Reinsurance Group Of America Reports Second-Quarter Results
Second-quarter premiums increased 20 percent, to $465.3 million from $387.3 million in 2001. Consolidated net investment income increased 18 percent, to $90.3 million from $76.3 million.
President and Chief Executive Officer A. Greig Woodring commented, "We are pleased with the results for the quarter, which are within our expectations. The prior-year quarter was very strong, in terms of operating income, so comparison to that quarter is difficult. We continue to see very good top-line growth as demonstrated by the increase in net premiums during the quarter. The markets upon which we focus continue to provide growth opportunities."
Woodring continued, "For the quarter, net premiums in the U.S. segment increased to $335.0 million, or 19 percent over the prior year. This growth was primarily from recurring business. Pre-tax operating income totaled $43.2 million. Mortality experience across the segment was in line with our expectations. The environment remains competitive and consolidation continues. We anticipate more of the same for the remainder of the year.
"For the second quarter, Canada reported pre-tax operating income of $10.0 million compared with $12.1 million in the prior year. Net premiums were flat. Pre-tax operating income was slightly below our expectations, primarily due to poor experience on one treaty.
"Our operations in Asia Pacific, Europe and South Africa continue to grow at a healthy pace. For the quarter, these operations reported net premiums of $83.8 million, an increase of 89 percent from the prior-year quarter. We experienced particularly strong premium growth in the UK market, where we have several large treaties in place. Pre-tax operating income for these operations for the quarter was $2.9 million compared with $1.9 million in the prior-year quarter. We continue to see a number of opportunities in these markets and are pleased to officially announce the opening of RGA's Seoul, South Korea office during the quarter. This office will strengthen RGA's relationships with local insurance companies by offering a variety of life reinsurance services."
Commenting on Latin America, Woodring said, "Our situation in Argentina has remained relatively stable as we run-off our operations there. For the quarter, the Latin America operations reported pre-tax operating income of $0.4 million on $2.3 million of premium."
Turning to other corporate matters, Woodring said, "The $50 million stock repurchase program we announced in January remains in effect, although we did not purchase any shares during the quarter. Year-to-date, we have 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 with the first-half results. We look forward to continued growth and success in the second half of 2002."
For the first half of 2002, net income totaled $55.8 million, or $1.12 per diluted share, compared with $52.2 million, or $1.04 per diluted share, in the year-ago period. Operating income, excluding $2.2 million in after-tax losses associated with discontinued operations, $7.6 million, after-tax, in net capital losses and related deferred acquisition costs and $0.7 million, after-tax, of goodwill write-off in 2002, increased to $66.3 million, or $1.33 per diluted share, from $59.2 million, or $1.19 per diluted share, the year before. Prior year operating earnings exclude $7.0 million, after-tax, in net capital losses and related deferred acquisition costs. Consolidated premiums were up 18 percent, to $934.4 million from $791.9 million.
The company announced that its board of directors declared a regular quarterly dividend of $0.06 per share, payable August 27 to shareholders of record as of August 6.
A conference call to discuss the company's second quarter results will begin at 9:00 a.m. Eastern Time on Friday, July 26. Interested parties may access the call by dialing 800-967-7140 (domestic) or 719-457-2629 (international). The access code is 733065. 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. A replay of the conference call will also be available via telephone through August 2 at 888-203-1112, access code 733065.
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, Japan, Korea, Taiwan, South Africa and the United Kingdom. Worldwide, the company has approximately $674 billion of life reinsurance in force, and assets of $7.5 billion. MetLife, Inc. is the beneficial owner of approximately 59 percent of RGA's outstanding shares.
Forward-Looking StatementsThis 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, except per share data)
Three Months Ended Six Months Ended
(Unaudited) June 30, June 30,
2002 2001 2002 2001
Revenues:
Net premiums $465,258 $387,336 $934,363 $791,921
Investment income, net
of related expenses 90,267 76,276 178,280 160,365
Realized investment
losses, net (8,426) (7,526) (12,017) (9,032)
Other income 10,210 9,441 16,895 15,928
Total revenues 557,309 465,527 1,117,521 959,182
Benefits and expenses:
Claims and other policy
benefits 366,770 302,204 754,496 639,770
Interest credited 29,896 19,547 57,621 46,951
Policy acquisition costs
and other insurance
expenses 84,804 67,442 156,303 133,275
Other operating expenses 21,859 21,819 41,376 44,078
Interest expense 8,915 4,377 17,469 9,288
Total benefits
and expenses 512,244 415,389 1,027,265 873,362
Income from continuing
operations before
income taxes 45,065 50,138 90,256 85,820
Provision for income
taxes 16,141 19,624 32,296 33,664
Income from continuing
operations 28,924 30,514 57,960 52,156
Discontinued operations:
Loss from discontinued
accident and health
operations, net of
income taxes (873) - (2,129) -
Net income $ 28,051 $ 30,514 $ 55,831 $ 52,156
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
(Unaudited) June 30, June 30,
2002 2001 2002 2001
Earnings per share from continuing operations:
Basic earnings per share $ 0.59 $ 0.62 $ 1.17 $ 1.06
Diluted earnings per share $ 0.58 $ 0.61 $ 1.17 $ 1.04
Diluted earnings before realized investment gains/(losses) and
related deferred acquisition costs and goodwill
writeoff $ 0.68 $ 0.72 $ 1.33 $ 1.19
Earnings per share from net income:
Basic earnings per share $ 0.57 $ 0.62 $ 1.13 $ 1.06
Diluted earnings per share $ 0.56 $ 0.61 $ 1.12 $ 1.04
Weighted average number of common
and common equivalent shares
outstanding (in thousands) 49,669 49,961 49,703 49,923
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
At or For the
Six Months Ended
(Unaudited) June 30,
2002 2001
Gross life reinsurance in force (in billions)
North American business $ 563.8 $ 531.0
International business 110.4 82.5
Gross life reinsurance written (in billions)
North American business 78.7 43.9
International business 29.0 17.1
Consolidated cash and invested assets
(in millions) 5,713.0 4,734.9
Invest Asset book yield - trailing
three months excluding funds withheld 6.68% 7.16%
Investment portfolio mix
Cash and short-term investments 3.38% 4.34%
Fixed maturity securities 54.35% 56.34%
Mortgage loans 3.33% 2.96%
Policy loans 13.65% 15.12%
Funds withheld at interest 23.27% 20.11%
Other invested assets 2.02% 1.13%
Book value per share outstanding $ 22.04 $ 17.98
Book value per share outstanding, before
impact of FAS 115 21.90 19.20
Treasury stock 1,743,556 1,647,939
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Dollars in thousands)
Six Months Ended June 30, 2002
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $ 678,018 $ 1,993 $ -- $ 680,011
Investment income,
net of related
expenses 75,963 46,448 127 122,538
Realized investment
gains/(losses),
net (2,984) (3,960) -- (6,944)
Other revenues 780 3,169 11,855 15,804
Total revenues 751,777 47,650 11,982 811,409
Benefits and expenses:
Claims and other
policy benefits 550,573 7,716 -- 558,289
Interest credited 27,639 28,811 -- 56,450
Policy acquisition
costs and other
insurance expenses 92,168 6,429 3,838 102,435
Other operating
expenses 11,955 386 4,392 16,733
Total benefits
and expenses 682,335 43,342 8,230 733,907
Income before
income taxes $ 69,442 $ 4,308 $ 3,752 $ 77,502
Six Months Ended June 30, 2001
Non-traditional
Asset- Financial Total
Traditional Intensive Reinsurance U.S.
Revenues:
Net premiums $ 584,866 $ 1,388 $ -- $ 586,254
Investment income,
net of related
expenses 74,083 36,708 394 111,185
Realized investment
gains/(losses),
net (10,347) 846 -- (9,501)
Other revenues 504 1,370 12,518 14,392
Total revenues 649,106 40,312 12,912 702,330
Benefits and expenses:
Claims and other
policy benefits 463,541 3,868 -- 467,409
Interest credited 25,258 20,745 -- 46,003
Policy acquisition
costs and other
insurance expenses 83,151 8,022 5,265 96,438
Other operating
expenses 13,904 283 4,164 18,351
Total benefits
and expenses 585,854 32,918 9,429 628,201
Income before
income taxes $ 63,252 $ 7,394 $ 3,483 $ 74,129
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CANADIAN OPERATIONS
(Dollars in thousands)
Six Months Ended
June 30,
2002 2001
Revenues:
Net premiums $ 90,677 $ 86,714
Investment income, net of related expenses 33,381 31,297
Realized investment gains/(losses), net (186) 8,516
Other revenues (78) 85
Total revenues 123,794 126,612
Benefits and expenses:
Claims and other policy benefits 90,826 83,095
Interest credited 388 179
Policy acquisition costs and other
insurance expenses 9,262 6,854
Other operating expenses 4,568 4,341
Total benefits and expenses 105,044 94,469
Income before income taxes $ 18,750 $ 32,143
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
OTHER INTERNATIONAL
(Dollars in thousands)
Six Months Ended June 30, 2002
Europe Total
Latin Asia & South Inter-
America Pacific Africa national
Revenues:
Net premiums $ 6,528 $64,992 $92,155 $163,675
Investment income,
net of related expenses 3,902 3,154 248 7,304
Realized investment gains
/ (losses), net (259) (173) (296) (728)
Other revenues 94 1,275 336 1,705
Total revenues 10,265 69,248 92,443 171,956
Benefits and expenses:
Claims and other policy
benefits 3,025 44,160 58,196 105,381
Interest credited 783 -- -- 783
Policy acquisition costs and
other insurance expenses 2,310 14,016 28,280 44,606
Other operating expenses 3,418 6,277 5,349 15,044
Interest expense -- 388 351 739
Total benefits and
expenses 9,536 64,841 92,176 166,553
Income before income taxes $ 729 $ 4,407 $ 267 $ 5,403
Six Months Ended June 30, 2001
Europe Total
Latin Asia & South Inter-
America Pacific Africa national
Revenues:
Net premiums $32,495 $54,821 $31,637 $118,953
Investment income,
net of related expenses 7,736 2,281 1,251 11,268
Realized investment gains
/ (losses), net (2,868) 143 (30) (2,755)
Other revenues 179 1,342 96 1,617
Total revenues 37,542 58,587 32,954 129,083
Benefits and expenses:
Claims and other policy
benefits 32,121 36,763 20,382 89,266
Interest credited 769 -- -- 769
Policy acquisition costs and
other insurance expenses 6,106 14,877 9,000 29,983
Other operating expenses 4,221 5,168 4,888 14,277
Interest expense -- 464 290 754
Total benefits and
expenses 43,217 57,272 34,560 135,049
Income before income taxes $(5,675) $ 1,315 $(1,606) $ (5,966)
SOURCE: Reinsurance Group of America, Incorporated
CONTACT: Reinsurance Group of America, Incorporated
Jack B. Lay, 636/736-7439
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