Reinsurance Group Of America Reports 13 Percent Increase In Operating Earnings Per Share For Second Quarter
ST. LOUIS--(BUSINESS WIRE)--July 26, 2001--Reinsurance Group of America, Incorporated (NYSE:RGA) reported operating earnings from continuing operations of $0.72 per diluted share for the second quarter, up 13 percent from $0.64 per diluted share reported in the prior year. Operating earnings from continuing operations totaled $35.8 million for the quarter, up 12 percent from the prior-year total of $32.0 million. Net income for the quarter, including capital gains and losses and discontinued operations, rose to $30.5 million, or $0.61 per diluted share, from $18.9 million, or $0.38 per diluted share, the year before.
Second quarter premiums increased 12 percent, to $387.3 million from $345.4 million in 2000. Consolidated revenues increased 11 percent, to $465.5 million from $419.3 million in 2000.
President and Chief Executive Officer A. Greig Woodring commented, "We are pleased with the quarter's operating results. Mortality experience during the quarter was generally as expected in all segments, as the poor mortality experience reflected in the first quarter did not recur. On a year-to-date basis, consolidated net premiums are up 17 percent, which is within our long-term range of expectations."
Woodring continued, "Our U.S. and Canada operations continued to drive our results, representing 84 percent of the premium flow in the quarter. Moreover, these segments contributed $61.3 million in pre-tax operating income, up approximately 10 percent over the year-earlier levels, which benefited from favorable mortality. Net premiums in the U.S. segment for the quarter totaled $280.5 million, a 12 percent increase. Net premiums in Canada declined 4 percent, primarily as a result of weakness in the Canadian dollar and the timing of reported premiums on certain blocks of business.
"RGA's international operations reported a good quarter with operating earnings of $0.7 million versus a modest loss in the prior year. Net premiums totaled $62.7 million during the quarter. In particular, we saw robust activity in Asia Pacific and our other international markets, primarily the UK and South Africa. Net premiums for these operations increased 62 percent from the prior year quarter. Results in our international segment continue to fluctuate from period to period due to the relatively small scale of these operations."
Woodring concluded, "Overall, the quarter was in line with our expectations. We still see strong fundamentals driving our growth, and believe the various markets in which we operate continue to present growth opportunities."
For the first half of 2001, operating earnings from continuing operations were $59.2 million, or $1.19 per diluted share, compared with $58.9 million, or $1.18 per diluted share, in the year-ago period. Net income, including discontinued operations and capital gains and losses, increased to $52.2 million, or $1.04 per diluted share, from $39.3 million, or $0.79 per diluted share, the year before. Consolidated premiums were up 17 percent, to $791.9 million from $674.9 million.
The company announced that its board of directors declared a regular quarterly dividend of $0.06 per share. The dividend is payable August 28 to shareholders of record as of August 7.
A conference call to discuss the company's second quarter results will begin at 9:00 a.m. Eastern Daylight Time on Friday July 27. A live audio webcast of the conference call will be available on the company's investor relations web page at www.rgare.com. A replay of the conference call will be available on the company's website for 10 days following the conference call.
Reinsurance Group of America, Incorporated, through its subsidiaries, RGA Reinsurance Company and RGA Life Reinsurance Company of Canada, is among the largest providers of life reinsurance in North America. In addition to its North American operations, Reinsurance Group of America, Incorporated has subsidiary companies, branch offices or representative offices in Argentina, Australia, Barbados, Hong Kong, Japan, Mexico, South Africa, Spain, Taiwan and the United Kingdom. Worldwide, the Company has approximately $614 billion of life reinsurance in force, and assets of $6.2 billion. Metropolitan Life Insurance Company is the beneficial owner of approximately 59 percent of RGA's outstanding shares.
Forward-Looking Statements
This news release is based on preliminary financial results, which are subject to further review and adjustment. Statements in this press release regarding the business of Reinsurance Group of America, Incorporated which are not historical facts, including, without limitation, statements and information relating to the Company's future financial performance, growth potential, increases in premiums, the effect of mortality rates and experience, claims levels, its views on the life reinsurance industry and other statements related to the Company's business are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Important factors that could cause actual results and events to differ materially from those expressed or implied by forward-looking statements including, without limitation, (1) market conditions and the timing of sales of investment securities, (2) regulatory action taken by the New York or Missouri Departments of Insurance with respect to Metropolitan Life Insurance Company ("MetLife"), General American Life Insurance Company ("General American"), or the Company or its subsidiaries, (3) changes in the credit ratings of the Company, MetLife or General American and the effect of such changes on the Company's future results of operations and financial condition, (4) material changes in mortality and claims experience, (5) competitive factors and competitors' responses to the Company's initiatives, (6) general economic conditions affecting the demand for insurance and reinsurance in the Company's current and planned markets, (7) successful execution of the Company's entry into new markets, (8) successful development and introduction of new products, (9) the stability of governments and economies in foreign markets in which we operate, (10) fluctuations in U.S. and foreign currency exchange rates, interest rates, and securities and real estate markets, (11) the success of the Company's clients, (12) changes in laws, regulations, and accounting standards applicable to the Company and its subsidiaries, and (13) other risks and uncertainties described in its Annual Report and in the Company's other filings with the Securities and Exchange Commission.
Forward-looking statements should be evaluated together with the many risks and uncertainties that affect our business, including those mentioned in this document and the cautionary statements described in the periodic reports filed by the company with the Securities and Exchange Commission. For a discussion of these risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to consult the section named "Forward-Looking and Cautionary Statements" contained in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000 and other documents filed with the Securities and Exchange Commission, which discussions are incorporated by reference into this document.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
(Unaudited) June 30, June 30,
2001 2000 2001 2000
Revenues:
Net premiums $387,336 $345,400 $791,921 $674,943
Net investment income 76,276 82,292 160,365 156,302
Realized capital gains/
(losses), net (7,526) (10,892) (9,032) (15,524)
Other income 9,441 2,475 15,928 5,688
Total revenue 465,527 419,275 959,182 821,409
Benefits and expenses:
Claims and other policy
benefits 302,204 267,666 639,770 533,405
Interest credited 19,547 27,176 46,951 48,475
Policy acquisition costs
and other insurance
expenses 67,442 62,179 133,275 113,662
Other expenses 21,819 19,260 44,078 39,225
Interest expense 4,377 3,775 9,288 7,309
Total benefits
and expenses 415,389 380,056 873,362 742,076
Income from continuing
operations before taxes
and minority interest 50,138 39,219 85,820 79,333
Income taxes 19,624 18,084 33,664 33,732
Income from continuing
operations before minority
interest 30,514 21,135 52,156 45,601
Minority interest - (275) - 287
Net income from continuing
operations 30,514 21,410 52,156 45,314
Discontinued operations:
Loss from discontinued
operations,
net of taxes - (2,506) - (5,988)
Net income $ 30,514 $ 18,904 $ 52,156 $ 39,326
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
(Unaudited) June 30, June 30,
2001 2000 2001 2000
Earnings per share from continuing operations:
Basic earnings
per share $ 0.62 $ 0.43 $ 1.06 $ 0.91
Diluted earnings
per share $ 0.61 $ 0.43 $ 1.04 $ 0.90
Diluted earnings before
realized investment gains/
(losses) $ 0.72 $ 0.64 $ 1.19 $ 1.18
Earnings per share from net income:
Basic earnings
per share $ 0.62 $ 0.38 $ 1.06 $ 0.79
Diluted earnings
per share $ 0.61 $ 0.38 $ 1.04 $ 0.79
Weighted average number of common
and common equivalent
shares outstanding
(in thousands) 49,961 50,043 49,923 50,085
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
At or For the
Six Months Ended
(Unaudited) June 30,
2001 2000
Gross life reinsurance in force (in billions)
North American business $ 531.0 $ 431.7
International business 82.5 53.0
Gross life reinsurance written (in billions)
North American business 43.9 58.5
International business 17.1 2.6
Consolidated cash and invested assets
(in millions) 4,734.9 4,429.9
Invested Asset book yield - trailing
three months 7.16% 7.36%
Investment portfolio mix
Cash and short-term investments 4.34% 4.79%
Fixed maturity securities 56.34% 56.26%
Mortgage loans 2.96% 2.90%
Policy loans 15.12% 15.08%
Funds withheld at interest 20.11% 20.45%
Other invested assets 1.13% 0.52%
Book value per share outstanding $ 17.98 $ 15.80
Book value per share outstanding, before
impact of FAS 115 19.20 17.79
Treasury stock 1,647,939 1,718,120
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Dollars in thousands)
Six Months Ended June 30, 2001
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $ 584,866 $ 1,388 $ -- $ 586,254
Investment income, net
of related expenses 74,083 36,708 394 111,185
Realized investment gains/
(losses), net (10,347) 846 -- (9,501)
Other revenue 504 1,370 12,518 14,392
Total revenues 649,106 40,312 12,912 702,330
Benefits and expenses:
Claims and other policy
benefits 463,541 3,868 -- 467,409
Interest credited 25,258 20,745 -- 46,003
Policy acquisition costs
and other insurance
expenses 83,151 8,022 5,265 96,438
Other operating expenses 13,904 283 4,164 18,351
Total benefits and
expenses 585,854 32,918 9,429 628,201
Income before income
taxes and minority
interest $ 63,252 $ 7,394 $ 3,483 $ 74,129
Six Months Ended June 30, 2000
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $ 496,528 $ 1,044 $ -- $ 497,572
Investment income,
net of related
expenses 70,441 36,700 -- 107,141
Realized investment gains/
(losses), net (4,414) (85) -- (4,499)
Other revenue (77) 399 3,240 3,562
Total revenues 562,478 38,058 3,240 603,776
Benefits and expenses:
Claims and other policy
benefits 383,357 742 -- 384,099
Interest credited 22,905 23,064 -- 45,969
Policy acquisition costs
and other insurance
expenses 70,315 9,799 1,961 82,075
Other operating expenses 12,442 277 37 12,756
Total benefits and
expenses 489,019 33,882 1,998 524,899
Income before income
taxes and minority
interest $ 73,459 $ 4,176 $ 1,242 $ 78,877
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CANADIAN OPERATIONS
(Dollars in thousands)
Six Months Ended
June 30,
2001 2000
Revenues:
Net premiums $ 86,714 $ 87,173
Investment income, net of related expenses 31,297 30,284
Realized investment gains/(losses), net 8,516 (647)
Other revenue 85 127
Total revenues 126,612 116,937
Benefits and expenses:
Claims and other policy benefits 83,095 79,965
Interest credited 179 494
Policy acquisition costs and other
insurance expenses 6,854 10,780
Other operating expenses 4,341 4,168
Total benefits and expenses 94,469 95,407
Income before income taxes
and minority interest $ 32,143 $ 21,530
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
OTHER INTERNATIONAL
(Dollars in thousands)
Six Months Ended June 30, 2001
Total
Latin Asia Other Inter-
America Pacific Markets national
Revenues:
Net premiums $32,495 $54,821 $31,637 $118,953
Investment income,
net of related
expenses 7,736 2,281 1,251 11,268
Realized investment
gains/(losses), net (2,868) 143 (30) (2,755)
Other revenue 179 1,342 96 1,617
Total revenues 37,542 58,587 32,954 129,083
Benefits and expenses:
Claims and other policy
benefits 32,121 36,763 20,382 89,266
Interest credited 769 -- -- 769
Policy acquisition
costs and other
insurance expenses 6,106 14,877 9,000 29,983
Other operating
expenses 4,221 5,168 4,888 14,277
Interest expense -- 464 290 754
Total benefits and
expenses 43,217 57,272 34,560 135,049
Income before income
taxes and minority
interest $(5,675) $ 1,315 $(1,606) $ (5,966)
Six Months Ended June 30, 2000
Total
Latin Asia Other Inter-
America Pacific Markets national
Revenues:
Net premiums $38,262 $41,203 $10,733 $ 90,198
Investment income,
net of related
expenses 12,624 2,051 691 15,366
Realized investment
gains/(losses), net (8,918) 19 318 (8,581)
Other revenue 153 741 1,102 1,996
Total revenues 42,121 44,014 12,844 98,979
Benefits and expenses:
Claims and other
policy benefits 37,074 24,638 7,629 69,341
Interest credited 2,012 -- -- 2,012
Policy acquisition
costs and other
insurance expenses 3,865 14,668 2,274 20,807
Other operating expenses 6,335 4,754 4,777 15,866
Interest expense -- 297 -- 297
Total benefits and
expenses 49,286 44,357 14,680 108,323
Income before
income taxes and
minority interest $(7,165) $ (343) $(1,836) $ (9,344)
SOURCE: Reinsurance Group of America, Incorporated
| CONTACT: | Reinsurance Group of America Inc., St. Louis |
|---|---|
| Jack B. Lay, 636/736-7439 | |