Q3 2023 Reinsurance Group of America Inc Earnings Call
Good day and welcome to the reinsurance group of America third quarter 2023 earnings Conference call.
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I would now like to turn the conference over to Todd Larson Senior Executive Vice President and Chief Financial Officer. Please go ahead.
Okay.
Thank you welcome to Rga's third quarter 2023 conference call.
I'm joined on the call. This morning, with Anna Manning Rga's, Chief Executive Officer, Tony Chang, President Leslie Barbie, Chief Investment Officer, Jonathan Porter, Chief Risk Officer.
A quick reminder, before we get started regarding forward looking information and non-GAAP financial measures.
Some of our comments or answers to your questions 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 materially 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 discussion of these terms and reconciliations to GAAP measures.
And now I'll turn the call over to Anna for her comments.
Thank you Chuck.
Good morning, Thank you for joining our call today.
Last night, we reported third quarter adjusted operating earnings of $5.57 per share and the trailing 12 months adjusted operating ROE of 14, 7% or.
Or 14% excluding notable items.
This quarter's results included very good performance in many of our regions and business lines.
Genuine to show the strength of the large underlying earnings engine in our business as well as the ongoing success of our growth strategy that is adding meaningful long term value to that engine.
Let me touch on a few of the many highlights in the quarter, which include a continuation of new business momentum in our organic slow business with a measurable pickup in Asia.
Underwriting results were favorable overall and in particular, we saw very favorable mortality experience in our U S individual business as well as favorable experience in our U S group and individual health businesses.
In Asia, the traditional business also delivered favorable underwriting results.
Our global financial solutions business had another strong quarter with contributions from both investment spreads and favorable longevity experience.
This story is a familiar one as the GFS business has consistently produced excellent results over a number of quarters and years.
Investment performance in the quarter was good as new money rates continue to rise and are at levels well above our portfolio yield.
Variable investment income was in line with our expectations, while impairments were low.
We believe our investment portfolio is well positioned to withstand ongoing economic uncertainties.
We deployed $203 million of capital into enforced and other transactions in the quarter, bringing the year to date total to $587 million.
This means that in just the first three quarters, we have already exceeded the total amount of capital deployed in each of the last two years, which were of themselves at impressive levels.
On the capital management side, we repurchased $50 million of shares bringing the year to date total to $150 million in share repurchases.
And our new business pipelines are very healthy and we are expecting a strong finish to the year.
Putting it all together.
This momentum is strong for both our organic slow and enforced block businesses.
Higher interest rates are very good tailwind for our business and they are also contributing driver of new enforced opportunities.
Our earnings power and capital levels position us extremely well, allowing us to pursue attractive growth opportunities with balancing returning excess capital to shareholders over time.
Industry dynamics are favorable we are well positioned with the capabilities and proven track record to continue to benefit from all of those dynamics.
We believe many many things are coming together for us and we are optimistic about our future and our ability to continue to deliver attractive returns for our shareholders.
As you know this is my last quarterly earnings call and I have just a few comments to end my prepared remarks.
It has been a privilege and an honor to lead RGA for the past seven years.
RGA is a great company, we are a global leader with a proven resilient and highly valuable franchise.
The depth of talent here is second to none.
I leave knowing that RGA will be in excellent hands with Tony and the leadership team.
And with a future that is very bright for RGA.
And I will close my remarks by thanking our investors for their trust and support over the years.
Got you.
With that I will hand, it over to Tony.
Good morning, everyone.
Let me start by thanking her for her leadership and immense contributions to RJ.
There is no question in my mind that Ana leaves behind a company that is stronger than ever.
I'll ask Simon and optimistic future very much due to her leadership over the past seven years.
Turning to this quarter's performance I am enthusiastic to shed these excellent results yes.
Yes, the industry dynamics are very favorable but this is just part of the picture.
RJ I has a very strong franchise and an incredibly talented team to capitalize on this environment.
We provide innovative solutions that help solve some of the life and health industries biggest challenges.
These challenges become our clients' greatest opportunities and we have always been very focused on helping them succeed and growing alongside them.
Thus there are many opportunities for RJ to grow our business and support our clients all around the world.
This is another excellent. This is another quarter in which we have demonstrated our ability to execute on the growth strategy deliver attractive returns for shareholders and build upon our future earnings power.
As previously shared we have highlighted four areas of notable growth.
Global PRT and longevity Asia traditional U S.
<unk> and the Asia asset intensive business.
Based upon another strong quarter of new business wins, and the deployment of capital into transaction. There is little doubt that we are firing on all cylinders.
Our internal measure of new business embedded value.
We are well ahead of our targets and the year ago period.
As important as the quantity of new business is so is the breadth and the quality, where you see the breadth by virtue of the fact that all our businesses across the company are contributing strongly to our success.
In terms of the quality one measure we use is the amount of business coming from exclusive arrangements with clients.
On this measure we are achieving performance well ahead of our goal.
In order to obtain exclusive these transactions usually involve innovative initiatives that create greater value for our clients and RJ.
Let me share a few specific highlights in terms of our new business activity in the quarter.
To stock U S traditional had a very strong quarter for new business.
This was driven by a number of wins across the platform and the pipelines remained strong.
We continue to see strong demand for our broad range of underwriting programs. One transaction to note is an exclusive opportunity where we recently worked with one of the largest term writers in the market.
We partnered with them to fully understand and help them accomplish their goals and objectives.
In return they rewarded this partnership with a sizable quota share reinsurance transaction.
And global PRT longevity, we weren't very active and successful in Q3.
I am happy to report that we completed our second payout annuity transaction in the U S for the $800 million in premium.
In line with our previously communicated strategy, we have entered into arrangements with established payout T insurers to jointly bid on southern transaction and this transaction was one with a second partner.
Our U S. PRT business continues to gain momentum the market is very active and we remain highly confident about prospects in this sizable and growing market.
In addition, our longevity business remains very strong and we completed a couple of significant transactions in Europe, adding to the very active first half of the year.
We continue to see a strong pipeline of business in the region and remain optimistic.
In Asia, we continue to see increasing demand for the new products, we have launched without partners some of the leading life insurers in the region.
Successful new products were launched in Japan, Korea, China, and Hong Kong during the quarter.
In Hong Kong the industry continues to see strong momentum from the additional tailwind that have followed the reopening of the Hong Kong China border.
As you know visitors from China are a material source of business for the Hong Kong insurance market.
One particular success to know it wasn't exclusive solution, we provided to a major client that was a combined product development underwriting and capital management solution.
As previously mentioned, we are world class in each of these area and when we combine all three into one transaction. It result in RJ winning exclusive reinsurance.
As a final recognition of our success I am pleased to announce RJ has been successful in winning a number of all of our awards in Asia over the past quarter.
The most significant wins, where the age of life re insurer of the year and.
And the Asian insurance reviewed innovation of the year Awards.
Well, yes, Im sorry, we are excited with the success that we are having not only in Asia, but very much across the globe.
Thus I have a tremendous amount of confidence in RJ future and in our ability to continue to deliver growth and attractive returns to our shareholders over many years to come.
We see many attractive growth opportunities and RJ will pursue these with vigor and creativity, but as always with strong risk discipline and with a long term focus that has positioned us so well for future success.
Thank you for your interest in RJ I will now turn it over to Todd to discuss the financial results.
Thanks, Tony.
RJ reported pretax adjusted operating income of $481 million for the quarter and adjusted operating earnings per share of $5 57, which.
Which includes a foreign currency tailwind of <unk> <unk> per share.
Trailing 12 month adjusted operating return on equity was 14, 7% <unk>.
Excluding the assumption changes under L. D T I referred to as notable items.
Trailing 12 month adjusted operating return on equity was 14%.
We are pleased with the strong quarterly results as well as new business volumes capital deployment and investment results.
I did want to make a few comments on the assumption changes that occurred in the quarter.
Our annual review of Restump of reserve assumptions resulted in a net positive financial impact of $3 million pretax to consolidated results.
And the specific geographic segments and various business lines. The net impacts were modest with many natural offsets.
Thinking about this from a high level it shouldn't be a surprise given our diversified platform, both geographically and by product with mortality and longevity of the most obvious.
The U K is a good example, where we reflected our expectation of some level of continued excess mortality that we have been seen in the population.
This has had an unfavorable impact to the traditional line and a favorable impact on our longevity business.
Turning to financial results reported premiums were up 31% for the quarter.
This quarter's increase includes more than $800 million in premium from our second U S. P. A R. T transaction this year that Tony mentioned earlier.
Also as Tony and Ana mentioned, we have strong momentum of new business activity and expect to continue to see attractive premium growth overtime.
As we move to the quarterly segment results starting on slide six of the earnings presentation.
I would like to note that we were discussing results that exclude the impact of assumption changes discussed earlier.
U S and Latin America traditional segment reflected favorable mortality.
And individual mortality, we saw very favorable experience that was widespread.
Primarily driven driven by lower frequency.
This experience occurred in both our capped and uncapped cohorts.
As we've previously discussed under L. D T. I a portion of the underlying mortality expense experience for uncapped cohorts as reported in the current period earnings and the remaining experienced this spread into future periods.
And that is what we saw this quarter were about half of the favorable mortality results were spread into the future.
The U S asset intensive business results were strong.
Reflecting improved investment spreads primarily due to higher yields on floating rate securities.
And our U S capital solutions business continues to perform in line with our expectations.
Canada traditional results reflected unfavorable group experience.
Individual mortality experience was favorable but a large part of this experience will be spread into the future for L. D T I.
The financial solutions business reflected favorable longevity experience.
In the Europe Middle East and Africa segment, the traditional business results reflected unfavorable mortality experience most of which was recognized in the current quarter.
Emea's financial solutions business results reflected favorable longevity experience.
Turning to our Asia Pacific traditional business.
Results reflected favorable claims experience much of which was recognized in the current period.
Additionally.
We have put a fair amount of attractive new business on the books in recent periods and that is having a beneficial impact.
Finally, there was a modest favorable effect from a one time item.
The Asia Pacific Financial solutions business results were in line with our expectations.
Yeah.
The corporate and other segment reported pretax adjusted operating loss of $25 million less than the expected quarterly range, primarily due to higher investment income.
Moving onto investments on slides nine through 12 in our earnings presentation.
Non spread portfolio yield for the quarter was $4 seven 2%, reflecting higher yields.
For non spread business, our new money rate rose to $6 three 1%.
Selecting higher available market yields with select opportunities in private assets and structured securities.
Credit impairments were low and we believe the portfolio is well positioned as we move through ongoing economic uncertainties.
Related to capital management as shown on slides 13, and 14 of our earnings presentation our.
Our capital and liquidity position remains strong.
And we ended the quarter with excess capital of approximately $1 $1 billion.
In the quarter, we deployed $203 million of capital in the in force and other transactions, bringing the year to date total to $587 million.
We also returned a total of $106 million of capital to shareholders through $50 million of share repurchases and 56 million in dividends.
We expect to remain active in deploying capital into attractive growth opportunities in our organic flow and enforced block transactions.
And returning excess capital to shareholders through dividends and share repurchases.
We continued our long track record of increasing book value per share as shown on slide 15, our book value per share excluding <unk> increased to $142 63.
This represents a compounded annual growth rate of 10, 8% since the beginning of 2021.
The first three quarters of 2023 have been particularly strong with each quarter coming in ahead of consensus estimates and expectations.
So I thought it would be benefit helpful to go through the main drivers from our perspective.
First very strong organic new business and in force transactions.
And then Tony has already reflected on the fact that both of these drivers have been very strong and above our expectations for the year.
In some cases.
Revenues from these sources have an immediate benefit to current profits while in other cases profits initially emerge and an increasing pattern.
But in either case, we have been building current and future earnings power through capital deployment, and the quality of new business and enforced transactions over the past few years.
Second underwriting results.
Across the organization, we have generally had very good underwriting results this year.
Areas of strength include Asia traditional U S traditional and our longevity business across the various geographies.
Under a L. D T. I some of this underwriting experience was recognized in the current period, whereas the rest is spread out into the future.
Third interest rates, we have been explicit in the past that the low interest rate environment in place for a number of years was a headwind for us.
Now that we are in a higher interest rate environment we.
We have had and should continue to have a nice tailwind to our investment yields and earnings.
While we incorporated an expectation of higher rates into our 2023 plans short term and long term rates are higher than we assumed and are providing some incremental benefit.
Going forward.
As long as new money rates stay higher than our portfolio yield we should pick up additional benefit on a gradual basis.
Fourth enforce management.
In Forest management has always been a lever for us the actions taken have had and will have a positive effect on our results over time.
Given these dynamics, we are running ahead of our intermediate term financial targets and current run rates provided at our June Investor Day.
As we look forward with these drivers in mind, we would expect to provide relevant updates.
To summarize we are very pleased with our third quarter performance, which follows a strong first half of the year.
Our business is resilient with substantial underlying earnings power.
Momentum is strong and.
And we see good opportunities across our geographies and business lines.
Looking forward, we are well positioned for the future.
And expect to deliver attractive returns to shareholders over time.
This concludes our prepared remarks.
We would now like to open it up for questions.
We will now begin the question and answer session.
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At this time, we will pause momentarily to assemble our roster.
The first question today comes from Ryan Krueger with VW. Please go ahead.
Hi, good morning, Todd.
Todd and the and the things you just went over in terms of the drivers of the strong year to date results. It seems like.
The new business growth interest rates and enforce management would all have ongoing recurring.
No the one that might not be as recurring it would just be the favorable underwriting experience.
Was hoping that you could are you able to give us any color or quantification of just how favorable the year to date results had been from an underwriting perspective relative to your expectation.
Yeah. So I can give you I have in my.
My hand, the current.
I'm, sorry, I was gonna size just for underwriting perspective.
For the current quarter I'd size it at around.
What went through the income statement around $60 million roughly now remember under L. D. T. I. That's the portion that was recognized currently overall underwriting for the quarter was probably closer to $150 million or so.
Perfect. Okay. So $60 million came through the actual income statement, though.
And in a quarter for us yeah yeah.
Yeah and Macquarie, Okay got it and then.
Separately.
You had done the second PRT transaction I think it's with a different partner. That's the first one are you able to tell.
Tell us who the partner is and then.
On a go forward basis are there built into arrangements in terms of.
In terms of jointly bidding or is it deal specific.
Yeah, Ryan Let me, let me take that.
To start with on the PRT business, that's what I've shared with look.
We think there's great opportunities in this market and we are very excited without our successes to date as we've previously shared we we feel we're one of the natural home. So longevity risks given we have such a big book of mortality business as well as our capabilities and our data that we've built up over many.
Many years on the mortality side as well as the longevity side in Europe.
To answer your question, Yes, I can't share the second partner and that partner is a prudential and to answer your other question.
The different partnerships have a clear guidelines on the type of pension funds, we will consider with each partner.
We priced the transactions obviously independently.
Coordinate closely on the on the presentations of Alpha as a combined package.
The next question comes from Wes Carmichael with Wells Fargo. Please go ahead.
Hey, good morning, just wanted to say congrats and best wishes for your retirement.
I think Todd you mentioned, a onetime favorable item in Asia would you be able to give us some additional color on that.
Oh sure Yeah to size it was around $10 million in the quarter.
Some.
Way, we classified as underlying treaty and the way the financial reporting work for that so it was sort of a reserve adjustment true up that then going forward it'll be more of a normal pattern. So it really was sort of a isolated one time item for the quarter.
Got it thanks, and maybe a higher level question, but.
Have you guys given any thought to them you know the advancement of the G. L. P. One drugs and could that have an impact on rga's results over the longer term as you know the cost issues are dealt with in adoption becomes more widespread.
Yeah, Hi, this is Jonathan.
Yeah, so you're referring to to drugs.
<unk> are used to manage obesity.
The next question comes from John Bainbridge from Piper Sandler. Please go ahead.
Good morning, and thank you very much you had talked about the main drivers of better earnings to kind of walk through it when you talk about in force management can you maybe talk about how much of that in scores has seen repricing actions.
The pipeline for more of that prospectively. Thank you.
Thanks, John let me take that one.
Look I'll stance on impulse managed trend hasn't changed I mean, we do not hesitate to exercise our rights in the Treaty Ah.
But we have been very focused says with pretty much everything we do on a partnership approach. So you know that involves obviously being very holistic and considering.
The whole relationship across the world consider with that client considering future opportunities for partnership and new business and so and so forth. So I would say you know.
But what we've sort of covered a lot of the low hanging fruit for lack of better words and buy we continue very focused on this strategy are to find any ways, where once again from a partnership perspective, there's opportunities for win win situations between ourselves and our partners.
Thank you for that and my follow up question.
Do you hear more and more carriers talking about automating their underwriting.
And you have the data to power that when you think about from a primary perspective within the U S life insurance market, how much of that is automated.
And what's the hurdle there.
And opportunity thank you.
What's the whole can opportunity sorry.
What's the hurdle for some of these primary carriers from implementing it today and because we've seen a number of them talk about doing more automated underwriting.
Within their portfolio. Thank you yeah.
Look automation of underwriting obviously.
Is that theme are very big in the U S and in Ah and across the globe.
Need shoved out our clients, obviously work very closely with us on that Alpha cause is a broad range of underwriting capability. So we absolutely work very closely with our clients to automate as well as provides the facultative as well as a multitude of services into.
Between them So you know.
I'd say the hurdles are really depends on client by client, obviously, our size and scale, but it's clearly a strong trend that are with very much pondering without our clients in the industry to facilitate them further.
Your next question comes from Joe Smith with Boa. Please go ahead.
Hi, Good morning, I wanted to start on the interest rate tailwind can you provide some color on the level of incremental benefits versus what's in your guidance, if it's new money yield stay around current levels.
Oh, yes. Thanks this is leslie.
And I think maybe it's helpful. If I just compare this quarter to last quarter still keep focusing on our non spread business.
Incremental difference from higher yields has been about 5 million on the quarter.
That is a sustainable.
Sustainable if we stay at these low levels that we had a quarter and it moved up a bit and they'll actually probably be a little additional tailwind in the fourth quarter because as you know the yields really moved up sharply towards the end of the quarter.
Level 5 million or maybe a little bit more in the fourth quarter.
Okay very helpful. And then just shifting to the in force activities.
Obviously year to date capital deployment is very strong there I guess do you see this level persisting over the intermediate time, and then can you just talk about where you see the strongest opportunities I know much of the activity has been in GFS, but are you seeing more opportunities with the traditional business.
Yeah, let me take that one yeah the growth in our deployment as Anna mentioned the growth in our deployment of capital into the business.
We've already surpassed all of last year, and we have obviously very strong momentum and we have no reason to believe that won't continue you know across the globe I'm you know obviously.
With regards to yeah, four major areas of notable growth Asia, the asset intensive business, well I've already discussed a bit on the payout tea in the U S, which is also asset asset involves asset intensity and and other parts of the world. So the prospects are very strong on both the GFS.
As well as the traditional business we.
We do time to time see impulse opportunities.
And particularly in the U S and I want to also say you know we spoke earlier about enforce management our ability to partner with clients are when we have to discuss with them in force actions.
And then how can I put it there experience when they work with us on that sort of differentiates us so that when they have other blocks of business, yeah, they're more prone to work with us on those opportunities.
Your next question comes from Tom Gallagher with Evercore. Please go ahead.
Good morning, Todd I, just wanted to come back to your response to Ryan's question. The favorable underwriting this quarter. Overall I think you said was around 150 million 60 million of which actually came through in the quarter do I have that right.
Yeah, and that's specific to the claims activity that's right.
Okay.
And that's the that's both our traditional and GFS.
Gotcha.
And the.
So Todd the right way to think about this.
The 90 million that is deferred is going to come through very slowly in the future that will get amortized in future periods.
I don't know 10 years.
How should we think about that $90 million.
Yeah, that's right the amortized in overtime and in the future and depending on which cohorts. It then in the underlying product it all depend on the duration of the underlying.
Liability.
It's probably is 10 years or longer on average.
The next question comes from Jimmy <unk> with Jpmorgan. Please go ahead.
Thanks, Good morning, first maybe for Leslie on the new money yield obviously, you're benefiting from the rise in interest rates I think you highlighted that the yields also benefited from its shifting allocation privates and do a structured investments.
Got.
It did.
And then did you highlight that do sort of implied that maybe this quarter. The new money yield is trending above what it normally would have done it because you opportunistically increase allocations, there or should we expect it to maybe not be as high or was that just the allocation still normal versus where you expect them to be.
Going forward.
Oh. Thank you I'm glad you asked that if that wasn't clear I think the comment really about this like the opportunity to make it clear I guess, what we have a broad platform and we're actively selecting and not.
Everything is driven by just the interest rates that show up on our doorstep, but actually the allocation of private took a little bit less than the second quarter in the second quarter I think I had noted we had a bit.
Higher allocation, so that shift in mix is actually a bit of a negative on the quarter, but generally we're at very healthy level.
Rock platform.
So nothing to suggest that if rates go up more your yields shouldn't incrementally improve from even the high levels that it was that didn't make it.
Yeah, correct and in fact, as you know rates went up much more towards the end of the quarter or so.
If you're going from the 930 level that would be supportive of going forward.
Your next question comes from Tracy <unk> with Barclays.
Please go ahead.
Thank you.
Basic question. So you could do a U S PRT transaction jointly with me.
Insurer partner or you could do some type of PRT reinsurance I'm wondering which path has a greater earnings potential.
It would be the pop that wed pursuits are the side by side, our partnership with P. O T insurers.
Okay perfect.
And because you also have a presence in Bermuda wondering if you had any early views on that consultation paper that's out there, particularly on the scenario analysis.
Yeah, Hi, Tracy it's Todd Yeah, we've we have been monitoring that.
We do have a company or companies in Bermuda.
You know based on our analysis for RGA Oh.
We don't expect a material impact we actually do not used a scenario based approach so that those are the.
Ranges to that.
Will not impact us directly.
The next question comes from Puneet <unk> with Jefferies. Please go ahead.
Thanks, Good morning.
Your interest rate leverage seems like it's coming in much stronger than I think we expected is there a way to help us think through how much of that is due to sort of the long end of the curve versus the short end of the curve.
Hyatt closely.
You know I would say that the beach are the numbers I was quoting before the change quarter over quarter are really.
I would say half and half it's or the short end of the curve.
Still and then we had done a nice job over this period of higher interest rates and and doing some extension trades and locking in the entire yields for longer so it's kind of happened.
Okay. That's that's helpful. And then I guess for Tony I think you had mentioned in your prepared comments.
Embedded value or value of new business was much higher on the stuff that you've added recently is there a way to think about that from a ROE perspective in other words, what are the returns that you're getting on sort of the new business that you've been adding relative to that I guess eight of 11% to 13% ROE target that you always talk about.
Yeah no. Thanks for the question Yeah, as you mentioned I mean, you know.
The new business is coming in strong the breadth the quality and the.
And the volume.
To add further to that.
Very pleased with the returns on the new business and and that's why we've mentioned a few times.
The exclusive it is because when you are able to sort of grow the pie for you and your partner then both partners benefit from that so you know.
To attain.
All of our pricing targets are higher than that and once again, we're just very pleased with the returns we're seeing on the new business.
Your next question comes from Mike Ward with UBS. Please go ahead.
Thanks, Good morning, and congratulations and a.
I, maybe just to expand on Western <unk> question on the G. L P ones.
<unk> of years ago, you guys sort of shared this high level hypothetical type of sensitivity to.
A one year extension of life expectancies of I was just wondering if you could help us think through that hypothetical again.
Just given your mix and whatnot.
Yeah, Hi, Mike It's Jonathan.
Yeah, I I don't have that number at the at the top of our top of my head table to provide you, but I mean, I guess you can think of it maybe in the context of you know again. This is just super high level. If you were to push out everyone's desk by one more year, we basically would collect an extra year of premium so that's <unk>.
Maybe some way to give you a very high level context for that but let me take that away and see if there's kind of a different way to think about it and you know maybe we can.
Look to provide some further information say at Investor day next year or something like that.
Awesome, Yeah that sounds great and then I was just wondering if theres any sort of update on the third party capital vehicles strategies, specifically the revamped langhorne.
Yeah, Hi, this is Todd Yeah, no alternative capital remains important.
Important strategically for us before I answer your specific Langhorne question, you know, we have been active and alternative capital around things like embedded value securitization surplus notes and there's some strategic retro session. So it's not just the third party capital element.
That we include in sort of our alternative capital considerations, but as far as the successor to Langhorne. We did we have taken the lessons that we've learned from langhorne.
And have been developing the next generation.
Our version if you will our structure were pretty far along on Hum execution, and hopefully we'll execute here in the near future as far as clothing.
Clothing that one out.
Hello.
I'll start with Goldman.
Go ahead.
Hi, first question for you was just to follow up on the Bermuda regulatory changes I wanted to.
Yes.
Asking for Ya.
If what you're seeing in some of those regulations and how it's impacting the market there.
It would actually go as far as the impact the competitive environment. You know certainly you guys arent necessarily competing directly with the private equity backed companies on every deal, but you know where where you do overlap with them are you seeing any signs of an easing competitive environment related to this.
Yeah. Thank you not weight.
Obviously, it's kind of anecdotal you know we will.
Look at every deal, but now we have started seeing some signs that says yeah. The Bermuda regulator changes all speaks of changes then the competitive environment does change and as Todd mentioned United.
Yeah, given our practices, that's only favorable for us.
Got it a second question I had is a little more broad and for you Tony I wanted to ask you know.
As we think through 'twenty four you know first full year as CEO what.
What are the you know what's the short list of things that you're most focused on and I know that's broad and this has been in the works for a while but I was just interested in hearing you know part of it.
Yeah.
Thanks for the question look.
And all of our strategies is only two years old and really.
The focus is very much on execution, we feel we've got obviously incredibly many many opportunities across the globe.
You know way firing on all cylinders right now yeah. The the past 12 months has been really the only period.
Post COVID-19 when when the World is fully opened up such its all about focus and execution and delivery Hum and teams are energized and excited you know strong balance sheet. You know incredible brand are all the positives.
Are there and you know, it's now up to us to continue to focus and execute and deliver.
The next question comes from Wes Carmichael with Wells Fargo. Please go ahead.
Hey, Thanks for taking my follow up I had a question on the U S. Traditional segment and I think we saw in the financials of Remeasurement gain and you said mortality experience was favorable. So are you seeing anything new there that maybe just more quarterly volatility.
Yeah for the.
Order for in the U S mortality markets as I mentioned in my comments, we saw some very favorable mortality primarily due to frequency.
I don't think we saw anything unusual it is pretty much widespread as far as the the favorable experience there.
Sure and I guess, what I'm trying to get at is are you still kind of expecting excess mortality continues into 2024 or do you kind of changed in your thinking at all from from your outlook at Investor Day.
Yeah.
Yeah, maybe I'll take that one west it's Jonathan I, yet we do our outlook is still pretty much consistent with what we thought at Investor Day. So you know we're we're.
We're pleased to see some of the trends where access mortality and the population is coming down I think now it's around 1% to 2%. If you look at some of the most recent couple of quarters.
But we still believe that excess mortality will continue.
In the intermediate term.
Of course, that's reflected in our.
Assumptions that we've got in our business and in our reserves. We haven't at this point changed our expectation for long term mortality improvement.
The next question comes from Tom Gallagher with Evercore. Please go ahead.
Thanks for taking the follow up just a question on Asia, what what's driving the such a good level of favorability in the traditional business is it life insurance underwriting is a critical illness is it both.
I'm guessing it's a critical illness, there might be something that's a little more sustainable to that but just curious if how.
How youre seeing that.
Yeah, Mike maybe I'll take that one.
Yeah.
Really that's there's a number of drivers in Asia that we're very happy with.
Part of it is the fact that we we feel being a U S company.
Obviously strong Asian presence and shrunk teams allows us to leverage off a sweet spot, we have which is being able to.
Great New products, yeah, with a liability liabilities such as critical illness and mortality, but also connect that with the ability to reinsurer on the asset side of the balance sheet. So that's a pretty unique attribute out out there in Asia.
So that's what's driving most of the the the performances is that ability to gain those exclusives and and and create more value for ourselves.
As well as our partners to Sharon.
Like you mentioned I mean critical illnesses is one of the major risk there most of them mortality, but it's something that we have been doing in in Asia and the rest of the globe for probably about 25 years now.
Okay. Thanks.
The next question comes from Jimmy <unk> with Jpmorgan. Please go ahead.
Hey, I just wanted to follow up on the.
Our Asia business and specifically on Australia on how that's been performing over the last few quarters, because I think you've obviously had charges there in the past, but I'm assuming that it's doing better given the results in the Asia Division overall.
Yeah, Hey, Jeremy it's Todd Yeah, so for the quarter for Australia, I think excluding notable items. There was a modest profit and I think year to date of or you know, it's it's profitable it's still not back to the level that we would like to see it up.
It's.
Moving in the right direction is the best way, we have been cautious there the last several years as far as new business and that's so going forward things are I think heading heading the right direction, Yeah, Jimmy just strategically I mean, that's it is a strong example of.
The Optionality, we have across the world I mean, what we are able to assess.
Assess the risk return Oh, many many blocks and businesses across the world and when they made the the market you know the market provides a risk return tradeoff that we like then we're able to to pursue it but the discipline. We've shown over the number of years as well as the repricing of in force blocks.
Has held us in good stead as Todd said in terms of the financial.
And fair to assume that a part of L. D. D. I you would've looked at reserves and taken experience into sort of account for reserves in Australia as well.
Yes, I'm afraid of the business subject to L. D. T. I mean, yeah, we have had to update all of our and our best estimate assumptions.
This concludes our question and answer session I.
I would like to turn the conference back over to Tony Chang for any closing remarks.
Well. Thank you all for your questions and continued interest in RJ.
You know on behalf of all the employees of RJ I would love to congratulate her on her on her upcoming retirement.
This was a very strong quarter further demonstrating the substantial earning power.
Our business, we remain very well positioned to capitalize on the many growth opportunities. We are firing on all cylinders and we are confident in our ability to continue to deliver attractive returns to our shareholders.
Thank you and this concludes our third quarter call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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