RZB — Reinsurance Group of America, Incorporated

Summary of RZB Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Operating EPS: Reported at $7.75 per share, marking a record for the second consecutive quarter.
• Return on Equity (ROE): Adjusted operating ROE for the trailing 12 months was 15.7%, exceeding the target range of 13% to 15%.
• Full Year Performance: Record operating EPS and 15.7% ROE for 2025, with an 18% increase in the value of in-force business margins.
• Capital Deployment: $2.5 billion deployed into in-force transactions for the year, with $98 million in Q4 alone. Share repurchases totaled $125 million since reinstating buybacks.
• Excess Capital: $2.7 billion in excess capital at the end of Q4, with $3.4 billion in deployable capital for the next 12 months.

2. Strategic Updates and Business Highlights

• Regional Performance: Strong results across all regions:
  • U.S.: Benefited from management actions and variable investment income; individual life mortality met expectations.
  • EMEA: Strong volume growth and favorable experience.
  • APAC: Continued growth momentum and successful in-force actions.
• Balance Sheet Optimization: Continued benefits from management actions, enhancing current earnings and improving liability risk profiles.
• New Business Contributions: Ongoing positive contributions from recent new business, particularly the Equitable block.
• Exit from Group Health Care: Following a strategic review, RGA will exit the group health care lines of business after 2026.

3. Forward Guidance and Outlook

• 2026 Expectations:
  • Anticipated tax rate between 22% to 23%.
  • Projecting $1.5 billion in capital deployment into in-force transactions.
  • Forecasting total shareholder return of capital to be between 20% to 30% of after-tax operating earnings.
  • Maintaining intermediate-term targets of 8% to 10% annual EPS growth and 13% to 15% ROE.
• Run Rate EPS for 2025: Estimated at approximately $24.75 per share, excluding in-force management actions.

4. Bad News, Challenges, or Points of Concern

• Biometric Claims Experience: Economic claims experience was unfavorable by $51 million in Q4, primarily from the U.S. group business, which has been a consistent challenge.
• Group Health Care Business: The decision to exit this segment indicates underlying issues, with only $25 million in pretax earnings expected from a $400 million annual premium business.
• Market Competition: Increased competition in the Japanese market from alternative asset managers could pressure pricing, although RGA remains focused on transactions with both asset and biometric risks.

5. Notable Q&A Insights

• Capital Allocation: Management confirmed the ongoing commitment to a balanced approach between capital deployment and shareholder returns, maintaining a payout ratio of 20% to 30%.
• Equitable Block Performance: RGA expects continued strong earnings from the Equitable transaction, with anticipated earnings of $160 million to $170 million in 2026.
• Long-Term Care (LTC) Business: Management expressed satisfaction with LTC performance but did not disclose specific ROE figures.
• Investment Portfolio: RGA has minimal exposure to software-related companies and is actively managing the portfolio in light of evolving market trends, including AI.

Overall, RGA reported strong financial results for Q4 2025, supported by strategic initiatives and a diversified global platform, while also addressing challenges in specific business segments and market conditions.