Reinsurance News

RGA announces higher income in 2021 as COVID-19 claims subside

4th August 2021 - Author: Luke Gallin

Global life reinsurance carrier, Reinsurance Group of America, Incorporated (RGA), has reported a higher net income, year-on-year, for both the second quarter and first half of the year, while premiums increased by 11% to $3.1 billion.

Reinsurance Group of America logoOverall, RGA has announced net income of $344 million for Q2 2021, compared with $158 million a year earlier, as adjusted operating income climbed from $87 million to $274 million.

Year-to-date, RGA has reported net income of $483 million in Q2 2021 against $70 million in Q1 2020, while adjusted operating income for H1 also improved year-on-year, from $176 million to $190 million.

In Q2 2021, consolidated net premiums increased by 11% and included a favourable net foreign currency effect of $124 million.

The COVID-19 pandemic continued to have an impact on RGA during the second quarter, driving estimated impacts of approximately $130 million.

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RGA explains that this estimate includes mortality and morbidity claims of around $168 million, with offsetting impacts from longevity of approximately $38 million.

“We are very pleased with the Company’s strong performance in the second quarter, as the earnings contribution was broad-based by geography and lines of business, the impact of COVID-19 was significantly reduced, and our investment results were very favorable. Notably, our U.S. Traditional segment had a very good quarter, and our GFS business performed extremely well across all our regions and lines of business. Reported premium growth was very good, organic growth was solid, and new business momentum has picked up and is encouraging. We deployed approximately $200 million of capital into in-force transactions, and the pipeline is active,” said Anna Manning, President and Chief Executive Officer (CEO) of RGA.

“Our balance sheet remains strong, and we ended the quarter with excess capital of approximately $1.2 billion. We expect our results to continue to reflect some additional COVID-19 claims, but at manageable and decreasing levels. We expect our underlying earnings power to be sustained and to continue to deliver attractive financial results over time.”

The life reinsurer’s COVID-19 impact has fallen from the $474 million witnessed in Q1 2021 and also the $300 million of pandemic claims witnessed a year earlier.

In the firm’s U.S. and Latin America business segment, COVID-19 claims totalled $57 million. This part of the business has recorded net income of $135 million in Q2 2021 against a net loss of $158 million a year earlier. While net premiums grew from $1.45 billion to $1.58 billion.

In Canada, COVID-19 claims amounted to approximately $21 million, while the non-COVID experience was favourable for RGA in Q2 2021. Pre-tax income in RGA’s Canada business fell slightly year-on-year, from $44 million in Q2 2020 to $32 million this year. While net premiums increased from $254 million to $301 million.

In Europe, Middle East and Africa (EMEA), RGA has announced an estimated COVID-19 impact of roughly $35 million, primarily from the UK and South Africa. This segment fell to a loss of $12 million in Q2 2021 against a profit of $16 million a year earlier, while net premiums increased to $433 million.

In Asia Pacific, RGA witnessed COVID-19 claims of an estimated $55 million in Q2 2021, of which $51 million was from India. This segment has reported a loss of $12 million for Q2 2021 against a gain of $47 million a year earlier, while net premiums increased slightly to $616 million.

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