Reinsurance Group Of America Reports 27 Percent Increase In Operating Earnings For Fourth Quarter; Charge To Discontinued Accident And Health Segment
ST. LOUIS--(BUSINESS WIRE)--Jan. 26, 2001--Reinsurance Group of America, Incorporated (NYSE:RGA) reported operating earnings from continuing operations of $0.72 per share for the fourth quarter, up 22 percent from $0.59 per share reported in the prior year. Operating earnings from continuing operations totaled $35.8 million for the quarter, up 27 percent from the prior year total of $28.2 million. Net income for the quarter, including capital gains and losses and discontinued operations, totaled $9.2 million, or $0.19 per share, compared to earnings of $15.4 million, or $0.32 per share, in the prior year. Net income for the fourth quarter of 2000 includes a $25 million non-cash, pretax charge associated with the company's discontinued accident and health segment.
Fourth quarter premiums increased 18 percent, to $413.0 million from $350.0 million in 1999. Consolidated net investment income increased 16 percent, to $88.1 million from $76.0 million in 1999.
President and Chief Executive Officer A. Greig Woodring commented, "We are pleased with both the full year and quarter's operating results. The U.S. and Canada segments contributed approximately $59 million in pre-tax operating income for the quarter. This represents an increase of approximately 28 percent from prior year, when we experienced adverse mortality in our U.S. segment. Mortality experience was generally as expected in all segments for the quarter and positive for the year as a whole. The U.S. segment was especially strong, and was the primary contributor to the 18 percent improvement in the quarter's consolidated net premiums."
Woodring continued, "RGA's other international operations reported a modest operating profit for the quarter and for the year. Premiums totaled approximately $54 million in the international operations for the fourth quarter, and $189 million for the year. Several of these operations are beginning to build some scale; however, we are still in the relatively early stages of our international development."
Commenting on discontinued operations, Woodring explained, "We took the $25 million pre-tax charge to strengthen reserves supporting the accident and health segment. We discontinued this segment in 1998 and have been disappointed with the additional losses we have experienced over the last two years. As we have indicated previously, the flow of information on this business has made it quite difficult to reserve. Now, however, the flow of premiums has diminished significantly, and we have a better perspective. The current reserve levels are intended to alleviate what has been a consistent need for small reserve increases each quarter. We are aggressively managing the run-off of this business. However, the nature of the business is such that it will take several more years to complete the claims run-off."
Woodring concluded, "We are pleased in having achieved our goal of growing operating earnings, on a per share basis, by 15 percent during 2000. That growth rate continues to be our long-term target. We are looking forward to the new year and the opportunities our various markets present."
For the year, operating earnings from continuing operations totaled $127.4 million, up 24 percent from the $102.4 million reported for 1999. That represents $2.55 per share, an increase of 15 percent over $2.21 per share in the prior year. Net income for the year, including discontinued operations and capital gains and losses, totaled $77.7 million, or $1.56 per share, up from $40.9 million, or $0.88 per share, reported for the prior year. Consolidated premiums totaled $1,404.1 million, up 7 percent over the prior year total of $1,315.6 million.
The company announced that its board of directors declared a regular quarterly dividend of $0.06 per share. The dividend is payable February 26 to shareholders of record as of February 5.
A conference call to discuss the company's fourth quarter results will begin at 9:00 a.m. Eastern Standard Time on Friday January 26. A live audio webcast of the conference call will be available on the company's investor relations web page at www.rgare.com. A replay of the conference call will be available on the company's website for ten days following the conference call.
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, Spain, Mexico, Hong Kong, Japan, Taiwan, South Africa and the United Kingdom. Worldwide, the Company has approximately $546 billion of life reinsurance in force, and assets of $6.1 billion. Metropolitan Life Insurance Company is the beneficial owner of 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 and growth potential, increase in premiums, the effect of mortality rates and experience, claims levels, its views on the life reinsurance industry 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 and other documents filed with the Securities and Exchange Commission, which discussions are incorporated by reference into this document.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
(Unaudited) December 31, December 31,
2000 1999 2000 1999
Revenues:
Net premiums $413,007 $350,035 $1,404,066 $1,315,638
Net investment income 88,085 76,049 326,505 340,280
Realized capital gains/
(losses), net (10,306) (13,564) (28,651) (75,308)
Other income 11,178 15,904 23,815 26,472
Total revenue 501,964 428,424 1,725,735 1,607,082
Benefits and expenses:
Claims and other policy
benefits 327,222 290,348 1,103,548 1,067,111
Interest credited 30,220 25,977 104,782 153,118
Policy acquisition costs
and other insurance
expenses 72,285 63,081 243,542 218,314
Other expenses 21,733 13,285 80,922 64,447
Interest expense 5,179 4,316 17,596 11,020
Total benefits
and expenses 456,639 397,007 1,550,390 1,514,010
Income from continuing
operations before taxes
and minority interest 45,325 31,417 175,345 93,072
Income taxes 16,528 11,893 69,271 39,059
Income from continuing
operations before
minority interest 28,797 19,524 106,074 54,013
Minority interest (306) 167 287 968
Net income from
continuing operations 29,103 19,357 105,787 53,045
Discontinued operations:
Loss from discontinued
operations, net of
taxes (19,869) (3,983) (28,118) (12,187)
Net income $ 9,234 $ 15,374 $ 77,669 $ 40,858
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
(Unaudited) December 31, December 31,
2000 1999 2000 1999
Earnings per share from continuing operations:
Basic earnings per share $ 0.59 $ 0.41 $ 2.14 $ 1.16
Diluted earnings per share $ 0.58 $ 0.41 $ 2.12 $ 1.15
Diluted earnings before
realized investment gains/
(losses) $ 0.72 $ 0.59 $ 2.55 $ 2.21
Earnings per share from net income:
Basic earnings per share $ 0.19 $ 0.33 $ 1.57 $ 0.89
Diluted earnings per share $ 0.19 $ 0.32 $ 1.56 $ 0.88
Weighted average number of common
and common equivalent shares
outstanding (in thousands) 49,802 47,483 49,920 46,246
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
At or For the
Twelve Months Ended
(Unaudited) December 31,
2000 1999
Gross life reinsurance in force (in billions)
North American business $ 467.0 $ 391.5
International business 78.9 55.5
Gross life reinsurance written (in billions)
North American business 129.5 130.7
International business 31.6 34.2
Consolidated cash and invested assets
(in millions) 4,631.0 3,836.2
Invested asset book yield -
trailing three months 7.30% 7.10%
Investment portfolio mix
Cash and short-term investments 3.01% 6.85%
Fixed maturity securities 58.15% 48.90%
Mortgage loans 2.77% 5.56%
Policy loans 15.26% 17.21%
Funds withheld at interest 20.26% 20.80%
Other invested assets 0.55% 0.68%
Book value per share outstanding $ 17.51 $ 14.68
Book value per share outstanding, before
impact of FAS 115 18.36 17.31
Treasury stock 1,759,715 1,112,820
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Dollars in thousands)
Twelve Months Ended December 31, 2000
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $1,036,656 $ 2,216 $ -- $1,038,872
Investment income, net
of related expenses 139,688 89,001 (37) 228,652
Realized investment
gains/(losses), net (12,206) (1,066) -- (13,272)
Other revenue 321 686 16,370 17,377
Total revenues 1,164,459 90,837 16,333 1,271,629
Benefits and expenses:
Claims and other
policy benefits 793,494 (95) -- 793,399
Interest credited 47,445 55,006 -- 102,451
Policy acquisition
costs and other
insurance expenses 150,347 23,446 5,457 179,250
Other operating
expenses 25,244 802 3,274 29,320
Total benefits and
expenses 1,016,530 79,159 8,731 1,104,420
Income before income
taxes and minority
interest $ 147,929 $ 11,678 $ 7,602 $ 167,209
Twelve Months Ended December 31, 1999
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $ 949,054 $ 1,380 $ -- $ 950,434
Investment income, net
of related expenses 125,745 124,713 -- 250,458
Realized investment
gains/(losses), net (17,043) (65,844) -- (82,887)
Other revenue (597) 12,655 13,180 25,238
Total revenues 1,057,159 72,904 13,180 1,143,243
Benefits and expenses:
Claims and other
Policy benefits 740,339 1,009 -- 741,348
Interest credited 40,240 109,644 -- 149,884
Policy acquisition costs
and other insurance
expenses 145,529 2,850 9,370 157,749
Other operating
expenses 23,002 623 100 23,725
Total benefits and
expenses 949,110 114,126 9,470 1,072,706
Income before income
taxes and minority
interest $108,049 $(41,222) $ 3,710 $ 70,537
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CANADIAN OPERATIONS
(Dollars in thousands)
Twelve Months Ended
December 31,
2000 1999
Revenues:
Net premiums $176,326 $162,482
Investment income, net of related expenses 61,950 52,767
Realized investment gains/(losses), net (1,291) 5,923
Other revenue 318 (38)
Total revenues 237,303 221,134
Benefits and expenses:
Claims and other policy benefits 171,417 154,194
Interest credited 763 1,799
Policy acquisition costs and other
insurance expenses 16,563 19,970
Other operating expenses 8,702 7,292
Total benefits and expenses 197,445 183,255
Income before income taxes
and minority interest $ 39,858 $ 37,879
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
OTHER INTERNATIONAL
(Dollars in thousands)
Twelve Months Ended December 31, 2000
Total
Latin Asia Other Inter-
America Pacific Markets national
Revenues:
Net premiums $ 64,897 $ 94,282 $29,690 $188,869
Investment income,
net of related expenses 19,782 4,628 2,056 26,466
Realized investment gains
/(losses), net (9,099) (191) 365 (8,925)
Other revenue 364 2,266 3,177 5,807
Total revenues 75,944 100,985 35,288 212,217
Benefits and expenses:
Claims and other policy
benefits 62,205 56,377 20,151 138,733
Interest credited 1,568 -- -- 1,568
Policy acquisition costs and
other insurance expenses 7,772 32,484 7,473 47,729
Other operating expenses 10,647 9,939 9,542 30,128
Interest expense -- 980 502 1,482
Total benefits and
expenses 82,192 99,780 37,668 219,640
Income before income taxes
and minority interest $ (6,248) $ 1,205 $(2,380) $ (7,423)
Twelve Months Ended December 31, 1999
Total
Latin Asia Other Inter-
America Pacific Markets national
Revenues:
Net premiums $104,167 $ 73,887 $24,668 $202,722
Investment income,
net of related expenses 23,753 2,182 775 26,710
Realized investment gains/
(losses), net 95 (3) 101 193
Other revenue (224) 1,263 105 1,144
Total revenues 127,791 77,329 25,649 230,769
Benefits and expenses:
Claims and other policy
benefits 111,479 46,785 13,305 171,569
Interest credited 1,435 -- -- 1,435
Policy acquisition costs and
other insurance expenses 2,340 29,860 8,388 40,588
Other operating expenses 9,209 6,983 7,810 24,002
Interest expense -- 491 -- 491
Total benefits and
expenses 124,463 84,119 29,503 238,085
Income before income taxes
and minority interest $ 3,328 $ (6,790) $(3,854) $ (7,316)
| SOURCE: | Reinsurance Group of America, Incorporated |
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--30--LR/na*
| CONTACT: | Reinsurance Group of America Incorporated, St. Louis |
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| Jack B. Lay, 636/736-7439 | |