RZC — 7.125% Fixed-Rate Reset Subordinated Debentures due 2052

Summary of RGA's 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.
• Adjusted Operating Return on Equity (ROE): 15.7% for the trailing 12 months, exceeding the target range of 13% to 15%.
• Pretax Adjusted Operating Income: $515 million for Q4.
• Capital Deployment: $2.5 billion in in-force transactions for the full year, with $98 million in Q4.
• Excess Capital: $2.7 billion at the end of Q4, with $3.4 billion in deployable capital for the next 12 months.
• Share Repurchases: $50 million in Q4, totaling $125 million since reinstating buybacks in Q3 2025.

2. Strategic Updates and Business Highlights

• Regional Performance: Strong results across the U.S., EMEA, and APAC regions, driven by management actions and favorable underwriting experiences.
• Balance Sheet Optimization: Continued focus on in-force management actions, contributing positively to earnings and risk profiles.
• New Business Contributions: The Equitable block performed in line with expectations, contributing significantly to earnings.
• Long-term Growth: Increased value of in-force business margins by 18% in 2025, reflecting successful management actions and new business.

3. Forward Guidance and Outlook

• 2026 Expectations:
  • Anticipated operating EPS run rate of approximately $24.75.
  • Continued commitment to 8% to 10% annual EPS growth and 13% to 15% ROE targets.
  • Projected capital deployment of around $1.5 billion into in-force transactions.
  • Expected tax rate of 22% to 23% for 2026.
• Investment Income: Anticipated variable investment income return of 7% for 2026, slightly above 2025's 6%.

4. Bad News, Challenges, or Points of Concern

• U.S. Group Health Business: Experienced unfavorable claims experience, particularly in the excess medical business, leading to a decision to exit this line after 2026. The business generates approximately $400 million in annual premium with $25 million in typical pretax earnings.
• Economic Claims Experience: Reported unfavorable claims experience of $51 million in Q4, primarily from the U.S. group business.
• Market Competition: Increased competition in the Japanese market from alternative asset managers, although RGA remains focused on transactions with both asset and biometric risks.

5. Notable Q&A Insights

• Capital Allocation: Management reiterated a balanced approach to capital deployment, maintaining a 20% to 30% payout ratio while remaining flexible to capitalize on attractive opportunities.
• Long-term Care (LTC) Business: Management expressed satisfaction with LTC performance, emphasizing a selective approach to new LTC business aligned with risk appetite.
• Equitable Block Performance: Management clarified that the Equitable transaction's earnings were consistent with guidance, highlighting differences in reserving assumptions between RGA and Equitable.
• Regulatory Changes in Europe: Management noted that changes in Solvency II regulations could create opportunities, but they have not observed significant competitive pressures from multiline reinsurers.

This summary encapsulates the key financial metrics, strategic initiatives, future outlook, challenges faced, and insights from the Q&A session, providing a comprehensive overview of RGA's performance and direction.