Reinsurance Group Of America Reports 20 Percent Gain In Operating Earnings Per Share For First Quarter
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| Jack B. Lay |
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ST. LOUIS, April 23, 1998 – Reinsurance Group of America, Incorporated (NYSE:RGA) reported a first quarter operating income per share increase of 20 percent, to $0.60 per share, or $15.3 million, from $0.50 per share, or $12.9 million, the year before, excluding the impact of the $0.40 per share, or $10.4 million, after-tax nonoperating accident and health pool charge taken in the first quarter of 1997.
First quarter net premiums increased 31 percent, to $270.0 million, from $205.4 million in 1997. Net investment income was up 52 percent, to $63.7 million, from $41.8 million. Total revenues rose 35 percent, to $341.1 million. The company reported total assets of approximately $5 billion.
A. Greig Woodring, president and chief executive officer, explained, "First quarter results were in line with our expectations and set the stage for 1998. We again experienced strong core earnings from our U.S. and Canadian life segments, due in part to some large transactions we closed at the end of 1997. Both the U.S. and Canadian operations reported significant premium increases. U.S. premiums rose 24 percent, while premiums from our Canadian operation increased 33 percent. The increase in net investment income reflects continued growth in asset-intensive business."
Turning to the company’s operations outside of North America, Woodring commented, "Asia Pacific operations posted a modest profit for the first quarter, thanks in part to a financial reinsurance transaction we closed with a large Japanese life insurance company. This transaction is important because it is the first of its kind in Japan and opens the door to this type of arrangement. It will also provide RGA additional name recognition in that market. Business in other parts of the region continues to develop well, including RGA’s Australian operations, with a premium level of $4.7 million reported this quarter, up from $0.2 million in the first quarter of 1997."
Woodring continued, "Premium levels rose 51 percent in our Latin American operations, due to our increased involvement in privatized pension plans in Argentina and to business written by our direct writing companies in Chile and Argentina. We are expanding our Latin American reinsurance operations by establishing a local presence in Mexico. In March, we opened a new office in Mexico City."
Woodring concluded, "We are pleased with this strong start to 1998. We continue to see a number of opportunities to develop our business domestically and internationally."
The board of directors declared a regular quarterly dividend of $0.06 per share, payable May 29, 1998, to shareholders of record as of May 8, 1998.
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 or branch offices in Argentina, Australia, Barbados, Bermuda, Chile, Hong Kong, Japan, Mexico and the United Kingdom. Worldwide, the Company has more than $253 billion of life reinsurance in force. General American Life Insurance Company owns approximately 64 percent of RGA’s outstanding shares.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES Condensed Consolidated Statements of Income
($ in thousands, except per share data)
Three Months Ended
(Unaudited) March 31,
1998 1997
Revenues:
Net premiums $269,978 $205,372
Net investment income 63,679 41,849
Realized capital gains 922 387
Other income 6,554 4,155
Total revenue 341,133 251,763
Benefits and expenses:
Claims and other policy benefits 217,296 158,760
Interest credited 34,512 19,122
Accident and health pool charge --- 18,000
Policy acquisition costs and
other insurance expenses 46,934 40,467
Other expenses 15,464 10,519
Interest expense 2,025 1,948
Total benefits and expenses 316,231 248,816
Income before taxes and minority interest 24,902 2,947
Income taxes 8,840 (1)
Income before minority interest 16,062 2,948
Minority interest 153 120
Net income $ 15,909 $ 2,828
Earnings per share information:
Basic Earnings (1) 0.63 0.11
Diluted Earnings (1) 0.62 0.11
Diluted earnings before realized investment
gains/(losses) (1) 0.60 0.10
Weighted average number of common and
common equivalent shares outstanding
(in thousands) 25,500 25,629
(1) All periods reflect adoption of FASB 128; diluted earnings per share includes common stock equivalents
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES Condensed Consolidated Business Summary
Three Months Ended
(Unaudited) March 31,
1998 1997
Gross life reinsurance in force (in billions)
North American business $225.6 $165.3
International business 27.8 8.5
Gross life reinsurance written (in billions)
North American business 32.0 9.5
International business 0.2 0.5
Consolidated cash and invested assets
(in millions) 4,012.9 2,482.8
Invested asset yield 7.06% 7.22%
Investment portfolio mix
Cash and short-term investments 5.63 3.46
Fixed maturity securities 73.29 68.80
Mortgage loans 4.62 4.00
Policy loans 11.75 17.10
Funds withheld at interest 4.18 6.29
Other invested assets 0.53 0.35
Book value per share outstanding $ 20.65 $ 16.01 Book value per share outstanding, before impact of FAS 115 17.72 15.59
Treasury stock at March 31 820,895 581,031
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