Reinsurance Group Of America, Incorporated · NYSE:RGA
Reinsurance Group Of America — Raymond James Institutional Investors Conference 2009
44 slides from Reinsurance Group Of America's conference presentation, Mar 10, 2009
Slide 1: Raymond James Institutional Investors Conference
Reinsurance Group of America, Incorporated Raymond James Institutional Investors Conference March 11, 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 Leading new business market share (23%) 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
Slide 5: Financial Highlights
Financial Highlights Operating EPS Growth 14% (5-year CAGR) Premium Growth 9% (2008 compared to 2007) Return on Equity* 14% (2007 and 2008) BV/Share Growth* 13% (15-year CAGR, since IPO) Operating EPS Growth 14% Return on Equity* 14% Historical Performance Intermediate Goals * Excludes accumulated o
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 2007 Worldwide in 2007 Lite Net Lite Reinsurance In Reinsurance Reinsurer Force Reinsurer Premiums (Snmmens) 1 Swiss Re $2,0908 24.5 1 Swiss Re $ 10,615 2 RGA 1,429.4 16.7 2 Munich Re Group 9.512 3 Munich AmericanRe 1,1324 132 3 RGA 4,909 4 Scottish Re 970.0 1
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 moderating Expect growth of 6%-8% in traditional market going forward Limited number of competitors; good pricing environment expected to continue Some direct companies retaining more business Highest growth rates likely to come from Asia Pacific
Slide 13: Life Reinsurance Inforce - North America Market Continues to Grow
Life Reinsurance Inforce - North America Market Continues to Grow 2003 2004 2005 2006 2007 5811 6672 7028 7292 7460 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 2003 2004 2005 2006 2007 712 825 929 935 1087 Source: Munich American / Society
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 = $263M 2003 Pre-tax Operating Income by Operating Segment* 2008 Pre-tax Operating Income by Operating Segment* Note:
Slide 15: Financial Performance
Financial Performance ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 16: Life Reinsurance In Force
Life Reinsurance In Force 2004 2005 2006 2007 2008 RGA 1459 1713 1941 2120 2108 ($ in billions) 2008 adversely affected by foreign currency translation
Slide 17: Consolidated Net Premiums
Consolidated Net Premiums 2004 2005 2006 2007 2008 3347 3867 4346 4909 5349 ($ in millions) 4-year CAGR 12%
Slide 18: Consolidated Operating Income
Consolidated Operating Income 2004 2005 2006 2007 2008 East 3.57 3.54 4.65 5.5 6.12 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 East 224.6 225.5 293.2 353.5 399.2 Operating R
Slide 19: Quarterly Mortality Volatility
Quarterly Mortality Volatility 5 Yr Average = 81.5% 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 0.795 0.796 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 RGA's
Slide 20: Book Value Per Share
Book Value Per Share* 5 Year Trend 5 year CAGR 9% * 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 Equity 1941 2081 2382 2663 3165 Debt 406 401 307 527 519 Hybrids 158 557 557 558 558 ($ in millions) Debt & Hybrids/ Total Capitalization 22.5% 31.5% 26.6% 28.9% 25.4% *See "Reconciliations of Non-GAAP Measu
Slide 22: Consolidated Asset Composition
Consolidated Asset Composition ($ in millions) Carrying Value Carrying Value YTD Asset Type 12/31/07 12/31/08 Change Fixed Maturities $ 9,398 $ 8,532 $ (276) Mortgage Loans 832 775 (50) Policy Loans 1,059 1,097 (11) Funds Withheld at Interest 4,749 4,520 58 Cash and Short Term 479 933 (34) Other 284
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 2213 2434 2654 2875 3100 2004 2005 2006 2007 2008 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 of this presentation.
Slide 29: U.S. Traditional Operations
U.S. Traditional Operations RGA's goal is to be among those 3-5 with very favorable terms Automatic reinsurance programs are placed with 3-5 reinsurers RGA's differentiator is our facultative services Companies cannot access these services unless RGA is participating automatically in their reinsuran
Slide 30: U.S. Asset Intensive and Financial Reinsurance Sub-segments
U.S. Asset Intensive and Financial Reinsurance Sub-segments Primarily annuities and COLI/BOLI; a spread business Some volatility in operating income due to VA business and treatment of realized gains/losses for funds withheld treaties RGA shares in asset risk for general account annuity transactions
Slide 31: Canada Operations
Canada Operations ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Slide 32: Canada Operations
Canada Operations Established in 1992 Traditional individual life reinsurance, including preferred classes; some creditor business 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 mortality in 2007
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 Ireland 2003 2004 2005 2006 2007 2008 479 553 588 679 708 UK market has fueled past growth; 15%- 20% premium growth expected going forward Strengthening presence in continental Europe Continued o
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 399.1 534.9 673.2 864.5 1000.8 Overview Markets and Date of Entry Net Premiums 4- Year 26% CAGR Pre-tax Operating Income* $ in millions $ in mil
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) ($ 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)
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: Reinsurance Group of America, Incorporated
Reinsurance Group of America, Incorporated Raymond James Institutional Investors Conference March 11, 2009 A. Greig Woodring, Chief Executive Officer Jack Lay, Sr. EVP and Chief Financial Officer
Reinsurance Group of America — Raymond James Institutional Investors Conference 2009 on 6ix