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RGA Records $485 Million in COVID-19 Claim Costs

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What You Need to Know

  • COVID-19 led to $340 million in U.S. individual life claims.
  • The level of claims per 100,000 reported U.S. deaths was at the lower end of what RGA had expected.
  • Increased mortality added $11 million to longevity reinsurance results.

Reinsurance Group of America Inc. says it did well in the first quarter despite a big surge in COVID-19 mortality claims.

RGA protects life insurers against the risk that death benefits claims will be higher than expected, and pension plans and annuity issuers against the risk that annuity benefits streams will last longer than expected.

COVID-19 killed about 191,000 U.S. residents in the first quarter, and it has killed a total of about 565,000 people in the United States, according to the U.S. Centers for Disease Control and Prevention.

At RGA, the pandemic led to:

  • $340 million in U.S. individual mortality claim costs.
  • $98 million in claim costs in Europe, the Middle East and Africa.
  • $36 million in claims costs in other regions.
  • $11 million in gains for pension and annuity reinsurance operations.

Thanks to strong results outside of the United States and Latin America, and strong earnings on reinsurance arrangements not linked to mortality throughout the world, RGA posted a profit for the first quarter.

The Chesterfield, Missouri-based company is reporting $139 million in net income for the quarter on $4.1 billion in revenue, up from a net loss of $88 million on $3.2 billion in revenue for the first quarter of 2020.

Anna Manning, RGA’s CEO, said the company’s results show its resilience.

“Beyond the effect of COVID-19, our results were solid,” Manning said, in a comment included in the earnings announcement. “While we expect our results to continue to reflect additional COVID-19 claims, we expect that impact to diminish in the coming quarters.”

Earnings Details

RGA’s U.S. and Latin America traditional reinsurance business is reporting a $344 million adjusted operating loss before income taxes for the latest quarter on $1.4 billion in revenue, compared with a $55 million pretax adjusted operating loss on $1.4 billion in revenue for the year-earlier quarter.

Pandemic-related claims amounted to 24% of U.S. and Latin America traditional reinsurance revenue.

Here’s what happened to the account values for certain types of annuities RGA reinsures between the first quarter of 2020 and the latest quarter:

  • Deferred Fixed Annuities: $10.7 billion (down from $11 billion)
  • Indexed Annuities: $3.4 billion (down from $3.5 billion)
  • Variable Annuities: $3.2 billion (up from $2.7 billion)

The average rate on newly invested money was 3.35%. That was down from 4.2% in the first quarter of 2020, but it was up from 2.79% in the fourth quarter of 2020.

Anna Manning (Photo: Geneva Association)