UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
   
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,June 30, 2007
OR
   
o 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
(State or other jurisdiction
of incorporation or organization)
 43-1627032
(IRS employer
identification number)
1370 Timberlake Manor Parkway
Chesterfield, Missouri 63017
(Address of principal executive offices)

(636) 736-7000
(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 þ     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
Large accelerated filer þ     Accelerated filer o     Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o     No þ
Common stock outstanding ($.01 par value) as of April 30,July 31, 2007: 61,885,56361,993,139 shares.
 
 

 


 

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS
        
Item Page Page
          
PART I — FINANCIAL INFORMATION
PART I — FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION
          
1 Financial Statements     Financial Statements  
          
 Condensed Consolidated Balance Sheets (Unaudited) March 31, 2007 and December 31, 2006  3 Condensed Consolidated Balance Sheets (Unaudited)
  
       June 30, 2007 and December 31, 2006 3
 Condensed Consolidated Statements of Income (Unaudited) Three months ended March 31, 2007 and 2006  4    
       Condensed Consolidated Statements of Income (Unaudited)
  
 Condensed Consolidated Statements of Cash Flows (Unaudited) Three months ended March 31, 2007 and 2006  5 Three and six months ended June 30, 2007 and 2006 4
          
 Notes to Condensed Consolidated Financial Statements (Unaudited)  6 Condensed Consolidated Statements of Cash Flows (Unaudited)
  
       Six months ended June 30, 2007 and 2006 5
    
 Notes to Condensed Consolidated Financial Statements (Unaudited) 6
    
2 Management’s Discussion and Analysis of Financial Condition and Results of Operations  12 Management’s Discussion and Analysis of
  
 Financial Condition and Results of Operations 12
          
3 Quantitative and Qualitative Disclosures About Market Risk  31 Quantitative and Qualitative Disclosures About Market Risk 33
          
4 Controls and Procedures  31 Controls and Procedures 33
          
PART II — OTHER INFORMATION
          
1 Legal Proceedings  31 Legal Proceedings 33
          
1A Risk Factors  32 Risk Factors 34
          
2 Unregistered Sales of Equity Securities and Use of Proceeds  32 Unregistered Sales of Equity Securities and Use of Proceeds 34
          
 Submission of Matters to a Vote of Security Holders 34
    
6 Exhibits  32 Exhibits 34
          
 Signatures  33 Signatures 35
          
 Index to Exhibits  34 Index to Exhibits 36
Certification Certification Certification
Certification Certification Certification
Certification Certification Certification
Certification Certification Certification

2


REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                
 March 31, December 31,  June 30, December 31, 
 2007 2006  2007 2006 
 (Dollars in thousands)  (Dollars in thousands) 
Assets
  
Fixed maturity securities:  
Available-for-sale at fair value (amortized cost of $8,234,363 and $7,867,932 at March 31, 2007 and December 31, 2006, respectively) $8,739,506 $8,372,173 
Available-for-sale at fair value (amortized cost of $8,419,503 and $7,867,932 at June 30, 2007 and December 31, 2006, respectively) $8,716,124 $8,372,173 
Mortgage loans on real estate 751,424 735,618  802,168 735,618 
Policy loans 1,015,347 1,015,394  1,018,215 1,015,394 
Funds withheld at interest 4,262,835 4,129,078  4,498,524 4,129,078 
Short-term investments 198,644 140,281  178,668 140,281 
Other invested assets 240,868 220,356  283,226 220,356 
          
Total investments 15,208,624 14,612,900  15,496,925 14,612,900 
Cash and cash equivalents 315,222 160,428  414,888 160,428 
Accrued investment income 91,872 68,292  95,330 68,292 
Premiums receivable and other reinsurance balances 656,582 695,307  668,216 695,307 
Reinsurance ceded receivables 580,227 563,570  599,767 563,570 
Deferred policy acquisition costs 2,845,457 2,808,053  2,945,325 2,808,053 
Other assets 127,911 128,287  113,984 128,287 
          
Total assets $19,825,895 $19,036,837  $20,334,435 $19,036,837 
     
      
Liabilities and Stockholders’ Equity
  
Future policy benefits $5,459,663 $5,315,428  $5,784,128 $5,315,428 
Interest sensitive contract liabilities 6,302,934 6,212,278  6,427,896 6,212,278 
Other policy claims and benefits 1,821,888 1,826,831  1,909,720 1,826,831 
Other reinsurance balances 216,071 145,926  174,018 145,926 
Deferred income taxes 684,340 828,848  667,245 828,848 
Other liabilities 468,936 177,490  529,025 177,490 
Short-term debt 29,517 29,384  30,132 29,384 
Long-term debt 944,147 676,165  908,658 676,165 
Collateral finance facility 850,402 850,402  850,265 850,402 
Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated debentures of the Company 158,740 158,701  158,779 158,701 
          
Total liabilities 16,936,638 16,221,453  17,439,866 16,221,453 
  
Commitments and contingent liabilities (See Note 5)  
  
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; 140,000,000 shares authorized; 63,128,273 shares issued at March 31, 2007 and December 31, 2006) 631 631 
Common stock (par value $.01 per share; 140,000,000 shares authorized; 63,128,273 shares issued at June 30, 2007 and December 31, 2006) 631 631 
Warrants 66,915 66,915  66,915 66,915 
Additional paid-in-capital 1,087,730 1,081,433  1,090,648 1,081,433 
Retained earnings 1,343,795 1,307,743  1,412,105 1,307,743 
Accumulated other comprehensive income:  
Accumulated currency translation adjustment, net of income taxes 123,124 109,067  181,956 109,067 
Unrealized appreciation of securities, net of income taxes 340,224 335,581  204,108 335,581 
Pension and postretirement benefits, net of income taxes  (11,327)  (11,297)  (11,610)  (11,297)
          
Total stockholders’ equity before treasury stock 2,951,092 2,890,073  2,944,753 2,890,073 
Less treasury shares held of 1,403,514 and 1,717,722 at cost at March 31, 2007 and December 31, 2006, respectively  (61,835)  (74,689)
Less treasury shares held of 1,135,134 and 1,717,722 at cost at 
June 30, 2007 and December 31, 2006, respectively  (50,184)  (74,689)
          
Total stockholders’ equity 2,889,257 2,815,384  2,894,569 2,815,384 
          
Total liabilities and stockholders’ equity $19,825,895 $19,036,837  $20,334,435 $19,036,837 
          
See accompanying notes to condensed consolidated financial statements (unaudited).

3


REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                        
 Three months ended March 31,  Three months ended June 30, Six months ended June 30, 
 2007 2006  2007 2006 2007 2006 
 (Dollars in thousands, except per share data)  (Dollars in thousands, except per share data) 
Revenues:
     
Net premiums $1,125,450 $992,442  $1,207,646 $1,076,603 $2,333,096 $2,069,045 
Investment income, net of related expenses 215,743 186,941  274,902 168,605 490,645 355,546 
Investment related gains (losses), net  (8,484) 632 
Investment related losses, net  (7,092)  (5,314)  (15,576)  (4,682)
Change in value of embedded derivatives 2,838 4,552   (7,126)  (11,075)  (4,288)  (6,523)
Other revenues 19,102 14,530  20,446 13,717 39,548 28,247 
              
Total revenues 1,354,649 1,199,097  1,488,776 1,242,536 2,843,425 2,441,633 
 
Benefits and Expenses:
  
Claims and other policy benefits 902,810 811,513  980,338 874,531 1,883,148 1,686,044 
Interest credited 61,066 61,529  113,652 44,732 174,718 106,261 
Policy acquisition costs and other insurance expenses 180,874 151,804  183,561 172,700 364,435 324,504 
Change in deferred acquisition costs associated with change in value of embedded derivatives 2,107 2,757   (5,545)  (7,982)  (3,438)  (5,225)
Other operating expenses 55,422 46,527  56,619 45,830 112,041 92,357 
Interest expense 20,453 16,767  23,232 15,014 43,685 31,781 
Collateral finance facility expense 12,687   13,206 277 25,893 277 
              
Total benefits and expenses 1,235,419 1,090,897  1,365,063 1,145,102 2,600,482 2,235,999 
Income from continuing operations before income taxes 119,230 108,200  123,713 97,434 242,943 205,634 
Provision for income taxes 42,293 37,620  44,676 33,645 86,969 71,265 
              
Income from continuing operations 76,937 70,580  79,037 63,789 155,974 134,369 
Discontinued operations:  
Loss from discontinued accident and health operations, net of income taxes  (685)  (1,510)  (1,562)  (158)  (2,247)  (1,668)
              
Net income $76,252 $69,070  $77,475 $63,631 $153,727 $132,701 
              
  
Basic earnings per share:
  
Income from continuing operations $1.25 $1.15  $1.28 $1.04 $2.53 $2.20 
Discontinued operations  (0.01)  (0.02)  (0.03)   (0.04)  (0.03)
              
Net income $1.24 $1.13  $1.25 $1.04 $2.49 $2.17 
              
  
Diluted earnings per share:
  
Income from continuing operations $1.20 $1.13  $1.22 $1.02 $2.43 $2.14 
Discontinued operations  (0.01)  (0.03)  (0.02)  (0.01)  (0.04)  (0.02)
              
Net income $1.19 $1.10  $1.20 $1.01 $2.39 $2.12 
              
  
Dividends declared per share
 $0.09 $0.09  $0.09 $0.09 $0.18 $0.18 
              
See accompanying notes to condensed consolidated financial statements (unaudited).

4


REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                
 Three months ended  Six months ended 
 March 31,  June 30, 
 2007 2006  2007 2006 
 (Dollars in thousands)  (Dollars in thousands) 
Cash Flows from Operating Activities:
  
Net income $76,252 $69,070  $153,727 $132,701 
Adjustments to reconcile net income to net cash provided by operating activities:  
Change in:  
Accrued investment income  (23,467)  (16,109)  (26,440)  (18,680)
Premiums receivable and other reinsurance balances 38,673  (19,127) 42,087  (91,410)
Deferred policy acquisition costs  (30,186)  (79,007)  (82,761)  (152,112)
Reinsurance ceded balances  (16,657) 7,421   (36,197)  (13,392)
Future policy benefits, other policy claims and benefits, and other reinsurance balances 183,149 137,557  373,895 384,937 
Deferred income taxes 37,264 37,173  77,666 26,061 
Excess tax benefits from share-based payment arrangement  (1,387)    (2,839)  
Other assets and other liabilities, net 17,056 19,157  16,477 58,886 
Amortization of net investment discounts and other  (9,551)  (11,888)  (29,674)  (26,624)
Non-cash equity compensation expense 6,568  
Investment related losses (gains), net 8,484  (632)
Investment related losses, net 15,576 4,682 
Other, net 1,738 8,435  9,656 2,870 
          
Net cash provided by operating activities 287,936 152,050  511,173 307,919 
  
Cash Flows from Investing Activities:
  
Sales of fixed maturity securities — available for sale 465,349 505,016  1,132,529 879,617 
Maturities of fixed maturity securities — available for sale 37,556 25,200  106,051 133,734 
Purchases of fixed maturity securities — available for sale  (795,437)  (610,412)  (1,531,894)  (1,273,922)
Cash invested in mortgage loans on real estate  (27,023)  (34,364)  (91,194)  (46,189)
Cash invested in policy loans  (8,750)  (8,579)
Cash invested in funds withheld at interest  (23,114)  (9,103)  (46,636)  (29,765)
Net increase in securitized lending activities 47,548 108,400  90,398 76,508 
Principal payments on mortgage loans on real estate 11,147 12,874  24,818 43,575 
Principal payments on policy loans 47 13,822  5,929 13,822 
Change in short-term investments and other invested assets  (98,434) 117,960   (124,582)  (725,033)
          
Net cash provided by (used in) investing activities  (382,361) 129,393 
Net cash used in investing activities  (443,331)  (936,232)
  
Cash Flows from Financing Activities:
  
Dividends to stockholders  (5,530)  (5,500)  (11,097)  (11,007)
Proceeds from long-term debt issuance 295,311   295,311  
Principal payments on debt   (100,000)
Net repayments under credit agreements  (30,000)    (66,602)  
Net proceeds from collateral finance facility  837,500 
Purchases of treasury stock  (3,611)  (194)  (3,611)  
Excess tax benefits from share-based payment arrangement 1,387   2,839  
Exercise of stock options, net 4,093 2,871  12,146 2,933 
Excess deposits (payments) on universal life and other investment type policies and contracts  (13,201) 24,429   (45,155) 49,831 
          
Net cash provided by financing activities 248,449 21,606  183,831 779,257 
Effect of exchange rate changes 770  (1,001) 2,787  (616)
          
Change in cash and cash equivalents 154,794 302,048  254,460 150,328 
Cash and cash equivalents, beginning of period 160,428 128,692  160,428 128,692 
          
Cash and cash equivalents, end of period $315,222 $430,740  $414,888 $279,020 
          
  
Supplementary information:  
Cash paid for interest $16,902 $4,568  $50,267 $33,334 
Cash paid (received) for income taxes, net of refunds $2,107 $(21,724) $22,440 $(12,931)
See accompanying notes to condensed consolidated financial statements (unaudited).

5


REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Reinsurance Group of America, Incorporated (“RGA”) and its 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 three-monthsix-month period ended March 31,June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2006 Annual Report on Form 10-K (“2006 Annual Report”) filed with the Securities and Exchange Commission on February 26, 2007.
The accompanying unaudited condensed consolidated financial statements include the accounts of Reinsurance Group of America, Incorporated and its subsidiaries. All intercompany accounts and transactions have been eliminated. The Company has reclassified the presentation of certain prior-period information to conform to the 2007 presentation.
2. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share on income from continuing operations (in thousands, except per share information):
        
 Three months ended                
 March 31, 2007 March 31, 2006 Three months ended Six months ended
   June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
Earnings:  
Income from continuing operations (numerator for basic and diluted calculations) $76,937 $70,580  $79,037 $63,789 $155,974 $134,369 
Shares:  
Weighted average outstanding shares (denominator for basic calculation) 61,520 61,138  61,898 61,185 61,710 61,162 
 
Equivalent shares from outstanding stock options 2,375 1,479  2,643 1,524 2,509 1,501 
    
Denominator for diluted calculation 63,895 62,617  64,541 62,709 64,219 62,663 
Earnings per share:  
Basic $1.25 $1.15  $1.28 $1.04 $2.53 $2.20 
Diluted $1.20 $1.13  $1.22 $1.02 $2.43 $2.14 
    
The calculation of common equivalent shares does not include the impact of options or warrants having a strike or conversion price that exceeds the average stock price for the earnings period, as the result would be antidilutive. The calculation of common equivalent shares also excludes the impact of outstanding performance contingent shares, as the conditions necessary for their issuance have not been satisfied as of the end of the reporting period. For the three-month periodthree and six month periods ended March 31,June 30, 2007 approximately 0.3 million stock options and 0.4 million performance contingent shares were excluded from the calculation. For the three months ended March 31, 2006, approximately 0.6 million stock options and 0.4 million performance contingent shares were excluded from the calculation.

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3. Comprehensive Income
The following schedule reflects the change in accumulated other comprehensive income(dollars in thousands):
        
 Three months ended                
 March 31, 2007 March 31, 2006 Three months ended Six months ended
   June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
Net income $76,252 $69,070  $77,475 $63,631 $153,727 $132,701 
Accumulated other comprehensive income (expense), net of income tax:  
Unrealized gains (losses), net of reclassification adjustment for gains (losses) included in net income 4,643  (114,630)
Unrealized losses, net of reclassification adjustment for losses, net included in net income  (136,116)  (116,249)  (131,473)  (230,879)
Foreign currency items 14,057  (2,037) 58,832 34,756 72,889 32,719 
Pension and postretirement benefit adjustments  (30)    (283)   (313)  
    
Comprehensive income (loss) $94,922 $(47,597) $(92) $(17,862) $94,830 $(65,459)
    
4. Segment Information
The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies in Note 2 of the consolidated financial statements accompanying the 2006 Annual Report. The Company measures segment performance primarily based on profit or loss from operations before income taxes. There are no intersegment reinsurance transactions and the Company does not have any material long-lived assets other than internally developed software. Investment income is allocated to the segments based upon average assets and related capital levels deemed appropriate to support the segment business volumes.
The Company allocates capital to its segments based on an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model considers the unique and specific nature of the risks inherent in the Company’s businesses. As a result of the economic capital allocation process, a portion of investment income and investment related gains (losses) are credited to the segments based on the level of allocated equity. In addition, the segments are charged for excess capital utilized above the allocated economic capital basis. This charge is included in policy acquisition costs and other insurance expenses.
Information related to total revenues, income (loss) from continuing operations before income taxes, and total assets of the Company for each reportable segment are summarized below(dollars in thousands).
                                
 Income (loss) from continuing Three months ended Six months ended
 Total revenues operations before income taxes June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
 Three months ended March 31, Three months ended March 31,
 2007 2006 2007 2006
Total revenues
 
U.S. $839,081 $765,552 $93,177 $80,336  $927,982 $782,387 $1,767,063 $1,547,939 
Canada 128,794 119,508 15,034 8,431  156,684 126,230 285,478 245,738 
Europe & South Africa 173,477 148,668 21,124 14,797  171,242 149,587 344,719 298,255 
Asia Pacific 197,257 147,634 10,332 6,614  209,665 177,163 406,922 324,797 
Corporate and Other 16,040 17,735  (20,437)  (1,978)
Corporate & Other 23,203 7,169 39,243 24,904 
      
Total $1,354,649 $1,199,097 $119,230 $108,200  $1,488,776 $1,242,536 $2,843,425 $2,441,633 
      

7


                        
 Total assets Three months ended Six months ended
 March 31, December 31, June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
 2007 2006
  
Income (loss) from continuing operations before income taxes
 
U.S. $12,700,414 $12,387,202  $86,215 $70,935 $179,392 $151,271 
Canada 2,160,267 2,182,712  24,202 11,074 39,236 19,505 
Europe & South Africa 1,247,682 1,140,374  11,846 17,269 32,970 32,066 
Asia Pacific 1,156,978 1,099,700  15,609 7,725 25,941 14,339 
Corporate and Other 2,560,554 2,226,849 
Corporate & Other  (14,159)  (9,569)  (34,596)  (11,547)
    
Total $19,825,895 $19,036,837  $123,713 $97,434 $242,943 $205,634 
    
         
  Total assets
  June 30, December 31,
  2007 2006
U.S. $13,180,208  $12,387,202 
Canada  2,263,833   2,182,712 
Europe & South Africa  1,352,023   1,140,374 
Asia Pacific  1,225,084   1,099,700 
Corporate and Other  2,313,287   2,226,849 
   
Total $20,334,435  $19,036,837 
   
5. Commitments and Contingent Liabilities
The Company has commitments to fund investments in mortgage loans and limited partnerships in the amount of $59.6$132.8 million at March 31,June 30, 2007. The Company anticipates that the majority of these amounts will be invested over the next five years, however, contractually these commitments could become due at the request of the counterparties. Investments in mortgage loans and limited partnerships are carried at cost less any other-than-temporary impairment and are included in total investments in the condensed consolidated balance sheets.
The Company is currently a party to three arbitrations that involve its discontinued accident and health business, including personal accident business, (whichwhich includes London market excess of loss business)business, and workers’ compensation carve-out business. The Company is also party to a threatened arbitration related to its life reinsurance business. As of AprilJune 30, 2007, the parties involved in these actions have raised claims, or established reserves that may result in claims, in the amount of $22.9$23.9 million, which is $22.1$23.2 million in excess of the amounts held in reserve by the Company. The Company generally has little information regarding any reserves established by the ceding companies, and must rely on management estimates to establish policy claim liabilities. It is possible that any such reserves could be increased in the future. 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. See Note 20, “Discontinued Operations” in the Company’s consolidated financial statements accompanying the 2006 Annual Report for more information. Additionally, from time to time, the Company is subject to litigation related to employment-related matters in the normal course of its business. The Company cannot predict or determine the ultimate outcome of the pending litigation or arbitrations or provide useful 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. However, it is possible that an adverse outcome could, from time to time, have a material adverse effect on the Company’s consolidated net income in a particular quarterlyquarter or annual periods.year.
The Company has obtained letters of credit, issued by banks, in favor of various affiliated and unaffiliated insurance companies from which the Company assumes business. These letters of credit represent guarantees of performance under the reinsurance agreements and allow ceding companies to take statutory reserve credits. At March 31,June 30, 2007 and December 31, 2006, there were approximately $20.1$20.9 million and $19.4 million, respectively, of outstanding bank letters of credit in favor of third parties. Additionally, the Company utilizes letters of credit to secure reserve

8


credits when it retrocedes business to its offshore subsidiaries, including RGA Americas Reinsurance Company, Ltd., RGA Reinsurance Company (Barbados) Ltd. and RGA Worldwide Reinsurance Company, Ltd. The Company cedes business to its offshore affiliates to help reduce the amount of regulatory capital required in certain jurisdictions, such as the U.S. and the United Kingdom. The capital required to support the business in the offshore affiliates reflects more realistic expectations than the original jurisdiction of the business, where capital requirements are often considered to be quite conservative. As of March 31,June 30, 2007 and December 31, 2006, $438.0$459.2 million and $437.7 million, respectively, in letters of credit from various banks were outstanding between the various subsidiaries of the Company. Applicable letter of credit fees and fees payable for the credit facility depend upon the Company’s senior unsecured long-term debt rating. Fees associated with the Company’s other 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.

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RGA has issued guarantees to third parties on behalf of its subsidiaries’ performance for the payment of amounts due under certain credit facilities, reinsurance treaties and office lease obligations, 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.size. Liabilities supported by the treaty guarantees, before consideration for any legally offsetting amounts due from the guaranteed party, totaled $287.6$299.8 million and $276.5 million as of March 31,June 30, 2007 and December 31, 2006, respectively, and are reflected on the Company’s condensed consolidated balance sheets in future policy benefits. Potential guaranteed amounts of future payments will vary depending on production levels and underwriting results. Guarantees related to trust preferred securities and credit facilities provide additional security to third parties should a subsidiary fail to make principal and/or interest payments when due. As of March 31,June 30, 2007, RGA’s exposure related to these guarantees was $187.0$171.5 million.
In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Since this indemnity generally is not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount due under this indemnity in the future.
6. Employee Benefit Plans
The components of net periodic benefit costs were as follows(dollars in thousands):
                 
  Three months ended March 31,
  Pension Benefits Other Benefits
  2007 2006 2007 2006
Determination of net periodic benefit cost:
                
Service cost $799  $614  $206  $179 
Interest cost  592   477   190   156 
Expected rate of return on plan assets  (455)  (347)      
Amortization of prior service cost  95   9       
Amortization of prior actuarial loss  113   106   84   66 
   
Net periodic benefit cost $1,144  $859  $480  $401 
   
                 
  Three months ended Six months ended
  June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
Net periodic pension benefit cost:
                
Service cost $472  $423  $1,271  $1,037 
Interest cost  258   371   850   848 
Expected return on plan assets  (483)  (411)  (938)  (758)
Amortization of prior service cost  79   6   174   15 
Amortization of prior actuarial (gain) loss  (44)  78   69   184 
   
Net periodic pension benefit cost $282  $467  $1,426  $1,326 
   
                 
Net periodic other benefits cost:
                
Service cost $(63) $180  $143  $359 
Interest cost  79   155   269   311 
Expected return on plan assets            
Amortization of prior service cost  12      12    
Amortization of prior actuarial (gain) loss  (2)  66   82   132 
   
Net periodic other benefits cost $26  $401  $506  $802 
   
The Company made no$1.9 million in pension contributions during the firstsecond quarter of 2007 and expects this to make second quarter 2007 contributions of approximately $1.9 million.be the only contribution for the year.

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7. Financing Activities
On March 6, 2007, RGA issued 5.625% Senior Notes due March 15, 2017 with a face amount of $300.0 million. These senior notes have been registered with the Securities and Exchange Commission. The net proceeds from the offering were approximately $295.3 million, a portion of which were used to pay down $30.0$50.0 million of indebtedness under a U.S. bank credit facility in March 2007. An additional $20.0 million was used to repay additional indebtedness under a bank credit facility in April 2007.facility. The remaining net proceeds are designated for general corporate purposes. Capitalized issue costs were approximately $2.6 million.
8. Equity Based Compensation
Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standard (“SFAS”) No. 123(r), “Share-Based Payment” (“SFAS 123(r)”). SFAS 123(r) requires that the cost of all share-based transactions be recorded in the financial statements. The Company has been recording compensation cost for all equity-based grants or awards after January 1, 2003 consistent with the requirement of SFAS No. 123 “Accounting for Stock-Based Compensation”, as amended by SFAS 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — An Amendment of SFAS No. 123”. Equity compensation expense was $6.6$2.9 million and $5.9$4.8 million in the second quarter of 2007 and 2006, respectively, and $9.5 million and $10.6 million in the first quartersix months of 2007 and 2006, respectively. In the first quarter of 2007, the Company granted 0.3 million incentive stock options at $59.63 weighted average per share and 0.1 million performance contingent units (“PCUs”) to employees. Additionally, non-employee directors were granted a total of 4,800 shares of common stock. As of March 31,June 30, 2007, the total compensation cost of

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non-vested awards not yet recognized in the financial statements was $22.7$18.1 million with various recognition periods over the next five years.
9. New Accounting Standards
Effective January 1, 2007 the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income tax recognized in a company’s financial statements. FIN 48 requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made.
As a result of implementation of FIN 48, the Company recognized a $17.3 million increase in the liability for unrecognized tax benefits, a $5.3 million increase in the interest liability for unrecognized tax benefits, and a corresponding reduction to the January 1, 2007 balance of retained earnings of $22.6 million. The Company’s total amount of unrecognized tax benefits upon adoption of FIN 48 was $196.3 million. The Company reclassified, at adoption, $9.1 million of current tax liabilities to the liability for unrecognized tax benefits. The Company also reclassified, at adoption, $169.9 million of deferred income tax liabilities to the liability for unrecognized tax benefits for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The total amount of unrecognized tax benefits as of January 1, 2007 that would affect the effective tax rate if recognized is $26.4 million. The Company also had $29.8 million of accrued interest, as of January 1, 2007. The Company classifies interest accrued related to unrecognized tax benefits in interest expense, while penalties are included within income tax expense.
The Company files income tax returns in the U.S. federal jurisdiction and various state and non U.S. jurisdictions. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or non U.S. income tax examinations by tax authorities for years before 2003. There were no significant changes in the liability for unrecognized tax benefits during the threesix months ended March 31,June 30, 2007.
Effective January 1, 2007, the Company adopted the provisions of the FASB’s Emerging Issues Task Force (“EITF”) Issue 06-5. This issue, titled “Accounting for the Purchases of Life Insurance — Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4”, clarified that the amount of the DAC receivable beyond one year generally must be discounted to present value under Accounting Principles Board

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Opinion 21. The adoption of EITF Issue 06-05 did not have a material impact on the Company’s condensed consolidated financial statements.
Effective January 1, 2007, the Company adopted Statement of Position (“SOP”) 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts” (“SOP 05-1”). SOP 05-1 provides guidance on accounting by insurance enterprises for DAC on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97, “Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments”. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007, the American Institute of Certified Public Accountants (“AICPA”) issued related Technical Practice Aids (“TPAs”) to provide further clarification of SOP 05-1. The TPAs are effective concurrently with the adoption of the SOP. The adoption of SOP 05-1 and related TPA’sTPAs did not have a material impact on the Company’s condensed consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and requires enhanced disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements. The pronouncement is effective

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for fiscal years beginning after November 15, 2007. The guidance in SFAS 157 will be applied prospectively with the exception of: (i) block discounts of financial instruments; and (ii) certain financial and hybrid instruments measured at initial recognition under SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) which is to be applied retrospectively as of the beginning of initial adoption (a limited form of retrospective application). The Company is currently evaluating the impact of SFAS 157 and does not expect that the pronouncement will have a material impact on the Company’s condensed consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits all entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to report related unrealized gains and losses in earnings. The fair value option will generally be applied on an instrument-by-instrument basis and is generally an irrevocable election. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is evaluating which eligible financial instruments, if any, it will elect to account for at fair value under SFAS 159 and the related impact on the Company’s condensed consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and requires enhanced disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements. The pronouncement is effective for fiscal years beginning after November 15, 2007. The guidance in SFAS 157 will be applied prospectively with certain exceptions. The Company is currently evaluating the impact of SFAS 157 and does not expect that the pronouncement will have a material impact on the Company’s condensed consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company’s primary business is life reinsurance, which involves reinsuring life insurance policies that are often in force for the remaining lifetime of the underlying individuals insured, with premiums earned typically over a period of 10 to 30 years. Each year, however, a portion of the business under existing treaties terminates due to, among other things, lapses or surrenders of underlying policies, deaths of policyholders, and the exercise of recapture options by ceding companies.
The Company derives revenues primarily from renewal premiums from existing reinsurance treaties, new business premiums from existing or new reinsurance treaties, income earned on invested assets, and fees earned from financial reinsurance transactions. The Company believes that industry trends have not changed materially from those discussed in its 2006 Annual Report.
The Company’s profitability primarily depends on the volume and amount of death claims incurred and its ability to adequately price the risks it assumes. While death claims are reasonably predictable over a period of many years, claims become less predictable over shorter periods and are subject to significant fluctuation from quarter to quarter and year to year. The maximum amount of coverage the Company retains per life is $6 million. Claims in excess of this retention amount are retroceded to retrocessionaires; however, the Company remains fully liable to the ceding company for the entire amount of risk it assumes. The Company believes its sources of liquidity are sufficient to cover potential claims payments on both a short-term and long-term basis.
The Company measures performance based on income or loss from continuing operations before income taxes for each of its five segments. The Company’s U.S., Canada, Europe & South Africa and Asia Pacific operations provide traditional life reinsurance to clients. The Company’s U.S. operations also provide asset-intensive and financial reinsurance products. The Company also provides insurers with critical illness reinsurance in its Canada, Europe & South Africa and Asia Pacific operations. Asia Pacific operations also provide financial reinsurance. The Corporate and Other segment results include the corporate investment activity, general corporate expenses, interest expense of RGA, operations of RGA Technology Partners, Inc., a wholly-owned subsidiary that develops and markets technology solutions for the insurance industry, Argentine business in run-off and the provision for income taxes. The Company’s discontinued accident and health operations are not reflected in its results from continuing operations.
The Company allocates capital to its segments based on an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model considers the unique and specific nature of the risks inherent in RGA’s businesses. As a result of the economic capital allocation process, a portion of investment income and investment related gains (losses) are credited to the segments based on the level of allocated equity. In addition, the segments are charged for excess capital utilized above the allocated economic capital basis. This charge is included in policy acquisition costs and other insurance expenses.
Results of Operations
Consolidated income from continuing operations before income taxes increased $11.0$26.3 million, or 10.2%27.0%, and $37.3 million, or 18.1%, for the second quarter and first quartersix months of 2007, respectively, primarily due to increased premiums in all segments. Also, contributing to this increase wasthese increases were improved mortality experience in the U.S., Canada andsegment partially offset by adverse mortality experience in the Europe and South Africa segments.segment. Consolidated net premiums increased $133.0$131.0 million, or 13.4% for12.2%, and $264.1 million, or 12.8%, during the second quarter and first quartersix months of 2007, respectively, due to growth in life reinsurance in force. Foreign currency fluctuations favorably affected net premiums by approximately $21.2 million and $34.3 million in the second quarter and first six months of 2007, respectively, as compared to the same periods in 2006.
Consolidated investment income, net of related expenses, increased $28.8$106.3 million, or 15.4% in63.0%, and $135.1 million, or 38.0%, during the second quarter and first quartersix months of 2007, respectively, primarily due to market value changes related to the Company’s funds withheld at interest investment in certain equity index annuity products, which are substantially offset by a corresponding increase in interest credited to policyholder account balances resulting in a negligible effect on net income, a larger invested asset base.base, and a higher effective yield. Invested

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assets as of March 31,June 30, 2007 totaled $15.2$15.5 billion, a 23.9%15.4% increase over March 31,June 30, 2006. A significant portion of the increase in invested assets is related to the Company’s investment of the net proceeds from the issuance of senior notes in March 2007 and its collateral finance facility in June 2006.2007. The average yield earned on investments, excluding funds withheld, increased slightly from 5.78%5.72% in the firstsecond quarter of 2006 to 5.93%5.90% for the firstsecond quarter of 2007. The average yield will vary from quarter to quarter and year to year depending on a number of variables, including the prevailing interest rate and credit spread environment and changes in the mix of the underlying investments and the timing of dividends and distributions on certain investments. Net investment related losses totaled $8.5$15.6 million for the quarterfirst six months of 2007 as the

12


Company recognized a $10.5 million foreign currency translation loss related to its decision to sell its direct insurance operations in Argentina. The Company does not expect the ultimate sale of that subsidiary to generate a material financial impact. Investment income and a portion of investment related gains (losses) are allocated to the segments based upon average assets and related capital levels deemed appropriate to support the segment business volumes.
The effective tax rate on a consolidated basis was 35.5%36.1% for the firstsecond quarter of 2007, compared to 34.8%34.5% for the prior-year period. The effective ratetax rates for the first quarterand second quarters of 2007 waswere affected by the adoptionapplication of FIN 48. However, on an ongoing basis, the Company does not anticipate that this will have a material impact on its effective tax rate.
Critical Accounting Policies
The Company’s accounting policies are described in Note 2 in the 2006 Annual Report. The Company believes its most critical accounting policies include the capitalization and amortization of deferred acquisition costs (“DAC”); the establishment of liabilities for future policy benefits, other policy claims and benefits, including incurred but not reported claims; the valuation of investment impairments; and the establishment of arbitration or litigation reserves. The balances of these accounts are significant to the Company’s financial position and require extensive use of assumptions and estimates, particularly related to the future performance of the underlying business.
Additionally, for each of the Company’s reinsurance contracts, it must determine if the contract provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. The Company must review all contractual features, particularly those that may limit the amount of insurance risk to which the Company is subject or features that delay the timely reimbursement of claims. If the Company determines that the possibility of a significant loss from insurance risk will occur only under remote circumstances, it records the contract under a deposit method of accounting with the net amount receivable or payable reflected in premiums receivable and other reinsurance balances or other reinsurance liabilities on the condensed consolidated balance sheets. Fees earned on the contracts are reflected as other revenues, as opposed to net premiums, on the condensed consolidated statements of income.
Costs of acquiring new business, which vary with and are primarily related to the production of new business, have been deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. Deferred policy acquisition costs reflect the Company’s expectations about the future experience of the business in force and include commissions and allowances as well as certain costs of policy issuance and underwriting. Some of the factors that can affect the carrying value of DAC include mortality assumptions, interest spreads and policy lapse rates. The Company performs periodic tests to determine that DAC remains recoverable, and the cumulative amortization is re-estimated and, if necessary, adjusted by a cumulative charge or credit to current operations.
Liabilities for future policy benefits under long-term life insurance policies (policy reserves) are computed based upon expected investment yields, mortality and withdrawal (lapse) rates, and other assumptions, including a provision for adverse deviation from expected claim levels. The Company primarily relies on its own valuation and administration systems to establish policy reserves. The policy reserves the Company establishes may differ from those established by the ceding companies due to the use of different mortality and other assumptions. However, the Company relies upon its clients to provide accurate data, including policy-level information, premiums and claims, which is the primary information used to establish reserves. The Company’s administration departments work directly with its clients to help ensure information is submitted by them in accordance with the reinsurance contracts. Additionally, the Company performs periodic audits of the information provided by ceding companies. The Company establishes reserves for processing backlogs with a goal of clearing all backlogs within a ninety-day period. The backlogs are usually due to data errors the Company discovers or computer file compatibility issues, since much of the data reported to the Company is in electronic format and is uploaded to its computer systems.

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The Company periodically reviews actual historical experience and relative anticipated experience compared to the assumptions used to establish aggregate policy reserves. Further, the Company establishes premium deficiency reserves if actual and anticipated experience indicates that existing aggregate policy reserves, together with the present value of future gross premiums, are not sufficient to cover the present value of future benefits, settlement and maintenance costs and to recover unamortized acquisition costs. The premium deficiency reserve is established through a charge to income, as well as a reduction to unamortized acquisition costs and, to the extent there are no unamortized acquisition costs, an increase to future policy benefits. Because of the many assumptions and estimates

13


used in establishing reserves and the long-term nature of the Company’s reinsurance contracts, the reserving process, while based on actuarial science, is inherently uncertain. If the Company’s assumptions, particularly on mortality, are inaccurate, its reserves may be inadequate to pay claims and there could be a material adverse effect on its results of operations and financial condition.
Other policy claims and benefits include claims payable for incurred but not reported losses, which are determined using case-basis estimates and lag studies of past experience. These estimates are periodically reviewed and any adjustments to such estimates, if necessary, are reflected in current operations. The time lag from the date of the claim or death to the date when the ceding company reports the claim to the Company can be several months and can vary significantly by ceding company and business segment. The Company updates its analysis of incurred but not reported claims, including lag studies, on a periodic basis and adjusts its claim liabilities accordingly. The adjustments in a given period are generally not significant relative to the overall policy liabilities.
The Company primarily invests in fixed maturity securities, and monitors these fixed maturity securities to determine potential impairments in value. With the Company’s external investment managers, it evaluates its intent and ability to hold securities, along with factors such as the financial condition of the issuer, payment performance, the extent to which the market value has been below amortized cost, compliance with covenants, general market and industry sector conditions, and various other factors. Securities, based on management’s judgments, with an other-than-temporary impairment in value are written down to management’s estimate of fair value.
Differences in experience compared with the assumptions and estimates utilized in the justification of the recoverability of DAC, in establishing reserves for future policy benefits and claim liabilities, or in the determination of other-than-temporary impairments to investment securities can have a material effect on the Company’s results of operations and financial condition.
The Company is currently a party to various litigation and arbitrations. While it is difficult to predict or determine the ultimate outcome of the pending litigation or arbitrations or even to provide useful ranges of potential losses, it is the opinion of management, after consultation with counsel, that the outcomes of such litigation and arbitrations, 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. However, it is possible that an adverse outcome could, from time to time, have a material adverse effect on the Company’s consolidated net income or cash flows in a particular quarter or year. See Note 20, “Discontinued Operations” of the consolidated financial statements accompanying the 2006 Annual Report for more information.
Further discussion and analysis of the results for 2007 compared to 2006 are presented by segment. References to income before income taxes exclude the effects of discontinued operations.

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U.S. OPERATIONS
U.S. operations consist of two major sub-segments: Traditional and Non-Traditional. The Traditional sub-segment primarily specializes in mortality-risk reinsurance. The Non-Traditional sub-segment consists of Asset-Intensive and Financial Reinsurance.
For the three months ended March 31,June 30, 2007 (dollars in thousands)
                                
    
 Non-Traditional  Total Traditional Non-Traditional Total
   Financial U.S. Asset- Financial U.S.
 Traditional Asset-Intensive Reinsurance Operations Intensive Reinsurance Operations
    
Revenues:
  
Net premiums $669,419 $1,626 $ $671,045  $718,753 $1,598 $ $720,351 
Investment income, net of related expenses 84,928 67,952 20 152,900  87,151 117,319 99 204,569 
Investment related losses, net  (338)  (783)   (1,121)  (4,497)  (1,144)  (7)  (5,648)
Change in value of embedded derivatives  2,838  2,838    (7,126)   (7,126)
Other revenues 106 7,424 5,889 13,419  300 9,690 5,846 15,836 
    
Total revenues 754,115 79,057 5,909 839,081  801,707 120,337 5,938 927,982 
  
Benefits and expenses:
  
Claims and other policy benefits 542,586 4,523 1 547,110  594,619  (553)  594,066 
Interest credited 14,270 46,158  60,428  14,579 98,324  112,903 
Policy acquisition costs and other insurance expenses 99,380 20,186 2,194 121,760  101,807 22,295 2,001 126,103 
Change in deferred acquisition costs associated with change in value of embedded derivatives  2,107  2,107    (5,545)   (5,545)
Other operating expenses 11,868 1,621 1,010 14,499  11,604 1,705 931 14,240 
    
Total benefits and expenses 668,104 74,595 3,205 745,904  722,609 116,226 2,932 841,767 
  
Income before income taxes $86,011 $4,462 $2,704 $93,177  $79,098 $4,111 $3,006 $86,215 
    
For the three months ended March 31,June 30, 2006 (dollars in thousands)
                                
    
 Non-Traditional  Total Traditional Non-Traditional Total
   Financial U.S. Asset- Financial U.S.
 Traditional Asset-Intensive Reinsurance Operations Intensive Reinsurance Operations
    
Revenues:
  
Net premiums $611,837 $1,474 $ $613,311  $662,301 $1,605 $ $663,906 
Investment income, net of related expenses 71,042 70,897  (3) 141,936  74,657 48,424  (152) 122,929 
Investment related losses, net  (1,229)  (3,333)   (4,562)  (2,506)  (2,511)   (5,017)
Change in value of embedded derivatives  4,552  4,552    (11,075)   (11,075)
Other revenues  (320) 3,289 7,346 10,315  276 3,908 7,460 11,644 
    
Total revenues 681,330 76,879 7,343 765,552  734,728 40,351 7,308 782,387 
  
Benefits and expenses:
  
Claims and other policy benefits 508,146  (869) 1 507,278  545,640 727  546,367 
Interest credited 11,487 49,537  61,024  11,796 31,930  43,726 
Policy acquisition costs and other insurance expenses 82,172 16,395 2,334 100,901  101,229 14,539 2,326 118,094 
Change in deferred acquisition costs associated with change in value of embedded derivatives  2,757  2,757    (7,982)   (7,982)
Other operating expenses 10,126 1,776 1,354 13,256  8,732 1,413 1,102 11,247 
    
Total benefits and expenses 611,931 69,596 3,689 685,216  667,397 40,627 3,428 711,452 
  
Income before income taxes $69,399 $7,283 $3,654 $80,336 
Income (loss) before income taxes $67,331 $(276) $3,880 $70,935 
    

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For the six months ended June 30, 2007 (dollars in thousands)
                 
   
  Traditional Non-Traditional Total
      Asset- Financial U.S.
      Intensive Reinsurance Operations
   
Revenues:
                
Net premiums $1,388,172  $3,224  $  $1,391,396 
Investment income, net of related expenses  172,079   185,271   119   357,469 
Investment related losses, net  (4,835)  (1,927)  (7)  (6,769)
Change in value of embedded derivatives     (4,288)     (4,288)
Other revenues  406   17,114   11,735   29,255 
   
Total revenues  1,555,822   199,394   11,847   1,767,063 
                 
Benefits and expenses:
                
Claims and other policy benefits  1,137,205 �� 3,970   1   1,141,176 
Interest credited  28,849   144,482      173,331 
Policy acquisition costs and other insurance expenses  201,187   42,481   4,195   247,863 
Change in deferred acquisition costs associated with change in value of embedded derivatives     (3,438)     (3,438)
Other operating expenses  23,472   3,326   1,941   28,739 
   
Total benefits and expenses  1,390,713   190,821   6,137   1,587,671 
                 
Income before income taxes $165,109  $8,573  $5,710  $179,392 
   
For the six months ended June 30, 2006 (dollars in thousands)
                 
   
  Traditional Non-Traditional Total
      Asset- Financial U.S.
      Intensive Reinsurance Operations
   
Revenues:
                
Net premiums $1,274,138  $3,079  $  $1,277,217 
Investment income, net of related expenses  145,699   119,321   (155)  264,865 
Investment related losses, net  (3,735)  (5,844)     (9,579)
Change in value of embedded derivatives     (6,523)     (6,523)
Other revenues  (44)  7,197   14,806   21,959 
   
Total revenues  1,416,058   117,230   14,651   1,547,939 
                 
Benefits and expenses:
                
Claims and other policy benefits  1,053,786   (142)  1   1,053,645 
Interest credited  23,283   81,467      104,750 
Policy acquisition costs and other insurance expenses  183,401   30,934   4,660   218,995 
Change in deferred acquisition costs associated with change in value of embedded derivatives     (5,225)     (5,225)
Other operating expenses  18,858   3,189   2,456   24,503 
   
Total benefits and expenses  1,279,328   110,223   7,117   1,396,668 
                 
Income before income taxes $136,730  $7,007  $7,534  $151,271 
   
Income before income taxes for the U.S. operations segment totaled $93.2$86.2 million and $179.4 million for the second quarter and first quartersix months of 2007, respectively, compared to $80.3$70.9 million and $151.3 million for the same periodperiods in the prior year. This increase in income for the first three months can be primarily attributed to growth in total business in force and favorableimproved mortality experience.experience over the first half of 2006.
Traditional Reinsurance
The U.S. Traditional sub-segment provides life reinsurance to domestic clients for a variety of life products through yearly renewable term, coinsurance and modified coinsurance agreements. These reinsurance arrangements may be

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either facultative or automatic agreements. During the second quarter and first quartersix months of 2007, this sub-segment added $40.2$44.1 billion and $84.4 billion of new business (life reinsurance in force)force, measured by face amount of insurance in force, respectively, compared to $47.9$41.7 billion inand $89.6 billion during the same periodperiods in 2006. Management believes industry consolidation and the established practice of reinsuring mortality risks should continue to provide opportunities for growth.
Income before income taxes for U.S. Traditional reinsurance increased 23.9% from$11.8 million, or 17.5%, and $28.4 million, or 20.8%, in the second quarter and first quarter of 2006. Favorable mortality experience in 2007 was the primary contributor to the overall growth in net income for the first threesix months of the year. Higher2007, respectively. Stronger premiums and higher investment income also contributedwere the primary contributors to the total increase in net income forincome. Mortality experience also improved compared to the year.comparable six month period.
Net premiums for U.S. Traditional reinsurance totaled $669.4 million$718.8 and $1,388.2 for the second quarter and first quartersix months of 2007 compared to $611.8 million for the first quarter of 2006.2007. Comparable prior year numbers were $662.3 and $1,274.1, respectively. The 9.4%9.0% increase in year to date net premiums was driven primarily by the growth of total U.S. business in force, which totaled just over $1.2 trillion of face amount as of March 31, 2007,June 30, 2007. This represents a 6.2%7.2% increase over the amount in force as of March 31,on June 30, 2006.
Investment income and investment related gains and losses are allocated to the various operating segments based on average assets and related capital levels deemed appropriate to support the segment business volumes. Investment performance varies with the composition of investments and the relative allocation of capital to the operating segments. During the firstsecond quarter of 2007, investment income in the segmentsub-segment totaled $84.9$87.2 million, a 19.5%16.7% increase over the same prior-year period.period in the prior year. Year to date 2007, investment income grew 18.1% over the first six months of 2006. This increase can be primarily attributed to growth in the invested asset base and an increase in investment income on policy loans.base.
Mortality experience for the first quartersix months of 2007 improved over the same year prior period while quarter over quarter the experience was favorable.relatively consistent. Claims and other policy benefits, as a percentage of net premiums (loss ratios), were 81.1%82.7% for the second quarter and 81.9% for the first quarter compared to 83.1% insix months of 2007. The loss ratios for the first quarter of 2006.same prior-year periods were 82.4% and 82.7%, respectively. 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 cash value products, which have a significant mortality component. The amount of interest credited fluctuates in step with changes in deposit levels, cash surrender values and investment performance. Income before income taxes is affected by the spread between the investment income and the interest credited on the underlying products. Interest credited expense for the second quarter and first quartersix months of 2007 totaled $14.3$14.6 million and $28.8 million, respectively, compared to $11.5$11.8 million and $23.3 million for the same periodperiods in 2006. The increase is primarily the result of one treaty in which the credited loan rate increased from 4.6% in 2006 to 5.6% in 2007 whilebased on an increase in the loan balance grew by 4.3%.related market index. A corresponding increase in investment income offset this increasedadditional expense.
Policy acquisition costs and other insurance expenses, as a percentage of net premiums, were 14.8%14.2% for the second quarter of 2007 and 14.5% for the first quartersix months of 2007. A comparable ratioComparable ratios for the second quarter and first quartersix months of 2006 was 13.4%.were 15.3% and 14.4%, respectively. Overall, while these ratios are expected to remain in a certain range, they may fluctuate from period to period due to varying allowance levels within coinsurance-type reinsurance agreements.arrangements. In addition, the amortization pattern of previously capitalized amounts, which are subject to the form of the reinsurance agreement and the underlying insurance policies, may vary. Additionally,Finally, the mix of first year coinsurance business versus yearly renewable term business can cause the percentage to fluctuate from period to period.
Other operating expenses, as a percentage of net premiums, were 1.8%1.6% for the firstsecond quarter of 2007 and 1.7% year to date, compared to 1.7% reported1.3% and 1.5% for the second quarter and year to date, respectively, in 2006. The expense ratio can fluctuate slightly from period to period, however, the size and maturity of the U.S. operations segment indicates it should remain relatively constant over the long term.

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Asset-Intensive Reinsurance
The U.S. Asset-Intensive sub-segment assumes investment risk within underlying annuities and corporate-owned life insurance policies. Most of these agreements are coinsurance, coinsurance with funds withheld or modified coinsurance of non-mortality risks whereby the Company recognizes profits or losses primarily from the spread between the investment income earned and the interest credited on the underlying deposit liabilities.

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In accordance with the provisions of Statement of Financial Accounting Standard (“SFAS”)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”), the Company recorded a change in value of embedded derivatives of $2.8$(7.1) million and $(4.3) million within revenues for the firstsecond quarter and $2.1first six months of 2007, respectively, and $(5.5) million and $(3.4) million of related deferred acquisition costs. Significant fluctuations may occur as the fair value of the embedded derivatives is tied primarily to the movements in credit spreads. These fluctuations have no impact on cash flows or interest spreads on the underlying treaties. Therefore, Company management believes it is helpful to distinguish between the effects of Issue B36 and the primary factors that drive profitability of the underlying treaties, namely investment income, fee income, and interest credited. Additionally, over the expected life of the underlying treaties, management expects the cumulative effect of Issue B36 to be immaterial.
The Asset-Intensive sub-segment reported income before income taxes of $4.5equal to $4.1 million for the firstsecond quarter of 2007 a $2.8and $8.6 million decrease comparedyear to prior year.date. Comparable figures for 2006 were $(0.3) million and $7.0 million, respectively. Of the $4.4 million increase quarter over quarter, Issue B36 contributed $1.1 million to this decrease.$1.5 million. The remaining $1.7 decrease$2.9 million can be primarily attributed to an increaseboth the improved spread between the investment income and the interest credited on the underlying deposit liabilities and a decrease in benefit claims on a single premium universal life reinsurance treaty offset in part by lower investment related losses.
Total revenues increased $2.2 million for the first quarter of 2007. Issue B36 related revenues decreased $1.7 million for the first quarter of 2007, resulting in a revenue increase of $3.9 million excluding Issue B36. One of the primary drivers of this increased revenue is a rise in the mortality and expense charges collected relating to a new variable annuity reinsurance treaty. Mortality and expense charges are included in other revenues. Additionally, investment related losses decreased $2.6 million over same quarter in 2006. In 2006, an increased interest rate environment allowed the Company to sell bonds at lower book yields and reinvest in higher book yielding securities. This strategy resultsresulted in investment losses at the time of sale, but should generate higher future investment income. The year over year increase in income before income taxes of $1.1 million, excluding Issue B36, is primarily the result of smaller investment losses offset in part by higher benefits due to an increase in benefit claims on a single premium universal life reinsurance treaty.
Total revenues increased $80.0 million for the second quarter of 2007 and $82.2 million for the first six months of 2007. Issue B36 related revenues increased $3.9 million for the second quarter of 2007 and $2.2 million for the first six months of the year, resulting in revenue growth of $76.1 and $80.0 million, respectively, excluding Issue B36. The primary driver of this increase in revenue was a $68.9 million increase in investment income quarter over quarter and $66.0 million year over year. The majority of this variation can be attributed to market value changes related to the Company’s funds withheld at interest investment in certain equity index annuity products. This increase in investment income is offset by an increase in interest credited expense, with minimal impact on income before income taxes. Also contributing to the overall growth in revenue are the mortality and expense charges earned on a variable annuity reinsurance treaty open for new business. Mortality and expense charges are included in other revenues. Additionally, as mentioned above, investment related losses decreased quarter over quarter and year over year.
The average invested asset base supporting this sub-segment grew from $4.1$4.2 billion in the firstsecond quarter of 2006 to $4.6$4.7 billion for the firstsecond quarter of 2007. The growth in the asset base is primarily driven by new business written on one existing annuity treaty. Invested assets outstanding as of March 31,June 30, 2007 were $4.7 billion, of which $3.2$3.4 billion were funds withheld at interest. Of the $3.2$3.4 billion of total funds withheld at interest balance as of March 31,June 30, 2007, 90.7%91.5% of the balance is associated with one client.
Total benefits and expenses, which are comprised primarily of interest credited and policy acquisition costs, increased $5.0$75.6 million forfrom the firstsecond quarter of 2007.2006 and $80.6 million year to date. Issue B36 related expenses decreased $0.7contributed $2.4 million and $1.8 million to the second quarter and year to date increases, respectively, resulting in an increase inincreased expenses of $5.7$73.2 million and $78.8 million, respectively, excluding Issue B36. The majority of the change in benefits and expenses relates to interest credited expense, which contributed $66.4 million and $63.0 million quarter over quarter and year over year, respectively. As statedmentioned above, a large part of this variance is offset in investment income. Also contributing to the increase in benefits and expenses year over year is an increase in benefit claims on a single premium universal life reinsurance treaty were unfavorable thisin the first quarter and is the primary driver of this increase in benefits and expenses.2007.
Financial Reinsurance
The U.S. Financial Reinsurance sub-segment income consists primarily of net fees earned on financial reinsurance transactions. The majority of the financial reinsurance risks are assumed by the Company and retroceded to other insurance companies or brokered business in which the company does not participate in the assumption of risk. The fees earned from the assumption of the financial reinsurance contracts are reflected in other revenues, and the fees

18


paid to retrocessionaires are reflected in policy acquisition costs and other insurance expenses. Fees earned on brokered business are reflected in other revenues.
Income before income taxes decreased 26.0%$0.9 million and $1.8 million in the second quarter and first quartersix months of 2007, respectively, compared to $2.7 million from $3.7 million.the same periods in 2006. In previous quarters,2006, both the domestic and a portion of various Asia Pacific financial reinsurance treaties were reflected in this segment. Beginning with the first quarter ofin 2007, the Asia Pacific-based treaties are included with the Company’s Asia Pacific segment with reimbursement to the U.S. segment for costs incurred by U.S. personnel. Total U.S. financial reinsurance business remained consistent quarter over quarter.quarter and year over year.

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At March 31,June 30, 2007 and 2006, the amount of reinsurance provided, as measured by pre-tax statutory surplus, was $1.1 billion compared toand $1.8 billion reported at March 31, 2006.respectively. This decrease is a result of the aforementioned change in reporting for Asia Pacific-based treaties. The pre-tax statutory surplus includes all business assumed or brokered by the Company in the U.S. Fees earned from this business can vary significantly depending on the size of the transactions and the timing of their completion and therefore can fluctuate from period to period.
CANADA OPERATIONS
The Company conducts reinsurance business in Canada through RGA Life Reinsurance Company of Canada (“RGA Canada”), a wholly-owned subsidiary. RGA Canada assists clients with capital management activity and mortality risk management, and is primarily engaged in traditional individual life reinsurance, as well as creditor, reinsurance,critical illness, and group life and health reinsurance and non-guaranteed critical illness products.
         
For the three months ended March 31, (dollars in thousands) 2007  2006 
Revenues:  
Net premiums $99,492  $94,402 
Investment income, net of related expenses  26,432   25,305 
Investment related gains (losses), net  2,784   (199)
Other revenues  86    
   
Total revenues  128,794   119,508 
         
Benefits and expenses:
        
Claims and other policy benefits  91,148   89,079 
Interest credited  186   205 
Policy acquisition costs and other insurance expenses  18,476   17,820 
Other operating expenses  3,950   3,973 
   
Total benefits and expenses  113,760   111,077 
         
Income before income taxes $15,034  $8,431 
   
Income before income taxes increased by $6.6 million or 78.3% in the first quarter of 2007. The increase in 2007 was primarily the result of more favorable mortality experience in the current period as well as an increase in investment related gains of $3.0 million.
Net premiums increased by $5.1 million, or 5.4% in the first quarter of 2007 from the prior-year quarter. The increase is primarily due to new business from new and existing treaties. In addition, an increase in premium from creditor treaties contributed $6.4 million of the premium increase.reinsurance. Creditor insurance covers the outstanding balance on personal, mortgage or commercial loans in the event of death, disability or critical illness and is generally shorter in duration than traditional life insurance.
                 
   
(dollars in thousands) For the three months ended For the six months ended
  June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
   
Revenues:
                
Net premiums $122,580  $97,120  $222,072  $191,522 
Investment income, net of related expenses  32,363   25,998   58,795   51,303 
Investment related gains, net  1,648   2,345   4,432   2,146 
Other revenues  93   767   179   767 
   
Total revenues  156,684   126,230   285,478   245,738 
                 
Benefits and expenses:
                
Claims and other policy benefits  105,667   95,449   196,815   184,528 
Interest credited  185   207   371   412 
Policy acquisition costs and other insurance expenses  21,343   15,769   39,819   33,589 
Other operating expenses  5,287   3,731   9,237   7,704 
   
Total benefits and expenses  132,482   115,156   246,242   226,233 
                 
Income before income taxes $24,202  $11,074  $39,236  $19,505 
   
Income before income taxes increased by $13.1 million or 118.5%, and $19.7 million or 101.2%, in the second quarter and first six months of 2007, respectively. These increases were primarily the result of higher premium volume, favorable mortality experience in the current periods and an increase of $2.3 million in investment related gains for the first six months.
Net premiums increased by $25.5 million, or 26.2%, and $30.6 million or 16.0% in the second quarter and first six months of 2007, respectively. The increase is primarily due to new business from new and existing treaties. In addition, an increase in premium from creditor treaties contributed $6.9 million and $13.3 million of the premium increase in the second quarter and first six months of 2007, respectively. Creditor and group life and health premiums represented 18.2%18.0% and 12.4%13.9% of net premiums in the first quartersix months of 2007 and 2006, respectively. These increases were offset by a decreaseA stronger Canadian dollar resulted in an increase in net premiums of $6.3$2.7 million due to administrative adjustments. The decline in the strength of the Canadian dollar resulted in a decrease of net premiums of $1.5and $1.1 million in the second

19


quarter and first quartersix months of 2007, respectively, as compared to 2006. Premium levels are significantly influenced by large transactions, mix of business and reporting practices of ceding companies and therefore can fluctuate from period to period.
Net investment income increased $1.1$6.4 million or 4.5%24.5%, and $7.5 million or 14.6% in the second quarter and first quartersix months of 2007, compared to the prior-year quarter.respectively. Investment income and investment related gains and losses are allocated to the segments based upon average assets and related capital levels deemed appropriate to support business volumes. Investment performance varies with the composition of investments and the relative allocation of capital to the operating segments. The increase in investment income was mainly the result of an increase in the allocated asset base due to growth in the underlying business volume.
The loss ratioLoss ratios for this segment was 91.6%were 86.2% and 88.6% in the second quarter and first quartersix months of 2007, respectively, compared to 94.4%98.3% and 96.3% in 2006.the comparable prior-year periods. During 2006 and 2005, the Company entered into three significant creditor reinsurance treaties. The loss ratios on this type of business are normally lower than traditional reinsurance, however, allowances are normally higher as a percentage of

18


premiums. Excluding creditor business, the loss ratioratios for this segment was 100.9%were 94.8% and 97.5% in the second quarter and first quartersix months of 2007, respectively, compared to 101.0%106.4% and 103.7% in the comparable prior-year period.periods. The lower loss ratioratios in 2007 isare primarily due to favorable mortality experience compared to the prior year. Historically, the loss ratio increased primarily as the result of several large permanent level premium in-force blocks assumed in 1997 and 1998. These blocks are mature blocks of permanent level premium business in which mortality as a percentage of net premiums is expected to be higher than historical ratios. The nature of permanent level premium policies requires the Company to set up actuarial liabilities and invest the amounts received in excess of early-year mortality costs to fund claims in the later years when premiums, by design, continue to be level as compared to expected increasing mortality or claim costs. Claims and other policy benefits, as a percentage of net premiums and investment income was 72.4%were 68.2% and 70.1% in the second quarter and first quartersix months of 2007, respectively, compared to 74.4%77.5% and 76.0% in 2006.the comparable prior-year periods. 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 18.6%17.4% and 17.9% in the second quarter and first quartersix months of 2007, respectively, compared to 18.9%16.2% and 17.5% in 2006.the comparable prior-year periods. Excluding the impact of the creditor business, policy acquisition costs and other insurance expenses as a percentage of net premiums totaled 12.9%11.0% and 11.9% in the second quarter and first quartersix months of 2007, respectively, compared to 14.7%11.3% and 13.0% in 2006.the comparable prior-year periods. Overall, while these ratios are expected to remain in a certain range, they may fluctuate from period to period due to varying allowance levels, significantly caused by the mix of first year coinsurance business versus yearly renewable term business. In addition, the amortization pattern of previously capitalized amounts, which are subject to the form of the reinsurance agreement and the underlying insurance policies, may vary.
Other operating expenses increased $1.6 million, or 41.7%, and $1.5 million, or 19.9%, in the second quarter and first six months of 2007, respectively. Other operating expenses as a percentage of net premiums totaled 4.3% and 4.2% in the second quarter and first six months of 2007, respectively, compared to 3.8% and 4.0% in the first quarter of 2007 compared to 4.2% in 2006.comparable prior-year periods.

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EUROPE & SOUTH AFRICA OPERATIONS
The Europe & South Africa segment has operations in France, India, Italy, Mexico, Poland, Spain, South Africa and the United Kingdom (“UK”). The segment provides life reinsurance for a variety of products through yearly renewable term and coinsurance agreements, and reinsurance of critical illness coverage. Reinsurance agreements may be either facultative or automatic agreements covering primarily individual risks and in some markets, group risks.
                        
For the three months ended March 31, (dollars in thousands) 2007 2006 
  
(dollars in thousands) For the three months ended For the six months ended
 June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
    
Revenues:
  
Net premiums $167,796 $145,151  $164,796 $146,073 $332,592 $291,224 
Investment income, net of related expenses 5,774 3,392  7,103 3,873 12,877 7,265 
Investment related gains (losses), net  (224) 34 
Investment related losses, net  (630)  (181)  (854)  (147)
Other revenues 131 91   (27)  (178) 104  (87)
    
Total revenues 173,477 148,668  171,242 149,587 344,719 298,255 
  
Benefits and expenses:
  
Claims and other policy benefits 114,154 105,646  128,828 101,034 242,982 206,680 
Interest credited 452 190  564 156 1,016 346 
Policy acquisition costs and other insurance expenses 26,060 19,257  17,129 21,821 43,189 41,078 
Other operating expenses 11,687 8,778  12,875 9,307 24,562 18,085 
    
Total benefits and expenses 152,353 133,871  159,396 132,318 311,749 266,189 
Income before income taxes $21,124 $14,797 
   
Income (loss) before income taxes $11,846 $17,269 $32,970 $32,066 
  
Income before income taxes was $21.1$11.8 million in the firstsecond quarter of 2007 as compared to $14.8$17.3 million for the second quarter of 2006, and $33.0 million for the first six months of 2007 as compared to $32.1 million for the first six months of 2006. The decrease for the second quarter was primarily due to an increase in the loss ratio for the second quarter of 2007 compared to the second quarter of 2006, as mortality experience for the segment was favorable in the second quarter 2006. ThisThe six month increase in 2007 over 2006 was primarily the result of thedue to growth in net premiums and investment income as well as a decreasewhich was partially offset by an increase in the loss ratio fromfor the first quartersix months of 20062007 compared to the first quarter of 2007.2006. Foreign currency exchange fluctuations resulted in an increase to income before income taxes totaling approximately $0.7$0.1 million for the second quarter and approximately $0.8 million during the first quartersix months of 2007.
Europe & South Africa net premiums increased $22.6$18.7 million, or 15.6%12.8%, in the firstsecond quarter compared to the same period last year, and increased $41.4 million or 14.2% during the six months ended June 30, 2007 compared to the same period last year. This increase was primarily the result of new business from both existing and new treaties. During

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the second quarter and for the first quartersix months of 2007, several foreign currencies, particularly the British pound and the euro strengthened against the U.S. dollar which resulted inand increased net premiums by approximately $9.2 million.$10.0 million and $19.2 million for the second quarter and first six months of 2007, respectively, over the prior year. A significant portion of the net premiums were due to reinsurance of critical illness coverage, primarily in the UK. This coverage provides a benefit in the event of the diagnosis of a pre-defined critical illness. Net premiums earned from policies including this coverage totaled $57.0$57.9 million forand $114.9 million during the second quarter and first quartersix months of 2007, respectively, compared to $49.2$52.4 million and $101.6 million in the first quarter of 2006.comparable prior-year periods. Premium levels are significantly influenced by large transactions and reporting practices of ceding companies and therefore can fluctuate from period to period.
Investment income increased $2.4$3.2 million or 70.2%, for the firstsecond quarter compared to the same period in 2006 and increased $5.6 million for the six months ended June 30, 2007 compared to the same period in 2006. This increase was

21


primarily due to growth of the invested assets in the UK of $24.7 million over the prior period. The growth was also due to an increase in allocated investment income. Investment income and investment related gains and losses are allocated to the various operating segments based on average assets and related capital levels deemed appropriate to support the segment business volumes. Investment performance varies with the composition of investments and the relative allocation of capital to the operating segments.
Loss ratios were 68.0% and 72.8%increased from 69.2% for the first three monthssecond quarter of 2006 to 78.2% for the second quarter of 2007, and from 71.0% for the six months ended June 30, 2006 respectively.to 73.1% for the six months ended June 30, 2007. The decreaseincrease in loss ratio from the first three months of 2006 to the first three months of 2007ratios is due primarily to favorable claims experience in the UK including the effect of claims reversals by several clients.during 2006. 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 15.5%10.4% in the firstsecond quarter of 2007 compared to 13.3%14.9% in the firstsecond quarter of 2006, and 13.0% for the six months ended June 30, 2007 compared to 14.1% for the six months ended June 30, 2006. These percentages fluctuate due to timing of client company reporting, variations in the mixture of business being reinsured and the relative maturity of the business. In addition, as the segment grows, renewal premiums, which have lower allowances than first-year premiums, represent a greater percentage of the total net premiums.
Other operating expenses for the quarter increased to 7.0%from 6.4% of net premiums in 2006 to 7.8% in 2007, and for the first six months it increased from 6.0% in 2006.6.2% to 7.4%. This increase was due to higher costs associated with maintaining and supporting the significant increase in business over the past several years and the entrance into new markets.years. The Company believes that sustained growth in net premiums should lessen the burden of start-up expenses and expansion costs over time.
ASIA PACIFIC OPERATIONS
The Asia Pacific segment has operations in Australia, Hong Kong, Japan, Malaysia, Singapore, New Zealand, South Korea, Taiwan and mainland China. The principal types of reinsurance for this segment include life, critical illness, disability income, superannuation, and financial reinsurance. Superannuation is the Australian government mandated compulsory retirement savings program. Superannuation funds accumulate retirement funds for employees, and in addition, offer life and disability insurance coverage. Reinsurance agreements may be either facultative or automatic agreements covering primarily individual risks and in some markets, group risks.
                        
For the three months ended March 31, (dollars in thousands) 2007 2006 
  
(dollars in thousands) For the three months ended For the six months ended
 June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
  
Revenues:
  
Net premiums $186,838 $139,213  $198,971 $168,852 $385,809 $308,065 
Investment income, net of related expenses 8,663 6,496  8,610 6,822 17,273 13,318 
Investment related gains (losses), net  (71) 15 
Investment related losses, net  (499)  (92)  (570)  (77)
Other revenues 1,827 1,910  2,583 1,581 4,410 3,491 
    
Total revenues 197,257 147,634  209,665 177,163 406,922 324,797 
  
Benefits and expenses:
  
Claims and other policy benefits 150,483 110,356  151,664 131,866 302,147 242,222 
Policy acquisition costs and other insurance expenses 24,614 22,005  28,173 27,567 52,787 49,572 
Other operating expenses 11,828 8,659  14,219 10,005 26,047 18,664 
    
Total benefits and expenses 186,925 141,020  194,056 169,438 380,981 310,458 
 
Income before income taxes $10,332 $6,614  $15,609 $7,725 $25,941 $14,339 
    

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Income before income taxes increased $3.7$7.9 million in the firstsecond quarter of 2007 and $11.6 million for the six months ended June 30, 2007, as compared to the same periodperiods in 2006. Strong growthFavorable mortality experience in business volume for the Asia Pacific segment contributedKorea and favorable results related to an increasedisability insurance coverage in investment income of $2.2 million for the first quarter of 2007 compared to the first quarter of 2006. Significant net premium growth in the Japan and South Korea offices, along with favorable mortality experience,New Zealand allowed these two operations combined to contribute an additional $9.6$20.4 million to income before income taxes for the first quartersix months of 2007

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compared to the same period in 2006. Higher mortality experience in Australia New Zealand and Hong Kong caused these three operations combinedthis operation to contribute $4.9$7.0 million less to income before income taxes for the firstsecond quarter of 2007 than they contributed during the same period of 2006. Foreign currency exchange fluctuations were neutral to income before income taxes for the first quartersix months of 2007.
Net premiums grew $47.6$30.1 million, or 34.2%17.8%, induring the current quarter, and $77.7 million, or 25.2%, for the six months ended June 30, 2007, as compared to the same periodperiods in 2006 due almost entirely to2006. This premium growth was primarily the result of continued increases in the volume of business in Japan, Australia and South Korea.Japan. Due to continued growth with two significant clients, premiums in Australia increased by $19.1 million in the second quarter of 2007, and $34.4 million for the six months ended June 30, 2007, as compared to the same periods in 2006. Premiums in Japan increased by $22.9 million in the second quarter of 2007, and $47.0 million for the six months ended June 30, 2007 as compared to the same periods in 2006, primarily due to a single new significant treaty. Premium levels are significantly influenced by large transactions and reporting practices of ceding companies and can fluctuate from period to period.
A portion of the net premiums for the segment in each period presented represents reinsurance of critical illness coverage. This coverage provides a benefit in the event of the diagnosis of a pre-defined critical illness. Reinsurance of critical illness in the Asia Pacific operations is offered primarily in South Korea, Australia and Hong Kong. Net premiums earned from policies including this coverage totaled $26.0$24.6 million forand $50.6 million during the second quarter and first quartersix months of 2007, respectively, compared to $11.7$23.2 million forand $34.9 million during the comparable prior-year period.second quarter and first six months of 2006, respectively.
Foreign currencies in certain significant markets, particularly the Australian dollar, the Korean won and the South Korean won,New Zealand dollar, have strengthened against the U.S. dollar induring the first quartersix months of 2007, as compared to the same period in 2006. However,2007; however, the Japanese Yenyen has weakened against the U.S. dollar during the same respective period. The overall effect of changes in local Asia Pacific segment currencies was an increase in net premiums of approximately $5.5$8.5 million in the firstsecond quarter of 2007 and an increase of approximately $14.0 million in net premiums for the six months ended June 30, 2007, as compared to the same periodperiods in 2006.
Net investment income increased $2.2$1.8 million in the current quarter compared to the prior-year quarter.quarter, and $4.0 million for the six months ended June 30, 2007 compared to the six months ended June 30, 2006. This increase was primarily due to growth in the invested assets in Australia, along with an increase in allocated investment income.Australia. Investment income and investment related gains and losses are allocated to the various operating segments based on average assets and related capital levels deemed appropriate to support the segment business volumes. Investment performance varies with the composition of investments and the relative allocation of capital to the operating segments.
Other revenues decreasedincreased by $0.1$1.0 million for the firstsecond quarter of 2007, as compared to the same period in 2006, and increased by $0.9 million for the six months ended June 30, 2007, as compared to the same period in 2006. The primary source of other revenues in 2007 and 2006 has been fees from financial reinsurance treaties, which increased to $2.1$4.8 million during the first quartersix months of 2007 from $1.1$2.7 million during the first quartersix months of 2006. In previous quarters,Prior to 2007, a portion of the fee income generated by certain Asia Pacific financial reinsurance treaties was reflected in the U.S. financial reinsurance segment. Beginning with the first quarter ofin 2007, all of the fee income from the Asia Pacific-based financial reinsurance treaties is included within the Asia Pacific segment with reimbursement to the U.SU.S. segment for costs incurred by U.S. personnel. The first quartersix months of 2006 included $0.6 million of other revenue generated by the recapture of a modified coinsurance treaty in Hong Kong. Additionally, during the first quartersix months of 2007, other revenues were reduced by $0.5 million associated with a funds withheld treaty in Hong Kong.
Loss ratios were 80.5%76.2% and 79.3%78.1% for the firstsecond quarter of 2007 and 2006, respectively, and 78.3% and 78.6% for the six months ended June 30, 2007 and June 30, 2006, respectively. The decreased loss ratio for the second quarter of 2007 was due to favorable experience in New Zealand’s disability income products as compared to the same period of 2006. Loss ratios will fluctuate due to timing of client company reporting, variations in the mixture of business being reinsured and the relative maturity of the business. 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 13.2% for14.2% during the firstsecond quarter of 2007, as compared to 15.8%16.3% for the firstsecond quarter of 2006. Policy acquisition costs and other insurance expenses as a percentage of net premiums were 13.7% during the six months ended June 30, 2007, as compared to 16.1% for the six months ended June 30, 2006. The ratio of policy acquisition costs and other

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insurance expenses as a percentage of net premiums will generally decline as the business matures, however, the percentage does fluctuate periodically due to timing of client company reporting and variations in the mixture of business being reinsured.
Other operating expenses remained relatively stable at 6.3%increased to 7.1% of net premiums in the current quarter, compared to

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6.2%and 6.8% of net premiums for the six months ended June 30, 2007, up from 5.9% and 6.1% in the comparable prior-year period.periods. The timing of premium flows and the level of costs associated with the entrance into and development of new markets in the growing Asia Pacific segment may cause other operating expenses as a percentage of net premiums to fluctuate over periods of time.
CORPORATE AND OTHER
Corporate and Other revenues include investment income from invested assets not allocated to support segment operations and undeployed proceeds from the Company’s capital raising efforts, in addition to unallocated investment related gains and losses. Corporate expenses consist of the offset to capital charges allocated to the operating segments within the policy acquisition costs and other insurance expenses line item, unallocated overhead and executive costs, and interest expense related to debt and the $225.0 million of 5.75% Company-obligated mandatorily redeemable trust preferred securities. Additionally, Corporate and Other includes results from RGA Technology Partners, Inc., a wholly-owned subsidiary that develops and markets technology solutions for the insurance industry, the Company’s Argentine privatized pension business, which is currently in run-off, an insignificant amount of direct insurance operations in Argentina and the investment income and expense associated with the Company’s collateral finance facility.
                        
For the three months ended March 31, (dollars in thousands) 2007 2006 
  
(dollars in thousands) For the three months ended For the six months ended
 June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
    
Revenues:
  
Net premiums $279 $365  $948 $652 $1,227 $1,017 
Investment income, net of related expenses 21,974 9,812  22,257 8,983 44,231 18,795 
Investment related gains (losses), net  (9,852) 5,344   (1,963)  (2,369)  (11,815) 2,975 
Other revenues 3,639 2,214  1,961  (97) 5,600 2,117 
    
Total revenues 16,040 17,735  23,203 7,169 39,243 24,904 
 
Benefits and expenses:
  
Claims and other policy benefits  (85)  (846) 113  (185) 28  (1,031)
Interest credited  110   643  753 
Policy acquisition costs and other insurance expenses  (10,036)  (8,179)  (9,187)  (10,551)  (19,223)  (18,730)
Other operating expenses 13,458 11,861  9,998 11,540 23,456 23,401 
Interest expense 20,453 16,767  23,232 15,014 43,685 31,781 
Collateral finance facility expense 12,687   13,206 277 25,893 277 
    
Total benefits and expenses 36,477 19,713  37,362 16,738 73,839 36,451 
  
Loss before income taxes $(20,437) $(1,978) $(14,159) $(9,569) $(34,596) $(11,547)
    
Loss before income taxes increased $18.5$4.6 million duringand $23.0 million for the first quarterthree and six month periods ended June 30, 2007, respectively. The increase for the three months ended June 30, 2007 is primarily due to the implementation of 2007 from $2.0 million duringFIN 48, while the same period in 2006. This increase for the six months ended June 30, 2007 is primarily due to investment related losses increased interest expense and operating expenses.the implementation of FIN 48. Contributing to the increase in investment income in 2007 is the impact of the Company’s investment of the net proceeds from its collateral finance facility in June 2006 which is largely offset by the recognition of collateral finance facility expense. Investment income and investment related gains are the result of an allocation to other segments based upon average assets and related capital levels deemed appropriate to support their business volumes. The increase in investment related losses for the six months ended June 30, 2007, is primarily due to the recognition of a $10.5 million currency translation loss related to the

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Company’s decision to sell its direct insurance operations in Argentina.Argentina, which occurred in the first quarter. The increase in other operating expenses is largely related to equity based compensation plans, while the increase in interest expense is largely related to the adoptionimplementation of FIN 48.48 and the issuance $300 million in senior notes in March 2007.
Discontinued Operations
The discontinued accident and health operations reported a loss, net of taxes, of $0.7$1.6 million for the firstsecond quarter of 2007 compared to a loss, net of taxes, of $1.5$0.2 million for the firstsecond quarter of 2006. As of AprilJune 30, 2007 amounts in dispute or subject to audit exceed the Company’s reserves by approximately $18.9 million. 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. Management must make estimates and

22


assumptions 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
The Holding Company
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 indebtedness, 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.
The Company believes that it has sufficient liquidity to fund its cash needs under various scenarios that include the potential risk of the early recapture of a reinsurance treaty by the ceding company and significantly higher than expected death claims. Historically, the Company has generated positive net cash flows from operations. However, in the event of significant unanticipated cash requirements beyond normal liquidity, the Company has multiple liquidity alternatives available based on market conditions and the amount and timing of the liquidity need. These options include borrowings under committed credit facilities, secured borrowings, the ability to issue long-term debt, capital securities or common equity and, if necessary, the sale of invested assets.
Cash Flows
The Company’s net cash flows provided by operating activities for the periods ended March 31,June 30, 2007 and 2006 were $287.9$511.2 million and $152.1$307.9 million, respectively. Cash flows from operating activities are affected by the timing of premiums received, claims paid, and working capital changes. The $135.8$203.3 million net increase in operating cash flows for the threesix months of 2007 compared to the same period in 2006 was primarily a result of cash inflows related to premiums and investment income increasing more than cash outflows related to claims, acquisition costs, income taxes and other operating expenses. Cash from premiums and investment income increased $190.8$397.6 million and $21.4$127.3 million, respectively, and was offset by higher operating cash outlays of $76.4$321.6 million for the current threesix month period. The Company believes the short-term cash requirements of its business operations will be sufficiently met by the positive cash flows generated. Additionally, the Company believes it maintains a high quality fixed maturity portfolio with positive liquidity characteristics. These securities are available for sale and could be sold if necessary to meet the Company’s shortshort- and long-term obligations.
Net cash provided by (used in)used in investing activities was $(382.4)$443.3 million and $129.4$936.2 million in the first threesix months of 2007 and the comparable prior-year period, respectively. This change is primarily due to the increasea decrease in purchases of fixed maturity securities and the change in short-term investments and other invested assets. Other invested assets relatedgrew substantially in June 2006 due to the investment ofnet proceeds from the Company’s issuance of Senior Notes in March 2007. Also, contributing to the change was a $60.9 million decrease in securitized lending activities. The cash generated in 2006 by the change in short-term investments and other invested assets was used to repay the Company’s $100 million Senior Notes in April 2006.collateral finance facility. Additionally, the sales and purchases of fixed maturity securities are related to the management of the Company’s investment portfolios and the investment of excess cash generated by operating and financing activities.

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Net cash provided by financing activities was $248.4$183.8 million and $21.6$779.3 million in the first threesix months of 2007 and 2006, respectively. This change was due primarily to net proceeds from the Company’s collateral finance facility partially offset by $100.0 million principal payments on debt in 2006. Net cash provided by financing activities in 2007 includes $295.3 million of the net proceeds from the Company’s issuance of Senior Notes in March 2007, partially offset by a $30.0$66.6 million decrease in the net borrowings under revolving credit agreements. Also contributing to the change were net withdrawals from universal life and other investment type policies and contracts of $45.2 million during the current period compared to excess deposits of $49.8 million in 2006.
Debt and Preferred Securities
As of March 31,June 30, 2007, the Company had $973.7$938.8 million in outstanding borrowings under its debt agreements and was in compliance with all covenants under those agreements.
On March 6, 2007, RGA issued 5.625% Senior Notes due March 15, 2017 with a face amount of $300.0 million.

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These senior notes have been registered with the Securities and Exchange Commission. The net proceeds from the offering were approximately $295.3 million, a portion of which were used to pay down $30.0$50.0 million of indebtedness under a U.S. bank credit facility in March 2007. An additional $20.0 million was used to repay additional indebtedness under a bank credit facility in April 2007.facility. The remaining net proceeds are designated for general corporate purposes. Capitalized issue costs were approximately $2.6 million.
The Company maintains three revolving credit facilities. The largest is a syndicated credit facility with an overall capacity of $600.0 million that expires in September 2010. The overall capacity available for issuance of letters of credit is reduced by any cash borrowings made by the Company against this credit facility. The Company may borrow up to $300.0 million of cash under the facility. As of March 31,June 30, 2007 the Company’sCompany had no outstanding cash balance was $20.0 million under this credit facility, with an average interest rate of 5.74%.facility. The Company’s other credit facilities consist of a £15.0 million credit facility that expires in May 20072008 and an AUD$A$50.0 million Australian credit facility that expires in June 2011. The Company’s foreign denominated credit facilities had a combined outstanding balance of $57.8$42.9 million as of March 31,June 30, 2007.
As of March 31,June 30, 2007, the average interest rate on all long-term and short-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 6.37%6.38%. Interest is expensed on the face amount, or $225 million, of the Trust Preferred Securities at a rate of 5.75%.
Collateral Finance Facility
In June 2006, RGA’s subsidiary, Timberlake Financial, L.L.C. (“Timberlake Financial”), issued $850.0 million of Series A Floating Rate Insured Notes due June 2036 in a private placement. The notes were issued to fund the collateral requirements for statutory reserves required by the U.S. valuation of Life Policies Model Regulation (commonly referred to as Regulation XXX) on specified term life insurance policies reinsured by RGA Reinsurance Company. Proceeds from the notes, along with a $112.7 million direct investment by the Company, have been deposited into a series of trust accounts that collateralize the notes and are not available to satisfy the general obligations of the Company. Interest on the notes will accrue at an annual rate of 1-month LIBOR plus a base rate margin, payable monthly. The payment of interest and principal on the notes is insured through a financial guaranty insurance policy with a third party. The notes represent senior, secured indebtedness of Timberlake Financial with no recourse to RGA or its other subsidiaries. Timberlake Financial will rely primarily upon the receipt of interest and principal payments on a surplus note and dividend payments from its wholly-owned subsidiary, Timberlake Reinsurance Company II (“Timberlake Re”), a South Carolina captive insurance company, to make payments of interest and principal on the notes. The ability of Timberlake Re to make interest and principal payments on the surplus note and dividend payments to Timberlake Financial is contingent upon South Carolina regulatory approval and the performance of specified term life insurance policies with guaranteed level premiums retroceded by RGA’s subsidiary, RGA Reinsurance Company, to Timberlake Re.
In accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46(r), “Consolidation of Variable Interest Entities — An Interpretation of ARB No. 51,” Timberlake Financial is considered to be a variable interest entity and the Company is deemed to hold the primary beneficial interest. As a result, Timberlake Financial has been consolidated in the Company’s condensed financial statements. The Company’s condensed consolidated balance sheets include the assets of Timberlake Financial recorded as fixed maturity investments and other invested assets, which consists of restricted cash and cash equivalents, with the liability for the notes recorded as collateral finance facility. The Company’s condensed consolidated statements of income include the investment return of Timberlake Financial as investment income and the cost of the facility is reflected in collateral finance facility expense.
Asset / Liability Management
The Company actively manages its assets using an approach that is intended to balance quality, diversification, asset/liability matching, liquidity and investment return. The goals of the investment process are to optimize after- tax,after-tax, risk-adjusted investment income and after-tax, risk-adjusted total return while managing the assets and liabilities on a cash flow and duration basis.

26


The Company has established target asset portfolios for each major insurance product, which represent the investment strategies intended to profitably fund its liabilities within acceptable risk parameters. These strategies

24


include objectives for effective duration, yield curve sensitivity and convexity, liquidity, asset sector concentration and credit quality.
The Company’s liquidity position (cash and cash equivalents and short-term investments) was $513.9$593.6 million and $300.7 million at March 31,June 30, 2007 and December 31, 2006, respectively. The increase in the Company’s liquidity position from December 31, 2006 is primarily due to the timing of cash received late in the second quarter. Liquidity needs are determined from valuation analyses conducted by operational units and are driven by product portfolios. Periodic evaluations of demand liabilities and short-term liquid assets are designed to adjust specific portfolios, as well as their durations and maturities, in response to anticipated liquidity needs.
The Company occasionally enters into sales of investment securities under agreements to repurchase the same securities to help manage its short-term liquidity requirements.increase the Company’s earned yield on invested assets. These transactions are reported as securitized lending obligations within other liabilities. There were $47.5$90.4 million of these agreements outstanding at March 31,June 30, 2007 and there were no agreements outstanding at December 31, 2006.
Future Liquidity and Capital Needs
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, management believes 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 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, trust preferred securities and junior subordinated notes, repurchase RGA common stock under the board of director approved plan and meet its other obligations.
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 invested assets of $15.5$15.9 billion and $14.8 billion at March 31,June 30, 2007 and December 31, 2006, respectively. All investments made by RGA and its subsidiaries conform to the qualitative and quantitative limits prescribed by the applicable jurisdiction’s insurance laws and regulations. In addition, the boards of directors of the various operating companies periodically review the investment portfolios of their respective subsidiaries. RGA’s board of directors also receives reports on material investment portfolios. The Company’s investment strategy is to maintain a predominantly investment-grade, fixed maturity portfolio, to provide adequate liquidity for expected reinsurance obligations, and to maximize total return through prudent asset management. The Company’s earned yield on invested assets, excluding funds withheld, was 5.93%5.90% in the firstsecond quarter of 2007, compared with 5.78%5.72% for the firstsecond quarter of 2006. See “Note 4 — Investments” in the Notes to Consolidated Financial Statements of the 2006 Annual 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, U.S. and Canadian government securities, as well as mortgage- and asset-backed securities. As of March 31,June 30, 2007, approximately 97.1% 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 corporate securities, including commercial, industrial, finance and utility bonds, which represented approximately 53.6%53.5% of fixed maturity securities as of March 31,June 30, 2007 and had an average Standard and Poor’s (“S&P”) rating of “A-”“A”. The Company owns floating rate securities that represent approximately 18.3%19.5% of the total fixed maturity securities at March 31,June 30, 2007. These investments 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. The Company holds these investments to match specific floating rate liabilities primarily reflected in the condensed consolidated balance sheets as collateral finance facility.

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Within the fixed maturity security portfolio, the Company holds approximately $472.6$500.7 million in asset-backed

25


securities at March 31,June 30, 2007, which include credit card and automobile receivables, home equity loans, manufactured housing bonds and collateralized bond obligations. The Company’s asset-backed securities are diversified by issuer and contain both floating and fixed rate securities. 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. As of June 30, 2007, the Company held investments in securities with subprime mortgage exposure with an amortized cost totaling $300.2 million and an estimated fair value of $299.7 million. Those amounts include exposure to subprime mortgages through securities held directly in the Company’s investment portfolios as well as securities backing the Company’s funds withheld at interest investment. The securities are highly rated with a weighted average S&P credit rating of “AA+”. Additionally, the Company has largely avoided investing in securities originated in the second half of 2005 and beyond, which management believes was a period of lessened underwriting quality. The majority of the Company’s holdings are originations from 2005 and prior periods. In light of the high credit quality of the portfolio, the Company does not expect to realize any material losses despite the recent increase in default rates and market concern over future performance of this asset class.
The following table presents a summary of the securities by rating (dollars in thousands):
             
  Amortized     % of Fair
S&P Rating Cost Fair Value Value
AAA $134,556  $134,527   44.9%
AA  116,268   115,976   38.7%
A  48,054   47,823   16.0%
BBB  1,325   1,332   0.4%
           
Total $300,203  $299,658   100.0%
           
The Company monitors its fixed maturity securities to determine impairments in value and 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, current intent and ability to hold securities and various other subjective factors. Based on management’s judgment, securities determined to have an other-than-temporary impairment in value are written down to fair value. The Company recorded $0.6$1.9 million in other-than-temporary write-downs on fixed maturity securities for the threesix months ending March 31,June 30, 2007. The Company did not recordrecorded $0.2 million in other-than-temporary write-downs on fixed maturity securities for the threesix months ending March 31,June 30, 2006. During the threesix months ended March 31,June 30, 2007, the Company sold fixed maturity securities and equity securities with a fair value of $238.8$629.0 million, which were below amortized cost, at a loss of $6.1$18.4 million. Generally, such losses are insignificant in relation to the cost basis of the investment and are largely due to changes in interest rates from the time the security was purchased. The securities are classified as available-for-sale in order to meet the Company’s operational and other cash flow requirements. The Company does not engage in short-term buying and selling of securities to generate gains or losses.
The following table presents the total gross unrealized losses for 9861,341 fixed maturity securities and equity securities as of March 31,June 30, 2007, where the estimated fair value had declined and remained below amortized cost by the indicated amount (dollars in thousands):
                
 At March 31, 2007  At June 30, 2007 
 Gross Unrealized    Gross Unrealized   
 Losses % of Total  Losses % of Total 
Less than 20% $66,676  100.0% $164,683  97.6%
20% or more for less than six months    4,009  2.4%
20% or more for six months or greater      
          
Total $66,676  100.0% $168,692  100.0%
          
While all of these securities are monitored for potential impairment, the Company’s experience indicates that the first two categories do not present as great a risk of impairment, and often, fair values recover over time. These securities have generally been adversely affected by overall economic conditions, primarily an increase in the interest rate environment.

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The following tables present the estimated fair values and gross unrealized losses for the 9861,341 fixed maturity securities and equity securities that have estimated fair values below amortized cost as of March 31,June 30, 2007. These investments are presented by class and grade of security, as well as the length of time the related market value has remained below amortized cost.

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 As of March 31, 2007 As of June 30, 2007
 Equal to or greater than   Equal to or greater than  
(dollars in thousands) Less than 12 months 12 months Total Less than 12 months 12 months Total
 Gross Gross Gross
 Estimated Gross Unrealized Estimated Gross Unrealized Estimated Gross Unrealized Estimated Unrealized Estimated Unrealized Estimated Unrealized
 Fair Value Loss Fair Value Loss Fair Value Loss Fair Value Loss Fair Value Loss Fair Value Loss
Investment grade securities:
  
Commercial and industrial
 $336,679 $5,962 $418,403 $13,374 $755,082 $19,336  $651,520 $22,318 $370,138 $18,325 $1,021,658 $40,643 
Public utilities
 189,465 3,068 132,973 4,906 322,438 7,974  295,270 9,761 99,383 6,346 394,653 16,107 
Asset-backed securities
 284,156 1,719 22,944 256 307,100 1,975  281,962 2,655 19,389 400 301,351 3,055 
Canadian and Canadian provincial governments
 74,469 1,117 13,592 130 88,061 1,247  213,421 11,192 3,026 141 216,447 11,333 
Mortgage-backed securities
 754,215 4,201 572,876 10,567 1,327,091 14,768  1,251,600 23,080 490,875 18,848 1,742,475 41,928 
Finance
 532,025 5,036 242,630 6,897 774,655 11,933  1,041,635 25,573 148,215 9,899 1,189,850 35,472 
U.S. government and agencies
   985 22 985 22  105  981 25 1,086 25 
State and political subdivisions
 40,575 332 15,225 513 55,800 845  44,963 1,186 14,792 947 59,755 2,133 
Foreign governments
 158,050 3,937 59,102 1,375 217,152 5,312  168,873 6,385 70,416 2,250 239,289 8,635 
            
Investment grade securities
 2,369,634 25,372 1,478,730 38,040 3,848,364 63,412  3,949,349 102,150 1,217,215 57,181 5,166,564 159,331 
            
 
Non-investment grade securities:
  
Commercial and industrial
 $42,226 $544 $46,153 $862 $88,379 $1,406  65,560 2,045 56,016 2,108 121,576 4,153 
Finance
 8,728 86   8,728 86  13,322 281   13,322 281 
Asset-backed securities
 3,013 141   3,013 141 
Public utilities
 13,499 83 1,101 9 14,600 92  24,353 751 2,940 39 27,293 790 
            
Non-investment grade securities
 67,466 854 47,254 871 114,720 1,725  103,235 3,077 58,956 2,147 162,191 5,224 
            
Total fixed maturity securities
 $2,437,100 $26,226 $1,525,984 $38,911 $3,963,084 $65,137  $4,052,584 $105,227 $1,276,171 $59,328 $5,328,755 $164,555 
            
Equity securities
 $39,247 $756 $21,465 $783 $60,712 $1,539  $96,121 $3,069 $18,227 $1,068 $114,348 $4,137 
            
The Company believes that the analysis of each security whose price has been below market for twelve months or longer indicates 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 March 31,June 30, 2007. The unrealized losses did not exceed 12.8%30.0% on an individual security basis and are primarily a result of changes in interest rates and credit spreads and the long-dated maturities of the securities.
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 are performing and no valuation allowance has been established as of March 31,June 30, 2007.
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.

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Funds withheld at interest comprised approximately 27.5%28.3% and 27.9% of the Company’s cash and invested assets as of March 31,June 30, 2007 and December 31, 2006, 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

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owned and managed by the ceding company, and are reflected as funds withheld at interest on the Company’s condensed consolidated balance sheet. In the event of a ceding company’s insolvency, the Company would need to assert a claim on the assets supporting its reserve liabilities. However, the risk of loss to the Company is mitigated by its ability to offset amounts it owes the ceding company for claims or allowances with amounts owed to the Company 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 risk, the Company helps set the investment guidelines followed by the ceding company and monitors compliance. Ceding companies with funds withheld at interest had a minimum A.M. Best rating of “A”“A-”.
Other invested assets represented approximately 1.6%1.8% and 1.5% of the Company’s cash and invested assets as of March 31,June 30, 2007 and December 31, 2006, respectively. Other invested assets include common stock, preferred stocks, restricted cash and cash equivalents and limited partnership interests. The Company did not record an other-than-temporary write-down on its investments in limited partnerships in the first threesix months of 2007. The Company recorded other-than-temporary writedowns of $3.1 million on its investments in limited partnerships in the threesix months ended March 31,June 30, 2006.
Contractual Obligations
Other thanThe Company’s commitment to fund limited partnerships has increased since December 31, 2006 by $64.2 million to $96.9 million at June 30, 2007. Additionally, the Company’s obligation for long-term debt, including interest, increased primarily due to the March 2007 issuance of senior notes as previously discussed, there wasdiscussed. There were no other material changechanges in the Company’s contractual obligations from that reported in the 2006 Annual Report.
Mortality Risk Management
In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or retrocessionaires under excess coverage and coinsurance contracts. In the U.S., the Company retains a maximum of $6.0 million of coverage per individual life. In certain limited situations, due to the acquisition of in force blocks of business, the Company has retained more than $6.0 million per individual policy. In total, there are 3938 such cases of over-retained policies, for amounts averaging $2.4$2.6 million over the Company’s normal retention limit. The largest amount over retained on any one life is $12.1 million. For other countries, particularly those with higher risk factors or smaller books of business, the Company systematically reduces its retention. The Company has a number of retrocession arrangements whereby certain business in force is retroceded on an automatic or facultative basis.
The Company maintains a catastrophe insurance program (“Program”) that renews on August 13th of each year. The current Program began August 13, 2006, and covers events involving 10 or more insured deaths from a single occurrence. The Company retains the first $25 million in claims, the Program covers the next $50 million in claims, and the Company retains all claims in excess of $75 million. The Program covers only losses under North American guaranteed issue (corporate owned life insurance, bank owned life insurance, etc.) reinsurance programs and includes losses due to acts of terrorism, but excludes terrorism losses due to nuclear, chemical and/or biological events. The Program is insured by several insurance companies and Lloyd’s Syndicates, with no single entity providing more than $10 million of coverage.
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.
Generally, RGA’s insurance subsidiaries retrocede amounts in excess of their retention to RGA Reinsurance Company (“RGA Reinsurance”), RGA Reinsurance Company (Barbados) Ltd., or RGA Americas Reinsurance Company, Ltd. External retrocessions are arranged through the Company’s retrocession pools for amounts in excess of its retention. As of March 31,June 30, 2007, all retrocession pool members in this excess retention pool reviewed by the A.M. Best Company were rated “B++”, the fifth highest rating out of fifteen possible ratings, or better. The

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Company also retrocedes most of its financial reinsurance business to other insurance companies to alleviate the

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strain on statutory surplus created by this business. For a majority of the retrocessionaires that are not rated, letters of credit or trust assets have been given as additional security in favor of RGA Reinsurance. In addition, the Company performs annual financial and in force reviews of its retrocessionaires to evaluate financial stability and performance.
The Company has never experienced a material default in connection with retrocession arrangements, nor has it experienced any material difficulty in collecting claims recoverable from retrocessionaires; however, no assurance can be given as to the future performance of such retrocessionaires or as to the recoverability of any such claims.
The Company relies upon its clients to provide timely, accurate information. The Company may experience volatility in its earnings as a result of erroneous or untimely reporting from its clients. The Company works closely with its clients and monitors this risk in an effort to minimize its exposure.
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. The Company 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 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).
There has been no significant change in the Company’s quantitative or qualitative aspects of market risk during the quarter ended March 31,June 30, 2007 from that disclosed in the 2006 Annual Report.
New Accounting Standards
Effective January 1, 2007 the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income tax recognized in a company’s financial statements. FIN 48 requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made.
As a result of implementation of FIN 48, the Company recognized a $17.3 million increase in the liability for unrecognized tax benefits, a $5.3 million increase in the interest liability for unrecognized tax benefits, and a corresponding reduction to the January 1, 2007 balance of retained earnings of $22.6 million. The Company’s total amount of unrecognized tax benefits upon adoption of FIN 48 was $196.3 million. The Company reclassified, at adoption, $9.1 million of current tax liabilities to the liability for unrecognized tax benefits. The Company also reclassified, at adoption, $169.9 million of deferred income tax liabilities to the liability for unrecognized tax benefits for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The total amount of unrecognized tax benefits as of January 1, 2007 that would affect the effective tax rate if recognized is $26.4 million. The

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Company also had $29.8 million of accrued interest, as of January 1, 2007. The Company classifies interest accrued related to unrecognized tax benefits in interest expense, while penalties are included within income tax expense.
The Company files income tax returns in the U.S. federal jurisdiction and various state and non U.S. jurisdictions. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or non U.S. income tax examinations by tax authorities for years before 2003. There were no significant changes in the liability for unrecognized tax benefits during the threesix months ended March 31,June 30, 2007.
Effective January 1, 2007, the Company adopted the provisions of the FASB’s Emerging Issues Task Force (“EITF”) Issue 06-5. This issue, titled “Accounting for the Purchases of Life Insurance — Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4”, clarified that the amount of the DAC receivable beyond one year generally must be discounted to present value under Accounting Principles Board Opinion 21. The adoption of EITF Issue 06-05 did not have a material impact on the Company’s condensed consolidated financial statements.
Effective January 1, 2007, the Company adopted Statement of Position (“SOP”) 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts” (“SOP 05-1”). SOP 05-1 provides guidance on accounting by insurance enterprises for DAC on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97, “Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments”. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007, the American Institute of Certified Public Accountants (“AICPA”) issued related Technical Practice Aids (“TPAs”) to provide further clarification of SOP 05-1. The TPAs are effective concurrently with the adoption of the SOP. The adoption of SOP 05-1 and related TPA’sTPAs did not have a material impact on the Company’s condensed consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and requires enhanced disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements. The pronouncement is effective for fiscal years beginning after November 15, 2007. The guidance in SFAS 157 will be applied prospectively with the exception of: (i) block discounts of financial instruments; and (ii) certain financial and hybrid instruments measured at initial recognition under SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) which is to be applied retrospectively as of the beginning of initial adoption (a limited form of retrospective application). The Company is currently evaluating the impact of SFAS 157 and does not expect that the pronouncement will have a material impact on the Company’s condensed consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits all entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to report related unrealized gains and losses in earnings. The fair value option will generally be applied on an instrument-by-instrument basis and is generally an irrevocable election. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is evaluating which eligible financial instruments, if any, it will elect to account for at fair value under SFAS 159 and the related impact on the Company’s condensed consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and requires enhanced disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements. The pronouncement is effective for fiscal years beginning after November 15, 2007. The guidance in SFAS 157 will be applied prospectively with certain exceptions. The Company is currently evaluating the impact of SFAS 157 and does not expect that the pronouncement will have a material impact on the Company’s condensed consolidated financial statements.
Forward-Looking and Cautionary 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 strategies, earnings, revenues, income or loss, ratios, future financial performance, and growth potential of the Company. 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.

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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, lapsation or claims experience, (2) changes in the Company’s financial strength and credit ratings or those of

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MetLife, Inc. (“MetLife”), the beneficial owner of a majority of the Company’s common shares, or its subsidiaries, and the effect of such changes on the Company’s future results of operations and financial condition, (3) inadequate risk analysis and underwriting, (4) general economic conditions or a prolonged economic downturn affecting the demand for insurance and reinsurance in the Company’s current and planned markets, (5) the availability and cost of collateral necessary for regulatory reserves and capital, (6) market or economic conditions that adversely affect the Company’s ability to make timely sales of investment securities, (7) risks inherent in the Company’s risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (8) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (9) adverse litigation or arbitration results, (10) the adequacy of reserves, resources and accurate information relating to settlements, awards and terminated and discontinued lines of business, (11) the stability of and actions by governments and economies in the markets in which the Company operates, (12) competitive factors and competitors’ responses to the Company’s initiatives, (13) the success of the Company’s clients, (14) successful execution of the Company’s entry into new markets, (15) successful development and introduction of new products and distribution opportunities, (16) the Company’s ability to successfully integrate and operate reinsurance business that the Company acquires, (17) regulatory action that may be taken by state Departments of Insurance with respect to the Company, MetLife, or its subsidiaries, (18) the Company’s dependence on third parties, including those insurance companies and reinsurers to which the Company cedes some reinsurance, third-party investment managers and others, (19) the threat of natural disasters, catastrophes, terrorist attacks, epidemics or pandemics anywhere in the world where the Company or its clients do business, (20) changes in laws, regulations, and accounting standards applicable to the Company, its subsidiaries, or its business, (21) the effect of the Company’s status as an insurance holding company and regulatory restrictions on its ability to pay principal of and interest on its debt obligations, and (22) other risks and uncertainties described in this document and in the Company’s other filings with the Securities and Exchange Commission (“SEC”).
Forward-looking statements should be evaluated together with the many risks and uncertainties that affect the Company’s business, including those mentioned in this document and the cautionary statements described in the periodic reports the Company files with the SEC. These forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligations to update these forward-looking statements, even though the Company’s situation may change in the future. The Company qualifies all of its forward-looking statements by these cautionary statements. For a discussion of these risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to see Item 1A Risk Factors of the 2006 Annual Report.
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 included herein.
ITEM 4. Controls and Procedures
The Chief Executive Officer and the Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective.
There was no change in the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the quarter ended March 31,June 30, 2007, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is currently a party to three arbitrations that involve its discontinued accident and health business, including personal accident business (which includes London market excess of loss business) and workers’ compensation carve-out business. The Company is also party to a threatened arbitration related to its life

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reinsurance business. As of AprilJune 30, 2007, the parties involved in these actions have raised claims, or established reserves that may result in claims, in the amount of $22.9$23.9 million, which is $22.1$23.2 million in excess of the amounts held in reserve by the Company. The Company generally has little information regarding any reserves established

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by the ceding companies, and must rely on management estimates to establish policy claim liabilities. It is possible that any such reserves could be increased in the future. 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. See Note 20, “Discontinued Operations” in the Company’s consolidated financial statements accompanying the 2006 Annual Report for more information. Additionally, from time to time, the Company is subject to litigation related to employment-related matters in the normal course of its business. The Company cannot predict or determine the ultimate outcome of the pending litigation or arbitrations or provide useful 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. However, it is possible that an adverse outcome could, from time to time, have a material adverse effect on the Company’s consolidated net income in a particular quarter or cash flows in particular quarterly or annual periods.year.
ITEM 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in the Company’s 2006 Annual Report.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table summarizes the Company’s repurchase activity of its common stock during the first quarter ended March 31, 2007:
                 
          Total Number of Maximum Number of
  Total Number of     Shares Purchased as Shares that May Yet
  Shares Purchased Average Price Paid Part of Publicly Be Purchased Under
  (1) per Share Announced Plans the Plans
   
March 1, 2007 — March 31, 2007  65,082  $55.48       
(1)In March 2007 the Company net settled — issuing 242,614 shares from treasury and repurchasing 65,082 shares in settlement of income tax withholding requirements incurred by recipients of an equity incentive award.
Under a board of directors approved plan, the Company may purchase at its discretion up to $50 million of its common stock on the open market. As of March 31,June 30, 2007, the Company had purchased 225,500 shares of treasury stock under this program at an aggregate price of $6.6 million. All purchases were made during 2002. The Company generally uses treasury shares to support the future exercise of options granted under its stock option plans.
ITEM 4.
Submission of Matters to a Vote of Security Holders
The Company’s Annual Meeting of Shareholders was held on May 23, 2007. At the Annual Meeting, the following proposals were voted upon by the shareholders as indicated below:
(1)Election of the following Directors:
         
 
Directors Voted For Withheld
 
William J. Bartlett  51,915,684   3,887,839 
Alan C. Henderson  54,610,187   1,193,336 
A. Greig Woodring  47,345,957   8,457,566 
             
  Voted For Voted Against Abstain
(2) Proposal to authorize the sale of certain types of securities from time to time to MetLife, Inc. or its affiliates  41,272,380   12,174,004   31,887 
(3) Proposal to approve an amendment to the Company’s Flexible Stock Plan  35,658,328   17,803,174   16,759 
ITEM 6. Exhibits
See index to exhibits.

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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              May 7,August 3, 2007 
  A. Greig Woodring  
  President & Chief Executive Officer
(Principal Executive Officer) 
 
 
   
 By:  /s/ Jack B. Lay                             May 7,August 3, 2007 
  Jack B. Lay  
  Senior Executive Vice President &
Chief Financial Officer
(Principal Financial and Accounting Officer) 
 

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INDEX TO EXHIBITS
   
Exhibit  
Number Description
   
3.1 Restated Articles of Incorporation, incorporated by reference to Exhibit 3.1 of Current
Report on Form 8-K filed June 30, 2004.
   
3.2 Bylaws of RGA, as amended, incorporated by reference to Exhibit 3.2 of Quarterly Report on
Form 10-Q filed August 6, 2004.
4.2Second Supplemental Senior Indenture, dated as of March 9, 2007, by and between the Company
and The Bank of New York Trust Company, N.A., as successor trustee to The Bank of New York,
incorporated by reference to Exhibit 4.2 to Form 8-K dated March 6, 2007 (File No. 1-11848),
filed March 12, 2007.
   
31.1 Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
   
31.2 Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of
2002.
   
32.1 Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of
2002.
   
32.2 Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of
2002.

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