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Reinsurance Group of America said that it did well in the third quarter, and that claims related to the COVID-19 pandemic continued to be toward the lower end of what it might have expected from a major pandemic.
But executives at RGA (NYSE: RGA) have been watching the pandemic closely. Jonathan Porter, the Chesterfield, Missouri-based company's global chief risk officer, said during a recent conference call with securities analysts that it has seen about $140 million individual COVID-19-related mortality claims, before taxes.
Porter said that, during the first three quarter of the year, the number of U.S. deaths not tagged as COVID-19 deaths may have been about 80,000 higher than the 198,000 total the U.S. Centers for Disease Control and Prevention reported, based on RGA experience data.
The CDC's own analysts have suggested that the number of COVID-19-related deaths might be about 100,000 higher than the official CDC count.
Porter said there are signs that pension and annuity cost savings related to COVID-19 may amount to roughly 10% of the pandemic-related mortality impact.
RGA is reporting $213 million in net income for the third quarter on $3.6 billion in revenue, compared with $263 million on $3.6 billion in revenue for the third quarter of 2019.
RGA's U.S. and Latin America business is reporting $88 million in adjusted operating income for the latest quarter, compared with $232 million in adjusted operating income for the year-earlier quarter.
At the asset-intensive solutions unit, here's what happened to the value of certain types of annuities reinsured, between the third quarter of 2019 and the latest quarter:
- Deferred Fixed Annuities: $11 billion (about the same)
- Indexed Annuities: $3.5 billion (down from $3.6 billion)
- Variable Annuities: $2.9 billion (down from $3 billion)
Another life and annuity reinsurer, Athene Holding Ltd. (NYSE: ATH) — a company that is also a major annuity issuer — is reporting $293 million in net income for the third quarter on $4.6 billion in revenue, compared with $652 million in net income on $3.3 billion in revenue for the third quarter of 2019.
Bill Wheeler, the president of Athene, said during a conference call with securities analysts that the Pembroke, Bermuda-based company has about $7.6 billion deployable deal capital, on top of what the company is spending to reinsure a large block of Jackson annuity business.
"As we look to our pipeline, we believe there will be numerous opportunities to deploy this capital over the near term," Wheeler said.
Wheeler said Athene sees the direct life and annuity borrowers evaluating the suitability of reinsurers for relationships that will last for many years.
"We find that some people are very aggressive, but they're also the kinds of companies that you would think twice about in terms of somebody for the long run," Wheeler said.
