RGA
#<UNK>, this is <UNK>.
The primary driver there is we have to revalue embedded derivatives that support some of the business that's written on a modco basis.
And that revaluation, on a net basis, was about $40 million.
On a gross basis, just in terms of the revenue line, it was about $92 million, as I recall.
But that's something that because there is a portfolio that doesn't reside on our books, we have to reflect some of the changes in the value of that portfolio as relates to credit spreads primarily.
And as a result, that's what drives the below-the-line, so to speak, sort of result.
It's primarily credit spreads, not equity portfolios at all.
Our expectation is that's an amount that starts at zero and ends at zero, and goes all over the place in between.
<UNK>, we see some companies that are a little more aggressive today than we thought they were a little while back.
It's always hard for us to attribute the causes of that.
That's hard for us to read.
The market is overall slightly increased in terms of competition around the globe, but not overly competitive.
We don't feel terrible about the about the status of competition in the marketplace.
No.
And really, if you look back historically, you see some of those sort of aberrations from quarter to quarter.
We can have changes of the variety that you mentioned.
So I wouldn't draw any conclusions there.
I think if you take a look year-to-year, and certainly at the end of this year when you look back, we'll have a fairly trendable sort of expense line in both of those segments.
I think the biggest affect you'll probably notice, <UNK>, will be on the currency.
Whatever happens to the Brexit situation, and the consequent effect on the pound sterling will have the biggest effect.
It should not affect business the flow or the experience in terms of mortality or longevity or critical illness, in any way that I can put it.
So, that would be the big effect.
Our assets in pounds sterling we don't think are abnormally at risk.
We really don't see a big effect from Brexit immediately, other than as it affects the macro trends in the economy of the UK.
We are just south of $20 million in that operation this quarter.
And that's actually less than the first quarter last year, but that's pretty much the way we would size it.
And so if the trend follows that we saw last year, we could give some of that back in the second quarter for the reasons that <UNK> mentioned in terms of the seasonality there.
But all-in, we expect for the year, Australia to be profitable and to continue building towards the profit levels that we experienced several years ago.
Yes, <UNK>, that's exactly right.
We wouldn't expect to change that projection now.
It remains to be seen just exactly where we'll end up, but no reason to change it based upon the first-quarter results.
<UNK>, on Canada, the mortality was not terrible.
It was off a few million bucks.
That's coming on the heels of three really strong quarters.
But you remember, last year, first quarter in Canada was highly seasonal, too, with a depressed level of earnings in Canada in there.
On the longevity side, it has ---+ it really is hard to predict on a quarter-to-quarter basis.
Normally, that's a very smooth operation, so we are not talking about a major deviation from expected there, either.
We had some group business that didn't perform as planned in Canada.
And put it all together ---+ it's just modestly off.
We expect, over the course of the year, those things will even out.
It's not common for us to have every operation actually so close to expected as we had in the first quarter.
We would expect, normally, a lot more variation than we saw this time.
But we do expect some things like that to happen.
And we don't view Canada as anything other than a variation from expected due to random volatility and maybe some seasonality, and not far off, at that.
Yes, everybody is stretching the amounts a bit.
We're hearing of companies willing to go up to $1 million, without fluids.
It's because of the advent of new information and new data; a little bit of experimentation going on, frankly, at the same time.
Everybody on the direct side would like to find a way to improve the process of underwriting to make it quicker, more consumer-friendly, and this is all part of it.
I think that the value of reinsurers becomes greater when you move off into the unknown, as companies are starting to do with some of the new underwriting protocols that you see out there.
Okay.
I appreciate that very much, <UNK>.
<UNK>, this is <UNK>.
I'll handle that.
It was a little bit stronger when you think of just generic flow at 7%.
Certainly, that's stronger than the more recent trend for that part of the business.
My suspicion is that will trail off somewhat over the following three quarters.
You always have some reporting issues that can move it 1 point or 2 from quarter to quarter.
But I think my takeaway comment is we view that to be ---+ that 7% to be fairly strong, and not necessarily what we would expect ongoing.
This is <UNK>.
I'd say a little north of the midpoint of that range.
So, maybe 7%-ish, ex-blocks, which would imply 3% with blocks overlaid.
In terms of the consolidated growth rate.
We target high-single-digits, which you can read that to be 7% to 10%.
So, we are hopeful that we could hit double-digits.
But I'd say somewhere midpoint of that range that I just quoted, probably the ---+ our best estimate.
Yes.
We had impairments of roughly $35 million during the quarter.
The lion's share of that was associated with the energy component of our portfolio.
So ---+ and particularly, we had one position that represented probably two-thirds of the energy impairment for the quarter.
So, it was a little lumpy.
And I guess we would characterize that the energy portfolio performed roughly as we would've expected; actually improved a little towards the latter part of the quarter, in terms of spreads on the various positions in the portfolio.
So, we are keeping a careful eye on it for obvious reasons.
But we are not particularly alarmed at this point.
It turns out, <UNK>, that we have a lot of tools that are very valuable for anybody looking at underwriting through alternative distribution or through non-specialist distribution.
It's not clear how ultimately we would participate in all this.
It's not in our plans at the moment to white-label anything.
We are supporting our clients who have ventures in this arena.
But I think you make a good point that as things move around like this, RGA is in a position to play in the game wherever the growth is.
And one of the benefits of RGA's platform ---+ our expertise and our people, frankly ---+ is that we have the ability to find ways to participate in growth in the industry broadly speaking wherever that may be; either geographically, product-wise, or even process-wise, some of these new innovations on the product side, and reaching middle income people and other target markets that have not historically been reached.
This is <UNK>.
With that, we'll end the call, and thanks to everyone who participated today.
Thank you.
