Reinsurance Group of America (RGA) has reported net income of $110.0 million for the fourth quarter of 2018, representing a significant drop from the $1.217 billion reported for the same period in 2017.
This difference is largely attributable to the Tax Cuts and Jobs Act of 2017, which benefited RGA’s Q4 2017 net income by approximately $1.0 billion, although Q4 2018 earnings still almost halved even when discounting this factor.
In contrast, RGA’s adjusted operating income totalled $221.8 million in Q4 2018, up from $170.9 million in Q4 2017.
The company explained that the difference between net income and adjusted operating income in the quarter reflects “realized and unrealized investment losses and changes in the fair value of certain embedded derivatives and related deferred acquisition costs.”
In terms of full-year results, RGA’s net income was $715.8 million in 2018, down from $1.822 billion in 2017, while adjusted operating income increased to $789.0 million from $712.7 million the year before.
Net premiums increased by 12% from $2.5 billion in Q4 2017 to $2.8 billion in Q4 2018, and by 7% from $9.8 billion for full-year 2017 to $10.5 billion over 2018.
RGA’s investment income also grew by 5% in Q4 2018 when compared to the prior year quarter, while its total assets increased from $60.5 billion to $64.6 billion.
Anna Manning, President and Chief Executive Officer (CEO) of RGA, commented on the results: “On balance, this was a solid quarter, as we continued to benefit from earnings diversity that comes with our global operating platform, with strong results in EMEA, Asia and Canada, offsetting moderate weakness in the U.S. Traditional segment and Australia. Premiums were up a healthy 12 percent, and we had another quarter of significant capital deployment.
“The full year featured numerous highlights, including continued strong operating results from our operations in EMEA and Asia, good overall organic growth and a high level of capital deployment.”
“Our strong capital position has allowed us to pursue and execute attractive in-force transactions and manage capital effectively through active share repurchases,” she added. “For the year, we deployed approximately $440 million toward in-force transactions, including approximately $160 million in the fourth quarter.
“We also repurchased $284 million of common shares in 2018, including $25 million in the fourth quarter. Our Board approved a new authorization of $400 million, replacing the previous authorization. We ended the year with an excess capital position of approximately $1.0 billion.”
Manning continued: “Looking forward, we remain optimistic about the future and our business prospects, and ability to deliver attractive financial returns. RGA is well positioned in its markets, we have a proven strategy and a long track record of successful execution.
“We anticipate ongoing change in the life insurance industry, and RGA expects to continue to innovate and add to its capabilities in order to help our clients successfully address these industry challenges and opportunities.”
