UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): November 3, 2003 REINSURANCE GROUP OF AMERICA, INCORPORATED (Exact Name of Registrant as Specified in its Charter) MISSOURI 1-11848 43-1627032 (State or Other Jurisdiction of (Commission (IRS Employer Incorporation) File Number) Identification Number) 1370 Timberlake Manor Parkway, Chesterfield, Missouri 63017 (Address of Principal Executive Office) Registrant's telephone number, including area code: (636) 736-7000
ITEM 5. OTHER EVENTS This Current Report on Form 8-K is being filed by Reinsurance Group of America, Incorporated ("RGA") solely to provide (i) certain historical financial results of RGA, by segment and sub-segment, (ii) certain historical financial information concerning RGA's consolidated stockholders' equity, (iii) certain additional third quarter 2003 information and (iv) certain supplemental data. The financial information provided below should be read in conjunction with and is qualified in its entirety by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the related notes contained in RGA's Annual Report on Form 10-K for the year ended December 31, 2002, Quarterly Reports on Form 10-Q for the quarters ended March 31, and June 30, 2003 and Current Report on Form 8-K which RGA filed with the Securities and Exchange Commission on August 25, 2003. KEY COMPONENTS OF PRE-TAX OPERATING EARNINGS AND PRE-TAX OPERATING EARNINGS PER SHARE RGA announces its results using a non-GAAP financial measure RGA calls "operating earnings," which RGA has previously referred to as "operating income." Management believes that operating earnings, on a pre-tax and after-tax basis, better measures the ongoing profitability of RGA's continuing operations by excluding from operating income the effect of net realized capital gains and losses and related deferred acquisition costs, which tend to be highly variable, any net gain or loss from discontinued operations and specified other items, which management believes are not indicative of ongoing operations. However, the definition of operating earnings can vary by company and is not considered a substitute in all applications for GAAP net income. The following are the key components of RGA's consolidated pre-tax operating earnings for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, ----------------------------------------------------- ----------------- 1998 1999 2000 2001 2002 2002 2003 ------ ----- ------ ----- ------ ------ ------ Income from continuing operations before income taxes............. $138.8 $92.1 $175.1 $66.2 $194.0 $144.3 $179.9 Realized investment (gains) losses. (3.1) 75.3 28.6 68.4 14.6 10.9 (0.8) Goodwill writeoff.................. - - - - 0.8 0.8 - Deferred acquisition cost offset .. - - - 1.3 (0.8) (0.8) (0.1) The following are the key components of pre-tax operating earnings for RGA's total U.S. Operations segment for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------------------------- ------------------ 1998 1999 2000 2001 2002 2002 2003 ------ ----- ------ ------ ------ ------ ------ Income from continuing operations before income taxes.............. $127.8 $72.3 $167.4 $124.6 $175.8 $132.3 $143.7 Realized investment (gains) losses.. (2.4) 83.2 13.3 29.6 10.4 5.3 9.1 Deferred acquisition cost offset.... - - - 1.3 (0.8) (0.8) (0.1) The following are the key components of pre-tax operating earnings for RGA's U.S. traditional operations for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, ----------------------------------------------------- ------------------ 1998 1999 2000 2001 2002 2002 2003 ------ ----- ------ ----- ------ ------ ------ Income from continuing operations before income taxes............. $114.0 $109.8 $148.1 $101.1 $152.2 $120.1 $124.0 Realized investment (gains) losses. (1.7) 17.4 12.3 30.8 6.3 1.0 7.0
The following are the key components of pre-tax operating earnings for RGA's U.S. asset-intensive operations for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------------------------- ---------------------- 1998 1999 2000 2001 2002 2002 2003 ------ ----- ------ ------ ----- ------ ------ Income (loss) from continuing operations before income taxes.... $9.1 $(41.2) $11.7 $15.0 $14.3 $6.8 $10.8 Realized investment (gains) losses... (0.7) 65.8 1.0 (1.2) 4.1 4.3 2.1 Deferred acquisition cost offset..... - - - 1.3 (0.8) (0.8) (0.1) The following are the key components of pre-tax operating earnings for RGA's U.S. financial reinsurance operations for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------------------------- ---------------------- 1998 1999 2000 2001 2002 2002 2003 ------ ---- ---- ---- ---- ---- ---- Income from continuing operations before income taxes.............. $4.7 $3.7 $7.6 $8.5 $9.3 $5.4 $8.9 The following are the key components of pre-tax operating earnings for RGA's Canadian operations for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, --------------------------------------------------- ----------------------- 1998 1999 2000 2001 2002 2002 2003 ----- ----- ----- ----- ----- ----- ------ Income from continuing operations before income taxes.............. $22.8 $37.9 $39.9 $51.5 $38.6 $27.5 $43.6 Realized investment (gains) losses.. (0.7) (5.9) 1.2 (9.1) 0.2 - (12.2) The following are the key components of pre-tax operating earnings for RGA's Asia-Pacific operations for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------------------------------------- ------------------------ 1998 1999 2000 2001 2002 2002 2003 ----- ----- ---- ---- ---- ---- ----- Income (loss) from continuing operations before income taxes... $(3.1) $(6.8) $1.2 $3.0 $6.3 $5.5 $12.4 Realized investment (gains) losses.. - - 0.2 (0.1) 0.3 0.1 0.6 The following are the key components of pre-tax operating earnings for RGA's Europe and South Africa operations for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, --------------------------------------------------- ---------------------- 1998 1999 2000 2001 2002 2002 2003 ----- ----- ----- ----- ---- ---- ---- Income (loss) from continuing operations before income taxes... $(5.0) $(3.8) $(2.4) $(1.0) $3.4 $3.2 $9.4 Realized investment (gains) losses.. (0.1) (0.1) (0.3) 0.2 (0.9) 0.3 (1.8) The following are the key components of pre-tax operating earnings for RGA's Corporate and Other operations for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------------------------------------- ----------------------- 1998 1999 2000 2001 2002 2002 2003 ----- ----- ------ ------- ------ ------ ------ Loss from continuing operations before income taxes.............. $(3.7) $(7.5) $(31.0) $(111.9) $(30.1) $(24.2) $(29.2) Realized investment (gains) losses.. 0.1 (1.9) 14.2 47.8 4.6 5.2 3.5 Goodwill writeoff................... - - - - 0.8 0.8 -
The following are the key components of pre-tax operating earnings for RGA's total Other International operations segment for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003 (amounts in millions): NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------------------------- --------------------- 1998 1999 2000 2001 2002 2002 2003 ----- ----- ------ ---- ---- ---- ----- Income (loss) from continuing operations before income taxes... $(8.1) $(10.6) $(1.2) $2.0 $9.7 $8.7 $21.8 Realized investment (gains) losses.. (0.1) (0.1) (0.1) 0.1 (0.6) 0.4 (1.2) The following are the key components of RGA's consolidated diluted operating earnings per share for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and for the nine-months ended September 30, 2002 and 2003: NINE MONTHS ENDED FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------------------------------------- ------------------------ 1998 1999 2000 2001 2002 2002 2003 ----- ----- ------ ------ ------ ------ ------ Diluted earnings per share.......... $1.48 $0.88 $1.56 $0.66 $2.47 $1.80 $2.34 Realized investment (gains) losses.. (0.04) 1.07 0.43 0.93 0.22 0.17 (0.02) Goodwill writeoff................... - - - - 0.01 0.01 - Deferred acquisition cost offset.... - - - 0.02 (0.01) (0.01) - Loss from discontinued operations... 0.60 0.26 0.56 0.14 0.11 0.07 0.04 For additional financial information about RGA's operational segments, see Note 17 to RGA's financial statements for the year ended December 31, 2002 contained in the Current Report on Form 8-K filed by RGA with the Securities and Exchange Commission on August 25, 2003. EFFECTS OF SFAS 115 ON TOTAL STOCKHOLDERS' EQUITY RGA has traditionally evaluated its stockholders' equity position excluding the impact of Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities ("SFAS 115"). This is considered a non-GAAP measure. RGA believes it is important to evaluate its stockholders' equity position to exclude the effect of the net unrealized gains or losses required by SFAS 115 since the net unrealized gains or losses primarily relate to changes in interest rates and credit spreads on investment securities that are not permanent and can fluctuate significantly from period to period. At December 31, 1998, 1999, 2000, 2001 and 2002, RGA's total stockholders' equity was $748.5 million, $732.9 million, $862.9 million, $1.0 billion and $1.2 billion, respectively. At September 30, 2002 and 2003, RGA's total stockholders' equity was $1.2 billion and $1.4 billion, respectively. At December 31, 1998, 1999, 2000, 2001 and 2002, the effects of SFAS 115 on our total stockholders' equity was $45.3 million, $(131.3) million, $(42.0) million, $0 and $102.8 million, respectively. At September 30, 2002 and 2003, the effects of SFAS 115 on our total stockholders' equity was $90.2 million and $173.3 million, respectively.
CERTAIN ADDITIONAL THIRD QUARTER INFORMATION On October 23, 2003, RGA issued a press release announcing its earnings for the three and nine months ended September 30, 2003 and providing certain additional information. Tables showing RGA's condensed consolidated statements of income and the results of operations for each of the U.S., Canadian, other international and corporate and other segments have been included in this Current Report. See "Selected Financial Data" below. The following is additional information related to RGA's third quarter results: Information related to net premiums and income (loss) from continuing operations before income taxes for each reportable segment are summarized below (amounts in $ millions): THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- -------------------- 2002 2003 2002 2003 ------ ------ -------- -------- NET PREMIUMS: U.S.................................................. $320.3 $369.3 $1,005.5 $1,118.6 Canada............................................... 41.9 53.1 132.6 153.7 Other International.................................. 95.0 149.8 252.2 425.7 Corporate and Other.................................. (1.4) 0.8 (0.2) 2.8 INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES: U.S.................................................. $55.3 $45.3 $132.3 $143.7 Canada............................................... 8.7 19.5 27.5 43.6 Other International.................................. 4.1 9.6 8.7 21.8 Corporate and Other.................................. (14.0) (11.5) (24.2) (29.2) For the nine months ended or at September 30, 2003, approximately 34% of our premiums, 34% of our income from continuing operations before income taxes, and 32% of our fixed maturity securities available for sale were denominated in currencies other than the U.S. dollar. Mortality experience for the quarter ended September 30, 2003 was approximately $6.0 million unfavorable on a pre-tax basis when compared with expectations. This differs from the first two quarters of 2003 in which RGA experienced positive mortality variances. Mortality experience does fluctuate from quarter to quarter. For 2003, on a year-to-date basis, U.S. mortality experience remained favorable. In the third quarter of 2003, RGA also reflected a $3.0 million, pretax, reduction in the reserves associated with the terrorist attacks on September 11, 2001. At September 30, 2003, RGA had assets of $10.5 billion, stockholders' equity of $1.4 billion and assumed reinsurance in force of $893 billion.
The following is a summary of RGA's unaudited consolidated capitalization as of September 30, 2003 (dollars in thousands): LONG-TERM DEBT: Borrowings under $175 million credit agreement.............................. $50,000 Other net borrowings........................................................ 44,650 7.25% senior notes due 2006................................................. 99,641 6.75% senior notes due 2011................................................. 199,872 ------- Total long-term debt...................................................... 394,163 5.75% Cumulative Trust Preferred Securities(2).............................. 158,262 STOCKHOLDERS' EQUITY: Preferred stock, par value $.01 per share; 10,000,000 shares authorized; no shares issued or outstanding............................... -- Common stock, par value $.01 per share; 75,000,000 shares authorized, 51,053,273 shares issued; 61,553,273 shares issued as adjusted(1)..................................................... 511 Warrants(2)................................................................. 66,915 Additional paid-in capital.................................................. 613,916 Retained earnings........................................................... 588,413 Accumulated other comprehensive income...................................... 206,676 Treasury stock (1,141,138 shares, at cost).................................. (32,736) ------- Total stockholders' equity................................................ 1,443,695 Total capitalization.................................................. $1,996,120 ========== (1) The number of issued shares of our common stock as of September 30, 2003 excludes: - an aggregate of 4,975,455 shares of our common stock issuable under our equity incentive plans, of which 2,891,556 shares were subject to outstanding stock options as of September 30, 2003, at a weighted average exercise price of $27.68 per share; and - 5,628,600 shares of our common stock issuable upon exercise of outstanding warrants at an exercise price of $39.98 per share, subject to certain antidilution adjustments, which expire on December 15, 2050. (2) The 5.75% cumulative trust preferred securities, stated liquidation amount $50 per security, and warrants to purchase shares of our common stock at an exercise price of $50 per warrant at maturity, subject to adjustment, were issued as part of Trust Preferred Income Equity Redeemable Securities Units in December 2001.
Under the terms of RGA's Flexible Stock Plan, RGA may issue up to a maximum of 6,260,077 shares of its common stock in the form of stock options, stock appreciation rights, restricted stock, performance shares or other stock-based awards to its officers and key employees and those of its subsidiaries. Options to purchase 2,804,708 shares of common stock have been granted and remain outstanding, 1,491,358 shares of common stock have been issued pursuant to or awarded under the plan and 1,964,011 shares of common stock are available for future grants, as of September 30, 2003. Under the terms of the plan, the number of authorized shares is increased each year by 5% of the number then allocated to the plan, effective each January 1. Under the terms of RGA's Flexible Stock Plan for Directors, RGA may issue up to a maximum of 212,500 shares of its common stock in the form of stock options, restricted stock, performance units or other stock-based awards only to non-employee directors. Options to purchase 86,848 shares of common stock have been granted and remain outstanding, 5,764 shares of common stock have been exercised by or awarded under the plan and 119,888 shares of common stock are available for future grants, as of September 30, 2003. Under our Management Incentive Plan, RGA may award eligible participants up to $2,500,000 upon the attainment of certain pre-established goals relating to RGA's performance or that of its divisions, business units or employees. Awards under the Management Incentive Plan may be made in cash or, pursuant to the Executive Performance Share Plan or Flexible Stock Plan, performance shares, restricted stock or other stock-based awards. Under RGA's Phantom Stock Plan for Directors, RGA may grant up to 100,000 performance units to non-employee directors in lieu of retainer and meeting fees. A performance unit is a hypothetical share of RGA's common stock based upon the fair market value at the time of grant. RGA may, at its option, elect to issue cash or shares of its common stock in payment for the performance units granted under the plan. 24,195 performance units have been granted and remain outstanding and 47,025 performance units are available for future grants, as of September 30, 2003. Under the terms of RGA's Executive Performance Share Plan, RGA may issue up to 500,000 performance shares to its employees and those of its subsidiaries. A performance share is a hypothetical share of RGA's common stock based upon the fair market value at the time of grant. RGA may, at its option, elect to issue cash or shares of its common stock in payment for the performance shares issued under the plan. 124,123 performance shares have been issued and remain outstanding and 289,720 performance shares are available for future issuance, as of September 30, 2003. RGA has reinsurance agreements with certain affiliates of MetLife, Inc. Under these agreements, RGA had net premiums of approximately $115.3 million for the first nine months of 2003. The net premiums reflect the net of business assumed from and ceded to such affiliates of MetLife, Inc. The pre-tax income on this business was approximately $23.9 million for the first nine months of 2003. SUPPLEMENTAL INFORMATION Based on a survey conducted on behalf of the Reinsurance Section of the Society of Actuaries (the "SOA"), as of December 31, 2002, we had a 10.9% share of the North American life reinsurance market, with approximately $624.9 billion of life reinsurance in force, and Allianz had a 4.0% share with $231.5 billion of life reinsurance in force. Allianz had approximately $231.4 billion of U.S. life reinsurance in force. The survey estimated the total amount of life reinsurance in force in North America was approximately $5.7 trillion as of that date. According to surveys conducted on behalf of the Reinsurance Section of the SOA, the amount of life reinsurance in force was estimated to be approximately $5.7 trillion as of December 31, 2002, which represented a compound annual growth rate of approximately 19% since December 31, 1998. According to surveys conducted on behalf of the Reinsurance Section of the SOA, the total amount of U.S. reinsurance in force, the amount was estimated to be approximately $2.6 trillion as of December 31, 1998, $3.1 trillion as of December 31, 1999, $3.8 trillion as of December 31, 2000, $4.5 trillion as of December 31, 2001 and $5.2 trillion as of December 31, 2002. According to an A.M. Best report, the total amount of U.S. life insurance in force was estimated to be approximately $13.0 trillion as of December 31, 1998, $14.4 trillion as of December 31, 1999, $15.9 trillion as of December 31, 2000, $17.4 trillion as of December 31, 2001 and $18.8 trillion as of December 31, 2002.
According to surveys conducted on behalf of the Reinsurance Section of the SOA, with respect to U.S. ordinary recurring life reinsurance, the amount reinsured was estimated to be approximately $679 billion as of December 31, 1998, $811 billion as of December 31, 1999, $985 billion as of December 31, 2000, $947 billion as of December 31, 2001 and $1.1 trillion as of December 31, 2002. According to a publication by the American Council of Life Insurers (the "ACLI"), the total amount of life insurance production was estimated to be approximately $1.3 trillion as of December 31, 1998, $1.4 trillion as of December 31, 1999, $1.6 trillion as of December 31, 2000, $1.6 trillion as of December 31, 2001 and $1.8 trillion as of December 31, 2002. An A.M. Best article dated September 2002 estimated the aggregate net premiums generated by life reinsurers in 2001 as approximately $35.5 billion worldwide. Based on its net premiums, RGA would have had a 4.7% share of the global market. The SOA surveys indicate that the authors obtained information from participating or responding companies and do not guarantee the accuracy and completeness of their information. Additionally, the surveys do not survey all reinsurance companies, but RGA believes most of its principal competitors are included. While RGA believes these surveys to be generally reliable, RGA has not independently verified their data. The ACLI indicated that it obtains information from various sources, including participating or responding companies and that the ACLI does not guarantee the accuracy and completeness of the information. The ACLI does not survey all life insurance companies, although RGA believes that most of the principal life insurers are included. While RGA believes the information is generally reliable, RGA has not independently verified the data. While RGA believes information published by A.M. Best is generally reliable, RGA has not independently verified the data. A.M. Best does not guarantee the accuracy and completeness of the information. RGA believes that some of the factors affecting the direct insurance market include consolidation; focus on distribution and asset management and outsourcing mortality to reinsurers; slower growth; the entrance of new competitors; the establishment of alternative means of distribution; and recent capital pressures, including investment losses and reserve increases. RGA believes some of the factors affecting the life reinsurance market include a strong trend of outsourcing mortality risk to reinsurers; the creation of opportunities as a result of merger and acquisition activity in the life insurance industry; consolidation among life reinsurers; and low reinsurance penetration in select international markets. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This document contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to, among others, matters relating to future or anticipated events. The words "intend," "expect," "project," "estimate," "predict," "anticipate," "should," "believe" and other similar expressions also are intended to identify forward-looking statements. These forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results, performance and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. Important factors that could cause actual results to differ materially from estimates or forecasts contained in the forward-looking statements include, among others: - adverse changes in mortality, morbidity and claims experience; - risks related to RGA being controlled by MetLife, Inc.; - the effect of RGA's status as a holding company and regulatory restrictions on its ability to pay principal of and interest on its debt obligations;
- changes in the financial strength, claims payment ability and credit ratings of RGA and its subsidiaries or those of MetLife or its subsidiaries, and the effect of such changes on RGA's future results of operations and financial condition; - market or economic conditions that adversely affect RGA's ability to make timely sales of investment securities in response to policyholder withdrawals, recaptures of reinsurance treaties or other events; - regulatory action that may be taken by State Departments of Insurance with respect to RGA, MetLife or its or our subsidiaries; - risks inherent in RGA's risk management and investment strategy, including changes in investment portfolio yields or values due to interest rate or credit quality changes; - the effect of changes in tax laws or a prolonged economic downturn in the demand for insurance products; - fluctuations in U.S. or foreign currency exchange rates, interest rates or securities and real estate markets; - competitive factors and competitors' responses to RGA's initiatives; - RGA's dependence on third parties, including insurance companies from which it assumes business and reinsurers to which it cedes some reinsurance, third-party investment managers and others; - inadequate risk analysis and underwriting; - the adequacy of resources relating to settlements, awards and discontinued lines of business; - general economic conditions affecting the demand for insurance and reinsurance in RGA's current and planned markets; - the stability of governments and economies in the markets in which RGA operates; - adverse litigation or arbitration results; - the success of RGA's clients; - successful execution of RGA's entry into new markets; - successful development and introduction of new product and distribution opportunities; - changes in laws, regulations and accounting standards applicable to RGA, its subsidiaries or its business; - RGA's ability to successfully integrate and operate reinsurance business that it acquires, including, without limitation, the business that it has agreed to acquire from Allianz Life Insurance Company of North America; and - other risks and uncertainties described under the "Risk Factors" captions in RGA's preliminary prospectus supplement dated November 3, 2003 and in the attached prospectus dated October 16, 2003 and in RGA's other filings with the Securities and Exchange Commission. If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. Investors should not place undue reliance on those statements, which speak only as of the date on which they are made. RGA may not update these forward-looking statements, even though its situation may change in the future. RGA qualifies all of its forward-looking statements by these cautionary statements.
SELECTED FINANCIAL DATA REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES Condensed Consolidated Statements of Income (Dollars in thousands, except per share data) Three Months Ended Nine Months Ended (Unaudited) September 30, September 30, ----------------------- ------------------------- 2003 2002 2003 2002 -------- -------- ---------- ---------- Revenues: Net premiums $572,970 $455,750 $1,700,746 $1,390,113 Investment income, net of related expenses 122,153 82,499 345,234 260,779 Realized investment gains/ (losses), net 6,560 1,066 776 (10,951) Other revenues 10,819 10,839 33,670 27,734 -------- -------- ---------- ---------- Total revenues 712,502 550,154 2,080,426 1,667,675 Benefits and expenses: Claims and other policy benefits 457,844 342,301 1,334,081 1,096,797 Interest credited 46,251 22,156 130,914 79,777 Policy acquisition costs and other insurance expenses 111,334 96,303 330,903 252,606 Other operating expenses 24,683 26,358 77,275 67,734 Interest expense 9,383 9,006 27,384 26,475 -------- -------- ---------- ---------- Total benefits and expenses 649,495 496,124 1,900,557 1,523,389 -------- -------- ---------- ---------- Income from continuing operations before income taxes 63,007 54,030 179,869 144,286 Provision for income taxes 20,783 19,307 60,899 51,603 -------- -------- ---------- ---------- Income from continuing operations 42,224 34,723 118,970 92,683 Discontinued operations: Loss from discontinued accident and health operations, net of income taxes (473) (1,135) (1,918) (3,264) -------- -------- ---------- ---------- Net income $ 41,751 $ 33,588 $ 117,052 $ 89,419 ======== ======== ========== ==========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES Condensed Consolidated Statements of Income (Dollars in thousands, except per share data) Three Months Ended Nine Months Ended (Unaudited) September 30, September 30, ----------------------- ----------------------- 2003 2002 2003 2002 -------- --------- --------- -------- Earnings per share from continuing operations: Basic earnings per share $ 0.85 $ 0.70 $ 2.39 $ 1.88 Diluted earnings per share $ 0.84 $ 0.70 $ 2.38 $ 1.87 Earnings per share from net income: Basic earnings per share $ 0.84 $ 0.68 $ 2.36 $ 1.81 Diluted earnings per share $ 0.83 $ 0.68 $ 2.34 $ 1.80 Weighted average number of common and common equivalent shares outstanding (in thousands) 50,267 49,639 49,943 49,683
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES Condensed Consolidated Business Summary At or For the Nine Months Ended (Unaudited) September 30, -------------------------- 2003 2002 --------- --------- Gross life reinsurance in force (in billions) North American business $674.0 $584.0 International business 219.0 130.8 Gross life reinsurance written (in billions) North American business 103.5 110.4 International business 65.7 50.0 Consolidated cash and invested assets (in millions) 7,925.0 5,934.0 Invested Asset book yield - trailing three months excluding funds withheld 6.66% 6.59% Investment portfolio mix Cash and short-term investments 2.26% 2.28% Fixed maturity securities 49.13% 56.43% Mortgage loans 5.48% 3.35% Policy loans 10.73% 13.14% Funds withheld at interest 30.68% 22.78% Other invested assets 1.72% 2.02% Book value per share outstanding $28.92 $23.91 Treasury stock 1,141,138 1,686,313
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES U.S. OPERATIONS (Dollars in thousands) Three Months Ended September 30, 2003 Non-traditional Asset- Total Traditional Intensive Financial U.S. ----------- --------- ----------- --------- Revenues: Net premiums $ 368,171 $ 1,093 $ -- $ 369,264 Investment income, net of related expenses 47,370 44,385 97 91,852 Realized investment losses, net (1,059) (367) -- (1,426) Other revenues 489 2,022 6,613 9,124 --------- --------- --------- --------- Total revenues 414,971 47,133 6,710 468,814 Benefits and expenses: Claims and other policy benefits 297,654 776 -- 298,430 Interest credited 14,919 30,703 -- 45,622 Policy acquisition costs and other insurance expenses 56,738 10,861 2,206 69,805 Other operating expenses 7,515 891 1,248 9,654 --------- --------- --------- --------- Total benefits and expenses 376,826 43,231 3,454 423,511 Income before income taxes $ 38,145 $ 3,902 $ 3,256 $ 45,303 ========= ========= ========= ========= Three Months Ended September 30, 2002 Non-traditional Asset- Total Traditional Intensive Financial U.S. ----------- --------- ---------- -------- Revenues: Net premiums $319,485 $ 803 $ -- $320,288 Investment income, net of related expenses 43,430 17,495 28 60,953 Realized investment gains / (losses), net 1,880 (295) -- 1,585 Other revenues 740 2,515 5,940 9,195 -------- -------- -------- -------- Total revenues 365,535 20,518 5,968 392,021 Benefits and expenses: Claims and other policy benefits 231,890 9,298 -- 241,188 Interest credited 13,422 6,642 -- 20,064 Policy acquisition costs and other insurance expenses 60,265 1,697 1,679 63,641 Other operating expenses 8,850 358 2,613 11,821 -------- -------- -------- -------- Total benefits and expenses 314,427 17,995 4,292 336,714 Income before income taxes $ 51,108 $ 2,523 $ 1,676 $ 55,307 ======== ======== ======== ========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES U.S. OPERATIONS (Dollars in thousands) Nine Months Ended September 30, 2003 Non-traditional Asset- Total Traditional Intensive Financial U.S. ----------- ----------- ----------- ----------- Revenues: Net premiums $ 1,115,360 $ 3,197 $ -- $ 1,118,557 Investment income, net of related expenses 135,246 122,923 97 258,266 Realized investment losses, net (7,017) (2,080) -- (9,097) Other revenues 3,186 5,035 20,179 28,400 ----------- ----------- ----------- ----------- Total revenues 1,246,775 129,075 20,276 1,396,126 Benefits and expenses: Claims and other policy benefits 888,905 4,166 -- 893,071 Interest credited 45,169 84,424 -- 129,593 Policy acquisition costs and other insurance expenses 164,257 26,892 7,447 198,596 Other operating expenses 24,454 2,829 3,881 31,164 ----------- ----------- ----------- ----------- Total benefits and expenses 1,122,785 118,311 11,328 1,252,424 Income before income taxes $ 123,990 $ 10,764 $ 8,948 $ 143,702 =========== =========== =========== =========== Nine Months Ended September 30, 2002 Non-traditional Asset- Total Traditional Intensive Financial U.S. ----------- ----------- ----------- ----------- Revenues: Net premiums $ 1,002,741 $ 2,796 $ -- $ 1,005,537 Investment income, net of related expenses 120,039 63,943 155 184,137 Realized investment losses, net (1,151) (4,255) -- (5,406) Other revenues 1,546 5,684 17,795 25,025 ----------- ----------- ----------- ----------- Total revenues 1,123,175 68,168 17,950 1,209,293 Benefits and expenses: Claims and other policy benefits 785,756 17,014 -- 802,770 Interest credited 41,517 35,453 -- 76,970 Policy acquisition costs and other insurance expenses 153,760 8,126 5,517 167,403 Other operating expenses 22,145 744 7,005 29,894 ----------- ----------- ----------- ----------- Total benefits and expenses 1,003,178 61,337 12,522 1,077,037 Income before income taxes $ 119,997 $ 6,831 $ 5,428 $ 132,256 =========== =========== =========== ===========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES CANADIAN OPERATIONS (Dollars in thousands) Three Months Ended September 30, 2003 2002 ------- ------- Revenues: Net premiums $53,144 $41,894 Investment income, net of related expenses 22,244 18,752 Realized investment gains, net 8,596 164 Other revenues 50 118 ------- ------- Total revenues 84,034 60,928 Benefits and expenses: Claims and other policy benefits 56,132 46,278 Interest credited 536 345 Policy acquisition costs and other insurance expenses 5,257 2,880 Other operating expenses 2,580 2,747 ------- ------- Total benefits and expenses 64,505 52,250 Income before income taxes $19,529 $ 8,678 ======= ======= Nine Months Ended September 30, 2003 2002 --------- --------- Revenues: Net premiums $ 153,747 $ 132,571 Investment income, net of related expenses 63,519 52,133 Realized investment gains/(losses), net 12,158 (22) Other revenues (191) 40 --------- --------- Total revenues 229,233 184,722 Benefits and expenses: Claims and other policy benefits 161,411 137,104 Interest credited 1,089 733 Policy acquisition costs and other insurance expenses 15,714 12,142 Other operating expenses 7,434 7,315 --------- --------- Total benefits and expenses 185,648 157,294 Income before income taxes $ 43,585 $ 27,428 ========= =========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES OTHER INTERNATIONAL (Dollars in thousands) Three Months Ended September 30, 2003 Europe Total Asia & South Inter- Pacific Africa national --------- --------- --------- Revenues: Net premiums $ 57,261 $ 92,502 $ 149,763 Investment income, net of related expenses 3,050 1,329 4,379 Realized investment gains/ (losses), net (104) 1,040 936 Other revenues (11) (105) (116) --------- --------- --------- Total revenues 60,196 94,766 154,962 Benefits and expenses: Claims and other policy benefits 41,101 60,435 101,536 Interest credited -- -- -- Policy acquisition costs and other insurance expenses 8,873 27,293 36,166 Other operating expenses 3,370 3,682 7,052 Interest expense 323 258 581 --------- --------- --------- Total benefits and expenses 53,667 91,668 145,335 Income before income taxes $ 6,529 $ 3,098 $ 9,627 ========= ========= ========= Three Months Ended September 30, 2002 Europe Total Asia & South Inter- Pacific Africa national ------- ------- -------- Revenues: Net premiums $32,839 $62,172 $95,011 Investment income, net of related expenses 1,722 343 2,065 Realized investment gains, net 48 8 56 Other revenues 431 440 871 ------- ------- ------- Total revenues 35,040 62,963 98,003 Benefits and expenses: Claims and other policy benefits 19,689 37,087 56,776 Interest credited -- -- -- Policy acquisition costs and other insurance expenses 10,244 20,213 30,457 Other operating expenses 3,809 2,534 6,343 Interest expense 225 148 373 ------- ------- ------- Total benefits and expenses 33,967 59,982 93,949 Income before income taxes $ 1,073 $ 2,981 $ 4,054 ======= ======= =======
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES OTHER INTERNATIONAL (Dollars in thousands) Nine Months Ended September 30, 2003 Europe Total Asia & South Inter- Pacific Africa national --------- --------- --------- Revenues: Net premiums $ 165,836 $ 259,829 $ 425,665 Investment income, net of related expenses 8,198 2,808 11,006 Realized investment gains/ (losses), net (622) 1,888 1,266 Other revenues 896 18 914 --------- --------- --------- Total revenues 174,308 264,543 438,851 Benefits and expenses: Claims and other policy benefits 115,555 161,668 277,223 Policy acquisition costs and other insurance expenses 33,401 81,516 114,917 Other operating expenses 12,086 11,228 23,314 Interest expense 842 722 1,564 --------- --------- --------- Total benefits and expenses 161,884 255,134 417,018 Income before income taxes $ 12,424 $ 9,409 $ 21,833 ========= ========= ========= Nine Months Ended September 30, 2002 Europe Total Asia & South Inter- Pacific Africa national --------- --------- --------- Revenues: Net premiums $ 97,831 $ 154,327 $ 252,158 Investment income, net of related expenses 4,876 591 5,467 Realized investment losses, net (125) (288) (413) Other revenues 1,706 776 2,482 --------- --------- --------- Total revenues 104,288 155,406 259,694 Benefits and expenses: Claims and other policy benefits 63,849 95,283 159,132 Policy acquisition costs and other insurance expenses 24,260 48,493 72,753 Other operating expenses 10,086 7,883 17,969 Interest expense 613 499 1,112 --------- --------- --------- Total benefits and expenses 98,808 152,158 250,966 Income before income taxes $ 5,480 $ 3,248 $ 8,728 ========= ========= =========
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES CORPORATE AND OTHER (Dollars in thousands) Three Months Ended September 30, 2003 2002 -------- -------- Revenues: Net premiums $ 799 $ (1,443) Investment income, net of related expenses 3,678 729 Realized investment losses, net (1,546) (739) Other revenues 1,761 655 -------- -------- Total revenues 4,692 (798) Benefits and expenses: Claims and other policy benefits 1,746 (1,941) Interest credited 93 1,747 Policy acquisition costs and other insurance expenses 106 (675) Other operating expenses 5,397 5,447 Interest expense 8,802 8,633 -------- -------- Total benefits and expenses 16,144 13,211 Loss before income taxes $(11,452) $(14,009) ======== ======== Nine Months Ended September 30, 2003 2002 -------- -------- Revenues: Net premiums $ 2,777 $ (153) Investment income, net of related expenses 12,443 19,042 Realized investment losses, net (3,551) (5,110) Other revenues 4,547 187 -------- -------- Total revenues 16,216 13,966 Benefits and expenses: Claims and other policy benefits 2,376 (2,209) Interest credited 232 2,074 Policy acquisition costs and other insurance expenses 1,676 308 Other operating expenses 15,363 12,556 Interest expense 25,820 25,363 -------- -------- Total benefits and expenses 45,467 38,092 Loss before income taxes $(29,251) $(24,126) ======== ========
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. REINSURANCE GROUP OF AMERICA, INCORPORATED Date: November 3, 2003 By: /s/ Jack B. Lay ----------------------------- Jack B. Lay Executive Vice President and Chief Financial Officer