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Reinsurance Group of America NYSE: RGA reported fourth-quarter 2025 operating earnings of $7.75 per share, marking what management described as its second consecutive record quarter. President and CEO Tony Cheng said the company’s adjusted operating return on equity (ROE) for the trailing 12 months, excluding notable items, was 15.7%, above its intermediate-term target range of 13% to 15%.
Cheng said the quarter “capped off another year of excellent financial results with strength across our businesses and geographies.” For full-year 2025, RGA reported record operating EPS, generated a 15.7% ROE, and increased the value of in-force business margins by 18%. Cheng also highlighted $2.5 billion of capital deployed into in-force transactions during 2025, the reinstatement of share repurchases, and an ending excess capital position of $2.7 billion.
Quarterly drivers: management actions, investments, and regional performance
Management pointed to favorable results in the U.S., citing in-force management actions and variable investment income, while noting that individual life mortality was in line with expectations. Cheng said EMEA benefited from strong volume growth and favorable experience, and APAC continued to deliver growth momentum along with in-force actions.
Chief Financial Officer Axel André said RGA posted record pre-tax adjusted operating income of $515 million in the quarter. He attributed results to earnings emerging from recent new business (including the Equitable transaction), favorable in-force management actions, and strong investment performance.
RGA’s balance sheet optimization efforts were again a key theme. André said in-force management actions had a $95 million favorable financial impact in Q4 and noted that such actions can range from large one-time steps (such as strategic recapture) to more recurring items like rate increases on specific blocks, though timing and magnitude can be difficult to predict.
2025 capital deployment and shareholder returns
During Q4, RGA deployed $98 million into in-force transactions and completed $50 million of share repurchases at an average price of $187.40. Total buybacks since the program was reinstated in the third quarter of 2025 reached $125 million. André said estimated excess capital ended the quarter at $2.7 billion, with estimated deployable capital over the next 12 months of $3.4 billion.
In response to an analyst question, management reaffirmed a targeted 20% to 30% total payout ratio (dividends plus buybacks) over the intermediate term, while emphasizing a balanced approach between reinvesting in attractive opportunities and returning capital to shareholders. Cheng said the company also wants to maintain financial flexibility and remain opportunistic as market conditions evolve.
2026 outlook assumptions: variable investment income, capital plans, and leverage
Looking to 2026, André said RGA expects an effective tax rate of 22% to 23%. The company assumes a 7% variable investment income return in 2026—above 2025’s 6%, but below RGA’s long-term expectations of 10% to 12%—which management said reflects a still-muted environment for real estate sales, when income from certain real estate assets is recognized.
André also described expectations for in-force management actions in 2026 as more limited than recent years, noting elevated contributions in the past: about $75 million of earnings in 2023, $225 million in 2024, and $135 million in 2025. He reiterated that these actions will continue, but are “highly unpredictable.”
Additional 2026 capital planning items discussed on the call included:
- Base-case in-force transaction deployment of about $1.5 billion during 2026
- $400 million of excess capital expected to be allocated to reducing financial leverage in 2026
- Continued opportunistic share repurchases alongside quarterly dividends, consistent with the company’s payout framework
On slide 9 of the earnings presentation, André said the company views 2025 run-rate EPS at approximately $24.75 after considering the impacts of biometric claims experience, variable investment income, and in-force management actions. He reiterated RGA’s intermediate-term targets of 8% to 10% annual EPS growth and 13% to 15% ROE, while noting the company is “running at or above the high end” of the ROE range and will continue to evaluate the target.
Biometric experience, group healthcare exit, and the Equitable transaction
On claims experience, André said economic biometric claims experience was unfavorable by $51 million in Q4, with a corresponding $53 million unfavorable current-period financial impact. About half of the unfavorable result was driven by the U.S. Group business, consistent with updated expectations previously communicated. RGA said U.S. individual life claims experience was in line with expectations. André added that since the beginning of 2023, total company economic claims experience has been favorable by $226 million, and that favorable economic experience not yet recognized through accounting will emerge over the remaining life of the business.
Management said challenging results in U.S. Group were tied to the excess medical business. Cheng said the business was fully repriced for 2026, and management expects a significant improvement over the next year. During the Q&A, André said rate increases averaged 40% from mid-2025 through January 2026. Following a strategic review, the company decided to exit group healthcare lines of business by stopping new business immediately and not renewing existing business at the end of the current one-year term. Management said the U.S. healthcare business represents about $400 million of annual premium and approximately $25 million of pre-tax run-rate earnings in a typical year, with the decision expected to have limited impact in 2026 and to primarily emerge in 2027 results.
On legacy risks such as universal life with secondary guarantees (ULSG) and long-term care (LTC), Cheng said RGA remains selective and disciplined, emphasizing higher hurdle rates for these lines given a public company balance sheet. He said RGA’s ULSG and LTC liabilities are less than 10% of the company’s balance sheet and are expected to remain so.
Regarding the Equitable transaction, André said results were consistent with the company’s guidance of $60 million to $70 million of earnings for the second half of 2025, and RGA continues to expect $160 million to $170 million of earnings from the transaction in 2026. He outlined four drivers of economic upside for RGA versus the original performance of the block: repricing with updated mortality and policyholder behavior assumptions, uplift from higher asset yields through repositioning of transferred assets, lower expenses by absorbing the business into RGA’s infrastructure, and capital efficiency from RGA’s legal entity structure. He also noted ongoing strategic relationship benefits, including underwriting new flow reinsurance business and participation by AllianceBernstein in RGA’s sidecar strategy.
In other investment commentary, Chief Investment Officer Leslie Barbi said software-related exposure in direct lending is “very modest,” at less than 30 basis points of the total investment portfolio, and noted the team continues to assess factors such as AI disruption across the portfolio. André added that variable investment income was above expectations by roughly $48 million in Q4, driven by higher limited partnership income.
Management closed the call emphasizing a “rich and diverse” pipeline across regions, pointing to continued opportunity in Asia (including Japan and Korea) and strength in U.K. longevity, while noting RGA’s focus on transactions that combine both asset and biometric risk.
About Reinsurance Group of America NYSE: RGA
Reinsurance Group of America, Incorporated NYSE: RGA is a leading global provider of life and health reinsurance solutions. Headquartered in St. Louis, Missouri, RGA partners with primary insurance companies to help them manage risk, improve capital efficiency and develop innovative products. The company’s offerings span traditional risk transfer, financial solutions and facultative underwriting services, enabling clients to address a wide range of mortality, longevity, morbidity and critical-illness exposures.
RGA’s product suite includes life reinsurance, living benefits reinsurance, structured reinsurance and financial solutions that support product innovation and capital management.
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