What You Need to Know
- RGA had hoped vaccines would get pandemic-related deaths under control.
- Instead, the pandemic has been killing many relatively young, unvaccinated, insured people in South Africa, India and the United States.
- One possible effect: Life insurers may have to pay more for reinsurance.
Reinsurance Group of America posted a net loss for the third quarter as a result of the wave of COVID-19 cases that swept the world this summer.
The Chesterfield, Missouri-based life reinsurer faced a high level of deaths in India and South Africa, as well as in the United States.
Losses at RGA could mean higher premiums for life insurance purchasers.
A life reinsurer acts as an insurance company for life insurance companies: It protects life insurers against high claim costs. If RGA is seeing more deaths related to the COVID-19 pandemic that means that many of its reinsurance customers, or “direct writers,” are paying more pandemic-related claims.
What Your Peers Are Reading
Jonathan Porter, RGA’s global chief risk officer, told securities analysts Friday that RGA is asking for higher life reinsurance prices when it can do so without hurting long-term client relationships.
Porter noted, for example, that RGA can change prices for group life reinsurance every year.
“Generally speaking, that absolutely is being repriced and taking into account the COVID expectations,” Porter said.
RGA is reporting a $22 million net loss for the third quarter on $4 billion in revenue, compared with $213 million in net income on $3.6 billion in revenue for the third quarter of 2020.
The company has large reinsurance operations throughout the world.
RGA faced $235 million in pandemic-related individual life COVID-19 claims in the United States, $161 million in COVID-19 claims in India and $64 million in COVID-19 claims in South Africa.
Because of the high level of COVID-19 mortality, RGA faced a pretax loss of $126 million on $1.6 billion in revenue in the region that includes the United States and Latin America; a $91 million loss on $432 million in revenue in the region that includes Europe, the Middle East and Africa; and a $96 million loss on $626 million in revenue in the Asia Pacific region.