Reinsurance Group of America, Incorporated

Good day and welcome to the Reinsurance Group of America First Quarter 2020 Results Conference Call. Today's call is being recorded. At this time, I'd like to introduce Mr. Todd Larson, Senior Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you. Good morning, everyone, and welcome to RGA's First Quarter 2020 Conference Call and our first Working From Home Conference Call. With me this morning on the call is Anna Manning, RGA's President and Chief Executive Officer, Alan Meany, Chief Operating Officer, Leslie Barbee, Chief Investment Officer, Jonathan Porter, our Chief Risk Officer, and Jeff Hobson, the Head of our Investor Relations. Considering the unprecedented environment, we have included additional members of our management team on the call and made available an earnings presentation supplement this quarter which we will be referring to during the call to provide more information on our investment portfolio and our global mortality exposures, amongst other things. We will discuss the first quarter results after a quick reminder about forward-looking information and non-GAAP financial measures. Following our prepared remarks, we'll be happy to take your questions. Some of our comments or answers to your questions may contain forward-looking information and statements. Actual results could differ materially from expected results. Please refer to the earnings release we issued yesterday for a list of the important factors that could cause actual results to differ materially from expected results. Additionally, during the course of this call, the information we provide may include non-GAAP financial measures. Please see our earnings release, earnings presentation, quarterly financial supplements, and website for discussion of these terms and reconciliations to GAAP measures. And now I'll turn the call over to Anna for her comments.

Thank you, Todd. Good morning, everyone. These are extremely challenging times for all of us, and particularly for those who have lost loved ones during this pandemic. Our thoughts are with them and with all of those on the front lines of this crisis who are bearing a disproportionate share of the burden. At RGA, we're focused on supporting our employees, our clients, and our communities. Millions of families around the world rely on the financial support that insurance companies provide in times like these, and RGA remains committed to helping our clients meet our shared responsibilities to those families. RGA is also supporting COVID-19 global response efforts through grants from the RGA Foundation. Like others, we have been operating with most of our employees working from home. I am pleased to report that our operations are functioning normally. the RGA teams have risen to the challenge of working remotely, and we are very proud of what they have accomplished. Although there remain many unknowns, RGA entered the pandemic in a position of strength. We have a strong balance sheet, our investment portfolio is defensively positioned, we have ample liquidity, and an excess capital position of approximately $700 million. We have a resilient global operating platform, a business that is well diversified by geography, product, and risk, a leading brand, and a strong track record of success. In short, I believe we have the best life and health team in the global reinsurance industry, and I'm confident that this team will manage through the challenges ahead and come out strong. Moving to our first quarter. Our operating results were below expectations as we reported adjusted operating EPS of $1.41 for the quarter compared to $2.61 a year ago. We also reported a net gap loss of $1.41 per share, which in part reflects the accounting treatment for a number of items that are directly attributable to the turmoil in the financial markets. Todd will provide a more comprehensive commentary on these elements but I would note that as financial markets stabilize, we would expect to see a reversal of some of those items over time. In the quarter, the two biggest sources of negative variance in our operating results were elevated U.S. individual mortality claims and very low levels of variable investment income. Elevated claims in our U.S. individual mortality business were largely the result of a higher than expected frequency of smaller claims. even after adjusting for normal seasonality and the impact of the leap day this year. As discussed at our recent investor day, the impact of seasonality has increased in recent years as our block ages, which impacts the pattern of earnings emergence throughout the year. The excess claim impact was highly concentrated at ages 70 and above, And as briefly outlined in our earnings release and earnings presentation, while cause of death and definitive COVID-19 impacts are difficult to establish, especially in the early days of the pandemic, we believe that some of these additional claims might have been directly or indirectly related to COVID-19. On the positive side, most of our other segments and businesses performed well in the quarter, including the traditional segments in Canada and EMEA, Asia Financial Solutions business, our U.S. group business, and our Australia business performed better than expected and produced a modest profit. Throughout the quarter, we continued to support our clients and executed on several in-force transactions, deploying $55 million in capital. The pipeline remains very good across all our major regions and product lines. Going forward, you can expect that we will continue to execute unattractive transactions following our disciplined approach of pursuing those that best align with our capabilities and advantages. Let me comment on COVID-19 more broadly. As we work our way through this pandemic, we do expect to see additional COVID-19 claims as well as claims from other causes of death that are accelerated or exacerbated by the pandemic. While the ultimate level and timing of claims is difficult to predict, we believe that our financial strength positions as well for a wide range of potential stress scenarios. Our chief risk officer, Jonathan Porter, will provide more in-depth comments later in this call. We recognize that we are in unprecedented times and that there are a range of uncertainties that will play out over time, including economic effects and societal changes. Through this, we will likely see some ongoing financial impacts, but believe that the effects are manageable given our strong financial position and the demonstrated ongoing earnings power of our global business. RGA's talented teams give me confidence that we will manage through the challenges ahead of us and that we can deliver on our promises of creating long-term value for all our stakeholders. Thank you for your interest in RGA, and I hope you all remain safe and well. And with that, I'll hand it back to Todd to provide more detail on our results.