Reinsurance Group of America Reports Increases in Revenues and Earnings
Third-quarter net premiums increased 18 percent, to $455.7 million from $387.8 million the year before. Consolidated net investment income decreased 9 percent, to $82.5 million from $90.7 million. This decrease is primarily a result of reduced investment performance on spread-based annuity business. The reduced investment performance is largely offset by a decrease in the interest credited on the business.
"We are pleased to report a strong third quarter," said A. Greig Woodring, president and chief executive officer. "On a consolidated basis, our results exceeded our expectations on both a top and bottom line basis. Our consolidated results continue to reflect good growth in our largest segment, the U.S., augmented by strong growth in certain international markets, primarily the UK and Asia Pacific."
Woodring continued, "Net premiums for the U.S. segment increased to $318.3 million, or 14 percent, from $280.0 million in the prior-year quarter, driven by production in our traditional business. On a year- to-date basis, net premiums in the U.S. have increased 15 percent. Pre- tax operating income for the quarter was $53.5 million compared with $35.9 million a year ago. The prior-year result includes $16 million in pretax loss associated with the September 11 terrorist attacks. Mortality results were better relative to our expectations and the comparable prior-year quarter, excluding the effect of the terrorist attacks. Somewhat offsetting the good mortality was a $3.0 million pretax loss on an annuity treaty due primarily to higher than expected lapse experience.
"Premiums in Canada totaled $41.9 million, approximately 5 percent ahead of a year ago. As expected, we have experienced a slowdown in growth in the Canadian market. Pre-tax operating income for the quarter was $8.5 million compared with $8.8 million a year ago.
"Our operations in Asia Pacific, Europe and South Africa continue to grow at a strong pace. For the quarter, these operations reported net premiums of $95.0 million, an increase of 62 percent from the prior-year quarter. We continue to experience particularly strong premium growth in the UK market, where we have several large treaties in place. Pre-tax operating income for Asia Pacific, Europe and South Africa totaled $4.0 million for the quarter compared with $2.2 million a year ago.
"We continue to see diminished business levels in our Latin America operations. For the quarter, the Latin America operations reported a pre-tax operating loss of $1.2 million, as premiums diminished to less than $1.0 million. We do not expect these operations to meaningfully affect future results."
Woodring concluded, "We are encouraged by the results for the third quarter and year-to-date, particularly given the difficult economic environment. The fundamentals of our business remain intact and we are executing a business plan that we believe will further our growth in the years to come."
For the first nine months of 2002, the company reported net income of $89.4 million compared with $61.1 million in the prior year. Operating earnings from continuing operations for the first nine months of 2002 totaled $101.4 million and excluded $8.0 million, after tax, in net capital losses and related deferred acquisition costs, goodwill write-off of $0.7 million and a $3.3 million after-tax loss associated with the company's discontinued accident and health segment. Operating earnings from continuing operations in the prior year totaled $84.9 million, and excluded $23.8 million, after tax, in net capital losses and related deferred acquisition costs. Operating earnings per diluted share from continuing operations totaled $2.04 compared with $1.70 the year before. Net premiums totaled $1,390.1 million compared with $1,179.7 million the year before.
The company announced that its board of directors declared a regular quarterly dividend of $0.06 per share, payable November 26 to shareholders of record as of November 5.
A conference call to discuss the company's third quarter results will begin at 9:00 a.m. Eastern Time on Friday October 25. Interested parties may access the call by dialing 800-967-7140 (domestic) or 719- 457-2629 (international). The access code is 771464. 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 ten days following the conference call. A replay of the conference call will also be available via telephone through November 1 at 888-203-1112, access code 771464.
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, Spain, Mexico, Hong Kong, India, Japan, Korea, Taiwan, South Africa and the United Kingdom. Worldwide, the Company has approximately $715 billion of life reinsurance in force, and assets of $7.7 billion. Metropolitan Life Insurance Company is the beneficial owner of approximately 59 percent of RGA's outstanding shares.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSThis 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, except per share data) Three Months Ended Nine Months Ended (Unaudited) September 30, September 30, 2002 2001 2002 2001 Revenues: Net premiums $455,750 $387,825 $1,390,113 $1,179,746 Investment income, net of related expenses 82,499 90,693 260,779 251,058 Realized investment gains/ (losses), net 1,066 (26,324) (10,951) (35,356) Other revenues 10,839 5,922 27,734 21,850 Total revenues 550,154 458,116 1,667,675 1,417,298 Benefits and expenses: Claims and other policy benefits 342,301 314,882 1,096,797 954,652 Interest credited 22,156 32,639 79,777 79,590 Policy acquisition costs and other insurance expenses 96,303 70,672 252,606 203,947 Other operating expenses 26,358 22,802 67,734 66,880 Interest expense 9,006 4,431 26,475 13,719 Total benefits and expenses 496,124 445,426 1,523,389 1,318,788 Income from continuing operations before income taxes 54,030 12,690 144,286 98,510 Provision for income taxes 19,307 3,705 51,603 37,369 Income from continuing operations 34,723 8,985 92,683 61,141 Discontinued operations: Loss from discontinued accident and health operations, net of income taxes (1,135) - (3,264) - Net income $ 33,588 $ 8,985 $ 89,419 $ 61,141 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, 2002 2001 2002 2001 Earnings per share from continuing operations: Basic earnings per share $ 0.70 $ 0.18 $ 1.88 $ 1.24 Diluted earnings per share $ 0.70 $ 0.18 $ 1.87 $ 1.22 Diluted earnings before realized investment gains/ (losses) and related deferred acquisition costs and goodwill writeoff $ 0.71 $ 0.52 $ 2.04 $ 1.70 Earnings per share from net income: Basic earnings per share $ 0.68 $ 0.18 $ 1.81 $ 1.24 Diluted earnings per share $ 0.68 $ 0.18 $ 1.80 $ 1.22 Weighted average number of common and common equivalent shares outstanding (in thousands) 49,639 49,970 49,683 49,922 REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES Condensed Consolidated Business Summary At or For the Nine Months Ended (Unaudited) September 30, 2002 2001 Gross life reinsurance in force (in billions) North American business $ 584.0 $ 519.2 International business 130.8 66.6 Gross life reinsurance written (in billions) North American business 110.4 78.1 International business 50.0 36.3 Consolidated cash and invested assets (in millions) 5,934.0 4,931.1 Invest Asset book yield - trailing three months excluding funds withheld 6.59% 6.99% Investment portfolio mix Cash and short-term investments 2.28% 4.83% Fixed maturity securities 56.43% 54.30% Mortgage loans 3.35% 3.16% Policy loans 13.14% 14.52% Funds withheld at interest 22.78% 21.86% Other invested assets 2.02% 1.33% Book value per share outstanding $ 23.91 $ 18.57 Book value per share outstanding, before impact of FAS 115 22.09 19.14 Treasury stock 1,686,313 1,578,280 REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES U.S. OPERATIONS (Dollars in thousands) Nine Months Ended September 30, 2002 Non-traditional Asset- Financial Total Traditional Intensive Reinsurance U.S. Revenues: Net premiums $ 995,490 $ 2,796 $ -- $ 998,286 Investment income, net of related expenses 119,301 63,943 155 183,399 Realized investment gains/(losses), net (1,110) (4,255) -- (5,365) Other revenues 1,540 5,684 17,795 25,019 Total revenues 1,115,221 68,168 17,950 1,201,339 Benefits and expenses: Claims and other policy benefits 781,745 17,014 -- 798,759 Interest credited 41,507 35,453 -- 76,960 Policy acquisition costs and other insurance expenses 151,629 8,126 5,517 165,272 Other operating expenses 19,767 744 7,005 27,516 Total benefits and expenses 994,648 61,337 12,522 1,068,507 Income before income taxes $ 120,573 $ 6,831 $ 5,428 $ 132,832 Nine Months Ended September 30, 2001 Non-traditional Asset- Financial Total Traditional Intensive Reinsurance U.S. Revenues: Net premiums $ 864,105 $ 2,127 $ -- $ 866,232 Investment income, net of related expenses 112,334 64,698 462 177,494 Realized investment gains/(losses), net (16,460) 1,802 -- (14,658) Other revenues 787 1,720 16,217 18,724 Total revenues 960,766 70,347 16,679 1,047,792 Benefits and expenses: Claims and other policy benefits 691,184 4,095 -- 695,279 Interest credited 37,890 40,256 -- 78,146 Policy acquisition costs and other insurance expenses 121,971 13,486 5,744 141,201 Other operating expenses 21,826 567 6,199 28,592 Total benefits and expenses 872,871 58,404 11,943 943,218 Income before income taxes $ 87,895 $ 11,943 $ 4,736 $ 104,574 REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES CANADIAN OPERATIONS (Dollars in thousands) Nine Months Ended September 30, 2002 2001 Revenues: Net premiums $132,571 $126,689 Investment income, net of related expenses 52,133 48,739 Realized investment gains/(losses), net (22) 8,015 Other revenues 40 179 Total revenues 184,722 183,622 Benefits and expenses: Claims and other policy benefits 137,104 126,259 Interest credited 733 248 Policy acquisition costs and other insurance expenses 12,142 10,163 Other operating expenses 7,315 6,508 Total benefits and expenses 157,294 143,178 Income before income taxes $ 27,428 $ 40,444 REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES OTHER INTERNATIONAL (Dollars in thousands) Nine Months Ended September 30, 2002 Europe Total Latin Asia & South Inter- America Pacific Africa national Revenues: Net premiums $ 7,098 $97,831 $154,327 $259,256 Investment income, net of related expenses 3,649 4,876 591 9,116 Realized investment gains / (losses), net (3,954) (125) (288) (4,367) Other revenues 167 1,706 776 2,649 Total revenues 6,960 104,288 155,406 266,654 Benefits and expenses: Claims and other policy benefits 1,802 63,849 95,283 160,934 Interest credited 2,084 -- -- 2,084 Policy acquisition costs and other insurance expenses 2,439 24,260 48,493 75,192 Other operating expenses 4,779 10,086 7,883 22,748 Interest expense -- 613 499 1,112 Total benefits and expenses 11,104 98,808 152,158 262,070 Income before income taxes $(4,144) $5,480 $ 3,248 $ 4,584 Nine Months Ended September 30, 2001 Europe Total Latin Asia & South Inter- America Pacific Africa national Revenues: Net premiums $41,567 $85,774 $59,484 $186,825 Investment income, net of related expenses 10,992 3,279 1,110 15,381 Realized investment gains / (losses), net (20,568) 76 (61) (20,553) Other revenues 297 2,234 581 3,112 Total revenues 32,288 91,363 61,114 184,765 Benefits and expenses: Claims and other policy benefits 42,760 54,252 36,102 133,114 Interest credited 1,196 -- -- 1,196 Policy acquisition costs and other insurance expenses 8,777 26,350 17,455 52,582 Other operating expenses 6,341 7,989 7,371 21,701 Interest expense -- 683 471 1,154 Total benefits and expenses 59,074 89,274 61,399 209,747 Income before income taxes $(26,786) $ 2,089 $ (285) $(24,982)
SOURCE: Reinsurance Group of America, Incorporated
CONTACT: Reinsurance Group of America, Incorporated Jack B. Lay, 636/736-7439 www.rgare.com URL: http://www.businesswire.com Today's News On The Net - Business Wire's full file on the Internet with Hyperlinks to your home page.
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