Good morning, and welcome to the Reinsurance Group of America Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jeff Hopson, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Welcome to RGA's Third Quarter 2025 Conference Call. I'm joined on the call this morning by Tony Cheng, RGA's President and CEO; Axel Andre, Chief Financial Officer; Leslie Barbi, Chief Investment Officer; and Jonathan Porter, Chief Risk Officer. A quick reminder before we get going regarding forward-looking information and non-GAAP financial measures. Some of our comments or answers may contain forward-looking statements. Actual results could differ materially from expected results. Please refer to the earnings release we issued yesterday for a list of important factors that could cause actual results to differ 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 and quarterly financial supplement, all of which are posted on our website for a discussion of these terms and reconciliations to GAAP measures. Throughout the call, we will be referencing slides from the earnings presentation, which again is posted on our website. And now I'll turn the call over to Tony for his comments.

Good morning, everyone, and thank you for joining us. I am delighted to share that we have had a very strong third quarter, as demonstrated by the continued successful execution of our strategy as well as the record financial performance we delivered. Let me open with a few key highlights. Firstly, we reported record operating EPS, excluding notable items, of $6.37 per share. These results were strong and above expectations. We had excellent performance overall with particularly good results in Asia Traditional and EMEA and U.S. Financial Solutions. Our diversified global platform continues to deliver significant long-term value. Secondly, we are seeing a positive contribution from the Equitable transaction, which closed this quarter. Thirdly, new business momentum remains strong, as evidenced by our premium growth and capital deployment into in-force transactions. We are seeing good year-to-date contributions from across our geographies. Our competitive advantages continue to differentiate RGA, leading to good new business results, a robust pipeline and the ability to be selective on the opportunities we pursue. Next, during the quarter, we repurchased $75 million of common shares. We will continue to balance investing our excess capital into the business and returning it to shareholders in a manner that allows us to execute our strategy and meet our financial targets over time. Finally, we continue to make progress on other strategic initiatives, including the utilization of Ruby Re and the successful execution of in-force management actions. All of these position us for continued long-term success. Let me now provide a few more details on the quarter, including highlights from across our regions, starting with North America. We continue to exceed our new business targets for the traditional business, driven by our strong underwriting capabilities. We closed a significant number of new deals in the quarter and reached a record…

Thanks, Tony. RGA reported pretax adjusted operating income, excluding notable items, of $534 million for the quarter or $6.37 per share after tax. For the trailing 12 months, adjusted operating return on equity, excluding notable items, was 14.2%. Results were strong this quarter and above expectations. Momentum across our business remains good, and we saw notable strength in Asia Traditional and EMEA and U.S. Financial Solutions. As Tony mentioned earlier, we closed the Equitable transaction and recognized a full quarter of income. Results for the block continue to be in line with expectations. As a reminder, this block is expected to have a highly diversified sources of earnings, split roughly between fee income, underwriting margin and investment spread. This is one of the reasons the transaction was so attractive to us. Given the diversified sources of earnings, this is immediate earnings impact as well as incremental ramp-up as some of the assets are repositioned. The portfolio repositioning is on track and was approximately 75% complete at the end of the quarter. The remainder will occur over the next 6 to 9 months. During the quarter, we deployed $233 million of capital into in-force transactions in addition to the previously announced $1.5 billion into the Equitable transaction. We also completed $75 million of share repurchases at an average price of $184.58. Our capital position remained strong, and we ended the quarter with estimated excess capital of $2.3 billion and estimated deployable capital of $3.4 billion. The effective tax rate for the quarter was 19.6% on adjusted operating income before taxes, below the expected range of 23% to 24%, primarily due to the jurisdictional mix of earnings. We still expect a tax rate of 23% to 24% for the full year. Our Traditional business premium growth was 8.5% year-to-date on a constant…

[Operator Instructions] And your first question today will come from Wes Carmichael with Autonomous Research.

First one was just on the U.S. claims activity in Traditional in the quarter. Just wanted to see if you would unpack current experience, if that's just normal volatility in your view, if there's any onetime-ish kind of items in there.

Yes, Wes. Thanks for the question. On the U.S. Trad side, so we had about $30 million of claims experienced from -- of negative claims experience on the individual life side, that's really kind of normal volatility. If you look at it on a historical basis, it's well below a standard deviation. So frankly, modest noise there. And then on the group side, as indicated last quarter, and consistent with the expectations that we had set, we had about a $20 million negative experience.

Got it. And maybe sticking with that segment, U.S. Traditional in the current quarter. Were there any onetime items that impacted premiums? It looks like premium growth was a little bit softer there than the rest of the enterprise. And if so, what was kind of the underlying growth rate there?

Yes. So on the U.S. premium side, so in the quarter, we had an in-force action, so a recapture of a treaty, which resulted in a positive impact to the results of about $20 million. And so the flip side of that is that we didn't record the premiums that we would have got from that treaty. And so that's really the main driver for the reduction in premiums.

And your next question today will come from John Barnidge with Piper Sandler.

There was a recent report in September from Swiss Re suggesting a mortality reduction from GLP-1 drugs of up to 6.4% in the U.S. and 5.1% in the U.K. How soon would it make sense to maybe recognize that benefit either on pricing or in your assumptions?

John, thanks for the question. This is Jonathan. So we haven't made any material changes to our assumptions due to anti-obesity medication, but the benefits from these medications have increased our confidence that our existing mortality improvement assumptions will be realized in the future. We've done some significant modeling and analysis, and we continue to believe that anti-obesity medications, including GLP-1s, will have a meaningful benefit on population-level mortality. And going forward, we'll continue to regularly assess the data and our model and expectations as to how this population improvement translates through to our insured book of business. Specifically for the study that you referenced, our analysis is generally aligned with a central estimate that Swiss Re has as well. So our numbers are consistent with their central estimate. I think the numbers you quoted were on the high end of their estimate.

Yes, those were the bull case outcomes. My follow-up, I believe the lift to annual run rate is $15 million over the intermediate term and would be expected to grow. To what level would it be expected to grow in the max year?

Yes. So thank you, John. So just to clarify, I think you referred to the impact of the actual assumptions update. As I mentioned, there's the accounting impact and there's the kind of long-term value impact, the $600 million, which will be recognized over time. That $600 million essentially will increase our run rates by $15 million next year, so annual increase of $15 million which then gradually ramps up to a $25 million increase to the annual run rate by 2040.

And your next question today will come from Jimmy Bhullar with JPMorgan.

I had a couple of questions. First, just on your expectation for Ruby Re, you mentioned you expect it to be the pipeline to be filled or your -- whatever your intentions were in terms of business activity. What type of liabilities are you considering for the structure and obviously, there's a lot of demand for reinsurance or deals on some of these legacy liabilities. To what extent do those fit in your plans as well? And then I have a follow-up.

Sure. Thanks for the question. Yes, so Ruby Re, so we were pleased to see another transaction seeded into the vehicle this quarter. As you may recall, the vehicle was set up to really take in U.S. asset-intensive type transactions. In terms of -- we have a pipeline of transactions that we already have on our books that we're working through the process of seeding into the vehicle, which is why we're saying we have the confidence that we will be fully deployed by the middle of 2026. I think just taking a step back, we've mentioned that sidecars, third-party capital is a core component of our strategy. We expect in the future to be pursuing other sidecars and for that to be a nice supplement to our ability to deploy capital over time.

And then the type of liabilities include just annuities or like LTC VAs with living benefits as well?

So Ruby Re is really focused on relatively simple liabilities, what we call asset intensive. Those are things such as pension risk transfer. Other types of liabilities that have some biometric risks but that are relatively vanilla. As we explore new vehicles, further vehicles, we will also potentially open the aperture of liabilities. But I want to make clear that we focus on what -- where our expertise is. Our expertise is in combining the 2 sides of the balance sheet, the biometric risk and the asset side in the types of transactions that we have a track record of executing. So the intent is not to open new avenues that we have no expertise or track record in.

And your next question today will come from Ryan Krueger with KBW.

I had a question on in-force actions. You've done a number of things over the last few years. I was just hoping to get an update on how far along you think you are at this point? And in the kind of opportunities that you still have going forward to do more actions on the in-force.

So maybe I can get started just in terms of the numbers and pass it on to Tony. So in-force actions, we've talked about it on a number of calls. We had significant contribution to earnings in 2023, 2024. If you recall, at the beginning of the year, when we talked about our intermediate-term financial targets, we said that we were expecting about $50 million a year of in-force actions. Of course, it's -- as we said, those can be lumpy. And so we -- at times, you can have a year where you are well above the $50 million, potentially below. This year, 2025, year-to-date, we're at about $45 million of cumulative in-force actions. So it's nice and on track and consistent with that run rate. And then we have a number of opportunities to continue to execute on in-force management actions throughout the book.

Yes, Ryan, maybe just to add, this is a discipline that I would argue, started in the U.S. before, but it's very much around the globe. So even this quarter, we're seeing those actions, it's not just the U.S., it's across the globe. So that's the first point. And then the second point is, I want to emphasize, that's why risk management is so critical for us. We're all over the risk. And then it's a question of, okay, how do we -- once we fully -- as we fully understand the blocks of business, we then leverage off our strong partnerships with our clients to come up with true win-win solutions, oftentimes as we go through these conversations with our clients. It really hasn't impacted our ability to write new business with them. Sometimes it actually strengthens it because you're getting through potentially tough conversations in the right manner. So we're very delighted with our approach. And as Axel said, we continue to deliver on it. We don't -- it's not drawing up in any way. It's just an ongoing part of our business that we expect to continue to do going forward.

And then I had a follow-up. I guess going back to last quarter on the value in-force benefit to excess capital. It seems like there's been some skepticism from -- that this is not from you, but from others about if this is fully -- if that benefit is fully able to be deployed into growth going forward. So I guess I just wanted to just come back to that and confirm that like there's no restrictions on that. You have the full blessing from rating agencies, and that's a part of your capital that you can deploy now going forward?

Yes. So thanks, Ryan, for the question. So let me -- first, let me say that, yes, we -- this capital represents real capital that is available to be deployed into transactions. But let me take a step back and remind you, our excess capital is really across all 3 frameworks: economic capital, regulatory and rating agency. And we really look at what is the binding constraint. So we have at least that amount of excess capital from each of the following lenses since we take the binding constraints. I think everybody would recognize that from a regulatory capital perspective, that is capital that is there in the legal entities available to be deployed. Obviously, there's different regulatory frameworks and different legal entities, but real capital available to be deployed. So the recognition of this value of in-force to your point is from a rating agency perspective. I want to remind you that we recognize only a portion -- the value in-force for only a portion of our block. And even when we do, there's a significant haircut that is applied to that value of in-force within the rating agency frameworks. That value of in-force does amortize over the life of the business. But over time, we expect to add further to our store of value of in-force by looking at our in-force, the blocks that have not been evaluated by the rating agencies as well as new business. And just to point to one item, if you look at our value of in-force business margin exhibits in the presentation, the growth of that by 16% since -- over the first 9 months of the year, shows that there's a robust growth in our store of value of in-force and the potential to recognize that capital from a rating agency perspective.

Ryan, let me just add one other point. I know you were referring to deployment into the business. With regards to, let's say, potential buybacks, we've indicated how much we're going to -- we're planning to return to shareholders. But just to answer your question, there is -- the only criteria we would look at beyond the strategic ones with regards to buyback would be, do we have sufficient liquidity and our leverage ratios? Otherwise, this capital is fully available to buyback. So I just want to add to Axel's comments.

Our next question today will come from Wilma Burdis with Raymond James.

Regarding the U.K. mortality assumption review impact, are those claims that you're seeing today? Or is it more of a long-term expectation for higher mortality? And could you also just provide some color on what you're seeing in terms of U.K. mortality trends?

Wilma, this is Jonathan. Thanks for the question. So part of the assumption review this quarter, we've increased our expectation for future U.K. mortality, and that's resulted in an increase in future mortality claims and an offsetting decrease to future longevity claims. So this change in assumptions reflects ongoing excess mortality we're seeing in the U.K. population, which likely reflects challenges with the National Health System as well as a thorough review of recent experience in our own book of business. Under LDTI, as Axel mentioned, most of this U.K. mortality impact is recognized in the current period as the strengthening of reserves on capped cohorts and the benefits of the longevity business are deferred and amortized into future periods. So on a net economic basis, looking at both mortality and longevity combined and just looking at the U.K. specifically, it's actually pretty neutral. So that's given our balanced book of business. There's not much net economic effect of the changes.

Okay. Now that the -- second question, now that the Equitable block is closed, could you provide a little bit more color on your expectation for accounting smoothing on the mortality on that block?

Sure. Yes, sure. Thanks, Wilma. Yes, for the Equitable block, there will be accounting smoothing of volatility. We expect roughly about 50% of that block to be to -- to benefit from that smoothing of results over time.

And your next question today will come from Alex Scott with Barclays.

First one I had is just on the group headwind that you guys have had from the medical piece of things. Can you talk about what you're seeing there, the kind of repricing you're taking? And just any further commentary on the trajectory there?

Sure. I can start here. Look, on the group side, like we mentioned last quarter, it's short-term business, right? So it all gets repriced over the course of the year. And as we mentioned, we had started to take repricing actions by Jan 1, 2026. By Jan 2026, all of the block will be repriced. And so from there on, we have expectations of profitability for all segments of the group business.

Got it. The second one I have is maybe a little bit more of a pointed question, so apologies in advance. But as we kind of go around and talk to industry participants and go to some of the conferences and so forth, one of the things that comes off, and I think -- look, I think some of the investors are hearing these kind of things, too, is that RGA is getting more competitive, getting more aggressive, maybe accepting lower IRRs to win business. And I think it's important to kind of hear your retort on it just because it does seem to be something that impacts your stock. And so I'd love to just kind of get your point of view on, is that just sort of [ sour grades ] because you guys are winning? Or is there more to it? I just want to see what your response is to those kind of comments that we're hearing.

Yes, Alex, let me take that. Look, there's a lot there. Firstly, with regards to risk -- taking risk, there's been no change in our risk tolerance, our risk appetite, our processes, our leaders, our culture and we probably couldn't change it if we want it and why would we change it? It has been a huge competitive advantage for us in over 52 years. So -- and you can see it throughout the whole organization like even our business approach is all around discipline. Why do we just choose and select the business that we want, i.e., the business that is exclusive and plays to our strengths of local offices, our strengths of ability to do biometric and asset risk, our incredibly strong client relationships. It's purely because it is better quality business and in my mind, less risky than tendered business. And you see that not only in what we pursue, but also what we don't pursue. I mean, our name does not come up because we're not participating in many of the recent U.S. tenders for risks that are just not in our sweet spot. Number one, they're tenders. Like I said, we very much pursue exclusive transactions. And number two, they're not in our sweet spot. They're not the risks we like. So look, this has always been our approach. It will continue to be our approach. When I heard commentary like you suggested, it just took me back to the Asian days where when we started success 20 years ago. Of course, you're going to hear these things. That's what one would expect. We just follow our strategy, follow our culture. It hasn't changed and we're so excited about our future growth and our future returns that we can provide to shareholders.

The next question will come from Suneet Kamath with Jefferies.

So if I think back to when we started talking about LDTI, I think the commentary was this was supposed to be a benefit to RGA because of the smoothing and if I just look at recent results, it just doesn't seem like that's playing out. You're getting more of the bad than the good. And I was just curious, is this just because there's a larger portion of your block that's in capped cohorts, and that's what's causing it? Or can you give us a sense of what percentage of your business is capped versus uncapped. Because I just don't think we're seeing the smoothing that we expected when we first started to talk about this.

Sure. Thanks for the question. Look, I think we still believe that LDTI is a benefit in terms of smoothing results over time. Now that may not play out quarter-by-quarter exactly. I think if you look at the presentation in the recent quarters or if you look at older presentations that have a longer track record, you'll see that in general, the impact that comes through on an accounting basis is less than the economic. So there's some level of smoothing and some reduction of the noise there. Nonetheless, you're correct that when -- for those capped cohorts, the results flow through immediately and in capped cohorts over time, you would expect that over time, there will be some portion of cohorts that are capped. And that will result, therefore, in a bit more volatility on the negative side.

Yes. And then Suneet, just to give you a number to size it for you, for our traditional business and total across the world, about 15% of our business is in capped cohorts.

Suneet, just let me add one more point. I mean, look, these capped cohorts to us, like I said earlier, look, risk management is our DNA, our critical part, and therefore, these capped cohorts are obviously blocks we monitor very closely and a fertile ground for the in-force actions that you see us doing. And that's, as I said earlier, an integral part of our way of generating further profit and ROE.

Yes, No, that makes sense. And then I guess my second question is on the economic solvency in Japan. As I think about over the past couple of quarters, I think you guys have talked about that as an opportunity. But we're, I guess, a couple of quarters away from it actually being implemented. And I guess -- has it turned out to be the opportunity that you thought it was? Or were companies able to figure out solutions that didn't require RGA's capabilities? Just curious kind of where we sit there.

Yes. No. Thanks, Suneet. Look, I would say the first inklings of it driving opportunities was probably about 5 or 6 years ago. So it's not just switched the light on, and it becomes relevant. I mean, the companies have been preparing for this for a number of years. And as a result, we've been able to win good business. And I'd say it's been the essential part of why you're seeing increased activity in Japan on coinsurance of blocks. I mean, we -- our partners in the market are both obviously the local companies as well as some of the multinationals or global companies. So there could be other tools available for some of the global companies, they may have internal reinsurers and so on. But for us, it has been a driver of opportunity. It continues to be. We're very selective once again on what we pursue, which will predominantly be those blocks of businesses that have both biometric as well as asset risk as well as usually, it's going to be with long-standing clients that we may have had decades-long relationships with on the biometric risk side.

Our last question of the day comes from Tom Gallagher with Evercore.

If I look at the earnings power in the quarter, and I adjust for, we'll call it, the accounting noise in the capped versus uncapped cohort, I sort of unwind that, you get about $7 of earnings power in the quarter. Now that seems well above the kind of levels that you guys have guided to if I think about glide path. Now I'm assuming there was like significant over-earnings in some of the segments versus what you think is trendable, but can you help kind of unpack $7 and maybe getting us back to a more reasonable trend line because that does seem quite high?

Sure. Thanks for the question, Tom. Yes. So when we think of kind of what are the pieces in the earnings this quarter, so I think we talked -- we mentioned the claims experience. So overall, about $50 million and then the offsetting impact of in-force actions, which across the globe in the quarter is about $40 million. So $40 million of positive to offset some of that $50 million negative. We mentioned the VII, which is a headwind of about $40 million this quarter. And then on the tax side, we had a benefit. So yes, look, this was a really good quarter. We're very, very pleased. I think a lot of the result of capital deployment of earnings coming up, coming online. We've talked about kind of the ramp-up of earnings with -- as we do the portfolio repositioning. Obviously, we had Equitable, the transaction, which is one example of that capital deployment, but it's a lumpy one, and it came in this quarter. It's very tangible. So yes, look, things are clicking well. And so we're very excited about the earnings growth trajectory from here on.

Yes. And Tom, let me just add a couple of points. As we always say, and as you know, one quarter's results is just one quarter's results. So if you do a similar analysis for the year, we've had an excellent quarter. That's why we describe it that way. And for the year-to-date, we're having a very strong year-to-date relative to expectations. So I'd encourage you to just maybe look back over the 3 quarters. It's probably a better gauge of where we're at in terms of sustainable earnings power for '25.

Good point, Tony. My follow-up is on -- have you considered any partnerships with alternative managers. We've seen multiple primary life companies enter into these partnerships. And I guess what I wonder is, with the asset-intensive business, kind of a critical part of your growth. I wonder -- and with a lot of the competitors for those types of deals seemingly having, we'll call it, pretty enhanced alternative strategies, whether it's private credit or other things. Is that something that you'd consider?

Yes. Thanks for the question, Tom. Look, I'd say a few things. One is with regards to private assets, obviously, we do the bulk of it still internally, but we do have a number of external relationships where we feel it doesn't make sense for us to build the capabilities or they've got scale that we would not be able to achieve. So that's the fundamental principle in which we've been operating. But I really want to send you towards -- we don't compete on pure asset transactions. That is not our sweet spot. And to be honest, there's no point us really bidding too much on those types of blocks because we know our price probably will not be competitive. So that's why we always turn back to what have we -- does that asset transaction have material biometric risk, which obviously is our -- very much our sweet spot, is a leverage of relationships that we've maybe had for decades. So I really want to center that thought. Yes, we do a material asset reinsurance or asset-intensive reinsurance, but it always comes with biometrics. And a lot of the blocks, as I shared in my comments, are smaller in nature. They're not -- or more modest in nature. They're not always the headline grabbing ones because the ones that rely on those relationships and those partnerships, we're just servicing that client, that's asked us to help them for many, many, many years, and we continue to do that.

This concludes our question-and-answer session. I would like to turn the conference back over to Tony Cheng for any closing remarks.

Well, thank you for your questions and your continued interest in RGA. Our strong quarter and continued growth in long-term value continues to fuel future growth and returns for RGA. And this ends today's call. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.