Reinsurance Group of America Inc. (RGA, Financial) filed Quarterly Report for the period ended 2009-03-31.
Reinsurance Group of America Inc. is primarily engaged in life reinsurance and international life and disability insurance on a direct and reinsurance basis. In addition the company provides reinsurance of non-traditional business including asset-intensive products and financial reinsurance. Reinsurance Group of America Inc. has a market cap of $2.2 billion; its shares were traded at around $30.34 with a P/E ratio of 6.8 and P/S ratio of 0.4. The dividend yield of Reinsurance Group of America Inc. stocks is 3.6%. Reinsurance Group of America Inc. had an annual average earning growth of 13.2% over the past 10 years. GuruFocus rated Reinsurance Group of America Inc. the business predictability rank of 4-star.
funds withheld basis are subject to the provisions of Statement of Financial Accounting Standards (SFAS) No. 133 Implementation Issue No. B36, Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments (Issue B36). The unrealized gains and losses associated with Issue B36, after adjustment for deferred acquisition costs, had a favorable effect on income of $31.9 million in the first quarter of 2009 as compared to the first quarter of 2008. Changes in risk free rates used in the present value calculations of embedded derivatives associated with EIAs affect the amount of unrealized gains and losses the Company recognizes. The unrealized gains and losses associated with EIAs, after adjustment for deferred acquisition costs and retrocession, had a favorable effect on income of $16.5 million in the first quarter of 2009 as compared to the first quarter of 2008. The change in the Companys liability for variable annuities associated with guaranteed minimum living benefits affect the amount of unrealized gains and losses the Company recognizes. The unrealized gains and losses associated with guaranteed minimum living benefits, after adjustment for deferred acquisition costs, had an unfavorable effect on income of $42.8 million in the first quarter of 2009 as compared to the first quarter of 2008.
Consolidated net premiums increased $48.0 million, or 3.7%, for the three months ended March 31, 2009, as compared to the same period in 2008, due to growth in life reinsurance in force in the U.S. segment. Foreign currency fluctuations unfavorably affected net premiums by approximately $144.7 million for the first quarter of 2009 compared to 2008. Consolidated assumed insurance in force decreased slightly to $2.1 trillion as of March 31, 2009 from $2.2 trillion as of March 31, 2008 due to unfavorable currency fluctuations. The Company added new business production, measured by face amount of insurance in force, of $85.2 billion and $76.4 billion during the first quarter of 2009 and 2008, respectively. Management believes industry consolidation, reduced capital levels in the life insurance industry and the established practice of reinsuring mortality risks should continue to provide opportunities for growth, albeit at rates less than historically experienced.
Consolidated investment income, net of related expenses, increased $23.7 million, or 11.9%, for the three months ended March 31, 2009, as compared to the same period in 2008, primarily due to market value changes related to the Companys funds withheld at interest investment related to the reinsurance of certain equity-indexed annuity products, which are substantially offset by a corresponding change in interest credited to policyholder account balances resulting in a negligible effect on net income. The first quarter increase in investment income also reflects a larger average invested asset base offset by a lower effective investment portfolio yield. Average invested assets at amortized cost for the first quarter of 2009 totaled $12.8 billion, a 10.7% increase over March 31, 2008. The average yield earned on investments, excluding funds withheld, was 5.57% in the first quarter of 2009 and 6.06% for the first quarter of 2008. The average yield will vary from quarter to quarter and year to year depending on a number of variables, including the prevailing interest rate and credit spread environment, changes in the mix of the underlying investments and cash balances, and the timing of dividends and distributions on certain investments.
Investment related losses, net decreased $83.0 million, or 53.5%, for the three months ended March 31, 2009, as compared to the same period in 2008. The decrease in the first quarter is due to a reduced net loss on the embedded derivatives related to Issue B36 and guaranteed minimum living benefits of $149.6 million offset by an increase in investment impairments of $35.1 million and net hedging losses related to the liabilities associated with guaranteed minimum living benefits of $18.8 million. See the discussion of Investments in the Liquidity and Capital Resources section of Managements Discussion and Analysis for additional information on the impairment losses. Investment income and investment related gains and losses are allocated to the operating segments based upon average assets and related capital levels deemed appropriate to support the segment business volumes.
Read the The complete ReportRGA is in the portfolios of NWQ Managers of NWQ Investment Management Co, John Keeley of Keeley Fund Management.
Reinsurance Group of America Inc. is primarily engaged in life reinsurance and international life and disability insurance on a direct and reinsurance basis. In addition the company provides reinsurance of non-traditional business including asset-intensive products and financial reinsurance. Reinsurance Group of America Inc. has a market cap of $2.2 billion; its shares were traded at around $30.34 with a P/E ratio of 6.8 and P/S ratio of 0.4. The dividend yield of Reinsurance Group of America Inc. stocks is 3.6%. Reinsurance Group of America Inc. had an annual average earning growth of 13.2% over the past 10 years. GuruFocus rated Reinsurance Group of America Inc. the business predictability rank of 4-star.
Highlight of Business Operations:
Consolidated income from continuing operations before income taxes decreased $22.5 million, or 39.7%, in the first quarter of 2009, as compared to the same period in 2008. The decrease in the first quarter reflects an increase in investment related losses due to the recognition of investment impairments, adverse mortality experience and unfavorable foreign currency fluctuations. Offsetting these negative income items were increases in investment income, U.S. segment net premiums and a slight decrease in the unrealized loss due to unfavorable changes in the value of embedded derivatives within the U.S. segment. Foreign currency exchange fluctuations resulted in a decrease to income from continuing operations before income taxes of approximately $13.6 million for the first quarter of 2009 compared to 2008.funds withheld basis are subject to the provisions of Statement of Financial Accounting Standards (SFAS) No. 133 Implementation Issue No. B36, Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments (Issue B36). The unrealized gains and losses associated with Issue B36, after adjustment for deferred acquisition costs, had a favorable effect on income of $31.9 million in the first quarter of 2009 as compared to the first quarter of 2008. Changes in risk free rates used in the present value calculations of embedded derivatives associated with EIAs affect the amount of unrealized gains and losses the Company recognizes. The unrealized gains and losses associated with EIAs, after adjustment for deferred acquisition costs and retrocession, had a favorable effect on income of $16.5 million in the first quarter of 2009 as compared to the first quarter of 2008. The change in the Companys liability for variable annuities associated with guaranteed minimum living benefits affect the amount of unrealized gains and losses the Company recognizes. The unrealized gains and losses associated with guaranteed minimum living benefits, after adjustment for deferred acquisition costs, had an unfavorable effect on income of $42.8 million in the first quarter of 2009 as compared to the first quarter of 2008.
Consolidated net premiums increased $48.0 million, or 3.7%, for the three months ended March 31, 2009, as compared to the same period in 2008, due to growth in life reinsurance in force in the U.S. segment. Foreign currency fluctuations unfavorably affected net premiums by approximately $144.7 million for the first quarter of 2009 compared to 2008. Consolidated assumed insurance in force decreased slightly to $2.1 trillion as of March 31, 2009 from $2.2 trillion as of March 31, 2008 due to unfavorable currency fluctuations. The Company added new business production, measured by face amount of insurance in force, of $85.2 billion and $76.4 billion during the first quarter of 2009 and 2008, respectively. Management believes industry consolidation, reduced capital levels in the life insurance industry and the established practice of reinsuring mortality risks should continue to provide opportunities for growth, albeit at rates less than historically experienced.
Consolidated investment income, net of related expenses, increased $23.7 million, or 11.9%, for the three months ended March 31, 2009, as compared to the same period in 2008, primarily due to market value changes related to the Companys funds withheld at interest investment related to the reinsurance of certain equity-indexed annuity products, which are substantially offset by a corresponding change in interest credited to policyholder account balances resulting in a negligible effect on net income. The first quarter increase in investment income also reflects a larger average invested asset base offset by a lower effective investment portfolio yield. Average invested assets at amortized cost for the first quarter of 2009 totaled $12.8 billion, a 10.7% increase over March 31, 2008. The average yield earned on investments, excluding funds withheld, was 5.57% in the first quarter of 2009 and 6.06% for the first quarter of 2008. The average yield will vary from quarter to quarter and year to year depending on a number of variables, including the prevailing interest rate and credit spread environment, changes in the mix of the underlying investments and cash balances, and the timing of dividends and distributions on certain investments.
Investment related losses, net decreased $83.0 million, or 53.5%, for the three months ended March 31, 2009, as compared to the same period in 2008. The decrease in the first quarter is due to a reduced net loss on the embedded derivatives related to Issue B36 and guaranteed minimum living benefits of $149.6 million offset by an increase in investment impairments of $35.1 million and net hedging losses related to the liabilities associated with guaranteed minimum living benefits of $18.8 million. See the discussion of Investments in the Liquidity and Capital Resources section of Managements Discussion and Analysis for additional information on the impairment losses. Investment income and investment related gains and losses are allocated to the operating segments based upon average assets and related capital levels deemed appropriate to support the segment business volumes.
Read the The complete ReportRGA is in the portfolios of NWQ Managers of NWQ Investment Management Co, John Keeley of Keeley Fund Management.
