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RGA Sees Strong Competition for Annuity Reinsurance Deals

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Executives at Reinsurance Group of America Inc. say competition for annuity and pension reinsurance business is strong.

RGA executives talked about the state of the longevity deal market Friday, during a conference call with securities analysts.

(Related: Reinsurers Have Traded $60 Billion in Longevity Risk: Rating Agency)

Anna Manning, the president of the Chesterfield, Missouri-based life reinsurer, told the analysts that the performance of reinsurance arrangements reinsuring U.S. individual life insurance was strong in the third quarter,

Manning also told the analysts that RGA made two large annuity deals during the quarter.

One was for individual annuities that are in payout status, and another was for a block of fixed deferred annuities. The larger of the two blocks was backed by $2.8 billion in assets, Manning said.

“Competition was strong on those deals,” Manning said.

RGA’s deal pipeline is strong, both in North America and Europe, and rising interest rates could increase the deal flow, Manning said.

One analyst asked Manning about blocks of long-term care insurance business.

“We just don’t think we’re the best buyers for the legacy blocks,” Manning said. “They remain low on our priority list.”

Analysts also asked RGA executives about the Langhorne Re joint venture that RGA formed in January with RenaissanceRe Holdings Ltd.

Manning suggested that, typically, RGA would handle deals involving less than about $5.6 billion in assets. Langhorne Re might handle deals that involve more than about $5.6 billion in assets.

“We are seeing a good pipeline for those larger deals,” Manning said.


RGA held the call to go over third-quarter earnings.

The company is reporting $301 million in net income for the quarter on $3.2 billion in revenue, compared with $228 million in net income on $3.1 billion in revenue for the third quarter of 2017.

The company’s provision for income taxes fell to $21 million, from $113 million for the third quarter of 2017.

Tax spending fell partly because RGA previously had prepared for the effects of the Tax Cuts and Jobs Act of 2017 by setting aside large valuation allowance. In the third quarter, RGA released the valuation allowance. That helped increase earnings.

— Read Reinsurer Hungry for Big Life and Annuity Blockson ThinkAdvisor.

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