Reinsurance Group Of America, Incorporated · NYSE:RGA
Reinsurance Group Of America — Keefe, Bruyette & Woods 2011 Insurance Conference
56 slides from Reinsurance Group Of America's conference presentation, Sep 6, 2011
Slide 1: Keefe, Bruyette & Woods 2011 Insurance Conference
Reinsurance Group of America, Incorporated Reinsurance Group of America, Incorporated | Wednesday, September 7, 2011 Reinsurance Group of America, Incorporated | Wednesday, September 7, 2011 Keefe, Bruyette & Woods 2011 Insurance Conference
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements, including among other things, investment performance, statements relating to projections of the revenue or earnings, and future financial performance and growth potential of RGA and its subsidiaries. Important factors could cause act
Slide 3: Capital Allocation and Non-GAAP Measures
Capital Allocation Effective in 1Q 2006, the Company changed its capital allocation methodology from a regulatory-based approach to an economic-based approach. To enhance comparability, all prior period segment results in this presentation have been adjusted to reflect the new methodology. This chan
Slide 4: Agenda
Agenda Overview Financial Performance Capital Management Life Reinsurance Market Growth Opportunities Conclusion Appendix 4
Slide 5: I. Overview
RGA I. Ove: lr Oaé6!
Slide 6: An Investment in RGA... A unique opportunity
An Investment in RGA... A unique opportunity Sole U.S.-based publicly traded life-only reinsurer Distinct risk profile A global leader in life reinsurance; limited competition Risk profile differs from direct writers High degree of mortality expertise Combination of high-growth and mature businesses
Slide 7: How Does RGA Differ from Direct Life Insurance Companies?
How Does RGA Differ from Direct Life Insurance Companies? Relatively high ROE Success based primarily on ability to underwrite mortality and morbidity risks Less reliant on spread-type businesses Relatively low equity market sensitivity and correlation Wholesale business; no distribution forces to m
Slide 8: A leading global life reinsurance company
A leading global life reinsurance company Proven track record of profitability #1 facultative reinsurer with high degree of mortality expertise and underwriting controls Strong presence in key international markets provides diversification and significant earnings contributions Industry leading mana
Slide 9: Operational Strength = High Levels of Client Satisfaction
Operational Strength = High Levels of Client Satisfaction #1 in U.S. and Canada recurring new business(1) Largest facultative reinsurer(2) Steady premium growth Long track record of profitability Voted Best Overall Life Reinsurer per Flaspohler Cedant Survey in each survey since 2005 #1 in Business
Slide 10: 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
Slide 11: 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 RGA Senior Debt Ratings Financial Strength Ratings
Slide 12: II. Financial Performance
Il. Financial Perform I EIUSUCIS] KHELLOLU:
Slide 13: Financial Snapshot / RGA Growth
December 31, 1993 December 31, 2010 CAGR Market Cap $480M $4.1B 13.4% Assets $1.2B $29.1B 20.6% Net Income $34.1M $574.4M 18.1% Operating Income(1) $30.5M $504.0M 17.9% Premiums $380M $6.7B 18.4% Employees 198 1,535 12.8% Financial Snapshot / RGA Growth (1) See "Reconciliations of Non-GAAP Measures"
Slide 14: Financial Highlights
Operating EPS Growth 14% (5-year CAGR, 2005-2010) Premium Growth 11% (5-year CAGR, 2005-2010) Operating ROE* 13% (average, 2006-2010) BV/Share Growth* 13% (17-year CAGR, since IPO) Historical Performance * Excludes accumulated other comprehensive income. See "Reconciliations of Non-GAAP Measures" at
Slide 15: Consolidated Operating Income
Operating Return on Equity* 2006...13% 2007...14% 2008...14% 2009...13% 2010...13% Operating Income ($ in millions) Operating Income Per Share *See "Reconciliations of Non-GAAP Measures" at the end of this presentation. 5-Year CAGR 17% 5-Year CAGR 14% Consolidated Operating Income* 15 Delivering val
Slide 16: Consolidated Net Premiums
($ in millions) 5-year CAGR 11% 2010 includes $301 million of premiums related to the acquisition of ReliaStar Life Insurance Company's group life and health reinsurance business Consolidated Net Premiums Consistent growth 10%
Slide 17: Life Reinsurance in Force
2008 adversely affected by foreign currency translation Life Reinsurance in Force ($ in billions)
Slide 18: Book Value Per Share 10-Year Trend
Book Value Per Share* 10-Year Trend Continuous increase in value 10 year CAGR 10.9% * Book value excludes other comprehensive income. See "Reconciliations of Non-GAAP Measures" at the end of this presentation.
Slide 19: Consolidated Invested Asset Profile
Asset Type ($ in millions) Carrying Value December 31, 2010 Carrying Value June 30, 2011 YTD Change Fixed Maturities $14,305 $15,154 $849 Mortgage Loans 886 908 22 Policy Loans 1,228 1,230 2 Funds Withheld at Interest 5,422 5,672 250 Cash and Short Term 582 836 254 Other 707 799 92 $23,130 $24,599 $
Slide 20: III. Capital Management
Ill. Capital Manager i csbirs} susdew
Slide 21: Total Capitalization Levels
2Q11 Debt includes $200 million short-term debt $850 million Timberlake Notes/collateral finance facility not included in figures above. ($ in millions) Hybrid to Total Capital Total Capitalization Levels (Excluding Other Comprehensive Income) Debt to Total Capital 70% 50% 40% 30% 20% 10% 0% 60% 5.4
Slide 22: Capital Management
Capital Management Recent transactions / announcements 1Q 2011: Redeemed convertible security, purchased 5.5 million shares 3Q 2011: Increased quarterly dividend 50% to $0.18/share Looking ahead RGA transitioning from net capital user to net capital producer Continued active management of an efficie
Slide 23: IV. Life Reinsurance Market
IV. Life Reinsurance Mai IA PHS KelvenLsuce IAS!
Slide 24: North American Market Share Individual Life Reinsurance in Force
Source: SOA/Munich American Re 2010 Reinsurance Survey (excludes group and portfolio business) North American Market Share Individual Life Reinsurance in Force $ Billions as of December 31, 2010 Rank Reinsurer In Force Market Share 1 Swiss Re 1,705.4 21.4% 2 RGA 1,547.0 19.4% 3 Munich American Re 1,
Slide 25: Top 10 Global Life & Health Reinsurers
Sources: Company annual reports, A.M. Best insurance reports Top 10 Global Life & Health Reinsurers Ranked by 2010 Net Premiums $ Millions Rank Reinsurer Net Premiums 1 Munich Re Group 9,958 2 Swiss Reinsurance Company 8,759 3 Reinsurance Group of America 6,660 4 Hannover Re Group 6,168 5 Berkshire
Slide 26: Life Reinsurance Consolidation
Source: Munich American / Society of Actuaries Reinsurance Surveys Life Reinsurance Consolidation 2000 2010 2000 2010 Top 5 Companies 57.8% 70.9% 91.4% 96.0% Top 10 Companies 83.8% 93.5% 99.6% 100.0% Top 15 Companies 96.4% 99.0% 100.0% 100.0% Top 20 Companies 99.6% 100.0% North American Market Share
Slide 27: Life Reinsurance Inforce - North America Market
Source: Munich American / Society of Actuaries Reinsurance Surveys 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 ($ in billions) Canada 5 year CAGR 16% +38% +16% +1% -16% +57% United States 5 year CAGR 6% +6% +4% +2% +9% +10% ($ in billions)
Slide 28: Life Reinsurance Penetration - New Ordinary Business Production
Life Reinsurance Penetration - New Ordinary Business Production United States ($ in billions) Canada (C$ in billions) Sources: Munich American / Society of Actuaries Reinsurance Surveys, ACLI, CLHIA *Company estimate $1,618* $1,813 $1,891 $1,870 $1,744 $190 $206 $219* $194 $188
Slide 29: Dynamic Environment
Dynamic Environment Solvency II Aging populations Interest rates Changing regulatory requirements Accounting / Financial reporting Non-commission DAC IFRS
Slide 30: V. Growth Opportunities
V. Growth Opportun A’ GLomry Obborsauigt
Slide 31: Life Reinsurance - Growth Opportunities
Life Reinsurance - Growth Opportunities Declining cession rates Increasing market share Product diversification Limited number of competitors Mostly stable pricing environment expected to continue; some signs of more competitive environment in the U.S. Attractive group reinsurance market North Ameri
Slide 32: Business Capability Index
Business Capability Index Key Decision Makers - Global 32 A global leader Source: 2009 NMG Consulting Reinsurance Study Asia, A&NZ, Canada, Europe, SA, UK&I and USA RGA's significant differential to sample average positioning AND to second- place indicative of positive momentum and likely lift in fu
Slide 33: Expanding Global Presence
Expanding Global Presence Non-U.S. Premiums as a % of RGA Note: Figures exclude Corporate segment.
Slide 34: FLASPOHLER
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Slide 35: VI. Conclusion
VI. Conclu: AY Coven
Slide 36: Delivering Value and Growth
Delivering Value and Growth RGA is 2nd largest life reinsurer in North America; 3rd largest in the world High degree of mortality expertise Multiple growth opportunities Proven track record Industry leading management team
Slide 37: Attractive Opportunity: RGA vs. US Life Insurers
Price to book 2007E ROAE Series 2 #2007E ROAE Series 3 Series 4 Series 5 Series 6 Series 7 Series 8 Series 9 Series 10 Series 11 Series 12 Series 13 Series 14 Series 15 Series 16 Series 17 0.106732858 0.988970588 MET 0.102807434 1.043234323 PRU 0.086128308 0.752115059 PL 0.094785545 0.803351663 LNC
Slide 38: VII. Appendix
VII. Appel Air wbbeu
Slide 39: Operating Segments
Operating Segments
Slide 40: 40
40
Slide 41: U.S. Mortality Business Market Position
U.S. Mortality Business Market Position Source: Munich American / Society of Actuaries Reinsurance Surveys
Slide 42: Total U.S. Operations
Total U.S. Operations 4 Year 9% CAGR 4 Year 13% CAGR Net Premiums ($ in millions) Pre-tax Operating Income* ($ in millions) *See "Reconciliations of Non-GAAP Measures" at the end of this presentation. 4% 10%
Slide 43: 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 44: U.S. Asset Intensive and Financial Reinsurance Sub-Segments
U.S. Asset Intensive and Financial Reinsurance Sub-Segments 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.; opportunities are consistent in Asia Paci
Slide 45: csusqs oberggi
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Slide 46: 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 favorable mortalit
Slide 47: lureLusfious] ObeLssl
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Slide 48: Europe and South Africa Operations
Europe and South Africa Operations Spain 1995 Mexico 1998 United Kingdom 1999 South Africa 1999 India 2002 Poland 2006 UK market has fueled past growth Strengthening presence in continental Europe Netherlands Branch office in Poland Primary reinsurance products include life YRT and coinsurance, acce
Slide 49: Asia Pacific Operations
Asia Pacific Operations Hong Kong 1994 Japan 1995 Australia/New Zealand 1996 Malaysia 1997 Taiwan 1999 South Korea 2002 China 2005 4- Year 14% CAGR $ in millions $ in millions Strong results in 2006 - 2009 led by Australia, Japan and South Korea A recognized leader in the Asia Pacific region based o
Slide 50: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 51: 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 52: 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 53: GAAP / Operating Income and EPS Reconciliations
Financial Performance GAAP / Operating Income and EPS Reconciliations ($ in millions)
Slide 54: Stockholders' Equity Reconciliation
Financial Performance Stockholders' Equity Reconciliation ($ in millions)
Slide 55: Pre-Tax Operating Income and Book Value per Share Reconciliation
Financial Performance Pre-Tax Operating Income ($ in millions) Book Value per Share Reconciliation
Slide 56: Keefe, Bruyette & Woods 2011 Insurance Conference
Reinsurance Group of America, Incorporated Reinsurance Group of America, Incorporated | Wednesday, September 7, 2011 Reinsurance Group of America, Incorporated | Wednesday, September 7, 2011 Keefe, Bruyette & Woods 2011 Insurance Conference
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