Reinsurance Group of America Reports Second-Quarter Results; Adverse Effect of High Claims Levels and Increase in Other Reserves
ST. LOUIS--(BUSINESS WIRE)--July 21, 2005--Reinsurance Group of America, Incorporated (NYSE:RGA), a leading global provider of life reinsurance, reported net income for the second quarter of $21.8 million, or $0.34 per diluted share, compared to net income of $65.3 million, or $1.04 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 decreased to $20.1 million, or $0.32 per diluted share, from $57.2 million, or $0.91 per diluted share, in the year-ago quarter. Second-quarter net premiums totaled $931.4 million compared to $797.3 million a year ago. Net investment income totaled $146.3 million versus $134.2 million the year before. The company's conference call, previously scheduled for July 26, will be held tomorrow, July 22, at 9 a.m. Eastern Time. Telephone numbers and webcast information can be found later in this press release.
A. Greig Woodring, president and chief executive officer, commented, "We are obviously disappointed with the results for the quarter. High claims levels in the U.S. and the UK along with an increase to reserves for the Argentine pension business, which is currently in run-off, were the primary contributing factors to the sub-par earnings. The level of claims in both the U.S. and UK operations during the quarter is well above the expected levels generated by our business models, and as such, is not expected to continue on an ongoing basis. This is a long-term business, which can be subject to volatility over shorter-term periods. Net premiums met our expected growth rate, increasing 17 percent over the prior-year quarter.
"The U.S. segment reported pre-tax net income of $30.6 million compared with $75.8 million in the prior-year quarter, while pre-tax operating income decreased to $36.8 million from $68.4 million. We have performed an extensive review of the claims experience during the quarter relative to expected levels. While the number of claims was at anticipated levels, we experienced an unusually high dollar volume of claims in excess of $1.0 million per life during the quarter. The dollar amount of such claims was approximately $32.0 million higher than the prior-year quarter. We also experienced a higher-than-expected flow of large claims in the first quarter, although to a lesser extent than occurred in the current quarter. Net premiums in the U.S. segment rose 8 percent to $575.9 million from $531.3 million in the prior year, compared with our expected full-year growth rate of at least 10 percent.
"Our Canada operations reported another strong quarter with pre-tax net income of $20.3 million compared to $21.2 million a year ago. The prior-year period included $6.9 million in net realized investment gains compared to $2.4 million net realized investment gains in the current quarter. Pre-tax operating income was up 25 percent to $17.9 million from $14.3 million. Net premiums increased $15.1 million, or 24 percent, for the quarter, and totaled $76.9 million. Approximately $6.4 million of the increase in net premiums and approximately $1.5 million of the increase in pre-tax operating income were the result of a favorable currency exchange rate. Mortality experience for the segment continues to be favorable.
"Other International operations, which include Asia Pacific and Europe and South Africa, reported mixed results. Asia Pacific reported a strong quarter with pre-tax net income of $13.8 million compared with $4.7 million in the year-ago quarter. Pre-tax operating income totaled $13.7 million compared to the prior-year quarter total of $4.8 million. Asia Pacific benefited from strong premium levels across all countries, as net premiums increased to $145.0 million from $84.2 million in the year-earlier quarter. Stronger foreign currencies contributed approximately $10.5 million to the premium growth and approximately $1.4 million to the growth in pre-tax operating income.
Results in our Europe and South Africa segment were adversely affected by high claim levels in the UK. After an unusually strong first quarter, the segment reported a second-quarter pre-tax net loss of $6.6 million compared to pre-tax net income of $11.8 million in the year before, which was also a particularly strong quarter. The pre-tax operating loss totaled $6.5 million compared with $10.7 million operating income in the prior-year quarter. Claims from several large treaties in the UK were unusually high during the quarter, due in part to a lag in client claim reporting. However, those treaties are performing within our pricing expectations on an inception-to-date basis. Net premium flow for the segment was good, totaling $133.0 million compared to $118.9 million a year ago. Foreign currency fluctuations did not have a significant impact on the quarter's results.
"Results in the Corporate and Other segment include a pre-tax charge of $24.0 million, or about $0.24 per diluted share on an after-tax basis, to increase the reserves associated with our reinsurance of Argentine pension accounts. We commuted our treaty with one of our larger clients during the quarter and are in discussions with the remaining clients regarding settlement of all our obligations under the remaining treaties. We believe the additional $24.0 million in reserves should eliminate any future negative impact on our earnings, thereby reducing the uncertainty associated with this run-off business."
For the first half of 2005, net income totaled $88.4 million, or $1.39 per diluted share, compared to $127.1 million, or $2.03 per diluted share, in the year-ago period. Operating income totaled $80.5 million, or $1.26 per diluted share, compared to $109.3 million, or $1.74 per diluted share in the prior-year period. Consolidated premiums were up 14 percent, to $1,833.2 million from $1,611.2 million.
Woodring concluded, "Our extensive analysis to date leads us to expect that the claims experience will revert to more normal levels, although we cannot reasonably expect to recoup all of the current quarter shortfall in earnings during the remainder of this year. The nature of our business is such that our results will continue to be subject to volatility. Our treaties are very long-term in duration, and the level of death claims is subject to significant volatility on a monthly, quarterly and even on an annual basis. We will continue to analyze the recent claims experience as we develop our intermediate-term operating and financial goals later this quarter. Based upon the analysis to date, we do not expect to materially change our intermediate growth expectations. Market fundamentals are very good right now in North America and growth prospects are very strong internationally. We remain well positioned to take advantage of attractive opportunities on a global basis."
The company also announced that its board of directors declared a regular quarterly dividend of $0.09 per share, payable August 26 to shareholders of record as of August 5.
A conference call to discuss the company's second-quarter results will begin at 9 a.m. Eastern Time on Friday, July 22. Interested parties may access the call by dialing 888-569-5033 (domestic) or 719-457-2653 (international). The access code is 838240. 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 15 days following the conference call. A replay of the conference call will also be available via telephone through July 29 at 888-203-1112 (domestic) or 719-457-0820, access code 838240.
Reinsurance Group of America, Incorporated, through its subsidiaries, is among the largest global providers of life reinsurance. In addition to its U.S. and Canadian operations, Reinsurance Group of America, Incorporated has subsidiary companies or offices in Australia, Barbados, Hong Kong, India, Ireland, Japan, Mexico, South Africa, South Korea, Spain, Taiwan, and the United Kingdom. Worldwide, the company has approximately $1.6 trillion of life reinsurance in force, and assets of $15.0 billion. MetLife, Inc. is the beneficial owner of approximately 51 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 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 or terrorist attacks 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 a 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 certain net investment related gains and losses, as well as changes in the fair value of 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)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
GAAP net income-continuing
operations $ 25,160 $68,390 $ 92,424 $131,384
Investment related
(gains)/losses (11,994) (8,175) (14,726) (20,859)
Change in value of embedded
derivatives 12,945 (11,356) (1,719) (12,345)
DAC offset for embedded
derivatives and investment
related (gains)/losses, net (6,004) 8,359 4,549 11,126
Operating income $ 20,107 $57,218 $ 80,528 $109,306
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 June 30, 2005
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 $ 30,740 $ (1,632) $ -- $ 29,108
Asset Intensive (3,739) 1,522(1) 6,313(2) 4,096
Financial Reinsurance 3,555 -- -- 3,555
Total U.S. 30,556 (110) 6,313 36,759
Canada Operations 20,279 (2,361) -- 17,918
Asia Pacific Operations 13,831 (133) -- 13,698
Europe & South Africa (6,641) 107 -- (6,534)
Other Intl Operations 7,190 (26) -- 7,164
Corporate & Other (25,416) (7,707)(3) -- (33,123)
Consolidated $ 32,609 $ (10,204) $ 6,313 $ 28,718
(1) Asset Intensive is net of $(322) DAC offset.
(2) Asset Intensive is net of DAC offsets of $(13,604) included in
change in deferred acquisition cost associated with change in
value of embedded derivative.
(3) Corporate & Other is net of DAC offsets of $3,048 included in
Policy acquisition costs and other insurance expenses.
Three Months Ended June 30, 2004
Pre-tax Investment Change in Pre-tax
net related value of operating
income (gains)/ embedded income
(loss) losses, net derivative (loss)
U.S. Operations:
Traditional $ 63,101 $ (3,662) $ -- $ 59,439
Asset Intensive 9,488 388(1) (4,179)(2) 5,697
Financial Reinsurance 3,221 -- -- 3,221
Total U.S. 75,810 (3,274) (4,179) 68,357
Canada Operations 21,211 (6,869) -- 14,342
Asia Pacific Operations 4,694 149 -- 4,843
Europe & South Africa 11,829 (1,143) -- 10,686
Other Intl Operations 16,523 (994) -- 15,529
Corporate & Other (8,151) (1,987) -- (10,138)
Consolidated $105,393 $(13,124) $ (4,179) $ 88,090
(1) Asset Intensive is net of $(433) DAC offset.
(2) Asset Intensive is net of DAC offsets of $13,293 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)
Six Months Ended June 30, 2005
Pre-tax Investment Change in Pre-tax
net related value of operating
income (gains)/ embedded income
(loss) losses, net derivative (loss)
U.S. Operations:
Traditional $ 75,816 $ (1,209) $ -- $ 74,607
Asset Intensive 13,887 (1,455)(1) (540)(2) 11,892
Financial Reinsurance 6,837 -- -- 6,837
Total U.S. 96,540 (2,664) (540) 93,336
Canada Operations 44,488 (3,195) -- 41,293
Asia Pacific Operations 18,603 (54) -- 18,549
Europe & South Africa 8,117 64 -- 8,181
Other Intl Operations 26,720 10 -- 26,730
Corporate & Other (34,604) (7,807)(3) -- (42,411)
Consolidated $133,144 $(13,656) $ (540) $118,948
(1) Asset Intensive is net of $205 DAC offset.
(2) Asset Intensive is net of DAC offsets of $2,104 included in
change in deferred acquisition cost associated with change in
value of embedded derivative.
(3) Corporate & Other is net of DAC offsets of $3,048 included in
Policy acquisition costs and other insurance expenses.
Six Months Ended June 30, 2004
Pre-tax Investment Change in Pre-tax
net related value of operating
income (gains)/ embedded income
(loss) losses, net derivative (loss)
U.S. Operations:
Traditional $127,133 $(11,220) $ -- $115,913
Asset Intensive 12,996 301(1) (1,501)(2) 11,796
Financial Reinsurance 5,928 -- -- 5,928
Total U.S. 146,057 (10,919) (1,501) 133,637
Canada Operations 37,131 (8,178) -- 28,953
Asia Pacific Operations 11,491 (198) -- 11,293
Europe & South Africa 18,089 (4,302) -- 13,787
Other Intl Operations 29,580 (4,500) -- 25,080
Corporate & Other (12,560) (7,886) -- (20,446)
Consolidated $200,208 $(31,483) $(1,501) $167,224
(1) Asset Intensive is net of $(376) DAC offset.
(2) Asset Intensive is net of DAC offsets of $17,493 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 Six Months Ended
(Unaudited) June 30, June 30,
2005 2004 2005 2004
Revenues:
Net premiums $ 931,354 $797,308 $1,833,174 $1,611,182
Investment income, net
of related expenses 146,284 134,185 303,337 267,745
Investment related
gains/(losses), net 12,950 12,691 16,929 31,107
Change in value of
embedded derivatives (19,917) 17,472 2,644 18,994
Other revenues 20,661 14,759 31,464 26,609
Total revenues 1,091,332 976,415 2,187,548 1,955,637
Benefits and expenses:
Claims and other
policy benefits 827,930 634,802 1,565,983 1,281,856
Interest credited 38,615 44,332 93,668 91,350
Policy acquisition
costs and other
insurance expenses 157,855 134,157 301,831 277,225
Change in deferred
acquisition cost
associated with
change in value of
embedded derivatives (13,604) 13,293 2,104 17,493
Other operating expenses 38,032 34,896 71,038 68,425
Interest expense 9,895 9,542 19,780 19,080
Total benefits
and expenses 1,058,723 871,022 2,054,404 1,755,429
Income from continuing
operations before
income taxes 32,609 105,393 133,144 200,208
Provision for income
taxes 7,449 37,003 40,720 68,824
Income from continuing
operations 25,160 68,390 92,424 131,384
Discontinued operations:
Loss from discontinued
accident and health
operations, net of
income taxes (3,343) (3,053) (4,050) (3,947)
Cumulative effect of
change in accounting
principle -- -- -- (361)
Net income $ 21,817 $ 65,337 $ 88,374 $ 127,076
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,
2005 2004 2005 2004
Earnings per share from
continuing operations:
Basic earnings per share $ 0.40 $ 1.10 $ 1.48 $ 2.11
Diluted earnings per share $ 0.39 $ 1.09 $ 1.45 $ 2.09
Diluted earnings before
realized investment gains/
(losses), change in value
of embedded derivatives,
and related deferred
acquisition costs $ 0.32 $ 0.91 $ 1.26 $ 1.74
Earnings per share from
net income:
Basic earnings per share $ 0.35 $ 1.05 $ 1.41 $ 2.04
Diluted earnings per share $ 0.34 $ 1.04 $ 1.39 $ 2.03
Weighted average number of
common and common equivalent
shares outstanding
(in thousands) 63,764 62,755 63,806 62,723
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Business Summary
At or For the
Six Months Ended
(Unaudited) June 30,
2005 2004
Gross life reinsurance in force (in billions)
North American business $1,139.4 $1,047.3
International business $ 453.8 $ 309.4
Gross life reinsurance written (in billions)
North American business $ 96.8 $ 103.2
International business $ 69.5 $ 55.3
Consolidated cash and invested assets
(in millions) $11,341.2 $9,502.9
Invested asset book yield - trailing
three months excluding funds withheld 5.99% 5.79%
Investment portfolio mix
Cash and short-term investments 1.70% 1.42%
Fixed maturity securities 55.72% 49.11%
Mortgage loans 5.54% 5.70%
Policy loans 8.40% 9.48%
Funds withheld at interest 26.63% 31.82%
Other invested assets 2.01% 2.47%
Short-term debt (in millions) $ 176.6 $ 27.3
Long-term debt (in millions) $ 226.8 $ 374.1
Book value per share outstanding $ 39.60 $ 31.38
Book value per share outstanding, before
impact of FAS 115(a) $ 33.39 $ 30.17
Total stockholders' equity (in millions) 2,480.7 1,955.2
Total stockholders' equity, before
impact of FAS 115(a) (in millions) 2,091.2 1,880.1
Treasury shares 489,640 814,122
Common stock outstanding 62,638,633 62,314,151
(a) Book value per share outstanding and total stockholders' equity,
before impact of FAS 115, is a non-GAAP financial measure that
management believes is important in evaluating the balance sheet
ignoring the effect of mark-to-market adjustments that primarily
relate to changes in interest rates and credit spreads on
investment securities since they were acquired.
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Unaudited) (Dollars in thousands)
Three Months Ended June 30, 2005
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
Net premiums $ 574,795 $ 1,117 $ -- $575,912
Investment income, net
of related expenses 59,475 42,545 (8) 102,012
Realized investment
gains/(losses), net 1,632 (1,844) -- (212)
Change in value of
embedded derivatives -- (19,917) -- (19,917)
Other revenues 933 2,797 7,854 11,584
Total revenues 636,835 24,698 7,846 669,379
Benefits and expenses:
Claims and other
policy benefits 497,019 4,934 -- 501,953
Interest credited 14,303 23,730 -- 38,033
Policy acquisition costs
and other insurance
expenses 84,732 12,141 2,946 99,819
Change in deferred ac-
quisition cost associated
with change in value
of embedded derivatives -- (13,604) -- (13,604)
Other operating expenses 10,041 1,236 1,345 12,622
Total benefits
and expenses 606,095 28,437 4,291 638,823
Income before
income taxes $ 30,740 $(3,739) $ 3,555 $ 30,556
Three Months Ended June 30, 2004
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
Net premiums $ 530,129 $ 1,190 $ -- $531,319
Investment income, net
of related expenses 53,974 47,495 72 101,541
Realized investment
gains/(losses), net 3,662 (821) -- 2,841
Change in value of
embedded derivatives -- 17,472 -- 17,472
Other revenues 931 1,907 6,958 9,796
Total revenues 588,696 67,243 7,030 662,969
Benefits and expenses:
Claims and other
policy benefits 429,423 3,246 -- 432,669
Interest credited 12,117 31,704 -- 43,821
Policy acquisition
costs and other
insurance expenses 72,714 8,484 2,280 83,478
Change in deferred ac-
quisition cost associated
with change in value of
embedded derivatives -- 13,293 -- 13,293
Other operating
expenses 11,341 1,028 1,529 13,898
Total benefits and
expenses 525,595 57,755 3,809 587,159
Income before
income taxes $ 63,101 $ 9,488 $3,221 $ 75,810
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
U.S. OPERATIONS
(Dollars in thousands)
Six Months Ended June 30, 2005
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
Net premiums $1,141,689 $ 2,341 $ -- $1,144,030
Investment income, net
of related expenses 114,706 100,817 33 215,556
Realized investment
gain/(losses),net 1,209 1,660 -- 2,869
Change in value of
embedded derivatives -- 2,644 -- 2,644
Other revenues 1,854 3,844 15,158 20,856
Total revenues 1,259,458 111,306 15,191 1,385,955
Benefits and expenses:
Claims and other
policy benefits 980,280 3,250 2 983,532
Interest credited 28,310 63,981 -- 92,291
Policy acquisition
costs and other
insurance expenses 155,749 25,510 5,570 186,829
Change in deferred ac-
quisition cost associated
with change in value of
embedded derivatives -- 2,104 -- 2,104
Other operating expenses 19,303 2,574 2,782 24,659
Total benefits and
expenses 1,183,642 97,419 8,354 1,289,415
Income before
income taxes $ 75,816 $13,887 $ 6,837 $ 96,540
Six Months Ended June 30, 2004
Asset- Financial Total
Revenues: Traditional Intensive Reinsurance U.S.
Net premiums $1,061,340 $ 2,372 $ -- $1,063,712
Investment income, net
of related expenses 108,027 92,962 115 201,104
Realized investment
gain/(losses),net 11,220 (677) -- 10,543
Change in value of
embedded derivatives -- 18,994 -- 18,994
Other revenues 2,265 3,577 13,338 19,180
Total revenues 1,182,852 117,228 13,453 1,313,533
Benefits and expenses:
Claims and other
policy benefits 860,314 2,225 -- 862,539
Interest credited 24,195 66,198 -- 90,393
Policy acquisition
costs and other
insurance expenses 148,145 16,129 4,574 168,848
Change in deferred ac-
quisition cost associated
with change in value of
embedded derivatives -- 17,493 -- 17,493
Other operating expenses 23,065 2,187 2,951 28,203
Total benefits and
expenses 1,055,719 104,232 7,525 1,167,476
Income before
income taxes $ 127,133 $12,996 $ 5,928 $ 146,057
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CANADIAN OPERATIONS
(Dollars in thousands)
Three Months Ended
(Unaudited) June 30,
2005 2004
Revenues:
Net premiums $ 76,854 $ 61,830
Investment income, net of related expenses 28,813 23,437
Realized investment gains, net 2,381 6,869
Other revenues 19 31
Total revenues 108,067 92,167
Benefits and expenses:
Claims and other policy benefits 74,251 59,499
Interest credited 252 418
Policy acquisition costs and other
insurance expenses 9,665 8,278
Other operating expenses 3,620 2,761
Total benefits and expenses 87,788 70,956
Income before income taxes $ 20,279 $ 21,211
Six Months Ended
(Unaudited) June 30,
2005 2004
Revenues:
Net premiums $150,610 $121,978
Investment income, net of related expenses 57,573 47,417
Realized investment gains, net 3,215 8,178
Other revenues 53 69
Total revenues 211,451 177,642
Benefits and expenses:
Claims and other policy benefits 142,897 118,865
Interest credited 609 795
Policy acquisition costs and other
insurance expenses 16,378 15,361
Other operating expenses 7,079 5,490
Total benefits and expenses 166,963 140,511
Income before income taxes $ 44,488 $ 37,131
Europe & South Africa
(Dollars in thousands)
Three Months Ended
(Unaudited) June 30,
2005 2004
Revenues:
Net premiums $132,972 $118,887
Investment income, net of related expenses 2,353 863
Realized investment gains, net (107) 1,143
Other revenues 69 444
Total revenues 135,287 121,337
Benefits and expenses:
Claims and other policy benefits 112,117 73,809
Interest credited 190 --
Policy acquisition costs and other
insurance expenses 22,120 29,842
Other operating expenses 7,118 5,524
Interest expense 383 333
Total benefits and expenses 141,928 109,508
Income before income taxes $ (6,641) $ 11,829
Six Months Ended
(Unaudited) June 30,
2005 2004
Revenues:
Net premiums $274,330 $236,090
Investment income, net of related expenses 4,908 2,407
Realized investment gains, net (64) 4,302
Other revenues 121 882
Total revenues 279,295 243,681
Benefits and expenses:
Claims and other policy benefits 208,449 155,806
Interest credited 553 --
Policy acquisition costs and other
insurance expenses 48,516 58,873
Other operating expenses 12,778 10,206
Interest expense 882 707
Total benefits and expenses 271,178 225,592
Income before income taxes $ 8,117 $ 18,089
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Asia Pacific
(Dollars in thousands)
Three Months Ended
(Unaudited) June 30,
2005 2004
Revenues:
Net premiums $145,019 $ 84,178
Investment income, net of related expenses 7,310 3,029
Realized investment gains/(losses), net 133 (149)
Other revenues 2,135 2,950
Total revenues 154,597 90,008
Benefits and expenses:
Claims and other policy benefits 110,617 67,380
Policy acquisition costs and other
insurance expenses 22,549 11,878
Other operating expenses 7,159 5,673
Interest expense 441 383
Total benefits and expenses 140,766 85,314
Income before income taxes $ 13,831 $ 4,694
Six Months Ended
(Unaudited) June 30,
2005 2004
Revenues:
Net premiums $263,226 $187,717
Investment income, net of related expenses 13,538 6,764
Realized investment gains/(losses), net 54 198
Other revenues 1,948 3,585
Total revenues 278,766 198,264
Benefits and expenses:
Claims and other policy benefits 201,277 142,225
Policy acquisition costs and other
insurance expenses 46,204 33,408
Other operating expenses 11,833 10,415
Interest expense 849 725
Total benefits and expenses 260,163 186,773
Income before income taxes $ 18,603 $ 11,491
CORPORATE AND OTHER
(Dollars in thousands)
Three Months Ended
(Unaudited) June 30,
2005 2004
Revenues:
Net premiums $ 597 $ 1,094
Investment income, net of related expenses 5,796 5,315
Realized investment gains, net 10,755 1,987
Other revenues 6,854 1,538
Total revenues 24,002 9,934
Benefits and expenses:
Claims and other policy benefits 28,992 1,445
Interest credited 140 93
Policy acquisition costs and other
insurance expenses 3,702 681
Other operating expenses 7,513 7,040
Interest expense 9,071 8,826
Total benefits and expenses 49,418 18,085
Income before income taxes $(25,416) $ (8,151)
Six Months Ended
(Unaudited) June 30,
2005 2004
Revenues:
Net premiums $ 978 $ 1,685
Investment income, net of related expenses 11,762 10,053
Realized investment gains, net 10,855 7,886
Other revenues 8,486 2,893
Total revenues 32,081 22,517
Benefits and expenses:
Claims and other policy benefits 29,828 2,421
Interest credited 215 162
Policy acquisition costs and other
insurance expenses 3,904 735
Other operating expenses 14,689 14,111
Interest expense 18,049 17,648
Total benefits and expenses 66,685 35,077
Income before income taxes $(34,604) $(12,560)
CONTACT: Reinsurance Group of America, Incorporated
Jack B. Lay, 636-736-7439
SOURCE: Reinsurance Group of America, Incorporated