RGA(RGA) - 2025 Q2 - Quarterly Results

Consolidated Financials Financial Highlights In the second quarter of 2025, RGA reported net premiums of $4.151 billion, a slight decrease in net income to $180 million, and adjusted operating income of $315 million Q2 2025 Key Financial Metrics (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | Change | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net premiums | $4,151M | $3,920M | +$231M | $8,170M | $9,296M | -$1,126M | | Net income available to shareholders | $180M | $203M | -$23M | $466M | $413M | +$53M | | Adjusted operating income | $315M | $365M | -$50M | $693M | $766M | -$73M | | Diluted EPS (Net Income) | $2.70 | $3.03 | -$0.33 | $6.97 | $6.19 | +$0.78 | | Diluted EPS (Adjusted Operating) | $4.72 | $5.48 | -$0.76 | $10.38 | $11.49 | -$1.11 | | Book value per share, excluding AOCI | $155.87 | $148.19 | +$7.68 | $155.87 | $148.19 | +$7.68 | - Assumed life reinsurance in force grew to $4.09 trillion as of June 30, 2025, up from $3.77 trillion in the prior year quarter[7] Consolidated GAAP Income Statements (including Adjusted Operating Income Reconciliations) For Q2 2025, total revenues were $5.6 billion, an increase from $4.88 billion in the prior-year quarter, driven by higher net premiums and net investment income Q2 2025 Consolidated Income Statement Summary (in millions) | Item | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net premiums | $4,151 | $3,920 | +$231 | | Net investment income | $1,408 | $1,082 | +$326 | | Total revenues | $5,599 | $4,878 | +$721 | | Total benefits and expenses | $5,258 | $4,609 | +$649 | | Income before income taxes | $341 | $269 | +$72 | | Net income available to RGA's shareholders | $180 | $203 | -$23 | Reconciliation to After-Tax Adjusted Operating Income (in millions) | Item | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | GAAP net income attributable to RGA | $180 | $203 | -$23 | | Adjustments (net) | +$135 | +$162 | -$27 | | Adjusted operating income | $315 | $365 | -$50 | - Foreign currency exchange rates had a positive effect on net premiums by $45 million and on pre-tax adjusted operating income by $9 million compared to the prior-year quarter[11] Consolidated Balance Sheets As of June 30, 2025, RGA's total assets increased to $133.5 billion from $109.9 billion a year prior, primarily due to growth in fixed maturity securities and mortgage loans Balance Sheet Summary (in millions) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total investments | $109,901 | $89,620 | | Total assets | $133,479 | $109,888 | | Future policy benefits | $63,531 | $50,779 | | Total liabilities | $121,336 | $100,063 | | Total RGA, Inc. shareholders' equity | $12,053 | $9,735 | | Total RGA, Inc. shareholders' equity, excluding AOCI | $10,301 | $9,755 | Segment Summaries of Adjusted Operating Income Statements U.S. and Latin America Traditional The U.S. and Latin America Traditional segment reported a significant decrease in pre-tax adjusted operating income to $4 million in Q2 2025 from $167 million in the prior-year quarter U.S. and Latin America Traditional Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Premiums | $2,019 | $1,827 | +$192 | | Adjusted Operating Income (Pre-tax) | $4 | $167 | -$163 | - The loss ratio for the segment increased significantly to 98.9% in Q2 2025, compared to 88.1% in Q2 2024[18] - Assumed Life Reinsurance in Force for this segment grew to $1.85 trillion from $1.72 trillion in the prior year[18] U.S. and Latin America Financial Solutions The U.S. and Latin America Financial Solutions segment saw pre-tax adjusted operating income increase to $97 million in Q2 2025 from $80 million in the prior-year quarter U.S. and Latin America Financial Solutions Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Premiums | $(5) | $305 | -$310 | | Net Investment Income | $371 | $318 | +$53 | | Adjusted Operating Income (Pre-tax) | $97 | $80 | +$17 | - Policyholder account balances for fixed annuities stood at $10.5 billion as of June 30, 2025[24] Canada Traditional The Canada Traditional segment reported a stable pre-tax adjusted operating income of $28 million for Q2 2025, a slight increase from $26 million in the prior-year quarter Canada Traditional Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Premiums | $339 | $326 | +$13 | | Adjusted Operating Income (Pre-tax) | $28 | $26 | +$2 | - Assumed Life Reinsurance in Force for this segment increased to $512.4 billion from $489.3 billion in the prior year[27] Canada Financial Solutions The Canada Financial Solutions segment, which includes longevity and fee-based transactions, posted a pre-tax adjusted operating income of $9 million in Q2 2025, up from $7 million year-over-year Canada Financial Solutions Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Premiums | $45 | $48 | -$3 | | Adjusted Operating Income (Pre-tax) | $9 | $7 | +$2 | - This segment's operations primarily consist of longevity and fee-based transactions[32] Europe, Middle East and Africa Traditional The EMEA Traditional segment showed significant improvement, reporting a pre-tax adjusted operating income of $18 million in Q2 2025, compared to a loss of $1 million in the prior-year quarter EMEA Traditional Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Premiums | $573 | $497 | +$76 | | Adjusted Operating Income (Loss) (Pre-tax) | $18 | $(1) | +$19 | - Assumed new business production in the segment more than doubled year-over-year, reaching $34.1 billion in Q2 2025[35] Europe, Middle East and Africa Financial Solutions The EMEA Financial Solutions segment delivered strong results with pre-tax adjusted operating income rising to $116 million in Q2 2025, a 35% increase from $86 million in the prior-year quarter EMEA Financial Solutions Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Premiums | $247 | $159 | +$88 | | Adjusted Operating Income (Pre-tax) | $116 | $86 | +$30 | - This segment's operations include longevity, asset-intensive, and fee-based transactions[40] Asia Pacific Traditional The Asia Pacific Traditional segment maintained stable profitability, with pre-tax adjusted operating income of $104 million in Q2 2025, compared to $99 million in the prior-year quarter Asia Pacific Traditional Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Premiums | $816 | $708 | +$108 | | Adjusted Operating Income (Pre-tax) | $104 | $99 | +$5 | - Critical illness net premiums, a key product in this region, grew to $424 million from $358 million in the prior-year quarter[43] Asia Pacific Financial Solutions The Asia Pacific Financial Solutions segment reported a pre-tax adjusted operating income of $77 million in Q2 2025, a slight increase from $71 million year-over-year Asia Pacific Financial Solutions Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Premiums | $117 | $50 | +$67 | | Net Investment Income | $247 | $163 | +$84 | | Adjusted Operating Income (Pre-tax) | $77 | $71 | +$6 | - Assumed Life Reinsurance in Force more than doubled to $22.1 billion from $9.6 billion in the prior year, indicating strong business growth[47] Corporate and Other The Corporate and Other segment reported a pre-tax adjusted operating loss of $32 million in Q2 2025, an improvement from a loss of $44 million in the prior-year quarter Corporate and Other Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Investment Income | $166 | $123 | +$43 | | Interest Expense | $90 | $73 | +$17 | | Adjusted Operating Loss (Pre-tax) | $(32) | $(44) | +$12 | Summary of Segment Adjusted Operating Income Consolidated pre-tax adjusted operating income for Q2 2025 was $421 million, down from $491 million in Q2 2024 Pre-Tax Adjusted Operating Income by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | U.S. and Latin America | $101 | $247 | -$146 | | Canada | $37 | $33 | +$4 | | Europe, Middle East and Africa | $134 | $85 | +$49 | | Asia Pacific | $181 | $170 | +$11 | | Corporate and Other | $(32) | $(44) | +$12 | | Consolidated Total | $421 | $491 | -$70 | Investments Cash and Invested Assets and Investment Income and Yield Summary As of June 30, 2025, total cash and invested assets reached $115.3 billion, up from $94.2 billion a year ago Cash and Invested Assets Breakdown (in millions) | Asset Class | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Fixed maturity securities, AFS | $86,043 | $70,491 | | Mortgage loans | $10,057 | $7,984 | | Cash and cash equivalents | $5,416 | $4,596 | | Total cash and invested assets | $115,317 | $94,216 | Investment Yield Summary (in millions, except yield) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net investment income (excl. spread business) | $595M | $436M | | Annualized investment yield | 5.31% | 4.65% | Fixed Maturity Securities The fixed maturity securities portfolio, valued at $86.0 billion at fair value as of June 30, 2025, is predominantly composed of corporate bonds (66.5%) Fixed Maturity Securities by Type (June 30, 2025, Fair Value, in millions) | Security Type | Fair Value (in millions) | % of Total | | :--- | :--- | :--- | | Corporate | $57,326 | 66.5% | | Other foreign government | $6,162 | 7.2% | | ABS | $6,016 | 7.0% | | Japanese government | $5,738 | 6.7% | | Canadian government | $5,134 | 6.0% | | Other | $5,767 | 6.6% | | Total | $86,043 | 100.0% | Corporate Fixed Maturity Securities by Industry The corporate fixed maturity portfolio of $57.3 billion (fair value) is well-diversified across industries Corporate Securities by Industry (June 30, 2025, Amortized Cost, in millions) | Industry Sector | Amortized Cost (in millions) | % of Total | Average Rating | | :--- | :--- | :--- | :--- | | Industrials | $31,866 | 52.4% | BBB to A- | | Financial institutions | $18,947 | 31.1% | A- | | Utilities | $10,193 | 16.5% | A- | | Total | $61,006 | 100.0% | BBB+ | Ratings of Fixed Maturity Securities and Structured Fixed Maturity Securities The fixed maturity portfolio maintains a high credit quality, with 93.8% of securities rated investment grade (NAIC 1 or 2) based on amortized cost as of June 30, 2025 - As of June 30, 2025, 93.8% of the fixed maturity portfolio by amortized cost was rated investment grade (NAIC Designation 1 or 2)[69] Structured Fixed Maturity Securities (June 30, 2025, Amortized Cost, in millions) | Security Type | Amortized Cost (in millions) | % of Total | | :--- | :--- | :--- | | Total ABS | $6,160 | 62.6% | | CMBS | $2,129 | 21.6% | | Total RMBS | $1,593 | 15.8% | | Total | $9,882 | 100.0% | Fixed Maturity Securities Below Amortized Cost As of June 30, 2025, the company held fixed maturity securities with a total fair value of $50.8 billion that were below their amortized cost, resulting in gross unrealized losses of $6.9 billion Gross Unrealized Losses (June 30, 2025, in millions) | Category | Gross Unrealized Losses | | :--- | :--- | | Investment grade securities | $6,808 | | Below investment grade securities | $126 | | Total fixed maturity securities | $6,934 | - Of the total $6.9 billion in gross unrealized losses, $6.1 billion were on securities held in an unrealized loss position for 12 months or longer[73] Consolidated Investment Related Gains and Losses For Q2 2025, the company reported total net investment related losses of $44 million Investment Related Gains (Losses) Summary (Q2 2025, in millions) | Item | Amount | | :--- | :--- | | Net losses on fixed maturity securities available for-sale | $(66) | | Net gains on total derivatives | $53 | | Other net losses | $(31) | | Total investment related gains (losses), net | $(44) | Appendix Reconciliations of GAAP to Non-GAAP Measures This section provides detailed reconciliations from GAAP measures to the non-GAAP measures used throughout the report - This section contains detailed reconciliations of GAAP income to adjusted operating income for each operating segment, such as U.S. and Latin America Traditional, Canada Financial Solutions, etc[83][87][91] - It also provides a reconciliation of RGA, Inc. shareholders' equity to a non-GAAP measure that excludes the impact of Accumulated Other Comprehensive Income (AOCI)[95] - A reconciliation of book value per share to book value per share excluding AOCI is also presented, showing the per-share impact of items like unrealized depreciation of securities and changes in discount rates[96] Non-GAAP Disclosures The company explains its use of non-GAAP financial measures, stating they provide a clearer picture of ongoing operating performance - The company uses non-GAAP financial measures to better reflect ongoing profitability and underlying trends by excluding volatile items not indicative of core operations[99] - Adjusted operating income is defined as net income excluding items such as net investment gains/losses, changes in fair value of embedded derivatives, and market risk benefit remeasurements[102] - The company states it is unable to provide reconciliations for its forward-looking non-GAAP financial targets due to the inherent difficulty in forecasting the various components[104]