RGA Unveils $400M 2026 Deleveraging Strategy with 20%-30% Capital Return

Management View

As highlighted by the leadership of Reinsurance Group of America (RGA), the company delivered a strong start to 2026 with excellent performance across multiple regions and businesses. The focus remains on balanced earnings growth, effective capital allocation, and delivering attractive returns over the long term.

In the Asia Pacific region, RGA experienced another strong quarter, driven by ongoing growth and solid execution. Notable transactions were closed in Japan, including both in-force and flow deals that involve asset and biometric risk. In the U.S., adjusted operating performance was strong, supported by favorable claims experience and contributions from recent new business. Activity in U.S. individual life insurance remained robust, demonstrating sustained momentum largely due to strategic underwriting initiatives.

The company 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%. RGA deployed $338 million into in-force transactions during the quarter and completed $50 million of share repurchases, bringing total repurchases to $175 million since buybacks were reinstated in the third quarter of last year.

Outlook

For 2026, RGA assumes a 7% variable investment income return, which is below its longer-term expectations of 10% to 12%, primarily due to a muted environment for real estate sales. The company plans to remain opportunistic with share repurchases and expects total shareholder return of capital to range between 20% to 30% of after-tax operating earnings over the long term. Additionally, RGA expects to allocate $400 million of excess capital to reduce financial leverage during 2026.

There were no material in-force management actions in the quarter, but the company remains active in managing its in-force blocks. However, the timing and size of these actions are difficult to predict.

Financial Results

Economic claims experience was favorable by $117 million in the quarter, with a corresponding favorable current period financial impact of $4 million. Since the beginning of 2023, economic claims experience for the total company has been favorable by $343 million.

After considering these impacts, the run rate EPS for the first quarter is approximately $6.70 per share. Total company variable investment income was modestly below the 7% yearly return expectation by around $8 million.

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, it remains above the portfolio yield, providing a continued tailwind to the overall book yield.

RGA 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.

Q&A Highlights

During the earnings call, analysts raised several questions about RGA's opportunities and strategies. Executive VP & CFO Axel Philippe Andre confirmed that the company is tracking in line with its expectations for meeting or exceeding the $1.5 billion target, emphasizing quality over quantity.

Regarding potential impacts on flow reinsurance agreements with Equitable, President, CEO & Director Tony Cheng stated that there should be no effects on either in-force or flow transactions. Analysts also inquired about mortality favorability, with Executive VP & Global Chief Risk Officer Jonathan Porter noting that Q1 claims experience was stable, with no other significant trends observed.

Concerns about GLP-1s were addressed, with Porter stating that no material changes have been made to assumptions due to GLP-1s, and any necessary adjustments would be reflected when appropriate. Seasonality was also discussed, with Porter confirming that assumptions reflect seasonality and that LDTI will result in less earnings impact than in the past.

Analysts also asked about the potential vehicle, with Andre indicating that the focus is on fully deploying Ruby Re, which is still expected this year. The impact of this initiative is projected to come through accounting results over a long time period, amounting to approximately $20 million annually.

Sentiment Analysis

Analysts maintained a neutral-to-skeptical tone, focusing on the persistence of mortality tailwinds, capital math, and competition. However, management expressed confidence in the outlook for 2026 and beyond, highlighting their strong capital position.

Comparisons between Q1 2026 and Q4 2025 showed increased deployment into in-force transactions and a slight reduction in excess capital. Economic claims experience improved significantly from unfavorable in Q4 to favorable in Q1, with ongoing discussions about the sustainability of favorable mortality and the timing of deferred experience.

Risks and Concerns

Management acknowledged that one quarter of claims experience should not be overly emphasized, as much of it was deferred to future periods due to uncapped cohorts. Variable investment income was noted as a key swing factor, with the 7% assumption below longer-term expectations. Expectations for near-term lift from in-force management actions were tempered, with a more limited financial impact anticipated compared to recent experience.

Final Takeaway

Overall, RGA’s Q1 2026 performance reflects a broad-based start to the year, with strong regional execution, $611 million in pretax adjusted operating income, and disciplined capital actions. Executives reiterated key assumptions and targets, emphasizing the importance of favorable claims experience and the unpredictability of in-force management action timing.