Reinsurance Group Of America Reports 22 Percent Increase In Operating Earnings Per Share From Continuing Operations; Increases Dividend 20 Percent
ST. LOUIS, July 29, 1999 Reinsurance Group of America, Incorporated (NYSE:RGA, RGA.A) reported operating earnings per diluted share from continuing operations of $0.56 for the second quarter of 1999, an increase of 22 percent over the $0.46 reported the year before. Operating earnings from continuing operations totaled $25.7 million, an increase of 40 percent over the prior-year total of $18.4 million. Net income for the quarter, including capital gains and losses and discontinued operations, totaled $20.7 million, or $0.45 per share, compared to $19.2 million, or $0.48 per share the year before.
The company also announced that the board of directors increased the quarterly dividend 20 percent to $0.06 per share from $0.05 per share. The dividend is payable August 27 to shareholders of record August 6.
RGA also reported a 33 percent increase in net premiums for the quarter, to $316.8 million from $237.9 million in the prior year. Net investment income increased 22 percent, to $87.5 million. Consolidated revenues totaled $409.3 million for the quarter, a 30 percent increase over the prior year. Revenue increases were reported in each operating segment, with the majority of the companys increases emanating from the U.S. and Canada operating segments.
"We are continuing to see strong results from the more established operating segments. In particular, the U.S. and Canada segments continue to report strong growth and earnings trends for the quarter," commented A. Greig Woodring, president and chief executive officer. "The U.S. segment reported a 27 percent premium increase over last years level, and a strong increase in operating earnings. The Canada segment likewise reported strong growth, including a 70 percent increase in premiums. We do not expect this level of growth for the full year in Canada, as several large blocks of business were reported by client companies and processed during the quarter, as were premiums from in force blocks of business first recorded near the end of 1998. Both segments are benefiting from the continued high level of mortality outsourcing that has characterized the life reinsurance industry for some time.
"While the Canadian segment experienced slightly adverse mortality experience during the quarter, the larger U.S. segment reported mortality experience that was very good," Woodring continued. "We were pleased with the mortality experience of our business on a companywide basis. The negative experience reported in the Asia Pacific segment during the first quarter has moderated in the most recent quarter. The mortality experience on the Companys portfolio of life reinsurance drives the overall profitability over time."
Woodring further commented, "Our international segments reported results that were in line with our expectations. Regarding our discontinued accident and health operations, the premium volume from the treaties in run-off has exceeded our expectations so far this year. Because of that, we thought it prudent to add to our reserves in accordance with the expected claims development on that business. We will obviously continue to closely monitor the run-off of that operation over time."
Woodring concluded, "We are pleased with the operating performance over the first half of 1999, and the opportunities presented in our various markets. We also announced at the end of the quarter that we intend to convert the outstanding non-voting common stock into common voting shares. That action should simplify our capital structure from the viewpoint of our investors. We believe the exchange ratio of .97 shares of voting common stock for each share of non-voting common stock is fair for all shareholders, and should enhance liquidity for all investors upon completion of the conversion."
For the first half of 1999, the company reported operating earnings from continuing operations of $47.7 million, an increase of 42 percent over the prior-year total of $33.7 million. Operating earnings per diluted share from continuing operations totaled $1.04, an increase of 21 percent over the $0.86 reported the year before. Net income for the six months, including capital gains and losses and discontinued operations, totaled $42.6 million, or $0.93 per share, compared to $35.1 million, or $0.89 per share the year before. Revenues increased 36 percent to $852.4 million for the first six months of 1999, and net premiums increased to $670.5 million, a 39 percent increase. Investment income totaled $172.5 million, up 28 percent from the first half of 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, Taiwan, South Africa and the United Kingdom. Worldwide, the Company has approximately $390 billion of life reinsurance in force, and assets of $6.7 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.
Statements in this press release regarding the business of Reinsurance Group of America, Incorporated and the trading of its securities 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.
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
(Unaudited) June 30, June 30,
1999 1998 1999 1998
Revenues:
Net premiums $316,765 $237,948 $670,524 $481,025
Net investment income 87,491 71,807 172,534 135,054
Realized capital gains 578 1,797 495 2,719
Other income 4,473 3,875 8,861 10,098
Total revenue 409,307 315,427 852,414 628,896
Benefits and expenses:
Claims and other policy
benefits 246,652 185,940 547,079 383,804
Interest credited 43,691 37,845 83,243 72,357
Policy acquisition costs
and other insurance
expenses 56,698 46,205 105,909 85,742
Other expenses 15,550 12,404 31,754 27,082
Interest expense 2,273 2,187 4,229 4,212
Total benefits
and expenses 364,864 284,581 772,214 573,197
Income from continuing
operations before taxes
and minority interest 44,443 30,846 80,200 55,699
Income taxes 18,446 11,141 32,116 19,968
Income from continuing
operations before minority
interest 25,997 19,705 48,084 35,731
Minority interest 350 155 459 306
Net income from continuing
operations 25,647 19,550 47,625 35,425
Discontinued operations:
Gain (loss) from
discontinued operations,
net of taxes (4,971) (332) (4,992) (298)
Net income $ 20,676 $ 19,218 $ 42,633 $ 35,127
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
(Unaudited) June 30, June 30,
1999 1998 1999 1998
Earnings per share from
continuing operations:
Basic earnings per share $ 0.57 $ 0.49 $ 1.05 $ 0.91
Diluted earnings per share $ 0.56 $ 0.48 $ 1.04 $ 0.90
Diluted earnings before
realized investment gains/
(losses) $ 0.56 $ 0.46 $ 1.04 $ 0.86
Earnings per share from net
income:
Basic earnings per share $ 0.46 $ 0.48 $ 0.94 $ 0.90
Diluted earnings per share $ 0.45 $ 0.48 $ 0.93 $ 0.89
Weighted average number of common
and common equivalent shares
outstanding (in thousands) 45,861 40,400 45,874 39,316
Condensed Consolidated Business Summary
At or For the
Six Months Ended
(Unaudited) June 30,
1999 1998
Gross life reinsurance in force (in billions)
North American business $ 336.6 $ 244.8
International business 54.0 29.1
Gross life reinsurance written (in billions)
North American business 56.4 57.9
International business 14.5 1.6
Consolidated cash and invested assets (in millions) 5,309.7 4,393.3
Invested asset yield 6.70% 7.03%
Investment portfolio mix
Cash and short-term investments 5.12% 6.60%
Fixed maturity securities 72.96% 73.26%
Mortgage loans 4.52% 4.87%
Policy loans 9.79% 10.87%
Funds withheld at interest 7.22% 3.92%
Other invested assets 0.39% 0.48%
Post-stock split:
Book value per share outstanding $ 15.79 $ 16.80
Book value per share outstanding, before
impact of FAS 115 16.80 15.14
Treasury stock at June 30 1,141,944 1,213,445
(Dollars in thousands)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $489,095 $ 843 $ -- $489,938
Investment income, net
of related expenses 59,833 73,620 -- 133,453
Realized investment gains/
(losses), net (5,575) (3,374) -- (8,949)
Other revenue 5 819 6,896 7,720
Total revenues 543,358 71,908 6,896 622,162
Benefits and expenses:
Claims and other policy
benefits 375,682 730 -- 376,412
Interest credited 19,460 62,639 -- 82,099
Policy acquisition costs
and other insurance
expenses 75,147 1,968 5,063 82,178
Other operating expenses 10,878 -- 6 10,884
Total benefits and
expenses 481,167 65,337 5,069 551,573
Income before income
taxes and minority
interest $ 62,191 $ 6,571 $ 1,827 $ 70,589
FOR THE SIX MONTHS ENDED JUNE 30, 1998
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $354,537 $ 687 $ -- $355,224
Investment income, net
of related expenses 52,942 58,731 -- 111,673
Realized investment gains/
(losses), net 1,264 837 -- 2,101
Other revenue (109) -- 7,778 7,669
Total revenues 408,634 60,255 7,778 476,667
Benefits and expenses:
Claims and other policy
benefits 273,088 2,299 -- 275,387
Interest credited 22,597 49,220 -- 71,817
Policy acquisition costs
and other insurance
expenses 60,515 2,609 5,946 69,070
Other operating expenses 7,900 370 66 8,336
Total benefits and
expenses 364,100 54,498 6,012 424,610
Income before income
taxes and minority
interest $ 44,534 $ 5,757 $ 1,766 $ 52,057
(Dollars in thousands)
Six Months Ended
June 30,
1999 1998
Revenues:
Net premiums $ 76,873 $ 49,354
Investment income, net of related expenses 23,972 12,476
Realized investment gains/(losses), net 6,253 617
Other revenue (62) 370
Total revenues 107,036 62,817
Benefits and expenses:
Claims and other policy benefits 75,818 44,331
Interest credited 905 461
Policy acquisition costs and other
insurance expenses 9,719 5,494
Other operating expenses 3,426 3,400
Total benefits and expenses 89,868 53,686
Income before income taxes
and minority interest $ 17,168 $ 9,131
For the Six Months Ended
June 30, 1999
LATIN AMERICA Total
Rein- ASIA OTHER Inter-
Direct surance PACIFIC MARKETS national
Revenues:
Net premiums $22,267 $37,974 $32,321 $11,150 $103,712
Investment income,
net of related expenses 6,674 1,235 1,356 528 9,793
Realized investment gains
/ (losses), net 12 268 (33) 120 367
Other revenue 78 0 386 612 1,076
Total revenues 29,031 39,477 34,030 12,410 114,948
Benefits and expenses:
Claims and other policy
benefits 23,128 35,128 27,164 9,429 94,849
Interest credited 240 -- -- -- 240
Policy acquisition costs and
other insurance expenses 2,074 658 10,444 835 14,011
Other operating expenses 3,206 2,177 3,960 3,378 12,721
Interest expense -- -- 232 1 233
Total benefits and
expenses 28,648 37,963 41,800 13,643 122,054
Income before income taxes
and minority interest $ 383 $ 1,514 $(7,770) $(1,233) $(7,106)
For the Six Months Ended
June 30, 1998
LATIN AMERICA Total
Rein- ASIA OTHER Inter-
Direct surance PACIFIC MARKETS national
Revenues:
Net premiums $25,574 $25,423 $23,406 $ 2,044 $ 76,447
Investment income,
net of related expenses 3,846 1,790 1,152 178 6,966
Realized investment gains/
(losses), net -- -- 1 -- 1
Other revenue (48) -- 2,127 (20) 2,059
Total revenues 29,372 27,213 26,686 2,202 85,473
Benefits and expenses:
Claims and other policy
benefits 23,523 23,918 15,156 1,489 64,086
Interest credited 79 -- -- -- 79
Policy acquisition costs and
other insurance expenses 1,987 958 7,627 606 11,178
Other operating expenses 3,350 1,863 3,529 2,515 11,257
Interest expense -- -- 221 -- 221
Total benefits and
expenses 28,939 26,739 26,533 4,610 86,821
Income before income taxes
and minority interest $ 433 $ 474 $ 153 $(2,408) $(1,348)