RGA(US:RGA)2025-08-01 15:02Financial Data and Key Metrics Changes - The company reported operating EPS of $4.72 per share, with an adjusted operating return on equity of 14.3% for the trailing twelve months, aligning with intermediate term targets [7][22] - The pretax adjusted operating income for the quarter was $421 million, reflecting a decrease due to claims volatility in U.S. Individual Life and unfavorable claims in the Healthcare Excess business [22][24] - Economic claims experience was lower than expected by $256 million, leading to a $158 million unfavorable financial impact for the current period [28] Business Line Data and Key Metrics Changes - U.S. Individual Life experienced a higher level of large claims, offsetting favorable results from Q1, while the Healthcare Excess business faced unfavorable claims consistent with market trends [7][8] - The traditional business premiums rose by 11% on a constant currency basis for the first six months of the year, indicating strong growth across regions [11][34] - The U.S. Financial Solutions results were higher than expected due to increased variable investment income and higher investment yields [38] Market Data and Key Metrics Changes - In Asia, traditional business had a robust quarter with significant new treaties, particularly in Hong Kong, which saw a 43% increase in life insurance sales [15][16] - The U.K. PRT market was active, with several attractive transactions closed, positioning the company as a market leader [18] - The Asia Financial Solutions segment closed several transactions in Japan, Korea, and Hong Kong, benefiting from regulatory changes [17] Company Strategy and Development Direction - The company aims to leverage its strong capital position to fund growth and return capital to shareholders through dividends and share repurchases [9][35] - A focus on creation REIT allows the company to exceed targets for exclusive arrangements, enhancing pricing returns and value creation [12][21] - The company is committed to maintaining strong risk discipline and selectively pursuing business that aligns with its risk appetite [13][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business prospects, citing a strong pipeline and the ability to drive improved returns for shareholders [21][43] - The company anticipates that the majority of the Healthcare Excess block will be repriced by January 2026, expecting improvements in results moving into 2026 [30][63] - Management acknowledged the volatility in claims experience but emphasized that it does not indicate a material trend [31][56] Other Important Information - The effective tax rate for the quarter was 25.2%, above the expected range, primarily due to valuation allowances on foreign tax credits [25] - The company announced a 4.5% increase in quarterly dividends to $0.93 per share [36] Q&A Session Summary Question: Can you talk about the additional credit on the LifeBlock? - Management indicated that the value of in-force credits was a result of extensive analysis and reflects the current book of business without changes in actuarial assumptions [48][49] Question: Was there a significant lag effect from Q1 in individual life experience? - Management noted that while there was some volatility, the year-to-date results for U.S. Individual Life were broadly in line with expectations [54][56] Question: Can you elaborate on the health experience in the quarter? - Management explained that the negative experience was primarily driven by higher claims costs in the healthcare access line, which is expected to improve with implemented rate increases [62][63] Question: What are the priorities for using excess capital? - Management emphasized a balanced approach, aiming for a total shareholder return of 20% to 30% of after-tax operating earnings through dividends and share repurchases [72][76] Question: Is there a practical limitation to the value of in-force credit? - Management confirmed that there are limits to the amount of value of in-force credit that can be recognized, but opportunities for further recognition exist [108] Question: How does the company plan to address volatility in results? - Management acknowledged the potential for retrocession to manage volatility but emphasized the importance of balancing this with business growth opportunities [110]