RGA (RGA) Q3 2025: 16% Value of In-Force Margin Growth Signals Compounding Earnings Power
RGA delivered a record Q3, underpinned by robust premium growth, disciplined capital deployment, and a 16% year-to-date increase in value of in-force business margins. Strategic execution across Asia, EMEA, and US Financial Solutions is compounding long-term earnings power, while disciplined risk selection and in-force management remain central to the business model. Management’s focus on holistic, repeatable solutions and a strong capital position set the stage for continued capital returns and selective growth into 2026.
Summary
- Value Creation Compounding: Value of in-force business margins rose 16% year-to-date, reinforcing sustainable earnings growth.
- Strategic Discipline in Capital Deployment: RGA remains selective, balancing new business, in-force actions, and capital returns to shareholders.
- Repeatable Growth Engine: Holistic solution strategy and strong client relationships fuel a robust new business pipeline across geographies.
Performance Analysis
RGA’s Q3 results exceeded expectations, propelled by diversified geographic strength and strong execution in Asia Traditional, EMEA, and US Financial Solutions. The closure of the Equitable transaction provided immediate earnings accretion, while ongoing asset portfolio repositioning is on track, with 75% completed and full ramp-up expected by mid-2026. Traditional business premiums grew 8.5% year-to-date on a constant currency basis, highlighting ongoing vitality and demand across regions.
Claims experience was mixed: Asia-Pacific and Canada delivered favorable results, partially offset by modestly unfavorable US traditional and group business claims. Notably, in-force management actions contributed $45 million year-to-date, maintaining a steady run-rate in line with management’s $50 million annualized target. The effective tax rate was below expectations due to jurisdictional mix, but is projected to normalize for the full year. Variable investment income lagged, primarily due to lower real estate joint venture activity, but core portfolio quality remains high with no direct exposure to recent auto sector bankruptcies.
- Premium Momentum: 8.5% year-to-date premium growth in traditional business, with broad-based regional contributions.
- Capital Deployment Discipline: $2.4 billion deployed year-to-date, including $1.5 billion for the Equitable block and $900 million across 20+ smaller transactions.
- Shareholder Returns: $75 million in share repurchases this quarter, with a long-term target of returning 20%–30% of after-tax operating earnings via dividends and buybacks.
Overall, RGA’s balanced approach to capital allocation, risk management, and client-centric innovation is translating into both near-term outperformance and long-term value accretion.
Executive Commentary
"Our diversified global platform continues to deliver significant long-term value. New business momentum remains strong, as evidenced by our premium growth and capital deployment into in-force transactions. Our competitive advantages continue to differentiate RGA, leading to good new business results, a robust pipeline, and the ability to be selective on the opportunities we pursue."
Tony Chang, President and Chief Executive Officer
"Momentum across our business remains good, and we saw notable strength in Asia Traditional and EMEA and U.S. Financial Solutions. 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. All in all, this was a great quarter with strong operating results. In addition, we continue to advance many strategic objectives."
Axel Andre, Chief Financial Officer
Strategic Positioning
1. Holistic, Repeatable Solution Model
RGA’s business model centers on providing holistic, innovative solutions that combine product development, capital strategies, and technology-enabled underwriting for clients. This approach drives exclusive, repeat business—especially in Asia Pacific and EMEA—by leveraging deep client relationships and a reputation for execution. The Hong Kong Federation of Insurers’ Outstanding Reinsurance Scheme Award exemplifies this strategic differentiation, as does the rapid uptake of new products in Korea and China.
2. In-Force Management as a Value Lever
Active in-force management actions are an embedded discipline at RGA, contributing $45 million year-to-date and supporting both earnings and capital flexibility. These actions span geographies and product lines, and management expects the $50 million annual run-rate to persist, with continued opportunity for incremental actions. This lever is integral to risk management and enhances the ROE profile by optimizing legacy blocks.
3. Selectivity and Risk Discipline in Growth
RGA’s leadership emphasized unwavering discipline in risk selection, countering industry chatter about aggressive pricing or lower IRR acceptance. The company continues to avoid commoditized, tender-driven US transactions outside its sweet spot, focusing instead on blocks with both biometric and asset risk where it has a competitive edge. This selectivity underpins superior new business lifetime returns above target range over the past two years.
4. Capital and Sidecar Strategy
Capital deployment is balanced between organic growth, in-force transactions, and opportunistic shareholder returns. The Ruby Re sidecar, a third-party capital vehicle, is on track for full deployment by mid-2026, focused on US asset-intensive liabilities such as pension risk transfer. Management signaled future expansion of sidecar structures as a supplement to organic capital deployment, but remains committed to areas of core expertise.
5. Value of In-Force Margin Expansion
The 16% increase in value of in-force business margins since the end of 2024 demonstrates RGA’s ability to compound long-term value from new business and management actions. This metric is increasingly recognized by rating agencies and is a critical lens for assessing future earnings power and capital deployability.
Key Considerations
This quarter reinforced RGA’s strategic consistency, risk discipline, and ability to compound value through both new business and legacy block optimization. The company’s global diversification, strong capital base, and commitment to selective growth position it well for continued outperformance.
Key Considerations:
- Asia and EMEA Leadership: Asia Traditional and EMEA remain growth engines, benefiting from product innovation and first-mover advantage in asset-intensive reinsurance.
- Equitable Block Integration: The Equitable transaction is delivering as expected, with earnings accretion and strategic partnership benefits in underwriting and asset management.
- Variable Investment Income Headwind: Lower variable investment income, especially from real estate joint ventures, was a drag this quarter, but new money rates and portfolio quality provide a partial offset.
- Claims Experience Volatility: US traditional and group claims were modestly unfavorable, but management views this as normal volatility, not a systemic issue.
- Capital Return Philosophy: RGA targets 20%–30% of after-tax operating earnings returned to shareholders, maintaining flexibility to balance capital deployment with shareholder returns.
Risks
Key risks include claims volatility in US traditional and group segments, persistent headwinds in variable investment income, and regulatory or rating agency changes impacting capital recognition. Industry competition remains intense, but RGA’s selective approach mitigates exposure to lower-return or commoditized business. Ongoing monitoring of population health trends (such as GLP-1 drug impact) and longevity/mortality assumptions is required, especially in the UK and US.
Forward Outlook
For Q4 2025, RGA expects:
- Continued momentum in Asia Traditional, EMEA, and US Financial Solutions.
- Full-year tax rate to normalize to 23%–24% as jurisdictional mix reverts.
For full-year 2025, management maintained guidance:
- Equitable block to contribute ~$70 million pre-tax, ramping to $160–$170 million in 2026 and ~$200 million by 2027.
Management highlighted several factors that will shape results:
- Full repricing of US group block by January 2026 is expected to restore profitability.
- Ruby Re sidecar deployment and ongoing in-force actions remain levers for incremental earnings and capital optimization.
Takeaways
RGA’s Q3 2025 results underscore the effectiveness of its disciplined, repeatable business model and its ability to generate and compound long-term value across cycles.
- Compounding Value Engine: 16% year-to-date growth in value of in-force margins signals sustained earnings power and capital flexibility.
- Operational Resilience: Diversified regional strength and robust in-force management offset claims volatility and investment headwinds.
- Strategic Watchpoint: Investors should monitor execution on sidecar deployment, ongoing in-force actions, and the evolution of new business returns as the competitive landscape intensifies.
Conclusion
RGA’s Q3 performance validated its reputation for disciplined growth, risk management, and value creation. The company’s strong capital position, robust pipeline, and consistent execution position it to deliver on its long-term financial targets and shareholder return commitments.
Industry Read-Through
RGA’s results reinforce the growing importance of holistic, repeatable solutions and disciplined capital deployment in the global life and health reinsurance sector. The 16% growth in value of in-force margins highlights the compounding power of new business and legacy block optimization, a model increasingly emulated by peers. Ongoing repricing in group and asset-intensive blocks, as well as the use of sidecar vehicles for capital efficiency, are likely to shape industry capital flows and competitive dynamics into 2026. Insurers and reinsurers should note the rising strategic value of client relationships, risk selection, and in-force management as differentiators in a more competitive, capital-aware environment.