Reinsurance Group of America, Incorporated

Good day and welcome to the Reinsurance Group of America third quarter 2020 results conference call. Today's call is being recorded. At this time, I would like to introduce Mr. Todd Larson, Senior Executive Vice President and Chief Financial Officer, and Ms. Anna Manning, President and Chief Executive Officer. Please go ahead, Mr. Larson.

Thank you. Good morning and welcome to RGA's third quarter conference. 2020 conference call. With me this morning on the call is Anna Manning, RGA's President and Chief Executive Officer, Elaine Meany, Chief Operating Officer, Leslie Barbee, Chief Investment Officer, Jonathan Porter, Global Chief Risk Officer, and Jeff Hopson, Head of Investor Relations. We will discuss the third 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 statements. Actual results could differ materially from expected results. Please refer to the earnings release we issued yesterday to a list of important factors that could cause actual results to differ materially from expected results. Additionally, during the course of this call, information we provide may include non-GAAP financial measures. Please see our earnings release, earnings presentation, quarterly financial supplement, and website for discussion of these terms and reconciliation to GAAP measures. And now, I'll turn the call over to Anna for her comments.

Thank you, Todd. Good morning, everyone, and thank you for joining our call today. I hope you are all remaining safe and staying healthy. Let me begin by saying that I am extremely proud of the perseverance and commitment that our employees have demonstrated throughout this crisis. Their well-being remains our top priority. Because of their efforts, our global business operations have continued to run smoothly, and we have continued to provide the superior level of support and thought leadership that our clients have come to expect and rely upon. An important part of our purpose is to help support the needs of families throughout the world who are suffering due to an unexpected illness or death of a loved one. Everyone at RGA is extremely proud of the role we play in helping families when they need it most. Turning to the third quarter results, last night we reported adjusted operating EPS of $3.51, which is a very strong performance, especially in the context of this global pandemic. This quarter further demonstrated the resilience and strategic value of our global platform. We have an earnings engine that is well diversified by risk and geography that continues to deliver substantial value as we saw this quarter with favorable performance for many of our key segments and businesses, including EMEA, Asia, U.S. Asset Intensive, and a modest profit in Australia. Included in our consolidated results for the quarter were total global COVID-19-related claim costs estimated at $140 million, which is at the low end of our model's expected range and approximately 30 million of favorable longevity experience. Of the 140 million claim costs, 100 million were in the U.S. individual mortality business, with the remaining 40 million spread amongst our other global businesses. Mortality performance in our U.S. individual business, excluding COVID-19, was better than our expectations this quarter due to very favorable large claims experience. And outside the U.S., overall performance of our traditional business was better than expected, even after including the impact of the pandemic. we will provide additional information on the pandemic later in the call. We completed several capital-motivated transactions in the quarter, which, while not requiring a significant amount of capital, will contribute to our future fee-based earnings. The transaction pipelines are active overall and include opportunities in many of our regions, including North America, Europe, and Asia. we remain active and at work on transaction opportunities. Our approach to capital deployment during this crisis remains prudent, disciplined, and balanced. In summary, we are very pleased with the overall performance this quarter and with the continuing strength and resilience of our global business. As we look forward, COVID-19 remains both a global health and global economic crisis. And there may be more challenges to come as we move through the winter months. But there are also reasons for some optimism regarding improving treatments and eventually vaccines. At RGA, we remain focused on protecting our employees, serving our clients, and supporting the industry and society. A strong balance sheet and earnings engine give us confidence that we can manage through the next phase of the pandemic and Emerge well-positioned to take advantage of future opportunities. We are intent on doing what is necessary to continue to build on our strong track record of financial performance and in creating substantial long-term shareholder value. Thank you for your interest in RGA, and I hope you all continue to remain safe and well. Let me now turn it over to Todd to go over the detailed financial results.

Thanks, Anna. I will review the financial results, investments, and RGA's capital and liquidity position. Beginning with consolidated premiums, we reported premium growth of approximately 1% as we continue to see some temporary slowdown as a result of the impact of the pandemic around the world, as well as a significant anticipated premium reduction in Australian. The effective tax rate on pre-tax adjusted operating income was 20.4% for the quarter, below the expected range of 23 to 24% due to the release of valuation allowances, basis differences in foreign jurisdictions, and favorable adjustments from tax returns filed. Turning to the segment results listed on slide six and seven of the earnings presentation, the US and Latin America, traditional segment earned $22 million pre-tax. This we consider to be a very good result in light of the pandemic. Our individual mortality experience, excluding COVID-19, was favorable. Excess individual mortality claims totaled $60 million, including COVID-19 claims. Let me provide a little more detail. Approximately 100 million of claims are attributed to COVID-19. The approach used to attribute COVID-19 claims is consistent with that used in the second quarter. We have very favorable large claim experience of approximately 85 million, which helped to offset COVID-19 related claims. As we have discussed with you in the past, volatility is an inherent part of our business and part of the value proposition of reinsurance. And this volatility goes in both directions. We also saw an elevated frequency of non-large claims in the quarter. This is consistent with CDC reporting of significant levels of excess deaths in the general population above specifically identified COVID-19 deaths. We believe a portion of which is likely related to COVID-19. Jonathan will provide an update on the pandemic shortly. Also in the US traditional segment, individual health and group businesses in total were slightly ahead of our expectations. Our US after intensive business reported a very good result, benefiting some favorable investment spreads and equity markets. US capital solutions reported an increase in adjusted operating income resulting from new business growth. Moving to Canada, The traditional segment results reflected modestly unfavorable claims experience, primarily due to the impact from COVID-19. Our financial solutions segment performed well, reflecting favorable longevity experience in the quarter. In the Europe, Middle East, and Africa segment, our traditional business results reflected unfavorable mortality experience, primarily driven by COVID-19 claims in South Africa and the UK. Linnea's financial solutions business had a very good quarter, reflecting favorable longevity experience, the majority of which we believe is related to COVID-19. For Asia Pacific traditional business, Asia had a very favorable experience overall. And in most regions, in most regions, COVID-19 related impacts were immaterial, reflecting some moderate benefit to our morbidity experience, offset by a moderate negative impact from our mortality experience. Australia had a modest profit as both individual lump sum and disability income claims experience was better than corrected. Our Asia Pacific Financial Solutions had another good quarter benefiting from the growth of business in Asia. The corporate and other segment reported pre-tax adjusted operating loss of 37 million more than the average run rate, primarily from lower variable investment income and increased interest expense due to the June 2020 senior debt issues. Moving on to investments, the non-spread portfolio yield ended the quarter at 3.66%. Variable investment income was below the average run rate as realizations of alternative investment sales continued to be slower than in previous periods. Our increased cash levels put some downward pressure on yields, active lower new money rates. We believe our portfolio was defensively positioned coming into the crisis. Credit performance continues to benefit from diligent security selection, as well as economic reopenings, policy responses, and open markets. Our portfolio average quality of A was maintained, and credit impairments were modest in the quarter. As shown on slide 10 of our presentation materials, our excess capital position at the end of the quarter increased to $1.5 billion, a robust level providing flexibility as we move through the winter months. Our strong business performance in the quarter absorbed the impact of COVID-19, funded our organic growth, covered the dividend, and added to our net excess capital position. RGA's leverage ratios remain in the at comfortable levels following the second quarter senior debt issuance and our liquidity remains strong with cash and cash equivalents at $3.3 billion. Looking forward, we expect to see some level of ongoing COVID-19 impacts that will negatively affect our earnings until this crisis is resolved. However, we continue to view this as manageable and believe that our strong balance sheet, the power of our earnings engine, and the benefits of our global diversified franchise positions us to emerge from the pandemic in good shape to continue to produce attractive returns to our shareholders over time. I will now turn the call over to Jonathan Porter, our Global Chief Risk Officer, who will provide some thoughts and updates on COVID-19.

Thanks, Todd. I'll be reviewing three topics today, our Q3 COVID-19 model, how our Q2 COVID-19 impacts are tracking relative to updated cause of death reporting, and our longevity results relative to our model expectations. Starting first with the prior quarter, recall that our Q2 COVID-19 claim cost estimates were based on specifically reported COVID-19 claims, adjusted to account for incomplete cause of death reporting, as well as incurred but not reported claims. As Q2 cause of death information has continued to complete in Q3, results are tracking very nicely with this method. We've used the same methodology to arrive at the previously mentioned Q3 estimate of $140 million of pre-tax COVID-19 claim costs. Our COVID-19 estimates only include claim costs that we think will ultimately be reported with a COVID-19 cause of death. Turning to the current quarter, we continue to refine our model assumptions and projections based on data from both our own reinsurance book as well as external sources. Our update this quarter resulted in some underlying pluses and minuses, but on balance there is no change to our claim cost rules of thumb for our major markets. As Anna mentioned, our Q3 COVID-19 excess claim costs are at the lower end of our range this quarter. As a reminder, I will repeat the caveat provided in prior quarters. Our model is based on a number of underlying assumptions reflecting our analysis of internal and external data, as well as the application of expert judgment, and therefore our estimates are subject to a range of uncertainties. I also wanted to provide some insight into our longevity experience this quarter relative to our model expectations. We've previously discussed our estimate of the potential offsetting impact from our longevity business of about 10% of our mortality claims, but with longer reporting delays. Our longevity results in Q3 were approximately 30 million pre-tax better than expected, which is in line with our model expectations. While cause of death information is not reported on our longevity business, we believe most of this experience is COVID-19 related. It is also important to keep in mind that our mortality business and longevity business do not have the same geographic concentration, and therefore, this offset relationship may change depending on country-specific COVID experience. Let me now hand it back to Todd.

Thank you, Jonathan. We'd now like to open it up for your questions.

Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, please press star followed by the digit 1. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star 1, and we'll pause for just a moment. And our first question today will come from Andrew Kligerman with Credit Suisse.

Hey, good morning. So, you know, it seems like we've seen a real heat up of these effectively reinsurance of annuity blocks, whether they're fixed annuities, indexed annuities, variable annuities. And I'm curious as to how RGA might play into that environment. Is that an area of interest to you or would it be something for Langhorne Ray? And, yeah, that's the question.

Good morning, Andrew. Yes, we have been participating in those block transactions for a very long time. Our asset intensive business includes both fixed annuities and asset intensive longevity annuities. And we've also been active in the longevity swap markets around the globe. This isn't new for us. We've won our fair share of those transactions, those blocks that come to market. Perhaps I'll ask Alain to comment on what we're seeing in some of the underlying product lines and perhaps in some of the markets. Alain?

Sure, Andrew. Look, generally, I'd say a healthy pipeline across all of our lines of business. whether it be longevity, financial solutions, or asset intensive, as Anne alluded to. I think in terms of, you know, whether RGA or Langhorne RE, both are equipped to do those types of transactions. We typically have a size criteria in which we separate whether we're going to RGA or Langhorne. But both are able to respond to those needs.

Okay. So do you think that – You know, something sizable could be imminent. Is your appetite a little bigger now?

I think imminent is always a difficult word. You know, these transactions tend to be lumpy in and of themselves. Certainly in this environment, there's potentially a little bit more lumpiness. But we're certainly active with both RGA and Langhorne. Clearly, we haven't closed the transaction yet in Langhorne, but it's not for lack of trying and it's not for lack of opportunity.

Interesting follow-up.

Maybe I should just add a comment as well. I think we're well positioned in those markets. Because for a couple of reasons, because we can support almost all the risks that are sitting on the client's balance sheet. So as I've mentioned earlier, fixed annuities, longevity, mortality. Because we take both insurance risks and market risks. We're comfortable doing both. And I think that gives us a lot of flexibility. And then I think we're also well-positioned because of our differentiators. We're a strong, well-rated counterparty. We have a very good reputation for execution certainty. When you say that we're going to do something, we deliver to our clients. And we have very deep client relationships. That's all helped us win business in the past. We've been at this for a number of decades, and I expect it'll continue to help us win our fair share of these block transactions going forward. Sorry, I didn't mean to cut you off. I think you had a follow-up question.

Yeah, just quickly, and thank you for that follow-up. APAC, the mortality was very favorable there, maybe a little taller around that. and whether you feel that Australia can finally at least remain break-even for the foreseeable future.

I'd love to say that we're going to call this a win in Australia. I still think it's too early. I'll ask Len maybe to provide some comments on what we're seeing there.

Sure. Thanks, Anna. And maybe I will call it a win in Australia. Just from the perspective, the industry obviously still has work to do to get through its issues. So, you know, you're still reading and hearing about some issues in Australia. Certainly, we've been very focused on managing our bottom line, sometimes at the expense of our top line, and so you'll see that we have seen premium come down in Australia. We've been certainly very active on portfolio and claims management, and I think we're seeing results from that. It's probably too early to claim that we're going to see this type of pattern continue and continue to improve. But we're still going to stay the course and continue to actively manage that bottom line. So I'm certainly very pleased with what we've seen so far. And we're going to, you know, remain hard at work. In terms of Asia, a good quarter there as well. We've, I think, talked in the past about treaty reporting in Asia being a little bit lumpy, and so we have had good mortality and morbidity experience, but we've also probably been helped a little bit by some of the lumpiness in the reporting on the bottom line.

Thank you.

Next, we'll move to Humphrey Lee with Dowling and Partners.

Good morning, and thank you for taking my questions. Just about the non-COVID deaths in the U.S., I was wondering if you can provide any additional color in terms of the frequency portion versus the large case portion, anything specific that you saw in the quarter?

Sure. Good morning. In respect of the large claim experience, this was a quarter where we saw both the number of large claims went down and the average size of the large claims went down. So, both worked in the same direction this quarter. As Todd mentioned in his prepared remarks, you know, short-term volatility, inherent part is a part of our business. It goes in both directions, plus and minus. It's good to see it in the plus direction in this quarter. It does tend to smooth out over time, but it is an important part of the value of reinsurance. And in respect of the part of your question about non-large claims on the frequency side, maybe I'll hand it over to Jonathan to talk about what we're seeing out in the CDC reporting and our business.

Yeah, thanks, Anna. So, yeah, we did this quarter, we looked at our claims experience on our smaller size policies and the increased frequency. And, you know, we do believe that it's consistent with what's being observed in the CDC data that Anna mentioned. So, you know, so far this year, the CDC has reported about 80,000 excess deaths that are not tagged as COVID-19 and more than half of those really coming in Q3. So, you know, when we line up those excess deaths and look at a few different metrics of our book of business, the experience we saw come through this quarter is pretty consistent with that. But as I mentioned, we'll see volatility in that number as well. So, you know, just keep that in mind too.

Okay, got it. And then as we think about the, in general, kind of the mobility results in the quarter, Asia definitely has some favorable experience there. And then in the U.S., I believe individual health and group was kind of favorable as well. As we think about the different economies being reopened and then at the same time some of them shutting down again, how should we think about the utilization for some of these health-related products in the fourth quarter?

Yeah, thanks. So you make a very good point. Year to date, we've had favorable aggregate experience in our global morbidity business. Some of that is likely the result of the slowdowns or the shutdowns, the slowdowns in people going to get diagnostic testing and, you know, having medical visits. In fact, we saw something similar during the SARS pandemic. People were staying away from hospitals and other medical visits. And our morbidity experience was favorable through that period. So short term, the impact of this pandemic of COVID on morbidity has been favorable. I will point out, though, that longer term, it's possible that we may see some negative health implications from these COVID survivors, these long haulers. Difficult at this point to estimate and somewhat premature because even the medical experts can't say with any certainty whether the health conditions they're seeing will in fact be permanent. Obviously, we'll continue to closely track it. But bear in mind, though, that any negative long-term morbidity impacts are likely going to be less material than our mortality impacts just given the profile of our business, the footprint of our business.

Yeah, I appreciate the cutoff. Thank you.

Next, we'll move to Eric Bass with Autonomous Research.

Hi, thank you. A couple of quick follow-ups. Just with your excess capital at $1.5 billion, talking from your comments, do you feel like you're in a position to put some of that to work if attractive opportunities emerge, particularly for block deals?

Yes. As I mentioned in my prepared remarks, you know, our capital management through this crisis is really one of being prudent and cautious, but we are active at looking at transactions and, you know, the attractive opportunities are something that we continue to pursue.

Thanks. And then the excess mortality in the CDC data. It sounds like some of this is certainly COVID-related. I guess, do you have any more sense of what's driving this, and is it all related to the pandemic, or is some of it kind of the trend that we've seen of worsening kind of population mortality and something that could continue post the pandemic?

I'll maybe provide some brief comments and then I'll ask Jonathan to weigh in. It's very hard to separate out the cause of all of those non-COVID specific excess deaths that are being reported in the population. I don't think it's unreasonable to assume that some of them might be unreported COVID claims. There's a lot of inconsistency in the state level reporting and the local level reporting. Some may be indirectly linked to COVID. So think about people who are delaying, you know, visiting their doctor or delaying going to hospitals. So, although they're being reported as excess non-COVID related, you know, I would be cautious in interpreting that. Jonathan, is there anything else that you'd like to add?

Yeah, yeah, maybe we'll just talk about, you know, what we might expect to see. So, yeah, I mean, I agree, it's hard to determine, you know, what level of excess will continue in the future. You know, there definitely seems to be, and you can see this on the graph, I think, that we provided from CDC. you know, correlation between the level of COVID-denoted deaths and the excess deaths, which I think could lead to the conclusion that some of these are definitely related to COVID. I think, as Anna said, it's likely in the short term that we will continue to see, therefore, some excess deaths in the U.S. But, you know, we are looking at data in other countries, too. So we've seen, you know, specifically, for example, the U.K., excess deaths have reversed, you know, post the large spikes in COVID mortality. So, you know, it's not clear, I guess, to what extent these may or may not continue in the future, but, you know, based on other countries' information, things have turned around.

Thanks.

Todd, just quickly, do you have an estimate of how much ongoing impact will be on the top line from the higher level of mortality claims? I would assume that does have some impact on premiums.

Yeah, I think, you know, in the near term, we'll see some impact on the top line as we, you know, go through this. I don't have a specific estimate of how much that could be. It's sort of hard to estimate.

Okay, thanks.

Next, we'll go to Ryan Krueger with KDW.

Hi, good morning. In the COVID sensitivity that you provided, did that include anything for COVID-related but not reported, I guess, excess mortality that you're seeing right now, or was that just very specific to COVID deaths?

As Jonathan mentioned in his prepared remarks, It is specific to deaths that are coded as COVID and we estimate will eventually be coded as COVID as the cause of death completes. It does not include any of the excess frequencies of what's being reported as non-COVID deaths. Jonathan, have I accurately described what we've included in our estimates.

Yeah, that's exactly right. So as an example, the $100 million that we attributed to COVID in the U.S. would just be looking at COVID reporting as opposed to including an amount for the excess deaths as well.

Thanks. I mean, it's another way to think about it that I guess so far COVID deaths seem to be trending towards the low end of the sensitivity. We're getting these additional deaths that are not coded as COVID, but maybe when you add those two together, it's still somewhere in the range that you've given?

Yeah, I mean, I think it depends what you use as the denominator, right, in that calculation. Well, sorry, the denominator and the numerator. So if you include what we think excess claims would be coming in because of these excess deaths, I think we still would be at the low end of the range. But if you only take the higher claims but use only the COVID-reported deaths, then, yeah, you might be higher in range, but still within it.

Okay. Thanks. And then just one last one. Excess capital increased $300 million in the quarter. You had good earnings, obviously, but that seemed like a pretty big increase. Do you have any more color on what drove that?

It actually increased by $100 million from $1.4 to $1.5 billion. It was primarily the earnings generation in the quarter, the net earnings in the quarter, some deployment into organic business growth, and then you know, the amount of dividends we paid out. Got it. Thanks.

And next, we'll move to John Barnage with Piper Sandler.

Thank you very much. Now that you're a couple quarters into this pandemic, how do you think about growth in the lens of are you seeing any signs that there's a secular tail intermerging for demand of life products? And then on the flip side, primary life insurers wanting to utilize more reinsurance to have less exposure. Thank you.

Yes. So, sorry. Hello? Hello?

Yeah, go ahead, Anna.

Oh, thank you. I think I'll turn that over to Len to provide some comments on what we're seeing in the various markets around the globe.

Sure. Thanks, Anna. Certainly, I think that you're seeing direct companies talk about higher sales, and I think that's natural to think or to see, given the slowdown that we've seen through COVID. I think the big question is, you know, how much of that will persist once we get through what I'll call the catch-up. I think there's certainly a hope and a belief in the industry that as digital takes hold – we'll see more sales in that underserved middle market. People will wake up and realize that they need insurance. So I'd like to think that that will persist, but I think it's probably a little too early to tell. In terms of the use of more reinsurance or less, I don't think we're seeing any particular change yet. You know, there's nothing significant that's happened in terms of any of our reinsurance pools or anything like that over the course of the last few months. And I wouldn't anticipate that any material would happen. Certainly seeing quite a bit of activity on the transactional side as companies look and try to manage their own balance sheets, as we talked about earlier, but that there's an element of lumpiness to that.

Great. Thank you very much. If I could add just one other thought, one other thought as a, As economies recover, we'd expect to see growth in some of the credit-based products that we've naturally followed. And those are very popular products in many parts of Europe and the U.K. And we'd add maybe as travel mobility comes back in Asia, we'd expect sales of protection products in markets like Hong Kong to benefit. And finally, I see, you know, the potential for opportunities, for growth opportunities on the organic side around designing consumer products that are better suited for this low and likely low and long interest rate environment, product opportunities for simple and affordable products for the consumer that better align with their needs and with their resources. So I think product innovation will accelerate as a result of the virus, and product innovation is something we're already doing and we're very good at.

Next, we'll move to Dan Bergman with Citi.

Thanks. Good morning. I guess first, could you provide a little more color on the favorable variable investment income in the quarter? What were the key drivers and how much impacted corporate versus the other segments? And just given the market's been pretty volatile lately, just any updated thoughts on how that portion of the investment income might trend into the fourth quarter and ahead?

Right. Why don't I ask Todd to address the first part of your question, which is with our experience in the third quarter, and then ask Leslie to provide some thoughts on the go-forward environment.

Yeah, Dan. If you look at the third quarter and look at sort of a historical run rate for the variable investment income, which it does bounce around a little bit, we were probably Approximately $14 million off pre-tax of that historical, more recent run rate. If that helps put it a little bit in context for you. And that was primarily in the traditional segment and some in corporate.

Hey, Dan, this is Leslie. Oh, sorry, Anna. Okay. Go ahead.

So, Dan, thank you for that. And so looking at the go forward, what's important to know, I think, is that our underlying asset base that creates a variable investment income is still there and is still expected to produce the type of returns that we have over time at that run rate. it's harder to push it in shorter periods of time. But given that our activity in those markets has picked up again overall, I think we'll start to see a trend back towards our run rate and hopefully in the fourth quarter.

And Dan, maybe I'll just add one more point. We feel most of the value is still there. It's more You know, we account for most of these alternative investments on a cost basis, and we only realize or recognize the income, and we actually realize the sale of the underlying, you know, venture or property, you know, versus marketing the market, you know, each quarter. So, these are most of the values, so they're going to be more of a timing issue.

Got it. Thanks. That's really helpful for both of you. I guess maybe moving to corporate, just given all the recent moving pieces, like the debt issuance and the impact of the pandemic on the expense level, things like that, I just wanted to see if you had any update on how we should be thinking about where that corporate loss might trend over the next couple quarters.

Yeah, we have been indicating, as you know, on average, the $25 million loss range, which is still a pretty good place to start, and then maybe add in Since we raised the proceeds back in June, we haven't fully invested those in the longer term. So there's a little bit of a drag here from the interest expense on the debt. So it's going to be probably a little bit elevated the next couple of quarters or so, and then we'll provide you with better, more up-to-date guidance as we do every year in the early part of next year. Got it. Thanks so much.

And next we'll hear from Brian Meredith with UBS.

Thanks, guys. This is Mike Ward on for Brian. So I appreciate the commentary about the potential for deploying capital into some blockchain transactions going forward, but I was just curious, you know, with your stock trading at about 20% discount to book value currently, just wondering if there are certain hurdles we need to cross with respect to COVID mortality or even the economy before you might consider resuming some of the repurchases.

Yes. So, as you know, we halted our share buyback program in the second quarter. We'd like to see increased clarity. We'd like to see a reduction in the level of uncertainty on the virus front and on the economic front. Let's get through the next quarter too, through the winter months. We'll remain focused on maintaining our financial strength and flexibility through that period. And we'll address share buybacks as part of our capital management strategy. That's the framework we'll use to make decisions. We'll look at the specific opportunities. We'll look at returns, other potential uses of our capital, including, you know, the opportunities in the pipeline, dividends, share buybacks. Our framework, I think, over time has resulted in a very good balance between deploying back into the business and then returning it to shareholders through dividends and share buybacks. And we'll continue to use that strategy and that framework going forward. But as I said, we'd like to see the uncertainty of reduction and a material reduction in the uncertainty and clarity as to an end to this crisis.

Thanks, that's really helpful. And then just a quick one on operating expenses or consolidated G&A. If I'm recalling correctly, I think lower expenses last quarter contributed about 50 cents to the quarter. This quarter, maybe it looks like it was a little bit around half of that. So just wondering if you could comment at all on your expectations, you know, going forward. Have there been opportunities you've taken maybe to keep some of those expense savings ongoing?

Yeah, this is Todd. What we saw in the second quarter was, you know, given the impact of COVID, et cetera, we did have some material, you know, true-ups to incentive comps, both short-term and, you know, long-term programs. And then I saw some savings on travel and entertainment. What we saw this quarter was more related to travel programs. entertainment savings and some savings on bringing on new employees and some maybe delayed project activity and that type of thing. I think it's probably reasonable to assume that as we go through the next couple of quarters or so that certainly the travel and entertainment expenses will continue to stay at lower levels given nobody's really traveling and etc. I think we'll continue to see some But it won't be as material as what you saw in the second quarter. And it's probably more similar to what we saw in this quarter.

And maybe longer term, you know, it's not unreasonable to expect that some of those travel entertainment costs will become permanent savings. I also think we're learning a lot in this virtual working environment, and we might see some, you know, improving cost footprints around our real estate. We're looking at all elements of our operating model, and I would expect that what, you know, what we're seeing, some of that will come back, but other parts will remain permanent savings.

Yeah, and maybe in this quarter, in this quarter, too, just the size, I would size the, so the savings that at least the way we look at it was more in the, say, the 15 to 15 or so million range. I'm not sure what number you quoted for the quarter, but I'd size it more around 50 million, 15 million plus a month. Thank you.

And that will conclude the question and answer session at this time. I would like to turn the call back over to Mr. Larson for any additional or closing remarks.

Okay, thank you. Well, thank you, everyone, for your continued support and interest in RGA. And that will conclude the call. Thank you very much.

And that will conclude today's call. We thank you for your participation.