Reinsurance Group Of America Reports 20 Percent Gain In Operating Earnings Per Share For First Quarter
ST. LOUIS, April 29, 1999 -- Reinsurance Group of America, Incorporated (NYSE: RGA, RGA.A) announced a 20 percent increase in first quarter operating earnings per share, to $0.48 per diluted share from $0.40 per diluted share the year before. Operating earnings from continuing operations were up 44 percent to $22.0 million from $15.3 million. Net income, including capital gains and losses and discontinued operations, was up 38 percent over the prior year, to $22.0 million, or $0.48 per diluted share, compared with $15.9 million, or $0.42 per diluted share.
Bottom-line results were driven by a 46 percent increase in net premium, to $353.8 million from $243.1 million in 1998, and a 34 percent increase in net investment income, to $85.0 million from $63.2 million in the prior year.
"We are pleased by a good start to the new year. Results this quarter are due in large part to a strong contribution from our North American operations," said A. Greig Woodring, president and CEO. "U.S. operations benefited from the processing of several significant blocks of business this quarter, as well as from ongoing new business production, setting the stage for a promising 1999. Results in the U.S. division were ahead of plan due to a 42 percent increase in total revenue over the prior year and favorable mortality results. Canadian operations reported pre-tax operating income up 44 percent for the quarter compared to first quarter 1998. Results there were driven by a 50 percent increase in total revenue over the prior year, offset to some extent by slightly adverse mortality experience."
The companys international operations posted mixed results. Latin American operations reported a profit for the quarter, slightly higher than the profit reported in first quarter 1998, due to increased net premium and investment income levels. While Asia Pacific operations reported a 37 percent increase in total revenue over last year, the gain was offset by significantly unfavorable claims experience, causing a $7.8 million pre-tax operating loss for the segment, compared with break-even results for the same period in 1998.
Woodring explained, "We continue to be encouraged by opportunities we see developing in the markets weve chosen to enter outside of North America. For example, Latin American reinsurance operations expanded its scope by developing and entering into Mexicos first reinsurance financing arrangement. We continue to build on our operations in Asia Pacific. Results this period were affected by adverse mortality, which is not unusual in a business marked by such short-term fluctuations."
Finally, turning to the companys discontinued accident and health line of business, Woodring commented, "Results for the quarter for the discontinued accident and health operations, currently in runoff, were as expected, having reported no significant impact on results for the period. We continue to aggressively monitor the experience on this block as the business runs off."
Woodring concluded, "Industry indications are that the factors driving favorable reinsurance trends remain firmly in place. We are encouraged by the strong start to 1999, and we look forward to continuing high levels of activity for the rest of the year, particularly in North America."
The board of directors declared a regular quarterly dividend of $0.05 per share, payable May 28, 1999, to shareholders of record as of May 7, 1999.
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, Taiwan, South Africa and the United Kingdom. Worldwide, the Company has $364 billion of life reinsurance in force and assets of $6.4 billion. General American Life Insurance Company owns approximately 64 percent of RGAs outstanding shares of voting common stock and approximately 53 percent of all outstanding shares.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Reinsurance Group of America, Incorporateds business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Forward-Looking and Cautionary Statements" in the Companys Annual Report or Form 10-K for the most recently ended fiscal year.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
($ in thousands, except per share data)
Three Months Ended
(Unaudited) March 31,
1999 1998
Revenues:
Net premiums $353,759 $243,077
Net investment income 85,043 63,247
Realized capital gains (83) 922
Other income 4,388 6,223
Total Revenue 443,107 313,469
Benefits and Expenses:
Claims and other policy benefits 300,427 197,864
Interest credited 39,552 34,512
Policy acquisition costs and other
insurance expenses 49,211 39,537
Other expenses 16,204 14,678
Interest expense 1,956 2,025
Total Benefits & Expenses 407,350 288,616
Income from continuing operations
before taxes and minority interest 35,757 24,853
Income Taxes 13,670 8,827
Income from continuing operations
before minority interest 22,087 16,026
Minority Interest 109 151
Net income from continuing operations 21,978 15,875
Discontinued Operations:
Gain (loss) from discontinued
operations, net of taxes (21) 35
Net income $ 21,957 $ 15,910
Earnings per share from continuing operations:
Basic earnings per share $ 0.48 $ 0.42
Diluted earnings per share $ 0.48 $ 0.42
Diluted earnings before realized
investment gains/(losses) $ 0.48 $ 0.40
Earnings per share from net income:
Basic earnings per share $ 0.48 $ 0.42
Diluted earnings per share $ 0.48 $ 0.42
Weighted average number of common and
common equivalent shares outstanding
(in thousands) 45,874 38,232
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Dollars in thousands)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
Non-Traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $268,049 $ 312 $ -- $268,361
Investment income, net
of related expenses 29,493 35,664 -- 65,157
Realized investment gains/
(losses), net (423) 299 -- (124)
Other revenue (272) -- 3,952 3,680
Total revenues 296,847 36,275 3,952 337,074
Benefits and expenses:
Claims and other policy
benefits 215,374 112 -- 215,486
Interest credited 7,894 31,019 -- 38,913
Policy acquisition costs
and other insurance
expenses 34,197 1,444 2,857 38,498
Other operating expenses 6,681 170 30 6,881
Total benefits and
expenses 264,146 32,745 2,887 299,778
Income before income
taxes and minority
interest $ 32,701 $ 3,530 $ 1,065 $ 37,296
FOR THE THREE MONTHS ENDED MARCH 31, 1998
Non-Traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $180,375 $ -- $ -- $180,375
Investment income,
net of related expenses 24,720 27,830 -- 52,550
Realized investment gains/
(losses), net 445 241 -- 686
Other revenue 306 -- 4,027 4,333
Total revenues 205,846 28,071 4,027 237,944
Benefits and expenses:
Claims and other policy
benefits 144,468 22 -- 144,490
Interest credited 10,623 23,614 -- 34,237
Policy acquisition costs
and other insurance
expenses 26,211 1,042 3,120 30,373
Other operating expenses 4,205 185 33 4,423
Total benefits and
expenses 185,507 24,863 3,153 213,523
Income before income
taxes and minority
interest $ 20,339 $ 3,208 $ 874 $ 24,421
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CANADIAN OPERATIONS
(Dollars in thousands)
Three Months Ended
March 31,
1999 1998
Revenues:
Net premiums $35,620 $25,026
Investment income, net of related expenses 11,937 6,104
Realized investment gains / (losses), net -- 236
Other revenue (18) 272
Total revenues 47,539 31,638
Benefits and expenses:
Claims and other policy benefits 35,884 23,115
Interest credited 458 245
Policy acquisition costs
and other insurance expenses 4,406 2,855
Other operating expenses 1,593 1,803
Total benefits and expenses 42,341 28,018
Income before income taxes
and minority interest $ 5,198 $ 3,620
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
OTHER INTERNATIONAL
(Dollars in thousands)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
LATIN AMERICA Total
Rein- ASIA OTHER Inter-
Direct surance PACIFIC MARKETS national
Revenues:
Net premiums $14,030 $14,797 $16,409 $ 4,542 $49,778
Investment income,
net of related expenses 1,868 1,260 415 165 3,708
Realized investment gains
/ (losses), net 12 -- (12) 40 40
Other revenue 42 -- 292 373 707
Total revenues 15,952 16,057 17,104 5,120 54,233
Benefits and expenses:
Claims and other policy
benefits 13,092 13,673 18,740 3,552 49,057
Interest credited 180 -- -- -- 180
Policy acquisition costs and
other insurance expenses 992 393 4,269 653 6,307
Other operating expenses 1,272 856 1,746 1,514 5,388
Interest expense -- -- 113 1 114
Total benefits and
expenses 15,536 14,922 24,868 5,720 61,046
Income before income
taxes and minority
interest $ 416 $ 1,135 $(7,764) $ (600) $(6,813)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
LATIN AMERICA Total
Rein- ASIA OTHER Inter-
Direct surance PACIFIC MARKETS national
Revenues:
Net premiums $13,451 $13,366 $10,453 $ 406 $37,676
Investment income,
net of related expenses 1,582 782 497 115 2,976
Other revenue 73 -- 1,535 10 1,618
Total revenues 15,106 14,148 12,485 531 42,270
Benefits and expenses:
Claims and other policy
benefits 12,116 12,284 5,553 306 30,259
Interest credited 30 -- -- -- 30
Policy acquisition costs and
other insurance expenses 978 372 4,837 122 6,309
Other operating expenses 1,628 1,168 2,013 1,323 6,132
Interest expense -- -- 100 -- 100
Total benefits and
expenses 14,752 13,824 12,503 1,751 42,830
Income before income
taxes and minority
interest $ 354 $ 324 $ (18) $(1,220) $ (560
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
Three Months Ended
(Unaudited) March 31,
1999 1998
Gross life reinsurance in force (in billions)
North American business $322.1 $225.6
International business 41.7 27.8
Gross life reinsurance written (in billions)
North American business 35.9 32.0
International business 2.0 0.2
Consolidated cash and invested assets
(in millions) 5,206.5 4,012.9
Invested asset yield 6.69% 7.06%
Investment portfolio mix
Cash and short-term investments 7.84% 5.63%
Fixed maturity securities 70.28% 73.29%
Mortgage loans 4.26% 4.62%
Policy loans 9.87% 11.75%
Funds withheld at interest 7.33% 4.18%
Other invested assets 0.42% 0.53%
Book value per share outstanding $ 16.69 $ 13.77
Book value per share outstanding, before
impact of FAS 115 16.39 11.81
Treasury stock at March 31 1,143,944 1,231,343