Q2 2026 Reinsurance Group of America, Incorporated Earnings Call Transcript
Key Points
- Record operating quarter with pretax adjusted operating income of $761 million and EPS of $8.89, driven by strong investment returns and favorable claims.
- New business momentum is healthy across all regions, with year-to-date capital deployment of nearly $500 million into in-force transactions that meet or exceed return targets.
- Investment portfolio performing well, with new money yield of 6.2% above portfolio yield of 4.96%, and variable investment income returns of 15% annualized for the quarter, well above the 7% target.
- Strong capital position with $2.2 billion in excess capital, a 5.4% dividend increase, and continued share repurchases, supporting a 20%-30% payout ratio target.
- Strategic underwriting programs in the US are on track to double volumes, driving exclusive reinsurance opportunities and enhancing long-term value.
- In-force management actions have reduced exposure to capped cohorts by 25% since LDTI adoption, lowering earnings volatility and improving business profile.
- Traditional premium growth was modest at 2.2% (0.9% constant currency), impacted by in-force management actions, which may signal slower organic growth.
- Earnings benefited from $71 million in onetime items, which are not indicative of trends and may not recur, potentially overstating the quarter's run rate.
- Excess capital remained flat quarter-over-quarter at $2.2 billion, with no significant increase despite strong earnings, due to capital deployment and shareholder returns.
- The company faces uncertainty from potential regulatory changes in Hong Kong (e.g., tax law changes affecting MCV business), which could impact future growth in the APAC region.
- Asset leverage has increased due to growth in asset-intensive business, which may raise concerns about balance sheet risk, though management notes a high percentage of deals have biometric liabilities.
- The company remains cautious on ULSG and LTC risks, with a narrow appetite and higher hurdle returns, limiting opportunities in these lines.
Welcome to the RGA's second quarter 2026 earnings conference call. (Operator Instructions) Please note, this event is being recorded. If you have any objections, you may disconnect at this time. Some of the comments made during this conference call, including answers given in response to questions, may constitute forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
For more detail on the risks and uncertainties, please refer to the risk factors discussed in RGA's periodic reports to the SEC. For a reconciliation of the non-GAAP measures discussed on this call as well as other information regarding these measures, please refer to the earnings release and other materials in the Investor Relations section of the company's website. There will be references to the earnings presentation slides throughout the call.
I will now turn the floor over to Tony for his opening remarks. Please go ahead.
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