Reinsurance Group Of America, Incorporated · NYSE:RGA
Reinsurance Group Of America — Keefe, Bruyette & Woods Insurance Conference 2009
44 slides from Reinsurance Group Of America's conference presentation, Sep 8, 2009
Slide 1: Keefe, Bruyette & Woods Insurance Conference
Reinsurance Group of America, Incorporated Keefe, Bruyette & Woods Insurance Conference September 9, 2009 A. Greig Woodring, Chief Executive Officer Jack Lay, Sr. EVP and Chief Financial Officer
Slide 2: Non-GAAP Measures and Safe Harbor
Non-GAAP 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-t
Slide 3: Overview
Overview ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 4: Operational Strength
Operational Strength New business market share (20%) in U.S.(1) Leading new business market share (35%) in Canada(1) Largest facultative reinsurer(2) High single-digit premium growth Long track record of profitability Region-wide leader in individual new business (22% market share)(3) Second-largest
Slide 5: Financial Highlights
Financial Highlights Operating EPS Growth 14% (5-year CAGR, 2003-2008) Premium Growth 9% (2008 compared to 2007) Return on Equity* 14% (average, 2006-2008) BV/Share Growth* 13% (15-year CAGR, since IPO) Historical Performance * Excludes accumulated other comprehensive income. See "Reconciliations of
Slide 6: Financial Strength and Senior Debt Ratings
RGA Reinsurance RGA Canada RGA International & RGA Global Standard & Poor's AA- AA- AA- A.M. Best A+ A+ NR Moody's A1 NR NR Standard & Poor's A- A.M. Best a- Moody's Baa1 Financial Strength Ratings RGA Senior Debt Ratings
Slide 7: Top Life Reinsurers
Top 10 Life Reinsurers North America In 2008 Worldwide in 2007 Net Lite Reinsurer | Rank Reinsurer Premiums 1 Swiss Re $2,0347 22.5 1 Swiss Re $ 10,615 2 RGA 1,465.8 16.2 2 Munich Re Group 9,512 3 Munich AmericanRe 1,083.1 120 3 RGA 4,909 4 Transamerica Re 917.0 10.2 4 Hannover Re 3,785 5 Scottish R
Slide 8: Leading Facultative Franchise
Leading Facultative Franchise Recognized facultative expertise; received approx. 270,000 facultative applications worldwide in 2008 Provide a market for non-conforming risks Significant barriers to entry Fosters closer relationships with cedants Leverage for additional business opportunities Provide
Slide 9: Experienced Executive Management Team
Experienced Executive Management Team Includes experience in life insurance and life reinsurance industries Includes experience with RGA's predecessor, the reinsurance division of General American Life Insurance Company
Slide 10: Growth Opportunities
Growth Opportunities ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 11: Financial Snapshot / RGA Growth
Financial Snapshot / RGA Growth Share Price $12.28(1) $42.82 8.7% Market Cap $480M $3.1B 13.2% Assets $1.2B $21.7B 21.3% Net Income $34.1M $176.8M 11.6% Operating Income(2) $30.5M $399.2M 18.7% Premiums $380M 5.3B 19.2% Employees 198 1,222 12.9% December 31, 1993 December 31, 2008 CAGR (1) Split-adj
Slide 12: Life Reinsurance - Growth Opportunities
Life Reinsurance - Growth Opportunities Growth rates steady Expect growth of 7%-9% in traditional market going forward Limited number of competitors; good pricing environment expected to continue Direct companies aggressively exploring reinsurance as a source of capital High growth rates - double di
Slide 13: Life Reinsurance Inforce - North America Market
Life Reinsurance Inforce - North America Market 2004 2005 2006 2007 2008 6672 7028 7292 7460 8116 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 2004 2005 2006 2007 2008 825 929 935 1087 908 Source: Munich American / Society of Actuaries Reins
Slide 14: Expanding Global Presence
U.S. Canada Asia Pacific Europe & S. Africa East 82 7 5 6 U.S. Canada Asia Pacific Europe & S. Africa East 335 107 88 74 Expanding Global Presence Total 2003 Pre-tax Operating Income = $263M 2003 Pre-tax Operating Income by Operating Segment* 2008 Pre-tax Operating Income by Operating Segment* Note:
Slide 15: Financial Performance
Financial Performance ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 16: Life Reinsurance In Force
Life Reinsurance In Force 2004 2005 2006 2007 2008 2Q09 RGA 1459 1713 1941 2120 2108 2219 ($ in billions) 2008 adversely affected by foreign currency translation
Slide 17: Consolidated Net Premiums
Consolidated Net Premiums 2004 2005 2006 2007 2008 YTD 2Q08 YTD 2Q09 3347 3867 4346 4909 5349 2657 2721 ($ in millions) 4-year CAGR 12% 2%* *YTD 2Q09 premiums increased 12% on original currency basis
Slide 18: Consolidated Operating Income
Consolidated Operating Income 2004 2005 2006 2007 2008 YTD 2Q08 YTD 2Q09 East 3.57 3.54 4.65 5.5 6.12 2.82 2.71 Operating Return on Equity(1) 2004...12% 2005...11% 2006...13% 2007...14% 2008...14% Operating Income ($ in millions) Operating Income Per Share 2004 2005 2006 2007 2008 YTD 2Q08 YTD 2Q09
Slide 19: Quarterly Mortality Volatility
Quarterly Mortality Volatility 5 Yr Average = 81.9% 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 0.783 0.824 0.818 0.889 0.795 0.8 0.818 0.812 0.78700000013148 0.796 0.802 0.811775967 0.819984 0.81 0.862447 0.8309 0.8154 0.8283 0.869 0.8171 RGA'
Slide 20: Book Value Per Share
Book Value Per Share* 5 Year Trend 5 year CAGR 8.7% * Book value excludes other comprehensive income. See "Reconciliations of Non-GAAP Measures" at the end of this presentation.
Slide 21: Total Capitalization Levels
Total Capitalization Levels (Excluding Other Comprehensive Income)* 2004 2005 2006 2007 2008 2Q09 Equity 1941 2081 2382 2663 3165 3340 Debt 406 401 307 527 519 498 Hybrids 158 557 557 558 558 478 ($ in millions) Debt & Hybrids/ Total Capitalization 22.5% 31.5% 26.6% 28.9% 25.4% 22.6% *See "Reconcili
Slide 22: Consolidated Asset Composition
Consolidated Asset Composition ($ in millions) Carrying Value Carrying Value YTD Asset Type December 31, 2008 June 30, 2009 Change Fixed Maturities $ 8,532 $ 9,843 $ 1,311 Mortgage Loans 775 757 (18) Policy Loans 1,097 1,086 (11) Funds Withheld at Interest 4,520 4,675 155 Cash and Short Term 933 471
Slide 23: Conclusion
Conclusion ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 24: Conclusion
Conclusion Second largest North American life reinsurer with established and expanding global presence A leading facultative reinsurer with high degree of mortality expertise; provides competitive advantage Multiple growth opportunities stemming from on- going industry consolidation and internationa
Slide 25: Appendix: RGA's Operating Segments; Reconciliations of Non-GAAP Measures
Appendix: RGA's Operating Segments Reconciliations of Non- GAAP Measures ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 26: RGA's Operating Segments
RGA's Operating Segments ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 27: U.S. Operations
U.S. Operations ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 28: Total U.S. Operations
Total U.S. Operations 2004 2005 2006 2007 2008 YTD 2Q08 YTD 2Q09 2213 2434 2654 2875 3100 1481 1597 2004 2005 2006 2007 2008 YTD 2Q08 YTD 2Q09 4 Year 9% CAGR 4 Year 4% CAGR Net Premiums ($ in millions) Pre-tax Operating Income* ($ in millions) *See "Reconciliations of Non-GAAP Measures" at the end o
Slide 29: U.S. Traditional Operations
U.S. Traditional Operations Automatic reinsurance programs are placed with 3-4 reinsurers, typically with unique terms. RGA's goal is to win business as the 3rd or 4th reinsurer (not as the price leader), offering additional value-added services. RGA's differentiator is our facultative services Comp
Slide 30: U.S. Asset Intensive and Financial Reinsurance Sub-segments
U.S. Asset Intensive and Financial Reinsurance Sub-segments 2004 2005 2006 2007 2008 YTD 2Q08 YTD 2Q09 Pre-tax Operating Income* ($ in millions) Asset Intensive Financial Reinsurance Recognized leader in this highly specialized market Limited capital capacity from banks and retrocessionaires in U.S.
Slide 31: Canada Operations
Canada Operations ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 32: Canada Operations
Canada Operations Established in 1992 Traditional individual life reinsurance, growing group life/health and creditor business; exploring other opportunities Most of the life insurance companies in Canada are clients A market leader; primary competitors are Munich Re and Swiss Re Strong results and
Slide 33: International Operations
International Operations ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 34: International Operations Overview
International Operations Overview Have demonstrated success Built green-field operations across the globe; centrally managed by dedicated team in Toronto Developed divisional infrastructure and culture Established as a leading reinsurer in key markets Focused on multi-nationals and larger local comp
Slide 35: Europe & South Africa Operations
Europe & South Africa Operations Spain 1995 Mexico 1998 United Kingdom 1999 South Africa 1999 India 2002 2004 2005 2006 2007 2008 YTD 2Q08 YTD 2Q09 479 553 588 679 708 375 353 UK market has fueled past growth; 15%- 20% premium growth expected going forward Strengthening presence in continental Europ
Slide 36: Asia Pacific Operations
Asia Pacific Operations Hong Kong 1994 Japan 1995 Australia/New Zealand 1996 Malaysia 1997 Taiwan 1999 South Korea 2002 China 2005 2004 2005 2006 2007 2008 YTD 2Q08 YTD 2Q09 399.1 534.9 673.2 864.5 1000.8 519 473 Overview Markets and Date of Entry Net Premiums 4- Year 26% CAGR Pre-tax Operating Inco
Slide 37: Reconciliations of Non-GAAP Measures
Reconciliations of Non- GAAP Measures ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 38: Reconciliation of Pre-Tax Income to Pre-Tax Operating Income
Financial Performance Reconciliation of Pre-Tax Income to Pre-Tax Operating Income ($ in millions) ($ in millions)
Slide 39: Reconciliation of Pre-Tax Income to Pre-Tax Operating Income
Financial Performance Reconciliation of Pre-Tax Income to Pre-Tax Operating Income ($ in millions)
Slide 40: GAAP / Operating Income and EPS Reconciliations
Financial Performance GAAP / Operating Income and EPS Reconciliations ($ in millions) ($ in millions)
Slide 41: Stockholders' Equity Reconciliation
Financial Performance Stockholders' Equity Reconciliation ($ in millions) ($ in millions)
Slide 42: Book Value per Share Reconciliation
Financial Performance ($ in millions) Book Value per Share Reconciliation Pre-tax Operating Income
Slide 43: Forward-Looking Statements
This presentation contains both historical and forward-looking statements. Forward-looking statements are not based on historical facts, but rather reflect the Company's current expectations, estimates and projections concerning future results and events. Forward-looking statements generally can be
Slide 44: Keefe, Bruyette & Woods Insurance Conference
Reinsurance Group of America, Incorporated Keefe, Bruyette & Woods Insurance Conference September 9, 2009 A. Greig Woodring, Chief Executive Officer Jack Lay, Sr. EVP and Chief Financial Officer
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