Reinsurance Group of America (RGA) has reported net income of $301.2 million for the third-quarter of 2018, up considerably from the $227.6 million reported in the prior year period.
During the quarter RGA has been working hard to deploy more of the excess capital it has built up over recent years and the company is beginning to find new transaction opportunities in its life reinsurance business.
During Q3 RGA underwrote net premiums amounting to $2.6 billion, up 3% from the prior year quarter’s $2.5 billion.
Commenting on the quarter, Anna Manning, President and Chief Executive Officer, said, “This was a very strong quarter for us, with this quarter’s performance offsetting some softness in the first two quarters of the year. I want to reiterate a few key points that this quarterʼs results reinforce.
“First, our global operating platform, which is diversified by both geography and product, continues to serve us well. Second, the nature of our business is such that we expect short-term volatility by segment, but we expect this volatility to even out over longer periods of time. Finally, we continue to use a balanced approach to effectively manage our capital over time, and this quarterʼs deployment and share repurchases demonstrate our discipline toward this end.”
The RGA life reinsurance businesses in Asia Pacific and EMEA drove most of the profit increase for the quarter, while U.S. and Latin American business was hit by unfavourable mortality experience across the group book and the Australian business was hit by a loss.
Manning explained, “Highlights for the quarter include a strong result for our U.S. Individual Mortality business due to very favorable mortality experience and strong performances from EMEA and Asia. Strength in these areas more than offset the unfavorable experience in the U.S. Group business and in Australia.”
Importantly though, RGA managed to put some of its dry powder to work during the quarter, the firm has been building excess capital from its profits and finding that the market often lacks attractive opportunities to put it to work.
“We deployed $190 million of our excess capital into in-force and other transactions, and we repurchased $109 million of shares, bringing year-to-date deployment and repurchases to $280 million and $259 million, respectively. We ended the quarter with an excess capital position of approximately $1.1 billion, down from the previous quarter,” Manning reported.