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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
X Annual report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934 for the fiscal year ended December 31, 1998
Transition report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934 Commission file number 1-11848
REINSURANCE GROUP OF AMERICA, INCORPORATED
(Exact name of registrant as specified in its charter)
MISSOURI 43-1627032
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
660 MASON RIDGE CENTER DRIVE, ST. LOUIS, MISSOURI 63141
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 453-7300
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Voting Common Stock, par value $0.01 New York Stock Exchange
Non-voting Common Stock, par value $0.01 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing sale price of the Common Stock on March 1,
1999, as reported on the New York Stock Exchange was approximately $584,600,330.
The aggregate market value of the non-voting stock held by non-affiliates of the
registrant, based upon the closing sale price of the Common Stock on March 1,
1999, as reported on the New York Stock Exchange was approximately $259,148,767.
As of March 1, 1999, Registrant had outstanding 37,927,128 shares of voting
common stock and 7,417,496 shares of non-voting common stock.
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DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Annual Report to Shareholders for the year ended
December 31,1998 ("the Annual Report") are incorporated by reference in Part I
of this Form 10-K. Certain portions of the Definitive Proxy Statement in
connection with the 1999 Annual Meeting of Shareholders ("the Proxy Statement")
which will be filed with the Securities and Exchange Commission not later than
120 days after the Registrant's fiscal year ended December 31, 1998, are
incorporated by reference in Part III of this Form 10-K.
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REINSURANCE GROUP OF AMERICA, INCORPORATED
FORM 10-K
YEAR ENDED DECEMBER 31, 1998
INDEX
PAGE
ITEM ----
NUMBER OF THIS FORM
- ------ ------------
PART I
1. BUSINESS..................................................................... 4
2. PROPERTIES................................................................... 22
3. LEGAL PROCEEDINGS............................................................ 23
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................... 23
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS........................................................ 23
6. SELECTED FINANCIAL DATA...................................................... 23
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................................ 24
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................... 24
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................................. 24
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE..................................... 24
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........................... 24
11. EXECUTIVE COMPENSATION....................................................... 26
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............... 26
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................... 26
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K............. 27
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Item 1. BUSINESS
A. OVERVIEW
Reinsurance Group of America, Incorporated ("RGA") is an insurance
holding company formed December 31, 1992. GenAmerica Corporation, a wholly owned
subsidiary of General American Mutual Holding Company and the parent corporation
of General American Life Insurance Company ("General American"), beneficially
owned approximately 64% of RGA's outstanding voting shares and approximately 53%
of all shares outstanding at December 31, 1998. The consolidated financial
statements include the assets, liabilities, and results of operations of RGA;
Reinsurance Company of Missouri, Incorporated ("RCM"); RGA Australian Holdings
Pty, Limited ("Australian Holdings"); RGA Reinsurance Company (Barbados) Ltd.
("RGA Barbados"); RGA International, Ltd. ("RGA International"), a Canadian
marketing and insurance holding company, RGA Sudamerica, S.A., a Chilean holding
company; RGA Holdings Limited (U.K.) ("RGA UK"), a United Kingdom holding
company; General American Argentina Seguros de Vida, S.A., formerly known as
Manantial Seguros de Vida, S.A. ("GA Argentina"), an Argentine life insurance
company; and RGA South African Holdings (Pty) Ltd ("RGA South Africa"), a South
African holding company. In addition, the consolidated financial statements
include the subsidiaries of RCM, Australian Holdings, RGA International, RGA UK,
RGA Sudamerica, S.A., and RGA South Africa subject to an ownership position of
fifty percent or more (collectively, the "Company").
The Company is primarily engaged in life reinsurance and international
life and disability on a direct and reinsurance basis. In addition, the Company
provides reinsurance of non-traditional business including asset-intensive
products and financial reinsurance. RGA and its predecessor, the Reinsurance
Division of General American ("Reinsurance Division") have been engaged in the
business of life reinsurance since 1973. As of December 31, 1998, the Company
had approximately $6.3 billion in consolidated assets.
Reinsurance is an arrangement under which an insurance company, the
"reinsurer," agrees to indemnify another insurance company, the "ceding
company," for all or a portion of the insurance risks underwritten by the ceding
company. Reinsurance is designed to (i) reduce the net liability on individual
risks, thereby enabling the ceding company to increase the volume of business it
can underwrite, as well as increase the maximum risk it can underwrite on a
single life or risk; (ii) stabilize operating results by leveling fluctuations
in the ceding company's loss experience; (iii) assist the ceding company to meet
applicable regulatory requirements; and (iv) enhance the ceding company's
financial strength and surplus position.
Life reinsurance primarily refers to reinsurance of individual term
life insurance policies, whole life insurance policies, universal life insurance
policies, and joint and survivor insurance policies. Ceding companies typically
contract with more than one company to reinsure their business. Reinsurance may
be written on an indemnity or an assumption basis. Indemnity reinsurance does
not discharge a ceding company from liability to the policyholder; a ceding
company is required to pay the full amount of its insurance obligations
regardless of whether it is entitled or able to receive payments from its
reinsurers. In the case of assumption reinsurance, the ceding company is
discharged from liability to the policyholder, with such liability passed to the
reinsurer. Reinsurers also may purchase reinsurance, known as retrocession
reinsurance, to cover their own risk exposure. Reinsurance companies enter into
retrocession agreements for reasons similar to those that cause primary insurers
to purchase reinsurance.
Reinsurance also may be written on a facultative basis or an automatic
treaty basis. Facultative reinsurance is individually underwritten by the
reinsurer for each policy to be reinsured, with the pricing and other terms
established at the time the policy is underwritten based upon rates negotiated
in advance. Facultative reinsurance normally is purchased by insurance companies
for medically impaired lives, unusual risks, or liabilities in excess of binding
limits on their automatic treaties.
An automatic reinsurance treaty provides that the ceding company will
cede risks to a reinsurer on specified blocks of business where the underlying
policies meet the ceding company's underwriting criteria. In contrast to
facultative reinsurance, the reinsurer does not approve each individual risk.
Automatic reinsurance treaties generally provide that the reinsurer will be
liable for a portion of the risk associated with the specified policies written
by the ceding company. Automatic reinsurance treaties specify the ceding
company's binding limit,
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which is the maximum amount of risk on a given life that can be ceded
automatically and that the reinsurer must accept. The binding limit may be
stated either as a multiple of the ceding company's retention or as a stated
dollar amount.
Facultative and automatic reinsurance may be written as yearly
renewable term, coinsurance, or modified coinsurance, which vary with the type
of risk assumed and the manner of pricing the reinsurance. Under a yearly
renewable term treaty, the reinsurer assumes only the mortality or morbidity
risk. Under a coinsurance arrangement, depending upon the terms of the contract,
the reinsurer may share in the risk of loss due to mortality or morbidity,
lapses, and the investment risk, if any, inherent in the underlying policy.
Modified coinsurance differs from coinsurance in that the assets supporting the
reserves are retained by the ceding company while the risk is transferred to the
reinsurer.
Generally, the amount of life reinsurance ceded under facultative and
automatic reinsurance agreements is stated on either an excess or a quota share
basis. Reinsurance on an excess basis covers amounts in excess of an agreed-upon
retention limit. Retention limits vary by ceding company and also vary by age
and underwriting classification of the insured, product, and other factors.
Under quota share reinsurance, the ceding company states its retention in terms
of a fixed percentage of the risk that will be retained, with the remainder up
to the maximum binding limit to be ceded to one or more reinsurers.
Reinsurance agreements, whether facultative or automatic, may provide
for recapture rights on the part of the ceding company. Recapture rights permit
the ceding company to reassume all or a portion of the risk formerly ceded to
the reinsurer after an agreed-upon period of time (generally 10 years), subject
to certain other conditions. Recapture of business previously ceded does not
affect premiums ceded prior to the recapture of such business.
The potential adverse effects of recapture rights are mitigated by the
following factors: (i) recapture rights vary by treaty and the risk of recapture
is a factor which is taken into account when pricing a reinsurance agreement;
(ii) ceding companies generally may exercise their recapture rights only to the
extent they have increased their retention limits for the reinsured policies;
and (iii) ceding companies generally must recapture all of the policies eligible
for recapture under the agreement in a particular year if any are recaptured,
which prevents a ceding company from recapturing only the most profitable
policies. In addition, when a ceding company increases its retention and
recaptures reinsured policies, the reserves maintained by the reinsurer to
support the recaptured portion of the policies are released by the reinsurer.
B. CORPORATE STRUCTURE
RGA is a holding company, the principal assets of which consist of the
common stock of RCM and RGA International, as well as investments in several
other subsidiaries or joint ventures. The primary source of funds for RGA to
make dividend distributions is dividends paid to RGA by its operating
subsidiaries, securities maintained in its investment portfolio, and proceeds
from securities offerings. RCM's primary source of funds are dividend
distributions paid by RGA Reinsurance Company ("RGA Reinsurance") whose
principal source of funds is derived from current operations. RGA
International's principal source of funds is dividends on its equity interest in
RGA Canada Management Company, Ltd. ("RGA Canada Management"), whose principal
source of funds is dividends paid by RGA Life Reinsurance Company of Canada
("RGA Canada"). RGA Canada's principal source of funds is derived from current
operations.
At December 31, 1998, the Company classified its accident and health
division as a discontinued operation for financial reporting purposes. The
accident and health operation has been placed into run-off with all treaties
(contracts) being terminated at the earliest possible date. RGA has given notice
to all reinsureds and retrocessionaires that all treaties will be cancelled at
the expiration of their term. If the treaty is continuous, a written Preliminary
Notice of Cancellation was given, followed by a final notice within 90 days of
the expiration date. The consolidated statements of income for all periods
presented have been restated, as appropriate, to reflect this line of business
as a discontinued operation.
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The Company has five main operational segments segregated primarily by
geographic region: U.S., Canada, Latin America, Asia Pacific, and other
international operations. The U.S. operations provide traditional life
reinsurance and non-traditional reinsurance to domestic clients. Non-traditional
business includes asset-intensive and financial reinsurance. Asset-intensive
products include reinsurance of stable value products, bank-owned life
insurance, and annuities. The Canada operations provide insurers with
traditional reinsurance as well as assistance with capital management activity.
The Latin America operations include direct life insurance through a joint
venture and subsidiaries in Chile and Argentina. The Latin America operations
also include traditional reinsurance and reinsurance of privatized pension
products primarily in Argentina. Asia Pacific operations provide primarily
traditional life reinsurance through RGA Reinsurance Company of Australia,
Limited ("RGA Australia") and RGA Reinsurance. Other international operations
include traditional business from Europe and South Africa, in addition to other
markets being developed by the Company. The operational segment results do not
include the corporate investment activity, general corporate expenses, interest
expense of RGA, and the provision for income tax expense (benefit). In addition,
the Company's discontinued accident and health operations are not reflected in
the continuing operations of the Company. The Company measures segment
performance based on profit or loss from operations before income taxes and
minority interest.
Consolidated income from continuing operations before income taxes and
minority interest increased 21.7% in 1998 and 24.4% in 1997. On a post-split
basis, after tax diluted earnings per share from continuing operations were
$2.08 for 1998 compared with $1.89 for 1997 and $1.52 for 1996. Earnings were
attributed primarily to the continuously strong performance of traditional
reinsurance in the U.S. and Canada. In addition, continued growth in
non-traditional products in the U.S. and developing business in Latin America
has contributed to the increase. The Asia Pacific operations have grown by more
than doubling revenue since 1996. For the Asia Pacific segment, results were
mixed with improving results in Australia offset by losses from the Hong Kong
operations due to increased lapse rates on several major treaties, reflecting
the overall economic slowdown in that market. For the other international
segment, the costs associated with the development of new business still exceed
the underlying product earnings. Nevertheless, the Company believes that the
sustained growth in premiums will lessen the burden of start-up costs.
The U.S. operations represented 70.5% of the Company's business as
measured by 1998 net premiums and have experienced significant growth since
inception through 1998. The U.S. operations market life reinsurance, reinsurance
of asset-intensive products, and financial reinsurance through RGA Reinsurance,
primarily to the largest U.S. life insurance companies. RGA Reinsurance, a
Missouri domiciled stock life insurance company, is wholly owned by RCM, a
wholly owned subsidiary of RGA. As of December 31, 1998, RGA Reinsurance had
regulatory capital and surplus of $359.6 million.
The Company's Canada operations, which represented 14.2% of the
Company's business as measured by 1998 net premiums, is conducted primarily
through RGA Canada, an indirect subsidiary of RGA International. RGA
International, a wholly owned subsidiary of RGA, is a New Brunswick, Canada,
marketing and insurance holding company which owns 100% of RGA Canada
Management, also a New Brunswick, Canada, holding company, which in turn owns
100% of RGA Canada. The Canadian operations provide insurers with traditional
reinsurance as well as assistance with capital management activity. As of
December 31, 1998, RGA Canada had regulatory capital and surplus of $103.9
million.
The Company's Latin America operations represented 9.7% of the
Company's business as measured by 1998 net premiums. Latin America direct
business is comprised primarily of Chilean single premium annuities and
Argentine group life and individual universal life products. RGA Sudamerica,
S.A., which is 99% owned by RGA and 1% owned by RGA Barbados, is a Chilean
holding company which currently has a 50% investment in BHIFAmerica Seguros de
Vida, S.A. ("BHIFAmerica"), and a 99% investment in RGA Reinsurance Company
Chile S.A. ("RGA Chile"), (the remaining 1% of RGA Chile is owned by RGA
Barbados). BHIFAmerica sells Chilean insurance products, including single
premium immediate annuities, credit life, and disability insurance. In July
1996, RGA created RGA Chile, which is licensed to assume life reinsurance
business in Chile. To date, all business assumed by RGA Chile was ceded from
BHIFAmerica. RGA also operates in Argentina through GA Argentina, a subsidiary,
which is 99% owned by RGA and 1%, owned by RGA Sudamerica S.A. GA Argentina
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markets and sells individual, group, credit and universal life and disability
insurance. The Company conducts reinsurance business in the Latin America region
through RGA Reinsurance. During 1998, a representative office was opened in
Mexico City and, in 1999, a representative office will be opened in Buenos Aires
to more directly assist clients in these markets. The Latin America reinsurance
operations derive revenue primarily from the reinsurance of privatized pension
products in Argentina. Additional types of reinsurance provided in the region
are traditional and credit life for groups and individuals.
The Company's Asia Pacific operations represented 5.2% of the Company's
business as measured by total net premiums in 1998. The Company conducts
reinsurance business in the Asia Pacific region through branch operations in
Hong Kong and Japan and will open a liaison office in Taiwan during 1999. In
January 1996, RGA formed Australian Holdings, a wholly owned holding company,
and RGA Australia, a wholly owned reinsurance company of Australian Holdings
licensed to assume life reinsurance in Australia. Business is also conducted
through Malaysian Life Reinsurance Group Berhad ("MLRG"), a joint venture in
Malaysia. The principal types of reinsurance provided in the region are life,
critical care, superannuation, and financial reinsurance.
The Company's other international operations represented 0.4% of the
Company's total net premiums for 1998. This segment provides life reinsurance to
international clients throughout Europe and South Africa. The principal type of
reinsurance being provided has been life reinsurance for a variety of life
products through yearly renewable term and coinsurance agreements. These
agreements may be either facultative or automatic agreements. During 1998, the
Company continued its expansion initiatives, with efforts underway to license a
life reinsurance subsidiary in London. In addition, the Company established RGA
South Africa, which conducts reinsurance through its wholly owned subsidiary,
RGA Reinsurance Company of South Africa, Limited, with offices in Cape Town and
Johannesburg, South Africa.
RGA Barbados was formed and capitalized in 1995, providing reinsurance
for a portion of certain business assumed by RGA Reinsurance from the ITT Lyndon
Life Insurance Company and certain other reinsurance business. During 1996, RGA
also formed a subsidiary in Bermuda, Benefit Resource Life Insurance Company
(Bermuda) Ltd., ("BRL," formerly known as RGA Reinsurance Company (Bermuda),
Ltd.), which had not commenced any business as of December 31, 1998.
Intercorporate Relationships
As a result of various transactions with General American, including
capital contributions and transfer of the business of the Reinsurance Division
from General American to the Company on January 1, 1993, the Company has all the
economic benefits and risks of certain reinsurance agreements entered into by
General American, although General American currently remains the contracting
party with some of the underlying ceding companies.
RGA operates on a stand-alone basis: however, General American and its
affiliates continue to provide certain administrative and other services to RGA
and RGA Reinsurance pursuant to separate administrative services agreements, and
provide investment management and advisory services to RGA, RCM, RGA
Reinsurance, Australian Holdings, RGA Barbados, RGA Canada, and RGA South Africa
pursuant to separate agreements.
The transfer of the Reinsurance Division to RGA has had no material
effect on the existing reinsurance business of the Reinsurance Division. A small
percentage of RGA Reinsurance's business continues to be written through General
American pursuant to a marketing agreement between RGA Reinsurance and General
American. Under the marketing agreement, General American has agreed to amend
and terminate its existing assumed and retroceded reinsurance agreements
pursuant to the Retrocession Agreements only at the direction of RGA
Reinsurance, thus giving RGA Reinsurance the contractual right to direct future
changes to existing reinsurance agreements. Further, General American has
agreed, during the term of the marketing agreement, to enter into additional
reinsurance agreements under which it is the reinsurer at, and only upon, the
direction of RGA Reinsurance. Therefore, until January 1, 2000, the date on
which the marketing agreement expires, General American will be precluded from
competing with the Company without the Company's consent, unless RGA Reinsurance
elects to terminate the marketing agreement earlier. Pursuant to the U.S.
Retrocession Agreement, any new reinsurance contracts will automatically be
retroceded to RGA Reinsurance. Although primary insurers must
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look to General American for payment in the first instance with respect to
reinsurance business written through General American, the Company will be
ultimately liable to General American with respect to such reinsurance. General
American charges RGA Reinsurance quarterly an amount equal to, on an annual
basis, 0.25% of specified policy-related liabilities that are associated with
existing reinsurance treaties written by General American for the benefit of RGA
Reinsurance. Most of the existing reinsurance agreements between General
American and various ceding companies were transferred to RGA Reinsurance,
replacing General American as the direct party to the treaties
Ratings
The ability of RGA Reinsurance to write reinsurance for its own account
will depend on its financial condition and its ratings. A.M. Best, an
independent insurance company rating organization, has rated RGA Reinsurance
"A+." A.M. Best's ratings are based upon an insurance company's ability to pay
policyholder obligations and are not directed toward the protection of
investors. A.M. Best's ratings for insurance companies currently range from
"A++" to "F", and some companies are not rated. Publications of A.M. Best
indicate that "A+" and "A++" ratings are assigned to those companies which, in
A.M. Best's opinion, have achieved superior overall performance when compared to
the standards established by A.M. Best and generally have demonstrated a strong
ability to meet their policyholder obligations over a long period of time. In
evaluating a company's financial strength and operating performance, A.M. Best
reviews the company's profitability, leverage, and liquidity as well as its
spread of risk, the quality and appropriateness of its reinsurance program, the
quality and diversification of its assets, the adequacy of its policy or loss
reserves, the adequacy of its surplus, its capital structure, management's
experience and objectives, and policyholders' confidence.
Additionally, RGA Reinsurance has received an "AA" rating from Standard
& Poor's and an "A2" rating from Moody's Investor Services ("Moody's") for
claims-paying ability. These ratings are based on an insurance company's ability
to pay policyholder obligations and are not directed toward the protection of
investors, and represent Standard & Poor's ("S&P's") third highest rating and
Moody's sixth highest rating. RGA has an "A" long-term debt rating from S&P,
which represents S&P's third highest rating classification and "Baa1" long term
debt rating from Moody's, which represents Moody's fourth highest rating
classification. A security rating is not a recommendation to buy, sell or hold
securities. It is subject to revision or withdrawal at any time by the assigning
rating organization, and each rating should be evaluated independently of any
other rating.
Regulation
RGA Reinsurance and RCM, RGA Canada, BHIF America and RGA Chile, GA
Argentina, RGA Barbados, BRL, RGA Australia, RGA South Africa, and RGA UK are
regulated by authorities in Missouri, Canada, Chile, Argentina, Barbados,
Bermuda, Australia, South Africa, and the United Kingdom, respectively. RGA
Reinsurance is subject to regulations in the other jurisdictions in which it is
licensed or authorized to do business. Insurance laws and regulations, among
other things, establish minimum capital requirements and limit the amount of
dividends, distributions, and intercompany payments affiliates can make without
prior regulatory approval. Missouri law imposes restrictions on the amounts and
type of investments insurance companies like RGA Reinsurance may hold.
General
The insurance laws and regulations, as well as the level of supervisory
authority that may be exercised by the various insurance departments, vary by
jurisdiction, but generally grant broad powers to supervisory agencies or
regulators to examine and supervise insurance companies and insurance holding
companies with respect to every significant aspect of the conduct of the
insurance business, including approval or modification of contractual
arrangements. These laws and regulations generally require insurance companies
to meet certain solvency standards and asset tests, to maintain minimum
standards of business conduct, and to file certain reports with regulatory
authorities, including information concerning their capital structure,
ownership, and financial condition, and subject insurers to potential
assessments for amounts paid by guarantee funds.
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RGA Reinsurance and RGA Canada are required to file annual or quarterly
statutory financial statements in each jurisdiction in which they are licensed.
Additionally, RGA Reinsurance and RGA Canada are subject to periodic examination
by the insurance departments of the jurisdictions in which each is licensed,
authorized, or accredited. The most recent examination of RGA Reinsurance by the
Missouri Department of Insurance was for the year ended December 31, 1995. The
result of this examination contained no material adverse findings. RGA Canada,
which was formed in 1992, was reviewed by the Canadian Superintendent of
Financial Institutions during 1997. The result of this examination contained no
material adverse findings.
RGA Australia is required to file a quarterly statistical return and
annual financial statement with the Insurance and Superannuation Commission of
Australia ("ISC"). RGA Australia is subject to additional reviews by the ISC on
an as required basis. In August 1997, RGA Australia was reviewed by the ISC with
no material adverse findings.
RGA Barbados is required to file an annual financial statement with the
Office of the Supervisor of Insurance of Barbados.
GA Argentina as a direct life insurance company is required to file
annual and quarterly statutory financial statements in Argentina which are
reviewed by external auditors and filed with the Superintendencia de Seguros de
la Nacion ("Superintendencia-Argentina"). Additionally, GA Argentina is subject
to periodic examination by the Superintendencia-Argentina. The most recent
examination by the Superintendencia-Argentina was in March 1997. The results of
this examination were discussed with management and all adjustments were
reflected during 1997.
BHIFAmerica and RGA Chile are required to file annual and quarterly
regulatory financial statements in Chile which are reviewed by external auditors
annually and filed with the Superintendencia de Valores y Seguros de Chile
("Superintendencia-Chile"). The most recent examination by the
Superintendencia-Chile was during 1997. The result of this examination contained
no material adverse findings.
Although some of the rates and policy terms of U.S. direct insurance
agreements are regulated by state insurance departments, the rates, policy
terms, and conditions of reinsurance agreements generally are not subject to
regulation by any regulatory authority. However, the NAIC Model Law on Credit
for Reinsurance, which has been adopted in most states, imposes certain
requirements for an insurer to take reserve credit for reinsurance ceded to a
reinsurer. Generally, the reinsurer is required to be licensed or accredited in
the insurer's state of domicile, or security must be posted for reserves
transferred to the reinsurer in the form of letter of credit or assets placed in
trust. The NAIC Life and Health Reinsurance Agreements Model Regulation, which
has been passed in most states, imposes additional requirements for insurers to
claim reserve credit for reinsurance ceded (excluding YRT reinsurance and
non-proportional reinsurance). These requirements include bona fide risk
transfer, an insolvency clause, written agreements, and filing of reinsurance
agreements involving in force business, among other things.
In recent years, the NAIC and insurance regulators increasingly have
been re-examining existing laws and regulations and their application to
insurance companies. In particular, this re-examination has focused on insurance
company investment and solvency issues, and, in some instances, has resulted in
new interpretation of existing law, the development of new laws, and the
implementations of non-statutory guidelines. The NAIC has formed committees and
appointed advisory groups to study and formulate regulatory proposals on such
diverse issues as the use of surplus debentures, accounting for reinsurance
transactions, and the adoption of risk-based capital rules. It is not possible
to predict the future impact of changing state and federal regulation on the
operations of RGA or its subsidiaries.
As part of this review, the NAIC recently adopted the Valuation of Life
Insurance Policies Model Regulation (the "Model Regulation"). If adopted in its
current form the Model Regulation will have the greatest impact on level term
life insurance products with current premiums guaranteed for more than five
years. Companies with these products generally will have to increase reserves
above the current levels or limit the period of guaranteed premiums to five
years. The Model Regulation will also affect the reserve requirements for other
increasing premium products, deficiency reserves and certain benefit guarantees
in universal life products. The Model Regulation will not affect the financial
statements of the Company prepared in accordance with GAAP:
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however, as a statutory accounting principle, the Model Regulation may affect
the statutory financial statements of the subsidiaries.
In addition to the above regulatory changes being reexamined and
considered by the NAIC, the NAIC is in the process of codifying statutory
accounting principles. The purpose of such codification is to establish a
uniform set of accounting rules and regulations for use by insurance companies
in financial report preparation in connection with financial reporting to
regulatory authorities. The Company has not determined what impact, if any, this
codification will have on its subsidiaries' statutory surplus requirements.
Capital Requirements
Guidelines on Minimum Continuing Capital and Surplus Requirements
("MCCSR") became effective for Canadian insurance companies in December 1992,
and Risk-Based Capital ("RBC") guidelines promulgated by the National
Association of Insurance Commissioners ("NAIC") became effective for U.S.
companies in 1993. The MCCSR risk-based capital guidelines, which are applicable
to RGA Canada, prescribe surplus requirements and consider both assets and
liabilities in establishing solvency margins. The RBC guidelines, applicable to
RGA Reinsurance, similarly identify minimum capital requirements based upon
business levels and asset mix. Both RGA Canada and RGA Reinsurance maintain
capital levels in excess of the amounts required by the applicable guidelines.
Regulations in Chile, Argentina, Australia, Barbados, Bermuda, South Africa and
United Kingdom also require certain minimum capital levels, and subject the
companies operating there to oversight by the applicable regulatory bodies. The
Company's subsidiaries in Chile, Argentina, Australia, Barbados, and Bermuda,
South Africa and United Kingdom meet the minimum capital requirements in their
respective jurisdiction. The Company cannot predict the effect that any proposed
or future legislation or rule making in the countries in which the Company
operates may have on the financial condition or operations of the Company or its
subsidiaries.
Insurance Holding Company Regulations
RGA is regulated in Missouri as an insurance holding company. The
Company is subject to regulation under the insurance and insurance holding
company statutes of Missouri. The Missouri insurance holding company laws and
regulations generally require insurance and reinsurance subsidiaries of
insurance holding companies to register with the Missouri Department of
Insurance and to file with the Missouri Department of Insurance certain reports
describing, among other information, their capital structure, ownership,
financial condition, certain intercompany transactions, and general business
operations. The Missouri insurance holding company statutes and regulations also
require prior approval of, or in certain circumstances, prior notice to the
Missouri Department of Insurance of certain material intercompany transfers of
assets, as well as certain transactions between insurance companies, their
parent companies and affiliates.
Under Missouri insurance laws and regulations, unless (i) certain
filings are made with the Missouri Department of Insurance, (ii) certain
requirements are met, including a public hearing, and (iii) approval or
exemption is granted by the Missouri Director of Insurance, no person may
acquire any voting security or security convertible into a voting security of an
insurance holding company, such as RGA, which controls a Missouri insurance
company, or merge with such a holding company, if as a result of such
transaction such person would "control" the insurance holding company. "Control"
is presumed to exist under Missouri law if a person directly or indirectly owns
or controls 10% or more or the voting securities of another person.
Certain state legislatures have considered or enacted laws that alter,
and in many cases increase, state regulation of insurance holding companies. In
recent years, the NAIC and state legislators have begun re-examining existing
laws and regulations, specifically focusing on insurance company investments and
solvency issues, risk-based capital guidelines, intercompany transactions in a
holding company system, and rules concerning extraordinary dividends.
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Canadian federal insurance laws and regulations do not contain
automatic registration and reporting requirements applicable to insurance
holding companies, although such companies, together with all affiliates of a
Canadian insurance company, may be required to supply such information to the
Canadian Superintendent of Financial Institutions upon request.
Transactions whereby a person or entity would acquire control of or a
significant interest in, or increase (by more than an insignificant amount) its
existing interest in, a Canadian insurance company are subject to the prior
approval of the Canadian Minister of Finance. "Significant interest" in an
insurance company means the beneficial ownership of shares representing 10% or
more of a given class, while "control" of an insurance company is presumed to
exist when a person beneficially owns shares representing more than 50% of the
votes entitled to be cast for the election of directors and such votes are
sufficient to elect a majority of the directors of the insurance company. Any
transaction or series of transactions with the same person involving the
acquisition or disposition by a Canadian insurance company of assets (other than
the payment of dividends) the aggregate value of which, over a twelve-month
period, exceeds 10% of such company's total assets are also subject to the prior
approval of the Canadian Superintendent of Financial Institutions.
In addition, Canadian federal insurance laws and regulations generally
prohibit transactions between insurance companies and related parties, with
certain specified exceptions. Permitted related-party transactions must be on
terms that are at least as favorable to the insurance company as market terms
and conditions as defined in the Canadian federal insurance laws and
regulations. Reinsurance agreements pursuant to which an insurance company
causes itself to be reinsured with related parties are restricted unless (i) the
reinsurance is taken out in the ordinary course of business, and (ii) the
related party is either a Canadian insurance company or a foreign insurance
company duly registered in Canada. Reinsurance agreements pursuant to which an
insurance company reinsures risks undertaken by a related party are restricted
unless the reinsurance is taken out in the ordinary course of business.
Restrictions on Dividends and Distributions
Current Missouri law (applicable to Reinsurance Group of America,
Incorporated, RCM, and RGA Reinsurance) permits the payment of dividends or
distributions which, together with dividends or distributions paid during the
preceding twelve months, do not exceed the greater of (i) 10% of statutory
capital and surplus as of the preceding December 31, or (ii) statutory net gain
from operations for the preceding calendar year. Any proposed dividend in excess
of this amount is considered an "extraordinary dividend" and may not be paid
until it has been approved, or a 30-day waiting period has passed during which
it has not been disapproved, by the Missouri Director of Insurance. In addition,
dividends may be paid only to the extent the insurer has earned surplus (as
opposed to contributed surplus). For example, the maximum amount available for
payment of dividends in 1999 by RGA Reinsurance under Missouri law, without the
prior approval of the Missouri Director of Insurance, is $36.0 million.
In contrast to current Missouri law, the NAIC Model Insurance Holding
Company Act (the "Model Act") defines an extraordinary dividend as a dividend or
distribution which, together with dividends or distributions paid during the
preceding twelve months, exceeds the lesser of (i) 10% of statutory capital and
surplus as of the preceding December 31, or (ii) statutory net gain from
operations for the preceding calendar year. The Company is unable to predict
whether, when, or in what form Missouri will enact a new measure for
extraordinary dividends. The maximum amount available for payment on dividends
in 1999 by RGA Reinsurance under the Model Act without prior approval of the
Missouri Director of Insurance would have been $12.8 million at December 31,
1998.
In addition to the foregoing, Missouri insurance laws and regulations
require that the statutory surplus of RGA Reinsurance following any dividend or
distribution be reasonable in relation to its outstanding liabilities and
adequate to meet its financial needs. The Missouri Director of Insurance may
bring an action to enjoin or rescind the payment of a dividend or distribution
by RGA Reinsurance that would cause its statutory surplus to be inadequate under
the standards of Missouri.
Under the corporate law and regulations of New Brunswick applicable to
RGA International and RGA Canada Management, dividends may be declared and paid
unless there are reasonable grounds for believing either that the corporation
is, or would after the payment be, unable to pay its liabilities when due or
that the realizable
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value of its assets would be less than the aggregate of its liabilities and
stated capital of all classes. RGA Canada may not pay a dividend if there are
reasonable grounds for believing that RGA Canada is, or the payment of the
dividend would cause RGA Canada to be, in contravention of any regulation made
by the Governor in Council and the guidelines adopted by the Superintendent of
Financial Institutions respecting the maintenance by life companies of adequate
and appropriate forms of liquidity. The Canadian MCCSR guidelines consider both
assets and liabilities in establishing solvency margins, the effect of which
could limit the maximum amount of dividends that may be paid by RGA Canada. RGA
Canada's ability to declare and pay dividends in the future will be affected by
its continued ability to comply with such guidelines. Moreover, RGA Canada must
give notice to the Superintendent of Financial Institutions of the declaration
of any dividend at least ten days prior to the day fixed for its payment. The
maximum amount available for payment of dividends by RGA Canada to RGA Canada
Management under the Canadian MCCSR guidelines was $26.6 million at December 31,
1998.
Default or Liquidation
In the event of a default on any debt that may be incurred by RGA or
the bankruptcy, liquidation, or other reorganization of RGA, the creditors and
stockholders of RGA will have no right to proceed against the assets of RGA
Reinsurance, RGA Canada, or other insurance or reinsurance company subsidiaries
of RGA. If RGA Reinsurance were to be liquidated, such liquidation would be
conducted by the Missouri Director of Insurance as the receiver with respect to
such insurance company's property and business. If RGA Canada were to be
liquidated, such liquidation would be conducted pursuant to the general laws
relating to the winding-up of Canadian federal companies. In both cases, all
creditors of such insurance company, including, without limitation, holders of
its reinsurance agreements and, if applicable, the various state guaranty
associations, would be entitled to payment in full from such assets before RGA,
as a direct or indirect stockholder, would be entitled to receive any
distributions made to it prior to commencement of the liquidation proceedings,
and, if the subsidiary was insolvent at the time of the distribution,
shareholders of RGA might likewise be required to refund dividends subsequently
paid to them.
If RGA Australia were to be liquidated, such liquidation would be
conducted pursuant to the general laws relating to winding-up of Australian
insurance companies as prescribed in the Australian Life Insurance Act 1995 and
conducted in accordance with the Corporations Law of the State or internal
territory under which RGA Australia was incorporated. The assets of RGA
Australia would then be applied by specific priority as specified in the
Corporations Law of the State.
Federal Regulation
Discussions continue in the Congress of the United States concerning
the future of the McCarran-Ferguson Act, which exempts the "business of
insurance" from most federal laws, including anti-trust laws, to the extent such
business is subject to state regulation. Judicial decisions narrowing the
definition of what constitutes the "business of insurance" and repeal or
modification of the McCarran-Ferguson Act may limit the ability of the Company,
and RGA Reinsurance in particular, to share information with respect to matters
such as rate-setting, underwriting, and claims management. It is not possible to
predict the effect of such decisions or change in the law on the operation of
the Company.
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 under excess coverage and
coinsurance contracts. RGA Reinsurance has a retention limit of $2.5 million of
liability on any one life for all life reinsurance. RGA Reinsurance has a number
of retrocession arrangements whereby certain business in force is retroceded on
a quota share or facultative basis. The Company also retrocedes most of its
financial reinsurance business to other insurance companies to alleviate the
strain on statutory surplus created by this business.
Generally, RGA's insurance subsidiaries retrocede amounts in excess of
their retention to RGA Reinsurance. Retrocessions are arranged through RGA
Reinsurance's retrocession pool for amounts in excess of its retention. A
majority of the U.S. retrocessionaires under such arrangements was rated "A-" or
better by A.M. Best
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as of December 31, 1997. Also, six of the twelve international retrocessionaires
were reviewed by A.M. Best since December 1996 and rated A- or better. In
addition, the Company performs annual financial and in force reviews of its
domestic and international retrocessionaires to evaluate financial stability and
performance. For a majority of the retrocessionaires that were not rated,
security in the form of letters of credit or trust assets have been given by
such retrocessionaires as additional security in favor of RGA Reinsurance.
RGA Reinsurance has never experienced a material default in connection
with its retrocession arrangements, nor has it experienced any difficulty in
collecting claims recoverable from its retrocessionaires; however, no assurance
can be given as to the future performance of such retrocessionaires or as to
recoverability of any such claims.
RGA Reinsurance has catastrophe insurance coverage issued by an insurer
rated "A" by A.M. Best as of December 31, 1997. This coverage provides benefits
of up to $100 million per occurrence for claims involving three or more deaths
in a single accident, with a deductible of $1.5 million per occurrence. This
coverage is terminable annually on 90 days notice and is ultimately provided
through a pool of seventeen unaffiliated insurers. The Company believes such
catastrophe insurance coverage is adequate to protect the Company from the risks
of multiple deaths of lives reinsured by policies with RGA Reinsurance in a
single accident.
RGA Canada's policy is to retain up to C$100,000 of individual life and
up to C$100,000 of Accidental Death and Dismemberment liability on any one life.
RGA Canada retrocedes amounts in excess of its retention mostly to RGA
Reinsurance through General American. Retrocessions are arranged through RGA
Reinsurance's retrocession pool. RGA Canada has never experienced a default in
connection with its retrocession arrangements, nor has it experienced any
difficulty in collecting claims recoverable from its retrocessionaires. However,
no assurance can be given as to the future performance of such retrocessionaires
or as to the recoverability of any such claims.
For other international business, RGA Reinsurance retains up to $2.5
million for U.S., Canadian, Australian, and New Zealand currency-denominated
business. For other currencies and for countries with higher risk factors, RGA
Reinsurance systematically reduces its retention. The Chilean subsidiaries have
a policy of ceding business in excess of approximately $22,000, while the
Argentine subsidiary cedes business in excess of $40,000. RGA Australia has a
retrocession arrangement with RGA Reinsurance in which life risks above $100,000
Australian dollars are retroceded to RGA Reinsurance. On an aggregate basis
among all of its subsidiaries, the Company does not retain more than $2.5
million on any one life.
Underwriting
Facultative. Senior management has developed underwriting guidelines,
policies, and procedures with the objective of controlling the quality of
business written as well as its pricing. RGA Reinsurance's underwriting process
emphasizes close collaboration among its underwriting, actuarial, and operations
departments. Management periodically updates these underwriting policies,
procedures, and standards to account for changing industry conditions, market
developments, and changes occurring in the field of medical technology; however,
no assurance can be given that all relevant information has been analyzed or
that additional risks will not materialize. These policies, procedures, and
standards are documented in an on-line underwriting manual.
RGA Reinsurance management determines whether to accept facultative
reinsurance business on a prospective insured by reviewing the client company's
applications and medical requirements, and assessing financial information and
any medical impairments. Most facultative applications involve a prospective
insured with multiple impairments, such as heart disease, high blood pressure,
and diabetes, requiring a difficult underwriting assessment. To assist its
underwriters in making this assessment, the U.S. life operations employ two
full-time and one part-time medical directors, as well as a medical consultant.
Automatic. RGA Reinsurance's management determines whether to write
automatic reinsurance business by considering many factors, including the types
of risks to be covered; the ceding company's retention limit and binding
authority, product, and pricing assumptions; and the ceding company's
underwriting standards, financial
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strength and distribution systems. For automatic business, the U.S. operations
endeavor to ensure that the underwriting standards and procedures of its ceding
companies are compatible with those of RGA. To this end, the U.S. operations
conduct periodic reviews of the ceding companies' underwriting and claims
personnel and procedures. Approximately seven client audits are conducted each
year.
AIDS. Since 1987, the U.S. life insurance industry has implemented the
practice of antibody blood testing to detect the presence of the HIV virus
associated with Acquired Immune Deficiency Syndrome ("AIDS"). Prior to the onset
of routine antibody testing, it was possible for applicants with AIDS to
purchase significant amounts of life insurance. Since 1987, the guidelines used
by the U.S. operations have required ceding companies to conduct HIV testing for
life insurance risks at or above $100,000. Since 1987, the accepted Canadian
industry practice is to conduct HIV testing for life insurance risks over
C$100,000.
The Company believes that the antibody test for AIDS is effective. No
assurance can be given, however, that additional AIDS-related death claims
involving insureds who test negative for AIDS at the time of underwriting will
not arise in the future. The Company believes that its primary exposure to the
AIDS risk is related to business issued before the onset of AIDS antibody
testing in 1987. Each year, this business represents a smaller portion of RGA's
reinsurance in force.
Competition
Reinsurers compete on the basis of many factors, including financial
strength, pricing and other terms and conditions of reinsurance agreements,
reputation, service, and experience in the types of business underwritten. The
U.S. and Canadian life reinsurance markets are served by numerous international
and domestic reinsurance companies. The Company believes that RGA Reinsurance's
primary competitors in the U.S. life reinsurance market are currently
Transamerica Occidental Life Insurance Company, Swiss Re Life of America,
Security Life of Denver, and Lincoln National Corporation. However, within the
reinsurance industry, this can change from year to year. The Company believes
that RGA Canada's major competitors in the Canadian life reinsurance market are
Swiss Re Life Canada and Munich Reinsurance Company of Canada.
The international life operations compete with subsidiaries of several
U.S. individual and group life insurers and reinsurers and other internationally
based insurers and reinsurers, some of which are larger and have access to
greater resources than the Company. Competition is primarily on the basis of
price, service, and financial strength.
Employees
As of December 31, 1998, the Company had 421 employees located in the
United States, Canada, Argentina, Chile, Mexico, Hong Kong, Australia, Japan,
Taiwan, South Africa, and the United Kingdom. None of these employees are
represented by a labor union. The Company believes that employee relations at
all of its subsidiaries are good.
C. INDUSTRY SEGMENTS
The Company obtains substantially all of its revenues through
reinsurance agreements that cover a portfolio of life insurance products,
including term life, credit life, universal life, whole life, and joint and last
survivor insurance, as well as annuities, financial reinsurance, accident and
health insurance, and direct premiums which include single premium pension
annuities and group life. Generally, the Company, through a subsidiary, has
provided reinsurance and, to a lesser extent, insurance for mortality and
morbidity risks associated with such products. With respect to asset-intensive
products, the Company has also provided reinsurance for investment-related
risks. RGA Reinsurance also writes a small amount of primary insurance on
General American directors and officers, and a small amount of short-term life
insurance.
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The following table sets forth the Company's gross and net premiums attributable
to each of the industry segments for the periods indicated:
GROSS AND NET PREMIUMS BY SEGMENT
(dollars in millions)
Year Ended December 31
----------------------
1998 1997 1996
---- ---- ----
Amount % Amount % Amount %
------ - ------ - ------ -
GROSS PREMIUMS:
U.S. operations $ 902.9 71.4 $687.2 76.2 $620.6 80.4
Canada operations 192.9 15.2 105.5 11.7 81.5 10.6
Latin America operations 108.3 8.6 69.0 7.7 48.1 6.2
Asia Pacific operations 56.9 4.5 37.3 4.1 21.8 2.8
Other international operations 3.7 0.3 2.3 0.3 0.3 0.0
-------- ----- ------ ----- ------ -----
Total $1,264.7 100.0 $901.3 100.0 $772.3 100.0
======== ===== ====== ===== ====== =====
NET PREMIUMS:
U.S. operations $716.2 70.5 $554.2 74.4 $486.4 78.7
Canada operations 144.8 14.2 83.6 11.2 63.1 10.2
Latin America operations 98.7 9.7 68.2 9.2 46.8 7.6
Asia Pacific operations 53.0 5.2 36.6 4.9 21.1 3.4
Other International operations 3.7 0.4 2.2 0.3 0.3 0.1
-------- ----- ------ ----- ------ -----
Total $1,016.4 100.0 $744.8 100.0 $617.7 100.0
======== ===== ====== ===== ====== =====
The following table sets forth selected information concerning assumed
reinsurance business in force for the Company's U.S., Canada, Latin America,
Asia Pacific, and other international segments for the indicated periods. (The
term "in force" refers to face amounts or net amounts at risk and is not
applicable to the accident and health segment.)
REINSURANCE BUSINESS IN FORCE BY SEGMENT
(dollars in billions)
Year Ended December 31,
-----------------------
1998 1997 1996
---- ---- ----
Amount % Amount % Amount %
------ - ------ - ------ -
U.S. operations $255.7 77.3 $171.7 75.5 $137.3 81.6
Canada operations 35.5 10.7 27.7 12.2 22.7 13.4
Latin America operations 35.1 10.7 26.1 11.5 7.0 4.2
Asia Pacific operations 3.8 1.1 1.8 0.8 1.3 0.8
Other international operations 0.5 0.2 - - - -
------ ----- ------ ----- ------ -----
Total $330.6 100.0 $227.3 100.0 $168.3 100.0
====== ===== ====== ===== ====== =====
The following table sets forth selected information concerning assumed
new business volume for the Company's U.S., Canada, Latin America, Asia Pacific,
and other international operations for the indicated periods. (The term "volume"
refers to face amounts or net amounts at risk and is not applicable to the
accident and health segment.)
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NEW BUSINESS VOLUME BY SEGMENT
(dollars in billions)
Year Ended December 31,
-----------------------
1998 1997 1996
---- ---- ----
Amount % Amount % Amount %
------ - ------ - ------ -
U.S. operations $102.7 82.2 $50.2 66.1 $27.0 71.2
Canada operations 12.8 10.2 8.0 10.5 6.9 18.2
Latin America operations 7.2 5.8 16.9 22.3 3.3 8.8
Asia Pacific operations 2.2 1.8 0.8 1.1 0.7 1.8
Other international operations 0.1 - - - - -
------ ----- ----- ----- ----- -----
Total $125.0 100.0 $75.9 100.0 $37.9 100.0
====== ===== ===== ===== ===== =====
Reinsurance business in force reflects the addition or acquisition of
new reinsurance business, offset by terminations (e.g., voluntary surrenders of
underlying life insurance policies, lapses of underlying policies, deaths of
insureds, the exercise of recapture options, changes in foreign exchange, and
any other changes in the amount of insurance in force). As a result of
terminations, assumed in force amounts at risk of $21.6 billion, $16.9 billion,
and $23.5 billion were released in 1998, 1997, and 1996, respectively.
Additional information regarding the operations of the Company's segments and
geographic operations is contained in Note 16 of the Notes to Consolidated
Financial Statements, which Note is incorporated herein by reference.
U.S. Operations
Traditional
The Company's U.S. life reinsurance business, which totaled 70.5%,
74.4%, and 78.7%, of the Company's net premiums in 1998, 1997, and 1996,
respectively, consists of the reinsurance of various types of life insurance
products. This business has been accepted under many different rate scales, with
rates often tailored to suit the underlying product and the needs of the ceding
company. Premiums typically vary for smokers and non-smokers, males and females,
and may include a preferred underwriting class discount. Regardless of the
premium mode for the underlying primary insurance, reinsurance premiums are
generally paid annually. This business is made up of facultative and automatic
treaty business.
In addition, several of the Company's U.S. clients have purchased life
insurance policies insuring the lives of their executives. These policies have
generally been issued to fund deferred compensation plans and have been
reinsured with the Company. As of December 31, 1998, reinsurance of such
policies was reflected in interest sensitive contract reserves of approximately
$951.7 million and policy loans of $513.8 million.
The U.S. facultative reinsurance operation involves the assessment of
the risks inherent in (i) multiple impairments, such as heart disease, high
blood pressure, and diabetes; (ii) cases involving large policy face amounts;
and (iii) financial risk cases, i.e., cases involving policies
disproportionately large in relation to the financial characteristics of the
proposed insured. The U.S. operations' marketing efforts have focused on
developing facultative relationships with client companies because management
believes facultative reinsurance represents a substantial segment of the
reinsurance activity of many large insurance companies and has been an effective
means of expanding the U.S. operations' automatic business. In 1998, 1997, and
1996, approximately 35.5%, 39.6%, and 39.2%, respectively, of the U.S. gross
premiums were written on a facultative basis. The U.S. operations have
emphasized personalized service and prompt response to requests for facultative
risk assessment.
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Only a portion of approved facultative applications result in paid
reinsurance. This is because applicants for impaired risk policies often submit
applications to several primary insurers, which in turn seek facultative
reinsurance from several reinsurers; ultimately, only one insurance company and
one reinsurer are likely to obtain the business. RGA Reinsurance tracks the
percentage of declined and placed facultative applications on a client-by-client
basis and generally works with clients to seek to maintain such percentages at
levels deemed acceptable.
Mortality studies performed by RGA Reinsurance have shown that its
facultative mortality experience is comparable to its automatic mortality
experience relative to expected mortality rates. Because RGA Reinsurance applies
its underwriting standards to each application submitted to it facultatively, it
generally does not require ceding companies to retain a portion of the
underlying risk when business is written on a facultative basis.
Automatic business, including financial reinsurance treaties, is
generated pursuant to treaties, which generally require that the underlying
policies meet the ceding company's underwriting criteria, although a number of
such policies may be rated substandard. In contrast to facultative reinsurance,
reinsurers do not engage in underwriting assessments of the risks assumed
through an automatic treaty. Automatic business tends to be very
price-competitive; however, clients are likely to give favorable consideration
to their existing reinsurers.
Because RGA Reinsurance does not apply its underwriting standards to
each policy ceded to it under automatic treaties, the U.S. operations generally
require ceding companies to keep a portion of the business written on an
automatic basis, thereby increasing the ceding companies' incentives to
underwrite risks with due care and, when appropriate, to contest claims
diligently.
Non-traditional Business
The Company also provides non-traditional reinsurance of
asset-intensive products and financial reinsurance. Asset-intensive business
includes the reinsurance of stable value products, bank-owned life insurance,
and annuities. The budget proposal recently submitted to Congress by the Clinton
Administration includes certain provisions which, if enacted in the form
proposed, would increase taxes on the owners of such bank-owned and
corporate-owned life insurance. If these or similar proposed tax changes were
enacted into law, they could adversely affect the Company: however, the Company
does not consider the reinsurance of such policies to be a material part of its
business. The Company earns investment income on the deposits underlying the
asset-intensive products, which is largely offset by earnings credited and paid
to the ceding companies. Financial reinsurance assists ceding companies in
meeting applicable regulatory requirements and enhances ceding companies'
financial strength and regulatory surplus position. The Company provides ceding
companies financial reinsurance by committing cash or assuming insurance
liabilities. Generally, such amounts are offset by receivables from ceding
companies that are supported by the future profits from the reinsured block of
business. The Company earns a return based on the amount of outstanding
reinsurance.
Asset Intensive Business
The above discussion of the Company's reinsurance on the basis of facultative
and automatic business relates to instances whereby the Company typically
reinsures only the mortality risk element of the underlying insurance product.
The Company also provides reinsurance of the investment risk in certain product
lines. Reinsurance business in which the investment risk is reinsured is
referred to as asset-intensive business. Asset-intensive business includes the
reinsurance of stable value products, bank-owned life insurance, and annuities,
both fixed rate and equity-indexed.
Through coinsurance or modified coinsurance, the Company earns investment income
and in certain cases, cost of insurance charges, on the deposits underlying the
products. These earnings are offset by interest credited and claim
reimbursements paid to the ceding companies.
Though most asset-intensive business is reinsured on an automatic basis, some
business is reviewed on a facultative basis by the Company if it does not fit
within the automatic parameters of the reinsurance agreement. Asset-
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intensive business that does not produce mortality risk (stable value products
and annuities) is normally limited by size of the deposit, from any one
depositor. Business which does produce mortality risks (corporate-owned and
bank-owned) normally involves a large number of insureds associated with each
deposit. Underwriting of these deposits also limits the size of any one deposit
but the individual policies associated with any one deposit are typically issued
within pre-set Guaranteed Issue parameters.
The Company looks for highly rated, financially secure companies as clients for
asset-intensive business. These companies may wish to limit their own exposure
to certain products. Ongoing asset/liability analysis is required for the
management of asset-intensive business. The Company performs this analysis
itself, in conjunction with asset/liability analysis performed by the ceding
companies.
Financial Reinsurance
The Company's financial reinsurance assists ceding companies in meeting
applicable regulatory requirements and enhances ceding companies' financial
strength and regulatory surplus position. The Company commits cash or assumes
insurance liabilities from the ceding companies. Generally, such amounts are
offset by receivables from ceding companies that are repaid by the future
profits from the reinsured block of business. The Company structures its
financial reinsurance transactions so that the projected future profits of the
underlying reinsured business significantly exceed the amount of regulatory
surplus provided to the ceding company.
The Company primarily targets highly rated insurance companies for financial
reinsurance. A careful analysis is performed before providing any surplus
enhancement to the ceding company. This analysis assures that the Company
understands the risks of the underlying insurance product and that the surplus
has a high likelihood of being repaid through the future profits of the
business. A staff of actuaries and accountants is required to track experience
on a quarterly basis in comparison to expected models.
CUSTOMER BASE
The U.S. reinsurance operation markets life reinsurance primarily to
the largest U.S. life insurance companies and currently has treaties with most
of the top 100 companies. These treaties generally are terminable by either
party on 90 days written notice, but only with respect to future new business;
existing business generally is not terminable, unless the underlying policies
terminate or are recaptured. In 1998, 41 clients had annual gross premiums of $5
million or more and the aggregate gross premiums from these clients represented
approximately 88.9% of 1998 U.S. life gross premiums. For the purpose of this
disclosure, companies that are within the same holding company structure are
combined.
In 1998, no U.S. client accounted for more than 10% of the Company's
consolidated gross premiums. However, one client accounted for more than 10% of
the Company's U.S. operations gross premiums. Also, five clients ceded more than
5% of U.S. life gross premiums. Together they ceded $289.2 million, or 32.0%, of
U.S. operations gross premiums in 1998.
General American and its affiliates generated approximately 4.0% of
U.S. operations gross premiums in 1998, 1997, and 1996, exclusive of
retrocession agreements. The Company's stable value products are reinsured from
General American. Deposits from stable value products totaled approximately
$700.9 million and $483.0 million during 1998 and 1997, respectively. In
addition, the Company entered into annuity reinsurance transactions during the
second quarter of 1997 with Cova Financial Services Life Insurance Company, a
subsidiary of General American. Deposit liabilities related to this business
were $112.5 million and $124.4 million, in 1998 and 1997, respectively.
During 1998, $294.6 million of U.S. operations net premium related to
facultative business. The U.S. life operation accepted new facultative business
from over 100 U.S. clients in 1998.
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OPERATIONS
During 1998, substantially all gross U.S. life business was obtained
directly, rather than through brokers. RGA Reinsurance has an experienced
marketing staff that works to maintain existing relationships and to provide
responsive service.
RGA Reinsurance's auditing and accounting department is responsible for
treaty compliance auditing, financial analysis of results, generation of
internal management reports, and periodic audits of administrative practices and
records. A significant effort is focused on periodic audits of administrative
and underwriting practices, records, and treaty compliance of reinsurance
clients.
RGA Reinsurance's claims department (i) reviews and verifies
reinsurance claims, (ii) obtains the information necessary to evaluate claims,
(iii) determines the Company's liability with respect to claims, and (iv)
arranges for timely claims payments. Claims are subjected to a detailed review
process to ensure that the risk was properly ceded, the claim complies with the
contract provisions, and the ceding company is current in the payment of
reinsurance premiums to RGA Reinsurance's operations. The claims department also
investigates claims generally for evidence of misrepresentation in the policy
application and approval process. In addition, the claims department monitors
both specific claims and the overall claims handling procedure of ceding
companies.
Claims personnel work closely with their counterparts at client
companies to attempt to uncover fraud, misrepresentation, suicide, and other
situations where the claim can be reduced or eliminated. By law, the ceding
company cannot contest claims made after two years of the issuance of the
underlying insurance policy. By developing good working relationships with the
claims departments of client companies, major claims or problem claims can be
addressed early in the investigation process. Claims personnel review material
claims presented to RGA Reinsurance in detail to find potential mistakes such as
claims ceded to the wrong reinsurer and claims submitted for improper amounts.
Canada Operation
The Canada operation represented 14.2%, 11.2%, and 10.2%, of the
Company's net premiums in 1998, 1997, and 1996, respectively. In 1998, the
Canadian life operations assumed $12.8 billion in new business. Approximately
90% of the 1998 Canadian new business was written on an automatic basis. The
Canadian operations are primarily engaged in traditional individual life
reinsurance, including preferred underwriting products. With the exception of
critical illness coverage, these new products and continued growth in
traditional reinsurance have contributed to the overall increase in business.
Clients include virtually all of Canada's principal life insurers with
no single client representing more than 10% of the Company's consolidated net
premium in 1998 and the two largest clients representing less than 5% of
consolidated gross premiums. The Canadian life operations compete with a small
number of individual and group life reinsurers. The Canadian life operations
compete primarily on the basis of price, service, and financial strength.
RGA Canada maintains a staff of fifty-four people at the Montreal
office and sixteen people in an office in Toronto. RGA Canada employs its own
underwriting, actuarial, claims, pricing, accounting, systems, marketing and
administrative staff.
RGA's Canadian life reinsurance business was originally conducted by
General American. General American entered the Canadian life reinsurance market
in 1978 and was primarily engaged in the retrocession business, writing only a
small amount of business with primary Canadian insurers. In April 1992, General
American, through RGA Canada, purchased the life reinsurance assets and business
of National Reinsurance Company of Canada ("National Re"), including C$26.0
million of Canadian life reinsurance gross in force premiums. National Re had
been engaged in the life reinsurance business in Canada since 1972, writing
reinsurance on a direct basis with primary Canadian insurers. Accordingly, this
acquisition represented a significant expansion of General American's Canadian
life reinsurance business.
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Latin America Operations
The Latin America operations represented 9.7%, 9.2%, and 7.6% of the
Company's net premiums in 1998, 1997, and 1996, respectively. Business in this
segment is classified as direct insurance or reinsurance. Direct insurance is
generated primarily from a joint venture and subsidiaries in Chile and
Argentina. In 1993, the Company entered into a joint venture in Chile to form
BHIFAmerica. This company is a direct life insurer whose primary source of
premium is generated from single premium immediate annuities with other lines
including credit, individual, and group life. During 1996, in an effort to
support the growth of this business and develop additional reinsurance
opportunities in Chile, the Company formed RGA Chile, a wholly owned reinsurance
company licensed to assume life reinsurance in Chile. RGA Chile assumed $26.0
million, $35.5 million, and $10.2 million of annuity premiums from BHIFAmerica
during 1998, 1997, and 1996, respectively. This business is reported as direct
business due to the intercompany nature of the reinsurance.
In 1994, to develop markets in Argentina, RGA formed GA Argentina. GA
Argentina writes direct life insurance primarily related to group life and
disability insurance for the Argentine privatized pension system as well as
traditional group life insurance. Effective July 1998, GA Argentina no longer
has new contracts related to the privatized pension system, but continues to
market group and individual life products.
The Company conducts reinsurance business in the Latin America region
through RGA Reinsurance. During 1998, a representative office was opened in
Mexico City and in 1999, a representative office will be opened in Buenos Aires
to more directly assist clients in these markets. The Latin America reinsurance
operations derive revenue primarily from the reinsurance of privatized pension
products in Argentina. Additional types of reinsurance provided in the region
are traditional and credit life for groups and individuals.
BHIFAmerica and RGA Chile maintain staffing of thirty-two people at the
head offices in Santiago, Chile. GA Argentina maintains a staff of forty people
in Buenos Aires, Argentina. These subsidiaries employ their own underwriting,
actuarial, claims, pricing, accounting, systems, marketing and administrative
staff. The Latin America reinsurance operations are primarily supported by the
Latin America Division of RGA Reinsurance based in St. Louis with a staff of
three people in a representative office in Mexico. The division provides
bilingual underwriting, actuarial, claims, pricing, marketing, and
administrative support. Claims, accounting, and systems support are provided on
a corporate basis through RGA Reinsurance operations.
Asia Pacific Operations
The Asia Pacific operations represented 5.2%, 4.9%, and 3.4% of the
Company's net premiums in 1998, 1997, and 1996, respectively. The Company has a
presence in the Asia Pacific region with a licensed branch office in Hong Kong
and a representative office in Tokyo. The Company also established subsidiary
companies in Australia in January 1996: Australian Holdings, a wholly owned
holding company, and RGA Australia, a wholly owned life reinsurance company. In
addition, RGA Reinsurance provides direct reinsurance to several companies
within the Asia Pacific region. The Company plans to open a representative
office in Taiwan during the first quarter of 1999.
Within the Asia Pacific segment, five people were on staff in the Hong
Kong office, five people were on staff in the Tokyo office, two people were
hired for the Taiwan office, and RGA Australia maintained a staff of thirteen
people in Sydney. The Hong Kong and Tokyo offices primarily provide marketing
and underwriting service to the direct life insurance companies with other
service support provided directly by RGA Reinsurance operations. RGA Australia
directly maintains its own underwriting, actuarial, claims, pricing, accounting,
systems, marketing and administration service with additional support provided
by RGA Reinsurance operations.
Other International Operations
The other international operations represented 0.4% and 0.3%, of the
Company's net premiums in 1998 and 1997, respectively. This segment provides
life reinsurance to international clients throughout Europe and South Africa.
The principal type of reinsurance being provided has been life reinsurance for a
variety of life products through
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yearly renewable term and coinsurance agreements. These agreements may be either
facultative or automatic agreements. During 1998, the Company continued its
expansion efforts, with actions underway to license a life reinsurance
subsidiary in London. In addition, the Company established RGA South Africa,
with offices in Cape Town and Johannesburg, South Africa, to promote life
reinsurance in South Africa. The Company entered into a joint venture to form
RGA Financial Products, Limited ("RGAFP") which had not commenced any business
as of December 31, 1998.
The other international operations are supported by divisional
management through RGA International based in Toronto. This subsidiary of RGA
had a staff of eight people that provided marketing support for operations in
existing and potential future markets. Additional support was provided by RGA
Reinsurance. The developing operations in the United Kingdom maintained a staff
of three people while RGA South Africa maintained a staff of six people.
Discontinued Operations
As of December 31, 1998, the Company formally reported its accident and
health division as a discontinued operation. The accident and health operations
was placed into run-off with all treaties (contracts) being terminated at the
earliest possible date. RGA has given notice to all reinsureds and
retrocessionaires that all treaties will be cancelled at the expiration of their
term. If the treaty is continuous, a written Preliminary Notice of Cancellation
was given, followed by a final notice within 90 days of the expiration date.
Included in 1998 and 1997 net income were additional pre-tax charges of $32.0
million and $21.0 million, respectively to increase the segment's reserves. The
additional reserves are expected to cover the run-off of the business accepted
from outside managed pools as well as the accident and health risks internally
underwritten by the Company in which it has earned premiums through December 31,
1998. The nature of the underlying risks is such that the claims may take years
to reach the reinsurers involved. Thus, the Company expects to pay claims out of
existing reserves over a number of years as the level of business diminishes.
The Company does not expect to incur significant operating losses for premiums
earned subsequent to December 31, 1998. The consolidated statements of income
for all periods presented have been restated, as appropriate, to reflect this
line of business being accounted for as a discontinued operation.
D. FINANCIAL INFORMATION ABOUT FOREIGN OPERATIONS
The Company's foreign operations are primarily in Canada, Latin
America, and the Asia Pacific region, which includes Australia. Revenue, income
(loss) which includes net realized gains (losses) before income tax and minority
interest, and identifiable assets attributable to these geographic regions were
identified in Note 16 of the Notes to Consolidated Financial Statements, which
Note is incorporated herein by reference.
E. EXECUTIVE OFFICERS OF THE REGISTRANT
For information regarding the executive officers of the Company, see
Part III, Item 10, entitled "Directors and Executive Officers of the
Registrant."
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Item 2. PROPERTIES
RGA Reinsurance houses its employees and the majority of RGA's officers
in 71,994 square feet of office space at 660 Mason Ridge Center Drive, St. Louis
County, Missouri. These premises are leased from General American for an initial
term ending August 31, 1999, at an annual rent of $1,585,308 plus a pro-rated
share of increases in taxes and operating expenses for the building beyond the
levels of 1995. A portion of this office space is subleased to subsidiaries. RGA
Reinsurance also sub-leases approximately 5,100 square feet of office space in
St. Louis. The sub-lease expires in August 1999. The rental expenses paid by RGA
Reinsurance under the sub-lease during 1998 were approximately $9,600. RGA
Reinsurance entered into a new lease on December 28, 1998 to move its principal
offices in St. Louis. The new premises are leased for an initial term of ten
years, commencing on or about August 1, 1999, at an annual rent of $1,963,010,
plus a pro-rated share of increases in taxes and operating expenses for the
building beyond the levels of 1999.
RGA Reinsurance also conducts business from approximately 1,800 square
feet of office space located in Hong Kong and approximately 1,300 square feet of
office space located in Tokyo, Japan. The rental expenses paid by RGA
Reinsurance under the leases during 1998 were approximately $145,000 and $90,500
for Hong Kong and Tokyo, respectively. RGA Australia conducts business from
approximately 5,649 square feet of office space located in Sydney, Australia and
paid $55,000 during 1998 for lease expense. The Hong Kong and Tokyo leases
expire in January 2001 and December 2000 respectively. The Sydney lease expires
in October 2003.
RGA Reinsurance also conducts business from approximately 1,500 square
feet of office space in Mexico City, Mexico. The rental expenses paid by RGA
Reinsurance under the lease during 1998 were approximately $17,000. The lease
expires in December 1999.
General American Argentina conducts business from approximately 6,800
square feet of office space in Buenos Aires, Argentina, pursuant to several
leases. Rental expense paid for the office was approximately $108,000 during
1998. BHIF America and RGA Chile conduct business from approximately 4,900
square feet of office space in Santiago, Chile. The lease expense paid during
1998 was approximately $48,000. One of the Buenos Aires leases expires in July
1999 with the remaining leases expiring in December 2001. The Santiago lease
expires in April 2000.
RGA Canada's operations are conducted from approximately 9,800 square
feet of office space located in Montreal, Canada. The lease with respect to such
space expires in 2010. Rental expenses paid by RGA Canada under the lease during
1998 were approximately $174,000. RGA Canada also sub-leases approximately 800
square feet of space in Montreal, Canada. The sub-lease expires in 2000. The
rental expenses paid by RGA Canada under the sub-lease during 1998 were
approximately $14,000. RGA Canada also leases approximately 5,900 square feet of
space in Toronto, Canada. This lease expires in 2005. The rental expenses paid
by RGA Canada under the Toronto lease during 1998 were approximately $126,500.
RGA International conducts operations from approximately 9,800 square feet of
office space located in Toronto, Canada. The lease with respect to such space
expires in 2007. The rental expenses paid by RGA International under the lease
during 1998 were approximately $57,000.
Great Rivers Reinsurance Management conducts business from
approximately 5,900 square feet of office space located in St. Louis, Missouri.
The rental expenses paid for the office were approximately $165,000 during 1998.
This lease expires in March 2002.
RGA UK Reinsurance conducts business from approximately 3,000 square
feet of office space in London, England. The rental expenses paid by RGA UK
Reinsurance under the lease during 1998 were approximately
$31,000. The lease expires in 2008.
RGA South Africa conducts business from approximately 5,300 square feet
of office space in Cape Town, South Africa. The rental expenses paid by RGA
South Africa under the lease during 1998 were approximately $24,000. The lease
expires in 2003.
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The Company believes its facilities have been generally well
maintained, are in good operating condition. The Company believes with its move
to the new facilities during 1999, the facilities are sufficient for our current
and projected future requirements.
Item 3. LEGAL PROCEEDINGS
From time to time, the Company is subject to litigation and arbitration
related to its reinsurance business and to employment-related matters in the
normal course of its business. Management does not believe that the Company is
party to any such pending litigation or arbitration which would have a material
adverse effect on its future operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
There were no matters that were submitted to a vote of security holders
during the fourth quarter of 1998.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information on this subject is contained in the Annual Report for 1998
at pages 72-73 under the caption "Quarterly Data (Unaudited)"and at pages 34-35
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources" which sections are
hereby incorporated by reference.
Dividend Policy
Historically, RGA has paid quarterly dividends ranging from $0.027 per
share in 1993 to $0.047 per share in 1998 (amounts adjusted to reflect the stock
splits). All future payments of dividends are at the discretion of the Company's
Board of Directors and will depend on the Company's earnings, capital
requirements, insurance regulatory conditions, operating conditions, and such
other factors as the Board of Directors may deem relevant. The amount of
dividends that the Company can pay will depend in part on the operations of its
reinsurance subsidiaries. The transfer of funds from the subsidiaries to RGA is
subject to applicable insurance laws and regulations.
The Board of Directors of RGA approved a three-for-two split of RGA's
stock for all shareholders of record as of August 8, 1997, which was payable on
August 29, 1997. Effective September 2, 1997, RGA stock began trading at a new,
post-split price. Additionally, the Board of Directors of RGA approved a
three-for-two split of RGA's common stock for all shareholders of record as of
February 5, 1999, payable on February 26, 1999. Effective March 1, 1999, RGA
stock began trading at the new, post-split price.
Insurance companies are subject to statutory regulations that restrict
the payment of dividends. In the case of RGA Reinsurance, Missouri regulations
impose a limit of the greater of 10% of statutory capital and surplus or
statutory operating income, both as of the end of the preceding year. Any
dividend proposed by RGA Reinsurance in excess of these measures would, under
Missouri law, be "extraordinary" and subject to review by the Missouri Director
of Insurance. See "Business - Corporate Structure - Regulation."
Item 6. SELECTED FINANCIAL DATA
The information required by this item is found at pages 20-21 in the
Annual Report for 1998 under the caption "Selected Consolidated Financial and
Operating Data" which section is incorporated herein by reference.
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This discussion and analysis is incorporated by reference to the Annual
Report for 1998 under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This discussion and analysis is incorporated by reference to the Annual
Report for 1998 under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Market Risk"
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is incorporated by reference to the Annual Report for
1998 under the following captions:
Page of Annual
Index Report
----- ------
Consolidated Balance Sheets 42
Consolidated Statements of Income 43
Consolidated Statements of
Stockholders' Equity 44 - 45
Consolidated Statements of Cash Flows 46
Notes to Consolidated Financial Statements 47 - 69
Independent Auditors' Report 70
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of the Company is incorporated by
reference to the Proxy Statement under the captions "Nominees and Continuing
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance." The
Proxy Statement will be filed pursuant to Regulation 14A within 120 days of the
end of the Company's fiscal year.
The following is certain additional information concerning each
executive officer of the Company who is not also a director. With the exception
of Mr. Watson, Mr. Nitsou, Mr. Sherman and Mr. St-Amour, each individual holds
the same position at RGA and RGA Reinsurance.
David B. Atkinson became President and Chief Executive Officer of RGA
Reinsurance Company in January 1998. Mr. Atkinson also serves as Executive Vice
President and Chief Operating Officer of RGA, since January 1997. He served as
Executive Vice President and Chief Operating Officer, U.S. Operations of the
Company from 1994 to 1996 and Executive Vice President and Chief Financial
Officer from 1993 to 1994. Prior to the formation of RGA, Mr. Atkinson served as
Reinsurance Operations Vice President of General American. Mr. Atkinson joined
General American in 1987 as Second Vice President and was promoted to Vice
President later the same year. Prior to joining General American, he served as
Vice President and Actuary of Atlas Life Insurance Company from 1981 to 1987, as
Chief Actuarial Consultant at Cybertek Computer Products from 1979 to 1981, and
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in a variety of actuarial positions with Occidental Life Insurance Company of
California from 1975 to 1979. Mr. Atkinson also serves as a director and officer
of certain RGA subsidiaries.
Bruce E. Counce has been Executive Vice President and Chief Corporate
Operating Officer since January 1997. He served as Executive Vice President,
U.S. Traditional Reinsurance from 1993 to 1997. Prior to the formation of RGA,
Mr. Counce served as Reinsurance Sales and Marketing Vice President for General
American. After joining General American in 1967, Mr. Counce joined the
Reinsurance Division in 1980 in a sales capacity and held a series of
increasingly responsible positions leading to his current position.
Jack B. Lay is Executive Vice President and Chief Financial Officer.
Prior to joining the Company in 1994, Mr. Lay served as Second Vice President
and Associate Controller at General American. In that position, he was
responsible for all external financial reporting as well as merger and
acquisition support. Before joining General American in 1991, Mr. Lay was a
partner in the financial services practice with the St. Louis office of KPMG
LLP. Mr. Lay also serves as a director and officer of certain RGA subsidiaries.
Paul A. Schuster is Executive Vice President, U. S. Division. He served
as Senior Vice President, U.S. Division from January 1997 to December 1998. Mr.
Schuster was Reinsurance Actuarial Vice President in 1995 and Senior Vice
President & Chief Actuary of the Company in 1996. Prior to the formation of RGA,
Mr. Schuster served as Second Vice President and Reinsurance Actuary of General
American. Prior to joining General American in 1991, he served as Vice President
and Assistant Director of Reinsurance Operations of the ITT Lyndon Insurance
Group from 1988 to 1991 and in a variety of actuarial positions with General
Reassurance Corporation from 1976 to 1988.
Graham S. Watson is Executive Vice President and Chief Marketing
Officer of RGA. Upon joining RGA in 1996, Mr. Watson was President and CEO of
RGA Australia. Prior to joining RGA in 1996, Mr. Watson was the President and
CEO of Intercedent Limited in Canada and has held various positions of
increasing responsibility for other life insurance companies. Mr. Watson also
serves as a director and officer of certain RGA subsidiaries.
Roberto Baron is Senior Vice President, Latin American Division. Prior
to joining RGA in 1997 as Vice President, Latin American Division, Mr. Baron was
a Consulting Actuary for William M. Mercer and a Pricing Actuary for Seguros
Bolivar, a life insurance company in Colombia. Mr. Baron was promoted to the
position of Senior Vice President, Latin American Division in 1998.
Brendan J. Galligan is Senior Vice President, Asia Pacific Division.
Prior to joining RGA, Mr. Galligan was Senior Vice President of RGA Canada, and
its predecessor, National Re, for five years. His insurance and reinsurance
career commenced in Canada in 1977.
Joel S. Iskiwitch is Senior Vice President, Accident and Health
Division. In 1995, Mr. Iskiwitch joined Great Rivers Reinsurance, a subsidiary
of RGA, as a participant in General American's Management Rotation Program.
Prior to joining Great Rivers Reinsurance Management and RGA, Mr. Iskiwitch held
the position of Vice President of Business Markets and Advanced Underwriting for
GenMark/Individual Line at General American. After joining General American in
1988, Mr. Iskiwitch held a series of responsible positions leading to his
current position at RGA.
Paul Nitsou is Senior Vice President, Market Development Division for
RGA. Prior to joining RGA in 1996, Mr. Nitsou was Vice President, Reinsurance
for Manulife Financial. Mr. Nitsou joined RGA in 1996 as Vice President, Market
Development and was promoted within his first year of employment to Senior Vice
President, Market Development Division.
Kenneth D. Sloan has been Senior Vice President, U.S. Facultative
Division since January 1997. He served as Vice President, Underwriting of the
Company from 1993 to 1997. Prior to the formation of RGA, Mr. Sloan served as
Second Vice President of Reinsurance Underwriting for General American. Mr.
Sloan joined General American in 1968 in an underwriting capacity and held a
series of increasingly responsible positions leading to his current position.
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Todd C. Larson is Vice President & Controller. Mr. Larson previously
was Assistant Controller at Northwestern Mutual Life Insurance Company from 1994
through 1995 and prior to this position he was an accountant for KPMG LLP from
1985 through 1993 (most recently as a Senior Manager).
James E. Sherman is General Counsel and Secretary of the Company. Mr.
Sherman joined General American in 1983. He has served as Associate General
Counsel of General American since 1995. Mr. Sherman is an officer of RCM as well
as RGA Reinsurance and Fairfield Management Group, subsidiaries of RGA
Reinsurance.
Andre St-Amour is President and Chief Executive Officer of RGA Canada
and Chief Agent for the General American Life Insurance Company Canadian Branch.
Mr. St-Amour was promoted to Chief International Officer of RGA in March 1999.
Prior to January 1995, he was President and Chief Operating Officer. Mr.
St-Amour joined RGA Canada in 1992 when the company acquired the reinsurance
business of National Re. Mr. St-Amour served as Executive Vice President, Life
Division, of National Re from 1989 to 1991. Prior to joining National Re, Mr.
St-Amour served in a variety of actuarial positions with Canadian National
Railways and Laurentian Mutual Insurance Company.
A. Greig Woodring is President, Chief Executive Officer, and director.
As President and CEO of the Company, Mr. Woodring is also an executive officer
of General American Life Insurance Company. Prior to the formation of RGA, Mr.
Woodring had headed General American's reinsurance business since 1986. He also
serves as a director and officer of a number of the Company's subsidiaries.
Before joining General American Life Insurance Company, Mr. Woodring was an
actuary at United Insurance Company.
Richard A. Liddy is Chairman of the Board of the Company. He also
serves as Chairman, President, and Chief Executive Officer of General American
Life Insurance Company, and President and Chairman of GenAmerica Corporation and
General American Mutual Holding Company (General American Holding). From 1982
through 1988, he was Senior Vice President and Executive Vice President of
Continental Corporation, and President, Financial Services Group of Continental
Insurance Company. He is also Chairman of the Board of General American Capital
Company and The Walnut Street Funds, Inc., each a registered investment company,
and is a director of Ameren Corporation, Brown Group, Inc., Conning Corporation
and Ralston Purina Company. Mr. Liddy is also Chairman of Cova Corporation,
Paragon Life Insurance Company, Security Equity Life Insurance Company and
Security Mutual Life Insurance Company of New York, and a number of other
subsidiaries and affiliates of General American Holding.
Item 11. EXECUTIVE COMPENSATION
Information on this subject is found in the Proxy Statement under the
captions "Executive Compensation" and "Nominees and Continuing Directors" and is
incorporated herein by reference. The proxy Statement will be filed pursuant to
Regulation 14A within 120 days of the end of the Company's fiscal year.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information of this subject is found in the Proxy Statement under the
captions "Common Stock Ownership of Certain Beneficial Owners" and "Nominees and
Continuing Directors" and is incorporated herein by reference. The Proxy
Statement will be filed pursuant to Regulations 14A within 120 days of the end
of the Company's fiscal year.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information on this subject is found in the Proxy Statement under the
caption "Certain Relationships and Related Transactions" and incorporated herein
by reference. The Proxy Statement will be filed pursuant to Regulation 14A
within 120 days of the end of the Company's fiscal year.
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PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated statements are incorporated by reference to the
Annual Report for 1998 under the following captions:
Index Page
- ----- ----
Consolidated Balance Sheets 42
Consolidated Statements of Income 43
Consolidated Statements of Stockholders' Equity 44-45
Consolidated Statements of Cash Flows 46
Notes to Consolidated Financial Statements 47-69
Independent Auditors' Report 70
2. Schedules, Reinsurance Group of America, Incorporated and Subsidiaries
Schedule Page
- -------- ----
I Summary of Investments 29
III Supplementary Insurance Information 30-31
IV Reinsurance 32
V Valuation and Qualifying Accounts 33
All other schedules specified in Regulation S-X are omitted for the reason
that they are not required, are not applicable, or that equivalent information
has been included in the consolidated financial statements, and notes thereto,
appearing in Exhibit 13.1 attached hereto.
3. Exhibits
See the Index to Exhibits on page 35.
(b) A report on Form 8-K was filed with the Securities and Exchange Commission
on February 1, 1999, regarding the three-for-two stock split of all classes
of the registrant's Common Stock. The stock split was in the form of a stock
dividend payable February 26, 1999, to stockholders of record on February 5,
1999. No other reports on Form 8-K were filed during the three months ended
December 31, 1998.
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INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors and Stockholders
Reinsurance Group of America, Incorporated:
Under date of January 27, 1999, we reported on the consolidated balance sheets
of Reinsurance Group of America, Incorporated and subsidiaries (the Company) as
of December 31, 1998 and 1997, and the related consolidated statements of
income, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1998, as contained in the 1998 annual
report to stockholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 1998. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related consolidated financial
statement schedules as listed in the accompanying index. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
/s/ KPMG LLP
St. Louis, Missouri
January 27, 1999
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REINSURANCE GROUP OF AMERICA, INCORPORATED
SCHEDULE I--SUMMARY OF INVESTMENTS--OTHER THAN
INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1998
(in millions)
Amount at
which
shown in
Fair the Balance
Type of Investment Cost Value (3) Sheets (1)(3)
------------------ ---- --------- -------------
Fixed maturities:
Bonds:
United States government and government agencies
and authorities $ 302.2 $ 305.7 $ 305.7
Foreign governments (2) 281.7 334.5 334.5
Public utilities 233.3 279.9 279.9
All other corporate bonds 2,796.4 2,781.5 2,781.5
-------- -------- --------
Total fixed maturities 3,613.6 3,701.6 3,701.6
-------- -------- --------
Equity securities 13.1 13.1 13.1
Mortgage loans on real estate 216.6 XXX 216.6
Policy loans 513.9 XXX 513.9
Funds withheld at interest 359.8 XXX 359.8
Short-term investments 315.0 XXX 315.0
Other 9.6 XXX 9.6
-------- --------
Total investments $5,041.6 XXX $5,129.6
======== ========
(1) Fixed maturities are classified as available for sale and carried at fair
value.
(2) The following exchange rates have been used to convert foreign securities to
U.S. dollars:
Canadian dollar $0.6535/C$1.00
Argentina dollar $1.0002/A$1.00
Chilean Peso $0.0021/$1.00 Peso
Australian dollar $0.6123/$1.00 Aus
(3) Fair value represents the closing sales prices of marketable securities.
Estimated fair values for private placement securities of $781.8 million,
included in all other corporate bonds, are based on the credit quality and
duration of marketable securities deemed comparable by the Company, which
may be of another issuer.
See accompanying independent auditor's report
29
30
REINSURANCE GROUP OF AMERICA, INCORPORATED
SCHEDULE III--SUPPLEMENTARY INSURANCE INFORMATION
(IN THOUSANDS)
as of December 31,
------------------------------------------------------------------------
Deferred Policy Future Policy Benefits, Other Policy Claims
Acquisition Costs Losses and Claims and Benefits Payable
------------------------------------------------------------------------
Assumed Ceded Assumed Ceded Assumed Ceded
- ---------------------------------------------------------------------------------------------------------------
1996
U.S. operations $160,737 (7,182) 1,578,172 (52,754) 111,257 (5,342)
Canada operations 52,039 (1,220) 184,800 (35,366) 11,390 (4,094)
Latin America operations 4,773 - 67,103 - 21,656 (2,224)
Asia Pacific operations 23,581 - 21,343 (3) 1,496 (548)
Other international operations - - - - - -
Discontinued operations 848 (11) 10,866 (252) 60,485 (20,228)
------------------------------------------------------------------------
Total $241,978 (8,413) 1,862,284 (88,375) 206,284 (32,436)
======== ====== ========= ======= ======= =======
1997
U.S. operations $203,486 (6,968) 2,735,772 (185,761) 157,240 (13,577)
Canada operations 50,506 (505) 278,738 (54,627) 49,267 (34,536)
Latin America operations 7,046 - 105,900 (1,243) 30,060 (2,274)
Asia Pacific operations 33,633 - 66,760 (32,883) 5,432 (1,470)
Other international operations - - 3,054 (6) 1,644 -
Discontinued operations 2,680 (36) 23,587 (1,146) 101,205 (31,323)
------------------------------------------------------------------------
Total $297,351 (7,509) 3,213,811 (275,666) 344,848 (83,180)
======== ====== ========= ======== ======= =======
1998
U.S. operations $247,424 (5,691) 3,797,712 (182,275) 261,661 (9,093)
Canada operations 56,159 (3,064) 515,632 (60,289) 29,048 (14,881)
Latin America operations 9,532 - 138,550 (108) 56,453 (4,894)
Asia Pacific operations 45,053 - 89,671 (42,888) 17,021 (6,453)
Other international operations 54 - 4,054 - 5,759 -
Discontinued operations 1,724 (149) 25,402 (2,224) 112,107 (21,412)
------------------------------------------------------------------------
Total $359,946 (8,904) 4,571,021 (287,784) 482,049 (56,733)
======== ====== ========= ======== ======= =======
See accompanying independent auditor's report
30
31
REINSURANCE GROUP OF AMERICA, INCORPORATED
SCHEDULE III--SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)
(IN THOUSANDS)
as of December 31,
-------------------------------------------------------------------------
Net Benefits, Other
Premium Investment Claims and Amortization Operating
Income Income Losses of DAC Expenses
-------------------------------------------------------------------------
1996
U.S. operations $486,431 98,250 (414,473) (33,920) (70,878)
Canada operations 63,118 15,369 (49,270) (1,603) (14,240)
Latin America operations 46,802 6,032 (42,641) - (8,090)
Asia Pacific operations 21,066 960 (11,641) (575) (15,118)
Other international operations 286 350 (170) - (2,771)
Corporate - 14,848 - - (14,589)
-------------------------------------------------------------------------
Total $617,703 135,809 (518,195) (36,098) (125,686)
======== ======= ======== ======= ========
1997
U.S. operations $554,254 141,306 (498,670) (37,469) (79,596)
Canada operations 83,563 18,936 (76,265) (10,775) (18,023)
Latin America operations 68,190 10,615 (63,590) - (14,465)
Asia Pacific operations 36,591 1,126 (21,164) (3,485) (19,494)
Other international operations 2,170 383 (1,755) - (4,791)
Corporate - 14,718 - - (15,237)
-------------------------------------------------------------------------
Total $744,768 187,084 (661,444) (51,729) (151,606)
======== ======= ======== ======= ========
1998
U.S. operations $716,244 231,475 (693,033) (58,375) (89,598)
Canada operations 144,784 38,858 (128,880) (1,976) (31,131)
Latin America operations 98,679 17,786 (94,650) - (18,238)
Asia Pacific operations 53,072 2,545 (31,900) (5,918) (23,972)
Other international operations 3,641 479 (2,685) (13) (7,467)
Corporate - 10,637 - - (18,609)
-------------------------------------------------------------------------
Total $1,016,420 301,780 (951,148) (66,282) (189,015)
========== ======= ======== ======= ========
See accompanying independent auditor's report
31
32
REINSURANCE GROUP OF AMERICA, INCORPORATED
SCHEDULE IV - REINSURANCE
(IN MILLIONS)
Percentage
Ceded to Assumed of Amount
Gross Other from Other Net Assumed to
Amount Companies Companies Amount Net
------ --------- --------- ------ ---
1996
Life insurance in force $ 85 $39,050 $168,339 $129,374 130.12%
Premiums
U.S. operations $ 2.5 $134.2 $618.1 $486.4 127.08%
Canada operations - 18.4 81.5 63.1 129.16%
Latin America operations 41.7 1.3 6.4 46.8 13.68%
Asia Pacific operations - 0.7 21.8 21.1 103.32%
Other international - - 0.3 0.3 100.00%
---------------------------------------------------------------
Total $44.2 $ 154.6 $ 728.1 $ 617.7 117.87%
===== ======= ======== ======== =======
1997
Life insurance in force $ 83 $28,720 $227,260 $198,623 114.42%
Premiums
U.S. operations $ 2.4 $133.0 $684.8 $554.2 123.57%
Canada operations - 21.8 105.4 83.6 126.08%
Latin America operations 56.5 0.8 12.5 68.2 18.33%
Asia Pacific operations - 0.8 37.4 36.6 102.19%
Other international - 0.1 2.3 2.2 104.55%
---------------------------------------------------------------
Total $58.9 $ 156.5 $ 842.4 $ 744.8 113.10%
===== ======= ======== ======== =======
1998
Life insurance in force $ 83 $16,171 $330,615 $314,527 105.11%
Premiums
U.S. operations $ 2.6 $186.7 $900.3 $716.2 125.71%
Canada operations - 48.1 192.9 144.8 133.22%
Latin America operations 48.4 9.6 59.9 98.7 60.69%
Asia Pacific operations - 3.8 56.9 53.1 107.16%
Other international - 0.1 3.7 3.6 102.78%
---------------------------------------------------------------
Total $51.0 $ 248.3 $1,213.7 $1,016.4 119.41%
===== ======= ======== ======== =======
See accompanying independent auditor's report
32
33
REINSURANCE GROUP OF AMERICA, INCORPORATED
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1998
(in millions)
Balance at Charges to Charged to Other
Beginning of Costs and Accounts- Deductions- Balance at End
Description Period Expenses Describe Describe of Period
- --------------------------------------------------------------------------------------------------------------------------
1996
Mortgage loan
valuation allowance $ - $0.3 $ - $ - $0.3
---- ---- --- --- ----
Total $ - $0.3 $ - $ - $0.3
==== ==== === === ====
1997
Mortgage loan
valuation allowance $0.3 $0.1 $ - $ - $0.4
---- ---- --- --- ----
Total $0.3 $0.1 $ - $ - $0.4
==== ==== === === ====
1998
Mortgage loan
valuation allowance $0.4 $0.3 $ - $ - $0.7
---- ---- --- --- ----
Total $0.4 $0.3 $ - $ - $0.7
==== ==== === === ====
See accompanying independent auditor's report
33
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
----------------------
A. Greig Woodring
President and Chief Executive Officer
Date: March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of
the registrant and in the capacities indicated on March 29, 1999.
Signatures Title
---------- -----
/s/ Richard A. Liddy March 29, 1999 Chairman of the Board and Director
- --------------------------------------------------
Richard A. Liddy
/s/ A. Greig Woodring March 29, 1999 President, Chief Executive Officer,
- -------------------------------------------------- and Director
A. Greig Woodring (Principal Executive Officer)
/s/ J. Cliff Eason March 29, 1999 * Director
- --------------------------------------------------
J. Cliff Eason
/s/ Bernard A. Edison March 29, 1999 * Director
- --------------------------------------------------
Bernard A. Edison
/s/ Stuart I. Greenbaum March 29, 1999 * Director
- --------------------------------------------------
Stuart I. Greenbaum
/s/ William A. Peck, M.D. March 29, 1999 * Director
- --------------------------------------------------
William A. Peck, M.D.
/s/ Leonard M. Rubenstein March 29, 1999 * Director
- --------------------------------------------------
Leonard M. Rubenstein
/s/ William P. Stiritz March 29, 1999 * Director
- --------------------------------------------------
William P. Stiritz
/s/ H. Edwin Trusheim March 29, 1999 * Director
- --------------------------------------------------
H Edwin Trusheim
/s/ Jack B. Lay March 29, 1999 Executive Vice President and Chief
- -------------------------------------------------- Financial Officer
Jack B. Lay (Principal Financial and Accounting
Officer)
*By: /s/ Jack B. Lay March 29, 1999
---------------------------------------------
Jack B. Lay Attorney-in-fact
34
35
INDEX TO EXHIBITS
Source
Exhibit (See footnotes
Number Description that follow)
- ------ ----------- --------------
2.1 Reinsurance Agreement dated as of December 31, 1992 between 2
General American Life Insurance Company ("General American") and
General American Life Reinsurance Company of Canada ("RGA Canada")
2.2 Retrocession Agreement dated as of July 1, 1990 between General 2
American and The National Reinsurance Company of Canada, as
amended between RGA Canada and General American on December 31,
1992
2.3 Reinsurance Agreement dated as of January 1, 1993 between RGA 2
Reinsurance Company ("RGA Reinsurance", formerly "Saint Louis
Reinsurance Company") and General American
3.1 Restated Articles of Incorporation of Reinsurance Group of 10
America, Incorporated ("RGA"), as amended
3.2 Bylaws of RGA 1
3.3 Certificate of Designations for Series A Junior Participating 5
Preferred Stock (included as Exhibit A to Exhibit 4.2)
4.1 Form of Specimen Certificate for Common Stock of RGA 2
4.2 Rights Agreement dated as of May 4, 1993, between RGA and 5
ChaseMellon Shareholder Services, L.L.C., as Rights Agent
4.3 Second Amendment to Rights Agreement, dated as of April 22, 10
1998, between RGA and ChaseMellon Shareholder Services, L.L.C. (as
successor to Boatmen's Trust Company), as Rights Agent
10.1 Marketing Agreement dated as of January 1, 1993 between RGA 3
Reinsurance and General American
10.2 Tax Allocation Agreement dated October 30, 1992 between RGA 2
Reinsurance and General American
10.3 Tax Allocation Agreement dated as of January 15, 1993 among RGA, 2
RGA Reinsurance, and General American
10.4 Tax Sharing Agreement dated as of January 15, 1993 among RGA, 2
RGA Reinsurance, and General American
10.5 Administrative Services Agreement dated as of January 1, 1993 3
between RGA and General American
35
36
Source
Exhibit (See footnotes
Number Description that follow)
- ------ ----------- --------------
10.6 Administrative Services Agreement dated as of January 1, 1993 3
between RGA Reinsurance and General American
10.7 Management Agreement dated as of January 1, 1993 between RGA 2*
Canada and General American
10.8 Investment Advisory Agreement dated as of January 1, 1993 3
between RGA and Conning Asset Management Company, formerly General
American Investment Management Company ("CAM")
10.9 Investment Advisory Agreement dated as of January 1, 1993 3
between RGA Reinsurance and CAM
10.10 Lease Agreement dated as of May 17, 1993 between RGA and General 4
American and Assignment to RGA Reinsurance
10.11 Standard Form of General American Automatic Agreement 2
10.12 Standard Form of General American Facultative Agreement 2
10.13 Standard Form of General American Automatic and Facultative YRT 2
Agreement
10.14 Shareholders' Agreement dated as of November 24, 1992 among 3*
General American, Fairfield Holding, Adrian N. Baker II, Richard
H. Chomeau, and Anthony J. Sutcliffe, as amended with RGA and RGA
Reinsurance
10.15 Shareholders' Agreement dated as of March 20, 1992 among 3*
General American, RGA International, Ltd., formerly G.A. Canadian
Holdings, Ltd., Penta-Life Group Inc., Claude M. Genest, Brendan
Galligan, Graham Watson, Societe FSA 50 Inc., Aenigma Holdings
Limited, Andre St-Amour, and Andre Primeau, as amended with RGA
10.16 Registration Rights Agreement dated as of April 15, 1993 between 2
RGA and General American
10.17 RGA Reinsurance Management Incentive Plan, as amended and 6*
restated effective November 1, 1996
10.18 RGA Reinsurance Management Deferred Compensation Plan (ended 2*
January 1, 1995)
10.19 RGA Reinsurance Executive Deferred Compensation Plan (ended 2*
January 1, 1995)
36
37
Source
Exhibit (See footnotes
Number Description that follow)
- ------ ----------- --------------
10.20 RGA Reinsurance Executive Supplemental Retirement Plan (ended 2*
January 1, 1995)
10.21 RGA Reinsurance Augmented Benefit Plan (ended January 1, 1995) 2*
10.22 RGA Flexible Stock Plan as amended and restated effective November
1, 1996 6*
10.23 Form of Directors' Indemnification Agreement 2
10.24 RGA Executive Performance Share Plan as amended and restated
effective November 1, 1996 6*
10.25 RGA Flexible Stock Plan for Directors 7*
10.26 Employment Agreement dated April 6, 1992 between RGA Canada and
Andre St-Amour 8*
10.27 Restricted Stock Award to A. Greig Woodring dated January 28, 1998 9*
13.1 Portions of Annual Report to Shareholders for 1998 Incorporated
by Reference in the Form 10-K --
21.1 Subsidiaries of RGA
--
23.1 Consent of KPMG LLP
--
24.1 Powers of Attorney for Messrs. Trusheim, Stiritz, Rubenstein,
Peck, Greenbaum, Edison, and Eason
--
27.1 Financial Data Schedule for the year ended December 31, 1998
--
27.2 Financial Data Schedule for the year ended December 31, 1997
--
27.3 Financial Data Schedule for the year ended December 31, 1996
--
27.4 Financial Data Schedule for the three months ended March 31, 1998
--
27.5 Financial Data Schedule for the six months ended June 30, 1998
--
27.6 Financial Data Schedule for the nine months ended September 30,
1998 --
27.7 Financial Data Schedule for the three months ended March 31, 1997
--
27.8 Financial Data Schedule for the six months ended June 30, 1997
--
27.9 Financial Data Schedule for the nine months ended September 30,
1997 --
37
38
1 Documents incorporated by reference to Registration Statement on Form
S-1 (No. 33-58960) filed on 2 March 1993 at the corresponding exhibit.
2 Documents incorporated by reference to Amendment No. 1 to Registration
Statement on Form S-1 (No. 33-58960), filed on 14 April 1993 at the
corresponding exhibit.
3 Documents incorporated by reference to Amendment No. 2 to Registration
Statement on Form S-1 (No. 33-58960), filed on 29 April 1993 at the
corresponding exhibit.
4 Documents incorporated by reference to Form 10-K for fiscal year ended
December 31, 1993 filed 29 March 1994 at the corresponding exhibit.
5 Documents incorporated by reference to Amendment No. 1 to Form 10-Q for
the quarter ended March 31, 1997 (No. 1-11848) filed on 21 May 1997 at
the corresponding exhibit.
6 Documents incorporated by reference to Form 10-K for the year ended
December 31, 1996 (No. 1-11848) filed on 24 March 1997 at the
corresponding exhibit.
7 Documents incorporated by reference to Registration Statement on Form
S-8 (No. 333-27167) filed on 15 May 1997 at the corresponding exhibit.
8 Documents incorporated by reference to Form 10-K for the year ended
December 31, 1997 (No. 1-11848) filed on 25 March 1998 at the
corresponding exhibit.
9 Documents incorporated by reference to Form 10-Q/A Amendment No. 1 for
the quarter ended March 31, 1998 (No. 1-11848) filed on 14 May 1998 at
the corresponding exhibit.
10 Documents incorporated by reference to Registration Statement on Form
S-3 (No. 333-5177) filed on 4 June 1998 at the corresponding exhibit.
* Represents a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this form pursuant to Item 14(c)
of this Part IV.
38