Reinsurance Group of America Reports Fourth-Quarter Operating Income of $1.42 Per Diluted Share; Provides Guidance for Full-Year 2008
ST. LOUIS, Jan 23, 2008 (BUSINESS WIRE) -- Reinsurance Group of America, Incorporated (NYSE:RGA), a leading global provider of life reinsurance, reported net income for the fourth quarter of $63.6 million, or $0.99 per diluted share, compared to $81.5 million, or $1.28 per diluted share, in the prior-year quarter. RGA uses a non-GAAP financial measure called operating income as a basis for analyzing financial results. The definition of operating income and reconciliations to GAAP net income are provided in the following tables. Operating income increased 13 percent to $91.2 million, or $1.42 per diluted share, from $81.0 million, or $1.27 per diluted share, in the year-ago quarter. On a per share basis, operating income increased 12 percent. Fourth-quarter net premiums rose 12 percent, to $1,348.0 million, from $1,200.7 million a year ago. Net investment income totaled $226.8 million versus $240.8 million the year before.
For the full-year 2007, net income totaled $293.8 million or $4.57 per diluted share, compared to $288.2 million, or $4.57 per diluted share, in the year-ago period. Operating income totaled $353.5 million, or $5.50 per diluted share, compared to $293.2 million, or $4.65 per diluted share, in the prior-year period, an 18 percent increase on a per share basis. Consolidated net premiums were up 13 percent, to $4,909.0 million from $4,346.0 million.
A. Greig Woodring, president and chief executive officer, commented, "Results for the quarter were once again strong, contributing to a record year for RGA in terms of revenues and operating income. The U.S. and Canada segments, in particular, reported very strong operating income. Total U.S. segment pre-tax operating income increased 30 percent to $110.7 million from $84.9 million the year before. Claim levels were very favorable in the Traditional segment.
"Our U.S. facultative operation set a record this year as it processed over 100,000 facultative submissions for the first time in its 30-plus year history. Our facultative expertise continues to be highly coveted by our clients and continues to distinguish us from our competition. Net premiums were up 9 percent to $791.4 million from $728.2 million in the prior-year quarter. On a year-to-date basis, net premiums increased 8 percent.
"The U.S. segment reported pre-tax net income totaling $82.4 million for the quarter versus $86.3 million the year before. The current quarter includes a $22.9 million pre-tax loss, net of deferred acquisition costs, due to a decline in the value of embedded derivatives associated with modified coinsurance and funds withheld treaties. The change in value of the embedded derivatives represents a non-cash, unrealized change due to the impact of widening credit spreads on the investment portfolios underlying certain of our funds withheld annuity reinsurance treaties. We consider it a non-operating item since it is unrealized and does not affect current cash flows or spread performance on the underlying treaties.
"Our Canada operations reported another strong quarter on favorable mortality, with pre-tax net income of $19.5 million compared to $12.8 million a year ago. Pre-tax operating income totaled $19.5 million, up substantially from $11.0 million a year ago. Net premiums increased 5 percent to $141.4 million from $134.6 million in the prior year. For the year, premiums were up 13 percent. Net premiums for the fourth quarter of 2007 were favorably affected by currency exchange rates relative to the prior year by approximately $19.6 million, as the Canadian dollar strengthened relative to the U.S. dollar. The impact of foreign currency fluctuations favorably affected pre-tax operating income by approximately $3.1 million.
"Asia Pacific reported a good quarter as well with strong premium flow and favorable segment-wide claims experience. Pre-tax net income totaled $16.9 million compared with $23.9 million in the year-ago quarter while pre-tax operating income totaled $17.5 million compared with $24.1 million a year ago. The prior-year quarter reflected very favorable mortality experience. Net premiums increased 28 percent to $238.3 million from $186.6 million. Our three largest markets, Australia, Japan and South Korea, reported solid results for the quarter and year as a whole. Additionally, we experienced good revenue growth and earnings contribution from our operation in Taiwan. Foreign currency fluctuations favorably affected net premiums and pre-tax operating income by approximately $17.5 million and $1.4 million, respectively.
"Our Europe and South Africa segment experienced high claim levels in the UK, which led to a poor segment-wide result for the quarter. Pre-tax net income totaled $2.8 million compared to $17.4 million a year ago and pre-tax operating income totaled $3.3 million versus $17.4 million last year, a period in which we experienced favorable mortality. For the year, claims levels in the UK were higher-than-expected, but within normal statistical fluctuations. Net premiums for the segment increased 16 percent to $175.2 million. Foreign currency exchange fluctuations favorably affected reported net premiums and pre-tax operating income by approximately $11.3 million and $0.5 million, respectively.
"The loss in our discontinued accidental and health operation for the quarter includes an increase in claim settlements on particular treaties as we continue to run off that business. The level of unreserved, disputed claims now stands at approximately $8.5 million. We expect to conclude a significant portion of the remaining business in 2008."
Woodring continued, "Fourth-quarter results marked the completion of a record year for RGA. Our operating income per share of $5.50 represents an increase of 18 percent over 2006, exceeding the top end of the expectation we set at the beginning of 2007. RGA continues to build its franchise as a preeminent provider in the global life reinsurance market, and we expect the positive trajectory of the last several years to continue. We expect 2008 operating income per share to be within a range of $6.00 to $6.50 per diluted share, representing 14 percent improvement at the midpoint of that range over 2007's strong performance. This rate of growth is consistent with our five-year compound annual growth rate. We expect that growth rate to continue. This guidance assumes an expected level of death claims, which are prone to normal short-term statistical fluctuations that can significantly affect our results on a quarterly and annual basis. We were pleased to achieve a 14 percent return on equity based on operating income, excluding 'accumulated other comprehensive income' in 2007, up from 13 percent in 2006. We expect to maintain the 14 percent return on equity in 2008, and beyond.
"We anticipate that net premiums will continue to grow at a brisk pace. On a consolidated basis for 2008, we expect net premiums to increase in a range of 10 to 13 percent. At the segment level, we expect a 7 to 9 percent increase in the U.S., 10 to 12 percent in Canada, 13 to 16 percent in Asia Pacific and 12 to 15 percent in Europe and South Africa. We will continue to exploit significant growth opportunities in select Asian markets such as Japan and South Korea, and will continue our inroads into European markets."
Woodring concluded, "It has been an exceptional year for RGA in terms of our operations and financial results. Our business continues to perform well despite the turmoil in the economy and financial markets and while there is still significant uncertainty, we believe we are well positioned in this market, both operationally and financially. Our balance sheet is solid and our assets are conservatively invested, with approximately 3 percent of our fixed maturity portfolio invested in other than investment grade securities. Our exposure to sub-prime mortgages totaled $267.7 million in book value at year end, or less than 2 percent of total invested assets, of which 82 percent is rated 'AA' or above, with 44 percent in the 'AAA' category and with no holdings in the non-investment grade category. We largely avoided investing in securities originated in the second half of 2005 and beyond, which we believe was a period of lessened underwriting quality.
"We don't expect our results to be significantly affected by the recent news regarding financial guarantors, as we have generally invested in securities where the financial guarantee does not significantly enhance the credit profile of the security. Our fixed maturity and funds withheld portfolios include approximately $683 million in amortized cost of securities that are wrapped by the various financial guarantors, or less than five percent of our total invested assets. The securities are diversified between municipal bonds and asset backed securities with well-diversified collateral pools. We do not invest in any wrapped CDO structures. Our securities are primarily investment-grade credit without the benefit of the financial guarantee. While we may see some increase in unrealized losses associated with these securities in the near term, we don't expect significant realized losses. In addition to these wrapped securities, our investment portfolio includes direct positions in four of the financial guarantors totaling $22.0 million in amortized cost."
The company also announced that its board of directors declared a regular quarterly dividend of $0.09, payable February 25 to shareholders of record as of February 4.
A conference call to discuss the company's fourth-quarter results and the outlook for 2008 will begin at 9 a.m. Eastern Time on Thursday, January 24. Interested parties may access the call by dialing 877-719-9789 (domestic) or 719-325-4781 (international). The access code is 1510425. 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 at the same address for three months following the conference call. A replay of the conference call will also be available via telephone through January 31 at 888-203-1112 (domestic) or 719-457-0820, access code 1510425.
Reinsurance Group of America, Incorporated, through its various operating subsidiaries, is among the largest global providers of life reinsurance. Reinsurance Group of America, Incorporated has subsidiary companies or offices in Australia, Barbados, Bermuda, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Mexico, Poland, South Africa, South Korea, Spain, Taiwan, the United Kingdom and the United States. Worldwide, the company has approximately $2.1 trillion of life reinsurance in force, and assets of $21.6 billion. MetLife, Inc. is the beneficial owner of approximately 52 percent of RGA's outstanding shares.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This 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) adverse changes in mortality, morbidity, lapsation or claims experience, (2) changes in our financial strength and credit ratings or those of MetLife, Inc. ("MetLife"), the beneficial owner of a majority of our common shares, or its subsidiaries, and the effect of such changes on our future results of operations and financial condition, (3) inadequate risk analysis and underwriting, (4) general economic conditions or a prolonged economic downturn affecting the demand for insurance and reinsurance in our current and planned markets, (5) the availability and cost of collateral necessary for regulatory reserves and capital, (6) market or economic conditions that adversely affect our ability to make timely sales of investment securities, (7) risks inherent in our risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (8) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (9) adverse litigation or arbitration results, (10) the adequacy of reserves, resources and accurate information relating to settlements, awards and terminated and discontinued lines of business, (11) the stability of and actions by governments and economies in the markets in which we operate, (12) competitive factors and competitors' responses to our initiatives, (13) the success of our clients, (14) successful execution of our entry into new markets, (15) successful development and introduction of new products and distribution opportunities, (16) our ability to successfully integrate and operate reinsurance business that we acquire, (17) regulatory action that may be taken by state Departments of Insurance with respect to us, MetLife, or its subsidiaries, (18) our dependence on third parties, including those insurance companies and reinsurers to which we cede some reinsurance, third-party investment managers and others, (19) the threat of natural disasters, catastrophes, terrorist attacks, epidemics or pandemics anywhere in the world where we or our clients do business, (20) changes in laws, regulations, and accounting standards applicable to us, our subsidiaries, or our business, (21) the effect of our status as an insurance holding company and regulatory restrictions on our ability to pay principal of and interest on our debt obligations, and (22) 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. These forward-looking statements 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.
Operating Income
RGA uses a non-GAAP financial measure called operating income as a
basis for analyzing financial results. This measure also serves as a
basis for establishing target levels and awards under RGA's
management incentive programs. Management believes that operating
income, on a pre-tax and after-tax basis, better measures the ongoing
profitability and underlying trends of the company's continuing
operations, primarily because that measure excludes the effect of net
investment related gains and losses, as well as changes in the fair
value of certain embedded derivatives and related deferred
acquisition costs. These items tend to be highly variable, primarily
due to the credit market and interest rate environment and are not
necessarily indicative of the performance of the company's underlying
businesses. Additionally, operating income excludes any net gain or
loss from discontinued operations and the cumulative effect of any
accounting changes, which management believes are not indicative of
the company's ongoing operations. The definition of operating income
can vary by company and is not considered a substitute for GAAP net
income.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Net Income From Continuing Operations to Operating
Income
(Dollars in thousands)
(Unaudited) Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------------------------
2007 2006 2007 2006
--------- -------- --------- ---------
GAAP net income-continuing
operations $ 71,501 $83,318 $308,273 $293,261
Investment related
(gains)losses, net 8,047 (523) 24,779 2,744
Change in value of embedded
derivatives 55,017 (5,716) 92,238 (4,253)
DAC offset for embedded
derivatives and investment
related (gains)losses, net (43,348) 3,916 (71,779) 1,453
--------------------------------------
Operating income $ 91,217 $80,995 $353,511 $293,205
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Net Income From Continuing Operations to
Pre-tax Operating Income
(Dollars in thousands)
(Unaudited) Three Months Ended December 31, 2007
Investment Change in
Pre-tax related value of Pre-tax
net (gains) embedded operating
income losses, derivatives, income
(loss) net net (loss)
--------- ---------- ------------ ---------
U.S. Operations:
Traditional $ 97,227 $ 3,478 $ -- $100,705
Asset Intensive (17,424) 2,008(1) 22,862(2) 7,446
Financial Reinsurance 2,581 (2) -- 2,579
-------------------------------------------
Total U.S. 82,384 5,484 22,862 110,730
Canada Operations 19,509 2 -- 19,511
Europe & South Africa 2,808 466 -- 3,274
Asia Pacific Operations 16,909 592 -- 17,501
Corporate and Other (11,365) 954 -- (10,411)
-------------------------------------------
Consolidated $110,245 $ 7,498 $22,862 $140,605
===========================================
(1) Asset Intensive is net of $(4,909)DAC off set.
(2) Asset Intensive is net of DAC offsets of $(61,780) included in
change in deferred acquisition cost associated with change in value
of embedded derivative.
(Unaudited) Three Months Ended December 31, 2006
Investment Change in
Pre-tax related value of Pre-tax
net (gains) embedded operating
income losses, derivatives, income
(loss) net net (loss)
--------- ---------- ------------ ---------
U.S. Operations:
Traditional $ 74,635 $ 542 $ -- $ 75,177
Asset Intensive 7,903 815(1) (2,720)(2) 5,998
Financial Reinsurance 3,737 -- -- 3,737
-------------------------------------------
Total U.S. 86,275 1,357 (2,720) 84,912
Canada Operations 12,799 (1,830) -- 10,969
Europe & South Africa 17,362 84 -- 17,446
Asia Pacific Operations 23,874 249 -- 24,123
Corporate & Other (12,125) (652) -- (12,777)
-------------------------------------------
Consolidated $128,185 $ (792) $(2,720) $124,673
===========================================
(1) Asset Intensive is net of $(49)DAC offset.
(2) Asset Intensive is net of DAC offsets of $6,074 included in change
in deferred acquisition cost associated with change in value of
embedded derivative.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Reconciliation of Pre-tax Net Income From Continuing Operations
to Pre-tax Operating Income
(Dollars in thousands, except per share data)
(Unaudited) Twelve Months Ended December 31, 2007
Investment Change in
Pre-tax related value of Pre-tax
net (gains) embedded operating
income losses, derivatives, income
(loss) net net (loss)
--------- ---------- ------------ ---------
U.S. Operations:
Traditional $337,624 $13,770 $ -- $351,394
Asset Intensive (22,329) 8,206(1) 37,524(2) 23,401
Financial Reinsurance 12,633 7 -- 12,640
-------------------------------------------
Total U.S. 327,928 21,983 37,524 387,435
Canada Operations 81,543 (6,646) -- 74,897
Europe & South Africa 47,467 2,183 -- 49,650
Asia Pacific Operations 60,090 1,529 -- 61,619
Corporate & Other (42,110) 12,522 -- (29,588)
-------------------------------------------
Consolidated $474,918 $31,571 $37,524 $544,013
===========================================
(1) Asset Intensive is net of $(6,047)DAC offset.
(2) Asset Intensive is net of DAC offsets of $(104,381) included in
change in deferred acquisition cost associated with change in value
of embedded derivative.
(Unaudited) Twelve Months Ended December 31, 2006
Investment Change in
Pre-tax related value of Pre-tax
net (gains) embedded operating
income losses, derivatives, income
(loss) net net (loss)
--------- ---------- ------------ ---------
U.S. Operations:
Traditional $287,122 $ 4,077 $ -- $291,199
Asset Intensive 20,187 7,206(1) (2,808)(2) 24,585
Financial Reinsurance 15,039 (4) -- 15,035
-------------------------------------------
Total U.S. 322,348 11,279 (2,808) 330,819
Canada Operations 45,766 (5,137) -- 40,629
Europe & South Africa 58,241 322 -- 58,563
Asia Pacific Operations 58,591 372 -- 58,963
Corporate & Other (33,558) (4,014) -- (37,572)
-------------------------------------------
Consolidated $451,388 $ 2,822 $(2,808) $451,402
===========================================
(1) Asset Intensive is net of $(1,500)DAC offset.
(2) Asset Intensive is net of DAC offsets of $3,735 included in change
in deferred acquisition cost associated with change in value of
embedded derivative.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands)
Three Months Ended Twelve Months Ended
(Unaudited) December 31, December 31,
----------------------------------------------------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Revenues:
Net premiums $1,348,023 $1,200,733 $4,909,026 $4,345,969
Investment income,
net of related
expenses 226,801 240,752 907,904 779,655
Investment related
gains(losses), net (12,097) 854 (36,811) (3,953)
Change in value of
embedded
derivatives (84,642) 8,794 (141,905) 6,543
Other revenues 18,510 18,442 80,147 65,477
----------------------- -----------------------
Total revenues 1,496,595 1,469,575 5,718,361 5,193,691
Benefits and expenses:
Claims and other
policy benefits 1,093,984 955,436 3,983,996 3,488,388
Interest credited 40,873 94,928 246,066 244,771
Policy acquisition
costs and other
insurance expenses 209,534 199,333 752,213 712,568
Change in deferred
acquisition cost
associated with
change in value of
embedded
derivatives (61,780) 6,074 (104,381) 3,735
Other operating
expenses 67,287 57,455 236,612 204,380
Interest expense 23,361 15,149 76,906 62,033
Collateral finance
facilities expense 13,091 13,015 52,031 26,428
----------------------- -----------------------
Total benefits
and expenses 1,386,350 1,341,390 5,243,443 4,742,303
----------------------- -----------------------
Income from
continuing
operations before
income taxes 110,245 128,185 474,918 451,388
Provision for
income taxes 38,744 44,867 166,645 158,127
----------------------- -----------------------
Income from
continuing
operations 71,501 83,318 308,273 293,261
Discontinued
operations:
Loss from
discontinued
accident and
health
operations, net
of income taxes (7,915) (1,844) (14,439) (5,051)
----------------------- -----------------------
Net income $ 63,586 $ 81,474$ 293,834 $ 288,210
======================= =======================
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
(Unaudited) December 31, December 31,
----------------------------------------------------------------------
2007 2006 2007 2006
---------- ------- ----------- -------
Earnings per share from
continuing operations:
Basic earnings per share $ 1.15 $ 1.36 $ 4.98 $ 4.79
Diluted earnings per share $ 1.11 $ 1.31 $ 4.80 $ 4.65
Diluted earnings before
investment related gains
(losses), change in value of
embedded derivatives, and
related deferred acquisition
costs $ 1.42 $ 1.27 $ 5.50 $ 4.65
Earnings per share from net
income:
Basic earnings per share $ 1.03 $ 1.33 $ 4.75 $ 4.71
Diluted earnings per share $ 0.99 $ 1.28 $ 4.57 $ 4.57
Weighted average number of
common and common equivalent
shares outstanding 64,270 63,815 64,231 63,062
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
At or For the
Twelve Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
------------ ------------
Gross life reinsurance in force (in
billions)
U.S. $ 1,232.3 $ 1,159.8
Canada $ 217.7 $ 155.4
Europe & South Africa $ 380.4 $ 345.1
Asia Pacific $ 289.5 $ 281.1
Gross life reinsurance written (in billions)
U.S. $ 164.2 $ 172.1
Canada $ 46.8 $ 39.8
Europe & South Africa $ 61.3 $ 105.1
Asia Pacific $ 30.1 $ 57.6
Balance sheet information (in millions, except share and
per share figures)
Consolidated cash and invested assets $ 16,802.0 $ 14,773.3
Invested asset book yield - trailing
three months excluding funds withheld 6.02% 5.92%
Investment portfolio mix
Cash and short-term investments 2.85% 2.04%
Fixed maturity securities 55.93% 56.67%
Mortgage loans 4.95% 4.98%
Policy loans 6.31% 6.87%
Funds withheld at interest 28.27% 27.95%
Other invested assets 1.69% 1.49%
Collateral finance facilities $ 850.4 $ 850.4
Short-term debt $ 29.8 $ 29.4
Long-term debt $ 896.1 $ 676.2
Company-obligated mandatorily redeemable
preferred securities of subsidiary $ 158.9 $ 158.7
Total stockholders' equity $ 3,189.8 $ 2,815.4
Less: Accumulated other comprehensive income
"AOCI"(a) 526.8 433.4
------------ ------------
Total stockholders' equity, before impact of
AOCI(a) $ 2,663.0 $ 2,382.0
Treasury shares 1,096,775 1,717,722
Common shares outstanding 62,031,498 61,410,551
Book value per share outstanding $ 51.42 $ 45.85
Book value per share outstanding, before
impact of AOCI(a) $ 42.93 $ 38.79
(a) Book value per share outstanding and total stockholders' equity,
before impact of AOCI, are non-GAAP financial measures that
management believes are important in evaluating the balance sheet in
order to ignore the effects of unrealized amounts primarily
associated with mark-to-market adjustments on investments and foreign
currency translation.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. Operations
(Dollars in thousands)
(Unaudited) Three Months Ended December 31, 2007
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
----------- --------- ----------- ---------
Net premiums $789,843 $ 1,577 $ -- $791,420
Investment income, net of
related expenses 91,253 57,497 (163) 148,587
Investment related gains
(losses), net (3,478) (6,917) 2 (10,393)
Change in value of
embedded derivatives -- (84,642) -- (84,642)
Other revenues 274 9,797 4,177 14,248
-------------------------------------------
Total revenues 877,892 (22,688) 4,016 859,220
Benefits and expenses:
Claims and other policy
benefits 634,109 (375) (125) 633,609
Interest credited 14,901 25,787 -- 40,688
Policy acquisition costs
and other insurance
expenses 117,012 29,118 384 146,514
Change in deferred
acquisition cost
associated with change in
value of embedded
derivatives -- (61,780) -- (61,780)
Other operating expenses 14,643 1,986 1,176 17,805
-------------------------------------------
Total benefits and
expenses 780,665 (5,264) 1,435 776,836
Income(loss)before
income taxes $ 97,227 $(17,424) $2,581 $ 82,384
=========== ========= =========== =========
(Unaudited) Three Months Ended December 31, 2006
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
----------- --------- ----------- ---------
Net premiums $726,655 $ 1,552 $ -- $728,207
Investment income, net of
related expenses 82,622 99,317 (51) 181,888
Investment related losses,
net (542) (864) -- (1,406)
Change in value of
embedded derivatives -- 8,794 -- 8,794
Other revenues 42 5,571 7,478 13,091
-------------------------------------------
Total revenues 808,777 114,370 7,427 930,574
Benefits and expenses:
Claims and other policy
benefits 606,097 (346) 1 605,752
Interest credited 14,439 79,801 -- 94,240
Policy acquisition costs
and other insurance
expenses 102,917 18,883 2,232 124,032
Change in deferred
acquisition cost
associated with change in
value of embedded
derivatives -- 6,074 -- 6,074
Other operating expenses 10,689 2,055 1,457 14,201
-------------------------------------------
Total benefits and
expenses 734,142 106,467 3,690 844,299
Income before income
taxes $ 74,635 $ 7,903 $3,737 $ 86,275
=========== ========= =========== =========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. Operations
(Dollars in thousands)
(Unaudited) Twelve Months Ended December 31, 2007
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
----------- ---------- ----------- -----------
Net premiums $2,868,403 $ 6,356 $ -- $2,874,759
Investment income, net
of related expenses 352,553 271,638 (53) 624,138
Investment related
losses, net (13,770) (14,253) (7) (28,030)
Change in value of
embedded derivatives -- (141,905) -- (141,905)
Other revenues 922 38,006 23,117 62,045
----------------------------------------------
Total revenues 3,208,108 159,842 23,057 3,391,007
Benefits and expenses:
Claims and other policy
benefits 2,344,185 5,875 (124) 2,349,936
Interest credited 58,595 185,726 -- 244,321
Policy acquisition
costs and other
insurance expenses 417,958 87,882 6,410 512,250
Change in deferred
acquisition cost
associated with change
in value of embedded
derivatives -- (104,381) -- (104,381)
Other operating
expenses 49,746 7,069 4,138 60,953
----------------------------------------------
Total benefits and
expenses 2,870,484 182,171 10,424 3,063,079
Income(loss)before
income taxes $ 337,624 $ (22,329) $12,633 $ 327,928
=========== ========== =========== ===========
(Unaudited) Twelve Months Ended December 31, 2006
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
----------- ---------- ----------- -----------
Net premiums $2,647,322 $ 6,190 $ -- $2,653,512
Investment income, net
of related expenses 305,221 267,111 (213) 572,119
Investment related
gains(losses), net (4,077) (8,706) 4 (12,779)
Change in value of
embedded derivatives -- 6,543 -- 6,543
Other revenues 269 20,031 29,868 50,168
----------------------------------------------
Total revenues 2,948,735 291,169 29,659 3,269,563
Benefits and expenses:
Claims and other policy
benefits 2,174,142 581 5 2,174,728
Interest credited 50,059 192,092 -- 242,151
Policy acquisition
costs and other
insurance expenses 395,531 67,461 9,284 472,276
Change in deferred
acquisition cost
associated with change
in value of embedded
derivatives -- 3,735 -- 3,735
Other operating
expenses 41,881 7,113 5,331 54,325
----------------------------------------------
Total benefits and
expenses 2,661,613 270,982 14,620 2,947,215
Income before income
taxes $ 287,122 $ 20,187 $15,039 $ 322,348
=========== ========== =========== ===========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Canada Operations
(Dollars in thousands)
Three Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
--------- ---------
Revenues:
Net premiums $141,388 $134,600
Investment income, net of related expenses 34,782 28,092
Investment related gains, net 308 1,941
Other revenues 2 (155)
--------- ---------
Total revenues 176,480 164,478
Benefits and expenses:
Claims and other policy benefits 122,267 105,839
Interest credited 185 208
Policy acquisition costs and other insurance
expenses 28,297 41,201
Other operating expenses 6,222 4,431
--------- ---------
Total benefits and expenses 156,971 151,679
Income before income taxes $ 19,509 $ 12,799
========= =========
Twelve Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
--------- ---------
Revenues:
Net premiums $487,136 $429,438
Investment income, net of related expenses 124,634 106,973
Investment related gains, net 7,453 5,506
Other revenues 182 160
--------- ---------
Total revenues 619,405 542,077
Benefits and expenses:
Claims and other policy benefits 425,498 386,221
Interest credited 726 831
Policy acquisition costs and other insurance
expenses 91,234 92,936
Other operating expenses 20,404 16,323
--------- ---------
Total benefits and expenses 537,862 496,311
Income before income taxes $ 81,543 $ 45,766
========= =========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Europe & South Africa
(Dollars in thousands)
Three Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
--------- ---------
Revenues:
Net premiums $175,185 $150,910
Investment income, net of related expenses 7,721 4,836
Investment related losses, net (466) (84)
Other revenues (205) 739
--------- ---------
Total revenues 182,235 156,401
Benefits and expenses:
Claims and other policy benefits 145,397 106,683
Interest credited - 285
Policy acquisition costs and other insurance
expenses 18,968 20,910
Other operating expenses 15,062 11,161
--------- ---------
Total benefits and expenses 179,427 139,039
Income before income taxes $ 2,808 $ 17,362
========= =========
Twelve Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
--------- ---------
Revenues:
Net premiums $678,551 $587,903
Investment income, net of related expenses 26,167 16,311
Investment related losses, net (2,183) (322)
Other revenues (144) 858
--------- ---------
Total revenues 702,391 604,750
Benefits and expenses:
Claims and other policy benefits 515,660 414,855
Interest credited 1,019 764
Policy acquisition costs and other insurance
expenses 84,749 90,098
Other operating expenses 53,496 40,792
--------- ---------
Total benefits and expenses 654,924 546,509
Income before income taxes $ 47,467 $ 58,241
========= =========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Asia Pacific
(Dollars in thousands)
Three Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
--------- ---------
Revenues:
Net premiums $238,265 $186,564
Investment income, net of related expenses 9,981 7,751
Investment related losses, net (592) (249)
Other revenues 2,682 1,731
--------- ---------
Total revenues 250,336 195,797
Benefits and expenses:
Claims and other policy benefits 192,885 136,341
Policy acquisition costs and other insurance
expenses 23,665 23,384
Other operating expenses 16,877 12,198
--------- ---------
Total benefits and expenses 233,427 171,923
Income before income taxes $ 16,909 $ 23,874
========= =========
Twelve Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
--------- ---------
Revenues:
Net premiums $864,550 $673,179
Investment income, net of related expenses 36,388 28,105
Investment related losses, net (1,529) (372)
Other revenues 9,197 6,465
--------- ---------
Total revenues 908,606 707,377
Benefits and expenses:
Claims and other policy benefits 692,859 512,740
Policy acquisition costs and other insurance
expenses 99,285 93,614
Other operating expenses 56,372 42,432
--------- ---------
Total benefits and expenses 848,516 648,786
Income before income taxes $ 60,090 $ 58,591
========= =========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Corporate and Other
(Dollars in thousands)
Three Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
--------- ---------
Revenues:
Net premiums $ 1,765 $ 452
Investment income, net of related expenses 25,730 18,185
Investment related gains (losses), net (954) 652
Other revenues 1,783 3,036
--------- ---------
Total revenues 28,324 22,325
Benefits and expenses:
Claims and other policy benefits (174) 821
Interest credited -- 195
Policy acquisition costs and other insurance
expenses (7,910) (10,194)
Other operating expenses 11,321 15,464
Interest expense 23,361 15,149
Collateral finance facilities expense 13,091 13,015
--------- ---------
Total benefits and expenses 39,689 34,450
Income(loss) before income taxes $(11,365) $(12,125)
========= =========
Twelve Months Ended
(Unaudited) December 31,
----------------------------------------------------------------------
2007 2006
--------- ---------
Revenues:
Net premiums $ 4,030 $ 1,937
Investment income, net of related expenses 96,577 56,147
Investment related gains(losses), net (12,522) 4,014
Other revenues 8,867 7,826
--------- ---------
Total revenues 96,952 69,924
Benefits and expenses:
Claims and other policy benefits 43 (156)
Interest credited -- 1,025
Policy acquisition costs and other insurance
expenses (35,305) (36,356)
Other operating expenses 45,387 50,508
Interest expense 76,906 62,033
Collateral finance facilities expense 52,031 26,428
--------- ---------
Total benefits and expenses 139,062 103,482
Loss before income taxes $(42,110) $(33,558)
========= =========
SOURCE: Reinsurance Group of America, Incorporated
Reinsurance Group of America, Incorporated
Jack B. Lay, 636-736-7000
Senior Executive Vice President
and Chief Financial Officer