Reinsurance Group of America, Incorporated (RGA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial performance with a 7.4% premium growth, increased book value, and better-than-expected variable investment income. The Q&A highlights strategic moves like exiting the U.S. health care business and focusing on high-return areas, with positive guidance for 2026. Although there are concerns about management's lack of specificity, the overall sentiment is positive due to optimistic EPS growth targets, shareholder returns, and strategic capital deployment. The absence of a market cap suggests a likely moderate stock price reaction, leading to a 'Positive' sentiment rating.
Key Financial Performance
Q4 Operating EPS $7.75 per share, a record quarter. This represents a significant increase year-over-year, driven by strong earnings across businesses and geographies.
Adjusted Operating Return on Equity (ROE) 15.7% for the trailing 12 months, exceeding the intermediate-term target range of 13%-15%. This increase was attributed to management actions, variable investment income, and favorable business performance.
Capital Deployment $2.5 billion deployed into in-force transactions for the year, reflecting attractive risk-adjusted returns and strategic initiatives.
Excess Capital $2.7 billion maintained, showcasing a strong balance sheet and financial stability.
APAC Pretax Operating Income Increased by 18% year-over-year, driven by strong growth, favorable underwriting experience, and market dynamics in Japan and Korea.
EMEA Pretax Earnings Increased by 35% year-over-year, supported by strong new business growth and favorable experience.
Value of In-Force Business Margins Increased by 18% or $6.6 billion in 2025, driven by new business, management actions, and experience.
Share Repurchases $50 million in Q4 at an average price of $187.40, totaling $125 million since reinstating buybacks in Q3.
Premium Growth 7.4% year-to-date on a constant currency basis, reflecting strong growth across North America, EMEA, and APAC.
Biometric Claims Experience Unfavorable by $51 million in Q4, with a $53 million financial impact, primarily due to U.S. group business.
Variable Investment Income Exceeded expectations by $48 million in Q4, driven by higher limited partnership income.
Book Value Per Share Increased to $165.50, representing a compounded annual growth rate of 10% since the beginning of 2021.
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Operating Highlights
Equitable block: Continued contributions from new business, including the Equitable block, which is expected to generate risk-adjusted returns meeting or exceeding targets.
Biometric expertise and innovative solutions: Strong momentum in Asia and the U.S. due to product development and underwriting solutions.
APAC region: Strong growth driven by product development and favorable market and regulatory dynamics in Japan and Korea.
EMEA region: 35% increase in full-year pretax earnings due to strong new business growth and favorable experience.
In-force management actions: Generated $135 million in 2025, contributing significantly to results. Actions include strategic recapture and rate increases.
Balance sheet optimization: Efforts to reposition acquired portfolios and enhance risk-adjusted returns.
Exit from group healthcare lines: Decision to exit group healthcare lines of business after a strategic review.
Capital deployment: $2.5 billion deployed into in-force transactions in 2025, with $50 million allocated to share repurchases in Q4.
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Risk or Challenges
Economic Claims Experience: Unfavorable economic claims experience of $51 million in Q4, with a corresponding unfavorable financial impact of $53 million. Approximately half of this result was driven by the U.S. group business.
Group Healthcare Lines Exit: Decision to exit the group healthcare lines of business following challenging results from U.S. Group, specifically the excess medical business.
Variable Investment Income: Variable investment income for 2026 is projected to be below long-term expectations due to a muted environment for real estate sales.
In-Force Management Actions: Timing and size of in-force management actions are highly unpredictable, with a projected more limited financial impact in 2026 compared to recent years.
Corporate and Other Segment Loss: Corporate and Other segment reported an adjusted operating loss before tax of $54 million, impacted by higher financing costs and general expenses.
Regulatory and Rating Agency Capital: Need to maintain ample levels of regulatory capital and manage rating agency capital to support strong ratings, which could limit flexibility in capital deployment.
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Guidance & Outlook
Tax Rate for 2026: Expected to be in the range of 22% to 23%.
Variable Investment Income for 2026: Assumed to be a 7% return, above the 6% in 2025 but below the long-term expectations of 10% to 12%.
In-force Management Actions for 2026: Projected to have a more limited financial impact compared to recent years, with a base case expectation of $1.5 billion capital deployed into in-force transactions.
Capital Allocation for 2026: Expect to allocate $400 million of excess capital to reduce financial leverage and remain opportunistic with share repurchases. Total shareholder return of capital is expected to range between 20% to 30% of after-tax operating earnings over the intermediate term.
Equitable Transaction Earnings for 2026: Expected to generate $160 million to $170 million of earnings.
Group Business Repricing for 2026: Fully repriced, with significant improvement in results expected back towards historical run rates.
Corporate and Other Segment Loss for 2026: Expected to be approximately $50 million to $55 million per quarter.
Intermediate-term Financial Targets: Reiterated targets of 8% to 10% annual EPS growth and a 13% to 15% return on equity.
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Shareholder Return Plan
Quarterly dividends: The company will continue to balance capital deployed into the business with returning capital to shareholders through quarterly dividends.
Share repurchase in Q4 2025: Repurchased $50 million worth of shares at an average price of $187.40 per share.
Total share repurchase since Q3 2025: Repurchased $125 million worth of shares since reinstating buybacks in Q3 2025.
Future share repurchase plans: The company intends to remain opportunistic with share repurchases and expects total shareholder return of capital to range between 20% to 30% of after-tax operating earnings over the intermediate term.
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Key Q&A
Q:Is the 20% to 30% payout ratio for buybacks and dividends still the right level?
A:The company is targeting a 20% to 30% total payout ratio going forward but maintains flexibility to be opportunistic as the year progresses.
Q:Would the company be open to additional partnerships with asset managers or alternative asset managers?
A:The company has been using external partners for decades and plans to continue doing so if it adds value. They are open to partnerships that bring additive capabilities or expertise.
Q:What rate actions were taken in 2026 for Group Health, and why is the company exiting the business?
A:The company raised rates by 40% on average from mid-2025 through January 2026. They decided to stop writing new business and not renew existing business due to a strategic review. The U.S. health care business has approximately $400 million in annual premium and $25 million in pretax run rate earnings.
Q:What is the company's appetite for derisking legacy blocks like long-term care and universal life with secondary guarantees?
A:The company remains selective and disciplined on ULSG and LTC risks, requiring higher hurdle rates. ULSG and LTC liabilities are less than 10% of the balance sheet and are expected to remain so.
Q:Why were the results of the Equitable block not correlated between the two companies?
A:The company repriced the business, reflected updated mortality and policyholder behavior experience, and operates with lower expenses. Their share of the business does not represent a 75% quota share of Equitable's entire life business.
Q:What is the earnings power of the $5 billion capital deployed in 2023?
A:The company views its 8% to 10% EPS growth target as achievable with $1.5 billion of capital deployed into in-force transactions annually. The Equitable transaction, which occurred mid-2025, contributed to 2025 earnings with further ramp-up expected in 2026.
Q:How has the Manulife long-term care risk transfer deal and broader exposure to long-term care performed?
A:The company is happy with its LTC business, which has performed well over time. They focus on a subset of LTC business that aligns with their risk appetite and return expectations.
Q:What is the company's exposure to software-related companies and the impact of AI on the portfolio?
A:The company's exposure to software-related companies is modest, less than 30 basis points of the total investment portfolio. They actively monitor AI trends and their potential impact on the portfolio.
Q:How does the company view the regulatory regime changes in Europe, such as Solvency II?
A:The company is aware of the benefits of various regulatory regimes and monitors their evolution. They have not observed increased competition or pricing pressure due to these changes.
Q:What regions or product lines are looking incrementally attractive in 2026?
A:The company sees opportunities in Asia (product development and financial solutions), the U.K. (longevity market), and the U.S. (industry realignment and biometric/underwriting strengths).
Q:How has the flu season impacted U.S. traditional mortality results?
A:The company did not see material evidence of seasonality in Q4 results, and mortality experience was in line overall. Declining trends in flu activity are encouraging.
Q:What are the components of the company's 8% to 10% EPS growth target for 2026?
A:The target assumes improved U.S. group experience, smaller contributions from in-force management actions, and a 7% variable investment income return. The $24.75 run rate EPS for 2025 excludes in-force actions, which could provide upside in 2026.
Q:How does macro volatility in Japan affect the company's business and opportunities?
A:The company sees strong opportunities in Japan due to regulatory and macroeconomic changes. They focus on transactions with both asset and biometric risks, leveraging their strengths.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on certain questions, such as the exact parts of the Equitable block not covered, the broad range ROE for the LTC business, and the specifics of in-force management rate actions included in the $24.75 run rate EPS for 2025.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APAC momentum
APAC region
America Asia
Conference RGA
EMEA pretax
EMEA result
Group improvement
Korea level
RGA strength
RGA value
ROE increase
ROE value
Relations course
ability shareholder
action contribution
action experience
action positive
action timing
action year
annum perspective
approach win
area focus
asset capability
benefit period
block vintage
brand flexibility
business geography
business opportunity
buyback balance
capability partnership
capability platform
capital front
capital indicator
capital plan
capital platform
capital result
capital stewardship
effort
expertise
force transaction
liability risk
risk return
shareholder value
term result
RGA Transcript
Saputo Inc. (SAP:CA) Q3 2026 Earnings Call Transcript
Positive2-6
The earnings call summary and Q&A indicate a positive outlook. Strong financial metrics, such as a significant increase in in-force business margins and a well-progressed portfolio repositioning, suggest long-term growth. The positive sentiment is reinforced by a robust new business pipeline, strategic capital deployment, and a clear shareholder return plan. While there are some uncertainties in the Q&A, the overall strategic plan and optimistic guidance outweigh these concerns, suggesting a positive stock price movement.
Reinsurance Group of America, Incorporated (RGA) Q4 2025 Earnings Call Transcript
Positive2-6
The earnings call summary indicates strong financial performance with a 7.4% premium growth, increased book value, and better-than-expected variable investment income. The Q&A highlights strategic moves like exiting the U.S. health care business and focusing on high-return areas, with positive guidance for 2026. Although there are concerns about management's lack of specificity, the overall sentiment is positive due to optimistic EPS growth targets, shareholder returns, and strategic capital deployment. The absence of a market cap suggests a likely moderate stock price reaction, leading to a 'Positive' sentiment rating.
Reinsurance Group of America, Incorporated (RGA) Q3 2025 Earnings Call Transcript
Positive10-31
The earnings call summary highlights strong financial metrics, capital flexibility, and shareholder return plans, which are positive indicators. The Q&A section reveals normal volatility in claims and deployable excess capital. While guidance remains unchanged, the company anticipates future profitability and market expansion, suggesting optimism. The lack of new partnerships or secondary offerings, and the absence of guidance refusal, further supports a positive outlook. Therefore, considering all factors, the stock price is likely to experience a positive movement of 2% to 8% over the next two weeks.
Reinsurance Group of America, Incorporated (RGA) Q2 2025 Earnings Call Transcript
Unknown8-1
The earnings call summary provides a mixed picture: while there are positive elements such as expected margin improvements, potential share repurchases, and a strong pipeline, there are also concerns about higher claims costs and uncertainty in the healthcare line. The Q&A section reveals cautious optimism but also highlights some uncertainties, particularly regarding future guidance and earnings volatility. This balance of positive and negative factors suggests a neutral sentiment.
RGA Slides
RGA Report
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