Reinsurance Group of America, Incorporated Stock

I think we're ready to get started. So first, I'd like to thank Laura Cockrill for being with us, CFO RGA; and Ron Hermann, Chief Commercial Officer. So thank you all for being here.

Maybe we'll start with a broad one to kick it off. And I wanted to ask about what do you see as the biggest priorities over the next 12 months? And what are the things we should look for to judge whether you're executing on those priorities.

Sure. I'll start. Feel free to jump in. So I think as I come into this world, there's a few priorities that I think about over the next year. First is really just continuing to deliver on our strategy. I think we've been doing extremely well in hitting our financial targets of the 8% to 10% EPS growth and the 13% to 15% ROE. So as I think about going forward and leveraging our competitive advantages and how we want to continue to benefit from our local presence, our ability to reinsure both sides of the balance sheet, our biometric expertise, continuing to use those to ensure we're going after that balanced disciplined growth.

Second would be investor communications. I think one of the things that I really want to focus on is just how we tell our story externally. I think there's a little bit of a gap between just the understanding of how RGA creates value, really our biometric focus and expertise, the mix of earnings of our business. So really want to enhance how we do the investor communications, whether through things like this or our disclosures or different metrics.

And then lastly, I would probably say third-party capital. That's a focus for us right now. A great tool for us as we think about our broader capital management and just different things we can benefit from that. So that's something as we finish deploying Ruby this year, we'll look to kind of what makes sense going forward.

So next, one of the questions I get frequently is on the competitive environment. And I was interested if you could talk about it and just how is the price discipline, the competition different when you're looking at bigger in-force box versus, I think, some of the recurring flow reinsurance through relationships that you've talked about.

Sure. You want to start this?

Yes, I can start this one. So one of the benefits we have is a global footprint. So when you think about the local support we have across the globe, the way we interact with the regions, it enables us really to think about competition in a different light. In Asia, for example, we do an awful lot of flow business, and a lot of that is origination with the clients and then work with the regulators as we build the products. And what we have found in our exclusive approach to many of those situations is we don't have competition per se in those.

Take the U.S., we do the same thing across the Americas, including Canada, where we focus on an underwriting approach and a lot of those transactions end up also being exclusive. And then on the larger blocks, which happen more in the U.S., we've become highly selective of the types of business that we want and where we think our biometric expertise can play a role. And as Laura mentioned, having the ability to do both sides of the balance sheet really do help us in terms of focus on transactions that we're capable of doing just about anything across the board.

And then in EMEA, primarily in the U.K., we're very big in the longevity space. We're well represented there. We've got a long-standing history there. And although that marketplace has been a little bit slow in 2026, the pipelines are picking up significantly. There just haven't been as many large transactions. And we're capable of handling the small transactions. We're capable of handling the larger transactions. And we have seen an increase, as I just mentioned. And so we're very selective where we compete, and I think that helps us in terms of the competitive environment overall.

Got it. Next topic, mortality. So it's been running pretty favorable recently. And I was interested if you all could comment on how transitory do you think it is? Is it more viewed as there was some pull forward around COVID-19 and so forth, and we're getting the benefit of being on the other side of that now. Does any of it have to do with some of the medications that are out there or potentially longer term, some of the tech improvements that could benefit medical care?

Yes, I'll take that. So I think from a mortality experience perspective, it's been favorable to date in the last few years, actually, and we're quite pleased with that. I think it really does show our expertise in the risk selection as we think about just broader mortality. The mortality trends have been really positive across a lot of our key markets in the U.K., the U.S. and Canada. So that certainly provides some potential tailwinds. If it's pull forward from COVID, I mean, I think that's a possibility. It's hard to say exactly if that's the case. It's certainly something that we monitor and we look at as we see the trends, but it's hard to tell.

The medical advancements for sure. I mean, GLP-1 is the one that absolutely comes up the most as we're talking and looking at a lot of our research. There's been a lot this year as far as advancements, specifically in that as far as kind of the oral GLP-1 the Medicare is going to start covering it. So that should allow broader access and hopefully make it cheaper. And then just the generic versions of it. So I think all of that will be beneficial.

When we think about that and we think about our assumptions, we generally bake in some sort of medical advancements into our assumptions. So what's happening with GLP-1 and some of the other drugs certainly helps give us confidence in those assumptions. We'll continue to monitor and see what happens. But between just the advancements and some of the technology, it certainly suggests potential tailwinds.

I guess mortality improvement assumptions over time because this isn't something that's a new assumption for you all. I mean, has it changed your approach to that? Or is it sort of things that are happening just give you more confidence in what you are already assuming?

Yes, I would say more of the latter. I mean, again, over, I guess, 50-plus years of us, there's been medical advancement. So we assume that in our general assumptions. And so this does give you confidence. Whether with things like AI and technology, there's going to be more, we'll have to see. But that's something as part of just our -- we have a huge global research and development team that's constantly doing research on all the different things that are going on. And then there's a lot of discussions back and forth across the different markets and regions and different products on what makes sense.

Yes. I was just going to add, I mean, if you think about, we have over 50 years of biometric experience in pricing. And so although, as Laura mentioned, we've got a lot of people looking at the improvements over time, we react slower, right? We don't build those things into pricing immediately. So we look to see some of those improvements which support some of the assumptions that we built in. And so I think part of what you're seeing is just that experience.

Got it. So the next one, I'm going to apologize ahead of time. It has an accounting kind of angle to it, but I do I think it's important, and I think it's important for people to like hear the explanation of what it is and why it's important. But you have these capped cohorts as they're called, and you reduced that meaningfully by 25%. And I think you suggested you could take it down further. What are these capped cohorts? Maybe you can kind of give us that in plain English. And why is it impactful for volatility of earnings and improvement of earnings to take these actions?

I guess that was mine. Sure. So I'll try to keep it plain English and feel free to tell me if it's not. But so the capped cohorts, it's a concept that just came out of the new long-duration targeted improvement accounting. But really, what it is, is when we think about -- sometimes we refer to an NPR or a net premium ratio and when that -- which is basically an indicator of profitability. So when we have an NPR or when a cohort is capped, it's because that net premium ratio is over 100%. And all that means is that all future premiums are needed to pay future benefits. So there's no profitability going forward that we can smooth it over when we talk about smoothing. So that's basically what the capped cohort is. It's just that it's over 100%, and there's no more to smooth it over.

And so when that happens, any experience in earnings, whether good or bad, just goes straight to the bottom line. And that can cause some volatility. And so a lot of the in-force management actions that we've talked about have been to address those capped cohorts so that we can try to limit or minimize that volatility. And when we do those in-force actions, we can do things like rate increases. So if we do get rate increases, that then improves the profitability and can change that a cohort can go from capped to uncapped or we might recapture the business or the client may recapture the business. We'll negotiate a recapture and then the business just comes off our books. So we have been intentional about trying to go after some of those capped cohorts just to help limit that volatility, and it can be underperforming business.

Got it. Very helpful. Pivoting to Asia Pacific, it's been an important source of growth recently. Sometimes on the outside, it's a little hard to see exactly where and how you're growing. So I wanted to see if you could give a little more detail on what kind of transactions those are, what kind of geographies, the products that you're engaged in? And are these bigger in-force blocks? Are they more asset heavy? Or are they more of these relationship deals that you talked about?

Yes, I can take that one. So primarily, most of our business in Asia is coming from Japan and Hong Kong. We've had a local presence there for a long time. In fact, our CEO, Tony, is who really established our footprint there and built that out over a number of years. And so that team has been with RGA for a long time. They're very connected with clients. They're also very connected with regulators. And a lot of what we're doing is flow transactions that there -- the ability to do exclusives because we're helping design them and helping them get through the regulatory environment has been a very big part of what we do.

It's a lot of single premium whole life and products along those lines. There have been some recent announcement about competition within those markets. That's primarily your asset plays, companies that are looking more for the asset transactions only, and that's not where we play. We play primarily where there are biometric and asset mixes coming together.

Yes. And maybe I'll just add to that. One of the big successes we've had in Asia, too, is just product development. And so we are working with the clients to actually create the products that we think can make sense in the market, and then we can get reinsurance from that. So that's been a huge part of our success there as well.

Got it. This where we were on Asia Pacific, I wanted to ask about the potential increased scrutiny from China on some of the brokerage accounts in Hong Kong. And if there's any update that you can provide on how you're seeing that impact, if at all, the sales, particularly to Mainland China visitors in Hong Kong.

Yes. I'll start with that one. Yes. So I think the bottom line is we expect it to have pretty limited impact on our business. What has come out in the news, but the tax law is actually not new. It's just more discussions on if they're going to enforce it and how. But as we look across the business and we talk to the clients, taxes are not the main motivation for why some of the Mainland Chinese visitors are coming over and buying the different products. It's access to USD or to a broader global investment strategy, some of the protection benefits that come with it. So it's not taxes. So still relatively new, but we expect it to be pretty limited.

Got it. So Ruby Re has become pretty fully deployed. Can you provide an update on that? What are you looking at in terms of potential next vehicles? And could that find a larger part of the set of liabilities that you all look at?

Yes, sure. So maybe just taking a step back from a sidecar perspective in general, like I mentioned, it is one of our priorities. I think it's a pretty advantageous tool to have in our toolkit as far as a few things really. It does obviously provide additional capital as we see some of these opportunities that we've been seeing. The fee income, just the reoccurring stream of capital-light fee income is always a benefit. We also like it because it helps us think about public versus private company balance sheets. So as we think about some of the different risks that we want to reinsure when we have the sidecars in place, we can see where they might make the most sense.

And then lastly, I would say it gives an opportunity for third-party investors to really benefit from some of our biometric expertise and our understanding of the liabilities and then really does help validate the price as other investors are happy to take the business. Ruby Re will be fully deployed this year. So we're very excited about that. And then we're looking to see what makes sense next. It is part of our broader strategy. Right now, nothing to specifically say, but look forward to talking about it when we have it.

Okay. Great. Next on the Equitable transaction. It's been a little while now. I'd be interested in just an update on how has that performed doing a larger deal. Is that something that you view as repeatable? Is that a unique transaction that could offer more opportunities with other large primaries?

Sure. I'll take that. So Number one, I think some know, but not all. I ran the life insurance business and the group employee benefits business at Equitable for years before joining RGA. It's a very unique transaction. The one that everybody looks at is the block, which we'll certainly talk about. But it was more of a partnering arrangement where we've ultimately gained exclusivity because of the different areas to which we were able to partner with them. They contributed to Ruby Re. We've talked to AllianceBernstein. We actually have taken over a significant part of their underwriting where we are actually doing the underwriting through our own organization, which we obviously always like doing and have built out over quite a bit over the last few years. We've also built them product and that relationship continues.

In terms of the deal itself, it has certainly met all of our expectations, and it is well within where we expected it to be, both from a mortality claims standpoint as well as earnings standpoint. So the numbers that we've disclosed, it's still tracking pretty much right in line with what we would expect it to be. I think that's -- there's really 4 reasons for that. One is we have 50 years plus of underwriting mortality, but we were able to look at that block and the experience that they had over that time and apply both our knowledge and experience with their knowledge and experience. And I think the net-net of that is what you saw in the ceding commissions and what that was published.

The other side of it is we were able to reposition the assets. And that enabled us to get better returns than they had traditionally been able to get. And that was all a big part of how we evolved and how we looked at that entire process going through it. And then in terms of capital, we're able to do it at a lower cost of capital. And that's just really due to our expertise and the teams that Laura have overall. We have done other transactions like Equitable, but they have been much smaller. So Equitable, there's not a lot of $32 billion statutory business out there, but it showed the capabilities that we had as an organization to be able to deliver it. We have repeated that type of business. And it's actually part of what we're looking for as we go forward where I mentioned earlier about driving to exclusives.

It's hard to tell somebody, "hey, you have a block, we want to look at it, give us exclusivity." It's much easier when we say, well, we can help you with this, this and this, and we can think about this as a holistic partnership and how do we move forward. And so we have repeated it, smaller transactions that aren't as public. And in terms of the underwriting capabilities, we've actually taken over 3 organizations now, either in total or a large sum of it, and those have led to additional blocks as we move forward.

Yes, that's a big piece for us when we can help play across different pieces of the value chain, whether it's the product development in Asia or the underwriting in the U.S., like all of that just contributes then as we kind of work with the clients and work towards that exclusive business.

Got it. Okay. Next on capital. Could you talk about the capital position of the company, how you're thinking about it and how much capacity that gives you for growth opportunities as well as maybe how you balance that with other forms of capital deployment like buybacks?

Sure, sure. So when I think about capital, we have numerous sources of capital. We obviously have organic growth that can help fund our capital, the third-party capital that I talked about. There's runoff of our existing block of business. we leverage capacity to the extent that, that's available and then our excess capital. So we do have about $2 billion of excess capital that we disclosed at the end of Q2. And so we really think about looking at our pipeline, which right now is very attractive across all the different regions and looking at both the mix of transaction and flow business and see what we see coming over the next, say, 12 to 18 months.

Some of these deals, especially larger transactions can take quite some time to play out with the clients. So we have to balance kind of that timing when we look at the capital. We also are very committed to the 20% to 30% payout ratio that we put out there as far as a shareholder return perspective. And we'll look at that, and we'll look at the pipeline and think about where we can be opportunistic if it makes sense from a buyback perspective or if there's just a large amount of transactions.

I think when we think about kind of funding the business overall and the total capacity, it is a mix of flow and transactions. And so that's where it's nice. When we think about hitting the 8% to 10% EPS, we have multiple different levers other than just deployment into the transaction. So that is the flow business, that is as we think about balance sheet optimization efforts across our asset portfolio, the in-force management that I talked about and the buyback. So it's all a balance, and we look across all those different pieces as we think about our broader kind of capital and capacity.

Maybe one quick thing to add to. I mean, under Laura and I've worked together now for quite a few years, but one of the things that we're really trying to focus on is the planning process to think about the transactions we want to be involved in. So we've become very highly selective in the types of transactions that we want to be in, more planning around the whole capital framework that Laura was just talking about because of the length of some of the processes that we have. And so -- it's helped because in my role, we're shifting across regions. We're doing and looking at different things, some move quicker than others, and that balance is really tied into sort of the selection, the governance and the oversight of the deals that we really want to partake in.

Yes. And that -- we add another one to that. But I think that is critical just because we've always talked about going after balanced disciplined growth and then really being selective. And as we kind of double down more on some of this exclusive business, and we're able to reinsure both sides of the balance sheet and see the value and the benefit that provides to clients, it's critical then as we look at the capital and we think about the allocation as we go into each planning season.

Got it. Okay. So one of the things that I think you guys changed recently was how you're talking about growth and you're looking at total premium growth, excluding PRT, pension risk transfers is a better metric for measuring RGA's growth. So maybe you could just explain why that is.

Yes, for sure. Thank you. So we talked about this first on the Q2 call. But more and more of the transactions that we're writing in the Financial Solutions segment specifically do have a biometric risk component to it. And I think there seems to be a misconception that anything in financial solutions is really just pure spread business. I actually had someone say that the other day. That's not the case. Again, going back to this, we're seeing a huge advantage in really being able to reinsure both sides of the balance sheet. And so when we do that, we're taking both the asset and the liability risk. And at that time, then it tends to go in our Financial Solutions segment.

So there's just -- it's a little gray now between traditional and financial solutions. So as we talk about kind of measuring our growth, we don't think it makes sense anymore that the focus is just on traditional because of that both sides of the balance sheet and seeing more and more biometric risk in the Financial Solutions segment. So we believe a better indicator is to look all in, excluding the PRT just because that can add lumpiness given kind of the mix of business that we're seeing right now.

Got it. Okay. And on the pension risk transfer market specifically, I mean, is that somewhere you still look for to growth? I think that is probably a little asset heavier in some cases. How does the pipeline look for that business? Is that something you still view as attractive?

It still is a key focus for us. And I would say the first half of '26, it's been a bit slow. The projections are that it's going to be an off year, certainly comparing to '25 and '24. Some are saying about half. I'm not good at predicting that. But I would say somewhere less than what we've expected. We're well positioned both in the U.S. and the U.K. to capitalize on that market. We have the ability to do the small transactions in a very complementary way to those sorts of opportunities as well as the large opportunities that we could see come to market.

One of the big things that's happened thus far in '26 is that there haven't been any real large opportunities. The pipeline is building. There's been strong momentum over the last several months looking into the year-end, and it's looking like the second half of the year will be -- will meet our expectations, but to be determined at this point.

Yes. Okay. And I wanted to circle back on one of the comments from the prior question. When a lot of investors are looking at RGA and they're seeing the investment portfolio growing and yes, I think it's growing a bit faster than equity, for example. I think a lot of times, the perception is that investment leverage is being added to the business. So you commented a bit about it. But maybe you could talk about that dynamic? And are there asset classes where you're increasing allocations? And what areas are you pulling back on?

Yes. So maybe I'll take that in a few pieces. So one, kind of hitting at asset leverage there and how people are looking at and that has been increased. I think asset leverage is really more of an output than an input for us. When I think about that as I talk about reinsuring both sides of the balance sheet and some of the opportunities that we have, when we do that and we bring in some of these larger transactions, asset leverage is going to go up inherently just based on the calculation. But it's a bit of a blunt metric, I would say, and that it doesn't really take into consideration then the underlying risk.

So our mix of business does have a significant biometric focus. It's longer duration. It has a large mix of assets across private public space, different currencies. And so it's not that kind of shorter duration spread only business that I think is generally thought of when you think about kind of asset leverage going up in some of those concerns. So that's one space where as I kind of go back to my first comment on investor communication or just external communication, being clearer about how we tell that story because I think there really is a difference in the mix of business that we have and that longer duration and our pretty balanced disciplined investment portfolio makes a big difference there. But again, it goes back to that's the mix of business that we're seeing and the biometric piece of it is always there. But when we do it on the coinsurance basis, we take the assets. And so you see that happening.

From an investment portfolio perspective, I think right now, there's been a lot of opportunities in the market in both the public and the private space. Yields are up. And so we look to have a really good balance of that. I mean, certainly, we are heavier on the public investment grade side as we think about liquidity portfolio construction, ALM, et cetera. But we have been taking opportunities as it makes sense for some of the higher-yielding private asset classes as well.

Got it. Okay. That's helpful. What do you think investors misunderstand about RGA today? I think there's a time where you traded at a much higher multiple, and we went through a pandemic. So that changed things. But at the same time, I also kind of felt like it was a proof point a little bit that you're able to manage through without taking too much hit to book value. And what do you think they're missing?

Yes. I think it's a great question. And one of the reasons that I -- it is a priority over the next year as I come into this role. I think one is the asset leverage that we just talked about. So we certainly own wanting to provide more details there to help provide clarity on that piece. I think two is the mix of business. I've said probably biometric a number of times since we started this. But that mix of how much is truly kind of underwriting margin biometric business and what is just spread only versus then the fee business. I think that's another piece where the assumption that anything in financial solutions is spread only is very far from accurate. And so that's something that we have to work towards and do better.

From a communication perspective, just to be clear about the types and the mix of business that we are taking and that there is -- like we don't even focus on the spread-only business anymore. We certainly have some. We did more in the past before it became more of a commodity, certainly in the U.S. But that focus on our biometric expertise and the underwriting margin is something we need to be clear about for sure. And probably those 2 things are the biggest.

Okay. Another topic that I wanted to touch on is just some of the more complex liabilities out there. And in certain cases, it can be biometric type risk, but things like SUL or long-term care and some of the -- I'd say products have been harder to underwrite over time, but maybe the data is becoming a little more fruitful. Are these things that you're interested in? I know there have been sort of parts of deals, but is that something that you engage more in?

Yes. I was going to pile on to the last question. Now I'm glad I didn't because it would be this answer. So we're -- I know we have disclosed our interest many times in those types of liabilities, but we are highly selective of the things that we'll get involved. So we're very comfortable with the complex liabilities that we currently have, and they have performed to meet our expectations. But we are not interested in the broad markets of every product out there. You heard a lot of transactions come to market in '25 and early '26. We really didn't have much interest in those because they didn't fit the profile that meets our risk tolerance, that meets our governance standards, that meets our accounting being in the U.S.

And so -- so we never say never, but we've been fully disclosed about where we would look at those, what are the criteria that we would look at. And so if you take long-term care, which is obviously a big one in that marketplace, there have been a number of transactions that have occurred over the past 1.5 years, and we haven't been involved since the one with Manulife. The one with Manulife was a very specific selection of criteria around that with no premium guarantees, no lifetime benefits, stuff that we feel that we can manage appropriately to the portfolio that we have. And then when you look at it overall, we -- it's less than 10% of our total liability, and we're -- we have no interest in going anything above that.

Got it. So recently, RGA has produced, I'd call it, a lot of strong quarters, even adjusting for things like variable investment income and some of the favorable mortality, et cetera. And would be interested in your views on how sustainable is the earnings power that you all have been printing. What's your level of confidence in how things are running right now?

Yes, sure. I'll start, jump in. So a couple of things, I think, there. One, I mean, the confidence in kind of what we've been printing and going forward is very strong. Like I have strong confidence in being able to hit our targets and continuing to deliver on that generally due to a lot of the things that I've mentioned as we've been talking, right? We have such a strong global platform. We've really seen the benefit of the local presence we have, of the biometric expertise, both sides of the balance sheet, like there's just been a number of opportunities, and we have such a large space to play in across the different markets. We continue to see that happening.

From the kind of sustainability of earnings or how you look at it quarter-to-quarter, we did start to provide that key consideration slide in the earnings presentations that we do each quarter, just to give a better sense of what might be, I guess, noise, I might refer to it in any given quarter. There's always going to be something. And so we wanted to provide that to be able to pull that out and really show just the strength of the core earnings quarter-to-quarter, which, again, between not only the opportunities we have for new business, whether in flow or transactions, but some of the other things I've mentioned that can contribute the asset portfolio being able to reposition, take advantage of the market, the in-force actions that we do, those can be a little bit volatile as far as quarter-to-quarter, but certainly provide a benefit.

Just even the earnings that we're seeing come in from the transactions that we wrote over the last few years. We've talked about the pattern of earnings and how it can take a little bit for some of that to come in. We're seeing the benefit of that come into the earnings. So really a lot of confidence that all of that will continue.

Great. Next, I wanted to ask about the value of in-force. I think sometimes it's a tricky metric, particularly for a lot of U.S. investors to get their head around. Many companies don't really go into as much detail on it. I think the last time you gave it, $44 billion, I think, was the number. It's a very large amount of sort of in-force embedded value. How should we interpret that? Like how should an external investor consider that in the context of investing in RGA? And what does it mean about the emergence of capital over time.

Yes, sure. So $44 billion, definitely a big number, I agree. It's really meant to just show, like you said, the embedded value that we have in our business. It is specifically the present value of the underwriting investment and fee margins, excluding expenses, taxes, cost of capital that are on the balance sheet and expected to come in over time. So we expect, on average, probably that to come in over a 10- to 15-year period. So it's a long period of time, but we have a long-duration business.

And again, it's those different margins and how they will come into income. They should generally come in as expected. I mean we might see some volatility, obviously, quarter-to-quarter as it relates to some of the mortality. But otherwise, it is the present value of those different margins and how we expect them to then influence our earnings and organic capital generation, et cetera, over time.

Got it. One of the other things you talked about is some of the RGA strategic underwriting programs and how they're on track to, I think, double from last year. And how large can that business become over time? And what do the economics look like?

It's a really good example to actually support some of the things that Laura was just talking about. So prior to my current role, I ran the Americas. And one of the things that we wanted to do that we learned from Asia is increase the flow business. How do we get that sort of modernization. Now U.S. is a very different market than Asia. But we developed that. And literally, over the last 4 years, the application counts to the way we measure it is going to double this year. we're just scratching the surface of it, and it is a very unique opportunity for us because most of our competitors cannot scale to accommodate what we're doing in that marketplace in any short order.

And so we took something that we were doing to help our clients handle capacity, the ups and downs of running an insurance company, and we determined that underwriting isn't necessarily going to be a core element of the process going forward, that it's becoming expensive, training underwriters is very difficult, developing them to be full supporting underwriters is even more difficult. And then keeping them after that process, even if you're trying to do it, they end up going to competitors because you just can't keep the compensation up. So we're known as an underwriter. Underwriters enjoy being part of our team, and we've scaled that team very effectively because of some things like AI and some of the tools that we've used to build out that model, but we're just scratching the surface.

As I mentioned earlier, there are 3 companies that we do either all or a significant amount of their underwriting. There are about 30 that we do some elements of it with. And as we move that forward and we continue to demonstrate that capability, it's the U.S. market in particular and then a little bit in Canada, we've got an opportunity, I think, to remove that as a core, turn it into a variable expense and make it a much more productive outcome when you look at the P&L of that company in particular.

That's really interesting. Next, I wanted to ask about just broad regulatory environment. I think over time, it's been highlighted as something that can be an opportunity for RGA when things are changing, whether it's either accounting, regulatory, et cetera. I mean how is that landscape broadly right now? And are there any opportunities that are arising out of it?

I think generally, yes, we generally -- it can be an opportunity for us. The regulations are changing all the time. I mean we have business across multiple different regions, multiple different countries. And so there's constantly different changes going on that we can benefit from or we can help our clients understand and benefit from.

I think it really depends on where it is and what it is, quite honestly, the change. From our perspective, having a local presence, being a super strong counterparty, being around for the last 50-plus years, that generally benefits us as some of these different regulatory changes are coming forward. So most have limited impact on us. We'll see more impact on the clients, and that's where we try to help, but certainly generally positive, I would say.

Yes. And I would -- I mean, obviously, it's a key focal point for us. And so we have very strong relationships with our regulators. In fact, I was meeting with one yesterday. So our goal is to sort of educate them along the way of how reinsurance works and the types of transactions we would do. I would say where you see Japan, where they're doing a lot of product development, they're very tight with their regulators. I think Europe spends a considerable amount of time given all the regulation is very different throughout the European area.

And then in the U.S., obviously, where we're domiciled, but we've spent quite a bit of time with all the regulators to where we do business. And a lot of it's just an education process on both sides. What do they expect, what do they know? And if you met with one reinsurer, you've met with one reinsurer, we're not all the same. And so we try to show the differentiation that we have in sort of the markets where we think we can be quite competitive.

I think the education is a really critical piece there because as we think about expanding the business from different markets to different market and being able to use some of the solutions that we did in the U.S. maybe 10 years ago that now might make sense in Asia, like that education is critical. And we can do that because we have the experience across multiple different products in multiple different regions.

Got it. Okay. Well, look, we are just out of time. So I will stop it there. Thanks, everybody, for being here.

Thank you.

Thank you, Laura. Thank you

Appreciate it. Thank you.

Welcome to the RGA's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

If you have any objections, you may disconnect at this time. Some of the comments made during this conference call, including answers given in response to questions, may constitute forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For more detail on the risks and uncertainties, please refer to the risk factors discussed in RGA's periodic reports to the SEC. For a reconciliation of the non-GAAP measures discussed on this call as well as other information regarding these measures, please refer to the earnings release and other materials in the Investor Relations section of the company's website. There will be references to the earnings presentation slides throughout the call.

I will now turn the floor over to Tony for his opening remarks. Please go ahead.

Good morning, everyone, and thank you for joining today's call. We appreciate your continued interest in RGA. I am delighted to share that we have delivered a record result, building on the strong momentum established at the start of the year. Results were excellent across all regions and business lines, driven by the recent new business placed over the past few years. This quarter benefited from strong investment returns and modestly favorable claims, extending a trend of steady results that demonstrate success on both sides of the balance sheet.

Consistent with the past number of quarters, the results showed our strengths at work, which include deep biometric expertise, strong asset management capabilities, a global platform of local offices, market-leading brand and flexibility to partner across the industry. Our focus is clear. We aim for balanced earnings growth, the smart use of capital and attractive returns over the long term.

Let me walk through the highlights from the quarter. Asia Pacific produced another excellent quarter, driven by continued earnings contribution from new business and additional investment income. Leading with biometric expertise, local experience and long-standing client relationships, we closed several notable deals in the region led by Hong Kong and Japan. These deals were in our sweet spot as they covered both in-force and flow business, leveraged both sides of the balance sheet and showcased the expertise of our exceptional local teams.

EMEA earnings outperformed our expectations. Higher investment income contributed to results and overall claims trends were in line. We also continued to build momentum with new business, completing several transactions across the region and expanded in our existing markets. In the U.S., results continued to be impressive with meaningful contributions from new business and investment income. New business activity in Individual Life remained steady, driven in part by the breadth of our underwriting services that make risk selection faster and smarter for clients.

U.S. Group results also met expectations and continued to benefit from pricing actions taken earlier this year. This quarter demonstrates the advantages of our global reach and flexibility. We deployed capital into in-force transactions and organic flow business across all 3 of our regions and across a range of products. Just as important, we were selective, declining opportunities that did not fit our risk return profile. This discipline is central to how we operate. For the new business closed both year-to-date and for the quarter, the expected returns met or exceeded our targets.

Now let me take a step back and remind you of the strategy driving RGA forward. Once again, RGA's distinctive strengths include deep expertise in biometric risk, proven asset management capabilities, global reach, the leading life and health brand and the flexibility to work with partners across the industry. We apply these strengths in combination across key areas of focus. First, creating win-win transactions that generate higher returns for RGA and greater value for clients. Our 5 decades of experience, global footprint and local market insights enable us to serve clients in our sweet spot, combining best-in-class biometric expertise with diversified investment capabilities.

Next, scaling our global platform to meet the rising demand for risk and capital solutions. Our strong balance sheet and global brand sets us apart as a trusted counterparty. And then third, we are also optimizing our balance sheet through in-force liability management, better risk-adjusted investment returns and both internal and third-party capital sources.

And finally, we focus on capital stewardship, striking the right balance between investing in attractive opportunities and returning capital to shareholders. Here are 3 examples of win-win solutions from around the world this quarter. In the U.S., growth is in part driven by our strategic underwriting programs where volumes are on track to double from last year. This matters because these opportunities are by nature, reinsurance exclusive. RGA's underwriting capabilities are expanding from a value-added service into a primary driver of reinsurance value. For example, one client started by asking for underwriting support, which grew into a broader long-term in-force transaction. This shows how our top-tier underwriting capabilities can be the reason a carrier chooses RGA.

In Asia, we closed a Hong Kong flow coinsurance treaty that helped the key client launch a new product addressing growing longevity needs, leveraging both RGA's differentiated biometrics and investment capabilities. The transaction showcases our ability to combine product development leadership, biometric expertise, risk sharing design, and local execution to deliver innovative client solutions.

In EMEA, we added to our asset-intensive markets in Continental Europe with a new transaction this quarter, another important step in growing our regional presence. This showcases our differentiated asset capabilities and the strength of our brand and teams in the region.

Turning to capital allocation. We have deployed nearly $500 million year-to-date into in-force transactions. And this quarter, we returned $111 million to shareholders, including $50 million in share repurchases and $61 million of dividends. We also announced a 5.4% increase in our dividend to be paid in the third quarter. We maintained a strong balance sheet, ending the quarter with $2.2 billion of excess capital. Balanced use of excess capital is a key part of how we build long-term shareholder value.

Looking ahead, our confidence in 2026 and beyond remains high. Our fundamentals remain strong, and our pipeline remains healthy. Our advantages are durable, and our strategy is consistent with what has created value at RGA for over 5 decades. We are confident we will meet or exceed our intermediate-term financial targets and deliver long-term value for shareholders.

Before I turn the call over to Laura, I want to take a moment to congratulate her on her new role. Laura is a remarkable RGA success story and an outstanding leader. In her 26 years with the company, she has advanced through multiple levels within the finance organization, including leading finance for the largest business unit and serving as Deputy CFO. In her latest position as Chief Strategy Officer, she played a central role in sharpening the enterprise strategy and reinforcing our strong focus on disciplined execution. Having worked closely with Laura for now over 2 decades, I have every confidence that she will excel as our new CFO.

With that, I'll turn the call over to Laura to share her comments on the quarter.

Thank you for the introduction, Tony, and good morning, everyone. Before I start with the results, I want to say how honored I am to take on the CFO role. I am very excited to continue working alongside Tony and our leadership team, and I look forward to developing relationships with our external stakeholders and continuing to deliver on our strategy. As for the results, RGA earned pretax adjusted operating income of $761 million for the quarter or $8.89 per share after tax. Over the trailing 12 months, our adjusted operating return on equity was 18.4%, excluding AOCI and notable items. This was a record operating quarter built on disciplined execution across our businesses.

Two drivers stood out. First, investment results were excellent due to higher new money yields and strong variable investment income. And second, earnings continued to benefit from new business we wrote in recent years, consistent with our expectations. As Tony said, we are successfully leveraging our strategic advantages to deliver strong results, and we are confident in our targets for 2026 and beyond.

Now to the segment results. In the U.S. and Latin America, traditional results reflected favorable individual life claims experience and strong variable investment income. Claims in U.S. Group were in line with our updated view, and our repricing work is on track to deliver solid results through 2026. In Financial Solutions, results were favorable primarily due to VII, in-force action and longevity experience. In Canada, traditional earnings were in line with expectations and Financial Solutions were favorable due to strong VII.

In Europe, the Middle East and Africa, traditional results were favorable, driven by onetime items and Financial Solutions results were favorable driven by higher investment income. In Asia Pacific, Traditional had another healthy quarter driven by new business and Financial Solutions reflected favorable VII and the strong contribution of new business. Finally, our Corporate and Other segment reported adjusted operating loss before tax of $35 million. This was better than our expectations due to, again, strong VII and lower financing costs.

Now turning to premium growth. Our traditional premiums grew 2.2% or 0.9% constant currency, which were impacted in part by previously noted in-force management actions. For total premiums, excluding PRT, year-to-date premiums grew 10.5% or 9.3% constant currency. A growing number of deals within Financial Solutions are tied to biometric underwriting, so focusing on traditional premium growth has become a less informative indicator of biometric underwriting growth at the company. This quarter, we executed additional in-force actions. And while they did not have a notable overall impact to consolidated earnings, they did cut our exposure to capped blocks.

In the U.S., that exposure is down by 25% since we adopted LDTI 3.5 years ago. Reducing our exposure to capped cohorts is a priority as it reduces earnings volatility and improves the overall profile and returns of our business. Our approach here is simple. We partner with clients to build value. That work can take many forms. It can mean new transactions, premium rate changes or recaptures. The expectation is always to improve the long-term value of our business.

Transitioning to claims. On an economic basis, claims came in $31 million better than expectations. The benefit to current period earnings was $14 million. Since 2023, economic claims for the company have run favorable by $375 million, primarily driven by U.S. Individual Life and Asia Traditional as well as contributions from Financial Solutions. As a reminder, the portion not yet in our reported results will flow into earnings over the life of the business.

In our earnings presentation on Slide 7, we highlight key items for the quarter, including claims experience, VII, in-force management actions and other items. The other bucket represents a mix of small adjustments across the portfolio that occur every quarter. Sometimes these items help earnings and sometimes they hurt. This quarter, almost all of them benefited RGA. Over time, we expect these items to net closer to 0. The effective tax rate for the quarter was 23.1% on adjusted operating income before taxes, generally in line with our expected range of 22% to 23%.

I'll now turn to investments. The yield on our core portfolio, excluding VII, was 4.96% in the quarter. Our new money rate was 6.02%, an increase due to higher market yields and higher allocation to investment-grade private assets compared to last quarter. Our strategic asset allocation is designed to take advantage of the higher reinvestment environment in a capital-efficient manner. The new money rate remains above our portfolio yield, supporting steady growth in investment income. Annualized returns for VII were strong at 15% for the quarter and 11% year-to-date, well above our 7% planned returns for 2026.

The outperformance was driven by a combination of realized gains and broad-based alternative equity outperformance. The results reflect sustainable value creation from our diversified alternative equity portfolio. For full year 2026, our strong year-to-date results raise our confidence that we can meet and potentially exceed our 7% target. Overall, portfolio fundamentals are healthy and credit performance is in line with expectations. Our globally integrated investment platform continues to leverage proprietary expertise and strategic asset manager partners to deliver superior liability-driven returns.

Now to capital. We put $158 million to work this quarter into in-force transactions. We are especially pleased with the quality of these deals as we expect returns from this new business to meet or exceed our targets. We returned $111 million to shareholders this quarter, including $50 million in share repurchases. That brings total buybacks to $225 million since restarting our repurchase program in the third quarter of last year. We closed the quarter with about $2.2 billion of excess capital, broadly in line versus last quarter. Our excess capital is calculated annually and adjusted periodically to reflect quarterly activity and update to assumptions.

We manage capital through several lenses. These include our internal economic capital, regulatory and rating agency frameworks. We remain well capitalized across all our frameworks, supporting our counterparty strength and providing financial flexibility. We will continue balancing capital invested in the business with capital we return to shareholders through dividends and buybacks. Over the intermediate term, we continue to target a 20% to 30% payout ratio, but will remain opportunistic. As previously noted, we expect to use $400 million of excess capital to pay down debt this September.

Turning to book value. We extended our long record of growing book value per share. In the quarter, excluding AOCI and B36 effects, our book value per share rose to $174.11. This reflects a compound growth rate of 10.1% since the start of 2021. To sum up, this was a record operating quarter, supported by continuous execution of our strategy. The fundamentals continue to be solid. New business momentum is healthy. Investment results continue to contribute steadily to earnings growth. Capital deployment remains disciplined, and we are focusing on deals that meet or exceed our return standards and fit our risk limits while also returning capital to shareholders.

Our priorities are unchanged; deliver attractive, sustainable returns, manage risk well and deploy capital where we see the best long-term value. Thank you for your continued interest in RGA. This concludes our prepared remarks.

We would now like to open it up for questions.

[Operator Instructions]

The first question will come from Wes Carmichael with Wells Fargo.

Just had a question on traditional premium growth in the U.S. I think there was maybe a modest decline from the actions you've taken. But I think, Tony, in your prepared remarks, you mentioned that volumes are on track to double. So just any color on how you're thinking about traditional premium growth in the U.S. from here?

Yes. Thanks, Wes. Let me kick it up a notch, and I'll hand it over to Laura to talk more specifically about the premium growth. So look, we've had a strong first half of the year. And I'm particularly pleased with the quality, as seen by my earlier comments of the business that we've written in all 3 of our regions. And that's represented by the fact of my earlier comments that we have met or exceeded on our pricing targets. Our pipeline remains strong, high quality and diversified in all 3 regions.

Now just some commentary on the U.S. As you mentioned, we have a very important underwriting program we call the SUP underwriting program, and it has doubled in volumes over the past year. And really, the key point here is twofold. One is these strategic underwriting programs lead to business directly and getting more and more meaningfully, but also lead to indirect business because, as I mentioned earlier that one transaction started off purely as an underwriting program and ended up into a much more material in-force transaction. But I'll allow Laura to comment more on the premium.

Sure. Thanks, Tony. So for the U.S. traditional business, underlying growth has remained solid as we grow share in a stable market, driven in part by the momentum of our underwriting initiatives that Tony just mentioned. For this quarter and the last few quarters, as we have noted, in-force management actions have been -- have impacted U.S. traditional premium growth, while at the same time improving the earnings profile of the business. As a reminder, these actions have cut our exposure to U.S. capped cohorts by 25% since we adopted LDTI 3.5 years ago.

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.

Got it. And maybe switching gears, but just an update on the Equitable transaction maybe. And U.S. Financial Solutions were really strong, but I think benefited probably from some VII. So I just wanted to see how the Equitable business is tracking relative to your prior earnings expectations.

Sure, Wes. Happy to address that. So overall, we remain on track with the financial results expected from the transaction. Claims experience on the block was in line with expectations for the quarter as it has been since the deal closed. So still in line.

The next question will come from Alex Scott with Barclays.

I wanted to get your take on mortality. We've seen a lot of favorable mortality across group life, I think now Individual Life more so. And I think there's even a company or 2 out there that have sort of guided to it continuing. How are you viewing that dynamic? What are you expecting in terms of sort of a benefit on the other side of the pandemic?

Yes. Thanks, Alex. This is Jonathan. I can take that question. I mean, certainly, we're pleased with our overall experience this quarter and more importantly, the continuation of our good year-to-date and longer-term results. And we believe that this reflects our biometric and risk selection expertise and is consistent with favorable population trends that you mentioned. Specific to U.S. individual mortality, our claims experience was in line with expectations in total and for large claims this quarter.

Our capped cohorts were modestly favorable and uncapped cohorts were in line, and there were really no other notable trends to call out when we slice our data by attained age or issue year. On a year-to-date basis, U.S. individual claims experience has been favorable by approximately $70 million, and these results are, again, directionally consistent with what we're seeing in the population and across the industry.

Okay. That's helpful. Second question I had was on the reduction in the capped cohort blocks. I hadn't appreciated the decline 25%. Can you talk about further decline you expect there and some of the actions you're taking?

Sure. I'll start with that. So first, we're pleased that our in-force management efforts have led to a 25% decline in the U.S. exposure to the capped cohorts, reducing our exposure to capped cohorts is a priority for us since it reduces the earnings volatility and does improve the overall profile and returns of the business. I'll also note that the exposure does naturally decline as well as we add profitable new business and older business runs off. But overall, the goal is to continue to reduce our exposure there over time.

The next question will come from Suneet Kamath with Jefferies.

I wanted to start with capital deployment. I guess year-to-date, Tony, as you mentioned, it's about $500 million. I just wanted to sort of frame that relative to, I think, what you've said in the past of deploying about $1.5 billion a year. Is that still a number that we should be thinking about? And you've mentioned your pipeline, so maybe a little bit of color in terms of what that looks like.

Sure. Let me kick that off, and I'll hand it over to Laura. Look, bottom line, we've had a very strong first half of the year. Our pipeline remains healthy. While transaction timing can vary quarter-to-quarter, our return expectations remain unchanged. Both quarterly and year-to-date returns have met or exceeded our targets. I'd like to just highlight a meaningful portion of our business, as you know, of our new business growth over the past 3 years has been sourced through exclusive opportunities, which is a key reason behind these higher returns and the strong results that you're now starting to see over the past few quarters. But hand it over to you, Laura.

Tony. A few other things that I'll add to that. First, I remain confident in achieving our intermediate-term targets of 8% to 10% EPS growth, 13% to 15% ROE and a 20% to 30% payout ratio. Second, and as we have highlighted in the past, we do have several levers to achieve the 8% to 10% EPS growth target, which does provide flexibility. Those include things like the capital deployment into the in-force transactions and organic flow business, positive contributions from our investment portfolio, effective in-force management and shareholder returns.

And I do agree with Tony, we have a healthy pipeline and capital stewardship is a priority for us. Our strategy does allow us to be flexible if we don't like the market opportunities. And to the extent we don't see the opportunities in the market to deploy capital, we will look at options to return capital to shareholders.

Okay. And then I guess a higher-level question maybe for Laura. I think one of the issues that investors struggle with is RGA's earnings mix and just how much of the earnings comes from sort of spread-based business versus your more traditional underwriting. So I was wondering if you could give us a little bit of color in terms of what that mix looks like, both for the overall company and if possible, the Global Financial Solutions businesses together.

Sure. Suneet, thanks for the question. So we don't provide the source of earnings view, as you know, but we do continue to really focus on the biometric risk. One of our key competitive advantages is reinsuring both sides of the balance sheet. And we see that a lot now as we're doing more biometric risk across our Financial Solutions business. We really believe that clients place a higher value on the reinsurance -- on reinsurance partners and solutions that can address both risk on both sides of the balance sheet, and that is a focus for us.

The next question will come from Tom Gallagher with Evercore.

First question is, what percent of your APAC business is Hong Kong? And within Hong Kong, how much is MCV? And obviously, just asking this because of what's come up lately with change in tax law and the potential that the MCV business could slow. But if you could provide some perspective on that.

Thanks for the question, Tom. Look, I'd say a couple of things. We don't give the country breakdown by -- within Asia. But obviously, Asia is a very important area of region for the company, and Hong Kong is an important part of that region. And really, it's too early to comment on the impact of some of the news coming out from the Chinese government. That said, as I mentioned, Hong Kong is an important region for us. I really want to highlight that our business in Hong Kong is very much more protection orientated with less investment income, but we will continue to observe how this evolves over time.

Okay. And then just a broader question about -- when I look at what's happened over the last few years, the asset-intensive business has grown, and it looks like you've done some pretty good deals as well. But it's had the effect of increasing your asset leverage. And I guess my -- and I know part of that is because you've gotten credit for the value of in-force from the rating agencies. But I guess my broader question is, would you expect that trend to continue, meaning your investment portfolio may grow faster than your shareholders' equity? Or do you think it's going to become more balanced over time? Do you see that trend continuing, I guess, is my question?

Sure. Thanks, Tom. So for RGA, asset leverage is really an output, not an input into our business. We manage the business for the best risk-adjusted returns over time. We have done more transactions in recent years due to the opportunities that have presented themselves, which have added to our asset leverage. However, a key to our competitive advantage, like I just mentioned, is the ability to reinsure both sides of the balance sheet.

And it's important to note that a high percentage of our in-force transactions have biometric liabilities attached and a very low percentage of pure asset-intensive or have spread-based earnings only. I'll note our asset-intensive business is different and tends to be longer duration with a biometric risk element where we have re-underwritten the key assumptions before taking them onto our balance sheet, and we expect those blocks then to deliver higher risk-adjusted returns over a longer period of time.

The next question will come from Joel Hurwitz with Dowling & Partners.

Just first on excess capital. Laura, can you just take us through the drivers of the reduction quarter-over-quarter in the excess number?

Sure, Joel. So first, excess capital level this quarter is really fairly consistent with last quarter, especially in the context of the large size of our capital base, and we're pleased with our strong excess capital position. Second, and just as a reminder, our excess capital is calculated annually and adjusted periodically to reflect quarterly activity and updates to the assumptions. We do remain well capitalized across all our capital frameworks and entities, which gives us significant financial flexibility. And we continue to generate strong organic capital that we're deploying in ways to support our targets and the 8% to 10% EPS growth and 13% to 15% ROE.

Got it. And then just a quick one on the capped cohort reduction. How much of that 25% reduction is due to management actions versus what's due to runoff and the new business growth you put on?

Yes, sure. Thanks. I'll address that, too. So we've had a pretty significant focus on our in-force management actions over the last few years that certainly have contributed, I would say, maybe not the majority of that, but a good part. But additionally, it will run off naturally over time just as we add business and the older business runs off.

The next question will come from Pablo Singzon with JPMorgan.

My first question is just Ruby Re. I'd be interested in just getting an update there. Are you fully deployed against the capital that sits there? Would you need to reload? And I guess, more broadly, if you could speak about the business opportunities you see?

Sure. Thanks for the question. So just as a reminder, third-party capital remains a core element of our capital management strategy. It does enhance our flexibility to fund growth and return capital to shareholders while also generating incremental fee income over time. Specific to Ruby Re, we expect to be fully deployed this year, and we are evaluating options and structures for our next sidecar vehicle, which we'll provide more updates on when appropriate.

And then my second question is basically just around -- is about reinsurance activity on legacy liabilities, right? So that's picked up, I think, more broadly and the reinsurers have sort of warmed up to blocks like GUL and LTC that traditionally have been shunned. So I guess the question is, has the activity from your peers changed how you look at these liabilities? Are they seasoned enough? Or have structures evolved enough to make you more comfortable with them?

Yes, Pablo, let me take that, and thank you very much for the question. Look, we remain very selective and disciplined on ULSG and LTC risk. So our appetite for these risks sits in a very well-defined narrow window. Our biometric risk capabilities are second to none and gives us specialized underwriting expertise on these risks. However, we are keenly aware of the need for higher hurdle returns on these lines, especially on a public company balance sheet.

Now ULSG and LTC liabilities are less than 10% of our balance sheet today, and we very much expect it to remain this way going forward. Finally, I'd like to say, look, given our discipline and expertise and our narrow selection criteria, these blocks have performed well and are in line with our expectations over a long period of time.

The next question will come from Wilma Burdis with Raymond James.

Given this is a relatively normal quarter for mortality, is this a good run rate in terms of EPS?

Yes. This is Jonathan. Yes, I think you're right, Wilma, in pointing out that it was a fairly benign quarter for claims experience. So as Laura mentioned, about $31 million of economic favorability across the whole portfolio and about $14 million impact on the bottom line. So like you said, it was pretty normal.

Yes. Thanks, Wilma. I'll just jump in. As you know, we don't give annual EPS guidance. We feel good about the results so far this year and believe they are the results of our disciplined growth strategy and our competitive advantages. Overall, we continue to feel confident in our 8% to 10% intermediate-term EPS growth target.

And then what is the appetite for another large block deal given Equitable has been integrated for about a year? And what are you seeing in the market?

Yes. Look, thank you for the question. Look, we continue to -- we really don't want to speculate or discuss transactions that -- further transactions down the road that could be out there. But we continue to stay focused on our execution of our strategy, which is absolutely combining our unique strengths to win exclusive transactions and replicate those transactions around the globe. And we've been delighted -- we're sticking to that very well-defined strategy and very happy that the results start to show over the past recent quarters.

Our last question of the day is a follow-up from Wes Carmichael of Wells Fargo.

I just wanted to dig in for a second on the earnings power. But just on the onetime items in the quarter, it was pretty material at $0.83. Can you give us just any color on what segments benefited most from that in the period and how much maybe?

Sure, Wes. Happy to address that. So as I mentioned in my script, every quarter, there are small adjustments across the portfolio that may impact earnings. These adjustments can help or hurt us in any given quarter. But over time, we do expect them to net closer to 0. This quarter, almost all the items benefited our earnings, and it really was across all the segments.

I won't quantify each item, but there were a number of smaller items that added up to that $71 million. They consisted of things such as catch-ups on our contract experience, client adjustments and modeling and data updates, all of which did add to the earnings, like I said. I will note, though, that none were indicative of a trend and are all truly onetime items.

Okay. Fair enough. And maybe just last one. But on Alts and VII very favorable in the second quarter with a 15% return. You mentioned that you're on track to meet or exceed. But any color on how you're thinking about the third quarter or the balance of the year, just given what you know now?

Yes. Thanks, Wes. This is Jayson. I'm happy to take that. And as you noted, the second quarter returns of approximately 15% on an annualized basis were strong. Year-to-date, that's around 11% on an annualized basis. And that's clearly above our 2026 expectations of 7%. We're seeing nice broad-based returns, and we feel good about the Alts performance. So while we aren't increasing or changing our target for the remainder of this year at 7%, the strong performance to date definitely gives us increased confidence in meeting and potentially exceeding that expectation for the year. It's really too early, though, for 2027 to have a prediction on that performance, but we'll certainly update you with our expectations if and when they change.

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

Yes. Look, thank you once again for your attention and participation in our call. I'd like to welcome Laura again as our new CFO. RGA is positioned well across the globe given the strength of our global platform and the tailwinds in these markets. We look forward to meeting or exceeding intermediate targets going forward and look forward to your continued partnership. This ends today's Q2 call.

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

Good day, and welcome to the Reinsurance Group of America First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jeff Hopson, Head of Investor Relations. Please go ahead.

Thank you. Welcome to RGA's First Quarter 2026 Conference Call. I'm joined on the call this morning with Tony Cheng, RGA's President and CEO; Axel Andre, Chief Financial Officer; Jonathan Porter, Chief Risk Officer; and Jayson Bronchetti, Chief Investment Officer.

A quick reminder before we get started 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 the 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 for today's call. We appreciate your continued interest in RGA.

As you've seen from our first quarter results, we delivered a strong start to the year with excellent performance across many regions and businesses. The quarter reflects disciplined execution, strong underlying fundamentals and the benefits of the diversified global platform we have built over time.

Building on our strong 2025 performance, we believe our results this quarter further demonstrates that we are successfully executing on our strategy. Our focus remains on well-balanced earnings growth, capital allocation and delivering attractive returns over the long term.

Looking at the financial results, the strength in the quarter was broad-based across our regions and products. I'll highlight a few specifics in the quarter.

Asia Pacific had another strong quarter, driven by ongoing growth and strong execution. We closed a number of notable transactions in the region, particularly in Japan, spanning both in-force and flow deals that includes both asset and biometric risk.

EMEA's earnings continue to reflect good new business with results exceeding expectations. Performance was supported by favorable overall experience and continued momentum in longevity across the region. We closed additional longevity transactions during the quarter by leveraging deep, long-standing client relationships, and we remain optimistic, given our leadership position and differentiated competitive strength.

In the U.S., adjusted operating performance was strong, supported by favorable claims experience and the contribution from recent new business. Activity in U.S. individual life remains robust, demonstrating sustained momentum, in large part driven by our strategic underwriting initiatives. Also, I'm pleased with our U.S. Group results, which are in line with our 2026 expectations.

Moving to claims experience in the quarter. Our economic claims experience was favorable across all regions. While 1 quarter of claims experience should not be overly emphasized, when considered as part of the cumulative experience since 2023, the favorable experience demonstrates the strength of our pricing, underwriting and risk selection.

Additionally, we continue to see profit emergence from business written and capital deployed over recent years. This profit emergence is tracking in line with expectations, as asset portfolios are repositioned prudently over time and claims continues to be in line with expectations.

This quarter was another administration of the strategic optionality in our global platform. Most of the deployment into in-force transactions was in Asia, where we saw the most attractive opportunities from a risk/reward perspective, primarily driven by our range of innovative solutions.

Additionally, we continue to have very good momentum with our flow business in the U.S., where our value-added underwriting solutions and outsourcing efforts sets us apart from competitors.

Equally important to our flexibility is that we are comfortable not proceeding with transactions that do not meet our risk-return trade-off. That discipline continues to be a key feature of both our strategy and our culture.

Now I want to take a brief step back from the details of the quarter and reinforce how we think about RGA's positioning and strategy.

At its core, our approach is straightforward. We focus on life and health risk. We operate globally, and we deploy capital selectively where we believe we have competitive advantages and can earn attractive risk-adjusted returns. Specifically, RGA has several unique strengths, including strong biometric expertise, asset management capabilities, a global platform, market-leading brand and flexibility to partner across the industry.

What is critical is that these strengths do not operate in isolation. They reinforce one another, creating a competitive advantage that is difficult to replicate. When we combine this competitive advantage with a proactive business approach, we create win-win transactions generating higher returns for RGA and greater value for our clients.

Let me share a few examples from this quarter. In North America, we extended a long-standing U.S. client relationship into Canada, where the client was seeking a reinsurer to partner on evolving product offerings. Our global platform enabled an exclusive relationship, while our biometric expertise and collaborative partnership model differentiated us and drove a successful outcome.

In Asia, we closed multiple coinsurance transactions by leveraging our ability to reinsure both sides of the balance sheet, combining asset management and biometric expertise. These wins across both flow and in-force transactions reflect the strength of our local presence and our position as a trusted counterparty.

Lastly, in EMEA, we completed an exclusive transaction with an insurance company that leveraged our biometric expertise to unlock value from its in-force portfolio. The structure generates incremental capital to support the partner's growth, and we expect to replicate this model in EMEA and other parts of the world going forward.

On the capital front, we again repurchased shares, allocating $50 million this quarter. A balanced use of excess capital is an important part of our strategy to generate long-term shareholder value.

Looking ahead, our confidence in the outlook for 2026 and beyond remains high. The fundamentals of our business are strong. Our pipeline is healthy, our competitive advantages are durable, and our strategy is consistent with what has driven value creation at RGA for the past 5 decades. We are confident that our disciplined execution of our strategy will enable us to deliver on our intermediate-term financial targets and long-term value for shareholders.

With that, I'll turn the call over to Axel to walk through the financials in more detail.

Thanks, Tony. RGA reported pretax adjusted operating income of $611 million for the quarter or $6.97 per share after tax. For the trailing 12 months, adjusted operating return on equity, excluding notable items, was 16.2%. We delivered another strong quarter, reflecting disciplined execution across our businesses. Results were driven by continued earnings emergence from business written in recent years, favorable underlying experience and solid investment performance.

As Tony mentioned, we continue to leverage our strategic advantages, reinforcing our confidence in delivering on our targets in 2026 and beyond. We deployed $338 million into in-force transactions in the quarter. We remain selective in our capital deployment and are pleased with the quality and expected returns of new business generated.

On the Traditional side, our premium growth was 5% compared to prior year, which benefited from good growth across EMEA and APAC. In the U.S., Traditional premium growth was up approximately 1% over prior year as the strategic recapture of certain treaties as a result of management actions in the second half of 2025 impacted results.

Overall, we continue to see very strong momentum in our strategic underwriting initiatives, including record volumes in the quarter and pipeline opportunities for block transactions, which reinforce RGA's biometric expertise advantage.

It's worth reminding everyone that the premium generated from the Equitable transaction last year is included in our Financial Solutions results and not reflected in the Traditional premium growth metrics.

We completed $50 million of share repurchases in the quarter, bringing total repurchases to $175 million since we reinstated buybacks in the third quarter of last year. Our capital position remains strong, and we ended the quarter with estimated excess capital of $2.4 billion and estimated next 12 months deployable capital of $2.9 billion.

The effective tax rate for the quarter was 24.4% on adjusted operating income before taxes, above the expected range due to the jurisdictional mix of earnings and an increase in the valuation allowance on tax credits.

Turning to biometric claims experience. Economic claims experience was favorable by $117 million in the quarter, with a corresponding favorable current period financial impact of $4 million.

Over half of the economic experience was driven by U.S. individual life, and every region had favorable experience. Most of this experience was deferred to future periods due to uncapped cohorts, and the portion included in the current period income was partially offset by unfavorable experience in EMEA traditional capped cohorts.

Claims experience in U.S. group was in line with updated expectations, and we continue to believe that our remedial actions taken last year will generate solid results in 2026.

Taking a step back, since the beginning of 2023, economic claims experience for the total company has been favorable by $343 million. As a reminder, the favorable economic experience that has not yet been recognized through the accounting results will be recognized over the remaining life of the business.

On Slide 7, we highlight certain key considerations for the quarter, including actual to expected biometric claims experience, variable investment income and other key items. After considering these impacts, we view run rate EPS for the first quarter at approximately $6.70 per share.

As a reminder, for 2026, we are assuming a 7% variable investment income return. This is below our longer-term expectations of 10% to 12%, primarily due to a still muted environment for real estate sales, which is when income from these investments is recognized.

As indicated in this table, there were no material in-force management actions in the quarter. We remain active in managing our in-force blocks, but the timing and size of these actions is difficult to predict.

Moving to the quarterly segment results. The U.S. and Latin America traditional results reflected favorable claims experience in individual life and good individual health results. As mentioned, experience in U.S. group was in line with expectations. The U.S. Financial Solutions results were in line with our expectations.

Canada traditional results reflected favorable individual life and group claims experience, while the U.S. -- while the Canada Financial Solutions results were in line with expectations.

In the Europe, Middle East and Africa region, the Traditional results reflected the timing benefit on an annual premium treaty, partially offset by unfavorable claims experience in capped cohorts. Economic claims experience was favorable. EMEA's Financial Solutions results reflected the contribution from recent new business and favorable overall experience.

Turning to our Asia Pacific region. Traditional had another good quarter, reflecting favorable overall experience and the benefit of ongoing growth. Financial Solutions results reflected the timing impact of new business portfolio repositioning and unfavorable foreign currency impacts.

Finally, the Corporate and Other segment reported an adjusted operating loss before tax of $65 million, primarily due to the timing of certain compensation expenses and slightly unfavorable [ variable ] investment income.

Moving to investments. The non-spread book yield, excluding variable investment income, was 4.85% in the first quarter. While the new money rate was lower at 5.64% in the quarter, primarily driven by a tactical allocation towards high-quality public corporates, it remains above our portfolio yield, thus providing a continued tailwind to our overall book yield.

Total company variable investment income was modestly below our 7% yearly return expectations by around $8 million. Overall, our portfolio quality remains high and credit impairments were favorable relative to our long-term expectations.

Before moving on, I want to spend a couple of minutes discussing our private credit strategy. We included updated information on our portfolio in the earnings presentation. Our allocation to private credit has been a measured and important part of our long-term investment strategy for many years, and we manage this exposure through a rigorous asset liability management framework.

We invest selectively in a diverse range of private credit assets when they are a good match for our stable liability profile and deliver attractive risk-adjusted returns through incremental illiquidity premiums with greater downside protection.

Private credit represents approximately 9% of our total portfolio and is highly diversified across many issuers and multiple asset categories, including investment-grade private placements, private asset-backed securities, fund finance, infrastructure debt and middle market loans. The majority of our private assets are rated investment grade.

In addition, the vast majority of our below investment-grade private assets are comprised of first lien senior secured loans underwritten by our experienced internal team, which provides better visibility into underwriting, tighter covenants, stronger downside protection and more control over credit selection.

Overall, fundamentals across the portfolio remain healthy. Credit performance has been in line with expectations, and we manage this portfolio with the risk discipline you expect from RGA.

Turning now to capital. Our excess capital ended the quarter at an estimated $2.4 billion, and our next 12 months deployable capital was an estimated $2.9 billion. It's important to note that we manage capital across multiple frameworks, including internal economic capital, regulatory capital and rating agency capital frameworks. We maintain ample regulatory capital across jurisdictions we operate in while supporting strong ratings that underpin our counterparty strength.

Across these frameworks, we remain very well capitalized. Additionally, we will continue to balance capital deployed into the business with returning capital to shareholders through quarterly dividends and share repurchases.

We intend to remain opportunistic with share repurchases and expect total shareholder return of capital to range between 20% to 30% of after-tax operating earnings over the long term. We also expect to allocate $400 million of excess capital to reduce financial leverage during 2026.

During the quarter, we continued our long track record of increasing book value per share. As shown on Slide 16, our book value per share, excluding AOCI and impact from B36 embedded derivatives increased to $167.92, representing a compounded annual growth rate of 9.9% since the beginning of 2021.

To summarize, this was another strong quarter for us, and we are confident in our ability to achieve our intermediate-term financial targets. The underlying fundamentals across our business are solid. New business momentum is healthy and investment performance continues to support earnings growth.

Capital deployment remains disciplined, focused on transactions that meet our return thresholds and fit our risk framework while continuing to return capital to shareholders. Our priorities are unchanged: deliver attractive, sustainable returns while appropriately managing risk and deploying capital where we see the best long-term value.

With that, I thank you for your continued interest in RGA. This concludes our prepared remarks. We would now like to open it up for questions.

[Operator Instructions] The first question comes from Suneet Kamath with Jefferies.

I just wanted to start on capital deployment. I guess in the past, we've spoken about needing $1.5 billion of deployment to hit the 8% to 10% EPS growth. Even if we consider the debt maturity that's coming, I mean, your excess is 2, your deployable is 2.5. So do you think you have enough opportunities to sort of meet that or exceed that $1.5 billion? Or are you still -- is that still sort of the base case for this year?

Yes. Thanks, Suneet. This is Axel. Yes, look, when we look at capital deployment for the quarter, we're tracking right in line with our expectations. As always, we're going to continue prioritizing quality over quantity just as we did this quarter. We are pleased with the types of transactions and the return expectations that we're generating. We have strategic optionality embedded in our platform, and we will continue to allocate capital towards the most compelling opportunities across the globe as well as returning capital to shareholders.

So we believe that we can achieve our financial targets through this combination of capital deployment and return of capital to shareholders.

Okay. And then I guess on the Equitable transaction. Now that Equitable and [ Corebridge ] are planning to merge, does that impact your flow reinsurance agreement that you have with Equitable? And there any other sort of concentration issues that we should think about as those two companies come together?

Suneet, thank you for the question. Look, we don't want to comment too much on any one client. Obviously, we have a strong partnership with Equitable and expect this to continue.

Look, we remain very pleased with the transaction executed last year, do not expect any impacts as a result of this news either on the in-force or the flow transaction. And just to bring it up a level -- look, for the U.S. overall, we remain very optimistic as we continue to benefit from our strategic positioning around our biometric and underwriting strength.

The next question comes from Mike Ward with UBS.

Just wondering if you guys could dig into the mortality favorability in the U.S. at least. It's just -- it's persistently been, I think, just surprisingly favorable. And I just -- I feel like you guys must have among some of the best data across the space, right, in terms of the underlying trends. So I was just wondering if we could dig into that a little bit.

Yes. Mike, this is Jonathan. I'm happy to address that. Speaking of our own experience, our Q1 claims experience was stable, and that was due to a lower frequency of claims, both large claims and non-large claims. Uncapped cohorts were favorable and capped cohorts were in line. I would say there are no other significant trends to call out in our own data experience that we saw in the quarter.

When I bring it up to a population level, the flu season was more moderate this year than last year based on CDC data and peaked at the end of December. And I would say population excess mortality when you look over 2024, 2025, continues to be modest. So we're seeing reasonable trends there.

So I guess what I really mean is like if we think about over kind of a longer-term period, I think Axel, you mentioned a $300 million economic benefit that you haven't recognized yet. Just -- I know there's probably an element of COVID pull forward. There's the GLP-1s coming on, that was more of kind of what I meant.

Okay. Yes. I mean, certainly, we're pleased to see that there are some favorable tailwinds in the future on the horizon. So you mentioned GLP-1 specifically. So just to reiterate, we haven't made any material changes to our assumptions due to GLP-1s, but the benefit we expect to see does give us more confidence that our existing mortality improvement assumptions will be realized in the future.

We continue to see signs of positive momentum as well related to GLP-1s in 2026 with the recent approval of oral GLP-1s, reducing prices and broadening access, including Medicare and Medicaid coverage in the U.S. So that's a trend we continue to follow. And if and when appropriate, we would reflect that in our assumptions.

Okay. And then just on the excess capital, I saw in the slide deck, you had mentioned there was, I think, $200 million negative impact from correction to subsidiary regulatory capital. I was just hoping you could run through that math, what drove that?

Yes, happy to take that. This is Axel. So each year, we update our excess capital estimates as part of the completion of our annual regulatory and rating agency capital models.

The adjustment that's discussed on the slide reflects, first, a correction in one of our subsidiary regulatory capital calculations; second, annual experience and assumptions updates; and third, changes to subsidiary excess capital from finalizing year-end calculations and as well as additions to the entities included in the analysis.

Importantly, we remain very well capitalized across all our legal entities and capital frameworks that provides us with significant financial flexibility to deploy capital into the business and return capital to shareholders.

The next question comes from Wes Carmichael with Wells Fargo.

My first question was just on earnings seasonality. And in the past, especially before LDTI, I think we thought about the first quarter as being weaker from an earnings perspective, particularly from mortality in the U.S.

When you step back now in a post-LDTI world, how should we think about all the geographies, but the seasonality in terms of the first quarter versus the rest of the year?

Yes, Wes, this is Jonathan. Thanks for the question. We do expect some higher claims in the winter months, as you point out, both from the flu and from other causes. Our assumptions reflect the seasonality, which is incorporated into our reserves. So an average flu season is essentially built in as higher Q1 claims expectation.

So under LDTI, we would expect any differences to that higher expectation to be partially offset from an earnings perspective, although this is dependent on how the experience emerges by type of cohort. The seasonality assumption is something we routinely review as part of our annual assumption process.

Okay. But Jonathan, any help with -- I mean, how we can think or maybe just like in a percentage basis of how much lower the first quarter would be in the rest of the year?

Yes. And I think because we take the seasonality into account, I think that levelizes what you would expect from an earnings perspective to a large extent other than potentially some seasonality that comes through on uncapped cohorts. So I think under LDTI, there should be less earnings impact from that than you would have seen in the past.

The next question comes from Wilma Burdis with Raymond James.

Just to make sure we understand correctly, the $26 million benefit will slip to be negative ending in the year at 0. Is that correct on the margin? And then it will come out evenly across the next 3 quarters? Just help us understand that piece a little bit.

This is Axel. Yes, the -- so for the EMEA segment, this is a -- this relates to an annual premium treaty where the premium from an accounting perspective is recognized all in the first quarter while the claims come through the 4 quarters. This is something that we've had already last year and before. And so assuming those treaties stay in place, that would continue to be the case, this pattern of earnings would continue to be the case in the future.

Okay. And maybe you could talk a little bit about what you're seeing on new in-force block transactions. There's been a lot of strong interest in the market in general, but maybe some ebbs and flows there. Can you just talk about what you're seeing there on spread expectations and also the level of interest in more complex deal structures?

Yes, sure. There's a lot there. Let me firstly start off just our pipeline. I'll give some color to that. Look, we see the pipeline remains strong, high quality and very importantly, diversified across the globe. So I'll take you through just the 3 regions.

Firstly, Asia continues to be strong, both in our product development area as well as serving the middle class as well as the financial solutions as clients adjust to new capital frameworks in markets such as Japan and Korea. In the U.K. longevity, we continue to be a market leader, and we're seeing continued business -- strong business momentum there, driven by our immensely strong team. And in the U.S., we continue to benefit from strategically repositioning around our biometric and underwriting strength as well as the industry realignment that's taking place there. I just want to reiterate and remind everyone that, look, our focus is very much on our sweet spot, which combines both the biometric and asset capabilities. And we are very disciplined and will not hesitate to walk away from any transactions that do not meet our risk return trade-off.

The next question comes from Tom Gallagher with Evercore ISI.

First question is just on a bit of the slower growth you saw in U.S. Trade. Can you talk a bit about what's going on in that market more broadly? Like is the market slowing somewhat? Are companies ceding less? Or has that been stable? I'm just wondering if the broader industry is becoming more constructive on mortality, whether companies might look to retain more themselves.

Okay. Tom, this is Axel. I can get started and pass it on to Tony for a bit more color on the business. So look, in 2025, we had some strategic recaptures as part of management actions that reduced the ongoing premiums. So that makes the year-over-year comparison more challenging. This is actually a good thing because the recaptures tended to be lower quality and less profitable blocks. And this also reduces volatility.

So let me remind you that the premiums also that are associated with the Equitable block are now reported in the Financial Solutions segment. But look, ultimately, we are pleased with our U.S. traditional business as we continue to improve the overall risk profile and as we see strong momentum in our strategic underwriting initiatives. We're confident that this performance will be reflected in our results over time.

Yes. And look, there's just not much to add to what Axel said, except for -- we had a very strong 2025 on U.S. Trade. And when we say that, it's the type of transactions, the focus on underwriting biometric capabilities. That momentum absolutely continues on into '26. So we continue to be very optimistic and positive around our prospects on the U.S. traditional business are winning very high-quality business at very good returns and adding a lot of value to our client partnerships.

And guys, do you have any sense of session rates though for the industry more broadly? I'm just curious, has that been stable? Is that changing at all?

Yes. Look, we don't have that at our fingertips at the moment. I mean we focus once again on delivering just those comprehensive solutions where it could be in product development nature, it could be underwriting solutions in nature. So I really focus on adding that value to the client in partnerships. So the session rates itself, I mean, obviously, we note over time that we feel we can control our own destiny by really focusing on our clients' problems and looking for win-win solutions.

The next question comes from Joel Hurwitz with Dowling & Partners.

So earlier this year, you guys brought up the prospect of potentially launching a sidecar for complex liabilities like long-term care and universal life with secondary guarantees. Just wanted to see if you could provide an update on that potential vehicle and if you're seeing parties interest in committing capital to it.

Yes. Thanks, Joel. This is Axel. So let me start by saying, look, third-party capital remains a core element of our capital management strategy. It enhances our flexibility to fund growth, return capital to shareholders while also generating incremental fee income for our shareholders over time.

Our current focus is on fully deploying Ruby Re, which is still expected this year. There are pros and cons to various sidecar structures and types of liabilities. But I would say it's too early for us to be specific on this as we're focusing on completing Ruby capital deployment. We will update you as appropriate. As it relates to ULSG, long-term care risks, at the end of the day, these risks are less than 10% of our balance sheet today, and we expect it to remain this way going forward.

Got you. That's helpful. Maybe just on Ruby Re, how much capital do you have left to deploy this year?

Yes. So we have the last piece of capital identified in terms of the blocks of business that are going to go to the sidecar, and we're just in the process of getting that approved by the investors and then working through the process with our regulator.

The next question comes from Pablo Singzon with JPMorgan.

My questions are not about the quarter specifically for [indiscernible] for indulging me. So first, there's this widely held industry view that as the P&C cycle softens, the large multiline European reinsurers tend to be more competitive in the life side. So do you agree with that view? And if so, how do you think competition from that part of the market unfolds given price softening in P&C?

Sure. Pablo, let me take that. Look, what you share is a view. I've heard both sides of that equation as to when the P&C cycling softens or hardens. So let me try and address competition in general as to how we see it. Look, in our spot, where our sweet spot where we focus on transactions with both biometric and asset risk, it continues to be very stable. We focus on the sweet spot by leveraging off our key strengths, our strong local presence and relationships. And in some ways, we feel RGA is unique, one of one player in that space.

In addition is that with our global platform, we have this strategic optionality to pursue the best risk-adjusted opportunities that arise around the world. So with that all in mind, we remain very excited about our business momentum and disciplined positioning in the reinsurance market.

And then my second question also has to do with competition, but from a different angle. So an increasing number of U.S. primary insurers are setting up internal reinsurance captives to generate capital efficiencies and some have even started writing third-party business. And some of them have set up side cards that are not that different for Ruby Re. So I guess what's your view on this trend? Does it reflect just enormous market opportunity? Or is it a sign of just more competition entering the space?

Yes. Let me try and address that. We definitely have been seeing that increased competition in various markets around the world. But that competition, once again, is really more for the vanilla asset-intensive type transactions. And that's what these vehicles are really being set up for. Once again, I'd just reiterate, our sweet spot is transactions that have both asset and biometric risk. We feel we're really uniquely positioned 101 to do that. Whether it's in Japan where this market is large or in the U.S., we are very optimistic about our ongoing momentum in these markets. And Q1 was a really strong proof point of our success in executing on our strategy in this area.

The next question comes from Alex Scott with Barclays.

First one I had for you is on some of the in-force management actions you guys have done over time. I felt like maybe there's a heightened element of that over the last few years. I just wanted to understand where we're at in the sort of time frame of completing that. Is there some of that still ahead of you? Are we at the point now where it's more just sort of normal course? And I guess, specifically on older age experience, are you still seeing the need to do some of that action on those blocks specifically?

All right. Thank you, Alex. This is Axel. Let me take that. Look, managing our in-force business, like I said, is a core part of our strategy and will continue to be. We've had very good success with these efforts over the past several years. And in the first quarter, specifically, we did not have any notable in-force management actions. We expect to remain active going forward, but the timing and size of these actions is unpredictable. So we're projecting a more limited financial impact compared to recent experience in the near term.

Got it. That's helpful. Second question I have is, I think in the U.K., there's some proposed regulation around captive reinsurance and limiting some of the uses of that. I mean, is there anything around that, that could be an opportunity or I guess, a risk at all to your structures? Just interested in how that might impact you?

Yes. Alex, this is Jonathan. So yes, I think you're referring to the recent information that's come up from the PRA related to counterparty charges. So that's very new. But at this point, we don't expect it to have a big impact on our business. It's related to funded reinsurance and the majority of our longevity business that we do in the U.K. is on a swap basis, where we take just the longevity risk and not the asset risk.

Just to size our block for you, about 90% of our in-force block for our longevity business is done on a swap basis. Our initial industry takeaways are that there may be a compression of overall economics for ceding companies due to the higher charge, but there will also be an increased linkage to reinsurer credit quality and collateral strength, and that should favor strong counterparties like RGA.

There is a follow-up question from Wes Carmichael with Wells Fargo.You may be muted.

Apologies. Can you hear me?

Yes.

My follow-up is on the economic biometric experience, just the $343 million that's going to be recognized in future periods. Can you just give us a sense on -- is it material over the next 12 months? How much of that comes in? Or is the duration longer that's probably pretty small?

Yes. Thanks, Wes, for the question. So that amount, right, meaning the difference between the economic claims experience that has not yet been recognized through the accounting results has grown in recent periods, and it's going to come through the accounting results over a long time period. The current annual impact to future earnings is baked into our expectations, and it's approximately $20 million a year.

Got it. That's helpful. And the follow-up, just on a regulatory topic. I think over the past, call it, 1.5 years, the NAIC has worked on this actuarial guideline 55 on asset adequacy testing for reinsurance. I think it's disclosure only, but curious if there's any impact to RGA, if you think this is material for the industry or not? I just want your color on that.

Sure. Yes, happy to take that. So in the U.S., our standard business practice utilizes our flagship U.S. entity, RGA Re, as the reinsurer-facing clients. As an onshore entity, our clients can confidently transact with a AA-rated counterparty and be exempt from AG 55. We believe that's an attractive option for our clients, especially combined with our broader solutions and the partnership mindset that we bring to those long-term reinsurance relationships.

For RGA, we're constantly modeling transactions across a variety of accounting and capital frameworks, and we have an open dialogue with our regulators on the expected impacts of any regulations. Our business model does not rely on any particular regulatory regime. So the additional requirements of AG 55 are really just an extension of our existing practices from a regulatory perspective. We do not expect it to have a material impact for RGA.

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

Yes. Look, thank you for your continued interest in RGA. We are pleased with the strong start for the year, and we look forward to continue to deliver in the future. This concludes our Q1 conference call. Thank you.

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

Welcome to the Reinsurance Group of America Fourth 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, Head of Investor Relations. Please go ahead.

Thank you. Welcome to RGA's Fourth 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 started 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 our call. Last night, we reported Q4 operating EPS of $7.75 per share which is our second consecutive record quarter in terms of earnings. Our adjusted operating return on equity for the trailing 12 months, excluding notable items, was 15.7% which exceeded our intermediate-term target range of 13% to 15%. The quarter capped off another year of excellent financial results with strength across our businesses and geographies. These results underscore the value and diversity of our global platform and the exceptional work of our local teams.

Looking back at the full year 2025 results, we delivered record operating EPS generated 15.7% ROE and increase the value of in-force business margins by 18%. From a capital perspective, we deployed $2.5 billion of capital into in-force transactions at attractive risk-adjusted returns, reinstated share buybacks and maintained a strong balance sheet with $2.7 billion of excess capital. These are clear indicators that we are successfully delivering on our strategy and are on track to continue meeting or exceeding our intermediate-term financial targets.

Now let me highlight a few specifics from the fourth quarter. Beginning by region. The U.S. was particularly favorable driven by management actions and variable investment income with individual life mortality in line with expectations. EMEA results reflect strong volume growth and favorable experience, and APAC continues to see growth momentum along within false actions. In the quarter, we benefited from the continued contributions of our balance sheet optimization strategy.

We saw the positive effects of various management actions in terms of current earnings and ROE, an increase in future value and an improvement in our liability risk profile. These actions are a regular part of our daily operations, but the timing and size can be difficult to predict. Additionally, we continue to see contributions from new business that we have added over recent years, including the Equitable block. We are confident that our most recent vintages of new business will generate risk-adjusted returns that meet or exceed our targets.

Moving to investments. Our team and platform delivered strong results boosted by variable investment income coming from our alternative investment portfolio. Our team continued their efforts to reposition certain acquired portfolios and we are on track to see these benefits in the periods ahead.

To be clear, our portfolio repositioning leverages our expertise on both sides of the balance sheet with strong asset liability management to incrementally enhance our risk-adjusted returns. Additionally, we continue to expand our capabilities, including external partnerships to enable us to offer superior client solutions.

On the capital front, we again repurchased shares, allocating $50 million this quarter at attractive prices. A balanced use of excess capital is an important part of our plan to generate long-term shareholder value.

Shifting to full year 2025 performance our diversified global platform continues to deliver strong long-term results. Our operations in North America Asia and EMEA have all been successful in executing on our strategy and delivering attractive financial results. Our APAC region produced excellent bottom line results for the year.

Pretax operating income, excluding notable items, was up 18%, reflecting strong underlying growth and favorable underwriting experience. This business continues to grow at a nice rate given our success in delivering product development across the region as well as some of the favorable market and regulatory dynamics in places like Japan and Korea that lead to a high level of opportunities to solve client issues through in-force transactions.

In EMEA, our full year pretax earnings, excluding notable items, were up 35% and reflecting continued strong new business growth, along with favorable experience. North America North American results reflected the contribution from the Equitable block, which continues to perform in line with expectations and strong contributions from in-force management actions. These positives helped overcome the challenging results from U.S. Group specifically the excess medical business. We fully repriced this business for 2026 and expect a significant improvement in results over the next year.

Looking beyond the recent renewal cycle, we completed a broader strategic review and have decided to exit the group of care lines of business. For the year, both organic low and input transactions were very strong, with in-force transactions, particularly robust from the Equitable bill and a wide range of other opportunities that we executed on.

Focusing on organic new business. We continue to have very good success and momentum built on our long-established biometric expertise and innovative mindset. We continue to see ongoing strength in Asia driven by our product development and range of innovative solutions. Similarly, in the U.S. our value-added underwriting solutions and underwriting outsourcing efforts have given us strong momentum in a market that is generally considered mature.

The 2025 success I've highlighted are visible in the increased value of in-force business margins. We introduced this concept in 2024 to convey the underlying value and future earnings power of our in-force business. It is a measure of how much value is being created by a range of means, most importantly, new business but also management actions and experience.

In 2025, the value increased by $6.6 billion or 18%, with meaningful contributions from both new business and management actions. Over the past 2 years, the future expected value has increased by over $11 billion or approximately 16% per annum.

Stepping back, let me provide some perspective on how we are positioned today and for the future and why we expect to deliver on our strategic and financial objectives. RGA has several unique strengths, including strong biometric expertise, asset management capabilities, a global platform, market-leading brand and flexibility to partner across the industry. We leverage these strengths as we execute across 4 key areas of focus.

First, we use a proactive business approach to create win-win transactions generating higher returns for J and greater value for our clients. Second, we optimize our balance sheet, including in-force liability management, improved risk-adjusted investment returns and leveraging third-party and internal sources of capital. Third, we operationally scale the platform and ensure that our portfolio of businesses aligns with the opportunities in the market. And lastly, we maintain a sharp focus on capital stewardship, ensuring we achieve the right balance between allocating capital to attractive business opportunities and returning capital to shareholders, which is critical to us.

Whether it is the record 2025 results over the past 3 years where we have met or exceeded our ROE and EPS targets, RGA is delivering successfully on our strategy. We have strong momentum a clear focus and the right strategy, and we remain confident in our ability to generate attractive shareholder value going forward.

With that, I will turn the call over to Axel.

Thanks, Tony. RGA reported record pretax adjusted operating income of $515 million for the quarter or $7.75 per share after tax. For the trailing 12 months, adjusted operating return on equity, excluding notable items, was 15.7%. During the quarter, we achieved strong results across our global businesses. This was generally driven by the continued emergence of earnings from recent new business, including the Equitable block, favorable in-force management actions and strong investment performance.

As Tony mentioned earlier, we continue to execute on our strategic initiatives, which positions us well for 2026 and beyond. I'll speak a bit more about 2026 expectations shortly. We deployed $98 million into in-force transactions in the quarter and $2.5 billion for the full year. We remained selective in the quarter. but overall, had a very successful year across multiple geographies and products. The traditional side, our premium growth was 7.4% year-to-date on a constant currency basis which has benefited from strong growth across North America, EMEA and APAC.

Premiums are a good indicator of the ongoing vitality of our traditional business, and we continue to have strong momentum across our regions. We also completed $50 million of share repurchases in the quarter at an average price of $187.4 and bringing total repurchases to $125 million since we reinstated buybacks in the third quarter.

Our capital position remained strong, and we ended the quarter with estimated excess capital of $2.7 billion. and estimated the next 12 months deployable capital of $3.4 billion. The effective tax rate for the quarter was 23.8% on adjusted operating income before taxes and 22.8% for the full year 2025. Looking ahead to 2026, we expect a tax rate in the range of 22% to 23%.

We continued our balance sheet optimization strategy in the quarter with additional in-force management actions. For Q4, these actions had a $95 million favorable financial impact. Managing our in-force block remains a core part of our strategy and has significantly contributed to results over the past few years. As a reminder, these actions come in various forms, ranging from large upfront actions such as strategic recapture to more recurring items like rate increases on specific blocks of business.

Turning to biometric claims experience, as outlined on Slide 11 of our earnings presentation. Economic claims experience was unfavorable by $51 million in the quarter with a corresponding unfavorable current period financial impact of $53 million Approximately half of this result was driven by the U.S. group business. consistent with the updated expectations that we communicated earlier in the year. Claims experience in U.S. Individual Life was in line with expectations.

Taking a step back, since the beginning of 2023, when we more fully emerge from COVID, economic claims experience for the total company has been favorable by $226 million. As a reminder, the favorable economic experience that has not been recognized through the accounting results will be recognized over the remaining life of the business.

Before getting into the segment results, I'd like to discuss a new slide, highlighting certain considerations for the quarter and the year. On Slide 9, we've included details on the financial impact of certain items, including actual to expected biometric claims experience, variable investment income and in-force management actions. After considering these impacts, we view run rate EPS for 2025 at approximately $24.75 per share which we believe provides a reasonable basis to apply future EPS growth expectations.

We are also reiterating our intermediate-term targets of 8% to 10% annual EPS growth and a 13% to 15% return on equity. Regarding ROE, we acknowledge that we are running at or above the high end of the range, and we'll continue to evaluate this target. For 2026 specifically, we are assuming a 7% variable investment income return. This is above the 6% in 2025, though below our long-term expectations of 10% to 12%, primarily due to a still muted environment for real estate sales, which is when income from real estate assets is recognized.

Regarding in-force management actions, our activity has been elevated in recent years. generating earnings of about $75 million in 2023, $225 million in 2024 and $135 million in 2025. We will remain active going forward. but the timing and size of these actions is highly unpredictable. Thus, we are projecting a more limited financial impact compared to recent experience. Additionally, we will continue to balance capital deployed into the business with returning capital to shareholders through quarterly dividends and share repurchases.

Our base case expectation for capital deployed into in-force transactions is around $1.5 billion in 2026. And we also expect to allocate $400 million of excess capital to reduce financial leverage during 2026. We intend to remain opportunistic with share repurchases and expect total shareholder return of capital to range between 20% to 30% of after-tax operating earnings over the intermediate term.

Moving to the quarterly segment results on Slide 7. The U.S. and Latin America traditional results reflected the favorable impacts from in-force management actions and strong variable investment income. These were partially offset by the expected unfavorable group claims experience noted earlier in the year.

A quick note on the group business. The block is now fully repriced, and we expect significant improvement in 2026 results back towards our historical run rates. The U.S. Financial Solutions results reflected the contribution from the Equitable transaction, which continues to perform in line with our expectations. The Equitable business generated earnings consistent with our $60 million to $70 million guidance for the second half of 2025, and we continue to expect $160 million to $170 million of earnings from the transaction in 2026.

Canada traditional results reflected favorable impacts from group and individual life businesses. The Financial Solutions results were in line with expectations. In the Europe, Middle East and Africa region, the traditional results were largely in line with expectations with favorable other experience, offset by modestly unfavorable claims experience.

EMEA Financial Solutions results reflected favorable longevity experience and strong growth in the segment. We continue to see high-quality opportunities, and the longevity business remains an area of notable growth for us.

Turning to our Asia Pacific region. Traditional had another good quarter, reflecting favorable underwriting margin and the benefit of ongoing growth. The segment performed very well this year, which is a reflection of our excellent competitive position and our execution of value-added solutions to clients. The Financial Solutions results were in line with expectations.

Finally, the Corporate and Other segment reported an adjusted operating loss before tax of $54 million, impacted by higher financing costs and general expenses. For 2026, we expect a corporate and other loss of approximately $50 million to $55 million per quarter.

Moving to investments on Slides 12 through 14. The nonspread book yield, excluding variable investment income was slightly higher than Q3 primarily due to new money rates in excess of portfolio yields. While the new money rate was lower in the quarter, primarily due to lower market yields and a lower allocation to private assets, it remains above our portfolio yield, providing a tailwind to our overall book yield.

Total company variable investment income was above expectations by around $48 million, driven by higher limited partnership income. Overall, our portfolio quality remains high and credit impairments were in line with expectations for the year.

Turning now to capital. Our excess capital ended the quarter at an estimated $2.7 billion and our next 12-month deployable capital was an estimated $3.4 billion. It's important to note that we manage capital through multiple frameworks, including our internal economic capital regulatory capital and rating agency capital. From a regulatory lens, we maintain ample levels of regulatory capital in the jurisdictions where we operate.

Also, our strong ratings are important to our counterparty strength. And thus, we manage our rating agency capital to support those ratings. On a holistic basis, considering all capital frameworks, we remain very well capitalized.

In the quarter, we successfully retroceded another block of U.S. PRT business to Ruby Re, and we are actively working on additional retro sessions. We still expect the vehicle to be fully deployed by the middle of 2026, and third-party capital remains a key component of our capital management strategy.

During the quarter, we continued our long track record of increasing book value per share. As shown on Slide 19, our book value per share, excluding AOCI and impacts from B36 embedded derivatives increased to $165.50, which represents a compounded annual growth rate of 10% since the beginning of 2021.

To summarize, this was another great quarter to close a very successful and rewarding 2025. We continue to execute on our strategic objectives, and we are confident in our ability to deliver on our intermediate term financial targets. Specifically, our adjusted operating EPS, excluding notable items, has grown at a compound annual growth rate of more than 10% since the beginning of 2023. And our adjusted operating ROE, excluding AOCI and notable items, has averaged around 15%, which is at the high end of the targeted range.

With that, I would like to thank everyone for your continued interest in RGA. This concludes our prepared remarks. We would now like to open it up for questions.

[Operator Instructions]. Our first question today is from Wes Carmichael with Wells Fargo.

I wanted to start on capital allocation. So you had a strong deployment year in 2025 with Equitable and another $1 billion on top of that, bought back some stock. I guess my question is, a couple of quarters ago, you spoke to a 20% to 30% payout ratio in terms of buybacks and dividends. As you look at the opportunities in front of you and excess capital you have and will generate, is that 20% to 30% payout ratio still the right level? And what might change your view there?

Yes. Thanks for the question, Wes. Look, as we stated earlier, we reinstated share buybacks in the second half of 2025, and we repurchased $125 million of stock in 2025. We're taking a balanced approach to capital deployment, Maintaining financial flexibility is very important to us. We continue to see attractive opportunities to deploy capital into new business at strong risk-adjusted returns, which also aligns with our strategy and leverages our unique strengths. But we also recognize the importance of returning capital to shareholders. We're targeting 20% to 30% total payout ratio going forward, but we also have the flexibility to be opportunistic as the year goes on.

Okay. And my follow-up, if you continue to grow the asset-intensive business, and I think you may have had this question before, but curious if anything's changed in your mind, but would you be open to additional partnerships with asset managers or alternative asset managers. And I know you do a lot of this yourself in-house, but just wondering if you gain access to any additional capabilities or perhaps even some outside capital.

Wes, it's Leslie Barbi. Thanks for that question. You might be interested to know that we have been using external partners for decades, and we definitely continue to plan to do that. Really, when we look out in the market, we're constantly talking to potential partners. We want to make sure we don't miss any additive capabilities or expertise anything that can add value for RGA and our shareholders. I think this flexible approach and our ability to partner is a real strength because what we're trying to do is really get the right capabilities and the right expertise into the total opportunity set. So to reinforce that, we're absolutely already using external partners, and we're very open to continuing to do that if it adds value for RGA.

The next question is from Joel Hurwitz with Dowling & Partners.

I wanted to touch on group health first. Can you just let us know what rate actions you took in '26? And then Tony, I think you said you'll be exiting the business, I guess, after '26. What drove that decision and any color on the size -- the overall size of the business that you're exiting and sort of what run rate earnings were expected to be?

Joe, this is Axel. We've taken significant actions to fully address the U.S. health care excess book. We raised rates by 40% on average, beginning mid to '25 through January 2026 which gives us confidence that 2026 will improve over 2025 results.

As mentioned in the prepared remarks, following a strategic review, we have decided to stop writing new business effective immediately and also to not renew existing business at the end of the current 1-year term across our group health care lines of business. So for some context, the U.S. Healthcare business has approximately $400 million of annual premium and generates approximately $25 million of pretax run rate earnings in a typical year.

So this decision will have limited impact in 2026 will primarily emerge in 2027 results. We remain focused on best positioning RGA for the future by ensuring that we're deploying capital in businesses that are strategically aligned, and we also believe that the rate actions taken will result in significant improvement to the U.S. health care results as the business winds down.

Got it. Very helpful. There continues to be activity in the market and optimism from primary writers on further derisking of legacy blocks like long-term care and universal life with secondary guarantees. I know you've done a little in this space, but just wanted to get an update on your appetite for these types of businesses.

Yes. Let me take that one. Thank you very much for the question. Look, we remain very selective and disciplined on ULSG and LTC long-term care risk. As you know, we have significant biometric risk capabilities but we also keenly recognize the need for higher hurdle rates on these lines of businesses, especially within our public company balance sheet. Now it's important to note that all of our ULSG and LTC businesses has been priced with updated assumptions and has performed well over time. And then the final point is that our ULSG and LTC liabilities are less than 10% of our balance sheet today, and we expect it to remain this way going forward.

Next question is from Jimmy Bhullar with JPMorgan.

I had a couple of questions. One was on the Equitable block, you're reinsuring 3/4 of the block, but your results -- there's not a long history, but results this quarter were not correlated between the 2 companies because they basically had weaker mortality than normal, you guys had better. So I'm just wondering if you could just give us some color on what parts of the book you're not covering either by vintage or by type of product or any other factor?

Yes. Thanks for the question, Jimmy. This is Axel. Maybe let me start with the high level. The Equitable transaction First of all, generated earnings consistent with our $60 million to $70 million guidance for the second half of 2025. We also continue to expect $160 million to $170 million of earnings from the transaction in 2026.

Now there are 4 key drivers of economic upside for RGA relative to the original performance of this block. Number one, we repriced the business, which allowed us to reflect updated mortality and policyholder behavior experience. This means our reserving assumptions differ from Equitables and therefore, will produce different actual to expected mortality experience on the same block.

Number two, we benefit from uplift from higher asset yields. We're repositioning the transferred assets into a higher-yielding environment and in a manner that is consistent with our overall portfolio asset allocation targets and ratings.

Number three, we operate with lower expenses as we've absorbed the business into our existing infrastructure and did not bring over their expenses.

Lastly, number four, we were able to benefit from capital efficiency given our legal entity structure. So also, please keep in mind that there are meaningful ongoing benefits to our strategic relationship with Equitable, including underwriting new flow reinsurance business and participation from Allianz Bernstein in our sidecar strategy.

Altogether, we remain confident that the Equitable transaction will generate strong risk-adjusted return for RGA. And then lastly, you're correct that our share of this business does not represent a 75% quota share of the entirety of Equitable's Life business, but it is only a portion of that business.

And are you able to share what it is that you don't cover, whether it's older -- business like UL like anything in that regard?

So I'm not going to get into the specifics, but suffice it to say that, of course, we monitor very closely the claims reporting from Equitable and that the performance has been in line with our expectations. We would also note that equitable under call cited less reinsurance coverage on these particular claims that impacted them.

The next question is from Suneet Kamath with Jefferies.

A question just on the capital deployment. If I look back to 2023, it looks like you've deployed about $5 billion of capital. And I guess the question is, if we think about the earnings power of that deployment, how much of that would you think is that sort of full earnings power? Like I know Equitable is not there yet, so that's $1.5 billion out of the $5 billion. But of the $3.5 billion left, are you getting your full expected returns at this point? Or is there still more in front of us?

Yes. Great. Thanks for the question. Well, it is an important question. Look, at a high level, we still view our 8% to 10% EPS growth target as a good intermediate-term target. As we've said before, we can achieve this with approximately $1.5 billion of capital deployed into in-force transactions, together with the ongoing growth of our traditional flow business and with the level of share repurchases consistent with our stated target total 20% to 30% payout ratio.

So when thinking of recent capital deployment, in particular, the Equitable transaction, keep in mind that it occurred in the middle of 2025. So it did contribute to the 2025 earnings with some further ramp-up expected in 2026. The 8% to 10% is an intermediate-term target, higher levels of capital deployment may allow us to come in at the higher end of the range. However, over the intermediate term, we're comfortable with the 8% to 10%, which we have met and exceeded at times in recent years.

But should we think about the non-equitable business is sort of fully earning at this point? Or is there still more on that piece? I'm talking about the $3.5 billion of related deployment?

So like we've discussed before on any capital deployment, there's a period of repositioning of the asset portfolio and as a result, a ramp-up in earnings. And our results reflect a blend of capital deployment and the trajectory of that earnings ramp up. All of that is being factored into our intermediate term EPS growth target.

Next question is from Tom Gallagher with Evercore ISI.

Just shifting gears to away from mortality to morbidity. Can you comment on both the Manulife long-term care risk transfer deal and your broader exposure to long-term care, how has that been performing? If you just look at it on a 2025 basis? Is that in line? Is that in line with your ROE? Has that been a lot higher? Any clarity there?

Tom, this is Jonathan. We don't talk about experience on a block-by-block level. But what I can say is that we're very happy with our LTC business, and it has performed well over time. And as you know, we have focused on a subset of available LTC business that's in the market that aligns with our risk appetite and return expectations. And we continue to manage our overall exposure to the product relative to the size of our balance sheet. So we expect this to continue to be our approach going forward.

And Jonathan, would you say the performance of that any broad range ROE that's been trending at?

No, Tom, we don't break down the performance at that level to discuss externally. But again, just to reiterate, we're very happy with the performance of that LTC business over time.

The next question is from John Barnidge with Piper Sandler.

My first question, can you talk about your exposure in the investment portfolio to software-related companies and how you're thinking about disruption from AI within the portfolio?

Thanks, John. This is Leslie. So in terms of your first question on the software, we look closely at that exposure. I'll note that software lending is typically done against enterprise value or revenue. It's become more popular in the market, but we've not been a big participant in that. So when we drill down on our exposure within direct lending, it's very modest, less than 30 basis points of our total investment portfolio. So we're very comfortable with where we're positioned. In terms of AI, that's something among many other factors that we continue to look at across the portfolio. So analysts by analysts, and we discussed it in our portfolio management meetings.

And like our approach to anything that's changing in the market, we look at trends that are coming, assess where they could impact. We make decisions where we need to and take actions at those times. And as we get more information because this will definitely be evolving. So we'll continue to do that in actively managing the portfolio.

Thank you for those comments. And sticking with the portfolio, if I can, Leslie, you talked about using external partners for decades that have specialized capabilities. You saw a transaction earlier this year in January with cross ownership between alternative asset managers, which resembled the transaction from a number of years prior in some ways. And so curious about maybe the evolution of the relationships that you've already had for decades with kind of the new environment.

Okay. Thanks for that question. I'm not sure I was completely clear on what you were referring to, but let me just comment generally about our partnerships or use of external managers. So we certainly. We look at what capabilities we want on the platform. And then who is best suited to do that. So often, it's our strong internal teams. Other times, you want to use an outside partner that has different or more scaled expertise than we have. We've also engaged in partnerships where when we have a lot of alignment, it's win-win, we can see that our alignment, our culture, our needs are all going to align for a long time. We will engage in partnerships. And so we've done that a number of times in the past. There are a few smaller ones we've announced. There's aspects of larger ones. You may have lean from some of our other transactions. But it's really engaging in this more wholesome approach and make sure all the value is considered.

Next question is from Alex Scott with Barclays.

First 1 is on I guess, regulatory regime in Europe. And my understanding is Solvency II is going to have some changes that beneficial to investing in things like alternatives and some of the privates that are out there, et cetera. Are you seeing any increased competition in pricing related to that? Do you anticipate that, that will happen at all? I'm just trying to understand how to think about those changes.

Yes. Look, let me start here, and if Tony wants to add something. So we have multiple legal entities. We're a global company. We have presence in Europe, in APAC, in America, in Bermuda with multiple jurisdictions and regulatory regimes that we operate in. So we're obviously well aware of the benefits of the virus regimes and the ability to pull risks and achieve efficiencies and we're engaged with our regulators in terms of monitoring the evolution of the regulatory regimes. We've been active in EMEA for a long time. with our longevity business, with our asset-intensive business and our traditional business.

Yes. And Alex, let me add to it. And actually absolutely alluded to it at the end. In EMEA, the large majority of our profits in our business is longevity swaps, which have no asset risk and really rely on gosh, I guess, 52 years of phenomenal experience in mortality and longevity. So really, the change your sharing has less of an impact, obviously, to that business. What I would add is we obviously are very focused on blocks of business that have both asset and biometric risk in it as leverages off one of our strongest strengths, which is able -- ability to reinsure both sides of the balance sheet. So even for the plain vanilla types of blocks, it really is not in our sweet spot. And the a lot of opportunities around the world we can pursue that have both the asset and biometric risk, which is where we focus.

Yes. Understood. Yes, I was thinking more along the lines of your biggest competitors being the multiline reinsurer. I think they generally manage the Solvency II. So even outside of EMEA, one could theoretically think that those companies may be able to get more aggressive on pricing. But it sounds like you're not seeing that at all right now, at least, right?

Yes. Look, I confirm we -- that -- that has not bubbled up to the surface of being even a threat or risk going forward.

The next question is from Mike Ward with UBS.

Kind of a good segue there. Just wondering, Tony, if you could elaborate on any specific regions or product lines that you think might be looking incrementally attractive this year so far?

Yes. No, thanks, Mike. Maybe I'll just go around the regions around the hall and talk a bit about our pipeline and answer your question there. Look, say our pipeline is both rich and diverse. And as you know, we always focus on the quality of the pipeline as much as the quantity of business opportunities. So firstly, in Asia, we continue to see a strong pipeline, both in product development area as we continue to serve the emerging middle at as well as the financial solutions as clients adjust to the new capital framework in markets like Japan and [ Korea ].

I've already mentioned the U.K. longevity market, that continues to be strong as a market, and we continue to be the market leader, and that momentum continues into 2026. And then in the U.S., we continue to benefit obviously from the industry realignment as we saw with the equitable deal.

But let me -- it's really important to note that there are many more modest-sized wins due to our biometric and underwriting strength that collectively are very meaningful in terms of returns and positioning us strategically in the future. So all in all, the pipeline is rich and diverse. It's across the board. And as a result, that's one of the reasons why we're so optimistic about delivering attractive returns from the business.

Great. And then just in the U.S. on traditional kind of mortality, a pretty solid result. I think considering the severe flu season, just wondering if you have any insight if it's ticked up in January at all? Just wondering if you have any view there.

Mike, this is Jonathan. It's still too early to predict the final outcome of the current flu season, but the latest declining trends in population flu activity in the U.S., Canada and the U.K. are encouraging. So influenza hospitalizations look to a peak at year-end, and that peak was at the higher end of a normal flu season range. But since that time, those hospitalization rates are down substantially.

This year, the northern hemisphere flu season is driven by Influenza A and there's no evidence at this point of increased severance compared to other seasonal strains. And when we look at our Q4 results, we didn't see any material evidence of seasonality in that experience. And as we noted in the prepared remarks, our mortality experience was in line overall.

The next question is a follow-up from Tom Gallagher with Evercore ISI.

Axel, I just wanted to make sure I understand all the components of earnings I followed everything you said in terms of the 8% to 10% intermediate-term EPS growth expectation. And it sounded to me because of the $1.5 billion of capital that you expect to deploy in deals in 2026 that you -- all things equal, should be running at that 8% to 10% intermediate-term growth rate in 2026, would be my best guess. But I guess, based on how you're thinking about things for '26, are there any other adjustments you would make to that. The 2 that I could think of would be your ultra return assumption is a little better, so that could provide upside. And then to the extent that you do any more in-force transactions, I don't think you've included those, but any further color you could give?

Yes. Tom, thanks for the question. So I would point you to Slide 9 in the deck, where we show our key assumptions, right, for 2026. Number one, we, of course, are assuming much improved U.S. group experience, which was the largest contributor to the unfavorable biometric experience in 2025. Number two, we are assuming a smaller contribution from in-force management actions since it has had outsized positive impact in recent years. And lastly, we are also assuming a variable investment income return of 7% for 2026. So the key takeaway is that we view $24.75 as a reasonable starting point for 2025 run rate EPS. And we are reiterating our intermediate term 8% to 10% EPS growth target, which, as I said, assumes approximately $1.5 billion of annual capital deployed into in-force transactions. That applies to the intermediate term, we don't comment specifically on a year-by-year forecast.

Axel, sorry, just a follow-up. The baseline, the $24.75, does that have any of the in-force management rate actions in it?

Yes. Look, I appreciate the question. So like I said, right, it's important to remember, we manage the in-force business, and it's a core part of our strategy. It will continue to be. We take a partnership and holistic approach to these situations, balancing the clients' relationship with our long-term business. We feel this approach is a means of differentiation leading to other business opportunities. We've had very good success over the past 3 years.

I'll remind you, we've generated approximately $425 million of cumulative pretax income and significant long-term future value. Like we said, in-force actions are unpredictable in terms of size and timing. Looking towards 2026, we feel there's less opportunity compared to recent periods. And thus, we expect a more limited impact on earnings going forward.

So like I said, as a reminder, the $24.75 of 2025 run rate earnings implied from Slide 9, removed all in-force actions from 2025 results. Therefore, actual in-force actions in 2026 could provide upside to these targets.

The next question is a follow-up from Alex Scott with Barclays.

I wanted to ask on Japan, just around the macro volatility associated with interest rates and FX. Does that have any impact on your business? And I guess connected to that, does it create new opportunities or reduce the opportunity set? How should I think about how it affects in force and go-forward deployment there?

Yes. Thanks, Alex, for the question. It's Tony here. Look, as you've shared, look, Japan has strong tailwinds from the recent regulatory changes. And like you mentioned, the macroeconomic changes. And clients are taking actions to adjust balance sheets which results in considerable opportunities for risk transfer in RGA. And we are incredibly well positioned with our strong local presence, obviously, our trusted client relationships and our world-class expertise on both sides of the balance sheet. And this is why it's one of our key markets.

Now the impacts you've referred to Look, when we look at the competition that entered the Japanese market, many of which are alternative asset managers, they've had some success in the more vanilla asset-intensive business. But let me reiterate, our focus is on the sweet spot, which are transactions which have both asset and biometric risks and leveraging of that key strength. So we remain very optimistic about our position in Japan and the ongoing momentum in the market overall, and J are winning a very good share of that.

Yes. And Alex, this is Jonathan. Maybe just on the in-force part of your question. So just as an overarching comment, higher interest rates are good for us from an overall earnings perspective, given our positive reinvestment cash flows and illiquid liability profile.

With regards to the Japanese asset-intensive business, our exposure to disintermediation risk from higher rates is modest, and we wouldn't expect to be -- have a significant impact at the current rate levels. And then specifically, on blocks -- on our older blocks and in-force business, we have high minimum guaranteed interest rates, and they're protection-oriented, making them less likely to have higher lapses. And on our newer invite products, we have protections from surrender charges and market value adjustments.

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

Thank you for your continued interest in RGA. We've had a great quarter to cap off a great year, and we look forward to continue to deliver in the future. This ends our Q4 conference call. Thank you.

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

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 RJ, 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 number of underwriting applications. One of these deals was an enhancement of our strategic underwriting program with a digital solution that enabled us to partner exclusively with a key client that has a strong brand and a large distribution footprint. These initiatives differentiate RG and represent an increasing portion of our U.S. business. This is yet another example of what RJ has done for over 50 years and continues to do its best, which is to be innovative and the leader in underwriting. Also, as indicated, the Equitable transaction closed in the quarter, and we recorded a full quarter of earnings in this period.

Results were in line with our expectations. The asset portfolio repositioning is progressing as planned, and our previous guidance on the expected future earnings remains unchanged. Along with the financial gains, the partnership is yielding strategic benefits through increased underwriting services, product development, asset management and participation in our Ruby Re sidecar. The depth and breadth of this partnership is 1 example of the win-win opportunities for the benefit of both RGA and our clients.

Moving to Asia Pacific. The region continues to perform very well. Traditional results were particularly strong this quarter, continuing its trend of excellent growth and bottom line results. We continue to delight our clients by staying at the forefront of innovation and helping them navigate evolving strategic needs. Our strategy in Hong Kong is to deliver holistic solutions combining product development, capital solutions and technology-enabled underwriting capabilities. We recently won the prestigious Hong Kong Federation of insurers outstanding reinsurance game award. Recognizing one of these holistic solutions. We expect this to lead to repeat transactions of this nature in Hong Kong.

In addition, we've been able to leverage these strengths across the region. This was best demonstrated in Mainland China where recent regulatory changes allow participating critical illness products like the ones in Hong Kong to be sold. RG code developed a first of its kind critical illness combination product, and early sales performance has been strong. In Korea, RGA remains the market leader in product innovation. Building on the success of last year's cancer treatment product, which launched with 19 clients. We introduced the second-generation version of this product, and our clients have already sold over 1 million policies, demonstrating the strong market demand.

Finally, in the EMEA region, RGA remains a clear market leader, and Q3 results reflect that. We successfully closed multiple transactions across the region and across a range of product lines. The strong client satisfaction from RGA executing on our promises will lead to repeat opportunities. In addition, we closed a market-first transaction in Switzerland. This follows our success in Belgium last year in a similar market pace and shows Continental Europe is opening up to asset-intensive reinsurance. I firmly believe we are best positioned in this market, and our innovation will continue to drive growth in the region. Reflecting on the activity from across the globe, I am very pleased with our traditional business results.

Traditional business premiums are up 8.5% year-to-date on a constant currency basis, with good growth across regions and we can rely on this business year in, year out, giving us a strong foundation for continued earnings growth. Now with regards to transactions, we have deployed $2.4 billion of capital year-to-date. This comprised of $1.5 billion into the Equitable transaction and $900 million of capital into over 20 other transactions spread around the globe. These are high-quality transactions that don't always make headlines due to their more modest size but are equally important as they form a regular base of business that we can also rely on year in, year out. They leverage our long-standing client relationships our strength in biometric risk and often are repeat transactions that are well within our sweet spot. As you can see from these examples, the new business success in all 3 regions are the result of our now well entrenched creation business approach. This approach proactively provides holistic and innovative solution leveraging our competitive advantages and often leads to exclusive and repeat business.

Over the past 2 years, this approach has driven expected lifetime returns of all new business across the company above our target range. Looking forward, our new business pipeline is strong across all 3 regions, and we will continue to select the best opportunities based on our expected returns risk appetite and other strategic considerations. Another highlight is that the value of in-force business margins increased by 16% over the past 3 quarters. This is a measure of our efforts to create long-term value through new business and other management actions and indicates our success in building a sustainable and successful future.

Finally, it is very gratifying that we can provide an attractive combination of organic growth and are in a strong capital position that enables us to fulfill our healthy pipeline and return a meaningful amount of capital to shareholders. So to sum up, we have had an excellent third quarter with many highlights. We are well positioned in the right markets with the right teams executing with the right strategies and have full confidence that the best is yet to come.

I will now turn it over to our CFO, Axel Andre, to discuss the financial results in more detail.

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 currency basis. which has benefited from strong growth in the U.S., EMEA and APAC. Premiums are a good indicator of the ongoing vitality of our traditional business, and we continue to have strong momentum across our regions.

Turning to biometric claims experience, as outlined on Slide 9 of our earnings presentation, Economic claims experience was favorable by $5 million in the quarter, primarily driven by APAC and Canada, partially offset by the U.S. Traditional segment. The corresponding current period financial impact was unfavorable by $50 million. Claims experience in U.S. individual life and group were modestly unfavorable. As discussed last quarter, our expectation was that the group business overall will be approximately breakeven for the second half of the year, and that remains true.

Over the longer term, economic claims experience for the total company has been favorable by $277 million since the beginning of 2023 when we more fully emerged from COVID. As a reminder, the favorable economic experience that has not been recognized through the accounting results will be recognized over the remaining life of the business.

I'll now make a few comments on the notable items reported in the period, which relates to the results of our annual actuarial assumptions review, the overall economic impact of the assumptions update is positive from a long-term value perspective and future run rates.

As presented on Slide 7, the impact is split into 2 components: a negative $149 million current period impact due to LDTI cohorting and a positive $600 million impact to long-term value. Said another way, if LDTI did not exist, the total impact is a benefit of $450 million. These updates will increase annual run rates by $15 million, gradually increasing to $25 million annually by 2040.

Moving to the quarterly segment results on Slide 6. The U.S. and Latin America traditional results reflected modestly unfavorable claims experience, partially offset by the favorable impact from in-force management actions. In our group business, as mentioned, results were approximately breakeven and in line with our updated 2025 expectations, and the block will be fully repriced by January 2026. The U.S. Financial Solutions results reflected the contribution from the Equitable transaction, partially offset by lower variable investment income. The results from the Equitable block were in line with expectations. For the full year, we still expect this transaction to contribute around $70 million of pretax income, increasing to $160 million to $170 million in 2026 and approximately $200 million per year by 2027.

Canada traditional results reflected unfavorable group experience, partially offset by favorable individual life claims experience. The Financial Solutions results in Canada were in line with expectations. In the Europe, Middle East and Africa region, the traditional results reflected favorable underwriting margins. EMEA's Financial Solutions results reflected favorable longevity experience and continued growth in the segment. This segment continues to be a bright spot for us.

Turning to our Asia Pacific region. Traditional had another good quarter, reflecting favorable claims experience and the benefit of ongoing growth. This segment continues to perform at a high level, a reflection of our excellent competitive position and our execution of value-added solutions to clients. Financial Solutions results were in line with expectations with a modest unfavorable impact from lower variable investment income.

Finally, the Corporate and Other segment reported an adjusted operating loss before tax of $58 million, unfavorable compared to the expected quarterly average run rate. This was primarily due to lower variable investment income and higher general expenses.

Moving to investments on Slides 10 through 13. The nonspread book yield, excluding variable investment income was slightly lower than Q2, primarily due to higher levels of cash for part of the quarter. The new money rate remains well above the portfolio yield providing a tailwind to our overall book yield. Total variable investment income was below expectations by around $40 million, primarily due to lower real estate joint venture activity.

Overall, our portfolio quality remains high and credit impairments are better than expectations for the year. Notably, we have zero direct exposure to the recent auto sector bankruptcies.

Turning now to capital. Our excess capital ended the quarter at an estimated $2.3 billion and our deployable capital was an estimated $3.4 billion. It's important to note that we manage capital through multiple frameworks, including our internal economic capital, regulatory capital and rating agency capital. From a regulatory lens, we maintain ample levels of regulatory capital in the jurisdictions where we operate. Also, our strong ratings are important to our counterparty strength.

Thus, we manage our rating agency capital to support these ratings. On a holistic basis, considering all capital frameworks, we are well capitalized. In the quarter, we successfully retroceded a midsized block of U.S. PRT business to Ruby Re and we are actively working on additional retrocessions. We still expect the vehicle to be fully deployed by the middle of 2026.

Looking ahead, we will balance capital deployment into the business with returning capital to shareholders through quarterly dividends and share repurchases. Our intention remains to be opportunistic with share repurchases quarter-by-quarter, depending on our capital position, a forward view of our transaction pipeline and valuation metrics.

Over the longer term, we expect total shareholder return of capital through dividends and share repurchases to range between 20% to 30% of after-tax operating earnings on average, consistent with our long history. During the quarter, we continued our long track record of increasing book value per share.

As shown on Slide 17, our book value per share, excluding AOCI and impacts from B36 embedded derivatives increased to $159.83, which represents a compounded annual growth rate of 9.7% since the beginning of 2021.

Moving to Slide 18. We we provided an update on the value of in-force business margins, which significantly increased since the end of 2024, reflecting the very strong new business momentum. Overall, we believe this is an additional lens through which to assess the long-term earnings power of our business that will emerge over time, and we are pleased with the results. All in all, this was a great quarter with strong operating results.

In addition, we continue to advance many strategic objectives. Our long-term strategy remains well on track, and we are confident in our ability to deliver on our intermediate-term financial targets. We continue to see very good opportunities across our geographies and business lines and remain well capitalized to execute on our strategic plan. We also believe we are in a position to return excess capital to shareholders through dividends and share repurchases.

With that, I would like to thank everyone for your continued interest in RGA. This concludes our prepared remarks. We would now like to open it up for questions.

[Operator Instructions] And your first question today will come from Wesley 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. that 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 SWIP 3 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 is. And 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. What level would be expected to grow in the next 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, 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 Nhullar with JPMorgan.

I had a couple of questions. First, just on the 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 side cars and for that to be a nice supplement to our ability to deploy at 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 do 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, but then 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 -- 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 biting 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 further to our store of value of in-force by looking at our in-force, the blocks that have not been current 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 plan 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 Axle'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 fetal longevity claims.

So this change functions 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 about the second question, now that the equitable block is closed, could you provide a little bit more color on your expectation for accounting moving on the mortality on that block?

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

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

First one I have 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, we 2 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 the 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 rates 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 their 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 strength of 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 hit 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 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 cap 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, the 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 cap cohorts to us, like I said earlier, look, risk management is our DNA, our critical part and therefore, these cap cohorts, obviously, blocks we monitor very closely and our 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.

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 a light on, and it becomes relevant. I mean, the companies have been preparing for a number of years. And as a result, we've been able to win good business. And I'd say it's it's been the essential part of why you're seeing increased activity in Japan on coinsurance of blocks -- or -- 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 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 cap 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 glidepath. 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 through 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, 1 quarter's results is just 1 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 is probably a better gauge of where we're at in terms of sustainable earnings power for '25.

Good point, Tony. The -- 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?

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 on 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 in 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.