Good day and welcome to the Reinsurance Group of America Fourth Quarter 2016 Results Conference. 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 fourth quarter 2016 conference call. Joining me in St. Louis this morning is Anna Manning, RGA’s Chief Executive Officer. Anna and I will discuss the fourth quarter results, after a quick reminder about forward-looking information and non-GAAP financial measures.

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

To help you better understand RGA’s business, we will 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 revenue or earnings, and future financial performance and growth potential of RGA and its subsidiaries.

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 will make comments on pretax and after-tax 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 operating income for our various business segments. These documents and additional information may be found on our investor relations website at rgare.com.

With that, I will turn it over to Anna for her comments..

Thank you, Todd. As indicated in the earnings release last night, we reported operating earnings per share of $2.63 compared to $2.84 a year ago. This was another good quarter overall continuing the solid momentum of recent periods and caps off a strong year.

We saw strength across most of our key business lines with particularly good results from our US traditional business. EMEA, Canada and our Asia traditional business all had very good quarters as well while the Australian business underperformed.

Overall topline premium growth was fairly strong again up 7% or 9% on a constant currency basis based primarily upon solid organic growth and modest contributions from in-force transactions. Looking at the full year results for 2016 I would like to highlight a few things.

Solid top line growth earnings diversity consistently overcoming headwinds and delivering strong earnings in a year when we did not execute on any large transactions although we closed a number of smaller size deals.

First from a topline standpoint reported premiums were up 8% and original currency premiums were up 10% year-over-year reflecting solid organic growth and in-force transactions. These results highlight our strong market position and our focus on delivering solutions that leverage the strength of our skills and services.

Second a key factor in our financial success in 2016 and in recent years has been the broad diversification of earnings that is come with a successful development of our global operating model overtime.

Thus we’ve been able to deliver strong financial results even as individual segments or business lines experience periods of underperformance or natural or cyclical volatility. Notably after a very challenging 2015 for our US traditional business. This business unit rebounded in 2016 and performed in line with expectations.

Third, RGA has achieved this financial success despite ongoing macro headwinds from low interest rates and from the strengthening US dollar. Lower interest rates and the strong US dollar reduced operating earnings $0.39 and $0.25 respectively in 2016.

Fourth, although it was another active year for in-force block transactions for RGA, we did not close on any large transactions. We did close on a number of smaller transactions deploying approximately $130 million in capital.

Solvency II transactions are taking from time to work through based upon complexity and the need to educate the various parties including multiple regulators but we continue to move forward and see considerable opportunities for these solutions.

Notably we closed some smaller proof of concept deals in Europe that were Solvency II compliant and we continued our momentum in the longevity area with our first ever longevity deal in France.

The capital deployed for the year on transactions was on the lower end of the recent range as we remained disciplined in putting our capital to work in deals that made our risk adjusted return hurdles.

Looking forward, we continue to be optimistic about the potential for acquisitions and in-force opportunities and on our ability to execute, the timing of the deals and the ultimate success in completing attractive transactions is always hard to predict.

In conclusion, our underlying business momentum remains strong as we continue to see good demand for our services and solutions by clients worldwide, we have a proven strategy and approach and our business model is dynamic, giving us the ability to anticipate and respond well in uncertain times.

We had a very good 2016 and we remain confident that we can continue to execute on our strategy and achieve our financial goals and objectives. With that let me turn it back over to Todd..

Thanks Anna. I’ll now provide information on our investment results, capital management and additional details on segment level results. I did want to mention that we have changed the name of our non-traditional segment to financial solutions which better aligns our external reporting with internally used terminology.

This name change does not affect any previously reported results for the financial solutions segments.

Turning to investments, the average investment yield of 4.69% excluding spread business was down 27 basis points from the fourth quarter of 2015 and 26 basis points higher than the third quarter yield, due primarily the strong variable investment income. As Anna mentioned we closed on a number of smaller in-force and other transactions.

We now excess capital of $1.1 billion at the end of the fourth quarter. And are well positioned to pursue opportunities as we move forward. We plan to continue to take a balanced approach to managing our capital, our board did authorize a $400 million stock repurchase authorization replacing the existing authorization.

The exact timing of deployment is always difficult to predict. Now turning to our segment results, the US and Latin America traditional business reported pre-tax operating income of $129.3 million versus $79 million a year ago.

This quarter’s earnings benefited from higher variable investment income and from modestly favorable individual mortality experience. Last year’s quarter reflected unfavorable mortality. Premium totaled $1.4 billion up 4% quarter-over-quarter reflecting ongoing organic growth.

Our asset-intensive business reported pretax operating income of $46.7 million this quarter slightly below our expected run rate of $50 million. Our financial reinsurance line reported pretax operating income of $14.4 million this period performing in line with our expectations.

Our Canada traditional segment reported pretax operating income of $34.8 million down from $45.1 million in the prior year period. Results reflected modestly favorable individual mortality claim while last year’s quarter was particularly strong.

Premiums totaled $241.9 million up 20% in translated US dollars reflected solid growth in the individual mortality business and a one-time amendment on a creditor treaty in 2016.

Canada’s financial solutions business which includes longevity and fee-based transactions reported pretax operating income of $4.1 million this period versus $3.4 million a year ago. Longevity experience was favorable in both periods.

Switching to Europe, Middle East and Africa, our traditional business reported pretax operating income of $15.8 million up from $12.9 million last year. The UK had adverse claims this quarter but this was offset by good experience in other offices as well as a favorable adjustment associated with improved client reporting.

EMEA’s financial solutions business which includes asset-intensive longevity and fee-based transactions performed very well this quarter. Reported pretax operating income was $36.7 million compared to last year’s $18.8 million. New business and favorable asset-intensive and longevity experience continue to provide positive results.

We note that this quarter’s earnings were above normalized result. Turning to our Asia-Pacific traditional business. Pretax operating income totaled $18.5 million compared to a very strong $35.7 million in the prior year period.

When just looking at the Asia results excluding Australia results were strong led by the very good results in Hong Kong and Japan. On the same basis Asia premiums were up 27% or 24% in constant currency reflecting healthy growth across the region. The favorable results in Asia were partially offset by high individual disability claims in Australia.

The higher claims were attributable to higher incident rates, higher average claim size and lower terminations. All three of these indicators went against this quarter. We expect some ongoing volatility and we’ve experienced volatility in both directions in previous periods.

For the quarter Australia had a pretax loss of $20 million and a similar loss for the full year. In the year ago period Australia reported a pretax gain of approximately $17 million. Australia premiums were down 3% or 7% on a constant currency basis due to lower Group premiums.

Our Asia-Pacific financial solutions business reported a pretax operating loss of $6.1 million versus a pretax operating income of $5.4 million a year ago. The decrease is primarily due to unfavorable experience on a particular treaty that is in runoff.

The corporate segment reported pretax operating loss of $26.3 million compared with $16.7 million a year ago. Slightly above the run rate of approximately $20 million due to higher incentive base compensation accrual adjustments.

We have historically provided intermediate term guidance at this time of year and I want to give you some perspective on the various issues that might affect our results going forward. Over the intermediate term we expect growth in operating income per share to be in the range of 5% to 8% and operating return on equity of 10% to 12%.

These ranges are unchanged versus that of year ago. The guidance is based on a normalized earnings per share pattern for 2016 we will suggest that FIN 48 related tax benefit of $0.22 could be thought of as a generally non-recurring and should be excluded one estimated a more normalized earnings per share.

And while we’re not specifically calling out any other items there are some favorable impacts to our various segments during the year and variable investment income was at the higher end of our range.

From the topic of taxes based on recent accounting change regarding stock options we expected our tax rate will be at the lower end of 34% to 35% in 2017. Against this positive backdrop we expect to see some continued headwinds from low interest rates and weak foreign currency. Though we’ve shown an ability to overcome these challenges overtime.

The recent rise in interest rates is encouraging and we’re hopeful that the trend will be sustained. However, we were faced with spread between our embedded portfolio yield and new money rate and let’s expect some ongoing challenge for the foreseeable future.

In conclusion, we remain confident that we can continue to execute on our strategy and achieve our financial goals and objectives. Thank you and we appreciate your support and interest in RGA and we will open the call for questions..

[Operator Instructions] We’ll take our first question from Nigel Dally with Morgan Stanley..

First question on Asia Pacific Financial Solutions, you mentioned the unfavorable results on one treaty that continues to run off, can you provide some additional color as to the nature of that treaty and how long it would likely take for that to run off..

Sure, this is Todd. The treaties as we’ve been existence for several years and over that period of time it’s formed in line with our expectations over the life of the treaty. It’s just now in the period of runoff we’re seeing some delayed last experience and that’s what causing the, sort of strain on income.

But we would expect it to runoff over the next I would say 12 to 18 to 24 months..

And should we expect continued losses over that time or is it likely, what was this quarter kind of anomalous in nature?.

Now I would expect some continued loss going forward. I would for 2017 I would put in the range of $10 million to $14 million..

Okay then I guess second on Australia, it seems like you’re putting the weakness in individual disability this quarter just down to normal quarterly volatility. But just interested in how you’re running generally against the original reserve assumptions that you set back in 2013 [ph]..

Nigel, it’s Anna.

On our individual disability business in Australia we expect to see volatility in that business and the poor performance that emerged in the second half followed the first half, which performed as expected now as Todd mentioned in his earlier remarks the higher claims costs are being driven by higher incident rates lower terminations as well as higher average claim size, so all three factors have really worked against us in the quarter.

Now our initial assessment suggest that it’s not broad based but rather limited to a small number of treaties and recall that rates on this business are generally reviewable and we have been actively managing the portfolio and have price increases coming online into 2017 and we can take additional action, if deemed necessary.

So it’s too early to conclude much based on one or two quarters and we will need to see how all three factors, the incidents, termination and average size continue to develop into 2017 based on what we know at this time and based on the full year results. We remain confident with the sufficiency of our reserves on this business..

Very helpful..

And to clarify the reserve increase that we reflected back in 2013 was on the group business..

Right, okay.

So not really - a completely different treaty is not than what you were facing back there?.

No I’m sorry I misunderstood your question Nigel, I thought it was on the individual with respect to Group in Australia that Group business has performed better than our expectations of a small profit in 2016 and we think the Group market is making progress as product changes are occurring.

We’ve generally repriced where we felt necessary and we’ve maintained our rights to reprice every few years if and if necessary. This business continues to perform in line with our expectations so at the group reserves, we’re comfortable with the level that we’re holding for our group business..

That’s very helpful. Thank you..

And moving on, we’ll go to Yaron Kinar with Deutsche Bank..

Good morning, everybody. I have a question on the potential impact from changes in the tax code, maybe on two fronts.

One, do you see that as having any potential impact on demand for transactions? And, two or how should we think of the impact on RGA’s tax rate? Just given the fact that you do have a relatively high effective tax rate, but at the same time a lot of it does come from overseas..

So let me take the second question first.

In general, tax rate reduction would be a positive for RGA, but we have to consider it in combination with other proposed changes, so changes that may impact the tax base such as this border adjustment as well as changes potentially to the territorial system and there are just too many moving parts at this point and we don’t have enough detail on the tax reform package to really understand what it could mean to us.

So I just be speculating at this point, we’re going to need to assess as the details emerge in order to determine what the impact will be, but just to reiterate. A drop in the tax rate itself we would expect to be positive to RGA.

Now potential for additional transactions look there are many reasons and motivations for business to be put to market, some maybe tax motivated, some depending on the attributes of the organization or the actual business may actually be harmed with a lower tax rate all else being equal.

So again I would say until we have better information on what those changes look like, we just be speculating..

Okay, fair enough and maybe I’ll ask that question again later in the year. And then maybe one other question, with regards to capital deployment this year, the transaction activity was a little bit on the light side just in terms of magnitude of deals.

So was there reason why maybe we didn’t see more buyback activity second half of the year to supplement that..

This is Todd. So we managed the capital base overtime it’s hard to fine-tune it quarter-to-quarter. So I wouldn’t read too much into the timing of the repurchases.

I think we continue to follow a balanced approach between deploying it into the business and balancing the share repurchase and dividends and if you think about, if you look out over the last five years.

I think we’ve averaged in excess of $400 million and deployment if you combine, the deployment into the block deals as well as the share repurchases. Now this year was a little bit under that average, but I think again over the longer term I think we’ll continue to follow this prudent balanced approach to the overall management of the capital base..

Okay, appreciate the color. Thank you..

Moving on, we’ll go to John Nadel with Credit Suisse..

Todd a question, so the full year 2016 operating EPS of $9.73 and you mentioned take out the Fin 48 benefit of $0.22 so we’re down around $9.50 the baseline as we think about that 5% to 8% growth. If you think about the range of variable investing income contribution to annual earnings, you mentioned that 2016 was at the upper end of that range.

Can you give us a sense for what that range would be?.

This way, we look at it internally it was probably on the high side by about $19 million [indiscernible] flat out $14 million or $0.14..

Okay, so about $0.14 higher contribution than what than a normal contribution..

Right than a normal run rate, that’s right..

Okay, got it. That’s helpful. Anna I guess the question I’m curious about the proof of concept comment that you made earlier and I would expect you to comment specifically on any single transaction but you’re definitely focused on Solvency II deals here and a proof of concept comment earlier caught my attention.

I’m curious what - can you give us a sense for what a proof of concept deal would look like?.

Think about the Solvency II capital framework and it’s focused on stressing underlying assumptions on our client’s data and really looking at the tail events.

So a proof of concept would be an idea or a solution that we create that would be focused on parts of that tail and would make the capital more efficient because we would be able to remove certain pieces of those adverse scenario.

So without getting into more detail or specific treaty solutions that’s generally what we mean by proof of concept and so it needs to be not only work through with the client, but then we need to take it to the appropriate and respective regulators to help them understand so that they can conclude that is actually does what the capital release is intended to do..

And that’s helpful and is this more focused on I suspect it’s more focused on non-traditional kinds of life and annuity products or is that a reasonable assumptions on my part?.

It can be applied to all our businesses and it can be applied to the traditional business so think about potentially lapse rates and being able to put this type of structure in place to address the tail risk on that lapse risk exposure on traditional business..

Got it and then if we think about order of magnitude, if you completed one or more transactions that are proof of concept type transactions, I would imagine that means on smaller scale, how scalable is the concept.

We believe that it can be scaled and it can be scaled to not only medium size transactions but potentially larger transactions, we don’t see any reasons for preventing us from doing so..

Excellent, thank you..

Next we’ll go to Jimmy Bhullar with JP Morgan..

I had a few questions, first, on the pace of buybacks; if we look in the past several years, a majority of your buybacks have happened in the first quarter or in the first half of the year.

Should we assume a similar pattern this year as well, or are there any reasons why you would take a more even approach throughout the year?.

Jimmy, its Todd. No I wouldn’t read too much into the timing of the repurchases.

As I mentioned earlier, we’re taking the intermediate to long-term view of our capital management and we’ll see sort of how things go here as far as the pipeline and while only one factor monitor the share price as well, but I would not read what we’ve done in the past into that you should expect the higher repurchases in the first quarter..

And then just on your business the potential impact on your business from a move towards principal based reserving.

Do you see that as sort of modest headwind in terms of premium growth and sort of in the non-traditional type businesses that you’re involved in?.

Yes I think that’s correct.

We do expect a modest impact on our financial reinsurance from PBR, but keep in mind a couple of things about PBR implementation is only on new business and it includes a three-year transition period and now we feel and we believe many companies will take a cautious approach and wait to implement because there is still some uncertainty with respect to tax reserves and that issue needs to be clarified and also the means of the in-force business are not impacted by PBR and so we expect that these deals to continue and in fact we have done a few of these deals, we did a few of these deals in 2016.

So impact on our business is expected to be modest and maybe spread out over a few years..

Okay and then just lastly on, can you comment on just competitive behaviour and pricing trends that you’re seeing in the US life insurance market?.

Sure. We haven’t seen any material shifts in the competitive environment for that traditional mortality and more broadly morbidity business globally. Competition remains generally responsible and I think the pricing environment hasn’t moved much over the course of 2016.

We continue to believe that our clients appreciate our value added services and solutions as well as our expertise and we think it’s a good market for us with respect to our traditional business..

Thank you..

Moving on from Wells Fargo Securities. We’ll go to Sean Dargan..

I’ve a question about the intermediate term ROE and EPS growth guidance.

Does it require some level of acquisition activity to reach those goals or can you hit the bottom end of that without doing any deals?.

Our overall business model is the organic growth combined with the in-force block transactions. So in our sort of forward-looking strategic plan, we do anticipate some level of transactions.

And I think we sort of assume on average annually we’ll be deploying about $300 million to $400 million of capital but that’s on average some years will be higher than that and some will be lower..

Okay thanks and then I have I guess a broader ranging question. There was, there was some articles in the press late last year about a society of actuaries study that showed that life expectancy at certain age point actually decreased year-over-year in the US which was the first time I think ever.

In the reason I asked this question because in the past prior management teams of RGA have talked about the benefit from cancer drugs etc. increasing life expectancy is there have been any change in how you view mortality in the US or this is just a blip and not something that is indicative of a longer term trend..

So we have studied that report that you just referenced and so a few quick things to note about that study, it looked at trends in the general population and keep in mind that our results reflect trends in the insured population and there are number of key differences between those two groups.

To start, the insured population is underwritten what that means is we have muted influences of things like obesity, drug, alcohol abuse, existing heart disease, mental illness and whole bunch of other underwriting factors.

Next there are also differences in the underlying composition of the two groups by things like economic class, education and some of the underwriting factors that I just mentioned and the population. The results of that study are based on death by count, whereas our results are more driven by amount rather than count.

So these and other factors meant that study based on population trends can’t easily be generalized to our business and while we study that report and by the way we thought it was a very good report. We’ve not concluded that there was an actual impact on our book and we have not changed our expectations with respect to our US mortality business..

So longer term you still expect mortality trends to be favorable for RGA..

Yes. Yes..

All right. Thank you..

And next we’ll go to Ryan Krueger with Keefe, Bruyette & Woods..

I had a question around block in transaction activity. I guess have you seen a material change in the dialog post-election and given the rise in US interest rates at least regarding potential US transaction..

So what we’re seeing in the pipeline is generally consistent to what we had been seeing in prior periods and that is more asset-intensive and longevity opportunities than mortality and outside of the US, we’re obviously also seeing robust interest in our Solvency II solutions.

I think the impact of increasing interest rates on potential pipeline is again as I mentioned earlier one factor in terms of the motivation for clients to want to transact on their book of business. It may cause both increases in opportunities as well as decreases so thinking on the potential for the increases.

I think that if interest rates continue to gradually increase and if coupled with improvements in the equity markets, we may see some opportunities in the pension buy in and buyout market in the US. I think those two combinations maybe part of a catalyst for that market to continue to develop.

Now I also think that there may be some sellers who may differ or at least delay putting some blocks to markets while they consider and watch interest rates because prices, if the underline business it’s attributes are benefited by rising rates then it may be the case that they will just take a bit of sideline, but we still see a lot of opportunities in the pipeline and I expect that we’ll see ins and outs as things continue to develop..

That’s helpful, thanks. And then I know this is kind of overtime guidance, but I think the $300 million to $400 million of annual capital deployment is similar to the amount of capital that you generate each year. But, presumably, you’d also have the opportunity to work down your excess capital position over time.

So should we think about - is that how we should think about it as you could go above the $300 million to $400 million as you work down that excess capital over time?.

No, I think that’s a very fair point. If you look at our history we’ve had some years where we deployed I think $700 million plus and some others where it’s been lower. I think that’s just really sort of a general average run rate..

Okay, thank you..

And next we’ll go to Eric Bass with Autonomous Research..

Just wanted to go back to the Solvency II deals.

Can you talk about RGA’s competitive position? And are other competitors doing similar transactions or do you have a material advantage by being not being subject to Solvency II yourself?.

Again it varies in terms of advantage I think depending on the underlying structure of the treaty and the resulting capital relief versus the capital that someone outside of Solvency II would be needed or would need to hold. I think that will vary transaction-by-transaction.

We certainly see competitors in the space, I mean the advantage of being a first mover is important, but it’s time bound, these pipes of transactions quickly become known in the market and we have very large global competitors who have the ability to quickly clone. So our challenge is to continue to be creative.

Our challenge is continue to find these types of bespoke solutions because then we’re not competing in those early transactions..

Got it, thank you. And then, Todd, maybe just one question. I think you commented in your prepared remarks about the drag from the stronger dollar on your earnings in 2016.

Have you looked at, if the dollar just remained flat at these levels, what would be the headwind for 2017?.

Yes. On a rough order magnitude it’s about call $19 million, $20 million build out $0.19 or $0.20 negative headwind..

Okay, thank you..

And next from Dowling & Partners. We’ll go Humphrey Lee..

Good morning and thank you for taking my question. Just a follow-up to the prepared remarks regarding some of the Solvency II transactions taking a little bit longer time to close, given the effort to educate your customers and the regulators.

If you had to describe, in terms of which inning you are in right now, can you share a little color on that?.

Just to be clear, did you ask me if I could describe which inning we’re in?.

Yes..

I’m not a big sports fan, so I’ll give it my best. And I guess it would be one through nine, correct. Nine innings. I would say we’re probably in the first third of the innings with respect to that..

Okay, got it and then a question about the US mortality. This quarter definitely was favorable, but in your prepared remarks you mentioned that it was modestly favorable, but it was definitely a meaningful impact. I think some of it is related to because your exposure to the larger case market and have a bigger swing to your underlying results.

Can you quantify how much favorable it was in the quarter? And how should we think about the typical seasonal swings between Q4 and Q1, given you seem to have a bigger exposure to the larger case market now?.

That’s a bit of difficult question to answer from the perspective of, well first your question about seasonality.

We on average expect perhaps 30 plus if not more million in additional claims in our winter quarters as compared to our other quarters and that will change overtime and if it’s been growing the impact that now your specific question about modestly favorable in the fourth quarter.

It’s less than $10 million in terms of claims were favorable just under I think $10 million..

Okay, got it. Thank you..

Moving on, we’ll go to Thomas Gallagher with Evercore..

First, just had a question on the way to think about corporate tax reform for you all. I guess what I would like to know is you have a fairly high GAAP tax rate, 34% to 35%, but I believe at least some meaningful portion of your risk is written out of Bermuda. So I don’t know if you can help me triangulate what your Bermuda structure gives you.

It apparently doesn’t look like it’s giving you any tax benefit.

But is there anything we should be thinking about, in terms of corporate tax reform, as it relates to your Bermuda subsidiary?.

Yes for some of our offshore companies maybe I’ll expand it beyond Bermuda we have some companies in Barbados as well. Most of those companies are actually US taxpayers; they’re called 953(d) company so they’re still subject to US tax rates.

So they would whatever we would enjoy from the US base companies that are US taxpayers they would see similar benefits depending or similar implications depending on where the tax reform goes..

Okay, so you’re not getting any tax benefit from those entities?.

No..

Is it a regulatory capital arbitrage benefit? Like what’s the rationale for writing risk out of those entities?.

We primarily use it from overall group capital management from a regulatory capital perspective..

Got you, okay.

And is there a meaningful difference between GAAP taxes and cash taxes, from a total entity standpoint?.

Yes, we certainly as far as the amount of cash taxes we pay are lower than what the effective GAAP tax would show you..

Okay.

Are you able to quantify that at all? Is that a meaningful difference?.

We do have a deferred tax liability on the balance sheet which reflect some of that difference overtime. So it could be not inconsequential number..

Okay. And then I just had a follow-up on Australia.

I guess just going back to what happened, I believe it was in 2013 on the group side, are you able to dimension the type of risk there relative to thinking about exposure in terms of the 13 charges that were taken? Just in terms of size like if disability continues to remain as it has been for the last few quarters and generating a loss, and you don’t see it turn, is that a potentially similar sized balance sheet charge? Would it be a lot less? Would it be a lot more? Can you help us think through that?.

I think that’s hard to quantify I think it’s too early at this stage because we do believe that there may be some regular volatility in those 4Q results for individual disability.

So when you ask the question about you know if trend, if experience continues not sure yet if there is any underlying trend change and with respect to the respective sizes of the business. Our group operations in Australia are larger than our retail operations and individual disability is a part of our retail operations.

We also have regular mortality within that part of our business..

Okay. And then I guess my final question is just on capital deployment pipeline.

Are you noticing a delay in activity since the election or do you feel like there’s more potential activity? Would you say clients are waiting to see how things settle out over the next several months or are you’re sensing that because interest rates have increased and macro is a bit more favorable, that there’s potentially more near-term activity? Just more that around near-term activity on the part of clients.

Do you think it’s actually going to delay things temporarily or do you think it will accelerate things?.

That’s difficult to answer, all I can speak to is the pipeline of opportunities that we see and that pipeline is very active. I can’t really speak to clients and their internal discussions around the timing of putting blocks to markets.

Our pipeline hasn’t changed in terms of deal activity and in fact it’s picked up a little bit over the last little while, but not materially but I haven’t seen a fall off. So to your question about, are they delaying? I would say we don’t see any evidence of that..

Okay, thanks..

Next we’ll go to Kenneth Lee with RBC Capital..

Thanks for taking my question. Just have one related to Solvency II. Want to get your comments on the recent developments on the US/EU covered agreement for reinsurance. Just wondering whether the lack of agreement has been holding back, to a certain extent, related transactions..

I’m not sure I’m connecting the two pieces of your question. Solvency II and covered agreements.

So if you could just provide me with a little bit more detail as to what exactly you were asking?.

Sure. I think there was a recent agreement that’s under review that the US and the EU negotiated and it would lower collateral requirements, as well as some other local presence requirements for reinsurance agreements between the EU and the US..

Okay, thank you. So the reduction those collateral reduction provisions they will have the effect of helping the non-US competitors. However it’s our understanding that those same companies are competitors largely qualify for collateral reduction already through the NAIC certified reinsurer program.

So we wouldn’t anticipate the impact to us to be significant based on our understanding that they’ve already got that facility through the certified reinsurer program..

Got you, got you. Okay. And just one more question; a little bit of a housekeeping. In your prepared remarks, you mentioned that the EMEA Financial Solutions business had a little bit above run rate in terms of earnings. Just wondering whether you could quantify a more normalized run rate for that business..

I would say probably, we had a really good fourth quarter to solutions. It’s part of putting exact number on it because that business has continued to grow, but if I had to, I would maybe say $25 million to $30 million a quarter run rate pretax..

Got you, okay very helpful. Thank you very much..

And next we’ll go to Dan Bergman with Citigroup.

Maybe just staying with EMEA to start. I believe this is the third or fourth straight quarter of favorable experience in the asset-intensive and longevity business there. I just wanted to see if there is any further color you can provide on the trend and overall what you’re seeing in this block..

I think for the most part that business, as I mentioned it continues to grow part of the numbers you’re seeing is just catching up on some of the underline treaty reporting, so there will be some noise from time-to-time but I would say the overall underlying experience has been good on that business plus we’re catching up on some of the underlying administration of the business..

Got it to maybe then just switching gears. You’ve generated consolidated high single-digit premium growth, both during in the fourth quarter and for the full year 2016, despite no large case block acquisitions in the past year.

Should we think of this growth rate as sustainable ahead, or were there any material one-time factors in those periods that you wouldn’t expect to occur?.

I think we mentioned that in the remarks.

There was one transaction that added a little bit to that premium growth this year was at Canada Credit or Treaty Amendment, so that added probably year-over-year about $80 million or so to the premium volume full year, so we wouldn’t expect something like that to repeat and we wouldn’t necessarily refer to that as an in-force block per se.

and then we have other reporting fluctuations from period-to-period but so I think we still feel that over the longer term the premium growth rate at a consolidated basis is high single digits..

Very helpful. Thank you..

And there are no further questions. Mr. Larson I’ll turn it back to you for any additional or closing comments..

Well everyone thank you for joining us for our fourth quarter 2016 earnings call. If you have any other questions please feel free to give us a call. Thank you very much..

And that does conclude today’s conference. We’d like to thank everyone for their participation. You may now disconnect..