REINSURANCE GROUP OF AMERICA INC

Previous wording

Forward-looking statements should be evaluated together with the many risks and uncertainties that affect the Company’s business, including those mentioned in this document and described in the periodic reports the Company files with the SEC. These forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update these forward-looking statements, even though the Company’s situation may change in the future. For a discussion of these risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to see Item 1A – “Risk Factors” in the 2023 Annual Report, as may be supplemented by Item 1A – “Risk Factors” in the Company’s subsequent Quarterly Reports on Form 10-Q.

Current wording

Forward-looking statements should be evaluated together with the many risks and uncertainties that affect the Company’s business, including those mentioned in this document and described in the periodic reports the Company files with the SEC. These forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update these forward-looking statements, even though the Company’s situation may change in the future, except as required under applicable securities law. For a discussion of the risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to see Item 1A – “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as may be supplemented by Item 1A – “Risk Factors” in the Company’s subsequent Quarterly Reports on Form 10-Q and in our other periodic and current reports filed with the SEC.

Previous wording

The Company is among the leading global providers of life reinsurance and financial solutions, with $3.7 trillion of life reinsurance in force and assets of $106.0 billion as of March 31, 2024. Traditional reinsurance includes individual and group life and health, disability and critical illness reinsurance. Financial Solutions includes longevity reinsurance, asset-intensive reinsurance, capital solutions, including financial reinsurance and stable value products. The Company derives revenues primarily from renewal premiums from existing reinsurance treaties, new business premiums from existing or new reinsurance treaties, fee income from Financial Solutions business and income earned on invested assets.

Current wording

The Company is among the leading global providers of life reinsurance and financial solutions, with $3.8 trillion of life reinsurance in force and assets of $109.9 billion as of June 30, 2024. Traditional reinsurance includes individual and group life and health, disability, and critical illness reinsurance. Financial Solutions includes longevity reinsurance, asset-intensive reinsurance, capital solutions, including financial reinsurance and stable value products. The Company derives revenues primarily from renewal premiums from existing reinsurance treaties, new business premiums from existing or new reinsurance treaties, fee income from Financial Solutions business and income earned on invested assets.

Previous wording

•An increase in investment related losses resulting from portfolio repositioning and an increase in losses on freestanding derivatives.

Current wording

•An increase in investment related losses resulting from portfolio repositioning and an increase in losses on freestanding derivatives, primarily related to foreign currency and interest rate derivatives.

Previous wording

•The increases in claims and other policy benefits and investment related losses were partially offset by an increase in net investment income attributable to an increase in average asset base and higher interest rates on new investments.

Current wording

•The increases in claims and other policy benefits and investment related losses were partially offset by an increase in net investment income attributable to an increase in average asset base and higher interest rates on new investments, favorable impacts of in force management actions and higher surrender charges and market value adjustments related to higher lapses on a single premium annuity block of business.

Previous wording

The decrease in income for the three months ended March 31, 2024, was primarily the result of:

Current wording

The decrease in income for the six months ended June 30, 2024, was primarily the result of:

Previous wording

•Unfavorable results in the U.S. Financial Solutions business as a result of a non-economic loss recognized at the inception of a single premium pension risk transfer (“PRT”) transaction completed in the quarter. The non-economic loss at inception is the difference between the single premium received and the valuation of the initial reserve based on interest rates prescribed by U.S. GAAP.

Current wording

•Unfavorable results in the U.S. Financial Solutions business as a result of a non-economic loss recognized at the inception of a single premium pension risk transfer (“PRT”) transaction completed in first quarter of 2024. The non-economic loss at inception is the difference between the single premium received and the valuation of the initial reserve based on interest rates prescribed by U.S. GAAP.

Previous wording

Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency exchange fluctuation increased income before taxes for the three months ended March 31, 2024, by $6 million primarily due to the strengthening of the Great British Pound and weakening of the Japanese Yen compared to the U.S. dollar. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.

Current wording

Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency exchange fluctuations increased income before taxes for the three and six months ended June 30, 2024, by $5 million and $11 million, respectively, primarily due to the weakening of the Japanese Yen compared to the U.S. dollar. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.

Previous wording

The increase in premiums was primarily due to a single premium PRT transaction completed in the U.S. during the first quarter of 2024. The PRT single premium was offset by an increase in reserves. The remaining increase in premiums was attributable to organic growth on existing treaties and new business production, measured by the face amount of life reinsurance in force, of $109.1 billion and $80.6 billion during the three months ended March 31, 2024 and 2023, respectively. The increase in premiums was partially offset by unfavorable foreign currency fluctuations of $12 million. Consolidated assumed life reinsurance in force increased to $3,729.8 billion as of March 31, 2024, from $3,426.7 billion as of March 31, 2023, due to new business production and a decrease in lapses and mortality claims, partially offset by unfavorable foreign currency fluctuations.

Current wording

The increase in premiums for the three and six months ended June 30, 2024, was primarily due to single premium pension risk transfer (“PRT”) transactions. The PRT single premiums received were offset by an increase in reserves. The remaining increase in premiums for the three and six months ended June 30, 2024, was attributable to organic growth on existing treaties and new business production, measured by the face amount of life reinsurance in force, of $198.7 billion and $168.8 billion during the six months ended June 30, 2024 and 2023, respectively. Consolidated assumed life reinsurance in force increased to $3,767.7 billion as of June 30, 2024, from $3,479.6 billion as of June 30, 2023, primarily due to new business production.

Previous wording

The increase in net investment income was primarily attributable to an increase in the average invested asset base and higher risk-free rates earned on new investments, partially offset by a decrease in variable investment income associated with joint venture and limited partnership investments:

Current wording

The increase in net investment income was primarily attributable to an increase in the average invested asset base and interest rates earned on new investments, partially offset by a decrease in variable investment income associated with joint venture and limited partnership investments:

Previous wording

•The average invested assets at amortized cost, excluding spread related business, totaled $38.5 billion and $35.9 billion in 2024 and 2023, respectively.

Current wording

•The average invested assets at amortized cost, excluding spread related business, totaled $38.1 billion and $35.8 billion in 2024 and 2023, respectively.

Previous wording

•The average yield earned on investments, excluding spread related business, was 4.70% and 4.71% for the three-month periods ended March 31, 2024 and 2023, respectively.

Current wording

•The average yield earned on investments, excluding spread related business, was 4.65% and 4.42% for the three month periods ended June 30, 2024 and 2023, respectively, and 4.67% and 4.56% for the six months ended June 30, 2024 and 2023, respectively. The increase in yield for the three and six months ended June 30, 2024, compared to the prior year was attributable to higher new money rates.

Previous wording

The increase in investment related losses, net is primarily attributable to the following:

Current wording

The increase in investment related losses, net was primarily attributable to the following:

Previous wording

•The Company uses various derivative instruments such as interest rate swaps, credit default swaps and foreign exchange forwards for risk management purposes that either do not qualify or have not been elected for hedge accounting treatment. Changes in the fair value of these instruments are included in investment related gains (losses), net. During the three months period ended March 31, 2024, the fair value of these instruments decreased by $99 million, compared to a decrease of $31 million during the first three months of 2023. See Note 11 – “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

•The Company uses various derivative instruments such as interest rate swaps, credit default swaps and foreign exchange forwards for risk management purposes that either do not qualify or have not been elected for hedge accounting treatment. Changes in the fair value of these instruments are included in investment related gains (losses), net. During the three and six months ended June 30, 2024, the fair value of these instruments decreased by $119 million and $218 million, respectively, compared to decreases of $93 million and $124 million during the first three and six months of 2023. See Note 11 – “Derivative Instruments” for additional information.

Previous wording

◦During the three months ended March 31, 2024, the Company incurred $20 million of impairments and change in allowance for credit losses on fixed maturity securities compared to $43 million during the first three months of 2023.

Current wording

•During the three and six months ended June 30, 2024, the Company incurred $17 million and $37 million of impairments and change in allowance for credit losses on fixed maturity securities compared to $(4) million and $39 million during the three and six months of 2023.

Previous wording

•The decreases in investment related losses were partially offset by the following:

Current wording

•The increases in investment related losses were partially offset by the following:

Previous wording

◦Changes in the fair value of embedded derivatives, associated with modco/funds withheld treaties, decreased investment related losses, net by $77 million for the three month period ended March 31 2024, compared to a decrease of $37 million for the three month period ended March 31, 2023.

Current wording

◦Changes in the fair value of embedded derivatives associated with modco/funds withheld treaties decreased investment related losses by $26 million and $103 million for the three and six months ended June 30, 2024, respectively, compared to $(20) million and $17 million for the three and six months ended June 30, 2023, respectively.

Previous wording

The effective tax rate was 22.0% and 28.0% for the three months ended March 31, 2024 and 2023, respectively. See Note 13 – “Income Tax” for additional information on the Company’s consolidated effective tax rate.

Current wording

The effective tax rate was 24.3% and 23.1% for the three and six months ended June 30, 2024, respectively, compared to 21.7% and 25.2% for the three and six months ended June 30, 2023. See Note 13 – “Income Tax” for additional information on the Company’s consolidated effective tax rate.

Previous wording

The decrease in income before income taxes was primarily due to the net impact of certain derivatives, market risk benefits and non-economic change in insurance liabilities in Financial Solutions. The non-economic change in insurance liabilities was primarily related to the initial loss recognized at the inception of a single premium PRT transaction completed in the quarter. The non-economic loss at inception is the difference between the single premium received and the valuation of the initial reserve based on interest rates prescribed by U.S. GAAP.

Current wording

The increase in income before income taxes for the second quarter was primarily due to favorable impacts of in-force management actions in the Traditional segment and higher net investment income. The increase in income before income taxes for the first six months of 2024 was primarily due to favorable impacts of in-force management actions in the Traditional segment and favorable net investment income, partially offset by the net impact of certain derivatives, market risk benefits and non-economic change in insurance liabilities in the Financial Solutions segment. The non-economic change in insurance liabilities was primarily related to the initial loss recognized at the inception of a single premium PRT transaction completed in the first quarter of 2024. The non-economic loss at inception is the difference between the single premium received and the valuation of the initial reserve based on interest rates prescribed by U.S. GAAP.

Previous wording

•The increase in net premiums was primarily due to organic growth and new business treaties, as well as the recapture of a large retrocession treaty, effective April 1, 2023. The segment added new life business production, measured by face amount of life reinsurance in-force, of $41.0 billion and $34.1 billion during the three months ended March 31, 2024 and 2023, respectively.

Current wording

•The increase in net premiums was primarily due to organic growth and new business treaties, as well as the recapture of a large retrocession treaty, effective April 1, 2023. The segment added new life business production, measured by face amount of life reinsurance in force, of $76.9 billion and $69.7 billion during the first six months of 2024 and 2023, respectively.

Previous wording

•The increase in net investment income during the three months ended March 31, 2024, was primarily due to a higher invested asset base in 2024 due to new business growth, partially offset by lower variable investment income period over period.

Current wording

•The increase in net investment income during the three and six months ended June 30, 2024, was primarily due to a higher invested asset base in 2024 due to new business growth.

Previous wording

•The increase in future policy benefits remeasurement gains was attributable to favorable claims experience period over period, primarily within the U.S. Individual Life business, partially offset by favorable impacts of in-force management actions in the first three months of 2023.

Current wording

•The increase in future policy benefits remeasurement gains for the second quarter and first six months of 2024 was attributable to favorable impacts of in-force management actions, as well as claims experience period over period, primarily within the U.S. Individual Life business.

Previous wording

The decrease in income before income taxes for the U.S. and Latin America Financial Solutions segment was primarily due to the net impact of certain derivatives, market risk benefits and non-economic changes in insurance liabilities.

Current wording

The increase in income before income taxes for the U.S. and Latin America Financial Solutions segment for the three months ended June 30, 2024, was driven by the net impact of certain derivatives, market risk benefits and non-economic changes in insurance liabilities, offset by increases in investment related losses. The decrease in income before income taxes for the six months ended June 30, 2024, was due to increases in investment related losses, the decline in the invested asset base, and the non-economic changes in insurances liabilities, partially offset by the net impact of certain derivatives and market risk benefits.

Previous wording

The invested asset base supporting asset-intensive transactions decreased to $22.4 billion as of March 31, 2024, from $23.2 billion as of March 31, 2023.

Current wording

The invested asset base supporting asset-intensive transactions decreased to $22.1 billion as of June 30, 2024, from $22.7 billion as of June 30, 2023.

Previous wording

•The decrease in the asset base was primarily due to $2.2 billion of net run off of existing in-force transactions and $2.6 billion associated with an in-force retrocession transaction, partially offset by $3.8 billion from new transactions.

Current wording

•The decrease in the asset base was primarily due to $2.3 billion in net run off of existing in-force transactions and $2.4 billion associated with an in-force retrocession transaction partially offset by $4.1 billion from new transactions.

Previous wording

•As of March 31, 2024 and 2023, $3.6 billion and $4.1 billion, respectively, of the invested assets were funds withheld at interest, of which greater than 90% was associated with two clients.

Current wording

•As of June 30, 2024 and 2023, $3.5 billion and $3.9 billion, respectively, of the invested assets were funds withheld at interest, of which greater than 90% was associated with two clients.

Previous wording

As of March 31, 2024 and 2023, the amount of reinsurance assumed in capital solutions transactions, as measured by pre-tax statutory surplus, risk based capital and other financial structures was $28.7 billion and $25.8 billion, respectively.

Current wording

As of June 30, 2024 and 2023, the amount of reinsurance assumed in capital solutions transactions, as measured by pre-tax statutory surplus, risk based capital and other financial structures was $29.5 billion and $25.6 billion, respectively.

Previous wording

Embedded Derivatives– Modco/Funds Withheld Treaties– Represents the change in the fair value of embedded derivatives on funds withheld at interest associated with treaties written on a modco or funds withheld basis. The Company’s utilization of a credit valuation adjustment did not have a material effect on the change in fair value of these embedded derivatives for the three months ended March 31, 2024 and 2023.

Current wording

Embedded Derivatives– Modco/Funds Withheld Treaties– Represents the change in the fair value of embedded derivatives on funds withheld at interest associated with treaties written on a modco or funds withheld basis. The Company’s utilization of a credit valuation adjustment did not have a material effect on the change in fair value of these embedded derivatives for the three and six months ended June 30, 2024 and 2023.

Previous wording

The change in fair value of the embedded derivatives related to modco/funds withheld treaties increased income before income taxes by $89 million and $38 million for the three months ended March 31, 2024 and 2023, respectively. The increase for the three months ended March 31, 2024, was due to tightening credit spreads on funds withheld asset balances and the impact of higher risk-free interest rates on funds withheld liabilities balances. The increase in the prior year was due to tightening credit spreads on funds withheld asset balances.

Current wording

The change in fair value of the embedded derivatives related to modco/funds withheld treaties increased (decreased) income before income taxes by $20 million and $(19) million for the second quarter and $109 million and $19 million for the six months ended June 30, 2024 and 2023, respectively. The increase in income for the three months ended June 30, 2024, was due to tightening credit spreads. The decrease in income for the three months ended June 30, 2023, was due to widening credit spreads. The increase in income for the six months ended June 30, 2024, was due to increased interest rates on funds withheld liabilities. The increase in income for the six months ended June 30, 2023, was due to tightening credit spreads on funds withheld asset balances and the impact of higher risk-free interest rates on funds withheld liabilities balances.

Previous wording

Non-Economic Changes in Insurance Liabilities– Non-economic changes in insurance liabilities include the initial loss on PRT transactions and changes in the fair value of embedded derivatives associated with the Company’s reinsurance of EIAs. The initial loss at inception of a PRT transaction is the difference between the single premium received and the valuation of the initial reserve based on interest rates prescribed by U.S. GAAP.

Current wording

Non-Economic Changes in Insurance Liabilities– Non-economic changes in insurance liabilities include the initial loss on PRT transactions, net of amortization, and changes in the fair value of embedded derivatives associated with the Company’s reinsurance of EIAs. The initial loss at inception of a PRT transaction is the difference between the single premium received and the valuation of the initial reserve based on interest rates prescribed by U.S. GAAP.

Previous wording

Market Risk Benefits– Represents the impact related to market risk benefits, which consist of guaranteed minimum benefits associated with the Company’s reinsurance of variable and equity-indexed annuities. The fair value changes of market risk benefits along with the changes in fair value of the freestanding derivatives (interest rate swaps, financial futures and equity options), purchased by the Company to substantially hedge the liability are reflected in revenues. The change in fair value of market risk benefits for guaranteed minimum benefits, after allowing for changes in the associated freestanding derivatives, decreased income before income taxes by $9 million and $12 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Market Risk Benefits– Represents the impact related to market risk benefits, which consist of guaranteed minimum benefits associated with the Company’s reinsurance of variable and equity-indexed annuities. The fair value changes of market risk benefits along with the changes in fair value of the freestanding derivatives (interest rate swaps, financial futures and equity options) purchased by the Company to substantially hedge the liability are reflected in revenues. The change in fair value of market risk benefits for guaranteed minimum benefits, after allowing for changes in the associated freestanding derivatives, had no impact on income before income taxes for the three months ended June 30, 2024, and decreased income before income taxes by $9 million for the six months ended June 30, 2024. The changes in fair value of the market risk benefits decreased income before income taxes by $11 million and $22 million for the three and six months ended June 30, 2023, respectively.

Previous wording

The impact of certain derivatives, market risk benefits and non-economic changes in insurance liabilities discussed above are considered unrealized and non-economic by management and do not affect current cash flows, crediting rates or performance on the underlying treaties. Fluctuations occur period to period primarily due to changing investment conditions including, but not limited to, interest rate movements (including benchmark rates and credit spreads), implied volatility and equity market performance, all of which are factors in the calculations of fair value. Therefore, management believes it is helpful to distinguish between the effects of changes in these items as the primary factors that drive profitability of the underlying treaties are investment income, fee income (included in other revenues) and interest credited.

Current wording

The impact of certain derivatives, market risk benefits and non-economic changes in insurance liabilities discussed above are considered unrealized and non-economic by management and do not affect current cash flows, crediting rates or performance on the underlying treaties. Fluctuations occur period to period primarily due to changing investment conditions including, but not limited to, interest rate movements (including benchmark rates and credit spreads), implied volatility and equity market performance, all of which are factors in the calculations of fair value. Therefore, management believes it is helpful to distinguish between the effects of these items and the primary factors that drive profitability of the underlying treaties, which are investment income, fee income (included in other revenues) and interest credited.

Previous wording

•Income before income taxes and certain items decreased by $17 million for the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to lower variable investment income in the current year.

Current wording

•Income before income taxes and certain items decreased by $46 million and $62 million for the three and six months ended June 30, 2024, as compared to the same periods in 2023, primarily due to increases in realized investment related losses and the decline in the invested asset base.

Previous wording

•Revenue before certain items increased by $1,794 million for the three months ended March 31, 2024, as compared to the same period in 2023. The increase in the first quarter of 2024 was primarily due to premiums recognized on PRT transactions, which was offset by a corresponding increase in reserves.

Current wording

•Revenue before certain items increased by $313 million and $2,102 million for the three and six months ended June 30, 2024, as compared to the same periods in 2023. The increase was primarily due to premiums recognized on PRT transactions, which was offset by a corresponding increase in reserves.

Previous wording

•Benefits and expenses before certain items increased by $1,891 million for the three months ended March 31, 2024, as compared to the same period in 2023. The increase in the current quarter was primarily due to the establishment of liabilities for future policy benefits associated with a new PRT transaction.

Current wording

•Benefits and expenses before certain items increased by $359 million and $2,164 million for the three and six months ended June 30, 2024, as compared to the same periods in 2023. The increase was primarily due to the establishment of liabilities for future policy benefits associated with PRT transactions.

Previous wording

•Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations did not impact income before income taxes for the three months ended March 31, 2024. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.

Current wording

Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations did not impact income before income taxes for the three and six months ended June 30, 2024. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.

Previous wording

•The increase in net premiums was primarily due to new group business and organic growth on all lines of business.

Current wording

•The increase in net premiums for the three and six months ended June 30, 2024, was primarily due to new group business and organic growth on all lines of business.

Previous wording

•The decrease in the loss ratio for the three months ended March 31, 2024, as compared to the same period in 2023, was primarily due to favorable claims experience in the individual life line of business.

Current wording

•The increase in the loss ratio for the second quarter was primarily due to unfavorable claims experience in the individual life line of business and higher future policy remeasurement losses as compared to the same period in 2023. The decrease in the loss ratio for the six months ended June 30, 2024 was primarily due to favorable experience on group line of business and future policy benefits remeasurement gains as compared to future policy benefits remeasurement losses in 2023.

Previous wording

•The increase in income before income taxes for the three months ended March 31, 2024, as compared to the same period in 2023, was primarily due to increased net premiums and an increase in net investment income, partially offset by increased claims and other policy benefits and increased policy acquisition costs and other insurance expenses.

Current wording

The increase in income before income taxes for the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to increased net premiums and net investment income, partially offset by increased claims and other policy benefits and increased policy acquisition costs and other insurance expenses.

Previous wording

•Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulted in a $3 million increase in income before income taxes for the three months ended March 31, 2024. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.

Current wording

Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations did not impact income before income taxes for the three months ended June 30, 2024, and resulted in a $3 million increase in income before income taxes for the six months ended June 30, 2024. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.

Previous wording

The increase in income before income taxes for the three months ended March 31, 2024, as compared to the same period in 2023, was primarily due to increased net premiums, largely offset by increased claims and other policy benefits and increased policy acquisition costs and other insurance expenses.

Current wording

The decreases in income before income taxes for the three and six months ended June 30, 2024, as compared to the same periods in 2023, were primarily due to unfavorable claims and other policy benefits and increased policy acquisition costs and other insurance expenses, largely offset by increased net premiums.