REINSURANCE GROUP OF AMERICA INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 1-11848

REINSURANCE GROUP OF AMERICA, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MISSOURI 43-1627032
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

1370 TIMBERLAKE MANOR PARKWAY
CHESTERFIELD, MISSOURI 63017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(636) 736-7439
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

YES [X] NO [ ]

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS
DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT).

YES [X] NO [ ]

COMMON STOCK OUTSTANDING ($.01 PAR VALUE) AS OF OCTOBER 31, 2003: 49,988,385
SHARES.

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES

TABLE OF CONTENTS

ITEM PAGE
---- ----

PART I - FINANCIAL INFORMATION

1 Financial Statements

Condensed Consolidated Balance Sheets (Unaudited)
September 30, 2003 and December 31, 2002 3

Condensed Consolidated Statements of Income (Unaudited)
Three and nine months ended September 30, 2003 and 2002 4

Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended September 30, 2003 and 2002 5

Notes to Unaudited Condensed Consolidated Financial
Statements 6

2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 11

3 Quantitative and Qualitative Disclosures About Market Risk 28

4 Controls and Procedures 28

PART II - OTHER INFORMATION

1 Legal Proceedings 29

6 Exhibits and Reports on Form 8-K 29

Signatures 31

Index to Exhibits 32

2

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

September 30, December 31,
2003 2002
------------- ------------
(Dollars in thousands)

ASSETS

Fixed maturity securities:
Available-for-sale at fair value (amortized cost of $3,606,738
and $3,332,717 at September 30, 2003 and December 31, 2002, respectively) $ 3,893,201 $ 3,502,703
Mortgage loans on real estate 434,626 227,492
Policy loans 850,301 841,120
Funds withheld at interest 2,431,611 1,975,071
Short-term investments 45,873 4,269
Other invested assets 136,096 99,540
------------ ------------
Total investments 7,791,708 6,650,195
Cash and cash equivalents 133,298 88,101
Accrued investment income 78,691 35,514
Premiums receivable 320,362 253,892
Reinsurance ceded receivables 388,949 452,220
Deferred policy acquisition costs 1,361,075 1,084,936
Other reinsurance balances 375,037 288,833
Other assets 76,414 38,906
------------ ------------
Total assets $ 10,525,534 $ 8,892,597
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Future policy benefits $ 2,854,517 $ 2,430,042
Interest sensitive contract liabilities 4,004,531 3,413,462
Other policy claims and benefits 889,210 760,166
Other reinsurance balances 247,452 233,286
Deferred income taxes 424,515 291,980
Other liabilities 109,189 55,235
Long-term debt 394,163 327,787
Company-obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely junior subordinated debentures of the Company 158,262 158,176
------------ ------------
Total liabilities 9,081,839 7,670,134
Commitments and contingent liabilities -- --

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 at September 30, 2003 and
December 31, 2002, respectively) 511 511
Warrants 66,915 66,915
Additional paid-in-capital 613,916 613,042
Retained earnings 588,413 480,301
Accumulated other comprehensive income:
Accumulated currency translation adjustment, net of income taxes 33,379 715
Unrealized appreciation of securities, net of income taxes 173,297 102,768
------------ ------------
Total stockholders' equity before treasury stock 1,476,431 1,264,252
Less treasury shares held of 1,141,138 and 1,596,629 at cost at
September 30, 2003 and December 31, 2002, respectively (32,736) (41,789)
------------ ------------
Total stockholders' equity 1,443,695 1,222,463
------------ ------------
Total liabilities and stockholders' equity $ 10,525,534 $ 8,892,597
============ ============

See accompanying notes to unaudited condensed consolidated financial statements.

3

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)

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
=========== =========== =========== ===========

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

Dividends declared per share $ 0.06 $ 0.06 $ 0.18 $ 0.18

See accompanying notes to unaudited condensed consolidated financial statements.

4

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine months ended
September 30,
--------------------------
2003 2002
----------- -----------
(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 117,052 $ 89,419
Adjustments to reconcile net income to net cash provided by
operating activities:
Change in:
Accrued investment income (42,498) (44,788)
Premiums receivable (83,332) (34,372)
Deferred policy acquisition costs (244,916) (128,378)
Reinsurance ceded balances 63,271 (14,454)
Future policy benefits, other policy claims and
benefits, and other reinsurance balances 342,263 325,414
Deferred income taxes 61,932 74,211
Other assets and other liabilities 15,797 (60,598)
Amortization of net investment discounts and other (31,302) (11,421)
Realized investment (gains) losses, net (776) 10,951
Other, net 654 10,360
----------- -----------
Net cash provided by operating activities 198,145 216,344

CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and maturities of fixed maturity securities - available for sale 1,315,599 1,627,768
Purchases of fixed maturity securities - available for sale (1,426,275) (2,047,969)
Cash invested in policy loans and mortgage loans on real estate (224,797) (52,198)
Cash invested in funds withheld at interest (42,671) (38,276)
Principal payments on policy loans and mortgage loans on real estate 8,891 12,384
Change in short-term investments and other invested assets (71,898) 114,109
----------- -----------
Net cash used in investing activities (441,151) (384,182)

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholders (8,940) (8,892)
Borrowings under credit agreements 63,448 --
Purchase of treasury stock -- (6,594)
Exercise of stock options 9,054 662
Excess deposits on universal life and other
investment type policies and contracts 221,245 88,045
----------- -----------
Net cash provided by financing activities 284,807 73,221
Effect of exchange rate changes 3,396 (254)
----------- -----------
Change in cash and cash equivalents 45,197 (94,871)
Cash and cash equivalents, beginning of period 88,101 226,670
----------- -----------
Cash and cash equivalents, end of period $ 133,298 $ 131,799
=========== ===========

Supplementary disclosure of cash flow information:
Amount of interest paid $ 21,634 $ 20,875
Amount of income taxes paid $ 5,938 $ 11,301

See accompanying notes to unaudited condensed consolidated statements.

5

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of
Reinsurance Group of America, Incorporated ("RGA") and subsidiaries
(collectively, the "Company") have been prepared in conformity with accounting
principles generally accepted in the United States of America for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments, consisting of normal recurring accruals, considered
necessary for a fair presentation have been included. Operating results for the
nine-month period ended September 30, 2003 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2003. These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 25, 2003 ("Current Report").

The accompanying unaudited condensed consolidated financial statements include
the accounts of Reinsurance Group of America, Incorporated and its subsidiaries.
All material intercompany accounts and transactions have been eliminated. The
Company has reclassified the presentation of certain prior period information to
conform to the 2003 presentation.

Accounting Changes. Effective January 1, 2003, the Company adopted the fair
value recognition provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation," and as amended by
SFAS No. 148, "Accounting for Stock-Based Compensation--Transition and
Disclosure," prospectively to all awards granted, modified or settled on or
after January 1, 2003. The effects on net income and earnings per share from net
income if the fair value based method had been applied to all awards since the
effective date of SFAS No. 123 for the periods presented below were (in
thousands, except per share amounts):

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------------------
2003 2002 2003 2002
---------- ---------- ----------- ----------

Net income as reported $ 41,751 $ 33,588 $ 117,052 $ 89,419

Add compensation expense included in net
income, net of income taxes 272 -- 815 --
Deduct total fair value of compensation
expense for all awards, net of income taxes (870) (741) (2,765) (2,254)
---------- ---------- ----------- ----------
Pro forma net income $ 41,153 $ 32,847 $ 115,102 $ 87,165
Net income per share:
As reported - basic $ 0.84 $ 0.68 $ 2.36 $ 1.81
Pro forma - basic $ 0.83 $ 0.67 $ 2.32 $ 1.77
As reported - diluted $ 0.83 $ 0.68 $ 2.34 $ 1.80
Pro forma - diluted $ 0.82 $ 0.66 $ 2.30 $ 1.75
========== ========== =========== ==========

6

2. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share on income from continuing operations for the three- and nine-months ended
September 30, 2003 and 2002 (in thousands, except per share information):

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2003 2002 2003 2002
-------- -------- -------- --------

Earnings:
Income from continuing operations
(numerator for basic and diluted
calculations) $ 42,224 $ 34,723 $118,970 $ 92,683
Shares:
Weighted average outstanding shares
(denominator for basic calculation) 49,793 49,363 49,684 49,371
Equivalent shares from outstanding stock
options 474 276 259 312
-------- -------- -------- --------
Denominator for diluted calculation 50,267 49,639 49,943 49,683
Earnings per share:
Basic $ 0.85 $ 0.70 $ 2.39 $ 1.88
Diluted $ 0.84 $ 0.70 $ 2.38 $ 1.87
======== ======== ======== ========

The calculation of equivalent shares from outstanding stock options does not
include the impact of options having a strike price that exceeds the average
stock price for the earnings period, as the result would be antidilutive. For
the three months ended September 30, 2003, substantially all outstanding stock
options were included in the calculation of common equivalent shares. For the
nine months ended September 30, 2003, approximately 0.8 million in outstanding
stock options were not included in the calculation of common equivalent shares.
For the three and nine month periods ended September 30, 2002, approximately 1.4
million and 0.9 million, respectively, in outstanding stock options were not
included in the calculation of common equivalent shares. These options were
outstanding at the end of their respective periods. Diluted earnings per share
for all periods exclude the antidilutive effect of 5.6 million shares that would
be issued upon exercise of outstanding warrants to purchase Company common
stock, as the Company could repurchase more shares with the exercise proceeds
than it issues.

3. COMPREHENSIVE INCOME

The following schedule reflects the change in accumulated other comprehensive
income for the three and nine-month periods ended September 30, 2003 and 2002
(dollars in thousands):

THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------

Net income $ 41,751 $ 33,588 $117,052 $ 89,419
Accumulated other comprehensive
income (expense), net of income taxes:
Unrealized gains (losses) on securities (35,410) 83,380 70,529 90,323
Foreign currency items (3,210) (20,061) 32,664 9,838
-------- -------- -------- --------
Comprehensive income $ 3,131 $ 96,907 $220,245 $189,580
======== ======== ======== ========

7

4. SEGMENT INFORMATION

Prior to 2003, the Company reported the results of its operations in five main
operational segments segregated primarily by geographic region: U.S., Canada,
Latin America, Asia Pacific, and Europe & South Africa. The Latin America, Asia
Pacific, and Europe & South Africa segments were presented historically as one
reportable segment, Other International. As a result of the Company's declining
presence in Argentina and changes in management responsibilities for part of the
Latin America region, beginning with the first quarter of 2003, the Other
International reportable segment no longer includes Latin America operations.
Latin America results relating to the Argentine privatized pension business as
well as direct insurance operations in Argentina are now reported in the
Corporate and Other segment. The results for all other Latin America business,
primarily traditional reinsurance business in Mexico, are now reported as part
of U.S. operations in the Traditional sub-segment. The Asia Pacific and Europe &
South Africa operational segments are presented herein as one reportable
segment, Other International. Prior period segment information has been
reclassified to conform to this new presentation.

The accounting policies of the segments are the same as those described in the
Summary of Significant Accounting Policies in Note 2 of the Current Report. The
Company measures segment performance based on profit or loss from operations
before income taxes. There are no intersegment transactions, and the Company
does not have any material long-lived assets. Investment income is allocated to
the segments based upon average assets and related capital levels deemed
appropriate to support the segment business volumes.

Information related to total revenues and income (loss) from continuing
operations before income taxes for each reportable segment for the three and
nine months ended September 30, 2003 and 2002 are summarized below (in
thousands).

THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------

REVENUES
U.S. $ 468,814 $ 392,021 $ 1,396,126 $ 1,209,293
Canada 84,034 60,928 229,233 184,722
Other International 154,962 98,003 438,851 259,694
Corporate and Other 4,692 (798) 16,216 13,966
----------- ----------- ----------- -----------
Total from continuing operations $ 712,502 $ 550,154 $ 2,080,426 $ 1,667,675
=========== =========== =========== ===========

INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
U.S. $ 45,303 $ 55,307 $ 143,702 $ 132,256
Canada 19,529 8,678 43,585 27,428
Other International 9,627 4,054 21,833 8,728
Corporate and Other (11,452) (14,009) (29,251) (24,126)
----------- ----------- ----------- -----------
Total from continuing operations $ 63,007 $ 54,030 $ 179,869 $ 144,286
=========== =========== =========== ===========

Other International assets increased approximately 52.6% from the amounts
disclosed in Note 17 of the Current Report, primarily due to the continued
growth in the Europe & South Africa and Asia Pacific segments. Latin America
assets have been reclassified between U.S. and Corporate and Other segments for
comparable periods.

5. COMMITMENTS AND CONTINGENT LIABILITIES

The Company is currently a party to various litigation and arbitrations that
involve medical reinsurance arrangements, personal accident business, and
aviation bodily injury carve-out business. As of September 30, 2003, the ceding
companies involved in these disputes have raised claims that are $50.9 million
in excess of the amounts held in reserve by the Company. The Company believes it
has substantial defenses upon which to contest these claims, including but not
limited to misrepresentation and breach of contract by direct and indirect
ceding companies. In addition, the Company is in the process of auditing ceding
companies which have indicated that they anticipate asserting claims in the
future against the Company that are $7.8 million in excess of the amounts held
in reserve by the Company. Depending upon the audit findings in these cases,
they could result in litigation or

8

arbitrations in the future. See Note 21, "Discontinued Operations," of the
Current Report for more information. From time to time, the Company is subject
to litigation and arbitration related to its reinsurance business and to
employment-related matters in the normal course of its business. While it is not
feasible to predict or determine the ultimate outcome of the pending litigation
or arbitrations or provide reasonable ranges of potential losses, it is the
opinion of management, after consultation with counsel, that their outcomes,
after consideration of the provisions made in the Company's condensed
consolidated financial statements, would not have a material adverse effect on
its consolidated financial position, but could have a positive or negative
effect on net income.

The Company has obtained letters of credit in favor of various affiliated and
unaffiliated insurance companies from which the Company assumes business. This
allows the ceding company to take statutory reserve credits. The letters of
credit issued by banks represent a guarantee of performance under the
reinsurance agreements. At September 30, 2003, there were approximately $41.7
million of outstanding letters of credit in favor of third-party entities.
Additionally, the Company utilizes letters of credit to secure reserve credits
when it retrocedes business to its offshore subsidiaries, including RGA Americas
Reinsurance Company, Ltd. and RGA Reinsurance Company (Barbados) Ltd. As of
September 30, 2003, $390.1 million in letters of credit from various banks were
outstanding between the various subsidiaries of the Company. Fees associated
with letters of credit are not fixed for periods in excess of one year and are
based on the Company's ratings and the general availability of these instruments
in the marketplace. The letters of credit are issued for a term of one year and
renew automatically unless the issuing bank provides the Company with at least
thirty days notice of their intent not to renew.

RGA has issued guarantees on behalf of its subsidiaries' performance for the
payment of amounts due under certain credit facilities, reinsurance treaties and
an office lease obligation, whereby if a subsidiary fails to meet an obligation,
RGA or one of its other subsidiaries will make a payment to fulfill the
obligation. In limited circumstances, treaty guarantees are granted to ceding
companies in order to provide them additional security, particularly in cases
where RGA's subsidiary is relatively new, unrated, or not of a significant size,
relative to the ceding company. Liabilities supported by the treaty guarantees,
before consideration for any legally offsetting amounts due from the guaranteed
party, totaled $113.3 million as of September 30, 2003 and are reflected on the
Company's condensed consolidated balance sheet in future policy benefits.
Guarantees related to credit facilities provide additional security to third
party banks should a subsidiary fail to make principal and/or interest payments
when due. As of September 30, 2003, RGA's exposure related to credit facility
guarantees was $44.6 million and is reflected on the condensed consolidated
balance sheet in long-term debt. RGA's maximum potential guarantee under the
credit facilities is $48.7 million. RGA has issued a guarantee on behalf of a
subsidiary in the event the subsidiary fails to make payment under its office
lease obligation. As of September 30, 2003, the maximum potential exposure was
approximately $2.8 million.

6. NEW ACCOUNTING STANDARDS

In July 2003, the Accounting Standards Executive Committee issued Statement of
Position ("SOP") 03-1, "Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate Accounts." SOP
03-1 provides guidance on separate account presentation and valuation, the
accounting for sales inducements and the classification and valuation of
long-duration contract liabilities. SOP 03-1 is effective for fiscal years
beginning after December 15, 2003. The Company is in the process of quantifying
the impact of SOP 03-1 on its consolidated financial statements.

In May 2003, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 150 "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". SFAS
No. 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. Effective July 1, 2003, the Company
adopted the provisions of SFAS No. 150, which did not materially affect the
Company's financial position or results of operations.

In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS No. 149 requires that
contracts with comparable characteristics be accounted for similarly. In
particular, SFAS No. 149 clarifies under what circumstances a contract with an
initial net investment meets the characteristic of a derivative and when a
derivative contains a financing component, amends the definition of an
underlying to conform it to language used in FASB Interpretation No. 45,
"Guarantor's Accounting and

9

Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others", and amends certain other existing pronouncements. SFAS
No. 149 is effective for contracts entered into or modified after June 30, 2003,
and for hedging relationships designated after June 30, 2003. In addition,
provisions of SFAS No. 149 should be applied prospectively. Effective July 1,
2003, the Company adopted the provisions of SFAS No. 149 with no impact to the
consolidated financial statements.

In April 2003, the FASB cleared SFAS No. 133 Implementation Issue No. B36,
"Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments
That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially
Related to the Creditworthiness of the Obligor under Those Instruments" ("Issue
B36"). Issue B36 concluded that (i) a company's funds withheld payable and/or
receivable under certain reinsurance arrangements and (ii) a debt instrument
that incorporates credit risk exposures that are unrelated or only partially
related to the creditworthiness of the obligor include an embedded derivative
feature that is not clearly and closely related to the host contract. Therefore,
the embedded derivative feature must be measured at fair value on the balance
sheet and changes in fair value reported in income. Issue B36 is effective
October 1, 2003.

Substantially all of the Company's funds withheld receivable balance is
associated with its reinsurance of annuity contracts. The funds withheld
receivable balance totaled $2.4 billion at September 30, 2003, of which $1.8
billion are subject to the provisions of Issue B36. Management believes the
embedded derivative feature in each of these reinsurance treaties is similar to
a total return swap on the assets held by the ceding companies. The Company has
developed cash flow models as the basis for estimating the value of the total
return swap. The cash flow models are based on the Company's expectations of the
future cash flows under the reinsurance treaties that in turn are driven by the
underlying annuity contracts. The fair value of the total return swap is
affected by changes, both actual and expected, in the cash flows of the
underlying annuity contracts, changes in credit risk associated with the assets
held by the ceding company and changes in interest rates. The change in fair
value, which is a non-cash item, also affects the amortization of deferred
acquisition costs since the Company is required to include it in its expectation
of gross profits. Management estimates the initial adoption of Issue B36 will
result in a net gain, after tax and after related amortization of deferred
acquisition costs, of approximately $1.0 million. This estimate is subject to
change as management continues to validate its models and refine its
assumptions. Additionally, industry standards and practices continue to evolve
related to valuing these types of embedded derivative features.

In addition to its annuity contracts, the Company has entered into various
financial reinsurance treaties on a funds withheld and modified coinsurance
basis. These treaties do not transfer significant insurance risk and are
recorded on a deposit method of accounting with the Company earning a net fee.
As a result of the experience refund provisions contained in these treaties, the
value of the embedded derivatives in these contracts is currently considered
immaterial. The Company monitors the performance of these treaties on a
quarterly basis. Significant adverse performance or losses on these treaties may
result in a loss associated with the embedded derivative.

Effective January 1, 2003, the Company adopted the provisions of SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities," FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities," and FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others." The
adoption of these provisions did not materially affect the Company's financial
position or results of operations.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement No.
123." Effective January 1, 2003, the Company prospectively adopted the fair
value-based employee stock-based compensation expense recognition provisions of
SFAS No. 123, as amended by SFAS No. 148. The Company formerly applied the
intrinsic value-based expense provisions set forth in APB Opinion No. 25,
Accounting for Stock Issued to Employees, ("APB 25"). For the three and nine
month periods ended September 30, 2003, the Company recorded pre-tax
compensation expense of approximately $0.4 million and $1.3 million,
respectively, associated with stock option grants issued during January 2003.

7. ACQUISITION OF BUSINESS

On September 22, 2003, RGA Reinsurance Company ("RGA Re"), a wholly-owned
subsidiary of the Company, entered into a definitive agreement whereby it will
acquire through coinsurance the traditional U.S. life reinsurance business of
Allianz Life Insurance Company of North America ("Allianz Life"). The
transaction is subject to filing under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, certain regulatory approvals, and other customary
closing conditions and is expected to close during the fourth quarter of 2003.
At closing, RGA Re will

10

pay Allianz Life a ceding commission of $310 million. Allianz Life will transfer
to RGA Re assets equal to the statutory reserves of Allianz Life associated with
those liabilities assumed by RGA Re as of June 30, 2003 after any estimated
premium adjustment, and including all of the cash income (net of expenses) under
the assumed life reinsurance treaties from July 1, 2003 to the date of closing,
net of purchase price, subject to certain post-closing adjustments. Upon such
closing, the Company expects to receive cash from Allianz Life in excess of the
$310 million ceding commission that the Company will pay to Allianz Life. The
excess will not be determined until the transaction is closed. RGA Re has agreed
to use commercially reasonable efforts to novate the business after the
transaction is closed. The Company expects the transaction to add approximately
$240 billion of life reinsurance in force, and to generate approximately $400 to
$450 million in annual premiums, approximately $5.0 to $8.0 million, after tax,
in net income to the fourth quarter of 2003, and approximately $30 to $40
million, after tax, in net income during 2004.

8. SUBSEQUENT EVENT

Common Stock Offering

RGA expects to complete the sale of 10,500,000 shares of its common stock on
November 13, 2003 at a price per share of $36.65 generating estimated net
proceeds of approximately $371.8 million. RGA has granted the underwriters a
30-day option to purchase an additional 1,575,000 shares of RGA's common stock.
RGA expects to use the net proceeds for general corporate purposes, including
funding its reinsurance operations. Pending such use, RGA expects to invest the
net proceeds in interest-bearing, investment-grade securities, short-term
investments, or similar assets. MetLife, Inc. has indicated that it and its
affiliates are interested in purchasing 3,000,000 shares of common stock in the
offering having a total purchase price of $109,950,000. If MetLife, Inc.
purchases these shares, immediately after this offering, it will beneficially
own approximately 53.4% of RGA's common stock outstanding as of September 30,
2003, assuming the underwriters do not exercise their option to purchase
additional shares.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

Prior to 2003, the Company reported the results of its operations in five main
operational segments segregated primarily by geographic region: U.S., Canada,
Latin America, Asia Pacific, and Europe & South Africa. The Latin America, Asia
Pacific, and Europe & South Africa segments were presented historically as one
reportable segment, Other International. As a result of the Company's declining
presence in Argentina and changes in management responsibilities for part of the
Latin America region, beginning with the first quarter of 2003, the Other
International reportable segment no longer includes Latin America operations.
Latin America results relating to the Argentine privatized pension business as
well as direct insurance operations in Argentina are now reported in the
Corporate and Other segment. The results for all other Latin America business,
primarily traditional reinsurance business in Mexico, are now reported as part
of U.S. operations in the Traditional sub-segment. The Asia Pacific and Europe &
South Africa operational segments are presented herein as one reportable
segment, Other International. Prior period segment information has been
reclassified to conform to this new presentation.

The U.S. Operations provide traditional life, asset-intensive, and financial
reinsurance products. The Canada operations provide insurers with traditional
life reinsurance as well as creditor and critical illness products. The Asia
Pacific operations provide primarily traditional life and critical illness
reinsurance and, to a lesser extent, financial reinsurance. The Europe & South
Africa operations include traditional life reinsurance and critical illness
business from Europe and South Africa, in addition to other markets being
developed by the Company. The Corporate and Other segment results include
corporate investment activity, general corporate expenses, interest expense of
RGA, and the provision for income tax expense (benefit). The Company's
discontinued accident and health operations are not reflected in the continuing
operations of the Company. The Company measures segment performance based on
income or loss from continuing operations before income taxes.

Consolidated income from continuing operations before income taxes increased
$9.0 million for the third quarter and $35.6 million for the nine months ended
September 30, 2003, as compared to the respective prior-year periods. Diluted
earnings per share from continuing operations were $0.84 and $2.38 for the third
quarter and first nine months of 2003, respectively, compared to $0.70 and $1.87
for the comparable prior-year periods.

11

Consolidated investment income, net of related expenses, increased 48.1% and
32.4% during the third quarter and first nine months of 2003, respectively,
primarily due to a larger invested asset base. Invested assets as of
September 30, 2003 totaled $7.8 billion, a 34.3% increase over September 30,
2002. The average yield earned on investments excluding funds withheld at
interest was 6.59% for the third quarters of 2003 and 2002. Investment income is
allocated to the segments based upon average assets and related capital levels
deemed appropriate to support the segment business volumes.

The consolidated provision for income taxes increased 7.6% and 18.0% for the
third quarter and first nine months of 2003, respectively, primarily a result of
a higher income from continuing operations before income taxes during the
current year. The effective tax rate was 33.0% for the third quarter and 33.9%
for the first nine months of 2003, compared to 35.7% and 35.8% for the
comparable prior-year periods. The decrease in the effective tax rate was
primarily due to earnings in certain foreign subsidiaries, which resulted in a
release of valuation allowances in those entities, and a reduction in foreign
country tax rates.

On September 22, 2003, RGA Reinsurance Company ("RGA Re"), a wholly-owned
subsidiary of the Company, entered into a definitive agreement whereby it will
acquire through coinsurance the traditional U.S. life reinsurance business of
Allianz Life. The transaction is subject to a filing under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, certain regulatory approvals, and other
customary closing conditions and is expected to close during the fourth quarter
of 2003. At closing, RGA Re will pay Allianz Life a ceding commission of $310
million. Allianz Life will transfer to RGA Re assets equal to the statutory
reserves of Allianz Life associated with those liabilities assumed by RGA Re as
of June 30, 2003 after any estimated premium adjustment, and including all of
the cash income (net of expenses) under the assumed life reinsurance treaties
from July 1, 2003 to the date of closing, net of purchase price, subject to
certain post-closing adjustments. Upon such closing, the Company expects to
receive cash from Allianz Life in excess of the $310 million ceding commission
that the Company will pay to Allianz Life. The excess will not be determined
until the transaction is closed. RGA Re has agreed to use commercially
reasonable efforts to novate the business after the transaction is closed. The
Company expects the transaction to add approximately $240 billion of life
reinsurance in force, and to generate approximately $400 to $450 million in
annual premiums, approximately $5.0 to $8.0 million, after tax, in net income to
the fourth quarter of 2003, and approximately $30 to $40 million, after tax, in
net income during 2004.

Further discussion and analysis of the results for 2003 compared to 2002 are
presented by segment.

12

RESULTS OF OPERATIONS

U.S. OPERATIONS

U.S. Operations consists of two major sub-segments: Traditional and
Non-Traditional. The Traditional sub-segment primarily specializes in
mortality-risk reinsurance. This category derives revenues primarily from
renewal premiums from existing mortality-risk reinsurance treaties, new business
premiums from existing or new mortality-risk reinsurance treaties, and income
earned on invested assets. The Non-traditional category consists of
Asset-Intensive and Financial Reinsurance.

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS):

NON-TRADITIONAL
------------------------
ASSET- FINANCIAL TOTAL
TRADITIONAL INTENSIVE REINSURANCE 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 from continuing operations before
income taxes $ 38,145 $ 3,902 $ 3,256 $ 45,303
========= ========= ========= =========

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS):

NON-TRADITIONAL
------------------------
ASSET- FINANCIAL TOTAL
TRADITIONAL INTENSIVE REINSURANCE 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 from continuing operations before
income taxes $ 51,108 $ 2,523 $ 1,676 $ 55,307
======== ======== ======== ========

13

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS):

NON-TRADITIONAL
---------------------------
ASSET- FINANCIAL TOTAL
TRADITIONAL INTENSIVE REINSURANCE 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 from continuing operations before
income taxes $ 123,990 $ 10,764 $ 8,948 $ 143,702
=========== =========== =========== ===========

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS):

NON-TRADITIONAL
---------------------------
ASSET- FINANCIAL TOTAL
TRADITIONAL INTENSIVE REINSURANCE 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 from continuing operations before
income taxes $ 119,997 $ 6,831 $ 5,428 $ 132,256
=========== =========== =========== ============

Income from continuing operations before income taxes for the U.S. Operations
segment totaled $45.3 million and $143.7 million for the third quarter and first
nine months of 2003, a decrease of 18.1% and an increase of 8.7% from the
comparable prior-year periods, respectively. The decrease in income from
continuing operations before income taxes for the quarter is primarily the
result of unfavorable claims experience in the current quarter and favorable
claim experience in the comparable prior-year quarter. The increase in income
from continuing operations before income taxes for the year is primarily the
result of premium growth compared to the same period last year.

14

Traditional Reinsurance

The U.S. traditional reinsurance is the oldest and largest sub-segment of the
Company. This sub-segment provides life reinsurance to domestic clients for a
variety of life products through yearly renewable term agreements, coinsurance,
and modified coinsurance arrangements. These reinsurance arrangements may be
either facultative or automatic agreements. During the third quarter and first
nine months of 2003, this sub-segment added $29.7 billion and $95.6 billion face
amount of new business, respectively, compared to $28.6 billion and $102.8
billion for the same periods in 2002. Total assumed inforce, as measured by
insurance face amount, as of September 30, 2003 for U.S. Operations was $594.8
billion, an increase of 13.9% over the total at September 30, 2002. Management
believes life insurance industry consolidations and the trend towards reinsuring
mortality risks should continue to provide reinsurance opportunities, although
the timing and level of production is uncertain.

Income from continuing operations before income taxes for U.S. traditional
reinsurance decreased 25.4% in the third quarter and increased 3.3% for the nine
months ended 2003, respectively. The decrease for the third quarter was due to
slightly unfavorable claims experience compared to favorable claims experience
for the comparable prior-year period. The increase for the year was due to
continued premium growth and generally favorable claims experience, somewhat
offset by an increase in net realized investment losses of $5.9 million.

Net premiums for U.S. traditional reinsurance increased 15.2% and 11.2% in the
third quarter and first nine months of 2003, respectively. New premiums from
facultative and automatic treaties and renewal premium on existing blocks of
business all contributed to growth. Additionally, new inforce blocks assumed
contributed $30.3 million of the growth for the year.

Net investment income increased 9.1% and 12.7% in the third quarter and first
nine months of 2003, respectively. The increase is due to growth in the invested
asset base, primarily due to increased cash flows from operating activities on
traditional reinsurance.

Claims and other policy benefits as a percentage of net premiums (loss ratio)
were 80.8% and 79.7% in the third quarter and first nine months of 2003,
respectively, compared to 72.6% and 78.4% for the same periods in 2002. The
increase in the loss ratio for the period is the result of modestly favorable
claims experience for the year compared to very favorable claims experience for
the same period last year. Management believes death claims are reasonably
predictable over a period of many years, but are less predictable over shorter
periods and are subject to significant fluctuation.

Interest credited relates to amounts credited on the Company's cash value
products in this sub-segment, which have a significant mortality component. This
amount fluctuates with the changes in deposit levels, cash surrender values and
investment performance.

As a percentage of net premiums, policy acquisition costs and other insurance
expenses were 15.4% and 14.7% for the third quarter and first nine months of
2003, respectively, compared to 18.9% and 15.3% for the same periods in 2002.
These percentages are generally expected to fluctuate due to variations in the
mixture of business being written.

Other operating expenses, as a percentage of net premiums were 2.0% and 2.2% for
the third quarter and first nine months of 2003, respectively, compared to 2.8%
and 2.2% for the same periods in 2002. These percentages are generally expected
to fluctuate slightly from period to period, but should remain fairly constant
over the long term.

As described above, the Company entered into a definitive agreement on September
22, 2003 whereby it will acquire the traditional U.S. life reinsurance business
of Allianz Life. This transaction is expected to add approximately $240 billion
of life reinsurance in force to the Company's book of business and to generate
approximately $400 to $450 million in annual premiums. Additionally, the Company
expects this business will generate approximately $5.0 to $8.0 million after
tax, in net income in the fourth quarter of 2003, and approximately $30 million
to $40 million in after-tax net income during 2004. This business will be
reported within the U.S. traditional reinsurance sub-segment. Management expects
it will take approximately 12 months to transition the policy information to
RGA's systems. Allianz Life will provide transition and service support during
that period.

15

RGA intends to initially finance the Allianz Life transaction using several
sources, including funds available under its current bank credit lines, funds
generated by existing operations and its retrocession arrangements. Based upon
its internal capital model, RGA expects to allocate approximately $250 million
of capital to support this block of business on a going forward basis. The mix
of financing sources will depend upon current and future market conditions.

Asset-Intensive Reinsurance

The U.S. asset-intensive reinsurance sub-segment includes the reinsurance of
annuities and corporate-owned and bank-owned life insurance ("BOLI"). Most of
these agreements are coinsurance or modified coinsurance of non-mortality risks
such that the Company recognizes profit or losses primarily from the spread
between the investment earnings and interest credited on the underlying deposit
liabilities.

Income from continuing operations before income taxes for the third quarter and
first nine months of 2003 was $3.9 million and $10.8 million, as compared to
$2.5 million and $6.8 million, respectively, in the comparable prior-year
periods. Contributing to the increase for the nine-month period was a reduction
in realized investment losses to $2.1 million from $4.3 million in the prior
period coupled with continued growth in the annuity business.

Total revenues, which are comprised primarily of investment income, increased to
$47.1 million and $129.1 million in the third quarter and first nine months of
2003, respectively, from $20.5 million and $68.2 million for the comparable
prior-year periods. The growth in revenue is primarily the result of new annuity
treaties executed during the fourth quarter of 2002. Three new annuity treaties
contributed $48.0 million of additional revenues over the prior year. The
invested asset base increased from $1.7 billion as of September 30, 2002, to
$2.4 billion as of December 31, 2002 to $3.0 billion as of September 30, 2003.
Other operating expenses were $0.9 million and $2.8 million for the third
quarter and first nine months of 2003, respectively, compared to $0.4 million
and $0.7 million in the comparable prior-year periods. This increase can be
attributed to the significant growth in this sub-segment in recent years.

Financial Reinsurance

The U.S. financial reinsurance sub-segment includes net fees earned on financial
reinsurance agreements. Financial reinsurance agreements represent low risk
business that the Company assumes and generally subsequently retrocedes with a
net fee earned on the transaction. The fees earned from the assumption of
financial reinsurance contracts are reflected in other revenues, and the fees
paid to retrocessionaires are reflected in policy acquisition costs and other
insurance expenses.

Income from continuing operations before income taxes increased to $3.3 million
and $8.9 million in the third quarter and first nine months of 2003,
respectively, from $1.7 million and $5.4 million in the comparable prior-year
periods. These results are attributed to higher amounts of financial reinsurance
outstanding and lower other operating expenses during the respective periods.
Financial reinsurance outstanding, primarily measured by pre-tax statutory
surplus, was $826.7 million and $726.6 million as of September 30, 2003 and
2002, respectively. The decreases in other operating expenses for the third
quarter and first nine months of 2003 compared to 2002 were a result of lower
overhead costs being allocated to this sub-segment.

CANADA OPERATIONS

The Company conducts reinsurance business in Canada through RGA Life Reinsurance
Company of Canada ("RGA Canada"), a wholly-owned company. RGA Canada is a
leading life reinsurer in Canada, assisting clients with capital management
activity and mortality risk management, and is primarily engaged in traditional
individual life reinsurance, including preferred underwriting products, as well
as creditor and non-guaranteed critical illness products.

16

(in thousands) FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------- ------------------------------------
2003 2002 2003 2002
----------------- ---------------- ------------------ -----------------

REVENUES:
Net premiums $53,144 $41,894 $153,747 $132,571
Investment income, net of related expenses
22,244 18,752 63,519 52,133
Realized investment gains (losses), net 8,596 164 12,158 (22)
Other revenues 50 118 (191) 40
------- ------- -------- --------
Total revenues 84,034 60,928 229,233 184,722

BENEFITS AND EXPENSES:
Claims and other policy benefits 56,132 46,278 161,411 137,104
Interest credited 536 345 1,089 733
Policy acquisition costs and other
insurance expenses 5,257 2,880 15,714 12,142
Other operating expenses 2,580 2,747 7,434 7,315
------- ------- -------- --------
Total benefits and expenses 64,505 52,250 185,648 157,294

Income from continuing operations
before income taxes $19,529 $ 8,678 $ 43,585 $ 27,428
======= ======= ======== ========

Income from continuing operations before income taxes increased by $10.9 million
and $16.2 million in the third quarter and first nine months of 2003,
respectively. Realized investment gains during the first nine months of 2003
were primarily related to the sale of fixed maturity securities associated with
the restructuring of the investment portfolio to eliminate concentrations in
certain issuers and improve asset-liability matching. These gains accounted for
$8.4 million and $12.2 million of the increase in income from continuing
operations before income taxes for the third quarter and first nine months of
2003, respectively. Additionally, the Canadian dollar has strengthened against
the U.S. dollar during 2003 relative to 2002, and, as a result, contributed $2.4
million and $4.1 million to income from continuing operations before income
taxes for the third quarter and the first nine months of 2003, respectively.

Net premiums increased 26.9% and 16.0% in the third quarter and first nine
months of 2003, respectively. A stronger Canadian dollar during 2003 contributed
$6.5 million, or 12.2%, and $14.2 million, or 9.2%, to net premiums reported
during the third quarter and first nine months of 2003, respectively. Premium
levels are significantly influenced by large transactions and reporting
practices of ceding companies and therefore can fluctuate from period to period.

Net investment income increased 18.6% and 21.8% in the third quarter and first
nine months of 2003, respectively. The increase is due to an increase in the
invested asset base and the strengthening of the foreign exchange rate, the
latter of which had an effect of $2.6 million, or 11.7%, and $5.4 million, or
8.5%, in the third quarter and first nine months of 2003, respectively. The
invested asset base growth is due to operating cash flows on traditional
reinsurance and interest on the growth of funds withheld at interest.

Claims and other policy benefits as a percentage of net premiums (loss ratio)
were 105.6% and 105.0% in the third quarter and first nine months of 2003,
respectively, compared to 110.5% and 103.4% in the prior-year periods. The
decreased percentage for the current quarter is primarily the result of better
mortality experience compared to the prior-year quarter. Loss ratios for this
segment exceeded 100% primarily as a result of several large inforce blocks
assumed in 1998 and 1997. These blocks are mature blocks of level premium
business in which mortality as a percentage of premiums is expected to be higher
than the historical ratios and increase over time. The nature of level premium
policies requires that the Company invest the amounts received in excess of
mortality costs to fund claims in the later years. Claims and other policy
benefits as a percentage of net premiums and investment income were 74.5% and
74.3% for the quarter and first nine months of 2003, respectively, compared to
76.3% and 74.2% in 2002. Management believes death claims are reasonably
predictable over a period of many years, but are less predictable over shorter
periods and are subject to significant fluctuation.

Policy acquisition costs and other insurance expenses as a percentage of net
premiums totaled 9.9% and 10.2% for the third quarter and first nine months of
2003, respectively, compared to 6.9% and 9.2% in the prior-year periods.

17

The increase in policy acquisition costs as a percentage of net premiums was
primarily affected by an increase in the level of creditor business, which upon
loss of life reinsures the amount of unpaid principal on mortgage or auto loans.
This type of reinsurance has significant allowances for commissions. Policy
acquisition costs and other insurance expenses as a percentage of net premiums
varies from period to period primarily due to the mix of business in the
segment.

OTHER INTERNATIONAL OPERATIONS

The Other International Operations reportable segment comprises the Asia Pacific
segment and the Europe & South Africa segment. The Asia Pacific segment provides
life reinsurance for a variety of life products, critical illness (paid on the
earlier of death or diagnosis of a pre-defined critical illness), disability
income, and financial reinsurance to life insurance companies throughout the
Asian region, with primary focus on Australia, Hong Kong, Japan, Malaysia, South
Korea, and Taiwan. The Europe & South Africa segment provides life reinsurance
for a variety of life products through yearly renewable term and coinsurance
agreements and the reinsurance of accelerated critical illness coverage. The
Europe & South Africa segment has business primarily from the United Kingdom,
South Africa and Spain. Reinsurance agreements for both segments may be either
facultative or automatic agreements covering primarily individual risks and in
some markets, group risks. Each segment operates multiple offices throughout
each region to best meet the needs of the local client companies.

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS):

TOTAL
ASIA EUROPE & OTHER
PACIFIC SOUTH AFRICA INTERNATIONAL
------------ --------------- ---------------

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
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 from continuing operations before income
taxes $ 6,529 $ 3,098 $ 9,627
======= ======= ========

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS):

TOTAL
ASIA EUROPE & OTHER
REVENUES: PACIFIC SOUTH AFRICA INTERNATIONAL
------------ --------------- ---------------

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
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 from continuing operations before income
taxes $ 1,073 $ 2,981 $ 4,054
======== ======= =======

18

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS):

TOTAL
ASIA EUROPE & OTHER
PACIFIC SOUTH AFRICA INTERNATIONAL
------------- -------------- ---------------

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 from continuing operations before income
taxes $ 12,424 $ 9,409 $ 21,833
======== ======== ========

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS):

TOTAL
ASIA EUROPE & OTHER
PACIFIC SOUTH AFRICA INTERNATIONAL
------------ --------------- ---------------

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 from continuing operations before income
taxes $ 5,480 $ 3,248 $ 8,728
======== ========= ========

Income from continuing operations before income taxes during the third quarter
of 2003 increased by 137.5% from $4.1 million to $9.6 million, driven by a 57.6%
growth in premiums from $95.0 million to $149.8 million. For the nine months
ended September 30, 2003, income from continuing operations before income taxes
grew from $8.7 million to $21.8 million, primarily attributable to a 68.8%
increase in premiums from $252.2 million to $425.7 million for the nine months
ended September 30, 2002 and 2003, respectively. In addition to strong premium
growth, strengthening foreign currencies contributed $1.1 million and $2.5
million to income from continuing operations before income taxes for the third
quarter and the first nine months of 2003, respectively.

The growth in net premiums for the quarter is attributable to growth in both
segments, with the Asia Pacific segment increasing premiums by 74.4% and the
Europe & South Africa segment growing by 48.8%. For the nine months ended
September 30, 2003, net premiums for the Asia Pacific segment increased 69.5%,
and for the Europe & South Africa segment net premiums increased 68.4%, in each
case, over the comparable period for 2002. The

19

growth has been generated by new business premiums from facultative and
automatic treaties and renewal premiums from existing treaties, including
premiums associated with accelerated critical illness coverage. The growth has
also been aided by favorable exchange rates, with several of the local
currencies strengthening significantly against the U.S. dollar. Stronger local
currencies contributed approximately $9.9 million, or 6.6%, and $28.2 million,
or 6.6%, to net premiums for the third quarter and first nine months of 2003,
respectively. Premiums earned during the third quarter and first nine months
associated with critical illness coverage totaled $44.1 million and $123.1
million, respectively, compared to $34.6 million and $84.9 million in the
prior-year periods. Premium levels are significantly influenced by large
transactions and reporting practices of ceding companies and therefore may
fluctuate from period to period.

Net investment income increased to $4.4 million in the third quarter of 2003 and
$11.0 million for the nine months ended September 30, 2003 due to an increase in
allocated assets supporting the growth in the overall business. Investment
income and realized investment gains and losses are allocated to the operating
segments on the basis of capital required to support underlying business and
investment performance varies with the composition of investments and the
relative allocation of capital to units.

Claims and other policy benefits as a percentage of net premiums (loss ratio)
were 67.8% and 59.8%, in the third quarter of 2003 and 2002, respectively.
Claims as a percentage of net premiums in Asia Pacific increased from 60.0% to
71.8%, and increased from 59.7% to 65.3% in Europe & South Africa. For the nine
months ended September 30, 2003, the percentage for the Other International
segment increased to 65.1% from 63.1% for the nine months ended September 30,
2002. The Asia Pacific sub-segment reported loss ratios of 69.7% and 65.3% for
the nine months ended September 30, 2003 and 2002, respectively. Europe & South
Africa reported a loss ratio of 62.2% for the first nine months of 2003 and
61.7% for the comparable prior-year period. Claims and other policy benefits
include claims paid, claims in the course of payment and establishment of
additional reserves to provide for unreported claims. Management believes death
claims are reasonably predictable over a period of many years, but are less
predictable over shorter periods and are subject to significant fluctuation.

Policy acquisition costs and other insurance expenses as a percentage of net
premiums were 24.1% in the third quarter of 2003 compared to 32.1% in 2002. For
the nine months ended September 30, 2003, the ratio decreased to 27.0% for 2003
versus 28.9% for the nine months ended September 30, 2002. These percentages
fluctuate due to the timing of client company reporting and variations in the
type of business being written, along with the mix of new and renewal business.
Other operating expenses for the quarter declined from 6.7% of premiums in 2002
to 4.7% in 2003. The comparable figures for the nine months declined to 5.5% in
2003 versus 7.1% in 2002. If the segment continues to grow in terms of net
premiums, as expected, the burden of start-up expenses and expansion costs
should be alleviated in future periods. Interest expense increased in 2003 over
2002 due to higher interest rates, an increase in debt levels in Europe & South
Africa to support the growth in operations, and the effect of foreign exchange
rates increasing against the U.S. dollar over the prior year.

CORPORATE AND OTHER OPERATIONS

Corporate and Other operations include investment income on invested assets not
allocated to support segment operations and undeployed proceeds from the
Company's capital raising efforts, in addition to unallocated realized capital
gains or losses. General corporate expenses consist of unallocated overhead and
executive costs and interest expense related to debt and the $225.0 million of
5.75% mandatorily redeemable trust preferred securities. Additionally, the
Corporate and Other operations segment includes results from the Company's
Argentine privatized pension business, which is currently in run-off, and an
insignificant amount of direct insurance operations in Argentina.

20

(in thousands) FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------- ------------------------------------
2003 2002 2003 2002
----------------- ---------------- ------------------ -----------------

REVENUES:
Net premiums $ 799 $ (1,443) $ 2,777 $ (153)
Investment income, net of related expenses
3,678 729 12,443 19,042
Realized investment losses, net (1,546) (739) (3,551) (5,110)
Other revenues 1,761 655 4,547 187
--------- --------- -------- --------
Total revenues 4,692 (798) 16,216 13,966

BENEFITS AND EXPENSES:
Claims and other policy benefits 1,746 (1,941) 2,376 (2,209)
Interest credited 93 1,747 232 2,074
Policy acquisition costs and other
insurance expenses 106 (675) 1,676 308
Other operating expenses 5,397 5,447 15,363 12,556
Interest expense 8,802 8,633 25,820 25,363
--------- --------- -------- --------
Total benefits and expenses 16,144 13,211 45,467 38,092

Loss from continuing operations before
income taxes $(11,452) $(14,009) $(29,251) $(24,126)
======== ======== ======== ========

Loss from continuing operations before income taxes decreased 18.3% during the
third quarter and increased 21.2% for the first nine months of 2003, compared to
the same periods in 2002. Fluctuations in the results for the Corporate and
Other segment are generally driven by investment income allocations which are
based upon average assets and related capital levels deemed appropriate to
support the Company's other operating segment business volumes. Additional
factors that could cause significant variances in comparable results for this
segment are claims on the Argentine privatized pension business and realized
foreign currency gains associated with the Argentine peso.

DISCONTINUED OPERATIONS

For the third quarter and first nine months of 2003, the discontinued accident
and health division reported losses, net of income taxes, of $0.5 million and
$1.9 million, respectively, compared to losses, net of income taxes, of $1.1
million and $3.3 million for the prior year comparable periods. The calculation
of the claim reserve liability for the entire portfolio of accident and health
business requires management to make estimates and assumptions that affect the
reported claim reserve levels. Those estimates and assumptions are based on
historical loss experience, changes in the nature of the business, anticipated
outcomes of claim disputes and claims for rescission, and projected future
premium run-off, all of which may affect the level of the claim reserve
liability. Due to the significant uncertainty associated with the run-off of
this business, net income in future periods could be affected positively or
negatively.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities for the nine months ended September
30, 2003 and 2002 was $198.1 million and $216.3 million, respectively. Cash
flows from operating activities are affected by the timing of premiums received,
claims paid, and working capital changes. The Company expects the short-term
cash requirements of its business operations will be sufficiently met by the
positive cash flows generated. Additionally, the Company maintains a fixed
maturity portfolio that it believes is high quality with good liquidity
characteristics. These securities are classified on the condensed consolidated
balance sheet as available-for-sale and management believes they could be sold
to meet the Company's obligations, if necessary.

Net cash used in investing activities was $441.2 million and $384.2 million in
2003 and 2002, respectively. Changes in cash provided by or used in investing
activities primarily relate to the management of the Company's investment
portfolios and the investment of excess funds generated by operating and
financing activities.

21

Net cash provided by financing activities was $284.8 million and $73.2 million
in 2003 and 2002, respectively. Changes in cash provided by financing activities
primarily relate to the issuance of equity or debt securities, borrowings or
payments under the Company's existing credit agreements, treasury stock
activity, and excess deposits or withdrawals under investment type contracts.
Upon closing of the transaction with Allianz Life, the Company expects to
receive cash from Allianz Life in excess of the $310 million ceding commission
that the Company will pay to Allianz Life. The excess amount will not be
determined until the transaction is closed.

RGA is a holding company whose primary uses of liquidity include, but are not
limited to, the immediate capital needs of its operating companies associated
with the Company's primary businesses, dividends paid by RGA to its
shareholders, interest payments on its senior indebtedness and junior
subordinated notes (See Notes 15, "Long-Term Debt," and 16, "Issuance of Trust
Piers Units," in the Current Report on Form 8-K filed with the Securities and
Exchange Commission on August 25, 2003 ("Current Report")), and repurchases of
RGA common stock under a plan approved by the board of directors. The primary
sources of RGA's liquidity include proceeds from its capital raising efforts,
interest income on undeployed corporate investments, interest income received on
surplus notes with two operating subsidiaries, and dividends from operating
subsidiaries. As the Company continues its expansion efforts, RGA will continue
to be dependent on these sources of liquidity.

RGA expects to complete the sale of 10,500,000 shares of its common stock on
November 13, 2003 at a price per share of $36.65 generating estimated net
proceeds of approximately $371.8 million. RGA has granted the underwriters a
30-day option to purchase an additional 1,575,000 shares of RGA's common stock.
RGA expects to use the net proceeds for general corporate purposes, including
funding its reinsurance operations. Pending such use, RGA expects to invest the
net proceeds in interest-bearing, investment-grade securities, short-term
investments, or similar assets. MetLife, Inc. has indicated that it and its
affiliates are interested in purchasing 3,000,000 shares of common stock in the
offering having a total purchase price of $109,950,000. If MetLife, Inc.
purchases these shares, immediately after this offering, it will beneficially
own approximately 53.4% of RGA's common stock outstanding as of September 30,
2003, assuming the underwriters do not exercise their option to purchase
additional shares.

Certain of the Company's debt agreements contain financial covenant restrictions
related to, among others, liens, the issuance and disposition of stock of
restricted subsidiaries, minimum requirements of net worth ranging from $600
million to $700 million, and minimum rating requirements. A material ongoing
covenant default could require immediate payment of the amount due, including
principal, under the various agreements. Additionally, the Company's debt
agreements contain cross-default covenants, which would make outstanding
borrowings immediately payable in the event of a material uncured covenant
default under any of the agreements, including, but not limited to, non-payment
of indebtedness when due for amounts greater than $10 million or $25 million
depending on the agreement, bankruptcy proceedings, and any event which results
in the acceleration of the maturity of indebtedness. As of September 30, 2003,
the Company had $394.2 million in outstanding borrowings under its debt
agreements and was in compliance with all covenants under those agreements.

The ability of the Company to make debt principal and interest payments depends
primarily on the earnings and surplus of its subsidiaries, investment earnings
on undeployed capital proceeds, and the Company's ability to raise additional
funds. At September 30, 2003, Reinsurance Company of Missouri, Incorporated
("RCM") and RGA Canada had statutory capital and surplus of $609.8 million and
$206.6 million, respectively. RCM's primary asset is its investment in RGA
Reinsurance Company, the Company's principal operating subsidiary based in
Missouri. RGA Reinsurance Company (Barbados) Ltd., which we refer to as "RGA
Barbados," and RGA Americas Reinsurance Company, Ltd., which we refer to as "RGA
Americas," do not have material restrictions on their ability to pay dividends
out of retained earnings. The transfer of funds from the subsidiaries to RGA is
subject to applicable insurance laws and regulations. The Company expects any
future increases in liquidity needs due to treaty recaptures, relatively large
policy loans or unanticipated material claims levels would be met first by cash
flows from operating activities and then by selling fixed-income securities or
short-term investments.

The Company's U.S. credit facility expires in May 2006 and has a total capacity
of $175.0 million. The Company is prohibited from paying dividends under the
credit agreement unless, at the time of declaration and payment, a default would
not exist under the agreement. As of September 30, 2003, the Company had $50.0
million outstanding under this facility and the average interest rate on all
long-term debt outstanding, excluding the Company-obligated mandatorily
redeemable preferred securities of subsidiary trust holding solely junior
subordinated debentures of the Company ("Trust Preferred Securities"), was
6.00%. Interest is expensed on the face amount, or $225.0 million, of the Trust
Preferred Securities at a rate of 5.75%.

22

Based on the historic cash flows and the current financial results of the
Company, subject to any dividend limitations which may be imposed by various
insurance regulations or our credit facility, management expects RGA's cash
flows from operating activities, together with undeployed proceeds from its
capital raising efforts, including interest and investment income on those
proceeds, interest income received on surplus notes with two operating
subsidiaries, and its potential ability to raise funds in the capital markets,
will be sufficient to enable RGA to make dividend payments to its shareholders,
to make interest payments on its senior indebtedness and junior subordinated
notes, to repurchase RGA common stock under the plan approved by the board of
directors, and to meet its other obligations. The Company did not purchase any
RGA common stock during the first nine months of 2003 and purchased
approximately 0.2 million shares at an aggregate cost of $6.6 million during
2002.

A general economic downturn or a downturn in the equity and other capital
markets could adversely affect the market for many annuity and life insurance
products. Because the Company obtains substantially all of its revenues through
reinsurance arrangements that cover a portfolio of life insurance products, as
well as annuities, its business would be harmed if the market for annuities or
life insurance were adversely affected.

INVESTMENTS

The Company had total cash and investments of $7.9 billion and $5.9 billion as
of September 30, 2003 and 2002, respectively. All investments made by RGA and
its subsidiaries conform in all material respects to the qualitative and
quantitative limits prescribed by the applicable jurisdiction's insurance laws
and regulations. In addition, the operating companies' boards of directors
periodically review the investment portfolios of their respective subsidiaries.
The Company's investment strategy is to maintain a predominantly
investment-grade, fixed maturity portfolio, with a goal of providing adequate
liquidity for expected reinsurance obligations, and maximizing total return
through prudent asset management. The Company's asset/liability duration
matching differs between the various operating segments. The target duration for
U.S. portfolios, which are segmented along product lines, range between four and
seven years. Based on Canadian reserve requirements, a portion of the Canadian
liabilities is strictly matched with long-duration Canadian assets, with the
remaining assets invested to maximize the total rate of return, given the
characteristics of the corresponding liabilities and Company liquidity needs.
The Company's earned yield on investments excluding funds withheld at interest
was 6.59% for the third quarters of 2003 and 2002, respectively. See "Note 5 -
INVESTMENTS" in the Notes to Consolidated Financial Statements of the Current
Report for additional information regarding the Company's investments.

The Company's fixed maturity securities are invested primarily in commercial and
industrial bonds, public utilities, Canadian government securities, and mortgage
and asset-backed securities. As of September 30, 2003, approximately 98% of the
Company's consolidated investment portfolio of fixed maturity securities was
investment-grade. Important factors in the selection of investments include
diversification, quality, yield, total rate of return potential, and call
protection. The relative importance of these factors is determined by market
conditions and the underlying product or portfolio characteristics. Cash
equivalents are invested in high-grade money market instruments. The largest
asset class in which fixed maturities were invested was in commercial and
industrial bonds, which represented approximately 52.9% of fixed maturity
securities as of September 30, 2003, an increase from 32.2% as of December 31,
2002. A majority of these securities were classified as corporate securities,
with an average Standard and Poor's ("S&P") rating of "A" at September 30, 2003.
The Company owned floating rate securities that represented approximately 2.1%
of fixed maturity securities at September 30, 2003, compared to 2.8% at December
31, 2002. These investments may have a higher degree of income variability than
the other fixed income holdings in the portfolio due to the floating rate nature
of the interest payments.

Within the fixed maturity security portfolio, the Company held approximately
$78.0 million in asset-backed securities at September 30, 2003, which included
credit card and automobile receivables, home equity loans and collateralized
bond obligations. The Company's asset-backed securities are diversified by
issuer and contain both floating and fixed rate securities. Approximately 3.4%,
or $2.7 million are collateralized bond obligations. In addition to the risks
associated with floating rate securities, principal risks in holding
asset-backed securities are structural, credit and capital market risks.
Structural risks include the securities' priority in the issuer's capital
structure, the adequacy of and ability to realize proceeds from collateral, and
the potential for prepayments. Credit risks include consumer or corporate
credits such as credit card holders, equipment lessees, and corporate obligors.
Capital market risks include general level of interest rates and the liquidity
for these securities in the marketplace.

23

The Company monitors its fixed maturity securities to determine impairments in
value. In conjunction with its external investment managers, the Company
evaluates factors such as financial condition of the issuer, payment
performance, the length of time and the extent to which the market value has
been below amortized cost, compliance with covenants, general market conditions
and industry sector, intent and ability to hold securities, and various other
subjective factors. As of September 30, 2003, the Company held fixed maturities
with a cost basis of $7.9 million and a market value of $9.2 million, or 0.2% of
fixed maturities, that were not accruing interest. Securities, based on
management's judgment, with an other-than-temporary impairment in value are
written down to fair value. The Company recorded other-than-temporary
write-downs of $4.7 million and $16.6 million for the three and nine months
ended September 30, 2003, respectively, compared to $9.0 million and $24.3
million for the comparable prior-year periods. The circumstances that gave rise
to these impairments were primarily bankruptcy proceedings or deterioration in
collateral value supporting certain asset-backed securities. During the first
nine months of 2003, the Company sold fixed maturity securities with a fair
value of $284.5 million that resulted in a loss of $38.1 million.

The following table presents the total gross unrealized losses as of September
30, 2003 for fixed maturity securities where the estimated fair value had
declined and remained below amortized cost by the indicated amount (in
thousands):

At September 30, 2003
-----------------------------------------------
Gross Unrealized
Losses % of Total
------------------- --------------------

Less than 20% $20,086 81.8%
20% or more for less than six months 3,790 15.4%
20% or more for six months or greater 692 2.8%
------ -----
Total $24,568 100.0%

While all of these securities are monitored for potential impairment, the
Company's experience indicates that the first two categories generally do not
present as great a risk of impairment, as fair values often recover over time.
These securities have generally been adversely affected by the downturn in the
financial markets and overall economic conditions. The unrealized losses of $0.7
million on fixed maturity securities whose book value has exceeded market value
by 20% or more for at least six months all related to Canadian zero coupon
bonds, the maturities of which are long term. Small movements in interest rates
can have a significant impact on the fair value of these securities. The Company
believes that the analysis of each security indicated that the financial
strength, liquidity, leverage, future outlook and/or recent management actions
support the view that the security was not other-than-temporarily impaired as of
September 30, 2003.

The following table presents the total gross unrealized losses for fixed
maturity securities as of September 30, 2003, by class of security, and breaks
out investment and non-investment grade investments for which market value has
been below amortized cost for the length of time indicated (in thousands):

Number of months
----------------------------------------------
More than
six, but
Less than less than Over
six twelve twelve Total
--------- --------- ------ -----

Investment grade securities:
Commercial and industrial $ 8,896 $2,383 $1,230 $12,509
Public utilities 568 43 3,914 4,525
Asset-backed securities 223 -- -- 223
Canadian and Canadian provincial governments 228 673 114 1,015
Mortgage-backed securities 3,357 36 1 3,394
Finance 1,043 -- -- 1,043
U.S. government and agencies 127 -- -- 127
Foreign governments 633 -- -- 633
------- ------ ------ -------
Investment grade securities $15,075 $3,135 $5,259 $23,469
------- ------ ------ -------

24

More than
six, but
Less than less than Over
six twelve twelve Total
--------- --------- ------ -----

Non-investment grade securities:
Commercial and industrial $ 898 $ -- $ -- $ 898
Public utilities 62 -- 139 201
------- ------ ------ -------
Non-investment grade securities 960 -- 139 1,099
------- ------ ------ -------
Total $16,035 $3,135 $5,398 $24,568
======= ====== ====== =======

Approximately $7.0 million of the total unrealized losses were related to
securities issued by the airline, financial, automotive, telecommunication, and
utility sectors. These securities have generally been adversely affected by the
downturn in the financial markets and overall economic conditions. The Company
believes that the analysis of each such security whose price has been below
market for greater than twelve months indicated that the financial strength,
liquidity, leverage, future outlook and/or recent management actions support the
view that the security was not other-than-temporarily impaired as of September
30, 2003.

The Company's mortgage loan portfolio consists principally of investments in
U.S.-based commercial offices and retail locations. The mortgage loan portfolio
is diversified by geographic region and property type. All mortgage loans were
performing and no valuation allowance had been established as of September 30,
2003.

Policy loans present no credit risk because the amount of the loan cannot exceed
the obligation due the ceding company upon the death of the insured or surrender
of the underlying policy. The provisions of the treaties in force and the
underlying policies determine the policy loan interest rates. Because policy
loans represent premature distributions of policy liabilities, they have the
effect of reducing future disintermediation risk. In addition, the Company earns
a spread between the interest rate earned on policy loans and the interest rate
credited to corresponding liabilities.

Funds withheld at interest comprised approximately 31.2% and 29.7% of the
Company's investments as of September 30, 2003 and December 31, 2002,
respectively. For agreements written on a modified coinsurance basis and certain
agreements written on a coinsurance basis, assets equal to the net statutory
reserves are withheld and legally owned and managed by the ceding company and
are reflected as funds withheld at interest on RGA's balance sheet. In the event
of a ceding company's insolvency, RGA would need to assert a claim on the assets
supporting its reserve liabilities. However, the risk of loss to RGA is
mitigated by its ability to offset amounts it owes the ceding company for claims
or allowances with amounts owed to RGA from the ceding company. Interest accrues
to these assets at rates defined by the treaty terms. The Company is subject to
the investment performance on the withheld assets, although it does not directly
control them. These assets are primarily fixed maturity investment securities
and pose risks similar to the fixed maturity securities the Company owns. To
mitigate some of this risk, the Company helps set, and monitor compliance with,
the investment guidelines followed by these ceding companies. Ceding companies
with funds withheld at interest had a minimum A.M. Best financial strength
rating of "A-". For further information, see the discussion of Issue B36 in "New
Accounting Standards" below.

COUNTERPARTY RISK

In the normal course of business, the Company seeks to limit its exposure to
reinsurance contracts by ceding a portion of the reinsurance to other insurance
companies or reinsurers. Should a counterparty not be able to fulfill its
obligation to the Company under a reinsurance agreement, the impact could be
material to the Company's financial condition and results of operations.

MARKET RISK

Market risk is the risk of loss that may occur when fluctuations in interest and
currency exchange rates and equity and commodity prices change the value of a
financial instrument. Both derivative and nonderivative financial instruments
have market risk so the Company's risk management extends beyond derivatives to
encompass all financial instruments held that are sensitive to market risk. RGA
is primarily exposed to interest rate risk and foreign currency risk.

Interest rate risk arises from many of the Company's primary activities, as the
Company invests substantial funds in interest-sensitive assets and also has
certain interest-sensitive contract liabilities. The Company manages interest

25

rate risk and credit risk to maximize the return on the Company's capital
effectively and to preserve the value created by its business operations. As
such, certain management monitoring processes are designed to minimize the
impact of sudden and sustained changes in interest rates on fair value, cash
flows, and net interest income.

The Company is subject to foreign currency translation, transaction, and net
income exposure. The Company generally does not hedge the foreign currency
translation exposure related to its investment in foreign subsidiaries as it
views these investments to be long-term. Translation differences resulting from
translating foreign subsidiary balances to U.S. dollars are reflected in equity.
The Company generally does not hedge the foreign currency exposure of its
subsidiaries transacting business in currencies other than their functional
currency (transaction exposure). Currently, the Company believes its foreign
currency transaction exposure is not material to the consolidated results of
operations.

There has been no significant change in the Company's quantitative or
qualitative aspects of market risk during the quarter ended September 30, 2003
from that disclosed in the Current Report.

NEW ACCOUNTING STANDARDS

In July 2003, the Accounting Standards Executive Committee issued Statement of
Position ("SOP") 03-1, "Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate Accounts." SOP
03-1 provides guidance on separate account presentation and valuation, the
accounting for sales inducements and the classification and valuation of
long-duration contract liabilities. SOP 03-1 is effective for fiscal years
beginning after December 15, 2003. The Company is in the process of quantifying
the impact of SOP 03-1 on its consolidated financial statements.

In May 2003, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 150 "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". SFAS
150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. Effective July 1, 2003, the Company
adopted these provisions of SFAS 150, which did not materially affect the
Company's financial position or results of operations.

In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS 149 requires that contracts
with comparable characteristics be accounted for similarly. In particular, SFAS
149 clarifies under what circumstances a contract with an initial net investment
meets the characteristic of a derivative and when a derivative contains a
financing component, amends the definition of an underlying to conform it to
language used in FASB Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others", and amends certain other existing pronouncements. SFAS
149 is effective for contracts entered into or modified after June 30, 2003, and
for hedging relationships designated after June 30, 2003. In addition,
provisions of SFAS 149 should be applied prospectively. Effective July 1, 2003,
the Company adopted the provisions of SFAS No. 149 with no impact to the
consolidated financial statements.

In April 2003, the FASB cleared SFAS No. 133 Implementation Issue No. B36,
"Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments
That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially
Related to the Creditworthiness of the Obligor under Those Instruments" ("Issue
B36"). Issue B36 concluded that (i) a company's funds withheld payable and/or
receivable under certain reinsurance arrangements and (ii) a debt instrument
that incorporates credit risk exposures that are unrelated or only partially
related to the creditworthiness of the obligor include an embedded derivative
feature that is not clearly and closely related to the host contract. Therefore,
the embedded derivative feature must be measured at fair value on the balance
sheet and changes in fair value reported in income. Issue B36 is effective
October 1, 2003.

Substantially all of the Company's funds withheld receivable balance is
associated with its reinsurance of annuity contracts. The funds withheld
receivable balance totaled $2.4 billion at September 30, 2003, of which $1.8
billion are subject to the provisions of Issue B36. We believe the embedded
derivative feature in each of these reinsurance treaties is similar to a total
return swap on the assets held by the ceding companies. We have developed cash
flow models as the basis for estimating the value of the total return swap. The
cash flow models are based on our expectations of the future cash flows under
the reinsurance treaties that in turn are driven by the underlying annuity
contracts. The fair value of the total return swap is affected by changes, both
actual and expected, in the cash flows

26

of the underlying annuity contracts, changes in credit risk associated with the
assets held by the ceding company and changes in interest rates. The change in
fair value, which is a non-cash item, also affects the amortization of deferred
acquisition costs since we are required to include it in our expectation of
gross profits. We estimate the initial adoption of Issue B36 will result in a
net gain, after tax and after related amortization of deferred acquisition
costs, of $1.0 million. This estimate is subject to change as we continue to
validate our models and refine our assumptions. Additionally, industry standards
and practices continue to evolve related to valuing these types of embedded
derivative features.

In addition to its annuity contracts, the Company has entered into various
financial reinsurance treaties on a funds withheld and modified coinsurance
basis. These treaties do not transfer significant insurance risk and are
recorded on a deposit method of accounting with the Company earning a net fee.
As a result of the experience refund provisions contained in these treaties, the
value of the embedded derivatives in these contracts is currently considered
immaterial. The Company monitors the performance of these treaties on a
quarterly basis. Significant adverse performance or losses on these treaties may
result in a loss associated with the embedded derivative.

Effective January 1, 2003, the Company adopted the provisions of SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities," FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities," and FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others." The
adoption of these provisions did not materially affect the Company's financial
position or results of operations.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement No.
123." Effective January 1, 2003, the Company prospectively adopted the fair
value-based employee stock-based compensation expense recognition provisions of
SFAS No. 123, as amended by SFAS No. 148. The Company formerly applied the
intrinsic value-based expense provisions set forth in APB Opinion No. 25,
Accounting for Stock Issued to Employees, ("APB 25"). For the three and nine
month periods ended September 30, 2003, the Company recorded pre-tax
compensation expense of approximately $0.4 million and $1.3 million,
respectively, associated with stock option grants issued during January 2003.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, including,
among others, statements relating to projections of the earnings, revenues,
income or loss, future financial performance and growth potential of Reinsurance
Group of America, Incorporated and its subsidiaries (which we refer to in the
following paragraphs as "we," "us" or "our"). The words "intend," "expect,"
"project," "estimate," "predict," "anticipate," "should," "believe," and other
similar expressions also are intended to identify forward-looking statements.
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.

Numerous important factors could cause actual results and events to differ
materially from those expressed or implied by forward-looking statements
including, without limitation, (1) adverse changes in mortality, morbidity or
claims experience, (2) changes in our financial strength and credit ratings or
those of MetLife, Inc. ("MetLife"), a beneficial owner of a majority of our
common shares, or its subsidiaries, and the effect of such changes on our future
results of operations and financial condition, (3) general economic conditions
affecting the demand for insurance and reinsurance in our current and planned
markets, (4) market or economic conditions that adversely affect our ability to
make timely sales of investment securities, (5) changes in investment portfolio
yields due to interest rate or credit quality changes, (6) fluctuations in U.S.
or foreign currency exchange rates, interest rates, or securities and real
estate markets, (7) adverse litigation or arbitration results, (8) the stability
of governments and economies in the markets in which we operate, (9) competitive
factors and competitors' responses to our initiatives, (10) the success of our
clients, (11) successful execution of our entry into new markets, (12)
successful development and introduction of new products, (13) our ability to
successfully integrate and operate reinsurance business that we acquire,
including without limitation, Allianz Life, (14) regulatory action that may be
taken by state Departments of Insurance with respect to us, MetLife, or its
subsidiaries, (15) changes in laws, regulations, and accounting standards
applicable to us, our subsidiaries, or our business, and (16) other risks and
uncertainties described in this document and in our other filings with the
Securities and Exchange Commission.

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Forward-looking statements should be evaluated together with the many risks and
uncertainties that affect our business, including those mentioned in this report
and described in the other periodic reports we file with the Securities and
Exchange Commission. You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date on which they are
made. We do not undertake any obligations to update these forward-looking
statements, even though our situation may change in the future. We qualify all
of our forward-looking statements by these cautionary statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

See "Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations - Market Risk," which is incorporated by reference herein.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, management, including the
Chief Executive Officer and the Chief Financial Officer, evaluated the
effectiveness of the design and operation of the Company's disclosure controls
and procedures with respect to the information generated for use in this
Quarterly Report. Based upon, and as of the date of that evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that the disclosure
controls and procedures were effective to provide reasonable assurance that
information required to be disclosed in the reports that the Company files or
submits under the Securities Exchange Act of 1934 are recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.

There was no change in the Company's internal control over financial reporting
during the quarter ended September 30, 2003, that has materially affected, or is
reasonably likely to materially affect our internal control over financial
reporting.

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PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

The Company is currently a party to various litigation and arbitrations that
involve medical reinsurance arrangements, personal accident business, and
aviation bodily injury carve-out business. As of September 30, 2003, the ceding
companies involved in these disputes have raised claims that are $50.9 million
in excess of the amounts held in reserve by the Company. The Company believes it
has substantial defenses upon which to contest these claims, including but not
limited to misrepresentation and breach of contract by direct and indirect
ceding companies. In addition, the Company is in the process of auditing ceding
companies which have indicated that they anticipate asserting claims in the
future against the Company that are $7.8 million in excess of the amounts held
in reserve by the Company. Depending upon the audit findings in these cases,
they could result in litigation or arbitrations in the future. See Note 21 to
the Consolidated Financial Statements, "Discontinued Operations", in the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 25, 2003, for more information. From time to time, the
Company is subject to litigation and arbitration related to its reinsurance
business and to employment-related matters in the normal course of its business.
While it is not feasible to predict or determine the ultimate outcome of the
pending litigation or arbitrations or provide reasonable ranges of potential
losses, it is the opinion of management, after consultation with counsel, that
their outcomes, after consideration of the provisions made in the Company's
consolidated financial statements, would not have a material adverse effect on
its consolidated financial position, but could have a positive or negative
effect on net income.

ITEM 6

EXHIBITS AND REPORTS ON FORM 8-K

(a) See index to exhibits.

(b) The following reports on Form 8-K have been filed with the SEC since
July 1, 2003:

1. On July 24, 2003, the Company filed a Current Report on Form 8-K
furnishing, under Items 9 and 12, a press release discussing results
of operations for the three months ended June 30, 2003. The press
release was attached thereto as Exhibit 99.1.

2. On August 25, 2003, the Company filed a Current Report on Form 8-K
reporting, under Item 5, certain adjustments to the presentation in
the Annual Report of the Company's operating segment financial
information for fiscal years 2002 and 2001 to reflect the change in
operating segment structure effective as of the first quarter of 2003
and to discuss certain other items.

3. On September 22, 2003, the Company filed a Current Report on Form 8-K
furnishing, under Item 9, its press release announcing the execution
of a definitive agreement whereby the Company would acquire through
coinsurance the traditional U.S. life reinsurance business of Allianz
Life Insurance Company of North America. The press release was
attached thereto as Exhibit 99.1.

4. On October 9, 2003, the Company filed a Current Report on Form 8-K,
dated September 22, 2003, reporting under Items 5 and 7 that RGA
Reinsurance Company, the primary operating subsidiary of the Company,
entered into a Master Agreement pursuant to which RGA Reinsurance
Company agreed to purchase and assume through coinsurance the
traditional life reinsurance business of Allianz Life Insurance
Company of North America. The Master Agreement and a Life Coinsurance
Retrocession Agreement were attached thereto as Exhibits 2.1 and 2.2,
respectively.

5. On October 23, 2003, the Company filed a Current Report on Form 8-K
(i) filing under Item 5 a press release reporting that two new
directors had been elected and (ii) furnishing under Items 9 and 12 a
press release discussing results of operations for the nine months
ended September 30, 2003. The press releases were attached thereto as
Exhibits 99.1 and 99.2.

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6. On November 3, 2003, the Company filed a Current Report on Form 8-K
reporting under Item 5 certain historical financial results, by
segment, certain historical financial information about RGA's
consolidated stockholders' equity, certain additional third quarter
2003 information and certain supplemental data.

7. On November 3, 2003, the Company filed a Current Report on Form 8-K
furnishing under Item 9 its press release announcing the offering of
10,500,000 shares of its common stock. The press release was attached
thereto as Exhibit 99.1.

8. On November 7, 2003, the Company filed a Current Report on Form 8-K
providing under Item 5 the underwriting agreement and opinion of
counsel required in connection with the registration statement on Form
S-3 (File Nos. 333-108200, 333-108200-01 and 333-108200-02) and
providing certain exhibits under Item 7. The press release was
attached thereto as Exhibit 99.1.

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SIGNATURES

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 thereunto duly authorized.

Reinsurance Group of America, Incorporated

By: /s/ A. Greig Woodring November 12, 2003
----------------------------------------------
A. Greig Woodring
President & Chief Executive Officer
(Principal Executive Officer)

/s/ Jack B. Lay November 12, 2003
----------------------------------------------
Jack B. Lay
Executive Vice President & Chief Financial Officer
(Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

Exhibit
Number Description
- ------- -----------
2.1 Master Agreement by and between Allianz Life Insurance of North
America and RGA Reinsurance Company, incorporated by reference to
Exhibit 2.1 to Current Report on Form 8-K filed on October 9, 2003
(file no. 1-11848).

2.2 Life Coinsurance Retrocession Agreement by and between Allianz
Life Insurance of North America and RGA Reinsurance Company,
incorporated by reference to Exhibit 2.2 to Current Report on Form
8-K filed on October 9, 2003 (file no. 1-11848).

3.1 Second Restated Articles of Incorporation, incorporated by
reference to Exhibit 3.1 of Post-Effective Amendment No. 2 to the
Registration Statements on Form S-3/A (File Nos. 333-55304,
333-55304-01 and 333-55304-02), filed on September 6, 2001.

3.2 Bylaws of RGA, as amended, incorporated by reference to Exhibit
3.2 to Form 10-Q for the quarter ended September 30, 2000 (No.
1-11848), filed on November 13, 2000.

31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002

32