Reinsurance Group Of America, Incorporated · NYSE:RGA
Reinsurance Group Of America — Investor Day (May 2016)
134 slides from Reinsurance Group Of America's investor day presentation, May 17, 2016
Slide 1: Investor Day 2016
Investor Day 2016 J. Jeffrey Hopson Senior Vice President, Investor Relations Exhibit 99.1
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 strategies, earnings, revenues, income or loss, ratios, future financial performance and gr
Slide 3: Use of Non-GAAP Financial Measures
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 i
Slide 4: Opening Remarks
Opening Remarks J. Jeffrey Hopson, Senior Vice President, Investor Relations Introduction and Overview A. Greig Woodring, Chief Executive Officer Review and Outlook Anna Manning, President Global Financial Solutions John P. Laughlin, Executive Vice President, Global Financial Solutions Global Acquis
Slide 5: Introduction and Overview
Introduction and Overview A. Greig Woodring Chief Executive Officer
Slide 6: Key messages
RGA is unique RGA is successfully executing its strategy RGA is well-positioned for continued success Key messages RGA is optimistic about the future
Slide 7: High-level observations
High-level observations Global life insurance industry is in flux Regulatory and macroeconomic uncertainty are spurring change Life reinsurance industry dynamics are stable Concentrated sector with “responsible” competition Favorable mortality trends are a nice tailwind over time Medical advances an
Slide 8: The evolution of RGA
The evolution of RGA RGA has evolved over time, but core principles endure Consistent management team leads to consistent approach and results Disciplined decision making reflects the long-term nature of the business RGA has expanded geographically and added capabilities over 20+ years Global platfo
Slide 9: Geographic expansion executed over time
Geographic expansion executed over time 1 2013-2015 have been adjusted for foreign currency effect. A key component of growth Non-U.S. Premiums Percent of Total1 Year of Office Opening Spain Hong Kong Japan Australia Malaysia Taiwan South Africa United Kingdom Mexico South Korea India China Poland F
Slide 10: Product expansion executed over time
Product expansion executed over time Balance and diversity by product 2005 2015 2010 1995 1997 1998 1999 2000 2001 2002 2007 2008 2009 2010 2013 2014 Entered capital- motivated reinsurance business Whole life medical products in Taiwan Co-insurance of indexed annuities Acquired group reinsurance bus
Slide 11: Global life and health reinsurers
Global life and health reinsurers 1 Does not include Munich Health. 2 Net premiums. 3 Does not include BHRG. Please note, exchange rate conversions are based on currency rates provided by each company in their Annual Reports. Source: Annual filings for each reinsurer. Ranked by 2015 net earned premi
Slide 12: Business Capability Index – All respondents
Business Capability Index – All respondents Global Market penetration Indicates competitor position RGA’s unique strengths NMG Consulting Studies, Business Capability Index (BCI) – 2015
Slide 13: RGA's unique strengths: Experienced executive management team
RGA’s unique strengths Experienced executive management team 1 Includes experience in life insurance and life reinsurance industries. 2 Includes experience with RGA’s predecessor, the reinsurance division of General American Life Insurance Company. Name Position Years of Experience In Industry1 With
Slide 14: RGA is unique
RGA is unique Only publicly traded reinsurer focused solely on life and health industry RGA is focused on finding solutions to client needs – staying nimble, flexible, responsive Open-minded, creative, “can do” attitude New ideas Disciplined applications “Build-it” mentality – most expansion has bee
Slide 15: Our strategy is effective
Our strategy is effective Global operating model is performing well, with good balance and diversity Experienced management team has a consistent approach Solid organic growth, transactional opportunities, effective capital management Strong growth in emerging markets Steady growth in mature markets
Slide 16: Long-term track record is the best measure of success
Long-term track record is the best measure of success Book value per share (ex-AOCI)1 total return growth2 1Book value excludes other comprehensive income. Periods prior to 4Q06 not restated for 2012 DAC accounting change. Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. 2CAGR
Slide 17: Historical stock price change
Historical stock price change Source: SNL. Information as of 5/6/16.
Slide 18: Well-positioned for continued success
Well-positioned for continued success RGA is in all key markets, with strong positions and market share Global life and health industry faces significant challenges Regulatory changes and economic uncertainty Clients face challenges: RGA has solutions Solvency II presents a particular opportunity Em
Slide 19: RGA is optimistic about the future
RGA is optimistic about the future Confidence in the team, the culture Continuity of approach Regulatory changes present challenges, but more opportunities Mortality and morbidity trends are constructive overall to RGA Life expectancies still increasing, demographics changing Positive medical and he
Slide 20: Review and Outlook
Review and Outlook Anna Manning President
Slide 21: Key messages
RGA is unique RGA is successfully executing its strategy RGA is well-positioned for continued success Key messages RGA is optimistic about the future
Slide 22: RGA is unique
RGA is unique Only pure-play life and health reinsurer Strong and well-established brand Emphasis on client centricity Leader in insights, skills, technical expertise Collaborative culture fostering innovation Nimble and flexible
Slide 23: Building on our geographic platform
RGA is successfully executing its strategy Building on our geographic platform Non-U.S. Premiums Percent of Total Year of Office Opening Spain Hong Kong Japan Australia Malaysia Taiwan South Africa United Kingdom Mexico South Korea India China Poland France Italy Germany Netherlands U.A.E. Canada 19
Slide 24: Product expansion over time
RGA is successfully executing its strategy Product expansion over time 2010 2018 Projection 2015 1995 2000 2005 2010 2015 2018 77% 14% 68% 21% 63% 24% Year of Product Introductions (Non-Mortality) 9% 11% 13% Percent of Revenues 1995: Entered capital-motivated reinsurance business 1997: First asset-i
Slide 25: RGA is successfully executing its strategy
RGA is successfully executing its strategy Executing in a disciplined manner by balancing profitable growth and risk management Generating diversified sources of earnings by both geography and product Applying best practices and leveraging best-of-class skills and capabilities across markets Continu
Slide 26: RGA is well-positioned for continued success
RGA is well-positioned for continued success Growing Steady growth in mature markets Strong growth in developing markets Attractive and robust pipeline of transactional opportunities Prepared Best-in-class risk selection, structuring and capital management capabilities Longstanding and deep partners
Slide 27: RGA is optimistic about the future
RGA is optimistic about the future Deep and experienced management team Assures a smooth transition and consistent approach going forward Continues to focus on execution, leveraging skills and capabilities across markets Strong global franchise in attractive markets Leading market shares in most pro
Slide 28: What to expect from RGA
What to expect from RGA We will be intently focused on execution We will be disciplined and selective across markets and risks We will pursue opportunities with the strongest fit with our capabilities and risk framework We will leverage our considerable strengths to create competitive advantage We w
Slide 29: Global Financial Solutions
Global Financial Solutions John P. Laughlin Executive Vice President, Global Financial Solutions
Slide 30: Key messages: environmental change driving growth
Environmental change is driving growth Unique strengths support sustainable competitive advantage Well-defined strategies and strong execution produce earnings growth and stability Key messages GFS has delivered stable, high-quality earnings and superior returns since 1995
Slide 31: History of GFS growth
History of GFS growth 1983 1995 1997 2000 2002 2005 2006 2008 2010 2012 2013 2014 2015 Began reinsurance operations as ITT Lyndon RGA acquired 40% ownership stake First asset- intensive transaction “BOLI” First longevity transaction in Canada First variable annuity transaction First stable value wra
Slide 32: Environmental change driving growth
Environmental change driving growth Regulatory changes Solvency and accounting changes Low interest rate environment Longer lifespans Growth opportunities triggered by changing environment New opportunities for innovative reinsurance solutions Need for more capital and more stability of capital Dema
Slide 33: Unique strengths support sustainable competitive advantage
Unique strengths support sustainable competitive advantage Long track record of credibility with clients and regulators Execution certainty Dependability Long-term partnership Recognized leader in large and complex transactions Ability to accept and retain biometric and investment risks Consistent,
Slide 34: Experienced management team
Experienced management team Difficult to replicate 1 Includes experience in life insurance and life reinsurance industries. 2 Includes experience with RGA’s predecessor, the reinsurance division of General American Life Insurance Company. Name Position Years of Experience In Industry1 With RGA2 John
Slide 35: Financial results
Financial results Strong operating income growth; important contributor to RGA’s results Proven track record of consistent and dependable earnings Above-average returns Balanced mix of business across products and regions Good diversification of earnings and risks Insurance and structuring expertise
Slide 36: Pre-tax Operating Income by region and product
All Regions Pre-tax Operating Income1 Financial results 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. All Products Pre-tax Operating Income1 $ in millions $ in millions 9 – 15% CAGR Projection 9– 15% CAGR
Slide 37: Asset-intensive reinsurance: Executing strategies
Asset-intensive reinsurance: Executing strategies Build a balanced portfolio of income and risks through: Assuming in-force blocks with the ability to re-price Selectively participating in profitable flow deals Target well-designed products from quality insurers Expand in established markets: U.S.,
Slide 38: Asset-intensive reinsurance results
Asset-intensive reinsurance results 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. FA/BOLI – Fixed Annuities/Bank Owned Life Insurance FIA – Fixed Indexed Annuities VA – Variable Annuities Other – Includes Asset Transfer Longevity
Slide 39: Asset-intensive business: Stable earnings under market movements
Asset-intensive business: Stable earnings under market movements Impact on 2015 pre-tax operating income1 Low Sensitivity to Interest Rate Movements Low Sensitivity to Equity Movements Equity shocks are manageable Interest rate shocks have immaterial effect on pre-tax operating income1 2% or $5M (2%
Slide 40: Asset-intensive optionality profile
Asset-intensive optionality profile Breakdown by 12/31/2015 Reserves $ in billions Significant portion of asset-intensive business is stable: No policyholder behavior risk: Longevity Limited policyholder behavior risk: BOLI Lower policyholder behavior risk: Fixed and indexed annuity business with: H
Slide 41: Capital-motivated reinsurance: Executing strategies
Capital-motivated reinsurance: Executing strategies Combine financial structuring expertise with strong local client relationships to create efficient capital solutions Expand strategic accounts in developed markets: U.S., Japan and Canada Continue to lead innovation in Europe (Solvency II) and deve
Slide 42: Capital-motivated reinsurance results
Capital-motivated reinsurance results Key Messages Broad income growth, balanced across regions Established presence in U.S., EMEA and AP Recognized leader in this highly specialized market Significant opportunities for growth in all regions AP and EMEA lower in 2015 due to expected recaptures as re
Slide 43: Longevity: Executing strategies
Longevity: Executing strategies Position RGA to be recognized expert at assessing longevity risk through leveraging mortality expertise Deliver negatively correlated risk at above target returns Focus on markets where good underlying experience data exists Target older average ages to minimize risk
Slide 44: Longevity results
Longevity results 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. Key Messages Continued strong income growth from new business and favorable experience Provided first longevity-only solution for a North America pension plan Selective participation in targeted markets Stron
Slide 45: Looking ahead: Strong opportunities
Looking ahead: Strong opportunities Regulatory and capital changes will continue to drive demand Increasing demand for efficient capital solutions in Europe (Solvency II) and in Asian markets Continued demand for efficient capital on term and UL products as next-generation solutions evolve Market de
Slide 46: Summary
Summary Environmental changes generate continued demand across products and geographies Seasoned expertise and strong client relationships create advantages Strong structuring and biometric capabilities enable broad solutions Continued discipline and selective participation in high-return opportunit
Slide 47: Global Acquisitions
Global Acquisitions Scott D. Cochran Executive Vice President, Global Acquisitions
Slide 48: Key messages
Key messages RGA has leveraged its considerable strengths to create a unique and flexible position in a competitive, dynamic marketplace We are a preferred buyer and/or partner with a broad range of solutions and high-quality reputation Environment points to continued restructurings and a range of f
Slide 49: Solid track record
Solid track record Launched in 2011 to deploy capital in attractive in-force blocks $1.1 billion capital deployed since inception Strong financial performance inception to date Acquisition of seasoned blocks allows for use of fresh assumptions Diversity of transactions Life, asset-intensive and long
Slide 50: Unique market positioning
Unique market positioning We are selective: pursue only those opportunities with the strongest fit to RGA capabilities, competitive positioning and risk philosophies RGA’s global credibility and relationships lead to competitive advantage We are flexible in pursuing opportunities alone or with a str
Slide 51: Market disruptions continue to create opportunities
Market disruptions continue to create opportunities Attractive and diverse pipeline expected to persist for the foreseeable future, driven by: Regulatory change (e.g., Solvency II, SIFI, G-SII) Economic pressures Strategic realignments North American and European opportunities predominate, including
Slide 52: Summary: Solid contributions and strong outlook
Summary: Solid contributions and strong outlook Established track record: past transactions fully integrated and performing well Well positioned to take advantage of ongoing market dislocations Strong current momentum although difficult to predict size and timing of future transactions Acquisition s
Slide 53: Geographic Overview
Geographic Overview Alain P. Néemeh Senior Executive Vice President, Global Life and Health Markets Michael Emerson Executive Vice President, Head of U.S., Latin and South American Markets
Slide 54: Leading life and health franchise
Leading life and health franchise Well-established brand Steady growth in mortality Opportunities to leverage our global platform Strong leadership
Slide 55: Well-established brand: market share and rankings
Well-established brand Best-in-class capabilities leading to solid market share Region 2015 Business Capability Ranking1 2015 New Business Individual (Premium3/Sum Assured4) Group Premium5 United States #2 / #12 #3 / #1 #2 Canada #1 #2 / #1 #2 EMEA #1 #2 / NA #4 Asia Pacific #1 #1 / NA #2 All result
Slide 56: Consistently highest-rated in industry surveys
Well-established brand Consistently highest-rated in industry surveys Over 615,000 facultative cases globally 24-hour turnaround on 95% of U.S. cases $21 billion+ in North American facultative production AURA e-underwriting systems processed over 4 million applications RGA’s global underwriting manu
Slide 57: Developing and delivering innovative solutions
Well-established brand U.K. MOBILE distribution Mobile app aimed at digital life insurance Microinsurance product with U.K. market leader ASIA Product development differentiates RGA High net worth products Australia Improved group benefit design Improving claims adjudication Developing and deliverin
Slide 58: Example: High Net Worth (HNW) in Asia
Example: High Net Worth (HNW) in Asia Pioneered product and leveraged into a leading market share Underwriting and pricing of mortality are key components Led the evolution and expansion of this product across the region Well-established brand Reinsurance Premiums (USD) $ in millions Delivering inno
Slide 59: Steady growth in mortality
Steady growth in mortality 1 4.1% and 2.6% in local currency and USD excluding retrocession transaction. RGA's global footprint supporting growth Reported Net Premiums Including Large 2014 U.S. Block Retrocession Premiums
Slide 60: Steady growth in mortality: global life premiums
Steady growth in mortality Source: McKinsey Global Insurance Pools. Global primary life insurance gross premiums CAGR 2015-2020 Projected 7% 4% $ in trillions 5% 0.81 1.04 1.20 1.50
Slide 61: Generally stable cession rates support continued reinsurance growth
1 Numbers in chart are recurring production published in SOA survey (Canada, U.S.) and are illustrative of directional trends only (U.K., EMEA, Australia, Asia). (ex-U.K.) U.K. Steady growth in mortality Generally stable cession rates support continued reinsurance growth Percent Individual life cess
Slide 62: Opportunities to leverage our global platform
Opportunities to leverage our global platform RGA’s global platform is well-positioned to take advantage of opportunities as middle classes develop in emerging markets and are reached in mature markets through digital distribution and new products Aging population 1 Government finances under pressur
Slide 63: Global primary health and group gross premiums
1 Source: McKinsey Global Insurance Pools. 2 Health includes all healthcare-related products not supported by government programs (e.g., excludes Medicare and Medicaid in the U.S.) and living benefits. 1.13 1.00 1.56 1.32 2.24 (E) 1.68 (E) 2 Group 0.85 0.57 $ in trillions CAGR 2015-2020 projected Op
Slide 64: Delivering attractive growth
Opportunities to leverage our global platform Delivering attractive growth
Slide 65: Strong leadership
Strong leadership Experienced life and health executive team 1 Includes experience in life insurance and life reinsurance industries. 2 Includes experience with RGA’s predecessor, the reinsurance division of General American Life Insurance Company. Name Position Years of Experience In Industry1 With
Slide 66: U.S. Markets
U.S. Markets 1 Recurring and in-force production result as provided by the SOA survey. 2 Actual results shown (except for projections). Refer to “Reconciliations of Non-GAAP Measures” in the Appendix. Key Messages “Best Overall Life Reinsurer” in U.S. Mortality in Flaspöhler survey – retained #1 ran
Slide 67: Long-term stability – Quarterly volatility
Long-term stability – Quarterly volatility 1Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. Annual Pre-tax Operating Income1 Year Amount 2011 $323.0M 2012 $376.7M 2013 $372.7M 2014 $350.3M 2015 $233.5M Quarter Amount 1Q 2015 $20.3M 1Q 2016 $53.2M 2015 results beyond typical v
Slide 68: Value embedded in U.S. in-force
Value embedded in U.S. in-force Key Messages Significant projected value embedded in in-force (excludes future new business) Value of 2015 new business in excess of 2015 assumption change to older-age mortality Actuarial Liabilities – U.S. GAAP vs. Best Estimate $ in billions Considerable projected
Slide 69: U.S. mortality outlook
U.S. mortality outlook Life insurance sales rose in 2015, with LIMRA and MIB reporting six consecutive quarters of growth, with an increasing share of sales to the middle-market and younger demographic RGA is finding new opportunities Sizable share of recurring production 1 Continued focus on in-for
Slide 70: Leading the underwriting evolution
Leading the underwriting evolution TRL Recently introduced, TransUnion TrueRisk Life® (TRL) adds to our portfolio of automated underwriting services, with further investments in predictive analytics that will enhance the customer journey Underwriting Services RGA Underwriting Technology And Rules Ev
Slide 71: U.S. group market outlook
U.S. group market outlook The Affordable Care Act (ACA) has created growth in the health market, and has also impacted traditional group and voluntary products Group growth opportunities fueled by ACA Capitalizing on our strong U.S. medical business 1 Expanding in the voluntary market 2 Building upo
Slide 72: Building upon our value proposition
Building upon our value proposition Client savings from ROSE® averaged 10% of reinsurance premium in 2015 $ in millions
Slide 73: U.S. individual health market outlook
U.S. individual health market outlook Primary market for stand-alone LTC sales has been declining, as carriers are dealing with issues created by legacy blocks of business Primary long-term care market is evolving Focusing on business issued after 2007 1 Comfortable with our reserve levels 2 Continu
Slide 74: Canada
Canada Key Messages New business recurring production leader since 20071 and Business Capability Index leader since 20082 Solid earnings rebound in 2015 following high claims in 2014 Potential growth opportunities: Developing longevity market Reaching the millennials and middle market Projection 6 –
Slide 75: Europe, the Middle East and Africa
Europe, the Middle East and Africa Key Messages A leading franchise1 #1 in Business Capability Index in 2015 #2 in new business individual premium in 2015 Proven track record in non-traditional business and healthy outlook with Solvency II Stable outlook for traditional business Projection 8 – 15% C
Slide 76: Asia Pacific (excluding Australia)
Asia Pacific (excluding Australia) Key Messages A leading franchise1 #1 in Business Capability Index in 2015 #1 in new business individual premium Top-rated facultative underwriting in aggregate, including both capabilities for HNW and substandard cases Product development and innovative solutions a
Slide 77: Australia
Australia Key Messages Encouraging 2015 and 2016 Q1 profitability Lumpy claims and IBNR lead to quarterly volatility Repricing continues where necessary Pursuing selective business opportunities Committed to shifting the claims paradigm -1.2% CAGR Local currency 5.2% CAGR 50 25 0 -25 -50 -75 -325 Pr
Slide 78: Summary
Summary RGA’s brand has never been stronger Mortality business continues to add value Global platform will enable us to capitalize on attractive growth opportunities Strong leadership and industry-leading expertise
Slide 79: Investments
Investments Timothy Matson Executive Vice President, Chief Investment Officer
Slide 80: Key messages
Key messages Growth in assets under management over 13% per annum Investment groups in St. Louis and London; mortgage origination offices in seven U.S. cities and Toronto Presence in Asia Pacific region Managing USD, CAD, GBP, EUR, AUD, and JPY assets Expect low interest rate environment to persist
Slide 81: Portfolio management overview
Portfolio management overview Assets: $41.9 billion Portfolio management 41 investment professionals Cover Core and Core Plus strategies, credit, risk and trading Key Core Plus strategies High yield corporate and emerging market bonds Senior bank loans Non-agency RMBS Mezzanine debt and private equi
Slide 82: Investments senior management team
Investments senior management team 1 Includes experience in the investments industry. 2 Includes experience with RGA’s predecessor, the reinsurance division of General American Life Insurance Company. Name Position Years of Experience In Industry1 With RGA2 Timothy Matson, CFA EVP, Chief Investment
Slide 83: Functional groups
Functional groups Portfolio Management Portfolio Construction Income Targets Tactical Asset Allocation External Managers Public Bonds Credit Analysis Sector Management Trading Security Selection Transactions Direct Mezzanine Private Equity Yield Enhancement Real Estate Proprietary CML Third-party CM
Slide 84: Investment objectives
Investment objectives Manage investment income and balance sheet strength for in-force portfolios Take an appropriate amount of credit and liquidity risk Invest in assets that meet the cash flow characteristics of our liabilities Partner with RGA’s business units to develop investment strategies tha
Slide 85: Manage income and balance sheet strength
Manage income and balance sheet strength Portfolio Management oversees internal and external managers Responsible for investment performance for in-force business Determine appropriate amount of credit and liquidity risk Develop yield enhancement opportunities Public Bonds team has responsibility fo
Slide 86: Partner with RGA business segments
Partner with RGA business segments Investment Solutions group works closely with business units to develop investment strategies that contribute to new business development Global Acquisitions Global Financial Solutions Investment Solutions focuses on enabling block transactions Design portfolios wi
Slide 87: Improve investment platform
Improve investment platform Continue to build platform for future growth Ensure that Investments is operating at third-party asset manager skill level Platform should have capability to manage $100 billion plus AUM Augment operations/systems to achieve best-in-class capability Update systems for alt
Slide 88: Asset allocation
Asset allocation Managed internally Investment grade corporate bonds Mortgage- and asset-backed securities Commercial mortgage loans Private equity and mezzanine debt Managed by external managers Corporate high yield bonds Emerging market high yield bonds Middle-market bank loans Higher risk mortgag
Slide 89: Energy prices and RGA's exposure
Energy prices and RGA’s exposure RGA’s total energy exposure is $2.54 billion (book value) / $2.53 (market value) 85% of total energy exposure is investment grade 40% is in the midstream sector (pipeline/infrastructure companies) with less commodity price exposure The oil field services sector is mo
Slide 90: Rating distribution
Rating distribution Credit rating distribution Average credit rating has been stable Rating distribution has been stable Credit distribution similar to life industry peers March 31, 2016 Rating Market Value $ in thousands % AAA-AA $ 13,455,103 32.2% A 13,586,727 32.5% BBB 11,809,440 28.2% < BBB 2,06
Slide 91: Commercial mortgage portfolio
Commercial mortgage portfolio Pacific Mountain West South Central West North Central East North Central East South Central South Atlantic Middle Atlantic New England ACLI Regions ACLI – The American Council of Life Insurers
Slide 92: Private investments
Private investments Category Book Value $ in thousands % of Total Estimated Market Value $ in thousands % of Total Private Equity Funds $188,885 31.7% $221,760 33.0% Private Debt Funds 105,465 17.7% 98,536 14.7% Direct Private Debt & Equity 129,165 21.6% 125,148 18.6% Real Estate Joint Ventures 172,
Slide 93: Governance
Governance Consolidated Investment Committee (CIC) Members include the Executive Council and other senior executives Meets quarterly to review investment activity and performance Approves significant changes in investment strategy or risk position Investment Management Committee Investment policy an
Slide 94: Investment risk and compliance
Investment risk and compliance Investments Risk Management Team Headed by mathematics Ph.D. with CFA / FSA / FRM designations Equipped with BlackRock's Aladdin risk and analytics systems and supported with proprietary risk analysis, monitoring, and reporting tools Produce monthly risk dashboard with
Slide 95: Looking forward
Looking forward Headwinds from low interest rates Continue to seek additional sources of income Balance need for yield with sound risk assessment Partnership with business units Play integral role in new transaction activity Bring expertise in portfolio design, asset liability management, and regula
Slide 96: Financial Overview
Financial Overview Jack B. Lay Senior Executive Vice President
Slide 97: Key messages
Key messages Experienced Finance and ERM teams Strong financial results over an extended period of time; stable financial condition Prudent and effective capital management Attractive operating model Less sensitive to financial market volatility Conventional life insurance company investment portfol
Slide 98: Experienced executive management team
Experienced executive management team 1 Includes experience in life insurance and life reinsurance industries. 2 Includes experience with RGA’s predecessor, the reinsurance division of General American Life Insurance Company. Name Position Years of Experience In Industry1 With RGA2 Todd C. Larson Sr
Slide 99: RGA's Track Record – Strong Financial Results
RGA’s Track Record – Strong Financial Results
Slide 100: Strong financial history
Strong financial history 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. 5-Year Average Operating ROE1 5-Year Operating EPS1 CAGR 5-Year Operating Revenues1 CAGR 10.8% 6.5% 4.7% 6.7% (in constant currencies) 5-Year BVPS (ex-AOCI)1 CAGR 9.8%
Slide 101: Total operating revenues
Total operating revenues1 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. Key Messages Consistent growth over time Good balance across mature and higher growth markets, products Weak foreign currencies have been a significant headwind in recent periods $ in millions Total O
Slide 102: Operating income per diluted share
Operating income per diluted share1 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. 2 Full bar excludes 2Q13 Australia reserve strengthening. 3 Full bar includes $0.47 of FIN 48 related tax benefits associated with closing five years of IRS examinations. Key Messages Long t
Slide 103: Operating return on equity
Operating return on equity1 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. Key Messages 2013 results reflect charge for reserve strengthening in Australia Reflects ongoing headwinds from lower interest rates and stronger U.S. dollar 5-year average 10.8% Successful track re
Slide 104: Long-term track record is the best measure of success
Long-term track record is the best measure of success Book value per share (ex-AOCI)1 total return growth2 1Book value excludes other comprehensive income. Periods prior to 4Q06 not restated for 2012 DAC accounting change. Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. 2CAGR
Slide 105: Book value growth ranking – last five years
Book value growth ranking – last five years1 Book value per share (ex-AOCI) total return growth2 1 CAGR growth of book value plus dividends. 2010-2015. Source: SNL. This group represents all companies in the SNL U.S. Life/Health index that were publicly traded over the period and which represent at
Slide 106: Excess capital – 2015 roll-forward
Excess capital – 2015 roll-forward $ in millions 1 Deployed capital includes block acquisitions and organic growth. 1
Slide 107: Deployment of excess capital
Deployment of excess capital 2011: Excludes shares repurchased in association with the redemption of convertible securities. 2015: Includes acquisition of Aurora National, which closed April 1, 2015. $ in millions
Slide 108: Capital management: payout ratios
Capital management Source: SNL. * Based upon normalized earnings in 2013 before charge for strengthening reserves in Australia. 1 Calculated as dividends divided by operating earnings. 2 Calculated as the dividend payout ratio plus buyback payout ratio. Dividend Payout Ratio1 Total Payout Ratio2 % %
Slide 109: Financial Preview
Financial Preview Todd C. Larson Senior Executive Vice President, Chief Financial Officer
Slide 110: Financial preview
Financial preview Capital management philosophy Enterprise risk management Financial outlook Concluding thoughts
Slide 111: Capital Management Philosophy
Capital Management Philosophy
Slide 112: Capital management principles
Capital management principles Effective Capital Management Strength Flexibility Efficiency Balance
Slide 113: Capital management: Strength
Capital management: Strength Consolidated excess capital position Expected to generate $300-$400 million in excess capital on an annual basis Target cushion: $300-$500 million; current level: $500 million Willing to tap into excess capital cushion to fund attractive opportunities Excess capital gene
Slide 114: Capital management: Flexibility
Capital management: Flexibility Proven ability to raise capital in a variety of ways Strong track record of accessing traditional capital markets Executed embedded-value securitization and mortality retrocession transactions in 2014 Continue to explore alternative capital sources Ongoing, dynamic pr
Slide 115: Capital management: Efficiency
Capital management: Efficiency 1 Excludes accumulated other comprehensive income. Current Capital Structure Strategy Maintain an efficient, appropriate mix of capital Access debt and hybrid markets periodically to ladder maturities, minimize cost of capital and increase liquidity Deploy capital in a
Slide 116: Capital management: Efficiency
Capital management: Efficiency $914 million Collateral finance and securitization notes not included in figures above. Shareholders’ equity excludes AOCI. Debt to Total Capital 19.5%16.6% 20.9% 20.8% 20.6% Hybrid to Total Capital 5.7%10.9% 10.1% 9.4% 9.3%
Slide 117: Capital management: Efficiency
Capital management: Efficiency Efficient laddering of debt and hybrid securities Senior Notes Hybrid Securities $ in millions 6.2% Fixed-to-floating in 2022 5.625% Fixed rate 6.45% Fixed rate 5.00% Fixed rate 6.2% Fixed-to-floating in 2022 3-month Libor +266.5 bps (~3.10%) 4.70% Fixed rate Other fin
Slide 118: Capital management: Balance
Capital management: Balance Well demonstrated capital management strategy affords balanced approach Dividend payout of $181 million over two years Capital deployed into in-force block and other transactions: approximately $700 million over two years Share repurchases: approximately $500 million over
Slide 119: Enterprise Risk Management
Enterprise Risk Management
Slide 120: Enterprise Risk Management
Enterprise Risk Management Well-established ERM function Quarterly risk reporting at all levels of management including to the Board Clear risk tolerances and limits control the company’s risk exposures Stress-testing identifies potential threats to company strategy RGA’s risk profile has become mor
Slide 121: Financial Outlook
Financial Outlook
Slide 122: Financial outlook: Key points
Financial outlook: Key points Consistent approach going forward Solid organic growth + transactional opportunities + capital management Operating model is less sensitive to financial market volatility Headwinds from lower interest rates and foreign exchange are ongoing Intermediate guidance 5%-8% EP
Slide 123: Operating income per diluted share
Operating income per diluted share1 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. 2 Full bar excludes 2Q13 Australia reserve strengthening. 3 Full bar includes $0.47 of certain one-time tax benefits as tax liabilities for the recent five-year period were deemed unnecessar
Slide 124: Operating return on equity
Operating return on equity1 1 Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. 2013 results reflect charge for reserve strengthening in Australia. Key Messages Intermediate target: 10%-12% Potential positive influences Higher interest rates Growth of international businesses E
Slide 125: Concluding Thoughts
Concluding Thoughts
Slide 126: What it means for investors
What it means for investors Attractive strategic positioning leads to solid organic growth Strong financial results over time, excess capital generation, balanced approach to capital management Strong and flexible balance sheet, operating income is less sensitive to financial markets Solid organic g
Slide 127: Key messages
RGA is unique RGA is successfully executing its strategy RGA is well-positioned for continued success Key messages RGA is optimistic about the future
Slide 128: Appendix: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations
Slide 129: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 130: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 131: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 132: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 133: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 134: ©2016 RGA. All rights reserved.
©2016 RGA. All rights reserved.
Reinsurance Group of America — Investor Day (May 2016) on 6ix