Form 10-K: Reinsurance Group of America, Incorporated and Subsidiaries

Overview

RGA is one of the leading global providers of life reinsurance and financial solutions. The company has $3.9 trillion of life reinsurance in force and $118.7 billion in assets as of December 31, 2024. RGA’s main business lines include traditional reinsurance of life, health, and disability insurance, as well as financial solutions like longevity reinsurance, asset-intensive reinsurance, pension risk transfer, and financial reinsurance.

RGA has operations around the world, including in Canada, Asia Pacific, Europe, the Middle East, Africa, and Latin America. Based on industry data, RGA believes it is the largest global life and health reinsurer by revenue. The company has also developed expertise in reinsuring longevity risk and asset-intensive products like annuities.

RGA’s long-term profitability depends on managing mortality, morbidity, and longevity risks, as well as generating investment income and fees from its financial solutions business. While death claims are relatively predictable over the long-term, they can fluctuate significantly in the short-term. Longevity risk profitability depends on the lifespan of underlying contract holders and investment performance.

Segment Performance

RGA has geographic-based and business-based operational segments. The geographic segments are U.S. and Latin America, Canada, Europe/Middle East/Africa (EMEA), and Asia Pacific. The business segments are Traditional reinsurance and Financial Solutions.

In 2024, the U.S. and Latin America segment saw an increase in adjusted operating income, driven by favorable in-force management actions and new business, partially offset by lower contributions from Financial Solutions. The Canada segment had higher adjusted operating income due to favorable experience in the Traditional business, while the EMEA segment saw an increase from higher premiums and investment income. The Asia Pacific segment had a decrease in adjusted operating income due to unfavorable assumption updates.

Industry Trends

RGA believes several trends will continue to drive demand for reinsurance, including:

• Increasing cession rates as insurers look to manage risk and capital
• Growing insured populations due to aging demographics and middle-class expansion
• Regulatory, accounting, and economic changes creating demand for risk management solutions
• Consolidation and reorganization in the life insurance industry

To capitalize on these trends, RGA is focused on leading with expertise and innovation, deepening client relationships, prioritizing high-growth opportunities, and building a responsible, diverse, and talented workforce.

Critical Accounting Estimates

RGA’s critical accounting estimates include:

• Premiums receivable - Estimating premiums due from ceding companies based on contract terms and historical experience.
• Liabilities for future policy benefits - Projecting mortality, morbidity, and persistency to estimate reserves, using discount rates based on current yields.
• Market risk benefits and embedded derivatives - Valuing variable annuity guarantees and other embedded derivatives using option-based models.
• Investments and impairments - Determining fair values, allowances for credit losses, and impairments for the investment portfolio.
• Income taxes - Estimating deferred tax assets and liabilities, including valuation allowances.

Differences between actual experience and the assumptions used can have a material effect on RGA’s results.

Consolidated Results

RGA’s consolidated income before income taxes decreased from $1,160 million in 2023 to $980 million in 2024. The decrease was primarily due to:

• Higher future policy benefits remeasurement losses in 2024 from assumption updates, partially offset by gains in 2023
• A non-economic loss on a pension risk transfer transaction in 2024
• Increased investment-related losses from portfolio repositioning and changes in derivative fair values

These were partially offset by higher net investment income from an increased asset base and higher yields.

RGA’s adjusted operating income, which excludes investment and derivative gains/losses and other non-operating items, increased from $1,699 million in 2023 to $1,752 million in 2024. The increase was driven by higher net premiums and net investment income, partially offset by higher claims and operating expenses.

Segment Results

U.S. and Latin America:

• Traditional segment saw an increase in adjusted operating income from favorable in-force management actions and new business
• Financial Solutions segment had a decrease due to lower contributions from new business and runoff of in-force

Canada:

• Traditional segment had higher adjusted operating income from favorable experience and future policy remeasurement gains
• Financial Solutions segment saw a decrease from lower future policy remeasurement gains

EMEA:

• Traditional segment increased from improved mortality experience and higher premiums
• Financial Solutions segment decreased due to future policy remeasurement losses compared to gains in 2023

Asia Pacific:

• Traditional segment declined from unfavorable assumption updates
• Financial Solutions segment increased from new business growth and higher investment income

Liquidity and Capital Resources

RGA believes its cash flows and available liquidity sources, including committed credit facilities, are sufficient to meet its liquidity needs. The company has a balanced capital structure and continues to have strong credit ratings.

RGA’s holding company primary uses of liquidity include funding operating subsidiaries, dividends, share repurchases, and debt service. Sources include investment income, dividends from subsidiaries, and proceeds from capital-raising.

RGA’s insurance subsidiaries are subject to regulatory restrictions on the payment of dividends, generally limited to the greater of the prior year’s statutory net gain from operations or 10% of statutory surplus. Dividend payments from non-U.S. operations are also subject to local regulatory restrictions.

As of December 31, 2024, RGA had $5.1 billion in outstanding debt and was in compliance with all debt covenants. The company issued $650 million of new senior notes in 2024 and entered a $850 million revolving credit facility in 2023.

RGA continues to execute on its capital deployment strategy, including share repurchases and dividends to shareholders, while also evaluating opportunities for acquisitions and in-force transactions.

Conclusion

RGA remains a leading global life and health reinsurer, leveraging its expertise and innovation to capitalize on favorable industry trends. While the company faced some headwinds in 2024 that impacted profitability, its diversified business model, strong liquidity, and prudent capital management position it well for the future. RGA is focused on delivering value to clients, shareholders, and other stakeholders through disciplined execution of its strategic priorities.