Q2 2024 Reinsurance Group of America Inc Earnings Call

Operator: Good day, and welcome to the Reinsurance Group of America Incorporated second quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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 star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Jeff Hobson, Head of Investor Relations. Please go ahead.

Good day and welcome to the reinsurance group of America incorporated second quarter 'twenty 'twenty four earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star.

Key followed by zero.

After todays presentation, there will be an opportunity to ask questions. If you ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.

I would now like to turn the conference over to Jeff Hopson head of Investor Relations. Please go ahead.

Jeff Hobson: Thank you. Welcome to RGA's second quarter 2024 conference call. I'm joined on the call this morning by Tony Cheng, RGA's Chief Executive Officer, Todd Larson, Chief Financial Officer, Leslie Barbi, Chief Investment Officer, and Jonathan Porter, Chief Risk Officer. A quick reminder before we get started regarding forward-looking information in non-GAAP financial measures. Some of our comments or answers to your questions may contain forward-looking statements, and actual results could differ materially from those expected.

Jeff Hopson: Thank you welcome to Rga's second quarter 2024 conference call I'm joined on the call. This morning by Tony Chang Rga's, Chief Executive Officer, Todd Larson, Chief Financial Officer, Leslie Barbie, Chief Investment Officer, and Jonathan Porter, Chief Risk Officer.

Speaker Change: 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 factor.

Jeff Hobson: Please refer to the earnings release we issued yesterday for a list of important factors that could cause actual results to differ from the expected. 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 gap measures. Throughout the call, we will be referencing slides from the earnings presentation, which is again posted on our website. Now, I'll turn the call over to Tony for his comments.

That could cause actual results to differ from the 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 re.

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.

Tony Cheng: Good morning, everyone, and thank you for joining our call. Last night, we reported adjusted operating earnings of $5.48 per share, continuing our trend of strong bottom-line results. In addition, we continue to have strong momentum across all our business lines and geographies worldwide. The pipeline remains robust, reflecting RGA's unique positioning in the market and the dedication of our team. Our adjusted operating return on equity for the past 12 months was 15.3 percent, exceeding the intermediate term targets we previously shared. Underwriting results on an economic basis were in line with our expectations across the company.

Tony: Good morning, everyone and thank you for joining our call.

Tony: Last night, we reported adjusted operating earnings of $5.48 per share continuing.

Tony: Continuing our trend of strong bottom line results.

Tony: In addition, we continue to have strong momentum across all our business lines and geographies worldwide.

Tony: The pipeline remains robust, reflecting rga's unique positioning in the market and the dedication of our teams.

Tony: Our adjusted operating return on equity for the past 12 months was 15, 3%.

<unk> the intermediate term targets, we've previously shared.

Tony: Underwriting results on an economic basis, but in line with our expectation across the company.

Tony Cheng: This is also generally the case across each of our business segments. It is pleasing to note that we have now had five straight quarters of positive underwriting results. We have a world-class investment platform that is integral to our business and strategy. We continue to put new money to work at returns well above the current portfolio yield, benefiting from our broad asset completion platform. In terms of new business activity, our recent momentum continued this quarter, and our internal measure, new business and better value, strongly exceeded our goals for both the quarter and the year to date.

This was also generally the case across each of our business segments.

It is pleasing to note that we have now had five straight quarters of positive underwriting results.

Tony: We have a world class investment platform that is integral to our business and strategy.

Tony: We continue to put new money to work at returns well above the current portfolio yield benefiting from our broad asset completion platform.

Tony: In terms of new business activity. Our recent momentum continued this quarter and our internal measure new business embedded value strongly exceeded our goals for both the quarter and the year to date.

Tony Cheng: This was driven by both the number of transactions and the expected returns on these transactions. At our investor day, we shared many recent examples of innovative forms of new business. These transactions do generate a higher expected return for RJ given the greater value created for all parties.

Tony: This was driven by both the number of transactions and the expected returns on these transactions.

Tony: At our Investor Day, we shed many recent examples of innovative forms of new business.

Tony: These transactions to generate a higher expected return for RJ, given the greater value created for all parties.

Tony Cheng: We continue to see the percentage of these transactions well ahead of our internal goals, leading to greater long-term value for RGA. In relation to this, we deployed a material amount of capital into in-force transactions at $307 million, which was a solid follow-up to an especially strong first quarter. We have always shared a preference to redeploy our excess capital back into the business for both financial and strategic reasons.

Tony: We continue to see the percentage of these transactions well ahead of our internal golf, leading to greater long term value for a J.

Tony: In relation to this we deployed a material amount of capital into in force transactions at $307 million, which was a solid follow up to an especially strong first quarter.

Tony: We have always shared a preference to redeploy our excess capital back into the business, but both financial and strategic reasons.

Tony Cheng: As we know, successful transactions lead to favorable economics and repeat transactions over time. Let's now share some more specifics from our four areas of notable growth, starting with our Longevity and PRT. In the USPRT market, we completed another transaction this quarter, and we remain optimistic about our prospects going forward. In the UK longevity space, where RJ is a market leader, we continue to be highly successful on longevity swaps of all sizes, as well as funded reinsurance transactions. The pipeline remains active in both the U.S. and U.K., and we expect the rest of the year to be productive.

Tony: As we know successful transactions need to favorable economics and repeat transactions over time.

Tony: Let's now shed some more specifics from all areas of notable growth.

Tony: Starting with our longevity and PRT business.

Tony: In the U S. P O T market, we completed another transaction this quarter and we remain optimistic about our prospects going forward.

Tony: In the U K longevity space, where RJ is a market leader, we continue to be highly successful on longevity swaps of all sizes.

Speaker Change: Well, that's funded reinsurance transactions.

Tony: The pipeline remains active in both the U S and U K and we expect the rest of the year to be productive.

Tony Cheng: This follows a strong Q1 where we closed the first material longevity deal in Japan and our largest USPRT transaction to date. Our second area of notable growth is the asset-intensive business in Asia. RGA's multifaceted client ownership means we have deep relationships with our clients in many ways. For example, with a large Japanese client, we closed their first asset-intensive transaction after enjoying a long-standing relationship on the biometric side over many years.

Tony: This follows a strong Q1, when we closed the first material longevity deal in Japan, and our largest U S. P O T transaction to date.

Tony: Our second area of notable growth is the asset intensive business in Asia.

Jay: Hi, Jay it's multi faceted client partnership means we have deep relationships with our clients in many ways.

Jay: With a large Japanese client we closed their first asset intensive transaction after enjoying a long standing relationship on the biometric side over many years.

Tony Cheng: The client highlighted the numerous positives from this transaction, including risk reduction and the increase in their long-term value. This further strengthens the view that reinsurance is a key tool for capital management, reinforcing our positive view of future opportunities. In addition, in Korea, we closed one of the first asset-intensive transactions in the market, and we are optimistic about further opportunities. This transaction continues RGA's long track record of being a pioneer in asset-intensive reinsurance around the world.

Speaker Change: The client highlighted the numerous positives from this transaction, including risk reduction and the increase of their long term value.

Speaker Change: This further strengthens the view that reinsurance is a key tool for capital management, reinforcing our positive view towards future opportunities.

Tony: In addition in Korea, we closed one of the first asset intensive transactions in the market and we are optimistic about the opportunities.

Tony: This transaction continues our long track record of being a pioneer in asset intensive reinsurance around the world.

Tony Cheng: In our third area of notable growth, which is our traditional Asia business, we continue to see very positive results. Our focus has long been to package product development with capital and underwriting solutions to fuel our clients' growth and success. This quarter, we have added a technology solution to this package. This is a market-first digital underwriting solution to address the lengthy onboarding process for mainland Chinese visitors buying insurance in Hong Kong.

Tony: Our third area of notable growth, which is out Asia traditional business. We continue to see very positive result.

Tony: Our focus has long been to package product development with capital and underwriting solutions to fuel our client growth and success.

Tony: This quarter, we have added a technology solution to this package. This is a market for digital underwriting solution to address the lengthy onboarding process for mainland Chinese visitors buying insurance in Hong Kong.

Tony Cheng: We have successfully launched this with a key client, and it is generating strong interest in the market. Finally, our fourth area of notable growth is the US traditional market. Here, RGA has worked in partnership with one of our clients, one of the largest distributors in the U.S., and another reinsurer to develop a new proprietary life product. Each partner brought their own strengths to the table, with RJ providing mortality expertise as well as performing all the case underwriting for the business.

Tony: We have successfully launched this with a key client and it is generating strong interest in the market.

Tony: Finally, our fourth area of notable growth is the U S traditional business.

Speaker Change: He has worked in partnership with one of our clients one of the largest distributors in the U S and another reinsurer to develop a new proprietary life product.

Speaker Change: Each partner brought their own strengths to the table with RJ, providing mortality expertise as well as performing all the case underwriting for the business.

Tony Cheng: We expect this will stimulate future growth for RJ in these exclusive transactions. Outside our four areas, we continue to have strong success. In South Africa, we launched a new effort with a large growing bank insurer to offer simplified issue policies to the mass market. This uses RJ's proprietary model and technology to enhance the underwriting journey for customers.

Tony: We expect this will stimulate future growth for our J in these exclusive transactions.

Speaker Change: Outside our four areas, we continue to have strong success.

Speaker Change: In South Africa, we launched a new asset with a large growing bancassurer so off a simplified issue policies to the mass market.

Tony: This uses RJ its proprietary model and technology to enhance the underwriting journey all customers.

Tony Cheng: This is an important transaction with strategic significance as we can leverage this solution elsewhere around the world. Finally, as I expressed at Investor Day, in addition to new business activities, we also have other levers to help grow ROE and PTAOI. This quarter, we executed and enforced Enforce Actions across multiple regions, as well as asset repositioning into higher yielding investments. These actions, in aggregate, generated positive PTOI this quarter and also on an ongoing basis.

Tony: This is an important transaction with strategic significance as we can leverage this solution elsewhere around the world.

Speaker Change: Finally, as I expressed at Investor Day. In addition to new business activities. We also have other levers to help grow our O E. M. P. T a L y.

Speaker Change: This quarter, we executed.

Tony: And enforce action in force actions across multiple regions as well as asset repositioning into higher yielding investments.

Tony: These actions in aggregate generated positive P. T O Y this quarter and also on an ongoing basis.

Tony Cheng: All in all, I am delighted with yet another quarter where we are firing on all cylinders, strong financial results in terms of PTAOI and ROE, strong success in the four areas of notable growth continues, and other areas are also contributing with strategic transactions. We are increasingly using technology to deploy our intellectual property, as we saw in South Africa and Hong Kong. Finally, we saw the successful use of the other levers RJ has available to unlock value in our balance sheet and positively impact profit and ROE.

Speaker Change: All in all I am delighted with yet another quarter, where we are firing on all cylinders Stu.

Tony: Strong financial results in terms of P. T I O I N R. O a strong success in the four areas of notable growth continues and other areas are also contributing with strategic transactions.

Tony: We are increasingly using technology to deploy our intellectual property as we saw in South Africa and Hong Kong.

Speaker Change: Finally, we saw the successful use of the other levels RJ. It has available to unlock value in our balance sheet and positively impact profit and ROA.

Tony Cheng: We are the only global reinsurer exclusively focused on life and health business, and thus, our platform is unique. In my view, our capabilities are second to none. Success breeds success as the virtuous innovation cycle continues. I am fully confident in our ability to continue to deliver growth at attractive returns to our shareholders for many years to come. I will now turn it over to Todd to discuss the financial results in more detail.

Speaker Change: We are the only global reinsurer exclusively focused on life and health business and thus our platform is unique in.

Tony: In my view, our capabilities are second to none.

Tony: Success breeds success as the virtuous innovation cycle continues.

Tony: I am fully confident in our ability to continue to deliver growth at attractive returns to our shareholders for many years to come.

Tony: I'll now turn it over to Todd to discuss the financial results in more detail.

Todd: Thanks, Tony.

Todd Larson: RGA reported pre-tax adjusted operating income of $491 million for the quarter and adjusted operating earnings per share of $5.48. For the trailing 12 months, adjusted operating return on equity was 15.3%. We are pleased with these results and with the continued positive momentum in new business activity and in forced transactions. Reported premiums were up 17.5%. This increase includes $282 million from a single-premium U.S. PRT transaction in our financial solutions. Our traditional business premium growth was a healthy 7% for the quarter and 7.6% year-to-date on a constant currency basis.

Todd: RJ reported pretax adjusted operating income of $491 million for the quarter and adjusted operating earnings per share of $5.48.

Todd: For the trailing 12 months adjusted operating return on equity was 15, 3%.

Speaker Change: We are pleased with these results.

Speaker Change: And with the continued positive momentum of new business activity and in force transactions.

Todd: Reported premiums were up 17, 5% for the quarter.

Tony: This increase includes $282 million from a single premium U S PRT transaction and our financial solutions business.

Todd: Our traditional business premium growth was a healthy 7% for the quarter and seven 6% year to date on a constant currency basis.

Todd Larson: We are pleased with the premium growth, reflecting good results across all. The effective tax rate for the quarter was 25.5% on pre-tax adjusted operating income, above the expected range, primarily related to income earned in foreign jurisdictions. For the full year, we expect the effective tax rate to be in the range of 24 to 25 percent.

Todd: We are pleased with the premium growth, reflecting good results across all regions.

Todd: Yeah.

Todd: The effective tax rate for the quarter was 25, 5% on pretax adjusted operating income.

Todd: Above the expected range, primarily related to income earned in foreign jurisdictions.

Todd: For the full year, we expect the effective tax rate to be in the range of 24% to 25%.

Todd Larson: Before turning to the quarterly segment results, I would like to speak to slide 7 in our earnings presentation that displays the total company claims experience and the related financial statement impact. We have seen positive biometric experience over the last five quarters. In the current period, underlying biometric experience, which includes mortality, morbidity, and longevity, was in line with overall expectations.

Speaker Change: Before turning to the quarterly segment results I would like to speak to slide seven in our earnings presentation that displays the total company claims experience and the related financial statement impacts.

Todd: We have seen positive biometric experience over the last five quarters.

Todd: In the current period underlying biometric experience, which includes mortality morbidity and longevity was in line with overall expectations.

Todd Larson: However, the financial statement impact recognized in the current quarter was a $14 million loss. The difference between the actual experience and the financial statement impact is a function of LDPI, cohorting, and the duration of the business. The U.S. and Latin America traditional segment results reflected favorable enforced management actions primarily related to a client recapture of a block of land. However, the financial impacts were recognized in the current period due to the business being a capped cohort.

Todd: The financial statement impact recognized in the current quarter was a $14 million loss the.

Todd: The difference between the actual experience in the financial statement impact is that a function of L. D T I cohort ing and the duration of the business.

Todd: The U S and Latin America traditional segment results reflected favorable enforce management actions primarily related to a client recapture of a block of business.

Todd: The financial impacts were recognized in the current period due to the business being a capped cohort.

Todd Larson: Not only did this lead to favorable current period results, but we expect this to reduce some claims volatility going forward. Additionally, this favorable impact was partially offset by client reporting adjustments. Overall, claims experience was in line with expectations, with nothing notable in terms of frequency or severity of claims.

Todd: Not only did this lead to favorable current period results. We expect this to reduce some claims volatility going forward.

Todd: Separately this favorable impact was partially offset by client reporting adjustments.

Todd: Overall claims experience was in line with expectations, but nothing notable in terms of frequency or severe severity of claims.

Todd Larson: The U.S. Financial Solutions results were below expectations due to the timing of recent new business, not yet at a full earnings rate, as well as some one-time items. The candidate traditional results reflected modestly unfavorable mortality. However, year-to-date, underlying mortality experience is favorable. The financial solutions business results were in line with expectations. In the Europe, Middle East, and Africa segment, the traditional business results reflected unfavorable experiences, primarily in the UK.

Todd: The U S financial solutions results were below expectations due to the timing of recent new business not yet at our full earnings rate as well as some one time items.

Todd: Canada traditional results reflected modestly unfavorable mortality experience, however year to date underlying mortality experience was favorable.

Todd: The financial solutions business results were inline with expectations.

Todd: In the Europe, Middle East and Africa segment.

Todd: The traditional business results reflected unfavorable experience primarily in the U K.

Todd Larson: AMIA's financial solutions business results were favorable, reflecting the impact of strong new business in recent periods and favorable longevity experience. Turning to our Asia-Pacific results, Both our Asia traditional and financial solutions businesses perform very well. The traditional business reflected the benefit of Enforced Management Actions, as well as the impact of recent new business in Asia, while the financial solutions business reflected favorable overall experience. The corporate and other segment reported a pre-tax adjusted operating loss of $44 million, slightly worse than the expected quarterly average run rate.

Todd: Emea's financial solutions business results were favorable reflecting the impact of strong new business in recent periods and favorable longevity experience.

Todd: Turning to our Asia Pacific results.

Todd: Both our Asia traditional and financial solutions businesses performed very well.

Todd: The traditional business reflected the benefits.

Todd: Of enforce management actions as well as the impact of recent new business in Asia financial solutions.

Todd: Solutions business reflected favorable overall experience.

Todd: The corporate and other segment reported a pretax adjusted operating loss of $44 million slightly worse than the expected quarterly average run rate.

Todd Larson: Due to some variable expenses, including higher incentive compensation, for the first half of the year, results were in line with the expected average run rate. Moving on to investments on slides 9 through 12, the non-spread portfolio yield for the quarter was 4.65%, including the impact of lower variable investment. For non-spread business, our new money rate was 6.22%.

Speaker Change: There's some very variable expenses, including higher incentive compensation accruals.

Todd: For the first half of the year results were in line with the expected average run rate.

Speaker Change: Moving onto investments on slides nine through 12, the non spread portfolio yield for the quarter was $4 six 5%.

Todd: Including the impact of lower variable investment income.

Todd: For non spread business, our new money rate was 6.22%.

Todd Larson: This is still well above the portfolio yield and higher than the prior quarter. Credit impairments were minimal, and we believe the portfolio remains well-positioned. Related to capital management, as shown on slides 13 and 14, our capital and liquidity position remains strong, and we ended the quarter with excess capital of approximately $1 billion. This concludes the impact of the $650 million senior debt issued in the second quarter. We have an active and balanced approach to capital management over time, and we had another solid quarter of $307 million of capital deployed into enforced transactions across multiple geographies. We also raised our quarterly dividend by 4.7% to $0.89 per share.

Todd: This is still well above the portfolio yield and higher than the prior quarter.

Todd: Credit impairments were minimal and we believe the portfolio remains well positioned.

Todd: Related to capital management as shown on slides 13, and 14, our capital and liquidity position remains strong and we.

Todd: We ended the quarter with excess capital of approximately $1 billion.

Todd: This includes the impact from the $650 million senior debt issued in the second quarter.

Todd: We have an active and balanced approach to capital management over time, and we had another solid quarter of $307 million of capital deployed and the enforced transactions across multiple geographies.

Todd: We also raised our quarterly dividend by four 7% to 89 cents per share.

Todd Larson: We remain well-capitalized and have access to multiple forms of capital. We expect to remain active in deploying capital into attractive growth opportunities while balancing returning excess capital to shareholders over time. During the quarter, we continued our long-term record of increasing book value per share. As shown on slide 15, our book value per share, excluding AOCI and the impacts of D36 embedded derivatives, increased to $149, which represents a compounded annual growth rate of 10.4% since the beginning of 2021.

Todd: We remain well capitalized and access to multiple forms of capital.

Todd: We expect to remain active in deploying capital into attractive growth opportunities, while balancing returning excess capital to shareholders over time.

Todd: During the quarter, we continued our long track record of increasing book value per share.

Todd: As shown on slide 15, our book value per share, excluding a OCI and the impacts of the 36 embedded derivatives increased to $149 with.

Todd: Which represents a compounded annual growth rate of 10, 4% since the beginning of 2021.

Todd Larson: As we've discussed, we had a great first half of the year. We continue to see very good opportunities across our geographies and business lines, and we are well positioned to execute on our strategic plan. Our business continues to demonstrate its resilience and underlying earnings power.

Todd: As we've discussed we've had a great first half of the year, we continued to see very good opportunities across our geographies and business lines and we are well positioned to execute on our strategic plan.

Todd: Our business continues to demonstrate its resilience and underlying earnings power.

Todd Larson: We are very excited about the future and expect to deliver attractive returns to our shareholders. With that, I'd like to take a moment to thank everyone for your continued interest in RGA. As many of you know, I have announced my planned retirement for the end of this year, and this will be my last earnings call as CFO before turning it over to Axel Andre on August 5th. I have enjoyed my nearly 30 years here at RGA and look forward to staying on through the end of the year as Special Advisor.

Todd: We are very excited about the future and expect to deliver attractive returns to our shareholders.

Todd: With that I'd like to take a moment to thank everyone for your continued interest in RGA.

Todd: As many of you know I've announced my planned retirement for the end of this year and this will be my last earnings call as CFO before turning it over to actual Andre on August 5th.

Todd: Enjoyed my nearly 30 years here at RGA and look forward to staying on through the end of the year a special advisor.

Todd Larson: And I will reiterate what I said yesterday; I believe that RGA's future is as bright as ever. This concludes our prepared remarks. We would now like to open it up for questions. We will now begin the question and answer session.

Speaker Change: I will reiterate what I said at Investor Day, I believe that Rga's future is as bright as ever.

Todd: Yeah.

Todd: This concludes our prepared remarks.

Speaker Change: I'd like to open it up for questions.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press the star on N2. Please limit yourself to only one follow-up question. At this time, we will pause momentarily to assemble our roster. The first question comes from Joel Hurwitz with Doling & Partners. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press the star on N1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: We will now begin the question and answer session.

Speaker Change: Ask a question you May press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys is that anytime. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: Please limit yourself to only one follow up question at this time, we will pause momentarily to assemble our roster.

Joel Herwords: The first question comes from Joel her words with Dowling and partners. Please go ahead.

Joel Hurwitz: Hey, good morning. And first, Todd, congratulations and best wishes in your retirement.

Joel Harwood: Hey, good morning, and first Todd Congratulations and best wishes in retirement.

Joel Hurwitz: My first question is just on the in-force management actions. What was the earnings benefit in the quarter? And then has there been an increase in sort of Enforce Actions, or is this sort of a one-off?

Joel Harwood: My first question. My first question is just on the the enforce management actions and what was the earnings benefit in the quarter and then has there been an increase in in sort of.

Speaker Change: Enforced actions or is this is this sort of a one off.

Todd Larson: Well, you know, this is Todd. In force management is an ongoing part of our, you know, daily activities, right? We are constantly managing the in force. That's part of what we do. But again, as we've talked about in the past, we do it in a very much partnership approach with our clients. If I take a step back, you know, in the quarter, we had both positives and negatives across certain areas.

Speaker Change: Well this.

Speaker Change: This is Todd you'll enforce management as an ongoing.

Todd: Part of our daily activities right, we were constantly managing the in force that's part of what we.

Speaker Change: We do it but again as we've talked about in the past we do it in very much a partnership approach with our clients.

Speaker Change: I take a step back in the quarter, we had both positives and negatives across certain areas I would say if you looked at on a consolidated basis the impact of the in force actions, which was positive offset by some of these client reporting items.

Todd Larson: I would say if you looked at, on a consolidated basis, the impact of the Enforce Actions, which was positive, offset by some of these client reporting items and data catch-ups, that kind of thing, on a consolidated basis, the impact was positive of about $100 million.

Speaker Change: He'll data catch ups that kind of thing on a consolidated basis. The impact was a positive of about $100 million.

Joel Hurwitz: Okay, let's hope. And then looking at the Asia-Pacific financial solutions business, it was off favorable experience again this quarter. It feels like a pretty consistent trend. What's been driving the continued favorable experience in that business, and I guess at what point could you start to think that some of the experience could be sustainable?

Speaker Change: Okay. That's helpful.

Speaker Change: And then <unk>.

Speaker Change: Looking at the Asia Pacific Financial solutions business, It's all favorable experience again this quarter it feels like a pretty consistent trend what's been driving the continued favorable experience.

Speaker Change: In that business and I guess at what point May you start start to think that some of the experience could be sustainable.

Unknown Speaker: I'm sorry. Which business did you ask about? Oh, Asia Traditional. Yeah.

Speaker Change: I'm sorry, what's your best guess.

Speaker Change: Did you ask about Oh Asia traditionally.

Unknown Speaker: No, Asia Financial Solutions. You have what? Asia Financial Solutions.

Speaker Change: No.

Speaker Change: Financial solutions.

Todd Larson: Asia Financial Solutions, business has continued to ramp up over the last few years, so we've been very successful. I'm bringing in, you know, new treaties and new business. So we just continue to see continued strong momentum in that business. Our clients are reacting well to the solutions that we're, you know, bringing to them. And those are, you know, very much value-added type transactions. So we can generally get some nice margins.

Speaker Change: So yeah, but Asia financial solutions.

Speaker Change: This continues to ramp up you know over the last few years. So we've been very successful, bringing on new treaties in new business. So we just continue to see.

Speaker Change: See continued strong momentum on that on that business. Our clients are reacting well with the solutions that we're bringing to those to them and those are you know very.

Speaker Change: Very much value added type.

Speaker Change: Transactions. So we can generally get some nice margins on those.

Speaker Change: Okay. Thank you.

Wes Carmichael: Our next question comes from Wes Carmichael with Autonomous Research. Please go ahead.

Speaker Change: Our next question comes from Wes Carmichael with Autonomous Research. Please go ahead.

Wes Carmichael: Good morning. Thanks for taking my questions and congratulations, Todd, on retirement. First, I just wanted to clarify something about Joel's question. With the enforced action of $100 million, is that a pre-tax number or is that after tax?

Wes Carmichael: Hey, good morning, Thanks for taking my questions and congrats Todd on retirement.

Wes Carmichael: First I just wanted to clarify on Joes question with the enforce action number $100 million, you've got a pretax numbers that after tax.

Todd Larson: That's pre-tax, and that's, you know, the consolidated number, and that's, um, net of some of the other client reporting adjustments and some other things that we did.

Speaker Change: That's pre tax.

Speaker Change: Consolidated number and that's.

Speaker Change: Net of some of the other on client reporting adjustments and some other things that we did.

Wes Carmichael: Got it. That's helpful. Thanks, Todd.

Speaker Change: Got it that's helpful. Thanks Todd.

Speaker Change: And then just on your financial solutions I think you had a retro session to Ruby re in the quarter is there any help you can give us with how that impacted the income statement and in that segment for the quarter.

Todd Larson: Yeah, this is Todd again. Let me clarify. For Ruby Reed, we had the initial seed block retrocession back in December. And we're in the process of doing some additional retro sessions, but we did not have a specific retro session in the second. We will have some as we go forward.

Wes Carmichael: And then just on U.S. Financial Solutions, I think you had a retro session with Ruby Rhee in the quarter. Is there any help you can give us with how that impacted the income statement in that segment for the quarter? Yeah.

Speaker Change: Yeah. This is Todd again, let me clarify for Ruby re we have the initial seed block retrocession.

Speaker Change: Back in December.

Speaker Change: And we're in the process of.

Speaker Change: There were some additional retro sessions, but we did not have a specific retrocession in a second.

Speaker Change: But we will have some as we go forward.

Wes Carmichael: Right, I guess, you know, the slides also mentioned, I guess, an earnings impact for timing. Is there, is there something that will change in the third quarter in financial solutions? Oh, so for...

Speaker Change: Right I guess.

Speaker Change: The slides also mentioned I guess.

Speaker Change: Earnings impact per timing is there is there something that will change in the third quarter.

Speaker Change: Financial solution.

Todd Larson: Oh, so for financial solutions, we had a couple of sort of one-time items in the quarter. We had some data catch-up from a client on a treaty that had a negative impact. And then we did have some timing of some fee recognition, which we would expect to be just a timing issue that, you know, should come back in the future.

Speaker Change: Oh, so well for you so for financial solutions, we had a couple.

Speaker Change: Hum.

Speaker Change: One time items.

Speaker Change: In the quarter, we had some data catch up from a client on a treaty that was a negative impact and then we did have some timing of some fee recognition, which we would expect to be just a timing issue that should come back in the future.

Speaker Change: Thank you.

Jimmy Bhullar: Our next question comes from Jimmy Bhullar of J.P. Morgan. Please go ahead.

Jimmy <unk>: Our next question comes from Jimmy <unk> with J P. Morgan. Please go ahead.

Jimmy Bhullar: Todd, good luck in the future. I just had a question on financial solutions. I think you mentioned that the depressed level of earnings or the earnings are affected a little bit by just the timing of new business being put on. Is this something that should correct itself beginning next quarter, or is it more of a longer-term issue where the full earnings power will emerge maybe into next year?

Jimmy: Hey, good morning, Doug Good luck in the future.

Jimmy: I just had a question on the financial solutions I think you mentioned that the depressed level of earnings was or the earnings were affected a little bit by just the timing of new business being put on is this something that should.

Speaker Change: Correct itself, beginning next quarter or is it more of a longer term issue there.

Speaker Change: The full earnings power will emerge maybe into next year.

Todd Larson: Yeah, as we've talked about in the past, it depends on the underlying transaction and structure, but generally, it starts out a little bit below our... Ultimate, you know, run rate, if you will, we still price the transactions to hit our overall returns, but generally, as we go through and, you know, reposition the investments, and that type of thing, generally take, say, a year to 18 months to ramp up.

Speaker Change: Yeah, as we've talked about in the past it depends on the underlying transaction and structure, but generally.

Speaker Change: Chart out a little bit below our.

Speaker Change: Ultimate run rate, if you will we still price the transactions to hit our overall reach.

Speaker Change: Turns, but generally as we go through and repositioning the investments and that type of thing generally takes say a year to 18 months to ramp up.

Jimmy Bhullar: Okay, and then if I go by the sort of unusual benefit you mentioned from the client Transaction Recaptures offset by some of the other one time, you get about $1.20 per share. Is that $1.20 per share a lower number from what you reported? Is that a good number to use in terms of looking at your earnings going forward? Or were there other things that might have depressed your earnings in the second quarter that you didn't include in that?

Speaker Change: Okay, and then if I go by the sort of unusual benefit you mentioned from.

Speaker Change: The client.

Speaker Change: Transaction Recaptures offset by some of the other one time, you get about $1.20 per share.

Speaker Change: Is that the dollar appointed 20 per share is a lower number from what you reported is that a good number to use in terms of looking at your earnings going forward or were there other things that might have depressed your earnings in the second quarter you Didnt again.

Jimmy Bhullar: Yes, the way I would look at it, if I take a step back at a high level, We talked about, and these are pre-tax numbers, we talked about the enforcement actions, you know, primarily in U.S. TRAD and Asia TRAD, and then offset by some of the financial reporting. You know, type items.

Speaker Change: Yeah, So what the way I would look at it if I take a step back at a high level.

Speaker Change: We talked about and these are pretax numbers, we talked about the in force actions you know.

Speaker Change: Primarily in U S Trad and Asia Fred.

Speaker Change: And then offset by some of the financial reporting.

Speaker Change: You know type items.

Todd Larson: And then we had, you know, from a financial and financial reporting perspective, we had some negative claims of about $15 million or so, but the underlying claims experience was still, you know, fine. That was just the LDTI reporting impact. And then we had some additional The expense accruals that I mentioned, primarily related to Incentive Comp, that was probably another... Transcripts provided by Transcription Outsourcing, LLC. I would advocate that things like the enforcement actions that we took really created a lot of value for the enterprise, not only in the current period but going forward as well.

Speaker Change: And then we had you know.

Speaker Change: From a financial financial reporting perspective, we have some.

Speaker Change: Negative claims of about $15 million or so, but the underlying claims experience was still.

Speaker Change: Fine that was just the L. D T I reporting impact and then we had some additional expense accruals that I mentioned are primarily related to incentive comp that was probably another <unk> <unk>.

Speaker Change: $20 million or so some small miscellaneous items. So to me those items add up to say 65 or $70 million pretax, but not I would advocate that.

Speaker Change: Things like the in force actions that we took really created a lot of value to the enterprise not only in the current period, but go forward as well.

Speaker Change: Okay, Yeah, and then I mean, just to reiterate that point I mean, you know I look during Investor day, we shed info sections is just one of our other levers for growth are for.

Todd Larson: Yeah, and then I mean, just to reiterate that point, I mean, look, during Invest Today, we shared in false actions is just one of our other levers for growth, for growth in PTOI and ROE. We always do it on a holistic basis, and we feel that's stood us in good stead over the medium and long term. And, you know, these are lumpy transactions. So at times, we could be working on them for one or two years.

Speaker Change: Gross and Peter O I and in a row.

Speaker Change: We always do it on a holistic basis, we feel that's a.

Speaker Change: To put us in good stead over the medium and long term.

Speaker Change: And yeah. These are lumpy transaction. So at times, we could be working on them for one or two years, but you know we're very active in.

Speaker Change: Good.

Speaker Change: Sort of.

Todd Larson: But, you know, we are very active in sort of making sure we execute on our rights in the treaty, but also, very much in a partnership fashion to continue to partner with these clients on new business and information.

Speaker Change: Making sure we execute on our rights and the trading but also very much in a partnership fashion.

Speaker Change: We continue to partner with these clients on new business and in force.

Unknown Speaker: And if I just ask one,

Speaker Change: Okay, and if I can just ask one.

Elyse Greenspan: Our next question comes from Elyse Greenspan with Wells Fargo. Please go ahead.

Speaker Change: Our next question comes from Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Greenspan: Hi, thanks. My first question is about Ruby Re.

Elyse Greenspan: Hi. Thanks. My first question is on Brady, we I mean, you guys, obviously see that business when the entity was set up but you havent been seeding ongoing business yet when would you.

Speaker Change: That that the change in I guess, what are you waiting on I'm just just for that you know for you guys to be able to seed.

Speaker Change: <unk> business into the platform.

Elyse Greenspan: You know, you guys obviously seeded business when the entity was set up, but you haven't been seeding ongoing business yet. When would you expect that to change? And I guess, what are you waiting on, you know, just for that, you know, for you guys to be able to seed current business into the platform?

Speaker Change: Yeah. This is Todd Yeah, no we're absolutely working on.

Speaker Change: Putting together the.

Speaker Change: Going through the process I guess is the best way to do it to Retrocede some business too.

Speaker Change: We have identified.

Todd Larson: Yeah, this is Todd. No, we're actually working on putting together the...going through the process, I guess, is the best way to do it, the retro seats in business to...we've identified I would expect that you will see some improvement in the process of doing the modeling and getting the appropriate approvals and that type of thing. Retro Sessions or Sessions Alpha Ruby, the remainder of the show.

Speaker Change: Blocks and we're just going through the process process of doing the modeling in getting there.

Speaker Change: The appropriate approvals and that type of thing. So I would expect that you will see some.

Speaker Change: Retro sessions are sessions out through the remainder of this year.

Elyse Greenspan: Thanks. And then my second question, you guys did issue some debt in the quarter. How do we think about, you know, target debt to capital, including hybrids, just when we think about the capacity away from Ruby for additional transactions?

Speaker Change: Thanks, and then my second question you guys did issue some debt in the quarter. How do we think about you know target debt to capital, including hybrid just when we think about the capacity away from will be for additional transactions.

Todd Larson: Yeah, generally, we target around 20% or so senior debt to equity and then, all in, combined with the hybrid, say 35%, but there's some flexibility around that. And, you know, in addition to the traditional debt markets, we all do spend quite a bit of time looking at what we call alternative forms of capital, of which, you know, Ruby Reed and third-party capital is part of that. And historically, we've also done some embedded value securitizations, as well as had some strategic retro sessions as well, where maybe

Speaker Change: Yeah, So generally we target around 20% or so senior debt to equity and then all in combined with the hybrid say, 35%, but there is some flexibility.

Speaker Change: Around that and.

Speaker Change: In addition, again to the traditional debt markets. We all just spent quite a bit of time looking at what we call alternative forms of capital.

Speaker Change: Which Ruby Reed for third party capital as part of that historically, we've also done some embedded value securitization as well as some strategic retro sessions as well where it makes sense.

Speaker Change: Thank you.

Ryan Krueger: Our next question comes from Ryan Krueger with KBW. Please go ahead.

Speaker Change: Our next question comes from Ryan Krueger with K B W. Please go ahead.

Ryan Krueger: Hey, thanks. Good morning.

Ryan Krueger: Hey, Thanks, Good morning, I'm, sorry to harp on this but I'm going to come back one more time on the underlying earnings power may make it Bernie and call. It cloud on this last one.

Ryan Krueger: I'm sorry to harp on this, but I'm going to come back one more time on the underlying earnings power, which would make it for an interesting call for Todd on his last one. So you mentioned the $100 million positives, the $15 million gap claims, and $20 million higher expenses. I think beyond that, I believe BII was also weaker, and the tax rate was higher. Are those the other two things you would consider when trying to kind of come up with more of a run rate earnings power? And if so, how would you quantify those two other items?

Speaker Change: So you mentioned the 100 million positive there was the 15 million gasoline $20 million higher expenses I think beyond that I believed I was also weaker and the tax rate was higher are those the other two things you would consider when trying to kind of come up with more of a run rate earnings power and if so how.

Speaker Change: Could you quantify those two other items.

Todd Larson: I think variable income, by our best estimate, is about a $15 million dollar negative pre-tax, negative impact in the quarter. Then, you know, the tax rate was... You know, our previous range was at 23 to 24 percent. So the impact of another, you know, say, point and a half to two points on the tax rate on the pre-tax income of, you know, $491 million. But, you know, we're still... We reiterate that we are comfortable with the run rates that we provided earlier in the year and continue to plan to grow and deliver the intermediate growth targets that we provided.

Speaker Change: Yes, I think variable income, but our best estimate.

Speaker Change: It was about $15 million.

Speaker Change: Pretax negative impact in the quarter.

Speaker Change: The tax rate was.

Speaker Change: Our previous range.

Speaker Change: <unk>, 23% to 24% so the impact of another.

Speaker Change: Okay.

Speaker Change: I have two points on the tax rate on the pretax income.

Speaker Change: $491 million.

Speaker Change: But we're still.

Speaker Change: Reiterate comfortable with the run rates that we provided earlier in the year and continue to plan to grow.

Speaker Change: Deliver the intermediate growth targets that we provided.

Ryan Krueger: Okay, great. Thank you. And then, given the challenges faced by one of your main competitors, I guess just wanted to give you guys a chance to kind of comment on your confidence in your own reserve assumptions at this point.

Speaker Change: Okay, great. Thank you and then just given the challenges at one of your main competitors I guess I wanted to give you guys a chance to kind of.

Speaker Change: Comment on your confidence in your own reserve assumptions at this point.

Jonathan Porter: Yeah, hi, Ryan, this is Jonathan. Let me take that one. So obviously, you know, we're not in a position to comment directly on other companies' actions, but just a few points from our perspective. The first one, I think, you know, we need to keep in mind that there are differences in, you know, the businesses that each company has, right. So the underlying business, the premiums that are being charged, the assumptions, [inaudible] I think we've demonstrated our discipline across multiple markets and product lines.

Speaker Change: Yeah, Hi, Ryan This is Jonathan let me take that one.

Jonathan: So obviously you know we're not in a position to comment directly on other companies' actions, but just a few points from our perspective. The first one I think we need to keep in mind that there are differences in.

Jonathan: The business that each company has right. So the underlying business the premiums that are being charged to the assumptions.

Jonathan: That are being used from an expectation perspective, so it's not really possible to read through things.

Jonathan: That way.

Jonathan: I would say we feel that risk management is one of our core strengths at RGA are we've got a very rigorous approach to pricing and I think we've demonstrated our discipline across multiple markets and product lines, and where we don't see the risk reward trade off making sense to us we don't pursue the business and then the last point I'll mention is we do regular monitoring.

Jonathan Porter: And where we don't see the risk-reward trade-off making sense to us, we don't. And then the last point I'll mention is, you know, we do regular monitoring and reporting of our experience. Things can move up and down quarter to quarter, but we have been pleased that our underlying biometric experience has been favorable, as Todd and

Jonathan: And reporting of our experience things.

Jonathan: Things can move up and down quarter to quarter, but we have been pleased that our underlying biometric experience has been favorable as taut and Tony both pointed out for the last five quarters.

Tony Cheng: Tony here. I mean, let me just add, you know. These actions or these activities happen from time to time. You know, as Jonathan said, our discipline, our risk management, our focus on life and health is critical for us, and at times, this can create opportunities for us, but we remain incredibly disciplined, focused on life and health, and the risk management principles we have will obviously continue well into the future.

Jonathan: Yeah.

Jonathan: Tony Here I mean, let me just add I mean.

Tony: These actions are these activities happened from time to time.

Jonathan: You know as Jonathan said.

Speaker Change: Our discipline and our risk management, and our focus on life and health.

Jonathan: It's critical for us and at times this can create opportunities for us.

Jonathan: But we remain incredibly disciplined.

Jonathan: Focus on life, and health and the risk management principles.

Jonathan: We have will obviously continue well into the future.

Tony: Thanks, Tony.

Suneet Kamath: Our next question comes from Suneet Kamath with Jeffries. Please go ahead.

Speaker Change: Our next question comes from Amit Kumar with Jefferies. Please go ahead.

Suneet Kamath: Thanks, good morning. So I guess on capital deployment, you've deployed about a billion dollars, you know, year to date, a very healthy number. Should we sort of think about the second half as maybe you guys needing some time to sort of digest what you've deployed? Or, you know, is it sort of still doors wide open to do more deployment?

Amit Kumar: Yeah. Thanks, Good morning, So I guess on capital deployment. It looks like you deployed about 1 billion you know year to date.

Speaker Change: A very healthy number.

Amit Kumar: Should we sort of think about the second half as maybe you guys needing some time to sort of digest, what you've deployed or is it sort of still in doors wide open to do more deployment.

Tony Cheng: Yeah, maybe I'll take that one, Suneet. You know what? I'd answer it by saying our pipelines are absolutely full. So obviously, Q1 was... unique or unusually strong.

Speaker Change: Yeah, maybe I'll take that one tonight.

Speaker Change: You know what.

Speaker Change: I'd answer it by saying I'll put like pipelines are absolutely full so obviously Q1 was.

Tony Cheng: But there's no reason we're slowing down in Q3, Q4. So hopefully that gives you a good sense. You know, very excited by the pipelines, very excited by how we're positioned strategically. We've got, you know, plenty of capital to use to execute on transactions. And, you know, that momentum is only growing stronger.

Speaker Change: You need call unusually strong.

Speaker Change: But there's no reason was slowing down and in Q3 Q4 so.

Speaker Change: Hopefully that gives you a good sense I'm very excited by the pipeline is very excited by how we're positioned strategically.

Speaker Change: Got plenty of capital to us to.

Speaker Change: To execute on transactions.

Speaker Change: And that momentum is only growing stronger.

Suneet Kamath: Got it. And then maybe, shifting gears to the PRT market, obviously, we've been seeing some headlines related to some of the deals that were done with the private equity backed players. Just wondering if that's having an impact on either competition for the PRT business or pricing in that business?

Speaker Change: Got it and then just maybe shifting gears to the PRT market. You know obviously, we've been seeing some headlines related to some of the.

Speaker Change: Deals that were done with the private equity backed players.

Speaker Change: Just wondering if that's having an impact on either competition for PRT business or pricing in that business. Thanks, Yeah. No. Thank you yeah, I mean, I don't really want to comment on on the issues relating to some of our competitors all yeah indirectly, but you know for US once again same thing.

Tony Cheng: Yeah, no, thank you. Yeah, I mean, I don't really want to comment on the issues relating to some of our competitors or, yeah, indirectly. But, you know, for us, once again, the same thing, pipeline strong, particularly on the jumbo side, where we do spend a lot of our focus, pricing, in my mind's fair. The key part of our strategy is the longevity risk, broadly, the PRT market in the US, you know, excited about the rest of the year, and no reason to think that that's not the case going forward.

Tony Cheng: Thanks. Yeah, thank you. Yeah.

Speaker Change: The pipeline is strong, particularly in the jumbo side, where are we do spend a lot of our focus.

Speaker Change: Pricing in my mind that so.

Speaker Change: Key part of our strategy is the longevity risk broadly the PRT market in the U S. A.

Speaker Change: Cited by the rest of the year and no reason to think.

Speaker Change: I think that that's not the case going forward.

Speaker Change: Okay. Thanks.

Tom Gallagher: Our next question comes from Tom Gallagher with Evercore. Please go ahead.

Speaker Change: Our next question comes from Tom Gallagher with Evercore. Please go ahead.

Tom Gallagher: Good morning. I'm Todd, just back on the 100 million enforced rate action benefit. Is it all a one-time benefit, or would you expect any go forward earnings impact as well?

Tom Gallagher: Good morning, Todd just back on the $100 million of in force rate actions benefit.

Tom Gallagher: Is it is there is it is it all one time benefit or would you rich or would you expect any go forward earnings impact as well.

Todd Larson: That's on a consolidated basis, again, and it's netted some of those client reporting adjustments. So, I would comment, maybe break it up into two, Tom.

Speaker Change: Yeah and again, it's just one that's on a consolidated basis again, that's net of some of those clients.

Speaker Change: Boring adjustments.

Speaker Change: So I would comment maybe break it up into two Tom the U S. Enforce action had a current year benefit as I mentioned in my comments that was on a what we call caps or under <unk> net premium ratio above 100%.

Todd Larson: The U.S. Enforced Action had a current year benefit, as I mentioned in my comments, that was on what we call a capped cohort under LDTI, a net premium ratio above 100%. So the impact of that came through the current period, and there really won't be much income statement plus or minus going forward, but we do believe it will help decrease some of the claims volatility with that treaty no longer on our books.

Speaker Change: Impact of that came through the current period and there really won't be much from an income statement plus or minus going forward, but we do believe.

Speaker Change: It'll.

Speaker Change: Decrease some of that.

Speaker Change: Claims volatility, but that treaty no longer on our books.

Todd Larson: And then switching over to Asia. That was a great adjustment; the way it works, that treaty had a net premium ratio of less than 100%, so it was an uncapped cohort. So the way you look at that, whatever the change in cash flows based on the new rate structure, you recalculate the net premium ratio and actually apply it back to the inception of the adoption of LDTI, so you get a little bit of a catch-up in the current period and then some positive impacts going forward.

Speaker Change: And then switching over to Asia.

Speaker Change: That was a rate adjustment.

Speaker Change: That the way it works.

Speaker Change: <unk> had a net premium ratio of less than a 100% with uncapped cohort.

Speaker Change: So the way you look at out whatever the change in cash flows based on the new rate structure.

Speaker Change: We calculate the net premium ratio and actually apply it back to the inception of the adoption.

Speaker Change: <unk>, so you get a little bit of a catch up or catch up in the current period and then some positive impacts going forward.

Tom Gallagher: Gotcha, that's helpful. And then just to put a bow on this.

Speaker Change: Gotcha. That's helpful. And then just to put a bow on this.

Tom Gallagher: Run Rate of Earnings. So 100 million favorable. And if I added up all the unfavorables, I think it's 60 to 70 million. So a net of 30 to 40 million pre-tax. Does that sound about right?

Speaker Change: Run rate of earnings.

Speaker Change: So $100 million of favorable and if I added up all the unfavorable I think it's $60 million to $70 million. So a net of $30 million to $40 million pretax does that sound about right.

Speaker Change: One of my I.

Todd Larson: I guess when I look at the past, there's been... Negatives, I get about $65 to $70 million pre-tax of positive impact on the Porter. But I would reiterate again, a lot of that was related to the in-force actions that we took that created quite a bit of value to the enterprise. So I view that as part of our business, if you will.

Speaker Change: I guess when I look at the positives.

Tom Gallagher: Got it. So 65 to 70 would be the net benefit in the quarter and then your tax effect on that. That would be the way you would adjust.

Speaker Change: It is I get about call it 65 to 70 million pretax.

Speaker Change: Positive impact in the quarter, but I would reiterate reiterate again a lot of that related to the in force actions that we took that created quite a bit of value into the enterprise. So I view that as part of our business it would be wrong.

Speaker Change: Got it so 65 to $7 65 to 70 would be the net benefit in the quarter and then you tax effect that that would be your the way you would adjust.

Todd Larson: Yeah, if we're looking at some of the... What do you want to call them one-time items or... And a little bit of those types of items. But again, every quarter we're going to have some of these positives and negatives, right? And again, a lot of the positives this quarter were related to some good things that we did from an enforcement management perspective.

Speaker Change: Yeah. We're looking at also does some of that.

Speaker Change: Whatever you want to call them onetime items or.

Speaker Change: A little bit.

Speaker Change: Those types of items, but again every quarter, we're going to have some of these losses are negatives right and again a lot of the positives. This quarter was related to some good things that we did from the enforce management perspective.

Tom Gallagher: Okay, thank you.

Speaker Change: Okay. Thank you.

John Barnidge: Our next question comes from John Barnidge with Piper Sandler. Please go ahead.

Speaker Change: Our next question comes from John Barnidge with Piper Sandler. Please go ahead.

John Barnidge: Good morning. Thanks for the opportunity and, Todd, congrats on reaching this stage. Another quarter above the ROE guided range. I know there's some one-timers that have been discussed. Are we trending from the high end to above it?

John Barnidge: Good morning, Thanks for the opportunity and Todd Congrats on reaching the stage.

John Barnidge: Another quarter above the guided range I know there was some one timers that are good Scott.

John Barnidge: Are we trending from the high end towards above it sustainably in your opinion.

Speaker Change: Thank you.

Todd Larson: Thanks, John. Yeah, we're happy with our strong performance over the last, you know, period of time. You know, we did recently set the intermediate financial targets, and those are meant to be sort of intermediate, which is to say over a three-year period. But, you know, at this point, we're not updating the targets. But, you know, we do feel good about coming in at the higher end of the Targeted range, and we'll monitor and consider updating as appropriate, you know, going forward.

Todd: Yeah. Thanks, Sean.

Speaker Change: Yeah, we're happy with our strong performance over the last.

Speaker Change: At a time.

Speaker Change: We did recently.

Speaker Change: Intermediate financial targets and those are meant to be sort of intermediate which is say over a three year period at this point, we're not updating that.

Speaker Change: It targets, but we do feel good about coming in at the higher end of the.

Speaker Change: Targeted.

Speaker Change: Range, and we will monitor and consider updating as appropriate going forward.

Tony Cheng: John, maybe just to add, you know, as we said during Invest Today, we've got all these tailwinds, whether that's the returns on the new business as we focus more and more on innovative, you know, exclusive transactions. Another tailwind, obviously, is, you know, new money rates still higher than portfolio yields. So, you know, over time, you'd hope we drift up, but, you know, at this point, you know, I look forward to continually improving and really working hard and creating value for ourselves and our clients.

Speaker Change: John maybe maybe just to add.

John: As we said during Investor Day, we've got all these tayo and.

John Barnidge: Whether that's the returns on the new business as we focus more and more on innovative exclusive transactions.

Speaker Change: Another tailwind obviously as you know our new money rate is still higher than the portfolio yields are.

Speaker Change: You know at the time, you'd hope would drift up but you know at this point and you know what.

Speaker Change: Happy with where we had signalled Oh are we and you know we.

Speaker Change: Look forward to continually beating and really working hard and in creating value for ourselves and our clients.

Speaker Change: Yeah.

John Barnidge: Thank you for that answer. My follow-up question, interestingly enough, it looks like your office portfolio LTV actually improved two basis points in the quarter. As you think of what that stability in the commercial real estate portfolio means for your outlook for gain harvesting and maybe the balance of the year on portions where you have an equity for BII. Thank Hey, John, this is Leslie Barbi.

Speaker Change: Thank you for that answer my follow up question.

Speaker Change: Christine.

Christine: So it looks like your office portfolio L. T V.

Christine: Actually improved two basis points in the quarter.

Speaker Change: As you think of what is that stability in the <unk>.

Speaker Change: Our real estate portfolio portend for your outlook for gain harvesting and maybe the balance will be your own portions where you have an equity position.

Speaker Change: Thank you.

Leslie Barbi: Hey, John. This is Leslie Barbi. Yeah, so the portfolio overall, the credit quality has been quite stable. We have a very experienced team that is managing that. So we can pick and choose. We're very disciplined. And so as we're doing this transition, we can both work through any individual issues but also look for market opportunities.

Speaker Change: Hey, John This is Leslie Barbie.

John: Yeah, so our.

Speaker Change: The portfolio overall, the credit quality has been quite stable, we have a very experienced team that is managing that.

Speaker Change: Related specifically to your comment on the office L. T V. It came down about two point on that.

Speaker Change: That is primarily due to some new loans closed in the quarter with a quite low ltvs and and stability on the rest of the portfolio there.

Speaker Change: And we did have a small amount.

John: 13 million in office that we took into Oreo that that helped contribute a little bit more so the new.

John: Very low LTV.

Speaker Change: And so you know we are only a while there's a lot of things go out of the market. Certainly there's also been less lending available we get to the market in general So we can.

John: Pick and choose we're very disciplined and so as we're doing this transition we can both work through any individual issues, but also look for market opportunities.

John: Thanks.

Mike Ward: Our next question comes from Mike Ward with Citi. Please go ahead.

Speaker Change: Our next question comes from Mike Ward with Citi. Please go ahead.

Mike Ward: Thank you. Good morning. Congratulations, Todd, and all the best. I was just wondering, with all this talk about, or all the dynamics from the in-force actions and whatnot, is there any change in sort of the run rate dollar earnings for the segments, like U.S. trad or Asia? Or, it sounds like not, but... (inaudible)

Mike Ward: Thank you and good morning, Congratulations Todd and all the best I was just wondering it all this talk about what are all the dynamics from the in force actions and whatnot.

Mike Ward: Is there any change in sort of the run rate dollar earning.

Speaker Change: Earnings for the segments like U S travel or Asia, or it sounds like not but just want to make sure.

Todd Larson: Yeah, no, Todd, I'd say no, you know, nothing, material.

Speaker Change: Yeah, No I was taught I'd say no no nothing nothing material.

Mike Ward: Okay, um, and then most of my other questions are answered, but I just, I'm just curious if there's been any sort of underlying changes in the US mortality experience that you've been observing over the last five quarters, call it, you know, post-pandemic, any sort of themes that you've seen? Yeah, thanks.

Mike Ward: Okay.

Mike Ward: Yeah.

Speaker Change: And then most of my other questions were asked but I just I'm just curious if there's been any sort of underlying changes in the U S mortality experience that your time that you've been observing.

Speaker Change: Over the last five quarters call. It post pandemic any sort of where it seems that you've seen.

Jonathan Porter: So I'd say nothing, nothing really new to report relative to what our expectations have been. You know, we continue to be pleased with our underlying economic performance within the business, which has been positive over the last five quarters. No real significant trends to note in Q1 or Q2 of this year at a sub level when you start to drill into the block of business.

Mike Ward: Yeah, thanks, Mike. This is Jonathan.

Speaker Change: Yeah. Thanks, Mike This is Jonathan so I'd say nothing nothing really new to report relative to what our expectations have been we continue to be pleased with our underlying economic performance within the business, which has been positive over the last five quarters no real significant trends to note.

Speaker Change: In Q1 or Q2 of this year at a sub level when you start to drill into the to the block of business. We do have an expectation as I've mentioned before built into our go forward mortality expectations for excess mortality in that.

Jonathan Porter: You know, we do have an expectation, as I've mentioned before, built into our go-forward mortality expectations for excess mortality. And that's, you know, we continue to see that in the population. It is declining. So it still is trending down; I think we're about three to 4% excess relative to pre-pandemic levels for the first half of this year. So it's nice to see that trend continue. But we have built that into our expectations. And as I mentioned, our results have been favorable compared to

Speaker Change: You continue to see that in the population it is reducing so it still is trending down I think we're about 3% to 4% excess relative to pre pandemic levels for the first half of this year. So that's nice to see that trend continue but we have built that into our expectation and as I mentioned, our results have been favorable versus that.

Speaker Change: Yeah.

Speaker Change: Great. Thank you.

Jimmy Bhullar: There's a follow-up question from Jimmy Bhullar. Please go ahead.

Speaker Change: There is a follow up question from Jimmy Buhler. Please go ahead.

Todd Larson: Hey, I just wanted to see if you could just give us an update on what's going on with your Australia business. I think results have fluctuated over the past several quarters, and I'm just trying to get an idea on the legacy block that's had recurring losses, how big of a part of the business that is, and how do you expect it to run off over time.

Jimmy Buhler: Yeah I just wanted to see if you could just give us an update on what's going on with your Australia business and I think results have fluctuated.

Jimmy Buhler: Over the past several quarters and just trying to get an idea on the legacy block that's had a recurring losses, how big of a part of the business that is and how do you expect it to run off over time.

Jimmy Bhullar: Yeah, Jimmy's Todd. Yeah. Year-to-date, Australia's seen a slight pre-tax profit. That's a little bit under where we would like them to be, but for the year-to-date, that's where they are. We continuously keep a close eye on the in-force there and have not been pushing the team. We've grown to a great extent, and so for that older legacy block, we see some claims here and there, but nothing material at this point.

Speaker Change: Yeah, Jamie it's Todd Yeah.

Jamie: Year to date, Australia has seen a slight pretax profit.

Speaker Change: A little bit under where we would like them to be but you know that.

Speaker Change: For year to date, that's where they are.

Speaker Change: We'll continuously keep a close eye on the in force there and have not been pushing that team.

Speaker Change: Wrote any great.

Speaker Change: Great extent and so for that older legacy block.

Speaker Change: We see some claims here and there, but nothing material at this point.

Tony Cheng: And is the new business environment in the market still tough, or is it just the older businesses that've actually had issues? Yeah, thanks.

Speaker Change: And is the new business environment, and the market still stuff or is it just the.

Speaker Change: Is it just the older business, that's actually can be had issues.

Speaker Change: Yeah. Thanks, I'll take that once you've made look now as Todd mentioned, we're very selective on the new business, we chose and it wouldn't surprise you that the new business areas, where we play in and it wouldn't surprise you that.

Speaker Change: We're comfortable with the environment and in those areas and once again, our discipline of choosing the right areas to play and be part of and you know, sometimes you see others leave the market, which create a better pricing environment for those areas.

Tony Cheng: once again, our discipline of choosing the right areas to play in and be part of. And, you know, sometimes you see others leave the market, which creates a better pricing environment for those areas. And we patiently wait for those situations, and we're comfortable with the new business pricing in the areas we focus on.

Speaker Change: And we we patiently wait for those situations and we're comfortable with the new business.

Speaker Change: Pricing in the areas we focus on.

Speaker Change: Okay.

Speaker Change: Thank you.

Wes Carmichael: There's a follow-up question from Wes Carmichael. Please go ahead.

Speaker Change: And as a follow up question from Wes Carmichael. Please go ahead.

Wes Carmichael: Hey, thanks for taking the follow-up. I had a higher-level question, maybe, Tony. In Asia, in asset-intensive, I'm just hoping you could give us some perspective, especially in the Japanese market, on how that market's embracing asset-intensive reinsurance.

Wes Carmichael: Hey, Thanks for taking the follow up I had a higher level question, maybe Tony and in Asia tend to just hoping you could give us some perspective, especially in the Japanese market, how that market's embracing asset intensive reinsurance maybe has that changed over the past couple of years and how you're thinking about that dynamic going forward.

Tony Cheng: Yeah, thanks. Thanks for the question. It's fully embracing it. I mean, you know, Asia, you know, we did our first transaction out of my head in Japan, probably seven or eight years ago, on these sort of block assets. Once one reputable company does it, others are studying it, we get phone calls often. I'm trying to understand it.

Tony Cheng: Maybe how that's changed over the past couple of years and how you're thinking about that dynamic going forward. Yeah, thanks. Thanks for the question.

Speaker Change: Yeah. Thanks, Thanks for the question its fully embracing it I mean.

Speaker Change: Yeah.

Speaker Change: As you know, we did outflows transfixed transaction top of my head and Japan, probably seven or eight years ago.

Speaker Change: On on these sort of blocks asset.

Speaker Change: Once one reputable company does it others are studying it we get phone calls often I'm trying to understand it.

Tony Cheng: You know, I think a few quarters ago, we said we did a first transaction with a more domestic-type life insurer, and that, once again, will set off a trend amongst that group of clients. We did a transaction, as I mentioned earlier, with a client that had never done one before. You know, one would think that could stimulate further transactions with them. And once again, they're a very strong, reputable company that others will look up to and follow.

Speaker Change: I think a few quarters ago.

Speaker Change: We said, we did our first transaction with a more domestic type life insurer and that once again, we will set off a trend amongst that group of clients we.

Speaker Change: We did a transaction as I mentioned earlier with a client that had never done it before.

Speaker Change: One would think that could stimulate further transactions with them and once again, they were very strong reputable company, which others will look upon it and in follow up you know I would say our strength. There is the fact that within that since 90 98.

Tony Cheng: You know, I would say our strength there is the fact that we've been there since 1998 and we've worked with the regulator, gosh, since the early 2000s on some of these rules. And as I mentioned during Investor Day and earlier today, just how multifaceted relationships are. The transaction we did this quarter was a client we've been with, you know, I think on the, you know, cancer risk or the mortality risk for 15 years. So obviously, that trust is built, those relationships are built, and when they're looking at, you know, improving their capital efficiency, it's not surprising that they turn to us.

Speaker Change: And we've worked with the regulator gosh since the early two thousands on some of some of these rules and as I mentioned during Investor day and earlier today, just a multifaceted relationships you know the transaction. We did this quarter was a decline with being with.

Speaker Change: You know I think on the you know cancer risk of the mortality risk for 15 years. So obviously that trusted build those relationships are built when they're looking at you know improving.

Speaker Change: Improving their capital efficiency, it's not surprising that they they tend towards us.

Speaker Change: Yeah.

Speaker Change: Great. Thanks, so much.

Tom Gallagher: Here's a follow-up question from Tom Gallagher. Please go ahead.

Speaker Change: There's a follow up question from Tom Gallagher. Please go ahead.

Speaker Change: Yeah.

Tom Gallagher: Hey, thanks. I just had a question about the process for these Enforce Management actions. Is it something that you react to as experience emerges the wrong way, and then, you know, you evaluate each treaty? And then, if, you know, it creates enough pressure, do you then go into action? Or do you have a pretty good sense for what treaties you've been seeing pressure on for several years? And so you kind of have a pipeline, and you have visibility into it, like, how does that really work? Do you have a big pipeline? Or is it something you're really just reacting to and responding to more in real time?

Tom Gallagher: Hey, thanks.

Tom Gallagher: Just had a question about the process of these in force management actions.

Tom Gallagher: Is it something that you react to as experience emerges the wrong way and then you evaluate each treaty.

Speaker Change: And then Dan if you know if it creates enough pressure you then.

Dan: Go into action or do you have a pretty good sense for what treaties you've been seeing pressure on for several years until you kind of have a pipeline and you have visibility into it like how does that really work do you do you have a big pipeline or is it something you're really just reacting and responding to more you know.

Speaker Change: Real time.

Tony Cheng: Yeah, maybe I'll take that and Jonathan will add if I miss out on anything. Um, you know, you got to look at the treaty. I mean, one action that can be taken is one, obviously, you can always try and negotiate extra, extra, you know, extra, out of the treaty type arrangements, but you know, firstly, that would be one. But, you know, like you said, there's a pipeline on which we focus, and these transactions are lumpy, can be material, and take time.

Speaker Change: Yeah, Mike, maybe I'll take that and Jonathan add if I Miss out on anything.

Mike Ward: Yeah, you got to look at the Treaty I mean, it's their actions that can be taken is one obviously you can always try and negotiate extra extra.

Tony Cheng: And, you know, we, if you think about what we do, right, we're obviously a very technical company in nature. So, hopefully, it gives you a sense that a lot of energy has to be put into it. It's very hard to predict, it's very lumpy, but it absolutely can allow us to exercise all our strengths of relationships, technical ability, and partnership mentality.

Speaker Change: Extra.

Speaker Change: Out of the Treaty type arrangements that you know, especially that would be one but like.

Speaker Change: Like you said that Theres, a pipeline in which we focus on and these transactions are lumpy can be material.

Speaker Change: And take time and you know we if you think about what we do right with obviously, a very technical company in nature. So.

Speaker Change: In great detail, we've got phenomenal relationships with our clients.

Speaker Change: Yeah, even during these types of discussions so we can be very creative in coming up with win win.

Speaker Change: With with the client to best manage the situation so.

Speaker Change: Yes, that's broadly the process yeah.

Speaker Change: Obviously, if experience is not as strong as as we liked that's another area that you'd look.

Speaker Change: Hopefully it gives you a sense that a lot of energy it has to be put into it it's very hard to predict it's very lumpy.

Speaker Change: But it absolutely can allow us to.

Speaker Change: Exercise all the all our strengths of relationship technical ability a partnership mentality.

Tom Gallagher: Gotcha. Thanks for the color, Tony.

Speaker Change: Got you thanks for the color Tony.

Tony Cheng: This concludes our question and answer session. I would like to turn the conference back over to Tony Cheng for any closing remarks.

Speaker Change: This concludes our question and answer session.

Speaker Change: I would like to turn the conference back over to Tony Chang for any closing remarks.

Speaker Change: Yeah.

Tony Cheng: Thank you all for your questions and your continued interest in RJA. This was a good quarter, following a very strong first quarter, further demonstrating our continued momentum and substantial earning power. Before I go, before we go, I want to congratulate Todd on his retirement and thank him for his nearly 30 years at RGA. There is no doubt his contributions over that time have helped shape RJ into the world-class organization it is today, and we will miss him both professionally and personally. Thank you, and this concludes our second quarter call.

Tony Chang: Thank you all for your questions and your continued interest in RJ. This was a good quarter. Following a very strong first quarter further demonstrating our continued momentum and substantial earning power.

Speaker Change: Before I go to before we go I want to congratulate Todd on his retirement and thank him for his nearly 30 years at RJ.

Speaker Change: There is no doubt this country. This his contributions over that time has helped shape the RJ into the world class organization. It is today.

Speaker Change: And we will miss him both professionally and personally.

Speaker Change: Thank you and this concludes our second quarter call.

Speaker Change: Okay.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.