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Reinsurance Group of America addresses large vintage claims in US mortality biz

Written by Jasir Jawaid

Reinsurance Group of America Inc. President and CEO Albert Woodring, speaking on an Oct. 30 earnings call, addressed another weak quarter in the U.S. mortality business, in which the company saw a number of maximum loss claims.

Woodring said it was "disappointing" to see the business perform badly, especially in a period when some seasonal recovery was expected. While the company saw large claims, he noted that the overall frequency of claims was better than expected.

The large claims, Woodring said, were mostly older issue age policies — those written on individuals over the age of 70 at the time of issuance.

"These policies have increasingly been a problem for us and are behind much of the higher claims flow we've seen in the recent past, including within the business written in what we have characterized as the highly competitive underperforming era in the roughly 1999-to-2004 time period," he said.

"The experience on large case older age business is particularly onerous this quarter."

Through the first nine months of 2015, the U.S. individual mortality underwriting experience was about $140 million worse than expected, and Reinsurance Group of America expects additional older issue age claims of approximately $60 million annually "for the next several years" before eventually trending down.

"While this will modestly reduce margins and returns for the overall U.S. individual mortality business, we consider this to be a manageable issue given the relative size of this block and its declining impact relative to RGA in total over time," Woodring said.

This article was published by S&P Global Market Intelligence on the S&P Capital IQ Pro platform.


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