Previous Statements by RGA
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» Reinsurance Group of America, Inc. Q4 2009 Earnings Call Transcript
In addition, during the course of this call, we will make comments on a pre-tax and after tax operating income, which is considered a non-GAAP financial measure under SEC regulations. We believe this measure better reflects the ongoing profitability and underlying trends of our business.Please refer to the tables in our press release and quarterly financial supplements for more information on this measure and reconciliations of operating income to net income for our various business segments. These documents and additional financial information may be found on our investor relations website at www.rgare.com. With that I will turn the call over to Greig for his comments. Greig Woodring The consolidated results for the quarter were in line with our expectations. We had mixed underwriting results, including better than expected performance in Canada and some adverse results in some of our international operations. US operations our largest segment performed in line with expectations including solid contributions from Asset Intensive business. On the whole, we met our expectations in terms of reported operating income which totaled a $128 million or $1.72 per diluted share, up from last years 122 million or $1.63. Foreign currency fluctuations helped operating income by $3.8 million or about $0.05 share. Annualized operating ROE was 12% this quarter and was 13% over the last 12 months. Consolidated net income totaled a 133 million or a $1.78 per diluted share, up from a $127 million or a $1.70 per share last year. Reported premiums were 1.8 billion, up 13% quarter-over-quarter. Ignoring the look from currency fluctuations, premiums rose 8%, a little off our expected pace perhaps. Investment income increased 16% this quarter, totaling $337 million with the yield of 5.35%. Yield was down compared to last years’ second quarter, but was flat with the first quarter of 2011. Contributing to the increase in investment income was a $20 million rise in the fair value of option contract, supporting equity-indexed annuities. Without the effect of those option contracts, investment income was up 9% quarter-over-quarter; a good result which reflects the continued growth of our invested asset base.
Investment impairments were relatively low again. Our net realized gain position increased nearly 25% this quarter, adding over $2 to book value per share, which now stands at $71.88 per share. Excluding all other comprehensive income, book value per share is $57.51.Capital management continues to be an area of focus for RGA. We are pleased to report a 50% increase in our quarterly shareholder dividend, which as announced yesterday rises from $0.12 to $0.18 per share. This action reflects our strong capital and liquidity positions, while providing flexibility for future growth opportunities. Further, we took advantage of a relatively low interest rate environment to issue $400 million of senior notes in May. Turning to our operating segments; our US traditional business produced pre-tax operating income of $93 million, compared to $96 million last year. Premiums were up 4% this quarter; totaling $974 million. Our large mortality block performed in line with expectations; however, we did experience some normal adverse claims volatility in our group [LTD] business, contributing to the slight decrease from an excellent 2010 result. Our US Asset Intensive business reported another strong quarter with pre-tax operating income of $20 million, up from $16 million a year ago. We still expect an average run rate of $15 million or $16 million per quarter from this business. This quarter we benefited primarily from better than expected spreads on our equity indexed annuity blocks. Also our financial reinsurance business performed well this quarter, with strong fee income. That business reported $7 million in pre-tax operating income, up from $4.4 million a year ago. Turning now to Canada; our pre-tax operating income rose sharply to $42 million, up 27% over a strong $33 million result last year. Virtually everything went our way this quarter including a strong premium growth, better than expected mortality experience and favorable currency fluctuations. Read the rest of this transcript for free on seekingalpha.com