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Currency fluctuations ding RGA earnings

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Reinsurance Group of America Inc. managed to increase net income and revenue in the fourth quarter in spite of the effects of low interest rates and volatility in foreign exchange rates.

The Chesterfield, Missouri-based life reinsurer is reporting $190 million in net income for the fourth quarter on $2.5 billion in revenue, up from $163 million in net income on $2.3 billion in revenue for the fourth quarter of 2015.

A reinsurer provides insurance for insurers. In some cases, it helps an insurer manage the risk involved with writing new business. In other cases, a reinsurer may assume responsibility for entire blocks of in-force policies.

RGA reinsures annuities as well as life insurance policies.

Related: Reinsurance and insurance markets are changing rapidly

Currency fluctuations in RGA’s European, Middle Eastern and African business cut overall revenue by about $37 million, and low interest rates continued to hurt the average yield on RGA’s investment portfolios.

RGA’s annualized investment yield increased to 4.69 percent for the fourth quarter, from 4.43 percent in the third quarter. But the average was still lower than the very low average of 4.69 percent the company reported for the fourth quarter of 2015.

In the United States and Latin America, pre-tax net income increased to $132 million in the fourth quarter of 2016, from $79 million in the year-earlier quarter. Investment income in the region improved, and individual life mortality looked a little better, RGA said.

Anna Manning, RGA’s president, said in a statement about the results that RGA completed a number of deals for blocks of in-force business during the year.

“But the size of the deals on average was smaller than in recent years,” she said. 


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