美國再保險集團 (RGA) 2019 Q2 法說會逐字稿

Good day and welcome to the Reinsurance Group of America Second Quarter 2019 Results Conference Call.

Today's call is being recorded.

At this time, I would like to introduce Mr. Todd Larson, Senior Executive Vice President and Chief Financial Officer; and Ms. Anna Manning, President and Chief Executive Officer.

Please go ahead, Mr. Larson.

Thank you.

Good morning, everyone, and welcome to RGA's Second Quarter 2019 Conference Call.

With me this morning, in St.

Louis, is Anna Manning, RGA's President and Chief Executive Officer.

Anna and I will discuss the second quarter results after a quick reminder about forward-looking information and non-GAAP financial measures.

Following our prepared remarks, we'll be happy to take your questions.

To help you better understand RGA's business, we'll 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 revenues, premiums or earnings and future financial performance and growth potential of RGA and its subsidiaries.

Please 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 is included in the earnings release we issued yesterday.

In addition, during the course of this call, we'll make comments on pretax and after-tax adjusted operating income, which is considered a non-GAAP financial measure under SEC regulations.

We believe this measure better reflects the ongoing profitability and underlying 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 net income to adjusted operating income for our various business segments.

These documents and additional information may be found on our Investor Relations website at rgare.com.

And now I'll turn the call over to Anna for her comments.

Thank you, Todd.

Good morning.

As indicated in our press release last night, we reported adjusted operating earnings per share of $3.31 for the quarter compared to $3.10 a year ago.

These results for the quarter were slightly above our expectations.

There are a number of positives I would like to highlight.

Organic growth remained strong and we enjoyed another successful quarter on the transaction front.

We continue to benefit from the earnings diversification that comes from our global platform as bottom line results from U.S. Financial Solutions, EMEA and Canada were strong and Asia was solid.

These were offset by some modest weakness elsewhere.

As we have commented in the past, the nature of our business is such that we will see some volatility in the short term, but this generally tends to even out over longer periods.

And our global platform, which is diversified by both geography and product delivers attractive financial results over time.

I'd like to highlight some points of interest in the quarter.

Premium growth of approximately 7% continued the recent pattern of strong organic growth.

Asia is a major driver of this growth and we continue to be optimistic about the prospects for that region as we highlighted at our Investor Day in June.

Our Canadian business had another strong quarter reflecting very favorable mortality, the third quarter in a row of favorable mortality experience.

Our Global Financial Solutions business continues to perform very well.

And we deployed approximately $185 million into in-force transactions in the quarter.

The quarter's deployment included the 2 sizable asset-intensive deals that were announced, demonstrating our ability to continue to be successful in this competitive environment.

The transaction pipeline remains very active and we are seeing good activity in our regions.

In Australia, our group business was profitable again this quarter but the individual business underperformed.

We continue to take action as necessary to remediate the business.

The U.S. Individual Mortality business had modest unfavorable experience.

We view this as regular volatility, and as discussed at our recent Investor Day, volatility is a normal part of our business and tends to even out over extended periods.

We were pleased to report an increase in our dividend of 17%, noting that this is the tenth straight year of double-digit increases.

Over the past 5 years, the average annual dividend increase has been in excess of 16%.

We believe we have been disciplined and effective in putting excess capital to work over time to achieve a good balance between deployment into in-force transactions, share repurchases and dividends.

In summary, we knew this as a solid quarter with good organic growth and strong capital deployment into transactions.

Business conditions remain favorable overall, we are well positioned and we are optimistic about the future.

And with that, I'll hand it back to Todd to provide more detail on our results.

Thanks, Anna.

I'll touch on a few financial metrics and provide highlights of our segment results.

Our adjusted operating return on equity for the trailing 12 months was 11%, which is within our guidance range of 10% to 12%.

Our excess capital position at the end of the period was approximately $1 billion, including the net $200 million of proceeds from our recent debt offering.

We delivered these results despite foreign currency headwinds of $0.06 in the quarter, primarily from weakness in the British pound and Canadian dollar.

The effective tax rate on pretax adjusted operating income was 21.1% for the quarter, at the lower end of our expected range of 21% to 24%, primarily due to less impact from the GILTI provision from the new tax act.

Moving on to investments.

The average investment yield excluding spread business was 4.38%, but that was up 6 basis points from a year ago, primarily due to additional variable income this quarter.

Our new money rate was 4.02%, down from 4.48% last quarter.

We continue to maintain a high-quality investment portfolio and have been selective with new money investments in the current environment.

Going to the U.S. segment.

The U.S. and Latin America Traditional business reported pretax operating income of $59.1 million compared to $68.3 million a year ago.

There were a number of items that effected results this quarter.

Individual Mortality experience was modestly unfavorable this quarter.

Also, there were some negative effects from lapses and some client data catch-ups.

The U.S. Group business was at breakeven this quarter.

And on a year-to-date basis, is in line with our expectations.

We view our remediation efforts as on track.

Our Asset-Intensive business reported pretax adjusted operating income of $69.4 million this quarter, above our expected range, benefiting from favorable longevity experience on payout annuities and the positive impact of recent transactions.

Our Financial Reinsurance line reported adjusted operating income of $19.3 million this period, which was in line with our expectations.

Moving to Canada.

The Traditional segment had another strong quarter, with pretax adjusted operating income of $45.2 million.

This reflects very favorable Individual Mortality experience, the third quarter of favorable mortality in a row.

Premiums were up slightly on a reported basis and up 5% on a constant currency basis.

Canada Financial Solutions reported pretax operating income of $3.8 million compared to $3.5 million a year ago.

Both of these quarters reflect favorable longevity experience.

In the Europe, Middle East and Africa segment, our Traditional business reported pretax adjusted operating income of $15.9 million, which was in line with our expectations.

Currency negatively influenced the bottom line by approximately $1 million.

Reported premiums totaled $350.9 million, down versus a year ago due to currency, but were up 6% if you look at the premiums on a constant currency basis.

EMEA's Financial Solutions business, which includes Asset-Intensive, longevity and fee-based transactions reported pretax adjusted operating income of $49.3 million compared to last year's $59.5 million.

Both periods were above our expectations, with the current year period reflecting higher variable investment income on Asset-Intensive business in the U.K. and the prior year period reflecting very favorable longevity experience.

Currency had a negative impact of approximately $3 million.

Turning to our Asia Pacific Traditional business.

Our pretax adjusted operating income totaled $34.8 million compared to $58.9 million in the prior year period.

This quarter reflects result in Asia that were relatively in line and a loss in Australia of approximately $9 million.

The year ago period had very favorable underwriting experience in Asia and a breakeven result in Australia.

Reported Asia Pacific Traditional premiums were up 13%, reflecting 20% growth in Asia offset by a decline in premiums in Australia.

Our Asia Pacific Financial Solutions business reported pretax adjusted operating income of $3.4 million, up from $2.9 million in the year ago quarter.

New treaties in the first half of the year generated significant increase in premiums of $44.5 million in the current quarter.

The Corporate segment reported a pretax adjusted operating loss of $32.9 million, higher than our expected run rate due to costs related to some strategic investments in our service businesses.

However, if you look at the average over the first 2 quarters of the year, the average is $26.4 million per quarter, which is slightly above our average run rate.

In conclusion, we view this as a solid quarter.

We continue to deliver strong organic growth and execute on in-force transactions.

Our bottom line continues to benefit from diversification by both geography and products.

Based upon the strong business fundamentals, we expect to continue to deliver attractive financial results over time despite some ongoing headwinds from lower interest rates and foreign currency.

We thank you and appreciate for your support and interest in RGA, and now we will open the call for questions.

(Operator Instructions) We will now take our first question from Erik Bass from Autonomous Research.

Was hoping you could size approximately how much impact mortality and the other items you mentioned in U.S. Traditional had relative to your expectations this quarter?

Erik, yes, so the U.S. Traditional segment, we would view it off about $30 million in total.

And really the split half on the mortality experience and half on -- we view as the impact of the lapse activity and some of the client reporting data catch-ups.

Got it.

So that would suggest, I guess, a run rate earnings for the quarter about $90 million would be your expectation?

And then clearly there's seasonality in the business.

I'm assuming we can't multiply that by 4 to get your full year earnings expectation.

But can you give us a sense of what your view of a normal run rate for U.S. Traditional would be on an annual basis at this point?

Really no change.

For the total Traditional segment, which includes the group business and the long-term care in Latin America.

We still do the run rate around the neighborhood of $350 million.

Okay.

And then just last.

At Investor Day, you were talking about a 4% to 6% target earnings growth rate for U.S. Traditional business.

But if we look back at the last several years, the earnings CAGR has been negative.

And I realize you adjusted the level of expected mortality claims higher and the group is underearning currently.

But, I guess, given that background, what gives you confidence that the growth will pick up to that 4% to 6% level going forward?

Well, continued growth in our business as well as the impact of interest rates to some degree depending on what happens in the interest environment.

And Erik, I would also add that we would expect our group operations to return to profitability over the course of the next -- well, into 2020 as those remediation efforts take hold.

Got it.

And that's about $40 million-ish of pretax earnings from that business?

Yes.

At full profitability, it's probably $35 million to $40 million for the U.S. Group business.

That's right.

We will now take our next question that comes from Jimmy Bhullar from JPMorgan.

So first, I just had a question on Australia.

And I think you had mentioned earlier this year that you think you'd be able to breakeven.

Is that -- for 2019, do you still expect that to be the case given the results -- given losses in the last few quarters?

Yes.

Jimmy, going into the year, we were expecting a breakeven result plus or minus a little bit.

Certainly, the first couple of quarters haven't demonstrated that.

I think if you look at the second half of the year, probably our best expectation for the second half of the year is probably a modest loss for the second half of the year.

I'd love to say that we'll regain the losses in the first couple of quarters, but I don't think that will happen.

And what is it specifically that's going worse than expected?

Is it just the claims -- is it slower pace of repricing the business?

Or it's just that the claims are elevated versus what you might have thought?

Yes.

So the -- to break it down a little bit, the group business has been profitable for the first couple of quarters.

And it's actually been profitable every year since 2014 except for last year.

So we view that as a positive.

Where the sort of the unfavorable experience is coming from is from the individual side of the business.

This quarter, we probably attribute a big part, which is the volatility in the business.

And around that, we continue to look at closing treaties and negotiating the recaptures and repricing where we can.

But we're still seeing some losses coming through there.

And it's a combination of a decrease in termination of claims, higher incidence of claims.

And so just -- we're keeping a close eye on the development of that business.

Our next question comes from Dan Bergman from Citi.

In terms of -- let's just start with the deal pipeline.

I just wanted to see if you could give any more color on what you're seeing, and what's been driving the strong level of activity.

And I know there's been any notable impact on the market due to the decline in low interest rates.

And just given, I guess, the few of the big deals in the second quarter were focused on annuities.

Just curious if there's any difference in deal flow or competition between mortality and Asset-Intensive blocks?

Dan, it's Anna.

Our -- the pipeline remains healthy.

If you remember, it was very active in 2018 and it's remained very active in 2019.

As you suggested, we are seeing strong demand for Asset-Intensive and longevity business.

We're also seeing some mortality opportunities as well.

And those opportunities in all our region.

So we're seeing them in North America, in Europe, and somewhat in Asia.

I would say that the recent markets -- the recent rate markets, we haven't seen a direct change in either the speed or the number or the type of deals that are coming into the pipeline.

Got it.

And then I was also just hoping if you could give some more color on the negative impact from lapses and client reporting catch-ups you saw in U.S. Traditional this quarter.

Just curious if there's been any negative trends you've noticed in terms of lapses or either of those items recently?

Or the things just happened to break the wrong way this quarter?

And finally, just any pattern in terms of specific vintages or blocks that drove the impact in 2Q?

No.

I mean these could go both ways.

We did see the impact from lapses.

This quarter to be a little bit more than what we expected.

And from a client-reporting aspect -- in our business, we're sort of at the mercy of how accurate and timely our clients are reporting to us.

And this quarter, we had some updated information that again resulted in a negative impact on earnings versus a positive.

But we're going to have these types of sort of client reporting true-ups around all of our businesses, throughout RGA.

So it's just getting updated information, sometimes even correcting some errors in the reporting from our clients.

But I wouldn't indicate that it's any type of trend at this point.

Our next question comes from Ryan Krueger from KBW.

Do you have an updated expectation for U.S. Asset-Intensive earnings at this point given you have done a fair amount of transactions over the last year or so?

Yes.

That's a fair question.

Yes, we've done what we view is a very successful job in deploying capital and winning some Asset-Intensive deals in the U.S. And I think we were guiding sort of in the $50 million to $55 million quarterly run rate range.

And probably that's ticked up to be more in the range of $55 million to $60 million, maybe even towards the higher end of that range.

So we're quite pleased with the business.

But we would increase the expected run rate at this point to more like $55 million to $60 million.

Our next question comes from John Nadel from UBS.

I guess sort of following up on Asset-Intensive and thinking about the EMEA Financial Solutions business is my first question.

Very strong results this quarter.

I guess if I think about that combined with maybe the U.S. Asset-Intensive, I think, Todd, you had mentioned variable investment income was maybe somewhat elevated this quarter.

Could you just quantify maybe how much higher alternatives returns may have contributed to 2Q results, at least relative to your typical expectation?

Yes.

I would say, in total, related to the sort of variable income, it was about $0.07 above our -- what we view as a typical run rate.

And fair to say that, that was mostly in U.S. and EMEA Asset-Intensive?

A good piece of it was in the EMEA longevity Asset-Intensive.

Okay.

And then second question is just around the Canadian Traditional business.

Obviously, a really strong run here.

I guess it's a good time to be living in Canada.

But, I guess, how much relative to a normal expectation has that business been now outperforming for this stretch here?

Well, I would -- sort of for this quarter, I would roughly estimate it at about $12 million or $13 million favorable.

Pretax?

Correct.

Our next question comes from Alex Scott from Goldman Sachs.

First question I had was on U.S. Mortality.

Could you just help us dimension what you're seeing that's kind of giving you comfort that is short-term volatility as opposed to a trend forming, whether it's on the specific blocks and some of those older-aged blocks, coming off a level term premium?

And anything you're seeing there as opposed to maybe just frequency and severity trends that are contributing.

Just any color that you could provide that would help us understand why you're concluding that it's short-term volatility?

Alex, it's Anna.

So when we look at this experience, we obviously look for systemic patterns, either by client, error -- sorry, era not error but era issues, et cetera.

And our analysis has not revealed any systemic patterns.

It really is variability, and just to frame it in context, you have to remember this is modest volatility.

Roughly $15 million more on over $1 billion of claims.

And so when we look for these type of systemic patterns, we can't just look at 1 quarter.

In fact, there's limited value in slicing and dicing any quarter's experience, we look at it over multiple quarters, in fact, multiple years.

And we regularly do this, and we are not seeing any systemic patterns in our business.

And so we're attributing this to just regular random volatility.

Okay.

And then maybe my follow-up just on expenses.

And I know strategic costs were called out in the Corporate segment a bit.

Could you provide any color on what you'd expect there?

I know there's accounting changes, you're probably investing in growth strategies, RGAx, et cetera.

Anything there that we should be thinking about as we head into the next year?

Yes.

So the expenses in the overall results in the Corporate segment can be lumpy quarter-to-quarter just given what flows through there.

This quarter, we were a little bit high on some of the initiatives we're investing in around the RGAx innovation as well as some of our services businesses like LOGiQ3 and our AURA automated underwriting manual.

But going forward, we still view that sort of on average $25 million pretax loss as a good estimate, at least, for the foreseeable quarters here.

And Alex, sorry, it's Anna again.

Can I just come back to mortality.

I just want to add one further comment.

It's not unusual for us to have multiple quarters of volatility in one direction, either plus or minus.

And I think Canada is a good recent example.

This was the third straight quarter of very favorable mortality results in Canada.

But that followed 3 consecutive quarters of unfavorable mortality.

So as I said earlier, we're -- we see no reason for concern on our U.S. Mortality business.

Our next question comes from Thomas Gallagher from Evercore.

Can you give some clarity on when you conduct your balance sheet review, was it in 3Q or 4Q?

And the long-term interest rate assumptions you're using both in the U.S. and EMEA?

We're continuously making sure that we're comfortable with our overall balance sheet.

I'd say, it's an ongoing assessment clearly.

At year-end, it may be a little bit more fine-tuned given that's the audit date, but it's an ongoing exercise in our standard quarterly reporting process.

Yes.

I think, Tom, to remember that the lion's share of our business has locked in assumptions.

So unlike perhaps some of the U.S. life insurance companies that do unlock and review their interest rate assumptions and every other assumption for that matter, we do not go through that process.

Instead, what we do on an annual basis is, we do what we call cash flow testing, loss recognition to make sure that the reserves on our balance sheet are still sufficient.

And so we do that once a year towards the latter part of the year.

Anna, that's a good point.

Most of your business is FAS 60.

So, I guess, it would be the Financial Solutions business where you would doing more annual testing related to long-term mixed rate assumptions, is that fair way to split it up?

That's true.

And certainly, that's where the assumption changes will actually could impact the financial results versus on the FAS 60 business where if there's anything going south on us to be more of a loss recognition issue versus a current -- sort of that ongoing financial reporting impact.

Got you.

And then just a question on EMEA.

And I think it's running at almost $200 million a year right now.

Is that -- how should we think about that portfolio in the context where interest rates are in Europe?

Is that a pretty well-protected portfolio from a callability ALM matching standpoint?

Or is there some of the reinvestment risk there when we think about trending where NII should go over the next couple of years?

Yes.

For our EMEA business, the overwhelming majority of that business is a longevity business and some of it is Asset-Intensive longevity business.

And that business, it's pretty -- it's fairly long-term business and the cash flows are pretty -- fairly predictable.

So there's not necessarily any close-knit ALM work that you need similar to like maybe a 5-year fixed annuity or something in the U.S. So it's been on the -- a lot of it's been on the books fairly recently and we're comfortable with how we've massed up the investment portfolio.

Got it.

And then final question, just on Australia.

Can you dimension a bit, I guess, a slightly bigger loss this quarter.

How big of a loss was it?

And your level of confidence that this is a short-term earnings issue as opposed to potential balance sheet issue?

Yes.

The loss for Australia this quarter was about $9 million pretax.

Yes, we still view this as a sort of earnings headwind versus a balance sheet issue.

Is that because of the nature of the claims that are developing adversely or short term?

And maybe if you're able to contrast that with -- I know there was an issue several years ago where there was a balance sheet adjustment.

I don't know if you could compare and contrast how -- like why it's different now?

Yes.

Back in 2013, when we took the balance sheet strengthening and that was an industry issue.

It's where -- a lot of claims that were coming in were from very -- from older claims due to there were no sunset clauses on the underlying policies or there's a big push just in the -- some of the industry players and that caused really a lot more claims to be reported than what the previous experience had indicated that the underlying business profile would result in.

We've -- as we've repriced the treaties over time and also, we needed some of the treaties -- we've done what we can to protect ourselves against those types of activities in the future.

Also, as I mentioned earlier, if you look at the group business in Australia, it's been profitable since 2014.

So we feel pretty good about that business and it's the individual business that's creating some of the losses.

And that's really -- that business is getting to be a smaller and smaller proportion of our overall business and most of the treaties, the individual treaties are actually closed and in runoff mode.

Our next question comes from Humphrey Lee from Dowling & Partners.

Just to follow-on on Australia.

So to your point that you don't think it's necessarily a balance sheet issue but more of an earnings issue.

But, I guess, like what is supporting your comfortable level to your reserving assumptions?

Well, we're looking at the experience levels of the different blocks of business and continually doing experience studies.

And as I mentioned, we have done quite a bit to remediate that block through repricing efforts and recaptures and changing terms to the extent that we can that protect us in certain situations.

So it's been a little over 5 years since you did your last resource strengthening for the block, and 5 years out, you're still kind of underperforming.

Do you feel like there's still more work to be done in order to fix the over block?

Well, Humphrey, please remember that the reserve strengthening that we took in 2013 was on the group business, not on the individual business.

And in fact, the group business has been profitable since 2014, as Todd had just indicated, except for last year, and it's been profitable in each of the first 2 quarters.

Okay.

Got it.

Thanks for the clarification.

Maybe just shifting gear.

In U.S. Asset-Intensive, thank you for providing the expectation in terms of run rates, earnings.

But can you remind us how the runoff of that block would emerge over time?

Given like you've done a big block of transactions back in 2012.

So actually there will be some runoff going through while you at the same type pulling on new business.

So if you were not pulling new business, what would be the runoff look like for U.S. Asset-Intensive?

Humphrey, I would say it's roughly 10% runoff rate on an ongoing basis.

It was just pegged exactly, but I'd say about 10% is a good estimate.

Our next question comes from Andrew Kligerman from Crédit Suisse.

Another question about Australia.

Todd, you talked about repricing and recapturing the treaties that you have there on the individual business.

Will that be done by the end of this year?

And then maybe next year, can -- and then secondly, can we actually expect some profitability if it is done in 2020?

Yes.

Andrew, I view our sort of efforts as far as looking at the Australia individual business is really ongoing.

We're going to do what we can to manage it back to profitability or minimize the losses going forward.

So it's an ongoing process.

It's not, say, done at this point and we'll continue the efforts.

Yes.

Just -- I think I'm just -- I need to go back to the model, but it appears that it's been a few years now that this pricing on the individual block has been pressured.

So wouldn't there be reason to kind of take a look at it?

And actually take a balance sheet charge as you said you probably won't do?

Andrew, we'll continue to look at the block and do what we can to manage it to the best that we can.

Okay.

All right.

And then just shifting over to 2 real quick questions.

Just Langhorne, any update, it's been 2 years?

And share repurchases, assuming the pipeline is still robust, do you expect to do much by way of share repurchase in the latter half of the year?

Andrew, I'll take the Langhorne, and maybe I'll pass the share repurchase to Todd.

So although, I understand time flies, it hasn't been 2 years for us with Langhorne.

We started Langhorne -- but we started Langhorne in 2018.

And so at this stage, we're fully staffed, we're deal ready and we're active as we speak.

Now remember that the deals, the market that we're focusing on is the larger size deals.

And those deals aren't going to be lumpy and they are generally complex and they take time.

And I will share with you that we were quite far along on some of the transactions and in fact, that we've been working on over the course of the last year.

And in fact, one in particular, the client pulled back very late in the process and it was for reasons completely unrelated to a Langhorne.

We actually had a good offer on the table, but the client had a change in circumstance last minute and decided to pull the deal.

So it wasn't that we lost the deal, it simply didn't execute.

And I would say that Langhorne has received favorable -- I mean, it's been received favorably by both our clients and the broader market.

So here it's patience, we're going to pursue the same approach we've used for RGA, that's our strategy.

We're going to be selective, we're not going to reduce our standards, we're not going to cut corners.

So it's going to take a little bit of time.

And I would end by saying, our Langhorne investors understood that, that they understand that is our strategy and that's why they committed that capital.

It's a long-term permanent capital.

And then I guess I'll pass it to Todd on your question of share repurchases.

Yes.

On the share repurchases, we feel we've done a good job effectively and following a balanced capital management approach.

Certainly, we like to invest the capital back into the business and into transactions that sit within our strategy and we can get an appropriate return on.

But we do balance it out, as you see with the increase in the dividend this quarter as well as we will do some share repurchases over time.

So I wouldn't do the lack of repurchases this past quarter is an indication of future activity.

So I think you'll see us continue with a balanced approach overall.

Our next question comes from John Nadel from UBS.

Thanks for taking the follow-up.

I guess I've got 2. One, Todd, it sounds like the new accounting standards for long-duration contracts is going to be extended.

The implementation date is going to be extended maybe another year or so.

I was just wondering if -- as you've gotten more opportunity and time to be able to do some analysis and get somethings done around this project.

If there's any update you can provide us with yet as it relates to sort of early observations on potential impacts?

And then the second question I have is just, if you think about that 11% ROE on a trailing 12-months basis, I know you don't really disclose ROEs by segment or geography, but at this point, how far below your targeted level ROE is the U.S. Traditional business?

I assume it's being offset by strength in a few of the other businesses or geographies at this point.

Yes.

So on the GAAP target improvements.

Yes, you're correct.

As we, a couple of weeks ago, put forth a proposal to defer it a year.

And I would assume that, that'll get formally approved.

So that -- give us -- we're still moving full speed ahead on our implementation project and are getting better and better understanding of the implications on our financial reporting.

I think it's still probably a little bit too early to get down into the details of the direct impact.

But certainly, as time goes on, we'll want to share that with all you guys as we get further along.

On the flip side, the delay by a year probably does -- it was just like any change in regulation or a change in accounting, it gives us a little bit more time potentially on the business development side to see if there's anything we can do to help our clients overall with the impacts of the adoption of the new accounting standard.

Yes.

That's a good point.

And then the ROE?

Yes.

We -- clearly, we haven't disclosed actual ROEs by segment or geography in the past.

Certainly, the U.S., probably a little bit below just given the low interest rate environment has been a drag over the past few years.

That being said, our EMEA segment as well as Asia continued to do very well as well as GFS continues to perform very well, and all of those businesses outside of the U.S. are becoming a bigger, bigger part of our overall earnings power.

Would it be fair to ask as a percentage of your total equity at this point, how much is supporting domestic business versus nondomestic business?

Probably want to take that away because we want to make sure we get it all between the GFS and Traditional and all that.

I don't want to just shoot from the hip, if you will.

As there are no further questions in the phone queue, at this time, I would like to hand the call back over to you, Mr. Larson, for any additional or closing remarks.

Thank you.

Everyone, thank you for your participation today and your continued support and interest in RGA.

Thank you very much.

This will conclude today's conference.

Thank you all for your participation.

You may now disconnect.