Core Viewpoint - Reinsurance Group (RGA) reported quarterly earnings of $4.99 per share, missing the Zacks Consensus Estimate of $5.24 per share, but showing an increase from $4.73 per share a year ago, indicating a -4.77% earnings surprise [1] Financial Performance - RGA posted revenues of $5.49 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.46% and up from $5.16 billion year-over-year [2] - Over the last four quarters, RGA has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - RGA shares have increased approximately 7.4% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $5.66 for the coming quarter and $23.14 for the current fiscal year [7] - The estimate revisions trend for RGA is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, suggesting expected outperformance in the near future [6] Industry Context - The Insurance - Life Insurance industry is currently ranked in the bottom 36% of over 250 Zacks industries, which may impact stock performance [8]

Financial Performance - Net premiums for Q4 2024 were $4,156 million, a decrease of 5.3% from $4,391 million in Q3 2024 and an increase of 1.2% from $4,108 million in Q4 2023[10]. - Adjusted operating income for Q4 2024 was $334 million, up 38.0% from $242 million in Q3 2024 and up 5.7% from $316 million in Q4 2023[10]. - Net income available to RGA's shareholders for Q4 2024 was $148 million, down 5.1% from $156 million in Q3 2024 and up 6.3% from $139 million in Q4 2023[10]. - The return on equity for Q4 2024 was 7.1%, down from 7.7% in Q3 2024 and down from 11.4% in Q4 2023[10]. - Total revenues for Q4 2024 reached $5,241 million, up from $4,878 million in Q4 2023, reflecting a 7% increase[13]. - The company reported a year-to-date net income of $724 million for 2024, down from $909 million in 2023, a decrease of 20%[13]. - The company reported a total of $2,986 million in year-to-date revenues, an increase of $1,465 million compared to $1,521 million in the previous year[27]. Shareholder Returns - Total returned to shareholders in Q4 2024 was $59 million, a decrease of 101.7% from $106 million in Q3 2024 and down from $229 million in Q4 2023[10]. - Shareholders' dividends paid in Q4 2024 were $59 million, an increase of 5.2% from $56 million in Q4 2023[10]. - RGA, Inc. shareholders' equity stood at $10,816 million as of December 31, 2024, compared to $9,081 million a year earlier, reflecting an increase of 19%[100]. Business Production and Reinsurance - Assumed new business production for Q4 2024 was $102.3 million, down from $204.4 million in Q3 2024 but up from $97.6 million in Q4 2023[10]. - Assumed life reinsurance in force was $3,878.7 billion, a decrease from $3,966.5 billion in Q3 2024[10]. - Assumed Life Reinsurance In Force reached $1,837.1 billion in Q4 2024, compared to $1,703.6 billion in Q4 2023, indicating a growth of 7.8%[23]. Claims and Expenses - Claims and other policy benefits for Q4 2024 totaled $3,943 million, an increase of 106% from $3,837 million in Q4 2023[13]. - Total benefits and expenses for Q4 2024 were $5,016 million, a 3% increase from $4,843 million in Q4 2023[13]. - The loss ratio improved to 88.9% in Q4 2024 from 96.3% in Q4 2023, indicating better claims management[23]. Investment Income - The company experienced a net investment income of $1,185 million in Q4 2024, up from $956 million in Q4 2023, representing a 24% increase[13]. - Net investment income for the current quarter was $64 million, a slight increase of 3.2% from $62 million in the same quarter last year[33]. - The company reported investment and derivative gains of $96 million in the current quarter, a significant recovery from losses of $59 million in the previous year[96]. Assets and Liabilities - Total assets decreased to $118,675 million in Q4 2024 from $120,258 million in Q3 2024, a decline of 1.3%[20]. - Total liabilities stood at $107,769 million in Q4 2024, down from $109,041 million in Q3 2024, reflecting a 1.2% decrease[20]. - Cash and cash equivalents decreased to $3,326 million in Q4 2024 from $5,195 million in Q3 2024, a significant drop of 36.0%[20]. Notable Items and Adjustments - The company reported notable items impacting adjusted operating income, with a total of $53 million in Q4 2024 compared to $17 million in Q4 2023, indicating an increase of 212%[88]. - Adjusted operating income excluding notable items for the year-to-date was $377 million, a slight increase of 6% compared to $371 million in the previous year[96]. - The company emphasized the importance of non-GAAP financial measures in evaluating performance, which provide a clearer picture of ongoing operations[104].

Core Insights - FastTrack has formed a strategic partnership with Reinsurance Group of America (RGA) to enhance digital automation in life and disability insurance workflows [1][2] - The collaboration aims to combine RGA's reinsurance expertise with FastTrack's automation technology to drive innovation and improve client experiences [2][3] Company Overview - FastTrack, a division of Kamine Technology Group, has been a leader in automated claims management solutions for the life and disability insurance sector since 2012 [4] - RGA is a global leader in life and health reinsurance, managing approximately $4.0 trillion of life reinsurance in force and holding assets of $120.3 billion as of September 30, 2024 [6] Partnership Objectives - The partnership will focus on identifying insurance carriers that can benefit from digital transformation strategies, aiming for operational and financial improvements [3] - Both companies are committed to enhancing customer claim experiences and improving operational processes within the life and disability insurance vertical [3] Technological Advancements - FastTrack's automation tools can eliminate up to 90% of manual administrative tasks and accelerate claim decisions by 30%-40% [5] - The collaboration is expected to create data-rich digital claimant profiles, which will reduce risk and improve the overall claims journey experience for various stakeholders [5]

Investment Philosophy - The investment philosophy focuses on buying high-quality stocks and great businesses [1] - Preferred businesses are those led by disciplined capital allocators, earn exceptional returns on capital, and can compound their invested capital over long periods of time [1] Analyst's Position - The analyst has no stock, option, or similar derivative position in any of the companies mentioned [2] - The analyst has no plans to initiate any such positions within the next 72 hours [2] - The article expresses the analyst's own opinions and is not receiving compensation for it (other than from Seeking Alpha) [2] - The analyst has no business relationship with any company whose stock is mentioned in the article [2] Seeking Alpha's Disclosure - Past performance is no guarantee of future results [3] - No recommendation or advice is being given as to whether any investment is suitable for a particular investor [3] - Any views or opinions expressed may not reflect those of Seeking Alpha as a whole [3] - Seeking Alpha is not a licensed securities dealer, broker, or US investment adviser or investment bank [3] - Analysts are third-party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body [3]

Valuation and Market Position - RGA shares are trading at a discount with a forward price-to-book value of 1.24X, lower than the industry average of 1.96X, the Finance sector's 3.99X, and the Zacks S&P 500 Composite's 8.85X [1] - The stock is attractively valued compared to competitors like Primerica, Manulife Financial, and Sun Life Financial [2] - RGA has a market capitalization of $13.88 billion and an average trading volume of 0.3 million shares over the last three months [6] Growth and Earnings - RGA's expected long-term earnings growth rate is 10.4%, outperforming the industry average of 4.6% [4] - The company has consistently beaten earnings estimates in the last four quarters with an average surprise of 17.74% [7] - The consensus estimate for 2025 earnings per share indicates a year-over-year increase of 5.4% from 2024 [8] - The Zacks Consensus Estimate for 2024 earnings per share shows an 8.9% year-over-year increase, with revenues expected to reach $22.36 billion, a 17.4% improvement [17] Financial Performance and Capital Management - RGA's return on invested capital (ROIC) in the trailing 12 months was 6.4%, higher than the industry average of 0.6% [9] - The company exited Q3 2024 with excess capital of around $0.7 billion, reflecting a solid capital position [14] - RGA has maintained a free cash flow conversion rate of over 85% in recent quarters [21] Business Expansion and Market Leadership - RGA is a leader in the traditional U S and Latin American markets, with a mature individual mortality business providing stable earnings [5] - The company has expanded its product line with market-leading services, capabilities, expertise, and innovation [5] - In Canada, RGA is a market leader with a sizable block of in-force business and expects steady demand for longevity insurance [19] Technological and Product Innovation - RGA is a global biometric liability reinsurance leader, with favorable biometrics experience over the last five quarters [12] - The company continues to integrate technology into its products, enhancing its market position [12] Market Performance and Analyst Sentiment - RGA shares have gained 31.1% over the past year, outperforming the industry's growth of 25.6%, the Zacks S&P 500 index's 27.4%, and the Finance sector's 18.3% [16] - The Zacks Consensus Estimate for 2025 moved 0.3% higher in the last 30 days, reflecting analyst optimism [13] Growth Opportunities - Demand for protection products among the emerging global middle class and aging populations creates growth opportunities [11] - RGA expects to deploy capital into attractive growth opportunities in organic flow and in-force block transactions while returning excess capital to shareholders [14][20]

Zacks Rating Upgrade for Reinsurance Group - Reinsurance Group (RGA) has been upgraded to a Zacks Rank 2 (Buy), reflecting an upward trend in earnings estimates, which is a powerful force impacting stock prices [1] - The Zacks rating system relies on changes in a company's earnings picture, tracking EPS estimates for the current and following years through the Zacks Consensus Estimate [1] - The upgrade indicates positivity about Reinsurance Group's earnings outlook, which could translate into buying pressure and an increase in its stock price [3] Earnings Estimate Revisions and Stock Price Movement - Changes in a company's future earnings potential, reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements [4] - Institutional investors use earnings estimates to calculate the fair value of a company's shares, and their transactions of large amounts of shares lead to price movements [4] - Rising earnings estimates and the consequent rating upgrade for Reinsurance Group imply an improvement in the company's underlying business, which investors may appreciate by pushing the stock higher [5] Zacks Rank System and Its Effectiveness - The Zacks Rank system uses four factors related to earnings estimates to classify stocks into five groups, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7] - The system maintains an equal proportion of 'buy' and 'sell' ratings for over 4000 stocks, with only the top 5% receiving a 'Strong Buy' rating and the next 15% receiving a 'Buy' rating [9] - Reinsurance Group's placement in the top 20% of Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term [10][11] Reinsurance Group's Earnings Estimates - For the fiscal year ending December 2024, Reinsurance Group is expected to earn $21.93 per share, a 10.3% increase from the year-ago reported number [8] - Over the past three months, the Zacks Consensus Estimate for Reinsurance Group has increased by 1.1%, reflecting steady upward revisions by analysts [8]

Stock Performance and Market Position - RGA shares have rallied 41.6% YTD, outperforming the industry's growth of 31.5%, the Finance sector's return of 20.9%, and the S&P 500's return of 24.5% [1] - The stock is currently priced at $229.17, slightly below its 52-week high of $233.14, with a market capitalization of $15.09 billion [1] - RGA is trading above its 50-day and 200-day simple moving averages of $218.40 and $203.60, respectively, indicating strong upward momentum [4] Earnings and Growth Projections - RGA has beaten earnings estimates in each of the last four quarters, with an average surprise of 17.74% [5] - The Zacks Consensus Estimate for 2024 earnings per share indicates a year-over-year increase of 10.3%, with revenues expected to grow by 17.4% to $22.36 billion [6] - The expected long-term earnings growth rate is 10.4%, significantly higher than the industry average of 4.6% [7] Business Segments and Market Leadership - RGA has strong momentum in U.S. Traditional, Longevity/PRT, Asia Asset-Intensive, and Asia Traditional segments, supported by solid growth projections [3] - The company is a leader in the U.S. and Latin American traditional markets, with a mature individual mortality business providing stable earnings and capital generation [10] - In Canada, RGA is a market leader with a sizable block of in-force business, and longevity insurance is expected to witness steady demand and long-term growth [11] Capital Management and Technological Advancements - RGA has a return on invested capital (ROIC) of 6.4% in the trailing 12 months, significantly higher than the industry average of 0.6% [8] - The company has maintained a free cash flow conversion rate of over 85% for many quarters, reflecting solid earnings [13] - RGA is well-capitalized, with excess capital of around $0.7 billion at the end of Q2 2024, and actively deploys capital into growth opportunities while returning excess capital to shareholders [15] Analyst Sentiment and Valuation - Two out of six analysts covering RGA have raised estimates for 2024, and three have raised estimates for 2025, with consensus estimates moving 0.6% and 1.1% north, respectively, in the past 30 days [9] - RGA has a VGM Score of A, indicating attractive value, growth, and momentum, and a Zacks Rank 2 (Buy) [14] Industry Comparison - Other top-ranked life insurance companies include Abacus Life, Inc. (ABL), Manulife Financial Corp (MFC), and Primerica, Inc. (PRI), each carrying a Zacks Rank 2 [16] - ABL's 2024 and 2025 earnings are expected to grow by 19.2% and 22.4%, respectively, while MFC's earnings are projected to grow by 6.6% and 9.2% [17][18] - PRI's 2024 and 2025 earnings are expected to grow by 18.9% and 7.9%, respectively, with shares climbing 44.3% YTD [19][20]

Company Performance - Reinsurance Group of America (RGA) has experienced strong performance over the past year, driven by robust underwriting results and favorable conditions in the pension-risk transfer and longevity markets [1] - The company benefits from a well-managed investment portfolio, strong capital reserves, and expanding global operations [1] Industry Insights - The pension-risk transfer and longevity markets have provided significant tailwinds for RGA, contributing to its recent success [1] Expert Perspective - Joseph Jones, a professor at The University of Southern Mississippi, has over fifteen years of experience studying the market, with a focus on portfolio construction from a dividend growth investor's perspective [1]

Zacks Premium and Style Scores Overview - Zacks Premium offers tools like daily updates of Zacks Rank and Industry Rank, access to Equity Research reports, and Premium stock screens to help investors make informed decisions [1] - Zacks Style Scores complement the Zacks Rank by rating stocks based on value, growth, and momentum characteristics, helping investors identify stocks with high potential to outperform the market [2][3] Zacks Style Scores Breakdown - **Value Score**: Focuses on identifying undervalued stocks using metrics like P/E, PEG, Price/Sales, and Price/Cash Flow ratios [3] - **Growth Score**: Evaluates a company's future prospects and financial health by analyzing projected and historic earnings, sales, and cash flow [4] - **Momentum Score**: Identifies stocks with strong price or earnings trends using factors like one-week price change and monthly percentage change in earnings estimates [4] - **VGM Score**: Combines Value, Growth, and Momentum Scores to provide a comprehensive rating for stocks, helping investors narrow down the most attractive opportunities [5] Zacks Rank and Style Scores Integration - Zacks Rank uses earnings estimate revisions to rate stocks, with 1 (Strong Buy) stocks delivering an average annual return of +25.41% since 1988, outperforming the S&P 500 [6][7] - Combining Zacks Rank 1 or 2 with Style Scores of A or B maximizes the probability of success, while stocks with 3 (Hold) rank should also have high Style Scores for upside potential [8][9] Reinsurance Group of America (RGA) Analysis - RGA holds a Zacks Rank 2 (Buy) and a VGM Score of A, making it a strong candidate for investors [10] - The company has a Momentum Style Score of B, with shares up 5.2% over the past four weeks, and an average earnings surprise of 17.7% [10][11] - RGA is a global leader in life and health reinsurance and financial solutions, operating across multiple regions including the US, Latin America, Europe, and Asia [12]

Financial Data and Key Metrics - Adjusted operating earnings excluding notable items were $6 13 per share, a record quarter for the company [6] - Adjusted operating return on equity (ROE) excluding notable items was 15 5% over the past year, exceeding intermediate-term targets [6] - Pretax adjusted operating income was $314 million for the quarter, or $3 62 per share after tax, while excluding notable items, it was $508 million or $6 13 per share after tax [25] - The value of in-force business margins increased by $4 6 billion or 13 9% over the first nine months of 2024, reaching $37 6 billion [27][43] - Premiums grew by 3 2% for the quarter, with traditional business premiums up 8 5% for the quarter and 7 9% year-to-date on a constant currency basis [28][29] Business Line Performance - In Asia, the company saw favorable conditions, particularly in Korea, Mainland China, and Hong Kong, with exclusive transactions driving significant growth [9][10][11][12] - The U S Traditional business had a strong quarter, with over 20 new business wins, including a significant transaction with American National [15] - The Pension Risk Transfer (PRT) and longevity market in the U S and UK showed strong performance, with a robust pipeline and record new business in the UK [16] - The Asia asset-intensive business expanded in Korea, completing two coinsurance transactions, including one with a market leader for an asset size equivalent to approximately $500 million [17] Market Performance - In Asia, the company linked strategies, capabilities, and data across the region, tailoring and innovating for each market [14] - The U S market presented increasingly attractive opportunities, with strong premium growth of 6 7% for the quarter [29] - The UK market continued to perform well, with a market-leading digital underwriting system driving exclusive business wins [16] Strategic Direction and Industry Competition - The company focused on long-term shareholder value through optimizing new business activities and balance sheet management [7] - Exclusive and higher-value business, termed "creation business," has been the majority of new business embedded value for the past one to two years [8] - The company is actively exploring alternative capital sources, including the imminent completion of a capital raise for Ruby Re [21] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum, strategy, and execution, with a focus on sustaining future growth and diversifying capital sources [23] - The company expects to continue seeing attractive opportunities across geographies and business lines, with a strong pipeline for future growth [45] Other Important Information - The company initiated a transaction to recapture retroceded business, expected to generate $1 5 billion in long-term value and be accretive to ROE and PTAOI in 2025 and beyond [19] - The effective tax rate for the quarter was 23%, below the expected range, primarily due to income earned in non-U S jurisdictions [29] - The company completed the annual actuarial assumption review, resulting in a $58 million unfavorable impact to current period pretax adjusted operating income but a positive $100 million contribution to the value of in-force business margins [30] Q&A Session Summary Question: Excess Capital Redefinition - The company primarily uses capital for business growth, including potential opportunities on the asset side, such as private asset origination [47] Question: Growth Opportunity in Asia - The company leverages its strong local teams and biometric capabilities to adapt and create new products, which can be exported to other global markets [49][50] Question: Recapture Decision - The decision to recapture the in-force block was entirely the company's, driven by raising the retention limit and the block's profitability over the past 10 years [52] Question: Capital Backing for Recaptured Business - The recapture increases mortality exposure by 1% to 2%, with the excess capital figure already including the slight increase in risk capital [54] Question: Long-Term Care (LTC) Exposure - The company has modest LTC exposure, with $4 billion of reserves on the books, and will consider transactions if the risk aligns with its thresholds [59][60] Question: Mortality Assumptions - The company expects excess mortality to continue for four to five years, with modest reserve releases consistent with recent experience [62] Question: Balance Sheet Optimization - The company is in the early stages of portfolio optimization and in-force management actions, with significant opportunities remaining [74] Question: Ruby Re Economics - Ruby Re generates fee streams from origination, admin, and asset management, contributing to the company's earnings [78] Question: Japan Regulatory Environment - The company sees early-stage opportunities in Japan due to regulatory changes, with clients spreading transactions over several years [82][83] Question: U S Financial Solutions Performance - The U S Financial Solutions segment saw lower contributions from new business, but the PRT side performed well [85] Question: Recapture Volatility - The recapture adds minimal volatility, with 90% of the business in uncapped cohorts and low double-digit millions of volatility expected annually [88][89] Question: Excess Capital and Ratings - The company's excess capital view incorporates internal, regulatory, and rating agency perspectives, with third-party validation of the value of in-force business [95][96]