Posted on Feb 01, 2011 by Sergio Ulloa
Reinsurance Group of America, Inc. (RGA), the life reinsurer, reported a strong improvement in net income during the fourth-quarter of 2010 amounting to US$196.7 million. This compared to net income of US$112.41 million delivered for the same period in 2009 reflecting a near 75 percent increase in profit for the comparable period last year.
The Missouri-based insurer's surge in year-on-year profit was down to a jump in net written premiums resulting from improvements in market conditions coupled with cost containment and benefits from currency fluctuations. Sales totalled US$2.3 billion in the fourth quarter of 2010 - an increase of 21 percent on earnings compared to US$1.9 billion in the fourth quarter of 2009.
RGA - a multinational life reinsurance specialist - strong fourth quarter earnings contributed to the generation of an annual profit of US$574.4 million in 2010 - up from US$407.1 million achieved in 2009.
RGA's President and Chief Executive Officer, A.Greig Woodring said: "We are pleased with our results for the fourth quarter and 2010 overall. For 2010, we posted double-digit growth in net premiums and operating income per share. Claims experience was in line with expectations on a consolidated basis. Book value per share increased 30 percent for the year, reflecting strong net income and improved market conditions. Investment impairments were significantly reduced from 2009 levels."
In the USA, RGA's principal market, the company reported pre-tax net income of US$113.3 million during the fourth quarter of 2010; this compared with US$74.3 million in the same period of 2009 when bottom line results were weakened by higher-than-expected claims. Net premiums in the fourth quarter of 2010 totaled over US$1 billion, which included US$70.4 million from the reinsurance business; in 2010 net premiums totaled US$3.77 billion including US$286.6 million from the US reinsurance business.
Operations in Canada saw RGA's 2010 fourth quarter pre-tax net operating income total US$36.6 million - a 19 percent increase on 2009 when a comparable figure of US$30.7 million reflected favourable mortality experience in 2010.
RGA's European and South African fourth-quarter pre-tax net income grew to US$35.4 million, up from US$24.5 million in 2009. The life reinsurer reported that positive net income figures for these regions was due to favorable levels of claims experienced across all market segments. European and South African net premiums climbed to US$258 million in 2010, up from US$224.5 year-on-year driven up by strong production in the UK and a number of other European markets.
Asia Pacific operations generated pre-tax net income of US$10.1 million - a decline from 2009 fourth quarter pre-tax net income of US$23.5 million. The steep decline in RGA's Asia Pacific results was primarily due to higher-than-expected group disability claims in Australia. Net premiums for the region increased to US$322.5 million from US$283.4 million year-on-year, with RGA experiencing strong production in Japan and Australia coupled with favorable foreign currency fluctuations.
Additionally corporate and other reported pre-tax net income totalled US$18.4 million, with pre-tax operating income of US$7.3 million in the fourth quarter of 2010. These results included investment income and realized gains and losses associated with unallocated assets, debt servicing costs and miscellaneous corporate activities.
RGA forecasts allow for a possible weakening in operating income for 2011 based on predicted levels of death claims effecting quarterly and annual results in the short term, although consolidated net premiums are expected to increase by 8 to 10 percent.
RGA strengthened its presence in North America in recent years when it acquired ING Groep N.V. a subsidiary of ReliaStar's U.S. and Canadian group life, accident and health reinsurance business. The acquisition was completed in early 2010 with ReliaStar's U.S. and Canadian group life, accident and health reinsurance business being structured as an indemnity coinsurance business.
The Reinsurance Group of America provides individuals and groups with life, annuity, asset-intensive, critical illness, and financial reinsurance solutions in the United States, Canada, Europe, South Africa, and the Asia Pacific region. RGA is also engaged in providing reinsurance for life insurance products which includes life, credit life, whole life, group life, universal life, joint and last survivor insurance. There US reinsurer also offers critical illness and financial reinsurance.
RGA is one of the largest global life insurers and has a network of subsidiaries in Australia, Barbados, Bermuda, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Mexico, the Netherlands, Poland, South Africa, South Korea, Spain, Taiwan, the United Kingdom and the United States. Within RGA's operations, a total of approximately US$2.5 trillion is held in life reinsurance and US$29.1 billion in assets.
As an international reinsurer, RGA competes with the Munich Reinsurance Company, Generali Re, Swiss Re Life and Health Ltd and Hannover Reinsurance.
Insurance Companies Mentioned:
Reinsurance Group of America
The Reinsurance Group of America was founded in 1973 and is one of the leading global life reinsurance companies, with more than US$2.4 trillion of life reinsurance in force and assets of US$29 billion. RGA serves clients from 27 offices around the world, delivering expert solutions in life reinsurance, facultative underwriting, risk management, product development and capital-motivated reinsurance services.
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. It operates in all lines of insurance, with around 47,000 employees throughout the world. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. The primary insurance operations are mainly concentrated in the ERGO Insurance Group. ERGO is one of the largest insurance groups in Europe and Germany and 40 million clients in over 30 countries place their trust in the services and security it provides. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand.
Swiss Reinsurance Company Ltd was established in 1863 and is present in more than 20 countries. Swiss Re provides reinsurance products and financial service solutions. It offers various reinsurance products covering property, casualty, life, health and special lines - such as agricultural, aviation, space, engineering, HMO reinsurance, marine, nuclear energy, and special risks.
Hannover Re is the third-largest reinsurer in the world, with a gross premium of around EUR 10 billion. It transacts all lines of non-life and life and health reinsurance and maintains business relations with more than 5,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices on all five continents with a total staff of roughly 2,100.