Reinsurance Group Of America Reports 22 Percent Increase In Operating Earnings For First Quarter; Operating Earnings Per Share Up 13 Percent
ST. LOUIS, April 27, 2000 – Reinsurance Group of America, Incorporated (NYSE:RGA), one of North America’s leading providers of life reinsurance, reported operating earnings from continuing operations of $26.9 million for the first quarter, up 22 percent from $22.0 million in the prior year. Operating earnings from continuing operations of $0.54 per diluted share were up 13 percent from $0.48 per diluted share in the prior year. Net income for the quarter, including capital gains and losses and discontinued operations, totaled $20.4 million, or $0.41 per diluted share, compared to earnings of $22.0 million, or $0.48 per diluted share in the prior year. Earnings per diluted share for the first quarter of 2000 reflect the impact of 4.8 million new shares issued to Metropolitan Life Insurance Company, a wholly owned subsidiary of MetLife, Inc. (NYSE:MET), in November 1999.
First quarter net premiums decreased 7 percent, to $329.5 million from $353.8 million in 1999. This decrease was due primarily to the timing of processing large in-force blocks of business. In the first quarter of 1999, the U.S. operating segment benefited from the processing of several significant new in-force blocks of business. However, that segment did not process any significant new blocks during the first quarter of 2000.
President and Chief Executive Officer A. Greig Woodring commented, “We are pleased to report good earnings growth for the quarter. The quarter is essentially in line with our expectations, as the poor mortality experience reflected in the fourth quarter of 1999 did not recur. The large blocks of business processed in the first quarter of 1999 included almost $40 million of premium from prior period quarters. That type of catch-up in client reporting is not unusual, but did create a difficult comparison since the current quarter results do not reflect any new large in-force transactions. The market for potential new business continues to be strong. We expect to participate in some large in-force transactions throughout the year. The size and timing of these transactions, however, is difficult to predict and can cause significant quarter-to-quarter fluctuations in premium trends. We remain committed to our year-over-year premium growth target of 15 to 20 percent.”
Woodring continued, “Our core operations in North America continue to be the primary driver of our results. Canada, in particular, had a strong first quarter. Premiums in the Canada segment for the quarter totaled $41.0 million versus $35.6 million in the prior year quarter, a 15 percent increase. Net operating income in the Canada segment increased to $7.4 million from $3.0 million, primarily due to favorable mortality results. The decrease in net premiums in our U.S. operations resulted in net operating income that was essentially flat compared to the prior period, when that operating segment reported very favorable mortality results. We continue to see a number of opportunities for the life reinsurance market in North America, and are comfortable with the pipeline of business in those markets.”
Woodring concluded, “RGA’s other international operations, which include our Latin American and Asia Pacific operations, continue to make progress. These operations reported a modest operating profit for the quarter on premiums of $41.2 million. Premiums in our Asia Pacific operations were up over 16 percent from the prior year, and mortality was much improved from the first quarter of 1999. As announced on April 3, we reached an agreement to sell the interest in our Chilean direct insurance operations. We closed the sale today. RGA Reinsurance UK Limited, our new life reinsurance subsidiary in London was licensed earlier this month. The establishment of this subsidiary is a major milestone for us and we look forward to the new opportunities this brings us in the UK market.”
The company announced that its board of directors declared a regular quarterly dividend of $0.06 per share, payable May 26 to shareholders of record as of May 5.
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 over $450 billion of life reinsurance in force, and assets of $5.4 billion. Metropolitan Life Insurance Company owns approximately 58 percent of RGA’s outstanding shares.
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 and expectations, the effect of mortality rates and experience, opportunities and expectations relating to new business transactions, claims levels, 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. 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” in the Company’s Annual Report on Form 10-K for the year ended December 31, 1999, which discussions are incorporated by reference into this document.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
2000 1999
Revenues:
Net premiums $329,543 $353,759
Net investment income 74,010 85,043
Realized capital gains/(losses), net (4,632) (83)
Other income 3,213 4,388
Total revenue 402,134 443,107
Benefits and expenses:
Claims and other policy benefits 265,739 300,427
Interest credited 21,299 39,552
Policy acquisition costs and other
insurance expenses 51,483 49,211
Other expenses 19,965 16,204
Interest expense 3,534 1,956
Total benefits and expenses 362,020 407,350
Income from continuing operations
before taxes and minority interest 40,114 35,757
Income taxes 15,648 13,670
Income from continuing operations
before minority interest 24,466 22,087
Minority interest 562 109
Net income from continuing operations 23,904 21,978
Discontinued operations:
Loss from discontinued operations,
net of taxes (3,482) (21)
Net income $ 20,422 $ 21,957
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended
(Unaudited) March 31,
2000 1999
Earnings per share from continuing
operations:
Basic earnings per share $ 0.48 $ 0.48
Diluted earnings per share $ 0.48 $ 0.48
Diluted earnings before realized
investment gains/(losses) $ 0.54 $ 0.48
Earnings per share from net income:
Basic earnings per share $ 0.41 $ 0.48
Diluted earnings per share $ 0.41 $ 0.48
Weighted average number of common
and common equivalent shares
outstanding (in thousands) 50,135 45,874
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
At or For the
Three Months Ended
(Unaudited) March 31,
2000 1999
Gross life reinsurance in force
(in billions)
North American business $ 410.0 $ 322.1
International business 52.8 41.7
Gross life reinsurance written
(in billions)
North American business 25.5 35.9
International business 1.5 2.0
Consolidated cash and invested assets
(in millions) 4,111.1 5,206.5
Invested asset yield 7.83% 6.69%
Investment portfolio mix
Cash and short-term investments 4.08% 7.84%
Fixed maturity securities 52.76% 70.28%
Mortgage loans 5.37% 4.26%
Policy loans 16.06% 9.87%
Funds withheld at interest 21.04% 7.33%
Other invested assets 0.69% 0.42%
Book value per share outstanding $ 16.16 $ 16.25
Book value per share outstanding,
before impact of FAS 115 17.63 15.96
Treasury stock 1,183,920 1,143,944
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Dollars in thousands)
Three Months Ended March 31, 2000
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $ 246,742 $ 618 $ -- $ 247,360
Investment income,
net of related
expenses 33,111 17,435 -- 50,546
Realized investment
gains/(losses),
net ( 2,819) (84) -- (2,903)
Other revenue 293 (44) 1,702 1,951
Total revenues 277,327 17,925 1,702 296,954
Benefits and expenses:
Claims and other
policy benefits 199,559 108 -- 199,667
Interest credited 11,426 9,381 -- 20,807
Policy acquisition
costs and other
insurance expenses 28,681 6,317 1,124 36,122
Other operating
expenses 6,223 139 19 6,381
Total benefits
and expenses 245,889 15,945 1,143 262,977
Income before
income taxes
and minority
interest $ 31,438 $ 1,980 $ 559 $ 33,977
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Dollars in thousands)
Three Months Ended March 31, 1999
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $268,048 $ 313 $ -- $ 268,361
Investment income,
net of related
expenses 30,190 34,967 -- 65,157
Realized investment
gains/(losses),
net (423) 299 -- (124)
Other revenue (273) 0 3,953 3,680
Total revenues 297,542 35,579 3,953 337,074
Benefits and expenses:
Claims and other
policy benefits 215,374 112 -- 215,486
Interest credited 7,895 31,018 -- 38,913
Policy acquisition
costs and other
insurance expenses 34,196 1,443 2,858 38,497
Other operating
expenses 6,682 170 30 6,882
Total benefits
And expenses 264,147 32,743 2,888 299,778
Income before
income taxes
and minority
interest $ 33,395 $ 2,836 $ 1,065 $ 37,296
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CANADIAN OPERATIONS
(Dollars in thousands)
Three Months Ended
March 31,
2000 1999
Revenues:
Net premiums $ 41,027 $ 35,620
Investment income, net of related expenses 14,983 11,937
Realized investment gains/(losses), net (446) 0
Other revenue 70 (18)
Total revenues 55,634 47,539
Benefits and expenses:
Claims and other policy benefits 37,263 35,885
Interest credited 345 459
Policy acquisition costs and other
insurance expenses 3,646 4,405
Other operating expenses 2,150 1,592
Total benefits and expenses 43,404 42,341
Income before income taxes
and minority interest $ 12,230 $ 5,198
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
OTHER INTERNATIONAL
(Dollars in thousands)
Three Months Ended March 31, 2000
Latin America Total
Rein- Asia Other Inter-
Direct surance Pacific Markets national
Revenues:
Net premiums $ 9,927 $ 6,726 $19,077 $ 5,426 $ 41,156
Investment income,
net of related
expenses 4,191 1,479 954 218 6,842
Realized investment
Gains / (losses), net 16 (252) 17 264 45
Other revenue 172 1 84 934 1,191
Total revenues 14,306 7,954 20,132 6,842 49,234
Benefits and expenses:
Claims and other policy
benefits 8,524 5,509 11,519 3,257 28,809
Interest credited 140 7 -- -- 147
Policy acquisition
costs and other
insurance expenses 2,072 890 6,738 2,015 11,715
Other operating
expenses 2,475 787 2,473 2,511 8,246
Interest expense -- -- 120 -- 120
Total benefits and
expenses 13,211 7,193 20,850 7,783 49,037
Income before income
taxes and minority
interest $ 1,095 $ 761 $( 718) $( 941)$ 197
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
OTHER INTERNATIONAL
(Dollars in thousands)
Three Months Ended March 31, 1999
Latin America Total
Rein- Asia Other Inter-
Direct surance Pacific Markets national
Revenues:
Net premiums $14,030 $14,796 $16,409 $ 4,542 $ 49,777
Investment income,
net of related
expenses 1,868 1,261 415 165 3,709
Realized investment
gains/(losses), net 12 -- (12) 40 40
Other revenue 42 -- 292 372 706
Total revenues 15,952 16,057 17,104 5,119 54,232
Benefits and expenses:
Claims and other policy
benefits 13,092 13,672 18,739 3,552 49,055
Interest credited 180 -- -- -- 180
Policy acquisition costs
and other insurance
expenses 993 393 4,269 653 6,308
Other operating expenses 1,272 856 1,747 1,514 5,389
Interest expense -- -- 113 -- 113
Total benefits and
expenses 15,537 14,921 24,868 5,719 61,045
Income before income
taxes and minority
interest $ 415 $ 1,136 $(7,764) $( 600)$ (6,813)
For further information, contact
Jack B. Lay
Executive Vice President and
Chief Financial Officer
(636) 736-7439