Reinsurance Group Of America, Incorporated · NYSE:RGA
Reinsurance Group Of America — Investor Presentation (March 2020)
53 slides from Reinsurance Group Of America's investor presentation, Mar 3, 2020
Slide 1: Todd Larson Senior Executive Vice President, Chief Financial Officer Jeff Hopson Senior Vice President,
Todd Larson Senior Executive Vice President, Chief Financial Officer Jeff Hopson Senior Vice President, Investor Relations March 3, 2020 Exhibit 99.1
Slide 2: Safe Harbor
Safe Harbor This report 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 performance a
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
Attractive financial prospects Track record of value creation Historic robust organic growth and active transaction pipeline Earnings diversity by geography and product Effective capital management Key Messages Well-positioned for expanding opportunities A leading global brand and experienced manage
Slide 5: Evolution of Our Diversified Global Platform
Evolution of Our Diversified Global Platform 1992 $14.2 Billion2 $4.6 Billion $0.4 Billion 2005 2019 Region1 Product1 1 Percentage excludes Corporate and Other. 2 Total adjusted operating revenues. Please refer to “Reconciliations of Non-GAAP Measures” in the Appendix. Revenue
Slide 6: Well-Positioned Global Life and Health Reinsurance
Well-Positioned Global Life and Health Reinsurance Revenues Rank Reinsurer 2018 Revenues $ in millions 1 Swiss Reinsurance Company 14,455 2 Reinsurance Group of America1 13,061 3 Munich Re2 11,427 4 SCOR Global Life Re 10,227 5 Hannover Re 8,243 6 China Life Re 5,302 7 General Re3 4,522 8 Pacific Li
Slide 7: Best-in-Class Capabilities
Best-in-Class Capabilities NMG Consulting, Global Life & Health Reinsurance Study 2018 1 NMG Consulting Global Life & Health Reinsurance Study 2018. 2 NMG Consulting’s Business Capability Index (Globally). NMG Consulting notes that RGA’s sources of differentiation and notable success in 2018 include
Slide 8: Experienced Team and Deep Bench Strength
Experienced Team and Deep Bench Strength Years of Experience Industry1 RGA2 Anna Manning, President and CEO 39 13 Todd Larson, SEVP, Chief Financial Officer 26 25 Alain Néemeh, SEVP, Chief Operating Officer 23 23 Leslie Barbi, EVP, Chief Investment Officer 16 1 Dennis Barnes, EVP, RGA and CEO, RGAX
Slide 9: Proven Strategy, Exceptional Strengths
Proven Strategy, Exceptional Strengths Traditional Reinsurance Diversified global platform and product offering Strong mortality and morbidity growth with favorable demographic trends Global underwriting leadership Deep risk knowledge Financial Solutions Established product lines, long track record
Slide 10: Success in Continually Growing Book Value Per Share
Success in Continually Growing Book Value Per Share Strong track record Double-digit returns Consistent execution over time, in a range of environments Balance sheet integrity is high Long-term value 15-Year 11.1% CAGR 10-Year 12.5% CAGR 5-Year 13.1% CAGR Book value per share (ex-AOCI)1 total return
Slide 11: RGA Shares Have Performed Well Historically
RGA Shares Have Performed Well Historically Source: S&P Global Market Intelligence, price change percent. Information as of 2/21/2020. 3 Years 5 Years Consistent management team Consistent approach Consistent underwriting, pricing Consistent value creation
Slide 12: Global Trends Create Broad Opportunities
Capabilities and Services Value chain expansion Data and analytics Next-generation underwriting Global Trends Create Broad Opportunities Macro Environment Regulatory change Balance sheet restructuring Low interest rates Client and Consumer Shifting demographics driving new products Digital distribut
Slide 13: Expanding Capabilities Across the Value Chain
Expanding Capabilities Across the Value Chain Claims Product Development Agent/ Advisor Marketing and Distribution Underwriting Administration Consumer Engagement Developing solutions across industry value chain to respond to opportunities Partnering with clients to create shared value Delivering ad
Slide 14: Vision for the Future
Vision for the Future We see an abundance of opportunities: RGA has what it takes to succeed High-performing global platform, with nice balance of risks Wide range of capabilities and solutions Innovative culture, focused on long-term value creation Strong teams, consistent approach, patience and di
Slide 15: Financial Overview
Financial Overview
Slide 16: Key Messages
Attractive financial prospects Attractive operating model Strong balance sheet and well-diversified earnings profile Intermediate guidance unchanged Key Messages Proven strategy, proven execution Strong financial track record Consistent book value growth Effective capital management Well-positioned
Slide 17: Strong Financial Track Record
Adjusted Operating ROE1 Favorable results despite lower interest rates and weak foreign currencies Global platform and capital strategy deliver consistent returns Strong Financial Track Record Adjusted Operating Revenues1 Global platform provides a diversified source of revenues Demonstrated growth
Slide 18: Excess Capital Deployed
Excess Capital Deployed Consistent growth in shareholder dividends Timing of in-force block transactions can be lumpy, but RGA has been successful over time Efficient Use of Capital Excess Capital Strong net income generation Regularly deploying capital back into the business Regular return to share
Slide 19: RGA Produces High-Quality Earnings
Consistent Over Long and Short Term RGA’s average net income divided by adjusted operating income over a three-year period is 101%, and is 101% over a five-year period RGA Produces High-Quality Earnings High Ranking Relative to Peers Investment-related gains and losses, embedded derivatives, and oth
Slide 20: Balanced Global Platform
Balanced Global Platform Deliberate build-out of RGA’s global platform over 25-plus years Selective on opportunities to ensure the right fit for RGA Global Platform Delivers Balance and Diversity Consistently Delivering Global mix of business reduces volatility Diversified by geography and by produc
Slide 21: Leverage Ratios
Leverage Ratios Leverage ratios within our targeted ranges 2Q19 debt issuance of $600 million and 4Q19 retirement of $400 million (net $200 million debt increase) had small effect on leverage Appropriate Capital Structure Financial Strength Ratings Strong ratings from rating agencies with stable out
Slide 22: Investment Portfolio Is Conventional
December 31, 2019 Total cash and invested assets $68.0 B Investment grade bonds 71.9% Corporate 43.2% Government 18.0% Structured 10.7% High-yield bonds 3.4% Corporate 3.0% Government 0.3% Structured 0.1% Equity securities 0.5% Mortgage loans on real estate 8.3% Policy loans 1.9% Funds withheld at i
Slide 23: Stable Liability Profile
Stable Liability Profile Optionality Profile Lower liquidity risk due to liability profile No policyholder behavior risk Locked-in longevity in payout Very low policyholder behavior risk Mortality, Morbidity, LTC, BOLI Lower policyholder behavior risk Fixed and indexed annuity business with: Higher
Slide 24: Vision for the Future
Vision for the Future Continue to deliver strong financial results Invest in new initiatives and developing new services Well-positioned to take advantage of in-force block and other transaction opportunities Effective capital management Continue attractive growth of book value Solid organic growth
Slide 25: Geographic Overview
Geographic Overview May 18, 2017
Slide 26: Established Global Brand
Established Global Brand Exceptional capabilities leading to solid market share Global United States Canada EMEA Asia Pacific1 2018 Business Capability Ranking (BCI)2 #1 #23 / #14 #1 #1 #1 2018 New Business Individual Premiums5 / Sum Assured6 #2 #3 / #2 #2 / #2 #3 #2 2018 Group Total Premiums7 #2 #3
Slide 27: Global Cession Rates
Global Cession Rates U.S. and Canada life cession rates have stabilized and recently increased following a period of decline EMEA cession rates vary by country Cession rates in Asia expected to increase New products and distribution (e.g., accelerated underwriting, insurtech) driving desire to reins
Slide 28: Mortality is seasonal
Mortality is seasonal Consistent seasonal pattern observed across populations, leading to more deaths in winter Magnitude varies by age with older ages more impacted by winter months Seasonality impacts how deaths are distributed throughout the year but does not represent a deterioration in trend Mo
Slide 29: Mortality is short-term volatile
Mortality Overview Mortality is short-term volatile 1RGA U.S. individual mortality claims 2008-2018, deviation from linear trend. All Claims1, Monthly Large Claims1, Monthly All Claims1, Annual Short-term volatility from the amount of large claims can be substantial Over the longer term, volatility
Slide 30: Mortality has improved over the long term
Mortality has improved over the long term Clear positive long-term trend in all-cause mortality rate improvement Improvement observed from countries with both high and low absolute mortality levels Mortality improvement varies by age over intermediate periods due to cause-specific factors Younger ag
Slide 31: Mortality Overview
Mortality Overview Seasonality Seasonal trends in mortality are consistent Older ages more impacted than younger ages As RGA’s block has aged, we would expect an increase in seasonal effects This does not represent a deterioration in mortality, simply a timing issue of when deaths occur during the y
Slide 32: U.S. and Latin America results
Pre-Tax Adjusted Operating Income2 Well-diversified and sustainable long-term profit stream expected Significant turnaround in U.S. Group earnings U.S. and Latin America A Leading Franchise Leader in All Respondents Business Capability Index (BCI)1 #2 - U.S. Individual Mortality #1 - U.S. Group Life
Slide 33: U.S. and Latin America Traditional Reinsurance
U.S. and Latin America Traditional Reinsurance cessions have increased since 2015 Overview of U.S. Individual Life Mortality Market Source: SOA Life Reinsurance Survey/ S&P Global Market Intelligence. Excludes portfolio (in-force) production. U.S. Market remains the largest individual mortality mark
Slide 34: Canada
Pre-Tax Adjusted Operating Income3 Expect sustainable long-term profit stream Canada A Leading Franchise Leader in All Respondents Business Capability Index (BCI) since 20081 Strong market share of individual new business production2 Adjusted Operating Revenues3 Potential growth opportunities Delive
Slide 35: Europe, the Middle East, and Africa
Pre-Tax Adjusted Operating Income2 Developing solutions to help clients address regulatory challenges Pursuing opportunities through technology-driven innovation with clients Europe, the Middle East, and Africa A Leading Franchise Leader in All Respondents Business Capability Index (BCI)1 #1 in EMEA
Slide 36: Asia
Pre-Tax Adjusted Operating Income2 Innovation leading to new treaty wins, exclusive treaties, and stronger margins GFS expected to increase in importance over time as markets mature Asia1 Strong Track Record and Exciting Future A market-leading position and brand Quality, depth, diversity, and size
Slide 37: Australia
Pre-Tax Adjusted Operating Income2 Disappointing 2019 PTAOI due to unfavorable claims from group and individual treaties Australia Overview of Industry Australia and New Zealand remain the largest group reinsurance market in the world1 RGA continues to be selective about new business opportunities g
Slide 38: Global Underwriting Leadership
Global Underwriting Leadership A Sample of RGA’s Underwriting Services Facultative underwriting – in 2018 assessed over 655,000 cases globally with 24-hour turnaround on 83% of cases Strategic services including process efficiency advisory Global Underwriting Manual – recorded almost 600,000 client
Slide 39: Vision for the Future
Vision for the Future Insurance and reinsurance remain important and needed products Favorable demographics and macro trends expected to continue to generate opportunities in emerging markets RGA remains optimistic on mortality improvement over the long term RGA is well-positioned to continue being
Slide 40: Global Financial Solutions (GFS)
Global Financial Solutions (GFS) May 18, 2017
Slide 41: GFS Product Lines
Capital Solutions Remote-risk solutions allowing companies to manage regulatory capital at a low-cost fee Includes relief for redundant reserves or solvency capital as well as other structured reinsurance solutions GFS Product Lines Asset-Intensive Full-risk coverage of investment or accumulation pr
Slide 42: Diversified Earnings and Risk
Diversified Earnings and Risk Established Product Lines, Long Track Record of Growth History of Success Strong Growth $ in millions Pre-Tax Adjusted Operating Income2 2019 $594M2 1 Began reinsurance operations as ITT Lyndon in 1983; RGA acquired an ownership stake in 1995; wholly owned by RGA since
Slide 43: GFS Results
GFS Results Pre-Tax Adjusted Operating Income1 by Region Proven track record of consistent and strong earnings with attractive returns Important contributor to RGA’s results Transaction flow can vary by region from year to year Pre-Tax Adjusted Operating Income1 by Product Asset-Intensive continues
Slide 44: Low Equity Market Sensitivity
Low Equity Market Sensitivity Effects of equity market movements are manageable Asset-Intensive Reinsurance – Market Risks Illustrative Sensitivities Stresses are designed to show the effects of interest rate or equity market changes on January 1, 2018, with no recovery for 12 months All shocks are
Slide 45: Vision for the Future
Vision for the Future Regulatory, accounting, and economic changes drive continued need for solutions Opportunities to deploy capital into attractive blocks expected to continue Strong client relationships, strong counterparty, seasoned expertise, and innovative culture create advantages Combination
Slide 46: Appendix: Reconciliations of Non-GAAP Measures
Appendix Reconciliations of Non-GAAP Measures
Slide 47: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures
Slide 48: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures
Slide 49: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures
Slide 50: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures
Slide 51: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures
Slide 52: Reconciliations of Non-GAAP Measures
Reconciliations of Non-GAAP Measures
Slide 53: Copyright notice
©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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