RGA's Q3 2025 Earnings Call: Contradictions Emerge on Mortality Assumptions, Capital Deployment, and Biometric Experience

Date of Call: October 31, 2025

Financials Results

• EPS: $6.37 per share (adjusted operating EPS, excluding notable items); pretax adjusted operating income $534M; record operating EPS

Guidance:

• Full-year effective tax rate expected to be 23%–24%.
• Equitable transaction contribution: ~ $70M pretax in 2025, $160M–$170M in 2026, and ~ $200M annually by 2027.
• Actuarial/assumptions update: $600M long-term benefit (offset by $149M current LDTI cohorting); increases annual run-rate by $15M next year, ramping to $25M by 2040.
• Ruby Re sidecar expected to be fully deployed by mid-2026; excess capital ~$2.3B and deployable capital ~$3.4B.
• Capital return target: 20%–30% of after-tax operating earnings via dividends and buybacks.
• Group business to be fully repriced by Jan 1, 2026.

Business Commentary:

• Record Financial Performance and Premium Growth:
• Reinsurance Group of America (RGA) reported record operating EPS of $6.37 per share, excluding notable items, for Q3 2025.
• Premium growth was notable, particularly in the U.S., EMEA, and APAC regions.

• The growth was driven by successful execution of the company's strategy and strong performance in specific regions.

• Effect of Equitable Transaction:

• The Equitable transaction closed in Q3, contributing to a full quarter of earnings.
• The partnership is yielding strategic benefits, including increased underwriting services and asset management.

• The transaction aligns with RGA's strategy, providing immediate earnings impact and long-term strategic benefits.

• Strong Performance in Asia Pacific and EMEA:

• Asia Pacific's traditional results were particularly strong, with continuous growth and excellent bottom-line results.
• EMEA remains a key market leader, with multiple transactions closed across product lines.

• The performance in these regions is attributed to innovative solutions, strong client relationships, and a focus on holistic solutions.

• In-force Management and Capital Deployment:

• The value of in-force business margins increased by 16% over the past three quarters.
• The company has deployed $2.4 billion of capital year-to-date into in-force transactions.
• These actions are part of RGA's strategy to create long-term value and demonstrate its ability to manage excess capital effectively.

Sentiment Analysis:

Overall Tone: Positive

• "We have had a very strong third quarter," management said, reporting "record operating EPS... of $6.37 per share." CFO: "Results were strong this quarter and above expectations." Multiple comments highlighted strong regional performance, robust new business momentum, and successful capital deployment.

Q&A:

• Question from Wesley Carmichael (Autonomous Research US LP): First one was just on the U.S. claims activity in Traditional in the quarter. Just wanted to see if you would unpack current experience, if that's just normal volatility in your view, if there's any onetime-ish kind of items in there.
  Response: About $30M unfavorable on U.S. individual life (normal volatility, below one standard deviation) and ~$20M unfavorable on group—modest and in line with prior expectations.

• Question from Wesley Carmichael (Autonomous Research US LP): Were there any onetime items that impacted premiums? It looks like premium growth was a little bit softer there than the rest of the enterprise. And if so, what was kind of the underlying growth rate there?
  Response: An in-force action (recapture of a treaty) removed ~$20M of premiums that would have otherwise been recorded—this is the primary driver of softer U.S. premium growth this quarter.

• Question from John Barnidge (Piper Sandler & Co., Research Division): Swiss Re suggested mortality reduction from GLP-1 drugs. How soon would it make sense to recognize that benefit either on pricing or in your assumptions?
  Response: No material assumption changes yet; analysis aligns with Swiss Re's central estimate and increases confidence in existing mortality improvement assumptions — management will continue to monitor and reassess as data evolve.

• Question from John Barnidge (Piper Sandler & Co., Research Division): The lift to annual run rate is $15M over the intermediate term and would be expected to grow. To what level would it be expected to grow in the max year?
  Response: The assumptions update yields a $600M long-term benefit (–$149M current LDTI cohorting); it increases annual run-rate by $15M next year, gradually ramping to $25M annually by 2040.

• Question from Jamminder Bhullar (JPMorgan Chase & Co, Research Division): On Ruby Re expectations: what type of liabilities are you considering for the structure and will legacy liabilities fit in your plans?
  Response: Ruby Re is focused on U.S. asset‑intensive, relatively simple liabilities (e.g., pension risk transfer); pipeline exists and management expects the vehicle to be fully deployed by mid‑2026; sidecars remain core to strategy.

• Question from Jamminder Bhullar (JPMorgan Chase & Co, Research Division): And then the type of liabilities include just annuities or like LTC VAs with living benefits as well?
  Response: Ruby Re targets relatively vanilla asset‑intensive liabilities with limited biometric complexity; future vehicles could broaden scope but only within areas where RGA has proven expertise combining biometric and asset risk.

• Question from Ryan Krueger (Keefe, Bruyette, & Woods, Inc., Research Division): Update on in-force actions—how far along are you and what opportunities remain?
  Response: Year-to-date in‑force actions total about $45M, on track to the ~$50M/year run-rate target; opportunities remain globally and in‑force management is an ongoing, disciplined source of earnings.

• Question from Ryan Krueger (Keefe, Bruyette, & Woods, Inc., Research Division): Is the value-in-force benefit fully deployable into growth and do rating agencies accept it?
  Response: Value‑in‑force represents real capital available under multiple lenses, but rating agencies recognize only a portion with significant haircuts and amortization; management monitors binding constraints across regulatory, rating, and economic frameworks.

• Question from Wilma Jackson Burdis (Raymond James & Associates, Inc., Research Division): Regarding the U.K. mortality assumption review impact, are those claims that you're seeing today? Or is it more of a long-term expectation for higher mortality? And could you provide color on U.K. mortality trends?
  Response: Assumption review increased expected future U.K. mortality reflecting observed excess population mortality and NHS pressures; under LDTI most U.K. mortality impact is recognized now (capped cohorts) while longevity benefits are deferred, leaving the net U.K. economic effect roughly neutral.

• Question from Wilma Jackson Burdis (Raymond James & Associates, Inc., Research Division): Now that the Equitable block is closed, could you provide a little bit more color on your expectation for accounting smoothing on the mortality on that block?
  Response: Approximately 50% of the Equitable block is expected to benefit from accounting smoothing of volatility over time.

• Question from Taylor Scott (Barclays Bank PLC, Research Division): On the group headwind from the medical piece—what are you seeing, the repricing you're taking and the trajectory?
  Response: Group business is short‑term and repriced annually; management has started repricing actions and expects the entire block to be repriced by Jan 1, 2026, after which profitability expectations improve.

• Question from Taylor Scott (Barclays Bank PLC, Research Division): Market commentary suggests RGA is getting more competitive/aggressive and accepting lower IRRs to win business—what's your response?
  Response: No change in risk appetite or discipline; RGA remains focused on selective, exclusive business in its sweet spot (biometric + asset risk) and is not pursuing tendered risks outside core expertise.

• Question from Suneet Kamath (Jefferies LLC, Research Division): LDTI was expected to smooth results; why does it seem to be producing more near-term negative volatility and what percent of business is in capped cohorts?
  Response: LDTI provides smoothing overall but capped cohorts flow through immediately and can cause near‑term volatility; about 15% of traditional business is in capped cohorts.

• Question from Suneet Kamath (Jefferies LLC, Research Division): On economic solvency in Japan—has it been the opportunity you expected or have competitors found alternatives?
  Response: Economic solvency changes have driven opportunities over several years; RGA has won business selectively, focusing on blocks with both biometric and asset risk and leveraging long-standing client relationships.

• Question from Thomas Gallagher (Evercore ISI Institutional Equities, Research Division): If you unwind accounting noise you get about $7 of earnings power this quarter—help unpack that and reconcile to trendable levels.
  Response: Quarter drivers included ~$50M unfavorable claims, ~$40M positive in‑force actions, a ~$40M variable investment income headwind, a tax benefit, and the lumpy Equitable contribution—together explaining elevated quarterly earnings versus trend.

• Question from Thomas Gallagher (Evercore ISI Institutional Equities, Research Division): Have you considered partnerships with alternative managers given asset‑intensive business needs?
  Response: RGA uses external manager relationships where sensible for private assets but does not compete on pure asset transactions; focus remains on asset‑intensive deals that include biometric risk where RGA adds unique value.

Contradiction Point 1

Mortality Assumptions and GLP-1 Drug Effects

It involves the company's approach to incorporating the effects of GLP-1 drugs on mortality assumptions, which could impact financial modeling and risk assessment.

Are you factoring mortality reduction from GLP-1 drugs into your assumptions or pricing? - John Barnidge (Piper Sandler & Co., Research Division)

2025Q3: We haven't materially changed our assumptions. The benefits from these drugs enhance confidence in our mortality improvement assumptions. We're aligned with Swiss Re's central mortality improvement estimates. - [Jonathan Porter](CRO)

How do you explain the strong underwriting performance despite the flu season and a large case mentioned by others, and how does RGA plan to turn Equitable's struggling business into a high-return business? - Suneet Kamath (Jefferies)

2025Q1: We continue to benefit from recent advances in medicine and biotechnology that are enhancing our confidence in our mortality improvement assumptions. - [Jonathan Porter](CRO)

Contradiction Point 2

In-Force Actions and Capital Deployment

It involves the company's approach to capital deployment and in-force actions, which directly affects financial strategy and shareholder returns.

How far along are you with current actions, and what opportunities remain? - Ryan Krueger (Keefe, Bruyette, & Woods, Inc., Research Division)

2025Q3: We're on track with about $45 million cumulative in-force actions year-to-date. Opportunities remain for further actions globally. - [Axel Philippe Andre](CFO)

Is RGA's retention rate on the excess healthcare business near its target, and are you more open to stock buybacks now than before? - Jamminder Bhullar (JPMorgan)

2025Q2: Our capital position allows for both business deployment and returning capital to shareholders. We expect to be opportunistic with share buybacks quarter-by-quarter, with a long-term target of 20-30% payout ratio. - [Tony Cheng](CEO)

Contradiction Point 3

Deployable Capital Increase

It involves the discrepancy in the reported increase in deployable capital, which can impact strategic decision-making and investor expectations.

Is there any restriction on deploying the value in-force benefit into growth? - Jamminder Bhullar (JPMorgan Chase & Co, Research Division)

2025Q3: The increase reflects forward-looking earnings growth and model updates. Excess capital remains a defensive metric, while deployable capital looks forward for opportunities. - [Axel Philippe Andre](CFO)

Why did deployable capital increase by several hundred million compared to the Equitable transaction slides? - Ryan Krueger (Keefe, Bruyette, & Woods, Inc., Research Division)

2025Q1: The increase reflects forward-looking earnings growth and model updates. Excess capital remains a defensive metric, while deployable capital looks forward for opportunities. - [Axel Andre](CFO)

Contradiction Point 4

Capital Deployment and Growth Expectations

It involves differing statements about the expected capital deployment and growth rates, which are critical for investor outlooks and strategic planning.

Is there any restriction on deploying the value in-force into growth? - Ryan Krueger (Keefe, Bruyette, & Woods, Inc., Research Division)

2025Q3: Run rates of 8% to 10% in 2026 and beyond, based on volumes consistent with recent business momentum. - [Tony Cheng](CEO)

Can you provide insight into assumed deal activity impacting run rates? - Ryan Krueger (KBW)

2024Q4: Run rates reflect significant new business momentum and in-force management actions. Growth of 8% to 10% is assumed based on volumes consistent with recent business momentum. - [Axel Andre](CFO)

Contradiction Point 5

Biometric Experience and Its Impact

It involves differing explanations of the economic and financial impacts of biometric experience, which are crucial for understanding the company's risk management and financial performance.

Can you explain the current U.S. claims activity in Traditional during the quarter and whether this is due to normal volatility or one-time items? - Wesley Carmichael (Autonomous Research US LP)

2025Q3: The $167 million favorable biometric experience this year has been in line with what we expected. - [Jonathan Porter](GCR)

Are favorable biometric results due to normal volatility or underlying dynamics? - Jimmy Bhullar (JPMorgan)

2024Q4: Biometric experience reflects long-term trends, potentially influenced by post-COVID improvements and technological advancements. - [Tony Cheng](CEO), [Jonathan Porter](GCR)