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Reinsurance Group Of America Reports Second-Quarter Results

Reinsurance Group of America, Incorporated (NYSE: RGA), a leading global provider of life reinsurance, reported second-quarter net income of $141.1 million, or $1.91 per diluted share, compared to $123.9 million, or $1.66 per diluted share in the prior-year quarter. Operating income* of $122.3 million, or $1.65 per diluted share, increased three percent over last year’s $119.1 million, or $1.60 per diluted share. Figures for 2011 have been adjusted for the retrospective adoption of new accounting guidance for deferred acquisition costs.
Quarterly Results Year-to-Date Results
($ in thousands, except per share data) 2012   2011 2012   2011
Net premiums $1,950,661 $1,788,676 $3,814,143 $3,524,806
Net income 141,111 123,944 264,429 272,864
Net income per diluted share 1.91 1.66 3.57 3.68
Operating income* 122,273 119,056 234,650 225,987
Operating income per diluted share* 1.65 1.60 3.17 3.05
Book value per share 84.75 67.81

Book value per share (excl. Accumulated Other Comprehensive Income “AOCI”)*


Total assets 38,344,323 30,212,717

* See ‘Use of Non-GAAP Financial Measures’ below

Consolidated net premiums increased nine percent to $1,950.7 million from $1,788.7 million in the prior-year quarter, including an adverse effect of $45.8 million from changes in foreign currency exchange rates. Investment income decreased three percent to $328.3 million from $337.4 million in the year-earlier quarter, primarily attributable to a $45.1 million decline in fair value of option contracts, which are included in funds withheld at interest and support the crediting rates for equity-indexed annuities. Partially offsetting the effect of those option contracts was an increase in investment income associated with a large fixed deferred annuity coinsurance agreement, effective April 1, 2012. Excluding the effect of both of those items, investment income was flat compared with the second quarter of 2011, with declining new money yields offsetting a growing invested asset base. Excluding funds withheld assets and the investment receivable associated with the newly executed annuity transaction, the average book value of invested assets was up approximately $1.1 billion to $18.6 billion, and the average portfolio yield decreased to 5.05 percent from 5.35 percent in the second quarter of 2011. The average yield was also 5.05 percent in the first quarter of 2012. Net foreign currency fluctuations adversely affected operating income by $2.3 million after taxes, or $0.03 per diluted share.

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