RGA(US:RGA)2026-02-06 16:02Financial Data and Key Metrics Changes - The company reported Q4 operating EPS of $7.75 per share, marking the second consecutive record quarter in earnings [6] - Adjusted operating return on equity (ROE) for the trailing 12 months was 15.7%, exceeding the intermediate-term target range of 13%-15% [6][17] - For the full year 2025, the company achieved record operating EPS and increased the value of Inforce business margins by 18% [6][10] Business Line Data and Key Metrics Changes - The U.S. market showed favorable results driven by management actions and variable investment income, with individual life mortality in line with expectations [8] - EMEA results reflected strong volume growth and favorable experience, with full-year pre-tax earnings up 35% [11] - APAC continued to see growth momentum, with pre-tax operating income up 18% for the year [10][11] Market Data and Key Metrics Changes - Premium growth was 7.4% year-to-date on a constant currency basis, benefiting from strong growth across North America, EMEA, and APAC [18] - The U.S. healthcare business has approximately $400 million of annual premium, generating about $25 million of pre-tax run rate earnings [39] Company Strategy and Development Direction - The company is focused on a proactive business approach, optimizing its balance sheet, operational scaling, and capital stewardship to generate long-term shareholder value [14][15] - A strategic review led to the decision to exit the group healthcare lines of business, with a focus on deploying capital in strategically aligned businesses [12][39] - The company aims to maintain a balanced approach to capital deployment, targeting a total payout ratio of 20%-30% for buybacks and dividends [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate attractive shareholder value going forward, supported by a strong pipeline of opportunities across various regions [16][77] - The company anticipates a more limited financial impact from Inforce management actions in 2026 compared to recent years [22][83] - Higher interest rates are viewed positively for overall earnings, with modest exposure to disintermediation risk from higher rates [89] Other Important Information - The company successfully repurchased $50 million of shares in Q4, totaling $125 million since reinstating buybacks [10][18] - The effective tax rate for Q4 was 23.8%, with expectations for 2026 in the range of 22%-23% [18] Q&A Session Summary Question: Capital allocation and payout ratio - Management confirmed the target of a 20%-30% total payout ratio while maintaining flexibility for capital deployment [32] Question: Group health rate actions and exit strategy - Significant rate actions were taken, including a 40% average increase, and the decision to exit the group healthcare business was driven by strategic alignment [38][39] Question: Performance of the Equitable block - The Equitable transaction is expected to generate earnings of $160-$170 million in 2026, with various drivers of economic upside identified [45][46] Question: Long-term care risk transfer deal performance - Management expressed satisfaction with the long-term care business performance, aligning with risk appetite and return expectations [57] Question: Exposure to software-related companies and AI disruption - The company has modest exposure to software lending and actively assesses the impact of AI on the investment portfolio [62] Question: Regulatory changes in Europe and competition - Management noted no significant competitive threats arising from regulatory changes in Europe, focusing on opportunities with both asset and biometric risks [72][73]