REINSURANCE GROUP OF AMERICA INC
For the period ended Mar 31, 2025. Filed May 2, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 2, 2025
RGA$261.90-0.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0000898174-24-000140
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0000898174-25-000085
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 216 previous paragraphs and 234 current paragraphs.
83 unchanged; 65 reworded; 80 added; 66 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 26 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (80)
Current report
A discussion regarding the Company’s financial condition and results of operations for the three months ended March 31, 2025 and 2024 are presented below.
Current report
Consolidated income before income taxes
Current report
Consolidated results
Current report
The increase in income for the three months ended March 31, 2025, was primarily the result of the following:
Current report
•Favorable claims and underwriting experience across all segments as compared to the prior period.
Current report
Investment related gains and losses
Current report
•During 2025 and 2024, the Company repositioned its investment portfolio to generate higher yields which led to net capital losses of $51 million and $102 million, respectively.
Current report
•Changes in the fair value of freestanding derivatives increased investment related losses, net by $2 million in 2025, compared to $99 million in 2024.
Current report
The decrease in investment related losses, net was partially offset by the following:
Current report
See the Investment section within Management Discussion and Analysis, Note 10 – “Investments” and Note 11 – “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for additional information on the changes in allowance for credit losses, impairment losses and derivatives.
Current report
Market risk benefits
Current report
Income taxes
Current report
The effective tax rate on a consolidated basis was 22.2% and 22.0% for 2025 and 2024, respectively. The effective tax rate for 2024 was greater than the U.S. Statutory rate of 21.0% primarily due to income in non-U.S. jurisdictions which were partially offset by the release of valuation allowances in non-U.S. jurisdictions. See Note 13 – “Income Tax” in the Notes to Condensed Consolidated Financial Statements for additional information.
Current report
Consolidated adjusted operating income before income taxes
Current report
Non-GAAP Measure – Adjusted operating income before income taxes is not determined in accordance with U.S. GAAP. The Company principally uses adjusted operating income before income taxes in evaluating performance because the Company believes that such measure, when reviewed in conjunction with relevant U.S. GAAP measure (i.e., income before income taxes), presents a clearer picture of its operating performance and assist the Company in the allocation of its resources. The Company believes that this non-GAAP financial measure provides investors and other third parties with a better understanding of the Company’s results of operations, financial statements and the underlying profitability drivers and trends of the Company’s businesses by excluding specified items which may not be indicative of the Company’s ongoing operating performance and may fluctuate significantly from period to period. This measure should be considered supplementary to the Company’s financial results that are presented in accordance with U.S. GAAP and should not be viewed as a substitute for U.S. GAAP measures. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way the Company calculates such measures. Consequently, the Company’s non-GAAP financial measures may not be comparable to similar measures used by other companies.
Current report
Adjusted operating income (loss) before taxes is calculated as income (loss) before income taxes excluding, as applicable:
Current report
•Substantially all of the effect of net investment related gains and losses;
Current report
•Changes in the fair value of contracts that provide market risk benefits;
Current report
•Non-economic losses at contract inception for direct pension risk transfer single premium business (which are amortized into adjusted operating income within claims and other policy benefits over the estimated lives of the contracts);
Current report
•Any net gain or loss from discontinued operations;
Current report
•The cumulative effect of any accounting changes;
Current report
•The impact of certain tax related items; and
Current report
•Any other items the Company believes are not indicative of the Company’s ongoing operations.
Current report
See “Segment Accounting Policies” within Note 16 – “Segment Information” in the Notes to Condensed Consolidated Financial Statements for additional information regarding the presentation of segment results and the Company’s definition of adjusted operating income.
Current report
Reconciliation of income before income taxes to adjusted operating income (loss) before income taxes
Current report
The reconciliation of income before income taxes to adjusted operating income before income taxes is shown below for the periods presented (dollars in millions):
Current report
Three months ended March 31, 2025, compared to the three months ended March 31, 2024
Current report
The decrease in adjusted operating income before income taxes in 2025 was primarily the result of the following:
Current report
•Variable investment income was a net loss of $8 million for the three months ended March 31, 2025, compared to income of $10 million in the prior year.
Current report
•A decrease in other income is due to a reduction in surrender charges related to a decline in lapses on a single premium block of business.
Current report
•An increase in operating and financing costs to support new business growth.
Current report
The decreases in adjusted operating income were partially offset by the following:
Current report
•Favorable claims experience across all of the Company’s geographic Traditional segments, particularly the U.S. Traditional segment.
Current report
See “Results of Operations by Segment” for additional discussion of current and prior period results of operations.
Current report
Net investment income
Current report
•The average yield earned on investments, excluding spread related business, was 4.64% and 4.70% in 2025 and 2024, respectively. The decrease in investment yield for the three months ended March 31, 2025, in comparison with the same period in the prior year, was primarily due to decreased variable income from limited partnerships and real estate joint ventures and lower yield on cash and cash equivalents. These decreases were slightly offset by increased yield due to higher new money rates.
Current report
The following table sets forth the U.S. and Latin America operating results for the periods indicated (dollars in millions). See additional information in the Traditional and Financial Solutions sections.
Current report
Adjusted operating income before income taxes for the first three months of 2025 was lower than the first three months of 2024. The decrease in adjusted operating income before income taxes was primarily due to the runoff in asset-intensive, partially offset by favorable claims experience period over period and new business growth in the Traditional segment.
Current report
The following table sets forth the U.S. and Latin America Traditional segment operating results for the periods indicated (dollars in millions):
Current report
(1)Includes adjusted claims and other policy benefits and future policy benefits remeasurement gains.
Showing the first 40 of 80 passages. Open the source sections for the rest.
Removed paragraphs (66)
Previous report
Results from Operations– 2024 compared to 2023
Previous report
Three months ended September 30, 2024 compared to three months ended September 30, 2023
Previous report
The decrease in income for the three months ended September 30, 2024, was primarily the result of:
Previous report
•During the third quarter of 2024, the Company completed its annual assumptions review resulting in a loss of $58 million, primarily driven by updated lapse assumptions in India, partially offset by favorable mortality updates in the U.S. and Canada. The 2023 annual assumptions update resulted in a gain of $3 million in the third quarter of 2023. See Note 4 – “Future Policy Benefits” for additional information.
Previous report
•During the third quarter of 2024, the Company made a decision to increase its per life retention limit from $8 million to $30 million. The current per life retention limit has been effective since 2008. Since then, the Company has grown significantly and further diversified its business, thus increasing the ability to absorb earnings volatility related to claims. Additionally, the recently adopted LDTI accounting standard further reduces earnings volatility related to claims. These factors led to the decision to increase the per life retention limit effective effective January 1, 2025. As a result, the Company expects to recapture business previously retroceded starting in 2025. The increased retention limit and updated recapture assumption resulted in a future policy benefits remeasurement loss of $136 million recognized in the third quarter of 2024. The higher per life retention limit is expected to increase profits in the future. See Note 9 – “Reinsurance” for additional information.
Previous report
•An increase in policy acquisition costs due to varying increased allowance levels within coinsurance type arrangements and other insurance expenses related to an increase in retrocessions on a funds withheld basis.
Previous report
•A remeasurement loss of $31 million in the current period related to changes in the fair value of market risk benefits compared to a remeasurement gain of $21 million in the prior year.
Previous report
•The losses due to changes in assumptions and remeasurement of market risk benefits 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.
Previous report
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Previous report
The decrease in income for the nine months ended September 30, 2024, was primarily the result of:
Previous report
•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 report
Net investment income and investment related gains (losses), net
Previous report
•The average yield earned on investments, excluding spread related business, was 5.08% and 4.72% for the three month periods ended September 30, 2024 and 2023, respectively, and 4.81% and 4.62% for the nine months ended September 30, 2024 and 2023, respectively. The increase in yield for the three and nine months ended September 30, 2024, compared to the prior year was attributable to higher new money rates.
Previous report
•During the three and nine months ended September 30, 2024, the Company repositioned its portfolio generating net capital losses of $41 million and $305 million, respectively, compared to net capital losses of $49 million and $119 million during the three and nine months ended September 30, 2023, respectively.
Previous report
•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 nine months ended September 30, 2024, the fair value of these instruments increased by $87 million and decreased by $131 million respectively, compared to decreases of $98 million and $222 million during the three and nine months ended September 30, 2023. See Note 11 – “Derivative Instruments” for additional information.
Previous report
•The decrease in investment related losses were partially offset by the following:
Previous report
The effective tax rate was 26.7% and 24.2% for the three and nine months ended September 30, 2024, respectively, compared to 24.2% and 24.9% for the three and nine months ended September 30, 2023. See Note 13 – “Income Tax” for additional information on the Company’s consolidated effective tax rate.
Previous report
The Company recognizes in consolidated income any changes in the fair value of embedded derivatives on modco or funds withheld treaties and non-economic changes in insurance liabilities, such as the initial loss on PRT transactions, and changes in the fair value of embedded derivatives associated with equity index annuities (“EIAs”). In addition, the Company recognizes the changes in fair value of market risk benefits associated with guaranteed minimum benefit riders in market risk benefits remeasurement gains (losses). The Company utilizes freestanding derivatives to minimize the income statement volatility due to changes in the fair value of market risk benefits associated with guaranteed minimum benefit riders. The following table presents the effect of embedded derivatives, market risk benefits, related freestanding derivatives and non-economic changes in insurance liabilities on income before income taxes for the periods indicated (dollars in millions):
Previous report
The decreases in income before income taxes for the third quarter and the first nine months of the year were primarily due to increases in investment related losses and unfavorable impacts of the change in per life retention from $8 million to $30 million in the Traditional segment, partially offset by increases in net investment income, favorable other assumption updates and the net impact of market risk benefits and related derivatives.
Previous report
The decrease in income before income taxes for the first nine months of the year was primarily due to non-economic changes in insurance liabilities in the Financial Solutions segment and unfavorable impacts of the change in per life retention limit in the Traditional segment, partially offset by increases in net investment income, other assumption updates, management in-force actions and the net impact of market risk benefits and related derivatives. 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 report
The decrease in income before income taxes for the third quarter of 2024 was primarily the result of unfavorable impacts of the change in per life retention from $8 million to $30 million and investment related losses due to portfolio repositioning, partially offset by net favorable assumption updates and management in-force actions. The increase in income before income taxes for the first nine months of 2024 was primarily the result of favorable claims experience period over period primarily within the U.S. Individual Life business, management in-force actions and assumption updates, partially offset by unfavorable impacts of the change in retention and investment related losses due to portfolio repositioning.
Previous report
•The increase in net premiums was primarily due to organic growth and new business, as well as the recapture of a large retrocession treaty, effective April 1, 2023. The segment added new life business, measured by face amount of life reinsurance in force, of $226.9 billion and $106.4 billion during the first nine months of 2024 and 2023, respectively.
Previous report
•The increase in other revenues was due to transaction and other fees related to a large in-force transaction completed during the quarter.
Previous report
•The change in future policy benefits remeasurement (gains) losses for during the third quarter of 2024 was primarily the result of unfavorable impacts of the change in the Company’s per life retention limit which resulted in a loss of $83 million, partially offset by net favorable assumption updates totaling $30 million and a management in-force transaction within the U.S. Individual Life business. The change in future policy benefits remeasurement (gains) losses for the first nine months of 2024 was attributable to favorable claims experience period over period, primarily within the U.S. Individual Life business, favorable impacts of in-force management actions and net favorable mortality assumption updates, partially offset by unfavorable impacts of the change in the retention limit.
Previous report
The decreases in income before income taxes for the U.S. and Latin America Financial Solutions segment for the three and nine months ended September 30, 2024, were driven by the decline in the invested asset base, increases in other insurance expenses due to increases in retrocessions to Ruby Re, and non-economic changes in insurance liabilities, partially offset by increases in net investment income and the net impact of market risk benefits and related derivatives.
Previous report
The invested asset base supporting asset-intensive transactions decreased to $22.1 billion as of September 30, 2024, from $23.0 billion as of September 30, 2023.
Previous report
•The decrease in the asset base was primarily due to $1.8 billion in net run off of existing in-force transactions and $2.8 billion associated with an in-force retrocession transaction, partially offset by $3.9 billion from new transactions.
Previous report
Impact of certain derivatives, market risk benefits and non-economic changes in insurance liabilities
Previous report
Income from the Financial Solutions business tends to be volatile due to the impact of certain items such as changes in the fair value of certain derivatives, including embedded derivatives associated with reinsurance treaties structured on a modco or funds withheld basis, non-economic changes in insurance liabilities, which include the initial loss on PRT transactions and changes in the fair value of embedded derivatives associated with the Company’s reinsurance of EIAs, and changes in the fair value of market risk benefits associated with guaranteed minimum benefit riders. Fluctuations occur period to period primarily due to changing investment conditions including, but not limited to, interest rate movements (including risk-free rates and credit spreads), implied volatility and equity market performance, all of which are factors in the calculations of the fair value of the assets and liabilities.
Previous report
The following table summarizes the U.S. and Latin America Financial Solutions results and quantifies the impact of these embedded derivatives, market risk benefits and non-economic changes in insurance liabilities for the periods presented. Revenues before the impact of certain items should not be viewed as substitutes for GAAP revenues, GAAP benefits and expenses and GAAP income before income taxes.
Previous report
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 nine months ended September 30, 2024 and 2023.
Previous report
The change in fair value of the embedded derivatives related to modco/funds withheld treaties increased (decreased) income before income taxes by $(90) million and $(1) million for the three months ended September 30, 2024, respectively, and increased income before income taxes by $18 million for each of the nine months ended September 30, 2024 and 2023, respectively. The decrease in income for the three months ended September 30, 2024, was due to the impact of declining interest rates on funds withheld liabilities.
Previous report
Discussion and analysis before certain derivatives, market risk benefits and non-economic changes in insurance liabilities
Previous report
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 report
•Income before income taxes and certain items decreased by $65 million and $122 million for the three and nine months ended September 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 report
•Revenue before certain items decreased by $176 million and increased by $1,924 million for the three and nine months ended September 30, 2024, as compared to the same periods in 2023. The decrease in the quarter ended September 30, 2024, was primarily due to less premiums recognized from PRT transactions compared to the prior year. The increase was primarily due to premiums recognized on PRT transactions, which was offset by a corresponding increase in reserves.
Previous report
•Benefits and expenses before certain items decreased by $111 million and increased by $2,046 million for the three and nine months ended September 30, 2024, as compared to the same periods in 2023. The decrease in the third quarter of 2024 was primarily due to less liabilities for future policy benefits established on associated PRT transactions. The increase was primarily due to the establishment of liabilities for future policy benefits associated with PRT transactions.
Previous report
The increase in income before income taxes for the three months ended September 30, 2024, was primarily due to higher investment related gains, partially offset by lower future policy benefits remeasurement gains. The increase in income before income taxes for the nine months ended September 30, 2024, was primarily due to favorable experience on group business and higher investment related gains, partially offset by lower future policy benefits remeasurement gains.
Previous report
For the three and nine months ended September 30, 2024, the increases in net premiums, net investment income, investment related gains (losses), net, other revenues, claims and other policy benefits and policy acquisition costs and other insurance expenses were due to a new financial solutions transaction executed in the second quarter of 2024.
Previous report
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulted in decreases in income before income taxes of $2 million for the three and nine months ended September 30, 2024. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
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Reworded paragraphs (65)
Previous wording
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws including, among others, statements relating to projections of the future operations, strategies, earnings, revenues, income or loss, ratios, financial performance, and growth potential of the Company. Forward-looking statements often contain words and phrases such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “if,” “intend,” “likely,” “may,” “plan,” “potential,” “pro forma,” “project,” “should,” “will,” “would,” and other words and terms of similar meaning or that are otherwise tied to future periods or future performance, in each case in all derivative forms. Forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements are not a guarantee of future performance and are subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results, performance, and achievements could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements.
Current wording
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws including, among others, statements relating to projections of the future operations, strategies, earnings, revenues, income or loss, ratios, financial performance and growth potential of the Company and future developments associated with the previously announced transaction relating to the master transaction agreement that a Company subsidiary entered into with subsidiaries of Equitable Holdings, Inc., pursuant to which upon the closing thereof, the Company subsidiary would enter into coinsurance and modified coinsurance agreements with those counterparties (the “Reinsurance Transaction”). Forward-looking statements often contain words and phrases such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “if,” “intend,” “likely,” “may,” “plan,” “potential,” “pro forma,” “project,” “should,” “will,” “would,” and other words and terms of similar meaning or that are otherwise tied to future periods or future performance, in each case in all derivative forms. Forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements are not a guarantee of future performance and are subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results, performance, and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.
Previous wording
Factors that could also cause results or events to differ, possibly materially, from those expressed or implied by forward-looking statements, include, among others: (1) adverse changes in mortality, morbidity, lapsation, or claims experience, (2) inadequate risk analysis and underwriting, (3) adverse capital and credit market conditions and their impact on the Company’s liquidity, access to capital, and cost of capital, (4) changes in the Company’s financial strength and credit ratings and the effect of such changes on the Company’s future results of operations and financial condition, (5) the availability and cost of collateral necessary for regulatory reserves and capital, (6) requirements to post collateral or make payments due to declines in the market value of assets subject to the Company’s collateral arrangements, (7) action by regulators who have authority over the Company’s reinsurance operations in the jurisdictions in which it operates, (8) the effect of the Company parent’s status as an insurance holding company and regulatory restrictions on its ability to pay principal of and interest on its debt obligations, (9) general economic conditions or a prolonged economic downturn affecting the demand for insurance and reinsurance in the Company’s current and planned markets, (10) the impairment of other financial institutions and its effect on the Company’s business, (11) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (12) market or economic conditions that adversely affect the value of the Company’s investment securities or result in the impairment of all or a portion of the value of certain of the Company’s investment securities that in turn could affect regulatory capital, (13) market or economic conditions that adversely affect the Company’s ability to make timely sales of investment securities, (14) risks inherent in the Company’s risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (15) the fact that the determination of allowances and impairments taken on the Company’s investments is highly subjective, (16) the stability of and actions by governments and economies in the markets in which the Company operates, including ongoing uncertainties regarding the amount of U.S. sovereign debt and the credit ratings thereof, (17) the Company’s dependence on third parties, including those insurance companies and reinsurers to which the Company cedes some reinsurance, third-party investment managers, and others, (18) financial performance of the Company’s clients, (19) the threat of natural disasters, catastrophes, terrorist attacks, pandemics, epidemics, or other major public health issues anywhere in the world where the Company or its clients do business, (20) competitive factors and competitors’ responses to the Company’s initiatives, (21) development and introduction of new products and distr…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Factors that could also cause results or events to differ, possibly materially, from those expressed or implied by forward-looking statements, include, among others: (1) adverse changes in mortality, morbidity, lapsation or claims experience, (2) inadequate risk analysis and underwriting, (3) adverse capital and credit market conditions and their impact on the Company’s liquidity, access to capital and cost of capital, (4) changes in the Company’s financial strength and credit ratings and the effect of such changes on the Company’s future results of operations and financial condition, (5) the availability and cost of collateral necessary for regulatory reserves and capital, (6) requirements to post collateral or make payments due to declines in the market value of assets subject to the Company’s collateral arrangements, (7) action by regulators who have authority over the Company’s reinsurance operations in the jurisdictions in which it operates, (8) the effect of the Company parent’s status as an insurance holding company and regulatory restrictions on its ability to pay principal of and interest on its debt obligations, (9) general economic conditions or a prolonged economic downturn affecting the demand for insurance and reinsurance in the Company’s current and planned markets, (10) the impairment of other financial institutions and its effect on the Company’s business, (11) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (12) market or economic conditions that adversely affect the value of the Company’s investment securities or result in the impairment of all or a portion of the value of certain of the Company’s investment securities that in turn could affect regulatory capital, (13) market or economic conditions that adversely affect the Company’s ability to make timely sales of investment securities, (14) risks inherent in the Company’s risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (15) the fact that the determination of allowances and impairments taken on the Company’s investments is highly subjective, (16) the stability of and actions by governments and economies in the markets in which the Company operates, including ongoing uncertainties regarding the amount of U.S. sovereign debt and the credit ratings thereof, (17) the Company’s dependence on third parties, including those insurance companies and reinsurers to which the Company cedes some reinsurance, third-party investment managers and others, (18) financial performance of the Company’s clients, (19) the threat of natural disasters, catastrophes, terrorist attacks, pandemics, epidemics or other major public health issues anywhere in the world where the Company or its clients do business, (20) competitive factors and competitors’ responses to the Company’s initiatives, (21) development and introduction of new products and distribut…
Excerpt shortened here; the source contains the full paragraph.
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, 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.
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. 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 2024 Annual Report, as may be supplemented by Item 1A – “Risk Factors” in the Company’s subsequent Quarterly Reports on Form 10-Q.
Previous wording
The Company is among the leading global providers of life reinsurance and financial solutions, with $4.0 trillion of life reinsurance in force and assets of $120.3 billion as of September 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.
Current wording
The Company is among the leading global providers of life reinsurance and financial solutions, with $4.0 trillion of life reinsurance in force and assets of $128.2 billion as of March 31, 2025. 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
The following table summarizes net income for the periods presented.
Current wording
The following table summarizes net income for the periods presented (dollars in millions, except per share data):
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 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.
Current wording
•During 2024, the Company recognized a non-economic loss at the inception of a single premium pension risk transfer (“PRT”). 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
•An increase in investment related losses resulting from portfolio repositioning.
Current wording
•A decrease in investment related losses resulting from lower unfavorable impacts from portfolio repositioning and freestanding derivatives.
Previous wording
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency exchange fluctuations decreased income before income taxes by $2 million for the three months ended September 30, 2024, primarily due to the weakening of the Canadian Dollar and Japanese Yen compared to the U.S. dollar. Foreign currency exchange rate fluctuations increased income before income taxes by $9 million for the nine months ended September 30, 2024, 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.
Current wording
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations decreased income before income taxes by $8 million primarily due to the weakening of the Canadian dollar as compared to the U.S. Dollar. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
Previous wording
The decrease and increase in investment related losses, net for the three and nine months ended September 30, 2024, respectively, was primarily attributable to the following:
Current wording
The decrease in investment related losses, net is attributable to the following:
Previous wording
•During the three and nine months ended September 30, 2024, the Company incurred $9 million and $45 million of impairments and change in allowance for credit losses on fixed maturity securities compared to $(7) million and $31 million during the three and nine months of 2023.
Current wording
•The Company incurred $8 million and $39 million of changes in allowance for credit losses and impairments during the three months ended March 31, 2025 and 2024, respectively.
Previous wording
◦Changes in the fair value of embedded derivatives associated with modco/funds withheld treaties increased investment related losses by $112 million and $9 million for the three and nine months ended September 30, 2024, respectively, compared to investment related gains of $1 million and $18 million for the three and nine months ended September 30, 2023, respectively.
Current wording
•Changes in the fair value of embedded derivatives associated with modco/funds withheld treaties, increased investment related losses, net by $11 million in 2025, compared to a decrease in investment related losses, net of $77 million in 2024.
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 for the three and nine months ended September 30, 2024, by $8 million and $16 million, respectively. The changes in fair value of the market risk benefits decreased income before income taxes by $23 million and $48 million for the three and nine months ended September 30, 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 indexed annuities. The changes in fair value of the freestanding derivatives purchased by the Company to hedge the liability are reflected in investment related gains (losses), net. 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 $3 million and $9 million in 2025 and 2024, respectively.
Previous wording
Impact of certain derivatives, market risk benefits and non-economic changes in insurance liabilities on income before taxes
Current wording
Non-economic changes in insurance liabilities
Previous 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.
Current wording
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 indexed products. 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. During 2025 and 2024, the Company incurred non-economic losses of $6 million and $136 million, respectively.
Previous wording
•The increases in net investment income for the three and nine months ended September 30, 2024, were primarily related to an increase in invested assets and higher yields from fixed-income securities.
Current wording
•An increase in investment income attributable to an increase in invested assets and higher new money rates.
Previous wording
The increase in premiums for the three and nine months ended September 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 nine months ended September 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 $403.1 billion and $265.5 billion during the nine months ended September 30, 2024 and 2023, respectively. Consolidated assumed life reinsurance in force increased to $3,966.5 billion as of September 30, 2024, from $3,499.4 billion as of September 30, 2023, primarily due to new business production.
Current wording
The decrease in premiums was primarily due to single premium pension risk transfer (“PRT”) transactions completed during 2024. The PRT single premiums received were offset by an increase in benefits. Excluding the impact of the PRT transaction, premium increased due to organic growth on existing treaties and new business production, measured by the face amount of reinsurance in force, of $131.7 billion during 2025 compared to $109.1 billion during 2024. Consolidated assumed life reinsurance in force increased to $3,950.9 billion as of March 31, 2025, from $3,729.8 billion as of March 31, 2024, due to new business production and changes in foreign exchange rates.
Previous 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:
Current 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 and higher yields earned on alternative and private asset classes, partially offset by a decrease in variable investment income associated with joint venture and limited partnership investments. The following summarizes the primary drivers contributing to the increase in net investment income for the three months ended March 31, 2025 and 2024:
Previous wording
•The average invested assets at amortized cost, excluding spread related business, totaled $38.2 billion and $35.9 billion in 2024 and 2023, respectively.
Current wording
•The average invested assets at amortized cost, excluding spread related business, totaled $44.0 billion and $38.5 billion in 2025 and 2024, respectively.
Previous wording
The average yield will vary from period to period depending on several variables, including the prevailing risk-free interest rate and credit spread environment, prepayment fees and make-whole premiums, changes in the mix of the underlying investments and cash and cash equivalents balances. Variable investment income from joint ventures and limited partnerships will also vary from period to period and is highly dependent on the timing of dividends and distributions on certain investments. Investment income is allocated to the operating segments based upon average assets and related capital levels deemed appropriate to support segment operations.
Current wording
The average yield will vary from year to year depending on several variables, including the prevailing risk-fee interest rate and credit spread environment, prepayment fees and make-whole premiums, changes in the mix of the underlying investments and cash and cash equivalents balances. Variable investment income from joint ventures and limited partnerships will also vary from year to year and is highly dependent on the timing of dividends and distributions on certain investments. Investment income is allocated to the operating segments based upon average assets and related capital levels deemed appropriate to support segment operations.
Previous wording
The U.S. and Latin America operations consist of two major segments: Traditional and Financial Solutions. The Traditional segment primarily specializes in the reinsurance of individual mortality-risk, health and long-term care, universal life products and to a lesser extent, group reinsurance. The Financial Solutions segment consists of asset-intensive and capital solutions. Asset-intensive includes coinsurance of annuities, corporate-owned life insurance policies, pension risk transfer (“PRT”) group annuity contracts and, to a lesser extent, fee-based synthetic guaranteed investment contracts, which include investment-only, stable value contracts. Capital solutions includes assisting ceding companies in meeting applicable regulatory requirements by enhancing the ceding companies’ financial strength and regulatory surplus position through relatively low risk reinsurance and other transactions. Typically, these transactions do not qualify as reinsurance under GAAP due to the low-risk nature of the transactions; therefore, only the related net fees are reflected in other revenues on the condensed consolidated statements of income.
Current wording
The U.S. and Latin America operations consist of two major segments: Traditional and Financial Solutions. The Traditional segment primarily specializes in the reinsurance of individual mortality-risk, health and long-term care, universal life products and, to a lesser extent, group reinsurance. The Financial Solutions segment consists of Asset-Intensive and Capital Solutions. Asset-Intensive within the Financial Solutions segment includes coinsurance of annuities, corporate-owned life insurance policies, pension risk transfer (“PRT”) group annuity contracts and, to a lesser extent, fee-based synthetic guaranteed investment contracts, which include investment-only, stable value contracts. Capital Solutions within the Financial Solutions segment primarily involves assisting ceding companies in meeting applicable regulatory requirements by enhancing the ceding companies’ financial strength and regulatory surplus position through relatively low risk reinsurance and other transactions. Typically, these transactions do not qualify as reinsurance under GAAP, due to the low-risk nature of the transactions, therefore only the related net fees are reflected in other revenues on the condensed consolidated statements of income.
Previous wording
•The increases in net investment income during the three and nine months ended September 30, 2024, were primarily due to a higher invested asset base in 2024 due to new business growth and higher yields.
Current wording
•The increase in net investment income during the three months ended March 31, 2025, was primarily due to a higher invested asset base in 2025 due to new business growth.
Previous wording
•The increase in policy acquisition costs and other insurance expenses as a percentage of net premiums was primarily due to varying allowance levels within coinsurance type arrangements and the mix of new business between coinsurance versus yearly renewable term.
Current wording
•The slight increase in policy acquisition costs and other insurance expenses as a percentage of net premiums was primarily due to varying allowance levels within coinsurance type arrangements and the mix of new business between coinsurance versus yearly renewable term.
Previous wording
•As of September 30, 2024 and 2023, $3.4 billion and $3.8 billion, respectively, of the invested assets were funds withheld at interest, of which greater than 90% was associated with two clients.
Current wording
•The book value of the invested asset base supporting asset-intensive transactions increased to $25.8 billion as of March 31, 2025, from $22.0 billion as of December 31, 2024, resulting in an increase in investment income partially offset by a decrease in variable investment income. As of March 31, 2025 and December 31, 2024, $3.2 billion and $3.3 billion, respectively, of the invested assets were funds withheld at interest, of which greater than 90% was associated with two clients.
Previous wording
The Canada operations are primarily engaged in traditional reinsurance, which consists mainly of traditional individual life reinsurance, and to a lesser extent, creditor, group life and health, critical illness and disability reinsurance. Creditor insurance covers the outstanding balance on personal, mortgage or commercial loans in the event of death, disability or critical illness and is generally shorter in duration than traditional individual life insurance. The Canada Financial Solutions segment consists of longevity and capital solutions.
Current wording
The Canada operations are primarily engaged in traditional reinsurance, which consists mainly of traditional individual life reinsurance, and to a lesser extent, creditor, group life and health, critical illness and disability reinsurance. Creditor insurance covers the outstanding balance on personal, mortgage or commercial loans in the event of death, disability or critical illness and is generally shorter in duration than traditional individual life insurance. The Canada Financial Solutions segment consists of longevity, asset-intensive and capital solutions.
Previous wording
•The increase in net premiums for the three and nine months ended September 30, 2024, was primarily due to new group business and organic growth on all lines of business.
Current wording
•The increase in net premiums was primarily due to new group business and organic growth in all lines of business, mostly offset by unfavorable foreign currency fluctuations.
Previous wording
The increase in income before income taxes for the three months ended September 30, 2024, was primarily due to future policy benefits remeasurement gains as compared to future policy benefits remeasurement losses in the third quarter of 2023. The increase in income before income taxes for the nine months ended September 30, 2024, was primarily due to favorable experience on group business and future policy benefits remeasurement gains as compared to future policy benefits remeasurement losses in 2023, partially offset by lower investment related gains.
Current wording
•The increase in the loss ratio for the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to more favorable experience on the group lines of business in 2024 and future policy benefits remeasurement losses in 2025 as compared to future policy benefits remeasurement gains in 2024.
Previous wording
The decreases in income before income taxes for the three and nine months ended September 30, 2024, were due to a decrease in future policy benefits remeasurement gains, partially offset by higher investment related gains. For the three and nine months ended September 30, 2024, the increases in net premiums, net investment income, investment related gains (losses), net, other revenues, claims and other policy benefits and policy acquisition costs and other insurance expenses were due to a new transaction executed in the second quarter of 2024.
Current wording
The increase in adjusted operating income before income taxes for the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to more favorable experience on longevity business, partially offset by unfavorable currency exchange fluctuations. The increases in net premiums, net investment income, adjusted claims and other policy benefits and policy acquisitions costs and other insurance expenses were due to a new asset-intensive transaction executed in the second quarter of 2024.
Previous wording
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulted in a $1 million increase in income before income taxes for the three months ended September 30, 2024, and a $4 million increase in income before income taxes for the nine months ended September 30, 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 resulted in a $1 million increase in adjusted operating income before income taxes for the three months ended March 31, 2025. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
Previous wording
•The increases in net premiums for the three and nine months ended September 30, 2024, were primarily due to increased business volume on new and existing treaties.
Current wording
•The increase in net premiums was due to increased business volume on new and existing treaties in the first three months of 2025.
Previous wording
•The increase in policy acquisition costs and other insurance expenses as a percentage of net premiums for the nine months ended September 30, 2024, was primarily due to an increase in premiums with higher allowances.
Current wording
•The decrease in policy acquisition costs and other insurance expenses as a percentage of net premiums was largely due to an increase in premiums with lower allowances.
Previous wording
•The increases in net premiums for the three and nine months ended September 30, 2024, were primarily due to increased volumes of closed block longevity transactions.
Current wording
•The increase in net premiums was primarily due to increased volumes of closed longevity block transactions.
Previous wording
•The increases in claims other policy benefits the three and nine months ended September 30, 2024, were the result of increased volumes of closed block longevity and asset-intensive transactions.
Current wording
•The increase in adjusted claims and other policy benefits was the result of increased volumes of closed block longevity and asset-intensive transactions.
Previous wording
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulted in no impact for the three months ended September 30, 2024, and a $8 million increase in income before income taxes during the nine months ended September 30, 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 resulted in a $3 million decrease in adjusted operating income before income taxes during the three months ended March 31, 2025. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
Previous wording
The invested asset base supporting asset-intensive transactions increased to $23.2 billion as of September 30, 2024, from $14.4 billion as of September 30, 2023. The increase in the asset base compared to September 30, 2023, was primarily due to approximately $7.3 billion from recently executed transactions and net organic growth of $1.5 billion from existing in force blocks. The amount of reinsurance assumed from client companies, as measured by pre-tax statutory surplus, risk based capital and other financial reinsurance structures was $1.9 billion and $1.1 billion for the nine months ended September 30, 2024 and 2023, respectively. Fees earned from this business can vary significantly depending on the size, complexity, and timing of the transactions and, therefore, can fluctuate from period to period.
Current wording
The invested asset base supporting asset-intensive transactions increased to $25.0 billion as of March 31, 2025, from $18.6 billion as of March 31, 2024. The increase in the asset base compared to March 31, 2024, was primarily due to approximately $4.5 billion from recently executed transactions and net organic growth of $1.9 billion from existing in-force blocks. The amount of reinsurance assumed from client companies, as measured by pre-tax statutory surplus, risk based capital and other financial reinsurance structures was $2.1 billion and $1.4 billion for the three months ended March 31, 2025 and 2024, respectively. Fees earned from this business can vary significantly depending on the size, complexity and timing of the transactions and, therefore, can fluctuate from period to period.
Previous wording
•The increase in net investment income was the result of a growing asset base.
Current wording
•The increase in net investment income was the result of a growing asset base, partially offset by lower variable investment income.
Previous wording
Corporate and Other revenues primarily include investment income from unallocated invested assets, investment related gains and losses and service fees. Corporate and Other expenses consist of the offset to capital charges allocated to the operating segments within the policy acquisition costs and other insurance income line item, unallocated overhead and executive costs, interest expense related to debt and service business expenses. Additionally, Corporate and Other includes results from the Company’s Funding Agreement Backed Notes (“FABN”) program and certain wholly-owned subsidiaries that, among other activities, develop and market technology and provide consulting and outsourcing solutions for the insurance and reinsurance industries. The Company invests in this area in an effort to both support its clientsand accelerate the development of innovative solutions and services to increase consumer engagement within the life insurance industry and hence generate new future revenue streams.
Current wording
The Corporate and Other revenues primarily include investment income from unallocated invested assets and service fees. Corporate and Other expenses consist of the offset to capital charges allocated to the operating segments within the policy acquisition costs and other insurance income line item, unallocated corporate overhead and executive costs, interest expense related to debt and service business expenses. Additionally, Corporate and Other includes results from the Company’s Funding Agreement Backed Notes (“FABN”) issued prior to January 1, 2025. Effective, January 1, 2025, newly issued FABN issuances are included in the U.S. Financial Solutions segment.
Previous wording
The increase in loss before income taxes for the three months ended September 30, 2024, was primarily attributable to increases in investment related losses, net and interest credited, partially offset by higher net investment income and other revenues. The increase in loss before income taxes for the nine months ended September 30, 2024, was primarily attributable to increases in investment related losses, interest credited, other operating expenses and interest expense, partially offset by higher net investment income and other revenues.
Current wording
The increase in adjusted operating loss before income taxes was primarily due to increases in adjusted interest credited, other operating expenses and interest expense, partially offset by higher net investment income.
Previous wording
•The increases in interest credited for the three and nine months ended September 30, 2024, were primarily attributable to new FABN issuances.
Current wording
•The increase in adjusted interest credited was primarily attributable to new FABN issuances in the second half of 2024.
Previous wording
•The increase in other operating expenses for the nine months ended September 30, 2024, was primarily attributable to an increase in compensation expense.
Current wording
•The increase in other operating expenses was primarily attributable to higher information technology expense.
Previous wording
•The increase in interest expense for the nine months ended September 30, 2024, was primarily attributable to an increase in outstanding debt.
Current wording
•The increase in interest expense was primarily attributable to an increase in outstanding debt.
Showing the first 40 of 65 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
•Changes in the fair value of embedded derivatives;
Current report — wording carried from elsewhere
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations increased adjusted operating income before income taxes by $8 million due to the weakening of the Canadian dollar and British Pound as compared to the U.S. Dollar. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
Current report — wording carried from elsewhere
•The increase in net premiums was primarily due to new business growth.
Current report — wording carried from elsewhere
•The increase in net investment income was primarily related to an increase in invested assets supporting the segment.
Current report — wording carried from elsewhere
•The increase in net investment income was primarily attributable to a higher invested asset base.
Current report — wording carried from elsewhere
Investment Yield– Excluding Spread Related Business
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
As of September 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 $25.9 billion, respectively.
Previous report — wording carried elsewhere
On March 13, 2023, the Company entered into a syndicated revolving credit facility with a five year term and an overall capacity of $850 million. See Note 18 – “Financing Activities” in the Notes to Consolidated Financial Statements in the 2023 Annual Report for further information.