Executives at Reinsurance Group of America Inc. said they are unhappy with the recent performance of part of the company’s employer group disability excess reinsurance business and its group health care excess reinsurance business.
RGA executives talked about the performance of the units last week, during a conference call with securities analysts.
The Chesterfield, Missouri-based reinsurer held the call to go over earnings for the second quarter.
Todd Larson, RGA’s chief financial officer, and Anna Manning, RGA’s president, said they saw a higher incidence of claims at the group disability excess operation, and some reopened group disability claims.
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Larson said the group disability excess reinsurance treaties, or contracts, give RGA the ability to increases prices every year.
“We have been repricing, and we’ll continue to reprice, this business, as appropriate,” Larson said.
A reinsurer can write quota share reinsurance, or reinsurance set up in such a way that the reinsurer shares a fixed percentage of the direct insurer’s premiums and claims.
When a reinsurer writes excess reinsurance, the reinsurer agrees to pay the direct insurer after claims exceed a minimum level, until the claims reach a specified maximum level.
Manning said that, in the group health sector, RGA has been having trouble with health excess reinsurance. She said the concerns involve the performance of major medical coverage that’s subject to Affordable Care Act underwriting and benefits rules.
“We’ve taken what we think of as a measured approach to supporting some of these ACA-related businesses and Medicaid expansion businesses,” Manning said. “Our approach has been to limit our exposure to this business toa small portion of our total U.S. group business. There is volatility there, as I’m sure you’re well aware, around that business.”
Some of that volatility has now shown up in RGA’s own results, Manning said.