Reinsurance Group of America Q4 2025 Reinsurance Group of America Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Reinsurance Group of America Inc Earnings Call
Speaker #1: Welcome to the Reinsurance Group of America fourth quarter Conference 2020 Earnings All be listen participants will mode in Should you need call assistance , signal a .
Speaker #1: please specialist by star only followed pressing by zero . After remarks , there will be an . opportunity to ask questions , to ask a question the , you may press star then one on your telephone today's keypad .
Operator: ... After today's prepared remarks, 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 Hobson, Head of Investor Relations. Please go ahead.
Operator: ... After today's prepared remarks, 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 Hobson, Head of Investor Relations. Please go ahead.
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Jeff Hobson: Thank you. Welcome to RGA's Q4 2025 Conference Call. I'm joined on the call this morning by Tony Cheng, RGA's President and CEO, Axel André, 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 expected results. Additionally, during the course of this call, the information we provide may include non-GAAP financial measures. Please see our earnings release, earnings presentation, and quarterly financial supplement, all of which are posted on our website, for a discussion of these terms and reconciliations to GAAP measures.
Jeff Hobson: Thank you. Welcome to RGA's Q4 2025 Conference Call. I'm joined on the call this morning by Tony Cheng, RGA's President and CEO, Axel André, 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.
Q4 2025 Reinsurance Group of America Inc Earnings Call
Speaker #2: Thank you . to Welcome quarter 2025 fourth conference call . I'm call this morning by Tony Chang joined on the president and CEO .
Speaker #2: Chief Financial Officer Axel Andr our Barbee , chief Leslie investment officer . And Jonathan Porter , chief risk . A quick reminder get started regarding forward looking before we information and non-GAAP financial officer measures , some of our comments or answers may contain forward looking statements .
Jeff Hobson: Actual results could differ materially from expected results. Please refer to the earnings release we issued yesterday for a list of important factors that could cause actual results to differ from expected results. Additionally, during the course of this call, the information we provide may include non-GAAP financial measures.
Speaker #2: Actual results may differ materially from expected results. Please refer to the earnings list we issued yesterday for factors that could cause actual results to differ from expected results.
Speaker #2: Additionally, this call, and our earnings release, may include financial measures that could differ during the period. Please see our earnings release for more information.
Jeff Hobson: Please see our earnings release, earnings presentation, and quarterly financial supplement, all of which are posted on our website, for a discussion of these terms and reconciliations to GAAP measures. Throughout the call, we will be referencing slides from the earnings presentation, which again, is posted on our website. Now I'll turn the call over to Tony for his comments.
Speaker #2: Earnings the financial and which are our posted on website for a supplement , these terms and reconciliations to GAAP presentation , measures . Throughout the we will call , referencing slides from the earnings be posted our website .
Jeff Hobson: Throughout the call, we will be referencing slides from the earnings presentation, which again, is posted on our website. Now I'll turn the call over to Tony for his comments.
Speaker #2: turn the call over is to Tony for his all of comments And
Tony Cheng: Good morning, everyone, and thank you for joining our call. Last night, we reported Q4 operating EPS of $7.75 per share, which is our second consecutive record quarter in terms of earnings. Our adjusted operating return on equity for the trailing twelve months, excluding notable items, was 15.7%, which exceeded our intermediate-term target range of 13% to 15%. The quarter capped off another year of excellent financial results, with strength across our businesses and geographies. These results underscore the value and diversity of our global platform and the exceptional work of our local teams. Looking back at the full year 2025 results, we delivered record operating EPS, generated a 15.7% ROE, and increased the value of in-force business margins by 18%.
Tony Cheng: Good morning, everyone, and thank you for joining our call. Last night, we reported Q4 operating EPS of $7.75 per share, which is our second consecutive record quarter in terms of earnings. Our adjusted operating return on equity for the trailing twelve months, excluding notable items, was 15.7%, which exceeded our intermediate-term target range of 13% to 15%.
Speaker #3: thank you for joining our call morning night we . Last reported Q4 operating EPs
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Speaker #3: $7.75 per is our second consecutive , everyone , and differ record quarter in terms of quarterly . Our earnings
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Speaker #3: adjusted return on operating equity for the trailing excluding 12 months , notable items , was , Aga's which exceeded our . Good intermediate target range of 13 to 15% .
Speaker #3: adjusted return on operating equity for the trailing excluding 12 months , notable items , was , Aga's which exceeded our . Good intermediate target range of 15.7% , of excellent results , with strength our businesses and geographies .
Tony Cheng: The quarter capped off another year of excellent financial results, with strength across our businesses and geographies. These results underscore the value and diversity of our global platform and the exceptional work of our local teams. Looking back at the full year 2025 results, we delivered record operating EPS, generated a 15.7% ROE, and increased the value of in-force business margins by 18%.
Speaker #3: Record operating EPs generated a 15.7% ROE and increased the value of in-force business margins by 18% capital. From a perspective, we deployed $2.5 billion of capital into in-force transactions at risk-adjusted returns, reinstated share buybacks, and maintained a strong balance sheet with attractive capital.
Tony Cheng: From a capital perspective, we deployed $2.5 billion of capital into in-force transactions at attractive risk-adjusted returns, reinstated share buybacks, and maintained a strong balance sheet with $2.7 billion of excess capital. These are clear indicators that we are successfully delivering on our strategy and are on track to continue meeting or exceeding our intermediate-term financial targets. Now let me highlight a few specifics from Q4. Beginning by region, the US was particularly favorable, driven by management actions and variable investment income, with individual life mortality in line with expectations. EMEA results reflect a strong volume growth and favorable experience, and APAC continues to see growth momentum along with in-force actions. In the quarter, we benefited from the continued contributions of our balance sheet optimization strategy.
Tony Cheng: From a capital perspective, we deployed $2.5 billion of capital into in-force transactions at attractive risk-adjusted returns, reinstated share buybacks, and maintained a strong balance sheet with $2.7 billion of excess capital. These are clear indicators that we are successfully delivering on our strategy and are on track to continue meeting or exceeding our intermediate-term financial targets.
Speaker #3: These are clear indicators that we are successfully delivering on our strategy and are on track to continue meeting or exceeding $2.7 billion of excess term intermediate financial.
Tony Cheng: Now let me highlight a few specifics from Q4. Beginning by region, the US was particularly favorable, driven by management actions and variable investment income, with individual life mortality in line with expectations. EMEA results reflect a strong volume growth and favorable experience, and APAC continues to see growth momentum along with in-force actions. In the quarter, we benefited from the continued contributions of our balance sheet optimization strategy.
Speaker #3: Now , let me highlight a few targets specifics from the fourth quarter by region , US the was favorable , particularly driven by .
Speaker #3: Income actions and individual life mortality, in line with results, strongly reflect the growth. Beginning experience in APAC, we see growth volume with in-force along with actions in the quarter.
Speaker #3: We from the continued contributions of our balance sheet optimization strategy . We saw the positive effects of various actions management in terms of current earnings and ROE , an increase in future value , and an our liability risk improvement in profile .
Tony Cheng: We saw the positive effects of various management actions in terms of current earnings and ROE, an increase in future value, and an improvement in our liability risk profile. These actions are a regular part of our daily operations, though the timing and size can be difficult to predict. Additionally, we continue to see contributions from new business that we have added over recent years, including the Equitable block. We are confident that our most recent vintages of new business will generate risk-adjusted returns that meet or exceed our targets. Moving to investments. Our team and platform delivered strong results, boosted by favorable variable investment income coming from our alternative investment portfolio. Our team continued their efforts to reposition certain acquired portfolios, and we are on track to see these benefits in the periods ahead.
Tony Cheng: We saw the positive effects of various management actions in terms of current earnings and ROE, an increase in future value, and an improvement in our liability risk profile. These actions are a regular part of our daily operations, though the timing and size can be difficult to predict. Additionally, we continue to see contributions from new business that we have added over recent years, including the Equitable block.
Speaker #3: a regular are our actions daily These part of operations , though the timing and size difficult to . Additionally , we continue can be to see contributions from new that we have added business over recent including the years , confident that .
Tony Cheng: We are confident that our most recent vintages of new business will generate risk-adjusted returns that meet or exceed our targets. Moving to investments. Our team and platform delivered strong results, boosted by favorable variable investment income coming from our alternative investment portfolio. Our team continued their efforts to reposition certain acquired portfolios, and we are on track to see these benefits in the periods ahead.
Speaker #3: our most recent We are vintages of new business will Block predict risk adjusted returns that meet or exceed our targets benefited . Moving to investments .
Speaker #3: Our team and platform strong results by favorable, boosted favorable investment variable income coming delivered from our alternative investment portfolio. Our team continued their acquired certain reposition portfolios, on track to see these benefits in the periods ahead be.
Tony Cheng: To be clear, our portfolio repositioning leverages our expertise on both sides of the balance sheet, with strong asset liability management to incrementally enhance our risk-adjusted returns. Additionally, we continue to expand our capabilities, including external partnerships, to enable us to offer superior client solutions. On the capital front, we again repurchased shares, allocating $50 million this quarter at attractive prices. A balanced use of excess capital is an important part of our plan to generate long-term shareholder value. Shifting to full year 2025 performance, our diversified global platform continues to deliver strong long-term results. Our operations in North America, Asia, and EMEA have all been successful in executing on our strategy and delivering attractive financial results. Our APAC region produced excellent bottom line results for the year. Pre-tax operating income, excluding notable items, was up 18%, reflecting strong underlying growth and favorable underwriting experience.
Tony Cheng: To be clear, our portfolio repositioning leverages our expertise on both sides of the balance sheet, with strong asset liability management to incrementally enhance our risk-adjusted returns. Additionally, we continue to expand our capabilities, including external partnerships, to enable us to offer superior client solutions. On the capital front, we again repurchased shares, allocating $50 million this quarter at attractive prices. A balanced use of excess capital is an important part of our plan to generate long-term shareholder value.
Speaker #3: Clearly, our portfolio repositioning leverages our expertise on both sides of the balance sheet, with strong asset-liability management to enhance our risk-adjusted returns.
Speaker #3: use of excess capital is an important part of our plan to generate long term shareholder value . Shifting to full year 2025 performance , our diversified global platform continues to deliver strong long term results .
Tony Cheng: Shifting to full year 2025 performance, our diversified global platform continues to deliver strong long-term results. Our operations in North America, Asia, and EMEA have all been successful in executing on our strategy and delivering attractive financial results. Our APAC region produced excellent bottom line results for the year. Pre-tax operating income, excluding notable items, was up 18%, reflecting strong underlying growth and favorable underwriting experience.
Speaker #3: Our operations in North America , Asia and EMEA have all been in successful executing on our strategy and delivering attractive financial results . Our APAC region excellent bottom line produced results year income operating , excluding notable items , for the was up 18% , reflecting strong underlying growth and favorable experience underwriting .
Tony Cheng: This business continues to grow at a nice rate, given our success in delivering product development across the region, as well as some of the favorable market and regulatory dynamics in places like Japan and Korea, that lead to a high level of opportunities to solve client issues through in-force transactions. In EMEA, our full year pre-tax earnings, excluding Notable Items, were up 35%, reflecting continued strong new business growth along with favorable experience. North America. North American results reflected the contribution from the Equitable block, which continues to perform in line with expectations and strong contributions from In-force Management Actions. These positives helped overcome the challenging results from US Group, specifically the Excess Medical Business. We fully repriced this business for 2026 and expect a significant improvement in results over the next year.
Tony Cheng: This business continues to grow at a nice rate, given our success in delivering product development across the region, as well as some of the favorable market and regulatory dynamics in places like Japan and Korea, that lead to a high level of opportunities to solve client issues through in-force transactions. In EMEA, our full year pre-tax earnings, excluding Notable Items, were up 35%, reflecting continued strong new business growth along with favorable experience.
Speaker #3: This continues to grow at a nice rate given success in our delivering product across the region, as well as some of the market and regulatory dynamics in favorable places like Japan and Korea that lead to a high level of opportunities to solve client issues through in-force transactions.
Speaker #3: In EMEA , our full year pre-tax earnings , excluding notable items , were up 35% , reflecting continued strong new business growth along with favorable experience in North North American results reflected the contribution from the Equitable Block , which continues to perform in line with expectations strong and contributions from In-force management actions .
Tony Cheng: North America. North American results reflected the contribution from the Equitable block, which continues to perform in line with expectations and strong contributions from In-force Management Actions. These positives helped overcome the challenging results from US Group, specifically the Excess Medical Business. We fully repriced this business for 2026 and expect a significant improvement in results over the next year.
Speaker #3: positives These overcome the challenging results from US group , specifically the excess Medical business we fully this reprice business for 2026 and expect a significant in results over year the next improvement .
Tony Cheng: Looking beyond the recent renewal cycle, we completed a broader strategic review and have decided to exit the group healthcare lines of business. For the year, both organic flow and in-force transactions were very strong, with in-force transactions particularly robust from the Equitable deal and a wide range of other opportunities that we executed on. Focusing on organic new business, we continue to have very good success and momentum built on our long-established biometric expertise and innovative mindset. We continue to see ongoing strength in Asia, driven by our product development and range of innovative solutions. Similarly, in the US, our value-added underwriting solutions and underwriting outsourcing efforts have given us strong momentum in a market that is generally considered mature. The 2025 successes I've highlighted are visible in the increased value of in-force business margins.
Tony Cheng: Looking beyond the recent renewal cycle, we completed a broader strategic review and have decided to exit the group healthcare lines of business. For the year, both organic flow and in-force transactions were very strong, with in-force transactions particularly robust from the Equitable deal and a wide range of other opportunities that we executed on.
Speaker #3: Looking beyond the recent renewal cycle , we completed a broader strategic review decided to and have exit the group lines of healthcare business for year the .
Speaker #3: Both organic flow and in-force transactions were very strong, with in-force transactions robust from deal Equitable and a wide range of other opportunities that we executed on.
Tony Cheng: Focusing on organic new business, we continue to have very good success and momentum built on our long-established biometric expertise and innovative mindset. We continue to see ongoing strength in Asia, driven by our product development and range of innovative solutions. Similarly, in the US, our value-added underwriting solutions and underwriting outsourcing efforts have given us strong momentum in a market that is generally considered mature. The 2025 successes I've highlighted are visible in the increased value of in-force business margins.
Speaker #3: On focusing business, organic new, we continue to have very good success momentum built on our long-established biometric expertise, innovative and mindset. We continue to see ongoing strength in Asia, driven by product development and range of innovative solutions.
Speaker #3: Similarly , in the Similar . US , our value added underwriting solutions and underwriting outsourcing given us strong momentum in a market that is considered mature .
Speaker #3: The general efforts have are highlighted, visible in the increased value of in-force business margins. We introduced this concept in 2024 to convey the underlying value and future earnings of our in-force business.
Tony Cheng: We introduced this concept in 2024 to convey the underlying value and future earnings power of our in-force business. It is a measure of how much value is being created by a range of means, most importantly, new business, but also management actions and experience. In 2025, the value increased by $6.6 billion or 18%, with meaningful contributions from both new business and management actions. Over the past 2 years, the future expected value has increased by over $11 billion or approximately 16% per annum. Stepping back, let me provide some perspective on how we are positioned today and for the future, and why we expect to deliver on our strategic and financial objectives. RGA has several unique strengths, including strong biometric expertise, asset management capabilities, a global platform, market-leading brand, and flexibility to partner across the industry.
Tony Cheng: We introduced this concept in 2024 to convey the underlying value and future earnings power of our in-force business. It is a measure of how much value is being created by a range of means, most importantly, new business, but also management actions and experience. In 2025, the value increased by $6.6 billion or 18%, with meaningful contributions from both new business and management actions.
Speaker #3: It is a power measure of how much value is being created by range of means . Most a importantly , new business , but also management actions experience and In .
Speaker #3: the 2025 , by $6.6 billion , or 18% , with increased contributions from both new business and management actions value . Over years , the future the has increased value meaningful by over $11 billion , or approximately 16% per .
Tony Cheng: Over the past 2 years, the future expected value has increased by over $11 billion or approximately 16% per annum. Stepping back, let me provide some perspective on how we are positioned today and for the future, and why we expect to deliver on our strategic and financial objectives. RGA has several unique strengths, including strong biometric expertise, asset management capabilities, a global platform, market-leading brand, and flexibility to partner across the industry.
Speaker #3: Stepping back, let me provide some perspective on how we are positioned today and for the future, and why we expect to meet our strategic and financial objectives. We have unique strengths, strong biometric and asset management expertise, global capabilities, a robust platform, several leading brands, and the flexibility to partner across the industry.
Tony Cheng: We leverage these strengths as we execute across four key areas of focus. First, we use a proactive business approach to create win-win transactions, generating higher returns for RGA and greater value for our clients. Second, we optimize our balance sheet, including in-force liability management, improved risk-adjusted investment returns, and leveraging third-party and internal sources of capital. Third, we operationally scale the platform and ensure that our portfolio of businesses aligns with the opportunities in the market. And lastly, we maintain a sharp focus on capital stewardship, ensuring we achieve the right balance between allocating capital to attractive business opportunities and returning capital to shareholders, which is critical to us. Whether it is the record 2025 results or the past three years, where we have met or exceeded our ROE and EPS targets, RGA is delivering successfully on our strategy.
Tony Cheng: We leverage these strengths as we execute across four key areas of focus. First, we use a proactive business approach to create win-win transactions, generating higher returns for RGA and greater value for our clients. Second, we optimize our balance sheet, including in-force liability management, improved risk-adjusted investment returns, and leveraging third-party and internal sources of capital.
Speaker #3: We leveraged these strengths as we executed across four key areas of focus. First, we use a proactive business approach to create win-win transactions, generating higher returns for RJ and greater value for our expected outcomes.
Speaker #3: Second , we optimize our balance including sheet , Inforce liability management , improved risk adjusted investment and third party and internal capital sources of we operationally scale the platform and that our ensure .
Tony Cheng: Third, we operationally scale the platform and ensure that our portfolio of businesses aligns with the opportunities in the market. And lastly, we maintain a sharp focus on capital stewardship, ensuring we achieve the right balance between allocating capital to attractive business opportunities and returning capital to shareholders, which is critical to us.
Speaker #3: portfolio of businesses Third , opportunities in the aligns market with the . And returns , we lastly , sharp focus on capital maintain leveraging stewardship we , ensuring a achieve the between right allocating capital balance attractive to business opportunities and capital to shareholders , which is critical to .
Tony Cheng: Whether it is the record 2025 results or the past three years, where we have met or exceeded our ROE and EPS targets, RGA is delivering successfully on our strategy. We have strong momentum, a clear focus, and the right strategy, and we remain confident in our ability to generate attractive shareholder value going forward. With that, I'll turn the call over to Axel.
Speaker #3: Whether it is the US 2025 record results or the three years where we have met or exceeded our ROE and EPS targets, it is delivering successfully on our...
Tony Cheng: We have strong momentum, a clear focus, and the right strategy, and we remain confident in our ability to generate attractive shareholder value going forward. With that, I'll turn the call over to Axel.
Speaker #3: We have past strategy momentum , a clear and the right strategy , and we remain our confident in ability to generate attractive value .
Speaker #3: shareholder Going forward . turn the that , I'll With call Axel .
Axel André: Thanks, Tony. RGA reported record pre-tax Adjusted Operating Income of $515 million for the quarter, or $7.75 per share after tax. For the trailing twelve months, Adjusted Operating Return on Equity, excluding Notable Items, was 15.7%. During the quarter, we achieved strong results across our global businesses. This was generally driven by the continued emergence of earnings from recent new business, including the Equitable block, favorable in-force management actions, and strong investment performance. As Tony mentioned earlier, we continue to execute on our strategic initiatives, which positions us well for 2026 and beyond. I'll speak a bit more about 2026 expectations shortly... We deployed $98 million into in-force transactions in the quarter, and $2.5 billion for the full year.
Axel André: Thanks, Tony. RGA reported record pre-tax Adjusted Operating Income of $515 million for the quarter, or $7.75 per share after tax. For the trailing twelve months, Adjusted Operating Return on Equity, excluding Notable Items, was 15.7%. During the quarter, we achieved strong results across our global businesses.
Speaker #4: RGA reported record pre-tax adjusted operating income
Speaker #4: or $7.75 per share , after tax the trailing for , RJ 12 months . Adjusted operating return on equity , excluding notable items , was 15.7% during the quarter , we achieved strong results global businesses .
Axel André: This was generally driven by the continued emergence of earnings from recent new business, including the Equitable block, favorable in-force management actions, and strong investment performance. As Tony mentioned earlier, we continue to execute on our strategic initiatives, which positions us well for 2026 and beyond. I'll speak a bit more about 2026 expectations shortly... We deployed $98 million into in-force transactions in the quarter, and $2.5 billion for the full year.
Speaker #4: This was across our generally driven by the continued emergence of earnings from recent new business, including the Blok Equitable, favorable inforce management actions, and strong investment performance.
Speaker #4: As Tony mentioned, we continued to execute on our strategic initiatives, which positions us well for 2026 and beyond. I'll speak a bit more about 2026 expectations shortly, as I mentioned earlier.
Speaker #4: We $98 million into enforce the transactions in quarter deployed , and year . We remained selective in the quarter , but overall successful had a year across $2.5 billion for the full multiple products geographies and .
Axel André: We remained selective in the quarter, but overall had a very successful year across multiple geographies and products. On the traditional side, our premium growth was 7.4% year to date on a constant currency basis, which has benefited from strong growth across North America, EMEA, and APAC. Premiums are a good indicator of the ongoing vitality of our traditional business, and we continue to have strong momentum across our regions. We also completed $50 million of share repurchases in the quarter at an average price of $187.40, bringing total repurchases to $125 million since we reinstated buybacks in Q3. Our capital position remains strong, and we ended the quarter with estimated excess capital of $2.7 billion, and estimated the next 12 months deployable capital of $3.4 billion.
Axel André: We remained selective in the quarter, but overall had a very successful year across multiple geographies and products. On the traditional side, our premium growth was 7.4% year to date on a constant currency basis, which has benefited from strong growth across North America, EMEA, and APAC. Premiums are a good indicator of the ongoing vitality of our traditional business, and we continue to have strong momentum across our regions.
Speaker #4: On the traditional side, our premium growth was 7.4% year to date on a constant currency basis, which has benefited from strong growth across North EMEA and APAC.
Speaker #4: A good premiums are indicator of the ongoing vitality of our traditional business, and we continue to have strong momentum across our regions.
Axel André: We also completed $50 million of share repurchases in the quarter at an average price of $187.40, bringing total repurchases to $125 million since we reinstated buybacks in Q3. Our capital position remains strong, and we ended the quarter with estimated excess capital of $2.7 billion, and estimated the next 12 months deployable capital of $3.4 billion.
Speaker #4: We also completed repurchases in the quarter at an average price of $187.40, bringing share repurchases from $50 million to $125 million. Since we reinstated buybacks in the third quarter, our position remains capital strong, and we ended the quarter with estimated excess capital of $2.7 billion and deployable capital over the next 12 months of $3.4 billion.
Axel André: The effective tax rate for the quarter was 23.8% on adjusted operating income before taxes, and 22.8% for the full year 2025. Looking ahead to 2026, we expect a tax rate in the range of 22% to 23%. We continued our balance sheet optimization strategy in the quarter with additional in-force management actions. For Q4, these actions had a $95 million favorable financial impact. Managing our in-force block remains a core part of our strategy and has significantly contributed to results over the past few years. As a reminder, these actions come in various forms, ranging from large upfront actions, such as strategic recapture, to more recurring items, like rate increases on specific blocks of business. Turning to biometric claims experience, as outlined on slide 11 of our earnings presentation.
Axel André: The effective tax rate for the quarter was 23.8% on adjusted operating income before taxes, and 22.8% for the full year 2025. Looking ahead to 2026, we expect a tax rate in the range of 22% to 23%. We continued our balance sheet optimization strategy in the quarter with additional in-force management actions.
Speaker #4: The effective rate for tax this quarter was 23.8% on adjusted operating income before taxes, and 22.8% for the full year 2025. Looking ahead to 2026, we expect a rate in the tax range of 22 to 23%.
Speaker #4: We continued our balance sheet optimization strategy quarter in the with additional management in-force actions for Q4. These actions had a $95 million favorable financial impact.
Axel André: For Q4, these actions had a $95 million favorable financial impact. Managing our in-force block remains a core part of our strategy and has significantly contributed to results over the past few years. As a reminder, these actions come in various forms, ranging from large upfront actions, such as strategic recapture, to more recurring items, like rate increases on specific blocks of business. Turning to biometric claims experience, as outlined on slide 11 of our earnings presentation.
Speaker #4: Managing our In-force block remains a core part of our strategy and has significantly contributed to results over the past few years a . reminder , these As actions come in various ranging from forms , large , upfront actions such as strategic recapture to more recurring items rate like increases on blocks of business specific Turning .
Speaker #4: To biometric claims, as slide 11 of our earnings slide outlined on experience presentation, economic claims experience was unfavorable by $51 million in the quarter, with a corresponding unfavorable current period.
Axel André: Economic claims experience was unfavorable by $51 million in the quarter, with a corresponding unfavorable current period financial impact of $53 million. Approximately half of this result was driven by the US group business, consistent with the updated expectations that we communicated earlier in the year. Claims experience in US individual life was in line with expectations. Taking a step back, since the beginning of 2023, when we more fully emerged from COVID, economic claims experience for the total company has been favorable by $226 million. 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. Before getting into the segment results, I'd like to discuss a new slide highlighting certain key considerations for the quarter and the year.
Axel André: Economic claims experience was unfavorable by $51 million in the quarter, with a corresponding unfavorable current period financial impact of $53 million. Approximately half of this result was driven by the US group business, consistent with the updated expectations that we communicated earlier in the year. Claims experience in US individual life was in line with expectations. Taking a step back, since the beginning of 2023, when we more fully emerged from COVID, economic claims experience for the total company has been favorable by $226 million.
Speaker #4: Financial impact of $53 million, approximately half of this result was driven by the US Group business, consistent with the updated expectations that we communicated earlier in the year.
Speaker #4: experience in US Claims individual life was in line with expectations step . Taking a back since the beginning of 2023 , when we more fully emerged from Covid economic claims experience for the total company has been favorable by $226 million .
Axel André: 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. Before getting into the segment results, I'd like to discuss a new slide highlighting certain key considerations for the quarter and the year.
Speaker #4: As a reminder , the favorable economic experience that has not been recognized through the accounting results will be recognized over the life of remaining the business .
Speaker #4: getting Before into the segment , results , I'd like to discuss a new slide highlighting certain key considerations for the quarter year and the on slide details nine , we've included on the financial impact of certain items , including actual to expected biometric claims , experience , variable investment income , and enforce actions .
Axel André: On slide nine, we've included details on the financial impact of certain items, including actual to expected biometric claims experience, variable investment income, and in-force management actions. After considering these impacts, we view run rate EPS for 2025 at approximately $24.75 per share, which we believe provides a reasonable basis to apply future EPS growth expectations. We are also reiterating our intermediate-term targets of 8% to 10% annual EPS growth and a 13% to 15% return on equity. Regarding ROE, we acknowledge that we are running at or above the high end of the range and will continue to evaluate this target. For 2026 specifically, we are assuming a 7% variable investment income return.
Axel André: On slide nine, we've included details on the financial impact of certain items, including actual to expected biometric claims experience, variable investment income, and in-force management actions. After considering these impacts, we view run rate EPS for 2025 at approximately $24.75 per share, which we believe provides a reasonable basis to apply future EPS growth expectations.
Speaker #4: After impacts , considering these we view run rate EPs for 2025 at approximately $24.75 per share , which we believe provides a reasonable basis to apply future EPs growth .
Axel André: We are also reiterating our intermediate-term targets of 8% to 10% annual EPS growth and a 13% to 15% return on equity. Regarding ROE, we acknowledge that we are running at or above the high end of the range and will continue to evaluate this target. For 2026 specifically, we are assuming a 7% variable investment income return.
Speaker #4: We are also reiterating our expectations for our intermediate-term targets of 8% to 10% annual EPS growth and a return on equity of 13% to 15%. We acknowledge that we are running at or above the high end of the range and will continue to evaluate this target for 2026.
Speaker #4: Specifically , we are assuming a 7% variable investment income return . This is the above 6% in 2025 , long term though expectations of 10 to 12% , primarily due to a still muted environment for real estate sales , which is when income from real estate assets is recognized .
Axel André: This is above the 6% in 2025, though below our long-term expectations of 10% to 12%, primarily due to a still muted environment for real estate sales, which is when income from real estate assets is recognized. Regarding in-force management actions, our activity has been elevated in recent years, generating earnings of about $75 million in 2023, $225 million in 2024, and $135 million in 2025. We will remain active going forward, but the timing and size of these actions is highly unpredictable. Thus, we are projecting a more limited financial impact compared to recent experience. Additionally, we will continue to balance capital deployed into the business with returning capital to shareholders through quarterly dividends and share repurchases.
Axel André: This is above the 6% in 2025, though below our long-term expectations of 10% to 12%, primarily due to a still muted environment for real estate sales, which is when income from real estate assets is recognized. Regarding in-force management actions, our activity has been elevated in recent years, generating earnings of about $75 million in 2023, $225 million in 2024, and $135 million in 2025.
Speaker #4: Regarding In-force management actions , our activity has been elevated in recent years , generating earnings of about $75 million in 2023 , $225 million in 2024 , and $135 million in 2025 .
Axel André: We will remain active going forward, but the timing and size of these actions is highly unpredictable. Thus, we are projecting a more limited financial impact compared to recent experience. Additionally, we will continue to balance capital deployed into the business with returning capital to shareholders through quarterly dividends and share repurchases.
Speaker #4: We will remain active , going forward , but the timing and size of these actions is highly unpredictable . Thus , we are projecting a more limited financial impact compared to recent experience .
Speaker #4: Additionally, we will continue to balance capital deployed into the business with returning capital to shareholders through quarterly dividends and share repurchases. Our base case expectation for capital repurchases deployed into In-force transactions is around $1.5 billion in 2026, and we also expect to allocate $400 million of excess capital to reduce financial leverage during 2026.
Axel André: Our base case expectation for capital deployed into in-force transactions is around $1.5 billion in 2026, and we also expect to allocate $400 million of excess capital to reduce financial leverage during 2026. We intend to remain opportunistic with share repurchases and expect total shareholder return of capital to range between 20% to 30% of after-tax operating earnings over the intermediate term. Moving to the quarterly segment results on slide 7. The US and Latin America traditional results reflected the favorable impacts from in-force management actions and strong variable investment income. These were partially offset by the expected unfavorable group claims experience noted earlier in the year. A quick note on the group business. The block is now fully repriced, and we expect significant improvement in 2026 results back towards our historical run rates.
Axel André: Our base case expectation for capital deployed into in-force transactions is around $1.5 billion in 2026, and we also expect to allocate $400 million of excess capital to reduce financial leverage during 2026. We intend to remain opportunistic with share repurchases and expect total shareholder return of capital to range between 20% to 30% of after-tax operating earnings over the intermediate term. Moving to the quarterly segment results on slide 7.
Speaker #4: We intend to remain opportunistic with share repurchases and expect total shareholder return of capital to between after tax range over the earnings intermediate term .
Speaker #4: Moving to quarterly segment results on slide seven, the US and Latin America traditional results reflected the favorable impacts from inforce management actions and strong variable investment.
Axel André: The US and Latin America traditional results reflected the favorable impacts from in-force management actions and strong variable investment income. These were partially offset by the expected unfavorable group claims experience noted earlier in the year. A quick note on the group business. The block is now fully repriced, and we expect significant improvement in 2026 results back towards our historical run rates.
Speaker #4: These were partially offset by the expected unfavorable group claims experience earlier in the year. A quick note on the group business: the block is now fully repriced, and we expect significant improvement in 2026.
Speaker #4: Results back our historical run rates. The US Solutions results contribution reflected the from the Equitable Financial towards continues to transaction, which with our 20% to 30% of operating expectations.
Axel André: The US Financial Solutions results reflected the contribution from the Equitable transaction, which continues to perform in line with our expectations. The Equitable business generated earnings consistent with our $60 to 70 million guidance for the second half of 2025, and we continue to expect $160 to 170 million of earnings from the transaction in 2026. Canada Traditional results reflected favorable impacts from Group and Individual Life businesses. The Financial Solutions results were in line with expectations. In the Europe, Middle East, and Africa region, the Traditional results were largely in line with expectations, with favorable other experience offset by modestly unfavorable claims experience. EMEA's Financial Solutions results reflected favorable longevity experience and strong growth in the segment. We continue to see high quality opportunities, and the longevity business remains an area of notable growth for us.
Axel André: The US Financial Solutions results reflected the contribution from the Equitable transaction, which continues to perform in line with our expectations. The Equitable business generated earnings consistent with our $60 to 70 million guidance for the second half of 2025, and we continue to expect $160 to 170 million of earnings from the transaction in 2026. Canada Traditional results reflected favorable impacts from Group and Individual Life businesses.
Speaker #4: The equitable business generated earnings consistent with our 60 to $70 million guidance for the second half of 2025 , and we continue to expect 160 to $170 million of earnings from the transaction in 2026 , Canada .
Speaker #4: Traditional results reflected favorable impacts from group and individual businesses. Life Financial Solutions results were in line with expectations in the Europe, Middle East, and Africa region.
Axel André: The Financial Solutions results were in line with expectations. In the Europe, Middle East, and Africa region, the Traditional results were largely in line with expectations, with favorable other experience offset by modestly unfavorable claims experience. EMEA's Financial Solutions results reflected favorable longevity experience and strong growth in the segment. We continue to see high quality opportunities, and the longevity business remains an area of notable growth for us.
Speaker #4: The traditional results were largely in line with expectations , with favorable other experience , offset by modestly unfavorable claims . Experience . Emea's financial Solutions results reflected favorable longevity experience and strong growth in the segment .
Speaker #4: We continue to see high quality opportunities and longevity business remains an area the of notable growth for us . Turning our Asia to Pacific region , traditional had another good quarter , reflecting favorable underwriting margin and the benefit of ongoing growth .
Axel André: Turning to our Asia Pacific region, Traditional had another good quarter, reflecting favorable underwriting margin and the benefit of ongoing growth. The segment performed very well this year, which is a reflection of our excellent competitive position and our execution of value-added solutions to clients. The Financial Solutions results were in line with expectations. Finally, the corporate and other segment reported an adjusted operating loss before tax of $54 million, impacted by higher financing costs and general expenses. For 2026, we expect a corporate and other loss of approximately $50 to 55 million per quarter. Moving to investments on slides 12 through 14. The non-spread book yield, excluding Variable Investment Income, was slightly higher than Q3, primarily due to new money rates in excess of portfolio yields.
Axel André: Turning to our Asia Pacific region, Traditional had another good quarter, reflecting favorable underwriting margin and the benefit of ongoing growth. The segment performed very well this year, which is a reflection of our excellent competitive position and our execution of value-added solutions to clients. The Financial Solutions results were in line with expectations.
Speaker #4: The segment performed very well this year, which is a reflection of our excellent competitive position and our execution of value-added solutions to clients.
Speaker #4: The financial solutions results were in line with expectations. Finally, the corporate and other segment reported an operating loss before adjusted tax of $54 million, impacted by higher financing costs and general expenses. For 2026, we expect a corporate and other segment loss of approximately $50 to $55 million per year.
Axel André: Finally, the corporate and other segment reported an adjusted operating loss before tax of $54 million, impacted by higher financing costs and general expenses. For 2026, we expect a corporate and other loss of approximately $50 to 55 million per quarter. Moving to investments on slides 12 through 14. The non-spread book yield, excluding Variable Investment Income, was slightly higher than Q3, primarily due to new money rates in excess of portfolio yields.
Speaker #4: Moving to investments on slide 12 through 14 , the non spread book yield excluding variable investment income , was slightly higher than Q3 , primarily due to new rates money in excess of portfolio yields new money quarter , was lower in the rate .
Axel André: While the new money rate was lower in the quarter, primarily due to lower market yields and a lower allocation to private assets, it remains above our portfolio yield, providing a tailwind to our overall book yield. Total company variable investment income was above expectations by around $48 million, driven by higher limited partnership income. Overall, our portfolio quality remains high, and credit impairments were in line with expectations for the year. Turning now to capital. Our excess capital ended the quarter at an estimated $2.7 billion, and our next 12 months deployable capital was an estimated $3.4 billion. It's important to note that we manage capital through multiple frameworks, including our internal economic capital, regulatory capital, and rating agency capital. From a regulatory lens, we maintain ample levels of regulatory capital in the jurisdictions where we operate.
Axel André: While the new money rate was lower in the quarter, primarily due to lower market yields and a lower allocation to private assets, it remains above our portfolio yield, providing a tailwind to our overall book yield. Total company variable investment income was above expectations by around $48 million, driven by higher limited partnership income.
Speaker #4: While the primarily due to lower market yields and a lower private assets , it allocation to above our portfolio yield , providing a tailwind to our overall book yield company variable investment .
Speaker #4: was above Total expectations by around $48 million , driven by higher limited partnership income . Overall , our portfolio quality remains high and credit impairments were in line with expectations for the year .
Axel André: Overall, our portfolio quality remains high, and credit impairments were in line with expectations for the year. Turning now to capital. Our excess capital ended the quarter at an estimated $2.7 billion, and our next 12 months deployable capital was an estimated $3.4 billion. It's important to note that we manage capital through multiple frameworks, including our internal economic capital, regulatory capital, and rating agency capital. From a regulatory lens, we maintain ample levels of regulatory capital in the jurisdictions where we operate.
Speaker #4: Turning now to capital , our excess capital ended the quarter at an estimated $2.7 billion , and our next 12 months deployable capital was an estimated $3.4 billion .
Speaker #4: It's important to note that we managed capital through multiple frameworks, including our internal economic capital, regulatory capital, and rating agency capital. From a regulatory lens, we maintain ample levels of regulatory capital in jurisdictions where we operate.
Axel André: Also, our strong ratings are important to our counterparty strength, and thus we manage our rating agency capital to support those ratings. On a holistic basis, considering all capital frameworks, we remain very well capitalized. In the quarter, we successfully retroceded another block of US PRT business to Ruby Re, and we are actively working on additional retrocessions. We still expect the vehicle to be fully deployed by the middle of 2026, and third-party capital remains a key component of our capital management strategy. During the quarter, we continued our long track record of increasing book value per share. As shown on slide 19, our book value per share, excluding AOCI and impacts from B36 embedded derivatives, increased to $165.50, which represents a compounded annual growth rate of 10% since the beginning of 2021.
Axel André: Also, our strong ratings are important to our counterparty strength, and thus we manage our rating agency capital to support those ratings. On a holistic basis, considering all capital frameworks, we remain very well capitalized. In the quarter, we successfully retroceded another block of US PRT business to Ruby Re, and we are actively working on additional retrocessions.
Speaker #4: Also , our ratings counterparty are important strong strength , and thus we our rating manage capital to support those ratings on a holistic basis .
Speaker #4: capital Considering all frameworks , we remain very well capitalized in the quarter , we successfully retroceded another block of us PRT business to Ruby Re , and we are actively working on additional retrocessions .
Axel André: We still expect the vehicle to be fully deployed by the middle of 2026, and third-party capital remains a key component of our capital management strategy. During the quarter, we continued our long track record of increasing book value per share. As shown on slide 19, our book value per share, excluding AOCI and impacts from B36 embedded derivatives, increased to $165.50, which represents a compounded annual growth rate of 10% since the beginning of 2021.
Speaker #4: We still expect the vehicle to be fully deployed by the middle of 2026, and third-party capital remains a key component of our capital management strategy.
Speaker #4: During the quarter , we continued our long track record of increasing book value per share as shown on slide 19 . Our book value per share , excluding Aoci and impacts from B-36 embedded derivatives , increased to $165.50 , which represents a compounded annual growth rate of 10% since the beginning of 2021 .
Axel André: To summarize, this was another great quarter to close a very successful and rewarding 2025. We continue to execute on our strategic objectives, and we are confident in our ability to deliver on our intermediate-term financial targets. Specifically, our adjusted operating EPS, excluding notable items, has grown at a compound annual growth rate of more than 10% since the beginning of 2023, and our adjusted operating ROE, excluding AOCI and notable items, has averaged around 15%, which is at the high end of the targeted range. 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.
Axel André: To summarize, this was another great quarter to close a very successful and rewarding 2025. We continue to execute on our strategic objectives, and we are confident in our ability to deliver on our intermediate-term financial targets.
Speaker #4: To summarize , this was another great quarter to close a very successful and rewarding 2025 . We continue to execute on our strategic objectives , and we are confident in our ability to deliver on our intermediate term financial targets , specifically our adjusted operating EPs .
Axel André: Specifically, our adjusted operating EPS, excluding notable items, has grown at a compound annual growth rate of more than 10% since the beginning of 2023, and our adjusted operating ROE, excluding AOCI and notable items, has averaged around 15%, which is at the high end of the targeted range. 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.
Speaker #4: Excluding notable items , has a grown at compound annual growth rate of more than 10% since the beginning of 2023 , and our adjusted operating ROE , excluding Aoci and notable items , has averaged around 15% , which is at the high end of the targeted range .
Speaker #4: 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.
Operator: We will now begin the question and answer session. Please limit yourself to one question and a single follow-up. If you have additional questions, you may rejoin the queue. 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. At this time, we will pause momentarily to assemble our roster. Our first question today is from Wes Carmichael with Wells Fargo. Please go ahead.
Operator: We will now begin the question and answer session. Please limit yourself to one question and a single follow-up. If you have additional questions, you may rejoin the queue. 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. At this time, we will pause momentarily to assemble our roster. Our first question today is from Wes Carmichael with Wells Fargo. Please go ahead.
Speaker #1: We will now begin the question and answer session . Please limit yourself to one question and a single follow up . If you have additional questions , you may rejoin the queue to ask star , keypad press question .
Speaker #1: telephone You may then one on your a . If you are using a speakerphone , please pick up your handset before pressing the keys to withdraw your question , please press star then two .
Speaker #1: At this time, we will pause momentarily to assemble our roster. Our first question today is from Wes Carmichael with Wells Fargo.
Speaker #1: Please go ahead .
Wes Carmichael: Hey, good morning. Wanted to start on capital allocation. So you had a strong deployment year in 2025 with Equitable and another $1 billion on top of that, bought back some stock. I guess my question is, you know, a couple of quarters ago, you spoke to a 20% to 30% payout ratio in terms of buybacks and dividends. As you look at the opportunities in front of you and the excess capital you have and will generate, is that 20% to 30% payout ratio still the right level? And what might change your view there?
Wes Carmichael: Hey, good morning. Wanted to start on capital allocation. So you had a strong deployment year in 2025 with Equitable and another $1 billion on top of that, bought back some stock. I guess my question is, you know, a couple of quarters ago, you spoke to a 20% to 30% payout ratio in terms of buybacks and dividends. As you look at the opportunities in front of you and the excess capital you have and will generate, is that 20% to 30% payout ratio still the right level? And what might change your view there?
Speaker #5: Hey . Good morning . I wanted start on to on capital allocation . So you had a strong deployment year in 2025 with equitable and another dollars on billion top of that , bought back some stock .
Speaker #5: I guess my question is , you know , a couple quarters ago you spoke to a 20 to 30% payout ratio in terms of buybacks and dividends .
Speaker #5: As you look at the opportunities in front of you, and the excess capital you have and will generate, is that 20 to 30% payout ratio still the right level?
Speaker #5: And change your—what might you view there?
Axel André: Yeah, thanks for the question, Wes. Look, as we stated earlier, we reinstated share buybacks in the second half of 2025, and we repurchased $125 million of stock in 2025. We're taking a balanced approach to capital deployment. Maintaining financial flexibility is very important to us. We continue to see attractive opportunities to deploy capital into new business at strong risk-adjusted returns, which also aligns with our strategy and leverages our unique strengths. But we also recognize the importance of returning capital to shareholders. We're targeting 20% to 30% total payout ratio going forward, but we also have the flexibility to be opportunistic as the year goes on.
Axel André: Yeah, thanks for the question, Wes. Look, as we stated earlier, we reinstated share buybacks in the second half of 2025, and we repurchased $125 million of stock in 2025. We're taking a balanced approach to capital deployment. Maintaining financial flexibility is very important to us.
Speaker #4: Yeah , thanks for the question , Wes . Look , as we stated earlier , we share reinstated buybacks in the second half of 2025 .
Speaker #4: And we repurchased $125 million of stock in 2025 . We're taking a balanced approach to capital deployment , maintaining financial flexibility is very important to us .
Axel André: We continue to see attractive opportunities to deploy capital into new business at strong risk-adjusted returns, which also aligns with our strategy and leverages our unique strengths. But we also recognize the importance of returning capital to shareholders. We're targeting 20% to 30% total payout ratio going forward, but we also have the flexibility to be opportunistic as the year goes on.
Speaker #4: We continue to see attractive opportunities to deploy capital into new business at strong risk . Adjusted returns , which also aligns with our strategy and leverages our unique strengths .
Speaker #4: But we also recognize the importance of returning capital to shareholders. We're targeting a 20% to 30% total payout ratio going forward, but we also have the flexibility to be opportunistic as the year goes on.
Wes Carmichael: Okay. And my follow-up is if you continue to grow the Asset-Intensive Business, and I think you may have had this question before, but curious if anything's changed in your mind, but would you be open to additional partnerships with asset managers or alternative asset managers? And, you know, I know you do a lot of this yourself in-house, but just wondering if you gained access to any additional capabilities or perhaps even some outside capital.
Axel André: Okay. And my follow-up is if you continue to grow the Asset-Intensive Business, and I think you may have had this question before, but curious if anything's changed in your mind, but would you be open to additional partnerships with asset managers or alternative asset managers? And, you know, I know you do a lot of this yourself in-house, but just wondering if you gained access to any additional capabilities or perhaps even some outside capital.
Speaker #5: Okay . And my follow up , if you continue to grow the asset intensive business , and I think you may have had this question before , but curious if anything has changed in your mind , but would you be open to additional partnerships with asset managers or alternative asset managers ?
Speaker #5: And I know you do a lot of this yourself in-house , but just wondering if you gain access to any additional perhaps even some capital .
Leslie Barbi: Hey, Wes, it's Leslie Barbi. Thanks for that question. You might be interested to know that we have been using external partners for decades, and we definitely continue to plan to do that. Really, when we look out in the market, we're constantly talking to potential partners. We want to make sure we don't miss any additive capabilities or expertise, anything that can add value for RGA and our shareholders. I think this flexible approach and our ability to partner is a real strength, because what we're trying to do is really get the right capabilities and the right expertise into the total opportunity set. So to reinforce that, we're absolutely already using external partners, and we're very open to continuing to do that if it adds value for RGA.
Leslie Barbi: Hey, Wes, it's Leslie Barbi. Thanks for that question. You might be interested to know that we have been using external partners for decades, and we definitely continue to plan to do that. Really, when we look out in the market, we're constantly talking to potential partners. We want to make sure we don't miss any additive capabilities or expertise, anything that can add value for RGA and our shareholders.
Speaker #6: Wes , Hey it's Leslie . Barb , thanks for that question . You might be interested to know that we have been using external partners for decades , and we definitely continue to plan to do that .
Speaker #6: Really, when we look out in the market, we're constantly talking to potential partners. We want to make sure we don't miss any additive capabilities or expertise.
Speaker #6: Anything that can add value for RGA and our shareholders . I think this flexible approach and our ability to partner is a real strength because what we're trying to do is really get the capabilities and the right expertise the total opportunity set .
Leslie Barbi: I think this flexible approach and our ability to partner is a real strength, because what we're trying to do is really get the right capabilities and the right expertise into the total opportunity set. So to reinforce that, we're absolutely already using external partners, and we're very open to continuing to do that if it adds value for RGA.
Speaker #6: So, to reinforce, we are absolutely already using external partners, and we're very open to continuing to do that if it adds value for RGA.
Operator: The next question is from Joel Hurwitz with Dowling & Partners. Please go ahead.
Operator: The next question is from Joel Hurwitz with Dowling & Partners. Please go ahead.
Speaker #1: The next from Joel Hurwitz Please go with Dowling and Partners . ahead .
Joel Hurwitz: Hey, good morning. Wanted to touch on group health first. Can you just let us know what rate actions you took in 2026? And then, Tony, I think you said you'll be exiting the business, I guess, after 2026. What drove that decision? And any color on the size, the overall size of the business that you're exiting and sort of what run rate earnings were expected to be?
Joel Hurwitz: Hey, good morning. Wanted to touch on group health first. Can you just let us know what rate actions you took in 2026? And then, Tony, I think you said you'll be exiting the business, I guess, after 2026. What drove that decision? And any color on the size, the overall size of the business that you're exiting and sort of what run rate earnings were expected to be?
Speaker #7: I morning . on first . wanted to touch Can you just let us know what Hey , good rate you actions took in 26 ?
Speaker #7: And then Tony , I think you said you'll be exiting the I guess 26 . after What what drove that decision in any color on the side ?
Speaker #7: The overall size of the business that you’re accepting, and sort of what run rate earnings were, be.
Axel André: Yeah. Hi, Joel, this is Axel André. We've taken significant actions to fully address the US healthcare excess book. We raised rates by 40% on average, beginning mid-2025 through January 2026, which gives us confidence that 2026 will improve over 2025 results. As mentioned in the prepared remarks, following a strategic review, we have decided to stop writing new business effective immediately, and also to not renew existing business at the end of the current one-year term across our group healthcare lines of business. So for some context, the US healthcare business has approximately $400 million of annual premium and generates approximately $25 million of pre-tax run rate earnings in a typical year. So this decision will have limited impact in 2026, will primarily emerge in 2027 results.
Axel André: Yeah. Hi, Joel, this is Axel André. We've taken significant actions to fully address the US healthcare excess book. We raised rates by 40% on average, beginning mid-2025 through January 2026, which gives us confidence that 2026 will improve over 2025 results. As mentioned in the prepared remarks, following a strategic review, we have decided to stop writing new business effective immediately, and also to not renew existing business at the end of the current one-year term across our group healthcare lines of business.
Speaker #4: Yeah . Hi , Joel . This is Axel . We've taken significant fully actions to address the health US care access book . We raised rates 40% on average beginning mid 2025 through January 2026 , which gives us confidence that 2026 will improve by over 2025 results .
Speaker #4: As mentioned in the prepared remarks , following a strategic review , we have decided to stop writing new business . Effective immediately and not renew also to existing business at the end of the one year term across our lines of group health care business .
Axel André: So for some context, the US healthcare business has approximately $400 million of annual premium and generates approximately $25 million of pre-tax run rate earnings in a typical year. So this decision will have limited impact in 2026, will primarily emerge in 2027 results.
Speaker #4: For some SO context, the US health business has approximately $400 million of annual premium and generates approximately $25 million of pre-tax run rate earnings in a year.
Speaker #4: So this decision typically will have limited impact in 2026. It will primarily impact 2027 results. We are focused on positioning RGA for the future by ensuring that we're deploying capital in businesses that are strategically aligned, and we also believe that the rate actions taken will result in improvements to the US health care results.
Axel André: We remain focused on best positioning RGA for the future by ensuring that we're deploying capital in businesses that are strategically aligned, and we also believe that the rate actions taken will result in significant improvement to the US healthcare results as the business winds down.
Axel André: We remain focused on best positioning RGA for the future by ensuring that we're deploying capital in businesses that are strategically aligned, and we also believe that the rate actions taken will result in significant improvement to the US healthcare results as the business winds down.
Speaker #4: As the business winds down.
Joel Hurwitz: Got it. Very helpful. And there continues to be activity in the market and optimism from primary writers on further de-risking of legacy blocks, like Long-Term Care and Universal Life with Secondary Guarantees. I know you've done a little in this space, but just wanted to get an update on your appetite for these types of businesses.
Joel Hurwitz: Got it. Very helpful. And there continues to be activity in the market and optimism from primary writers on further de-risking of legacy blocks, like Long-Term Care and Universal Life with Secondary Guarantees. I know you've done a little in this space, but just wanted to get an update on your appetite for these types of businesses.
Speaker #7: Got it . Very . And there be to market and optimism primary from writers on on further de-risking of legacy blocks like long care term and universal life with secondary guarantees .
Speaker #7: know you've little this space , but just get an in update . wanted to update on your appetite for these types of businesses .
Tony Cheng: Yeah, let me take that one. Thank you very much for the question. Look, we remain very selective and disciplined on ULSG and LTC long-term care risks. As you know, we have significant biometric risk capabilities, but we also keenly recognize the need for higher hurdle rates on these lines of businesses, especially within a public company balance sheet. Now, it's important to note that all of our ULSG and LTC businesses has been priced with updated assumptions and has performed well over time. And then the final point is that our ULSG and LTC liabilities are less than 10% of our balance sheet today, and we expect it to remain this way going forward.
Tony Cheng: Yeah, let me take that one. Thank you very much for the question. Look, we remain very selective and disciplined on ULSG and LTC long-term care risks. As you know, we have significant biometric risk capabilities, but we also keenly recognize the need for higher hurdle rates on these lines of businesses, especially within a public company balance sheet.
Speaker #3: Thank you Yeah , let very much for the question one . we . me take that Look , very
Speaker #3: selective and disciplined on Ulcc and remain LTC , long term care risks I . As you know , we have significant risk biometric capabilities , but we keenly recognize the need for also higher rates on hurdle these lines of businesses , especially within a public balance sheet it's important to note .
Tony Cheng: Now, it's important to note that all of our ULSG and LTC businesses has been priced with updated assumptions and has performed well over time. And then the final point is that our ULSG and LTC liabilities are less than 10% of our balance sheet today, and we expect it to remain this way going forward.
Speaker #3: that .
Speaker #3: all of our USG Now , businesses has company been priced with LTC updated and has assumptions over well time . And then the final point is that our ULC and LTC are less liabilities than 10% of our balance sheet today , and we expect it to remain this Going forward way .
Operator: The next question is from Jimmy Bhullar with J.P. Morgan. Please go ahead.
Operator: The next question is from Jimmy Bhullar with J.P. Morgan. Please go ahead.
Speaker #1: Next question is from Jimmy The Bhullar with J.P. Please go ahead.
Jimmy Bhullar: Hi, I had a couple of questions. One was on the Equitable block. You're reinsuring three-fourths of the block, but your results, and there's not a long history, but the results this quarter were not correlated between the two companies because they basically had weaker mortality than normal. You guys had better. So I'm just wondering if you could just give us some color on what parts of the book you're not covering, either by vintage, by type of product, or any other factor.
Jimmy Bhullar: Hi, I had a couple of questions. One was on the Equitable block. You're reinsuring three-fourths of the block, but your results, and there's not a long history, but the results this quarter were not correlated between the two companies because they basically had weaker mortality than normal. You guys had better. So I'm just wondering if you could just give us some color on what parts of the book you're not covering, either by vintage, by type of product, or any other factor.
Speaker #8: I Hi , had a couple questions . One was on the of Block Equitable . You're three fourths of the reinsuring block , but your results not a long .
Speaker #8: Historically, there's been a correlation, but results this quarter were not correlated between the two companies because they basically had weaker mortality than normal. You guys had better.
Speaker #8: So, I'm just wondering if you could just give us some color on what of the book you're not—parts covered by vintage or by type, product, of any, or factor.
Axel André: Yeah, thanks for the question, Jimmy. This is Axel. Maybe let me start with the high level. You know, the Equitable transaction, first of all, generated earnings consistent with our $60 to 70 million dollar guidance for the second half of 2025. We also continue to expect $160 to 170 million dollars of earnings from the transaction in 2026. Now, there are four key drivers of economic upside for RGA relative to the original performance of this block. Number one, we repriced the business, which allowed us to reflect updated mortality and policyholder behavior experience.... This means our reserving assumptions differ from Equitable's, and therefore will produce different actual to expected mortality experience on the same block. Number two, we benefit from uplift from higher asset yields.
Axel André: Yeah, thanks for the question, Jimmy. This is Axel. Maybe let me start with the high level. You know, the Equitable transaction, first of all, generated earnings consistent with our $60 to 70 million dollar guidance for the second half of 2025. We also continue to expect $160 to 170 million dollars of earnings from the transaction in 2026.
Speaker #4: Yeah , thanks for the question , Jimmy . Excel . Maybe . Let me start with the This is high level . You know , the equitable transaction .
Speaker #4: First of all , generated earnings consistent with our 60 to $70 million guidance for the second half We continue also to expect 160 to $170 million of earnings from the transaction in 2026 .
Axel André: Now, there are four key drivers of economic upside for RGA relative to the original performance of this block. Number one, we repriced the business, which allowed us to reflect updated mortality and policyholder behavior experience.... This means our reserving assumptions differ from Equitable's, and therefore will produce different actual to expected mortality experience on the same block. Number two, we benefit from uplift from higher asset yields.
Speaker #4: Now, drivers of economic upside for RGA relative to the original performance of this block. Number one, we repriced the business, which updated mortality and policyholder reflect behavior experience.
Speaker #4: This means our reserving assumptions differ from Equitable's and therefore will produce different actual to expected mortality experience on the block . Number benefit from we uplift from higher yields asset two , .
Axel André: We're repositioning the transferred assets into a higher yielding environment and in a manner that is consistent with our overall portfolio asset allocation targets and ratings. Number three, we operate with lower expenses as we've absorbed the business into our existing infrastructure and did not bring over their expenses. Lastly, number four, we were able to benefit from capital efficiency given our legal entity structure. So also, please keep in mind that, you know, there are meaningful ongoing benefits to our strategic relationship with Equitable, including underwriting new flow reinsurance business and participation from Allianz Bernstein in our sidecar strategy. Altogether, we remain confident that the Equitable transaction will generate strong risk-adjusted return for RGA.
Axel André: We're repositioning the transferred assets into a higher yielding environment and in a manner that is consistent with our overall portfolio asset allocation targets and ratings. Number three, we operate with lower expenses as we've absorbed the business into our existing infrastructure and did not bring over their expenses.
Speaker #4: We the repositioning into a higher yielding assets and in a manner that is consistent with our transferred portfolio asset allocation targets and overall ratings environment .
Speaker #4: Number three, we, with lower expenses, absorbed the operate business as we've into our existing infrastructure and did not bring over their expenses.
Axel André: Lastly, number four, we were able to benefit from capital efficiency given our legal entity structure. So also, please keep in mind that, you know, there are meaningful ongoing benefits to our strategic relationship with Equitable, including underwriting new flow reinsurance business and participation from Allianz Bernstein in our sidecar strategy.
Speaker #4: Lastly , number four , we were able to benefit from capital . Given our legal entity efficiency structure . please So also keep in mind there are meaningful that ongoing benefits to strategic relationship with equitable , including new flow reinsurance our business underwriting our sidecar strategy .
Axel André: Altogether, we remain confident that the Equitable transaction will generate strong risk-adjusted return for RGA. And then lastly, you're correct that, you know, our share of this business does not represent a 75% quarter share of the entirety of Equitable's life business, but it is only a portion of that business.
Speaker #4: Altogether, we are confident that the Equitable remain transaction will strongly risk-generate adjusted return for RGA, and lastly, you are correct that our share of this business does not represent a 75% quarter share of the entirety of Equitable's life—it is only a business, but it's a portion of that business.
Axel André: And then lastly, you're correct that, you know, our share of this business does not represent a 75% quarter share of the entirety of Equitable's life business, but it is only a portion of that business.
Jonathan Porter: Are you able to share what it is that you don't cover? Whether it's older age business, IUL, like, anything, anything in that regard?
Jonathan Porter: Are you able to share what it is that you don't cover? Whether it's older age business, IUL, like, anything, anything in that regard?
Speaker #8: And are you able to it is that you share what don't cover older age , , whether it's business , IUL like anything , anything in that regard
Axel André: So I'm not going to get into the specifics, but you know, suffice it to say that that of course we monitor very closely the claims reporting from Equitable, and that the performance has been in line with our expectations. We would also note that Equitable, on their call, cited less reinsurance coverage on these particular claims that impacted them.
Axel André: So I'm not going to get into the specifics, but you know, suffice it to say that that of course we monitor very closely the claims reporting from Equitable, and that the performance has been in line with our expectations. We would also note that Equitable, on their call, cited less reinsurance coverage on these particular claims that impacted them.
Speaker #4: not going
Speaker #4: to get into the . So I'm specifics , but you know , suffice it to say that that of course we monitor very claims closely the reporting from equitable .
Speaker #4: And that’s the performance has been in line with our expectations. We would also note that, on the cited reinsurance, Equitable had less coverage on claims than impacted.
Speaker #4: on this
Operator: The next question is from Suneet Kamath with Jefferies. Please go ahead.
Operator: The next question is from Suneet Kamath with Jefferies. Please go ahead.
Speaker #1: The
Speaker #1: next question is from Suneet Kumar with Jefferies . Please go ahead
Suneet Kamath: Thanks. First question, just on the capital deployment. If I look back to 2023, it looks like you've deployed about $5 billion of capital. And I guess the question is, if we think about the earnings power of that deployment, how much of that would you think is at sort of full earnings power? Like, I know Equitable is not there yet, so that's $1.5 billion out of the $5 billion. But of the $3.5 billion left, are you getting your full expected returns at this point, or is there still more in front of us? Thanks.
Suneet Kamath: Thanks. First question, just on the capital deployment. If I look back to 2023, it looks like you've deployed about $5 billion of capital. And I guess the question is, if we think about the earnings power of that deployment, how much of that would you think is at sort of full earnings power? Like, I know Equitable is not there yet, so that's $1.5 billion out of the $5 billion. But of the $3.5 billion left, are you getting your full expected returns at this point, or is there still more in front of us? Thanks.
Speaker #1: .
Speaker #9: Thanks . First question just on particular the capital deployment , if I look back to 2023 , it looks like you've deployed about capital $5 billion of .
Speaker #9: And I guess the question is, if we think about the earnings power deployment, how much of that is sort of full, do you think, in terms of earnings power?
Speaker #9: Like, I know Equitable there, so it's not $1.5 billion out of the five. But of the three and a half left, are you getting your full, expected returns? Or is there at this point still more in front of us?
Speaker #9: Thanks .
Axel André: Yeah, great. Thanks for the question. Well, it is an important question. Look, at a high level, we still, we still view our 8 to 10% EPS growth core target as a good intermediate term target. As we've said before, we can achieve this with approximately $1.5 billion of capital deployed into in-force transactions, together with the ongoing growth of our traditional flow business and with a level of share repurchases consistent with our stated target total 20 to 30% payout ratio. So when thinking of recent capital deployment, in particular, the Equitable transaction, you know, keep in mind that it occurred in the middle of 2025, so it did contribute to 2025 earnings, with some further ramp-up expected in 2026. The 8 to 10% is an intermediate term target.
Axel André: Yeah, great. Thanks for the question. Well, it is an important question. Look, at a high level, we still, we still view our 8 to 10% EPS growth core target as a good intermediate term target. As we've said before, we can achieve this with approximately $1.5 billion of capital deployed into in-force transactions, together with the ongoing growth of our traditional flow business and with a level of share repurchases consistent with our stated target total 20 to 30% payout ratio.
Speaker #4: Yeah , for the question . Well , it is an important question . at a high level . Look We we still view our 8 to 10% EPs growth target as a good intermediate term target .
Speaker #4: As we've said before , we can achieve this with approximately $1.5 billion of deployed capital In-force transactions . Together with the ongoing growth of our traditional flow business and with a level of share repurchases consistent with our stated target total 20 to 30% payout ratio .
Axel André: So when thinking of recent capital deployment, in particular, the Equitable transaction, you know, keep in mind that it occurred in the middle of 2025, so it did contribute to 2025 earnings, with some further ramp-up expected in 2026. The 8 to 10% is an intermediate term target.Higher levels of capital deployment may allow us to come in at the higher end of the range. However, over the intermediate term, we're comfortable with the 8% to 10%, which we have met, and exceeded at times in recent years.
Speaker #4: So, when thinking of recent capital deployment, in particular the Equitable, keep in mind that it occurred in a transaction in the middle of 2025.
Speaker #4: So did contribute to 2025 earnings with some further ramp up expected in 2026 . The 8 to 10% is an intermediate term target .
Axel André: Higher levels of capital deployment may allow us to come in at the higher end of the range. However, over the intermediate term, we're comfortable with the 8% to 10%, which we have met, and exceeded at times in recent years.
Speaker #4: levels of Higher capital deployment may allow us to come in at the higher end of the range . However , over the intermediate term , we're comfortable with the we have 8 to 10% , which met and exceeded at times in recent years .
Suneet Kamath: But should we think about the non-Equitable business as sort of fully earning at this point, or is there still more on that piece? I'm talking about the $3.5 billion of related deployment.
Suneet Kamath: But should we think about the non-Equitable business as sort of fully earning at this point, or is there still more on that piece? I'm talking about the $3.5 billion of related deployment.
Speaker #9: But should we think about the non-equitable business as sort of fully earning at this point, or is there still that piece?
Speaker #9: I'm talking about the related $3.5 billion of deployment.
Axel André: So, like we've discussed before, on any capital deployment, there's a period of repositioning of the asset portfolio, and as a result, a ramp-up in earnings. And we know our results reflect the blend of capital deployment and the trajectory of that earnings ramp-up. All of that is being factored into our intermediate-term EPS growth target.
Axel André: So, like we've discussed before, on any capital deployment, there's a period of repositioning of the asset portfolio, and as a result, a ramp-up in earnings. And we know our results reflect the blend of capital deployment and the trajectory of that earnings ramp-up. All of that is being factored into our intermediate-term EPS growth target.
Speaker #4: Like, so we've discussed deployment of capital before. On any, there's a period of repositioning of the asset portfolio, and as a result, an up-ramp in earnings.
Speaker #4: And we know our results reflect the blend of capital deployment and the trajectory of that earnings ramp-up. All of that is being factored into our intermediate-term EPS growth target.
Operator: The next question is from Tom Gallagher with Evercore ISI. Please go ahead.
Operator: The next question is from Tom Gallagher with Evercore ISI. Please go ahead.
Speaker #1: The next question is Tom from Gallagher Evercore ISI. Please go ahead.
Thomas Gallagher: Good morning. Just shifting gears to away from mortality to morbidity. Can you comment on both the Manulife long-term care risk transfer deal and your broader exposure to long-term care? How has that been performing, if you just look at it on a 2025 basis? Is that in line? Is that, you know, in line with your ROE? Has that been a lot higher? Yeah, any clarity there?
Tom Gallagher: Good morning. Just shifting gears to away from mortality to morbidity. Can you comment on both the Manulife long-term care risk transfer deal and your broader exposure to long-term care? How has that been performing, if you just look at it on a 2025 basis? Is that in line? Is that, you know, in line with your ROE? Has that been a lot higher? Yeah, any clarity there?
Speaker #10: Good morning . Just shifting gears to away from mortality to morbidity . The can you comment on both the Manulife long term care Risk Transfer deal and your broader exposure to long term care .
Speaker #10: How has that been performing? If you just look at it on a 2025 basis, is that in line? Is that in line with your ROE?
Speaker #10: it been a Is lot higher ? Yeah . Any any clarity ?
Jonathan Porter: Yeah. Hi, Tom, this is Jonathan. We don't talk about experience at a block-by-block level, but what I can say is that we're very happy with our LTC business, and it has performed well over time. And as you know, we have focused on a subset of available LTC business, that's available in the market that aligns with our risk appetite and return expectations, and we continue to manage our overall exposure to the product relative to the size of our balance sheet. So we expect this to continue to be our approach going forward.
Jonathan Porter: Yeah. Hi, Tom, this is Jonathan. We don't talk about experience at a block-by-block level, but what I can say is that we're very happy with our LTC business, and it has performed well over time. And as you know, we have focused on a subset of available LTC business, that's available in the market that aligns with our risk appetite and return expectations, and we continue to manage our overall exposure to the product relative to the size of our balance sheet. So we expect this to continue to be our approach going forward.
Speaker #11: Yeah . Tom . This is
Speaker #11: Hi there, Jonathan. Talk about a block—we don't experience that by block level. But what I can say is that we're very happy with our LTC business.
Speaker #11: And it has well overperformed time. And as you know, we have focused on a subset of available LTC business that's available in the market that aligns with our risk appetite and return expectations.
Speaker #11: And we continue to manage our overall exposure product to the relative to the size of our balance sheet . So we expect this to continue to be our approach going forward .
Thomas Gallagher: Jonathan, would you say the performance of that, any broad range ROE that's been trending at?
Tom Gallagher: Jonathan, would you say the performance of that, any broad range ROE that's been trending at?
Speaker #10: And Jonathan , would you would you say the performance of that any any broad range ROE that that's been trending at ?
Jonathan Porter: No, no, Tom, we don't break down the performance at that level for to discuss externally. But again, just to reiterate, we're very happy with the performance of that LTC business over time.
Jonathan Porter: No, no, Tom, we don't break down the performance at that level for to discuss externally. But again, just to reiterate, we're very happy with the performance of that LTC business over time.
Speaker #11: Tom , No , no , don't break we down the that level performance at for to . Discuss externally . But again just to reiterate happy with the we're very performance of that LTC business over time .
Operator: The next question is from John Barnidge with Piper Sandler. Please go ahead.
Operator: The next question is from John Barnidge with Piper Sandler. Please go ahead.
Speaker #1: The next question, John, is from Barnidge with Piper Sandler. Go ahead, please.
Axel André: Good morning. Thank you for the opportunity. My first question, can you talk about your exposure in the investment portfolio to software-related companies and how you're thinking about disruption from AI within the portfolio? Thank you.
John Barnidge: Good morning. Thank you for the opportunity. My first question, can you talk about your exposure in the investment portfolio to software-related companies and how you're thinking about disruption from AI within the portfolio? Thank you.
Speaker #12: Thank you for the good morning and the opportunity. My first question: can you talk about the exposure in your investment portfolio to software-related companies, and how you're thinking about disruption from AI within the portfolio?
Speaker #12: Thank you .
Leslie Barbi: ... John, this is Leslie. So in terms of your first question on the software, we look closely at that exposure. I'll note that software lending is typically done against enterprise value or revenue. It's become more popular in the market, but we've not been a big participant in that. So when we drill down on our exposure within direct lending, it's very modest, less than 30 basis points of our total investment portfolio. So we're very comfortable with where we're positioned. In terms of AI, that's something among many other factors that we continue to look at across the portfolio, so analyst by analyst, and we discuss it in our portfolio management meetings. And like our approach to anything that's changing in the market, we look at trends that are coming, assess where they could impact.
Leslie Barbi: ... John, this is Leslie. So in terms of your first question on the software, we look closely at that exposure. I'll note that software lending is typically done against enterprise value or revenue. It's become more popular in the market, but we've not been a big participant in that. So when we drill down on our exposure within direct lending, it's very modest, less than 30 basis points of our total investment portfolio.
Speaker #6: Thanks , John . This is Lesley . So in terms of your first question on the software , we look closely at that exposure .
Speaker #6: Note that all software lending is done against enterprise, typically value or revenue. It's become more popular in the market. But we've not been a big participant in that.
Speaker #6: So when we drill down on our exposure within direct lending , it's very less than points of our modest , 30 basis total investment So we're very portfolio .
Leslie Barbi: So we're very comfortable with where we're positioned. In terms of AI, that's something among many other factors that we continue to look at across the portfolio, so analyst by analyst, and we discuss it in our portfolio management meetings. And like our approach to anything that's changing in the market, we look at trends that are coming, assess where they could impact. We make decisions where we need to and take actions at those times and as we get more information, because this will definitely be evolving. So we'll continue to do that and actively managing the portfolio. Thanks.
Speaker #6: Comfortable with where we're positioned in terms of AI. That's something we continue to look at among many other factors in that portfolio. Analysts discuss it in so, and we, by analysts, our portfolio management meetings.
Speaker #6: And like our approach to anything changing that's in the market, we look at trends that are coming, assess where they could impact.
Leslie Barbi: We make decisions where we need to and take actions at those times and as we get more information, because this will definitely be evolving. So we'll continue to do that and actively managing the portfolio. Thanks.
Speaker #6: We make decisions where we need to and take actions at those times. And as we get more information, because this will definitely be evolving.
Speaker #6: So we'll continue to to do that and actively be managing the portfolio . Thanks .
Tony Cheng: Thank you for those comments. And sticking with the portfolio, if I can. Leslie, you talked about using external partners for decades, that have specialized capabilities. We saw a transaction earlier this year in January with cross-ownership between alternative asset managers, which resembled a transaction from a number of years prior in some ways. And so curious about maybe the evolution in the relationships that you've already had for decades with kind of the new environment. Thank you.
John Barnidge: Thank you for those comments. And sticking with the portfolio, if I can. Leslie, you talked about using external partners for decades, that have specialized capabilities. We saw a transaction earlier this year in January with cross-ownership between alternative asset managers, which resembled a transaction from a number of years prior in some ways. And so curious about maybe the evolution in the relationships that you've already had for decades with kind of the new environment. Thank you.
Speaker #12: Thank you for those comments and sticking with the portfolio . If I can . Leslie , you talked about using external partners for decades .
Speaker #12: That have specialized capabilities. We saw a transaction earlier this year in January with a cross between alternative asset managers, which resembles the transaction from a number of years prior.
Speaker #12: In some ways, I'm curious about the evolution in the relationships that maybe you've already had for decades, and how those are adapting to the new environment. Thank you.
Leslie Barbi: Okay. Thanks for that question. I'm not sure I was completely clear on what you were referring to, but let me just comment generally about our partnerships or use of external managers. So we certainly we look at what capabilities we want on the platform and then who is best suited to do that. So often it's our strong internal teams. Other times, we want to use an outside partner that has different or more scaled expertise than we have. We've also engaged in partnerships where, when we have a lot of alignment, it's win-win. We can see that our alignment, our culture, our needs are all going to align for a long time, we will engage in partnerships. And so we've done that a number of times in the past. There's a few smaller ones we've announced.
Leslie Barbi: Okay. Thanks for that question. I'm not sure I was completely clear on what you were referring to, but let me just comment generally about our partnerships or use of external managers. So we certainly we look at what capabilities we want on the platform and then who is best suited to do that. So often it's our strong internal teams.
Speaker #6: Okay. Thanks for that question. I'm not sure I was completely clear on what you were referring to, but let me just comment generally about our partnerships or use of external managers.
Speaker #6: So certainly, we look at what capabilities we want on the platform, and then who is best suited to do that.
Speaker #6: So often it's our strong internal teams . Other times we want to use an outside partner that has different or more scaled expertise than we have .
Leslie Barbi: Other times, we want to use an outside partner that has different or more scaled expertise than we have. We've also engaged in partnerships where, when we have a lot of alignment, it's win-win. We can see that our alignment, our culture, our needs are all going to align for a long time, we will engage in partnerships. And so we've done that a number of times in the past. There's a few smaller ones we've announced. There's aspects of larger ones you may have gleaned from some of our other transactions, but it's really engaging in this more wholesome approach and making sure all the value is considered. Thanks.
Speaker #6: We've also engaged in partnerships where when we have a lot of alignment , it's win win . We can see that our alignment , our culture , our needs are all going to align for a long time .
Speaker #6: We will engage in partnerships . And so we've done that a number of times in the past . ones ones . few aspects of announced .
Speaker #6: We will engage in partnerships . And so we've done that a number of times in the past . ones ones . few aspects of announced . larger We've There's you may have gleaned from some of our other transactions , but it's really engaging in this more approach and making sure all the considered .
Leslie Barbi: There's aspects of larger ones you may have gleaned from some of our other transactions, but it's really engaging in this more wholesome approach and making sure all the value is considered. Thanks.
Speaker #6: wholesome Thanks .
Operator: The next question is from Alex Scott with Barclays. Please go ahead.
Operator: The next question is from Alex Scott with Barclays. Please go ahead.
Speaker #1: The next question is from Alex Scott with Barclays. Please go ahead.
Alex Scott: Hey, thanks. Good morning. First one is on, I guess, regulatory regime in Europe. And my understanding is Solvency II is gonna have some changes that are beneficial to investing in things like alternatives and some of the privates that are out there, et cetera. Are you seeing any increased competition in pricing related to that? Do you anticipate that that'll happen at all? I just am trying to understand how to think about those changes.
Alex Scott: Hey, thanks. Good morning. First one is on, I guess, regulatory regime in Europe. And my understanding is Solvency II is gonna have some changes that are beneficial to investing in things like alternatives and some of the privates that are out there, et cetera. Are you seeing any increased competition in pricing related to that? Do you anticipate that that'll happen at all? I just am trying to understand how to think about those changes.
Speaker #13: Hey , thanks . Good morning . First one is on a I guess , regulatory regime in Europe . And my understanding is solvency two is going to have some changes that are beneficial to invest in .
Speaker #13: And things like alternatives, and some of the privates that are out there, etc. Are you seeing any increased competition in pricing related to that?
Speaker #13: Do you anticipate that that will happen at all? I'm just trying to understand how to think about those changes.
Axel André: Yeah, look, let me start here, and if Tony wants to add something. We're, you know, with multiple legal entities, we're a global company. We have presence in Europe, in APAC, in America, in Bermuda, with multiple jurisdictions and regulatory regimes that we operate in. So we're, you know, obviously well aware of the benefits of the various regimes and the ability to pool risks and achieve efficiencies. And we're engaged with our regulators in terms of monitoring the evolution of the regulatory regimes. You know, we've been active in EMEA for a long time with our longevity business, with our asset-intensive business, and our traditional business.
Axel André: Yeah, look, let me start here, and if Tony wants to add something. We're, you know, with multiple legal entities, we're a global company. We have presence in Europe, in APAC, in America, in Bermuda, with multiple jurisdictions and regulatory regimes that we operate in. So we're, you know, obviously well aware of the benefits of the various regimes and the ability to pool risks and achieve efficiencies. And we're engaged with our regulators in terms of monitoring the evolution of the regulatory regimes. You know, we've been active in EMEA for a long time with our longevity business, with our asset-intensive business, and our traditional business.
Speaker #4: Yeah . Look start , let me here . And if Tony wants to add something know , with , we're so , you we're multiple entities , we're global company .
Speaker #4: We have presence in legal Europe , in APAC , in America , in Bermuda , with multiple jurisdictions and regulatory regimes that we operate in .
Speaker #4: So , you know , obviously , well , well aware of the the the benefits of the various regimes and the ability to pool and achieve risks efficiencies .
Speaker #4: And we're engaged with with our regulators in terms of monitoring the , the , the evolution of the regulatory regimes . You know , we've been active in EMEA for for a long time with our longevity business , with our asset intensive business and our traditional business .
Tony Cheng: Yeah, and Alex, let me add to it. You know, and Axel absolutely alluded to it at the end. You know, in EMEA, the large majority of our profits in our business is longevity swaps, which have no asset risk and really rely on, gosh, I guess, 52 years of phenomenal experience in mortality and longevity. So, you know, really the change you're sharing has less of an impact, obviously, to that business. What I would add is, you know, we obviously are very focused on, you know, blocks of business that have both asset and biometric risk in it. It leverages off one of our strongest strengths, which is ability to reinsure both sides of the balance sheet.
Tony Cheng: Yeah, and Alex, let me add to it. You know, and Axel absolutely alluded to it at the end. You know, in EMEA, the large majority of our profits in our business is longevity swaps, which have no asset risk and really rely on, gosh, I guess, 52 years of phenomenal experience in mortality and longevity. So, you know, really the change you're sharing has less of an impact, obviously, to that business. What I would add is, you know, we obviously are very focused on, you know, blocks of business that have both asset and biometric risk in it. It leverages off one of our strongest strengths, which is ability to reinsure both sides of the balance sheet.
Speaker #3: Yeah . And Alex , let me add to it , you know , and Axel , absolutely alluded it to it at the end .
Speaker #3: You know , EMEA the large majority of our profits and our business in is longevity swaps , which have no asset risk . And really rely on , gosh , I guess 52 years of phenomenal in experience mortality and , and longevity .
Speaker #3: so So , you know , really the change you're sharing has an less of impact , obviously to that business . What I would add is , you know , we obviously focused on , you know , blocks of business that both have asset biometric risk in it .
Speaker #3: And it leverages off one of our strongest strengths, which is the ability to reinsure both sides of the balance sheet. So even for the plain vanilla types, it really is not in our sweet spot.
Tony Cheng: So even for the plain vanilla, types of blocks, it really is not in our sweet spot. And, you know, there's a lot of opportunities around the world we can pursue that have both the asset and biometric risk, which is where we focus.
Tony Cheng: So even for the plain vanilla, types of blocks, it really is not in our sweet spot. And, you know, there's a lot of opportunities around the world we can pursue that have both the asset and biometric risk, which is where we focus.
Speaker #3: And, you know, there's a lot of opportunities around the world we can pursue that have both the asset and biometric risks, which is where we focus.
Alex Scott: Yep, understood. Yeah, I was thinking more along the lines of, you know, your biggest competitors being the multi-line reinsurers. I think they generally manage the Solvency II. So even outside of EMEA, one could, you know, theoretically think that those companies may be able to get more aggressive on pricing, but it sounds like you're not seeing that at all right now, at least, right?
Alex Scott: Yep, understood. Yeah, I was thinking more along the lines of, you know, your biggest competitors being the multi-line reinsurers. I think they generally manage the Solvency II. So even outside of EMEA, one could, you know, theoretically think that those companies may be able to get more aggressive on pricing, but it sounds like you're not seeing that at all right now, at least, right?
Speaker #13: Yep. Understood. Yeah. I was thinking more along the lines of your being the biggest of the multi-line reinsurers. I think they generally manage to Solvency II.
Speaker #13: Competitors outside of EMEA, one could theoretically think that those companies may be able to get more aggressive on pricing. It sounds, but like you're not seeing that at all right now.
Tony Cheng: Yeah, look, yeah, absolutely. I confirm. We, that has not bubbled up to the surface of being even a threat or risk going forward.
Tony Cheng: Yeah, look, yeah, absolutely. I confirm. We, that has not bubbled up to the surface of being even a threat or risk going forward.
Speaker #13: At least . Right ?
Speaker #3: Yeah. Look, I confirm that we—that that has not bubbled up to the surface as being even a threat or risk going forward.
Operator: The next question is from Mike Ward with UBS. Please go ahead.
Operator: The next question is from Mike Ward with UBS. Please go ahead.
Speaker #1: Next question is from Mike Ward with UBS.
Speaker #1: Please go ahead. The.
Mike Ward: Thanks. Kind of a good segue there. Just wondering, Tony, if you could elaborate on any specific regions or product lines that you think might be looking incrementally attractive this year so far?
Mike Ward: Thanks. Kind of a good segue there. Just wondering, Tony, if you could elaborate on any specific regions or product lines that you think might be looking incrementally attractive this year so far?
Speaker #14: Kind of a Thanks . good segue there . Just wondering , if if you could elaborate on any specific regions or product lines that you might be think looking .
Speaker #14: Tony , Incrementally attractive . This year . So far , yes .
Tony Cheng: Yes. No, thanks, Mike. Maybe I'll just go around the regions, around the horn and talk a bit about our pipeline and answer your question there. Look, I'd say our pipeline is both rich and diverse. And as you know, we always focus on the quality of the pipeline as much as the quantity of business opportunities. So firstly, in Asia, we continue to see, you know, a strong pipeline, both in the product development area as we continue to serve the emerging middle class, as well as the financial solutions as clients adjust to the new capital frameworks in markets like Japan and Korea. I've already mentioned the UK longevity market.
Tony Cheng: Yes. No, thanks, Mike. Maybe I'll just go around the regions, around the horn and talk a bit about our pipeline and answer your question there. Look, I'd say our pipeline is both rich and diverse. And as you know, we always focus on the quality of the pipeline as much as the quantity of business opportunities.
Speaker #3: Thanks . No . Mike . Maybe just go I'll the around around the regions , around around the horn and talk a bit about our our pipeline and and answer your question there .
Speaker #3: Look, I'd say our pipeline is both rich and diverse. And, as always, we focus on the quality of the pipeline as much as the business of the opportunities.
Tony Cheng: So firstly, in Asia, we continue to see, you know, a strong pipeline, both in the product development area as we continue to serve the emerging middle class, as well as the financial solutions as clients adjust to the new capital frameworks in markets like Japan and Korea. I've already mentioned the UK longevity market.
Speaker #3: So in firstly , Asia , we to you know , we continue see , you know , a strong pipeline both in the product development area as we continue to serve the emerging middle class as well as the financial solutions as clients adjust to the new capital frameworks in markets Japan and Korea .
Tony Cheng: That continues to be strong as a market, and we continue to be the market leader, and that momentum continues into 2026. And then in the US, we continue to benefit, obviously, from the industry realignment, as we saw with the Equitable deal. But you know, it's really important to note that there are many more modest-sized wins due to our biometric and underwriting strengths, that collectively are very meaningful in terms of returns and positioning us strategically, in the future. So, you know, all in all, the pipeline is rich and diverse. It's across the board, and as a result, that's one of the reasons why we're so optimistic about delivering attractive returns from the business.
Tony Cheng: That continues to be strong as a market, and we continue to be the market leader, and that momentum continues into 2026. And then in the US, we continue to benefit, obviously, from the industry realignment, as we saw with the Equitable deal. But you know, it's really important to note that there are many more modest-sized wins due to our biometric and underwriting strengths, that collectively are very meaningful in terms of returns and positioning us strategically, in the future. So, you know, all in all, the pipeline is rich and diverse. It's across the board, and as a result, that's one of the reasons why we're so optimistic about delivering attractive returns from the business.
Speaker #3: I've already mentioned the UK longevity market that continues to be strong as a market, and we continue to be the market leader.
Speaker #3: momentum And continues 2026 . into in the And then that US , like we continue to benefit , obviously , from the industry as we saw with the equitable deal .
Speaker #3: But but let me you know , it's really important to note that many there are more modest sized wins and that biometric collectively are very due to our meaningful in terms of returns positioning .
Speaker #3: Us and strategically in the So future . all in all , the rich and diverse . It's across the , you know , board .
Speaker #3: Result, pipeline is, and that's one of the reasons why we're so optimistic about delivering attractive returns from the business.
Mike Ward: Great, thanks. Thank you, Tony. And then, just in the US on traditional kind of mortality, pretty solid result, I think, you know, considering the severe flu season. Just wondering if you know, you have any insight, you know, if it's ticked up in January at all? Just wondering if you have any view there.
Mike Ward: Great, thanks. Thank you, Tony. And then, just in the US on traditional kind of mortality, pretty solid result, I think, you know, considering the severe flu season. Just wondering if you know, you have any insight, you know, if it's ticked up in January at all? Just wondering if you have any view there.
Speaker #14: on US traditional kind of , US pretty solid result . I mortality , you know , think the considering severe flu if , you know , wondering you have any .
Speaker #14: Insight, you just know if it's—you could pick it up in January at all, wondering if you just have any view there.
Jonathan Porter: Yeah. Hi, Mike, this is Jonathan. It's still too early to predict the final outcome of the current flu season, but the latest declining trends in population level of flu activity in the US, Canada, and the UK are encouraging. So influenza hospitalizations looked to a peak at year-end, and that peak was at the higher end of a normal flu season range. But since that time, those hospitalization rates are down substantially. This year, the Northern Hemisphere flu season is driven by influenza A, and there's no evidence at this point of increased virulence compared to other seasonal strains. And when we look at our Q4 results, we didn't see any material evidence of seasonality in that experience. As we noted in the prepared remarks, our mortality experience was in line overall.
Jonathan Porter: Yeah. Hi, Mike, this is Jonathan. It's still too early to predict the final outcome of the current flu season, but the latest declining trends in population level of flu activity in the US, Canada, and the UK are encouraging. So influenza hospitalizations looked to a peak at year-end, and that peak was at the higher end of a normal flu season range. But since that time, those hospitalization rates are down substantially. This year, the Northern Hemisphere flu season is driven by influenza A, and there's no evidence at this point of increased virulence compared to other seasonal strains. And when we look at our Q4 results, we didn't see any material evidence of seasonality in that experience. As we noted in the prepared remarks, our mortality experience was in line overall.
Speaker #11: Mike, this is Jonathan. It's still too early to predict the
Speaker #11: final outcome of the current season, but
Speaker #11: latest flu trends in . Yeah . Hi , population level flu activity in the US , and the Canada UK season So are influenza peak hospitalizations look to a encouraging .
Speaker #11: The year was at the top end, higher than the peak end of a normal flu range. But since that season, at that time, those hospitalization rates are down substantially.
Speaker #11: This year, the flu hemisphere is driven by influenza A, and there's no evidence at this point of increased virulence compared to other strains.
Speaker #11: When we look at Q4, we didn't see any material evidence of results. We see seasonality in seasonal, and that experience we noted and prepared.
Speaker #11: Remarks, our mortality experience was in line overall and as.
Operator: The next question is a follow-up from Tom Gallagher with Evercore ISI. Please go ahead.
Operator: The next question is a follow-up from Tom Gallagher with Evercore ISI. Please go ahead.
Speaker #1: The next question is a follow-up from Tom Gallagher at Evercore ISI. Please go ahead.
Thomas Gallagher: Hey, thanks for the follow-up. Axel, I just wanted to make sure I understand all the components of earnings. You know, I followed everything you said, in terms of the 8 to 10% intermediate-term EPS growth expectation. And it sounded to me, because of the $1.5 billion of capital you expect to deploy into in-force deals in 2026, that you, all things equal, should be running at that 8 to 10% intermediate term growth rate in 2026, would be my best guess. But I guess based on how you're thinking about things for 2026, are there any other adjustments you would make to that?
Tom Gallagher: Hey, thanks for the follow-up. Axel, I just wanted to make sure I understand all the components of earnings. You know, I followed everything you said, in terms of the 8 to 10% intermediate-term EPS growth expectation. And it sounded to me, because of the $1.5 billion of capital you expect to deploy into in-force deals in 2026, that you, all things equal, should be running at that 8 to 10% intermediate term growth rate in 2026, would be my best guess. But I guess based on how you're thinking about things for 2026, are there any other adjustments you would make to that?
Speaker #10: Hey , in the
Speaker #10: thanks for the follow up wanted just to make sure I I understand components of all the earnings . You followed know , I everything you said in terms of intermediate term EPs expectation the 8 to 10% , and it sounded to because of the me 1.5 billion of you capital that deploy In-force expect to into deals in 2026 , that you all things equal , running should be at that 8 to 10% intermediate term growth rate in 2026 would be my best guess .
Speaker #10: But I guess, based on how you're thinking about things for '26, are there any other adjustments you would make to that? The two that I think of would be your ultra return assumption is a little—so that better.
Thomas Gallagher: The two that I could think of would be your alter return assumption is a little better, so that could provide upside, and then to the extent that you do any more in-force transactions. I don't think you've included those, but any further color you could give?
Tom Gallagher: The two that I could think of would be your alter return assumption is a little better, so that could provide upside, and then to the extent that you do any more in-force transactions. I don't think you've included those, but any further color you could give?
Speaker #10: could provide upside . And then to the extent that any you do more in-force transactions , I don't think you've included those . any , But any , any further color you could give .
Axel André: Yeah, Tom, thanks for the question. So I would point you to slide nine in the deck, where we show our key assumptions, right, for 2026. Number one, we, of course, are assuming much improved US group experience, which was the largest contributor to the unfavorable biometric experience in 2025. Number two, we are assuming a smaller contribution from in-force management actions, since it has had outsized positive impact in recent years. And lastly, we are also assuming a variable investment income return of 7% for 2026.
Axel André: Yeah, Tom, thanks for the question. So I would point you to slide nine in the deck, where we show our key assumptions, right, for 2026. Number one, we, of course, are assuming much improved US group experience, which was the largest contributor to the unfavorable biometric experience in 2025. Number two, we are assuming a smaller contribution from in-force management actions, since it has had outsized positive impact in recent years. And lastly, we are also assuming a variable investment income return of 7% for 2026.
Speaker #4: Yeah . So thanks for the . So I would I would point you to , to slide nine in the deck where we show our key assumptions , for 2026 .
Speaker #4: question assuming much improved US group experience , which was the largest contributor to the unfavorable biometric experience Number two , in 2025 . are we assuming a smaller contribution from In-force actions management , since it has had outsized positive impact in recent years .
Speaker #4: And lastly, we are also assuming a variable investment income return of 7% for 2026. So the key takeaway is that we view a reasonable starting point for 2025 run-rate EPS, and we are reiterating our intermediate-term 8 to 10% EPS growth, which, as you said, assumes a target of approximately $1.5 billion of capital annually deployed into in-force transactions, with a run rate EPS of around $24.75.
Axel André: So the key takeaway is that we view $24.75 as a reasonable starting point for 2025 run rate EPS, and we are reiterating our intermediate term 8% to 10% EPS growth target, which as we said, assumes approximately $1.5 billion of annual capital deployed into in-force transactions. That applies to the intermediate term. We don't comment specifically on the year-by-year forecast.
Axel André: So the key takeaway is that we view $24.75 as a reasonable starting point for 2025 run rate EPS, and we are reiterating our intermediate term 8% to 10% EPS growth target, which as we said, assumes approximately $1.5 billion of annual capital deployed into in-force transactions. That applies to the intermediate term. We don't comment specifically on the year-by-year forecast.
Speaker #4: That applies to the intermediate term. We don't on the specifically year-by-year forecast.
Thomas Gallagher: Axel, sorry, just to follow up, the baseline, the $24.75, does that have any of the in-force management rate actions in it?
Tom Gallagher: Axel, sorry, just to follow up, the baseline, the $24.75, does that have any of the in-force management rate actions in it?
Speaker #10: And Axel , just to follow up , the sorry , baseline , that any of the 2475 does that have actions in it rate management in-force
Axel André: Yeah, look, I appreciate the question. So like I said, right, it's important to remember, we manage the in-force business, and it's a core part of our strategy. It will continue to be. We take a partnership and holistic approach to these situations, balancing the client relationship with our long-term business. We feel this approach is a means of differentiation, leading to other business opportunities. We've had very good success over the past three years. I'll remind you, we've generated approximately $425 million of cumulative pre-tax income and significant long-term future value. Like we said, in-force actions are unpredictable in terms of size and timing. Looking towards 2026, we feel there's less opportunity compared to recent periods, and thus we expect a more limited impact on earnings going forward.
Axel André: Yeah, look, I appreciate the question. So like I said, right, it's important to remember, we manage the in-force business, and it's a core part of our strategy. It will continue to be. We take a partnership and holistic approach to these situations, balancing the client relationship with our long-term business. We feel this approach is a means of differentiation, leading to other business opportunities. We've had very good success over the past three years. I'll remind you, we've generated approximately $425 million of cumulative pre-tax income and significant long-term future value. Like we said, in-force actions are unpredictable in terms of size and timing. Looking towards 2026, we feel there's less opportunity compared to recent periods, and thus we expect a more limited impact on earnings going forward.
Speaker #4: Look , I appreciate the . So like I said , right . question It's important to remember we manage inforce in it's a the core part of our business It will continue to be we take a partnership and holistic approach to situations , balancing the client relationship with our long term business .
Speaker #4: We feel this approach is a means of these to other business opportunities—very good. We've had success over the past three years.
Speaker #4: I'll remind you , we've generated approximately $425 million of cumulative pre-tax income and significant long term future value . Like we said , actions are In-force unpredictable in terms of size and timing .
Speaker #4: Looking towards 2026, we feel there's less opportunity compared to recent periods, thus we expect limited earnings and a more ongoing impact going forward.
Axel André: So like I said, as a reminder, the $24.75 of 2025 run rate earnings implied from slide nine removed all in-force actions from 2025 results. Therefore, actual in-force actions in 2026 could provide upside to these targets.
Axel André: So like I said, as a reminder, the $24.75 of 2025 run rate earnings implied from slide nine removed all in-force actions from 2025 results. Therefore, actual in-force actions in 2026 could provide upside to these targets.
Speaker #4: like I said , So , as a reminder , the $24.75 of 2025 run rate earnings implied from slide nine removed all In-force actions from 2025 results .
Speaker #4: Therefore, actual in-force actions in 2026 could provide upside to these targets.
Jonathan Porter: The next question is a follow-up from Alex Scott with Barclays. Please go ahead.
Jonathan Porter: The next question is a follow-up from Alex Scott with Barclays. Please go ahead.
Speaker #1: The next question is from Alex Scott with Barclays. Please go ahead.
Alex Scott: Hey, thanks for taking the follow-up. I wanted to ask on Japan, just around the macro volatility associated with interest rates and FX, does that have any impact on your business? And, you know, I guess connected to that, does it create new opportunities or, you know, reduce the opportunity set? How should I think about how it affects in-force and go forward deployment there?
Alex Scott: Hey, thanks for taking the follow-up. I wanted to ask on Japan, just around the macro volatility associated with interest rates and FX, does that have any impact on your business? And, you know, I guess connected to that, does it create new opportunities or, you know, reduce the opportunity set? How should I think about how it affects in-force and go forward deployment there?
Speaker #13: Hey, thanks for taking the follow-up. I wanted to ask about Japan, just around the macro volatility associated with interest rates and FX.
Speaker #13: Does that have any impact on your business ? And guess connected to that , does it create new I opportunities , you know , reduce or the opportunity set ?
Speaker #13: How should I think about how it affects in-force and forward deployment there?
Tony Cheng: Yeah. No, thanks, Alex, for the question. It's Tony here. Look, as you shared, Japan has strong tailwinds from the recent regulatory changes, and, you know, like you mentioned, the macroeconomic changes. And clients are taking actions to address balance sheets, which results in considerable opportunities for risk transfer in RGA. And we are incredibly well positioned with our strong local presence, you know, obviously our trusted client relationships and our world-class expertise on both sides of the balance sheet. And this is why it's one of our key markets.
Tony Cheng: Yeah. No, thanks, Alex, for the question. It's Tony here. Look, as you shared, Japan has strong tailwinds from the recent regulatory changes, and, you know, like you mentioned, the macroeconomic changes. And clients are taking actions to address balance sheets, which results in considerable opportunities for risk transfer in RGA. And we are incredibly well positioned with our strong local presence, you know, obviously our trusted client relationships and our world-class expertise on both sides of the balance sheet. And this is why it's one of our key markets.
Speaker #3: Yeah . Thanks , Alex , for the question . That's Tony here . Look . As George said , look Japan has has strong tailwinds from the recent regulatory changes .
Speaker #3: And, you know, like you mentioned, the macroeconomic changes, and clients are taking actions to address balance sheets, which results in considerable opportunities for risk transfer.
Speaker #3: And RJ we we and are incredibly well positioned with our strong local presence . You know , obviously our trusted client relationships our and world class expertise on both sides of the balance sheet .
Speaker #3: And this why it's is one of our key markets now , the of impact your referred to look , when we look at the competition that's entered the Japanese market , many of which are alternative asset managers , you know , they've had some success in the more vanilla asset intensive business .
Tony Cheng: Now, the impacts you've referred to, look, when we look at the competition that's entered the Japanese market, many of which are alternative asset managers, you know, they've had some success in the more vanilla asset intensive business. But let me reiterate, our focus is on the sweet spot, which are transactions which have both asset and biometric risks, and leveraging off that key strength. So, you know, we remain very optimistic about our position in Japan and the ongoing momentum in the market overall, and RGA winning a very good share of that.
Tony Cheng: Now, the impacts you've referred to, look, when we look at the competition that's entered the Japanese market, many of which are alternative asset managers, you know, they've had some success in the more vanilla asset intensive business. But let me reiterate, our focus is on the sweet spot, which are transactions which have both asset and biometric risks, and leveraging off that key strength. So, you know, we remain very optimistic about our position in Japan and the ongoing momentum in the market overall, and RGA winning a very good share of that.
Speaker #3: But let me reiterate , our focus is on the sweet spot , which are transactions which have which have both asset and biometric risks leveraging off of that key , and strength .
Speaker #3: So, you know, we very much remain about our optimistic position in Japan and the ongoing momentum in the market overall. And RJ winning a very good share of that.
Jonathan Porter: Yeah, and Alex, this is Jonathan, maybe just on the in-force part of your question. So just as an overarching comment, higher interest rates are good for us from an overall earnings perspective, given our positive reinvestment cash flows and illiquid liability profile. With regards to the Japanese asset intensive business, our exposure to disintermediation risk from higher rates is modest, and we wouldn't expect to have a significant impact at the current rate levels. And then specifically, on blocks, on our older blocks of in-force business, we have high minimum guaranteed interest rates, and they're protection oriented, making them less likely to have higher lapses. And on our newer vintage products, we have protections from surrender charges and market value adjustments.
Jonathan Porter: Yeah, and Alex, this is Jonathan, maybe just on the in-force part of your question. So just as an overarching comment, higher interest rates are good for us from an overall earnings perspective, given our positive reinvestment cash flows and illiquid liability profile. With regards to the Japanese asset intensive business, our exposure to disintermediation risk from higher rates is modest, and we wouldn't expect to have a significant impact at the current rate levels. And then specifically, on blocks, on our older blocks of in-force business, we have high minimum guaranteed interest rates, and they're protection oriented, making them less likely to have higher lapses. And on our newer vintage products, we have protections from surrender charges and market value adjustments.
Speaker #11: Yeah . And Alex , this is Jonathan . Maybe just on the enforce part of your question . as an So just overarching comment , higher are good interest rates from an for us overall earnings perspective , given our positive reinvestment cash flows and liability illiquid profile with regards to the Japanese asset intensive to exposure disintermediation , risk rates is from higher we wouldn't modest , and have a expect to be significant at the current impact rate levels .
Speaker #11: then And specifically on blocks on our older blocks of In-force business , we have high minimum guaranteed interest rates , and their protection oriented , making them likely to have higher lapses .
Speaker #11: And on our venture newer products, we have protections from surrender charges and market value adjustments.
Speaker #11: And on our venture newer products, we have protections from surrender charges and market value adjustments.
Alex Scott: Got it. Really helpful. Thank you.
Alex Scott: Got it. Really helpful. Thank you.
Speaker #13: Thank helpful .
Speaker #13: you in the .
Jonathan Porter: This concludes our question and answer session. I would like to turn the conference back over to Tony Cheng for any closing remarks.
Jonathan Porter: This concludes our question and answer session. I would like to turn the conference back over to Tony Cheng for any closing remarks.
Speaker #1: This concludes our question and answer session. I would like to turn the conference back over to Tony Cheng for any closing remarks.
Tony Cheng: Thank you for your continued interest in RGA. We've had a great quarter to cap off a great year, and we look forward to continue to deliver in the future. This ends our Q4 conference call. Thank you.
Tony Cheng: Thank you for your continued interest in RGA. We've had a great quarter to cap off a great year, and we look forward to continue to deliver in the future. This ends our Q4 conference call. Thank you.
Speaker #3: Thank you for your interest in RJ. We've had a great quarter to cap off a great year, and we look forward to continuing to deliver in the future.
Speaker #3: This ends our Q4 conference call. Thank you.
Jonathan Porter: The conference is now concluded. Thank you for attending today's call. You may now disconnect.
Jonathan Porter: The conference is now concluded. Thank you for attending today's call. You may now disconnect.
