RGA(RGA) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Presents unaudited condensed consolidated financial statements and detailed notes on business operations, accounting policies, and the impact of ASU 2018-12 Item 1 Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income, equity, and cash flows, with notes on business, accounting policies, and ASU 2018-12 impact Condensed Consolidated Balance Sheets Presents the company's financial position, detailing assets, liabilities, and equity as of specific reporting dates - Total assets increased to $89,120 million as of March 31, 2023, from $84,904 million as of December 31, 2022[8] - Total liabilities increased to $81,404 million as of March 31, 2023, from $77,733 million as of December 31, 2022[8] - Total equity increased to $7,716 million as of March 31, 2023, from $7,171 million as of December 31, 2022[8] | Item | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :------------------------------------------ | :----------------------------- | :------------------------------- | | Fixed maturity securities available-for-sale | $56,085 | $52,901 | | Total investments | $74,015 | $70,480 | | Cash and cash equivalents | $3,294 | $2,927 | | Future policy benefits | $38,222 | $35,689 | | Interest-sensitive contract liabilities | $30,405 | $30,342 | | Long-term debt | $4,455 | $3,961 | | Total RGA, Inc. stockholders' equity | $7,626 | $7,081 | Condensed Consolidated Statements of Income Details the company's financial performance over a period, presenting revenues, expenses, and net income - Net income available to RGA, Inc. shareholders increased by 28% to $252 million for Q1 2023 from $197 million for Q1 2022[11] - Diluted earnings per share increased to $3.72 for Q1 2023 from $2.91 for Q1 2022[11] | Item | 2023 (in millions) | 2022 (in millions) | Change (in millions) | YoY Change (%) | | :------------------------------------------ | :----------------- | :----------------- | :----------------- | :------------- | | Net premiums | $3,385 | $3,155 | +$230 | +7.3% | | Net investment income | $856 | $810 | +$46 | +5.7% | | Investment related gains (losses), net | $(77) | $(139) | +$62 | -44.6% | | Total revenues | $4,251 | $3,917 | +$334 | +8.5% | | Claims and other policy benefits | $3,063 | $2,871 | +$192 | +6.7% | | Future policy benefits remeasurement (gains) losses | $(26) | $58 | $(84) | -144.8% | | Market risk benefits remeasurement (gains) losses | $14 | $(34) | +$48 | -141.2% | | Total benefits and expenses | $3,900 | $3,650 | +$250 | +6.8% | | Income before income taxes | $351 | $267 | +$84 | +31.5% | | Net income | $253 | $197 | +$56 | +28.4% | Condensed Consolidated Statements of Comprehensive Income Presents net income alongside other comprehensive income components, reflecting changes in equity not from net income - Total comprehensive income (loss) significantly improved to $663 million for Q1 2023 from $(161) million for Q1 2022[13] - Net unrealized investment gains (losses) swung from a loss of $(3,790) million in Q1 2022 to a gain of $1,103 million in Q1 2023[13] - The effect of updating discount rates on future policy benefits changed from a gain of $3,414 million in Q1 2022 to a loss of $(721) million in Q1 2023[13] Condensed Consolidated Statements of Equity Details the changes in total equity, including net income, dividends, and other comprehensive income, over a period - Total equity increased to $7,716 million at March 31, 2023, from $7,171 million at December 31, 2022[15] - Net income contributed $252 million to RGA, Inc. stockholders' equity in Q1 2023[15] - Dividends to stockholders were $53 million ($0.80 per share) in Q1 2023[15] Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities over a period - Net cash provided by operating activities increased substantially to $1,574 million in Q1 2023 from $163 million in Q1 2022[17] - Net cash used in investing activities decreased to $(1,705) million in Q1 2023 from $(2,235) million in Q1 2022[17] - Net cash provided by financing activities decreased significantly to $497 million in Q1 2023 from $1,854 million in Q1 2022, primarily due to lower net deposits on investment-type policies and contracts[17] | Item | 2023 (in millions) | 2022 (in millions) | | :------------------------------------------ | :----------------- | :----------------- | | Net cash provided by operating activities | $1,574 | $163 | | Net cash used in investing activities | $(1,705) | $(2,235) | | Net cash provided by financing activities | $497 | $1,854 | | Dividends to stockholders | $(53) | $(49) | | Proceeds from long-term debt issuance | $500 | $0 | | Deposits on investment-type policies and contracts | $976 | $2,369 | | Withdrawals on investment-type policies and contracts | $(880) | $(505) | Notes to Condensed Consolidated Financial Statements (Unaudited) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, including accounting policies and significant events Note 1 Business and Basis of Presentation Describes the company's core business operations, types of reinsurance products, and the accounting principles and standards applied in financial statement preparation - RGA provides traditional reinsurance (individual and group life and health, disability, critical illness) and financial solutions (longevity, asset-intensive products, financial reinsurance, capital solutions, stable value products)[19] - The company adopted ASU 2018-12 in Q1 2023, which updates accounting for long-duration insurance contracts, requiring annual review of cash flow assumptions, quarterly discount rate updates (changes in OCI), and fair value measurement for market risk benefits[23][24][34][39] - Deferred policy acquisition costs (DAC) are now amortized on a constant level or straight-line basis over the expected term of contracts[41] Note 2 Impact of New Accounting Standard Details the financial impact of adopting ASU 2018-12 on shareholders' equity and net income, including adjustments to previously reported figures - The adoption of ASU 2018-12 resulted in a total after-tax transition impact of $(7,513) million on shareholders' equity as of January 1, 2021, comprising $(1,245) million to retained earnings and $(6,268) million to accumulated other comprehensive income (loss)[45] - For the year ended December 31, 2022, net income available to RGA, Inc. shareholders was adjusted down by $106 million to $517 million due to ASU 2018-12 adoption[55] Impact on Previously Reported Consolidated Balance Sheets (December 31, 2022): | Item | As Previously Reported (in millions) | Adoption of ASU 2018-12 (in millions) | As Adjusted (in millions) | | :------------------------------------------ | :----------------------------------- | :------------------------------------ | :------------------------ | | Total assets | $84,706 | $198 | $84,904 | | Total liabilities | $80,471 | $(2,738) | $77,733 | | Total RGA, Inc. stockholders' equity | $4,145 | $2,936 | $7,081 | Note 3 Earnings Per Share Presents the calculation of basic and diluted earnings per share, reflecting net income attributable to common shareholders - Net income available to RGA, Inc. shareholders was $252 million for Q1 2023, up from $197 million for Q1 2022[81] - Basic earnings per share increased to $3.77 for Q1 2023 from $2.93 for Q1 2022[81] - Diluted earnings per share increased to $3.72 for Q1 2023 from $2.91 for Q1 2022[81] Note 4 Equity Provides details on changes in common stock, share repurchases, and accumulated other comprehensive income (loss) - Common stock outstanding was 66,540,466 shares at March 31, 2023, a slight decrease from 66,676,208 at December 31, 2022[82] - RGA repurchased 371,343 shares of common stock for $50 million during Q1 2023 under a $400 million share repurchase program[84] - Accumulated other comprehensive income (loss) improved from $(1,871) million at December 31, 2022, to $(1,461) million at March 31, 2023[86] Note 5 Future Policy Benefits Details the total liability for future policy benefits and the weighted-average discount rates used for traditional and financial solutions businesses - Total liability for future policy benefits was $38,222 million as of March 31, 2023, compared to $42,406 million as of March 31, 2022[111] - For Traditional Business, the weighted-average current discount rate increased across all segments (e.g., U.S. and Latin America: 4.9% in Q1 2023 vs. 3.9% in Q1 2022)[95][99] - For Financial Solutions Business, the weighted-average current discount rate increased in U.S. and Latin America (5.0% vs. 3.9%) and Europe, Middle East and Africa (4.7% vs. 2.8%)[101][109] Expected Future Gross Premiums (March 31, 2023, in millions): | Segment | Undiscounted | Discounted | | :------------------------------------ | :------------- | :--------- | | Traditional: U.S. and Latin America | $172,081 | $82,288 | | Traditional: Canada | $53,244 | $21,317 | | Traditional: Europe, Middle East and Africa | $24,591 | $13,611 | | Traditional: Asia Pacific | $92,305 | $37,986 | | Financial Solutions: U.S. and Latin America | $3,112 | $1,975 | | Financial Solutions: Canada | $4,738 | $3,149 | | Financial Solutions: Europe, Middle East and Africa | $64,424 | $37,636 | | Financial Solutions: Asia Pacific | $2,977 | $2,478 | Note 6 Policyholder Account Balances Provides information on total policyholder account balances, including significant increases in specific segments and guaranteed crediting rates - Total policyholder account balances increased to $23,911 million as of March 31, 2023, from $22,256 million as of March 31, 2022[114] - Asia Pacific – Financial Solutions saw a significant increase in balances from $1,864 million (March 31, 2022) to $3,758 million (March 31, 2023)[113][114] - For U.S. and Latin America – Traditional, all $1,646 million in policyholder account balances had guaranteed minimum crediting rates of 4.0% and Greater as of March 31, 2023[115] Note 7 Unpaid Claims and Claim Expense – Short-Duration Contracts Presents the balance of unpaid claims for short-duration contracts, including incurred claims and prior years' development - The balance of unpaid claims for short-duration contracts was $2,558 million as of March 31, 2023, consistent with $2,557 million as of March 31, 2022[116] - Total incurred claims for Q1 2023 were $338 million, down from $675 million in Q1 2022[116] - Prior years' incurred claims showed a favorable development of $(25) million in Q1 2023, compared to $(51) million in Q1 2022[116] Note 8 Market Risk Benefits Provides information on the balance of market risk benefits, net amount at risk, and the impact of interest rate and equity market changes - The balance of market risk benefits was $259 million as of March 31, 2023, compared to $233 million as of March 31, 2022[118] - Net amount at risk increased to $1,428 million as of March 31, 2023, from $1,220 million as of March 31, 2022[118] - Changes in interest rates had a positive impact of $21 million in Q1 2023, while changes in equity markets had a negative impact of $(17) million[118] Note 9 Deferred Policy Acquisition Costs Details the total deferred policy acquisition costs, including changes in balances, capitalization, and amortization expenses by segment - Total deferred policy acquisition costs were $4,257 million as of March 31, 2023, up from $3,906 million as of March 31, 2022[123] - For U.S. and Latin America Traditional business, the balance increased from $1,981 million (Q1 2022) to $2,109 million (Q1 2023), with capitalization of $57 million and amortization expense of $(35) million in Q1 2023[122] - Asia Pacific Financial Solutions saw a significant increase in balance from $91 million (Q1 2022) to $289 million (Q1 2023), driven by $108 million in capitalization[122] Note 10 Reinsurance Ceded Receivables and Other Provides information on reinsurance ceded receivables, including concentration with major reinsurers, claims recoverable, and deposit assets - Two major reinsurance companies account for approximately 76% of reinsurance ceded receivables and other as of March 31, 2023[125] - Claims recoverable totaled $183 million as of March 31, 2023, with $17 million in excess of 90 days past due[126] - A deposit asset on reinsurance of $1.6 billion was included in the balance as of March 31, 2023[126] Note 11 Investments Provides a comprehensive overview of the company's investment portfolio, including asset composition, unrealized gains/losses, and net investment income - Total cash and invested assets increased to $77,309 million as of March 31, 2023, from $73,407 million as of December 31, 2022[326] - Fixed maturity securities available-for-sale constituted 72.6% of total invested assets ($56,085 million) as of March 31, 2023, with approximately 94.5% being investment grade[326][330] - Gross unrealized losses on fixed maturity securities decreased from $7,319 million at December 31, 2022, to $6,105 million at March 31, 2023[128][341] Net Investment Income (in millions): | Category | Q1 2023 | Q1 2022 | | :------------------------------------------ | :------ | :------ | | Fixed maturity securities available-for-sale | $645 | $533 | | Mortgage loans | $74 | $73 | | Funds withheld at interest | $72 | $51 | | Limited partnerships and real estate joint ventures | $54 | $161 | | Total Net Investment Income | $856 | $810 | Investment Related Gains (Losses), Net (in millions): | Category | Q1 2023 | Q1 2022 | | :------------------------------------------ | :------ | :------ | | Change in allowance for credit losses | $(42) | $(11) | | Realized gains on investment activity | $31 | $11 | | Realized losses on investment activity | $(75) | $(36) | | Net gains (losses) on derivatives | $6 | $(119) | | Total Investment Related Gains (Losses), Net | $(77) | $(139) | Note 12 Derivative Instruments Details the company's use of derivative instruments, including notional amounts, gains/losses from non-hedging derivatives, and credit exposure - Total notional amount of derivative instruments increased to $34,479 million as of March 31, 2023, from $33,341 million at December 31, 2022[159] - Non-hedging derivatives, including embedded derivatives, generated $23 million in gains for Q1 2023, compared to $(87) million in losses for Q1 2022[167] - Cash flow hedges resulted in net deferred losses of $(198) million before income tax in AOCI as of March 31, 2023, compared to $(81) million at March 31, 2022[162] - Credit exposure for non-collateralized derivative contracts in an asset position was $15 million as of March 31, 2023[173] Note 13 Fair Value of Assets and Liabilities Provides disclosures on assets and liabilities measured at fair value, categorized by valuation levels (Level 1, 2, and 3), and unobservable inputs - Total assets measured at fair value were $57,935 million as of March 31, 2023, with 83.7% in Level 2 and 10.3% in Level 3[178] - Level 3 assets included $6,139 million in fixed maturity securities and $68 million in equity securities as of March 31, 2023[178] - Level 3 liabilities included $495 million in interest-sensitive contract liabilities – embedded derivatives as of March 31, 2023[178] - Unobservable inputs for Level 3 measurements include liquidity premium, EBITDA multiple, mortality, lapse, withdrawal, CVA, and crediting rate[182] Note 14 Income Tax Explains the effective tax rate for the period and the expected impact of recent tax legislation on the company's tax expense - The effective tax rate for Q1 2023 was 28.0%, higher than the U.S. statutory rate due to income in higher-tax jurisdictions, GILTI, Subpart F income, and valuation allowance adjustments[193] - The Inflation Reduction Act of 2022 is not expected to have a material impact on the company's tax expense for 2023[192] Note 15 Employee Benefit Plans Provides information on the net periodic benefit costs for pension and other employee benefits - Net periodic benefit cost for pension benefits was $3 million for both Q1 2023 and Q1 2022[195] - Net periodic benefit cost for other benefits was $1 million for both Q1 2023 and Q1 2022[195] Note 16 Commitments, Contingencies and Guarantees Outlines the company's commitments to fund investments, outstanding funding agreements, and management's assessment of loss contingencies from legal matters - Commitments to fund investments totaled $1,821 million as of March 31, 2023, primarily for limited partnerships, real estate joint ventures, and bank loans[197] - The company had $1.3 billion in FHLB funding agreements and $900 million in Funding Agreement Backed Notes (FABN) outstanding as of March 31, 2023[199][200] - Management does not believe loss contingencies from pending legal, regulatory, and governmental matters will have a material adverse effect[201] Maximum Potential Obligation for Statutory Reserve Support (March 31, 2023, in millions): | Commitment Period | Maximum Potential Obligation | | :---------------- | :--------------------------- | | 2034 | $1,243 | | 2035 | $2,630 | | 2036 | $3,599 | | 2037 | $6,850 | | 2038 | $800 | | 2039 | $8,751 | | 2046 | $3,000 | Note 17 Segment Information Presents financial performance data segmented by geographic region and business type, including total revenues, income before taxes, and assets - Total revenues increased to $4,251 million for Q1 2023 from $3,917 million for Q1 2022[207] - Total income before income taxes increased to $351 million for Q1 2023 from $267 million for Q1 2022[209] - Total assets were $89,120 million as of March 31, 2023, up from $84,904 million as of December 31, 2022[209] Segment Income (Loss) Before Income Taxes (in millions): | Segment | Q1 2023 | Q1 2022 | | :------------------------------------ | :------ | :------ | | U.S. and Latin America – Traditional | $121 | $60 | | U.S. and Latin America – Financial Solutions | $114 | $57 | | Canada – Traditional | $29 | $15 | | Canada – Financial Solutions | $10 | $9 | | Europe, Middle East and Africa – Traditional | $27 | $34 | | Europe, Middle East and Africa – Financial Solutions | $59 | $67 | | Asia Pacific – Traditional | $79 | $108 | | Asia Pacific – Financial Solutions | $(13) | $(56) | | Corporate and Other | $(75) | $(27) | Note 18 Financing Activities Describes recent financing activities, including the issuance of surplus notes and the establishment of a new revolving credit facility - Chesterfield Reinsurance Company issued $500 million of 7.125% Surplus Notes due 2043 on March 23, 2023[210] - The company entered into a new $850 million syndicated revolving credit facility with a five-year term on March 13, 2023[211] Note 19 New Accounting Standards Not Yet Adopted States that no new accounting standards not yet adopted are expected to have a material impact on the company's financial statements - No new accounting standards not yet adopted are expected to have more than a minimal impact on the company's condensed consolidated financial statements[212] Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on financial performance and condition, discussing key drivers, critical accounting policies, segment performance, liquidity, capital resources, and investment strategies, including ASU 2018-12 impact Cautionary Note Regarding Forward-Looking Statements Warns that the document contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - The document contains forward-looking statements based on management's current expectations, which are subject to risks and uncertainties that could cause actual results to differ materially[213] - Key risk factors include adverse changes in mortality, morbidity, lapsation, claims experience, capital and credit market conditions, regulatory actions, and general economic conditions[214] - The company does not undertake any obligation to update these forward-looking statements[215] Overview Provides a high-level overview of RGA as a global life reinsurance and financial solutions provider, highlighting its assets and profitability drivers - RGA is a leading global provider of life reinsurance and financial solutions, with $3.4 trillion of life reinsurance in force and $89.1 billion in assets as of March 31, 2023[216] - Profitability is largely dependent on claims experience, adequate risk pricing, lifespan of contract holders (for longevity business), and investment performance[218] - The company adopted ASU 2018-12 in Q1 2023, which updates accounting for long-duration insurance contracts[220] Segment Presentation Explains the company's operational segmentation by geography and business type, capital allocation, and factors influencing segment revenue and claims volatility - Operations are segmented geographically and by business type (Traditional and Financial Solutions)[221] - Capital is allocated to segments based on an internally developed economic capital model, which also influences investment income and policy acquisition costs[221][222] - Segment revenue and claims experience can be significantly influenced by currency fluctuations, large transactions, business mix, and ceding company reporting practices, leading to period-to-period volatility[223] Critical Accounting Policies Discusses key accounting policies including premiums receivable, future policy benefits, investment valuation, embedded derivatives, market risk benefits, and income taxes - Key critical accounting policies include premiums receivable, liabilities for future policy benefits and IBNR claims, valuation of investments, valuation of embedded derivatives and market risk benefits, and income taxes[226] - Deferred policy acquisition costs (DAC) are no longer considered a critical accounting policy due to simplifications from ASU 2018-12[228] - Liabilities for future policy benefits are estimated using updated mortality, morbidity, persistency assumptions, and quarterly updated discount rates based on upper-medium grade fixed-income instruments[229][233] - Market risk benefits and embedded derivatives are measured at fair value using option-based valuation models, with changes in fair value recognized in net income (except for instrument-specific credit risk in OCI)[235] Consolidated Results of Operations Summarizes the consolidated financial performance, highlighting changes in net income, net premiums, and net investment income, along with derivative impacts - Net income available to RGA, Inc. shareholders increased by $55 million to $252 million in Q1 2023 compared to $197 million in Q1 2022[241] - The increase was primarily driven by favorable claims experience in the U.S. and Latin America Traditional segment and positive changes in the fair value of embedded derivatives[241] - Net premiums increased by $230 million to $3,385 million, largely due to a single premium pension risk transfer transaction and organic growth[242] - Net investment income increased by $46 million to $856 million, supported by an increased average invested asset base and higher risk-free rates[243] Impact of Derivatives and Market Risk Benefits on Income Before Taxes (in millions): | Item | Q1 2023 | Q1 2022 | Change | | :------------------------------------------ | :------ | :------ | :----- | | Change in fair value of funds withheld embedded derivatives | $37 | $(33) | +$70 | | Embedded derivatives – interest credited (EIAs) | $7 | $17 | $(10) | | Market risk benefits remeasurement (gains) losses | $(14) | $34 | $(48) | | Related freestanding derivatives | $2 | $(35) | +$37 | | Total net effect after freestanding derivatives | $32 | $(17) | +$49 | Results of Operations by Segment Provides a detailed breakdown of financial results by geographic and business segments, analyzing key performance drivers and changes U.S. and Latin America Operations Details the financial performance of U.S. and Latin America operations, including income before taxes, loss ratios, and changes in embedded derivatives - Total income before income taxes for U.S. and Latin America operations increased by $118 million to $235 million in Q1 2023 from $117 million in Q1 2022[248] - U.S. and Latin America Traditional segment's income before income taxes increased by $61 million to $121 million, with the loss ratio improving to 90.0% from 100.6% due to favorable claims experience[250][252] - U.S. and Latin America Financial Solutions segment's income before income taxes increased by $57 million to $114 million, primarily due to a $38 million positive change in the fair value of embedded derivatives on funds withheld at interest[253][260] - The invested asset base supporting asset-intensive transactions decreased to $23.2 billion as of March 31, 2023, from $23.7 billion as of March 31, 2022[254] Canada Operations Presents the financial performance of Canada operations, highlighting increases in income before taxes for both Traditional and Financial Solutions segments - Total income before income taxes for Canada operations increased by $15 million to $39 million in Q1 2023 from $24 million in Q1 2022[266] - Canada Traditional segment's income before income taxes increased by $14 million to $29 million, driven by more favorable claims experience in individual mortality and lower policy acquisition costs[269] - Canada Financial Solutions segment's income before income taxes increased by $1 million to $10 million, due to higher other revenues from favorable experience on capital solutions business[271] Europe, Middle East and Africa Operations Details the financial performance of EMEA operations, noting decreases in income before taxes for both Traditional and Financial Solutions segments - Total income before income taxes for EMEA operations decreased by $15 million to $86 million in Q1 2023 from $101 million in Q1 2022[273] - EMEA Traditional segment's income before income taxes decreased by $7 million to $27 million, primarily due to decreased net premiums (foreign currency fluctuations) and an increased loss ratio (Turkey earthquake claims)[275][276] - EMEA Financial Solutions segment's income before income taxes decreased by $8 million to $59 million, mainly due to investment related losses from CPI swap derivatives, partially offset by favorable longevity claims experience[277][278] Asia Pacific Operations Presents the financial performance of Asia Pacific operations, including changes in income before taxes for Traditional and Financial Solutions segments - Total income before taxes for Asia Pacific operations increased by $14 million to $66 million in Q1 2023 from $52 million in Q1 2022[280] - Asia Pacific Traditional segment's income before income taxes decreased by $29 million to $79 million, primarily due to lower underwriting results and an increased loss ratio (83.7% vs. 75.7%) from unfavorable claims experience[282][283] - Asia Pacific Financial Solutions segment's loss before income taxes decreased by $43 million to $(13) million, driven by higher net investment income from an increased asset base ($14.4 billion vs. $10.3 billion)[284][287] Corporate and Other Reports the loss before income taxes for Corporate and Other, attributing changes to investment-related gains/losses and operating expenses - Loss before income taxes for Corporate and Other increased by $48 million to $(75) million in Q1 2023 from $(27) million in Q1 2022[288] - The increased loss was primarily due to a $47 million decrease in investment related gains (losses), net, and a $14 million increase in other operating expenses (compensation expense)[288][289][291] - Net investment income increased by $23 million to $82 million, due to higher yields and a larger asset base on corporate invested assets[288][291] Liquidity and Capital Resources Discusses the company's liquidity sources, capital management, investment yields, and unrealized losses on fixed maturity securities Overview Assesses the sufficiency of liquidity sources for the next twelve months, noting average investment yield and changes in unrealized losses - The company believes its liquidity sources are sufficient for the next twelve months, supported by operating cash flows and alternatives like credit facilities and asset sales[290] - The average investment yield (excluding spread related business) for Q1 2023 was 4.71%, a 58 basis point decrease from Q1 2022, primarily due to decreased variable investment income[291] - Gross unrealized losses on fixed maturity securities decreased from $7.3 billion at December 31, 2022, to $6.1 billion at March 31, 2023[292] The Holding Company Details the holding company's liquidity uses, including capital needs, dividends, share repurchases, and compliance with debt covenants - RGA's primary uses of liquidity include capital needs of operating companies, dividends, common stock repurchases, and interest payments on debt[295] - RGA repurchased 371,343 shares of common stock for $50 million in Q1 2023 under its $400 million share repurchase program[298] - Dividends to shareholders totaled $53 million ($0.80 per share) in Q1 2023[300][301] - The company was in compliance with all debt covenants as of March 31, 2023, with $4.5 billion in outstanding borrowings[303] Credit and Committed Facilities Describes the company's credit and committed facilities, including a new revolving credit facility, outstanding bank letters of credit, and FHLB borrowings - The company entered into a new $850 million syndicated revolving credit facility in March 2023, maturing in March 2028, with no cash borrowings outstanding as of March 31, 2023[305][307] - Outstanding bank letters of credit totaled $128 million in favor of third parties and $740 million (undrawn) backing intercompany reinsurance as of March 31, 2023[308] - The company had $631 million of funds available through collateralized borrowings from the FHLB as of March 31, 2023[310] Cash Flows Summarizes net cash provided by operating, investing, and financing activities, highlighting significant changes year-over-year - Net cash provided by operating activities increased significantly to $1,574 million for Q1 2023 from $163 million in Q1 2022[313] - Net cash used in investing activities decreased to $1,705 million for Q1 2023 from $2,235 million in Q1 2022[313] - Net cash provided by financing activities decreased to $497 million for Q1 2023 from $1,854 million in Q1 2022, mainly due to lower net deposits to investment-type policies and contracts[313] Asset / Liability Management Describes the company's active management of cash and invested assets to balance quality, diversification, asset/liability matching, liquidity, and investment return - The company actively manages its cash and invested assets to balance quality, diversification, asset/liability matching, liquidity, and investment return[317] - Investment strategies aim to optimize after-tax, risk-adjusted investment income and total return while managing cash flow and duration[317] - The liquidity position (cash and cash equivalents and short-term investments) was $3.5 billion at March 31, 2023[320] Investments Provides an overview of the investment portfolio, including total assets, fixed maturity securities, investment yield, and unrealized losses - Total cash and invested assets were $77.3 billion as of March 31, 2023[326] - Fixed maturity securities available-for-sale represented 72.6% of total invested assets ($56,085 million) as of March 31, 2023, with 94.5% being investment grade[326][330] - The investment yield (excluding variable investment income) increased to 4.45% in Q1 2023 from 3.80% in Q1 2022, due to increased interest rates[328] - Gross unrealized losses on fixed maturity securities were $6,105 million as of March 31, 2023[341] - Allowance for credit losses and impairments totaled $40 million in Q1 2023, primarily related to securities for banks that collapsed in March 2023[345] New Accounting Standards Confirms the adoption of ASU 2018-12 and states that no other new accounting standards are expected to have a material impact - The company adopted ASU 2018-12 on January 1, 2023[356] - No other new accounting standards not yet adopted are expected to have more than a minimal impact on the company's financial statements[356] Item 3 Quantitative and Qualitative Disclosure About Market Risk Reports no material changes in the company's economic exposure to market risk or its Enterprise Risk Management function as of March 31, 2023, compared to December 31, 2022 - No material changes in the company's economic exposure to market risk or its Enterprise Risk Management function as of March 31, 2023, compared to December 31, 2022[357] - Market risk is defined as the risk of fluctuations in the value of financial instruments due to changes in interest rates, foreign currency exchange rates, equity prices, or commodity prices[357] Item 4 Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting except for ASU 2018-12 modifications - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[358] - No material changes occurred in the company's internal control over financial reporting during Q1 2023, except for modifications related to the adoption and ongoing operation of ASU 2018-12[359] PART II – OTHER INFORMATION Presents additional information including legal proceedings, risk factors, equity sales, exhibits, a glossary of terms, and official signatures Item 1 Legal Proceedings The company is involved in various legal proceedings and regulatory investigations, but management believes loss contingencies will not have a material adverse effect on its financial condition or results - The company is subject to litigation and regulatory investigations or actions from time to time[361] - Management does not believe that loss contingencies from these matters will have a material adverse effect on the company's financial condition, results of operations, or cash flows[361] Item 1A Risk Factors Reports no material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - There have been no material changes from the risk factors previously disclosed in the Company's 2022 Annual Report[362] Item 2 Unregistered Sales of Equity Securities and Use of Proceeds RGA continued its share repurchase program in Q1 2023, repurchasing 371,343 shares for $50 million under a $400 million authorization, with pace influenced by available cash and stock price - RGA repurchased 371,343 shares of common stock for $50 million during Q1 2023[364] - The repurchases were part of a $400 million share repurchase program authorized on February 25, 2022, which has no expiration date[364] - As of March 31, 2023, approximately $300 million remained available under the share repurchase program[363] Item 6 Exhibits Lists all exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, equity compensation plan forms, and CEO/CFO certifications - Exhibits include Amended and Restated Articles of Incorporation and Bylaws[369] - The Credit Agreement dated March 13, 2023, is listed as Exhibit 10.1[369] - Forms of 2023 Performance Contingent Share Agreement, Stock Appreciation Right Award Agreement, and Restricted Stock Unit Agreement are included[369] - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are provided[369] Glossary of Selected Terms Provides a comprehensive glossary defining various entities, financial terms, and acronyms used throughout the quarterly report for clarity - The glossary defines key entities such as RGA Reinsurance, Rockwood Re, and Papara Financing LLC[373] - It includes definitions for important financial and insurance terms like AOCI (Accumulated other comprehensive income (loss)), ASU 2018-12 (Accounting Standards Update Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts), DAC (Deferred policy acquisition costs), and Market risk benefits[374][375][376][377][378] - Operational and regulatory terms such as Enterprise Risk Management (ERM), RBC (Risk-Based Capital), and Retrocession are also defined[375][377] Signatures The report is officially signed by Reinsurance Group of America, Incorporated's CEO, Anna Manning, and CFO, Todd C. Larson, on May 5, 2023, affirming its submission - The report is signed by Anna Manning, Chief Executive Officer[381] - The report is signed by Todd C. Larson, Senior Executive Vice President and Chief Financial Officer[381] - The signing date for the report is May 5, 2023[381]