REINSURANCE GROUP OF AMERICA INC Q2 FY2024 earnings call

• Tony Cheng noted strong adjusted operating earnings of $5.48 per share, 15.3% adjusted operating return on equity, five straight quarters of positive underwriting results, and strong momentum across business lines. - Todd Larson discussed pre-tax adjusted operating income, premium growth, claims experience (positive biometrics experience overall but $14M loss in current quarter due to LDTI cohorting, segment-specific results like US Trad and Asia Trad having favorable in-force actions, US financial solutions below expectations, Canada Trad having unfavorable mortality), investment yields (non-spread portfolio yield 4.65%, new money rate 6.22%), and capital position with excess capital of ~$1 billion. - Key operational highlights included in-force transactions of $307 million, growth in Longevity/PRT, Asia asset intensive, Asia Traditional's digital solution, US Traditional's new product, and South Africa's simplified issue policies launch.

The company reported pre-tax adjusted operating income of $491 million for the quarter. Segments included: Longevity and PRT - US PRT had a transaction, UK longevity successful with active pipeline; Asia Traditional - added a market-first digital underwriting solution for Mainland Chinese visitors buying insurance in Hong Kong; US Traditional - partnered to develop a new proprietary life product; Asia asset intensive - strong with Japanese and Korean transactions; Financial solutions - Asia financial solutions had favorable experience, US financial solutions had timing issues; Europe, Middle East, Africa - traditional business had unfavorable experience in UK, financial solutions favorable; Corporate and Other - reported pre-tax adjusted operating loss of $44 million. Adjusted operating return on equity for past 12 months was 15.3%, and reported premiums were up 17.5% with $282 million from a single premium US PRT transaction.

• Effective tax rate expected to be in the range of 24% to 25% for the full year. - Continued positive momentum in new business activity. - Confidence in delivering growth at attractive returns to shareholders, with expectations to maintain intermediate-term ROE targets and continue growing through strategic transactions and capital deployment.

• Claims volatility due to LDTI cohorting and business duration. - Timing issues in US financial solutions new business not yet at full earnings rate. - Client reporting adjustments impacting segment results. - Commercial real estate portfolio dynamics affecting gain harvesting and potential office LTV fluctuations.

Q: Joel Hurwitz asked about the earnings benefit of in-force management actions and if it's a one-off.

A: Todd Larson responded that in-force management is ongoing, consolidated impact was a positive of about $100 million pre-tax, offset by client reporting items.

Q: Joel Hurwitz asked about continued favorable experience in Asia Pacific financial solutions business.

A: Tony Cheng said Asia financial solutions continues to ramp up with strong momentum and value-added transactions.

Q: Wes Carmichael asked if the $100 million in-force action benefit was pre-tax.

A: Todd Larson confirmed it was pre-tax, consolidated number net of client reporting adjustments.

Q: Wes Carmichael asked about US financial solutions retrocession to Ruby Re.

A: Todd Larson said there was no specific retrocession in Q2 but will have some going forward.

Q: Jimmy Bhullar asked about underlying earnings power and run rate earnings.

A: Todd Larson said nothing material changed in segment run rates.

Q: Ryan Krueger asked about reserve assumptions and confidence.

A: Jonathan Porter said RGA has rigorous risk management, disciplined pricing, and favorable underlying biometric experience.

Q: Suneet Kamath asked about capital deployment in second half.

A: Tony Cheng said pipelines are full, no slowdown expected.

Q: Suneet Kamath asked about PRT market competition.

A: Tony Cheng said pipeline strong, pricing fair.

Q: Thomas Gallagher asked about go-forward impact of in-force actions.

A: Todd Larson explained current year benefits and reduced claims volatility for future.

Q: John Barnidge asked about office portfolio LTV and gain harvesting.

A: Leslie Barbi said portfolio credit quality stable, office LTV improved due to new low LTV loans.

Q: Michael Ward asked about US mortality experience post-pandemic.

A: Jonathan Porter said underlying economic performance positive, excess mortality trending down but built into expectations.

Q: Jimmy Bhullar asked about Australia business.

A: Todd Larson said year-to-date slight pre-tax profit, selective on new business.

Q: Wes Carmichael asked about Asia asset intensive market in Japan.

A: Tony Cheng said Japan is fully embracing asset intensive reinsurance, with trust-building relationships leading to more transactions.

Q: Thomas Gallagher asked about in-force management process.

A: Tony Cheng said process involves relationship-building, technical ability, and win-win negotiations with clients.