Good day and welcome to the Reinsurance Group of America Fourth Quarter 2015 Results Conference Call. Today's call is being recorded. At this time, I would like to introduce Chief Executive Officer, Mr. Greig Woodring; and Senior Executive Vice President and Chief Financial Officer, Mr. Jack Lay. Mr. Lay, you may begin.

Okay. Thank you. Good morning and welcome everyone to RGA's fourth quarter 2015 conference call. Joining me in St. Louis this morning is Greig Woodring, our Chief Executive Officer. Greig and I will discuss the fourth quarter results after a quick reminder about forward-looking information and non-GAAP financial measures. Following our prepared remarks, we will be happy to take to your questions. To help you better understand RGA's business, we will make certain statements and discuss certain subjects during this call that will contain forward-looking information including, among other things, investment performance, statements relating to projections of revenue or earnings, and future financial performance and growth potential for RGA and its subsidiaries. Keep in mind that actual results could differ materially from expected results. A list of important factors that could cause actual results to differ materially from expected results have included in the earnings release we issued yesterday. In addition, during the course of this call, we will make comments on pre-tax and after-tax operating income, which is considered a non-GAAP financial measure under SEC regulations. We believe this measure better reflects the ongoing profitability and underwriting trends of our business. Please refer to the tables in the press release and quarterly financial supplement for more information on this measure and reconciliations of operating income to net income for our various business segments. These documents and additional information may be found on our Investor Relations website at rgare.com. With that, I'll turn it over to Greig for his comments.

Thanks Jack. Our fourth quarter results were strong and it’s nice to end the year on a high note. For the quarter, operating EPS was $2.84 including $0.36 in tax benefits from the reversal of the active financing exception with full year operating EPS was $8.43, down compared to last year’s very strong result of $9.12, which included some unusual tax related benefits which boosted that result by $0.55 per share, but up against the $8.30 that we had discussed last year had some more normalized result. This was another quarter in which our International segments performed well over all with Asia and Canada having excellent quarters. Our U.S. mortality business had another quarter that was not at the part but there was some recovery versus Q3 and we benefited from a more significant contribution from the various in-force transactions that we have completed in the last couple of years. Fourth quarter reported premiums were up just modestly due to foreign currency headwinds but excluding those effects, premium growth was 10% for the quarter. So our top line growth remains quite healthy. As I step back and view the full year, I want to highlight a few things. First, from a top line standpoint, excluding the effect of a larger retrocession agreement executed in the fourth quarter of 2014, original currency premiums were up 8% year-over-year. We also considered this to be a solid year from an earnings standpoint given the macro headwinds that we faced. In particular in fact the week point currencies was even more significant than we expected and had a negative effect on operating EPS and ROE, up $0.53 per share and 7.7% respectively. Further, we accomplished these results despite the fact that U.S. Traditional business had an unusually challenging year as we have benefited from…

Okay, thanks, Greig. I’ll give you a quick synopsis of the fourth quarter financial results and then comment on our intermediate term guidance and add some additional forward-looking thoughts. We are pleased with the strong fourth quarter with operating income of 188 million or $2.84 per diluted share. As Greig mentioned, the fourth quarter results reflected strong operating results in most markets and a reversal of accruals related to the AFE legislation. Reported premiums totaled $2.3 billion increasing 5% in translated U.S. dollar and 10% in original currencies. The premium growth includes new transaction layered on through our 2015. Our investment portfolio continues to growth well filling the effects of the ongoing low interest rate environment. Our average portfolio yield excluding this spread businesses, was 4.96% this quarter in line with a year ago quarter. Both periods were boosted by a variable investment income and prepayments as well as some additional investment income related to the closing of an in-force transaction late in this year’s quarter. We repurchased about $51 million worth of shares and deployed $250 million into block transactions during the fourth quarter. For the full year, executing of our capital management strategy was well balanced as we repurchased $375 million of shares and deployed a little over $500 in the block transactions. It’s worth mentioning that we’ve used just over $1.2 billion of excess capital over the past two years for deployment and repurchases. Our board approved a $400 million share repurchase authorization that replaced the old one. The current excess capital position is approximately 600 million at this time. Our transaction teams remain very busy in the pipeline and outlook where deal flow remains healthy. Now turning to our individual segments, the U.S. and Latin America Traditional segment recorded pre-tax operating income of $79 million versus…

Thank you. [Operator Instructions] We’ll go first to Jimmy Bhullar with JPMorgan.

Hi, good morning. So first question is just on the deal pipeline, a lot of the deals obviously that you do to the clear smaller but a number of larger deals have come up in the U.S. market with what’s going on with AIG and MetLife. And so my question is, do you see an opportunity in this and what are your options to raise capital in case you win any of these large deals? And also if you could remind us on what typically would be the return ROEs when you look at deals in the U.S. or internationally.

Yeah, taking the last part first, our return hurdles for transactions are similar to what our return hurdles are for organic business 13% sort of the life time return on the business. In terms of transactions in the U.S., there are some very large ones, I am not sure that we would entertain being a buyer for big large properties, but we certainly could team with people and be part of it. That happens from time to time and we get into discussions on various different things, Jimmy. But you know I think that we set our sights more on the transactions that involve anywhere from say $100 million to $500 million of capital. If we had to raise capital, we demonstrated last year that we can securitize embedded value out of the company and raise significant amounts of capital if we have a need to do so. And that would assuming market conditions are receptive that would be certainly an avenue we would look at.

And then secondly on Australia, you had some quarters as you went through 2015, the last quarter is pretty good but weak quarters prior to that. What’s your comfort level with the reserve charge you took a couple of years ago as you’ll see an experience immerge over the last two years?

Hey Jimmy, this is Jack. You know we still are comfortable with the reserves that we have established. You’ll recall that was primarily on the Group business. And it does take over than you’d expect for that business to roll off. We don’t have any issues. We think we are probably the reserved at this point.

And then just one more lastly if I could, the investment losses seemed elevated this quarter, so what were the drivers of that? And then also if you could give us any numbers that on to your energy exposure in the portfolio?

Yeah, I’ll take that. Yeah they were a little bit elevated. I think the last two quarter they were a little bit elevated in terms of impairments compared to our more recent run rate. You mentioned Energy credits and they were behind the lion share of our impairments. We impaired about $28 million or so during the fourth quarter, most of that was energy related, bring some securities that we have year marked for sale that impact we haven’t sold the portion of those already. So that was behind it. In terms of our total exposure, we’re about 2.1 billion in total energy exposure in the portfolio at year end.

Okay, thank you.

We’ll go next to Erik Bass with Citi.

Good morning. Thank you. Can you provide some more color on the U.S. Group results for this quarter and for 2015? And is how big a component of traditional earnings this Group typically and what’s the typical quarterly volatility that you’d expect?

Erik I’ll take that. Our characterizing entire year is we had a negative result. We are well off our plan. We ended up with positive earnings but it wasn’t particularly significant. I think we probably missed our plan by $30 million or so pre-tax for the year. So that also gives you some indication. A run rate on earnings for that line is between 30 and 40 million in terms of expectation.

For the year?

Yeah, for the year, I am sorry.

Yeah, for the year. Actually that’s a Group line has four lines business within it. The problem incented this year around the LTD business which enjoyed a very strong result in 2014. So it is volatile business and it is a volatile business period. This was about a server as we would ever expect the LTD business to be.

Got it. And then maybe switching to Canada, you’ve now had several quarter of favorable mortality experience after a tough 2014, is this changed your view at all about the outlook for the block?

Yeah, we always had a strong view on the outlook for the Canadian block. I can’t say that we really understand completely it switched on and off very suddenly but it went from a long spring of extremely good results to struggle for period of 18 months or so and it’s turned around sharply and suddenly after that.

Got it.

Erik, I guess you can that’s really the nature of that mortality business that you can go through somewhat extended periods where you just have very positive or a negative mortality results.

Okay, I guess, I thought you’d sort of characterized the end of the last year that you’d felt like some of the weakness could continue and now it’s turned around, so you be back to sort of - would you say the block sort of on track with your long term expectations now?

Yeah, so Erik, you’re right, we did express some concern at the end of last year because we had unfortunately a fair consistent negative pattern for several quarters. So we did comment that we were looking very closely at it, did had some concern in that like then they did turn around after the first quarter this year.

Okay, thank you.

And we’ll go next to Michael Kovac with Goldman Sachs.

Thanks. Just a question on the excess capital position here, so you’re sitting at 600 million following a pretty active year down from that 1.2 billion last year. And I believe in the past you’ve discussed about 300 million of annual free cash flow that you are generating and if they roll for the repurchase announcement in kind of a similar level of deals to what you’ve done this year. You kind of at that whole excess capital position by the end of 2016. So my question is do you expect to go into the capital markets for the type of retrocessional transaction or any capital feeing activity that you saw last year and do you see the market as fairly receptive to those type of deals?

Yeah, I think the answer is yes. You know I’ll remind you that the last two years really 2014 and 2015 where really relatively high years in terms of capital deployment. So you know I think your math is right, if we were to continue with that level, we would hid into the excess capital that we have on the balance sheet at year end. Now we do have, Greig had mentioned, we have the opportunity to go through another embedded value securitization that we thought that was the appropriate thing to do. We also feel we have capacity to issue hybrid securities to some degree. So there is several levers we could pull if we felt the opportunities were attractive amount that we wanted to raise some level of capital.

Great, and then in terms of thinking about asset intensive earnings which exclude this quarter in the U.S. and the past run rate had been somewhere around 50 million I think. In terms of both the macro environment from an interest rate in volatile equity market to certainly just start the year, do you think that is still sustainable rate in 2016 and forward and sort of thinking if we mark-to-market it today give sort of moves that we’d seen to date, what do you think is the outlook for that business?

Yeah, I think that we’re comfortable that 50 million or so for quarter is a reasonable run rate going forward. We don’t feel we are overly exposed to the equity market, so lot of that is simple spread business you know as PDA back business and that sort of thing. So you know we wouldn’t back off an expectation of earnings 50 a quarter or so.

And Michael, most of that business is done on a bulk basis on a close block basis and so match asset some liabilities we don’t really have to worry so much about what interest rates do after that if we’ve done a good job of matching assets and liabilities.

It makes sense. And one last numbers question for you, so you broke out the 20 million I believe of unfavorable in the Group lays part of the U.S. Traditional business, do you have a similar breakout for the favorable benefit in Canada?

My recollection is in Canada, the favorable benefit that was around $10 million or so pre-tax.

Thanks.

And we’ll go next to Yaron Kinar with Deutsche Bank.

Good morning, everybody. First question going back to the U.S. Group, can you give us a sense of I think you said it was pretty significant delta between expectations and results this quarter, can you give us a sense in terms of is it a ones in a deviation event, is it more or less than that?

Yeah, I don’t know the answer to that off. And we continually are repricing that business and it comes up whatever year, so it’s - it was probably more than a standard deviation. But I am not sure exactly how I would quantify that or if we have really done the work to quantify that. We view that as a situation that picks us itself because it will all be repriced as quick as it can be.

And speaking of that repricing, so it seems like it was already performing below expectations are going into the quarter, so how much of the book is being repriced for 2016 renewals?

Well it will all repriced within a year if there is a problem with it. As I said 2014 results were sternly positively in terms of delta and in 2015 the results were strongly negative and much strongly negative. So all of that is a continual work by the Group team in Minneapolis to stand up things and they are doing excellent job of that.

Okay. And then switching to the other side of U.S. Traditional, the individual mortality, so am I correctly understand that the elevated claims there were not from the 1998 to 2004 events each block?

Yeah that was probably the best - that was probably the best performing era in this particular quarter it shows the volatility of things. So things go up and down from quarter to quarter.

Okay. Can you give us maybe a little more color as to what the pressure points were in individual mortality?

It was all the other errors and it was predominantly much across the board.

And predominantly you can think of it is not the large cases that were the big contributors, it was small. And we characterize large cases a million dollar more. So it’s really claims low for smaller cases that contributed.

Okay, and this was not something that you’d seen in previous quarters?

No, we …

We saw it certainly in the first quarter last year what we had what looks to like a lot of cases last year.

Okay. And then finally one question on capital deployment, so clearly very strong deployment into in-force blocks, but with the stock price at current levels and excess capital saw 600 million, why wouldn’t you consider buying back more share this quarter?

Well we may. As we noted we’ve got a $400 million authorization and the stock has traded you know fairly dramatically but that’s been relative reason of current within a block out period. So you know we’ll strongly consider all the alternative in terms of whether it makes sense to take out additional share early on versus what’s in the pipeline for potential block transactions.

Alright, thank you very much.

We’ll go next to Steven Schwartz with Raymond James.

Hey, good morning, everybody. First a follow-up, Jack on the energy portfolio I think you said you had 2.1 billion in total, could you tell us at the end of the year, how much of that was below investment grade?

Yeah, I think about - I think roughly 1.9 billion was investment grade, so 200 million or so would have been high yield.

Okay, thank you on that. And then just a couple more, could you - you mentioned in the press release that there was some interest income coming on a retroactively basis from a deal, how much was that and can you say what deal that was?

Well it’s not an announce deal, so we wouldn’t want to indicate which client, but there was about $30 million. Steven it’s not particularly unusual where we will develop a block transaction and then have it retroactively effective, so we will get two or more quarters of earnings associated with that deal. And that was a case on this particular deal, it was a little different in that all of the lot the way the deal was structured, lot of that performance prior to the actually executing the deal came through as investment income. And you had it - because we didn’t have the investments in portfolio, it had kind of effect on our overall investment yield, so that’s why we try to break that on and comment on it.

Okay, the assets are now in portfolio?

That’s right.

Okay. And then just looking at U.S. Traditional ordinary flow business as opposed to in-force transactions, would you have that number and could you compare it to 4Q ‘14?

Are you talking about an in-force number or new business production or?

New business production, Jack.

I know we’ve got that in the Q, that’s going on …

Okay, got it, I’ll find it.

Okay.

Alright, thank you.

And we’ll go next to Sean Dargan with Macquarie.

Thanks. I have a question about Japan, Japan post also known as CompoLife recently received approval to get a reinsurance license, I was wondering what the implications of that are for your business in Japan?

We don’t think much of any implication at all. There are a lot of national and startup type reinsurance in various different markets around the world that it’s really not likely that we will see major competition of anything of the sort of Compo normal that detract from our business momentum in Japan which is quite strong.

That even given out unique place in the market there and having …?

Yeah, they have restrictions, they have also restrictions on size of we still taken the types of things they can do and if anything is they might be somebody we can team up with uncertain transactions. But we don’t see them as - that event as significant in terms of the competitive landscape at this point.

Okay. And then another question about the investment portfolio, your GAAP book value per share has been declining every quarter this year and that’s driven and it looks like large part by the unrealized gain position on the balance sheet shrinking, it’s roughly half of what it was in the first quarter. Is that due to your energy exposure or what’s driving that?

No, it’s more changes in rates than is the energy exposure, because that - energy exposure well the value has changed, it’s really not an uptick meaningfully changed the amount of unrealized appreciation in AOCI. That’s really a more reflection of the macro environment.

Okay, but is that - does U.S. assets and because U.S. interest rates haven’t fallen that much?

It’s really all assets including the large portfolio in Canada.

Okay, got it, thank you.

We’ll go next to John Nadel with Piper Jaffray.

Hey, good morning. I have a maybe a house keeping question first and that is you know there is a lot of moving parts in your 2015 EPS but if we think about you know the $8.43 that you are reported, is that the way you characterize the baseline as we think about you know 5% to 8% growth outlook on an intermediate term basis, Jack?

Yeah, John, I think that’s fair and you are right and we see it over year it’s nature of our business, there are lot of moving parts and some moving in different directions. But yeah, I think we don’t feel, I need to try to re-characterize and give a more normalize view of the ‘15 run rate, so I would agree with you.

Okay. And then if I think about you know the shorter term you know maybe the one year you know portion of that intermediate term outlook, you know would that be wrong if I was thinking about that is perhaps having you know a higher possibility of delivering above the 5% to 8% as opposed to below. And the reason I would think that way Jack is that you know you deployed probably more than two times what your intermediate term outlook you know what call for you to deploy on an annual basis, you have obviously this group weakness in 2015 that should setup for a reasonably easy comparison. You have a lot of FX headwind that’s already sort of in the baseline. So I am just trying and obviously your organic growth has been pretty good, so is there anything I am missing there?

No, I don’t think you are, it’s only hard to project the next 12 months. And I think you commented on some of the major kind of the macro headwinds and we worry about the investment yield, we worry about FX in terms of providing a headwind. You are also correct that as we layer on these transactions, they have incrementally a positive impact on our earnings expectation going forward. So any drawback together and obviously we think that the positives are going to outlay the negatives or we wouldn’t be projecting a growth in EPS. But you know I think it may be putting two final point in terms of where in that range, it’s you know what characterizes pretty much on a middle of the range as we enter the year their expectation. It’s not - will end up, we’ll be little more south of that, just by the business.

Okay, understood, thank you very, it was helpful. Thanks.

We’ll go next to Humphrey Lee with Dowling & Partners.

Good morning. I just have a question regarding your organic growth in U.S. Traditional, so looking at fourth quarter, pretty strong premium growth there even then when you strip out the in-force transactions. So maybe can you comment on the organic growth in the quarter, what are you seeing and then also in terms of the outlook for 2016?

I think it’s take that. Yeah, I guess I characterized fourth quarter as a little bit stronger than a run rate you know if you call out the impact of any in-force transactions and that sort of thing. So yeah, I think our expectation would be a run rate throughout 2016 a little bit lighter than we reflected or reported in the fourth quarter 2015.

Is there a reason why the stronger run rate result in the fourth quarter, just seemly there are more activities by the primary areas or just seemly it’s just a random?

Yeah, Humphrey, I think it’s really difficult to look a quarter and wash out the noise reporting noise, the issue noise and so forth that happens and it’s clear that that business is not growing at real strong rates on the traditional mortality business, there is some growth in the Group business and a long term care business is growing a little bit not through new issues this much as just continuing to add on to the level, there is no lapses in that business. And so you see some incremental changes but it’s not the robust growth that we experienced back in the 90s and the early part of the 2000s. And it’s hard to see that returning in the short term that sort of growth. So we are expecting that the ability to supplement organic growth with occasional block transactions has been a very, very beneficial for us and it’s kept that business vitality to a reasonable level.

Understood, so maybe shifting gear to Australia, so on a full year basis, it appears to be profit above even though there are some volatility throughout 2015, then can you be maybe size the total earnings contribution for - from Australia in 2015 and how should we think about the improvement in 2016?

You know Humphrey, I’ll take that. For the entire year pre-tax, it was about 20 million in terms of earnings level. We would not expect that, that was actually a little bit higher than our expectation coming into the year that is higher than our plan. We wouldn’t expect any sort of significant increase in that level. I think we would be happy within result similar to ‘15 and ‘16. Our results over the last little while have in Australia have been less several years. It’s not only been volatile but have shown a lot of seasonality with the fourth quarter and first quarter tending to be good and the second quarter in particularly tending to be bad. So you are looking at it right off of a very good quarter. It’s - as Jack said, $20 million of lot of that 20 million occurred in the fourth quarter. So I wouldn’t read too much into projecting our run rate based on what you see it’s the case that from time to time we got to have good quarters and backwards in Australia, but we’re hoping to bring that operating backup to performance over the course of time.

Okay, thank you.

We’ll go next to Dan Bergman with UBS.

Hi, good morning. First, I just wanted to see if you can give any update on the block acquisition pipeline and level of the activity you are seeing in the market. And specifically looking forward if the reason global market weakness in volatility continues, I just wanted to see how you might expect us to impact the outlook potential for future block deal if at all?

I’d say the pipeline is okay right now, it’s - you know I guess we’ve got in the custom to having a very strong pipeline with a lot of activity given all of the change in disruption in the industry and a lot of re-shifting, re-focusing. And I would say it’s not as strong as it has been at times, but still much stronger than it was a number of years ago. So we expect that things like new capital standards are going to spur significant of transactional opportunity over the next several years and this will just keep coming. A lot of them will be small and you won’t hear about them in a major way and some of them can be done privately and then others will be large transactions. And so we’re very happy with the way the transactional business opportunities that looks right now.

Great and then switching to the tiny, but I guess in terms of the 250 million of capital you deployed in block M&A in the fourth quarter, I think a couple of U.S. traditional deals have been previously disclosed or announced, but I wanted to see if you can give us anymore color on the types of deals that comprise the reminder of the fourth quarter deployment and maybe what geographies there and any additional color would be helpful? Thanks.

Yeah, this is Jack. For that 250 was the volume transaction that we had previously announced, so that deployed round numbers about 100 million of capital. We also did a large payout annuity, relative large payout annuity transaction in the UK that deployed a little over 100 million of capital and that’s not announced since over that comfortable indication to the counterparties order. But between the two of those that’s the lion share of the deployment in the fourth quarter.

Alright, gotcha, very helpful, thank you.

[Operator Instructions] We’ll go next to Ryan Krueger with Keefe, Bruyette & Woods.

Hey, thanks, good morning. First question was on U.S. session rates, I know the industry that hasn’t been published yet, but when you look back to this year giving they remain pretty stable or did you think of it’s much of a change?

Yeah, I don’t - I don’t know that we expect much of a change, I think that if anything, the rates would be within a very close range of where they were last year, they might be a little low or might be a little bit down but we are waiting for those results as well and we’ll see them in a very short time now.

Okay, thanks. And then principal rates are having - I guess this should impacted in 2017, how do you see that impacting RGA?

Again where there in tinge like that there is opportunities when business was priced under one set of assumptions and suddenly if something changes it looks a little different and a lot of times companies want to restructure change the nature of that of their balance sheet in in-force blocks. And so we viewed as an opportunity set for us, at the same time, will be subject to our own principals based capital regime, so we’ll have some things concern ourselves within that front as well. But generally speaking when there is change like that we view that as more opportunity than not.

Okay. And then just a last one, do you have an estimate of how much low interest rates would impact 2016 results?

Yeah, so I swear to call, because we have to make a call on prepayments and that sort of thing, but we expect certainly that will be a headwind and could have an impact of 15 to 20 basis points on the yields.

Okay, got it, thank you.

And there are no other questions at this time. I would like to turn things back to our speakers for any additional or closing remarks.

So thanks to everyone who joined us with the call today. With that we will go ahead and complete the call and are available for any other questions.

By the way I would add before we close that Anna Manning is actually travelling in Asia this week and on future calls the President will join us. Thank you very much for your attention today.

Thank you everyone. That does conclude today’s conference. We thank you for your participation.