Reinsurance Group of America, Inc. is a holding company, which engages in the provision of traditional and non-traditional life and health reinsurance products. It operates through the following segments: U.S. and Latin America, Canada, Europe, Middle East, and Africa, Asia Pacific, and Corporate and Other. The U.S. and Latin America segment markets individual and group life and health reinsurance to domestic clients for a variety of products through yearly renewable term agreements, coinsurance, and modified coinsurance. The Canada segment offers individual life reinsurance, and, to a lesser extent, creditor, group life and health, critical illness, and disability reinsurance, through yearly renewable term and coinsurance agreements. The Europe, Middle East, and Africa segment serves individual and group life and health products through yearly renewable term and coinsurance agreements, reinsurance of critical illness coverage that provides a benefit in the event of the diagnosis of a pre-defined critical illness, and underwritten annuities. The Asia Pacific segment consists of individual and group life and health reinsurance, critical illness coverage, disability, and superannuation through yearly renewable term and coinsurance agreements. The Corporate and Other segment consists of investment income from unallocated invested assets, investment related gains, and losses and service fees. The company was founded in 1973 and is headquartered in Chesterfield, MO.
COMMENTARY
Market Review
Global equity markets declined in September, with weakness evident across nearly every region and sector in local terms. For unhedged Australian investors, a weaker Australian dollar supported returns. Japan stood out as the strongest major market, with its Financials sector buoyed by the Bank of Japan’s decision to raise its policy rate by 25 basis points to 1.25%, the highest level the country has seen in over three decades. The move supported bank margins and reinforced the shift away from the ultra-loose stance that had defined Japanese policy for a generation.
European equities were among the weakest, with France and Germany leading declines within the euro area and the Nordics and Sweden lagging in the wider region. The region contended with a sharp rise in energy prices stemming from the ongoing US-Iran conflict, alongside higher interest rates and rising bond yields amid a broader global sell-off in fixed income.
Among sectors, Information Technology was the strongest performer, recovering from a mid-month stumble in semiconductor and AI-related shares to finish higher. Materials was the weakest, weighed down by a decline in gold prices, which pressured mining companies. Consumer Discretionary and Real Estate also underperformed, reflecting concerns around persistent inflation and the implications of higher rates.
Portfolio Commentary
The Fund rose 1.7% in September, marginally behind the MSCI All Country World Total Return Index (net, AUD), which gained 1.9%. Contributions from Information Technology holdings supported performance, while stock-specific weakness in parts of the software sector weighed on relative returns.
While AI-related companies continue to dominate headlines, the Fund also holds several businesses whose growth is drawn from other sources of demand that should prove durable even as AI-related spending moderates. HEICO, the US-based leading supplier of replacement parts to the aerospace industry, has generated an annualised profit growth rate of 25% over the past three years and is on track for a similar outcome this year, as airlines facing cost pressures increasingly turn to its more affordable replacement parts. Compass Group, the UK-based global food-service company, continues to win new outsourcing mandates and take share from rivals as more businesses outsource their catering operations. Couche-Tard, the Canadian convenience store operator, is extending its geographic footprint through the recently announced acquisition of Poland’s largest convenience-store chain, a transaction that should generate meaningful cost synergies across its European operations while enhancing scale in the region.
During the month, the Fund exited positions in Deere, the US industrial equipment manufacturer, and Booking Holdings, the US travel website operator. Deere’s strong share price run lifted its valuation above the team’s most optimistic estimate of intrinsic value. In Booking’s case, the investment thesis had weakened, as the growing tendency for consumers to delegate travel planning to AI assistants may undermine the company’s “connected travel” strategy, a long-term effort to build an ecosystem spanning flights, hotels, ground transport, and dining.
Turning to attribution, Lenovo, the Chinese personal computer and enterprise infrastructure provider, was a leading contributor within Emerging Markets, benefiting from strong server and storage sales driven by AI-related demand from hyperscalers and enterprises. Meta Platforms also contributed meaningfully after shares surged on the release of its new AI agent Muse, which quickly became one of the most downloaded apps on the Apple App Store. In contrast, shares of Adobe, the US-based creative software and digital media company, declined despite strong year-over-year revenue growth, as investors focused on disappointing fourth-quarter earnings guidance.
Taken together, the month’s activity reflects a continued focus on building the portfolio around businesses with durable, differentiated sources of growth, whether tied to the AI buildout or to the quieter structural trends unfolding alongside it. Maintaining that balance remains central to how the team positions the portfolio for a wide range of long-term outcomes.