Reinsurance News

RGA saw premiums grow 4.3% in Q2 2022 despite net income fall

5th August 2022 - Author: Kassandra Jimenez-Sanchez

Global provider of life reinsurance, Reinsurance Group of America (RGA) reported a growth in premiums of 4.3% over last year’s second quarter despite a fall in its net income.

Reinsurance Group of America logoAdditionally, COVID-19 claim costs came down considerably in Q2 2022. RGA reported that the global estimated impact of COVID-19 would be approximately $11mn on a pre-tax basis.

The firm’s net premiums totalled $3.2bn, compared to the $3.09bn reported in Q2 2021.

Yet its net income fell from $344mn in Q2 2021 to $198 in the same quarter this year, with an adverse net foreign currency effect of $119mn.

The reinsurer said that, compared with the year-ago period, excluding spread-based businesses and the value of associated derivatives, investment income in Q2 2022 increased 3.7%, reflecting a higher average asset balance.

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Average investment yield was flat at 4.63% compared with 4.64% in last year’s second quarter; and the effective tax rate for the quarter was 22.1% on pre-tax income.

The US and Latin America segment net premiums went up, to $1.63bn from $1.57bn in Q2 2021, as well as pre-tax income, which went up to $209mn, from $135mn in Q2 2021.

According to RGA, these quarterly results reflected favourable individual mortality experience.

In addition, non-COVID-19 individual mortality experience was favourable, both large and non-large claims. COVID-19 claim costs were a net positive of $9mn, including IBNR adjustments.

Net premiums for the Canada segment went up as well, to $314mn from $301mn in Q2 2021, yet pre-tax income went down to $16mn this second quarter, compared to the $32mn reported in the same period last year.

These quarterly results reflected unfavourable individual life mortality experience driven by large claims and COVID-19 claim costs of $4mn.

For the Europe, Middle East and Africa (EMEA) segment net premiums went up to $427mn, from $433 in the prior second quarter, and reported a pre-tax income of $2mn, an improvement compared to the $12mn in loss reported in Q2 2021.

Quarterly results reflected unfavourable UK mortality experience and $5mn of COVID-19 claim costs, partially offset by favourable results in other markets, according to RGA.

Asia Pacific segment net premiums went up to $640mn from $616mn in Q2 2021, as well as pre-tax income, which was up to $58mn, recovering from a loss of $12mn in last year’s second quarter.

These results, said RGA, reflected favourable underwriting experience, absorbing $7mn of COVID-19 claim costs. Though, Australia reported a small loss for the quarter, driven by COVID-19 claim costs.

The Corporate and Other segment saw a loss in net premiums of $63mn compared to an income of $35mn in Q2 2021. As well as pre-tax income, which saw a $5mn loss, smaller compared to the $39mn reported last year.

According to RGA, the second quarter pre-tax adjusted operating loss was favourable as compared to the quarterly average run rate, primarily due to higher net investment income, including limited partnership income.

Anna Manning, President and Chief Executive Officer, commented: “This was a record level of earnings for us, and importantly it included strong contributions from many of our business segments.

“In addition, growth in organic new business was good and we had another active quarter for capital deployment into in-force and other transactions. COVID-19 claim costs came down substantially this quarter, and our underlying non-COVID-19 mortality was favourable in many markets.

“On the capital front, we deployed $121mn into in-force and other transactions, and increased our quarterly dividend 9.6% to $0.80 per share. Our balance sheet remains strong, and we ended the quarter with excess capital of approximately $1.0bn.

“This quarter continues to demonstrate that our global platform can perform well in a range of economic environments.”

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