, PRT, stable value products)[18](index=18&type=chunk) - The financial statements are prepared in conformity with U.S. GAAP for interim reporting and should be read with the 2024 Annual Report on Form 10-K[19](index=19&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=56&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A details decreased adjusted operating income due to unfavorable claims, offset by investment gains, and highlights a major upcoming reinsurance transaction - The company is a leading global provider of life reinsurance and financial solutions, with **$4.1 trillion of life reinsurance in force** and assets of **$133.5 billion** as of June 30, 2025[185](index=185&type=chunk) - On July 31, 2025, RGA Re executed a significant reinsurance transaction with subsidiaries of Equitable Holdings, Inc., assuming a 75% quota share of approximately $32 billion in U.S. statutory individual life insurance liabilities, which is estimated to add **$11 billion to $12 billion** in assets and liabilities[149](index=149&type=chunk)[181](index=181&type=chunk) Reconciliation of Income Before Income Taxes to Adjusted Operating Income (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income before income taxes | $341 | $269 | $710 | $541 | | Adjustments | $80 | $222 | $196 | $466 | | **Adjusted operating income before income taxes** | **$421** | **$491** | **$906** | **$1,007** | [Consolidated Results of Operations](index=58&type=section&id=MD&A_Consolidated_Results) Consolidated results show higher pre-tax income due to lower investment losses, though adjusted operating income declined from unfavorable claims experience - For the six months ended June 30, 2025, **pre-tax income increased to $710 million** from $541 million year-over-year, driven by a decrease in investment-related losses and the non-recurrence of a large non-economic loss from a PRT transaction in 2024[195](index=195&type=chunk) - **Adjusted operating income before tax decreased** for both the three and six-month periods ended June 30, 2025, primarily due to unfavorable claims experience in the U.S. Traditional segment and higher operating costs, partially offset by increased investment income[205](index=205&type=chunk)[207](index=207&type=chunk) - Net premiums decreased for the six-month period due to large single-premium Pension Risk Transfer (PRT) transactions in 2024, however, **life reinsurance in force grew to $4.1 trillion** from $3.8 trillion year-over-year[209](index=209&type=chunk) [Results of Operations by Segment](index=62&type=section&id=MD&A_Segment_Results) Segment results reveal mixed performance, with a significant decline in the U.S. & Latin America segment offset by strong growth in

Financial Data and Key Metrics Changes - The company reported operating EPS of $4.72 per share, with an adjusted operating return on equity of 14.3% for the trailing twelve months, aligning with intermediate term targets [7][22] - The pretax adjusted operating income for the quarter was $421 million, reflecting a decrease due to claims volatility in U.S. Individual Life and unfavorable claims in the Healthcare Excess business [22][24] - Economic claims experience was lower than expected by $256 million, leading to a $158 million unfavorable financial impact for the current period [28] Business Line Data and Key Metrics Changes - U.S. Individual Life experienced a higher level of large claims, offsetting favorable results from Q1, while the Healthcare Excess business faced unfavorable claims consistent with market trends [7][8] - The traditional business premiums rose by 11% on a constant currency basis for the first six months of the year, indicating strong growth across regions [11][34] - The U.S. Financial Solutions results were higher than expected due to increased variable investment income and higher investment yields [38] Market Data and Key Metrics Changes - In Asia, traditional business had a robust quarter with significant new treaties, particularly in Hong Kong, which saw a 43% increase in life insurance sales [15][16] - The U.K. PRT market was active, with several attractive transactions closed, positioning the company as a market leader [18] - The Asia Financial Solutions segment closed several transactions in Japan, Korea, and Hong Kong, benefiting from regulatory changes [17] Company Strategy and Development Direction - The company aims to leverage its strong capital position to fund growth and return capital to shareholders through dividends and share repurchases [9][35] - A focus on creation REIT allows the company to exceed targets for exclusive arrangements, enhancing pricing returns and value creation [12][21] - The company is committed to maintaining strong risk discipline and selectively pursuing business that aligns with its risk appetite [13][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business prospects, citing a strong pipeline and the ability to drive improved returns for shareholders [21][43] - The company anticipates that the majority of the Healthcare Excess block will be repriced by January 2026, expecting improvements in results moving into 2026 [30][63] - Management acknowledged the volatility in claims experience but emphasized that it does not indicate a material trend [31][56] Other Important Information - The effective tax rate for the quarter was 25.2%, above the expected range, primarily due to valuation allowances on foreign tax credits [25] - The company announced a 4.5% increase in quarterly dividends to $0.93 per share [36] Q&A Session Summary Question: Can you talk about the additional credit on the LifeBlock? - Management indicated that the value of in-force credits was a result of extensive analysis and reflects the current book of business without changes in actuarial assumptions [48][49] Question: Was there a significant lag effect from Q1 in individual life experience? - Management noted that while there was some volatility, the year-to-date results for U.S. Individual Life were broadly in line with expectations [54][56] Question: Can you elaborate on the health experience in the quarter? - Management explained that the negative experience was primarily driven by higher claims costs in the healthcare access line, which is expected to improve with implemented rate increases [62][63] Question: What are the priorities for using excess capital? - Management emphasized a balanced approach, aiming for a total shareholder return of 20% to 30% of after-tax operating earnings through dividends and share repurchases [72][76] Question: Is there a practical limitation to the value of in-force credit? - Management confirmed that there are limits to the amount of value of in-force credit that can be recognized, but opportunities for further recognition exist [108] Question: How does the company plan to address volatility in results? - Management acknowledged the potential for retrocession to manage volatility but emphasized the importance of balancing this with business growth opportunities [110]

Financial Data and Key Metrics Changes - The company reported operating EPS of $4.72 per share, with an adjusted operating return on equity of 14.3% for the trailing twelve months, which aligns with intermediate-term targets [6][23] - The pretax adjusted operating income for the quarter was $421 million, reflecting a decrease due to claims volatility in U.S. Individual Life and unfavorable claims in the Healthcare Excess business [23][24] - Economic claims experience was lower than expected by $256 million, leading to a $158 million unfavorable financial impact for the current period [28][29] Business Line Data and Key Metrics Changes - U.S. Individual Life experienced a higher level of large claims, offsetting favorable results from Q1, while the Healthcare Excess business faced unfavorable claims consistent with market trends [6][7] - The traditional business premium growth was 11% year-to-date on a constant currency basis, with strong growth in the U.S., EMEA, and Asia [35] - The company achieved a record quarter for individual underwriting cases, indicating strong performance in the U.S. Traditional area [20] Market Data and Key Metrics Changes - In Asia, traditional business saw robust performance with a 43% increase in life insurance sales in Hong Kong for the first quarter [16] - The U.S. PRT market showed increased activity at the jumbo end, with expectations for a pickup in the second half of the year [19] - Claims in Canada and EMEA were modestly unfavorable, while APAC experience was favorable [32] Company Strategy and Development Direction - The company is focused on capital optimization and has increased excess capital to $3.8 billion, providing flexibility for growth and shareholder returns [24][36] - The strategic focus includes building a comprehensive asset management platform and maintaining strong risk discipline [14][22] - The company aims to balance capital deployment into business growth with returning capital to shareholders through dividends and share repurchases, targeting a payout ratio of 20% to 30% of after-tax operating earnings [37][77] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business prospects, citing a proven strategy that has stood the test of time [22][44] - The company anticipates improvements in claims experience and margins in the Healthcare Access business as pricing actions are implemented [31][64] - Management acknowledged the volatility in claims experience but emphasized that year-to-date results are broadly in line with expectations [57][72] Other Important Information - The effective tax rate for the quarter was 25.2%, above the expected range, primarily due to valuation allowances on foreign tax credits [26] - The company announced a 4.5% increase in quarterly dividends to $0.93 per share [37] Q&A Session Summary Question: Can you talk about the additional credit on the LifeBlock? - Management indicated that the value of in-force credits was a result of extensive analysis and reflects the current book of business without changes in actuarial assumptions [48][49] Question: Can you unpack the individual life experience in the quarter? - Management noted that the claims experience should be reviewed over longer periods, and while Q2 saw elevated large claims, year-to-date results are in line with expectations [55][56] Question: Can you discuss the health experience in the quarter? - Management explained that the negative experience in the Healthcare Access line is driven by higher claims costs, but rate increases have been implemented and margins are expected to improve [63][64] Question: What are the priorities for using excess capital? - Management stated that they aim to balance capital deployment into business growth with returning capital to shareholders, with a focus on share buybacks being opportunistic [75][77] Question: Is there a practical limitation to the value of in-force credit? - Management confirmed that there are limits to the amount of value of in-force credit that can be recognized, but they believe there are opportunities for further recognition [106][108] Question: How does the company plan to address volatility in results? - Management acknowledged the potential for volatility but emphasized their focus on long-term growth and the importance of maintaining appropriate reserves [110][112]

Financial Performance - Adjusted operating income, excluding notable items, was $4.72 per diluted share[15] - The trailing twelve-month adjusted operating ROE, excluding notable items, was 14.3%[15] - The company's total adjusted operating income before taxes was $421 million[20] Capital Management - Estimated deployable capital is $3.4 billion[15] - Estimated excess capital increased to $3.8 billion, or $2.3 billion pro forma for the EQH transaction[15] - The company has access to an $850 million syndicated credit facility[56] Business Growth - Traditional premium growth was 11.0% year-to-date on a constant currency basis[15] - U S and Latin America Traditional premiums increased by 11.2% to $3.940 billion[23] - Global Financial Solutions premiums decreased by 67.8% to $866 million, primarily due to a decrease in single premium pension risk transfer transactions[23] Investment Portfolio - Assets under management are approximately $115 billion[30] - Over 94% of fixed maturity securities are rated investment-grade[30] - The Q2 new money rate was 6.53%[38]

Core Insights - Reinsurance Group (RGA) reported $5.64 billion in revenue for Q2 2025, a 9.6% year-over-year increase, but fell short of the Zacks Consensus Estimate of $5.71 billion, resulting in a surprise of -1.09% [1] - The company's EPS for the quarter was $4.72, down from $5.48 a year ago, with an EPS surprise of -15.41% compared to the consensus estimate of $5.58 [1] Financial Performance Metrics - Net premiums from U.S. and Latin America Traditional were $2.02 billion, exceeding the average estimate of $1.95 billion [4] - Other Revenues from Corporate and Other were $18 million, surpassing the average estimate of $11.5 million [4] - Net premiums from U.S. and Latin America Financial Solutions reported a loss of $5 million, significantly below the average estimate of $245.13 million [4] - Net investment income from U.S. and Latin America Financial Solutions was $371 million, exceeding the average estimate of $348.21 million [4] - Total net premiums reported were $4.15 billion, below the average estimate of $4.32 billion, representing a year-over-year change of +5.9% [4] - Other revenues totaled $84 million, significantly lower than the average estimate of $109.95 million, reflecting a year-over-year decline of -42.9% [4] - Net investment income overall was $1.41 billion, surpassing the five-analyst average estimate of $1.22 billion [4] Stock Performance - Shares of Reinsurance Group have returned -2.9% over the past month, contrasting with the Zacks S&P 500 composite's +2.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]