Reinsurance Group Of America, Incorporated · NYSE:RGA
Reinsurance Group Of America — Q2 2020 Earnings Presentation
21 slides from Reinsurance Group Of America's earnings presentation, Aug 5, 2020
Slide 1: 2Q20 Earnings Presentation
The security of experience. The power of innovation. 2Q20 Earnings Presentation Reinsurance Group of America, Incorporated August 5, 2020
Slide 2: Safe Harbor
Safe Harbor This presentation 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 future operations, strategies, earnings, revenues, income or loss, ratios, financial perform
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures RGA uses a non-GAAP financial measure called adjusted 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 adju
Slide 4: Key Messages
Key Messages RGA operations continue to run smoothly. Our top priority is the health and well-being of our employees, and supporting our clients and communities. We are extremely proud of how the RGA team has adapted to these very difficult circumstances. Q2 2020 Results Key Developments RGA's res
Slide 5: Second Quarter Results
Second Quarter Results Pre-tax Adjusted Operating Adjusted Operating EPS1 Trailing 12 Month Adjusted Income1 Adjusted operating income of $87 Operating ROE1 Consolidated results were impacted by million Ongoing headwinds from low COVID-19 related excess mortality claim Effective tax rate was
Slide 6: Results by Segment
Results by Segment U.S. and Latin America Traditional results reflect $240 Pre-tax Adjusted Operating Income (Loss)1 2Q20 2Q19 million of excess individual mortality claim costs; both our Group and Individual Health lines of business were modestly above expectations U.S. and Latin America Traditio
Slide 7: U.S. Individual Mortality
U.S. Individual Mortality Q2 excess claim costs of $240 million, including an additional COVID-19 IBNR reserve Higher frequency drove excess claims Our analysis suggests Q2 excess claim costs are attributable to the COVID-19 pandemic – Estimate consistent with known cause-of-death reporting ad
Slide 8: Pre-Tax Income (Loss) Reconciliation
Pre-Tax Income (Loss) Reconciliation $ in millions 1Q20 2Q20 2Q YTD Investment impairments slowed in Q2 due to various improvements in the financial Pre-tax income (loss) $ (96) 195 99 markets, while the allowance for commercial Investment-related mortgage loans increased due to macro economic fac
Slide 9: Investments Summary
Investments Summary Our investment strategy strives to consistently balance risk and return with strong underwriting discipline to build a portfolio to weather cycles Investment portfolio credit performance is tracking better than our previously discussed stress scenarios Portfolio average qua
Slide 10: Non-Spread Investment Yield
Non-Spread Investment Yield1 Non-Spread Investment Yield1 New Money Rates2 Investment yield similar to prior quarter; higher New money rate was 3.57% in Q2 2020 cash balances reduced yield; variable Limited sourcing of private debt and investment income improved in Q2, but was commercial mortg
Slide 11: Capital and Liquidity
Capital and Liquidity Capital Leverage Ratios Ample Liquidity Available We believe our balance sheet is strong Leverage ratios within our targeted Continued to build liquidity in Q2, with with a stable capital mix ranges cash and cash equivalents of $4.3 Successful execution of capital raise
Slide 12: COVID-19 Mortality Model Update
COVID-19 Mortality Model Update
Slide 13: COVID-19 Mortality Model Update
COVID-19 Mortality Model Update Mortality model revised based on updated external data and our own claims experience RGA Mortality Amount at Risk % by Geography Financial impact projected to be lower than previous estimates for the same level of general population deaths U.S. 45% U.K. – Previou
Slide 14: Projection of COVID-19 Impact on Mortality Claim Costs
Projection of COVID-19 Impact on Mortality Claim Costs Wide range of uncertainty around future general population excess deaths and impacts on RGA given multiple factors that influence course of the virus – Government and societal responses to the crisis – Timing and effectiveness of treatments
Slide 15: Appendix
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Slide 16: Diversified and High-Quality Portfolio
Diversified and High-Quality Portfolio Average portfolio credit rating: A 95.1% investment grade $72.0B Short-term, cash and cash equivalents 6.1%, up from 4.4% in 1Q CML average LTV 58% CLO book value $1.8 billion1, AA average credit quality We believe our BBB investments are defensivel
Slide 17: Commercial Mortgage Loans (CML)
Commercial Mortgage Loans (CML) Team has managed through multiple real estate cycles; robust infrastructure to protect value in times of stress $6.0B Portfolio loan-to-value (58%) prior to COVID-19 provides significant downside support Portfolio diversified across geography and property type ‒
Slide 18: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures Reconciliation of GAAP pre-tax income to pre-tax adjusted operating income In millions 2Q19 2Q20 U.S. & Latin America Traditional GAAP pre-tax income (loss) $ 55.0 $ (158.0) Capital (gains) losses, derivatives and other, net - - Change in MV of embedded derivativ
Slide 19: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures Reconciliation of GAAP pre-tax income to pre-tax adjusted operating income In millions 2Q19 2Q20 Asia Pacific Traditional GAAP pre-tax income $ 34.0 $ 47.0 Pre-tax adjusted operating income $ 34.0 $ 47.0 Asia Pacific Financial Solutions GAAP pre-tax income (loss)
Slide 20: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures Reconciliation of GAAP stockholders' equity to stockholders' equity excluding AOCI In millions 2Q19 2Q20 GAAP stockholders' equity $ 10,709 $ 12,553 Less: Unrealized appreciation of securities 2,816 4,089 Less: Accumulated currency translation adjustments (123) (
Slide 21: ©2020 RGA. All rights reserved.
©2020 RGA. All rights reserved. No part of this publication may be reproduced in any form without the prior permission of RGA. The information in this publication is for the exclusive, internal use of the recipient and may not be relied upon by any other party other than the recipient and its affili
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