RGA — Reinsurance Group of America, Incorporated

RGA Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Operating EPS: $7.75 per share, marking a record for the second consecutive quarter.
• Adjusted Operating ROE: 15.7% for the trailing 12 months, exceeding the target range of 13% to 15%.
• Pretax Adjusted Operating Income: $515 million for the quarter.
• Capital Deployment: $2.5 billion into in-force transactions for the full year, with $98 million in Q4.
• Excess Capital: $2.7 billion at the end of the quarter, with deployable capital estimated at $3.4 billion.
• Share Repurchases: $50 million in Q4, totaling $125 million since reinstating buybacks.

2. Strategic Updates and Business Highlights:

• Strong performance across regions: U.S. showed favorable results driven by management actions and variable investment income; EMEA saw 35% growth in pretax earnings; APAC continued to gain momentum.
• Balance sheet optimization strategy contributed positively to earnings and ROE.
• Successful integration of the Equitable block, expected to generate $160 million to $170 million in earnings in 2026.
• Decision to exit the U.S. group health care lines after 2026 due to strategic review, with significant rate increases implemented.

3. Forward Guidance and Outlook:

• 2026 Expectations:
  • Anticipated EPS growth of 8% to 10%.
  • Projected variable investment income return of 7%, slightly above 2025's 6%.
  • Base case for run rate EPS in 2025 set at $24.75.
  • Expectation of $1.5 billion capital deployment into in-force transactions.
  • Continued focus on returning capital to shareholders, targeting a total payout ratio of 20% to 30%.

4. Bad News, Challenges, or Points of Concern:

• Claims Experience: Unfavorable economic claims experience of $51 million in Q4, primarily from the U.S. group business, which is expected to improve in 2026 after repricing.
• Market Competition: Increased competition in the Japanese market from alternative asset managers, although RGA remains focused on transactions with both asset and biometric risks.
• In-force Management Actions: Anticipated to have a more limited financial impact in 2026 compared to recent years, creating uncertainty in earnings contributions.

5. Notable Q&A Insights:

• Capital Allocation: Management reiterated their balanced approach to capital deployment, maintaining flexibility while pursuing attractive opportunities.
• Long-term Care (LTC) and ULSG Exposure: RGA remains selective in these areas, with a focus on maintaining a low percentage of these liabilities on their balance sheet.
• Equitable Block Performance: Differences in mortality experience between RGA and Equitable were discussed, with RGA benefiting from repricing and operational efficiencies.
• Japan Market Dynamics: RGA is optimistic about opportunities in Japan despite macroeconomic volatility, leveraging strong local relationships and expertise.

Overall, RGA reported strong financial performance in Q4 2025, with a positive outlook for 2026, although challenges in claims experience and competitive pressures were acknowledged. The company remains committed to strategic growth and shareholder value.