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RGA’s second-quarter revenue and adjusted earnings per share both beat the consensus. On the basis used for the consensus comparison, revenue was $6.7 billion against $6.6 billion expected, while adjusted EPS was $8.89 against $6.51 expected.
RGA reported quarterly revenue of $6.6 billion, up from $5.6 billion a year earlier, and diluted EPS of $7.01, compared with $2.70. Its operating margin rose to 10.7% from 8.91%, while gross margin rose to 15.6% from 14.4%. Free cash flow was −$484.0 million, compared with −$820.0 million a year earlier.
The filing attributed the increase in adjusted operating income before taxes to earnings from the Equitable Holdings transaction, growth in net investment income and favorable claims experience. RGA said organic growth and new business production increased net premiums, while higher invested assets and variable investment income contributed to investment income growth. It also said recaptured treaties reduced net premiums in part of its business.
The filing said portfolio repositioning to generate higher yields resulted in $88 million of net realized losses in the quarter, compared with $35 million of net capital losses a year earlier.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $6.6 billion | $5.6 billion | 18.5% |
| Diluted EPS | $7.01 | $2.70 | 159.6% |
| Gross margin | 15.6% | 14.4% | 1.2 percentage points |
| Operating margin | 10.7% | 8.91% | 1.8 percentage points |
| Free cash flow | −$484.0 million | −$820.0 million | — |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $8.89 | $6.51 | Beat by 36.6% |
| Revenue | $6.7 billion | $6.6 billion | Beat by 0.95% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Tony Cheng said recent new business, investment returns and modestly favorable claims contributed to the quarter. He said RGA had completed transactions across its regions and declined opportunities that did not fit its risk-return profile. Expected returns on business closed in the quarter and year to date met or exceeded targets, he said.
Cheng said U.S. Group results met expectations and benefited from pricing actions taken earlier in the year. CFO Laura said repricing was on track through 2026. She also said financial-solutions deals increasingly involved biometric underwriting, making traditional premium growth a less informative indicator of that activity.
On investments, Laura said higher new-money yields and variable investment income contributed to earnings. The new-money rate was 6.02% in the quarter, above the 4.96% yield on the core portfolio excluding variable investment income. She said RGA ended the quarter with $2.2 billion of excess capital and would balance investment in the business with dividends and repurchases.
In the Q&A, Cheng said transaction timing could vary by quarter but return expectations were unchanged. Laura said a high percentage of in-force transactions involved biometric liabilities, while a low percentage were purely asset-intensive or generated only spread-based earnings. She also said RGA expected its Ruby Re vehicle to be fully deployed this year and was evaluating structures for another sidecar.
Asked about smaller earnings adjustments, Laura said they totaled $71 million and included contract-experience catch-ups, client adjustments, and modeling and data updates. She declined to quantify each item and said, “none were indicative of a trend and are all truly one-time items.”
Guidance
Jason, RGA’s head of alternative investments, said the company was not changing its 7% target for alternative investment returns for 2026. He said performance to date increased confidence in meeting or potentially exceeding it.