- Earnings per diluted share: $2.92 from
net income, $2.63 from operating income*
- ROE 10 percent and Operating ROE* 11
percent for the full year
- Reported net premiums increased 7
percent in the fourth quarter
Reinsurance Group of America, Incorporated (NYSE: RGA), a
leading global provider of life reinsurance, reported
fourth-quarter net income of $190.1 million, or $2.92 per diluted
share, compared with $163.1 million, or $2.46 per diluted
share, in the prior-year quarter. Operating income* totaled
$171.3 million, or $2.63 per diluted share, compared with
$188.0 million, or $2.84 per diluted share, the year before. Net
foreign currency fluctuations had an adverse effect of $0.10 per
diluted share on net income, and $0.08 per diluted share on
operating income.
Quarterly Results
Year-to-Date Results ($ in thousands, except per share
data) 2016 2015 2016
2015 Net premiums $ 2,493,163 $ 2,328,501 $ 9,248,871
$ 8,570,741 Net income 190,149 163,127 701,443 502,166 Net income
per diluted share 2.92 2.46 10.79 7.46 Operating income* 171,259
187,950 632,598 567,084 Operating income per diluted share* 2.63
2.84 9.73 8.43 Book value per share 110.31 94.09 Book value per
share, excluding accumulated other comprehensive income (AOCI)*
92.59 83.23 Total assets 53,097,879 50,383,152 * See ‘Use of
Non-GAAP Financial Measures’ below
Full-year 2016 net income totaled $701.4 million, or $10.79 per
diluted share, versus $502.2 million, or $7.46 per diluted share,
in 2015. Operating income for the full year increased to $632.6
million, or $9.73 per diluted share, from $567.1 million, or $8.43
per diluted share, the year before. Net adverse foreign currency
fluctuations reduced 2016 net income by $0.29 per diluted share,
and operating income by $0.25 per diluted share. Net premiums
increased 8 percent in 2016. Full-year premiums reflected net
adverse foreign currency effects of approximately $172.2
million.
For the fourth quarter, consolidated net premiums totaled $2.5
billion, up 7 percent from last year’s fourth quarter.
Current-period premiums reflected net adverse foreign currency
effects of approximately $35.2 million. Excluding spread-based
businesses and the value of associated derivatives, investment
income rose 8 percent over year-ago levels, attributable to an
increase in average invested assets of approximately 14 percent and
strong variable investment income, offset in part by the impact of
lower yield on new money and reinvested assets. The average
investment yield, excluding spread businesses, was down 27 basis
points to 4.69 percent from the fourth quarter of 2015, mainly
attributable to a 2015 fourth-quarter transaction with investment
income retroactive to January 1. The average investment yield was
26 basis points higher than the third-quarter yield due to stronger
variable investment income.
The effective tax rate was approximately 36 percent on both
pre-tax GAAP income and operating income this quarter, above an
expected range of 34 to 35 percent, due to a greater balance of
income from jurisdictions with higher tax rates. For the full year,
the effective tax rate on pre-tax GAAP income and operating income
was approximately 33 percent.
Anna Manning, president and chief executive officer, commented,
“This was another good quarter for RGA, and it closed out a very
successful year. The fourth-quarter results continued a pattern of
good overall momentum and favorable diversification of earnings by
geography and product. Most key business segments posted good
results, with a notably strong performance for the U.S. Traditional
segment. EMEA, Asia Traditional and Canada also performed well,
while Australia underperformed. Overall top-line premium growth was
fairly strong again up 7 percent, or 9 percent in constant
currencies, based primarily upon solid organic growth and modest
contributions from in-force transactions.
“For the year, net income per share of $10.79 and operating
earnings per share of $9.73 also reflected strong results across
most key segments. Our overall strategy and global operating model
continued to produce solid returns as we serve our clients with
solutions spanning across geographies and product areas. We
achieved these strong results despite ongoing macroeconomic
headwinds including lower interest rates and weak foreign
currencies. In 2016, our return on equity was 10 percent and
operating return on equity was 11 percent. Importantly, RGA's
balance sheet remains strong.
“We executed a number of in-force and other transactions during
the year, but the size of the deals on average was smaller than in
recent years. We ended the year with an excess capital position of
$1.1 billion and our board approved a new share repurchase
authorization of $400 million, replacing the previous
authorization. We are well positioned to continue to pursue a
balanced approach to capital management in terms of deployment into
in-force and other attractive transactions, share repurchases and
shareholder dividend increases. Book value per share at year-end
2016 was $110.31 including AOCI, and $92.59 excluding AOCI.
“Looking forward, we remain optimistic about our ability to
serve clients, execute on our strategies and deliver attractive
financial returns.”
SEGMENT RESULTS
In the fourth quarter, RGA changed the name of its
Non-Traditional segments to Financial Solutions. The name change
better aligns our external reports with internally used
terminology. This name change does not affect any previously
reported results for the Financial Solutions segments.
U.S. and Latin America
Traditional
The U.S. and Latin America Traditional segment reported pre-tax
net income of $131.5 million, compared with $79.5 million
in the fourth quarter of 2015. Pre-tax operating income totaled
$129.3 million for the quarter, compared with
$79.0 million in last year’s fourth quarter. Results for the
current quarter benefited from higher variable investment income
and modestly favorable claims results in the Individual Mortality
business. Results in the year-ago quarter reflected poor experience
in the Group business, and unfavorable claims in the Individual
Mortality business. For the full year, pre-tax net income increased
to $371.1 million from $235.8 million and pre-tax operating income
increased to $375.3 million versus $233.5 million in 2015.
Traditional net premiums increased 4 percent from last year’s
fourth quarter to $1,430.3 million and 9 percent to $5,249.6
million for the full year.
Financial Solutions
The Asset-Intensive business reported pre-tax net income of
$72.3 million compared with $30.9 million last year.
Fourth-quarter pre-tax operating income totaled $46.7 million
compared with $47.6 million last year. Both periods' operating
income reflected favorable investment spreads. Full-year pre-tax
net income totaled $224.1 million versus $152.9 million in 2015.
Pre-tax operating income totaled $205.0 million for the full year
versus $199.6 million in 2015, with both periods benefiting from
favorable interest rate spreads.
The Financial Reinsurance business reported pre-tax net income
and pre-tax operating income of $14.4 million for the fourth
quarter compared with $15.9 million the year before, performing in
line with expectations. For the year, pre-tax net income and
pre-tax operating income rose to $59.2 million from $55.0 million
in the prior year.
Canada
Traditional
The Canada Traditional segment reported pre-tax net income of
$37.0 million compared with $44.6 million the year before. Pre-tax
operating income totaled $34.8 million compared with
$45.1 million in the fourth quarter of 2015. The year-ago
quarter was driven by particularly favorable individual mortality
claims experience, while the 2016 quarter reflected modestly
favorable individual mortality claims. The effect of net foreign
currency fluctuations was immaterial to pre-tax net income and
pre-tax operating income in the quarter. For the full year, pre-tax
net income increased to $134.7 million from $124.2 million in 2015.
Pre-tax operating income for the year rose to $125.6 million from
$123.8 million the year before. Foreign currency exchange rates
adversely affected pre-tax net income by $5.8 million and pre-tax
operating income by $6.2 million for the full year.
Reported net premiums increased 20 percent to $241.9 million for
the quarter, attributable to solid growth in individual mortality
and a one-time amendment in 2016 on a creditor treaty. Net premiums
for the full year increased to $928.6 million compared with $838.9
million in 2015. Net foreign currency fluctuations adversely
affected net premiums by $33.0 million for the full year.
Financial Solutions
The Canada Financial Solutions business segment, which consists
of longevity and fee-based transactions, reported fourth-quarter
pre-tax net income and pre-tax operating income of $4.1 million
compared with $3.4 million a year ago, reflecting favorable
longevity experience. The effect of net foreign currency
fluctuations was immaterial to pre-tax net income and pre-tax
operating income in the quarter. Pre-tax net income and pre-tax
operating income totaled $7.9 million for the full year compared
with $13.9 million in 2015, as 2015 experience was particularly
good. For the full year, foreign currency exchange rates adversely
affected pre-tax net income and pre-tax operating income by $0.7
million.
Europe, Middle East and Africa (EMEA)
Traditional
The EMEA Traditional segment reported pre-tax net income and
pre-tax operating income of $15.8 million, up from $12.9 million in
last year’s fourth quarter. Current-period results included higher
premiums and a favorable adjustment associated with improved client
reporting, somewhat offset by modestly unfavorable mortality and
morbidity experience in the U.K. Last year’s fourth quarter was
generally in line with expectations. Net foreign currency
fluctuations adversely affected pre-tax net income and pre-tax
operating income by $1.0 million. For the full year, pre-tax net
income decreased to $30.1 million from $48.4 million in 2015, and
pre-tax operating income decreased to $30.1 million from $48.1
million in the prior year. Full-year net foreign currency
fluctuations adversely affected pre-tax net income and pre-tax
operating income by $1.0 million.
Reported net premiums increased to $301.3 million from $299.9
million in the prior-year period primarily due to the impact of new
treaties. Foreign currency exchange rates adversely affected net
premiums by $37.4 million. For the full year, net premiums totaled
$1,140.1 million, with an adverse effect of $113.1 million
from foreign currency fluctuations.
Financial Solutions
The EMEA Financial Solutions business segment includes
longevity, asset-intensive and fee-based transactions. Pre-tax net
income totaled $41.3 million compared with $28.1 million in the
year-ago period. Pre-tax operating income increased to $36.7
million compared with $18.8 million the year before. Current-period
results reflected continued favorable experience in both the
asset-intensive and longevity businesses, along with the impact of
new business. Net foreign currency fluctuations adversely affected
pre-tax net income by $9.3 million and pre-tax operating income by
$8.2 million. For the full year, pre-tax net income totaled $138.0
million compared with $108.4 million in 2015. Pre-tax operating
income for the year was $122.4 million, up from $98.1 million the
year before. Net foreign currency fluctuations adversely affected
full-year pre-tax net income by $19.4 million and pre-tax operating
income by $16.7 million.
Asia Pacific
Traditional
The Asia Pacific Traditional segment reported pre-tax net income
of $18.5 million, down from $37.4 million in the prior-year
period. Pre-tax operating income totaled $18.5 million compared
with a very strong $35.7 million a year ago. Underwriting
experience was favorable across Asia with particularly strong
results in Hong Kong and Japan, but was offset by high claims on
individual disability business in Australia. Net foreign currency
fluctuations had a favorable effect of $1.1 million on pre-tax net
income and pre-tax operating income. For the full year, pre-tax net
income and pre-tax operating income totaled $113.9 million compared
with $105.7 million in 2015. The effect of net foreign currency
fluctuations was immaterial to pre-tax net income and pre-tax
operating income for the full year.
Reported net premiums rose to $448.3 million from $388.7
million in the prior-year period, reflecting solid growth in Asia.
Foreign currency exchange rates had a favorable effect of $12.6
million on net premiums. For the year, net premiums totaled
$1,681.5 million, up 8 percent over the prior year. Net foreign
currency fluctuations had a favorable effect of $3.3 million on net
premiums for the full year.
Financial Solutions
The Asia Pacific Financial Solutions business segment includes
asset-intensive and fee-based transactions. Pre-tax net losses
totaled $12.0 million compared with pre-tax net income of
$5.5 million last year. Pre-tax operating losses totaled $6.1
million compared with a pre-tax operating income of $5.4 million in
the prior-year quarter. The losses in the current period are
primarily due to unfavorable results on one treaty that continues
to run off. The effect of net foreign currency fluctuations was
immaterial to pre-tax net income and pre-tax operating income in
the quarter. For the full year, pre-tax net income totaled $4.1
million compared with $19.6 million in 2015. Pre-tax operating
losses were $2.4 million for the year, down from pre-tax operating
income of $22.5 million a year ago. Foreign currency exchange rates
had a favorable effect of $1.5 million on pre-tax net income and
$0.8 million on pre-tax operating income for the full year.
Corporate and Other
The Corporate and Other segment’s pre-tax net losses totaled
$27.4 million compared with a pre-tax net loss of $51.5 million the
year before. Pre-tax operating losses were $26.3 million, versus
the year-ago pre-tax loss of $16.7 million. Current-period results
reflected higher compensation, including annual incentive accrual
adjustments. For the full year, pre-tax net losses totaled $39.2
million compared with $119.1 million in 2015. Pre-tax operating
losses were $88.4 million versus $52.0 million in the prior
year.
Company Guidance
On an annual basis, the Company provides financial guidance
based upon the intermediate term rather than giving a range of
annual earnings per share for an upcoming year. This better
reflects the long-term nature of the business and the difficulty in
predicting the timing of shorter-term or periodic events such as
block transactions. The Company accepts risks over very long
periods of time, up to 30 years or longer in some cases. While more
predictable over longer-term horizons, RGA’s business is subject to
inherent short-term volatility, primarily due to mortality and
morbidity experience.
Over the intermediate term, the Company continues to target
growth in operating income per share in the 5 to 8 percent range,
and operating return on equity of 10 to 12 percent. It is presumed
that there are no significant changes in the investment environment
from current levels, and the Company will deploy $300 to $400
million of excess capital, on average, annually. These guidance
ranges are based upon “normalized” results. Both the operating EPS
target range and the ROE ranges are unchanged from a year ago.
Todd C. Larson, chief financial officer, commented, “We believe
that our EPS range is appropriate, and we expect the combination of
organic growth, execution of block transactions and efficient
capital management to allow us to reach our financial targets. We
have faced significant macro headwinds in terms of weak foreign
currencies and sustained low interest rates over the past several
years, and we assume that there will be some level of ongoing
headwinds for the foreseeable future. Nevertheless, we expect that
we can overcome these challenges and achieve our goals.”
Stock Repurchase Authorization
The board of directors authorized a share repurchase program for
up to $400 million of the company's outstanding common stock,
replacing the previous share repurchase authorization. This new
authorization is effective immediately and does not have an
expiration date. Repurchases would be made in accordance with
applicable securities laws and would be made through market
transactions, block trades, privately negotiated transactions or
other means, or a combination of these methods, with the timing and
number of shares repurchased dependent on a variety of factors,
including share price, corporate and regulatory requirements, and
market and business conditions. Repurchases may be commenced or
suspended from time to time without prior notice.
Dividend Declaration
The board of directors declared a regular quarterly dividend of
$0.41, payable March 2 to shareholders of record as of February
9.
Earnings Conference Call
A conference call to discuss fourth-quarter results will begin
at 11 a.m. Eastern Time on Tuesday, January 31. Interested parties
may access the call by dialing 877-879-6174 (domestic) or
719-325-4849 (international). The access code is 1763380. A live
audio webcast of the conference call will be available on the
Company’s Investor Relations website at www.rgare.com. A replay of the conference call
will be available at the same address for 90 days following
the conference call. A telephonic replay also will be available
through Wednesday, February 8 at 888-203-1112 (domestic) or
719-457-0820 (international), access code 1763380.
The Company has posted to its website a Quarterly Financial
Supplement that includes financial information for all segments as
well as information on its investment portfolio. Additionally, the
Company posts periodic reports, press releases and other useful
information on its Investor Relations website.
Use of Non-GAAP Financial Measures
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
substantially all of 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 can
be volatile, 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,
the cumulative effect of any accounting changes, and other items
that 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.
Reconciliations to GAAP net income are provided in the following
tables. Additional financial information can be found in the
Quarterly Financial Supplement on RGA’s Investor Relations website
at www.rgare.com in the “Earnings”
section.
Book value per share excluding the impact of AOCI is a non-GAAP
financial measure that management believes is 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.
Operating income per diluted share is a non-GAAP financial
measure calculated as operating income divided by weighted average
diluted shares outstanding. Operating return on equity is a
non-GAAP financial measure calculated as operating income divided
by average shareholders’ equity excluding AOCI.
About RGA
Reinsurance Group of America, Incorporated is among the largest
global providers of life reinsurance, with operations in Australia,
Barbados, Bermuda, Brazil, Canada, China, France, Germany, Hong
Kong, India, Ireland, Italy, Japan, Malaysia, Mexico, the
Netherlands, New Zealand, Poland, Singapore, South Africa, South
Korea, Spain, Taiwan, the United Arab Emirates, the United Kingdom
and the United States. Worldwide, RGA has assumed approximately
$3.1 trillion of life reinsurance in force, and total assets of
$53.1 billion.
Cautionary Note 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, ratios, future financial
performance and growth potential of Reinsurance Group of America,
Incorporated and its subsidiaries (which we refer to in the
previous 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 capital and credit market conditions and their impact on
the Company’s liquidity, access to capital and cost of capital, (2)
the impairment of other financial institutions and its effect on
the Company’s business, (3) requirements to post collateral or make
payments due to declines in market value of assets subject to the
Company’s collateral arrangements, (4) the fact that the
determination of allowances and impairments taken on the Company’s
investments is highly subjective, (5) adverse changes in mortality,
morbidity, lapsation or claims experience, (6) changes in the
Company’s financial strength and credit ratings and the effect of
such changes on the Company’s future results of operations and
financial condition, (7) inadequate risk analysis and underwriting,
(8) general economic conditions or a prolonged economic downturn
affecting the demand for insurance and reinsurance in the Company’s
current and planned markets, (9) the availability and cost of
collateral necessary for regulatory reserves and capital, (10)
market or economic conditions that adversely affect the value of
the Company’s investment securities or result in the impairment of
all or a portion of the value of certain of the Company’s
investment securities, that in turn could affect regulatory
capital, (11) market or economic conditions that adversely affect
the Company’s ability to make timely sales of investment
securities, (12) risks inherent in the Company’s risk management
and investment strategy, including changes in investment portfolio
yields due to interest rate or credit quality changes, (13)
fluctuations in U.S. or foreign currency exchange rates, interest
rates, or securities and real estate markets, (14) adverse
litigation or arbitration results, (15) the adequacy of reserves,
resources and accurate information relating to settlements, awards
and terminated and discontinued lines of business, (16) the
stability of and actions by governments and economies in the
markets in which the Company operates, including ongoing
uncertainties regarding the amount of United States sovereign debt
and the credit ratings thereof, (17) competitive factors and
competitors’ responses to the Company’s initiatives, (18) the
success of the Company’s clients, (19) successful execution of the
Company’s entry into new markets, (20) successful development and
introduction of new products and distribution opportunities, (21)
the Company’s ability to successfully integrate acquired blocks of
business and entities, (22) action by regulators who have authority
over the Company’s reinsurance operations in the jurisdictions in
which it operates, (23) the Company’s dependence on third parties,
including those insurance companies and reinsurers to which the
Company cedes some reinsurance, third-party investment managers and
others, (24) the threat of natural disasters, catastrophes,
terrorist attacks, epidemics or pandemics anywhere in the world
where the Company or its clients do business, (25) interruption or
failure of the Company’s telecommunication, information technology
or other operational systems, or the Company’s failure to maintain
adequate security to protect the confidentiality or privacy of
personal or sensitive data stored on such systems, (26) changes in
laws, regulations, and accounting standards applicable to the
Company, its subsidiaries, or its business, (27) the effect of the
Company’s status as an insurance holding company and regulatory
restrictions on its ability to pay principal of and interest on its
debt obligations, and (28) other risks and uncertainties described
in this document and in the Company’s 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. For a discussion of the risks and
uncertainties that could cause actual results to differ materially
from those contained in the forward-looking statements, you are
advised to see Item 1A - “Risk Factors” in the 2015 Annual Report,
as updated by Part II, Item 1A - “Risk Factors” in the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
2016.
REINSURANCE GROUP OF AMERICA, INCORPORATED
AND SUBSIDIARIESReconciliation of Consolidated Net Income to
Operating Income(Dollars in thousands)
(Unaudited)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31,
2016 2015 2016 2015 Net income $
190,149 $ 163,127 $ 701,443 $ 502,166 Reconciliation to operating
income: Capital (gains) losses, derivatives and other, included in
investment related (gains) losses, net 66,640 40,203 (21,322 )
30,020 Capital (gains) losses on funds withheld, included in
investment income, net of related expenses (5,355 ) 161 (18,330 )
(10,640 ) Embedded derivatives: Included in investment related
(gains) losses, net (72,343 ) (6,004 ) (40,302 ) 85,789 Included in
interest credited (25,977 ) (917 ) (18,289 ) (8,178 ) DAC offset,
net 17,957 (8,542 ) 30,787 (31,996 ) Investment income on
unit-linked variable annuities (2,741 ) — (8,535 ) — Interest
credited on unit-linked variable annuities 2,741 — 8,535 —
Non-investment derivatives 188 (78 ) (1,389 ) (77 )
Operating income $ 171,259 $ 187,950 $ 632,598
$ 567,084
Reconciliation of Consolidated Income
before Income Taxes to Pre-tax Operating Income(Dollars in
thousands)
(Unaudited)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31,
2016 2015 2016 2015 Income before income taxes $ 295,543 $ 206,743
$ 1,043,946 $ 744,795 Reconciliation to pre-tax operating income:
Capital (gains) losses, derivatives and other, included in
investment related (gains) losses, net 103,944 64,034 (22,082 )
49,586 Capital (gains) losses on funds withheld, included in
investment income, net of related expenses (8,238 ) 246 (28,200 )
(16,370 ) Embedded derivatives: Included in investment related
(gains) losses, net (111,297 ) (9,236 ) (62,003 ) 131,984 Included
in interest credited (39,964 ) (1,412 ) (28,137 ) (12,582 ) DAC
offset, net 27,625 (13,142 ) 47,364 (49,225 ) Investment income on
unit-linked variable annuities (4,217 ) — (13,131 ) — Interest
credited on unit-linked variable annuities 4,217 — 13,131 —
Non-investment derivatives 289 (120 ) (2,137 ) (118 )
Pre-tax operating income $ 267,902 $ 247,113 $
948,751 $ 848,070
REINSURANCE GROUP OF AMERICA, INCORPORATED
AND SUBSIDIARIESReconciliation of Pre-tax Net Income to Pre-tax
Operating Income(Dollars in thousands)
(Unaudited) Three Months Ended December 31,
2016
Pre-tax netincome (loss)
Capital(gains) losses,derivativesand
other, net
Change invalue ofembeddedderivatives,
net
Pre-taxoperatingincome (loss)
U.S. and Latin America: Traditional $ 131,492 $ (336 ) $ (1,811 ) $
129,345 Financial Solutions: Asset Intensive 72,261 35,800 (1)
(61,363 ) (2) 46,698 Financial Reinsurance 14,447 — —
14,447 Total U.S. and Latin America 218,200 35,464
(63,174 ) 190,490 Canada Traditional 37,026 (2,272 ) — 34,754
Canada Financial Solutions 4,065 — — 4,065
Total Canada 41,091 (2,272 ) — 38,819 EMEA Traditional
15,826 — — 15,826 EMEA Financial Solutions 41,328 (4,600 ) —
36,728 Total EMEA 57,154 (4,600 ) — 52,554 Asia
Pacific Traditional 18,464 — — 18,464 Asia Pacific Financial
Solutions (11,966 ) 5,846 — (6,120 ) Total Asia
Pacific 6,498 5,846 — 12,344 Corporate and Other (27,400 ) 1,095
— (26,305 ) Consolidated $ 295,543 $ 35,533
$ (63,174 ) $ 267,902 (1) Asset Intensive is
net of $(60,462) DAC offset. (2) Asset Intensive is net of $88,087
DAC offset. (Unaudited) Three Months Ended December 31, 2015
Pre-tax netincome (loss)
Capital(gains) losses,derivativesand
other, net
Change invalue ofembeddedderivatives,
net
Pre-taxoperatingincome (loss)
U.S. and Latin America: Traditional $ 79,483 $ 203 $ (696 ) $
78,990 Financial Solutions: Asset Intensive 30,874 124,163 (1)
(107,441 ) (2) 47,596 Financial Reinsurance 15,936 —
— 15,936 Total U.S. and Latin America 126,293 124,366
(108,137 ) 142,522 Canada Traditional 44,640 446 — 45,086 Canada
Financial Solutions 3,420 — — 3,420
Total Canada 48,060 446 — 48,506 EMEA Traditional 12,859 — — 12,859
EMEA Financial Solutions 28,145 (9,366 ) — 18,779
Total EMEA 41,004 (9,366 ) — 31,638 Asia Pacific Traditional
37,415 (1,706 ) — 35,709 Asia Pacific Financial Solutions 5,467
(17 ) — 5,450 Total Asia Pacific 42,882 (1,723
) — 41,159 Corporate and Other (51,496 ) 34,784 —
(16,712 ) Consolidated $ 206,743 $ 148,507 $ (108,137
) $ 247,113 (1) Asset Intensive is net of $84,347 DAC
offset. (2) Asset Intensive is net of $(97,489) DAC offset.
REINSURANCE GROUP OF AMERICA, INCORPORATED
AND SUBSIDIARIESReconciliation of Pre-tax Net Income to Pre-tax
Operating Income(Dollars in thousands)
(Unaudited) Twelve Months Ended December 31,
2016
Pre-tax netincome (loss)
Capital(gains) losses,derivativesand
other, net
Change invalue ofembeddedderivatives,
net
Pre-taxoperatingincome (loss)
U.S. and Latin America: Traditional $ 371,101 $ (339 ) $ 4,568 $
375,330 Financial Solutions: Asset Intensive 224,142 (52,840 ) (1)
33,680 (2) 204,982 Financial Reinsurance 59,238 — —
59,238 Total U.S. and Latin America 654,481 (53,179 )
38,248 639,550 Canada Traditional 134,705 (9,056 ) — 125,649 Canada
Financial Solutions 7,945 — — 7,945
Total Canada 142,650 (9,056 ) — 133,594 EMEA Traditional 30,059 (5
) — 30,054 EMEA Financial Solutions 138,007 (15,595 ) —
122,412 Total EMEA 168,066 (15,600 ) — 152,466 Asia
Pacific Traditional 113,928 (16 ) — 113,912 Asia Pacific Financial
Solutions 4,063 (6,473 ) — (2,410 ) Total Asia
Pacific 117,991 (6,489 ) — 111,502 Corporate and Other (39,242 )
(49,119 ) — (88,361 ) Consolidated $ 1,043,946 $
(133,443 ) $ 38,248 $ 948,751 (1) Asset
Intensive is net of $(81,024) DAC offset. (2) Asset Intensive is
net of $128,388 DAC offset. (Unaudited) Twelve Months Ended
December 31, 2015
Pre-tax netincome (loss)
Capital(gains) losses,derivativesand
other, net
Change invalue ofembeddedderivatives,
net
Pre-taxoperatingincome (loss)
U.S. and Latin America: Traditional $ 235,771 $ 201 $ (2,507 ) $
233,465 Financial Solutions: Asset Intensive 152,946 (37,872 ) (1)
84,488 (2) 199,562 Financial Reinsurance 55,017 — —
55,017 Total U.S. and Latin America 443,734 (37,671 )
81,981 488,044 Canada Traditional 124,175 (364 ) — 123,811 Canada
Financial Solutions 13,902 — — 13,902
Total Canada 138,077 (364 ) — 137,713 EMEA Traditional 48,410 (338
) — 48,072 EMEA Financial Solutions 108,445 (10,359 ) —
98,086 Total EMEA 156,855 (10,697 ) — 146,158 Asia
Pacific Traditional 105,654 — — 105,654 Asia Pacific Financial
Solutions 19,619 2,899 — 22,518 Total
Asia Pacific 125,273 2,899 — 128,172 Corporate and Other (119,144 )
67,127 — (52,017 ) Consolidated $ 744,795 $
21,294 $ 81,981 $ 848,070 (1) Asset
Intensive is net of $(11,804) DAC offset. (2) Asset Intensive is
net of $(37,421) DAC offset.
REINSURANCE GROUP OF AMERICA, INCORPORATED
AND SUBSIDIARIESPer Share and Shares Data(In thousands, except per
share data)
(Unaudited)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, 2016
2015 2016 2015 Earnings per share from net income:
Basic earnings per share $ 2.96 $ 2.49 $ 10.91 $ 7.55 Diluted
earnings per share $ 2.92 $ 2.46 $ 10.79 $ 7.46 Diluted
earnings per share from operating income $ 2.63 $ 2.84 $ 9.73 $
8.43 Weighted average number of common and common equivalent shares
outstanding 65,124 66,247 64,989 67,292
(Unaudited) At December 31, 2016 2015 Treasury shares 14,835 13,933
Common shares outstanding 64,303 65,205 Book value per share
outstanding $ 110.31 $ 94.09 Book value per share outstanding,
before impact of AOCI $ 92.59 $ 83.23
REINSURANCE GROUP OF AMERICA, INCORPORATED
AND SUBSIDIARIESCondensed Consolidated Statements of Income(Dollars
in thousands)
(Unaudited)
Three Months EndedDecember 31,
Twelve Months EndedDecember 31,
2016 2015 2016 2015 Revenues: Net
premiums $ 2,493,163 $ 2,328,501 $ 9,248,871 $ 8,570,741 Investment
income, net of related expenses 497,227 467,468 1,911,886 1,734,495
Investment related gains (losses), net: Other-than-temporary
impairments on fixed maturity securities (4,142 ) (27,605 ) (38,805
) (57,380 ) Other-than-temporary impairments on fixed maturity
securities transferred to accumulated other comprehensive income 74
— 74 — Other investment related gains (losses), net 14,261
(17,204 ) 132,926 (107,370 ) Total investment related gains
(losses), net 10,193 (44,809 ) 94,195 (164,750 ) Other revenue
68,715 77,431 266,559 277,692 Total
revenues 3,069,298 2,828,591 11,521,511
10,418,178 Benefits and expenses: Claims and other policy
benefits 2,116,045 2,015,929 7,993,375 7,489,382 Interest credited
64,089 105,032 364,691 336,964 Policy acquisition costs and other
insurance expenses 370,134 300,329 1,310,540 1,127,486 Other
operating expenses 175,634 158,556 645,509 554,044 Interest expense
41,422 35,820 137,623 142,863 Collateral finance and securitization
expense 6,431 6,182 25,827 22,644 Total
benefits and expenses 2,773,755 2,621,848 10,477,565
9,673,383 Income before income taxes 295,543 206,743
1,043,946 744,795 Provision for income taxes 105,394 43,616
342,503 242,629 Net income $ 190,149 $
163,127 $ 701,443 $ 502,166
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version on businesswire.com: http://www.businesswire.com/news/home/20170130006085/en/
Reinsurance Group of America, IncorporatedJeff Hopson,
636-736-7000Senior Vice President - Investor Relations
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