• Adjusted Operating Earnings: $4.99 per share for Q4 2024.
• Adjusted Operating Return on Equity: 15.4% for the past year, excluding notable items.
• Capital Deployed: $250 million in Q4 2024; nearly $1.7 billion for the full year.
• Record Operating EPS: $22.57 per share for 2024, up 14% from 2023.
• Record Capital Deployment: $1.7 billion in transactions, up 80% from 2023.
• Premium Growth: Reported premiums up 1.2% for Q4 2024; adjusted premiums up 11% excluding US PRT transactions.
• Traditional Business Premium Growth: 9.5% for Q4 2024 on a constant currency basis.
• Effective Tax Rate: 22.5% for Q4 2024 on pretax adjusted operating income.
• Deployable Capital: $1.7 billion at the end of 2024.
• Book Value Per Share: $151.97, with a compounded annual growth rate of 9.9% since the beginning of 2021.

• Warning! GuruFocus has detected 6 Warning Signs with RGA.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Reinsurance Group of America Inc (NYSE:RGA) reported record operating earnings for 2024, with adjusted operating earnings of $4.99 per share and a return on equity of 15.4%.
• The company successfully deployed $1.7 billion into transactions for the year, marking the highest capital deployment in its history.
• RGA increased its intermediate-term operating ROE target to 13% to 15%, reflecting confidence in its business fundamentals.
• The company demonstrated strong growth in its Asia Traditional business, particularly in Mainland China, enhancing asset liability management profiles.
• RGA's strategic platform and disciplined risk management have resulted in a robust pipeline and sustainable business momentum across global markets.

Negative Points

• The US Financial Solutions segment experienced a decline due to the runoff of existing annuity business and slower earnings emergence from new transactions.
• Variable investment income was below plan, impacting overall financial results.
• The company faced unfavorable biometric claims experience, with a financial impact of $58 million in the quarter.
• RGA's deployable capital metric indicates minimal expected share buybacks in the foreseeable future, focusing instead on capital deployment into transactions.
• The company's earnings run rate is sensitive to foreign exchange fluctuations, with a potential $40 million to $50 million impact from recent currency movements.

Q & A Highlights

Q: Could you talk about the difference between the economic and financial impacts of the biometric experience and the time frame for the $167 million of favorable biometric claims experience from 2024 to flow through earnings? A: The economic impact gets amortized through the accounting results over the life of the business, typically around a 15-year-plus period. This means the economic claims experience will be reflected gradually in the financial results over this time frame. - Axel Andre, CFO

Q: Can you explain the deployable capital definition and whether rating agencies have approved this approach? A: The deployable capital metric incorporates regulatory capital, rating agency, and internal economic capital frameworks. We have high confidence in gaining recognition from rating agencies for the value of in-force business, which is factored into our deployable capital estimate. - Axel Andre, CFO

Q: How should we think about the value of in-force rolling through durable earnings power? A: The value of in-force represents the present value of underwriting and investment margins over the business's life. For example, a retro recapture increased the value metric by $1.5 billion, impacting 2025 earnings by $20 million, ramping up to $60 million by 2040. This demonstrates the long-term nature of earnings from in-force business. - Axel Andre, CFO

Q: What are the best capital deployment opportunities for 2025? A: Opportunities are strong across Asia, EMEA, and the US. In the US, there's a shift towards asset deals with biometric risk. In Asia, both Traditional and Financial Solutions businesses are thriving. In Europe, the focus is on longevity business, particularly in the UK, with potential opportunities in the Netherlands and Solvency II solutions. - Tony Cheng, CEO

Q: What is your interest in long-term care (LTC) transactions, given the market dynamics? A: We focus on LTC transactions that align with our existing in-force block, which has performed well historically. Transactions should be strategic, often bundled with other business blocks, and we prefer modest-sized blocks. This approach ensures alignment with our risk management and strategic goals. - Tony Cheng, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.