Q2 2025 Reinsurance Group of America Inc Earnings Call

Conference Operator: Good morning and welcome to the Reinsurance Group of America second quarter 2025 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. Follow, yeah, star followed by zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To 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, Senior Vice President, Investor Relations. Please go ahead.

Good morning and welcome to the Reinsurance Group of America’s second quarter 2025 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. Excuse me. Follow? Yeah. Start followed by zero on your telephone keypad. 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.

Axel Andre: Thank you. Welcome to RGA's second quarter 2025 conference call. I am joined on the call this morning with Tony Cheng, RGA's President and CEO; Axel Andre, 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 and non-GAAP financial measures. Some of our comments or answers may contain forward-looking statements. Actual results could differ materially from expected results. Please refer to the earnings release we issued yesterday for a list of important factors that could cause actual results to differ from 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 discussion of these terms and reconciliations to GAAP measures.

I would now like to turn the conference over to Jeff Hobson, Senior Vice President of Investor Relations. Please go ahead.

Axel Andre: Throughout the call, we will be referencing slides from the earnings presentation, which again is posted on our website. Now I will turn the call over to Tony for his comments.

Thank you, welcome to RGA, second quarter 2025 conference call I'm joined on the call this morning with Tony Chang rga's president and CEO axle Andre Chief Financial Officer. Leslie Barbie Chief investment officer in 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 may contain forward-looking statements, actual results. Could differ materially from expected results, please refer to the earnings release, we issued yesterday for a list of important factors that could cause actual results to differ from 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, in quarterly, Financial supplements. All of which are posted on our website for discussion of these terms and reconciliations to gaap measures throughout the call.

Tony Cheng: Good morning, everyone, and thank you for joining our call. Last night, we reported operating EPS of $4.72 per share. Our adjusted operating return on equity for the trailing 12 months, excluding notable items, was 14.3%, which is in line with our intermediate-term targets. The operating results were below expectation due to large claims volatility in U.S. individual life and unfavorable claims in our healthcare access business, which is one of our four business lines within the U.S. group. The U.S. individual experience reflected a higher level of large claims. That offset the favorable experience in Q1. For the year, we are in line with expectations, and our forward-looking views have not changed. On the U.S. group healthcare access business, claims were unfavorable, consistent with the trends in the market as seen by the experience of other health companies.

We will be referencing slides from the earth earnings presentation, which again is posted on our website. And now I'll, I'll turn the call over to Tony for his comments.

Good morning everyone. And thank you for joining our call.

Last night, we reported operating EPS of $4.72 cents per share.

Our adjusted operating return on equity for the trailing 12 months, excluding notable items, was 14.3%, which is in line with our intermediate-term targets.

The operating results were below expectations due to large claims volatility in the U.S., individual life, and unfavorable claims in our Healthcare excess business, which is one of our four business lines within the U.S. group.

The US individual experience, reflected a higher level of large claims,

That offset the favorable experience in q1.

All the year, we are in line with expectations and our forward-looking views.

Have not changed.

Tony Cheng: This is short-term business, the vast majority of which will be repriced by January 2026. At a more strategic level, RGA has achieved one of our best quarters yet in terms of delivering tangible successes. Firstly, during the quarter, there was a significant increase in our excess and deployable capital measures. This will give us considerably more flexibility going forward to fund not only our strong growth but also return capital to shareholders in the form of dividends and share repurchases. Secondly, our business momentum remains very strong in both our financial solutions and traditional businesses. I am delighted with the closing of the Equitable transaction as we announced yesterday. This transaction has an effective date of April 1st. This start date was mutually agreed with Equitable as the experience on the block in Q2 was in line with our expectations. It is not just in the U.S.

On the US group, Healthcare access business claims were unfavorable consistent with the trends in the market as seen by the experience of other health companies.

This is short-term business. The vast majority of which will be repriced by January 2026.

At a more strategic level, RJ has achieved one of our best quarters yet. In terms of delivering tangible successes,

Firstly, during the quarter, there was a significant increase in our excess and Deployable Capital measures.

This will give us considerably more flexibility going forward to fund not only our strong growth, but also to return capital to shareholders in the form of dividends and share repurchases.

Secondly, our business momentum remains very strong in both our Financial Solutions and traditional businesses.

I am delighted with the closing of the Equitable transaction as we announced yesterday.

This transaction has an effective date of April 1st.

In line with our expectations.

Tony Cheng: that we continue to be a market leader in the asset-intensive business. We are having tremendous success in this business line across the globe. I believe this quarter was the first time in our history we have won asset-intensive transactions in five different countries across three continents. This shows the power of RGA's global platform. In the traditional space, for the first six months of the year, our premiums rose by a strong 11% on a constant currency basis while maintaining our robust margins by delivering unique and customized solutions. Whether in the traditional or financial solutions space, the nature of our solutions do vary around the world. What is consistent throughout and what drives this business momentum is our focus on creation rate. This focus allows us to continue to exceed our targets in terms of the percentage of business coming from exclusive arrangements.

It is not just in the US that we continue to be a market leader in the asset intensive business.

We are having tremendous success in this business line across the globe.

I believe this quarter was the first time in our history. We have won asset intensive transactions. In 5 different countries across 3 continents.

This shows the power of rjs global platform.

In the traditional space for the first 6 Months of the Year, our premiums Rose by a strong, 11% on a constant currency basis while maintaining our robust margins by delivering unique and customized Solutions.

Whether in the traditional or financial solution space, the nature of our solutions does vary around the world.

But what is consistent throughout, and what drives this business momentum is our focus on creation rates.

Tony Cheng: This increases our pricing returns as we create greater value for RGA and our clients. As you know, creation rate is about our ability to create innovative solutions. It is also about our ability to maintain our strong risk discipline. We speak a fair amount about the business we do win, but as instructive, is information about the blocks we do not pursue. This quarter, there were several high-profile broker transactions in the U.S. that we chose not to participate in. These transactions did not fit within our sweet spot and risk appetite. Our global platform allows us the flexibility to selectively pursue the business we like around the world. Thirdly, another area of strategic success is the continued build-out of our comprehensive asset management platform, both in terms of the breadth and depth of capabilities. Our investment results were strong this quarter.

This Focus allows us to continue to exceed our Targets in terms of the percentage of business coming from exclusive Arrangements.

This increases our pricing returns as we create greater value for RJ and our clients.

As you know, creation re is about our ability to create innovative solutions.

It is also about our ability to maintain our strong risk discipline.

We speak a fair amount about the business we do win.

But as instructive is information about the blocks. We do not pursue.

This quarter, there were several high-profile broker transactions in the US that we chose not to participate in.

These transactions did not fit within our sweet spot and risk appetite.

Our global platform allows us the flexibility to selectively pursue the business we like around the world.

Thirdly another area of strategic success is the continued buildout of our comprehensive Asset Management platform. Both in terms of the breadth and depth of capabilities.

Tony Cheng: The earned rate on the portfolio increased due to the strong variable investment income and higher new money rate. Our efforts over the past year to identify and act on repositioning some existing investments also supported these results. Our success is due to our prudent long-term approach to asset management. We build portfolios to weather the entirety of the investment cycle and have delivered strong returns while remaining well-matched to our liability profile. I will now provide more specific details on some of our new business activities in the quarter focused on our four areas of notable growth. In Asia Traditional, we had a robust quarter in terms of new treaties with all markets performing well. Our Hong Kong operations continue to shine in a market that showed a 43% increase in life insurance sales for the first quarter to a record high.

Our investment results were strong this quarter, the earned rate on the portfolio, increased due to the strong variable investment income and higher new money rates.

Our efforts over the past year to identify and act on repositioning, some existing Investments. Also supported these results.

Our success is due to our prudent, long-term approach to Asset Management.

We build portfolios to whether the entirety of the investment cycle and have delivered strong returns while remaining well matched to our liability profile.

I will now provide more specific details on some of the new business activities in the quarter focused on our 4 areas of notable growth.

in Asia traditional we had a robust quarter in terms of new treaties with all markets performing well,

Tony Cheng: In Taiwan, which is one of our strongest markets, we have been active in the senior market. Currently, there are six clients in the market offering 14 senior products, all supported by RGA. Finally, in Korea, we continue to have success in the upgrade cycle relating to the next generation of critical illness products. As you can see, each new product development not only leads to greater business within that market but also adds to our library of solutions that we then redeploy across Asia and across the globe. Moving to Asia Financial Solutions, our second area of notable growth, we closed several transactions in Japan, Korea, and Hong Kong. We continue to see regulatory changes as a key tailwind in these and other markets.

Our Hong Kong operations continue to shine in a market that showed a 43% increase in life insurance sales for the first quarter to a record high.

In Taiwan, which is 1 of our strongest markets, we have been active in the senior market.

Currently there are 6 clients in the market offering 14 senior products.

Or supported by RGA.

Finally, in Korea, we continue to have success in the upgrade cycle relating to the next generation of critical illness products.

As you can see, each new product development not only leads to greater business within that market but also adds to our library of solutions. We then redeploy across Asia and across the globe.

Moving to Asia Financial Solutions, our second area of notable growth.

We closed several transactions in Japan, Korea and Hong Kong.

Tony Cheng: While the large marquee transactions get the headlines, we also value these more frequent, modest-sized flow or block transactions that are often completed without an intense bidding process. RGA, with its many touchpoints and longstanding relationships, is best positioned to provide these differentiated and more tailored solutions to our clients. Our third area of notable growth is the longevity in the PRT market. In the U.K., we had a very active quarter as we closed a number of attractive transactions. We are on pace to meet our targets for new business and believe we are the clear market leader. The highlight of the quarter in the U.K. was an asset-intensive transaction with a new client. We partnered to develop a tailored solution made possible because of RGA's strong ratings, reputation, and execution certainty. In the U.S.

We continue to see regulatory changes as a key Tailwind in these and other markets.

While the large Marquee transactions, get the headlines. We also value these more frequent modest sized flow or block transactions that are often completed without an intense bidding process.

RJ with its many touch points. And long-standing relationships is best positioned to provide these differentiated and more tailored solutions to our clients.

Our third area of notable growth is the longevity in the PRT Market.

We are on Pace to meet our targets for new business and believe we are the clear market leader.

The quarter in the UK was an asset intensive transaction, with a new client.

Tony Cheng: PRT market, we are encouraged by the increase in activity at the jumbo end of the market. Given our business pipeline, we expect a pickup in activity in the second half of the year. In the U.S. traditional area, our fourth area of notable growth, we had strong new business, most of which was related to our underwriting initiatives. It was a record quarter for individual underwriting cases, and we made inroads towards full underwriting outsourcing with a few important clients. Additionally, our broad array of underwriting services was the primary driver of us winning a leading share in many transactions. This included one invoice transaction where the client increased our share due to the services we provide.

We partnered to develop a tailored solution made possible because of RJ's, strong ratings reputation, and execution certainty.

In the US PRT Market, we are encouraged by the increase in activity at the jumbo end of the market.

Given our business pipeline, we expect a pickup in activity in the second half of the year.

In the US traditional area, our fourth area of notable growth, we had strong new business, most of which was related to our underwriting initiatives.

It was a record quarter for individual underwriting cases and we made inroads towards 4 under writing Outsourcing with a few important clients.

Additionally, our broad array of underwriting Services was the primary driver of us, winning a leading share in many transactions.

Tony Cheng: When you combine our underwriting and product development services with our partners that provide distribution technology and other services, further coupled with our ability to reinsure both sides of the balance sheet, you can see why we continue to bring holistic solutions generating exclusive business for RGA. Putting it all together, I am very pleased with our continued success in providing significant value to RGA and our clients through our creation re-efforts. When combined with our balance sheet optimization on the capital side, invoice actions, investment portfolio repositioning, and other management levers, we expect to be successful in driving improved returns for shareholders and therefore a tailwind to our current ROE. We remain confident about the future of our business prospects as RGA is well-positioned in its markets, and we have a proven successful strategy that has stood the test of time.

This included 1 in force transaction, where the client increased, our share due to the services. We provide

When you combine our underwriting and product development services with our partners, that provide distribution technology and other services further, coupled with our ability to reassure both sides of the balance sheet, you can see why we continue to bring Holistic Solutions, generating exclusive business for RGA.

Putting it all together. I am very pleased with our continued success in providing significant value to RJ and our clients through our creation re efforts.

When combined with our balance sheet, optimization on the capital side in force actions Investment Portfolio, repositioning and other management levels. We expect to be successful in driving improved returns for shareholders and therefore a Tailwind to our current Roe.

Tony Cheng: I will now turn it over to our CFO, Axel Andre, to discuss the financial results in more detail.

We remain confident about the future of our business Prospect prospects as RJ's. Well, positioned in its markets, and we have a proven successful strategy that has stood the test of time.

I will now turn it over to our CFO axle, Andre to discuss the financial results in more detail.

Leslie Barbi: Tony. Reinsurance Group of America reported pre-tax adjusted operating income of $421 million for the quarter, or $4.72 per share after tax. For the trailing 12 months, adjusted operating return on equity, excluding notable items, was 14.3%. After a strong first quarter, this quarter's results were below expectations, driven primarily by claims volatility in U.S. individual life and unfavorable claims in one of the businesses within U.S. group, which I will expand on shortly. Aside from the financial results, we have made good progress on several strategic initiatives in the quarter, including materially improving our capital position. As a result of further balance sheet optimization and the recognition of the additional value of in-force business in certain capital models, our excess capital increased to $3.8 billion at the end of Q2. Pro forma for the equitable transaction, which I will discuss in more detail, excess capital was $2.3 billion.

Hi, Sony rg8 reported pre-tax adjusted operating income of 421 million for the quarter or 4.72 cents per share after tax.

For the trading 12 months, adjusted operating return on equity, excluding notable items, was 14.3%.

After a strong first quarter, this quarter's results were below expectations driven primarily by claims volatility in US individual life and unfavorable claims in 1 of the businesses within us Group, which I'll expand on shortly.

Aside from the financial results, we have made good progress on several strategic initiatives. In the quarter, including materiality, improving our Capital position.

As a result of further balance sheet, optimization and the recognition of the additional value of enforced business in certain Capital models, our excess Capital increase to 3.8 billion at the end of Q2.

Leslie Barbi: Similarly, our deployable capital increased to $3.4 billion at the end of the quarter. During the period, we deployed $276 million into in-force transactions. Our non-spread portfolio yield, excluding variable investment income, was 4.98% in Q2, up eight basis points from the first quarter. Total variable investment income was strong at $105 million, significantly higher than last quarter and now favorable for the year. The results were primarily due to realizations in our limited partnerships and real estate joint venture sales. The effective tax rate for the quarter was 25.2% on adjusted operating income before taxes, above the expected range of 23% to 24%, primarily due to the establishment of valuation allowances on foreign tax credits. We are still expecting a tax rate of 23% to 24% for the full year. Yesterday, we announced the closing of the previously discussed transaction with Equitable.

Pro forma for the Equitable transaction, which I'll discuss in more detail excess. Capital was 2.3 billion dollars.

Similarly, our Deployable Capital increased to 3.4 billion dollars at the end of the quarter.

During the period, we deployed 276 million into enforced transactions.

Our non-reader yield excluding variable investment. Income was 4.98% in Q2 up 8 basis points from the first quarter.

total variable investment income was strong at 105 million significantly higher than last quarter, and now, favorable for the year,

The results were primarily due to realizations in our limited partnership and real estate joint venture sales.

The effective tax rate for the quarter was 25.2% on adjusted operating income before taxes. Above the expected range of 23 to 24%, primarily due to the establishment of valuation allowances on foreign tax credits.

We are still expecting a tax rate of 23% to 24% for the full year.

Leslie Barbi: I would like to provide additional details regarding certain closing terms. The transaction is effective April 1st, which was mutually agreed, versus an alternative of July 1st. When reviewing the Q2 claims experience and overall results on the assumed block, we found it to be in line with our expectations and thus found it beneficial to accept an earlier effective date. Our review of the experience also helped affirm the reasonableness of our actuarial and pricing assumptions. Although it is effective April 1st, we will only report six months of earnings in our 2025 GAAP results. The Q2 earnings on the block are estimated to be $30 million, in line with our expectations. These will be deferred and amortized into earnings over the life of the transaction.

Yesterday, we announced the closing of the previously discussed transaction with Equitable. I would like to provide additional details regarding certain closing terms.

The transaction is effective April 1st, which was mutually agreed upon versus an alternative of July 1st.

In line with our expectations and that's founded beneficial to accept an earlier effective date.

Our review of the experience also helped the firm the reasonable nest of our actual and pricing assumptions.

Although it's effective April 1st, we would only report 6 months of earnings in our 2025 GAAP results.

Leslie Barbi: For the second half of 2025, we still expect pre-tax operating income contributions of approximately $70 million, increasing to $160 to $170 million in 2026, and approximately $200 million per year by 2027. Turning to biometric claims experience, as outlined on slide eight of our earnings presentation, this displays the total company claims experience and the related financial statement impacts on a quarterly basis. As mentioned earlier, claims experience was unfavorable in the quarter, primarily driven by the U.S. traditional segment. For the company, economic claims experience was lower than expected by $256 million, with a corresponding $158 million unfavorable current period financial impact. Claims experience was unfavorable in U.S. individual life, primarily due to higher large claims, offsetting the favorable experience from Q1. For the year, the economic claims experience for U.S. individual life is broadly in line with expectations.

The Q2 earnings on the block are estimated to be 30% and these will be deferred and advertised into earnings over the life of the transaction.

For the second half of 2025, we still expect pre-tax operating income contributions of approximately 70 million dollars.

Increasing to 160 to 170 million dollars in 2026.

And approximately $200 million per year by 2027.

Turning to biometric claims experience as our client on slide 8 of our earnings presentation.

This displays the total company claims experience and the related financial statement impacts on a quarterly basis.

As mentioned earlier, claims experience was unfavorable in the quarter, primarily driven by the U.S. traditional segment.

For the company, economic claims experience was lower than expected by 256 million with a corresponding 158 million unfavorable current period Financial impact.

claims experience was unfavorable in US, individual life, primarily due to higher large claims offsetting the favorable experience from q1

Leslie Barbi: The current period financial impact was significant due to the proportion of claims in capped cohorts. Claims in U.S. group were also higher than expected, driven by our healthcare access business, consistent with recent industry trends. Other lines within U.S. group performed in line with expectations. We think that the current challenges within the healthcare access block can be remediated in a reasonable timeframe, given its short tail and our ability to reprice quickly and modify underwriting. We have already begun taking pricing action and expect that the majority of the block will be repriced by January 2026. Looking at the second half of the year, our assumption is that the group business overall will be approximately break-even versus an expectation of $20 to $30 million for the remainder of the year. We expect to see improvements in the results as we move through 2026.

For the year, the economic claims experience for U.S. individual life is broadly in line with expectations.

The current period financial impact was significant due to the proportion of claims in capped cohorts.

Claims in US group were also higher than expected driven by our Healthcare access business consistent with recent industry trends.

Other Lines within us group performed in line with expectations.

We think that the current challenges within the healthcare access block can be remediated in a reasonable time frame, given its short tail and our ability to repricing.

We have already begun taking pricing action and expect that the majority of the block will be reprised by January 2026.

Looking at the second half of the Year, our assumption is that the group business overall will be approximately Break Even versus an expectation of 20 to 30 million dollars for the remainder of the year?

We expect to see Improvement in the results as we move through 20126.

Leslie Barbi: Claims in Canada and EMEA were modestly unfavorable, while APAC experience was favorable. As we've seen in the first two quarters, volatility on a quarterly basis, both positive and negative, is normal and does not necessarily include a material trend. As shown on page 8 of our presentation, on a longer-term basis, economic claims experience for the total company has been favorable by $272 million since the beginning of 2023, when we fully emerged, more fully emerged from COVID. U.S. individual life represents approximately $75 million of this favorable experience. As a reminder, the favorable economic experience that has not been recognized through the accounting results will be recognized over the remaining life of the business.

Claims in Canada and emia were modestly unfavorable. While APAC experience was favorable.

As we've seen in the first 2 quarters volatility on a quarterly basis, both positive and negative is normal and does not necessarily include immaterial trends.

As shown on page, 8 of our presentation on a longer term basis, economic claims experience for the total company has been favorable by 272 million dollars. Since the beginning of 2023, when we fully emerge, more fully emerged from Co

Us individual life represents approximately $75 million of this favorable experience.

As a reminder, the favorable economic experience that has not been recognized through the accounting results will be recognized over the remaining life of the business.

Leslie Barbi: As a result of our substantial new business activity year to date, the value of in-force business margins totaled $41 billion at the end of the quarter, an increase of approximately $4 billion year to date, with approximately $2 billion coming from new business. This excludes the impact of the equitable transaction, which will be included in our Q3 results. We will provide a more detailed update on the value of in-force business margins with our Q3 results. For the year, consolidated net premiums were up 14% year over year when adjusted for the impacts from U.S. PRT transactions, which can cause premiums to fluctuate. Our traditional business premium growth was 11% year to date on a constant currency basis, which has benefited from strong growth in the U.S., EMEA, and Asia.

As a result of our substantial new business activity year to date, the value of enforced, business margins totaled 41 billion dollars. At the end of the quarter, an increase of approximately 4 billion dollars year to date with approximately 2 billion dollars. Coming from new business.

This excludes the impact of the Equitable transaction which will be included in O Q3 results.

We will provide a more detailed update on the value of enforced business margins, with our Q3 results.

For the year, consolidated net premiums were up 14% year-over-year when adjusted for the impacts from U.S. PRT transactions, which can cause premiums to fluctuate.

Leslie Barbi: Premiums are a good indicator of the ongoing strength of a traditional business, and we continue to have strong momentum across our regions. Turning now to capital, our excess capital increased to an estimated $3.8 billion at the end of Q2, or $2.3 billion pro forma for the equitable transaction. The increase is primarily due to the recognition within certain capital frameworks of additional value of in-force credits related to business already on our books. We recently satisfied the strict external requirements needed to include these balances in our capital metrics. Note that excess capital considers our three main capital lenses corresponding to RGA's internal economic capital model, local regulatory capital across our main legal entities, and rating agency capital methodologies. Our deployable capital at Q2 increased to an estimated $3.4 billion due to similar reasons I just highlighted.

Our traditional business premium growth was 11% year to date on a constant currency basis, which has benefited from strong growth in the US emia and Asia.

Premiums are a good indicator of the ongoing strength of our traditional business, and we continue to have strong momentum across our regions.

Turning now, to Capitol our excess Capital increased to an estimated 3.8 billion dollars. At the end of Q2 or 2.3 billion dollars per for the Equitable transaction.

Frameworks of additional value of enforced. Credit related to business, already on our books.

We recently satisfied the strict external requirements needed to include these balances in our Capital metrics.

Note that excess Capital considers our 3, main capital lenses corresponding to rga's internal. Economic capital model, local regulatory Capital across our main legal entities, and rating agency Capital methodologies.

Leslie Barbi: As a quick reminder, this measure represents management's estimates of the capital available to be deployed into transactions or returned to shareholders over the next 12 months, taking into account estimated capital sources and committed uses over that forward-looking 12-month period, including the impacts of the equitable transaction. Our strong balance sheet, capital management toolkit, and current levels of excess and deployable capital position us well to continue to support an attractive new business pipeline with existing capital. We will balance the deployment into the business with returning capital to shareholders through quarterly dividends, which we just increased 4.5% to $0.93 per share, and share repurchases. Regarding share repurchases, our intention in the short to intermediate term is to be active but opportunistic quarter by quarter, depending on our capital position, a forward view of our transaction pipeline, as well as valuation metrics.

Our deployable capital at Q2 increased to an estimated $3.4 billion due to similar reasons. I just highlighted.

as a quick reminder, this measure represents Management's estimates of the capital available to be deployed into transactions or return to shareholders over the next 12 months, taking into account estimated Capital sources and committed uses over that forward-looking 12-month period, including the impact of the Equitable transaction.

our strong balance sheets Capital Management tool kits, and current levels of excess, and Deployable Capital position as well to continue to support an attractive new business pipeline with existing capital,

We will balance the deployments into the business with returning Capital to shareholders through quarterly dividends which we just increased 4.5% to 93 cents per share.

And share repurchases.

Leslie Barbi: Over the longer term, we would expect total shareholder return of capital through dividends and share repurchases to range between 20% to 30% of after-tax operating earnings on average, consistent with our long-term history. Moving to the quarterly segment results on slide six, the U.S. and Latin America traditional results reflected unfavorable claims experience as previously discussed. For the year, the economic claims experience in U.S. individual life is broadly in line with expectations. The U.S. financial solutions results were higher than expected due to higher variable investment income and higher investment yields. As a reminder, the equitable transaction will be recorded within this segment. Canada traditional results reflected modestly unfavorable group results and individual life claims experience. The financial solutions results reflected favorable longevity experience. In the Europe, Middle East, and Africa region, the traditional results reflected unfavorable claims experience partially offset by favorable other experience.

Regarding share repurchases, our intention in the short to intermediate term is to be active but opportunistic, quarter by quarter, depending on our capital position, a forward view of our transaction pipeline, as well as valuation metrics.

Over the longer term. We would expect total shareholder return of capital through dividends and share repurchases to range between 20 to 30% of after tax operating earnings on average consistent with our long-term history.

Moving to the quarterly segment results on slide 6.

The US and Latin America, traditional results, reflected unfavorable claims experience as previously discussed for the year. The economic claims experience in US. Individual life is broadly in line with expectations.

The U.S. Financial Solutions results were higher than expected due to higher variable investment income and higher investment yields.

As a reminder, the Equitable transaction will be recorded within this segment.

Canada, traditional results, reflected modestly unfavorable group results and individual life claims experience.

The Financial Solutions results reflected favorable, longevity experience.

Leslie Barbi: EMEA's financial solutions results were above expectations, reflecting favorable longevity experience, higher variable investment income, and higher investment margins due to ongoing growth. Turning to our Asia Pacific region, the traditional results were good, reflecting favorable claims experience across the region. Financial solutions results were favorable, primarily due to higher variable investment income and ongoing growth of the business. Finally, the corporate and other segments reported an adjusted operating loss before tax of $32 million, favorable compared to the expected quarterly average run rate. This was primarily due to higher variable investment income. Moving to investments on slides 9 through 12, the non-spread book yield, excluding variable investment income, rose to 4.98%, primarily due to higher new money rates, which increased to 6.53% and remain well above the portfolio yield.

In Europe, the Middle East, and Africa, the traditional results reflected unfavorable claims experience, partially offset by favorable other experience.

EMS Financial Solutions results were above expectations reflecting. Favorable longevity experience higher variable investment income and higher investment margins due to ongoing growth.

Turning to our asia-pacific region.

The traditional results were good, reflecting favorable claims experience of the region.

Financial Solutions results were favorable, primarily due to higher variable investment income and ongoing growth of the business.

Finally, the corporate and other segments reported an adjusted operating loss before tax of 32 million favorable compared to the expected quarterly average run rate.

This was primarily due to higher variable investment income.

Leslie Barbi: The total non-spread portfolio yield for the quarter was 5.31%, up from last quarter, reflecting higher variable investment income and higher new money rates. Variable investment income was strong for the period, driven by increased realizations in limited partnerships and real estate joint venture sales. I will note that we still hold an above-average lever of cash that we look to deploy opportunistically over the coming quarters. Importantly, portfolio quality remains high, and credit impairments are in line with expectations for the year. We believe the portfolio remains well-positioned. During the quarter, we continued our long track record of increasing book value per share. As shown on slide 16, our book value per share, excluding AOCI and impacts from B36 embedded derivatives, increased to $156.63, which represents a compounded annual growth rate of 9.7% since the beginning of 2021.

Moving to investments on slides 9 through 12. The nonprofit book yield, excluding variable investment income, rose to 4.98%, primarily due to higher new money rates, which increased to 6.53% and remain well above the portfolio yield.

The total non-real yield for the quarter was 5.31% up from last quarter reflecting higher variable investment income and higher new money rates.

Variable investment income was strong for the period, driven by increased realizations in limited partnerships and real estate joint venture sales.

I'll note that we still hold an above-average level of cash that we look to deploy opportunistically over the coming quarters.

Importantly, portfolio, quality remains high and credit impairments, are in line with expectations for the year.

And we believe the portfolio remains well-positioned.

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

Leslie Barbi: To summarize, following a strong first quarter, this quarter's results were impacted by claims experience in our U.S. traditional segment. Importantly, we continue to advance many strategic objectives. Our long-term strategy remains well on track, and we are confident in our ability to deliver on our intermediate-term financial targets. We continue to see good opportunities across our geographies and business lines and remain well-capitalized to execute on our strategic plan. We also believe we are in a position to return excess capital to shareholders through dividends and share repurchases. With that, I would like to thank everyone for your continued interest in RGA. This concludes our prepared remarks. We would now like to open it up for questions.

Increased to 15663 which represents a compounded annual growth rate of 9.7% since the beginning of 2021.

To summarize following a strong first quarter. This quarter's results were impacted by claims experience in our us traditional segments. Importantly, we continue to advance many strategic objectives. Our long-term strategy remains well on track, and we are confident in our ability to deliver on our intermediate term Financial targets.

We continue to see good opportunities across our geographies and business lines and remain well-capitalized to execute on our strategic plan.

We also believe we are in a position to return excess capital to shareholders through dividends and share repurchases.

Conference Operator: We will now begin the question and answer session. To 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. To withdraw your question, please press star, then two. Please limit yourselves to one question and one follow-up. If you have additional questions, you may re-enter the queue. Our first question today comes from John Barnidge with Piper Sandler. Please go ahead.

With that, I would like to thank everyone for your continued interest in RGA. This concludes our prepared remarks, we would now like to open it up for questions.

We will now begin the question and answer session.

to ask a question, you may press star then 1 on your telephone keypad,

If you are using a speaker-phone, please pick up your handset before pressing the keys.

To withdraw your question, please press star, then 2.

Please limit yourselves to 1 question and 1 follow-up.

If you have additional questions, you may re-enter the queue.

Our first question, today comes from John barnidge with Piper Sandler. Please go ahead.

John Barnidge: Good morning. Thank you for the opportunity. Can you talk a little bit more about the additional credit you got on the life block? I know it was probably a very thorough analysis across markets and products. What changes were made, and are you making an assumption for an improvement in the obesity epidemic because of GLP-1 drugs? Thank you.

Good morning. Thank you for the opportunity. Can you talk a little bit more about the additional credit you got on the LifeLock? I know it was a bit, probably a very thorough analysis across markets and products. Uh what what changes were made and did you are you making an assumption for an improvement in obesity epidemic because of glp? 1 drug, thank you.

Axel Andre: Hi, John. Thank you for the question. We are very pleased, obviously, with the value of invoice credit that we have received in our capital model. As you correctly pointed out, this was the result of a lot of work over a long period of time. This really represents capturing within available capital models some portion of the large embedded value in our business, given the long-term nature of our cash flows and the long-term embedded underwriting margins in our business. This is really a reflection of the current book of business with current assumptions and does not reflect any change in our actuarial assumptions at this point.

Hi, John. Thank you for the question.

Um, we're very pleased, obviously, with the value of enforced credit that we've received in our capital model. As you correctly pointed out, this was the result of a lot of work over a long period of time.

Um, and this really represents capturing within, uh, within the available capital models. Um, some portion of the larger embedded value in our business. Given the long-term nature of our cash flows and the long-term embedded underwriting margins in our business.

Um, this is really a reflection of the current book of business with current assumptions and does not reflect any change in our actual assumptions at this point.

John Barnidge: Are you considering incorporating that with the third quarter actuarial assumption review as my follow-up? Thank you.

Are you considering incorporating that with the third quarter actuarial assumption review as my follow-up? Thank you.

Axel Andre: It is too early to be talking about the Q3 actuarial assumptions work. This work is still ongoing, and we will be discussing that on the next quarter's earnings call.

Um so it is too early to be talking about the the third quarter actual assumptions uh worked if work is still ongoing um and we will be discussing that on the next quarter's earnings call.

Conference Operator: The next question is from Joel Hurwitz with Dowling Partners. Please go ahead.

The next question is from Joel hurwitz with Dowling Partners. Please go ahead.

Joel Hurwitz: Hey, good morning. Can you just unpack the individual life experience in the quarter? Was there some significant lag effect from Q1, or was there any impact from you guys increasing retentions at the beginning of the year?

Jonathan Porter: Yeah. Hi, Joel. Thanks for the question. This is Jonathan Porter. When we review claims experience, we focus on longer time periods before drawing conclusions on trends, positive or negative, because underlying results can be more variable when you look at any one quarter, any one market. In that context, we are very pleased with our overall biometric experience, as Axel Andre talked about in his remarks. Q1 of this year, we had very positive results in our U.S. individual line of business due to large claims volatility being favorable. Q2, we saw the same thing, but in the opposite direction. On a year-to-date basis, results for U.S. individual are broadly in line with our expectations. The total number of large claims we get in any one quarter is less than 200.

Hey, good morning. Uh can you just unpack the individual life experience in the quarter? Was there some significant lag effect from from q1? And, or was there any impact from you guys? Increasing retention at the beginning of the year?

Yeah. Hi, Joel. Thanks for the question. This is Jonathan. You know, when we review claims experience, we focus on longer time periods before drawing conclusions on trends, positive or negative, because underlying results can be more variable when you look at any one quarter in any market. So, in that context, we're very pleased with our overall biometric experience, as Axel talked about in his remarks.

Uh, q1 of this year. Uh, we had very positive results in our us individual, uh, line of business due to large claims volatility, being favorable, uh, Q2. We saw the same thing but in the opposite direction. So on a year-to-date basis results for us individual are broadly in line with our expectations.

Jonathan Porter: A small change in count or average size can create fluctuations in the experience, and that is really what we saw in Q2. We had a slightly elevated frequency of large claims, so more or less in line with expectations, a little bit higher, but it was really the materiality or the severity of the claims or the average claim size that was higher. I would characterize the magnitude of the large claims volatility that we have seen in Q1 and Q2 as unusual. I would not expect it to continue at that level on a regular basis. Again, given things are broadly in line on a year-to-date basis, there is nothing from a trend perspective that we are concerned about at this point.

Uh, the total number of large claims we get in any 1, quarter is less than 200. So, a small change in count or average size, can create fluctuations in the experience. And that's really what we saw in Q2. Uh, we had a, a slightly elevated frequency of large claims, so more or less in line with expectations a little bit higher, but it was really the materiality or the severity of the claims or the average claim size, that was higher and characterize. The magnitude of the large claims volatility that we've seen in q1 and Q2 is unusual. I wouldn't expect it.

To continue at that level on a regular basis. And again, given things are broadly in line on a year-to-date basis. There's nothing from a trend perspective that we're concerned about at this point.

Joel Hurwitz: Okay. Got it. Then, Axel, going back to the $2 billion value of invoice credit, can you just unpack that process a little more for me and sort of, you know, what rating agency and regulators were involved? I guess just in your deck, right, you talk about the binding capital framework can change. Was there a change and just what would cause that to change?

You know what rating agency and regulators were involved, and, uh, I guess just...

Axel Andre: Yes, thank you for the question. You are correct to point out that our capital metrics, whether it is excess capital or deployable capital, consider the three main capital lenses that we evaluate capital on. That is, of course, Reinsurance Group of America's internal economic capital model. It is the local regulatory capital across legal entities and rating agency capital models. You are correct to point out that at times we have talked about how the binding constraint between these three frameworks is what determines for us the excess or the deployable capital. In this case, value of invoice is a process that we pursued with rating agency. It says that the rating agency capital framework was our binding constraint. Through this work, which is thorough, which requires third-party review and a thorough process from the rating agency perspective, we now see this value of invoice reflected in our model.

In in your deck, right? You talk about the the the The Binding Capital framework can change, just it it was there a change and then just what would cause that to change?

Yeah, thank you for the question. Um so so you you you correct 2 points out that are um or Capital metrics whether it's excess capital or Deployable Capital uh consider the 3 main capital lenses uh that we that we evaluate capital on. And that's of course our G is internal economic capital model. It's the local regulatory Capital across legal entities and uh rating agency Capital models. Um, do you you you correct to to point out that at times, we've talked about how the biting The Binding constraint between these 3 Frameworks is what determines for us, the, the, the excess or the Deployable Capital. Um, in this case, the value of enforce is, uh, is a process that we, um, uh, that that we pursued with rating agencies. So, it it, it says that the rating agency Capital framework was orbiting constraints and that through this work which is thorough, which requires third-party um third-party review and uh and a and a thorough process from the rate.

Axel Andre: We are now in a position where rating agency and regulatory capital are relatively comparable. Lastly, I just want to point out that this value of invoice recognition is a recognition for only a portion of our invoice block and that there are further opportunities for further recognition down the line.

Agency perspective. Um, we now see this, uh, value of enforce reflected in our model. Um, we are now in a position where rating agency and Regulatory Capital are, um, relatively comparable. Um, and then, lastly, I just want to point out that this value of enforce recognition is the recognition for only a portion of our enforced block, um, and that there are further opportunities for further recognition down the line.

Conference Operator: The next question is from Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Greenspan: Hi. Thanks. Good morning. I was hoping you guys could talk more about the health experience in the quarter. I am just thinking about future performance of the block. I know you guys touched on rate increases in the prepared remarks. Can you just give us a sense of the magnitude and the expected impact there as well?

The next question is from Elise. Greenspan with Wells, Fargo, please go ahead.

Hi, thanks. Um, good morning. Um, I was hoping you guys could talk more, um, just about the health experience in the quarter, um, and just thinking about, um, you know, future performance of the block and then I know you guys touched on rain increases in the prepared, remarks can you just give us a sense of just the magnitude and the expected impact there as well.

Jonathan Porter: Hi, Elyse. This is Jonathan Porter. I'll take that question. This is a line of business that we've been in for a significant period of time, and we have quite a bit of expertise. It has also performed well over time and has been profitable, even including the results that we're seeing in this quarter. Our U.S. group business is comprised of four major lines. Three of those are performing as expected. The negative experience we're seeing this quarter is in this line: HR healthcare access line. Just to size that for you, it's about 30% of our expected U.S. group earnings, which is about 3% of our U.S. traditional earnings. The results of this quarter are really driven by higher claims costs stemming from a variety of more expensive treatments, so things like specialty drugs, transplants, premature births, and some cancer therapies.

Hi, Lisa. This is Jonathan, I'll take that question. Um, so this is a line of business that we've been in, for a significant period of time and we have quite a bit of expertise. Uh, it is also performed well over time and has been profitable even including, uh, the results that we're seeing in this quarter.

Um are us Group business is comprised of 4, major lines, 3 of those are performing as expected. The negative experience. We're seeing this quarter is I get to our Healthcare access line and just the size of that for you. It's about 30% of our expected us group earnings which is about 3% of our us traditional earnings.

Jonathan Porter: As Axel Andre mentioned, the business is short-term and annually repricable, which means we're able to quickly address the experience variances in the business. We do expect margins to improve going into 2026. The rate increases we have, as you mentioned in your question, we have already implemented rate increases so far this year on blocks that have already been renewed. Those amount of increases are significant. I don't have an exact figure to give you, but they are material in what we've seen so far and expect that to continue.

The results of this quarter are really driven by higher claims costs stemming from a variety of more expensive treatments. So, things like specialty drugs, transplants, premature births, and some cancer therapies. Um, as Axel mentioned, you know, the business is short-term and annually replaceable, which means we're able to quickly address the...

Experience experiences, uh, in the business. Uh, and we do expect, uh, margins to improve going into 2026. Uh, the rate increases— we have, as you mentioned in your question— we have already implemented rate increases so far this year on blocks that have already been renewed. Uh, those amount of increases are significant. Um, I don't have an exact figure to give you, but they are material, uh, in what we've seen so far and expect that to continue.

Elyse Greenspan: Thanks. My second question, I guess, is also just on the excess capital figure you were talking about, getting credit for part of the value invoice. As we think about future deals that get done in the future, how should we think about you guys getting incremental credit there? Is it certain types of deals that would qualify for credit? Do you talk to the rating agencies on a case-by-case basis? Can you just give us a sense for future transactions and deployable capital credit that you could get?

Thanks. Um, and then my second question, I guess is also just on um, the excess Capital figure. Um, you were talking about by getting credit for part of the value and force, as we think about future deals that get done in in the future. How should we think about? You guys getting incremental credit, there is a certain types of deals that would qualify for credit. Do you talk to the rating agencies on a Case by case basis? Could you just give

Axel Andre: Thank you for the question, Elyse. We have a long-term track record of working with the rating agencies to obtain credit for value of inforce. At times in the past, it has been in the context of the securitization of a block of business. But also, at times, it does not necessarily require that securitization. We have a process where there are certain portions of our business where we are receiving value of inforce credit as we write new business because we have a well-established process and understanding of the nature of the business. Then for other portions of our inforce business, we address it block by block, if you will. We do expect that over time, we will be constantly looking at our balance sheet and looking for opportunities to create more value of inforce recognition through the rating agency process.

Us a sense for, you know, just future transactions and Deployable Capital Credit that you could get.

Yeah, thank you for the question, please. Um, yeah, so we we have a. So we have a long-term, um, track record of working with the rating agencies to obtain, uh, credit for value of enforce, uh, at times, uh, in the past, it's been in the context of the securitization of a block of business. Um, but at also at times, it doesn't necessarily require that, uh, that securitization. Um, we have a process where there are certain portions of our business, where we are receiving value of enforced credit, as we write new business, because we have a, well established process and understanding of the nature of the business.

So we do expect that over time, we will be constantly looking at our balance sheet and looking for opportunities to create more, uh, more value of enforce, uh, recognition through the rating agency process.

Conference Operator: The next question is from Jimmy Bhullar with JPMorgan. Please go ahead.

John Barnidge: Hey, good morning. I had a couple of questions. One is on the health insurance business. Can you talk about the lag in your results versus what your clients are seeing? The point of the question is that given that health insurance results have generally gotten worse in Q2, should we assume that that flows through your results in the third quarter or the fourth quarter? So even though you will reprice part of the block, things might actually get worse in the near term in terms of your results and then maybe not improve until 2026. Secondly, on capital, I think based on what you are saying in terms of your excess or deployable capital, that number is close to 20% to 30% of your market cap.

The next question is from Jimmy Bhullar with JP Morgan. Please go ahead.

Hey, good morning. I had a couple of questions 1 is on the health insurance business. Can you talk about, um, the lag in your results, versus what your clients are seeing and the point. The question is that given that health insurance results have generally gotten worse in Dooku, should be assumed that that flows through your results in the third quarter or the fourth quarter. So even though you'll re price

Part of the block, uh, is that things might actually get worse in the near term in terms of your results, and then maybe not improve until 2026.

John Barnidge: Yet if we look at most of the traditional metrics like debt to cap or RBC, they really do not imply that much excess capital. Similarly, if we look at your actions, despite a fairly low multiple, you guys have not really been buying back stock. Obviously, you have deployed capital into deals. Excess capital, in my view, is more of an opinion than a fact anyway. But what are your priorities in terms of using that excess capital over the next year, two years or so? Are you more open to buying back stock than you have been in the past year or two years? Thanks.

And then secondly on Capital, I think your based on what you're saying in terms of your excess or Deployable Capital that number is close to 20, 30% of your Market Gap. Uh, yet if we look at most of the traditional metrics, like debt the gap or RBC, they really don't imply that much excess capital. And similarly, if we look at your actions, um, despite a fairly low multiple you guys haven't really been, um, buying back stocks, obviously, you have deployed Capital into deals. So just, um, and and that's a

Access Capital in my view. More is more of a opinion than a fact anyway. But what are your um priorities in terms of using that excess Capital over the next um, year 2 years or so. And are you more open to buying back stocks? Then you've been in the past year or 2 years.

Jonathan Porter: Thanks, Jimmy. This is Jonathan. I will take the first question. With respect to the healthcare excess and the claims lag, as a reinsurer, if possible, we might see a little longer of a lag in reporting, but a couple of things on that. We work very closely with our clients, obviously. In fact, we provide services to our clients that help them better manage their claims expectations. We have a successful track record of demonstrating that value historically as well. Also, these claims, because of the nature of them and them being large, they tend to be very known very quickly. That also helps in addressing any potential lag situation. From the perspective of our actuarial liabilities, obviously, we have established reserves from a case perspective, as well as IBNR, using our best estimate of what we believe the experience has been.

Thanks.

Excess. And the claims like, I mean as a reinsurer.

Jonathan Porter: From that perspective, we feel we are appropriately reserved at the end of the quarter.

John Barnidge: Okay. Thanks.

Tony Cheng: Jimmy, let me start off on a question around the capital. As I shared in my opening remarks, our business remains incredibly strong. The business where the returns we are seeing on the new business are a tailwind to the ROE guidance we have given of the 13% to 15%. Actually, it ticked up this quarter just from an internal management report. The business is as strong as ever. Make no mistake, our job from an investor perspective is to raise the ROE, keep pushing towards raising ROE, and keep pushing towards EPS growth. We all obviously know that share repurchases is a very, very effective tool that can obviously cement essentially EPS growth and, at the right price, ROE accretion. We are really trying to balance those two strong forces. Absolutely, as RGA traditionally and will continue to do, is have a very balanced approach.

It's possible. We might see a little bit longer of a lag in reporting, but, you know, the couple things on that. So, you know, we work very closely with our clients obviously. Um, in fact, we provide services to our clients that help them that are managed their claims, uh, expectations. And we have successful track record of of demonstrating that value, uh, historically as well. Uh, also these claims because of the nature of them and then being large, they tend to be very known very quickly. So that also helps in addressing any potential lag situation. And then from the perspective of our actual liability is obviously we've established reserves from a case perspective, as well as ibmr to using our best estimate of what we believe we experience has been. So, you know, just from that perspective, we feel we're appropriately reserved at the end of the quarter. Okay, thanks and Jimmy, Jimmy. Let me start off, uh, on the question, around the capitol.

Um, look as as I shared in my opening remarks, um, our business remains incredibly strong. Um, you know, and, uh, the, the the business where the returns were seeing on the new business, um, are a Tailwind to the, the Roe guidance we've given of the 13 to 15%, uh, actually ticked up, um, this quarter, uh, just from an internal management report, so the business is as strong as ever.

Tony Cheng: We are saying at this point in time that balance is 20% to 30% of our earnings as a returning to shareholders. As I am sure you are fully aware, we have not bought back stock for the past six quarters. It is an important communication that we will commence considering buying back stock from this point forward. Axel Andre, I do not know if there is anything further to add, but I will pass it on to you if there is.

Um, but you know, I'm make no mistake our, our job from an investor perspective. Is to, you know, raise the Roe, you know, keep pushing towards raising Roe and keep pushing towards EPS growth. So, um, yeah. And we all obviously know that share repurchases is a very very effective Tool. Uh, that can obviously, you know, cement essentially EPS growth and, you know, at the right price Roe, uh, accretion so we're really trying to balance, you know, those 2, strong forces, you know? Absolutely. Uh, as RJ, you know, traditionally and will continue to do is have a very balanced approach, you know. And we, we are saying at this point in time, you know, that balance is 20 to 30%, um, of of our earnings as, as a returning, to, to shareholders as I'm sure you're fully aware. We, we have not bought back stock for the past 6 quarters. Uh, so it is a important, um, communication that, uh, we will uh, commence, you know, considering you know, buying back stock uh, from

Axel Andre: Yeah. No, I mean, I think first, I think with that point, we are very pleased to be in the capital position that we are in. We have the flexibility with the capital that we have to defer into the business to return capital to shareholders. As I mentioned, we expect to be with share buyback to be opportunistic quarter by quarter, but over the long term, think of a 20% to 30% payout ratio in terms of the total return through dividends and buyback to shareholders. Again, varying quarter by quarter, but over the long term, consistent with that, which is consistent with our long-term history. On the capital point, I would remind you that we have multiple balance sheets, multiple legal entities across both the U.S. RBC framework, but also Bermuda framework in particular.

This point forward. Um, actually, I don't know if there's anything further to add, but I'll pass it on to you if there is. Yeah, no, I mean so I think first, I think with that point. So, you know, we we're very pleased to be in the capital position that we're in. Uh, we have the flexibility with the capital that we have to deploy, to the business to return Capital, to shareholders.

As I mentioned, we expect to be um with share buyback to be opportunistic, quarter by quarter.

Long term uh think of a 20 to 30% uh payout ratio in terms of the total return uh through dividends and buy back.

Axel Andre: So all of our capital metrics are really on a consolidated basis, looking at the totality of our balance sheets. They consider all of the frameworks. So they capture the binding constraint. So whatever is going to be most binding, including regulatory, is going to determine that number.

John Barnidge: Okay. Thank you.

Of the capital Point. Um, you know, I would remind you that we have multiple balance sheet, multiple legal, entities across, both us, RBC firmware, but also Bermuda, um, framework in particular. So all of our Capital metrics consider are really on a Consolidated basis. Looking at the totality of our balance sheet. They consider all of the Frameworks. Um, and so they and they capture the, The Binding constraint. So, whatever is going to be most binding, including regulatory is going to determine that number

Thank you.

Conference Operator: The next question is from Wilma Burdis with Raymond James. Please go ahead.

The next question is from Will Albertis with Raymond James. Please go ahead.

Wilma Burdis: Hey, good morning. Do you think any of the higher costs you're seeing in excess healthcare on more expensive but more effective treatments could eventually be offset by savings on claims in life down the line? Thanks.

Hey good morning. Um do you think any of the higher costs you're seeing in excess Health Care on more expensive but more effective treatments?

Jonathan Porter: Yeah. Thanks, Wilma. This is Jonathan. I think that's a very valid point. That's one of the things that excites us about the potential opportunities in the mortality space, right? That's also another reason why we've pursued a diversification from a risk perspective position from the enterprise. So when we see potentially some stress or volatility going in a negative direction in one line of business, that can support positivity either in the current period or down the road in another line of business. That's part of how we think about our mix of risks at the enterprise level.

Could eventually be offset by savings on claims in life down the line. Thanks.

Yeah, thanks a lot. This is Jonathan.

Um, I think that's a very

John Barnidge: Wilma, let me just add, thank you for asking that question. We internally observe that. We obviously, as an investment community, get focused on short-term earnings. But the long-term impacts from the medical advances, as Jonathan mentioned, whether it is GLP-1 or other medical advances we expect to see in the future, outweigh the short-term earnings impact quite tremendously. So thank you for the question.

potential opportunity, uh, in the mortality space, right? And that's also another reason why, you know, we want we, uh, we pursued a diversification, uh, from a risk perspective, uh, position at from the Enterprise. So, when we see, uh, potentially some stress or or volatility going in a negative Direction and 1 line of business, that can support positivity, uh, either in the current period or down the road in another line of business. And that's part of how we think about our mix of risks at the Enterprise,

Price level.

Yeah, well, let me just add now. Thank you for asking that question. We, we internally observed that and, you know, we obviously as an investment Community get focused on short-term earnings. Um, but the long-term impacts from the medical advances in, as, as Jonathan mentioned, whether glp1 or other medical advances, we expect to see in the future.

Way, our way, you know, the short-term earnings impact quite tremendously. So thank you for the question.

Wilma Burdis: Is RGA anywhere near its retention on the excess healthcare business? Just trying to assess. I know a lot of those claims come in towards year-end, so just trying to assess how confident you are in the remaining weakness there. Thanks.

Second question. Uh, is RGA anywhere near its retention on the excess health care business? Uh, just trying to assess, you know, I know a lot of those claims come in towards year-end. So, just trying to assess how confident you are in the remaining uh,

Weakness there, thanks.

Jonathan Porter: Yeah. Hi, Wilma. This is Jonathan again. As I mentioned before, I think the reserves we've established this quarter, which is driving the negative result, is our best estimate of where we expect the claims to come out for business that we or for premium we've already recognized and earned to the income statement. The drag effect that Axel mentioned in his remarks is really additional reserves that we expect to establish as the premium is earned over the balance of the year. At this point, we believe our reserves are appropriate for the business.

Um, I I want this is Jonathan again. Um, you know, as I mentioned before, you know, I think the reserve so we've established this quarter which is driving, the negative result is is our best estimate of where we expect.

John Barnidge: Yeah. I mean, just to let Tony here. Look, as we said, this is a very short-term business. In our comments, we have said the majority of which will be repriced by January 1. I think all of it gets repriced by the quarter after. So it is just that January 1 is the main renewal period. So it is a very self-contained. We have got actions in place, which Axel Andre has already shared. We have commenced for the July renewals, and we are comfortable with the position.

The claims to come out for business that we are for premium we’ve already recognized and earned through the income statement. The drag effect that Axel mentioned in his remarks is really additional reserves that we expect to establish as the premium is earned over the balance of the year. But at this point, we believe our reserves are appropriate for the business.

Yeah, I mean and just it's Tony here. Look, um, as we said, this is very short-term business in our comments. We've said, the majority of which will be repriced by 1 January, I think all of it gets reprised by the quarter after. So it's just a 1 January, is the the main renewal period. Um, so it is a very self-contained. Um, you know, we've got actions in place, uh, which actually has already shared, uh, with with commenced for the July renewals, um, and, and, and we're comfortable with the position.

Conference Operator: The next question is from Ryan Krueger with KBW. Please go ahead.

Ryan Krueger: Hey, thanks. Good morning. Just one more follow-up on the value invoice credit. Did you actually have to do anything in regards to, you know, like borrowing against future invoice value or anything like that, or is this just more about getting the credit from the rating agencies through the process that you have to go through with them? I wanted to make sure I understood that.

The next question is from Ryan Krueger with KBW. Please go ahead.

Axel Andre: Yeah. Hi, Ryan. Thank you for the question. It's Axel. No, in this case, this is really recognition of the value of invoice that did not require or was not associated with an actual securitization or borrowing. Now, we have that, of course, which means we have that still available to us should we find value in doing that in the future. But this was strictly from a rating agency process perspective.

Hey, thanks. Good morning. Uh, just one more follow-up on the value and force credit. Did you actually have to do anything in regards to bar? You know, like borrowing against future enforced value or anything like that? Or is this just more about getting the credit from the rating agencies through the process that you have to go through with them? Um, so I wanted to make sure I understood that.

Yeah, hi Ryan, thank you for the question. It's Excel. Um, ya know, in this case, this is, uh, this is really recognition of, uh, the value of enforce that that did not require or was not associated with, um, an actual security or borrowing. Um, now we have that, of course,

John Barnidge: Yeah. Ryan, maybe if you do not mind me adding strategically, we talk a lot about our long-term value or what do we call it, value of invoice business margins, which is now at $41 billion. That generates these opportunities. If you do not have the embedded value in the company, you cannot do these things. As Axel said, it is a question of us doing the work, focusing on doing the work, getting the satisfactory resources or necessary resources. In the past, that has not been a constraint to our business growth. It became a constraint, which we spent a lot of energy to rectify. Yes, it takes external consultants to verify. Yes, it takes the ratings agency also to agree, and tick it off. It is not uncommon. Other regulatory environments, I believe IFRS already allow for this bit of credit in capital.

Which means we have that still available to us. Should we find Value in doing that, um, in the future? But this is, this was strictly from a, from a, from a rating agency process perspective.

Process and the pasta has not been constrained to our to our business growth. It it became a constraint, which we

John Barnidge: We are really excited by what we have achieved, and we believe there are further blocks to come.

Spent a lot of energy to rectify. Um, and and and and you know, yes, it takes external Consultants to verify. Yes, it takes the um, ratings agency, also to agree, you know, and and take it off. Um, and it's not uncommon. I mean, other regulatory environments, I believe IFRS already, you know, allow for this their credit in, in in capital. So, um, so we're really excited by what we've achieved and and we believe there's further blocks to come.

Ryan Krueger: Thank you. Tony, you had mentioned some higher profile blocks in the market that you chose not to bid on during the quarter. Just curious, were those you referring to deals that have already been announced, or are you referring to deals that are in the market where there haven't been transactions yet?

Thank you, and then Tony you had mentioned some higher profile.

John Barnidge: Yeah. Thanks, Ryan. Look, that does refer to transactions that have occurred. I know there's been some questions around our businesses that we've taken, whether LTC or ULSG-type businesses. I just want to assure everyone there's no intention whatsoever to increase the proportion of the company in that direction. The only way besides me continually saying that is look at the actions we take. In the first quarter, there was a very material LTC block that came to market. We were not involved whatsoever. It just did not fit into our criteria of what we set for LTC, which is very strict and tight. In the second quarter, there was a multitude of, I think, some variable annuities and ULSG. Once again, not interested. We've got our global platform, right? We've got all these businesses around the world that we can do on an exclusive basis.

Uh blocks in the market that you chose not to to bid on during the quarter. Just curious where those are are you referring to deals that have already been announced? Or are you referring to deals that are in the market that where there haven't been transactions yet?

Yeah, thanks Ryan. Look, that that does refer to transactions that have occurred. Um, you know, I know that it's been some questions around our, you know, the the, the, the businesses, um, that that were taken whether LTC or LSG, um, type businesses. You look, I just want to assure everyone. There's there's there's no intention whatsoever to increase the proportion, you know, of the company, um, in that direction. Um, so you know, and and the only way besides me

John Barnidge: That's where we obviously want to allocate the capital. That's why we're able to have a tailwind to our ROE through the pricing process, through the business we win. So, some balance of business, but absolutely, our eyes are focused on just creating long-term value. As I said earlier, growth in EPS and ROE.

Continually saying that is you know look at the actions we take. So uh in the first quarter there was a very uh material. LTC block that came to Market, we were not involved whatsoever. Um, it just did not fit into our criteria of what what um, we set for, for LTC, which is very strict and and and and and tight and second quarter, there was a multitude of um I think uh some variable, annuities some SG, once again, not interested, you know, we've got our Global platform, right? We've got all these businesses around the world you know, that we can do on exclusive basis. And that's where we obviously want to allocate the capital. That's why we're able to have a Tailwind to our Roe through the pricing process, uh, through the business we win. So, um, you know, some balance of business, but absolutely, our eyes are focused on just creating long-term value. And then, as I said earlier, you know, growth in EPs and, and, and Roe

Conference Operator: The next question is from Suneet Kamath with Jefferies. Please go ahead.

Suneet Kamath: Great. Thanks. I did want to come back to the $2 billion of value in force credit. Can you just talk to the conservatism that is built into that? Because to me, it sounds like this is another sort of assumption-driven sort of number. If those assumptions end up being too aggressive, then maybe the $2 billion is not $2 billion. I just want to make sure we do not run into an issue like that down the road as you continue to pursue this source of capital.

The next question is from Sunni Kamath with Jeffrey's. Please go ahead.

Axel Andre: Thank you, Suneet, for the question. As I mentioned, it is a very strict review process for reflecting value of invoice in the frameworks. First of all, of course, it starts with our actuarial assumptions that are conservative and that are backed by a long history and long-term data and the throw of information. You only get partial credit for the value of invoice. You only get, frankly, less than 50% credit for it. So we feel very confident in the amount that is recognized through that framework. As I mentioned, again, it is reviewed by third party as well as the rating agency process.

Uh, great, thanks. Um, I I I did want to come back to the 2 billion, um, of value. Enforced credit, can you just talk to the conservatism that's built into that because to me it sounds like this is another sort of assumption driven sort of number. And if those assumptions end up being too aggressive, then maybe the 2 billion isn't 2 billion. And I just want to make sure we don't run into an issue like that down the road as you continue to pursue this source of capital.

Yes. Thank thank you senate for the question. Um, well as I mentioned there's a it's a very strict uh, review process uh, for for reflecting.

You know, value of enforce in in the Frameworks. Uh, so first of all, of course, it starts with with our actual assumptions that are, um, you know, that are that are conservative and that are backed by long, long history, and long long-term of, uh, of data and throw throw of information. Um, but but also, um, you know, there's you only get partial credits for the value of enforce. You only get a, uh, frankly, less than 50%, uh, credit for it. So, um, so we feel very confident in, uh, in the amount that is recognized.

Through, um, through that framework. Uh, as I mentioned, um, you know, again it is, it has reviewed by third party as well as, uh, the rating agency process.

Suneet Kamath: Okay. Then I guess for Tony Cheng, if we just take a step back, you have raised the ROE target. You have raised the EPS growth target. You are very bullish about the opportunity, but the stock's multiple is lower than when the ROE target was lower and the growth was lower. We can debate the reasons why, but I think one of them is, there is a view in the market that maybe this new strategy is going to add a lot of risk to the story relative to kind of the Reinsurance Group of America of old. I just wanted to give you an opportunity to comment on that because I think that is perhaps a change in the way that people are thinking about your company and about your stock.

Okay. Um, and then I guess for Tony, if we just take a step back, you know, you've raised the ROE target, you've raised the EPS growth target, um, you're very bullish about the opportunity, but the stock's multiple is lower than when the ROE target was lower and the growth was lower. And we can debate the reasons why, but I think one of them is, you know, there's a view in the market that maybe this new strategy is going to add a lot of risk to the story relative to kind of the RGA of old. And so I just wanted to get.

John Barnidge: Yeah. No, thanks, Suneet, for the question. The Reinsurance Group of America of old, all I could really point to is Asia. That's where I was instrumental in running that business for 20 years. And this is exactly the approach we took, right? What is that approach? It is the approach of being proactive. Innovative,

Give you an opportunity to comment on that because I think that's perhaps a change in the way that people are thinking about your company and about your stock.

Yeah, no thanks for the question. Um,

You know.

Conference Operator: finding things that can help our clients grow and succeed. Therefore, you create greater value and you get to share it. Are we more aggressive? We are absolutely more aggressive in that approach, which I think is a more proactive approach. I could argue a less risky approach in a sense because commoditized business is really, long run, not conducive or probably will not allow us to meet our long-term goals. That is not just Asia. Look, we have had tremendous leadership throughout the organization. This is a culture that essentially has been established from day one, where we were all around innovation, all around proactivity and solutions, providing our solutions. It plays to our absolute sweet spot because we only do life and health risk.

Right. And what is that approach? It is the approach of being proactive and innovative.

Conference Operator: It is sort of shame on us if we cannot be the best in doing that because we only focus on one thing, which is life and health risk. We have made the investments around the world to have the talent out there. We are obviously very proud of our team. This continues. The market is going to do what the market is going to do. Our job is to continue to grow the EPS and continue to raise the ROE. We have faith that the market will be right in the medium to long term.

Finding things that can help our clients grow and, and succeed, and therefore you create greater value and you get to share it. So, are we more aggressive? We're absolutely more aggressive in that approach, um, which I think is a, a more proactive approach. I, I would argue a less risky approach in a sense because, you know, commoditized businesses really, uh, long run, not not not, not conducive, or probably will not allow us to meet our long-term goals. So and that that's not just Asia. I mean, you know, look, we've had tremendous leadership throughout the organization. And this is a culture that essentially has been established from day 1, where we were all around Innovation, all around our proactivity and and solutions providing our Solutions and a place to our absolute sweet spot because we only do life and health risks. So it's sort of Shame on us. If we can't be the best in doing that because we only focus on 1 thing which is life and health risk and we've made the Investments around the world to have the talent out there. We're obviously very proud of our team and this

Um, so you know the market's going to do what the market's going to do. Our job is to continue to grow the EPS and continue to raise the ROE. And, uh, we have faith that the market will be right in the medium to long term.

Conference Specialist: The next question is from Tom Gallagher with Evercore ISI. Please go ahead.

The next question is from Tom Gallagher with Evercore ISI. Please go ahead.

Tom Gallagher: Good morning. One, on just a follow-up on the $2 billion capital benefit from the value of Enforce. Is there a practical limitation to how much you could do, like the maximum? I assume you cannot go to 100% of equity capital or something like that. But when we think about two, I do not know, would the limit be half of total actual equity from a credit profile? Sorry, from a credit you would get on capital? Can you just give kind of the framework in terms of maybe the max you could go to theoretically? That is the first question.

Axel Andre: Yeah, thank you for the question, Tom. First, let's start with, as we discussed, we have a substantial embedded value of Enforce in our business. One of the lenses through which we look at that is the value of Enforce business margin. As I said, what is that? It is the reflection of the long-term embedded underwriting margins that are embedded in our business. Now, you are correct. From a rating agency perspective, there is a limit to the amount of value of Enforce credit that can be recognized. Another important thing to remember, first of all, even relative to that limit, we think we still have upside opportunities to capture more value of Enforce with further Enforce blocks that we have on today's balance sheet.

Good morning 1 on, uh, just a follow-up on the, the 2 billion dollar Capital benefit from the value of enforce is there, is there a practical limitation to how much you could do, like the maximum? I assume you can't go to 100% of equity capital or something like that. But when we think about 2, um, I don't know with the limit, be half of total actual Equity uh from a credit profile. Uh sorry from a credit you would get on Capital. Can you just give kind of the framework in terms of maybe the max you could go to, theoretically? That's the first question.

Yeah, thank you for the question Tom. Um, so so right. So first, let's start with, you know, as as we discussed we have we have a substantial, uh, embedded value of enforce in our business, uh, you know, 1 of The lenses through which we look at. That, is the value of enforced, business margin. As I said, what is that? It's a reflection of the long term embedded on the writing on the writing margins that are embedded in our business

Um, now you're correct from a rating agency perspective. There is a limit to the amount of value of reinforced credit that can be recognized.

Axel Andre: Also, as I reminded you earlier, we have our three capital frameworks: economic capital, regulatory, and rating agency. We are now at a point where the rating agency and regulatory are roughly equivalent. Further work from here would benefit from both getting further value of Enforce recognition, but also improving on the regulatory side, which we have been able to do in the past through retrocession of business, for example, and other capital management tools that enable us to free up capital to redeploy into the business.

Um, but another important thing to remember—so first of all, even relative to that limit, we think we still have, you know, upside opportunities to capture more value from enforce with further enforce blocks that we have on today's balance sheet.

Um, but also, as I as I, as I reminded, uh, you earlier, we have of 3 Capital firms, economic capital, Regulatory, and rating agency. We're now at a point where rating agency and Regulatory are roughly equivalent. So, further work from here, would would, you know, would benefit from both, uh, getting further value of enforce recognition, but also, um, you know, improving on the, on the regulatory side which, you know, we we have we have been able to do in the past through um retro session of business, for example, and other Capital Management tools that enable us to free up Capital uh to redeploy into the business.

Tom Gallagher: Thank you for that. My follow-up is, Tony, it is a question about, do you think something needs to change here? The reason I ask you is because you had very favorable experience in Q1. The market did not reward you for the favorability. Then you fully reverse it in Q2 and your stock gets pounded. You seem to be getting only the downside of volatility, not the upside, unfortunately. The reason I set it up that way, is there anything you can do structurally here to improve the situation from a shareholder standpoint by limiting volatility somewhat? I will throw out one idea. Would you entertain something like doing a retro cover with RGA, which could limit the level of volatility for RGA shareholders, but still give you skin in the game for the economics of that business because of your stake in RGA?

Thank you, thank you for that. And my, my follow-up is, um,

You know, Tony, really, it's a question about: do you think something needs to change here? And the reason I ask you is because you had a very favorable experience in Q1; the market didn't reward you for the favorability. Then you fully reversed it in Q2, and your stock gets pounded. So you seem to be getting only the downside of volatility.

Not the upside. Unfortunately, the reason I sort of set it up that way is there anything you can do structurally here?

To improve the situation from a shareholder standpoint by limiting, volatility somewhat. You know, I'll throw out 1 idea. Uh, is, you know, would would you entertain something like doing a retro cover with Ruby Ray, which could limit the level of volatility for RGA shareholders? But still

Tom Gallagher: I am just trying to understand, I am getting a lot of frustrated shareholders saying to me, what can be done here? They like your story. They really do not like the level of volatility.

Conference Operator: Yeah, no, thanks, Tom, for the clarity of the question. There are things we can do. Where the volatility usually happens is around the capped cohorts under LDTI, right? Obviously, the other cohorts get smoothed out over the life. So, yeah, we could, in theory, retrocede those blocks of business, give up economic value, as you suggest, whether it's Ruby or some third party on an arm's length. So, we balance all of those considerations. But we've got finite resources. So, the alternative to that could be, price and create more business or other balance sheet optimization opportunities and so on. So, like I said, all we can share is the facts, right? We're running the business for the medium-long term. Year to date, experience has been pretty spot on for the U.S. individual life.

Um, give your skin in the game for the economics of that business because of your stake in Ruby Ray. I'm just trying to understand, you know, I'm getting a lot of frustrated shareholders saying to me, "What can be done here?" Because they like your story. They really don't like the level of volatility.

You know, there is, you know, there are things we can do. Um, so, you know, the where the volatility usually happens is around the, the, you know, the cap cohorts under ldti, right? Obviously, the, the, the the other cohorts gets smooth smoothed out over the life. Um, so yeah, we could, um, in theory, um, retrocede, those blocks of business, um, give up economic value as you suggest, you know, whether it's Ruby or or some third party on a arms length. Um, so we, we, we balance all of those considerations. Um,

Conference Operator: Over the last six quarters, I believe, or 10 quarters, I can't recall exactly, since 2003, the experience has been strong. And the market is going to do what the market's going to do, as you know, as well as I. So, we'll keep running it for the right economics, for the right EPS and ROE growth. But very mindful of your comments. Thank you.

Conference Specialist: The next question is from Wes Carmichael with Autonomous Research. Please go ahead.

But we've got finite resource. So, you know, the alternative to that could be, you know, price and and, and create more business or other balance sheet optimization opportunities and so on. So, you know, like I said, um, you know, all we can share is the facts, right? We're we're we're running the business, um, for the medium long term, um, you know, year to date experience has been pretty spot-on uh, for the for the uh, us individual life over the last 6 quarters. I believe or 10 quarters. I can't recall, exactly. Since 2003 the experience has been strong um and the market is going to do what the Market's going to do as you know, as well as I. So uh we'll keep running it uh, for the right economics. Um, for the right, um, Epps in Harrow e growth. Um, but no, very mindful of your, your comments. Thank you.

The next question is from West, Carmichael, with Autonomous Research. Please go ahead.

Tom Gallagher: Hey, thank you. Good morning. Tony, in your prepared remarks, you mentioned an expected pickup in jumbo PRT activity in the second half of the year in the U.S. My question is, when I look at the carriers that transacted with plan sponsors where there is a class action lawsuit that has been filed, those carriers have effectively not written any new business over the past few quarters, at least. Are those lawsuits not a hurdle that needs to be overcome before you see a meaningful increase in volume to those carriers?

Conference Operator: Yeah, no, thank you for the question. Just to reiterate, look, obviously, long term, the PRT market fits well in our sweet spot with the biometric, the size of the business, its U.S., and the market dynamics. So we are very excited medium-long term about the business. As I shared, there has been, as you pointed out, a lull in the market, let's say, for various reasons. But I was encouraged and optimistic to at least start hearing those green shoots, at least in our pipeline. Whether that continues, I am encouraged and optimistic. It is lumpy business. We are in the jumbo end of the market. It is a positive sign that I did not necessarily expect. But let us see if those green shoots continue into going forward.

Hey, thank you. Good morning. Um, Tony, in your prepared remarks, you mentioned an expected pickup in jumbo PRT activity in the second half of the year in the US. Um, I guess my question is, when I look at the carriers that transacted with plan sponsors, where there's a class action lawsuit that's been filed, those carriers have effectively not written any new business over the past few quarters at least. So are those lawsuits not a hurdle that needs to be, you know, overcome before you see a meaningful increase in volume to those carriers?

Yeah, no, thank you for the question. Um,

you know, I just to reiterate look obviously long term, the PRT Market fits well, in our sweet spot with the biometric, the size of the business. It's us and and, you know, the market dynamics. So we're very excited. Medium, long term about the business, um, and as I I shared, you know, and you know, there has been as you've, you've pointed out A Lull in the market, let's say, uh, you know, and, and for various reasons. Um, but I was encouraged and optimistic to, at least start hearing. There was green shoots. Um, you know, at least in our pipeline, um, you know, whether that continues, you know, I'm encouraged and optimistic. Um, it is Lumpy business, we are in the jumbo end of the market. Um, so, um, but you know, it's a, it's a positive sign that I did a necessarily expect. Uh, but let's see if, if those green shoots continue into into going forward,

Tom Gallagher: Gotcha. I guess a similar question to some that had been asked, but maybe slightly different. On the recognition of the value of Enforce, just theoretically, should a large transaction come down the road and you want to deploy a big amount of capital and more than what you have that I'd call liquid or hard capital that you could buy back stock with? Are there steps that you need to take to be able to deploy that into a big deal, like securitizations or any other things?

Gotcha. Um, and then, I guess a similar question to one that has been asked, but maybe slightly different, on the recognition of the value of enforce.

Axel Andre: Thanks for the question. Yes, look, this deployable capital is deployable, right? So it is real capital available to be put to work in transactions. The capital sits, frankly, most of it sits in the legal entities as excess capital relative to the respective regulatory frameworks in each entity. It's there and available to be put to work. In addition, of course, we manage holding company cash flows. That's what feeds the ability to then pay holding company expenses, interest, debt expense, as well as share repurchases.

Just theoretically, should a large transaction come down the road and you want to deploy a big amount of capital, and more, that you have that I'd call, you know, liquid or hard capital that you could buy back stock with. Are there steps that you need to take to be able to deploy that into a big deal like securitizations or any other measures?

Thanks for the question. Um, so yes, so look, this Deployable capital is is Deployable, right? So it it is really Capital available to be put to work in transactions. Um, the capital sits, frankly most of it sits in the legal entities as excess Capital relative to, uh, to the respective regulatory Frameworks in each entity. And so it's there and available to, um, to be put to work. Uh, in addition of course we manage uh holding company, uh, cash, flows. Uh and that's that's what feeds the ability to then pay holding company expenses in.

That expense, as well as share repurchases.

Conference Specialist: The next question is from Mike Ward with UBS. Please go ahead.

Tony Cheng: Thanks. Good morning. I was just hoping you could help us kind of frame this, the variability in the result this quarter. I guess, you know, I am just thinking about if there is any change in the earnings power, right? Or even just 2026, the calendar year. Because we have, you know, the equitable accretion, organic and inorganic growth, maybe some buyback. Then there is maybe a little bit of a risk from some stop-loss losses in a worst-case scenario. Is there anything else that should be changing, you know, how we think about 2026?

The next question is from Michael Ward with UBS. Please go ahead.

Thanks, good morning. Um, I was just, uh, hoping you could help us kind of frame this uh, the variability in the result this quarter. Um, and I guess, you know, I'm just thinking about, if, if that if it may change in the earnings power, right? Or or or even just 2026, the calendar year because we have, you know, the Equitable creation, um, organic and inorganic growth, maybe maybe some buyback.

Axel Andre: Hi, Mike. It's Axel Andre. Thanks for the question. First, let me start off by saying we remain confident in our intermediate-term financial targets that we laid out. We're very pleased with the capital that we've deployed into attractive transactions. Last year, 2024, we deployed $1.7 billion. This year, year to date, if I take into account the equitable transaction, we've deployed $2.2 billion. That adds significantly to the earnings power over time. We did communicate previously the earnings expectation for the equitable transaction into 2026. I mentioned earlier today, $160 million to $170 million a year of pre-tax income, which is a significant down payment on our target EPS growth. In addition to that, like Tony Cheng said, we have a lot of tailwinds. The creation re-strategy is producing really well. It's enabling us to attract deals that produce returns that are above our targets.

And then there's maybe a little bit of a risk from some stop losses in the worst-case scenario. But is there anything else that should be changing? You know how we think about 2026?

Um, I mean, first, let me start off by saying, you know, we we remain confident in our intermediate term Financial targets. Uh, that that we laid out. Um the we we're we're very pleased with um the capital that we've deployed into attractive transactions. Uh, so last year 2024, we deployed 1.7 billion dollars this year year to date. If I if I take into account the Equitable transaction we've deployed 2.2 billion dollars. Um so that that adds significantly to the earnings power over time. Uh we did communicate previously, the earnings expectation for uh the Equitable transaction into 2026. I mentioned earlier today, 160 to 170 million dollars a year of pre-tax income which uh is a significant down payment on, um our Target, EPS growth. Um, in addition to that, like Tony said, you know, we have a lot of Tailwinds uh the the creation re strategy is producing really well. It's it's a

Axel Andre: Investment portfolio, as we invest new money at significantly higher yield than current book yield, we're picking up investment income. Lastly, balance sheet optimization, an example of which is the significant value of enforced credit that we receive, enables us to do more things with the resources that we have. In short, we're very confident about our targets, and we would not be changing our run rates or expectations based on one or two quarters' worth of volatility.

Enabling us to attract uh deals that produce returns that are above or um or targets um Investment Portfolio. As we as we invest new money at significantly higher yield in current book yield, we're picking up investment income.

Um, and lastly balance sheet, optimization an example of which is the significant value of enforced credit that we received enables us to do more things with the resources that we have.

So in short, we're we're very confident about our targets and we would not be uh, changing our run rates or or expectations based on 1 or 2 quarters worth of volatility.

Tony Cheng: Okay, that's helpful. Thank you, Axel Andre. On the kind of the biometric or deal pipeline, curious how you see that today versus financial solutions. Just curious how the regulatory regime changes in Asia may be impacting demand.

Conference Operator: Yeah, let me take that one, Mike. Look, on the business front, it's strong throughout. It really is, whether it's across the globe, whether it's with strategic clients, repeat business, and obviously the nature of deals within the pipeline is really focused on the creation re and the exclusivities. You mentioned our favorite word in the company, which is biometric, for two reasons. One is, it is obviously the driver of our traditional business, which, as we shared, is incredibly robust at this point, with 11% premium growth rate and still very strong, robust margins. But two, the second reason is even our asset intensive, which is our main second line of business, is really, the sweet spot is when there is material biometric risk within that. Hence, we can go ahead and try and win the exclusive along with the creation re philosophy.

Okay, that that's helpful. Thank you axle. Um, and then just on the, the kind of the, the biometric uh, or deal pipeline. Um, curious how you see that today versus Financial Solutions? Um, and and just curious how the regulatory regime changes in in Asia, maybe our impacting demand

Yeah, let me take.

On the business front, it's it's, it's strong throughout. I mean, it it really is whether it's, um,

you know, across the globe, whether it's um, with

With strategic clients repeat business. And obviously the nature of deals within the pipeline is, um, you know, it's really focused on the Creationary and the exclusivity. Um, you know, you you mentioned our favorite word in the company which is biometric. Uh, for 2 Reasons 1 is, you know, it is obviously the driver of our traditional business which as we shared is incredibly robust. At this point, uh, with 11%, uh, premium growth rate, uh, and and, and still very strong robust margins. Uh, but

Conference Operator: So there's growth all over the place, but I want to make sure the audience is clear. When we look at the asset transactions, it is absolutely, first question is how much biometric risk is in that block of business because we know that's our way to differentiate. That's our way to get creation re. That's our way to build a long-term, not only sustainable financial results, but obviously further strengthen our strategic platform.

Who the second reason is even our asset intensive which is our our main second line of business is really, you know, The Sweet Spot is when there is material biometric risk within that, and hence, we can go ahead and, you know, try and win the exclusive along along with the Creationary, uh, philosophy. So there's growth all over all over the place, but I want to make sure the audience is clear, when we look at the asset transactions, it is absolutely first question is, how much biometric risk is is, is in that block of business, because we know that's our way to differentiate. That's our way to get Creationary. That's what our way to build a long-term. Not only sustainable, um, Financial results. But obviously, further strengthen our strategic platform,

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

Conference Operator: Well, thank you all for the questions and your continued interest in Reinsurance Group of America. It was a great quarter in terms of our strategic successes, which we believe will continue to fuel our future growth and return. With this, I want to end today's call. Thank you very much.

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

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

Well, thank you all uh, for the questions and and you'll continue the interests in RJ. Uh, it was a great quarter in terms of our straight strategic successes, uh which we believe will uh continue to fuel our future growth and returns. So uh with this, I want to end today's call. Thank you very much.

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