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F500-207-Reinsurance Group of America

The company offers mortality risk services including life, health, and group reinsurance.

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F500-2020-225-Reinsurance-Group-of-America

St. Louis-based Reinsurance Group of America provides financial solutions and life and health reinsurance products.

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Reinsurance Group of America (RGA) is one of the largest global providers of life and health-related reinsurance. RGA’s history traces back to the 1970s when General American Life Insurance entered its first reinsurance arrangement, and after rapid growth saw RGA incorporated in 1981. In more recent years, RGA stepped up to the plate during the coronavirus pandemic, paying out $2.5 billion in COVID-related claims through 2022. In February 2025 it announced a $1.5 billion deal with Equitable to reinsure $32 billion worth of life insurance policies.

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Reinsurance Group of America (RGA): Company Profile, Stock Price, News, Rankings

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Reinsurance Group of America

reinsurance group of america

Good day, and welcome to Reinsurance Group of America First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press then 2.

Please note that this event is being recorded. I would now like to turn the conference over to Jeff Hopson, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Welcome to RGA's first quarter twenty twenty five conference call. I'm joined on the call this morning by Tony Chang, RGA's President and CEO Axel Andre, Chief Financial Officer Leslie Barbee, Chief Investment Officer and Jonathan Porter, Chief Risk Officer. A quick reminder before we get going regarding forward looking information and non GAAP financial measures. Some of our comments today may contain forward looking statements.

Actual results could differ materially from expected results. Please refer to the earnings release we issued yesterday for a list of important factors that could cause actual results to differ from expected results. Additionally, during the course of this call, the information we provide may include non GAAP financial measures. Please see our earnings release, earnings presentation and quarterly financial supplement, all of which are posted on our website for a discussion of these terms and reconciliations to GAAP measures. Throughout the call, we will be referencing slides from the earnings presentation, which again is posted on our website.

And now I'll turn the call over to Tony for his comments.

Good morning, everyone, and thank you for joining our call. Last night, we reported adjusted operating earnings of $5.66 per share. Our adjusted operating return on equity, excluding notable items, was 15%. I consider this to be a very good quarter, and it provides a strong start to the year. We achieved these results through a balance of strong performances across many of our geographic regions and products.

The most significant driver of the results was the favorable claims experience, which is a continuation of our strong underwriting results over the past couple of years. Despite ongoing macroeconomic uncertainties, we are not seeing a significant impact on our business. Our asset portfolio remains well positioned and our capital position remains strong. Therefore, we are highly confident we can successfully navigate the current environment without losing any of our strong momentum. I am very proud to announce that for the fourteenth year in a row, RJ was number one in terms of the NMG Consulting's Business Capability Index, with particular strength in underwriting, actuarial, product innovation and relationship management.

We believe the backbone to our success is our biometric expertise. In other words, we are second to none in terms of pricing, underwriting and ongoing risk management of mortality, morbidity and longevity risks. As you know, this expertise either directly leads to more biometric reinsurance or indirectly is our key differentiator in the asset intensive blocks that we pursue. Our biometric expertise has also led to strong claims experience over RGA's history. Since the end of twenty twenty two, our cumulative underwriting claims experience has been highly favorable compared to expectations.

And finally, with regards to this quarter, all of our key geographic regions reported favorable claims experience on both an economic and GAAP income statement basis. In terms of in force transactions, we had a strong quarter with $418,000,000 of capital deployed. This includes the previously announced Manulife deal that closed at the beginning of the quarter as well as two more modest sized strategic transactions in Asia. Additionally, in February, we announced the strategic transaction with Equitable. The actual capital deployment for this deal will be recorded when it closes, which is expected mid year.

As a reminder, this transaction is in our wheelhouse of mortality risk and we expect the financial returns to be within our targeted range. I will now provide details on some of our new business activities in the quarter focused on our four areas of notable growth. In Asia Traditional, we had a strong quarter in terms of new treaties with all markets performing well. Importantly, nearly all this success is related to Creation Re product development initiatives. Creation Re refers to our ability to partner with clients on a more exclusive basis to deliver new products and create greater value for both our clients and RGA.

These partnerships have allowed RGA to grow together with our clients and in many cases help them win industry awards and gain market leadership. For RJ, this leads to quality repeat business and also larger transactions as our clients grow in scale. This is best illustrated by the fact that since 2021, the new business embedded value per transaction for Asia has tripled in size. This is due not only to larger sized transactions, but also due to higher expected underwriting profitability as we create new products with little competition. More strategically, each new product not only leads to more business, more data and a stronger brand, but also deepens our library of solutions.

These solutions are then adapted and replicated across different markets, creating further new products and the Creation Re flywheel continues. Let me highlight this with our largest traditional business in Asia. The Hong Kong underlying life insurance market remains very strong, achieving record sales in 2024, increasing over 21% from 2023. This is due to the rapid growth in mainland Chinese visitors buying insurance, the ageing population and Hong Kong being a major high net wealth management center. In response to these trends, we recently launched three new initiatives.

The first is our simplified issue critical illness product catered to the senior market. Second, we continue to be highly successful in delivering the more complex underwriting services needed for the high net worth segment. Third, we developed the MedScreen Plus underwriting system, which simplifies the process for mainland Chinese visitors coming to Hong Kong. This underwriting system won its second award during the quarter and is fast being recognized as a competitive advantage for our clients. These innovations drive the Creation Read business in Hong Kong, lead to deeper market penetration and further creates our library of solutions that we tailor for other markets with similar needs across Asia.

Moving to Asia Financial Solutions, our second area of notable growth, we closed two block transactions in Japan. For both these transactions, RGA has had a long standing relationship for more than a decade. Japan is one of our most exciting business opportunities as a result of the new ESR capital framework. Our local teams not only provide quotes on a timely manner, but also provide the after sales service in the local language and adhering to local cultures. We feel this gives RJ a distinct edge in this market segment.

We, of course, tremendously value the large marquee transactions, but as important are these more frequent modest sized blocks that play towards our sweet spot of biometric expertise and strong local teams. These more modest sized transactions are often completed without an intense bidding process and RJ with its many touch points and long standing relationships is best positioned to benefit. Our third area of notable growth is the longevity and PRT market. Starting with The UK, we expect strong levels of PRT sales once again during the year. Similar to Japan, our local UK team has in my view an comparable combination of expertise, data, relationships and experience in the longevity market, which is why they have long been the market leader.

Similar to Hong Kong, we have a market leading underwriting system for the individual retail annuity segment that ensures we win more than our fair share of business. Our pipeline remains very strong and we expect another successful year. Recently, which may be reflecting the effects of market uncertainty resulting in less deal activity at the upper end of the market. We do expect this to be temporary and for the market to recover and we remain very bullish on this business line. Finally, in The U.

S. Traditional area, our fourth area of notable growth, we had another active quarter as we added a number of new treaties, most of them related to our underwriting initiatives. As demonstrated with the Equitable transaction, we not only do large block transactions, but we also provide product development and underwriting outsourcing services to support new business. When you couple this with our partners that provide distribution technology and other services, it is clear that together we bring holistic solutions generating exclusive business for RGA. I trust you can see our business playbook of creating and perpetuating the Creation Reef flywheel is very consistent across the world.

Strong local teams can learn from each other and are empowered to partner and deliver unique solutions for our clients such that we can grow together and become market leaders. Through our global network and often with the same global client, we then spread and adapt these new solutions to different markets, creating more new solutions and the virtuous cycle continues. This business generates greater value for our clients and higher returns for RGA. We have executed this strategy ahead of schedule over the past two years, resulting in greater than 50% of our new business coming from Creation Re over this period of time. Continuing this success will provide a tailwind to our current ROE levels once the earnings power from this new business fully materializes.

With regards to in force management actions, as we have discussed previously, in addition to attractive new business, we are able to enhance ROE and earnings through our balance sheet optimization strategy and other management actions and levers. This is very much part of our business, but is lumpy in nature. The impact of in force actions was modest in Q1, but we continue to move forward on a number of initiatives that we expect to help drive higher returns over time. Looking forward, we continue to be very optimistic about our business due to our strong focus on being disciplined. We have strong strategic discipline of sticking to what we know and what we are great at.

Just as important is our risk taking and being patient for right risk return trade off to emerge. And the third important area of discipline is in capital management and finding efficient new sources of capital. As we know, building a sustainably successful business takes a total company effort. And by applying this disciplined approach with our culture of collaboration and innovation, we are very optimistic that we will continue to deliver on both growth and attractive ROEs. This is even more important during the current period of heightened uncertainties in the macro environment.

Our disciplined, proactive business approach and acceleration of the Creation Re flywheel means RJ continues to be nimble and we are well positioned to take advantage of the new opportunities that often arise during uncertain times. Thus, it is without doubt that I remain fully confident that the best is yet to come. I will now turn it over to our CFO, Axel Andre, to discuss the financial results in more detail.

Thank you, Tony. RGA reported pretax adjusted operating income of $485,000,000 for the quarter of $5.66 per share after tax.

For the trailing twelve months, adjusted operating return on equity, excluding notable items, was 15%. We delivered strong overall results for the quarter. We deployed $418,000,000 into in force transactions, have excess capital of $1,900,000,000 before the Equitable transaction and our deployable capital is an estimated $1,300,000,000 at the end of the quarter. The economic impact in our biometric claims experience was favorable by $196,000,000 and positive across all regions and the financial impact was favorable by $58,000,000 Our non spread portfolio yield, excluding variable investment income, was 4.9% in Q1, up 10 basis points from the fourth quarter. Variable investment income was below our expectation by approximately 30,000,000 primarily due to lower mark to market adjustments on our limited partnerships and timing of real estate joint venture sales.

The effective tax rate for the quarter was 21.9% on adjusted operating income before taxes, below the expected range of 23% to 24%, primarily due to U. S. Tax benefits received from taxes paid in foreign jurisdictions. We are still expecting a tax rate of 23% to 24% for the remainder of the year. New business was strong and contributed around $1,100,000,000 to the value of in force business margins.

Consolidated net premiums were up 13% year over year when adjusted for the impact from U. S. PRT transactions, which can cause premiums to fluctuate. Our traditional business premium growth was 11.2% for the quarter on a constant currency basis, which benefited from strong growth in The U. S.

And Asia. Premiums are a good indicator of the ongoing strength of our traditional business, and we continue to have strong momentum across our regions. Turning to biometric claims experience, as outlined on Slide eight of our earnings presentation, this displays the total company claims experience and the related financial statement impact on a quarterly basis. As mentioned earlier, claims experience was favorable in the quarterly results. Economic claims experience was favorable by $196,000,000 with a corresponding $58,000,000 favorable current period financial impact.

The remaining favorable experience will be recognized in income over the life of the underlying business. Claims experience was particularly strong in The U. S, primarily due to lower than expected large claims. It is also noteworthy that there was favorable economic experience in every geographic region. I'll point out that some volatility on a quarterly basis, both positive and negative is normal and does not necessarily indicate a material trend.

Turning now to capital. Our excess capital is estimated to be approximately $1,900,000,000 at the end of Q1 twenty twenty five. Based on rolling forward our year end excess capital of $1,300,000,000 as previously disclosed and considering capital generation, capital deployed and debt financing activities during the quarter. As a reminder, this is before taking into account the announced transaction with Equitable, which is expected to close midyear twenty twenty five. Note that the excess capital considers our three main capital lenses corresponding to RGA's internal economic capital model, local regulatory capital across our main legal entities and rating agency capital methodologies.

Our deployable capital at Q1 twenty twenty five is estimated to be $1,300,000,000 and represents management's estimate of the capital available to be deployed into transactions or returned to shareholders over the next twelve months. Taking into account estimated capital sources and committed uses over that forward looking twelve month period, including the impact of the Equitable transaction. We are always looking to efficiently manage risks and capital across our different frameworks. This includes utilizing tools such as third party capital, strategic retrocession, internal retrocession and recognition of the significant of our in force business. As demonstrated during the first quarter, this enabled us to efficiently fund the capital expected to be deployed into the Equitable transaction with a mix of excess capital and hybrid debt financing.

Our strong balance sheet, capital management toolkit and current levels of excess and deployable capital positions us well to continue to support an attractive new business pipeline across the various business segments. Turning to the quarterly segment results on Slide six. The U. S. And Latin America Traditional results reflected favorable individual life claims experience driven by a lower than expected number of large claims.

Other experience in the segment was in line with expectations. The U. S. Financial Solutions results were at the low end of the expected range due to lower variable investment income of roughly $7,000,000 As a reminder, the Equitable transaction is expected to be recorded within this segment once closed. Assuming a midyear close, we expect pretax operating income contributions of approximately $70,000,000 in twenty twenty five and one hundred and sixty million dollars to $170,000,000 in 2026 as previously disclosed.

Canada Traditional results reflected modestly unfavorable lapse experience, partially offset by favorable claims experience. The Financial Solutions results reflected favorable longevity experience. In the Europe, Middle East and Africa region, the traditional results reflected modestly favorable claims experience as well as favorable timing impacts from the earnings recognition of an annual premium treaty. EMEA's Financial Solutions results were above expectations, reflecting favorable overall experience. Turning to our Asia Pacific region.

The traditional results were good, reflecting favorable overall experience and contributions from new business. Underlying claims experience was again favorable in the quarter. Financial Solutions results were slightly lower than expected, primarily due to lower variable investment income of around $6,000,000 We expect the segment results to increase over the course of the year, reflecting the earnings emergence from recent transactions and planned timing of new business. Finally, the Corporate and Other segment reported an adjusted operating loss before tax of $70,000,000 unfavorable compared to the expected quarterly average run rate. This was primarily due to lower than expected variable investment income of around $15,000,000 and a few other smaller one time items.

Overall, we are pleased with the results this quarter and we remain confident in our ability to deliver on our intermediate term financial targets. Moving to investments on slides nine through 12. The non spread book yield, excluding variable investment income rose to 4.9%, primarily due to higher new money rates, which increased to 6.39% and remains well above the portfolio yield. The total non spread portfolio yield for the quarter was 4.64%, down slightly from last quarter, reflecting lower variable investment income and a higher balance of cash and cash equivalents, partially offset by higher new money rates. Variable investment income was modestly negative for the period and approximately $30,000,000 below expectations, driven by lower valuations on limited partnerships and timing of real estate joint venture sales.

I'll note that we still hold an above average level of cash that we look to deploy opportunistically over the coming quarters. Importantly, portfolio quality remains high and credit impairments were again minimal, and we believe the portfolio remains well positioned. During the quarter, we continued our long track record of increasing book value per share. As shown on Slide 16, our book value per share excluding AOCI and impacts from B36 embedded derivatives increased to $154.6 which represents a compounded annual growth rate of 9.8% since the beginning of 2021. To summarize, a strong first quarter is a good start for the year following a record 2024.

We continue to see very good opportunities across our geographies and business lines. We are well positioned and remain appropriately capitalized to execute on our strategic plan. With that, I would like to thank everyone for your continued interest in RGA. This concludes our prepared remarks. We would now like to open it up for questions.

We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press then 2. Please go ahead.

Great, thank you. I was hoping you could help us understand the mortality experience, particularly in The U. S. Obviously, you know, we've seen the flu season data. We know that there was a single large case that in the first quarter.

We're seeing it at other companies, yet you're showing very strong And then there's a disconnect there that I'd like to try to understand, if you can comment. Thanks.

Sure. I can get started on that. So we saw large positive experience, in particular driven by lower than expected large claims in The US. I want to remind you that some volatility on claims experience is expected, both to the positive and the negative. Excluding the large claims experience, so for smaller claims experience, our overall US mortality claims were slightly higher than expected consistent with a flu season, an elevated flu season.

In terms of, obviously, our process, we are, of course, very confident in our claims process. In fact, this quarter we performed extra due diligence to ensure that all claims are collected. As you can imagine, for large claims, there's an extra incentive for CDNs to notify us. And of course, we hear from companies, from CDNs, whenever they experience large claims, and ensure that we verify whether we see the similar data in our data.

Yeah. And this is Jonathan. So maybe just to add specifically on that large case you referenced that's been mentioned on other calls, that experience is reflected in our Q1 results.

Got it. Okay. All right. And then I guess the other question, I've been struggling with this since you announced the Equitable deal. For those of us that cover Equitable, we look at that business and it's, I think, a fair way to describe it would be challenged.

Then all of a sudden, you take it over and you're able to turn it into 13% to 15% ROE business per your comments about it being in line with your target. So, I'm just trying to understand how does that happen? Is there an expense piece or a capital piece or something? Because the earnings should be the same, I would think, other than what you do on the investment portfolio. So how do you take this challenged business and make it a good return business?

it off strategically. I'm sure others have areas to involve. Obviously, like I said in my comments or previous comments, the big block obviously is a big part of the transaction and feel that's totally priced appropriately. And then there are other components that made this transaction so strategically valuable for both parties and then adds to the value we create. Let me hand it over to Axel and Jonathan to provide any further comments on your question.

Yes. So I think a few things just to remind you. When we announced the transaction, obviously, this is a large block of business, mortality business. However, we've been in business for over fifty years. And so when we look at our total mortality exposure across the globe, the impact of the transaction is to increase that exposure by about 5%.

That's point number one. Point number two, like Tony said, we, of course, when we execute a transaction, get to reprice the business. Fundamentally, we benefit from all of our experience, of the treasure of data that we have available on that, and also the specific experience for that block of business that is part of the due diligence that we perform when we underwrite the block. We expect some volatility of claims on the business, but that is we believe that is very manageable given our balance sheet and our expertise.

And I think just to add further, I think the synergies you do highlight, I mean, whether it's capital or whether it's expense or whether it's the asset side, I think they all play parts of it. It's very hard for us to opine given we obviously don't know exactly what Equitable used to do with this business. But for us, once again, fits very well within our wheelhouse. It's all risk and operations that we have established already to manage going forward. Very comfortable with the pricing as we look through it all.

Thank you. Our next question comes from Elyse Greenspan from Wells Fargo. Please go ahead.

Hi. Thanks. Good morning. My first question, I was hoping that you guys could just talk about just the current pipeline of transactions and where you guys are seeing the most opportunity.

Sure. Happy to do that. Thank you for the question. Look, I think in our comments, we've described it as attractive. I think it's the appropriate word because we look at when we think of attractive, the quantity is nice.

But really, our our word is trying to characterize more the quality of of of the pipeline. So, obviously, since the recently announced transactions in RJ's brand and history, you know, we've we've been in the enviable position to work with many, many great companies. Way we describe the quality of the pipeline is really around who are the partners. Are they long term partners? Are they ideally sizable?

But as long as they're really long term partnership mentality. To answer your question on the breadth, we run our business with a heavy focus in all the three major regions of EMEA, Asia and North America. And it's it's each of those pipelines are very robust and strong. So it's across the board. Breadth is is great.

And then the third element, you know, as I've alluded to is, you know, does it fit within our strategy? And Our strategy is very simple. We call it creation rate, but really it's a focus on getting not only repeat business, but repeat exclusive business. Because if we're able to solve a client's opportunity or problem or hopefully even an industry opportunity or problem, then others will come to us to solve that same issue. Then we can use our global network to just spread that around the world because life insurance markets around the world seem different, but to be honest, the underlying drivers are very, very similar, the underlying needs.

So our global platform allows us to really solve these across the board.

Thanks. And then my follow-up, in your prepared remarks, you were talking about PRT and just there being an impact of some of the market uncertainty there. Do you expect that and I know you said it would be temporary. Do you see this as becoming a greater opportunity later this year? Or just how do you see things playing out on the PRT side just given the volatility we're dealing with right now?

Yeah. Absolutely. You know, this is, as you've suggested, longer term story that's already started. So, absolutely, do we believe that this is a temporary pause, let's say, that there's uncertainty in the macro environment in general. A lot of these the biggest schemes would have been down this journey of de risking for many years already.

So it's not a question of stopping it. It's a question of really pausing it perhaps. But we're very bullish on this. Look, we're looking at some other strategies also to highlight our strengths in other segments of the market that really have not paused at all. That was part of our broader strategic direction anyway.

So we're very bullish about this market in the medium term and the longer term and we do expect it to pick up in the second half of the year.

Thank you. Our next question comes from John Barnidge from Piper Sandler. Please go ahead.

Good morning. Thank you for the opportunity. With portfolio investing ahead for that elevated cash balance, can you talk about how those new money rates maybe have trended so far in the second quarter for you? Thank you.

Hey, John, this is Leslie Barbee. Thanks for the question. Yes, so as you know, there's been a lot of movement up and down, but, really the rates currently are similar to the first quarter. I guess only time will tell if that plays out, but yields came down, but spreads widened. So there's still a good opportunity set to put that cash to work.

My follow-up question sticking with the portfolio, you talked about increased private asset sourcing. Has that also continued to be favorable as well? Thank you.

Thanks. Yes. So we have a very broad platform across many public and private asset types, and we've been building that private asset capability for over twenty years. And we had attractive opportunities in the first quarter. And I'll just note that those are also a good match for our stable liabilities.

And given the portfolio growth overall, we've had some room to invest. I think your question also got to the fact that with market volatility, issuance had paused in public markets and maybe slower in privates. It's certainly coming back in publics and we still had a good pipeline in place for private. So I still think there'll be a good set of opportunities, although, you know, if volatility continues, may be somewhat slower.

Operator, we're ready for the next question. I apologize, everybody. Please hang tight. We are finding the operator. Thank you for your patience.

The next question comes from the line of Jimmy Bhullar. Please go ahead.

Hey, good morning. So first, I had a question for Tony just on if you could just talk about competition across your various businesses. Many of your competitors are P and C companies which or have P and C reinsurance businesses as well. And it seems like the market's a little softer there. When it was hardening a lot, there were comments from RGA that that might actually improve things in life reinsurance as well as some of those companies would be focusing more on the P and C side of their business.

Are you seeing the reverse of that now? And how are competitive conditions across various markets given that dynamic and also the fact that in some of the product lines, you're seeing a lot more activity by some of the PE backed companies?

Sure. Thanks, Jimmy, for the question. I guess I'll kick it off with the obvious, is our focus and strategy is this creation, really. So we honestly look at our competition, you know, observe what they do and, you know, any any great things they're doing that are successful, we obviously, you know, consider. But, you know, our our focus is really not to compete, but I I've sort of shared with you that view in the past.

To answer your question more directly, I think around the fringes, you could say it's always hard and I think the different property and casualty companies may act differently depending on a softening and hardening market. So I don't think it's particularly conclusive as to how the P and C market's hardness or softness impacts their attitudes necessarily to life and health. What I would say is that what it does show is we are consistently in the market. Right? We're not in and out or even having any view towards that or any consideration because that's all we do is life and health.

And that means we can just consistently build our platform. Right? And, you know, such that, you know, right at this point, you know, the competition intensity, whether it's with the traditional business, which is more the PNC felt, you know, before. We don't feel it's particularly overwhelming, level of competition.

Okay. I just wanted to let you know, think there's some issue with the call because your comments were paused for a few minutes. I don't know. Can you hear me okay? Can you hear me okay?

Yeah. So there might be some issue we could you could address that later as well. The I don't know. But maybe go on with your answer if you're gonna say

Alright. Okay. So, I mean, Jimmy, to answer your question, like I said, look, our focus really is not to compete. That's the creation refocus. The fact that we can continuously stay in the life and health market given that's all we do in reinsurance, we don't believe the level or intensity of competition has increased materially or noticeably with regards to the blocks or the traditional business that we see from the more PNC orientated reinsurers.

You know, the hardness or the softness of the market, you know, if it impacts their attitude towards life and health, it really is around the fringes. We continue to just strengthen our platform. Believe that we're in a very, very strong position. That's why we're so optimistic about our future.

then just another one on the Equitable transaction along the lines of the question previously. They're basically losing around $100,000,000 of income per year. And you've said that you could pick up close to $200,000,000 eventually from that block. And I think a big chunk of that is just you guys repositioning the portfolio. So since Leslie is on the call, what is it actually that you're doing with the portfolio that's different than how they've invested it?

Because I think there's a lot of confusion in the market about how one company is losing a lot less business than the other one's picking up from the same block.

Well, I know others will want to jump in. It's not all asset portfolio and we're sticking to our discipline. There'll be a reasonable amount of risk and we're there'll also be some of the assets still managed by AllianceBernstein. But, at the crux of it, where we will be adding value, we do have quite a broad platform, including a broad private asset platform. So that is where some of the value is coming in, but it's not the entire value for the transaction.

And Leslie, would just add, I mean, course, the expense footprint is, of course, going to be very different for Equitable versus us. That, of course, could explain some of that difference. And then the very last piece would be the accounting, the underlying accounting for that block of business as a reinsurer also looks different. So the way that the it's more of an emergence point, earnings emergence point rather than the, of course, underlying economics. But all of these factors probably play in.

Thank you. Your next question comes from the line of Wes Carmichael from Autonomous Research. Please go ahead.

Hey. Good morning. I I wanted to follow-up on the point on Equitable in in the accounting. And I think there's probably good reason to think that that might exhibit less volatility. Is that because when you reprice the business and it changes hands, the I think the way I understand it is with LDTI accounting, the net premium ratio may be reset and then you have less of the capped cohort volatility coming through.

Is basically the dynamic? Do I have that right?

Thank you, Wes, for the question. So just to clarify, there's some parts of the business may be subject to LDTI, but a big part of it will not be subject to LDTI. So that's not certainly the driver. I think there could be some smoothing of claims experience through reinsurance accounting. It's not directly related to Alethia, but it's kind of something like that, something along those lines.

Okay, thanks. And I guess we saw a pretty material long term care reinsurance transaction since the last call. And I believe our European reinsurer took the morbidity risk with an all spec reinsurer taking the assets. Does RGA have appetite for structures like that? Because LTC is obviously a gigantic liability for the industry and a potential opportunity.

Thanks, Wes, for the question. Let me take that. Look, our attitude to long term care is very clear. Number one, obviously, given our market position, we do see, I would believe, every opportunity that arises in the market. That's point number one.

Reinsurance Group of America Q1 2025 Earnings Call Transcript | Fortune

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Fortune 500 Power Moves: Which executives gained and lost power, Sept. 6–12, 2025

/2025/09/12/fortune-500-power-moves-sept-6-12/

John Kell

e.l.f. Beauty’s CDIO says she’s responsible for AI’s foundation, but that these tools aren’t an IT mandate

/2025/09/10/e-l-f-beautys-cdio-says-shes-responsible-for-ais-foundation-but-that-these-tools-arent-an-it-mandate/

Phil Wahba

Why Walmart’s U.S. CEO says staffing levels will remain steady even as A.I. becomes a bigger part of work

/2025/09/09/walmart-ai-jobs-brainstorm-tech/

Jessica Mathews

DoorDash CEO Tony Xu says path to autonomous deliveries filled with ‘lots of pain and suffering’ but company is nearing first inning of commercial progress

Reinsurance Group of America (RGA) Q1 2025 Earnings Call Transcript

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