Reinsurance Group of America Reports 26 Percent Increase in Third-Quarter Operating Earnings Per Share From Continuing Operations
Premiums Up 32 Percent
ST. LOUIS, Oct. 28 /PRNewswire/ -- Reinsurance Group of America, Incorporated (NYSE: RGA) reported a 26 percent increase in third-quarter operating earnings per diluted share from continuing operations to $0.58 from $0.46 in the prior year. Operating earnings from continuing operations totaled $26.5 million, a 25 percent increase over the prior year's $21.2 million. The company reported a net loss of $17.1 million, or $0.38 per share, including capital gains and losses and discontinued operations versus net income of $20.7 million, or $0.45 per share, the year before. The loss included net capital losses incurred in connection with the liquidation of assets and related recapture of funding agreement business from RGA by General American Life Insurance Company. All remaining funding agreement business was recaptured by General American during the quarter.
Net premiums increased 32 percent to $295.1 million from $224.3 million the year before. Net investment income rose 29 percent to $91.7 million.
"We have just completed an eventful third quarter, and are quite pleased with our operating results and overall business levels," commented A. Greig Woodring, president and chief executive officer. "As has been previously reported, the liquidity problems that affected our parent company, General American Life Insurance Company, led to an agreement by Metropolitan Life Insurance Company to acquire General American, including its investment in RGA. That transaction, which is expected to close before year-end, is subject to various legal and regulatory approvals."
Woodring continued, "We have been gratified by the extent to which our clients have shown confidence in us. Looking forward, we feel the affiliation with MetLife will prove to be an extremely positive development for RGA. As we recently announced, MetLife has agreed in principle to a $125 million private placement of RGA common stock in a transaction expected to close shortly. This type of support should ensure that RGA has the resources to independently continue growing its operations.
Woodring concluded, "The third quarter operating results reflect a continuation of the growth RGA has exhibited for several years now. Almost all segments reported increases in premium levels, and we continue to be encouraged by business levels. In particular, premiums were up 29 percent in the U.S. operating segment, and up 66 percent in the Canada operating segment. These increases result in part from some of the large, in-force portfolios of reinsurance added over the last several years. Mortality results were positive for the quarter, and we continue to see a number of opportunities in our various markets."
For the first nine months of 1999, operating earnings from continuing operations totaled $74.3 million, an increase of 35 percent over the $54.9 million reported in the prior year. On a per share basis, operating earnings from continuing operations totaled $1.62, up 23 percent from $1.32 a year ago. Net income for the first nine months, including capital gains and losses and discontinued operations, declined 54 percent to $25.5 million, or $0.56 per share, from $55.8 million, or $1.35 per share. Premiums were up 37 percent, to $965.6 million from $705.4 million the prior year. Investment income totaled $264.2 million, up 28 percent from the prior year.
The board of directors declared a regular quarterly dividend of $0.06 per share, payable November 24 to shareholders of record November 3.
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 $400 billion of life reinsurance in force, and assets of $5.2 billion. General American Life Insurance Company owns approximately 53 percent of RGA's outstanding shares. RGA completed the conversion of its non-voting common shares to voting common shares during September. The conversion brings the total of voting common shares outstanding to approximately 45.1 million.
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 Company's 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
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
(Unaudited) September 30, September 30,
1999 1998 1999 1998
Revenues:
Net premiums $295,079 $224,327 $965,603 $705,352
Net investment income 91,697 71,126 264,231 206,180
Realized capital gains/
(losses), net (62,239) 639 (61,744) 3,358
Other income 1,707 6,573 10,568 16,671
Total revenue 326,244 302,665 1,178,658 931,561
Benefits and expenses:
Claims and other policy
benefits 229,684 168,611 776,763 552,415
Interest credited 43,898 38,821 127,141 111,178
Policy acquisition costs
and other insurance
expenses 49,324 44,824 155,233 130,566
Other expenses 19,408 14,094 51,162 41,176
Interest expense 2,475 2,228 6,704 6,440
Total benefits
and expenses 344,789 268,578 1,117,003 841,775
Income (loss) from continuing
operations before taxes
and minority interest (18,545) 34,087 61,655 89,786
Income taxes (4,950) 12,311 27,166 32,279
Income (loss) from continuing
operations before minority
interest (13,595) 21,776 34,489 57,507
Minority interest 342 151 801 457
Net income/(loss) from
continuing operations (13,937) 21,625 33,688 57,050
Discontinued operations:
(Loss) from
discontinued operations,
net of taxes (3,212) (968) (8,204) (1,266)
Net income/(loss) $(17,149) $ 20,657 $ 25,484 $ 55,784
Reinsurance Group Of America, Incorporated and Subsidiaries
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
(Unaudited) September 30, September 30,
1999 1998 1999 1998
Earnings/(loss) per share from
continuing operations:
Basic earnings per share $ (0.31) $ 0.48 $ 0.74 $ 1.39
Diluted earnings per share $ (0.31) $ 0.47 $ 0.73 $ 1.38
Diluted earnings before
realized investment gains/
(losses) $ 0.58 $ 0.46 $ 1.62 $ 1.32
Earnings/(loss) per share from
net income:
Basic earnings per share $ (0.38) $ 0.46 $ 0.56 $ 1.36
Diluted earnings per share $ (0.38) $ 0.45 $ 0.56 $ 1.35
Weighted average number of common
and common equivalent shares
outstanding (in thousands) 45,311 45,788 45,854 41,474
Reinsurance Group Of America, Incorporated And Subsidiaries
Condensed Consolidated Business Summary
At or For the
Nine Months Ended
(Unaudited) September 30,
1999 1998
Gross life reinsurance in force (in billions)
North American business $ 349.5 $ 259.2
International business 64.2 34.5
Gross life reinsurance written (in billions)
North American business 76.5 76.5
International business 18.1 4.4
Consolidated cash and invested assets
(in millions) 3,870.1 4,617.0
Invested asset yield 6.87% 6.97%
Investment portfolio mix
Cash and short-term investments 6.12% 3.82%
Fixed maturity securities 53.68% 76.84%
Mortgage loans 6.23% 4.63%
Policy loans 15.69% 10.22%
Funds withheld at interest 17.61% 4.02%
Other invested assets 0.67% 0.47%
Post-stock split:
Book value per share outstanding $ 14.33 $ 17.33
Book value per share outstanding, before
impact of FAS 115 15.98 15.43
Treasury stock at September 30 1,138,595 1,208,645
Reinsurance Group Of America, Incorporated And Subsidiaries
U.S. Operations
(Dollars in thousands)
Nine Months Ended September 30, 1999
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $696,220 $ 781 $ -- $697,001
Investment income, net
of related expenses 90,511 110,471 -- 200,982
Realized investment
gains/(losses), net (14,988) (56,439) -- (71,427)
Other revenue (1,521) 801 10,142 9,422
Total revenues 770,222 55,614 10,142 835,978
Benefits and expenses:
Claims and other policy
benefits 529,317 897 -- 530,214
Interest credited 29,212 95,958 -- 125,170
Policy acquisition
costs and other
insurance expenses 106,192 2,695 7,434 116,321
Other operating
expenses 16,889 583 96 17,568
Total benefits and
expenses 681,610 100,133 7,530 789,273
Income/(loss) before income
taxes and minority
interest $ 88,612 $(44,519) $ 2,612 $ 46,705
Reinsurance Group Of America, Incorporated And Subsidiaries
U.S. Operations
(Dollars in thousands)
Nine Months Ended September 30, 1998
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $514,961 $ 1,014 $ -- $515,975
Investment income, net
of related expenses 78,296 92,286 -- 170,582
Realized investment gains
(losses), net 1,717 981 -- 2,698
Other revenue 4 -- 13,661 13,665
Total revenues 594,978 94,281 13,661 702,920
Benefits and expenses:
Claims and other policy
benefits 391,052 2,851 -- 393,903
Interest credited 33,064 77,321 -- 110,385
Policy acquisition costs
and other insurance
expenses 86,722 4,503 9,852 101,077
Other operating
Expenses 11,827 555 99 12,481
Total benefits and
expenses 522,665 85,230 9,951 617,846
Income before income
taxes and minority
interest $ 72,313 $ 9,051 $ 3,710 $ 85,074
Reinsurance Group Of America, Incorporated And Subsidiaries
Canadian Operations
(Dollars in thousands)
Nine Months Ended
September 30,
1999 1998
Revenues:
Net premiums $119,636 $ 75,058
Investment income, net of related expenses 38,125 19,034
Realized investment gains/(losses), net 6,253 617
Other revenue (24) 339
Total revenues 163,990 95,048
Benefits and expenses:
Claims and other policy benefits 112,890 69,394
Interest credited 1,356 677
Policy acquisition costs and other
insurance expenses 17,161 9,208
Other operating expenses 5,418 4,824
Total benefits and expenses 136,825 84,103
Income before income taxes
and minority interest $ 27,165 $ 10,945
Reinsurance Group Of America, Incorporated and Subsidiaries
Other International
(Dollars in thousands)
Nine Months Ended September 30, 1999
Latin America Total
Rein- Asia Other Inter-
Direct surance Pacific Markets national
Revenues:
Net premiums $33,882 $44,598 $51,188 $19,298 $148,966
Investment income,
net of related expenses 11,471 4,260 1,612 608 17,951
Realized investment gains
/(losses), net 12 268 (33) 275 522
Other revenue 104 (126) 643 420 1,041
Total revenues 45,469 49,000 53,410 20,601 168,480
Benefits and expenses:
Claims and other policy
benefits 35,096 42,645 41,242 14,676 133,659
Interest credited 239 377 -- -- 616
Policy acquisition costs
and other insurance
expenses 2,911 1,190 14,193 3,456 21,750
Other operating expenses 5,575 2,411 5,607 5,980 19,573
Interest expense -- -- 355 1 356
Total benefits and
expenses 43,821 46,623 61,397 24,113 175,954
Income/(loss) before
Income taxes and
minority interest $ 1,648 $ 2,377 $(7,987) $(3,512) $(7,474)
Reinsurance Group Of America, Incorporated And Subsidiaries
Other International
(Dollars in thousands)
Nine Months Ended September 30, 1998
Latin America Total
Rein- Asia Other Inter-
Direct surance Pacific Markets national
Revenues:
Net premiums $35,072 $37,035 $37,630 $ 4,582 $114,319
Investment income,
net of related expenses 4,675 2,685 1,715 274 9,349
Realized investment gains
(losses), net -- -- 1 42 43
Other revenue 180 -- 2,476 11 2,667
Total revenues 39,927 39,720 41,822 4,909 126,378
Benefits and expenses:
Claims and other policy
benefits 30,650 33,712 21,669 3,087 89,118
Interest credited 116 -- -- -- 116
Policy acquisition costs
and other insurance
expenses 3,023 1,511 14,312 1,420 20,266
Other operating expenses 5,532 2,690 5,353 3,913 17,488
Interest expense -- -- 336 (4) 332
Total benefits and
expenses 39,321 37,913 41,670 8,416 127,320
Income/(loss) before
income taxes and
minority interest $ 606 $ 1,807 $ 152 $(3,507) $ (942)
SOURCE Reinsurance Group of America, Incorporated