RGA's Record Capital Deployment: A Driver for Future Growth

Reinsurance Group of America (RGA) reported its Q4 2024 earnings, with net income available to RGA shareholders totaling $148 million, or $2.22 per diluted share, compared to $158 million, or $2.37 per diluted share, in the prior-year quarter. Adjusted operating income and adjusted operating income, excluding notable items for the fourth quarter, totaled $334 million, or $4.99 per diluted share, compared with $316 million, or $4.73 per diluted share, the year before. Net foreign currency fluctuations had a favorable effect of $0.07 per diluted share on net income available to RGA shareholders, and $0.09 per diluted share on adjusted operating income, both as compared with the prior year.

Full-year net income available to RGA shareholders totaled $717 million, or $10.73 per diluted share, compared with $902 million, or $13.44 per diluted share the year before. Adjusted operating income for the full year totaled $1,342 million, or $20.06 per diluted share, compared with $1,334 million, or $19.88 per diluted share the year before. Adjusted operating income, excluding notable items for the full year, totaled $1,510 million, or $22.57 per diluted share, compared with $1,334 million, or $19.88 per diluted share the year before. Net foreign currency fluctuations had a favorable effect of $0.18 per diluted share on net income available to RGA shareholders, and $0.06 per diluted share on adjusted operating income, both as compared with the year before.

Tony Cheng, President and Chief Executive Officer, commented, "The fourth quarter capped off a tremendous year, as we delivered record annual operating earnings, with many achievements across our organization. In the quarter, we continued to see strong momentum in organic business activity in the traditional business, and our in-force transactions were solid, with $250 million of capital deployed. This brought our full-year capital deployment into in-force transactions to $1,676 million, a record for RGA and an increase of approximately 80% over the previous record in 2023. Equally strong was the record expected future value from new business written during the year, with a significant amount coming from exclusive opportunities."



The record capital deployment into in-force transactions in 2024, which totaled $1,676 million, an 80% increase over the previous record in 2023, has several implications for the company's future growth prospects:

1. Increased value of in-force business margins: The significant capital deployment led to a $4.6 billion increase in the value of in-force business margins, reaching $37.6 billion, a 13.9% growth. This demonstrates the company's ability to create value through strategic investments in its in-force business.
2. Robust premium growth: The record capital deployment was accompanied by robust premium growth, with full-year net premiums reaching $17.8 billion, up 18.3% year-over-year. This indicates that RGA's growth prospects are strong, driven by both organic business activity and new business opportunities.
3. Optimism about future financial results: Based on the favorable business conditions and RGA’s global leadership position, the company remains optimistic about its future financial results. This is reflected in the increased intermediate-term financial targets, including raising the adjusted operating ROE target to 13% to 15%. The record capital deployment into in-force transactions is a testament to the company's confidence in its growth prospects and its ability to generate attractive financial results over time.

In conclusion, RGA's record capital deployment into in-force transactions in 2024, coupled with strong organic business activity and robust premium growth, positions the company well for future growth. The company's optimism about its future financial results, reflected in its increased intermediate-term financial targets, underscores its confidence in its ability to deliver attractive financial results over time.