Each year as part of its annual FORECAST survey, LIMRA asks members of its board of directors to share their perspectives on the forces shaping the industry’s future. As a member of the board, RGA's Ron Herrmann recently offered his insights, which are summarized below, on everything from economic drivers to emerging opportunities.
How the economy progresses, particularly over the coming months, will remain a focal point because of the potential impacts on interest rates, growth, and other economic factors that affect our industry.
AI and emerging technology are a primary focus and will continue to accelerate as companies move out of the pilot phase and into production. While we cannot predict exactly how this will affect the industry, potential impacts could be profound – from workforce development and client engagement to product creation and risk management. There are also other impacts we expect to see in areas such as medical innovation and health delivery.
The most immediate wins will center on efficiency, but over the long term, it will be new insights and better-informed decisions driven by AI that will fuel transformational progress.
RGA is actively engaging clients to improve their capital positions and take advantage of emerging opportunities. Focus areas include:
Risk management is a core strength of RGA and is integrated throughout the company. We continuously monitor risks and stress test our balance sheet across a variety of macroeconomic, insurance, and operational scenarios, and we remain well-capitalized with over $3 billion in deployable capital. We’ve focused on products with less policyholder and market risks, as pure spread-based or market-based products generally do not align with our strategy and risk appetite. From an investment perspective, we remain ALM-matched using a high-quality portfolio, with over 94% of our fixed maturity portfolio rated investment grade. We are starting from a strong position to manage risk and uncertainty.
Currently, all-in fixed income yields have been trading at the highest levels since the financial crisis, and we have been rotating our portfolio over the past few years into attractive yields. With today’s tight credit spreads, we see an opportunity to favor high-quality investments without taking unnecessary credit risk, while continuing to manage exposure to floating rate assets.
AI has emerged as an enabler of execution excellence at RGA, empowering our workforce and creating new growth opportunities. We have expanded our capabilities by adopting best-in-class enterprise technology, upskilling employees and integrating market-leading external resources, and prioritizing new business opportunities that have emerged.
While friction points remain, such as embedding tailored AI solutions into mature technology architecture, the opportunities far outweigh the challenges. The greatest opportunity lies in the redeployment of resources to fuel meaningful progress. For example, our subject matter experts have minimized manual processes and are devoting even more of their time and attention to innovation.
RGA’s client-focused approach requires that we provide innovative solutions that empower insurers to meet the changing needs of consumers across all aspects of life and health. We have invested in capabilities across the value chain so that we can work with clients on solutions that drive durable competitive advantage for their organizations.
Take wellness as an example. Rampant obesity and aging populations increase the relevance of insurance-supported wellness solutions. They have the ability to improve mortality experience and elevate insurers’ status as an active partner in consumers’ health. Wellness programs can take many forms, including engagement-based incentives, prevention programs, condition management, mental health services, and other benefits, such as financial wellness.
A dedicated wellness initiative (physical, mental, financial) leverages RGA’s experience, third-party relationships and preferred ecosystem partners to create broad-based and holistic wellness solutions. In addition, with the rise of biometric trend drivers such as GLP-1 drugs and multi-cancer early detection tests, RGA is leading the way with insurance industry-focused research and exploration of opportunities to integrate these medical advances into wellness initiatives.
We will continue to identify consumer needs, barriers to coverage, and market solutions designed to address emerging issues – from using social media to bridge the financial knowledge gap for younger consumers to deploying an enterprise-wide AI governance framework to ensure trust and transparency at RGA and across the industry.
RGA is committed to attracting, developing, and retaining top talent Our people are our greatest asset, and we are committed to investing in the development, growth, and wellbeing of our employees. Here are a few of the ways RGA is advancing our culture and attracting and empowering a world-class workforce:
Given the expanded use of AI technology, it is important to recognize that people may have access to more advanced capabilities outside the workplace than inside the workplace because of rigorous internal governance practices. We must make sure our governance remains responsible while giving employees the tools necessary to do great work and expand their knowledge.
AI and cyber threats may be the biggest disruptors. As AI pushes the boundaries for speed, cyber risks are constant threats. We need to continue to innovate and find ways to leverage AI while staying vigilant about cyber threats.
In the financial transactions space, strong market momentum for asset-intensive transactions continues. The infusion of capital from reinsurers and private equity-backed entities continues to spur activity on the buy-side. Meanwhile, the benefits and positive outcomes experienced by insurers – including increased stock valuations – generate increased interest on the sell-side. Major transactions still require finding the right partner. How companies navigate this environment will have profound impacts on the industry.
Opportunities are abundant for the industry and for RGA. These include:
Want to partner with RGA and build the future of the industry together? Let’s talk.
