29 January 2016 News

Profits at RGA hit by currency fluctuations

Profits and net premiums written by Reinsurance Group of America (RGA), a global provider of life reinsurance, dipped last year driven partly by the negative effect of foreign currency movements and a difficult year for its US mortality business.

The company’s net written premiums dropped to $8.5 billion in 2015 compared with $8.6 billion in 2014 though the company said that excluding the adverse foreign currency fluctuations and the effect of a large retrocession agreement executed in the fourth quarter of 2014, net premiums increased 8 percent in 2015.

Its full-year 2015 net income was $502.2 million, a steep drop compared with the $684 million it posted in 2014.

Its full-year operating income also decreased to $567.1 million from $638 million the year before. RGA said net adverse foreign currency fluctuations reduced 2015 operating income by $55.2 million.

Greig Woodring, chief executive officer, said: “For the year, operating earnings per share of $8.43 was also strong, despite the sizeable negative effect of foreign currency movements and a difficult year for our US Mortality business. All our International operations performed well, and our Global Financial Solutions business continued to make a strong contribution across our global platform. Our operating return on equity was 11 percent in 2015, and our balance sheet remains strong.

“Our strong capital position has allowed us to pursue and execute attractive in-force transactions and manage capital effectively through active share repurchases. For the year, we deployed more than $500 million toward in-force transactions, including approximately $250 million in the fourth quarter.

“We also repurchased $375 million of common shares in 2015, including $51 million in the fourth quarter, and our board approved a new authorization of $400 million, replacing the previous authorization. Over the past two years, we have deployed a total of $1.3 billion toward transactions and share repurchases, and have reduced shares outstanding by roughly 8 percent. Our deployable excess capital position is approximately $600 million.

“Looking forward, while the macro environment continues to be challenging in certain respects, we are optimistic about our ability to execute collectively across the organisation.”

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