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Reinsurer Sees COVID-19 Delta Variant Still Driving Mortality

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What You Need to Know

  • RGA insurers life and annuity issuers against catastrophic losses.
  • It reported $156 million in total Q4 net income on $4.4 billion in revenue.
  • It suffered a $215 pretax adjusted operating loss in the U.S. and Latin America unit, mainly because of $276 million in COVID-19 pandemic-related mortality claim costs.

Reinsurance Group of America — a company that insurers life and annuity issuers around the world against catastrophic losses — says the fourth quarter of 2021 was a bad quarter for U.S. mortality.

The Chesterfield, Missouri-based company reported higher net income for the quarter on higher revenue.

But the arm that serves the United States and Latin America posted a big net loss, mainly because of the cost of about $276 million in claims related to the pandemic. The total included $25 million in U.S. group life claim costs.

That was up from $250 million in COVID-19 mortality claim costs in United States and Latin America in the third quarter of 2021.

RGA executives talked about the continuing effects of the pandemic on U.S. and pandemic mortality recently, during a conference call the company held to go over fourth-quarter results with securities analysts.

Most of the U.S. life claims arriving in the fourth quarter seemed to be due to the deadly COVID-19 delta variant, according to Jonathan Porter, RGA’s chief risk officer, said during the conference call.

Porter declined to make specific predictions about what the highly infectious COVID-19 omicron variant might do.

“I think it’s still too early,” Porter said. “There is no credible data yet that we can point to.”

Preliminary reports suggest that the omicron variant may cause less severe illness than the delta variant, and the number of new omicron cases now appears to be falling in many markets, Porter said.

But “COVID-19 general population deaths remain at elevated levels in January due to the very high number of infections caused by the omicron variant,” Porter said. “This will result in additional mortality claims. We do expect to see deaths decline from the current levels over the remainder of Q1, consistent with the current drop in cases.”

Anna Manning, RGA’s CEO, said she is proud about what of what the company has achieved during difficult times.

For RGA, “the quarter is a story of continued strong underlying performance, active capital management and favorable business momentum, while absorbing a meaningful level of COVID-19 claim costs,” Manning said.

RGA streamed the conference call live on the web and has posted a recording in the investor relations section of its website.

The Numbers

RGA is reporting $156 million in net income for the fourth quarter on $3.4 billion in revenue, up from $132 million in net income on $3.3 billion in revenue for the fourth quarter of 2020.

The company has large reinsurance operations throughout the world.

In addition to the COVID-19 claim costs in the United States and Latin America, RGA recorded COVID-19 claim costs in other countries and regions:

  • Canada: $10 million
  • Europe, Middle East and Africa: $61 million
  • Asia Pacific: $4 million

The U.S. and Latin America arm recorded a $215 million pre-tax adjusted operating loss on $1.7 billion in net premiums, compared with an $89 million operating loss on $1.6 billion in net premiums for the fourth quarter of 2020.

Although COVID-19 life insurance claims ran high, U.S. individual health results were better than expected, and real estate joint ventures produced strong variable investment income.

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Anna Manning (Photo: Geneva Association)