Reinsurance Group of America (RGA) Q3 2024 earnings summary

Executive summary

• Adjusted operating earnings excluding notable items reached a record $6.13 per share for Q3 2024, with a trailing 12-month adjusted operating ROE of 15.5%, both all-time highs and above targets.

• Net income for Q3 2024 was $158 million, down from $289 million in Q3 2023, while total assets rose to $120.3 billion and life reinsurance in force increased to $3.97 trillion.

• Strong business momentum was driven by robust premium growth, capital deployment, and balance sheet optimization, with $1.4 billion of capital deployed YTD and new business embedded value surpassing last year’s total.

• Notable one-time items included a $136 million pre-tax impact from increasing the per-life retention limit and a $58 million pre-tax impact from the annual actuarial assumption review, both expected to benefit future profitability and Value of In-Force Business Margins.

• Ended the quarter with approximately $0.7 billion in excess capital and declared a quarterly dividend of $0.89 per share.

Financial highlights

• Pre-tax adjusted operating income was $314 million ($3.62 per share after tax); excluding notable items, it was $508 million ($6.13 per share after tax).

• Net premiums rose 3.2% year-over-year to $4.4 billion, with traditional business premiums up 8.5% for the quarter and 7.9% YTD on a constant currency basis.

• Value of In-Force Business Margins increased by $4.6 billion (13.9%) in the first nine months, ending at $37.6 billion.

• Book value per share (excluding AOCI and B36 Embedded Derivatives) increased to $151.79, a 10.4% CAGR since 2021.

• Average investment yield increased to 5.08% from 4.72% year-over-year.

Outlook and guidance

• Effective tax rate for the quarter was 26.7% on pre-tax income and 23% on pre-tax adjusted operating income; full-year rate expected at the lower end of 24%-25%.

• Recapture of retroceded business and higher per-life retention limits are expected to add $20 million to 2025 run-rate pre-tax operating income, ramping to $60 million per year by 2040, and increase Value of In-Force Business Margins by $1.5 billion.

• Management anticipates continued strong business growth, ongoing balance sheet optimization, and active capital deployment.

• The company projects sufficient liquidity and capital to meet obligations for at least the next 12 months, with no anticipated need for capital augmentation.

• Optimism expressed for continued attractive financial results based on favorable business conditions and global leadership position.