Reinsurance Group Of America Reports 15 Percent Gain In Second Quarter Operating Earnings; 3-For-2 Stock Split, Dividend Increase

July 24, 1997

ST. LOUIS, July 24, 1997 - Reinsurance Group of America, Incorporated (NYSE:RGA) reported second quarter operating income rose 15 percent, to $14.8 million, or $0.86 per share, from $12.8 million, or $0.75 per share, the year before. Second quarter earnings, including realized capital gains and losses, increased 12 percent, to $0.88 per share from $0.79 per share the year before.

At the same time, the company announced that the board of directors increased the quarterly dividend and declared a 3-for-2 stock split to shareholders of record August 8. The dividend, which will total $0.06 per share after the split and will be payable August 29, represents a 13-percent increase over the previous dividend rate.

On a post-split basis, the company's operating income represents $0.57 per share for the quarter, compared with $0.50 for 1996. Reported earnings on a post-split basis, including realized capital gains and losses, total $0.58 per share compared with $0.53 for 1996.

Net premiums increased 23 percent, to $201.6 million, from $163.4 million in 1996. Net investment income increased 39 percent, to $46.0 million from $33.1 million, as the company's asset base continued to expand, due in part to further growth of asset-intensive reinsurance arrangements. Total revenues increased 26 percent, to $252.9 million, from $201.5 million in 1996.

A. Greig Woodring, president and chief executive officer, commented, "The second quarter results, from the standpoint of premiums, total revenues and operating earnings, continued well-established growth trends. Our U.S. operations exhibit solid growth as the market continues to present a number of niche opportunities in addition to traditional reinsurance. Revenues for the U.S. operating segment increased 15 percent over the second quarter of 1996, and 18 percent for the year-to-date. We expect continued growth in the U.S. reinsurance market."

Woodring also noted, "Other segments of our operations also reported encouraging results. Premiums grew at a 12 percent rate in the Canadian segment compared with the second quarter of 1996, and almost 26 percent for the year-to-date. Other international operations, consisting of our Latin American and Asia Pacific businesses, had a premium increase of $15.3 million for the quarter, and $25.7 million for the year. Those increases primarily reflected higher annuity production in Chile and a gradual increase in several Asian markets, including the Australian operation initiated in 1996. The Latin American operations produced a modest profit, while operations in the Asia Pacific region are still operating below the break-even level. In addition, our accident and health segment produced a slight profit on premiums of $36.6 million."

Woodring further observed, "The company's consolidated earnings were generally in line with our operating plan, as were policy lapses and allowance levels. The mortality experience was moderately higher than we would have anticipated, although we believe this reflects a normal fluctuation. Quote activity and other business opportunities continue at strong levels, and we remain optimistic regarding our ongoing growth prospects. As a result, we are in a position to increase our dividend for the third year in a row. Additionally, the company's stock repurchase program, suspended briefly in anticipation of its earnings announcement, will be re-activated."

First-half operating earnings rose to $27.7 million, from $23.0 million a year ago. These results exclude the $10.4 million after-tax, nonoperating charge taken in the first quarter of 1997 in connection with the company's decision to exit all accident and health pools in which it didn't control the underwriting process. Pre-split operating earnings per share increased 19 percent, to $1.61 from $1.35. On a post-split basis, first-half operating earnings per share total $1.07 compared with $0.90 in the first half of 1996.

For the first half, revenues increased $102.8 million, or 26 percent, and net premiums rose $75.6 million, or 23 percent. Investment income totaled $87.8 million, an increase of 44 percent over the first half of 1996.

Reinsurance Group of America, Incorporated, through its U.S. and Canadian 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 or branch offices in Argentina, Australia, Barbados, Bermuda, Chile, Hong Kong, Japan and the United Kingdom. Worldwide, it has more than $182 billion of life reinsurance in force. General American Life Insurance Company owns approximately 63 percent of RGA's outstanding shares.