Reinsurance Group of America Reports First-Quarter Results
ST. LOUIS--(BUSINESS WIRE)--April 25, 2002--Reinsurance Group of America, Incorporated (NYSE:RGA - news) reported first-quarter net income of $27.8 million, or $0.56 per share, compared with $21.6 million, or $0.43 per share the year before. Operating earnings from continuing operations totaled $32.4 million or $0.65 per share, and excluded $2.6 million, after tax, in net capital losses, a $0.7 million after-tax loss associated with the write-off of goodwill, and a $1.3 million after-tax loss associated with the company's discontinued accident and health segment. Operating earnings from continuing operations in the prior year totaled $23.4 million, or $0.47 per share, and excluded $1.8 million, after tax, in net capital losses.
First-quarter premiums increased 16 percent, to $469.1 million from $404.6 million in 2001. Consolidated net investment income increased 5 percent, to $88.0 million from $84.1 million.
President and Chief Executive Officer A. Greig Woodring commented, ``We are pleased with the results for the quarter. On a consolidated basis, our results were within our expectations and momentum has been re-established after a difficult fourth quarter. Notably, consolidated net premiums increased 16 percent over the year-earlier quarter, a period in which premiums had increased 23 percent from the previous year. We view this as a solid start to the year.''
Woodring continued, ``For the quarter, net premiums in the U.S. increased to $345.0 million, or 13 percent over the prior year. This growth was primarily from recurring business. Pre-tax operating income totaled $40.7 million, up 18 percent from the prior-year quarter. The fundamentals that have driven growth in the U.S. life reinsurance market continue. Preliminary industry information indicates that total ordinary life reinsurance face amount assumed during 2001 in the U.S. increased over 20 percent from 2000.
``For the first quarter, Canada reported pre-tax operating income of $8.9 million compared with $11.5 million in the prior year. Net premiums increased 9 percent to $46.5 million from $42.6 million in the prior year, in line with expectations. Pre-tax operating income in the current quarter was slightly below our expectations; however, the decrease from the prior year is primarily a reflection of better-than- expected mortality in each of the previous two years. We expect the Canada segment will continue to exhibit year-over-year earnings growth as it has historically.
``Our operations in Asia Pacific, Europe and South Africa continue to grow and have now combined to produce an operating profit in each of the last four quarters. For the quarter, these operations reported net premiums of $73.4 million, an increase of 74 percent from the prior-year quarter. Pre-tax operating income for the quarter was $2.3 million with both operations contributing to the profit. We continue to see good opportunities in these markets.''
Commenting on Latin America, Woodring said, ``The economic and political issues in Argentina continue. Our situation there has remained relatively stable as we continue to pursue settlements of our claim obligations associated with the reinsurance of the privatized pension program. During the quarter, we did settle some claims resulting in a modest gain due to currency translation. For the quarter, the Latin America segment reported pre-tax operating income of $1.3 million. Should current trends continue, we believe that the weakness of the Argentine peso relative to the U.S. dollar could provide us with some advantage as we continue to pursue claim settlements.''
Turning to other corporate matters, Woodring said, ``In January, we announced that our board of directors authorized the company to purchase up to $50 million of RGA stock, as conditions warrant. During the first quarter, we purchased 225,500 shares of stock at an average price of $29.24. We will continue to evaluate additional purchases.''
Woodring concluded, ``We are pleased to be off to a good start in 2002. We look forward to continued growth and success throughout the remainder of 2002.''
The company announced that its board of directors declared a regular quarterly dividend of $0.06 per share, payable May 28 to shareholders of record as of May 7.
A conference call to discuss the company's first quarter results will begin at 9:00 a.m. Eastern Time on Friday, April 26. Interested parties may access the call by dialing 800/967-7140 (domestic) or 719/457-2629 (international). The access code is 775753. A live audio Webcast of the conference call will be available on the company's website at www.rgare.com. A replay of the conference call will be available on the company's website for 10 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 $652 billion of life reinsurance in force, and assets of $7.2 billion. MetLife is the beneficial owner of approximately 59 percent of RGA's outstanding shares.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements relating to projections of the earnings, revenues, income or loss, future financial performance and growth potential of Reinsurance Group of America, Incorporated and its subsidiaries (which we refer to in the following paragraphs as ``we,'' ``us'' or ``our''). The words ``intend,'' ``expect,'' ``project,'' ``estimate,'' ``predict,'' ``anticipate,'' ``should,'' ``believe,'' and other similar expressions also are intended to identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results, performance and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.
Numerous important factors could cause actual results and events to differ materially from those expressed or implied by forward-looking statements including, without limitation, (1) material changes in mortality and claims experience, (2) market or economic conditions that adversely affect our ability to make timely sales of investment securities, (3) competitive factors and competitors' responses to our initiatives, (4) general economic conditions affecting the demand for insurance and reinsurance in our current and planned markets, (5) changes in our financial strength and credit ratings or those of Metropolitan Life Insurance Company (``MetLife''), General American Life Insurance Company (``General American''), and their respective affiliates, and the effect of such changes on our future results of operations and financial condition, (6) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (7) changes in investment portfolio yields due to interest rate or credit quality changes, (8) the stability of governments and economies in the markets in which we operate, (9) adverse litigation or arbitration results, (10) the success of our clients, (11) successful execution of our entry into new markets, (12) successful development and introduction of new products, (13) regulatory action that may be taken by state Departments of Insurance with respect to us, MetLife, or General American, (14) changes in laws, regulations, and accounting standards applicable to us, our subsidiaries, or our business, and (15) other risks and uncertainties described in this document and in our other filings with the Securities and Exchange Commission.
Forward-looking statements should be evaluated together with the
many risks and uncertainties that affect our business, including those
mentioned in this document and described in the periodic reports we
file with the Securities and Exchange Commission. You are cautioned
not to place undue reliance on the forward-looking statements, which
speak only as of the date on which they are made. We do not undertake
any obligations to update these forward-looking statements, even
though our situation may change in the future. We qualify all of our
forward-looking statements by these cautionary statements.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands)
Three Months Ended
(Unaudited) March 31,
2002 2001
Revenues:
Net premiums $469,105 $404,585
Investment income, net of
related expenses 88,013 84,089
Realized capital losses, net (3,591) (1,506)
Other revenues 6,685 6,487
Total revenues 560,212 493,655
Benefits and expenses:
Claims and other policy benefits 387,726 337,566
Interest credited 27,725 27,404
Policy acquisition costs and other
insurance expenses 71,499 65,833
Other operating expenses 19,517 22,259
Interest expense 8,554 4,911
Total benefits and expenses 515,021 457,973
Income from continuing operations
before income taxes 45,191 35,682
Income taxes 16,155 14,040
Income from continuing operations 29,036 21,642
Discontinued operations:
Loss from discontinued accident
and health operations, net
of income taxes (1,256) ---
Net income $ 27,780 $ 21,642
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,
2002 2001
Earnings per share from continuing operations:
Basic earnings per share $ 0.59 $ 0.44
Diluted earnings per share $ 0.58 $ 0.43
Diluted earnings before realized
investment gains/(losses) and
goodwill write-off in 2002 $ 0.65 $ 0.47
Earnings per share from net income:
Basic earnings per share $ 0.56 $ 0.44
Diluted earnings per share $ 0.56 $ 0.43
Weighted average number of common
and common equivalent shares
outstanding (in thousands) 49,750 49,886
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
At or For the
Three Months Ended
(Unaudited) March 31,
2002 2001
Gross life reinsurance in force (in billions)
North American business $ 559.7 $ 507.3
International business 92.2 78.4
Gross life reinsurance written (in billions)
North American business 38.6 19.4
International business 3.4 2.2
Consolidated cash and invested assets
(in millions) 5,557.9 4,665.0
Invested asset book yield - trailing
three months excluding funds withheld 6.64% 7.25%
Investment portfolio mix
Cash and short-term investments 2.38% 3.25%
Fixed maturity securities 53.60% 57.94%
Mortgage loans 3.11% 2.77%
Policy loans 13.94% 15.16%
Funds withheld at interest 25.03% 20.37%
Other invested assets 1.94% 0.51%
Book value per share outstanding $ 20.17 $ 17.83
Book value per share outstanding, before
impact of FAS 115 21.10 18.46
Treasury stock 1,751,230 1,662,082
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Dollars in thousands)
Three Months Ended March 31, 2002
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $344,142 $ 868 $ -- $ 345,010
Investment income,
Net of related
expenses 36,826 23,718 103 60,647
Realized investment
(losses)/gains, net (2,027) 564 -- (1,463)
Other revenues 101 261 6,151 6,513
Total revenues 379,042 25,411 6,254 410,707
Benefits and expenses:
Claims and other
policy benefits 286,003 6,001 -- 292,004
Interest credited 13,780 13,693 -- 27,473
Policy acquisition
costs and other
insurance expenses 40,802 1,845 1,900 44,547
Other operating
expenses 5,778 200 1,932 7,910
Total benefits and
expenses 346,363 21,739 3,832 371,934
Income before
income taxes $ 32,679 $ 3,672 $ 2,422 $ 38,773
Three Months Ended March 31, 2001
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $305,489 $ 298 $ -- $ 305,787
Investment income,
net of related
expenses 36,701 23,159 199 60,059
Realized investment
(losses)/gains, net (4,568) 234 -- (4,334)
Other revenues 118 (718) 6,216 5,616
Total revenues 337,740 22,973 6,415 367,128
Benefits and expenses:
Claims and other
policy benefits 249,430 3,081 -- 252,511
Interest credited 12,616 14,388 -- 27,004
Policy acquisition
costs and other
insurance expenses 42,496 3,102 2,854 48,452
Other operating
expenses 6,692 129 2,068 8,889
Total benefits
and expenses 311,234 20,700 4,922 336,856
Income before
income taxes $ 26,506 $ 2,273 $ 1,493 $ 30,272
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CANADIAN OPERATIONS
(Dollars in thousands)
Three Months Ended
March 31,
2002 2001
Revenues:
Net premiums $ 46,533 $ 42,566
Investment income, net of related expenses 15,605 15,646
Realized investment (losses)/gains, net (81) 5,614
Other revenues (29) 247
Total revenues 62,028 64,073
Benefits and expenses:
Claims and other policy benefits 45,723 41,207
Interest credited -- 107
Policy acquisition costs and other
insurance expenses 5,217 3,486
Other operating expenses 2,243 2,124
Total benefits and expenses 53,183 46,924
Income before income taxes $ 8,845 $ 17,149
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
OTHER INTERNATIONAL
(Dollars in thousands)
Three Months Ended March 31, 2002
Europe Total
Latin Asia & South Inter-
America Pacific Africa national
Revenues:
Net premiums $ 4,197 $33,152 $40,213 $77,562
Investment income,
net of related expenses 2,557 1,369 231 4,157
Realized investment losses,
net (155) (50) (295) (500)
Other revenues 25 696 6 727
Total revenues 6,624 35,167 40,155 81,946
Benefits and expenses:
Claims and other policy
benefits 2,241 22,568 25,190 49,999
Interest credited 252 -- -- 252
Policy acquisition costs and
other insurance expenses 1,555 8,224 11,948 21,727
Other operating expenses 2,154 2,731 2,487 7,372
Interest expense -- 173 78 251
Total benefits and
expenses 6,202 33,696 39,703 79,601
Income before income taxes $ 422 $ 1,471 $ 452 $ 2,345
Three Months Ended March 31, 2001
Europe Total
Latin Asia & South Inter-
America Pacific Africa national
Revenues:
Net premiums $14,098 $28,887 $13,247 $ 56,232
Investment income,
net of related expenses 2,879 1,035 655 4,569
Realized investment (losses)
/ gains, net (388) 85 (36) (339)
Other revenues 91 725 (4) 812
Total revenues 16,680 30,732 13,862 61,274
Benefits and expenses:
Claims and other policy
benefits 14,336 19,502 10,010 43,848
Interest credited 293 -- -- 293
Policy acquisition costs and
other insurance expenses 2,274 8,312 3,309 13,895
Other operating expenses 2,126 2,858 2,480 7,464
Interest expense -- 270 145 415
Total benefits and
expenses 19,029 30,942 15,944 65,915
Loss before income taxes $(2,349) $ (210) $(2,082)$ (4,641)
SOURCE: Reinsurance Group of America, Incorporated
Contact:
Reinsurance Group of America, Incorporated
Jack B. Lay, 636/736-7439