Reinsurance Group of America Analyst Day Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“Now some things at RGA are changing. For the first 15 years or so of our history, we were a 20% compound growth type company, and we’re not that anymore. And in fact, our biggest business, our U.S. mortality business is declining rather than growing in market overall. And our business is growing only marginally in the U.S. mortality business.”

“Our global build-out is virtually complete. There might be a couple geographic territories that we would like to strengthen or to enter. But for the most part, we have gone through the expansion phase and are now in the phase of operating efficient organizations.”

“U.S. Traditional business is slow growth at the moment. We are the largest market share company in that business. But it is a business where companies are retaining more and reinsuring less at the moment. ”

“A strategic account is a client that sees us more as a partner than a vendor. They’re more value-driven than price-driven. And it’s a client where we have opportunities across multiple product lines and multiple geographies to transact.”

“we’ve got an advantage over primary writers in that we don’t have the large distribution force to maintain nor do we have the substantial fixed administrative costs that direct writers have. And this allows us to be very nimble in this space. We don’t have to accept business to support a large infrastructure. This also provides a diverse income stream for RGA. We have a defined appetite for the amount of business that we want to write. And that allows us to be very selective and participate in what we think are the best opportunities. We review a lot of products in the asset-intensive space and we reinsure a select few.”

“we believe we have a good grasp of the issues and we are working through them. We operate in a long-term business that sometimes goes through cycles, and we believe a little patience is required to work through the issues we’ve identified.”

“the U.S. Traditional segment is our largest source of revenue and income, contributing just over 50% of our revenue and income in 2012. The largest subsegment is our individual mortality business, and that’s the business that goes back 40 years to our roots.”

“In recent years, we’ve seen the market go through a steady de-risking of the products. We’ve seen a shortening in the products’ shelf lives. We’re seeing regular updates in new business premium rates to reflect the changes in the product features as well as to reflect this continuing low interest rate environment.

We’re also seeing general tightening up of underwriting standards. And recently, we’ve started to see the introduction of sex-distinct premiums. Again, although it is a new product line for RGA, the majority of our clients have been in the business for a much longer period of time, and they’ve accumulated substantial data. And we use that data in verifying and refining our assumptions.”

“in 2012, we maintained our #1 position with a 20% new business market share…Also, looking at this market, we believe that a leading market share, a leading of 20% — in the low 20%, perhaps 22%, 23%”

“there was a period, there was a 5- to 6-year period, starting around 1999 and ending around 2004, where the business written during that period is producing higher mortality relative to original pricing…You’ll note that we did not have leading market shares during that era. And the business that was written during that era was written during the period of generally significant price competition, both in the direct market and the reinsurance market. It was written during the time of strong reinsurance demand as a source of financing of redundant reserve — reserves. It was also around the time of the onset of the slowly activity in the market, and it was during the period of generally weaker underwriting standards.”

“for the fifth straight time, RGA was named the best overall life reinsurer. Now that spans a period of 10 years where we’ve been ranked #1 by our clients.”

“It’s also a positive reflection on our culture. We’re not complacent. We’re always looking for ways to improve, and it’s very satisfying that our clients are acknowledging this.”

“We are very proud of our research capabilities, and we believe they are second to none…We are able to capitalize on our extensive database as well as partnering with third-party data providers to deliver more precise pricing and underwriting that reflects measurable deviations. That is one of our core competitive advantages.”

“the common thread that we have used in Japan and throughout the world really is this, the administrative claims management and risk management functions are tied to other parts of RGA’s organization where we have deep expertise. We bring that global expertise to the local markets and device local solutions.”

“Another recent underwriting-driven agreement involves one of the largest Japanese insurers for which we set up an advantage program. For this customer, we helped to extend the client’s underwriting manual to include impairments that the customer — that this customer isn’t comfortable with in retaining. Under this program, it will sell policies with certain — with specific parameters, and those policies will be automatically passed to RGA.”