RGA(US:RGA)2025-05-02 16:37PART I – FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, including balance sheets, income, and cash flow statements, with detailed notes Condensed Consolidated Balance Sheet Highlights (in millions) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $128,210 | $118,675 | | Total Investments | $105,580 | $98,040 | | Cash and cash equivalents | $5,151 | $3,326 | | Total Liabilities | $116,718 | $107,769 | | Future policy benefits | $59,836 | $53,368 | | Long-term debt | $5,734 | $5,042 | | Total Equity | $11,492 | $10,906 | Condensed Consolidated Statement of Income Highlights (in millions) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenues | $5,260 | $6,337 | | Net premiums | $4,019 | $5,376 | | Net investment income | $1,232 | $961 | | Total Benefits and Expenses | $4,891 | $6,065 | | Income Before Income Taxes | $369 | $272 | | Net Income | $288 | $212 | | Diluted Earnings Per Share | $4.27 | $3.16 | Condensed Consolidated Statement of Cash Flows Highlights (in millions) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,429 | $5,736 | | Net cash used in investing activities | $(1,695) | $(3,720) | | Net cash provided by financing activities | $2,067 | $1,005 | | Change in cash and cash equivalents | $1,825 | $2,965 | Notes to Condensed Consolidated Financial Statements These notes provide detailed disclosures on earnings per share, equity changes, policy benefits, investment portfolio, derivatives, segment information, and recent financing activities - The company is engaged in providing traditional reinsurance (life, health, disability) and financial solutions (longevity, asset-intensive products, financial reinsurance, capital solutions, PRT, and stable value products)17 Earnings Per Share (Q1 2025 vs Q1 2024) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Basic EPS | $4.33 | $3.20 | | Diluted EPS | $4.27 | $3.16 | - Total liability for future policy benefits increased to $59.8 billion as of March 31, 2025, from $47.1 billion as of March 31, 2024, driven by growth in both Traditional and Financial Solutions segments48 - On March 3, 2025, the Company issued $700 million of 6.65% fixed-rate reset subordinated debentures due 2055 for general corporate purposes, including funding a pending reinsurance transaction166 Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial performance, covering consolidated results, segment performance, liquidity, capital resources, and investment portfolio analysis - The company is a leading global provider of life reinsurance and financial solutions, with $4.0 trillion of life reinsurance in force and assets of $128.2 billion as of March 31, 2025173 - In February 2025, RGA Reinsurance Company entered into a Master Transaction Agreement with subsidiaries of Equitable Holdings, Inc. to cede a 75% quota share of in-force individual life insurance liabilities, representing $32 billion on a U.S. statutory basis; the transaction is expected to close mid-2025140141 Consolidated Results of Operations Consolidated income before taxes increased in Q1 2025 due to reduced claims and lower investment-related losses, despite a decrease in net premiums primarily from a prior-year PRT transaction Consolidated Results Summary (in millions) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net premiums | $4,019 | $5,376 | | Claims and other policy benefits | $3,822 | $5,132 | | Income before income taxes | $369 | $272 | | Adjusted operating income before income taxes | $485 | $516 | - The decrease in net premiums was primarily due to single premium pension risk transfer (PRT) transactions completed in 2024; excluding this, premiums increased due to organic growth and new business194 - The decrease in investment related losses was due to lower unfavorable impacts from portfolio repositioning ($51 million loss in Q1'25 vs $102 million in Q1'24) and freestanding derivatives183 Results of Operations by Segment This section details segment performance, noting increased operating income in U.S. & Latin America Traditional and EMEA, while Canada and Asia Pacific were impacted by currency and underwriting factors respectively Adjusted Operating Income Before Income Taxes by Segment (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | U.S. and Latin America | $207 | $218 | | Canada | $43 | $53 | | Europe, Middle East and Africa | $140 | $115 | | Asia Pacific | $165 | $168 | | Corporate and Other | $(70) | $(38) | - U.S. & Latin America Traditional segment's adjusted operating income increased to $140 million from $128 million YoY due to new business growth201202 - EMEA's adjusted operating income increased to $140 million from $115 million YoY, driven by increased net premiums and investment income218 Liquidity and Capital Resources The company maintains sufficient liquidity with $5.8 billion in outstanding debt, an undrawn $850 million credit facility, no share repurchases in Q1 2025, and a declared quarterly dividend - The company has an $850 million syndicated revolving credit facility maturing in March 2028, with no cash borrowings or letters of credit outstanding as of March 31, 2025253256 - The company did not repurchase any shares under its $500 million share repurchase program during Q1 2025; the entire amount remains available249324 - In April 2025, the board of directors declared a quarterly dividend of $0.89 per share252 Investments Total cash and invested assets grew to $110.7 billion, with 76.3% in fixed maturity securities, 94.4% investment grade, and an annualized investment yield of 4.64% Portfolio Composition as of March 31, 2025 (in millions) | Asset Class | Amount | % of Total | | :--- | :--- | :--- | | Fixed maturity securities | $84,507 | 76.3% | | Mortgage loans | $9,331 | 8.4% | | Funds withheld at interest | $5,328 | 4.8% | | Cash and cash equivalents | $5,151 | 4.7% | | Other | $6,414 | 5.8% | | Total | $110,731 | 100.0% | - As of March 31, 2025, approximately 94.4% of the total fixed maturity securities portfolio was investment grade280286 Investment Yield (Excluding Spread Business) | | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Annualized investment yield | 4.64% | 4.70% | | Annualized investment yield excluding VII | 4.90% | 4.75% | Quantitative and Qualitative Disclosures About Market Risk As of March 31, 2025, there have been no material changes to the company's economic exposure to market risk or its Enterprise Risk Management function - There have been no material changes in the Company's economic exposure to market risk or its Enterprise Risk Management function from December 31, 2024305 Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period306 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls307 PART II – OTHER INFORMATION Legal Proceedings The company is involved in various legal and regulatory matters, but management does not anticipate a material adverse effect on its financial condition or results - Management does not believe that loss contingencies from pending legal, regulatory, and governmental matters will have a material adverse effect on the company's financial condition or results308 Risk Factors This section outlines new risk factors related to the pending Reinsurance Transaction, including completion risks, regulatory conditions, due diligence inaccuracies, counterparty reliance, and integration challenges - The pending Reinsurance Transaction with Equitable Holdings, Inc. is subject to closing conditions, including regulatory approvals, and may not be completed, which could negatively affect the company's business and financial results309311 - Risks associated with the transaction include: potential for inaccurate assumptions regarding mortality, lapse, and investment returns; reliance on the counterparty for administration and asset management; and challenges in integrating the large block of business315317321 - The company will rely on the counterparty for policy administration and investment advice, exposing it to risks from the counterparty's IT systems, cybersecurity, and operational performance320 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any shares under its $500 million share repurchase program in Q1 2025, with the full authorization remaining available - The Company did not repurchase any shares of common stock under its share repurchase program in Q1 2025323 - As of March 31, 2025, the entire $500 million authorized under the January 2024 share repurchase program remains available324 Other Information During Q1 2025, no directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - During Q1 2025, no directors or executive officers adopted or terminated any Rule 10b5-1(c) trading plan or any non-Rule 10b5-1 trading arrangement326 Exhibits This section provides an index of all exhibits filed with the Form 10-Q report, including corporate governance documents, debt indentures, employee agreements, and CEO/CFO certifications - The report includes an index of exhibits, listing documents such as the Tenth Supplemental Indenture, forms of employee stock agreements, and CEO/CFO certifications328