Executive Summary / Key Takeaways

• Disciplined Growth and Strategic Execution: Reinsurance Group of America (RZB) is a global leader in life and health reinsurance, leveraging its deep biometric expertise and "Creation Re" strategy to secure exclusive, high-value transactions and drive consistent growth across its diversified global platform.
• Record Financial Performance and Robust Capital: RZB delivered record operating earnings in 2024, with a 15.4% adjusted operating return on equity, surpassing its intermediate target. The company maintains a strong capital position, with $2.3 billion in estimated excess capital and $3.4 billion in deployable capital as of Q3 2025, enabling significant capital deployment into attractive new business and shareholder returns.
• Transformative Equitable Transaction: The recently closed Equitable transaction, involving the assumption of $12 billion in individual life insurance liabilities, is a significant earnings driver, projected to contribute $70 million in pretax income in 2025, escalating to $200 million annually by 2027.
• Technological Edge and Innovation: RZB differentiates itself through advanced underwriting technology like MedScreen+ and digital solutions, enhancing efficiency, client partnerships, and market penetration, particularly in high-growth Asian markets.
• Positive Outlook with Managed Risks: Management projects continued earnings growth, supported by a robust pipeline, strategic in-force actions, and favorable long-term industry trends like GLP-1 drug impacts on mortality and regulatory changes in Japan. While claims volatility and integration risks exist, RZB's diversified portfolio and risk management framework are designed to mitigate these.

The Biometric Edge: RZB's Foundation in a Dynamic Reinsurance Landscape

Reinsurance Group of America, Incorporated (RZB) stands as a global stalwart in the life and health reinsurance sector, a position meticulously built since its formation as an insurance holding company on December 31, 1992. At its core, RZB's investment thesis is anchored in its unparalleled "biometric expertise"—a deep proficiency in pricing, underwriting, and ongoing risk management of mortality, morbidity, and longevity risks. This specialized focus, honed over more than 50 years, is not merely a capability but a foundational competitive advantage, enabling RZB to consistently deliver value in both traditional reinsurance and complex financial solutions.

The global reinsurance landscape is characterized by intense competition from established players like Munich Re , Swiss Re , Hannover Re , and SCOR SE (SCRYY), as well as emerging threats from insurtech firms and alternative risk transfer mechanisms. RZB distinguishes itself through its "Creation Re" strategy, which emphasizes proactive, innovative, and often exclusive partnerships with clients. This approach allows RZB to co-develop tailored solutions that address specific client needs, fostering long-term relationships rather than engaging in commoditized bidding wars. While larger global competitors may boast broader scale and higher R&D budgets, RZB's focused expertise and regional presence often translate into superior client loyalty and operational execution in its target markets. For instance, RZB's gross profit margin of 30.86% and net profit margin of 3.97% reflect a competitive profitability profile, though some larger, more diversified peers like Munich Re (MURGY) (Net Profit Margin 0.08) and Hannover Re (HVRRY) (Net Profit Margin 0.09) also demonstrate robust profitability.

RZB's technological differentiation is a critical component of its competitive moat and "Creation Re" strategy. The company has developed and deployed advanced underwriting systems and digital solutions that enhance efficiency and client engagement. A prime example is the MedScreen+ underwriting system, which simplifies the process for mainland Chinese visitors to Hong Kong, a market experiencing rapid growth. This system has garnered multiple industry awards and is recognized as a significant competitive advantage for RZB's clients, enabling deeper market penetration and streamlined operations. Such technological tools offer tangible benefits by improving the speed and accuracy of risk assessment, reducing operational costs, and ultimately contributing to higher underwriting profitability. RZB's R&D initiatives are geared towards continually enhancing these capabilities and expanding its "library of solutions" that can be adapted and replicated across its global network. This focus on specialized, technology-enabled solutions allows RZB to secure deals with little competition, driving higher expected underwriting profitability and contributing to its long-term growth strategy.

Broad industry trends and market drivers further underscore RZB's strategic positioning. The increasing demand for health products, influenced by factors like an aging global population and medical advancements, directly benefits RZB's core business. The potential for GLP-1 drugs to reduce population-level mortality, as suggested by a Swiss Re (SSREY) report indicating reductions of up to 6.4% in the U.S. and 5.1% in the U.K., presents a significant long-term tailwind for RZB's mortality business. While RZB's analysis aligns with these optimistic projections, the company has not yet explicitly incorporated these impacts into its actuarial assumptions, maintaining a conservative stance. Regulatory changes, such as Japan's new ESR capital framework and Mainland China's allowance for participating critical illness products, are creating substantial new business opportunities, particularly in Asia, where RZB's local teams and biometric expertise provide a distinct edge.

Strategic Evolution and Financial Momentum

RZB's history is one of continuous adaptation and strategic refinement. The company's evolution from its 1992 founding to a global leader has been marked by a consistent emphasis on life and health risk management. Early strategic initiatives included addressing "underperforming" blocks from 1999-2004 through in-force management actions, a discipline that continues to reduce risk and enhance value. By 2021, RZB's new business embedded value per transaction in Asia had tripled, signaling the success of its focused growth strategy in that region. The launch of Ruby Reinsurance Company in 2023, a U.S. asset-intensive sidecar, further demonstrated RZB's innovative approach to leveraging third-party capital.

The year 2024 was historic, with RZB deploying nearly $1.7 billion into transactions, an 80% increase from 2023, and completing its first, third, and fourth largest transactions ever. This included significant deals in Mainland China, a long-term care (LTC) and structured settlements block, a large UK longevity swap, and RZB's first funded reinsurance PRT transaction in Canada. This momentum continued into 2025, highlighted by the Equitable transaction, which closed on July 31, 2025, with an effective date of April 1, 2025. This deal involved RZB's U.S. Financial Solutions segment assuming a 75% quota share of Equitable's in-force individual life insurance liabilities, totaling approximately $12 billion.

RZB's financial performance in 2025 reflects the impact of these strategic initiatives. For the nine months ended September 30, 2025, total revenues reached $17,063 million, with net income available to RGA, Inc. shareholders of $719 million, or $10.78 diluted EPS. This compares favorably to $16,866 million in revenues and $569 million in net income for the same period in 2024. The third quarter of 2025 alone saw total revenues of $6,204 million and net income of $255 million, or $3.81 diluted EPS. The Equitable transaction significantly boosted the U.S. Financial Solutions adjusted operating income by $37 million in Q3 2025 and generated a $21 million gain for the U.S. Traditional segment through risk recapture. Investment income increased due to an expanded invested asset base and higher new money rates.

RZB's segments demonstrate varied but strategically aligned performance. The U.S. and Latin America Traditional segment reported $280 million in adjusted operating income for the nine months ended September 30, 2025, benefiting from the Equitable recapture and favorable assumption updates. The U.S. and Latin America Financial Solutions segment, despite a year-to-date revenue decrease due to 2024 PRT transactions, saw adjusted operating income of $264 million for the nine months ended September 30, 2025, with the Equitable transaction contributing as expected. EMEA Financial Solutions emerged as a "bright spot," with adjusted operating income of $346 million year-to-date, driven by favorable longevity experience and continued growth. Asia Pacific Traditional delivered $348 million in adjusted operating income year-to-date, reflecting continuous growth and favorable underwriting experience. These results underscore RZB's ability to generate diversified earnings across its global footprint, leveraging its biometric and asset management expertise.

Capital Strength, Liquidity, and Outlook

RZB maintains a robust capital and liquidity position, essential for funding its growth initiatives and managing risks. As of September 30, 2025, the company reported an estimated $2.3 billion in excess capital and $3.4 billion in deployable capital . This deployable capital is considered "real capital that is available to be deployed into transactions" , supported by retained earnings, credit for the value of in-force business, and alternative sources like Ruby Re. The company's liquidity position, including cash and cash equivalents and short-term investments, stood at $5 billion. RZB does not rely on short-term funding or commercial paper and anticipates sufficient cash flows for the next twelve months, even under stress scenarios.

Management's outlook is optimistic, with specific guidance tied to strategic execution. The Equitable transaction is projected to contribute approximately $70 million of pretax income in 2025, increasing to $160-$170 million in 2026, and around $200 million annually by 2027 . The annual actuarial assumptions update is expected to increase annual run rates by $15 million, gradually rising to $25 million annually by 2040 . The U.S. Group business is expected to be approximately breakeven for the second half of 2025, with full repricing by January 2026 leading to improved profitability in 2026 . RZB aims to deploy $1.5 billion to $2 billion in capital annually to achieve its growth targets . Over the longer term, RZB expects to return 20% to 30% of after-tax operating earnings to shareholders through dividends and share repurchases .

RZB's strategic positioning is further reinforced by its disciplined approach to risk management. While mortality and morbidity risks remain significant, the company's diversified portfolio and rigorous underwriting processes are designed to mitigate volatility. The Equitable transaction, while adding to RZB's mortality exposure, also provides broader diversification benefits across the entire book . Risks associated with the Equitable transaction, such as potential undiscovered liabilities or reliance on Equitable for services, are acknowledged and managed through due diligence and contractual agreements . The company's long-term care (LTC) strategy remains highly disciplined, focusing on modest-sized blocks aligned with its successful in-force business and strategic partnerships .

Conclusion

Reinsurance Group of America (RZB) is a compelling investment proposition, driven by its specialized biometric expertise, innovative "Creation Re" strategy, and robust capital management. The company's ability to consistently generate high-quality, exclusive new business, as evidenced by its record capital deployment and strong new business value, positions it for sustained earnings growth. The transformative Equitable (EQH) transaction, coupled with ongoing in-force management actions and favorable long-term industry trends, provides a clear trajectory for enhanced profitability and shareholder value.

RZB's technological differentiators, particularly in underwriting, reinforce its competitive moat, enabling efficient risk selection and client-centric solutions. Despite inherent industry risks and market volatility, RZB's diversified global platform and disciplined risk appetite provide resilience. The company's commitment to a balanced approach of investing in growth and returning capital to shareholders, supported by its strong deployable capital, underscores its confidence in delivering on its elevated financial targets. RZB's strategic clarity and operational excellence in the complex world of life and health reinsurance make it a noteworthy contender for discerning investors seeking long-term value.