RGA profits plummet in Q2
Reinsurance Group of America (RGA) has posted another set of disappointing results for the second quarter of 2015.
Previously, the chief executive officer (CEO) of RGA had admitted that its first quarter results were below expectations.
In the second quarter of 2015, its profits fell to $130.4 million, compared with $198.3 million in the second quarter of 2014.
Profits were negatively impacted by the higher effective tax rate and foreign currency effects. RGA also reported higher claims in the US and Australia, although this was partially offset by better-than-expected overall results in EMEA and Asia.
RGA’s US and Latin America traditional segment reported pre-tax operating income of $79.4 million in the second quarter of 2015, compared with $89 million in the second quarter of 2014, driven by elevated individual mortality claims.
This was partially offset by strong performance in RGA’s EMEA non-traditional segment, where pre-tax operating income increased sharply to $31.8 million from $21.6 million a year ago.
Asia Pacific’s traditional business reported pre-tax operating income of $4.3 million in the second quarter of 2015, down from $26.3 million in the same period of the prior year.
Within this, RGA’s Australia operation posted poor results in its individual and group morbidity product lines, contributing to a pre-tax operating loss of approximately $20 million in that market, said the reinsurer.
“Outside of Australia, traditional businesses performed very well, with particularly strong results from our operations in Hong Kong & Southeast Asia, Japan and South Korea,” said RGA.
Greig Woodring, president and chief executive officer, said: “The results this quarter were negatively affected by the higher tax rate and foreign currency weakness. Otherwise, the results generally reflect a continuation of recent trends of balance and diversity of earnings by geography and product line, but with some volatility in segment and business line results consistent with the nature of our business.
“Most of our international operations continued a pattern of very good results, with the EMEA segment particularly strong, but Australia had a weak quarter, a reversal of some of the experience in the first quarter. The operating income of the Australia operation is essentially in line with expectations on a year-to-date basis.”
