RGA(RGA) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted operating earnings were reported at $4.99 per share, with an adjusted operating return on equity of 15.4% for the past year [6][28] - Record operating EPS of$ 22.57 per share, up 14% from 2023 [23] - Total capital deployment into transactions reached $1.7 billion, an increase of 80% from 2023 [23] - Reported premiums increased by 1.2% for the quarter, but adjusted for US PRT transactions, total premiums were up 11% [30] Business Line Data and Key Metrics Changes - Traditional business premium growth was 9.5% for the quarter and 8.3% year-to-date on a constant currency basis [31] - In-force transactions in the quarter amounted to$ 250 million, contributing to a total of nearly $1.7 billion for the full year [29] - New business value added was at an all-time high for the year, with record new business value up 70% from 2023 [24] Market Data and Key Metrics Changes - Asia traditional business saw significant growth, particularly in Hong Kong and Mainland China, with four important transactions in Q4 2024 [11][12] - The US traditional market presented attractive opportunities, with a strong quarter for new business [13] - The UK market was active, closing several strategic transactions, including a large director plan longevity swap [15] Company Strategy and Development Direction - The company has increased its intermediate-term operating ROE target to 13% to 15%, up from the previous 12% to 14% [10] - The strategy focuses on balance sheet optimization and risk management, with a disciplined approach to capital deployment [25][27] - The company aims to leverage its strong local market presence and biometric capabilities to create value for clients while diversifying risk [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong fundamentals of the business and a robust pipeline entering 2025 [10] - The company noted that the favorable claims experience is primarily due to normal volatility and does not indicate any material trends [46] - Management remains optimistic about the long-term growth potential, particularly in the longevity market and pension risk transfer [95][100] Other Important Information - The effective tax rate for the quarter was 22.5%, below the expected range due to the release of valuation allowances in non-US jurisdictions [31] - The value of in-force business margins increased by$ 4.6 billion or around 14% for the year, driven by new business contributions [39] Q&A Session Summary Question: Difference between economic and financial impacts of biometric experience - Management explained that the economic impact is amortized over a long period, typically around fifteen years [62] Question: Potential run rate improvements in financial solutions business - Management indicated that repositioning assets can take up to twelve to eighteen months to reach full run rate [67] Question: Confirmation on deployable capital definition and rating agency approval - Management confirmed that the deployable capital metric incorporates regulatory, rating agency, and internal economic capital frameworks [70] Question: Assumptions for 2025 earnings guidance regarding FX and in-force actions - Management stated that FX assumptions are based on year-end exchange rates and that current run rates incorporate modest in-force actions [104] Question: Long-term care market interest and transaction strategy - Management emphasized a focus on transactions that align with existing in-force blocks and strategic transactions [120] Question: Capital deployment expectations for 2025 - Management indicated that a capital deployment level of about $1.5 billion to$ 2 billion would be necessary to achieve growth rates [126]