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Reinsurance Group of America (RGA) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Aug 7, 2026

Source: earnings call transcript

Executive summary

Reinsurance Group of America Q2 FY26 — Record Operating Quarter Driven by Strong Investment Returns and New Business

RGA reported a record operating quarter, driven by robust investment performance and the continued contribution from recently written new business across all regions. The company demonstrated disciplined capital deployment into high-return in-force transactions while also returning significant capital to shareholders. Management remains confident in achieving its intermediate-term financial targets, leveraging its strategic advantages and healthy pipeline.

Highlights

5

  • Delivered a record operating quarter with pretax adjusted operating income of $761 million or $8.89 per share after tax.

  • Achieved an adjusted operating return on equity of 18.4% over the trailing 12 months, excluding AOCI and notable items.

  • Investment results were excellent with a new money rate of 6.2% and annualized Variable Investment Income (VII) returns of 15% for the quarter, well above the 7% target.

  • Reduced exposure to U.S. capped cohorts by 25% since LDTI adoption, improving earnings profile and reducing volatility.

  • Returned $111 million to shareholders this quarter, including $50 million in share repurchases and a 5.4% dividend increase.

Concerns

2

  • Traditional premium growth was impacted by in-force management actions, resulting in 2.2% reported growth and 0.9% constant currency growth.

  • One-time items across all segments contributed $71 million to earnings this quarter, which are not indicative of a trend and are expected to net closer to zero over time.

Guidance & targets

CategoryTargetConfidence
Intermediate-term EPS growth
8% to 10%
high materiality
High
Intermediate-term Adjusted Operating ROE
13% to 15%
high materiality
High
Intermediate-term Payout Ratio
20% to 30%
medium materiality
High
Full-year 2026 Variable Investment Income Return
7%
medium materiality
High
Excess Capital for Debt Paydown
$400 million
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
U.S. and Latin America
Traditional business saw solid underlying growth, with in-force management actions impacting reported premium growth but improving the earnings profile. Total U.S. premium, excluding PRT, grew approximately 8% for the quarter and year-to-date.
Individual Life Claims Experience: favorableVariable Investment Income: strongU.S. Group Claims: in lineU.S. Group Repricing: on track to deliver solid results through 2026Financial Solutions Results: favorable primarily due to VII, in-force actions and longevity experience
————
Canada
Both traditional and financial solutions businesses performed well, with financial solutions benefiting from strong variable investment income.
Traditional Earnings: in line with expectationsFinancial Solutions Results: favorable due to strong VII
————
Europe, Middle East and Africa (EMEA)
Outperformed expectations, with higher investment income contributing to results and overall claims trends in line. New business momentum continued with several transactions completed.
Traditional Results: favorable, driven by onetime itemsFinancial Solutions Results: favorable, driven by higher investment income
————
Asia Pacific
Produced another excellent quarter, driven by continued earnings contribution from new business and additional investment income. Closed several notable deals in Hong Kong and Japan.
Traditional Results: healthy, driven by new businessFinancial Solutions Results: favorable VII and strong contribution of new business
————
Corporate and Other
Adjusted operating loss was better than expectations due to strong variable investment income and lower financing costs.
———Adjusted operating loss before tax: $35 million

Deals & partnerships

key client Helped client launch a new product addressing growing longevity needs, leveraging RGA's differentiated biometrics and investment capabilities.

Showcases RGA's ability to combine product development leadership, biometric expertise, risk-sharing design, and local execution.

Continental Europe Added to asset-intensive markets in Continental Europe with a new transaction.

Important step in growing regional presence, showcasing differentiated asset capabilities and strength of brand and teams.

Risks & headwinds

Potential slowdown in MCV business in Hong Kong due to changes in tax law from the Chinese government. Ongoing

Too early to comment on impact.

Mitigation:RGA's Hong Kong business is more protection-oriented with less investment income; company will observe evolution.

Earnings volatility from exposure to capped cohorts. Ongoing

Exposure reduced by 25% since LDTI adoption.

Mitigation:Active in-force management actions and natural runoff to continue reducing exposure; priority to improve business profile and returns.

Reliance on one-time items for earnings benefit, which are not indicative of a trend and expected to net closer to zero over time. Short-term

$71 million benefit in Q2 FY26.

Mitigation:Management acknowledges these are not recurring and expects them to normalize.

What to watch in Q3 FY26

Ruby Re Deployment and Next Sidecar Vehicle

When appropriate
Current Ruby Re expected to be fully deployed this year.
Target Announcement of options and structures for next sidecar vehicle.

Why it matters

Third-party capital is a core element of RGA's capital management strategy, enhancing flexibility and funding growth.

Specific to Ruby Re, we expect to be fully deployed this year, and we are evaluating options and structures for our next side car vehicle, which will provide more updates on when appropriate.

Find out whether RGA delivers this. Inve re-checks your case every morning.

Q&A highlights

How to reconcile modest decline in traditional premium growth with stated doubling of underwriting program volumes in the U.S.?

Laura explained that in-force management actions impacted reported traditional premium growth, but underlying growth remains solid. Total U.S. premium (ex-PRT) grew 8% for the quarter and YTD, which is a more indicative measure of underlying growth, combining traditional and financial solutions. Tony highlighted that strategic underwriting programs lead to direct and indirect business, often resulting in material in-force transactions.

“Excluding these nonrecurring items, both U.S. Traditional and total Traditional premiums year-to-date grew 3%. But most importantly, I want to note that total U.S. premium, excluding the PRT growth was approximately 8% for both this quarter and year-to-date, which is both the traditional and the Financial Solutions business, a more indicative indicator of the underlying growth of the U.S.”

asked by Wesley Carmichael · answered by Laura Cockrill

2 min read 7 chapters

Detailed narrative

Strategic Underwriting Programs Driving Growth

RGA's strategic underwriting programs in the U.S. are on track to double in volume from last year, acting as a primary driver of reinsurance value. These programs not only lead to direct business but also serve as an entry point for broader, long-term in-force transactions, showcasing RGA's top-tier underwriting capabilities as a key differentiator for clients. This initiative contributes to underlying growth despite impacts on reported traditional premium figures.

Global Platform and Local Expertise

The company's global reach and local market insights enabled several notable deals across Asia Pacific (Hong Kong, Japan) and EMEA, leveraging both biometric expertise and diversified investment capabilities. These transactions align with RGA's strategy of combining product development leadership, risk-sharing design, and local execution to deliver innovative client solutions, contributing to excellent regional performance.

In-Force Management and Capped Cohort Reduction

RGA has actively managed its in-force business, leading to a 25% reduction in exposure to U.S. capped cohorts since LDTI adoption 3.5 years ago. This strategic focus aims to reduce earnings volatility and improve the overall profile and returns of the business, with further reductions expected over time through both active management and natural runoff, enhancing the long-term value of the business.

Strong Investment Performance

Investment results were a significant driver of the record quarter, benefiting from higher new money yields (6.2%) and strong variable investment income. The annualized VII return of 15% for the quarter and 11% year-to-date significantly exceeded the 7% target for 2026, driven by realized gains and broad-based alternative equity outperformance, reflecting sustainable value creation from the diversified alternative equity portfolio.

Disciplined Capital Allocation

RGA deployed $158 million into in-force transactions this quarter and $500 million year-to-date, with expected returns meeting or exceeding targets. The company maintains a strong balance sheet with $2.2 billion of excess capital and plans to use $400 million for debt paydown in September, balancing investment in the business with shareholder returns through dividends and buybacks.

Mortality Experience and Population Trends

The company reported favorable claims experience, particularly in U.S. Individual Life and Asia Traditional, contributing $375 million in economic favorability since 2023. This is consistent with favorable population trends and RGA's biometric and risk selection expertise, with uncapped cohorts performing in line and capped cohorts modestly favorable, indicating a benign claims environment.

Ruby Re and Third-Party Capital Strategy

Ruby Re is expected to be fully deployed this year, underscoring RGA's strategy to leverage third-party capital to enhance flexibility, fund growth, and generate incremental fee income. The company is actively evaluating options for its next sidecar vehicle, demonstrating its commitment to this capital management approach as a core element of its capital management strategy.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.