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REINSURANCE GROUP OF AMERICA INC (RGA)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $6.204B, up 9.0% sequentially and modestly above Wall Street consensus, while adjusted operating EPS was $4.66 and adjusted operating EPS excluding notable items reached a record $6.37; management called results “strong, and above expectations.” Revenue beat consensus ($6.062B), but adjusted operating EPS of $4.66 was below consensus ($5.77); ex-notables EPS was $6.37, which the Street does not always model explicitly . Values retrieved from S&P Global.*
  • Annual actuarial assumption review caused an unfavorable current-period impact of $149M pre-tax, largely from EMEA Traditional capped cohorts under LDTI, but added ~$600M to expected future cash flows (long-term value), lifting run-rate earnings by ~$15M in 2026 and gradually to ~$25M by 2040 .
  • Equitable block closed and contributed in-line; guidance for block unchanged at ~$70M pre-tax in 2025, $160–$170M in 2026, and ~$200M in 2027. Deployable capital was ~$3.4B and excess capital ~$2.3B; $75M of buybacks executed at ~$184.58 average price, dividend maintained at $0.93 .
  • Segment standouts: Asia Traditional and EMEA Financial Solutions delivered strong underwriting/longevity margins; U.S. Traditional had modestly unfavorable individual life and expected group claims, partly offset by in-force management actions. Corporate and Other was a headwind on lower variable investment income and higher general expenses .

What Went Well and What Went Wrong

What Went Well

  • Asia Traditional delivered strong underwriting results and premium growth ($880M), with favorable claims experience; adjusted operating income before tax was $138M ($137M ex-notables) .
  • EMEA Financial Solutions benefitted from favorable longevity experience and continued growth, with adjusted operating income before tax of $140M ($116M ex-notables) .
  • Management executed strategic initiatives: closed the Equitable transaction with full-quarter earnings contribution and continued deploying capital into in-force transactions ($1.7B); Tony Cheng: “The record third quarter operating results were strong, and above expectations” .

What Went Wrong

  • Annual actuarial assumption updates created a $149M unfavorable current-period impact, concentrated in EMEA Traditional (segment adjusted operating income before tax of -$192M; $222M notable items), despite positive long-term economics .
  • U.S. Traditional saw modestly unfavorable individual life and expected group claims, partially offset by in-force actions; adjusted operating income before tax $136M ($97M ex-notables) .
  • Corporate and Other posted an adjusted operating loss of -$58M before tax, worse than expected quarterly run rate due to lower variable investment income and higher expenses .

Financial Results

Headline Metrics: Revenues and EPS (oldest → newest)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$5.651 $5.260 $5.599 $6.204
Diluted EPS (GAAP)$2.33 $4.27 $2.70 $3.81
Adjusted Operating EPS (incl notable items)$3.62 $5.66 $4.72 $4.66
Adjusted Operating EPS (ex notable items)$6.13 $5.66 $4.72 $6.37

Consensus vs Actual (Q3 2025)

MetricS&P Global ConsensusActual
Revenue ($USD Billions)$6.062*$6.204
Primary EPS (Adjusted Operating EPS)$5.77*$4.66
Note: Values retrieved from S&P Global.*

Margin and ROE (TTM)

MetricQ3 2024Q2 2025Q3 2025
GAAP ROE (TTM)7.7% 7.0% 7.4%
Adjusted Operating ROE (ex-AOCI, TTM)13.8% 12.7% 13.2%
Adjusted Operating ROE (ex-AOCI & notable items, TTM)15.5% 14.3% 14.2%

Segment Adjusted Operating Income Before Taxes (USD Millions)

SegmentQ3 2024Q2 2025Q3 2025
U.S. & LatAm Traditional$79 $4 $136
U.S. & LatAm Financial Solutions$80 $97 $100
Canada Traditional$30 $28 $43
Canada Financial Solutions$4 $9 $7
EMEA Traditional-$18 $18 -$192
EMEA Financial Solutions$86 $116 $140
Asia Pacific Traditional$11 $104 $138
Asia Pacific Financial Solutions$60 $77 $71
Corporate & Other-$18 -$32 -$58

KPIs and Other Financials

KPIQ3 2025Q2 2025YoY/Notes
Book Value per Share$197.52 $182.37 vs $168.93 in Q3’24
Book Value per Share ex-AOCI$158.67 $155.87 vs $149.63 in Q3’24
Deployable Capital (Est.)$3.4B $3.4B Maintained
Excess Capital (Est.)$2.3B $3.8B (pre-Equitable pro forma $2.3B) Mix shift after Equitable close
Capital Deployed (In-force)$1.7B (incl $1.5B Equitable) $276M Strong pipeline
Share Repurchases$75M @ ~$184.58 —Execution in Q3
Dividend$0.93 declared (pay 11/25/25) $0.93 (raised in Q2 by 4.5%) Maintained
Effective Tax Rate (GAAP)20.3% 47.0% Jurisdiction mix/Q2 one-offs
Effective Tax Rate (Adjusted)19.6% 25.2% Below 23–24% range
Avg Investment Yield (ex-spread)4.73% (Q3) 5.31% (Q2) Lower VII

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax Rate (Adjusted)FY 202523–24% 23–24% (Q3 came in 19.6%) Maintained (Q3 below range)
Equitable Block Pre-tax ContributionFY 2025~$70M ~$70M Maintained
Equitable Block Pre-tax ContributionFY 2026$160–$170M $160–$170M Maintained
Equitable Block Pre-tax ContributionFY 2027~$200M ~$200M Maintained
Group Business Repricing CompletionJan 2026In progress “Fully repriced by Jan 2026” Clarified timeline
Shareholder Capital Return (LT)LT average20–30% of after-tax operating earnings 20–30% of after-tax operating earnings Maintained
Ruby Re Sidecar DeploymentMid-2026“Fully deployed by mid-2026” “Fully deployed by mid-2026” Maintained
Quarterly DividendQ3/Q4 2025Raised to $0.93 in Q2 $0.93 declared in Q3 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Assumption Review & LDTI ImpactsNot presentNot present-$149M current-period under LDTI; +$600M long-term; run-rate +$15M rising to +$25M by 2040 New, with favorable LT
GLP-1/Anti-obesity meds & mortalityNot discussedNot discussedCRO: confidence higher in mortality improvement; aligns with Swiss Re central estimate Emerging positive
Group claims and repricingFavorable biometric $58M econ; some Canada lapses U.S. group healthcare excess headwinds Modestly unfavorable; fully repriced by Jan 2026 Stabilizing by 2026
Equitable block earningsAnnounced; expected mid-2025 close Closed (7/31/2025); capital credits boosted excess capital Full-quarter contribution; portfolio reposition ~75% complete; guidance unchanged Executing/in-line
Ruby Re sidecarNot highlightedActive; pipeline building Another retroceded PRT block; fully deployed by mid-2026 Expanding
Value of In-Force (VIF) capital recognitionNot highlightedExcess capital rose on VIF recognition VIF margins up 16% YTD through Q3; available capital confirmed Building store of value
EMEA asset-intensive & longevityStrong EMEA FS in Q1 Strong EMEA FS growth EMEA FS strong; EMEA Traditional hit by capped cohorts Mixed: FS strong, Trad volatile
Investment yield & VIILower VII in Q1 Higher VII in Q2 VII below expectations by ~$40M; book yield ex-VII slightly lower QoQ Variable

Management Commentary

  • Tony Cheng (CEO): “The record third quarter operating results were strong, and above expectations… Asia Traditional and EMEA and U.S. Financial Solutions [performed well]… We deployed $1.7 billion into in-force transactions… estimated deployable capital of $3.4 billion” .
  • Axel André (CFO): “Pre-tax adjusted operating income, excluding notable items, [was] $534 million… Equitable [portfolio repositioning] ~75% complete… effective tax rate… 19.6% on adjusted operating income before taxes, below the expected range of 23% to 24%” .
  • Jonathan Porter (CRO): “We continue to believe that anti-obesity medications, including GLP-1s, will have a meaningful benefit on population-level mortality… our analysis is generally aligned with [Swiss Re’s] central estimate” .

Q&A Highlights

  • U.S. Traditional claims: ~$30M negative in individual life (normal volatility) and $20M negative in group; premiums impacted by a treaty recapture and in-force actions ($20M positive results effect) .
  • LDTI smoothing: ~15% of Traditional cohorts are capped, creating immediate P&L impacts; smoothing still viewed as beneficial over time .
  • Ruby Re scope: focused on “relatively simple” asset-intensive liabilities (e.g., PRT); additional sidecars possible but aligned with RGA strengths .
  • UK mortality assumptions: increased future mortality expectations (NHS challenges); offset by decreased longevity claims—net economic impact largely neutral within UK .
  • Equitable block smoothing: about 50% of the block benefits from accounting smoothing; guidance unchanged .

Estimates Context

  • Q3 2025 revenue beat consensus ($6.204B actual vs $6.062B consensus), while adjusted operating EPS of $4.66 missed ($5.77 consensus). The company emphasized adjusted operating EPS excluding notable items at $6.37 (record), but sell-side consensus often models EPS including notable items and may not fully adjust for assumption review impacts. Expect Street models to revisit classification of notable items, incorporate lower effective tax rate, and reflect segment strength in Asia and EMEA FS . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Strong underlying earnings power: ex-notables EPS of $6.37 and segment strength (Asia Traditional, EMEA FS) suggest robust core trends despite assumption-review noise .
  • Assumption review created a one-quarter headwind but adds ~$600M to long-term value and lifts run-rate earnings over time; watch EMEA Traditional volatility from capped cohorts under LDTI .
  • Capital deployment remains a catalyst (Equitable in-line; Ruby Re progressing); with ~$3.4B deployable capital and ~$2.3B excess capital, buybacks and selective in-force/new business should continue .
  • Effective tax rate beat (19.6% on adjusted) boosted EPS; management maintains 23–24% full-year expectation—tax mix is a swing factor for quarterly results .
  • Variable investment income was ~$40M below expectations; investment yield tailwinds from new money rates should support book yield as VII normalizes .
  • Group business repricing to complete by Jan 2026; expect profitability improvement thereafter, reducing near-term claims noise .
  • Monitoring items: EMEA Traditional LDTI cohorting, pace of Equitable portfolio repositioning, GLP-1 mortality benefits realization, and VIF recognition across rating frameworks .

Appendix: Supporting Segment Detail (Selected Q3 2025 items)

  • Asia Traditional: Net premiums $880M; adjusted operating income before taxes $138M ($137M ex-notables) .
  • EMEA Traditional: Net premiums $562M; adjusted operating income before taxes -$192M ($30M ex-notables) .
  • EMEA Financial Solutions: Adjusted operating income before taxes $140M ($116M ex-notables) .
  • U.S. & LatAm Traditional: Net premiums $1,883M; adjusted operating income before taxes $136M ($97M ex-notables) .
  • Corporate & Other: adjusted operating loss before taxes -$58M .