Filed pursuant to Rule 424(b)(5)
Registration No. 333-74104
333-74104-01
333-74104-02
(Pursuant to Rule 429, also
Registration No. 333-55304
333-55304-01
333-55304-02
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 3, 2001)
$225,000,000
TRUST PREFERRED INCOME EQUITY REDEEMABLE SECURITIES (PIERS*)
UNITS
[RGA LOGO]
- --------------------------------------------------------------------------------
This is an offering by Reinsurance Group of America, Incorporated and RGA
Capital Trust I of their Trust PIERS Units. Each unit will consist of:
- a preferred security issued by RGA Capital Trust I (the "Trust"), having a
stated liquidation amount of $50, representing an undivided beneficial
ownership interest in the assets of the Trust, which will consist solely
of junior subordinated debentures issued by us each of which will have a
principal amount at maturity of $50, a stated maturity of March 18, 2051
and, at any time, an accreted value as described in this prospectus
supplement; and
- a warrant to purchase, at any time prior to the close of business on
December 15, 2050, 1.2508 shares of our common stock at an exercise price
of $50 (or $39.98 per share, which is a 23.0% premium to the $32.50
closing price of our common stock on December 12, 2001, as reported on the
New York Stock Exchange), unless we redeem the warrants as described
below, in which case the exercise price will be an amount initially equal
to $35.13, which price will accrete on a daily basis as described in this
prospectus supplement to a maximum of $50 on the expiration date.
The preferred securities will have a distribution rate of 5.75% per annum of
their stated liquidation amount, subject to reset upon a remarketing of the
preferred securities and deferral as described in this prospectus supplement.
At any time after issuance of the units, the preferred security and warrant
components of each unit may be separated by the holder and transferred
separately. Thereafter, a separated preferred security and warrant may be
recombined to form a unit.
The units, warrants and preferred securities may not be redeemed or remarketed
prior to December 18, 2004, except upon the occurrence of certain special
events. On any date after December 18, 2004, we may, if specified conditions are
satisfied, redeem the warrants, in whole but not in part, for cash or our common
stock or a combination of cash and our common stock for a price equal to 100% of
the warrant redemption amount (which will be the difference between $50 and the
exercise price described below as of the end of the day next preceding the
redemption date), if the closing price of our common stock has exceeded a price
per share equal to $47.97, subject to adjustment, for at least 20 trading days
within the immediately preceding 30 trading days and on the day on which we make
that election. Instead of the redemption, a warrant holder may exercise the
warrant at an exercise price, which initially will be equal to $35.13 and which
price will accrete on a daily basis as described in this prospectus supplement
to a maximum of $50 on the expiration date. In connection with a redemption, we
will be obligated to seek a remarketing of the preferred securities at a price
equal to their accreted value as of the end of the day next preceding the
redemption settlement date.
If the warrant holder chooses to exercise the warrant and is a unit holder that
has not opted out of the remarketing, the proceeds from a successful
contemporaneous remarketing of the related preferred security will be applied to
satisfy in full the exercise price of the warrant.
We will guarantee the preferred securities to the extent described in this
prospectus supplement.
We have applied to list the units on the New York Stock Exchange under the
trading symbol "RGA PrA" and expect to receive approval, subject to official
notice of issuance, by or promptly following the closing of this offering.
INVESTING IN THE UNITS INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE S-13
OF THIS PROSPECTUS SUPPLEMENT AND PAGE 5 OF THE ATTACHED PROSPECTUS.
<Table>
<Caption>
PER UNIT TOTAL
-------- -----
Public Offering Price....................................... $50.00 $225,000,000
Underwriting Commission..................................... $ 1.50 $ 6,750,000
Proceeds to RGA (before expenses)........................... $48.50 $218,250,000
</Table>
Any accrued distributions on the preferred securities from December 18, 2001
should be added to the public offering price.
We have granted the underwriters a 30-day option to purchase up to an additional
$33,750,000 of units to cover over-allotments, if any.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Lehman Brothers Inc., on behalf of the underwriters, expects to deliver the
units on or about December 18, 2001.
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
BANC OF AMERICA SECURITIES LLC
* "Preferred Income Equity Redeemable Securities(SM)" and "PIERS(SM)" are
service marks owned by Lehman Brothers Inc.
DECEMBER 12, 2001
- --------------------------------------------------------------------------------
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of the units and their components
that we are offering and other matters relating to us and our financial
condition. The second part, the attached prospectus, describes our common stock,
which you will receive on exercise of the warrants, which are a component of the
units offered hereby, and gives more general information about other securities
we may offer from time to time, some of which does not apply to the units we are
offering and their components. Generally, when we refer to the prospectus, we
are referring to both parts of this document combined. If the description of the
units and their components in the prospectus supplement differs from the
description of the units and their components in the accompanying base
prospectus, you should rely on the information in this prospectus supplement.
When we use the terms "RGA," "we," "us" or "our" in this prospectus
supplement, we mean Reinsurance Group of America, Incorporated and its
subsidiaries on a consolidated basis (but excluding the Trust), unless we state
or the context implies otherwise. Unless we state or the context implies
otherwise, when we use the term "unit securities," we mean, collectively, the
units, the preferred securities, the warrants, the debentures if they are
distributed to the holders of preferred securities, and the guarantee, but we do
not include in that term the shares of our common stock issuable on exercise of
the warrants.
You should rely only on the information provided or incorporated by
reference in this prospectus supplement and the attached prospectus. We have
not, and the underwriters have not, authorized anyone to provide you with
different or additional information. If anyone provides you with different or
inconsistent information, you should not rely on it. This document may only be
used where it is legal to sell the units, their components and the common stock
issuable upon exercise of the warrants.
Certain jurisdictions may restrict the distribution of these documents, the
offering of the units and the common stock issuable upon exercise of the
warrants. We require persons receiving these documents to inform themselves
about and to observe any such restrictions. We have not taken any action that
would permit an offering of the units or common stock or the distribution of
these documents in any jurisdiction that requires such action.
TABLE OF CONTENTS
<Table>
<Caption>
PROSPECTUS SUPPLEMENT PAGE
- --------------------- ----
About This Prospectus Supplement...... i
Cautionary Statement Regarding
Forward-Looking Statements.......... ii
Prospectus Supplement Summary......... S-1
Risk Factors.......................... S-13
Use of Proceeds....................... S-19
Capitalization........................ S-20
Selected Consolidated Financial
Information......................... S-21
Ratios of Earnings to Fixed Charges... S-22
Price Range of Common Stock........... S-23
Dividend History And Policy........... S-23
Accounting Treatment.................. S-24
The Trust............................. S-25
Description of the Units.............. S-26
Description of the Warrants........... S-29
Description of the Preferred
Securities.......................... S-42
Description of the Debentures......... S-58
Description of the Guarantee.......... S-66
Relationship Among the Preferred
Securities, the Debentures and the
Guarantee........................... S-68
Book-Entry Issuance................... S-70
Material United States Federal Tax
Consequences........................ S-72
ERISA Considerations.................. S-80
Underwriting.......................... S-83
Legal Matters......................... S-86
</Table>
<Table>
<Caption>
PROSPECTUS PAGE
- ---------- ----
About This Prospectus................. 2
Where You Can Find More Information... 3
Incorporation of Certain Documents by
Reference........................... 3
Risk Factors.......................... 5
Cautionary Statement Regarding
Forward-Looking Statements.......... 10
Information about RGA................. 11
Information about the RGA Trusts...... 12
Use of Proceeds....................... 13
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preference Dividends.... 14
Description of Debt Securities of
RGA................................. 14
Description of Capital Stock of RGA... 28
Description of Depositary Shares of
RGA................................. 37
Description of Warrants and Warrant
Units of RGA........................ 40
Description of Stock Purchase
Contracts And Stock Purchase Units
Of RGA.............................. 41
Description of Preferred Securities of
the RGA Trusts...................... 42
Description of the Preferred
Securities Guarantees of RGA........ 45
Effect of Obligations Under the Junior
Subordinated Debt Securities and the
Preferred Securities Guarantees..... 48
Plan of Distribution.................. 49
Legal Matters......................... 51
Experts............................... 51
</Table>
---------------------
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement and the attached prospectus contain and
incorporate by reference a number of forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 relating to,
among others:
- projections of our earnings, revenues, income or loss, or capital
expenditures;
- our plans for future operations and financing needs or plans; and
- assumptions relating to the foregoing.
The words "intend," "expect," "project," "estimate," "predict," "anticipate,"
"should," "believe" and other similar expressions also are intended to identify
forward-looking statements.
ii
These forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results, performance and achievements could differ materially from
those set forth in, contemplated by or underlying the forward-looking
statements.
Important factors that could cause actual results to differ materially from
estimates or forecasts contained in the forward-looking statements include,
among others:
- market conditions and the timing of sales of investment securities;
- regulatory action taken by the New York or Missouri Departments of
Insurance with respect to Metropolitan Life Insurance Company, which we
refer to as "MetLife," GenAmerica Financial Corporation, which we refer
to as "GenAmerica," or us and our subsidiaries;
- changes in the financial strength and credit ratings of RGA and our
subsidiaries and of MetLife and its affiliates and the effect of such
changes on our future results of operations and financial condition;
- material changes in mortality and claims experience;
- competitive factors and competitors' responses to our initiatives;
- general economic conditions affecting the demand for insurance and
reinsurance in our current and planned markets;
- successful execution of our entry into new markets;
- successful development and introduction of new products;
- the stability of governments and economies in the markets in which we
operate;
- fluctuations in U.S. and foreign interest rates and securities and real
estate markets;
- the success of our clients;
- changes in laws, regulations and accounting standards applicable to us
and our subsidiaries; and
- other risks and uncertainties described in this document and in our other
filings with the SEC.
If one or more of these risks or uncertainties materializes, or if
underlying assumptions prove incorrect, actual outcomes may vary materially from
those indicated.
You should not place undue reliance on those statements, which speak only
as of the date on which they are made. We may not update these forward-looking
statements, even though our situation may change in the future, unless we are
obligated under the federal securities laws to update and disclose material
developments related to previously disclosed information. We qualify all of our
forward-looking statements by these cautionary statements.
---------------------
Missouri insurance laws and regulations provide that no person may acquire
control of us, and thus indirect control of our Missouri insurance subsidiaries,
including, RGA Reinsurance Company, unless such person has provided certain
required information to the Missouri Department of Insurance and such
acquisition is approved by the Director of Insurance of the State of Missouri,
whom we refer to as the "Missouri Director of Insurance," after a public
hearing. Under Missouri insurance laws and regulations, any person acquiring 10%
or more of the outstanding voting securities of a corporation is presumed to
have acquired control of that corporation and its subsidiaries. The warrants
offered hereby likely constitute a "voting security" under Missouri insurance
laws and regulations.
Canadian federal insurance laws and regulations provide that no person may
directly or indirectly acquire "control" of or a "significant interest" in our
Canadian insurance subsidiary, RGA Life Reinsurance Company of Canada, unless
such person has provided information, material and evidence to the Canadian
Superintendent of Financial Institutions as required by him and such acquisition
is approved
iii
by the Canadian Minister of Finance. In addition, under Canadian federal
insurance laws and regulations, "significant interest" means the direct or
indirect beneficial ownership by a person (or any person associated with that
person or two or more persons acting in concert) of shares representing 10% or
more of a given class, while "control" of an insurance company exists when a
person (or any person associated with that person or two or more persons acting
in concert) beneficially owns or controls an entity that beneficially owns
securities 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. Although the warrants offered hereby are not
expected to constitute securities entitled to vote for purposes of the foregoing
provisions, the warrants are exercisable for our common stock and, in the event
of any such exercise, these securities would constitute securities entitled to
vote for purposes of the foregoing provisions.
iv
PROSPECTUS SUPPLEMENT SUMMARY
The following summary highlights selected information contained elsewhere
in this prospectus supplement and the attached prospectus and does not contain
all the information you will need in making your investment decision. You should
read carefully this entire prospectus supplement, the attached prospectus and
the documents incorporated by reference in them. Our principal subsidiaries are
RGA Reinsurance Company, which we refer to as "RGA Reinsurance," RGA Life
Reinsurance Company of Canada, which we refer to as "RGA Canada" and RGA
Reinsurance Company (Barbados) Ltd., which we refer to as "RGA Barbados." Except
as otherwise noted, all information in this prospectus supplement assumes no
exercise by the underwriters of their option to purchase additional units.
RGA
We, through our operating subsidiaries, are one of the largest life
reinsurers in North America. At September 30, 2001, we had assets of $6.5
billion, stockholders' equity of $918.5 million and assumed reinsurance in force
of $585.8 billion. We have five main operational segments segregated primarily
by geographic region: United States, Canada, Latin America, Asia Pacific, and
other international operations. Our core United States and Canadian life
reinsurance business serves as the platform for our business strategy of further
expansion into selected domestic and international markets.
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:
- reduce the net liability on individual risks, thereby enabling the ceding
company to increase the volume of business it can underwrite, as well as
to increase the maximum risk it can underwrite on a single life or risk;
- stabilize operating results by leveling fluctuations in the ceding
company's loss experience;
- assist the ceding company to meet applicable regulatory requirements; and
- enhance the ceding company's financial strength and surplus position.
Reinsurance 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. 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, 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, as a stated
dollar amount or a pro rata percentage of the insured amount.
Our approach to North America -- the United States and Canadian markets,
which represented approximately 74% and 13% of net premiums in 2000,
respectively, and approximately 73% and 11% for the first nine months of 2001,
respectively -- has been to:
- focus on large, high quality life insurers as clients;
- provide quality facultative underwriting and competitive automatic
reinsurance capacity; and
- deliver responsive and flexible service to our clients.
We believe we are one of the largest facultative life reinsurers in North
America. We conduct business with the majority of the largest U.S. and Canadian
life insurance companies, with no single non-affiliated client representing more
than 10% of 2000 consolidated gross premiums.
S-1
We have also developed our capacity and expertise in non-traditional
reinsurance, which includes asset-intensive products and financial reinsurance.
In 2000 and the first nine months of 2001, our North American non-traditional
reinsurance business earned $19.3 million and $16.7 million, respectively, or
approximately 11% and 17%, respectively, of income before income taxes and
minority interest (excluding the discontinued accident and health operations).
Our non-traditional business currently includes reinsurance of corporate-owned
life insurance and annuities.
We use our underwriting expertise and industry knowledge as we expand into
selected international markets. Our operations outside North America currently
include Latin America, Asia Pacific, and other select international locations,
primarily the United Kingdom and South Africa. The Latin American operations,
which represented approximately 5% of net premiums in 2000 and 4% of net
premiums for the first nine months of 2001, include traditional reinsurance,
reinsurance of privatized pension products primarily in Argentina, and direct
life insurance through a subsidiary in Argentina. Since 1999, we have reduced
our participation in the reinsurance of privatized pension contracts in
Argentina, and in June 2001, we did not renew insurance treaties associated with
this business. We have completed an analysis and review of the privatized
pension business and will record a charge during the fourth quarter, as
described under "-- Recent Developments." Asia Pacific operations, which
represented approximately 7% of net premiums in 2000 and for the first nine
months of 2001, provide primarily traditional life reinsurance through RGA
Reinsurance Company of Australia, Limited and RGA Reinsurance. Other
international operations, which represented approximately 2% of net premiums in
2000 and 5% of net premiums for the first nine months of 2001, include
traditional reinsurance business from Europe and South Africa, in addition to
other markets being developed by us.
RGA Reinsurance has an "AA" claims paying rating from Standard & Poor's
Ratings Service Inc., an "A1" claims paying rating from Moody's Investors
Service and an "A+" claims paying rating from A.M. Best and Company, Inc. The
S&P, Moody's and A.M. Best claims paying ratings are based upon an insurance
company's ability to pay policyholder obligations and are not directed toward
the protection of investors.
RGA was formed on December 31, 1992. Through a predecessor, we have been
engaged in the business of life reinsurance since 1973. Our executive office is
located at 1370 Timberlake Manor Parkway, Chesterfield, Missouri 63017-6039, and
our telephone number is (636) 736-7000.
INDUSTRY TRENDS
We believe that the following trends in the insurance industry are
increasing the demand for life reinsurance.
Outsourcing of Mortality. Life reinsurance penetration of life insurance
in force has been increasing over the last several years. We believe this trend
reflects increased use by life insurance companies of reinsurance to manage
capital and mortality risk and to develop competitive products.
Increased Capital Sensitivity. Regulatory environment and competitive
business pressures are causing life insurers to reinsure as a means to:
- manage risk-based capital by shifting mortality and other risks to
reinsurers;
- release capital to pursue new businesses; and
- unlock the capital supporting, and value embedded in, non-core product
lines.
Consolidation and Reorganization Within the Industry. The number of merger
and acquisition transactions within the U.S. life insurance industry has
increased in recent years. We believe that U.S. reorganizations of life
insurers, such as demutualizations, and international consolidation will
continue. As reinsurance products are increasingly used to facilitate these
transactions and manage risk, we expect demand for our products to continue.
S-2
Changing Demographics of Insured Populations. The aging of the population
in North America is increasing demand for financial products among "baby
boomers" who are concerned about protecting their peak income stream and are
considering retirement and estate planning. We believe that this trend is likely
to result in continuing demand for annuity products and life insurance policies,
larger face amounts of life insurance policies and higher mortality risk taken
by life insurers, all of which should cause insurers to seek reinsurance
products.
BUSINESS STRATEGY
We continue to follow a two-part business strategy to capitalize on
industry trends.
Continue Growth of Core North American Business. Our strategy includes
continuing to grow each of the following components of our North American
operations:
- Facultative Reinsurance. We intend to maintain a leading position as a
facultative underwriter in North America by emphasizing our underwriting
standards, prompt response on quotes, competitive pricing, capacity and
flexibility in meeting customer needs.
- Automatic Reinsurance. We intend to expand our presence in the North
American automatic reinsurance market by using our mortality expertise
and breadth of products and services to gain additional market share.
- In Force Block Reinsurance. We anticipate opportunities to grow our
business by reinsuring "in force block" insurance, as insurers seek to
exit various non-core businesses and increase financial flexibility in
order to, among other things, redeploy capital and pursue merger and
acquisition activity.
Continue Expansion Into Selected Markets. Our strategy includes building
upon the expertise and relationships developed from our core North American
business platform to continue our expansion into selected markets, including:
- Non-Traditional Reinsurance. We intend to continue leveraging our
existing client relationships and reinsurance expertise to create
customized non-traditional reinsurance products and solutions. Industry
trends, particularly the increased pace of consolidation and
reorganization among life insurance companies and changes in product
distribution, are expected to create growth opportunities for
non-traditional reinsurance.
- Other International. Management believes that international markets
offer opportunities for growth, and we intend to capitalize on this
opportunity by establishing a presence in selected markets. We use our
reinsurance expertise, facultative underwriting abilities and market
knowledge as we continue to enter mature and emerging insurance markets.
METLIFE OWNERSHIP AND REINSURANCE RELATIONSHIPS
On January 6, 2000, MetLife acquired 100% of GenAmerica Financial
Corporation, including its beneficial ownership of RGA shares, which was
approximately 48% at December 31, 1999. This acquisition, together with a
private placement of approximately 4.8 million shares of our common stock
completed in November 1999, made MetLife our majority shareholder, with
beneficial ownership of approximately 58.4% of all outstanding shares as of
September 30, 2001.
We have reinsurance agreements with MetLife and some of its subsidiaries.
As of December 31, 2000, we had assets and liabilities related to these
agreements totaling $103.3 million and $114.1 million, respectively. Under these
agreements, we reflected net premiums of approximately $144.0 million, $130.3
million, and $111.5 million in 2000, 1999 and 1998, respectively. The net
premiums reflect the net of business assumed from and ceded to MetLife and its
subsidiaries, including GenAmerica. The pre-tax gain (loss) on this business was
approximately $17.8 million, ($31.0) million, and $17.7 million in 2000, 1999
and 1998, respectively.
S-3
MetLife does not, and will not, have any obligations with respect to the
unit securities.
For more information about our corporate structure and relationships with
MetLife, see "Business -- Overview" and "-- Corporate Structure" and "Certain
Relationships and Related Transactions" in our Annual Report on Form 10-K, as
amended on Form 10-K/A, for the year ended December 31, 2000, which is
incorporated by reference in the attached prospectus.
RECENT DEVELOPMENTS
ARGENTINE PENSION BUSINESS
On October 25, 2001, we announced that we were reviewing the recent
experience of our reinsurance of Argentina's privatized pension program, which
we refer to as the "AFJP business," and that several aspects of the pension fund
claims flow were not developing as was contemplated when the reinsurance
programs were initially priced. As a result, we will add to reserves and record
a charge during the fourth quarter of $35 million, on a pre-tax basis. We
established these reserves based on assumptions concerning the run-off of the
remaining AFJP business and current market conditions. We believe the resultant
reserve levels will be adequate to cover the run-off of that business. If,
however, our assumptions prove incorrect or market conditions change, we may
need to establish additional reserves. In addition, subsequent to September 30,
2001, we sold substantially all our remaining Argentine-based bond investments
supporting the privatized pension reinsurance, resulting in a pre-tax realized
investment loss of $4.2 million.
ACCIDENT AND HEALTH ARBITRATION
Since April of 2000, RGA Reinsurance has been involved in a dispute with a
ceding company involving certain quota share reinsurance agreements covering
first dollar medical insurance policies in our discontinued accident and health
business. The dispute was subsequently referred to an arbitration panel pursuant
to the terms of these reinsurance agreements. Recently, the arbitration panel
issued its final award, which requires RGA Reinsurance to make a payment to the
ceding company. RGA Reinsurance will incur a charge, after utilization of
existing reserves, of approximately $10.0 million on a pre-tax basis in the
fourth quarter of 2001 relating to the arbitration.
INVESTMENTS IN SECURITIES OF ENRON CORP. AND ITS AFFILIATES
As of December 5, 2001, we held $10.0 million par value (book value of
$8.92 million) of notes issued by Enron Corp., which recently filed for
bankruptcy. As of December 5, 2001, the Enron bonds had a quoted market value of
$2.6 million. Additionally, until December 3, 2001, we held $2.5 million par
value (book value is the same) of bonds issued by an Enron affiliate, and the
sale of the bonds resulted in a pre-tax loss of $2.2 million.
S-4
THE OFFERING
SECURITIES OFFERED............ 4,500,000 units (or up to 5,175,000 units to
the extent the underwriters exercise their
option to purchase additional units),
consisting of:
- a preferred security having a stated
liquidation amount of $50; and
- a warrant to purchase 1.2508 shares of our
common stock at any time prior to December
15, 2050, unless earlier redeemed, subject to
antidilution adjustments.
The 5.75% Cumulative Trust Preferred
Securities, which we refer to as the "preferred
securities," represent an undivided beneficial
ownership interest in the assets of the Trust,
which will consist solely of the 5.75% Junior
Subordinated Deferrable Interest Debentures due
March 18, 2051, which we refer to as the
"debentures," issued by us. Each debenture will
have a principal amount at maturity of $50. To
exercise a warrant, a holder must tender the
warrant together with its exercise price as
described below under "-- Warrant Exercise
Price."
At any time after the issuance of the units,
the preferred security and the warrant
components of each unit may be separated by the
holder and transferred separately. Thereafter,
a separated warrant and preferred security may
be recombined to form a unit.
PRICE......................... $50 per unit.
MATURITY OF DEBENTURES........ March 18, 2051.
EXPIRATION OF WARRANTS........ December 15, 2050.
DISTRIBUTION DATES............ March 15, June 15, September 15 and December 15
of each year, beginning on March 15, 2002.
Distribution on the preferred securities will
be made only to the extent that we make
corresponding interest payments on the
debentures.
DISTRIBUTION RATE............. 5.75% per year of the stated liquidation amount
of the preferred securities, subject to reset
upon a remarketing to the reset rate on the
accreted value as of the end of the day next
preceding the remarketing settlement date. The
distribution rate on the preferred securities
will correspond to the interest rate on the
debentures.
ACCRETED VALUE................ The "accreted value" of a preferred security is
equal to the accreted value of a debenture,
which is equal to the sum of the initial
purchase price of the preferred security
component of each unit (or $35.13) plus accrual
of discount calculated from December 18, 2001
to the date of calculation at the all-in-yield
rate of 8.25% per annum through December 15,
2050 minus accrual of interest on the principal
amount of the debentures (or $50) at the rate
of 5.75%, in each case, on a quarterly bond
equivalent yield basis using a 360-day year of
twelve 30-day months until that sum equals $50
on December 15, 2050. For example, because the
purchase price initially allocable to the
S-5
preferred securities will be $35.13, the
accreted value of a debenture will be equal to
$35.203 on December 18, 2004.
DEFERRAL OF PAYMENTS.......... So long as we are not in default in the payment
of interest on the debentures and so long as a
failed remarketing has not occurred, we will
have the right, at any time, and from time to
time during the term of the debentures, to
defer payments of interest by extending the
interest payment period for a period not
exceeding 20 consecutive quarters or extending
beyond the stated maturity of the debentures,
during which extension period no interest will
be due and payable. Prior to the termination of
any such extension period, we may further
extend such extension period; except that such
extension period, together with all such
previous and further extensions, may not exceed
20 consecutive quarters or extend beyond the
stated maturity of the debentures or end on a
date other than an interest payment date.
During any extension period, we will agree not
to make certain restricted payments.
WARRANT EXERCISE PRICE........ The warrant exercise price will be $50, unless
we choose to redeem the warrants as described
below, in which case the exercise price of the
warrants at the time of a redemption will be an
amount initially equal to $35.13, which price
will accrete on a daily basis as described in
this prospectus supplement to a maximum of $50,
on the expiration date. In such circumstances,
the warrant exercise price will accrete on a
daily basis such that on any given date of
calculation it will be equal to $35.13 plus
accretion, calculated from December 18, 2001 to
the date of calculation, at the all-in yield of
8.25% per annum through December 15, 2050 minus
accrual of an amount equal to $50 multiplied by
5.75%, in each case, on a quarterly bond
equivalent basis using a 360-day year of twelve
30-day months. In connection with an exercise
of the warrants instead of a redemption, the
exercise price of the warrants will be
calculated as of the business day next
preceding the redemption date. IF THE WARRANT
HOLDER EXERCISES THE WARRANT OTHER THAN INSTEAD
OF A REDEMPTION, THE WARRANT EXERCISE PRICE
WILL BE $50.
OPTIONAL REDEMPTION OF
WARRANTS AND REMARKETING OF
PREFERRED SECURITIES.......... If on any date after December 18, 2004, the
closing price of our common stock exceeds and
has exceeded a price per share equal to $47.97,
subject to adjustment, for at least 20 trading
days (as defined below) within the immediately
preceding 30 consecutive trading days and we
have satisfied specified conditions, we may at
our option, elect to redeem the warrants, in
whole but not in part, for cash, our common
stock or a combination of cash and our common
stock, equal to the warrant redemption amount,
which will be equal to $50 minus the exercise
price of the warrant upon a redemption as of
the end of the day next preceding the
redemption date as described above. In
addition, as described below, we may redeem the
warrants if certain other events occur.
The warrants will be redeemed on the redemption
date unless a warrant holder affirmatively
elects to exercise its warrants. We
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are not required to give the holders of the
warrants more than six business days notice of
our election to redeem the warrants. Because of
the abbreviated notification period, a warrant
holder who intends to exercise its warrant upon
an optional redemption of the warrants may want
to make arrangements for the exercise of the
warrants and the delivery of shares to the
warrant agent quickly upon receipt of a notice
of redemption from us. See "Risk Factors -- You
may be required to elect to exercise your
warrants within five business days of
notification of an election by RGA to
optionally redeem the warrants" on page S-13 in
this prospectus supplement.
In connection with a redemption or upon
expiration of the warrants, we will also be
obligated to seek a remarketing of all the
preferred securities at a price of no less than
100% of their accreted value. If the warrant
holder chooses to exercise the warrant and is a
unit holder that has not opted out of the
remarketing, the proceeds from a successful
contemporaneous remarketing of the related
preferred security will be applied to satisfy
in full the exercise price of the warrant. The
remarketing settlement date and the optional
redemption date will be three business days
after the remarketing date.
Also in connection with a remarketing:
- the adjusted maturity of the debentures (and,
as a result, the adjusted redemption date of
the preferred securities) will become the
date which is 93 days following the
remarketing settlement date;
- the amount due at the adjusted maturity date
of the debentures will be the accreted value
of the debentures as of the end of the day
next preceding the remarketing settlement
date (and, as a result, the amount due at the
adjusted redemption date of the preferred
securities will be the accreted value of the
preferred securities as of such date);
- upon a remarketing of the preferred
securities in connection with an expiration
of the warrants at maturity, the preferred
securities will be remarketed at their stated
liquidation amount; and
- on the remarketing settlement date, the
debentures will have an interest rate on
their accreted value or stated liquidation
amount if remarketed at maturity (and, as a
result, the preferred securities will have a
distribution rate on their accreted value or
stated liquidation amount if remarketed at
maturity) equal to the rate established in
the remarketing.
See "-- Failed Remarketing" below for a
description of the consequences of the failure
to successfully remarket the preferred
securities in connection with a redemption or
expiration of the warrants.
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REDEMPTION AND REMARKETING
UPON TAX EVENT OR INVESTMENT
COMPANY EVENT................. If (1) certain tax events occur or (2) there is
a more than an insubstantial risk that the
Trust will be considered an investment company
under the Investment Company Act of 1940 and if
we satisfy specified conditions, we may, at our
option, elect to redeem the warrants at their
warrant redemption amount, which may be paid,
at our option, in cash, our common stock or a
combination of cash and our common stock, and
remarket the preferred securities.
CHANGE OF CONTROL............. If a change of control occurs, as defined under
"Description of the Warrants -- Change of
Control" in this prospectus supplement, the
holders of unit securities will have the right
to:
- require RGA to redeem that holder's warrant
on the date that is not later than 45 days
(subject to extension) after the date RGA
gives notice of the change of control event
at a redemption price equal to 100% of the
warrant redemption amount on the redemption
date which may be paid, at our option, in
cash, our common stock or a combination of
cash and our common stock; and
- exchange that holder's preferred security for
a debenture having an accreted value equal to
the accreted value of such preferred security
and to require RGA to repurchase such
debenture on the date which is not later than
138 days after the change of control notice
at a repurchase price equal to 100% of the
accreted value of the debenture on the
repurchase date plus accrued and unpaid
interest (including deferred interest) on the
debentures to, but excluding, the repurchase
date.
See "Description of the Warrants -- Change of
Control" and "Description of the Preferred
Securities -- Change of Control" in this
prospectus supplement.
REMARKETING AT EXPIRATION OF
WARRANTS...................... The warrants will expire on December 15, 2050,
which we refer to as the "expiration date,"
unless previously exercised or redeemed. If not
previously remarketed, the preferred securities
will be remarketed three business days prior to
the expiration date of the warrants.
EXERCISE OF WARRANTS.......... A holder may exercise warrants at any time by
giving notice prior to the close of business on
the business day prior to the expiration date,
unless earlier redeemed.
The warrants will not be exercisable unless, at
the time of the exercise:
- a registration statement is in effect under
the Securities Act of 1933 covering the
issuance and sale of the shares of common
stock upon exercise of the warrants or the
issuance and sale (and resale) of the shares
upon exercise of the warrants is exempt from
the registration requirements of the
Securities Act of 1933;
S-8
- the shares have been registered, qualified or
are deemed to be exempt under applicable
state securities laws; and
- to the extent required by applicable law, a
then current prospectus is delivered to the
exercising holders of the warrants.
Holders must pay the exercise price of their
warrants in cash (including the automatic
application of a portion of the proceeds of any
remarketing of preferred securities).
Accordingly, the holders of units may not
tender their preferred securities directly
toward payment of the exercise price of the
warrants.
RIGHTS OF A UNIT HOLDER....... Following an exercise of warrants by a unit
holder other than in connection with a
remarketing, the holder may require the Trust
to exchange the holder's related preferred
securities for debentures and require RGA to
repurchase such debentures at $50 on a special
distribution date which is no less than 93 days
following the exercise of the warrants.
If a unit holder exercises the warrant that is
part of the unit in connection with an optional
redemption of the warrants by RGA or expiration
of the warrants, the holder will be able to
satisfy in full the exercise price by applying
the proceeds of a successful related
remarketing of the related preferred
securities. See "Description of the Preferred
Securities -- Remarketing" in this prospectus
supplement.
FAILED REMARKETING............ If the remarketing agent is unable to remarket
the preferred securities when required for any
reason, a "failed remarketing" will have
occurred. If a failed remarketing occurs:
- beginning on the third business day after
such date, interest will accrue on the
accreted value of the debentures, and
distributions will accumulate on the accreted
value of the preferred securities;
- the interest rate on the accreted value of
debentures will be 10.25% per annum and, as a
result, the distribution rate on the accreted
value of the preferred securities will adjust
correspondingly;
- the stated maturity of the accreted value of
the debentures (and, as a result, the final
distribution date for the preferred
securities) will become the date which is 93
days after the failed remarketing settlement
date; and
- we will no longer have the option to defer
interest payments on the debentures.
Notwithstanding that a failed remarketing in
connection with an optional redemption of the
warrants may occur, the warrants would
nevertheless be redeemed at the warrant
redemption amount on the optional redemption
date and a warrant holder who has elected to
exercise its warrants will be obligated to
exercise its warrants instead of such
redemption by paying the exercise price in
cash.
S-9
GUARANTEE..................... The following payments or distributions with
respect to the preferred securities and common
securities on a pro rata basis, to the extent
not paid by or on behalf of the Trust, will be
guaranteed by us:
- any accumulated and unpaid distributions
required to be paid on the preferred
securities and common securities on a pro
rata basis, to the extent that the Trust has
sufficient funds available therefor at the
time;
- the redemption price with respect to any
preferred securities and common securities on
a pro rata basis called for redemption, to
the extent that the Trust has sufficient
funds available therefor at such time;
- the repurchase of debentures, which are
exchanged for preferred securities if a
change of control occurs, at the accreted
value equal to the accreted value of the
preferred securities, plus accrued and unpaid
interest on the debentures (including
deferred interest) to, but excluding, the
repurchase date; and
- upon a voluntary or involuntary dissolution,
winding up or termination of the Trust (other
than in connection with the exchange of all
of the preferred securities for debentures
and the distribution of the debentures to the
holders of the preferred securities and
common securities on a pro rata basis), the
lesser of
-- the aggregate accreted value of the common
and preferred securities of the Trust and
all accumulated and unpaid distributions
thereon to the date of payment; and
-- the amount of assets of the Trust
remaining available for distribution to
the holders of preferred securities and
common securities on a pro rata basis.
Our obligations under the guarantee will be
subordinated and junior in right of payment to
all of our existing and future senior
indebtedness.
THE TRUST..................... The Trust is a Delaware statutory business
trust. The sole assets of the Trust will be the
debentures. The Trust will issue the preferred
securities and the common securities. All of
the common securities will be owned by us, in
an aggregate liquidation amount of at least 3%
of the total capital of the Trust.
RANKING....................... Payment of distributions on, and the redemption
price of, the preferred securities and the
common securities, will generally be made pro
rata based on their stated liquidation amounts.
However, if on any payment date, an indenture
event of default has occurred and is
continuing, no payment on the common securities
will be made unless payment in full in cash of
all accumulated and unpaid distributions on all
of the outstanding preferred securities for all
current and prior distribution periods (or in
the case of payment of the redemption price,
the full
S-10
amount of such redemption price on all of the
outstanding preferred securities then called
for redemption), has been made or provided for.
FORM AND DENOMINATION......... The Depository Trust Company, which we refer to
as "DTC," will act as securities depositary for
the unit securities. Each of the unit
securities will be issued only as fully
registered securities registered in the name of
DTC or its nominee for credit to an account of
a direct or indirect participant in DTC. One or
more fully registered certificates will be
issued for each of the unit securities, and
will be deposited with the property trustee as
custodian for DTC. The preferred securities
will be issued in denominations of $50 stated
liquidation amount and whole multiples of $50.
See "Book-Entry Issuance" in this prospectus
supplement.
USE OF PROCEEDS............... We will use the net proceeds from the offering
of the units (consisting of the portion of the
net proceeds from the sale of the units
relating to the warrants, and the net proceeds
from the issuance of the debentures to the
Trust) for general corporate purposes. The
Trust will use the portion of the net proceeds
from the sale of the units relating to the
preferred securities to acquire the debentures
from us.
MATERIAL UNITED STATES FEDERAL
TAX CONSEQUENCES.............. RGA intends to treat, and you (by your
acceptance of a beneficial interest in the
unit) agree to treat, each unit as an
"investment unit" consisting of a preferred
security and a warrant. As such, the purchase
price of each unit will be allocated between
the preferred security and the warrant in
proportion to their respective fair market
values at the time of purchase.
In the opinion of Bryan Cave LLP, counsel to
RGA, for United States federal income tax
purposes the debentures will be treated as debt
and the Trust will be treated as a grantor
trust. As a result, each holder of a preferred
security generally will be treated as owning an
undivided beneficial ownership interest in the
debentures. As a consequence, if the holder is
a United States taxpayer, it will be required
to include as ordinary income amounts
constituting original issue discount. The
amount of interest income, including original
issue discount, on which it will be taxed will
exceed its share of the cash interest payments
received from the Trust on the preferred
securities. See "Material United States Federal
Tax Consequences" in this prospectus
supplement.
ERISA CONSIDERATIONS.......... Each purchaser and subsequent transferee of the
units, including the underlying preferred
securities, warrants, debentures and any shares
of our common stock issued upon the exercise of
the warrants will be deemed to have represented
and warranted that the acquisition and holding
of these securities by the purchaser or
transferee will not constitute a non-exempt
prohibited transaction under Section 406 of the
Employee Retirement Income Security Act of 1974
("ERISA") or Section 4975 of the
S-11
Internal Revenue Code of 1986 or similar
violation under any applicable similar laws.
See "ERISA Considerations" in this prospectus
supplement.
ABSENCE OF A PUBLIC MARKET FOR
THE UNITS..................... The units and their components will be new
securities. We cannot assure you that an active
or liquid market will develop for the units or
their components.
NEW YORK STOCK EXCHANGE SYMBOL
FOR OUR COMMON STOCK AND
LISTING....................... Our common stock is traded on the New York
Stock Exchange under the symbol "RGA". We have
applied to list the units on the NYSE under the
symbol "RGA PrA" and expect to receive
approval, subject to official notice of
issuance, by or promptly following the closing
of this offering. If either the preferred
securities or the warrants are traded at a
volume that satisfies applicable exchange
listing requirements, then we will use our
reasonable best efforts to list those
securities on the national securities exchange
or quotation system on which the units are then
listed or quoted.
CONCURRENT SENIOR NOTES OFFERING
Concurrently with this offering, we are offering $200.0 million aggregate
principal amount of our 6 3/4% senior notes due 2011. This offering is not
conditioned on the senior notes offering, which means that we may complete this
offering without completing the senior notes offering.
S-12
RISK FACTORS
You should carefully consider the following factors, the other information
contained in this prospectus supplement and the attached prospectus and the
information incorporated by reference in the attached prospectus before deciding
to purchase the units or to exercise any warrants. Any of these risks could
materially adversely affect our business, financial condition and results of
operations, which could in turn materially adversely affect the price of the
unit securities and the shares of our common stock issuable upon exercise of the
warrants. In addition, whether or not the holders of preferred securities
receive debentures upon the occurrence of specified events, prospective
purchasers of units are also making an investment decision with regard to the
debentures and should carefully review all the information contained and
incorporated by reference in this prospectus supplement and the attached
prospectus regarding the debentures.
FOR RISKS RELATING SPECIFICALLY TO RGA, SEE "RISK FACTORS" BEGINNING ON
PAGE 5 IN THE ATTACHED PROSPECTUS.
THE MARKET PRICE FOR THE UNIT SECURITIES AND OUR COMMON STOCK MAY BE HIGHLY
VOLATILE.
The market price for the unit securities and our common stock may be highly
volatile. There may be a significant impact on the market price of these
securities due to:
- the announcement of acquisitions by us or our competitors;
- variations in our anticipated or actual operating results;
- market conditions; and
- general economic conditions.
AT OUR OPTION, YOU MAY RECEIVE THE DEBENTURES IN EXCHANGE FOR YOUR PREFERRED
SECURITIES, OR IF SPECIFIED EVENTS OCCUR WE MAY REDEEM THE WARRANTS AND THE
MATURITY OF THE PREFERRED SECURITIES MAY BE SHORTENED.
At our option, at any time, we may:
- subject to certain conditions, liquidate the Trust and distribute the
debentures to the beneficial holders of preferred securities; or
- if a specified tax or investment company event occurs, cause a
remarketing of the preferred securities and a redemption of the warrants.
See "Description of the Warrants -- Redemption Upon Special Event" and
"Description of Preferred Securities -- Distribution of Debentures" in this
prospectus supplement. In addition, at any time after December 18, 2004, we may
cause a remarketing of the preferred securities and a redemption of the warrants
if the price of our common stock reaches specified levels. In connection with a
remarketing of the preferred securities, the maturity date of the debentures
and, accordingly, the preferred securities will change to the date which is 93
days from the remarketing. In connection with a remarketing of the preferred
securities, you will only be entitled to the accreted value, and not the stated
liquidation amount, except in a remarketing at maturity, of the preferred
securities. As a result of the above, you may face the risk of reinvesting the
proceeds of the remarketing at yields below the related security.
YOU MAY BE REQUIRED TO ELECT TO EXERCISE YOUR WARRANTS WITHIN FIVE BUSINESS DAYS
OF NOTIFICATION OF AN ELECTION BY RGA TO OPTIONALLY REDEEM THE WARRANTS.
RGA is not required to give the holders of the warrants more than six
business days' notice of its election to redeem the warrants. The warrants will
be redeemed on the redemption date unless a warrant holder affirmatively elects
to exercise its warrants. As a result, upon an election by RGA to redeem the
warrants, a holder may have only five business days to elect to exercise its
warrants instead of a redemption. If a holder does not receive the redemption
notification because of illness, absence or other circumstances the warrants
held by that holder will be redeemed. Because of the abbreviated notification
S-13
period, a warrant holder who intends to exercise its warrant upon an optional
redemption of the warrants may want to make arrangements to provide standing
instructions to its broker or the party which holds the warrant for the exercise
of the warrants and the delivery of shares to the warrant agent in order to
allow that party to act quickly if it receives a notice of redemption from RGA.
See "Description of the Warrants -- Optional Redemption -- Procedures" in this
prospectus supplement.
THE GUARANTEE AND YOUR RIGHTS UNDER THE GUARANTEE ARE LIMITED.
Under the guarantee, we will guarantee to the holders of the preferred
securities and common securities on a pro rata basis, but only to the extent the
Trust has funds available for these payments, the payment of:
- any accumulated and unpaid distributions required to be paid on the
preferred securities and common securities on a pro rata basis, to the
extent that the Trust has sufficient funds available therefor at the
time;
- the redemption price with respect to any preferred securities and common
securities on a pro rata basis called for redemption, to the extent that
the Trust has sufficient funds available therefor at such time; and
- the repurchase of debentures, which are exchanged for preferred
securities if a change of control occurs, at the accreted value equal to
the accreted value of the preferred securities, plus accrued and unpaid
interest on the debentures (including deferred interest) to, but
excluding, the repurchase date to the extent the Trust has sufficient
funds available therefor at that time;
- upon a voluntary or involuntary dissolution, winding up or termination of
the Trust (other than in connection with the exchange of all of the
preferred securities for debentures or the distribution of the debentures
to holders of the preferred securities and common securities on a pro
rata basis), the lesser of:
-- the aggregate accreted value of the preferred securities and common
securities and all accumulated and unpaid distributions thereon to the
date of payment; and
-- the amount of assets of the Trust remaining available for distribution
to holders of preferred securities and common securities on a pro rata
basis.
The guarantee trustee will hold the guarantee for the benefit of the
holders of the preferred securities and the common securities. The holders of a
majority in aggregate stated liquidation amount of the preferred securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the guarantee trustee, or to direct the exercise of
any trust or other power conferred upon the guarantee trustee under the
guarantee. If the guarantee trustee fails to enforce the guarantee, then any
holder of preferred securities, subject to the subordination provisions of the
guarantee for that payment, may sue us directly to enforce such holder's right
to receive payment under the guarantee without first suing the Trust, the
guarantee trustee or any other person or entity. If we default on our obligation
to pay amounts on the debentures, the Trust would lack sufficient funds for the
payment of distributions or amounts payable on redemption of the preferred
securities or otherwise. The holders of the preferred securities would not be
able to rely upon the guarantee for payment of those amounts. A holder of the
preferred securities could instead rely on the enforcement by:
- the property trustee of its rights as registered holder of the debentures
against us in accordance with the terms of the debentures; or
- such holder of its right to bring a suit directly against us to enforce
payments on debentures.
The declaration of trust states that each holder of preferred securities will
agree to the provisions of the guarantee, including the subordination
provisions, and the indenture.
S-14
OUR OBLIGATIONS UNDER THE GUARANTEE AND THE DEBENTURES WILL BE SUBORDINATED TO
OUR OBLIGATIONS TO PAY SENIOR DEBT.
Our obligations under the guarantee and the debentures will be
contractually subordinated and junior in right of payment to all of our existing
and future senior indebtedness, including our outstanding senior notes, bank
debt and the senior notes we plan to issue following the issuance of the units.
"Senior indebtedness" includes:
- all of our indebtedness, whether outstanding on the date of the issuance
of the debentures or thereafter created, incurred or assumed, which is
for money borrowed, or which is evidenced by a note or similar instrument
given in connection with the acquisition of any business, properties or
assets), including securities;
- all of our obligations under leases required or permitted to be
capitalized under generally accepted accounting principles;
- any indebtedness of others of the kinds described in the first bullet
point above, for the payment of which RGA is responsible or liable as
guarantor or otherwise; and
- amendments, renewals, extensions and refundings of any such indebtedness.
The senior indebtedness will continue to be senior indebtedness and entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of the senior indebtedness or extension or
renewal of the senior indebtedness. Senior indebtedness will not include (1)
indebtedness incurred for the purchase of goods or materials or for services
obtained in the ordinary course of business, (2) any indebtedness which by its
terms is expressly made equal in rank and payment with or subordinated to the
debentures and (3) obligations by RGA owed to its subsidiaries.
Any significant additional indebtedness that we may incur may materially
adversely impact our ability to service our debt, including the debentures. Due
to the subordination provisions in the indenture under which the debentures will
be issued, in the event of our insolvency, funds which we would otherwise use to
pay the holders of the debentures will be used to pay the holders of senior
indebtedness to the extent necessary to pay the senior indebtedness in full. As
a result of these payments, our general creditors may recover less, ratably,
than the holders of our senior indebtedness and these general creditors may
recover more, ratably, than the holders of the debentures or our other
subordinated indebtedness. In addition, the holders of our senior indebtedness
may, under certain circumstances, restrict or prohibit us from making payments
on the debentures or distributions on the preferred securities. As of September
30, 2001, after giving effect to this offering and to the planned offering of
$200.0 million of our senior notes, we would have had approximately $323.2
million of debt, including approximately $323.2 million of senior indebtedness.
The consummation of the offering of the units is not dependent upon the
completion of the offering of the senior notes.
In addition, because RGA is a holding company, its principal assets consist
of the stock of its insurance company subsidiaries and its principal cash flow
is derived from dividends, other distributions or loans from its insurance
company subsidiaries. Therefore, RGA's ability to service its debt, including
the guarantee and the debentures, will primarily be dependent upon the earnings
of these subsidiaries and their ability to distribute those earnings as
dividends or make loans or other payments to RGA. In addition, regulatory
restrictions may limit these payments. Our insurance company subsidiaries are
subject to various state statutory and regulatory restrictions, applicable to
insurance companies generally, that limit the amount of cash dividends, loans
and advances that those subsidiaries may pay to us. See "Business -- Corporate
Structure," "-- Regulation" and "-- Restrictions on Dividends and Distributions"
in our Annual Report on Form 10-K for the year ended December 31, 2000 which is
incorporated by reference in the attached prospectus.
As a result of RGA being a holding company, both the guarantee and the
debentures will be structurally subordinated to all of its subsidiaries'
existing and future obligations. RGA only has a stockholder's claim in the
assets of its subsidiaries. This stockholder's claim is junior to claims that
S-15
creditors and reinsurance contract holders of RGA's subsidiaries have against
those subsidiaries. Holders of the debentures and beneficiaries of the guarantee
of the preferred securities will only be creditors of RGA, and such holders will
not be creditors of RGA's subsidiaries, where most of RGA's consolidated assets
are located. All of RGA's subsidiaries' existing and future liabilities,
including any claims of trade creditors, claims under reinsurance contracts,
debt obligations and other liabilities and preferred shareholders of our
subsidiaries, will be effectively senior to the guarantee of the preferred
securities and the debentures. As of September 30, 2001, the total liabilities
of our subsidiaries were approximately $5.3 billion. See "Business -- Default or
Liquidation" in our Annual Report on Form 10-K for the year ended December 31,
2000, which is incorporated by reference in the attached prospectus.
THE DEBENTURES WILL NOT CONTAIN RESTRICTIVE COVENANTS, AND THERE IS LIMITED
PROTECTION IN THE EVENT OF A CHANGE OF CONTROL.
The indenture under which the debentures will be issued will not contain
several types of restrictive covenants that would protect the holders of
debentures from transactions that may adversely affect them. In particular, the
indenture will not contain covenants that limit our ability, absent exercise of
our deferral option, to pay dividends or make distributions on, or redeem or
repurchase, our capital shares and will not contain provisions that would give
the holders of the debentures the right to require us to repurchase their
debentures in the event of a change of control of RGA, except as described in
this prospectus supplement, or a decline in our credit rating or the credit
rating of our debt securities as a result of a takeover, recapitalization or
similar restructuring, or any other reason. In addition, the indenture will not
limit our ability to incur additional indebtedness and, therefore, will not
contain provisions that afford the holders of the debentures protection in the
event of a highly leveraged transaction or other similar transaction involving
us that may adversely affect the holders.
Other than the warrants, the warrant agreement, the debentures and the
indenture, none of the unit securities or the agreements governing these
securities will contain provisions that permit holders of units to require that
RGA redeem the warrants or repurchase the debentures in the event of, or
otherwise prohibit RGA from undertaking, a merger, takeover, recapitalization or
similar business combination or restructuring transaction. In addition, RGA
could enter into certain transactions, including acquisitions, refinancings or
other recapitalization, that could affect RGA's capital structure or the value
of our common stock, but that would not constitute a change of control.
OUR ABILITY TO REDEEM THE WARRANTS AND REPURCHASE THE DEBENTURES UPON A CHANGE
OF CONTROL MAY BE LIMITED.
In certain circumstances involving a change of control of RGA, you may
require us to redeem the warrants for, at our option, cash, shares of our common
stock or a combination of cash and our common stock and exchange the preferred
securities for debentures and then repurchase the debentures. We cannot assure
you that, if required, we will have sufficient cash or other financial resources
at such time or would be able to arrange financing to redeem the warrants for
the warrant redemption amount and to pay the repurchase price of the debentures
in cash. Our ability to do these things in this event may be limited by law,
insurance regulations, by the indenture, by the terms of other agreements
relating to our senior indebtedness and by such indebtedness and agreements as
may be entered into, replaced, supplemented or amended from time to time. We may
not have the financial ability to redeem the warrants and repurchase the
debentures in cash if payment for our senior indebtedness is accelerated. Our
right to pay the warrant redemption amount in our common stock is subject to
conditions described in "Description of the Warrants -- Change of Control."
YOU MUST RELY ON THE ENFORCEMENT RIGHTS OF THE PROPERTY TRUSTEE.
If:
- the Trust fails to pay distributions in full on the preferred securities,
other than pursuant to a deferral of interest during an extension period,
or
S-16
- a trust enforcement event, which we define under "Description of the
Preferred Securities -- Trust Enforcement Events" in this prospectus
supplement, including a failure by us to make payments on the debentures,
occurs and is continuing;
the holders of preferred securities must rely upon the enforcement rights of the
property trustee, as a holder of the debentures. The holders of a majority in
liquidation amount of the preferred securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the property trustee or to direct the exercise of any trust or power conferred
upon the property trustee under the declaration of trust, including the right to
direct the property trustee to exercise the remedies available to it as a holder
of the debentures.
If the property trustee fails to enforce its rights under the debentures in
respect of an indenture event of default after a holder of record of preferred
securities has made a written request, a holder of preferred securities may sue
us directly to enforce the property trustee's rights under the debentures
without first suing the property trustee. If a trust enforcement event has
occurred and is continuing and is attributable to our failure to pay interest,
principal or premium on the debentures when due, then the registered holder of
the preferred securities may sue directly for enforcement of payment to the
holder of the principal, premium or interest on the debentures having a
principal amount equal to the aggregate liquidation amount of the preferred
securities of such holder. As the holder of the common securities of the Trust,
we will be subrogated to the rights of such holder of preferred securities under
the declaration to the extent of any payment made by us to such holder of
preferred securities in that suit. The holders of preferred securities will not
be able to exercise directly any other remedy available to the holders of the
debentures.
HOLDERS OF PREFERRED SECURITIES WILL HAVE ONLY LIMITED VOTING RIGHTS.
Holders of preferred securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, the various trustees of
the Trust. Holders will not be able to increase or decrease the number of these
trustees. Those voting rights are held exclusively by the holders of the common
securities of the Trust, which initially will be us.
BECAUSE OF THE LACK OF AN ESTABLISHED TRADING MARKET FOR THE UNIT SECURITIES,
YOU MAY NOT BE ABLE TO SELL THESE SECURITIES AT AN ATTRACTIVE PRICE OR AT ALL.
The unit securities constitute a new issue of securities with no
established trading market. Although we have applied to list the units on the
New York Stock Exchange, we cannot assure you that an active market will develop
or, if any trading market does develop, that it will be liquid or that unit
securities will not trade at a price lower than the offering price. In general,
several factors may affect whether a liquid trading market for a new issue of
securities develops, including the following:
- prevailing interest rates;
- our operating results and prospects; and
- the market for similar securities.
As a result, we cannot assure you that you will be able to sell the unit
securities at attractive prices or at all.
WE HAVE THE OPTION TO EXTEND INTEREST PAYMENT PERIODS, WHICH MAY RESULT IN
ADVERSE TAX CONSEQUENCES AND ADVERSELY AFFECT THE MARKET PRICE OF THE PREFERRED
SECURITIES.
We have the right to defer payments of interest on the debentures by
extending the interest payment period for extension periods not exceeding 20
consecutive quarters with respect to each deferral period, provided that no
extension period may extend beyond maturity of the debentures. Prior to the end
of an extension period, we may, and at the end of such extension period we
shall, pay all interest then accrued and unpaid, together with interest thereon
at the stated rate borne thereby, compounded quarterly at the applicable rate
for the debentures to the extent permitted by applicable law. Prior to the
termination of any extension period we may further extend the extension period,
provided that any extension period,
S-17
together with all previous and further extensions, may not exceed 20 consecutive
quarters or extend beyond the maturity of the debentures or end on a date other
than an interest payment date. Upon termination of any extension period and the
payment of all amounts then due, including interest on deferred interest
payments, we may select a new extension period, subject to the above
requirements. If interest payments on the debentures are deferred, distributions
on the preferred securities also will be deferred and we, or any of our
subsidiaries, will not be permitted, subject to certain exceptions described in
"Description of the Debentures -- Option to Extend Interest Payment Period" in
this prospectus supplement, to:
- declare or pay dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital
stock or under any dividend reimbursement plan;
- make any payment of interest, principal or premium, if any, on, or repay,
repurchase or redeem any debt securities issued by RGA that rank equally
with or junior to the debentures; or
- make any guarantee payments with respect to any guarantee by RGA of the
debt securities of any subsidiary, if such guarantee ranks equally with
or junior in interest to the debentures, other than payments under our
guarantee of the preferred securities of the Trust.
During an extension period, interest on the debentures will continue to
accrue and, as a result, distributions on the preferred securities will
accumulate. See "Description of the Preferred Securities -- Distributions" and
"Description of the Debentures -- Option to Extend Interest Payment Period" in
this prospectus supplement.
Should an extension period occur, you will be required to accrue the stated
interest payments, in the form of original issue discount, in income in respect
of your pro rata share of the debentures held by you for United States federal
income tax purposes. As a result, you will be required to include such interest
in gross income for United States federal income tax purposes in advance of
receipt of cash, and will not receive cash related to such income from the Trust
if you dispose of your preferred securities prior to the record date for the
payment of distributions. See "Material United States Federal Tax
Consequences -- The Debentures -- Interest Income and Original Issue
Discount -- Deferral of Interest" in this prospectus supplement.
We have no current intention of exercising our right to defer payments of
interest by extending the interest payment period on the debentures. However,
should we elect to exercise such right in the future, the market price of the
preferred securities is likely to be adversely affected. If you dispose of your
preferred securities during an extension period, you might not receive the same
return on your investment that you would if you continue to hold your preferred
securities. In addition, as a result of the existence of our right to defer
interest payments, the market price of the preferred securities, which represent
an undivided beneficial ownership interest in the debentures, may be more
volatile than other securities that do not have such rights.
OUR SIGNIFICANT REDEMPTION OBLIGATIONS WITH RESPECT TO THE UNITS MAY ADVERSELY
AFFECT OUR OPERATIONS.
We will incur redemption obligations for the units. These obligations could
adversely affect our ability to obtain additional financing for acquisitions,
working capital or other purposes and could make us more vulnerable to economic
downturns and competitive pressures.
Our obligations under the units could also hurt our liquidity. In the event
of a cash shortfall, we could be forced to reduce other expenditures to be able
to meet our obligations. Our ability to meet our obligations under the units
will be dependent upon our future performance, which will be subject to
financial, business and other factors affecting our operations. Many of these
factors are beyond our control. If we are unable to meet our obligations under
the units and to service our debt, we may be required to refinance our
obligations or obtain additional financing.
ACCRUAL OF ORIGINAL ISSUE DISCOUNT WILL HAVE TAX CONSEQUENCES FOR THE HOLDERS OF
THE UNITS.
RGA intends to treat, and you, by your acceptance of a beneficial interest
in a unit, agree to treat, the units as "investment units" for United States
federal income tax purposes. As such, the purchase price of a unit will be
allocated between the preferred security and the warrant in proportion to their
respective fair
S-18
market values at the time of issue. This allocation will cause the preferred
securities to have a stated redemption price at maturity greater than their
issue price. As a result, the debentures will be treated as issued with original
issue discount. You will be required to accrue an amount of original issue
discount in gross income each year before you receive any cash attributable to
that income. See "Material United States Federal Tax Consequences" in this
prospectus supplement.
USE OF PROCEEDS
We estimate that the proceeds less expenses from the sale of the units,
consisting of the portion of the net proceeds from the sale of the units
relating to the warrants, and the net proceeds from the issuance of the
debentures to the Trust, will be approximately $217.7 million (or $250.5 million
if the underwriters' option to purchase additional units is exercised in full),
after deducting the underwriters' discounts and commissions and estimated
offering expenses. We anticipate that we will use the net proceeds from the
offering of the units for general corporate purposes. As a result, we will
retain broad discretion over the use of the net proceeds of this offering. The
Trust will use the net proceeds from the sale of the preferred securities to
purchase the debentures from us.
In addition, we estimate that the net proceeds from the concurrent offering
of our senior notes will be approximately $198.4 million, after deducting the
underwriters' discounts and commissions and estimated offering expenses. We
anticipate that we will use the net proceeds from the senior notes offering to
repay the $75.0 million term loan we borrowed from an affiliate of MetLife, and
approximately $120.0 million of outstanding revolving borrowings under our
$140.0 million credit agreement led by a bank syndicate that includes The Bank
of New York, as administrative agent, Bank of America, N.A., as syndication
agent, Fleet National Bank, as documentation agent and Royal Bank of Canada, as
co-agent. This offering is not conditioned on the concurrent senior notes
offering, which means that we may complete this offering without completing the
senior notes offering.
We summarize below the outstanding debt that we intend to repay from the
net proceeds of our planned offering of our senior notes, assuming that the
offering had closed on September 30, 2001, and the related interest rates and
maturities:
- We had an outstanding $75.0 million term loan under the term loan
agreement dated as of March 1, 2001 with MetLife Credit Corp., a
subsidiary of MetLife, our majority shareholder. The term loan accrues
interest at 75.5 basis points over the 30-day "AA" rated financial
discount rate, which equaled 2.705% as of December 3, 2001, and matures
on June 30, 2004. The term loan was entered into on March 1, 2001, and
the proceeds of the loan were used to refinance a $75.0 million term loan
note in favor of General American, a subsidiary of MetLife, issued in
connection with a June 1, 1999 term loan agreement between us and General
American.
- We had outstanding approximately $120.0 million in revolving credit loans
under a credit agreement with The Bank of New York, Bank of America,
N.A., Fleet National Bank, Royal Bank of Canada and Mellon Bank, N.A., as
lenders. Borrowings under this credit agreement accrue interest at LIBOR
plus 62.5 basis points, which equaled 2.75% annually as of December 1,
2001, and mature on May 24, 2003. The proceeds of these loans were used
for general corporate purposes.
Upon repayment, our borrowing capacity available under the credit agreement
will be restored, and we will have broad discretion over the use of any funds we
subsequently borrow under this credit agreement or any future credit agreement.
Pending the use of the net proceeds from both offerings, we intend to invest the
net proceeds in short-term, interest-bearing, investment-grade securities.
Affiliates of some of the lenders under our credit agreement are acting as
underwriters for the offerings and The Bank of New York and its Delaware
affiliate will act as unit agent under the unit agreement, warrant agent under
the warrant agreement, property trustee under the amended and restated
declaration of trust and indenture trustee under the junior subordinated
indenture.
S-19
CAPITALIZATION
We present in the table below the capitalization of RGA and its
subsidiaries:
- on an actual, consolidated basis as of September 30, 2001;
- as adjusted to give effect to this offering; and
- as further adjusted to give effect to this offering and the concurrent
offering of $200.0 million of 6 3/4% senior notes due 2011.
The as adjusted and as further adjusted columns also give effect to the
application of the net proceeds from the offerings as described under "Use of
Proceeds" in this prospectus supplement. You should read this table in
conjunction with the consolidated financial statements of RGA and the notes
relating to them which are contained in our Annual Report on Form 10-K for the
year ended December 31, 2000 and our Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2001, June 30, 2001 and September 30, 2001, which are
incorporated by reference in the attached prospectus. The actual, as adjusted,
and as further adjusted information set forth in the table exclude:
- 2,283,671 shares of common stock issuable upon the exercise of options
outstanding as of December 4, 2001 under the RGA Flexible Stock Plan,
with a weighted average exercise price of $24.15 per share;
- 65,848 shares of common stock issuable upon the exercise of options
outstanding as of December 4, 2001 under the Flexible Stock Plan for
Directors, with a weighted average exercise price of $31.42 per share;
- an additional 4,317,530 shares of common stock reserved for issuance
under the RGA Flexible Stock Plan as of December 4, 2001, subject to a 5%
increase each year; and
- an additional 112,500 shares of common stock reserved for issuance under
the Flexible Stock Plan for Directors as of December 4, 2001.
<Table>
<Caption>
SEPTEMBER 30, 2001
-----------------------------------
ACTUAL AS AS FURTHER
(UNAUDITED) ADJUSTED ADJUSTED
----------- -------- ----------
($ IN MILLIONS)
Long-term debt:
Borrowings under $140 million bank credit facility........ $ 120.0 $ 120.0 $ --
Other net borrowings...................................... 23.2 23.2 23.2
Term loan due 2004(1)..................................... 75.0 75.0 --
7.25% senior notes due 2006............................... 100.0 100.0 100.0
6.75% senior notes due 2011 to be offered(3).............. -- -- 200.0
-------- -------- --------
Total long-term debt................................... 318.2 318.2 323.2
5.75% Cumulative Trust Preferred Securities offered
hereby(2).............................................. -- 158.1 158.1
Stockholders' equity:
Preferred stock, par value $.01 per share; 10,000,000
shares authorized; no shares issued or outstanding..... -- -- --
Common stock, par value $.01 per share; 75,000,000 shares
authorized, 51,053,273 shares issued at September 30,
2001................................................... 0.5 0.5 0.5
Warrants offered hereby(2)................................ -- 66.9 66.9
Additional paid-in capital................................ 612.8 612.8 612.8
Retained earnings......................................... 400.4 400.4 400.4
Accumulated other comprehensive income.................... (57.9) (57.9) (57.9)
Treasury stock............................................ (37.3) (37.3) (37.3)
-------- -------- --------
Total stockholders' equity............................. 918.5 985.4 985.4
-------- -------- --------
Total capitalization................................... $1,236.7 $1,461.7 $1,466.7
======== ======== ========
</Table>
- ---------------
(1) Owed to a subsidiary of MetLife.
(2) Each Trust PIERS unit consists of a 5.75% cumulative trust preferred
security, liquidation amount $50 per security, and a warrant to purchase
1.2508 shares of our common stock at an exercise price of $50 per warrant at
maturity, subject to adjustment.
(3) We expect the notes will contain certain covenants related to liens and the
issuance and disposition of restricted subsidiaries.
S-20
SELECTED CONSOLIDATED FINANCIAL INFORMATION
We present in the table below our selected consolidated financial data and
other data which should be read in conjunction with and is qualified in its
entirety by reference to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements
and unaudited consolidated financial statements and the related notes which are
contained in our Annual Report on Form 10-K in each case, for the year ended
December 31, 2000 and our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2001, June 30, 2001 and September 30, 2001, which are incorporated by
reference in the attached prospectus. The selected consolidated financial data
for the fiscal years ended December 31, 1996, 1997, 1998 and 1999 have been
derived from our financial statements which have been audited by KPMG Peat
Marwick LLP, and the selected consolidated financial data for the fiscal year
ended December 31, 2000 have been derived from our consolidated financial
statements which have been audited by Deloitte & Touche LLP. The selected
consolidated financial data for the nine months ended September 30, 2000 and
September 30, 2001 have been derived from our unaudited consolidated financial
statements. In the opinion of management, the unaudited information reflects all
adjustments (consisting only of normal and recurring adjustments) necessary for
a fair presentation of the results for those periods. Results for the nine
months ended September 30, 2001 are not necessarily indicative of the results to
be expected for the full fiscal year.
<Table>
<Caption>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ -------------------
1996 1997 1998 1999 2000 2000 2001
------ ------ -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND OPERATING DATA)
INCOME STATEMENT DATA:
Revenues:
Net premiums........................ $617.7 $744.8 $1,016.4 $1,315.6 $1,404.1 $ 991.1 $1,179.7
Investment income, net of related
expenses.......................... 135.8 187.1 301.8 340.3 326.5 238.4 251.1
Realized capital (losses) gains..... 0.9 0.3 3.1 (75.3) (28.7) (18.3) (35.4)
Other income........................ 16.8 46.0 23.2 26.5 23.8 12.6 21.9
------ ------ -------- -------- -------- -------- --------
Total revenue..................... 771.2 978.2 1,344.5 1,607.1 1,725.7 1,223.8 1,417.3
Benefits and expenses:
Claims and other policy benefits.... 463.5 569.1 797.9 1,067.1 1,103.6 776.3 954.7
Interest credited................... 54.7 92.3 153.2 153.1 104.8 74.6 79.6
Policy acquisition costs and other
insurance expenses................ 118.1 148.1 188.5 218.3 243.5 171.3 203.9
Other expenses...................... 37.5 47.5 58.0 64.5 80.9 59.2 66.9
Interest expense.................... 6.2 7.8 8.8 11.0 17.6 12.4 13.7
------ ------ -------- -------- -------- -------- --------
Total benefits and expenses....... 680.0 864.8 1,206.4 1,514.0 1,550.4 1,093.8 1,318.8
Income from continuing operations
before income taxes and minority
interest.......................... 91.2 113.4 138.1 93.1 175.3 130.0 98.5
Provision for income taxes.......... 33.1 40.4 49.1 39.1 69.2 52.7 37.4
------ ------ -------- -------- -------- -------- --------
Income from continuing operations
before minority interest.......... 58.1 73.0 89.0 54.0 106.1 77.3 61.1
Minority interest in earnings
(losses) of consolidated
subsidiaries...................... 0.3 0.4 (0.7) 1.0 0.3 0.6 --
------ ------ -------- -------- -------- -------- --------
Income from continuing operations... 57.8 72.6 89.7 53.0 105.8 76.7 61.1
Discontinued operations:
Loss from discontinued accident and
health operations, net of income
taxes............................. (2.7) (18.0) (27.6) (12.1) (28.1) (8.3) --
------ ------ -------- -------- -------- -------- --------
Net income.......................... $ 55.1 $ 54.6 $ 62.1 $ 40.9 $ 77.7 $ 68.4 $ 61.1
====== ====== ======== ======== ======== ======== ========
</Table>
S-21
<Table>
<Caption>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ -------------------
1996 1997 1998 1999 2000 2000 2001
------ ------ -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND OPERATING DATA)
BASIC EARNINGS PER SHARE:
Continuing operations............... $ 1.53 $ 1.91 $ 2.11 $ 1.16 $ 2.14 $ 1.55 $ 1.24
Discontinued operations............. (0.08) (0.47) (0.61) (0.27) (0.57) (0.17) --
------ ------ -------- -------- -------- -------- --------
Net income.......................... 1.45 1.44 1.50 0.89 1.57 1.38 1.24
DILUTED EARNINGS PER SHARE:
Continuing operations............... $ 1.52 $ 1.89 $ 2.08 $ 1.15 $ 2.12 $ 1.53 $ 1.22
Discontinued operations............. (0.08) (0.47) (0.60) (0.27) (0.56) (0.16) --
------ ------ -------- -------- -------- -------- --------
Net income.......................... 1.44 1.42 1.48 0.88 1.56 1.37 1.22
Weighted average diluted shares (in
millions)......................... 38.1 38.4 42.6 46.2 49.9 50.0 49.9
Dividends per share on common
stock............................. 0.13 0.15 0.17 0.22 0.24 0.18 0.18
</Table>
<Table>
<Caption>
DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -------------------
1996 1997 1998 1999 2000 2000 2001
-------- -------- -------- -------- -------- -------- --------
BALANCE SHEET DATA:
Total investments................ $2,272.0 $3,634.0 $5,129.6 $3,811.9 $4,560.2 $4,377.4 $4,747.6
Total assets..................... 2,893.7 4,673.6 6,318.6 5,123.7 6,061.9 5,922.2 6,505.4
Policy liabilities............... 2,068.6 3,558.7 5,053.1 3,998.1 4,617.7 4,531.5 4,962.4
Total long-term debt............. 106.5 106.8 108.0 184.0 272.3 262.1 318.2
Stockholders' equity............. 425.6 499.3 748.5 732.9 862.9 829.6 918.5
Stockholders' equity per share... 11.14 13.21 16.52 14.68 17.51 16.84 18.57
OTHER FINANCIAL DATA (IN
BILLIONS):
Assumed ordinary life reinsurance
business in force.............. $ 168.3 $ 227.3 $ 330.6 $ 446.9 $ 545.9 $ 494.3 $ 585.8
Assumed new business
production..................... 37.9 75.9 125.0 164.9 161.1 94.5 114.4
</Table>
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed charges and
earnings to fixed charges, including interest credited under reinsurance
contracts, for the periods indicated (1) on an actual basis, (2) on a pro forma
basis to give effect to this offering, and (3) on an adjusted pro forma basis to
give effect to this offering and our concurrent offering of $200.0 million of
6 3/4% senior notes due 2011. For purposes of computing the consolidated ratio
of earnings to fixed charges, earnings consist of net earnings from continuing
operations adjusted for the provision for income taxes, minority interest and
fixed charges. Fixed charges consist of interest and discount on all
indebtedness and one-third of annual rentals, which we believe is a reasonable
approximation of the interest factor of such rentals.
<Table>
<Caption>
NINE MONTHS ENDED SEPTEMBER 30,
2001
YEARS ENDED DECEMBER 31, ADJUSTED ----------------------------------
---------------------------------- PRO FORMA PRO FORMA ADJUSTED
1996 1997 1998 1999 2000 2000 2000 HISTORICAL PRO FORMA PRO FORMA
---- ---- ---- ---- ---- --------- --------- ---------- --------- ---------
Ratio of earnings to fixed
charges.................... 13.8 13.9 15.2 8.5(1) 9.9 5.9 5.1 7.4 4.5 4.0
Ratio of earnings to exceed
charges including interest
credited under reinsurances
contracts.................. 2.5 2.1 1.8 1.6(1) 2.4 2.2 2.1 2.0 1.8 1.8
</Table>
- ---------------
(1) Coverage ratio in 1999 is lower than other annual periods presented due to
the inclusion of $75.3 million of net realized investment losses primarily
associated with the recapture of one block of business by General American
Life Insurance Company.
S-22
PRICE RANGE OF COMMON STOCK
Our common stock trades on the New York Stock Exchange under the symbol
"RGA." As of November 30, 2001, there were 49,509,743 shares issued and
outstanding held by 106 shareholders of record. The closing price of our common
stock on December 12, 2001 was $32.50 per share. At November 30, 2001, we had no
preferred stock outstanding.
For the last two fiscal years and the first three quarters of 2001, and the
fourth quarter through December 12, 2001, the high and low prices of our common
stock on the New York Stock Exchange by quarter were as follows:
<Table>
<Caption>
PRICE RANGE OF
COMMON STOCK
---------------
FISCAL YEAR AND QUARTER HIGH LOW
- ----------------------- ------ ------
1999
First Quarter............................................. $49.17 $38.92
Second Quarter............................................ $44.25 $34.25
Third Quarter............................................. $40.75 $24.75
Fourth Quarter............................................ $34.50 $22.13
2000
First Quarter............................................. $30.25 $15.38
Second Quarter............................................ $35.13 $22.00
Third Quarter............................................. $34.50 $26.25
Fourth Quarter............................................ $38.38 $31.88
2001
First Quarter............................................. $41.93 $29.23
Second Quarter............................................ $39.53 $32.33
Third Quarter............................................. $39.36 $27.95
Fourth Quarter (through December 12, 2001)................ $36.23 $27.90
</Table>
DIVIDEND HISTORY AND POLICY
Our cash dividends per share declared by quarter for the last two fiscal
years and the current year were as follows:
<Table>
<Caption>
FISCAL YEARS ENDED
DECEMBER 31,
---------------------
1999 2000 2001
----- ----- -----
First Quarter............................................... $0.05 $0.06 $0.06
Second Quarter.............................................. $0.05 $0.06 $0.06
Third Quarter............................................... $0.06 $0.06 $0.06
Fourth Quarter.............................................. $0.06 $0.06 $0.06
</Table>
The declaration and payments of dividends in the future will be determined
by our board of directors based upon an assessment of the earnings and financial
condition of RGA and other factors. In addition, because RGA is a holding
company, its principal assets consist of the stock of its insurance company
subsidiaries and its principal cash flow is derived from dividends, other
distributions or loans from its insurance company subsidiaries. Therefore, our
ability to declare and pay dividends is dependent upon the earnings of these
subsidiaries, and their ability to distribute those earnings as dividends or
make loans or other payments to RGA. Regulatory restrictions may further limit
these payments. Our insurance company subsidiaries are subject to various state
statutory and regulatory restrictions, applicable to insurance companies
generally, that limit the amount of cash dividends, loans and advances that
those subsidiaries may pay to us. See "Business -- Corporate Structure,"
"-- Regulation" and "-- Restrictions on Dividends and Distributions" in our
Annual Report on Form 10-K for the year ended December 31, 2000, which is
incorporated by reference in the attached prospectus.
S-23
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with our
financial statements. The purchase price of each unit will be allocated between
the preferred security and the warrant comprising the unit in proportion to
their respective fair market values at the time of issue. The assigned value of
the preferred securities will be presented as a separate line item on our
consolidated balance sheet under the caption "Company-obligated mandatorily
redeemable preferred securities of subsidiary trust holding solely junior
subordinated debentures of the Company." The difference between the assigned
value and the stated liquidation amount of the preferred securities will be
treated as an original issue discount and amortized on a level yield basis over
the life of the preferred securities. The value assigned to the warrants is
recorded as a component of shareholders' equity in our consolidated financial
statements. The distributions on the preferred securities and amortization of
the original issue discount will be reported for as interest expense in our
consolidated financial statements. Appropriate disclosures about the preferred
securities, the preferred securities guarantee, the debentures and the warrants
will be included in the notes to our consolidated financial statements.
Our future reports filed under the Securities Exchange Act of 1934 will
include a footnote to the audited consolidated financial statements stating
that:
- the Trust is wholly owned;
- the sole assets of the Trust are the debentures, specifying the
debentures' outstanding principal amount, interest rate and maturity
date; and
- our obligations described in this prospectus supplement, in the
aggregate, constitute a full, irrevocable and unconditional guarantee on
a subordinated basis by us of the obligations of the Trust under the
preferred securities.
Prior to the issuance of our common stock upon the exercise of the
warrants, we expect that the units will be reflected in our diluted earnings per
share calculations using the treasury stock method. Under this method, the
number of shares of our common stock used in calculating diluted earnings per
share will be deemed to be increased by the excess, if any, of the number of
shares issuable upon exercise of the warrants over the number of shares that
could be purchased by us in the market at the average market price during the
period using the proceeds receivable upon exercise of the warrant.
S-24
THE TRUST
The Trust is a statutory business trust formed under the Delaware Business
Trust Act in February 2001, and is governed by an amended and restated trust
agreement, which we refer to as the "declaration of trust," to be executed by
RGA, as sponsor, a property trustee and a Delaware trustee, and A. Greig
Woodring, Jack B. Lay, and Todd C. Larson, as administrative trustees, and a
certificate of trust, dated as of February 8, 2001, filed with the Secretary of
State of the State of Delaware. The Trust's business and affairs will be
conducted by The Bank of New York, as property trustee, The Bank of New York
(Delaware), as Delaware trustee, and the three individual administrative
trustees, who are employees of RGA. The Trust exists for the exclusive purpose
of issuing the preferred securities and common securities of the Trust,
investing the gross proceeds from these sales in the debentures and engaging in
only those other activities that are necessary or incidental to the other
activities mentioned above. Accordingly, the debentures will be the sole assets
of the Trust, and payments under the debentures will be the sole source of
revenue of the Trust. All of the common securities of the Trust will be owned by
RGA. The common securities will rank equally, and payments will be made on them
pro rata, with the preferred securities, except that upon the occurrence and
continuance of an event of default under the declaration of trust resulting from
an event of default under the indenture, which we refer to as an "indenture
event of default," the rights of RGA as holder of the common securities to
payment in respect of distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of holders of the preferred
securities. RGA will acquire common securities in an aggregate liquidation
amount at least equal to 3% of the total capital of the Trust.
The property trustee will hold title to the debentures for the benefit of
holders of the preferred securities and common securities and, as the holder of
the debentures, the property trustee will have the power to exercise all rights,
powers and privileges of a holder of debentures under the indenture. In
addition, the property trustee will maintain exclusive control of a segregated
non-interest bearing trust account to hold all payments made in respect of the
debentures for the benefit of holders of the preferred securities and common
securities. The guarantee trustee will hold the guarantee for the benefit of
holders of the preferred securities and common securities. RGA, as the holder of
all the common securities, will have the right to appoint, remove or replace any
of the trustees and to increase or decrease the number of trustees; provided
that the number of trustees will be at least three; and provided further that at
least one trustee will be a Delaware trustee, at least one trustee will be the
property trustee and at least one trustee will be an administrative trustee.
RGA, as issuer of the debentures, has agreed to pay all fees and expenses
related to the organization and operations of the Trust (including (1) any
taxes, duties, assessments or governmental charges of whatever nature imposed by
the United States or any other taxing authority upon the Trust, or (2) any tax
in the nature of a withholding tax imposed by any taxing authority outside of
the United States on any payment by the Trust to holders of preferred securities
and common securities) upon the offering of the preferred securities and be
responsible for all debts and obligations of the Trust (other than with respect
to the preferred securities).
For so long as the preferred securities remain outstanding, RGA will
covenant (1) to maintain directly or indirectly ownership of all of the common
securities, (2) to cause the Trust to remain a statutory business trust and not
to voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the declaration of trust, (3) to use its commercially reasonable
efforts to ensure that the Trust will not be an "investment company" under the
Investment Company Act of 1940 and (4) to take no action that would be
reasonably likely to cause the Trust to fail to be classified as a grantor trust
for United States federal income tax purposes.
The rights of holders of preferred securities, including economic rights,
rights to information and voting rights, are set forth in the declaration of
trust, the Delaware Business Trust Act and the Trust Indenture Act of 1939. The
declaration of trust and the guarantee also incorporate by reference the terms
of the Trust Indenture Act of 1939.
The office of the Delaware trustee is located at 23 White Clay Center,
Route 273, Newark, Delaware 19771. The principal place of business of the trust
is c/o Reinsurance Group of America, Incorporated, 1370 Timberlake Manor
Parkway, Chesterfield, Missouri 63017-6039, telephone (636) 736-7000.
We anticipate that the Trust will not be subject to the reporting
requirements of the Securities Exchange Act of 1934.
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DESCRIPTION OF THE UNITS
We and the Trust will issue the units issued under the Unit Agreement among
RGA, the Trust, The Bank of New York, as unit agent, The Bank of New York, as
warrant agent, and The Bank of New York, as property trustee. Because a purchase
of the units will also involve an investment decision regarding the components
of the units, as well as the shares of our common stock issuable upon exercise
of the warrants and the debentures issuable in exchange for the preferred
securities in specified instances, you should also read captions "Description of
the Warrants," "Description of the Preferred Securities," "Description of the
Debentures," "Description of the Guarantee," "Relationship Among the Preferred
Securities, the Debentures and the Guarantee" in this prospectus supplement and
"Description of Debt Securities of RGA" and "Description of Capital Stock of
RGA" in the attached prospectus. The following description of the material terms
of the units and the material provisions of the unit agreement in this
prospectus supplement and in the attached prospectus contain only a summary of
their material terms and do not purport to be complete. We urge you to read
these documents in their entirety because they, and not this description and the
descriptions referred to above, will define your rights as a holder of the
units. We will file the unit agreement and the units as exhibits to a Current
Report on Form 8-K, which will be incorporated by reference in the attached
prospectus. You may also request copies of these documents from us at our
address set forth in the attached prospectus under "Incorporation of Certain
Documents by Reference." Unless otherwise specified, when we refer to "RGA" in
the following description, we mean only Reinsurance Group of America,
Incorporated and not its subsidiaries.
GENERAL
Each unit will consist of:
- a preferred security, having a stated liquidation amount of $50,
representing an undivided beneficial ownership interest in the assets of
the Trust, which assets will consist solely of the debentures; and
- a warrant to purchase, at any time prior to December 15, 2050 (unless
earlier redeemed), 1.2508 shares (subject to antidilution adjustments) of
our common stock. The exercise price will be $50, unless RGA chooses to
redeem the warrants as described below, in which case the exercise price
instead of a redemption will be an amount initially equal to $35.13,
which price will accrete on a daily basis as described in this prospectus
supplement to a maximum of $50 on the expiration date of the warrants.
At any time after issuance, the preferred security and the warrant
components of each unit may be separated by the holder thereof and transferred
separately, and thereafter, a separated preferred security and warrant may be
recombined to form a unit by providing RGA and the unit agent with notice and
appropriate instructions.
The $50 purchase price of each unit will be allocated between the preferred
security and the warrant comprising such unit in proportion to their respective
fair market values at the time of issue. RGA expects that, at the time of
issuance, the fair market value of each preferred security will be $35.13 and
the fair market value of each warrant will be $14.87. Such position will be
binding on each beneficial owner of a unit, but not on the Internal Revenue
Service. See "Material United States Federal Tax Consequences -- Treatment of
Units and Allocation of Purchase Price of the Units" in this prospectus
supplement.
DISTRIBUTIONS
Holders of units will be entitled to receive cash distributions payable on
the related preferred securities by the Trust at the rate of 5.75% of the stated
liquidation amount per annum, payable quarterly in arrears, subject to reset
upon a remarketing and subject to deferral of payment as described under
"Description of the Debentures -- Terms Upon Remarketing of Preferred
Securities; Failed Remarketing," "-- Option to Extend Interest Period" and
"Description of the Preferred Securities -- Distributions," in this prospectus
supplement. The ability of the Trust to pay the quarterly distributions on the
preferred securities will depend solely upon its receipt of corresponding
interest payments from RGA on the
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debentures. Holders of units will also be entitled to receive a pro rata
distribution of payments of principal on the debentures, except that payments of
principal following an exchange of preferred securities for debentures will be
paid to the holder of the debentures.
EXERCISE OF WARRANTS
A unit holder who exercises the warrant that is part of the unit in
connection with an optional redemption of the warrants by RGA or in connection
with the expiration of the warrants will be able to satisfy in full the exercise
price by applying the proceeds of the related remarketing of the related
preferred securities. See "Description of the Warrants -- Optional Redemption"
and "Description of the Preferred Securities -- Remarketing" in this prospectus
supplement. In the event of a failed remarketing (as described under
"Description of the Preferred Securities -- Remarketing -- Remarketing
Procedures -- A Failed Remarketing" in this prospectus supplement):
- in connection with an optional redemption by RGA, the warrants will still
be redeemed on the redemption date (that is, a successful remarketing of
the preferred securities will not be a condition to the redemption of the
warrants on the redemption date);
- in connection with the expiration of the warrants, the warrants will
still expire on December 15, 2050 (that is, a successful remarketing of
the preferred securities on the third business day prior to that date
will not be a condition to the expiration of the warrants on December 15,
2050); and
- the holder will still have the option of exercising its warrant instead
of such redemption by paying the exercise price in cash.
Following an exercise of a warrant which is part of a unit, other than an
exercise in connection with a redemption of the warrants as described under
"Description of the Warrants -- Optional Redemption" in this prospectus
supplement, the holder of the unit will have a limited right to require the
Trust to distribute its pro rata share of debentures in exchange for the
preferred securities which had been part of the unit and to require RGA to
repurchase the debentures. See "-- Limited Right to Repurchase."
LIMITED RIGHT TO REPURCHASE
If a holder of units exercises its warrants, other than an exercise instead
of a redemption of the warrants (see "Description of the Warrants -- Optional
Redemption" and "Description of the Warrants -- Exercise of Warrants" in this
prospectus supplement), such holder will have the right, which we refer to as a
limited right to repurchase, on the next special distribution date which is no
less than 93 days following the exercise date of its warrants, to require the
Trust to exchange the preferred securities related to such exercised warrants
for debentures having a face amount equal to the liquidation amount of such
preferred securities plus accumulated and unpaid distributions (including
deferred distributions) to, but excluding, such date and to require RGA to
contemporaneously repurchase the exchanged debentures at $50 plus accrued and
unpaid interest (including deferred interest) per debenture to, but excluding,
the repurchase date. The 15th day of each calendar month will be a "special
distribution date." In order to effect a repurchase of debentures, a unit holder
must:
- provide the administrative trustees and RGA with notice of its election
to require an exchange of preferred securities and repurchase of
debentures to the Trust no less than 30 days prior to the applicable
special distribution date on which such repurchase is to be effected;
- specify the number of the preferred securities to be exchanged for
debentures by the Trust; and
- certify to the Trust and RGA that such holder has exercised warrants
having an exercise price no less than the liquidation amount of the
preferred securities sought to be exchanged and that such holder is the
beneficial owner of the preferred securities to be exchanged.
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CHANGE OF CONTROL
If a change of control (as defined under "Description of the
Warrants -- Change of Control" in this prospectus supplement) occurs, each
holder of a unit will have the right to:
- require RGA to redeem that holder's related warrant on the date that is
not later than 45 days (subject to extension as described under
"Description of the Warrants -- Change of Control"), or if not a business
day, the next business day after that date, after the date RGA gives
notice of the change of control event at a redemption price, at the
option of RGA, in cash, with its common stock or a combination of cash
and its common stock, equal to 100% of the warrant redemption amount on
the redemption date; and
- exchange that holder's related preferred security for a debenture having
an accreted value equal to the accreted value of such preferred security
and to require RGA to repurchase such debenture on the date that is not
later than 138 days after RGA gives notice of a change of control at a
repurchase price equal to 100% of the accreted value of the debenture on
the repurchase date plus accrued and unpaid interest (including deferred
interest) on the debentures to, but excluding, the repurchase date.
Within 30 days after the occurrence of a change of control, RGA must give
notice to each holder of a unit and the unit agent of the transaction that
constitutes the change of control and of the resulting redemption right and
repurchase right. See "Description of the Warrants -- Change of Control" and
"Description of the Preferred Securities -- Change of Control" in this
prospectus supplement. RGA will comply with the requirements of the Securities
Exchange Act of 1934 and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
redemption of the warrants or the repurchase of the debentures as a result of a
change of control.
AMENDMENT AND MODIFICATION OF THE UNIT AGREEMENT
The unit agreement may be amended by RGA and the unit agent, without
consent of holders, for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective or inconsistent provision therein or
in any other manner which RGA and the unit agent may deem necessary or desirable
and which will not adversely affect the interests of the affected holders.
The unit agreement will contain provisions permitting RGA and the unit
agent, with the consent of holders of a majority of the units at the time
outstanding, to modify the rights of holders of the units and the terms of the
unit agreement, except that no modification may, without the consent of the
holder of each outstanding unit affected thereby, reduce the percentage of
outstanding units the consent of holders of which is required for the
modification or amendment of the provisions of the unit agreement.
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DESCRIPTION OF THE WARRANTS
We will issue the warrants, which form a part of the units and which may
trade separately from the preferred securities also forming a part of the units,
under the Warrant Agreement between RGA and The Bank of New York, as warrant
agent. The terms of the warrants will include those provided in the warrant
agreement and the warrant. The following description of the material terms of
the warrants and the material provisions of the warrant agreement in this
prospectus supplement supplements the description under "Description of Warrants
of RGA" in the attached prospectus and, to the extent it is inconsistent with
that description, replaces the description in the attached prospectus. This
description is only a summary and does not purport to be complete. We urge you
to read these documents in their entirety because they, and not this
description, will define your rights as a holder of the warrants, including as a
component of the units. We will file the warrant agreement and the warrants as
exhibits to a Current Report on Form 8-K which will be incorporated by reference
in the attached prospectus. You may also request copies of these documents from
us at our address set forth in the attached prospectus under "Incorporation of
Certain Documents by Reference." In addition, for a summary of the terms of our
capital stock, see "Description of Capital Stock of RGA" in the attached
prospectus. Unless otherwise specified, when we refer to "RGA" in the following
description, we mean only Reinsurance Group of America, Incorporated and not its
subsidiaries.
GENERAL
A warrant will, unless exercised, automatically expire on the close of
business on December 15, 2050, unless extended as described below, or earlier as
described under "-- Optional Redemption" or "-- Redemption Upon Special Event."
A warrant will be exercisable at any time, subject to satisfaction of certain
conditions set forth below, at the applicable exercise price. The warrant
exercise price will be $50, unless RGA chooses to redeem the warrants as
described below, in which case the exercise price upon a redemption will be an
amount initially equal to $35.13, which price will accrete on a daily basis as
described below to a maximum of $50 on the expiration date. In that case, the
warrant exercise price will accrete on a daily basis such that on any given date
of calculation it will be equal to $35.13 plus accretion calculated from
December 18, 2001 to the date of calculation, at an all-in yield of 8.25% per
year through December 15, 2050 minus accrual of an amount equal to $50
multiplied by 5.75% per year, in each case, on a quarterly bond equivalent basis
using a 360-day year of twelve 30-day months. The accretion of the exercise
price in those circumstances will be calculated as of the end of the day next
preceding the redemption date.
Each warrant, when exercised, will entitle the holder to purchase fully
paid and non-assessable shares of our common stock. However, the exercise price
and the number of shares of our common stock issuable upon a holder's exercise
of a warrant are subject to adjustment in certain circumstances described under
"-- Anti-Dilution Adjustments."
Following an exercise of a warrant which is part of a unit, other than an
exercise in connection with a redemption of the warrants as described under
"-- Optional Redemption," the holder of the unit will have a limited right to
require the Trust to distribute its pro rata share of debentures in exchange for
the preferred securities which had been part of the unit and to require RGA to
repurchase the debentures. See "Description of the Preferred
Securities -- Limited Right to Repurchase" in this prospectus supplement.
Our common stock is listed on the New York Stock Exchange under the trading
symbol "RGA". On December 12, 2001, the last reported sale price of our common
stock on the New York Stock Exchange was $32.50 per share.
EXERCISE OF WARRANTS
A holder may exercise warrants at any time prior to the close of business
on December 15, 2050, unless extended as described below, which day we refer to
as the "expiration date," unless RGA has redeemed the warrants on an earlier
date as described below under "-- Optional Redemption" or "-- Redemption Upon
Special Event." A holder may exercise warrants by giving notice to the warrant
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agent no later than 5:00 p.m., New York City time, on the business day before
the proposed date of exercise. The exercise price on the date of exercise (other
than in connection with an exercise instead of redemption as described below
under "-- Optional Redemption" or a redemption upon a special event as described
below under "-- Redemption Upon Special Event") will be $50.
Notwithstanding a warrant holder's desire to exercise its warrants, the
warrants will not be exercisable unless, at the time of exercise:
- a registration statement is in effect under the Securities Act of 1933
covering the issuance and sale of the shares of common stock upon
exercise of the warrants or the issuance and sale (or resale) of the
shares upon exercise of the warrants is exempt from the registration
requirements of the Securities Act of 1933;
- the shares have been registered, qualified or are deemed to be exempt
under applicable state securities laws; and
- to the extent required by applicable law, a then current prospectus is
delivered to exercising holders of the warrants.
We currently have an effective shelf registration statement covering the
sale of the shares of our common stock issuable upon exercise of the warrants.
We have agreed to use our reasonable best efforts (and will not be in breach of
the warrant agreement for so long as we are exercising our reasonable best
efforts) to:
- maintain the effectiveness of the shelf registration statement until the
earlier of (1) the expiration date of the warrants and (2) the first date
on which no warrants remain outstanding;
- continue to have all the shares of our common stock issuable upon
exercise of the warrants so registered or qualified; and
- to the extent required by applicable law, deliver a then current
prospectus to the exercising holders of the warrants.
We cannot assure you, however, that we will be successful in accomplishing these
agreements. The scheduled December 15, 2050 expiration date will be extended if,
during the 90 days immediately preceding the scheduled expiration date, RGA:
- was required to but did not maintain an effective registration statement
under the Securities Act of 1933 with respect to the issuance and sale of
the maximum number of shares of our common stock underlying the warrants;
- did not maintain the registration or qualification of the shares under
the applicable state securities laws; or
- was required to but did not deliver a then current prospectus to
exercising holders of the warrants.
In any of those events, the expiration date will be extended to the first date
after the scheduled expiration date after which RGA has for a 90-day period (1)
maintained such registration statement effective under the Securities Act of
1933, (2) maintained the registration or qualification under the applicable
state securities laws and (3) delivered a then current prospectus to exercising
holders of the warrants.
In order to exercise a warrant, a holder must, after providing notice to
the warrant agent on the preceding business day, prior to 5:00 p.m., New York
City time, on the date of exercise:
- if part of a unit, separate the warrant from the unit;
- surrender to the warrant agent the certificate representing such warrant
(in the case of a definitive warrant);
- comply with the procedures set forth in the warrant agreement;
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- properly complete and execute a form of election to purchase or otherwise
comply with the applicable procedures of the depositary; and
- pay in full (which may be a remarketing payment as described below) in
cash the exercise price for each share of our common stock to be received
upon exercise of such warrants.
In order to ensure timely exercise of a warrant, beneficial owners of warrants
held in book-entry form should consult their brokers or other intermediaries as
to applicable cutoff times they may have for accepting and implementing exercise
instructions from their customers and other exercise mechanics. See "Book-Entry
Issuance" in this prospectus supplement.
Holders must pay the exercise price of their warrants in cash (including
the automatic application of the proceeds of any remarketing of preferred
securities prior to the effective date of exercise), by certified or official
bank check or by wire transfer to an account that RGA has designated for that
purpose. In no circumstances may holders of units tender their preferred
securities directly toward payment of the exercise price of the warrants. See
"-- Optional Redemption" and "Description of the Preferred
Securities -- Remarketing" in this prospectus supplement.
Following an exercise of a warrant that is part of a unit other than an
exercise in connection with a redemption of the warrants as described below
under "-- Optional Redemption," the holder will have a right to require the
Trust to exchange the related preferred securities for a corresponding amount of
debentures and to require RGA to repurchase those debentures at $50 plus accrued
and unpaid interest (including deferred interest) to, but excluding, the
repurchase date. See "Description of the Units -- Limited Right to Repurchase"
and "Description of the Preferred Securities -- Limited Right to Repurchase" in
this prospectus supplement.
No service charge will be made for registration of transfer or exchange
upon surrender of any warrant certificate at the office of the warrant agent
maintained for that purpose. RGA may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration or transfer or exchange of warrant certificates.
If a holder has satisfied all of the procedures for exercising its warrants
on the exercise date, and RGA has satisfied or caused to be satisfied the
conditions to exercise set forth above, RGA will deliver or cause to be
delivered to such holder, or upon such holder's written order, a certificate
representing the requisite number of shares of our common stock to be received
upon exercise of such warrants. If a holder exercises less than all of the
warrants evidenced by a definitive warrant, a new definitive warrant will be
issued to such holder for the remaining number of warrants.
No fractional shares of our common stock will be issued upon exercise of a
warrant. Instead, at the time of exercise of a warrant, RGA will pay the holder
of such warrant an amount in cash equal to the then current market price as
determined in accordance with the warrant agreement of any such fractional share
of our common stock.
Unless the warrants are exercised, holders thereof will not be entitled to
receive dividends or other distributions, to vote, to receive notices for any
RGA shareholders meeting for the election of directors or any other purpose, or
to exercise any other rights whatsoever as an RGA shareholder. These rights will
belong only to holders of our common stock, including persons who become holders
upon the exercise of the warrants.
In the event a bankruptcy or reorganization is commenced by or against RGA,
a bankruptcy court may decide that unexercised warrants are executory contracts
that may be subject to RGA's rejection with approval of the bankruptcy court. As
a result, a holder of warrants may not, even if sufficient funds are available,
be entitled to receive any consideration or may receive an amount less than such
holder would be entitled to receive if such holder had exercised its warrants
before the commencement of any such bankruptcy or reorganization.
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OPTIONAL REDEMPTION
GENERAL
Prior to December 18, 2004, RGA may not redeem the warrants. Subsequently,
RGA may, subject to satisfaction of the conditions set forth under
"-- Conditions to Optional Redemption," redeem the warrants, in whole but not in
part, at its option, for cash, its common stock or a combination of cash and
common stock in an amount equal to the warrant redemption amount if on any date
but prior to December 15, 2050, the closing price of our common stock exceeds
and has exceeded the price per share equal to $47.97, subject to adjustment as
described under "-- Anti-Dilution Adjustments," for at least 20 trading days
within the immediately preceding 30 consecutive trading days. The warrant
redemption amount on that day will be equal to $50 minus the exercise price of
the warrant as of the end of the day next preceding the redemption date. We
refer to these circumstances under which the price of RGA reaches a specified
level for a specified time period as an "optional redemption event." RGA may
elect to redeem the warrants within ten business days of an optional redemption
event.
A "trading day" means any day on which shares of our common stock or other
capital stock then issuable upon exercise of the warrants:
- are not suspended from trading on any national securities association or
exchange or over-the-counter market at the close of business; and
- have traded at least once on the national securities association or
exchange or over-the-counter market that is the primary market for the
trading of our common stock,
provided that "trading day" shall not include any days other than full trading
days and shall exclude extended hours trading.
For purposes of determining the value of RGA common stock used to satisfy
the warrant redemption amount, if at all, each share of common stock shall be
deemed to have a value equal to the average of the closing sale price per share
of RGA's common stock for the five trading days ending immediately prior to the
redemption date.
If there occurs an optional redemption event and the conditions to an
optional redemption have been satisfied, as described below under "-- Conditions
to Optional Redemption", and RGA elects to redeem the warrants, RGA will be
obligated to cause a remarketing of the preferred securities on the remarketing
date at a price equal to their accreted value as of the day next preceding the
remarketing settlement date. Holders of preferred securities will have their
preferred securities included in the remarketing unless they elect to opt out of
the remarketing. See "Description of the Preferred Securities -- Remarketing --
Remarketing Procedures -- Remarketing in Connection with an Optional Redemption"
in this prospectus supplement. The settlement date of the remarketing shall be
the redemption date and shall be three business days after the remarketing date.
In connection with a redemption, a warrant holder will have the choice of:
- having the warrants redeemed, at our option, for cash, our common stock
or a combination of cash and our common stock, in an amount equal to the
warrant redemption amount for the redemption date; or
- exercising the warrant by tendering the warrant and the warrant exercise
price prior to 5:00 p.m. New York City time on the business day next
preceding the redemption date, which will be an amount initially equal to
$35.13, which price will accrete on a daily basis as described in this
prospectus supplement in "-- General" to a maximum of $50 on the
expiration date, and following the procedures set forth above under
"-- Exercise of Warrants."
IF THE WARRANT HOLDER DOES NOT ELECT TO EXERCISE THE WARRANT, THE WARRANT
WILL BE REDEEMED ON THE REDEMPTION DATE. IF THE WARRANT HOLDER EXERCISES THE
WARRANT AS OF ANY DAY OTHER THAN THE REDEMPTION DATE, THE WARRANT EXERCISE PRICE
WILL BE $50.
To exercise the warrant, the warrant holder will be required to tender
cash. If, however,
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- a holder exercising warrants holds such warrants as part of units on the
remarketing settlement date; and
- the holder has not opted out of participating in the remarketing of the
preferred securities, then, upon a successful remarketing, the proceeds
of such remarketing will be applied by the remarketing agent no later
than the remarketing settlement date to pay the exercise price of the
warrants, which we refer to as a "remarketing payment."
- In the event of a failed remarketing:
- the warrants will still be redeemed for cash or at our option, our
common stock or a combination of cash and our common stock, in an amount
equal to the warrant redemption amount on the redemption date, which
would have also been the remarketing settlement date; and
- holders of warrants who have elected to exercise their warrants (which
final date for election will occur after the remarketing date) will be
obligated to tender the applicable exercise price in cash.
A redemption of the warrants will be conditioned upon a contemporaneous
remarketing -- whether successful or failed -- of the preferred securities. A
warrant will cease to be outstanding upon payment by RGA of the warrant
redemption amount on a redemption date or upon exercise of the warrant. IN THE
ABSENCE OF AN ELECTION TO THE CONTRARY, PREFERRED SECURITY HOLDERS WILL BE
DEEMED TO HAVE ELECTED TO PARTICIPATE IN THE REMARKETING.
Subject to applicable law, RGA or its affiliates may at any time and from
time to time purchase outstanding warrants or units of which the warrants are
components by tender, in the open market or by private agreement.
PROCEDURES
RGA must cause written notice of its election to redeem the warrants to be
given to holders of the units and the warrants within ten business days of an
optional redemption event. At the time RGA gives a notice of election to redeem
the warrants, it must also give notice that the preferred securities will be
remarketed. RGA may select a date, not less than six nor more than 20 business
days (subject to extension, to comply with applicable law) after the date
written notice is given to holders of units and warrants, on which the
redemption shall occur, which we refer to as the "redemption date." As long as
the units and warrants are evidenced by one or more global certificates
deposited with DTC, RGA also will request, not less than six nor more than 20
business days (subject to extension) prior to the redemption date, that DTC
notify its participants holding units or warrants of the redemption. In
addition, notice of redemption will be published in The Wall Street Journal or
in a newspaper of general circulation in New York City, New York no less than
six nor more than 20 business days (subject to extension) before the redemption
date.
If RGA gives a notice of redemption in respect of the warrants, then, by
12:00 noon, New York City time, on the redemption date, RGA will deposit
irrevocably with DTC consideration sufficient to pay the warrant redemption
amount for all warrants registered in the name of DTC's nominee, Cede & Co.
(other than warrants held by persons electing to exercise their warrants instead
of a redemption). See "Book-Entry Issuance" in this prospectus supplement. If
any warrants are not represented by one or more global certificates, RGA will
irrevocably deposit with the warrant agent for the warrants consideration
sufficient to pay the applicable warrant redemption amount for all such warrants
(other than warrants held by persons electing to exercise that warrant instead
of a redemption) and will give the warrant agent irrevocable instructions and
authority to pay the warrant redemption amount to holders thereof upon surrender
of their certificates evidencing the warrants.
If notice of redemption shall have been given and consideration deposited
or paid as required, then immediately prior to the close of business on the
redemption date, all rights of holders of warrants will cease, except the right
of holders of warrants to receive the warrant redemption amount (or our common
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stock if the holder elected to exercise a warrant on the redemption date), and
the warrants will cease to be outstanding.
ELECTION TO EXERCISE
At any time prior to 5:00 p.m., New York City time, on the business day
prior to the applicable redemption date for the warrants, a warrant holder may
elect, at its option, to exercise its warrants instead of a redemption by
notifying the warrant agent of such election, provided that RGA has satisfied or
caused to be satisfied, as of the date of exercise of such warrants, the
conditions to exercise of warrants set forth above under "-- Exercise of
Warrants." In such event, an electing warrant holder will be required to tender
the exercise price (except in the case of a remarketing payment as described
above) to the warrant agent and follow the procedures for exercising warrants
specified above under "-- Exercise of Warrants" in order to effect an exercise
on the applicable redemption date.
The warrants will be redeemed on the redemption date unless a warrant
holder affirmatively elects to exercise its warrants. As a result, upon an
election by RGA to redeem the warrants, a holder may have only five business
days to elect to exercise its warrants instead of a redemption. If a holder does
not receive the redemption notification because of illness, absence or other
circumstances the warrants held by that holder will be redeemed. Because of the
abbreviated notification period, a warrant holder who intends to exercise its
warrant upon an optional redemption of the warrants may want to make
arrangements for the exercise of the warrants and delivery of the shares to the
warrant agent quickly upon receipt of a notice of redemption from RGA. See
"-- Optional Redemption -- Procedures" in this prospectus supplement.
CONDITIONS TO OPTIONAL REDEMPTION
The following will be conditions precedent to the right (or obligation) of
RGA to redeem the warrants:
- as of the date on which RGA elects to redeem the warrants and on the
redemption date, a registration statement covering the issuance and sale
of shares of our common stock to holders of warrants upon exercise of
such warrants shall be effective under the Securities Act of 1933 or such
issuance and sale shall be exempt from the registration requirements of
the Securities Act of 1933;
- as of the date on which RGA elects to redeem the warrants and on the
redemption date, the shares of our common stock shall have been
registered, qualified or deemed to be exempt under applicable state
securities laws;
- as of the redemption date, to the extent required by applicable law, a
then current prospectus shall be available to be delivered to exercising
holders of the warrants; and
- as of the date on which RGA elects to redeem the warrants, RGA shall have
complied, or be able to comply, with all other applicable laws and
regulations, if any, including, without limitation, the Securities Act of
1933, necessary to permit the redemption of the warrants.
In addition, the conditions to a contemporaneous remarketing of the
preferred securities as described below (see "Description of the Preferred
Securities -- Remarketing -- Remarketing Procedures" in this prospectus
supplement) must be satisfied as a condition to the contemporaneous redemption
of the warrants. A failed remarketing will not constitute a failure to satisfy
the conditions to remarketing.
If a redemption cannot occur because of RGA's inability to satisfy the four
conditions precedent specified above and RGA is using its best efforts to
satisfy such requirements, then the redemption will be cancelled and RGA will
have the right to redeem the warrants on a subsequent date which is no later
than December 15, 2050 upon satisfaction of the conditions described above under
the first paragraph of "-- Optional Redemption -- General."
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REDEMPTION UPON SPECIAL EVENT
If at any time, a tax event or an investment company event, as those terms
are defined below, occurs and the administrative trustees have been informed by
an independent law firm that such firm, for substantive reasons, cannot deliver
a No Recognition Opinion (as that term is defined in "Description of the
Preferred Securities -- Distribution of Debentures" in this prospectus
supplement) to the Trust (either of the foregoing events, a "special event"),
then, upon satisfaction of certain specified conditions, as described under
"-- Optional Redemption -- Conditions to Optional Redemption," RGA may elect, at
its option, to redeem the warrants for cash or, at the option of RGA, its common
stock or a combination of cash and its common stock, in an amount equal to the
warrant redemption amount, which will be equal to $50 minus the exercise price
of the warrant as of the end of the day next preceding the redemption date.
If a special event occurs, the conditions to electing such redemption have
been satisfied (see "-- Conditions to Redemption Upon Special Event" below) and
RGA elects to cause a redemption of the warrants, then RGA will be obligated to
cause a remarketing of the preferred securities at a price equal to their
accreted value as of the end of the day next preceding the remarketing date.
Holders of preferred securities, whether or not holders of units, may elect to
participate in the remarketing. See "Description of the Preferred
Securities -- Remarketing" in this prospectus supplement. The settlement date of
the remarketing shall be the redemption date and shall be three business days
after the remarketing date. On the redemption date, a warrant holder will have
the choice of:
- having the warrants redeemed, at the option of RGA, for cash, our common
stock or a combination of cash and our common stock, in an amount equal
to the warrant redemption amount for such date; or
- exercising the warrant by tendering the warrant and the exercise price
prior to 5:00 p.m. New York City time on the business day next preceding
the redemption date, which will be an amount initially equal to $35.13,
which price will accrete on a daily basis as described in this prospectus
supplement in "-- General" to a maximum of $50 on the expiration date,
and following the procedures set forth above under "-- Exercise of
Warrants."
IF THE WARRANT HOLDER DOES NOT ELECT TO EXERCISE THE WARRANT, THE WARRANT
WILL BE REDEEMED ON THE REDEMPTION DATE.
For purposes of determining the value of RGA common stock used to satisfy
the warrant redemption amount, if at all, each share of common stock shall be
deemed to have a value equal to the average of the closing sale price per share
of RGA's common stock for the five trading days ending immediately prior to the
redemption date.
"Investment company event" means the receipt by the Trust of an opinion of
counsel, rendered by an independent law firm having a recognized national
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority, there more than an insubstantial risk that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, which change becomes effective on or after the
date on which the preferred securities were initially issued and sold.
"Tax event" means the receipt by the Trust of an opinion of counsel,
rendered by an independent law firm experienced in such matters, to the effect
that, as a result of (a) any amendment to, change in or announced proposed
change in the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
proposed change, pronouncement or decision is announced on or after the date on
which the preferred securities were initially issued and sold, there is more
than an insubstantial risk that (1) the Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to interest received or accrued on the debentures, or (2) the Trust is,
or will be within
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90 days of the date of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
CONDITIONS TO REDEMPTION UPON SPECIAL EVENT
In addition to the four conditions specified under "-- Optional
Redemption -- Conditions to Optional Redemption" in this prospectus supplement,
the conditions to a contemporaneous remarketing of the preferred securities as
described below (see "Description of the Preferred Securities -- Remarketing --
Remarketing Procedures" in this prospectus supplement) must be satisfied as a
condition to the contemporaneous redemption of the warrants. A failed
remarketing will not constitute a failure to satisfy the conditions to
remarketing. However, if a remarketing of preferred securities following a
Special Event cannot occur because of an inability to satisfy the applicable
conditions precedent, the contemporaneous redemption of the warrants will be
canceled.
If a redemption of the warrants cannot occur because of an inability to
satisfy the four conditions precedent set forth above under "-- Optional
Redemption -- Conditions to Optional Redemption" and RGA is using its best
efforts to satisfy such requirements, then the redemption of the warrants will
be canceled and RGA will have the right to redeem the warrants on a subsequent
date which is no later than December 15, 2050 upon satisfaction of the
conditions described under the first paragraph of "-- General."
CHANGE OF CONTROL
If a change of control (as defined below) occurs, each holder of a warrant
and preferred security will have the right to:
- require RGA to redeem that holder's related warrant on the date that is
45 days (or, if not a business day, the first business day thereafter,
subject to extension as described below) after the date RGA gives notice
at a redemption price, at the option of RGA, in cash or with its common
stock or a combination of cash and its common stock, as described below,
equal to 100% of the warrant redemption amount on the redemption date,
which will be equal to $50 minus the exercise price of the warrant as of
the end of the day next preceding the redemption date instead of
redemption; and
- exchange that holder's related preferred security for a debenture having
an accreted value equal to the accreted value of such preferred security
and to require RGA to repurchase such debenture on the repurchase date at
a repurchase price equal to 100% of the accreted value of the debenture
on the repurchase date plus accrued and unpaid interest (including
deferred interest) on the debentures to, but excluding, the repurchase
date.
A "change of control" will be deemed to have occurred when any of the following
has occurred:
- the acquisition by any person of beneficial ownership, directly or
indirectly, through a purchase, merger, other acquisition transaction or
a series of such transactions, of shares of RGA's capital stock entitling
(A) any person other than the MetLife Group (as defined below) to
exercise 50% or more of the total voting power of all shares of RGA's
capital stock entitled to vote generally in elections of directors, other
than any acquisition by us, any of our future subsidiaries or any of our
employee benefit plans, or (B) the MetLife Group and any other person to,
directly or indirectly, exercise in the aggregate 85% or more of the
total voting power of RGA's capital stock entitled to vote generally in
the election of directors;
- the acquisition by MetLife, any of its direct or indirect subsidiaries or
any of their affiliates (collectively, the "MetLife Group") of any
additional shares of capital stock entitled to vote generally in the
election of directors through a purchase, merger, other acquisition
transaction or series of such transactions if after giving effect to such
acquisition the MetLife Group would be the beneficial owner, directly or
indirectly, of shares representing more than 80% of the total voting
power of RGA's capital stock entitled to vote generally in the election
of directors for any 120 days within a period of 360 consecutive days;
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- the first day on which a majority of the members of the board of
directors of RGA are not "continuing directors," which means, as of any
date of determination, any member of the board of directors of RGA who:
- was a member of the board of directors on December 1, 2001; or
- was nominated for election or elected to the board of directors with the
approval of a majority of the continuing directors who were members of
the board at the time of a new director's nomination or election; or
- the consolidation or merger of RGA with or into any other person, any
merger of another person into RGA, or any conveyance, transfer, sale,
lease or other disposition of all or substantially all of RGA's
properties and assets to another person, other than:
-- any transaction:
(1) that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of RGA's capital stock;
and
(2) pursuant to which holders of our capital stock immediately
prior to such transaction have the entitlement to exercise, directly or
indirectly, 50% or more of the total voting power of all shares of our
capital stock entitled to vote generally in elections of directors of
the continuing or surviving person immediately after giving effect to
such transaction; or
-- any merger solely for the purpose of changing RGA's jurisdiction of
incorporation and resulting in a reclassification, conversion or
exchange of outstanding shares of common stock solely into shares of
common stock of the surviving entity.
The beneficial owner shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Securities Exchange Act of 1934. The term
"person" includes any syndicate or group which would be deemed to be a "person"
under Section 13(d)(3) of the Securities Exchange Act of 1934.
However, a change of control will not be deemed to have occurred if:
- the closing sale price per share of RGA's common stock for any five full
trading days (not including extended hours trading) within the period of
ten consecutive trading days ending immediately after the later of the
change of control or the public announcement of the change of control, in
the case of a change of control under the first bullet point above, or
the period of 10 consecutive full trading days (not including extended
hours trading) ending immediately before the change of control, in the
case of a change of control under the fourth bullet point above, equals
or exceeds 110% of the exercise price of the warrants at maturity (as
adjusted); or
- at least 90% of the consideration in the transaction or transactions
constituting a change of control consists of shares of common stock
traded or to be traded immediately following such change of control on a
national securities exchange or the Nasdaq National Market and, as a
result of such transaction or transactions, the warrants become
exercisable solely into such common stock (and any rights attached
thereto).
In case of a change of control (1) resulting from, or including, a tender
offer for our common stock or (2) under the fourth bullet point of the
description of "change of control" above only, the percentage of consideration
paid in cash to redeem any warrant a holder has elected to have redeemed must be
at least equal, on a pro rata basis, to the cash portion of the consideration
received by a majority of RGA's shareholders (other than the MetLife Group) for
each share of our common stock in such change of control transaction. Except for
the amount of cash required to be paid in accordance with the previous sentence,
the consideration to be paid to redeem any warrant in a change of control
transaction may be paid in our common stock.
The right of RGA to pay all or a portion of the warrant redemption amount
in connection with a change of control transaction in its common stock is
subject to the conditions that the shares of common
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stock received by holders of warrants must be issued by RGA and not any
successor, and RGA must use its best efforts to cause such shares to be listed
for trading on a national securities exchange or the Nasdaq National Market. In
addition, if RGA elects to pay all or a portion of the redemption amount in
connection with a change of control transaction in its common stock, and to
issue such stock, RGA must comply with the registration provisions of the
Securities Act of 1933 or state securities laws, then RGA will use its best
efforts to comply with the registration provisions of the Securities Act of 1933
and any applicable state securities laws. In such event, the date for payment of
the change of control redemption amount shall be extended until a reasonable
period of time after the stock is registered. Until the stock is so registered,
RGA shall not be obligated to pay the change of control redemption amount.
For purposes of determining the value of our common stock used to pay
redeeming warrantholders, each share of common stock shall be deemed to have a
value equal to the average of the closing sale price per share of RGA's common
stock for the five full trading days (not including after hours trading) ending
immediately prior to the redemption date.
Except as described above with respect to a change of control, none of the
unit securities or the agreements governing them will contain provisions that
permit holders of units to require that RGA redeem the warrants or repurchase
the debentures in the event of, or otherwise prohibit RGA from undertaking, a
merger, takeover, recapitalization or similar business combination or
restructuring transaction. In addition, RGA could enter into certain
transactions, including acquisitions, refinancings or other recapitalization,
that could affect RGA's capital structure or the value of RGA's common stock,
but that would not constitute a change of control.
Within 30 days after the occurrence of a change of control, RGA must give
notice to each holder of a warrant and the warrant agent of the transaction that
constitutes the change of control and of the resulting redemption right. To
exercise the redemption right, a warrant holder must deliver on or prior to the
45th day after the date of RGA's notice irrevocable written notice to the
warrant agent of the holder's exercise of its redemption right.
RGA will comply with the requirements of the Securities Exchange Act of
1934 and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the redemption of the
warrants as a result of a change of control.
RGA's ability to redeem warrants upon the occurrence of a change of control
is subject to important limitations. The occurrence of a change of control could
cause an event of default under, or the redemption could be prohibited or
limited by, the terms of RGA's senior debt. As a result, any redemption of the
warrants would, absent a waiver, be prohibited under the indenture until the
senior debt is paid in full. Further, there can be no assurance that RGA would
have the financial resources, or would be able to arrange financing, to pay the
redemption price for all the warrants that might be delivered by holders of
warrants seeking to exercise the redemption right. Any failure by RGA to redeem
the warrants when required following a change of control may, in turn, cause a
default under its senior debt.
ANTI-DILUTION ADJUSTMENT
The number of shares of our common stock issuable upon the exercise of the
warrants, as well as the price requirements for an optional redemption as set
forth under "-- Optional Redemption," will be subject to adjustment in certain
circumstances, but subject to certain exceptions, including:
- the issuance of our common stock payable as a dividend or distribution on
its common stock;
- subdivisions and combinations of the common stock of RGA;
- the issuance to all holders of our common stock of certain rights or
warrants to purchase our common stock (or securities convertible into our
common stock) at less than (or having a conversion price per share less
than) the then current market price (as defined) of our common stock;
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- the dividend or other distribution to all holders of our common stock of
shares of RGA capital stock or evidence of RGA indebtedness or cash or
other assets (including the capital stock of subsidiaries), but excluding
those rights and warrants referred to above and dividends and
distributions in connection with a reclassification, change,
consolidation, merger, combination, sale or conveyance resulting in a
change in the conversion consideration pursuant to the second paragraph
following these bullet points or distributions or dividends paid
exclusively in cash;
- dividends or other distributions consisting exclusively of cash to all
holders of our common stock to the extent that such distributions,
combined together with (A) all other such all-cash distributions made
within the preceding 12 months for which no adjustment has been made plus
(B) any cash and the fair market value of other consideration paid for
any tender offers by RGA or any of its subsidiaries for our common stock
concluded within the preceding 12 months for which no adjustment has been
made, exceeds 10% of RGA's market capitalization on the record date for
such distribution; market capitalization is the product of the average of
the closing sales prices during the preceding 10 trading days times the
number of shares of our common stock then outstanding; and
- the purchase of our common stock pursuant to a tender offer made by RGA
or any of its subsidiaries to the extent that the same involves an
aggregate consideration that, together with (A) any cash and the fair
market value of any other consideration paid in any other tender offer by
RGA or any of its subsidiaries for our common stock expiring within the
12 months preceding such tender offer for which no adjustment has been
made plus (B) the aggregate amount of any all-cash distributions referred
to in the paragraph above to all holders of our common stock within 12
months preceding the expiration of tender offer for which no adjustments
have been made, exceeds 10% of RGA's market capitalization on the
expiration of such tender offer.
No adjustment in the amount of shares of our common stock issuable upon
exercise of a warrant or price requirements for an optional redemption will be
required unless such adjustment would require a change of at least 1% in the
number of shares of our common stock issuable upon exercise of a warrant then in
effect at such time or the price of our common stock to effect an optional
redemption. Any adjustment that would otherwise be required to be made shall be
carried forward and taken into account in any subsequent adjustment. Except as
stated above, the number of shares of our common stock issuable upon exercise of
a warrant and the price of our common stock to effect an optional redemption
will not be adjusted for the issuance of our common stock or any securities
convertible into or exchangeable for our common stock or carrying the right to
purchase any of the foregoing.
In the case of:
- any reclassification or change of our common stock (other than changes in
par value or resulting from a subdivision or combination); or
- a consolidation, merger, statutory share exchange or combination
involving RGA or a sale or conveyance to another corporation of all or
substantially all of RGA's property and assets,
then, in each case, as a result of which holders of our common stock are
entitled to receive stock, other securities, other property or assets (including
cash or any combination thereof) with respect to or in exchange for our common
stock, holders of the warrants then outstanding will be entitled thereafter to
exercise those warrants and receive the kind and amount of shares of stock,
other securities or other property or assets (including cash or any combination
thereof) which they would have owned or been entitled to receive upon such
reclassification, change, consolidation, merger, statutory share exchange
combination, sale or conveyance had such warrants been exercised immediately
prior to such reclassification, change, consolidation, merger, statutory share
exchange, combination, sale or conveyance and the price of our common stock to
effect an optional redemption will be appropriately and proportionately
adjusted. Such adjustment would be made assuming the holder did not exercise any
rights of election as to the kind or amount of consideration receivable. RGA
will agree not to become a party to any such transaction unless its terms are
consistent with the foregoing.
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In the event that we distribute shares of common stock of a subsidiary of
ours, the number of shares of our common stock issuable upon the exercise of the
warrants will be adjusted, if at all, based on the market value of the
subsidiary stock so distributed relative to the market value of our common
stock, in each case over a measurement period following distribution and if an
adjustment is so made, the price of our common stock to effect an optional
redemption will be appropriately and proportionately adjusted.
If a taxable distribution to holders of our common stock or other
transaction occurs which results in any adjustment of the exercise price or the
amount of shares of our common stock issuable upon exercise of a warrant,
holders of warrants may, in certain circumstances, be deemed to have received a
distribution subject to U.S. income tax as a dividend. In certain other
circumstances, the absence of an adjustment may result in a taxable dividend to
holders of common stock. See "Material United States Federal Tax
Considerations -- The Warrants" in this prospectus supplement.
RGA may, from time to time, to the extent permitted by law, reduce the
exercise price of the warrants by any amount for any period of at least 20 days.
In that case RGA will give at least 15 days' notice of such decrease. RGA may
make such reductions in the exercise price, in addition to those set forth
above, as RGA's board of directors deems in the best interests of RGA. RGA may
also make such reductions as the board deems advisable to avoid or diminish any
income tax to holders of our common stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes.
RESERVATION OF SHARES
RGA has authorized and will reserve for issuance the maximum number of
shares of its common stock as will be issuable upon the exercise of all
outstanding warrants. Such shares of common stock, when issued and paid for in
accordance with the warrant agreement, will be duly and validly issued, fully
paid and nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests.
GOVERNING LAW
The warrants and the warrant agreement will be governed by, and construed
in accordance with, the laws of the State of New York.
MODIFICATIONS AND AMENDMENTS OF THE WARRANT AGREEMENT
Modifications of warrants may only be made in accordance with the terms of
the warrant agreement. RGA and the warrant agent may amend or supplement the
terms of the warrant and the warrant agreement without the consent of holders of
the warrants in order to:
- cure any ambiguity;
- cure, correct or supplement any defective or inconsistent provision; or
- amend such terms in any other manner that does not adversely affect the
interests of any holder of warrants.
RGA and the warrant agent, with the consent of holders of a majority of the
then outstanding unexercised warrants, may modify or amend the warrants and the
warrant agreement. However, RGA and the warrant agent may not make any of the
following modifications or amendments without the consent of each holder of
warrants:
- change the exercise price of the warrants, except as provided in the
warrant agreement, or, the right to receive the warrant redemption
amount;
- reduce the number of shares of common stock issuable upon exercise of the
warrants other than as specified under "-- Anti-Dilution Adjustments";
- accelerate the expiration date of the warrants; or
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- reduce the percentage of the outstanding unexercised warrants the consent
of whose holders is required for modifications and amendments.
COMMON STOCK OF RGA
For a description of RGA's common stock, see "Description of Capital Stock
of RGA -- Common Stock" in the attached prospectus.
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DESCRIPTION OF THE PREFERRED SECURITIES
The Trust will issue the preferred securities, which form a part of the
units and which, under certain circumstances, may trade separately from the
warrants also forming a part of the units, under the amended and restated trust
agreement, which we refer to as the "declaration of trust." The terms of the
preferred securities will include those stated in the declaration of trust and
those made part of the declaration of trust by the Trust Indenture Act of 1939.
The following description of certain terms of the preferred securities and
certain provisions of the declaration of trust in this prospectus supplement
supplements the description under "Description of Preferred Securities of RGA
Trusts" in the attached prospectus and, to the extent it is inconsistent with
that description, replaces the description in the attached prospectus. This
description is only a summary and does not purport to be complete. We urge you
to read these documents in their entirety, the Delaware Business Trust Act and
the Trust Indenture Act of 1939 because they, and not this description, will
define your rights as a holder of the preferred securities, including as a
component of the units. We will file the declaration of trust and the preferred
securities as exhibits to a Current Report on Form 8-K which will be
incorporated by reference in the attached prospectus. You may also request
copies of the declaration of trust from us at our address set forth in the
attached prospectus under "Incorporation of Certain Documents by Reference."
Unless otherwise specified, when we refer to "RGA" in the following description,
we mean only Reinsurance Group of America, Incorporated and not its
subsidiaries.
DISTRIBUTIONS
Cash distributions on the preferred securities will be fixed at a rate per
annum of 5.75% of the stated liquidation amount of $50 per preferred security,
subject to reset in connection with a remarketing as described under
"Description of the Debentures -- Interest" in this prospectus supplement,
payable quarterly, in arrears, on March 15, June 15, September 15 and December
15 of each year, commencing March 15, 2002, and payable at such rate to, but
excluding, the remarketing settlement date, when, as and if available for
payment, by the property trustee. Distributions will accumulate from December
18, 2001. The ability of the Trust to pay the quarterly distributions on the
preferred securities will depend solely upon its receipt of corresponding
interest payments from RGA on the debentures. Interest on the debentures not
paid on the scheduled payment date will accrue and compound quarterly, to the
extent permitted by law, at the applicable interest rate, and, as a result,
distributions will accumulate and compound quarterly, to the extent permitted by
law, at the applicable distribution rate.
The term "distribution" as used herein includes any regular quarterly
distributions, together with any compounded distribution, unless otherwise
stated. The amount of distributions payable for any period will be computed as
follows:
- for any full 90-day quarterly distribution period, on the basis of a
360-day year of twelve 30-day months;
- for any period shorter than a full 90-day distribution period, on the
basis of a 30-day month; and
- for periods of less than a month, on the basis of the actual number of
days elapsed per 30-day month.
In the event that any date on which distributions are payable on the preferred
securities is not a business day, then payment of the distributions payable on
such date will be made on the next day that is a business day (and without any
additional distributions or other payment in respect of any such delay), except
that, if such business day is in the next calendar year, such payment will be
made on the immediately preceding business day, with the same force and effect
as if made on the date such payment was originally payable. A "business day"
means any day, other than a Saturday or Sunday, that is not a day on which
banking institutions in the Borough of Manhattan, the City of New York, St.
Louis, Missouri or Wilmington, Delaware are authorized or required by law,
regulation or executive order to close.
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Distributions on the preferred securities (other than distributions on a
remarketing settlement date or redemption date) will be payable to holders
thereof as they appear on the books and records of the unit agent or property
trustee as of the close of business on the relevant record dates, which, as long
as the preferred securities are represented by one or more global certificated
securities, will be the close of business on the business day prior to the
relevant distribution dates, unless otherwise provided in the declaration of
trust or unless a different regular record date is established or provided for
the corresponding interest payment date on the debentures. If the preferred
securities are not represented only by one or more global certificates, the
record date may be selected by the administrative trustee. The record dates will
be at least one business day prior to the relevant distribution dates. See
"Book-Entry Issuance" in this prospectus supplement. Distributions payable on
any preferred securities that are not punctually paid on any distribution date
will cease to be payable to the person in whose name such preferred securities
are registered on the original record date, and such defaulted distribution will
instead be payable to the person in whose name such preferred securities are
registered on the special record date or other specified date determined in
accordance with the declaration of trust.
Holders of preferred securities will also be entitled to receive a pro rata
distribution of payments of principal on the debentures, except that payments of
principal following an exchange of preferred securities for debentures will be
paid to holders of the debentures.
At all times, the distribution rate, the distribution dates and other
payment dates for the preferred securities will correspond to the interest rate,
interest payment dates and other payment dates on the debentures, which will be
the sole assets of the Trust.
Distributions on the preferred securities will be paid on the dates payable
only to the extent that payments are made in respect of the debentures held by
the property trustee and to the extent that the Trust has funds available for
the payment of such distributions. If RGA does not make payments on the
debentures, the property trustee will not have funds available to make payments
(including distributions) on the preferred securities.
So long as RGA is not in default in the payment of interest on the
debentures, and so long as a failed remarketing has not occurred, RGA has the
right under the indenture to defer payments of interest on the debentures by
extending the interest payment period at any time, and, from time to time, on
the debentures. As a consequence of each such extension, distributions on the
preferred securities would be also deferred (but despite such deferral payments
of interest would continue to accrue at the then applicable interest rate per
annum compounded quarterly, to the extent permitted by applicable law, and, as a
result, distributions would continue to accumulate at the then applicable
distribution rate compounded quarterly, to the extent permitted by law) by the
Trust for a corresponding period. Such right to extend the interest payment
period for the debentures is limited to a period not exceeding 20 consecutive
quarters and no extension may extend beyond the stated maturity of the
debentures or end on a date other than an interest payment date. In the event
that RGA exercises this right to defer payments of interest, then RGA will not,
and will not permit any subsidiary to:
- declare or pay any dividends on, make distributions regarding, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of
the capital stock of RGA, other than:
(1) purchases of the capital stock of RGA in connection with employee
or agent benefit plans or the satisfaction of its obligations under any
contract or security outstanding on the date of the event requiring us to
purchase capital stock or under any dividend reinvestment plan;
(2) in connection with the reclassifications of any class or series of
RGA's capital stock, or the exchange or conversion of one class or series
of RGA's capital stock for or into another class or series of our capital
stock;
(3) the purchase of fractional interests in shares of RGA's capital
stock in connection with the conversion or exchange provisions of that
capital stock or the security being converted or exchanged;
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(4) dividends or distributions in RGA's capital stock, or rights to
acquire capital stock, or repurchases or redemptions of capital stock
solely from the issuance or exchange of capital stock;
(5) any declaration of a dividend in connection with the implementation
of a shareholders rights plan, or issuances of stock under any such plan
in the future, or redemptions or repurchases of any rights outstanding
under RGA's shareholder rights plan; or
(6) repurchases of our common stock in connection with acquisitions of
businesses made by RGA (which repurchases are made by RGA in connection
with the satisfaction of indemnification obligations of the sellers of
such businesses);
- make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by RGA that rank equally
with or junior to the debentures; and
- make any guarantee payments with respect to any guarantee by RGA of the
debt securities of any subsidiary, if such guarantee ranks equally with
or junior in interest to the debentures, other than payments under our
guarantee of the preferred securities of the Trust.
Prior to the termination of any extension period, RGA may further defer payments
of interest by extending the interest payment period, provided that such
extension period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters or extend beyond the stated
maturity of the debentures or end on a date other than an interest payment date.
Upon the termination of any extension period and the payment of all amounts then
due, RGA may commence a new extension period, subject to the above requirements.
RGA has no current intention of exercising its right to defer payments of
interest by extending the interest payment period of the debentures.
The accreted value of a preferred security is equal to the accreted value
of a debenture, which is equal to the sum of the initial purchase price of the
preferred security component of each unit (or $35.13) plus accrual of discount
calculated from December 18, 2001 to the date of calculation at the all-in-yield
rate of 8.25% per annum through December 15, 2050 minus accrual of interest on
the principal amount at maturity of the debentures (or $50) at the rate of 5.75%
per year, in each case, on a quarterly bond equivalent yield basis using a
360-day year of twelve 30-day months. For example, because the purchase price
initially allocable to the preferred securities will be $35.13, the accreted
value of a debenture will be equal to $35.203 on December 18, 2004.
REMARKETING
A "remarketing event" will occur:
- in connection with a redemption of the warrants by RGA; or
- on the third business day prior to December 15, 2050 in connection with
the expiration of the warrants if the preferred securities have not
previously been remarketed.
Following the occurrence of a remarketing event, all of the preferred
securities other than the preferred securities as to which holders have opted
not to participate in the remarketing will be remarketed by an entity to be
designated by RGA as remarketing agent, initially Lehman Brothers Inc. IN THE
ABSENCE OF AN ELECTION TO THE CONTRARY, HOLDERS OF PREFERRED
SECURITIES -- WHETHER OR NOT COMPONENTS OF UNITS -- WILL BE DEEMED TO HAVE
ELECTED TO PARTICIPATE IN THE REMARKETING. Under the remarketing agreement, the
remarketing agent will use its commercially reasonable efforts to remarket the
participating preferred securities at a price equal to 100% of their accreted
value as of the end of the day on the day next preceding the remarketing
settlement date. If the remarketing is in connection with the expiration of the
warrants, the accreted value will equal the stated liquidation amount at
maturity. It is a condition precedent to the remarketing that, as of the
remarketing settlement date, all applicable laws and regulations, including,
without limitation, the Securities Act of 1933, necessary to permit the
remarketing of the preferred securities, shall be complied with.
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The proceeds from the remarketed preferred securities will be paid to the
selling holders, unless holders are unit holders which have elected to exercise
their warrants, in which case the proceeds will be applied on behalf of the
selling holders to satisfy in full the exercise price of the warrants.
In connection with a remarketing related to a redemption, whether or not
the holder is participating in a remarketing:
- the adjusted maturity of the debentures (and, as a result, the adjusted
redemption date of the preferred securities) will become the date which
is 93 days following the remarketing settlement date;
- the amount due at the adjusted maturity date of the debentures will be
the accreted value of the debentures as of the end of the day on the day
next preceding the remarketing settlement date (and as a result, the
amount due at the adjusted redemption settlement date of the preferred
securities will be the accreted value of the preferred securities as of
such date); and
- beginning on the remarketing settlement date, all of the debentures will
bear interest on their accreted value equal to the rate established in
the remarketing (and as a result, distribution rates on the preferred
securities will be adjusted correspondingly).
In connection with a remarketing related to the expiration of the warrants:
- the maturity date of the debentures (and redemption date of the preferred
securities) will continue to be March 18, 2051, which will be 93 days
following the remarketing settlement date; and
- beginning on the remarketing settlement date, all of the debentures will
bear interest on their accreted value, which at that time will equal $50,
at a rate equal to the rate established in the remarketing.
Accordingly, holders of preferred securities -- whether or not components
of units -- who continue to hold the preferred securities after the remarketing
will receive:
- distributions on their preferred securities for 93 days at the rate equal
to the rate established in the remarketing; and
- the accreted value of their preferred securities (which in connection
with the expiration of the warrants is $50) 93 days following the
remarketing settlement date.
REMARKETING PROCEDURES
Set forth below is a summary of the procedures to be followed in connection
with a remarketing of the preferred securities.
Remarketing in Connection with an Optional Redemption
In the event of a remarketing in connection with an optional redemption,
RGA must cause written notice of the remarketing to be given to holders of the
units and the preferred securities at the same time as notice of the related
redemption is given by RGA to holders of the units and warrants. See
"Description of the Warrants -- Optional Redemption -- Procedures" in this
prospectus supplement. As long as the units or the preferred securities are
evidenced by one or more global certificates deposited with DTC, RGA also will
request, not later than three nor more than 17 business days (subject to
extension, to comply with applicable law) prior to the remarketing date, that
DTC notify its participants holding units or preferred securities of the
remarketing. The remarketing date will be three business days prior to the
redemption date. The remarketing settlement date will be the redemption date.
It is a condition precedent to the remarketing that, as of the remarketing
date and the remarketing settlement date, no event of default under the
declaration of trust or deferral of distributions to holders of the preferred
securities shall have occurred and be continuing. It is a further condition that
the conditions
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to a contemporaneous redemption of the warrants shall have been satisfied, but
if these conditions are not met, the warrants may still be redeemed if the
conditions are met later.
Remarketing in Connection with a Special Event Redemption
In the event of a remarketing in connection with a tax event or an
investment company event, RGA must cause written notice of the remarketing to be
given to holders of the units and the preferred securities at the same time as
notice of the related redemption is given by RGA to holders of the units and
warrants. See "Description of the Warrants -- Redemption Upon a Special Event"
in this prospectus supplement. As long as the units or the preferred securities
are evidenced by one or more global certificates deposited with DTC, RGA also
will request, not later than three nor more than 17 business days (subject to
extension) prior to the remarketing date, that DTC notify its participants
holding units or preferred securities of the remarketing. The remarketing date
will be three business days prior to the redemption date. The remarketing
settlement date will be the redemption date.
It is a condition precedent to the remarketing that, as of the remarketing
date and the remarketing settlement date, no event of default under the
declaration of trust or deferral of distributions to holders of the preferred
securities shall have occurred and be continuing. It is a further condition that
the conditions to a contemporaneous redemption of the warrants shall have been
satisfied, but if these conditions are not met, the warrants may still be
redeemed if the conditions are met later.
Remarketing in Connection with the Expiration of the Warrants
If not previously remarketed in connection with a redemption of the
warrants by RGA, the preferred securities will be remarketed on the third
business day prior to December 15, 2050 in connection with the expiration of the
warrants. No further action will be required of RGA to select such date or give
notice of such date. As long as the units or the preferred securities are
evidenced by one or more global certificates deposited with DTC, RGA will
request, not later than three nor more than 17 business days (subject to
extension) prior to the remarketing date, that DTC notify its participants
holding units or preferred securities of the remarketing. The warrants will
expire on December 15, 2050, the settlement date for a remarketing in connection
with the expiration of the warrants.
A Failed Remarketing
If, by 4:00 p.m., New York City time, on the remarketing date, the
remarketing agent is unable to remarket all the preferred securities deemed
tendered for remarketing, a "failed remarketing" will have occurred. The
administrative trustees will give notice of a failed remarketing to RGA. RGA
will instruct the appropriate agent to notify all holders of preferred
securities (whether or not a component of a unit) prior to the close of business
on the business day following the remarketing settlement date.
Upon a failed remarketing:
- beginning on the third business day after the date of a failed
remarketing, interest will accrue on the accreted value of the debentures
(which in connection with the expiration of the warrants is $50), and
distributions will accumulate on the accreted value of the preferred
securities;
- the interest rate on the accreted value of debentures will be equal to
10.25% per annum and, as a result, the distribution rate on the accreted
value of preferred securities will be adjusted correspondingly;
- the accreted value of the debentures and, as a result the accreted value
of the preferred securities, as of the end of the day on the day next
preceding the remarketing settlement date will become due on the date
which is 93 days after the failed remarketing settlement date (which in
connection with the expiration of the warrants will be 93 days after
December 15, 2050); and
- RGA will no longer have the option to defer interest payments on the
debentures.
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Notwithstanding that a failed remarketing may occur in connection with an
optional redemption of the warrants, the warrants would nevertheless be redeemed
at the warrant redemption amount on the optional redemption date and a warrant
holder who has elected to exercise its warrants will be obligated to exercise
its warrants instead of such redemption by paying the exercise price in cash.
A successful remarketing is not a condition to a redemption of the warrants
and the warrant holder will have the option to exercise its warrants instead of
such redemption, as described under "Description of the Warrants -- Optional
Redemption" in this prospectus supplement.
General
The following common provisions apply to any remarketing.
UNLESS HOLDERS OF PREFERRED SECURITIES, WHETHER OR NOT HOLDERS OF UNITS,
ELECT NOT TO HAVE THEIR PREFERRED SECURITIES REMARKETED, ALL PREFERRED
SECURITIES WILL BE REMARKETED ON THE REMARKETING DATE. RGA may select a
remarketing date not less than three nor more than 17 business days (subject to
extension) after written notice of the remarketing is given to holders of the
units and the preferred securities. A holder may elect not to have its preferred
securities remarketed by notifying the unit agent, in the case of unitholders,
or the property trustee, in the case of other holders, of such election not
later than 5:00 p.m., New York City time, on the business day preceding the
remarketing date. Any such notice will be irrevocable and may not be conditioned
upon the level at which the reset rate is established in the remarketing. A
holder may elect to exercise its warrants instead of having them redeemed by
following the procedures set forth in "Description of the Warrants -- Optional
Redemption -- Election to Exercise" in this prospectus supplement. Not later
than 5:00 p.m., New York City time, on the business day preceding the
remarketing date, the property trustee and the unit agent, as applicable, shall
notify the Trust, RGA and the remarketing agent of the number of preferred
securities to be tendered for purchase in the remarketing.
If none of the holders elects to have preferred securities remarketed in
the remarketing, the reset rate will be the rate reasonably determined by the
remarketing agent, in good faith after consultation with RGA, as the rate that
would have been established had a remarketing been held on the remarketing
settlement date, and the modifications to the maturity date of the debentures
will be effective as of the remarketing settlement date.
If the remarketing agent determines prior to 4:00 p.m., New York City time,
on the remarketing date that it will be able to remarket all the preferred
securities deemed tendered for remarketing at a price of 100% of the accreted
value of such preferred securities as of the end of the day on the day next
preceding the remarketing settlement date, the remarketing agent will determine
the reset rate, which will be the rate, rounded to the nearest one-thousandth
(0.001) of one percent, per annum that the remarketing agent reasonably
determines, in good faith after consultation with RGA, to be the lowest rate per
year that will enable it to remarket all the preferred securities deemed
tendered for remarketing at that price.
By approximately 4:30 p.m., New York City time, on the remarketing date, so
long as there has not been a failed remarketing, the remarketing agent will
advise:
- DTC, the property trustee, the indenture trustee, the Trust and RGA of
the reset rate determined in the remarketing and the number of preferred
securities sold in the remarketing;
- each person purchasing preferred securities in the remarketing, or the
appropriate DTC participant, of the reset rate and the number of
preferred securities such person is to purchase; and
- each person purchasing preferred securities to give instructions to its
DTC participant to pay the purchase price on the remarketing settlement
date in same day funds against delivery of the preferred securities
purchased through the facilities of DTC.
In accordance with DTC's normal procedures, on the remarketing settlement
date, the transactions described above with respect to each preferred security
tendered for purchase and sold in the remarketing will be executed through DTC,
and the accounts of the respective DTC participants will be debited and
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credited and such preferred securities delivered by book entry as necessary to
effect purchases and sales of the preferred securities. DTC will make payment in
accordance with its normal procedures.
If any holder selling preferred securities in the remarketing fails to
deliver the preferred securities, the direct or indirect DTC participant of the
selling holder and of any other person that was to have purchased preferred
securities in the remarketing may deliver to that other person a number of
preferred securities that is less than the number of preferred securities that
otherwise was to be purchased by that person. In that event, the number of
preferred securities to be so delivered will be determined by the direct or
indirect participant, and delivery of the lesser number of preferred securities
will constitute full satisfaction of the delivery requirement.
The right of each holder to have preferred securities tendered for purchase
will be subject to the limitations that:
- the remarketing agent conducts a remarketing pursuant to the terms of the
remarketing agreement;
- the remarketing agent is able to find a purchaser or purchasers for
tendered preferred securities; and
- the purchaser or purchasers deliver the purchase price for the tendered
preferred securities to the remarketing agent.
The remarketing agent is not obligated to purchase any preferred securities
that would otherwise remain unsold in the remarketing. Neither RGA, the Trust,
any trustee, nor the remarketing agent will be obligated in any case to provide
funds to make payment upon tender of preferred securities for remarketing.
RGA, as borrower, will be liable for any and all costs and expenses
incurred in connection with the remarketing.
In connection with a remarketing of the preferred securities and at any
time thereafter, a holder of preferred securities (whether or not participating
in the remarketing) may elect to receive a debenture in exchange for its
preferred securities. See "-- Exchange."
Remarketing Agent
The remarketing agent will be selected by RGA. The remarketing agreement
will provide that the remarketing agent will act as the exclusive remarketing
agent and will use commercially reasonable efforts to remarket preferred
securities deemed tendered for remarketing in the remarketing at a price of 100%
of their accreted value as of the end of the day on the day next preceding the
remarketing settlement date. Under specified circumstances, some portion of the
preferred securities tendered in the remarketing will be able to be purchased by
the remarketing agent.
The remarketing agreement will also provide that the remarketing agent will
incur no liability to RGA or to any holder of the units or the preferred
securities in its individual capacity or as remarketing agent for any action or
failure to act in connection with a remarketing or otherwise, except as a result
of negligence or willful misconduct on its part. RGA will pay the fee of the
remarketing agent.
RGA will agree to indemnify the remarketing agent against certain
liabilities, including liabilities under the Securities Act of 1933, arising out
of or in connection with its duties under the remarketing agreement.
The remarketing agreement also will provide that the remarketing agent may
resign and be discharged from its duties and obligations thereunder. However, no
resignation will become effective unless a nationally recognized broker-dealer
has been appointed by RGA as successor remarketing agent and the successor
remarketing agent has entered into a remarketing agreement with RGA. In that
case, RGA will use commercially reasonable efforts to appoint a successor
remarketing agent and enter into a remarketing agreement with that person as
soon as reasonably practicable. See "Description of the Units -- Limited Right
to Repurchase" in this prospectus supplement.
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LIMITED RIGHT TO REPURCHASE
If a holder of units exercises its warrants, other than an exercise upon a
redemption of the warrants (see "Description of the Warrants -- Optional
Redemption" and "Description of the Warrants -- Exercise of Warrants" in this
prospectus supplement), such holder will have the right, on the next special
distribution date which is no less than 93 days following the exercise date of
its warrants, to require the Trust to exchange the preferred securities related
to such exercised warrants for debentures having a face amount equal to the
liquidation amount of such preferred securities plus accumulated and unpaid
distributions (including deferred distributions) to, but excluding, such date
and to require RGA to contemporaneously repurchase the exchanged debentures at
$50 plus accrued and unpaid interest (including deferred interest) to, but
excluding, the repurchase date. See "Description of the Units -- Limited Right
to Repurchase" in this prospectus supplement.
REDEMPTION
Upon the repayment of the debentures held by the Trust, whether at stated
maturity (as adjusted in connection with a remarketing described below) or
otherwise, the proceeds from such repayment will be applied by the property
trustee to redeem a like aggregate liquidation amount of the preferred
securities and common securities. If less than all of the debentures held by the
Trust are to be repaid, then, except as described under "-- Subordination of
Common Securities of the Trust," and in the next paragraph, the proceeds from
such repayment will be allocated pro rata to the redemption of the preferred
securities and common securities.
Under certain circumstances, a holder of preferred securities may elect to
exchange the preferred securities for an equivalent amount of debentures. See
"-- Limited Right to Repurchase," "-- Change of Control" and "-- Exchange."
Also, in connection with a liquidation of the Trust, the debentures will be
distributed to holders of preferred securities. See "-- Distribution of
Debentures Upon Tax or Investment Company Event" and "-- Liquidation
Distribution Upon Dissolution." In any such event, payments after an exchange
made by RGA on account of the debentures will be paid to holders of the
debentures.
Subject to applicable law, RGA or its affiliates may at any time and from
time to time purchase outstanding preferred securities or units of which the
warrants are components by tender, in the open market or by private agreement.
REDEMPTION PROCEDURES
Preferred securities will be redeemed at the redemption price in accordance
with the terms of the debentures which will include an amount equal to
accumulated and unpaid distributions thereon through the date of redemption with
the applicable proceeds from the contemporaneous payment of the debentures.
Redemptions of the preferred securities will be made and the Redemption Price
will be payable on the redemption date only to the extent that the Trust has
sufficient consideration available for the payment of such redemption price. See
"-- Subordination of Common Securities of the Trust."
Notice of any redemption will be given in the manner and at the times
specified above under "-- Remarketing." On the redemption date, to the extent
funds are available, the property trustee will deposit irrevocably with DTC
consideration sufficient to pay the applicable redemption price for all
securities held at DTC and will give DTC irrevocable instructions and authority
to pay the redemption price to holders of the preferred securities. See
"Book-Entry Issuance" in this prospectus supplement. If any preferred securities
are not represented by one or more global certificates, the Trust, to the extent
consideration is available, will irrevocably deposit with the paying agent for
the preferred securities consideration sufficient to pay the applicable
redemption price and will give the paying agent for the preferred securities
irrevocable instructions and authority to pay the redemption price to holders
thereof upon surrender of their certificates evidencing the preferred
securities. Notwithstanding the foregoing, distributions payable on or prior to
the redemption date for any preferred securities will be payable to holders of
record of such preferred securities who are holders on the relevant record dates
for the related distribution dates. If notice of redemption shall have been
given and consideration deposited as required,
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then immediately prior to the close of business on the date of such redemption,
all rights of holders of preferred securities called for redemption will cease,
except the right of holders of preferred securities to receive the redemption
price, but without interest on such redemption price, and preferred securities
which are called for redemption will cease to be outstanding. In the event that
any date set for redemption of preferred securities is not a business day, then
payment of the redemption price payable on such date will be made on the next
day which is a business day (and without any interest or other payment in
respect of any such delay), except that if such business day falls in the next
calendar year, such payment will be made on the immediately preceding business
day, in each case with the same force and effect as if made on the date such
payment was originally payable.
In the event that payment of the redemption price in respect of preferred
securities called for redemption is improperly withheld or refused and not paid
either by the Trust or by RGA pursuant to the guarantee as described under
"Description of the Guarantee" in this prospectus supplement, distributions on
such preferred securities will continue to accumulate at the applicable rate per
annum, from the redemption date originally established by the Trust for the
preferred securities to the date such redemption price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the redemption price. See "-- Distributions."
If preferred securities are represented by one or more global certificates,
they will be redeemed as described below under "Book-Entry
Issuance -- Book-Entry Issuance of the Preferred Securities" in this prospectus
supplement.
CHANGE OF CONTROL
If a change of control (as defined in "Description of the
Warrants -- Change of Control" in this prospectus supplement) occurs, each
holder of a preferred security will have the right to exchange any or all of
that holder's preferred securities for debentures having an accreted value equal
to the accreted value of such preferred securities and to require RGA to
repurchase such debentures on the repurchase date at a repurchase price in cash
equal to 100% of the accreted value on the repurchase date of the debentures
that are exchanged for such holder's preferred securities, plus accrued and
unpaid interest (including deferred interest) on such debentures to, but
excluding, the repurchase date.
Within 30 days after the occurrence of a change of control, RGA must give
notice to each holder of a preferred security and the property trustee of the
transaction that constitutes the change of control and of the resulting
repurchase right. To exercise the repurchase right, a preferred security holder
must deliver, within a 30-day period specified in RGA's notice, irrevocable
written notice to RGA, the Trust and the property trustee and the exchange agent
of the holder's exercise of its repurchase right. The preferred securities shall
be exchanged for debentures no less than three business days prior to the
repurchase date, which shall not be later than 138 days after the date of the
change of control notice.
RGA will comply with the requirements of the Securities Exchange Act of
1934 and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the redemption of the
warrants or the repurchase of the debentures as a result of a change of control.
RGA's ability to repurchase debentures upon the occurrence of a change of
control is subject to important limitations. The occurrence of a change of
control could cause an event of default under, or be prohibited or limited by,
the terms of RGA's senior debt. As a result, any repurchase of the debentures
would, absent a waiver, be prohibited under the indenture until the senior debt
is paid in full. Further, there can be no assurance that RGA would have the
financial resources, or would be able to arrange financing, to pay the
repurchase price for all the debentures that might be delivered by holders of
debentures seeking to exercise the repurchase right. Any failure by RGA to
repurchase the debentures when required following a change of control would
result in an event of default under the declaration of trust, whether or not
such repurchase is permitted by the indenture. Any such default may, in turn,
cause a default under senior debt.
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EXCHANGE
In connection with a remarketing of the preferred securities and at any
time thereafter, a holder of preferred securities may exchange its preferred
securities for debentures, assuming compliance with applicable securities laws,
including the Securities Act of 1933. In such event, the administrative trustees
will cause debentures held by the property trustee, having an aggregate accreted
value equal to the aggregate accreted value of the preferred securities held by
such holder and with accrued and unpaid interest equal to accumulated and unpaid
distributions on the preferred securities held by such holder, to be distributed
to such holder in exchange for such holders' pro rata interest in the Trust. In
such event, the debentures held by the Trust will decrease by the amount of
debentures delivered to the holder of preferred securities.
DISTRIBUTION OF DEBENTURES
The administrative trustees may, with the consent of RGA except in certain
limited circumstances, at any time dissolve the Trust and, after satisfaction of
liabilities to creditors, cause debentures held by the property trustee, having
an aggregate principal amount equal to the aggregate liquidation amount of the
preferred securities and common securities, with an interest rate identical to
the distribution rate of the preferred securities and common securities, and
accrued and unpaid interest equal to accumulated and unpaid distributions on the
preferred securities and common securities, to be distributed to holders of the
preferred securities and the common securities of the Trust in liquidation of
such holders' interests in the Trust on a pro rata basis, upon not less than 30
nor more than 60 days' notice, within 93 days following the occurrence of such
event; provided, however, that such dissolution and distribution shall be
conditioned on the administrative trustees' receipt of an opinion of independent
counsel to the effect that holders of the preferred securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of the dissolution of the Trust and the distribution of debentures, which
we refer to as a "No Recognition Opinion".
If the administrative trustees shall have been informed by an independent
law firm that such firm cannot deliver a No Recognition Opinion to the Trust and
a tax event or investment company event shall have occurred, RGA shall have the
right to cause a remarketing of the preferred securities as described above
under "-- Remarketing" within 93 days following the occurrence of such event.
Under current United States federal income tax law, and interpretations
thereof and assuming that, as expected, the Trust is treated as a grantor trust,
a distribution of the debentures will not be a taxable event to the Trust and/or
to holders of the preferred securities. Should there be a change in law, a
change in legal interpretation, certain tax events or other circumstances,
however, the distribution of debentures could be a taxable event to holders of
the preferred securities in which event RGA could, as provided above, cause a
remarketing of the preferred securities, and would not be permitted to
distribute the debentures at such time.
If RGA does not elect any of the options described above, the preferred
securities will remain outstanding until the repayment of the debentures. In the
event a tax event has occurred and is continuing and RGA is not permitted to
distribute the debentures, under the indenture, RGA, as borrower, will be
obligated to pay any taxes, duties, assessments and other governmental charges
to which the Trust or distributions paid by the Trust have become subject as a
result of a tax event. See "Description of the Debentures -- Payment of Expenses
of the Trust" in this prospectus supplement.
If debentures are distributed in exchange for preferred securities and
common securities, the holders of such debentures will have the same right of
repurchase and change of control right of repurchase.
SUBORDINATION OF COMMON SECURITIES OF THE TRUST
Payment of distributions on, and the redemption price of, the preferred
securities and common securities, as applicable, shall be made pro rata based on
the liquidation amount of such preferred securities and common securities;
provided, however, that if on any distribution date an indenture event of
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default shall have occurred and be continuing, no payment of any distribution
on, or redemption price of, any of the common securities of the Trust, and no
other payment on account of the redemption or liquidation of, or otherwise with
respect to, the common securities of the Trust, shall be made unless payment in
full in cash of all accumulated and unpaid distributions on all of the
outstanding preferred securities for all distribution periods terminating on or
prior thereto, or in the case of payment of the redemption price the full amount
of such redemption price on all of the outstanding preferred securities then
called for redemption, shall have been made or provided for, and all funds
available to the property trustee shall first be applied to the payment in full
in cash of all distributions on, or redemption price of, the preferred
securities then due and payable.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the declaration of trust, the Trust shall automatically
dissolve on the first to occur of: (1) certain events of bankruptcy, dissolution
or liquidation of RGA, (2) the distribution of the debentures to holders of the
preferred securities and the common securities, (3) the redemption of all of the
preferred securities and common securities in connection with the maturity of
all of the debenture, (4) the entry by a court of competent jurisdiction of an
order for the dissolution of the Trust and (5) the expiration of the term of the
Trust.
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, which we refer to as a "liquidation,"
holders of the preferred securities on the date of the liquidation will be
entitled to receive, out of the assets of the Trust available for distribution
to holders of preferred securities and the common securities after satisfaction
of the Trust's liabilities to creditors, if any, distributions in cash or other
immediately available funds in an amount equal to the accreted value of the
preferred securities plus accumulated and unpaid distributions thereon to the
date of payment, which we refer to as the "liquidation distribution," unless, in
connection with such liquidation, debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accumulated and unpaid distributions on, such preferred securities and
common securities shall be distributed on a pro rata basis to holders of the
preferred securities and common securities in exchange for the preferred
securities and common securities. If liquidation distributions can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate liquidation distribution, then the amounts payable directly by the
Trust on the preferred securities and common securities shall be paid on a pro
rata basis so that holders of the common securities of the Trust will be
entitled to receive distributions upon any such liquidation pro rata with
holders of the preferred securities, except that if an indenture event of
default has occurred and is continuing, the preferred securities shall have a
preference over the common securities of the Trust with regard to liquidation
distributions.
After the liquidation date is fixed for any distribution of debentures to
holders of the preferred securities:
- the preferred securities will no longer be deemed to be outstanding;
- if the preferred securities are represented by one or more global
certificates, DTC or its nominee, as a record holder of preferred
securities, will receive a registered global certificate or certificates
representing the debentures to be delivered upon such distribution; and
- any certificates representing preferred securities not held by DTC or its
nominee will be deemed to represent debentures having a principal amount
equal to the liquidation amount of such preferred securities, and bearing
accrued and unpaid interest in an amount equal to the accumulated and
unpaid distributions on such preferred securities, until such
certificates are presented for cancellation, whereupon RGA will issue to
such holder, and the indenture trustee will authenticate, a certificate
representing such debentures.
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TRUST ENFORCEMENT EVENTS
An event of default under the indenture, which we refer to as an "indenture
event of default," constitutes an event of default under the declaration of
trust with respect to the preferred securities and common securities, which we
refer to as a "trust enforcement event." See "Description of the
Debentures -- Indenture Events of Default" in this prospectus supplement.
Upon the occurrence and continuance of a trust enforcement event, the
property trustee as the sole holder of the debentures will have the right under
the indenture to declare the principal amount of the debentures due and payable.
RGA and the Trust are each required to file annually with the property trustee
an officer's certificate as to its compliance with all conditions and covenants
under the declaration of trust.
If the property trustee fails to enforce its rights under the debentures,
after a holder has made a written request, such registered holder of preferred
securities may institute a legal proceeding against RGA to enforce the property
trustee's rights under the debentures. Notwithstanding the foregoing, if a trust
enforcement event has occurred and is continuing and such event is attributable
to the failure of RGA to pay interest or principal on the debentures on the date
such interest or principal is otherwise payable (or in connection with a
repurchase of preferred securities, the repurchase date), then a registered
holder of preferred securities may institute a direct action for payment after
the respective due date specified in the debentures. Except as provided in this
paragraph, holders of preferred securities will not be able to exercise directly
any other remedy available to holders of the debentures.
Pursuant to the declaration of trust, the holder of the common securities
of the Trust will be deemed to have waived any trust enforcement event with
respect to the common securities of the Trust until all trust enforcement events
with respect to the preferred securities have been cured, waived or otherwise
eliminated. Until all trust enforcement events with respect to the preferred
securities have been so cured, waived or otherwise eliminated, the property
trustee will be deemed to be acting solely on behalf of holders of the preferred
securities and only holders of the preferred securities will have the right to
direct the property trustee in accordance with the terms of the preferred
securities.
VOTING RIGHTS AND AMENDMENT OF THE DECLARATION
Except as provided below and other than as required by law and the
declaration of trust, holders of the preferred securities will have no voting
rights.
Subject to the property trustee receiving a tax opinion, as described
below, so long as any debentures are held by the property trustee, holders of a
majority in liquidation amount of the preferred securities shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the property trustee, or to direct the exercise of any trust or
power conferred upon the property trustee under the declaration of trust,
including the right to direct the property trustee, as holder of the debentures,
to:
- exercise the remedies available to it under the indenture as a holder of
the debentures;
- consent to any amendment or modification of the indenture or the
debentures where such consent shall be required; or
- waive any past default and its consequences that is available under the
indenture;
provided, however, that if an indenture event of default has occurred and is
continuing, then holders of at least 25% of the aggregate liquidation amount of
the preferred securities may direct the property trustee to declare the
principal of and premium, if any, and interest on the debentures due and
payable; provided, further, that where a consent or action under the indenture
would require the consent or act of holders of more than a majority of the
aggregate principal amount of debentures affected thereby, only holders of the
percentage of the aggregate stated liquidation amount of the preferred
securities which is at least equal to the percentage required under the
indenture may direct the property trustee to give such consent or to take such
action.
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The property trustee shall notify each holder of the preferred securities
of any notice of any indenture event of default which it receives from RGA with
respect to the debentures. Except with respect to directing the time, method,
and place of conducting a proceeding for a remedy, the property trustee shall be
under no obligation to take any of the actions described above unless the
property trustee has obtained an opinion of counsel, rendered by an independent
law firm experienced in such matters, to the effect that the Trust will not fail
to be classified as a grantor trust for United States federal income tax
purposes as a result of such action, and each holder will be treated as owning
an undivided beneficial ownership interest in the debentures.
The declaration of trust may be amended from time to time by RGA and a
majority of the administrative trustees (and in certain circumstances the
property trustee and the Delaware trustee), without the consent of holders of
the preferred securities:
- to cure any ambiguity or correct or supplement any provisions in the
declaration of trust that may be defective or inconsistent with any other
provision, or to make any other provisions with respect to matters or
questions arising under the declaration of trust that shall not be
inconsistent with the other provisions of the declaration of trust;
- to add to the covenants, restrictions or obligations of RGA in its
capacity as depositor of the Trust;
- to conform to any change in Rule 3a-5 or 3a-7 under the Investment
Company Act of 1940 or written change in interpretation or application of
Rule 3a-5 or 3a-7 under the Investment Company Act of 1940 by any
legislative body, court, government agency or regulatory authority;
- to modify, eliminate or add to any provisions of the declaration of trust
to the extent necessary to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust at all times
that any preferred securities and common securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act of 1940; or
- facilitate the tendering, remarketing and settlement of the preferred
securities;
provided, however, that none of the foregoing actions shall adversely affect in
any material respect the interests of any holder of preferred securities and
common securities, and any amendments of the declaration of trust shall become
effective when notice thereof is given to holders of preferred securities and
common securities.
The declaration of trust may not be amended without the consent of RGA, a
majority of the administrative trustees and the consent of holders representing
not less than a majority in liquidation amount of the outstanding preferred
securities and common securities, each voting as a class, if such amendment
would adversely affect the powers, preferences or special rights of the
securities or their holders or result in the dissolution, winding up or
termination of the Trust, provided that if any amendment would adversely affect
only the preferred securities or the common securities of the Trust, or, in
either case, the holders of such securities, then only the affected class will
be entitled to vote on such amendment and such amendment shall not be effective
except with the approval of a majority in liquidation amount of such class of
preferred securities and common securities affected thereby.
In any event, without the consent of each holder of preferred securities
and common securities affected thereby, the declaration of trust may not be
amended to:
- change the amount or timing of any distribution on the preferred
securities and common securities or otherwise adversely affect the amount
of any distribution required to be made in respect of the preferred
securities and common securities as of a specified date;
- change the holder's rights upon a change of control as described under
"-- Change of Control";
- restrict the right of a holder of preferred securities and common
securities to institute suit for the enforcement of any such payment on
or after such date; or
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- change the right of any unit holder to exchange its preferred securities
for debentures and to require repurchase of such debentures as described
under "-- Limited Right to Repurchase."
Any required approval or direction of holders of preferred securities may
be given at a meeting of holders of preferred securities convened for such
purpose or pursuant to written consent. The administrative trustees will cause a
notice of any meeting at which holders of preferred securities are entitled to
vote, or of any matter upon which action by written consent of such holders is
to be taken, to be given to each holder of record of preferred securities in the
manner set forth in the declaration of trust. The administrative trustee shall
call a meeting of the holders of a class at the direction of holders of at least
20% in liquidation amount of such class.
No vote or consent of holders of preferred securities will be required for
the Trust to redeem and cancel the preferred securities in accordance with the
declaration of trust or to distribute the debentures in accordance with the
indenture.
Notwithstanding that holders of preferred securities are entitled to vote
or consent under any of the circumstances described above, any of the preferred
securities that are owned by RGA, the administrative trustees or any affiliate
of RGA or any other trustees of the Trust, shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
REGISTRAR AND TRANSFER AGENT
The Bank of New York, as property trustee, will also act as registrar and
transfer agent for the preferred securities.
Registration of transfers or exchanges of preferred securities will be
effected without charge by or on behalf of the Trust, but upon payment of any
tax or any other governmental charges that may be imposed in connection with any
transfer or exchange, the Trust may charge a sum sufficient to cover any such
payment. If the preferred securities are to be redeemed in part, the Trust will
not be required to:
- issue, register the transfer of or exchange any preferred securities
during a period beginning at the opening of business 15 days before the
day of the mailing of the relevant notice of redemption and ending at the
close of business on the day of such mailing; or
- register the transfer or exchange of any preferred securities so selected
for redemption, except, in the case of any preferred securities being
redeemed in part, any portion thereof not to be redeemed.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and continuance of a
trust enforcement event (as defined under "Description of the Preferred
Securities -- Trust Enforcement Events" in this prospectus supplement),
undertakes to perform only such duties as are specifically set forth in the
declaration of trust and, after such trust enforcement event (which has not been
cured or waived), must exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, the property trustee is under no obligation to exercise any
of the powers vested in it by the declaration of trust at the request of any
holder of preferred securities unless it is offered security and indemnity
reasonably satisfactory to it against the costs, expenses and liabilities that
might be incurred thereby.
PAYMENT AND PAYING AGENCY
Payments in respect of the global certificates shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable distribution dates
or, if the preferred securities are not represented by one or more global
certificates, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the register in respect
of the registrar. The paying agent for the preferred securities shall initially
be the property trustee and any co-paying agent chosen by the property trustee
and acceptable to the administrative trustees and RGA. The paying agent for the
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preferred securities shall be permitted to resign as paying agent for the
preferred securities upon 30 days' written notice to the administrative
trustees. In the event that the property trustee shall no longer be the paying
agent for the preferred securities, the administrative trustees shall appoint a
successor, which shall be a bank or trust company acceptable to RGA, to act as
paying agent for the preferred securities.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other person,
except as described below. The Trust may, at the request of RGA, with the
consent of the administrative trustees and without the consent of holders of the
preferred securities, the Delaware trustee or the property trustee merge with or
into, consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to a trust
organized as such under the laws of any State, provided that:
- such successor entity (if not the Trust) either expressly assumes all of
the obligations of the Trust with respect to the preferred securities and
the common securities of the Trust or substitutes for such securities
other securities having substantially the same terms as such securities,
which we refer to as the "successor securities," so long as the successor
securities rank the same as such securities rank in priority with respect
to distributions and payments upon liquidation, redemption and otherwise;
- if the Trust is not the successor entity, RGA expressly appoints a
trustee of such successor entity possessing the same powers and duties as
the property trustee as the holder of the debentures;
- any successor securities are listed (or eligible for trading), or any
successor securities will be listed (or eligible for trading) upon
notification of issuance, on any national securities exchange or with any
other organization on which the preferred securities were listed or
quoted or eligible for trading prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease;
- such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the preferred securities (including any
successor securities) to be downgraded by any nationally recognized
statistical rating organization;
- such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of holders of the preferred securities (including any
successor securities) in any material respect;
- such successor entity (if not the Trust) has a purpose identical in all
material respects to that of the Trust;
- prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, RGA has received an opinion of counsel to
the Trust, rendered by an independent law firm experienced in such
matters, to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of holders of the preferred securities
(including any successor securities) in any material respect and (b)
following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, (1) neither the Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act of 1940 and (2) the Trust or the successor entity,
as the case may be, will continue to be classified as a grantor trust for
United States federal income tax purposes;
- RGA or any permitted successor or assignee owns all of the common
securities of the Trust or such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at
least to the extent provided by the guarantee; and
- such successor entity expressly assumes all of the obligations of the
Trust.
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In addition, the Trust shall not, except with the consent of holders of
100% in aggregate stated liquidation amount of the preferred securities,
consolidate, amalgamate, merge with or into, be replaced by or convey, transfer
or lease its properties and assets as an entirety or substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it or acquire by conveyance, transfer
or lease its properties and assets as an entirety or substantially as an
entirety if such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease would cause the Trust or the successor entity to be classified
as other than a grantor trust for United States federal income tax purposes.
MERGER OR CONSOLIDATION OF TRUSTEES
Any corporation into which the property trustee, the Delaware trustee or
any administrative trustee that is not a natural person may be merged or
converted or with which such trustee may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such trustee
shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of such trustee, shall be the successor of such trustee
under the declaration of trust, provided such corporation shall be otherwise
qualified and eligible.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that the Trust will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act of 1940 or classified as other than a grantor trust for
United States federal income tax purposes and so that the debentures will be
treated as indebtedness of RGA for United States federal income tax purposes.
RGA and the administrative trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust or the declaration of
trust, that RGA and the administrative trustees determine in their discretion to
be necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the preferred
securities.
The Trust may not make any loans or incur any indebtedness, invest any
proceeds received in connection with ownership of debentures, or take or consent
to any action that would result in a lien on any of its assets. In addition, the
Trust may not take any action inconsistent with the status of the Trust as a
grantor trust for United States federal income tax purposes.
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DESCRIPTION OF THE DEBENTURES
RGA will issue the junior subordinated debentures under the Junior
Subordinated Indenture dated as of December 18, 2001, as supplemented by a First
Supplemental Junior Subordinated Indenture dated as of December 18, 2001, in
each case, between us and The Bank of New York, as indenture trustee, which we
refer to collectively as the indenture. The following description of certain
terms of the debentures and certain provisions of the indenture in this
prospectus supplement supplements the description under "Description of Debt
Securities of RGA" in the attached prospectus and, to the extent it is
inconsistent with that description, replaces the description in the attached
prospectus. This description is only a summary of the material terms and does
not purport to be complete. We urge you to read these documents in their
entirety because they, and not this description, will define your rights as a
beneficial holder of the debentures. We will file the First Supplemental Junior
Subordinated Indenture and the debentures as exhibits to a Current Report on
Form 8-K which will be incorporated by reference in the attached prospectus. You
may also request copies of these documents from us at our address set forth in
the attached prospectus under "Incorporation of Certain Documents by Reference."
Unless otherwise specified, when we refer to "RGA" in the following description,
we mean only RGA and not its subsidiaries.
GENERAL
The debentures will be limited in aggregate principal amount to the
aggregate liquidation amount of all preferred securities and common securities
as set forth in the declaration of trust.
The debentures will not be subject to a sinking fund provision. The entire
principal amount of the debentures will mature and become due and payable,
together with any accrued and unpaid interest thereon, including compounded
interest (as defined under "-- Option to Extend Interest Payment Period"), if
any, on March 18, 2051, unless such maturity date is earlier in connection with
a remarketing of the preferred securities as described under "Description of the
Preferred Securities -- Remarketing" in this prospectus supplement, in which
event the accreted value of the debentures will be due and payable on such
earlier maturity date, together with any accrued and unpaid interest on the
accreted value.
The debentures will initially be issued as a global certificate. See
"Book-Entry Issuance" in this prospectus supplement. As described in this
prospectus supplement, under certain limited circumstances, debentures may be
issued in certificated form in exchange for a global certificate. See
"Book-Entry Issuance -- Depository Procedures" in this prospectus supplement.
Payments on debentures issued as a global certificate will be made through the
debenture paying agent for the debentures to DTC. In the event debentures are
issued in certificated form, principal, premium, if any, and interest will be
payable, the transfer of the debentures will be registrable and debentures will
be exchangeable for debentures of other denominations of a like aggregate
principal amount at the corporate trust office of the indenture trustee in New
York, New York; provided that payment of interest may be made at the option of
RGA by check mailed to the address of the holder entitled to it at the address
held by the registrar. Notwithstanding the foregoing, so long as the beneficial
holder of some or all of the debentures is the property trustee, the payment of
principal, premium, if any, and interest on the debentures held by the property
trustee will be made through DTC to such account as may be designated by the
property trustee.
If a holder of units exercises its warrants, other than an exercise instead
of a redemption of warrants, that holder will have the right to require the
Trust to exchange its preferred securities for debentures and require RGA to
repurchase its debentures as described in "Description of the Units -- Limited
Right to Repurchase" in this prospectus supplement.
Under certain circumstances involving the dissolution of the Trust,
including following the occurrence of a tax event or an investment company
event, the debentures may be distributed to holders of the preferred securities
and common securities in liquidation of the Trust, unless the preferred
securities are otherwise redeemed in connection with that event. See
"Description of the Preferred Securities -- Distribution of Debentures" in this
prospectus supplement.
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SUBORDINATION
The payment of principal of and interest on the debentures will be, to the
extent provided in the indenture, subordinated to the prior payment in full of
all present and future senior indebtedness (as defined below) and as described
under "Description of Debt Securities of RGA -- Subordination Under the
Subordinated Indenture and the Junior Subordinated Indenture" in the attached
prospectus.
Subject to the qualifications described below, the term "senior
indebtedness" includes principal and premium, if any, of and interest on the
following:
- all indebtedness of RGA, whether outstanding on the date of the issuance
of the debentures or thereafter created, incurred or assumed, which is
for money borrowed, or which is evidenced by a note or similar instrument
given in connection with the acquisition of any business, properties or
assets, including securities;
- all obligations of RGA under leases required or permitted to be
capitalized under generally accepted accounting principles;
- any indebtedness of others of the kinds described in the first bullet
point above for the payment of which RGA is responsible or liable as
guarantor or otherwise; and
- amendments, renewals, extensions and refundings of any of the above types
of indebtedness.
The senior indebtedness will continue to be senior indebtedness and entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of the senior indebtedness or extension or
renewal of the senior indebtedness. Notwithstanding anything to the contrary in
the foregoing, senior indebtedness will not include (1) indebtedness incurred
for the purchase of goods or materials or for services obtained in the ordinary
course of business, (2) any indebtedness which by its terms is expressly made
equal in rank and payment with or subordinated to the debentures and (3)
obligations by RGA owed to its subsidiaries.
In the event that, notwithstanding any of the foregoing prohibitions, the
indenture trustee or the holders of the debentures receive any payment or
distribution on account of or in respect of the debentures at a time when a
responsible officer of the indenture trustee or such holder has actual knowledge
that such payment or distribution should not have been made to it, the trustee
or such holder shall hold such payment or distribution in trust for the benefit
of, and, upon written request, shall pay it over to, the holders of the senior
indebtedness or their agents or representatives, for application to the payment
of the all principal, premium, if any, and interest then payable with respect to
any senior indebtedness.
Senior indebtedness will only be deemed to have been paid in full if the
holders of such indebtedness have received cash, securities or other property
which is equal to the amount of the outstanding senior indebtedness. After
payment in full of all present and future senior indebtedness, holders of
subordinated debt securities will be subrogated to the rights of any holders of
senior indebtedness to receive any further payments or distributions that are
applicable to the senior indebtedness until all the subordinated debt securities
are paid in full. In matters between holders of the debentures and any other
type of RGA's creditors, any payments or distributions that would otherwise be
paid to holders of senior indebtedness and that are made to holders of the
debentures because of this subrogation will be deemed a payment by RGA on
account of senior indebtedness and not on account of the debentures.
In addition to the contractual subordination provisions described above,
the rights of the holders of the debentures (and the guarantee) will be
structurally subordinated to all existing and future obligations of RGA's
subsidiaries. RGA is a holding company. As a result, we rely primarily on
dividends or other payments from our direct and indirect principal operating
subsidiaries, RGA Reinsurance and RGA Canada, to pay principal and interest on
our outstanding debt obligations, and to make dividend distributions on our
capital stock. See "Risk Factors -- Our ability to pay principal, interest
and/or dividends on offered securities is limited" beginning on page 5 of the
attached prospectus. We can also utilize investment securities maintained in our
portfolio for these payments. The principal source of funds for RGA Reinsurance
and RGA Canada comes from current operations.
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Due to the subordination provisions, described above, in the indenture
under which the debentures will be issued, in the event of our insolvency, funds
which we would otherwise use to pay the holders of the debentures will be used
to pay the holders of senior indebtedness to the extent necessary to pay the
senior indebtedness in full. As a result of these payments, our general
creditors may recover less, ratably, than the holders of our senior indebtedness
and these general creditors may recover more, ratably, than the holders of the
debentures or our other subordinated indebtedness. In addition, the holders of
our senior indebtedness may, under certain circumstances, restrict or prohibit
us from making payments on the debentures or distributions on the preferred
securities. As of September 30, 2001, after giving effect to this offering and
to the contemplated offering of $200.0 million of our senior notes, we would
have had approximately $323.2 million of debt, including approximately $323.2
million of senior indebtedness. The consummation of the offering of the units is
not dependent upon the completion of the offering of the senior notes.
In addition, because RGA is a holding company, its principal assets consist
of the stock of its insurance company subsidiaries and absent any additional
capital raising or borrowing, its principal cash flow would be derived from
dividends and other distributions or loans from its insurance company
subsidiaries. Therefore, RGA's ability to service its debt, including the
guarantee and the debentures, would be dependent upon the earnings of these
subsidiaries and their ability to distribute those earnings as dividends or make
loans or other payments to RGA. In addition, regulatory restrictions may limit
these payments. Our insurance company subsidiaries are subject to various state
statutory and regulatory restrictions, applicable to insurance companies
generally, that limit the amount of cash dividends, loans and advances that
those subsidiaries may pay to us. See "Business -- Corporate Structure",
"-- Regulation" and "-- Restrictions on Dividends and Distributions" in our
Annual Report on Form 10-K for the year ended December 31, 2000 which is
incorporated by reference in the attached prospectus.
As a result of RGA being a holding company, both the guarantee and the
debentures will be structurally subordinated to all of its subsidiaries'
existing and future obligations. RGA only has a stockholder's claim in the
assets of its subsidiaries. This stockholder's claim is junior to claims that
creditors and reinsurance contract holders of RGA's subsidiaries have against
those subsidiaries. Holders of the debentures and beneficiaries of the guarantee
of the preferred securities will only be creditors of RGA, and such holders will
not be creditors of RGA's subsidiaries, where most of RGA's consolidated assets
are located. All of RGA's subsidiaries' existing and future liabilities,
including any claims of trade creditors, claims under reinsurance contracts,
debt obligations and other liabilities and third-party preferred shareholders,
will be effectively senior to the guarantee of the preferred securities and the
debentures. As of September 30, 2001, the total liabilities of our subsidiaries
were approximately $5.3 billion. See "Business -- Default or Liquidation" in our
Annual Report on Form 10-K for the year ended December 31, 2000 and "Risk
Factors -- Our ability to pay principal, interest and/or dividends on offered
securities is limited" beginning on page 5 of the attached prospectus.
COVENANTS OF RGA
Except as otherwise provided in the indenture, for so long as the
debentures are held by the property trustee, RGA will covenant:
- to maintain directly or indirectly ownership of all of the common
securities of the Trust; provided, however, that any permitted successor
of RGA under the indenture may succeed to RGA's ownership of the common
securities of the Trust;
- to cause the Trust to remain a statutory business trust, except in
connection with the distribution of the debentures to holders of
preferred securities and common securities, the redemption of all
preferred securities and common securities, or certain mergers,
consolidations or amalgamations, each as permitted by the declaration of
trust, and not to voluntarily dissolve, wind-up, liquidate or be
terminated, except as permitted by the declaration of trust and otherwise
to cause the Trust to continue to be classified as a grantor trust for
U.S. federal income tax purposes;
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- to take no action that would be reasonably likely to cause the Trust to
be classified as other than a grantor trust for United States federal
income tax purposes; and
- to use its commercially reasonable efforts to ensure that the Trust will
not be an "investment company" under the Investment Company Act of 1940.
REDEMPTION; REPURCHASE BY HOLDER
RGA will not have the right to redeem or shorten the maturity of the
debentures in whole or in part at any time, except in connection with a
remarketing which may shorten the maturity of the debentures as described under
"-- Terms Upon Remarketing of Preferred Securities; Failed Remarketing." RGA
will be required to redeem the debentures in certain circumstances following the
exercise of warrants by a unit holder as described under "Description of the
Units -- Limited Right to Repurchase" in this prospectus supplement.
INTEREST
Each debenture will bear interest on the stated principal amount thereof at
the rate of 5.75% per annum, subject to adjustment as described below and under
"Description of the Preferred Securities -- Remarketing" in this prospectus
supplement, from and including December 18, 2001. Interest is payable quarterly
in arrears on March 15, June 15, September 15, and December 15 of each year,
each of which we refer to as an "interest payment date," commencing on March 15,
2002, to the person in whose name the debenture is registered at the close of
business on the day next preceding the interest payment date. In addition,
holders of record as of a special record date, will receive accrued and unpaid
interest on the debentures to, but excluding, the remarketing settlement date,
in connection with a remarketing. In the event the preferred securities shall
not continue to remain in book-entry only form and the debentures are not in the
form of a global certificate, RGA shall have the right to select record dates,
which shall be at least one business day before an interest payment date.
The amount of interest payable for any full quarterly interest period will
be computed on the basis of a 360-day year of twelve 30-day months. The amount
of interest payable for any period shorter than a full 90-day quarterly interest
period for which interest is computed, will be computed on the basis of 30-day
months and, for periods of less than a 30-day month, the actual number of days
elapsed per 30-day month. In the event that any date on which interest is
payable on the debentures is not a business day, then payment of the interest
payable on such date will be made on the next succeeding day that is a business
day (and without any interest or other payment in respect of any such delay),
except that if such business day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding business day, in each
case with the same force and effect as if made on such date.
If a remarketing event, as defined below, occurs and the preferred
securities are remarketed, interest will accrue on the accreted value of the
debentures at the reset rate, as defined below, from the remarketing settlement
date to but not including the stated maturity (as modified in connection with
such remarketing). If there is a failed remarketing (as described in
"Description of the Preferred Securities -- Remarketing -- Remarketing
Procedures -- A Failed Remarketing" in this prospectus supplement), interest
will accrue on the accreted value of the debentures at a rate of 10.25% from the
failed remarketing settlement date to but not including the stated maturity (as
modified in connection with such failed remarketing).
TERMS UPON REMARKETING OF PREFERRED SECURITIES; FAILED REMARKETING
In connection with a remarketing of the preferred securities as described
in "Description of the Preferred Securities -- Remarketing" in this prospectus
supplement:
- the aggregate accreted value of the debentures as of the end of the day
next preceding the remarketing settlement date will become due and
payable on the date which is 93 days from the remarketing settlement
date; and
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- the debentures will have an interest rate payable on the accreted value
equal to the rate established in the remarketing, which we refer to as
the "reset rate."
In the event of a failed remarketing as described in "Description of the
Preferred Securities -- Remarketing -- Remarketing Procedures -- A Failed
Remarketing" in this prospectus supplement:
- the interest rate on the debentures will equal 10.25% from the failed
remarketing settlement date to but not including the stated maturity (as
modified in connection with such failed remarketing);
- the aggregate accreted value of the debentures will become due and
payable on the date which is 93 days from the failed remarketing
settlement date; and
- RGA will not be allowed to defer interest payments on the debentures.
In the event debentures are distributed to holders of preferred securities,
the provisions describing the remarketing of the preferred securities will apply
to the debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as RGA is not in default in the payment of interest on the
debentures, and so long as a failed remarketing has not occurred, RGA will have
the right, at any time, and from time to time during the term of the debentures
to defer payments of interest by extending the interest payment period for an
extension period not exceeding 20 consecutive quarters or extending beyond the
stated maturity of the debentures, during which extension period no interest
will be due and payable. The extension period will automatically terminate, and
cash interest will thereafter be payable, upon the occurrence of a failed
remarketing. At the end of the extension period, RGA will be required to pay all
interest then accrued and unpaid, together with interest thereon, compounded
quarterly to the extent permitted by applicable law, at the then applicable rate
for the debentures, which we refer to as "compounded interest." Prior to the
termination of any such extension period, RGA may further extend such extension
period, provided that such extension period, together with all such previous and
further extensions, may not exceed 20 consecutive quarters or extend beyond the
stated maturity of the debentures or end on a date other than an interest
payment date. Upon the termination of any extension period and the payment of
all amounts then due, RGA may commence a new extension period, subject to the
above requirements. No interest during an extension period, except at the end
thereof, shall be payable. RGA has no present intention of exercising its right
to defer payments of interest by extending the interest payment period on the
debentures.
During any such extension period, RGA shall not, and shall not permit any
subsidiary to do the following:
- declare or pay any dividends on, make distributions regarding, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of
the capital stock of RGA, other than:
(1) purchases of the capital stock of RGA in connection with employee
or agent benefit plans or the satisfaction of its obligations under any
contract or security outstanding on the date of the event requiring us to
purchase capital stock or under any dividend reinvestment plan;
(2) in connection with the reclassifications of any class or series of
RGA's capital stock, or the exchange or conversion of one class or series
of RGA's capital stock for or into another class or series of our capital
stock;
(3) the purchase of fractional interests in shares of RGA's capital
stock in connection with the conversion or exchange provisions of that
capital stock or the security being converted or exchanged;
(4) dividends or distributions in RGA's capital stock, or rights to
acquire capital stock, or repurchases or redemptions of capital stock
solely from the issuance or exchange of capital stock;
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(5) any declaration of a dividend in connection with the implementation
of a shareholders rights plan, or issuances of stock under any such plan
in the future, or redemptions or repurchases of any rights outstanding
under RGA's shareholder rights plan; or
(6) repurchases of our common stock in connection with acquisitions of
businesses made by RGA (which repurchases are made by RGA in connection
with the satisfaction of indemnification obligations of the sellers of
such businesses).
- make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by RGA that rank equally
with or junior to the debentures; and
- make any guarantee payments with respect to any guarantee by RGA of the
debt securities of any subsidiary, if such guarantee ranks equally with
or junior in interest to the debentures, other than payments under our
guarantee of the preferred securities of the Trust.
If the property trustee is the only holder of the debentures, RGA shall
give the administrative trustees, the property trustee and the indenture trustee
notice of its election of such extension period at least one business day before
the earlier of (1) the next date on which distributions on the preferred
securities are payable or (2) the date the administrative trustees are required
to give notice of the record date or the date such distributions are payable for
the first quarter of such extension period to any national stock exchange or
other organization on which the preferred securities are listed or quoted, if
any, or to holders of the preferred securities as of the record date or the
distribution date. The administrative trustees will give notice of RGA's
election of the extension period to the holders of the preferred securities. If
the property trustee is not the only holder of the debentures, RGA shall give
the holders of the debentures notice of its election of such extension period at
least ten business days before the earlier of (1) the interest payment date for
the first quarter of such extension period or (2) the date upon which RGA is
required to give notice of the record or payment date of such related interest
payment for the first quarter to any national stock exchange or other
organization on which the debentures are listed or quoted, if any, or to holders
of the debentures.
In connection with the exercise of its right to cause a remarketing of the
debentures, RGA must pay all deferred interest and compounded interest thereon
no later than the remarketing settlement date so that no such amounts are then
owing on the debentures.
PAYMENT OF EXPENSES OF THE TRUST
RGA, as borrower, has agreed to pay all fees and expenses related to the
organization, maintenance and operations, and any dissolution of the Trust
(including any taxes, other than U.S. withholding taxes, duties, assessments or
governmental charges of whatever nature imposed on the Trust by the United
States, or any other taxing authority) and the offering of the preferred
securities, common securities and the debentures and the retention of the
indenture trustee, the property trustee and the guarantee trustee, and be
responsible for all debts and obligations of the Trust (other than U.S.
withholding taxes with respect to the preferred securities and common
securities), so that the net amounts received, retained or paid by the Trust
after paying such fees, expenses, debts and obligations will be equal to the
amounts the Trust would have received or paid had no such fees, expenses, debts
and obligations been incurred by or imposed on the Trust. In addition, RGA will
be primarily liable for any indemnification obligations with respect to the
declaration of trust. The foregoing obligations of RGA are for the benefit of,
and shall be enforceable by, any person to whom such fees, expenses, debts and
obligations are owed, whom we refer to as a "creditor", whether or not such
creditor has received notice thereof. Any such creditor may enforce such
obligations of RGA directly against RGA, and RGA irrevocably waives any right or
remedy to require that any such creditor take any action against the Trust or
any other person before proceeding against RGA. RGA shall execute such
additional agreements as may be necessary to give full effect to the foregoing.
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CONSOLIDATION, MERGER, CONVEYANCE, SALE OF ASSETS AND OTHER TRANSFERS
The provisions of the indenture relating to RGA's possible consolidation,
merger, conveyance, sale of assets and other transfers will apply to the
debentures. You should refer to the description of these provisions under
"Description of Debt Securities of RGA -- Consolidation, Merger, Conveyance,
Sale of Assets and Other Transfers" in the attached prospectus.
INDENTURE EVENTS OF DEFAULT
The indenture will set forth events of default which will apply to the
debentures. You should refer to the description of the events of default and the
related remedies of the holders of debentures and the indenture trustee under
"Description of Debt Securities of RGA -- Events of Default" in the attached
prospectus.
If any indenture event of default shall occur and be continuing, the
property trustee, as the holder of the debentures, will have the right under the
indenture to declare the principal of the debentures (including any compounded
interest, if any) and any other amounts payable under the indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the debentures. An indenture event of default will also constitute a
trust enforcement event. The holders of preferred securities in certain
circumstances have the right to direct the property trustee to exercise its
rights as the holder of the debentures. In addition, if the property trustee
fails to enforce its rights under the debentures, any holder of preferred
securities may institute a legal proceeding against RGA to enforce the property
trustee's rights under the debentures. However, the payment of principal and
interest on the debentures shall remain subordinated to the extent provided in
the indenture. See "Description of the Preferred Securities -- Trust Enforcement
Events" and "Description of the Preferred Securities -- Voting Rights, Amendment
of the Declaration" in this prospectus supplement. Notwithstanding the
foregoing, if an indenture event of default has occurred and is continuing and
such event is attributable to the failure of RGA to pay interest or principal on
the debentures on the date such interest or principal is otherwise payable, RGA
acknowledges that then a holder of preferred securities may institute a direct
action for payment after the respective due date specified in the debentures.
Notwithstanding any payments made to such holder of preferred securities by RGA
in connection with a direct action, RGA shall remain obligated to pay the
principal of or interest on the debentures held by the Trust or the property
trustee. The holders of preferred securities will not be able to exercise
directly any other remedy available to the holders of the debentures.
In addition, if a bankruptcy proceeding is commenced in respect of RGA, the
claim of the holder of the preferred securities and debentures will be, under
the Bankruptcy Code of 1978, limited to the issue price of these securities plus
that portion of the original issue discount that has accrued from the date of
issue to the commencement of the proceeding.
DEFEASANCE; SATISFACTION AND DISCHARGE
The defeasance, satisfaction and discharge provisions of the indenture will
apply to the debentures. You should refer to the description of these provisions
under "Description of Debt Securities of RGA -- Defeasance; Satisfaction and
Discharge" in the attached prospectus. Notwithstanding a defeasance of the
debentures, RGA will continue to have the right to cause a remarketing of the
debentures so long as the amounts which are required to be on deposit in the
escrow trust account as of that modified maturity date are on deposit as of that
date.
MODIFICATION, WAIVER, MEETINGS AND VOTING
MODIFICATION OF INDENTURE
The modification provisions of the indenture will apply to the debentures.
You should refer to the description of these provisions under "Description of
Debt Securities of RGA -- Modification or Amendment of the Indentures" in the
attached prospectus. In addition, the indenture will provide that any
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supplemental indenture will not be effective until the holders of a majority in
aggregated stated liquidation amount of preferred securities and common
securities shall have consented to such supplemental indenture; provided, that
if the consent of the holder of each outstanding debenture is required, any
supplemental indenture will not be effective until each holder of the preferred
securities and common securities shall have consented to that supplemental
indenture.
WAIVER OF DEFAULT
The holders of not less than a majority of aggregate principal amount of
the debentures then outstanding may, on behalf of the holders of all debentures,
waive any past default under the indenture with respect to the debentures except
a default in the payment of principal, premium, if any, or any interest on the
debentures and a default in respect of a covenant or provision of the indenture
which cannot be modified or amended without the consent of each holder of the
debentures then outstanding. Such waiver shall not be effective until the
holders of a majority in aggregate stated liquidation amount of preferred
securities and common securities shall have consented to such waiver provided,
further, that where a consent under the indenture would require the consent of
the holders of more than a majority in principal amount of the debentures, such
waiver shall not be effective until the holders of at least the same proportion
in aggregate stated liquidation amount of the preferred securities and common
securities shall have consented to such waiver.
MEETINGS AND VOTING
A meeting may be called at any time by the indenture trustee, and shall be
called upon request, by RGA, pursuant to a resolution of its board of directors
or the holders of at least 20% in aggregate principal amount of the debentures
then outstanding. Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by the indenture to be given or taken
by holders of the debentures may be embodied in one or more instruments of
substantially similar tenor signed by such holders in person or by an agent or
proxy duly appointed in writing; and, except as otherwise expressly provided in
the indenture, such action shall become effective when such instrument or
instruments are delivered to the Trustee, and, where expressly required, to RGA.
Whenever holders of a specified percentage in aggregate principal amount of
debentures may take any act, such act may be evidenced by:
- instruments executed by holders;
- the record of holders voting in favor thereof at any meeting of such
holders; or
- a combination of such instruments and any such record of such a meeting
of holders.
GOVERNING LAW
The indenture and the debentures will be governed by, and construed in
accordance with, the laws of the State of New York.
MISCELLANEOUS
RGA will have the right at all times to assign any of its respective rights
or obligations under the indenture to a direct or indirect wholly owned
subsidiary of RGA; provided that, in the event of any such assignment, RGA will
remain liable for all of its respective obligations. Subject to the foregoing,
the indenture will be binding upon and inure to the benefit of the parties
thereto and their respective successors and assigns. The indenture provides that
it may not otherwise be assigned by the parties thereto.
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DESCRIPTION OF THE GUARANTEE
We will issue the guarantee under the Guarantee Agreement between RGA and
The Bank of New York, as guarantee trustee. The following description of certain
provisions of the guarantee agreement in this prospectus supplement supplements
the description under "Description of Preferred Securities Guarantees of RGA" in
the attached prospectus and, to the extent it is inconsistent with that
description, replaces the description in the attached prospectus. This
description is only a summary of the material terms and does not purport to be
complete. We urge you to read the guarantee agreement in its entirety because it
and the Trust Indenture Act of 1939 and not this summary will define your rights
as a holder of the guarantee. We will file the guarantee agreement as an exhibit
to a Current Report on Form 8-K which will be incorporated by reference in the
attached prospectus. You may also request copies of the guarantee agreement at
our address set forth in the attached prospectus under the caption
"Incorporation of Certain Documents by Reference." Unless otherwise specified,
when we refer to "RGA" in the following description, we mean only Reinsurance
Group of America, Incorporated and not its subsidiaries.
GENERAL
The following payments or distributions with respect to the preferred
securities and common securities on a pro rata basis, to the extent not paid by
or on behalf of the Trust (the "Guarantee Payments"), will be subject to the
guarantee:
- any accumulated and unpaid distributions required to be paid on the
preferred securities and common securities on a pro rata basis, to the
extent that the Trust has sufficient funds available therefor at the
time;
- the Redemption Price with respect to any preferred securities and common
securities on a pro rata basis called for redemption, to the extent that
the Trust has sufficient funds available therefor at such time; and
- the repurchase of debentures, which are exchanged for preferred
securities if a change of control occurs, at the accreted value equal to
the accreted value of the preferred securities, plus accrued and unpaid
interest on the debentures (including deferred interest) to, but
excluding, the repurchase date to the extent the Trust has sufficient
funds available therefor at that time;
- upon a voluntary or involuntary dissolution, winding up or termination of
the Trust (other than in connection with the exchange of all of the
preferred securities for debentures or the distribution of the debentures
to holders of the preferred securities and common securities on a pro
rata basis), the lesser of:
-- the aggregate accreted value of the preferred securities and common
securities and all accumulated and unpaid distributions thereon to the
date of payment; and
-- the amount of assets of the Trust remaining available for distribution
to holders of preferred securities and common securities on a pro rata
basis.
RGA's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by RGA to the holders of the applicable
preferred securities and common securities on a pro rata basis, subject to the
subordination provisions of the guarantee for such payment, or by causing the
Trust to pay such amounts to such holders.
The holders of not less than a majority in aggregate stated liquidation
amount of the preferred securities and common securities, each voting as a
class, have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee in respect of the
guarantee or to direct the exercise of any trust or other power conferred upon
the guarantee trustee under the guarantee. If the guarantee trustee fails to
enforce the guarantee, then any holder of the preferred securities, subject to
the subordination provisions of the guarantee for that payment, may institute a
legal proceeding directly against RGA to enforce the holder's rights to receive
payment under the guarantee without first instituting a legal proceeding against
the Trust, the guarantee trustee or any other person or
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entity. If RGA were to default on its obligation to pay amounts payable under
the debentures, the Trust would lack sufficient funds for the payment of
distributions or amounts payable on redemption of the preferred securities or
otherwise, and, in such event, holders of the preferred securities would not be
able to rely upon the guarantee for payment of such amounts. Instead, if an
indenture event of default shall have occurred and be continuing and such event
is attributable to the failure of RGA to pay interest on or principal of the
debentures on the applicable payment date, then a holder of preferred securities
may institute a legal proceeding directly against RGA pursuant to the terms of
the indenture for enforcement of payment to such holder of the principal of or
interest on such debentures having a principal amount equal to the aggregate
liquidation amount of the preferred securities of such holder. Except as
described herein, holders of preferred securities will not be able to exercise
directly any other remedy available to the holders of debentures or assert
directly any other rights in respect of the debentures.
The declaration of trust will provide that each holder of preferred
securities will agree to the provisions of the guarantee, including the
subordination provisions, and the indenture.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEE
Unless otherwise specified, when we refer to "RGA" in the following
summary, we mean only Reinsurance Group of America, Incorporated and not its
subsidiaries.
FULL AND UNCONDITIONAL GUARANTEE
Payments of distributions and other amounts due on the preferred securities
(to the extent the Trust has funds available for the payment of such
distributions) are irrevocably guaranteed by RGA as and to the extent set forth
under "Description of the Guarantee" in this prospectus supplement. If and to
the extent that RGA does not make payments under the debentures, the Trust will
not have sufficient funds to pay distributions or other amounts due on the
preferred securities. The guarantee does not cover payment of distributions when
the Trust does not have sufficient funds to pay such distributions. In such
event, a holder of preferred securities, as described below, may institute a
legal proceeding directly against RGA to enforce payment of such distributions
to such holder after the respective due dates. Taken together, RGA's obligations
under the declaration of trust, the debentures, the indenture and the guarantee
provide, in the aggregate, a full and unconditional guarantee of payments of
distributions and other amounts due on the preferred securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full and unconditional
guarantee to the extent provided herein of the Trust's obligations under the
preferred securities. The obligations of RGA under the guarantee will be
subordinated and junior in right of payment to all senior indebtedness of RGA.
SUFFICIENCY OF PAYMENTS
As long as payments of interest, principal and other payments are made when
due on the debentures, such payments will be sufficient to cover distributions
and other payments due on the preferred securities, because of the following
factors: (1) the aggregate principal amount of the debentures will be equal to
the sum of the aggregate stated liquidation amount of the preferred securities
and common securities, (2) the interest rate and interest and other payment
dates on the debentures will match the distribution rate and distribution and
other payment dates for the preferred securities, (3) pursuant to the indenture,
RGA, as borrower, will pay, and the Trust will not be obligated to pay, all
costs, expenses and liabilities of the Trust except the Trust's obligations
under the preferred securities and common securities and (4) the declaration of
trust further provides that the Trust will not engage in any activity that is
not consistent with the limited purposes of the Trust.
Notwithstanding anything to the contrary in the indenture, RGA has the
right to set-off any payment it is otherwise required to make thereunder with
and to the extent RGA has theretofore made, or is concurrently on the date of
such payment making, a related payment under the guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
If a trust enforcement event occurs and is continuing, the holders of
preferred securities would rely on the enforcement by the property trustee of
its rights as holder of the debentures against RGA. In addition, the holders of
a majority in liquidation amount of the preferred securities will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the property trustee or to direct the exercise of any trust or
power conferred upon the property trustee under the declaration of trust,
including the right to direct the property trustee to exercise the remedies
available to it as the holder of the debentures. The indenture provides that the
indenture trustee shall give holders of debentures notice of all defaults or
events of default within 30 days after occurrence.
If the property trustee fails to enforce its rights under the debentures in
respect of an indenture event of default after a holder of record of preferred
securities has made a written request, such holder of record of preferred
securities may, to the extent permitted by applicable law, institute a legal
proceeding against RGA to enforce the property trustee's rights in respect of
debentures having a principal amount equal to
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the aggregate stated liquidation amount of the preferred securities of such
holder. In addition, if RGA fails to pay interest or principal on the debentures
on the date such interest or principal is otherwise payable, and such failure to
pay is continuing, a holder of preferred securities may institute a direct
action for enforcement of payment to such holder of the principal of or interest
on the debentures having a principal amount equal to the aggregate stated
liquidation amount of the preferred securities of such holder after the
respective due date specified in the debentures. In connection with such a
direct action, any payment made by RGA directly to a holder of a preferred
security will reduce the amount that RGA must pay the Trust under the debentures
held by the Trust. As the holder of the common securities of the Trust, we will
be subrogated to the rights of such holder of preferred securities under the
declaration to the extent of any payment made by us to such holder of preferred
securities in that suit. The holders of preferred securities will not be able to
exercise directly any other remedy available to the holders of the debentures.
LIMITED PURPOSE OF TRUST
The preferred securities and common securities will evidence beneficial
ownership interests in the Trust, and the Trust exists for the sole purpose of
issuing the preferred securities and common securities and investing the
proceeds thereof in debentures. A principal difference between the rights of a
holder of preferred securities and a holder of debentures is that a holder of
debentures is entitled to receive from RGA the principal amount of and interest
accrued on debentures held, while a holder of preferred securities is entitled
to receive distributions from the Trust (or from RGA under the guarantee) if and
to the extent the Trust has funds available for the payment of such
distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the Trust involving the liquidation of the debentures, the holders of the
preferred securities and common securities will be entitled to receive, out of
assets held by the Trust, subject to the rights of creditors of the Trust, if
any, the liquidation distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution" in this prospectus
supplement. Upon any voluntary or involuntary liquidation or bankruptcy of RGA,
the property trustee, as holder of the debentures, would be a subordinated
creditor of RGA, subordinated in right of payment to all senior indebtedness as
set forth in the indenture, but entitled to receive payment in full of principal
and interest before any shareholders of RGA receive payments or distributions.
The positions of a holder of preferred securities and a holder of the debentures
relative to other creditors and to shareholders of RGA in the event of
liquidation or bankruptcy of RGA should be substantially the same.
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BOOK-ENTRY ISSUANCE
OVERVIEW
DTC will act as securities depositary for the unit securities, each of
which will be issued only as fully registered securities registered in the name
of DTC or its nominee for credit to an account of a direct or indirect
participant in DTC as described below. One or more fully registered certificates
(each, a "Global Certificate") will be issued for each of the unit securities
and will be deposited with the property trustee as custodian for DTC.
DEPOSITORY PROCEDURES
DTC has advised the Trust and RGA that DTC is a limited-purpose trust
company created to hold securities for the participating organizations,
including securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations (collectively, the "Participants")
and to facilitate the clearance and settlement of transactions in those
securities between Participants through electronic book-entry changes in
accounts of its Participants. Access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interest
and transfer of ownership interest of each actual purchaser of each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised the Trust and RGA that purchases of Global Securities
within the DTC system must be made by or through Participants, which will
receive a credit for the applicable Global Security on DTC's records. The
ownership interest of each actual purchaser of each applicable Global Security
is in turn to be recorded on the Participants' and Indirect Participants'
records. Owners of interest will not receive written confirmation from DTC of
their purchases, but owners of interest are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Participants or Indirect Participants
through which the owners of interest purchased their applicable Global
Securities. Transfers of ownership interests in the Global Securities are to be
accomplished by entries made on the books of Participants or Indirect
Participants acting on behalf of owners of interest. Except as described below,
owners of interests will not receive physical delivery of certificates
representing their ownership interests in the Global Securities and will not be
considered the registered owners or holders thereof for any purpose.
The laws of some states require that certain persons take physical delivery
in certificated form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Certificate to such persons will be
limited to that extent. Because DTC can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants and certain banks, the
ability of a person having beneficial interests in a Global Certificate to
pledge such interests to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interests, may be affected
by the lack of a physical certificate evidencing such interests. For certain
other restrictions on the transferability of the Global Securities, see
"-- Exchange of Book-Entry Securities for Certificated Securities."
Payments in respect of the Global Securities will be payable by the
property trustee and the debenture trustee, respectively, to DTC in its capacity
as the registered holder. The property trustee and the debenture trustee will
treat the persons in whose names the applicable Global Securities, including the
Global Certificates, are registered as the owners thereof for the purpose of
receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the property trustee nor any agent thereof has or will
have any responsibility or liability for (1) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made on
account of beneficial ownership interests in the Global Certificates, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global
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Certificates or (2) any other matter relating to the actions and practices of
DTC or any of its Participants or Indirect Participants. DTC has advised the
Trust and RGA that its current practice, upon receipt of any payment in respect
of securities such as the unit securities, is to credit the accounts of the
relevant Participants with the payment on the payment date unless DTC has reason
to believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of Global
Securities will be governed by standing instructions and customary practices and
will be the responsibility of the Participants or the Indirect Participants and
will not be the responsibility of DTC, the property trustee, the debenture
trustee or the Trust. None of the Trust, the property trustee, the warrant agent
or the debenture trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Global Securities, and
the Trust, the property trustee, the warrant agent and the indenture trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Interests in the Global Certificates will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its Participants. Transfers between Participants
in DTC will be effected in accordance with DTC's procedures, and will be settled
in same-day funds.
DTC has advised the Trust and RGA that it will take any action permitted to
be taken by a holder of a Global Security only at the direction of one or more
Participants to whose account with DTC interests in the Global Certificates are
credited. However, if there is an Indenture Event of Default (or, in the case of
preferred securities, any event which after notice or lapse of time or both
would be a Trust Enforcement Event), DTC reserves the right to exchange the
Global Certificates for the unit securities, as appropriate, in certificated
form and to distribute such securities to its Participants.
The information in this section concerning DTC and its book-entry systems
has been obtained from sources that the Trust and RGA believe to be reliable,
but neither the Trust nor RGA takes responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interest in the Global Securities among participants in DTC, they are under
no obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Trust nor the property
trustee will have any responsibility for the performance by DTC or its
respective participants or indirect participants of its obligations under the
rules and procedures governing its operations.
EXCHANGE OF BOOK-ENTRY SECURITIES FOR CERTIFICATED SECURITIES
A Global Certificate is exchangeable for unit securities in registered
certificated form if (1) DTC (x) notifies the Trust that it is unwilling or
unable to continue as depositary for the Global Certificate and the Trust or
RGA, as applicable, thereupon fails to appoint a successor depositary or (y) has
ceased to be a clearing agency registered under the Securities Exchange Act of
1934, (2) RGA in its sole discretion elects to cause the issuance of the unit
securities in certificated form or (3) there shall have occurred and be
continuing an Indenture Event of Default or, in the case of preferred
securities, any event which after notice or lapse of time or both would be a
Trust Enforcement Event. In all cases, certificated unit securities delivered in
exchange for any Global Certificate or beneficial interests therein will be
registered in the names, and issued in any approved denominations, requested by
or on behalf of the depositary in accordance with its customary procedures.
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MATERIAL UNITED STATES FEDERAL TAX CONSEQUENCES
The following summary describes the material United States federal tax
consequences of the ownership of the units, preferred securities and warrants as
of the date hereof. Where noted, it constitutes the opinion of Bryan Cave LLP,
counsel to RGA and the Trust.
Unless otherwise specified, when we refer to "RGA" in the following
description, we mean only RGA and not its subsidiaries.
Except where we state otherwise, this summary deals only with units held as
capital assets by a holder who is a United States person (as defined below) and
who purchases the units upon original issuance at their original issue price. A
"United States person" is any beneficial owner who is one of the following:
- a citizen or resident of the United States;
- a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision of the United States;
- an estate the income of which is subject to United States federal income
taxation regardless of its source; or
- any trust if it (x) is subject to the primary supervision of a court
within the United States and one or more United States persons has
authority to control all substantial decisions of the trust or (y) has a
valid election in effect under applicable U.S. Treasury regulations to be
treated as a United States person.
A "Non-U.S. Holder" is a beneficial owner of a unit who is not a United States
person.
If a partnership holds units, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. If you are a partner of a partnership holding units, we suggest
that you consult your tax advisor.
Your tax treatment may vary depending on your particular situation. Except
where noted, this summary does not deal with special situations. For example,
this summary does not address:
- tax consequences to holders who may be subject to special tax treatment
such as financial institutions, insurance companies, tax-exempt
organizations, dealers in securities or currencies, traders in securities
that elect to use a mark-to-market method of accounting for their
securities, real estate investment trusts, and regulated investment
companies;
- tax consequences to persons who hold the units, preferred securities or
warrants as part of a hedging, integrated, conversion or constructive
sale transaction or a straddle;
- tax consequences to holders of the units, preferred securities or
warrants whose functional currency is not the U.S. dollar;
- alternative minimum tax consequences, if any; or
- any state, local or foreign tax consequences.
This summary is based on the Internal Revenue Code of 1986 and regulations,
rulings and judicial decisions as of the date hereof and such authorities may be
repealed, revoked or modified so as to result in United States federal income
tax consequences different from those discussed below.
The authorities on which this summary is based are subject to various
interpretations. The opinions of Bryan Cave LLP are not binding on the Internal
Revenue Service or the courts. Either the Internal Revenue Service or the courts
could disagree with the explanations or conclusions contained in this summary.
Nevertheless, Bryan Cave LLP has advised us that they believe that the opinions
expressed in this summary, if challenged, would be sustained by a court with
jurisdiction in a properly presented case.
You are urged to consult your tax advisor with respect to the tax
consequences to you of the purchase, ownership and disposition of the units,
preferred securities and warrants including the tax
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consequences under state, local, foreign, and other tax laws, and the possible
effects of changes in United States federal income tax laws.
TREATMENT OF UNITS AND ALLOCATION OF PURCHASE PRICE OF THE UNITS
RGA intends to treat and you (by your acceptance of a beneficial interest
in a unit) agree to treat your acquisition of a unit as an acquisition of an
"investment unit" consisting of a preferred security and a warrant. The purchase
price of each unit will be allocated between the preferred security and the
warrant in proportion to their respective fair market values at the time of
purchase, and this allocation will establish your initial tax bases in the
preferred security and the warrant. RGA will report the fair market value of
each preferred security as $35.13 and the fair market value of each warrant as
$14.87. By your acceptance of a beneficial ownership interest in a unit, you
agree to allocate the purchase price for each unit in accordance with the
foregoing. The remainder of this discussion assumes that RGA's treatment of the
units as "investment units" and its allocation of the purchase price will be
respected for United States federal income tax purposes. You should consult your
tax advisor concerning the United States federal income tax consequences of the
purchase, ownership and disposition of units, preferred securities and warrants
if this treatment and allocation are not respected for United States federal
income tax purposes, which consequences may differ materially from those
described in this discussion, and could affect the timing, amount and character
of income recognized by you.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the preferred securities, Bryan Cave LLP
is of the opinion that under current law and interpretations thereof, and
assuming full compliance with the terms of the declaration of trust, and based
upon certain facts and assumptions contained in such opinion, the Trust will be
classified as a grantor trust for United States federal income tax purposes and
not as an association taxable as a corporation. As a result, for United States
federal income tax purposes, each holder of a preferred security (a
"Securityholder") generally will be treated as owning an undivided beneficial
ownership interest in the debentures held by the Trust. Thus, you will be
required to include in your gross income your pro rata share of the interest
income or original issue discount that is paid or accrued on the debentures. See
"-- The Debentures -- Interest Income and Original Issue Discount."
CLASSIFICATION OF THE DEBENTURES
RGA, the Trust and you (by your acceptance of a beneficial interest in a
preferred security) agree to treat the debentures as indebtedness for United
States tax purposes. In connection with the issuance of the debentures, Bryan
Cave LLP is of the opinion that under current law and assuming full compliance
with the terms of the indenture and certain other documents, and based upon
certain facts and assumptions described in the opinion, the debentures will be
classified, for United States federal income tax purposes, as indebtedness of
RGA.
THE DEBENTURES
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
General
Except as set forth below, a Securityholder will generally be taxed on the
stated interest on the debentures as ordinary income at the time it is paid or
accrued in accordance with such Securityholder's regular method of tax
accounting. The debentures will be treated as "reset bonds" under applicable
Treasury regulations, and interest on the debentures will not constitute
contingent interest for purposes of the original issue discount ("OID") rules.
Under the Treasury regulations applicable to reset bonds, the debentures will be
treated, solely for purposes of calculating the accrual of OID (as discussed
below), as maturing on the date immediately preceding the remarketing settlement
date for an amount equal to 100% of the accreted value and as having been
reissued on the remarketing settlement date for the accreted value.
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Original Issue Discount Resulting from Allocation of Purchase Price
Because the amount of the initial purchase price of a unit allocated to the
preferred security is less than 100% of the stated liquidation amount, the
debentures will be treated as having been issued with original issue discount in
an amount equal to the difference between the stated redemption price at
maturity (the sum of all payments made on the debentures other than stated
interest that is not considered original issue discount as described above) and
their issue price. You should be aware that if you hold a preferred security you
must include original issue discount in gross income in advance of the receipt
of cash attributable to that income.
Under the original issue discount economic accrual rules, the following
occurs:
- each Securityholder would accrue an amount of original issue discount
each year using the constant-yield-to-maturity method of accrual
described in Section 1272 of the Internal Revenue Code of 1986 assuming a
maturity date of the debentures of December 15, 2050;
- the actual cash payments (other than stated interest unless the stated
interest is considered original issue discount as described below)
received on the debentures would not be reported separately as taxable
income;
- any amount of original issue discount included in the Securityholder's
gross income (whether or not during a deferral period) with respect to
the preferred securities will increase such Securityholder's tax basis in
such preferred securities; and
- the amount of distributions received on such preferred securities (other
than distributions of stated interest not considered original issue
discount as described above) will reduce the Securityholder's tax basis
in such preferred securities.
No original issue discount will accrue after the date of the remarketing.
Because the debentures are debt for tax purposes, you will not be entitled
to a dividends-received deduction with respect to any income you recognize with
respect to the preferred securities.
Deferral of Interest
If RGA were to exercise its right to defer payments of stated interest on
the debentures, the debentures would be treated as reissued at the time of
deferral for purposes of determining your share of includible OID. For purposes
of using the OID rules described above, once RGA exercises its right to defer
interest payments you would be required to include in ordinary income, on a
current basis, over the period that you are deemed to hold the debentures,
amounts reflecting the accrual of deferred stated interest as well as the other
amounts representing OID described above, even though RGA would not be making
any actual cash payments during the extended interest payment period. In such
event, all stated interest would thereafter be accounted for on an economic
accrual basis regardless of a holder's method of tax accounting and actual
distributions of stated interest would not be reported as taxable income.
The Treasury Regulations dealing with original issue discount and the
deferral of interest payments have not yet been addressed in any rulings or
other interpretations by the Internal Revenue Service, and it is possible that
the Internal Revenue Service could take a contrary position. If the Internal
Revenue Service were to assert successfully that the stated interest on the
debentures was original issue discount regardless of whether RGA exercised its
right to defer interest payments, all Securityholders would be required to
include such stated interest in income on a daily economic accrual basis as
described above.
DISTRIBUTION OF DEBENTURES
As described under the captions "Description of the Preferred
Securities -- Limited Right to Repurchase," "-- Change of Control,"
"-- Exchange," "-- Distribution of Debentures Upon Tax or Investment Company
Event" and "-- Liquidation Distribution Upon Dissolution" in this prospectus
supplement, the debentures held by the Trust may be distributed to
Securityholders in exchange for their
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preferred securities in certain circumstances. Under current law and
interpretations thereof, and assuming that, as expected, the Trust is treated as
a grantor trust for United States tax purposes, this type of distribution would
not be taxable. Upon a distribution, each Securityholder will receive a pro rata
share of the debentures previously held indirectly through the Trust. Each
Securityholder's aggregate tax basis in the debentures will equal the aggregate
tax basis that such Securityholder had in the preferred securities before the
distribution and the Securityholder's holding period in the debentures will
include the holding period for the preferred securities surrendered in the
exchange.
If you receive debentures in exchange for your preferred securities, you
would accrue interest and original issue discount in respect of the debentures
received from the Trust in the manner described above under "-- Interest Income
and Original Issue Discount."
SALES OF PREFERRED SECURITIES
If you sell or otherwise dispose of preferred securities (including upon
redemption pursuant to a remarketing of the preferred securities or upon
repurchase pursuant to your limited right of repurchase or upon a change of
control), you will recognize gain or loss equal to the difference between:
- your amount realized on the sale or other disposition of the preferred
securities (other than amounts attributable to accrued interest or
accrued original discount not previously included in income which will be
treated as interest for United States federal income tax purposes); and
- your adjusted tax basis in the preferred securities sold.
Your initial tax basis in the preferred security will equal the portion of the
purchase price of the unit allocated to the preferred security.
Your gain or loss will be a capital gain or loss. The gain or loss will
generally be a long-term capital gain or loss if you have held your preferred
securities for more than one year. Long-term capital gains of individuals are
subject to United States federal income tax at reduced rates. Your ability to
deduct capital losses currently is subject to limitations.
THE WARRANTS
ACQUISITION OF RGA COMMON STOCK
The exercise of the warrants to purchase our common stock generally will
not constitute a taxable event. Accordingly, a holder of a warrant (a
"Warrantholder") will not recognize gain or loss upon the exercise of the
warrants, except with respect to any cash paid instead of a fractional share of
our common stock. Rather, a Warrantholder will recognize taxable gain or loss if
and when the Warrantholder disposes of the common stock in a taxable
transaction. The aggregate initial tax basis in our common stock will be equal
to the amount paid to RGA upon exercise of the warrants plus the Warrantholder's
tax basis in the warrants, less any portion of the purchase price and tax basis
allocable to the fractional share. The Warrantholder's basis in the warrants
will equal the portion of the initial purchase price of the units allocable to
the warrant component. See "-- Treatment of the Units and Allocation of Purchase
Price of the Units." Cash received instead of a fractional share of our common
stock should be treated as a payment in exchange for the fractional share
interest. Warrantholders will generally recognize short-term capital gain or
loss in an amount equal to the difference, if any, between the amount of cash
received and their tax basis allocable to the fractional share interest.
OWNERSHIP OF RGA COMMON STOCK
In general, if you dispose of our common stock in a taxable transaction,
you will recognize capital gain or loss in an amount equal to the difference
between the proceeds you receive and your tax basis in our common stock. The
resulting gain or loss will be either short-term or long-term capital gain or
loss depending on your holding period for our common stock. The holding period
for the common stock will begin the day you exercise the warrants. Capital gains
realized by individuals on assets held for more than
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one year are subject to United States federal income tax at reduced rates. Your
ability to deduct capital losses is subject to limitations.
DISPOSITION OF WARRANTS
If you sell your warrants or if RGA redeems your warrants, you will
recognize capital gain or loss equal to the difference between the proceeds you
receive and your tax basis in the warrants. The resulting gain or loss will be
either short-term or long-term depending on whether you have held the warrants
for more than one year. If you do not exercise the warrants and they expire, you
will recognize a short-term or long-term capital loss when they expire equal to
your tax basis in the warrants. Your tax basis in the warrants will equal the
portion of the purchase price of the units allocable to the warrant component
(as described above), and your holding period for the warrants will commence on
the date that you purchase the units. If your warrants are redeemed by RGA in
exchange for RGA common stock, you will have the same tax consequences that you
would have upon your election to exercise your warrants, although your holding
period may include the period that you owned the warrants. See "-- Acquisition
of RGA Common Stock."
ADJUSTMENT TO EXERCISE PRICE
Warrantholders might be treated as receiving a constructive distribution
from RGA if:
- the exercise price is adjusted and as a result of such adjustment the
Warrantholder's proportionate interest in RGA's assets or earnings and
profits is increased; and
- the adjustment is not made pursuant to a bona fide, reasonable
anti-dilution formula.
An adjustment in the exercise price is not made pursuant to a bona fide
formula if, for example, the adjustment is made to compensate for certain
taxable distributions with respect to our common stock. Thus, under some
circumstances, an adjustment in the exercise price will give rise to a taxable
dividend to a Warrantholder even though the Warrantholder would not receive any
cash.
NON-U.S. HOLDERS
The following discussion only applies to you if you are a Non-U.S. Holder.
As discussed above, the preferred securities will be treated as evidence of an
indirect beneficial ownership interest in the debentures. See "-- Classification
of the Trust."
Special rules may apply to you if you are a "controlled foreign
corporation," "passive foreign investment company," "foreign personal holding
company," or, in certain circumstances, a company that accumulates earnings for
the purpose of avoiding tax or, in certain circumstances, a United States
individual that is an expatriate, and are subject to special treatment under the
Internal Revenue Code of 1986. In such case, you should consult your tax advisor
to determine the United States federal, state, local and other tax consequences
that may be relevant to you.
U.S. FEDERAL WITHHOLDING TAX
The 30% U.S. federal withholding tax will not apply to any payment of
principal or interest (including original issue discount) on the preferred
securities or debentures provided that:
- the beneficial owner of the preferred securities does not actually or
constructively own 10% or more of the total combined voting power of all
classes of RGA voting stock within the meaning of the Internal Revenue
Code of 1986 and the Treasury regulations (including our common stock
that would be received upon the exercise of any warrants held by such
beneficial owner);
- the beneficial owner of the preferred securities is not a controlled
foreign corporation that is related to RGA through stock ownership;
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- the beneficial owner of the preferred securities is not a bank whose
receipt of interest on the debentures is described in Section
881(c)(3)(A) of the Internal Revenue Code of 1986; and
- either (a) the beneficial owner of the preferred securities provides his,
her or its name and address on an Internal Revenue Service Form W-8BEN
(or other applicable form), and certifies, under penalties of perjury,
that such beneficial owner is not a United States person, or (b) if the
preferred securities or debentures are held through certain foreign
intermediaries, the beneficial owner satisfies the certification
requirements of applicable Treasury Regulations. Special certification
rules apply to holders of preferred securities that are pass-through
entities rather than individuals.
If the beneficial owner of the preferred securities cannot satisfy the
requirements described above, payments of interest (including original issue
discount) made to such beneficial owner will be subject to the 30% U.S. federal
withholding tax, unless the beneficial owner provides us with a properly
executed (1) Internal Revenue Service Form W-8BEN (or other applicable form)
claiming an exemption from, or reduction in the rate of, withholding under the
benefit of an applicable tax treaty or (2) Internal Revenue Service Form W-8ECI
(or successor form) stating that interest paid on the debentures is not subject
to withholding tax because it is effectively connected with the conduct by the
beneficial owner of a trade or business in the United States.
Dividends paid to a Non-U.S. Holder of our common stock acquired through
the exercise of a warrant (and any constructive distribution you may be deemed
to receive as described above under "-- The Warrants -- Adjustment to Exercise
Price") will be subject to withholding of United States federal income tax at a
30% rate or such lower rate as may be specified by an applicable income tax
treaty. However, dividends that are effectively connected with the conduct of a
trade or business by the Non-U.S. Holder within the United States and, if a tax
treaty applies, are attributable to a United States permanent establishment of
the Non-U.S. Holder, are not subject to the withholding tax, but instead are
subject to United States federal income tax as described below.
A Non-U.S. Holder of units or our common stock eligible for a reduced rate
of United States withholding tax pursuant to an income tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for refund
with the Internal Revenue Service.
The 30% U.S. federal withholding tax will not apply to any gain that you
realize on the sale, exchange, retirement or other disposition of preferred
securities, debentures, warrants or our common stock (but such gain may be
subject to U.S. federal income tax as described below under "-- U.S. Federal
Income Tax").
U.S. FEDERAL INCOME TAX
If a Non-U.S. Holder is engaged in a trade or business in the United States
and the interest, including original issue discount, on the debentures or the
dividends on our common stock are effectively connected with the conduct of that
trade or business, such Non-U.S. Holder will be subject to U.S. federal income
tax on the interest, original issue discount and dividends on a net income basis
(although exempt from the 30% withholding tax if the payor is supplied with the
appropriate Internal Revenue Service forms) in the same manner as if such
Non-U.S. Holder were a United States person as defined under the Internal
Revenue Code of 1986. In addition, if the Non-U.S. Holder is a corporation, it
may be subject to a branch profits tax equal to 30% (or lower applicable treaty
rate) of its earnings and profits for the taxable year, subject to adjustments,
that are effectively connected with the conduct by it of a trade or business in
the United States. For this purpose, interest, including original issue
discount, on the debentures and dividends on our common stock will be included
in earnings and profits.
Any gain or income realized by a Non-U.S. Holder on the disposition of a
unit, preferred security, debenture, warrant or our common stock will generally
not be subject to U.S. federal income tax unless:
- that gain or income is effectively connected with the conduct of a trade
or business in the United States by the Non-U.S. Holder;
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- the Non-U.S. Holder is an individual who is present in the United States
for 183 days or more in the taxable year of that disposition, and certain
other conditions are met;
- in the case of gain representing accrued interest on the debentures, the
requirements described above under "-- U.S. Federal Withholding Tax" are
not met; or
- in the case of our common stock or warrants, RGA is or has been a "United
States real property holding corporation" for United States federal
income tax purposes.
An individual Non-U.S. Holder described in the first bullet point above
will be subject to tax on the net gain derived from the sale under regular
graduated United States federal income tax rates. An individual Non-U.S. Holder
described in the second bullet point above will be subject to a flat 30% tax on
the gain derived from the sale, which may be offset by United States source
capital losses (even though the individual is not considered a resident of the
United States). If a Non-U.S. Holder that is a corporation falls under the first
bullet point above, it will be subject to tax on its gain under regular
graduated United States federal income tax rates and, in addition, may be
subject to the branch profits tax equal to 30% of its effectively connected
earnings and profits or at such lower rate as may be specified by an applicable
income tax treaty.
RGA does not believe it is a United States real property holding
corporation and does not anticipate becoming one. Even if RGA is or becomes a
United States real property holding corporation, so long as our common stock
continues to be regularly traded on an established securities market, (1) a
Non-U.S. Holder will not be subject to United States federal income tax on the
disposition of our common stock unless the Non-U.S. Holder actually or
constructively (including through ownership of warrants) holds or has held at
any time during the five year period preceding the date of disposition more than
five percent of the total fair market value of our outstanding common stock, and
(2) the Non-U.S. Holder will not be subject to United States federal income tax
on the disposition of the warrants unless the Non-U.S. Holder actually or
constructively holds or has held at any time during the five year period
preceding the date of disposition more than five percent of the total fair
market value of our outstanding common stock or more than five percent of the
total fair market value of the outstanding warrants.
U.S. FEDERAL ESTATE TAX
The estate of an individual Non-U.S. Holder will not be subject to U.S.
federal estate tax on the preferred securities beneficially owned by the
Non-U.S. Holder at the time of his or her death, provided that (1) the Non-U.S.
Holder does not actually or constructively own 10% or more of the total combined
voting power of all classes of RGA voting stock, within the meaning of the
Internal Revenue Code of 1986 and Treasury regulations, and (2) income from the
preferred securities would not have been, if received at the time of his or her
death, effectively connected with the conduct by him or her of a trade or
business in the United States. Our common stock acquired upon an exercise of a
warrant and owned by a Non-U.S. Holder at the time of his or her death will be
subject to U.S. federal estate tax unless an applicable estate tax treaty
provides otherwise. Warrants held at the time of death may be subject to U.S.
federal estate tax unless an applicable estate tax treaty applies.
INFORMATION REPORTING AND BACKUP WITHHOLDING
If you are a United States person, unless you are an exempt recipient such
as a corporation, payments made to you on, and proceeds you receive from, the
sale, exchange, redemption or other disposition of the units, preferred
securities, debentures, warrants and our common stock may be subject to
information reporting and may be subject to United States federal backup
withholding unless you supply an accurate taxpayer identification number or
otherwise comply with applicable United States information reporting or
certification requirements.
In general, if you are a Non-U.S. Holder, no information reporting or
backup withholding will be required regarding payments of interest on the
preferred securities or debentures if we do not have actual knowledge or reason
to know that you are a United States person and we have received the
certification described above in the fourth bullet point under the caption
"Non-United States Holders -- U.S. Federal
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Withholding Tax." RGA must report annually to the Internal Revenue Service and
to each Non-U.S. Holder the amount of dividends paid to such holder and the tax
withheld with respect to such dividends, regardless of whether withholding was
required. Payment of the proceeds of a sale of preferred securities, debentures,
warrants or our common stock within the United States or conducted through
certain U.S. related financial intermediaries is subject to information
reporting, and may be subject to backup withholding, unless you certify under
penalties of perjury that you are a Non-U.S. Holder (and the payor does not have
actual knowledge or reason to know that you are a United States person) or you
otherwise establish an exemption.
Any amounts withheld from you under the backup withholding rules generally
will be allowed as a refund or a credit against your United States federal
income tax liability, provided the required information is furnished to the
Internal Revenue Service.
S-79
ERISA CONSIDERATIONS
The following is a summary of certain considerations associated with the
purchase of the unit securities and any shares of common stock of RGA received
upon the exercise or redemption thereof by employee benefit plans that are
subject to Title I of ERISA, plans, individual retirement accounts and other
arrangements that are subject to Section 4975 of the Internal Revenue Code of
1986 or provisions under any federal, state, local, non-U.S. or other laws or
regulations that are similar to such provisions of the Internal Revenue Code of
1986 or ERISA (collectively, "Similar Laws"), and entities whose underlying
assets are considered to include "plan assets" of such plans, accounts and
arrangements (each, a "Plan").
GENERAL FIDUCIARY MATTERS
ERISA and the Internal Revenue Code of 1986 impose certain duties on
persons who are fiduciaries of a Plan subject to Title I of ERISA or Section
4975 of the Internal Revenue Code of 1986 and prohibit certain transactions
involving the assets of a Plan and its fiduciaries or other interested parties.
Under ERISA and the Internal Revenue Code of 1986, any person who exercises any
discretionary authority or control over the administration of such a Plan or the
management or disposition of the assets of such a Plan, or who renders
investment advice for a fee or other compensation to such a Plan, is generally
considered to be a fiduciary of the Plan.
In considering an investment in the Securities of a portion of the assets
of any Plan, a fiduciary should determine whether the investment is in
accordance with the documents and instruments governing the Plan and the
applicable provisions of ERISA, the Internal Revenue Code of 1986 or any Similar
Laws relating to a fiduciary's duties to the Plan including, without limitation,
the prudence, diversification, delegation of control and prohibited transaction
provisions of ERISA, the Internal Revenue Code of 1986 and any other applicable
Similar Laws.
Any insurance company proposing to invest assets of its general account in
the unit securities and shares of common stock issuable on exercise of the
warrants should consider the extent that such investment would be subject to the
requirements of ERISA in light of the U.S. Supreme Court's decision in John
Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank and under any
subsequent legislation or other guidance that has or may become available
relating to that decision, including the enactment of Section 401(c) of ERISA by
the Small Business Job Protection Act of 1996 and the regulations promulgated
thereunder.
PROHIBITED TRANSACTION ISSUES
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986
prohibit Plans subject to Title I of ERISA or Section 4975 of the Internal
Revenue Code of 1986 from engaging in specified transactions involving plan
assets with persons or entities who are "parties in interest," within the
meaning of ERISA, or "disqualified persons," within the meaning of Section 4975
of the Internal Revenue Code of 1986, unless an exemption is available. A party
in interest or disqualified person who engages in a non-exempt prohibited
transaction may be subject to excise taxes and other penalties and liabilities
under ERISA and the Internal Revenue Code of 1986. In addition, the fiduciary of
the Plan that engaged in such a non-exempt prohibited transaction may be subject
to penalties and liabilities under ERISA and the Internal Revenue Code of 1986.
Whether or not the underlying assets of the Trust or RGA were deemed to
include "plan assets," as described below, the acquisition and/or holding of the
unit securities and shares of common stock issuable on exercise of the warrants
by a Plan subject to Title I of ERISA or Section 4975 of the Internal Revenue
Code of 1986 with respect to which the Trust, RGA or a prior purchaser, is
considered a party in interest or a disqualified person may constitute or result
in a direct or indirect prohibited transaction under Section 406 of ERISA and/or
Section 4975 of the Internal Revenue Code of 1986, unless the investment is
acquired and is held in accordance with an applicable statutory, class or
individual prohibited transaction exemption. In this regard, the Department of
Labor has issued prohibited transaction class exemptions, or
S-80
"PTCEs," that may apply to the acquisition and holding of the unit securities
and shares of common stock issuable on exercise of the warrants. These class
exemptions include, without limitation, PTCE 84-14 respecting transactions
determined by independent qualified professional asset managers, PTCE 90-1
respecting insurance company pooled separate accounts, PTCE 91-38 respecting
bank collective investment funds, PTCE 95-60 respecting life insurance company
general accounts and PTCE 96-23 respecting transactions determined by in-house
asset managers, although there can be no assurance that all of the conditions of
any such exemptions will be satisfied.
PLAN ASSET ISSUES
ERISA and the Internal Revenue Code of 1986 do not define "plan assets."
However, regulations (the "Plan Asset Regulations") promulgated under ERISA by
the Department of Labor generally provide that when a Plan subject to Title I of
ERISA or Section 4975 of the Internal Revenue Code of 1986 acquires an equity
interest in an entity that is neither a "publicly-offered security" nor a
security issued by an investment company registered under the Investment Company
Act, the Plan's assets include both the equity interest and an undivided
interest in each of the underlying assets of the entity unless it is established
either that equity participation in the entity by "benefit plan investors" is
not significant or that the entity is an "operating company," in each case as
defined in the Plan Asset Regulations. For purposes of the Plan Asset
Regulations, equity participation in an entity by benefit plan investors will
not be significant if they hold, in the aggregate, less than 25% of the value of
any class of such entity's equity, excluding equity interests held by persons
(other than benefit plan investors) with discretionary authority or control over
the assets of the entity or who provide investment advice for a fee (direct or
indirect) with respect to such assets, and any affiliates thereof. For purposes
of this 25% test, "benefit plan investors" include all employee benefit plans,
whether or not subject to ERISA or the Internal Revenue Code of 1986, including
"Keogh" plans, individual retirement accounts and pension plans maintained by
foreign corporations, as well as any entity whose underlying assets are deemed
to include "plan assets" under the Plan Asset Regulations (e.g., an entity of
which 25% or more of the value of any class of equity interests is held by
benefit plan investors and which does not satisfy another exception under the
Plan Asset Regulations).
For purposes of the Plan Asset Regulations, a "publicly offered security"
is a security that is (a) "freely transferable," (b) part of a class of
securities that is "widely held," and (c) (1) sold to the Plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act of 1933 and the class of securities to which
such security is a part is registered under the Exchange Act within 120 days
after the end of the fiscal year of the issuer during which the offering of such
securities to the public has occurred, or (2) is part of a class of securities
that is registered under Section 12 of the Securities Exchange Act of 1934.
While it is currently anticipated that the shares of common stock delivered
to warrant holders upon the exercise or redemption of the warrant will qualify
as "publicly offered securities" for purposes of the Plan Asset Regulations
and/or that RGA will qualify as an operating company for purposes of the Plan
Asset Regulations, there can be no assurance in such regard. In addition, it is
not anticipated that the underlying debentures, preferred securities or warrants
will constitute "publicly offered securities" for purposes of the Plan Asset
Regulations or that the Trust will constitute an investment company under the
Investment Company Act of 1940 or an operating company within the meaning of the
Plan Asset Regulations. Furthermore, no monitoring or other measures will be
taken to determine or limit the value of any class of unit securities and shares
of common stock issuable on exercise of the warrants that is acquired or held
from time to time by "benefit plan investors" or to determine whether investment
in the Trust by benefit plan investors is "significant" as described above.
Consequently, there can be no assurance that the underlying assets of the Trust
will not constitute "plan assets" for purposes of ERISA and the Internal Revenue
Code of 1986.
S-81
PLAN ASSET CONSEQUENCES
If the assets of RGA or the Trust were deemed to be "plan assets" under
ERISA, this would result, among other things, in (1) the application of the
prudence and other fiduciary responsibility standards of ERISA to investments
made by RGA or the Trust, as applicable (including the liability of Plan
fiduciaries for the breach of fiduciary responsibility of another fiduciary of
the Plan) and (2) the possibility that certain transactions in which RGA or the
Trust, as applicable, might seek to engage could constitute "prohibited
transactions" under ERISA and the Internal Revenue Code of 1986.
Even if the conditions of one or more of the foregoing prohibited
transaction exemptions are satisfied with respect to the acquisition and holding
of the unit securities and shares of common stock issuable on exercise of the
warrants, no assurance can be given that such exemptions would apply to
transactions engaged in by the Trust or RGA or to the potential fiduciary or
co-fiduciary breaches that might occur with respect to the assets of the Trust
or RGA if the assets of the Trust or RGA were deemed to include "plan assets"
for purposes of ERISA and the Internal Revenue Code of 1986.
REPRESENTATION
Each purchaser and subsequent transferee of the unit securities and shares
of common stock issuable on exercise of the warrants will be deemed to have
represented and warranted that the acquisition and holding of the unit
securities and shares of common stock issuable on exercise of the warrants by
such purchaser or transferee satisfies the fiduciary requirements of ERISA and
will not constitute a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986 or similar violation
under any applicable Similar Laws.
The foregoing discussion is general in nature and is not intended to be all
inclusive. Due to the complexity of these rules and the penalties that may be
imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons considering purchasing
the unit securities and shares of common stock issuable on exercise of the
warrants on behalf of, or with the assets of, any employee benefit plan, consult
with their counsel to determine whether such employee benefit plan is subject to
Title I of ERISA, Section 4975 of the Internal Revenue Code of 1986 or any
Similar Laws and the potential applicability of such laws to the acquisition or
holding of the unit securities and shares of common stock issuable on exercise
of the warrants.
S-82
UNDERWRITING
Lehman Brothers Inc. and Banc of America Securities LLC, as underwriters,
have agreed severally, subject to the terms and conditions of the underwriting
agreement, to purchase from us, and we have agreed to sell to the underwriters,
the respective aggregate number of units opposite their names below:
<Table>
<Caption>
UNDERWRITER NUMBER OF UNITS
- ----------- ---------------
Lehman Brothers Inc. ....................................... 3,150,000
Banc of America Securities LLC.............................. 1,350,000
---------
Total..................................................... 4,500,000
=========
</Table>
The underwriting agreement provides that the underwriters' obligations to
purchase the units depends on the satisfaction of the conditions contained in
the underwriting agreement, including:
- the underwriters must purchase all of the units if they purchase any of
them, other than those covered by the over-allotment option described
below;
- the representations and warranties made by us to the underwriters are
true;
- there is no material change in the financial markets; and
- we deliver customary closing documents to the underwriters.
The underwriters have advised RGA that they will offer the units directly
to the public initially at the offering price and to certain dealers at the
offering price less a selling concession not to exceed $0.90 per unit. The
underwriters may allow and these dealers may reallow a concessions not to exceed
$0.10 per unit to other dealers. After the initial offering of the units, the
underwriters may change the public offering price, the concession to selected
dealers and the reallowance to other dealers.
The following table summarizes the underwriting discounts and commissions
we will pay to the underwriters. These amounts are shown assuming both no
exercise and full exercise of the underwriters' over-allotment option to
purchase up to 675,000 additional units. The underwriting fee is the difference
between the initial price to the public and the amount the underwriters pay us
for the units.
<Table>
<Caption>
NO EXERCISE FULL EXERCISE
----------- -------------
Per unit.................................................... $1.50 $1.50
Total....................................................... $6,750,000 $7,762,500
</Table>
The expenses of this offering, excluding underwriting discounts and cash
summarized in the table above, that are payable by us are estimated to be
approximately $0.5 million.
RGA has granted to the underwriters an option to purchase an aggregate of
up to an additional 675,000 units to cover over-allotments. Any additional
purchases must be consummated on or before 30 days after the date of the
underwriting agreement.
We and MetLife and one of its affiliates have agreed, subject to certain
exceptions, not to offer, sell or otherwise transfer any unit securities or
shares of our common stock or any securities convertible or exchangeable into
these securities for a period of 90 days from the date of this prospectus
supplement without the prior written consent of Lehman Brothers Inc. All of our
directors and those officers that have reporting responsibilities under Section
16 of the Securities Exchange Act of 1934 have agreed, pursuant to lock-up
agreements, that, without the prior written consent of Lehman Brothers Inc.,
they will not, except in certain limited circumstances, directly or indirectly,
offer, sell or otherwise transfer any shares of our common stock or any
securities convertible or exchangeable into our common stock for a period of 90
days from the date of this prospectus supplement. The foregoing restriction on
sales does not apply to our ability to sell units to the underwriters pursuant
to the underwriting agreement or to existing reservations, agreements and
incentive stock plans and other exceptions specified in the underwriting
agreement.
S-83
Purchasers of the unit securities and common stock issuable on exercise of
the warrants may be required to pay stamp taxes and other charges in accordance
with the laws and practices of the country of purchase.
Prior to this offering, there has been no public market for the units. We
have applied to list the units on the NYSE and expect to receive approval,
subject to official notice of issuance, by or promptly following the closing of
this offering. In order to meet one of the requirements for listing on the NYSE,
the underwriters have undertaken to sell the units to a minimum of 400
beneficial owners. The underwriters have advised us that they presently intend
to make a market in the units as permitted by applicable laws and regulations.
The underwriters are not obligated to make a market in the units, however, and
they may discontinue this market making at any time in their sole discretion.
Accordingly, we cannot assure investors that there will be adequate liquidity or
adequate trading markets for the units.
The underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions, and penalty bids or purchases for the purpose
of pegging, fixing or maintaining the price of the units and RGA's common stock,
in accordance with Regulation M under the Securities Exchange Act of 1934:
- Over-allotment involves sales by the underwriters of units in excess of
the number of the units the underwriters are obligated to purchase, which
creates a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the number of units over-allotted by the underwriters is not
greater than the number of units that they may purchase in the
over-allotment option. In a naked short position, the number of units
involved is greater than the number of units that they may purchase in
the over-allotment option. The underwriters may close out any short
position by either exercising their over-allotment option and/or
purchasing units in the open market.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Syndicate covering transactions involve the purchase of the units in the
open market after the distribution has been completed in order to cover
syndicate short positions. In determining the source of units to close
out the short position, the underwriters will consider, among other
things, the price of units available for purchase in the open market as
compared to the price at which they may purchase units through the
over-allotment option. If the underwriters sell more units than could be
covered by the over-allotment option, a naked short position, the
position can only be closed out by buying units in the open market. A
naked short position is more likely to be created if the underwriters are
concerned that there could be downward pressure on the price of the units
in the open market after pricing that could adversely affect investors
who purchase in the offering.
- Penalty bids permit the underwriters to reclaim a selling concession from
an underwriter when the units originally sold by the underwriter is
purchased in a stabilizing or syndicate covering transaction to cover
syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of our units
and RGA's common stock or preventing or retarding a decline in the market price
of the units and RGA's common stock. As a result, the price of the units and
RGA's common stock may be higher than the price that might otherwise exist in
the open market. These transactions may be effected on the NYSE or otherwise,
and, if commenced, may be discontinued at any time.
A prospectus supplement and attached prospectus in electronic format may be
made available on the Internet sites or through other online services maintained
by one or more of the underwriters or by their affiliates. In those cases,
prospective investors may view offering terms online and, depending upon the
particular underwriter, prospective investors may be allowed to place orders
online. The underwriters may agree with us to allocate a specific number of
units for sale to online brokerage account holders. Any such allocation for
online distributions will be made by the underwriters on the same basis as other
allocations.
S-84
Other than the prospectus supplement and attached prospectus in electronic
format, the information on any underwriter's web site and any information
contained in any other web site maintained by an underwriter is not part of the
prospectus supplement, attached prospectus or the registration statement of
which the prospectus supplement and attached prospectus form a part, has not
been approved and/or endorsed by us or any underwriter in its capacity as
underwriter and should not be relied upon by investors.
Neither we nor any of the underwriters make any representations or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the units. In addition, neither we nor
any of the underwriters make representations that the underwriters will engage
in these stabilizing transactions or that any transaction, once commenced, will
not be discontinued without notice.
This prospectus supplement and the attached prospectus are not, and under
no circumstances are to be construed as, an advertisement or a public offering
of units in Canada or any province or territory thereof. Any offer or sale of
units in Canada will be made only under an exemption from the requirements to
file a prospectus supplement or prospectus and an exemption from the dealer
registration requirement in the relevant province or territory of Canada in
which such offer or sale is made.
Each of the underwriters has represented and agreed that:
- other than in connection with the offering, it has not offered or sold
and, during the period ending six months after the closing date, it will
not offer or sell any units to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their business, or otherwise, in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (as amended);
- it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 (the "Act") (and, after they come into force,
all applicable provisions of the Financial Services and Markets Act 2000,
the "FSMA") with respect to anything done by it in relation to the units
in, from or otherwise involving the United Kingdom; and
- it has only issued or passed on and will only issue or pass on in the
United Kingdom before the repeal of Section 57 of the Act, any document
received by it in connection with the issue, offer, and sale of the units
to a person who is of a kind described in Article 11(3) of the Act
(Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a
person to whom such document may otherwise lawfully be issued or passed
on. After the repeal of Section 57 of the Act it will only communicate or
cause to be communicated an invitation or inducement to engage in
investment activity (within the meaning of Section 21 of the FSMA) in
connection with the issue or sale of such units in circumstances in which
Section 21(1) of the FSMA does not apply to RGA.
RGA has agreed to indemnify the underwriters against liabilities relating
to the offering, including liabilities under the Securities Act of 1933 and to
contributed to payments that the underwriter may be required to make for these
liabilities.
Concurrently with this offering, we are offering $200.0 million aggregate
principal amount of our 6 3/4% senior notes due 2011. This offering is not
conditioned on the senior notes offering, which means that we may complete this
offering without completing the senior notes offering.
The underwriters and their affiliates have provided, from time to time, and
may continue to provide, investment banking, financial and other services to us
and our majority shareholder, MetLife, for which we have paid, and intend to
pay, them customary fees. Affiliates of some of the lenders under our credit
agreement are acting as underwriters for the offerings and The Bank of New York
and its Delaware affiliate will act as unit agent under the unit agreement,
warrant agent under the warrant agreement,
S-85
property trustee under the amended and restated declaration of trust and
indenture trustee under the junior subordinated indenture.
This prospectus supplement, as amended or supplemented, and the attached
prospectus may be used by us in connection with our obligation to deliver a
current prospectus to holders of warrants when we deliver our common stock upon
exercise of the warrants.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the preferred
securities, the enforceability of the declaration of trust and the formation of
the Trust will be passed upon by Richards, Layton & Finger, P.A., special
Delaware counsel to RGA and the Trust. The validity of the warrants and the
common stock issuable on exercise of the warrants will be passed upon by James
E. Sherman, Esq., General Counsel and Secretary of RGA, for RGA and the Trust,
and the validity of the units, the debentures and the guarantee of RGA will be
passed upon by Bryan Cave LLP, St. Louis, Missouri, for RGA and the Trust.
Simpson Thacher & Bartlett, New York, New York, will pass upon the validity of
the debentures, the guarantee, the warrants and the common stock issuable on
exercise of the warrants for the underwriters. Mr. Sherman, Bryan Cave LLP and
Simpson Thacher & Bartlett will rely upon the opinion of Richards, Layton &
Finger, P.A. as to certain matters of Delaware law, and Simpson Thacher &
Bartlett will rely upon the opinion of Bryan Cave LLP as to certain matters of
Missouri law. Mr. Sherman is paid a salary by RGA, is a participant in various
employee benefit plans offered by RGA to employees of RGA generally and owns and
has options to purchase shares of our common stock. John C. Danforth, a partner
of Bryan Cave LLP, is on the board of directors of MetLife and two of its
subsidiaries, General American Life Insurance Company and GenAmerica Financial
Corporation, which are, collectively, our majority shareholders. Certain United
States federal income tax matters will be passed upon for RGA and the Trust by
Bryan Cave LLP.
S-86
PROSPECTUS
$950,000,000
REINSURANCE GROUP OF AMERICA, INCORPORATED
Debt Securities, Preferred Stock, Depositary Shares, Common Stock,
Stock Purchase Contracts, Stock Purchase Units and Warrants
RGA CAPITAL TRUST I
RGA CAPITAL TRUST II
Preferred Securities Fully, Irrevocably and Unconditionally Guaranteed
on a Subordinated Basis as described in this Document by
Reinsurance Group Of America, Incorporated
------------------------
Reinsurance Group of America, Incorporated and RGA Capital Trust I and RGA
Capital Trust II may offer up to $950,000,000 of the securities listed above, or
units consisting of any two or more of such securities, from time to time.
When RGA, RGA Capital Trust I or RGA Capital Trust II decides to sell a
particular series of securities, we will prepare a prospectus supplement
describing those securities. You should read this prospectus and any prospectus
supplement carefully before you invest.
INVESTING IN THESE SECURITIES INVOLVES RISKS. CONSIDER CAREFULLY THE RISK
FACTORS BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
RGA, RGA Capital Trust I or RGA Capital Trust II may offer securities
through underwriting syndicates managed or co-managed by one or more
underwriters, or directly to purchasers. The prospectus supplement for each
offering of securities will describe in detail the plan of distribution for that
offering. For general information about the distribution of securities, please
see "Plan of Distribution" in this prospectus.
RGA's common stock is listed on the New York Stock Exchange under the
symbol "RGA."
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is December 3, 2001
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we and RGA Capital
Trust I and RGA Capital Trust II, which we refer to as the "RGA trusts," filed
with the Securities and Exchange Commission, which we refer to as the "SEC,"
utilizing a "shelf" registration process. Under this shelf process, we may, from
time to time, sell any combination of the securities described in this
prospectus in one or more offerings up to a total amount of $950,000,000 or the
equivalent of this amount in foreign currencies or foreign currency units.
You should rely only on the information provided in this prospectus and in
any prospectus supplement, including the information incorporated by reference.
We have not authorized anyone to provide you with different information. You
should not assume that the information in this prospectus, or any supplement to
this prospectus, is accurate at any date other than the date indicated on the
cover page of these documents.
TABLE OF CONTENTS
<Table>
About This Prospectus....................................... 2
Where You Can Find More Information......................... 3
Incorporation of Certain Documents by Reference............. 3
Risk Factors................................................ 5
Cautionary Statement Regarding Forward-Looking Statements... 10
Information About RGA....................................... 11
Information about the RGA Trusts............................ 12
Use of Proceeds............................................. 13
Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preference Dividends........... 14
Description of Debt Securities of RGA....................... 14
Description of Capital Stock of RGA......................... 28
Description of Depositary Shares of RGA..................... 37
Description of Warrants and Warrant Units of RGA............ 40
Description of Stock Purchase Contracts and Stock Purchase
Units of RGA.............................................. 41
Description of Preferred Securities of the RGA Trusts....... 42
Description of the Preferred Securities Guarantees of RGA... 45
Effect of Obligations Under the Junior Subordinated Debt
Securities and the Preferred Securities Guarantees........ 48
Plan of Distribution........................................ 49
Legal Matters............................................... 51
Experts..................................................... 51
</Table>
2
WHERE YOU CAN FIND MORE INFORMATION
RGA is subject to the informational requirements of the Securities Exchange
Act of 1934. As a result, RGA files annual, quarterly and special reports, proxy
statements and other information with the SEC. Because our common stock trades
on the New York Stock Exchange under the symbol "RGA," those materials can also
be inspected and copied at the offices of that organization. Here are ways you
can review and obtain copies of this information:
<Table>
<Caption>
WHAT IS AVAILABLE WHERE TO GET IT
- ----------------- ---------------
Paper copies of information................... SEC's Public Reference Room
Judiciary Plaza Building
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
The New York Stock Exchange
20 Broad Street
New York, New York 10005
On-line information, free of charge........... SEC's Internet website at http://www.sec.gov
Information about the SEC's Public Reference
Rooms....................................... Call the SEC at 1-800-SEC-0330
</Table>
We and the RGA trusts have filed with the SEC a registration statement
under the Securities Act that registers the distribution of these securities.
The registration statement, including the attached exhibits and schedules,
contains additional relevant information about us and the securities. The rules
and regulations of the SEC allow us to omit certain information included in the
registration statement from this prospectus. You can get a copy of the
registration statement, at prescribed rates, from the sources listed above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this prospectus, except
for any information that is superseded by other information that is included in
or incorporated by reference into this document.
This prospectus incorporates by reference the documents listed below that
we have previously filed with the SEC (File No. 1-11848). These documents
contain important information about us.
- Our Annual Report on Form 10-K and Amendment No. 1 on Form 10-K/A for the
year ended December 31, 2000.
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001,
June 30, 2001 and September 30, 2001.
- Our Current Report on Form 8-K, filed September 24, 2001.
- The description of our common stock contained in our Registration
Statement on Form 8-A dated April 6, 1993, as amended by Amendment No. 1
on Form 8-A/A dated April 27, 1993, including any amendments or reports
filed for the purpose of updating such description.
- The description of our preferred stock purchase rights contained in our
Registration Statement on Form 8-A dated April 6, 1993, as amended by
Amendment No. 1 to Form 8-A/A dated April 27, 1993, and as further
supplemented on Form 8-A dated May 4, 1998, including amendments or
reports filed for the purpose of updating such description.
We incorporate by reference any additional documents that we may file with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 (other than those made
3
pursuant to Item 9 of Form 8-K) between November 28, 2001, the date we first
filed the registration statement to which this prospectus relates, and the
termination of the offering of the securities. These documents may include
periodic reports, like Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as Proxy Statements. Any material
that we subsequently file with the SEC will automatically update and replace the
information previously filed with the SEC.
You can obtain any of the documents incorporated by reference in this
prospectus from the SEC on its web site (http://www.sec.gov). You can also
obtain these documents from us, without charge (other than exhibits, unless the
exhibits are specifically incorporated by reference), by requesting them in
writing or by telephone at the following address:
Reinsurance Group of America, Incorporated
1370 Timberlake Manor Parkway
Chesterfield, Missouri 63017-6039
Attention: Jack B. Lay
Executive Vice President and Chief Financial Officer
(636) 736-7000
4
RISK FACTORS
Investing in securities offered by this prospectus involves certain risks.
Any of the following risks could materially adversely affect our business,
results of operations, or financial condition and could result in a loss of your
investment.
WE ARE CONTROLLED BY METLIFE, AND THE INTERESTS OF METLIFE MAY DIFFER FROM THE
INTERESTS OF RGA AND ITS SECURITYHOLDERS.
Metropolitan Life Insurance Company, which we refer to as "MetLife,"
beneficially owned approximately 58.4% of our outstanding common stock, as of
September 30, 2001, and several individuals employed by or associated with
MetLife hold seats on our board of directors. MetLife has the power, because of
the voting power of the shares of common stock beneficially held by it, to elect
our board of directors, and to substantially influence business combination
transactions. For financial reporting purposes, MetLife will include its share
of our net income or loss in its consolidated financial statements. Our board of
directors, including members who are also affiliated with MetLife, may consider
not only the short-term and long-term impact of operating decisions on us, but
also the impact of such decisions on MetLife and its affiliates.
OUR ABILITY TO PAY PRINCIPAL, INTEREST AND/OR DIVIDENDS ON OFFERED SECURITIES IS
LIMITED.
We are a holding company, with our principal assets consisting of the stock
of our insurance company subsidiaries. Our ability to pay principal and interest
on any debt securities or dividends on any preferred or common stock depends
significantly on the ability of our insurance company subsidiaries, our
principal sources of cash flow, to declare and distribute dividends. Regulatory
restrictions may limit these payments. Our insurance company subsidiaries are
subject to various state statutory and regulatory restrictions, applicable to
insurance companies generally, that limit the amount of cash dividends, loans
and advances that those subsidiaries may pay to us. We indirectly own our
principal operating subsidiary, RGA Reinsurance Company, which we refer to as
"RGA Reinsurance," through Reinsurance Company of Missouri, Incorporated, which
we refer to as "RCM." Both RCM and RGA Reinsurance are organized under Missouri
insurance law, which 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:
- 10% of statutory capital and surplus as of the preceding December 31; or
- 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. RCM's allowable dividend without prior
approval for 2001 is approximately $49.3 million pursuant to this calculation.
RGA Reinsurance's allowable dividend without prior approval for 2001 is
approximately $80.6 million pursuant to this calculation. Dividends may be paid
only to the extent the insurer has unassigned surplus, as opposed to contributed
surplus. As of December 31, 2000, which is the current determinative date for
regulatory purposes, RCM and RGA Reinsurance had unassigned surplus of
approximately $38.9 million and $67.1 million, respectively. RGA is unable to
predict the unassigned surplus amounts for RGA Reinsurance and RCM as of
December 31, 2001, which will be the date for determining the allowable dividend
in 2002 without prior approval. For example, any significant reinsurance
transactions that occur in the fourth quarter of 2001 could have an impact on
the unassigned surplus of RGA Reinsurance and RCM. Because RCM is our direct
subsidiary and RGA Reinsurance is a subsidiary of RCM, any dividends paid by RGA
Reinsurance would be paid to RCM. Our ability to make payments on debt
securities or to pay dividends on capital stock will depend on the ability of
RCM to pay dividends to us. As a result, without prior approval of the Missouri
Director of Insurance, we may only receive the allowable dividend for RCM, even
though the allowable dividend which could be paid to RCM by RGA Reinsurance is
currently a higher amount.
5
In contrast to Missouri law, the Model Insurance Holding Company Act of the
National Association of Insurance Commissioners defines an "extraordinary
dividend" as a dividend which exceeds the lesser of the two amounts described
above. We are unable to predict when or in what form Missouri will enact a new
measure for extraordinary dividends, and we cannot assure you that more
stringent restrictions will not be adopted from time to time in other
jurisdictions in which our insurance subsidiaries are domiciled, which could,
under certain circumstances, significantly reduce dividends or other amounts
payable to us by our subsidiaries unless they obtain approval from insurance
regulatory authorities.
RGA Life Reinsurance Company of Canada, which we refer to as "RGA Canada"
and which is our second largest operating subsidiary, is limited in its ability
to pay dividends by the Canadian Minimum Continuing Capital and Surplus
Requirements. As of June 30, 2001, the maximum amount available for dividends
from RGA Canada was $31.3 million.
In the event of the insolvency, liquidation, reorganization, dissolution or
other winding-up of one of our insurance subsidiaries, all creditors of that
subsidiary, including holders of life and health insurance policies, would be
entitled to payment in full out of the assets of such subsidiary before we, as
shareholder, would be entitled to any payment. Our subsidiaries would have to
pay their direct creditors in full before our creditors, including holders of
any offered securities, could receive any payment from the assets of such
subsidiaries.
A DOWNGRADE IN THE RATINGS OF OUR INSURANCE SUBSIDIARIES OR METLIFE OR ITS
AFFILIATES COULD ADVERSELY AFFECT OUR ABILITY TO COMPETE.
Ratings are an important factor in our competitive position. Rating
organizations periodically review the financial performance and condition of
insurers, including our insurance subsidiaries. Rating organizations assign
ratings based upon several factors. While most of the factors considered relate
to the rated company, some of the factors relate to general economic conditions
and circumstances outside the rated company's control. RGA Reinsurance and RGA
Canada are rated "A+" by A.M. Best. Additionally, RGA Reinsurance maintains
ratings from Standard & Poor's and Moody's Investor Services. Standard & Poor's
has assigned RGA Reinsurance a financial strength rating of "AA" and Moody's has
assigned RGA Reinsurance a rating of "A1". Our ratings were downgraded in August
1999 due to downgrades in the ratings of our parent, General American Life
Insurance Company. MetLife completed its acquisition of General American in
January 2000, at which time our ratings were upgraded. We do not have any
subsidiaries that are rated by A.M. Best as less than "very good" or its
equivalent by other leading rating organizations. A downgrade in the ratings of
our insurance subsidiaries could adversely affect their ability to sell
products, retain existing business, and compete for attractive acquisition
opportunities. These ratings are based on an insurance company's ability to pay
policyholder obligations and are not directed toward the protection of
investors.
In addition, we believe that the ratings agencies strongly consider the
ratings of a parent company when assigning a rating to a subsidiary of that
company. Accordingly, we believe a ratings downgrade of MetLife or its
affiliates could have a negative impact on our ratings and our ability to
conduct business.
WE COULD BE FORCED TO SELL INVESTMENTS AT A LOSS TO COVER POLICYHOLDER
WITHDRAWALS OR RECAPTURES OF REINSURANCE TREATIES.
Some of the products offered by our insurance company customers allow
policyholders and contractholders to withdraw their funds under defined
circumstances. Our insurance subsidiaries manage their liabilities and configure
their investment portfolios so as to provide and maintain sufficient liquidity
to support anticipated withdrawal demands and contract benefits and maturities
under reinsurance treaties with these customers. While our insurance
subsidiaries own a significant amount of liquid assets, a portion of their
assets are relatively illiquid. Unanticipated withdrawal or surrender activity
could, under some circumstances, require our insurance subsidiaries to dispose
of assets on unfavorable terms, which could have an adverse effect on us.
Reinsurance agreements may provide for recapture rights on the part of our
insurance company customers. Recapture rights permit these customers to reassume
all or a portion of the
6
risk formerly ceded to us after an agreed upon time, usually 10 years, subject
to various conditions. Recapture of business previously ceded does not affect
premiums ceded prior to the recapture, but may result in immediate payments to
our insurance company customers and a charge for unrecoverable deferred
acquisition costs. Under some circumstances, payments to our insurance company
customers could require our insurance subsidiaries to dispose of assets on
unfavorable terms.
OUR INSURANCE SUBSIDIARIES ARE HIGHLY REGULATED, AND CHANGES IN THESE
REGULATIONS COULD NEGATIVELY AFFECT OUR BUSINESS.
Our insurance subsidiaries are subject to government regulation in each of
the jurisdictions in which they are licensed or authorized to do business.
Governmental agencies have broad administrative power to regulate many aspects
of the insurance business, which may include premium rates, marketing practices,
advertising, policy forms, and capital adequacy. These agencies are concerned
primarily with the protection of policyholders rather than shareholders or
holders of debt securities. Moreover, insurance laws and regulations, among
other things, establish minimum capital requirements and limit the amount of
dividends, tax distributions, and other payments our insurance subsidiaries can
make without prior regulatory approval, and impose restrictions on the amount
and type of investments we may hold. The State of Missouri also regulates RGA as
an insurance holding company.
Recently, insurance regulators have increased their scrutiny of the
insurance regulatory framework in the United States and some state legislatures
have considered or enacted laws that alter, and in many cases increase, state
authority to regulate insurance holding companies. In light of recent
legislative developments, the National Association of Insurance Commissioners,
which we refer to as the "NAIC," and state insurance regulators have begun
re-examining existing laws and regulations, specifically focusing on insurance
company investments and solvency issues, guidelines imposing minimum capital
requirements based on business levels and asset mix, interpretations of existing
laws, the development of new laws, the implementation of nonstatutory
guidelines, and the definition of extraordinary dividends. We cannot predict the
effect that any NAIC recommendations or proposed or future legislation or rule
making in the United States or elsewhere may have on our financial condition or
operations.
IF OUR RISK MANAGEMENT OR INVESTMENT STRATEGY IS NOT SUCCESSFUL, WE COULD SUFFER
UNEXPECTED LOSSES.
Risk management and the success of our investment strategy are crucial to
the success of our business. In particular, we structure our investments to
match our anticipated liabilities under reinsurance treaties. If our
calculations with respect to these reinsurance liabilities are incorrect, or if
we improperly structure our investments to match such liabilities, we could be
forced to liquidate investments prior to maturity at a significant loss.
Our investment guidelines also permit us to invest up to 5% of our
investment portfolio in below-investment grade fixed income securities. While
any investment carries some risk, the risks associated with lower-rated
securities are greater than the risks associated with investment grade
securities. The risk of loss of principal or interest through default is greater
because lower-rated securities are usually unsecured and are often subordinated
to an issuer's other obligations. Additionally, the issuers of these securities
frequently have high debt levels and are thus more sensitive to difficult
economic conditions, individual corporate developments and rising interest rates
which could impair an issuer's capacity or willingness to meet its financial
commitment on such lower-rated securities. As a result, the market price of
these securities may be quite volatile, and the risk of loss is greater.
The success of any investment activity is affected by general economic
conditions, which may adversely affect the markets for interest-rate-sensitive
securities and equity securities, including the level and volatility of interest
rates and the extent and timing of investor participation in such markets.
Unexpected volatility or illiquidity in the markets in which we directly or
indirectly hold positions could adversely affect us.
7
RECENT AND PROPOSED TAX LAW CHANGES OR A PROLONGED ECONOMIC DOWNTURN COULD
REDUCE THE DEMAND FOR SOME INSURANCE PRODUCTS, WHICH COULD ADVERSELY AFFECT OUR
BUSINESS.
Under the Internal Revenue Code of 1986, income tax payable by
policyholders on investment earnings is deferred during the accumulation period
of some life insurance and annuity products. To the extent that the Internal
Revenue Code is revised to reduce the tax-deferred status of life insurance and
annuity products, or to increase the tax-deferred status of competing products,
all life insurance companies would be adversely affected with respect to their
ability to sell such products, and, depending on grandfathering provisions, the
surrenders of existing annuity contracts and life insurance policies. In
addition, life insurance products are often used to fund estate tax obligations.
Congress has adopted legislation to reduce, and ultimately eliminate, the estate
tax. Under this legislation, our life insurance company customers will face
reduced demand for some of their life insurance products, which in turn could
negatively affect our reinsurance business. We cannot predict what future tax
initiatives may be proposed and enacted which could affect us.
In addition, a general economic downturn or a downturn in the equity and
other capital markets could adversely affect the market for many annuity and
life insurance products. Because we obtain substantially all of our revenues
through reinsurance arrangements that cover a portfolio of life insurance
products, as well as annuities, our business would be harmed if the market for
annuities or life insurance were adversely affected. In addition, the market for
annuity reinsurance products is currently not well developed, and we cannot
assure you that such market will develop in the future.
WE ARE EXPOSED TO FOREIGN CURRENCY RISK.
We have foreign currency risk on business conducted and investments in
foreign currencies to the extent that the exchange rates of the foreign
currencies are subject to adverse change over time. Approximately 25% of our
premiums, 25% of our pre-tax earnings from operations, and 27% of our fixed
maturity investments were denominated in currencies other than the U.S. dollar
as of September 30, 2001. Fluctuations in exchange rates can negatively or
positively impact premiums and earnings. We hold fixed-maturity investments
denominated in foreign currencies as a natural hedge against liabilities based
in those currencies. We generally do not hedge the foreign currency exposure
associated with our net investments in foreign subsidiaries due to the long-term
nature of these investments. During 2000, we incurred a foreign currency loss of
$4.7 million associated with the sale of our Chilean operations. We cannot
predict whether exchange rate fluctuations will significantly harm our
operations or financial results in the future.
INTEREST-RATE FLUCTUATIONS COULD NEGATIVELY AFFECT THE INCOME WE DERIVE FROM THE
DIFFERENCE BETWEEN THE INTEREST RATES WE EARN ON OUR INVESTMENTS AND INTEREST WE
PAY UNDER OUR REINSURANCE CONTRACTS.
Significant changes in interest rates expose reinsurance companies to the
risk of not earning income or experiencing losses based on the difference
between the interest rates earned on investments and the credited interest rates
paid on outstanding reinsurance contracts.
Both rising and declining interest rates can negatively affect the income
we derive from these interest rate spreads. During periods of falling interest
rates, our investment earnings will be lower because interest earnings on some
of our fixed maturity securities will likely have declined in parallel with
market interest rates. Additionally, new investments in fixed maturity
securities will likely bear lower interest rates. We may not be able to fully
offset the decline in investment earnings with lower crediting rates on our
reinsurance contracts that have cash values. During periods of rising interest
rates, we may be contractually obligated to increase the crediting rates on our
reinsurance contracts that have cash values. However, we may not have the
ability to immediately acquire investments with interest rates sufficient to
offset the increased crediting rates on our reinsurance contracts. While we
develop and maintain asset/ liability management programs and procedures
designed to reduce the volatility of our income when interest rates are rising
or falling, we cannot assure you that changes in interest rates will not affect
our interest rate spreads.
8
Changes in interest rates may also affect our business in other ways. Lower
interest rates may result in lower sales of certain insurance and investment
products of our customers, which would reduce the demand for our reinsurance of
these products.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY, WHICH COULD LIMIT OUR ABILITY TO
GAIN OR MAINTAIN OUR POSITION IN THE INDUSTRY.
The reinsurance industry is highly competitive, and we encounter
significant competition in all lines of business from other reinsurance
companies, as well as competition from other providers of financial services.
Our competitors vary by geographic market. We believe our primary competitors
are Transamerica Occidental Life Insurance Company, Swiss Re, ING Re, Lincoln
National Corporation and Munich Reinsurance Company. Swiss Re recently acquired
the reinsurance operations of Lincoln National. Many of our competitors have
greater financial resources than we do. Our ability to compete depends on, among
other things, our ability to maintain strong financial strength ratings from
rating agencies, pricing and other terms and conditions of reinsurance
agreements, and our reputation, service, and experience in the types of business
that we underwrite. However, competition from other insurers could adversely
affect our competitive position.
Our target market is large life insurers. We compete based on the strength
of our underwriting operations, insights on mortality trends based on our large
book of business, and responsive service. We believe our quick response time to
client requests for individual underwriting quotes and our underwriting
expertise are important elements to our strategy and lead to other business
opportunities with our clients. We are currently transplanting our strategy in
North America to other international locations and expect to support our North
American clients as they expand internationally. Our business will be adversely
affected if we are unable to maintain these competitive advantages or if our
international strategy is not successful.
WE DEPEND ON THE PERFORMANCE OF OTHERS, AND THEIR FAILURE TO PERFORM IN A
SATISFACTORY MANNER WOULD NEGATIVELY AFFECT US.
In the normal course of business, we seek to limit our exposure to losses
from our reinsurance contracts by ceding a portion of the reinsurance to other
insurance enterprises or reinsurers. We cannot assure you that these insurance
enterprises, or reinsurers, will be able to fulfill their obligations to us. We
are also subject to the risk that our clients will be unable to fulfill their
obligations to us under our reinsurance agreements with them.
We use the services of third-party investment managers to manage a majority
of our investment portfolio. We rely on these investment managers to provide
investment advice and execute investment transactions that are within our
investment policy guidelines. Poor performance on the part of our outside
investment managers could have an adverse effect on our financial performance.
As with all financial services companies, our ability to conduct business
depends on consumer confidence in the industry and our financial strength.
Actions of competitors, and financial difficulties of other companies in the
industry, could undermine consumer confidence and harm our reputation.
INADEQUATE RISK ANALYSIS AND UNDERWRITING MAY HAVE AN ADVERSE EFFECT ON OUR
FINANCIAL RESULTS.
We have developed risk analysis and underwriting guidelines, policies, and
procedures with the objective of controlling the quality of the business as well
as the pricing of the risk we are assuming. Among other things, these processes
rely heavily on our own underwriting and information provided to us from, and
underwriting by, our insurance company customers, our analysis of mortality
trends and the rate at which policies for which we are at risk lapse, and our
understanding of medical impairments and their impact on mortality. To the
extent these processes are inadequate or are based on inadequate information,
the premiums we receive for the risks we assume may not be sufficient to cover
our claims.
9
RECENT TERRORIST ATTACKS AND RELATED EVENTS MAY ADVERSELY AFFECT OUR BUSINESS
AND RESULTS OF OPERATIONS.
The terrorist attacks on the United States and ensuing events may have a
continuing negative impact on our business. The Company believes its reinsurance
programs, including its catastrophe coverage, which is with two carriers, will
limit its net losses in individual life claims relating to the September 11,
2001 terrorist attacks to the amount reflected as of September 30, 2001.
However, no assurance can be given as to the extent of claims development or
recoverability of any such claims, particularly in light of the magnitude and
unprecedented nature of the terrorist attacks of September 11, 2001.
OUR OBLIGATIONS TO PAY CLAIMS, INCLUDING SETTLEMENTS OR AWARDS, ON CLOSED OR
DISCONTINUED LINES OF BUSINESS MAY EXCEED THE RESERVES WE HAVE ESTABLISHED TO
COVER SUCH CLAIMS AND MAY REQUIRE US TO ESTABLISH ADDITIONAL RESERVES, WHICH
WOULD REDUCE OUR NET INCOME.
In 1994, we entered the reinsurance market for the privatized pension
program in Argentina, which we refer to as the "AFJP business." Although we
ceased renewal of AFJP business treaties and no longer write AFJP business, we
must continue to pay claims that develop during the run-off of the remaining
treaties. Benefits paid to claimants under the AFJP business are indexed to the
returns of the underlying pension funds. Because of higher than expected claims
levels, on October 25, 2001 we announced that we expect to establish additional
reserves for the AFJP business in the range of $25 to $35 million in the fourth
quarter of 2001. If the amount of claims resulting from this closed line of
business exceeds our current estimates, we may establish additional reserves.
As of December 31, 1998, we formally reported our accident and health
division as a discontinued operation. The accident and health operation was
placed into run-off, and all treaties were terminated at the earliest possible
date. The nature of the underlying risks is such that the claims may take years
to reach the reinsurers involved. Accordingly, we expect to pay claims out of
existing reserves over a number of years as the level of business diminishes. We
are a party to several disputes relating to the accident and health operation,
some of which are currently in arbitration or may be subject to arbitration in
the future. We have established reserves for these treaties based upon our
estimates of the expected claims, including settlement or arbitration outcomes.
In a few cases, however, we are unable to determine our potential liability, if
any, because of insufficient claims information. If the amount of claims,
including awards or settlements, resulting from this discontinued line of
business exceeds our current reserves, we may establish additional reserves.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains or incorporates by reference a number of
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 relating to, among others:
- projections of our earnings, revenues, income or loss, or capital
expenditures;
- our plans for future operations and financing needs or plans; and
- assumptions relating to the foregoing.
The words "intend," "expect," "project," "estimate," "predict,"
"anticipate," "should," "believe" and other similar expressions also are
intended to identify forward-looking statements.
These forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results, performance and achievements could differ materially from
those set forth in, contemplated by or underlying the forward-looking
statements.
10
Important factors that could cause actual results to differ materially from
estimates or forecasts contained in the forward-looking statements include,
among others:
- market conditions and the timing of sales of investment securities;
- regulatory action taken by the New York or Missouri Departments of
Insurance with respect to MetLife or GenAmerica or us and our
subsidiaries;
- changes in the financial strength and credit ratings of RGA and our
subsidiaries and of MetLife and its affiliates and the effect of such
changes on our future results of operations and financial condition;
- material changes in mortality and claims experience;
- competitive factors and competitors' responses to our initiatives;
- general economic conditions affecting the demand for insurance and
reinsurance in our current and planned markets;
- successful execution of our entry into new markets;
- successful development and introduction of new products;
- the stability of governments and economies in the markets in which we
operate;
- fluctuations in U.S. and foreign interest rates and securities and real
estate markets;
- the success of our clients;
- changes in laws, regulations and accounting standards applicable to us
and our subsidiaries; and
- other risks and uncertainties described in this document and in our
other filings with the SEC.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual outcomes may vary materially from
those indicated.
You should not place undue reliance on those statements, which speak only
as of the date on which they are made. We may not update these forward-looking
statements, even though our situation may change in the future, unless we are
obligated under the federal securities laws to update and disclose material
developments related to previously disclosed information. We qualify all of our
forward-looking statements by these cautionary statements.
INFORMATION ABOUT RGA
We are an insurance holding company that was formed on December 31, 1992.
Through our operating subsidiaries, we are primarily engaged in life reinsurance
in North America and select international locations. In addition, we provide
reinsurance of non-traditional business including asset-intensive products and
financial reinsurance. Through a predecessor, we have been engaged in the
business of life reinsurance since 1973. As of September 30, 2001, we had
approximately $6.5 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:
- 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;
- stabilize operating result by leveling fluctuations in the ceding
company's loss experience;
- assist the ceding company to meet applicable regulatory requirements;
and
- enhance the ceding company's financial strength and surplus position.
11
We are a holding company, the principal assets of which consist of the
common stock of our principal operating subsidiaries, RGA Reinsurance and RGA
Canada, as well as investments in several other subsidiaries.
We have 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 bank-owned life insurance and reinsurance of 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 subsidiary in Argentina and traditional
reinsurance and reinsurance of privatized pension products in Argentina. The
Asia Pacific operations provide primarily traditional life reinsurance. Other
international operations include traditional life reinsurance from Western
Europe and South Africa.
On January 6, 2000, Metropolitan Life Insurance Company acquired 100% of
GenAmerica Corporation, including its beneficial ownership of RGA shares (which
was approximately 48% at December 31, 1999). This acquisition, together with a
private placement of approximately 4.8 million shares of our common stock
completed in November 1999, made MetLife our majority shareholder, with
beneficial ownership of approximately 58.4% of all outstanding shares as of
September 30, 2001.
Our executive office is located at 1370 Timberlake Manor Parkway,
Chesterfield, Missouri 63017-6039, and its telephone number is (636) 736-7000.
In this prospectus, "we," "us," "our," the "Company" and "RGA" refer to
Reinsurance Group of America, Incorporated.
This prospectus provides you with a general description of the securities
we and the RGA trusts may offer. Each time we or either of the RGA trusts sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. We will file each prospectus
supplement with the SEC. The prospectus supplement may also add, update or
supplement information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the heading "Where You Can Find More Information" on page 3.
INFORMATION ABOUT THE RGA TRUSTS
Each of the RGA trusts is a statutory business trust formed under Delaware
law. Each RGA trust exists for the exclusive purposes of:
- issuing and selling its preferred securities and common securities;
- using the proceeds from the sale of its preferred securities and common
securities to acquire RGA's junior subordinated debt securities; and
- engaging in only those other activities that are related to those
purposes.
All of the common securities of each trust will be directly or indirectly
owned by RGA. The common securities will rank equally, and payments will be made
proportionally, with the preferred securities. However, if an event of default
under the amended and restated trust agreement of the respective RGA trust has
occurred and is continuing, the cash distributions and liquidation, redemption
and other amounts payable on the common securities will be subordinated to the
preferred securities in right of payment. We will directly or indirectly acquire
common securities in an amount equal to at least 3% of the total capital of each
RGA trust. The preferred securities will represent the remaining 97% of such
trusts' capital.
RGA will guarantee the preferred securities of each RGA trust as described
later in this prospectus.
Unless otherwise specified in the applicable prospectus supplement, each
RGA trust has a term of up to 55 years but may terminate earlier, as provided in
its amended and restated trust agreement. Each
12
RGA trust's business and affairs will be conducted by the trustees appointed by
us. According to the amended and restated trust agreement of each RGA trust, as
the holder of all of the common securities of an RGA trust, we can increase or
decrease the number of trustees of each trust, subject to the requirement under
Delaware law that there be a trustee in the State of Delaware and to the
provisions of the Trust Indenture Act of 1939. The amended and restated trust
agreement will set forth the duties and obligations of the trustees. A majority
of the trustees of each RGA trust will be employees or officers of or persons
who are affiliated with RGA, whom we refer to as "administrative trustees."
One trustee of each RGA trust will be an institution, which we refer to as
the "property trustee," that is not affiliated with RGA and has a minimum amount
of combined capital and surplus of not less than $50,000,000, which will act as
property trustee and as indenture trustee for the purposes of compliance with
the provisions of the Trust Indenture Act of 1939, under the terms of the
applicable prospectus supplement. Unless otherwise indicated in the applicable
prospectus supplement, the property trustee will maintain exclusive control of a
segregated, non-interest bearing "payment account" established with The Bank of
New York to hold all payments made on the junior subordinated debt securities
for the benefit of the holders of the trust securities of each RGA trust. In
addition, unless the property trustee maintains a principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
one trustee of each RGA trust will be an institution having a principal place of
business in, or a natural person resident of, the State of Delaware, which we
refer to as the "Delaware trustee." As the direct or indirect holder of all of
the common securities, RGA will be entitled to appoint, remove or replace any
of, or increase or reduce the number of, the trustees of each RGA trust, except
that if an event of default under the junior subordinated indenture has occurred
and is continuing, only the holders of preferred securities may remove the
Delaware trustee or the property trustee. RGA will pay all fees and expenses
related to the RGA trust and the offering of the preferred securities and the
common securities.
Unless otherwise specified in the applicable prospectus supplement, the
property trustee for each RGA trust will be The Bank of New York. Unless
otherwise specified in the applicable prospectus supplement, the Delaware
trustee for each RGA trust will be The Bank of New York (Delaware), an affiliate
of The Bank of New York, and its address in the state of Delaware is White Clay
Center, Route 273, Newark, Delaware 19771. The principal place of business of
each RGA trust is c/o Reinsurance Group of America, Incorporated, 1370
Timberlake Manor Parkway, Chesterfield, Missouri 63017-6039, telephone (636)
736-7000.
The RGA trusts will not have separate financial statements. The statements
would not be material to holders of the preferred securities because the trusts
will not have any independent operations. Each of the trusts exists solely for
the reasons provided in the amended and restated trust agreement and summarized
above. Unless otherwise provided in the applicable prospectus supplement, RGA
will pay all fees and expenses related to each RGA trust and the offering of its
preferred securities, including the fees and expenses of the trustee.
USE OF PROCEEDS
Except as otherwise described in a prospectus supplement, the proceeds from
the sale by any RGA trust of any preferred securities, together with any capital
contributed in respect of common securities, will be loaned to RGA in exchange
for RGA's junior subordinated debt securities. Unless otherwise stated in the
prospectus supplement, we will use borrowings from the trusts, and the net
proceeds from the sale of any other securities offered by RGA, for general
corporate purposes. Such general corporate purposes may include, but are not
limited to, repayments of our indebtedness or the indebtedness of our
subsidiaries. Pending such use, the proceeds may be invested temporarily in
short-term marketable securities. The prospectus supplement relating to an
offering will contain a more detailed description of the use of proceeds of any
specific offering of securities.
13
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS
The following table sets forth RGA's ratios of earnings to fixed charges
and earnings to fixed charges, including interest credited under reinsurance
contracts, for the periods indicated. For purposes of computing the consolidated
ratio of earnings to fixed charges, earnings consist of net earnings from
continuing operations adjusted for the provision for income taxes, minority
interest and fixed charges. Fixed charges consist of interest and discount on
all indebtedness and one-third of annual rentals, which we believe is a
reasonable approximation of the interest factor of such rentals. We have not
paid a preference security dividend for any of the periods presented, and
accordingly have not separately shown the ratio of earnings to combined fixed
charges and preference dividends for these periods.
<Table>
<Caption>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------- SEPTEMBER 30,
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- -------------
Ratio of earnings to fixed charges.......... 13.8 13.9 15.2 8.5(1) 9.9 7.4
Ratio of earnings to fixed charges including
interest credited under reinsurance
contracts................................. 2.5 2.1 1.8 1.6(1) 2.4 2.0
</Table>
- ---------------
(1) Coverage ratio in 1999 is lower than other annual periods presented due to
the inclusion of $75.3 million of net realized investment losses primarily
associated with the recapture of one block of business by General American
Life Insurance Company.
DESCRIPTION OF DEBT SECURITIES OF RGA
The following description of the terms of the debt securities sets forth
the material terms and provisions of the debt securities to which any prospectus
supplement may relate. The particular terms of the debt securities offered by
any prospectus supplement and the extent, if any, to which such general
provisions may apply to the debt securities so offered will be described in the
prospectus supplement relating to such debt securities. The debt securities will
be either our senior debt securities or subordinated debt securities, or our
junior subordinated debt securities issued in connection with the issuance by an
RGA trust of its trust preferred securities.
THE INDENTURES
The senior debt securities will be issued in one or more series under a
senior indenture, to be entered into by us with a financial institution as
trustee. The subordinated debt securities will be issued in one or more series
under a subordinated indenture, to be entered into by us with a financial
institution as trustee. The junior subordinated debt securities will be issued
in one or more series under a junior subordinated indenture, to be entered into
by us with The Bank of New York, as trustee. The statements herein relating to
the debt securities and the indentures are summaries and are subject to the
detailed provisions of the applicable indenture. Each of the indentures will be
subject to and governed by the Trust Indenture Act of 1939. The description of
the indentures set forth below assumes that we have entered into the indentures.
We will execute the senior indenture or the subordinated indenture, as
applicable, when and if we issue senior or subordinated debt securities. We will
execute the junior subordinated indenture when and if we issue junior
subordinated debt securities in connection with the issuance by an RGA trust of
its preferred securities. See "Description of Preferred Securities of the RGA
Trusts" below. The descriptions below do not restate the indentures and do not
contain all the information you may find useful. We urge you to read the
indentures because they, and not the summaries, define your rights as a holder
of our debt securities. If you would like to read the indentures, they are on
file with the SEC, as described under "Where You Can Find More Information"
beginning on page 3. Whenever we refer to particular sections or defined terms
in an indenture, those sections and definitions are incorporated by reference.
14
GENERAL
The indentures do not limit the aggregate amount of debt securities which
we may issue. We may issue debt securities under the indentures up to the
aggregate principal amount authorized by our board of directors from time to
time. Except as may be described in a prospectus supplement, the indentures will
not limit the amount of other secured or unsecured debt that we may incur or
issue.
The debt securities will be our unsecured general obligations. The senior
debt securities will rank with all our other unsecured and unsubordinated
obligations. Unless otherwise specified in the applicable prospectus supplement,
the subordinated debt securities will be subordinated and junior in right of
payment to the extent and in the manner set forth in the subordinated indenture
to all our present and future senior indebtedness. Unless otherwise specified in
the applicable prospectus supplement, the junior subordinated debt securities
that we may issue to one of the RGA trusts will be subordinated and junior in
right of payment to the extent and in the manner set forth in the junior
subordinated indenture to all our present and future indebtedness, including any
senior and subordinated debt securities issued under the senior or subordinated
indenture. See "-- Subordination under the Subordinated Indenture and the Junior
Subordinated Indenture." The indentures will provide that the debt securities
may be issued from time to time in one or more series. We may authorize the
issuance and provide for the terms of a series of debt securities pursuant to a
supplemental indenture.
We are a holding company. As a result, we rely primarily on dividends or
other payments from our principal operating subsidiaries, RGA Reinsurance and
RGA Canada, to pay principal and interest on our outstanding debt obligations,
and to make dividend distributions on our capital stock. We can also utilize
investment securities maintained in our portfolio for these payments. The
principal source of funds for RGA Reinsurance and RGA Canada comes from current
operations.
Applicable insurance regulatory and other legal restrictions limit the
amount of dividends and other payments our subsidiaries can make to us. Our
subsidiaries have no obligation to guarantee or otherwise pay amounts due under
the debt securities. Therefore, the debt securities will be effectively
subordinated to all indebtedness and other liabilities and commitments of our
subsidiaries, including claims under reinsurance contracts, debt obligations and
other liabilities incurred in the ordinary course of business. As of September
30, 2001, our subsidiaries had approximately $24.1 million of outstanding
long-term debt. We will disclose material changes to this amount in any
prospectus supplement relating to an offering of our debt securities. In the
event of a default on any debt securities, the holders of the debt securities
will have no right to proceed against the assets of any insurance subsidiary. If
the subsidiary were to be liquidated, the liquidation would be conducted under
the laws of the applicable jurisdiction. Our right to receive distributions of
assets in any liquidation of a subsidiary would be subordinated to the claims of
the subsidiary's creditors, except to the extent any claims of ours as a
creditor would be recognized. Any recognized claims of ours would be
subordinated to any prior security interest held by any other creditors of the
subsidiary and obligations of the subsidiary that are senior to those owing to
us.
The applicable prospectus supplement relating to the particular series of
debt securities will describe specific terms of the debt securities offered
thereby, including, where applicable:
(1) the specific designation of such debt securities;
(2) any limit upon the aggregate principal amount of such debt securities;
(3) the date or dates on which the principal of and premium, if any, on
such debt securities will mature or the method of determining such date or
dates;
(4) the rate or rates, which may be fixed, variable or zero, at which such
debt securities will bear interest, if any, or the method of calculating such
rate or rates;
(5) the date or dates from which interest, if any, will accrue or the
method by which such date or dates will be determined;
15
(6) the date or dates on which interest, if any, will be payable and the
record date or dates therefor and whether we may elect to extend or defer such
interest payment dates;
(7) the place or places where principal of, premium, if any, and interest,
if any, on such debt securities may be redeemed, in whole or in part, at our
option;
(8) our obligation, if any, to redeem or purchase such debt securities
pursuant to any sinking fund or analogous provisions or upon the happening of a
specified event and the period or periods within which, the price or prices at
which and the other terms and conditions upon which, such debt securities will
be redeemed or purchased, in whole or in part, pursuant to such obligations;
(9) the denominations in which such debt securities are authorized to be
issued;
(10) the currency or currency unit for which such debt securities may be
purchased or in which debt securities may be denominated or the currency or
currencies, including currency unit or units, in which principal of, premium, if
any, and interest, if any, on such debt securities will be payable and whether
we or the holders of any such debt securities may elect to receive payments in
respect of such debt securities in a currency or currency unit other than that
in which such debt securities are stated to be payable;
(11) if the amount of payments of principal of and premium, if any, or
interest, if any, on such debt securities may be determined with reference to an
index based on a currency or currencies other than that in which such debt
securities are stated to be payable, the manner in which such amount shall be
determined;
(12) if the amount of payments of principal of and premium, if any, or
interest, if any, on such debt securities may be determined with reference to
changes in the prices of particular securities or commodities or otherwise by
application of a formula, the manner in which such amount shall be determined;
(13) if other than the entire principal amount, the portion of the
principal amount of such debt securities which will be payable upon declaration
of the acceleration of the maturity of such securities or the method by which
such portion shall be determined;
(14) the person to whom any interest on any such debt security shall be
payable if other than the person in whose name such debt security is registered
on the applicable record date;
(15) any addition to, or modification or deletion of, any term of
subordination, event of default or covenant of RGA specified in the indenture
with respect to such debt securities;
(16) the application, if any, of such means of defeasance as may be
specified for such debt securities;
(17) the terms, if any, upon which the holders may convert or exchange such
debt securities into or for our common or preferred stock or other securities or
property;
(18) in the case of the subordinated and junior subordinated debt
securities, provisions relating to any modification of the subordination
provisions described elsewhere in this prospectus; and
(19) whether the provisions relating to extension or deferral of interest
payment dates described in this prospectus will apply to the debt securities;
(20) any other special terms pertaining to such debt securities. (Section
3.1 of each indenture).
Unless otherwise specified in the applicable prospectus supplement, the
debt securities will not be listed on any securities exchange.
None of our shareholders, officers or directors, past, present or future,
will have any personal liability in respect of our obligations under the
indenture or the debt securities on account of that status. (Section 1.14 of
each indenture).
16
FORM AND DENOMINATIONS
Unless otherwise specified in the applicable prospectus supplement, debt
securities will be issued only in fully registered form, without coupons, and
will be denominated in U.S. dollars issued only in denominations of U.S. $1,000
and any integral multiple thereof. (Section 3.2 of each indenture).
GLOBAL DEBT SECURITIES
Unless otherwise specified in a prospectus supplement for a particular
series of debt securities, each series of debt securities will be issued in
whole or in part in global form that will be deposited with, or on behalf of, a
depositary identified in the prospectus supplement relating to that series.
Global securities will be registered in the name of the depositary, which will
be the sole direct holder of the global securities. Any person wishing to own a
debt security must do so indirectly through an account with a broker, bank or
other financial institution that, in turn, has an account with the depositary.
Special Investor Considerations for Global Securities. Our obligations with
respect to the debt securities, as well as the obligations of each trustee, run
only to persons who are registered holders of debt securities. For example, once
we make payment to the registered holder, we have no further responsibility for
that payment even if the recipient is legally required to pass the payment along
to an individual investor but fails to do so. As an indirect holder, an
investor's rights relating to a global security will be governed by the account
rules of the investor's financial institution and of the depositary, as well as
general laws relating to transfers of debt securities.
An investor should be aware that when debt securities are issued in the
form of global securities:
- the investor cannot have debt securities registered in his or her own
name;
- the investor cannot receive physical certificates for his or her debt
securities;
- the investor must look to his or her bank or brokerage firm for payments
on the debt securities and protection of his or her legal rights
relating to the debt securities;
- the investor may not be able to sell interests in the debt securities to
some insurance or other institutions that are required by law to hold
the physical certificates of debt that they own;
- the depositary's policies will govern payments, transfers, exchanges and
other matters relating to the investor's interest in the global
security; and
- the depositary will usually require that interests in a global security
be purchased or sold within its system using same-day funds.
Neither we nor the trustees have any responsibility for any aspect of the
depositary's actions or for its records of ownership interests in the global
security, and neither we nor the trustees supervise the depositary in any way.
Special Situations When the Global Security Will Be Terminated. In a few
special situations described below, the global security will terminate, and
interests in the global security will be exchanged for physical certificates
representing debt securities. After that exchange, the investor may choose
whether to hold debt securities directly or indirectly through an account at the
investor's bank or brokerage firm. In that event, investors must consult their
banks or brokers to find out how to have their interests in debt securities
transferred to their own names so that they may become direct holders.
The special situations where a global security is terminated are:
- when the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary, unless a replacement is
named;
- when an event of default on the debt securities has occurred and has not
been cured; or
- when and if we decide to terminate a global security. (Section 3.4 of
each indenture).
17
A prospectus supplement may list situations for terminating a global
security that would apply only to a particular series of debt securities. When a
global security terminates, the depositary, and not us or one of the trustees,
is responsible for deciding the names of the institutions that will be the
initial direct holders.
ORIGINAL ISSUE DISCOUNT SECURITIES
Debt securities may be sold at a substantial discount below their stated
principal amount and may bear no interest or interest at a rate which at the
time of issuance is below market rates. Important federal income tax
consequences and special considerations applicable to any such debt securities
will be described in the applicable prospectus supplement.
INDEXED SECURITIES
If the amount of payments of principal of, and premium, if any, or any
interest on, debt securities of any series is determined with reference to any
type of index or formula or changes in prices of particular securities or
commodities, the federal income tax consequences, specific terms and other
information with respect to such debt securities and such index or formula and
securities or commodities will be described in the applicable prospectus
supplement.
FOREIGN CURRENCIES
If the principal of, and premium, if any, or any interest on, debt
securities of any series are payable in a foreign or composite currency, the
restrictions, elections, federal income tax consequences, specific terms and
other information with respect to such debt securities and such currency will be
described in the applicable prospectus supplement.
OPTIONAL REDEMPTION, PREPAYMENT OR CONVERSION IN CERTAIN EVENTS
The prospectus supplement relating to a particular series of debt
securities which provides for the optional redemption, prepayment or conversion
of such debt securities on the occurrence of certain events, such as a change of
control of RGA, will provide:
(1) a discussion of the effects that such provisions may have in deterring
certain mergers, tender offers or other takeover attempts, as well as any
possible adverse effect on the market price of RGA's securities or the ability
to obtain additional financing in the future;
(2) a statement that RGA will comply with any applicable provisions of the
requirements of Rule 14e-1 under the Securities Exchange Act of 1934 and any
other applicable securities laws in connection with any optional redemption,
prepayment or conversion provisions and any related offers by RGA, including, if
such debt securities are convertible, Rule 13e-4;
(3) a disclosure as to whether the securities will be subject to any
sinking fund or similar provision, and a description of any such provision;
(4) a disclosure of any cross-defaults in other indebtedness which may
result as a consequence of the occurrence of certain events so that the payments
on such debt securities would be effectively subordinated;
(5) a disclosure of the effect of any failure to repurchase under the
applicable indenture, including in the event of a change of control of RGA;
(6) a disclosure of any risk that sufficient funds may not be available at
the time of any event resulting in a repurchase obligation; and
(7) a discussion of any definition of "change of control" contained in the
applicable indenture.
18
PAYMENT
Unless otherwise indicated in the applicable prospectus supplement,
payments in respect of the debt securities will be made in the designated
currency at the office or agency of RGA maintained for that purpose as RGA may
designate from time to time, except that, at the option of RGA, interest
payments, if any, on debt securities in registered form may be made by checks
mailed to the holders of debt securities entitled thereto at their registered
addresses. (Section 3.7 of each indenture).
PAYMENT OF INTEREST WITH RESPECT TO REGISTERED DEBT SECURITIES
Unless otherwise indicated in an applicable prospectus supplement, payment
of any installment of interest on debt securities in registered form will be
made to the person in whose name such debt security is registered at the close
of business on the regular record date for such interest. (Section 3.7 of each
indenture).
TRANSFER AND EXCHANGE
Unless otherwise indicated in the applicable prospectus supplement, debt
securities in registered form will be transferable or exchangeable at the agency
of RGA maintained for such purpose as designated by RGA from time to time. Debt
securities may be transferred or exchanged without service charge, other than
any tax or other governmental charge imposed in connection with such transfer or
exchange. (Section 3.5 of each indenture).
CONSOLIDATION, MERGER, CONVEYANCE, SALE OF ASSETS AND OTHER TRANSFERS
We may not consolidate with or merge with or into or wind up into, whether
or not we are the surviving corporation, or sell, assign, convey, transfer or
lease our properties and assets substantially as an entirety to any person,
unless:
- the surviving corporation or other person is organized and existing
under the laws of the United States or one of the 50 states, any U.S.
territory or the District of Columbia, and assumes the obligation to pay
the principal of, and premium, if any, and interest on all the debt
securities and coupons, if any, and to perform or observe all covenants
of each indenture; and
- immediately after the transaction, there is no event of default under
each indenture. (Section 10.1 of each indenture).
Upon the consolidation, merger or sale, the successor corporation formed by
the consolidation, or into which we are merged or to which the sale is made,
will succeed to, and be substituted for us under each indenture. (Section 10.2
of each indenture).
Unless a prospectus supplement relating to a particular series of debt
securities provides otherwise, the indenture and the terms of the debt
securities will not contain any covenants designed to afford holders of any debt
securities protection in a highly leveraged or other transaction involving us,
whether or not resulting in a change of control, which may adversely affect
holders of the debt securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
If indicated in the applicable prospectus supplement, we will have the
right, as long as no event of default under the applicable series of debt
securities has occurred and is continuing, at any time and from time to time
during the term of the series of debt securities to defer the payment of
interest on one or more series of debt securities for the number of consecutive
interest payment periods specified in the applicable prospectus supplement,
subject to the terms, conditions and covenants, if any, specified in the
prospectus supplement, provided that no extension period may extend beyond the
stated maturity of the debt securities. Material United States federal income
tax consequences and special considerations applicable to these debt securities
will be described in the applicable prospectus supplement. Unless otherwise
indicated in the applicable prospectus supplement, at the end of the extension
period, we will
19
pay all interest then accrued and unpaid together with interest on accrued and
unpaid interest compounded semiannually at the rate specified for the debt
securities to the extent permitted by applicable law. However, unless otherwise
indicated in the applicable prospectus supplement, during the extension period
neither we nor any of our subsidiaries may:
- declare or pay dividends on, make distributions regarding, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of
our capital stock, other than:
(1) purchases of our capital stock in connection with any employee or
agent benefit plans or the satisfaction of our obligations under any
contract or security outstanding on the date of the event requiring
us to purchase capital stock,
(2) in connection with the reclassifications of any class or series of
our capital stock, or the exchange or conversion of one class or
series of our capital stock for or into another class or series of
our capital stock,
(3) the purchase of fractional interests in shares of our capital stock
in connection with the conversion or exchange provisions of that
capital stock or the security being converted or exchanged,
(4) dividends or distributions in our capital stock, or rights to
acquire capital stock, or repurchases or redemptions of capital
stock solely from the issuance or exchange of capital stock, or
(5) redemptions or repurchases of any rights outstanding under our
shareholder rights plan;
- make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by us that rank equally
with or junior to the debt securities;
- make any guarantee payments regarding the foregoing, other than payments
under our guarantee of the preferred securities of any RGA trust; or
- redeem, purchase or acquire less than all of the junior subordinated
debt securities or any preferred securities of an RGA trust.
Prior to the termination of any extension period, as long as no event of
default under the applicable indenture has occurred and is continuing, we may
further defer payments of interest, subject to the above limitations set forth
in this section, by extending the interest payment period; provided, however,
that, the extension period, including all previous and further extensions, may
not extend beyond the maturity of the debt securities.
Upon the termination of any extension period and the payment of all amounts
then due, we may commence a new extension period, subject to the terms set forth
in this section. No interest during an extension period, except at the end of
the extension period, will be due and payable, but we may prepay at any time all
or any portion of the interest accrued during an extension period. We do not
currently intend to exercise our right to defer payments of interest by
extending the interest payment period on the debt securities. In the case of our
junior subordinated debt securities, if the property trustee is the sole holder
of such debt securities, we will give the administrative trustees and the
property trustee notice of our selection of an extension period one business day
before the earlier of (1) the date distributions on the preferred securities are
payable or (2) the date the administrative trustees are required to give notice
to the New York Stock Exchange, or other applicable self-regulatory
organization, or to holders of the preferred securities of the record or payment
date of the distribution. The administrative trustees will give notice of our
selection of the extension period to the holders of the preferred securities. If
the property trustee is not the sole holder of such debt securities, or in the
case of the senior and subordinated debt securities, we will give the holders of
these debt securities notice of our selection of an extension period ten
business days before the earlier of (1) the interest payment date or (2) the
date upon which we are required to give notice to the New York Stock Exchange,
or other applicable self-regulatory organization, or to holders of such debt
securities of the record or payment date of the related interest payment.
20
(Article XVII of the senior indenture; Article XVIII of the subordinated and
junior subordinated indentures).
MODIFICATION OR AMENDMENT OF THE INDENTURES
Supplemental Indentures Without Consent of Holders. Without the consent of
any holders, we and the trustee may enter into one or supplemental indentures
for certain purposes, including:
(1) to evidence the succession of another corporation to our rights and the
assumption by such successor of our covenants contained in each indenture;
(2) to add to our covenants for the benefit of all or any series of debt
securities, or to surrender any of our rights or powers;
(3) to add any additional events of default;
(4) to add or change any provisions to permit or facilitate the issuance of
debt securities of any series in uncertificated or bearer form;
(5) to change or eliminate any provisions, as long as any such change or
elimination is effective only when there are no outstanding debt securities of
any series created before the execution of such supplemental indenture which is
entitled to the benefit of the provisions being changed or eliminated;
(6) to provide security for or guarantee of the debt securities;
(7) to supplement any of the provisions to permit or facilitate the
defeasance and discharge of any series of debt securities in accordance with
such indenture as long as such action does not adversely affect the interests of
the holders of the debt securities in any material respect;
(8) to establish the form or terms of debt securities in accordance with
each indenture;
(9) to provide for the acceptance of the appointment of a successor trustee
for any series of debt securities or to provide for or facilitate the
administration of the trusts under the indenture by more than one trustee;
(10) to cure any ambiguity, to correct or supplement any provision of any
indenture which may be defective or inconsistent with any other provision, to
eliminate any conflict with the Trust Indenture Act or to make any other
provisions with respect to matters or questions arising under such indenture
which are not inconsistent with any provision of the indenture, as long as the
additional provisions do not adversely affect the interests of the holders in
any material respect; or
(11) in the case of the subordinated and the junior subordinated
indentures, to modify the subordination provisions thereof, except in a manner
which would be adverse to the holders of subordinated or junior subordinated
debt securities of any series then outstanding. (Section 11.1 of each such
indenture).
Supplemental Indentures With Consent of Holders. If we receive the consent
of the holders of at least a majority in principal amount of the outstanding
debt securities of each series affected, we may enter into supplemental
indentures with the trustee for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of each indenture or
of modifying in any manner the rights of the holders under the indenture of such
debt securities and coupons, if any. As long as any of the preferred securities
of an RGA trust remain outstanding, no modification of the related junior
subordinated indenture may be made that requires the consent of the holders of
the related junior subordinated debt securities, no termination of the related
junior subordinated indenture may occur, and no waiver of any event of default
under the related junior subordinated indenture may be effective, without the
prior consent of the holders of a majority of the aggregate liquidation amount
of the preferred securities of such RGA trust.
21
However, unless we receive the consent of all of the affected holders, we
may not enter into supplemental indentures that would, with respect to the debt
securities of such holders:
(1) conflict with the required provisions of the Trust Indenture Act;
(2) except as described in any prospectus supplement:
- change the stated maturity of the principal of, or installment of
interest, if any, on, any debt security,
- reduce the principal amount thereof or the interest thereon or any
premium payable upon redemption thereof; however, a requirement to
offer to repurchase debt securities will not be deemed a redemption
for this purpose,
- change the stated maturity of or reduce the amount of any payment to
be made with respect to any coupon,
- change the currency or currencies in which the principal of, and
premium, if any, or interest on such debt security is denominated or
payable,
- reduce the amount of the principal of a discount security that would
be due and payable upon a declaration of acceleration of the maturity
thereof or reduce the amount of, or postpone the date fixed for, any
payment under any sinking fund or analogous provisions for any debt
security,
- impair the right to institute suit for the enforcement of any payment
on or after the stated maturity thereof, or, in the case of
redemption, on or after the redemption date,
- limit our obligation to maintain a paying agency outside the United
States for payment on bearer securities, or
- adversely affect the right to convert any debt security into shares of
our common stock if so provided;
(3) reduce the requirement for majority approval of supplemental
indentures, or for waiver of compliance with certain provisions of either
indenture or certain defaults; or
(4) modify any provisions of either indenture relating to waiver of past
defaults with respect to that series, except to increase any such percentage or
to provide that certain other provisions of such indenture cannot be modified or
waived without the consent of the holders of each such debt security of each
series affected thereby. (Section 11.2 of each indenture).
It is not necessary for holders of the debt securities to approve the
particular form of any proposed supplemental indenture, but it is sufficient if
the holders approve the substance thereof. (Section 11.2 of each indenture).
A supplemental indenture which changes or eliminates any covenant or other
provision of the indenture to which it relates with respect to one or more
particular series of debt securities and coupons, if any, or which modifies the
rights of the holders of debt securities or any coupons of such series with
respect to such covenant or other provision, will be deemed not to affect the
rights under such indenture of the holders of debt securities and coupons, if
any, of any other series. (Section 11.2 of each indenture).
SUBORDINATION UNDER THE SUBORDINATED INDENTURE AND THE JUNIOR SUBORDINATED
INDENTURE
In the subordinated and junior subordinated indentures, RGA has covenanted
and agreed that any subordinated or junior subordinated debt securities issued
thereunder are subordinated and junior in right of payment to all present and
future senior indebtedness to the extent provided in the subordinated indenture.
(Section 17.1 of the subordinated and junior subordinated indentures). Unless
otherwise indicated in the applicable prospectus supplement, the subordinated
and junior subordinated indentures
22
define the term "senior indebtedness" with respect to each respective series of
subordinated and junior subordinated debt securities, to mean the principal,
premium, if any, and interest on:
- all indebtedness of RGA, whether outstanding on the date of the issuance
of subordinated debt securities or thereafter created, incurred or
assumed, which is for money borrowed, or which is evidenced by a note or
similar instrument given in connection with the acquisition of any
business, properties or assets, including securities;
- any indebtedness of others of the kinds described in the preceding
clause for the payment of which RGA is responsible or liable as
guarantor or otherwise; and
- amendments, renewals, extensions and refundings of any such
indebtedness.
In the case of the junior subordinated indenture, unless otherwise indicated in
the applicable prospectus supplement, senior indebtedness also includes all
subordinated debt securities issued under the subordinated indenture. The senior
indebtedness will continue to be senior indebtedness and entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of the senior indebtedness or extension or
renewal of the senior indebtedness. Unless otherwise indicated in the applicable
prospectus supplement, notwithstanding anything to the contrary in the
foregoing, senior indebtedness will not include (A) indebtedness incurred for
the purchase of goods or materials or for services obtained in the ordinary
course of business and (B) any indebtedness which by its terms is expressly made
pari passu, or equal in rank and payment, with or subordinated to the applicable
debt securities. (Section 17.2 of the subordinated and junior subordinated
indentures).
Unless otherwise indicated in the applicable prospectus supplement, no
direct or indirect payment, in cash, property or securities, by set-off or
otherwise, shall be made or agreed to be made on account of the subordinated or
junior subordinated debt securities or interest thereon or in respect of any
repayment, redemption, retirement, purchase or other acquisition of subordinated
debt securities, if:
- RGA defaults in the payment of any principal, or premium, if any, or
interest on any senior indebtedness, whether at maturity or at a date
fixed for prepayment or declaration or otherwise; or
- an event of default occurs with respect to any senior indebtedness
permitting the holders to accelerate the maturity and written notice of
such event of default, requesting that payments on subordinated or junior
subordinated debt securities cease, is given to RGA by the holders of
senior indebtedness,
unless and until such default in payment or event of default has been cured or
waived or ceases to exist. Unless otherwise indicated in the applicable
prospectus supplement, the foregoing limitations will also apply to payments in
respect of the junior subordinated debt securities in the case of an event of
default under the subordinated indebtedness (Section 17.4 of the subordinated
and junior subordinated indentures).
Unless otherwise indicated in the applicable prospectus supplement, all
present and future senior indebtedness, which shall include subordinated
indebtedness in the case of our junior subordinated debt securities, including,
without limitation, interest accruing after the commencement of any proceeding
described below, assignment or marshaling of assets, shall first be paid in full
before any payment or distribution, whether in cash, securities or other
property, shall be made by RGA on account of subordinated or junior subordinated
debt securities in the event of:
- any insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition or other similar proceeding relating to RGA,
its creditors or its property;
- any proceeding for the liquidation, dissolution or other winding-up of
RGA, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings;
- any assignment by RGA for the benefit of creditors; or
- any other marshaling of the assets of RGA.
23
Unless otherwise indicated in the applicable prospectus supplement, in any
such event, payments or distributions which would otherwise be made on
subordinated or junior subordinated debt securities will generally be paid to
the holders of senior indebtedness, or their representatives, in accordance with
the priorities existing among these creditors at that time until the senior
indebtedness is paid in full. Unless otherwise indicated in the applicable
prospectus supplement, if the payments or distributions on subordinated or
junior subordinated debt securities are in the form of RGA's securities or those
of any other corporation under a plan of reorganization or readjustment and are
subordinated to outstanding senior indebtedness and to any securities issued
with respect to such senior indebtedness under a plan of reorganization or
readjustment, they will be made to the holders of the subordinated debt
securities and then, if any amounts remain, to the holders of the junior
subordinated debt securities. (Section 17.3 of the subordinated and junior
subordinated indentures). No present or future holder of any senior indebtedness
will be prejudiced in the right to enforce the subordination of subordinated or
junior subordinated debt securities by any act or failure to act on the part of
RGA. (Section 17.9 of the subordinated and junior subordinated indentures).
Senior indebtedness will only be deemed to have been paid in full if the
holders of such indebtedness have received cash, securities or other property
which is equal to the amount of the outstanding senior indebtedness. After
payment in full of all present and future senior indebtedness, holders of
subordinated debt securities will be subrogated to the rights of any holders of
senior indebtedness to receive any further payments or distributions that are
applicable to the senior indebtedness until all the subordinated debt securities
are paid in full. In matters between holders of subordinated debt securities and
any other type of RGA's creditors, any payments or distributions that would
otherwise be paid to holders of senior debt securities and that are made to
holders of subordinated debt securities because of this subrogation will be
deemed a payment by RGA on account of senior indebtedness and not on account of
subordinated debt securities. (Section 17.7 of the subordinated and junior
subordinated indentures).
Subordinated indebtedness will only be deemed to have been paid in full if
the holders of such indebtedness have received cash, securities or other
property which is equal to the amount of the outstanding subordinated
indebtedness. After payment in full of all present and future subordinated
indebtedness, holders of junior subordinated debt securities will be subrogated
to the rights of any holders of subordinated indebtedness to receive any further
payments or distributions that are applicable to the subordinated indebtedness
until all the junior subordinated debt securities are paid in full. In matters
between holders of junior subordinated debt securities and any other type of
RGA's creditors, any payments or distributions that would otherwise be paid to
holders of subordinated debt securities and that are made to holders of junior
subordinated debt securities because of this subrogation will be deemed a
payment by RGA on account of subordinated indebtedness and not on account of
junior subordinated debt securities. (Section 17.7 of the junior subordinated
indenture).
The subordinated and junior subordinated indentures provide that the
foregoing subordination provisions may be changed, except in a manner which
would be adverse to the holders of subordinated or junior subordinated debt
securities of any series then outstanding. (Sections 11.1 and 11.2 of the
subordinated and junior subordinated indentures). The prospectus supplement
relating to such subordinated or junior subordinated debt securities would
describe any such change.
If this prospectus is being delivered in connection with the offering of a
series of subordinated or junior subordinated debt securities, the accompanying
prospectus supplement or information incorporated by reference will set forth
the approximate amount of indebtedness senior to such subordinated or junior
subordinated indebtedness outstanding as of a recent date. The subordinated and
junior subordinated indentures place no limitation on the amount of additional
senior indebtedness that may be incurred by RGA. RGA expects from time to time
to incur additional indebtedness constituting senior indebtedness. At September
30, 2001, RGA had approximately $318.2 million of long-term indebtedness,
including $24.1 million of outstanding long-term indebtedness of our
subsidiaries. The indebtedness of our subsidiaries would effectively rank senior
to all of RGA's senior, subordinated and junior subordinated debt securities.
The remaining $294.1 million of our outstanding long-term indebtedness would
rank equally with the senior debt securities and prior in right of payment to
the subordinated and junior subordinated
24
debt securities. At September 30, 2001, RGA had no debt which would rank equal
to or junior in right of payment to the subordinated or junior subordinated debt
securities.
EVENTS OF DEFAULT
An event of default with respect to any series of debt securities issued
under each of the indentures means:
- default for 30 days in the payment of any interest upon any debt
security or any payment with respect to the coupons, if any, of such
series when it becomes due and payable, except where we have properly
deferred the interest, if applicable;
- default in the payment of the principal of, and premium, if any, on, any
debt security of such series when due;
- default in the deposit of any sinking fund payment when due by the terms
of a debt security of such series;
- default for 90 days after we receive notice as provided in the
applicable indenture in the performance of any covenant or breach of any
warranty in the indenture governing that series;
- certain events of bankruptcy, insolvency or receivership, or, with
respect to the junior subordinated debt securities, the dissolution of
the RGA trust; or
- any other events which we specify for that series, which will be
indicated in the prospectus supplement for that series. (Section 5.1 of
each indenture).
Within 90 days after a default in respect of any series of debt securities,
the trustee, or property trustee, if applicable, must give to the holders of
such series notice of all uncured and unwaived defaults by us known to it.
However, except in the case of default in payment, the trustee may withhold such
notice if it determines that such withholding is in the interest of such
holders. (Section 6.2 of each indenture).
If an event of default occurs in respect of any outstanding series of debt
securities, the trustee of the senior or subordinated indentures, the property
trustee under the junior subordinated indenture or the holders of at least 25%
in principal amount of the outstanding debt securities of that series may
declare the principal amount, or, if the debt securities of that series are
original issue discount securities or indexed securities, such portion of the
principal amount as may be specified in the terms of those securities, of all of
the debt securities of that series to be due and payable immediately by written
notice thereof to us, and to the trustee or property trustee, if applicable, if
given by the holders of the debt securities. However, with respect to any debt
securities issued under the subordinated or junior subordinated indenture, the
payment of principal and interest on such debt securities shall remain
subordinated to the extent provided in Article XVII of the subordinated and
junior subordinated indentures. In addition, at any time after such a
declaration of acceleration but before a judgment or decree for payment of the
money due has been obtained, the holders of a majority in principal amount of
outstanding debt securities of that series may, subject to specified conditions,
rescind and annul such acceleration if all events of default, other than the
non-payment of accelerated principal, or premium, if any, or interest on debt
securities of such series have been cured or waived as provided in the
indenture. (Section 5.2 of each indenture).
The holders of a majority in principal amount of the outstanding debt
securities of a series, on behalf of the holders of all debt securities of that
series, may waive any past default and its consequences, except that they may
not waive an uncured default in payment or a default which cannot be waived
without the consent of the holders of all outstanding securities of that series.
(Section 5.13 of each indenture).
Within four months after the close of each fiscal year, we must file with
the trustee a statement, signed by specified officers, stating whether or not
such officers have knowledge of any default under the
25
indenture and, if so, specifying each such default and the nature and status of
each such default. (Section 12.2 of each indenture).
Subject to provisions in the applicable indenture relating to its duties in
case of default, the trustee, or property trustee, if applicable, is not
required to take action at the request of any holders of debt securities, unless
such holders have offered to the trustee reasonable security or indemnity.
(Section 6.3 of each indenture).
Subject to such indemnification requirements and other limitations set
forth in the applicable indenture, if any event of default has occurred, the
holders of a majority in principal amount of the outstanding debt securities of
any series may direct the time, method and place of conducting proceedings for
remedies available to the trustee, or exercising any trust or power conferred on
the trustee, in respect of such series. (Section 5.12 of each indenture).
DEFEASANCE; SATISFACTION AND DISCHARGE
Legal or Covenant Defeasance. Each indenture provides that we may be
discharged from our obligations in respect of the debt securities of any series,
as described below. These provisions will apply to any registered securities
that are denominated and payable only in U.S. dollars, unless otherwise
specified in a prospectus supplement. The prospectus supplement will describe
any defeasance provisions that apply to other types of debt securities. (Section
15.1 of each indenture).
At our option, we may choose either one of the following alternatives:
- We may elect to be discharged from any and all of our obligations in
respect of the debt securities of any series, except for, among other
things, certain obligations to register the transfer or exchange of debt
securities of such series, to replace stolen, lost or mutilated debt
securities of such series, and to maintain paying agencies and certain
provisions relating to the treatment of funds held by the trustee for
defeasance. We refer to this as "legal defeasance."
- Alternatively, we may omit to comply with the covenants described under
the heading "-- Consolidation, Merger, Conveyance, Sale of Assets and
Other Transfers" and any additional covenants which may be set forth in
the applicable prospectus supplement, and any omission to comply with
those covenants will not constitute a default or an event of default
with respect to the debt securities of that series. We refer to this as
"covenant defeasance."
In either case, we will be so discharged upon the deposit with the trustee,
in trust, of money and/or U.S. Government Obligations that, through the payment
of interest and principal in accordance with their terms, will provide money in
an amount sufficient in the opinion of a nationally recognized firm of
independent public accountants to pay and discharge each installment of
principal, including any mandatory sinking fund payments, premium, if any, and
interest on the debt securities of that series on the stated maturity of those
payments in accordance with the terms of the indenture and those debt
securities.
This discharge may occur only if, among other things, we have delivered to
the trustee an opinion of counsel or Internal Revenue Service ruling to the
effect that the holders of the debt securities of that series will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of the
defeasance. (Section 15.2 of each indenture).
In addition, with respect to the subordinated and junior subordinated
indentures, in order to be discharged, no event or condition shall exist that,
pursuant to certain provisions described under "-- Subordination under the
Subordinated Indenture and the Junior Subordinated Indenture" above, would
prevent us from making payments of principal of, and premium, if any, and
interest on subordinated or junior subordinated debt securities and coupons at
the date of the irrevocable deposit referred to above. (Section 15.2 of the
subordinated and junior subordinated indentures).
Covenant Defeasance and Events of Default. In the event we exercise our
option to effect covenant defeasance with respect to any series of debt
securities and the debt securities of that series are declared due and payable
because of the occurrence of any event of default, the amount of money and/or
26
U.S. Government Obligations on deposit with the trustee will be sufficient to
pay amounts due on the debt securities of that series at the time of their
stated maturity but may not be sufficient to pay amounts due on the debt
securities of that series at the time of the acceleration resulting from the
event of default. However, we will remain liable for those payments.
"U.S. Government Obligations" means securities which are (1) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (2) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and will also include a depository receipt issued
by a bank or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of the holder of a
depository receipt, provided that, except as required by law, such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such depository
receipt. (Section 15.2 of each indenture).
We may exercise our legal defeasance option even if we have already
exercised our covenant defeasance option.
There may be additional provisions relating to defeasance which we will
describe in the prospectus supplement. (Section 15.1 of each indenture).
CONVERSION OR EXCHANGE
Any series of the senior or subordinated debt securities may be convertible
or exchangeable into common or preferred stock or other debt securities
registered under the registration statement relating to this prospectus. The
specific terms and conditions on which such debt securities may be so converted
or exchanged will be set forth in the applicable prospectus supplement. Those
terms may include the conversion or exchange price, provisions for conversion or
exchange, either mandatory, at the option of the holder, or at our option,
whether we have an option to convert debt securities into cash, rather than
common stock, and provisions under which the number of shares of common or
preferred stock or other securities to be received by the holders of debt
securities would be calculated as of a time and in the manner stated in the
applicable prospectus supplement. (Section 16.1 of each indenture).
GOVERNING LAW
The indentures and the debt securities will be governed by, and construed
in accordance with, the internal laws of the State of New York. (Section 1.11 of
each indenture).
REGARDING THE TRUSTEE
We will designate the trustee under the senior and subordinated indentures
in a prospectus supplement. Unless otherwise specified in the applicable
prospectus supplement, The Bank of New York will be the trustee under the junior
subordinated indenture relating to the junior subordinated debt securities which
may be offered to the RGA trusts. From time to time, we may enter into banking
or other relationships with any of such trustees or their affiliates.
There may be more than one trustee under each indenture, each with respect
to one or more series of debt securities. (Section 1.1 of each indenture). Any
trustee may resign or be removed with respect to one or more series of debt
securities, and a successor trustee may be appointed to act with respect to such
series. (Section 6.10 of each indenture).
If two or more persons are acting as trustee with respect to different
series of debt securities, each trustee will be a trustee of a trust under the
indenture separate from the trust administered by any other such trustee. Except
as otherwise indicated in this prospectus, any action to be taken by the trustee
may
27
be taken by each such trustee with respect to, and only with respect to, the one
or more series of debt securities for which it is trustee under the indenture.
(Section 6.1 of each indenture).
DESCRIPTION OF CAPITAL STOCK OF RGA
The following is a summary of the material terms of our capital stock and
the provisions of our Second Restated Articles of Incorporation, bylaws and
rights agreement. It also summarizes some relevant provisions of the Missouri
General and Business Corporation Law, which we refer to as Missouri law. Since
the terms of our articles of incorporation, bylaws and rights agreement, and
Missouri law, are more detailed than the general information provided below, you
should only rely on the actual provisions of those documents and Missouri law.
If you would like to read those documents, they are on file with the SEC, as
described under the heading "Where You Can Find More Information" beginning on
page 3.
GENERAL
Our authorized capital stock consists of 75,000,000 shares of common stock,
par value $0.01 per share, and 10,000,000 shares of preferred stock, par value
$0.01 per share.
COMMON STOCK
All of our outstanding shares of common stock are fully paid and
nonassessable. Subject to the prior rights of the holders of any shares of
preferred stock which later may be issued and outstanding, holders of common
stock are entitled to receive dividends as and when declared by us out of
legally available funds, and, if we liquidate, dissolve, or wind up RGA, to
share ratably in all remaining assets after we pay liabilities. Each holder of
common stock is entitled to one vote for each share held of record on all
matters presented to a vote of shareholders, including the election of
directors. Holders of common stock have no cumulative voting rights or
preemptive rights to purchase or subscribe for any stock or other securities and
there are no conversion rights or redemption or sinking fund provisions for the
common stock.
We may issue additional shares of authorized common stock without
shareholder approval, subject to applicable rules of the New York Stock
Exchange. At our annual meeting of shareholders on May 23, 2001, our
shareholders, including MetLife, adopted a proposal authorizing our board of
directors to approve, during the three years following the date of the
shareholder meeting, any sales to MetLife or its affiliates of our equity
securities, including our common stock or other securities convertible into or
exercisable for our common stock, in which the number of shares will not exceed
the number of shares that would enable MetLife to maintain its then current
ownership percentage of our common stock. Any such sale would be on
substantially the same terms as a sale to unaffiliated third parties. The
shareholder approval was obtained to comply with applicable New York Stock
Exchange rules regarding issuances of common equity to a substantial shareholder
such as MetLife.
Mellon Investor Services LLC, Ridgefield Park, New Jersey is the registrar
and transfer agent for our common stock. Our common stock is listed on the New
York Stock Exchange under the symbol "RGA."
PREFERRED STOCK
Our articles of incorporation vests our board of directors with authority
to issue up to 10,000,000 shares of preferred stock from time to time in one or
more series, with such voting powers, full or limited, or no voting powers, and
such designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as may
be adopted by the resolution or resolutions providing for the issuance of such
stock adopted from time to time by the board of directors. Our board of
directors is expressly authorized to fix or determine:
- the specific designation of the shares of the series;
- the consideration for which the shares of the series are to be issued;
28
- the rate and times at which, and the conditions under which, dividends
will be payable on shares of that series, and the status of those
dividends as cumulative or non-cumulative and as participating or
non-participating;
- the price or prices, times, terms and conditions, if any, upon which the
shares of the series may be redeemed;
- the rights, if any, which the holders of shares of the series have in
the event of dissolution or upon distribution of our assets;
- from time to time, whether to include the additional shares of preferred
stock which we are authorized to issue in the series;
- whether or not the shares of the series are convertible into or
exchangeable for other securities of RGA, including shares of our common
stock or shares of any other series of our preferred stock, the price or
prices or the rate or rates at which conversion or exchange may be made,
and the terms and conditions upon which the conversion or exchange right
may be exercised;
- if a sinking fund will be provided for the purchase or redemption of
shares of the series and, if so, to fix the terms and the amount or
amounts of the sinking fund; and
- any other preferences and rights, privileges and restrictions applicable
to the series as may be permitted by law.
All shares of the same series of preferred stock will be identical and of
equal rank except as to the times from which cumulative dividends, if any, on
those shares will be cumulative. The shares of different series may differ,
including as to rank, as may be provided in our articles of incorporation, or as
may be fixed by our board of directors as described above. We may from time to
time amend our articles of incorporation to increase or decrease the number of
authorized shares of preferred stock.
The material terms of any series of preferred stock being offered by us
will be described in the prospectus supplement relating to that series of
preferred stock. If so indicated in the prospectus supplement and if permitted
by the articles of incorporation and by law, the terms of any such series may
differ from the terms set forth below. That prospectus supplement may not
restate the amendment to our articles of incorporation or the board resolution
that establishes a particular series of preferred stock in its entirety. We urge
you to read that amendment or board resolution because it, and not the
description in the prospectus supplement, will define your rights as a holder of
preferred stock. The certificate of amendment to our articles of incorporation
or board resolution will be filed with the Secretary of State of the State of
Missouri and with the SEC.
Dividend Rights. The preferred stock will be preferred as to payment of
dividends over our common stock or any other stock ranking junior to the
preferred stock as to dividends. Before any dividends or distributions on our
common stock or stock of junior rank, other than dividends or distributions
payable in common stock, are declared and set apart for payment or paid, the
holders of shares of each series of preferred stock will be entitled to receive
dividends when, as and if declared by our board of directors. We will pay those
dividends either in cash, shares of common stock or preferred stock or
otherwise, at the rate and on the date or dates indicated in the applicable
prospectus supplement. With respect to each series of preferred stock, the
dividends on each share of that series will be cumulative from the date of issue
of the share unless some other date is set forth in the prospectus supplement
relating to the series. Accruals of dividends will not bear interest.
Rights upon Liquidation. The preferred stock will be preferred over common
stock, or any other stock ranking junior to the preferred stock with respect to
distribution of assets, as to our assets so that the holders of each series of
preferred stock will be entitled to be paid, upon voluntary or involuntary
liquidation, dissolution or winding up and before any distribution is made to
the holders of common stock or stock of junior rank, the amount set forth in the
applicable prospectus supplement. However, in this case the holders of preferred
stock will not be entitled to any other or further payment. If upon any
liquidation, dissolution or winding up our net assets are insufficient to permit
the payment in full of the
29
respective amounts to which the holders of all outstanding preferred stock are
entitled, our entire remaining net assets will be distributed among the holders
of each series of preferred stock in an amount proportional to the full amounts
to which the holders of each series are entitled.
Redemption. All shares of any series of preferred stock will be redeemable
to the extent set forth in the prospectus supplement relating to the series.
Conversion or Exchange. Shares of any series of preferred stock will be
convertible into or exchangeable for shares of common stock or preferred stock
or other securities to the extent set forth in the applicable prospectus
supplement.
Preemptive Rights. No holder of shares of any series of preferred stock
will have any preemptive or preferential rights to subscribe to or purchase
shares of any class or series of stock, now or hereafter authorized, or any
securities convertible into, or warrants or other evidences of optional rights
to purchase or subscribe to, shares of any series, now or hereafter authorized.
Voting Rights. Except as indicated in the applicable prospectus
supplement, the holders of preferred stock will be entitled to one vote for each
share of preferred stock held by them on all matters properly presented to
shareholders. The holders of common stock and the holders of all series of
preferred stock will vote together as one class. In addition, currently under
Missouri law, even if shares of a particular class or series of stock are not
otherwise entitled to a vote on any matters submitted to the shareholders,
amendments to the articles of incorporation which adversely affect those shares
require a vote of the class or series of which such shares are a part, including
amendments which would:
- increase or decrease the aggregate number or par value of authorized
shares of the class or series;
- create a new class of shares having rights and preferences prior or
superior to the shares of the class or series;
- increase the rights and preferences, or the number of authorized shares,
of any class having rights and preferences prior to or superior to the
rights of the class or series; or
- alter or change the powers, preferences or special rights of the shares
of such class or series so as to affect such shares adversely.
Most of our operations are conducted through our subsidiaries, and thus our
ability to pay dividends on any series of preferred stock is dependent on their
financial condition, results of operations, cash requirements and other related
factors. Our subsidiaries are also subject to restrictions on dividends and
other distributions contained under applicable insurance laws and related
regulations.
Depending upon the rights of holders of the preferred stock, an issuance of
preferred stock could adversely affect holders of common stock by delaying or
preventing a change of control of RGA, making removal of the management of RGA
difficult, or restricting the payment of dividends and other distributions to
the holders of common stock. Except as otherwise contemplated by our shareholder
rights plan described below, we presently have no intention to issue any shares
of preferred stock.
As described under "Description of Depositary Shares of RGA," we may, at
our option, elect to offer depositary shares evidenced by depositary receipts,
each representing an interest, to be specified in the applicable prospectus
supplement for the particular series of the preferred stock, in a share of the
particular series of the preferred stock issued and deposited with a preferred
stock depositary. All shares of preferred stock offered by this prospectus, or
issuable upon conversion, exchange or exercise of securities, will, when issued,
be fully paid and non-assessable.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
We may issue additional shares of common stock or preferred stock without
shareholder approval, subject to applicable rules of the New York Stock
Exchange, for a variety of corporate purposes, including raising additional
capital, corporate acquisitions, and employee benefit plans. The existence of
unissued and unreserved common and preferred stock may enable us to issue shares
to persons who are friendly to
30
current management, which could discourage an attempt to obtain control of RGA
through a merger, tender offer, proxy contest, or otherwise, and protect the
continuity of management and possibly deprive you of opportunities to sell your
shares at prices higher than the prevailing market prices. We could also use
additional shares to dilute the stock ownership of persons seeking to obtain
control of RGA pursuant to the operation of the rights plan or otherwise. See
also "-- Certain Charter and Bylaw Provisions" below.
RIGHTS PLAN
Under our shareholder rights plan, we authorized the issuance of one
preferred stock purchase right for each outstanding share of common stock. The
rights agreement, as amended, between RGA and Mellon Investor Services LLC, as
rights agent, contains the terms of the shareholder rights plan. Since the terms
of our shareholder rights plan are more extensive than the general summary
information we are providing, you should only rely on the actual provisions of
the rights agreement. If you would like to read the rights agreement, it is on
file with the SEC or you may request a copy from us.
Exercisability of Rights
Under the rights agreement, one right attaches to each outstanding share of
our common stock and, when exercisable, entitles the registered holder to
purchase from us one two hundred twenty fifth (1/225th) of a share of Series A
preferred stock at an initial purchase price of $130 per one one-hundredth
(1/100th) of a share, subject to customary antidilution adjustments. For a
description of the terms of the Series A preferred stock. See "Description of
Capital Stock -- Series A Preferred Stock" below.
The rights will not become exercisable until the earlier of:
- 10 business days following a public announcement that a person or group,
other than GenAmerica, MetLife and certain related persons, has become
the beneficial owner of securities representing 20% or more of the
voting power of common stock;
- 10 business days after we first determine that a person or group, other
than GenAmerica, MetLife and certain related persons, has become the
beneficial owner of securities representing 20% or more of the voting
power of our common stock; or
- 10 business days, or such later date as we may determine, following the
commencement of, or the announcement of an intention to commence, a
tender offer or exchange offer that would result in a person or group,
other than GenAmerica, MetLife and certain related persons, becoming the
beneficial owner of securities representing 20% or more of the voting
power of our common stock (or such later date as our board of directors
may determine, but in no event later than the date that any person or
group actually becomes such an owner).
Additionally, at any time a person or a group, other than GenAmerica,
MetLife and certain related persons, has become the beneficial owner of
securities representing 20% or more of the voting power of our common stock, and
RGA has registered the securities subject to the rights under the Securities Act
of 1933, the flip-in features of the rights or, at the discretion of our board
of directors, the exchange features of the rights, may be exercised by any
holder, except for such person or group. A summary description of each of these
features follows:
"Flip In" Feature
In the event a person or group, other than GenAmerica, MetLife and certain
related persons, becomes the beneficial owner of securities representing 20% or
more of the voting power of our common stock, each holder of a right, except for
such person or group, will have the right to acquire, upon exercise of the
right, instead of one two hundred twenty fifth (1/225th) of a share of Series A
preferred stock, shares of our common stock having a value equal to twice the
exercise price of the right. For example, if we assume that the initial purchase
price of $130 per one one-hundredth (1/100th) of a share of Series A preferred
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stock is in effect on the date that the flip-in feature of the right is
exercised, any holder of a right, except for the person or group that has become
the beneficial owner of securities representing 20% or more of the voting power
of our common stock, can exercise nine of his or her rights by paying us $520 in
order to receive from us shares of our common stock having a value equal to
$1,040.
"Exchange" Feature
At any time after a person or group, other than GenAmerica, MetLife and
certain related persons, becomes the beneficial owner of securities representing
20% or more, but less than 50%, of the voting power of our common stock, our
board of directors may, at its option exchange all or some of the rights held by
holders of our common stock, except for those held by such person or group, for
our common stock at an exchange ratio of one share of common stock per right,
and cash instead of fractional shares, if any.
Use of this exchange feature means that eligible rights holders would not
have to pay a purchase price before receiving shares of our common stock.
"Flip Over" Feature
In the event we are acquired in a merger or other business combination
transaction or 50% or more of the assets or earning power of us and our
subsidiaries, taken as a whole, are sold, each holder of a right, except for a
person or group, other than GenAmerica, MetLife and certain related persons,
that is the beneficial owner of securities representing 20% or more of the
voting power of our common stock, will have the right to receive, upon exercise
of the right, the number of shares of the acquiring company's capital stock with
the greatest voting power having a value equal to two times the exercise price
of three rights.
Redemption of Rights
At any time before the earlier to occur of:
- public disclosure that a person or group, other than GenAmerica, MetLife
and certain related persons, has become the beneficial owner of
securities representing 20% or more of the voting power of our common
stock; or
- our determination that a person or group, other than GenAmerica, MetLife
and certain related persons, has become the beneficial owner of
securities representing 20% or more of the voting power of our common
stock,
our board of directors may redeem all the rights at a redemption price of
$0.0067 per right, subject to adjustment. The right to exercise the rights, as
described above under "-- Exercisability of Rights," will terminate upon
redemption, and at such time, the holders of the rights will have the right to
receive only the redemption price for each right held.
Amendment of Rights Agreement
At any time before a person or group, other than GenAmerica, MetLife and
certain related persons, has become the beneficial owner of securities
representing 20% or more of the voting power of our common stock, we may amend
any or all of the terms of the rights and the rights agreement without your
consent. However, if at any time after a person or group, other than GenAmerica,
MetLife and certain related persons, beneficially owns securities representing
20% or more, or such lower percentage as may be amended in the rights agreement,
of the voting power of our common stock, our board of directors may not adopt
amendments to the rights agreement that adversely affect the interests of
holders of the rights.
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Termination of Rights
If not previously exercised, the rights will expire on April 15, 2003,
unless we earlier redeem or exchange the rights or extend the final expiration
date.
Anti-takeover Effects
The rights have certain anti-takeover effects. Once the rights have become
exercisable, the rights will cause substantial dilution to a person or group
that attempts to acquire or merge with us in certain circumstances. Accordingly,
the existence of the rights may deter potential acquirors from making a takeover
proposal or tender offer. The rights should not interfere with any merger or
other business combination approved by our board of directors because we may
redeem the rights as described above and because a transaction approved by our
board of directors would not cause the rights to become exercisable.
SERIES A PREFERRED STOCK
In connection with the creation of the rights, as described above, our
board has authorized the issuance of 500,000 shares of preferred stock as Series
A junior participating preferred stock.
We have designed the dividend, liquidation, voting and redemption features
of the Series A preferred stock so that the value of one two hundred twenty
fifth (1/225th) of a share of Series A preferred stock approximates the value of
one share of common stock. Shares of Series A preferred stock may only be
purchased after the rights have become exercisable, and each share of the Series
A preferred stock:
- is nonredeemable and junior to all other series of preferred stock,
unless otherwise provided in the terms of those series of preferred
stock;
- will have a preferential dividend in an amount equal to the greater of
$1.00 and 225 times any dividend declared on each share of common stock;
- in the event of liquidation, will entitle its holder to (1) receive a
preferred liquidation payment equal to $100, plus the amount of any
accrued and unpaid dividends, and (2) following payment of a specified
amount to the holders of the common stock, to participate in any further
distributions of the RGA's remaining assets;
- will have 225 votes, voting together with our common stock and any other
capital stock with general voting rights; and
- in the event of any merger, consolidation or other transaction in which
shares of common stock are converted or exchanged, will be entitled to
receive 225 times the amount and type of consideration received per
share of common stock.
The rights of the Series A preferred stock as to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
CERTAIN CHARTER AND BYLAW PROVISIONS
Our articles of incorporation and bylaws:
- provide for a classified board of directors;
- limit the right of shareholders to remove directors or change the size
of the board of directors;
- limit the right of shareholders to fill vacancies on the board of
directors;
- limit the right of shareholders to act by written consent and to call a
special meeting of shareholders or propose other actions;
- require a higher percentage of shareholders than would otherwise be
required to amend, alter, change, or repeal the provisions of our
articles of incorporation and bylaws; and
- provide that the bylaws may be amended only by the majority vote of the
board of directors.
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Shareholders will not be able to amend the bylaws without first amending
the articles of incorporation. These provisions may discourage certain types of
transactions that involve an actual or threatened change of control of RGA.
Since the terms of our articles of incorporation and bylaws may differ from the
general information we are providing, you should only rely on the actual
provisions of our articles of incorporation and bylaws. If you would like to
read our articles of incorporation and bylaws, they are on file with the SEC or
you may request a copy from us.
Size of Board
Our articles of incorporation provide that the number of directors to
constitute the board of directors is ten, and hereafter the number of directors
will be fixed from time to time as provided in our bylaws. Our bylaws provide
for a board of directors of at least three directors and permit the board of
directors to increase the number of directors. In accordance with our bylaws,
our board of directors has fixed the number of directors at ten. One of our
directors, William P. Stiritz, resigned in October 2001, creating one vacancy on
our board. Our articles of incorporation further provide that our bylaws may be
amended only by majority vote of our entire board of directors.
Election of Directors
In order for one of our shareholders to nominate a candidate for director,
our articles of incorporation require that such shareholder give timely notice
to us in advance of the meeting. Ordinarily, the shareholder must give notice
not less than 60 days nor more than 90 days before the meeting, but if we give
less than 70 days' notice of the meeting, then the shareholder must give notice
within ten days after we mail notice of the meeting or make a public disclosure
of the meeting. The notice must describe various matters regarding the nominee,
including the nominee's name, address, occupation, and shares held. Our articles
of incorporation do not permit cumulative voting in the election of directors.
Accordingly, the holders of a majority of the then outstanding shares of common
stock can elect all the directors of the class then being elected at that
meeting of shareholders.
Classified Board
Our articles of incorporation and bylaws provide that our board will be
divided into three classes, with the classes to be as nearly equal in number as
possible, and that one class shall be elected each year and serve for a
three-year term.
Removal of Directors
Missouri law provides that, unless a corporation's articles of
incorporation provide otherwise, the holders of a majority of the corporation's
voting stock may remove any director from office. Our articles of incorporation
provide that shareholders may remove a director only "for cause" and with the
approval of the holders of 85% of RGA's voting stock.
Filling Vacancies
Missouri law further provides that, unless a corporation's articles of
incorporation or bylaws provide otherwise, all vacancies on a corporation's
board of directors, including any vacancies resulting from an increase in the
number of directors, may be filled by the vote of a majority of the remaining
directors even if that number is less than a quorum. Our articles of
incorporation provide that, subject to the rights, if any, of the holders of any
class of preferred stock then outstanding and except as described below, only
the vote of a majority of the remaining directors may fill vacancies.
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Limitations on Shareholder Action by Written Consent
As required by Missouri law, our bylaws provide that any action by written
consent of shareholders in lieu of a meeting must be unanimous.
Limitations on Calling Shareholder Meetings
Under our articles of incorporation shareholders may not call special
meetings of shareholders or require our board to call a special meeting of
shareholders, and only a majority of our entire board of directors, our chairman
of the board or our President may call a special meeting of shareholders.
Limitations on Proposals of Other Business
In order for a shareholder to bring a proposal before a shareholder
meeting, our articles of incorporation require that the shareholder give timely
notice to us in advance of the meeting. Ordinarily, the shareholder must give
notice at least 60 days but not more than 90 days before the meeting, but if we
give less than 70 days' notice of the meeting, then the shareholder must give
notice within ten days after we mail notice of the meeting or make other public
disclosure of the meeting. The notice must include a description of the
proposal, the reasons for the proposal, and other specified matters.
Our board may reject any proposals that have not followed these procedures
or that are not a proper subject for shareholder action in accordance with the
provisions of applicable law.
Anti-Takeover Effects of Provisions
The classification of directors, the inability to vote shares cumulatively,
the advance notice requirements for nominations, and the provisions in our
articles of incorporation that limit the ability of shareholders to increase the
size of our board or to remove directors and that permit the remaining directors
to fill any vacancies on our board make it more difficult for shareholders to
change the composition of our board. As a result, at least two annual meetings
of shareholders may be required for the shareholders to change a majority of the
directors, whether or not a change in our board would benefit RGA and its
shareholders and whether or not a majority of our shareholders believes that the
change would be desirable.
The provision of our bylaws which requires unanimity for shareholder action
by written consent gives all our shareholders entitled to vote on a proposed
action the opportunity to participate in the action and prevents the holders of
a majority of the voting power of RGA from using the written consent procedure
to take shareholder action. The bylaw provision requiring advance notice of
other proposals may make it more difficult for shareholders to take action
opposed by the board. Moreover, a shareholder cannot force a shareholder
consideration of a proposal over the opposition of our board of directors by
calling a special meeting of shareholders.
These provisions make it more difficult and time-consuming to obtain
majority control of our board of directors or otherwise bring a matter before
shareholders without our board's consent, and thus reduce the vulnerability of
RGA to an unsolicited takeover proposal. These provisions enable RGA to develop
its business in a manner which will foster its long-term growth, by reducing to
the extent practicable the threat of a takeover not in the best interests of RGA
and its shareholders and the potential disruption entailed by the threat. On the
other hand, these provisions may adversely affect the ability of shareholders to
influence the governance of RGA and the possibility that shareholders would
receive a premium above market price for their securities from a potential
acquirer who is unfriendly to management.
MISSOURI STATUTORY PROVISIONS
Missouri law also contains certain provisions which may have an
anti-takeover effect and otherwise discourage third parties from effecting
transactions with us, including control share acquisition and business
combination statutes.
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Business Combination Statute
Missouri law contains a "business combination statute" which restricts
certain "business combinations" between us and an "interested shareholder," or
affiliates of the interested shareholder, for a period of five years after the
date of the transaction in which the person becomes an interested shareholder,
unless either such transaction or the interested shareholder's acquisition of
stock is approved by our board on or before the date the interested shareholder
obtains such status.
The statute also prohibits business combinations after the five-year period
following the transaction in which the person becomes an interested shareholder
unless the business combination or purchase of stock prior to becoming an
interested shareholder is approved by our board prior to the date the interested
shareholder obtains such status.
The statute also provides that, after the expiration of such five year
period, business combinations are prohibited unless:
- the holders of a majority of the outstanding voting stock, other than
the stock owned by the interested shareholder, approve the business
combination; or
- the business combination satisfies certain detailed fairness and
procedural requirements.
A "business combination" includes a merger or consolidation, some sales,
leases, exchanges, pledges and similar dispositions of corporate assets or stock
and any reclassifications or recapitalizations that increase the proportionate
voting power of the interested shareholder. An "interested shareholder"
generally means any person who, together with his or her affiliates and
associates, owns or controls 20% or more of the outstanding shares of the
corporation's voting stock.
A Missouri corporation may opt out of coverage by the business combination
statute by including a provision to that effect in its governing corporate
documents. We have not done so. However, our board of directors adopted a
resolution approving the acquisition of beneficial ownership by MetLife as an
"interested shareholder," thereby rendering the statute inapplicable to MetLife.
The business combination statute may make it more difficult for a 20%
beneficial owner to effect other transactions with us and may encourage persons
that seek to acquire us to negotiate with our board prior to acquiring a 20%
interest. It is possible that such a provision could make it more difficult to
accomplish a transaction which shareholders may otherwise deem to be in their
best interest.
Control Share Acquisition Statute
Missouri also has a "control share acquisition statute." This statute may
limit the rights of a shareholder to vote some or all of his shares. A
shareholder whose acquisition of shares results in that shareholder having
voting power, when added to the shares previously held by him, to exercise or
direct the exercise of more than a specified percentage of our outstanding stock
(beginning at 20%), will lose the right to vote some or all of his shares in
excess of such percentage unless the shareholders approve the acquisition of
such shares.
In order for the shareholders to grant approval, the acquiring shareholder
must meet certain disclosure requirements specified in the statute. In addition,
a majority of the outstanding voting shares, as determined before the
acquisition, must approve the acquisition. Furthermore, a majority of the
outstanding voting shares, as determined after the acquisition, but excluding
shares held by the acquiring shareholder or employee directors and officers,
must approve the acquisition.
Not all acquisitions of shares constitute control share acquisitions. The
following acquisitions do not constitute control share acquisitions:
- good faith gifts;
- transfers in accordance with wills;
- purchases made in connection with an issuance by us;
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- purchases by any compensation or benefit plan;
- the conversion of debt securities;
- mergers involving us which satisfy the other requirements of the General
and Business Corporation Law of Missouri;
- transactions with a person who owned a majority of our voting power
within the prior year, or
- purchases from a person who previously satisfied the requirements of the
control share statute, so long as the acquiring person does not have
voting power after the ownership in a different ownership range than the
selling shareholder.
A Missouri corporation may opt out of coverage by the control share
acquisition statute by including a provision to that effect in its governing
corporate documents. We recently amended our bylaws to opt out of the control
share acquisition statute.
Take-Over Bid Disclosure Statute
Missouri's "take-over bid disclosure statute" requires that, under some
circumstances, before making a tender offer that would result in the offeror
acquiring control of us, the offeror must file certain disclosure materials with
the Commissioner of the Missouri Department of Securities.
Insurance Holding Companies Act
We are regulated in Missouri as an insurance holding company. Under the
Missouri Insurance Holding Companies Act and related regulations, the
acquisition of control of a domestic insurer must receive prior approval by the
Missouri Department of Insurance. Missouri law provides that a transaction will
be approved if the Department of Insurance finds that the transaction would,
among other things, not violate the law or be contrary to the interests of the
insureds of any participating domestic insurance corporations. The Department of
Insurance may approve any proposed change of control subject to conditions.
DESCRIPTION OF DEPOSITARY SHARES OF RGA
The description of any deposit agreement and any related depositary shares
and depositary receipts in this prospectus and in any prospectus supplement of
certain provisions are summaries of the material provisions of that deposit
agreement and of the depositary shares and depositary receipts. These
descriptions do not restate those agreements and do not contain all of the
information that you may find useful. We urge you to read the applicable
agreements because they, and not the summaries, define your rights as a holder
of the depositary shares. For more information, please review the form of
deposit agreement and form of depositary receipts relating to each series of the
preferred stock, which will be filed with the SEC promptly after the offering of
that series of preferred stock and will be available as described under the
heading "Where You Can Find More Information" on page 3.
GENERAL
We may elect to have shares of preferred stock represented by depositary
shares. The shares of any series of the preferred stock underlying the
depositary shares will be deposited under a separate deposit agreement between
us and a bank or trust company we select. The prospectus supplement relating to
a series of depositary shares will set forth the name and address of this
preferred stock depositary. Subject to the terms of the deposit agreement, each
owner of a depositary share will be entitled, proportionately, to all the
rights, preferences and privileges of the preferred stock represented by such
depositary share, including dividend, voting, redemption, conversion, exchange
and liquidation rights.
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The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement, each of which will represent the applicable
interest in a number of shares of a particular series of the preferred stock
described in the applicable prospectus supplement.
A holder of depositary shares will be entitled to receive the shares of
preferred stock, but only in whole shares of preferred stock, underlying those
depositary shares. If the depositary receipts delivered by the holder evidence a
number of depositary shares in excess of the whole number of shares of preferred
stock to be withdrawn, the depositary will deliver to that holder at the same
time a new depositary receipt for the excess number of depositary shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions in respect of the series of preferred stock represented by
the depositary shares to the record holders of depositary receipts in
proportion, to the extent possible, to the number of depositary shares owned by
those holders. The depositary, however, will distribute only the amount that can
be distributed without attributing to any depositary share a fraction of one
cent, and any undistributed balance will be added to and treated as part of the
next sum received by the depositary for distribution to record holders of
depositary receipts then outstanding.
If there is a distribution other than in cash in respect of the preferred
stock, the preferred stock depositary will distribute property received by it to
the record holders of depositary receipts in proportion, insofar as possible, to
the number of depositary shares owned by those holders, unless the preferred
stock depositary determines that it is not feasible to make such a distribution.
In that case, the preferred stock depositary may, with our approval, adopt any
method that it deems equitable and practicable to effect the distribution,
including a public or private sale of the property and distribution of the net
proceeds from the sale to the holders.
The amount distributed in any of the above cases will be reduced by any
amount we or the preferred stock depositary are required to withhold on account
of taxes.
CONVERSION AND EXCHANGE
If any series of preferred stock underlying the depositary shares is
subject to provisions relating to its conversion or exchange as set forth in an
applicable prospectus supplement, each record holder of depositary receipts will
have the right or obligation to convert or exchange the depositary shares
evidenced by the depositary receipts pursuant to those provisions.
REDEMPTION OF DEPOSITARY SHARES
If any series of preferred stock underlying the depositary shares is
subject to redemption, the depositary shares will be redeemed from the proceeds
received by the preferred stock depositary resulting from the redemption, in
whole or in part, of the preferred stock held by the preferred stock depositary.
Whenever we redeem a share of preferred stock held by the preferred stock
depositary, the preferred stock depositary will redeem as of the same redemption
date a proportionate number of depositary shares representing the shares of
preferred stock that were redeemed. The redemption price per depositary share
will be equal to the aggregate redemption price payable with respect to the
number of shares of preferred stock underlying the depositary shares. If fewer
than all the depositary shares are to be redeemed, the depositary shares to be
redeemed will be selected by lot or proportionately as we may determine.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary shares will cease, except the right to receive the
redemption price. Any funds that we deposit with the preferred stock depositary
relating to depositary shares which are not redeemed by the holders of the
depositary shares will be returned to us after a period of two years from the
date the funds are deposited by us.
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VOTING
Upon receipt of notice of any meeting at which the holders of any shares of
preferred stock underlying the depositary shares are entitled to vote, the
preferred stock depositary will mail the information contained in the notice to
the record holders of the depositary receipts. Each record holder of the
depositary receipts on the record date, which will be the same date as the
record date for the preferred stock, may then instruct the preferred stock
depositary as to the exercise of the voting rights pertaining to the number of
shares of preferred stock underlying that holder's depositary shares. The
preferred stock depositary will try to vote the number of shares of preferred
stock underlying the depositary shares in accordance with the instructions, and
we will agree to take all reasonable action which the preferred stock depositary
deems necessary to enable the preferred stock depositary to do so. The preferred
stock depositary will abstain from voting the preferred stock to the extent that
it does not receive specific written instructions from holders of depositary
receipts representing the preferred stock.
RECORD DATE
Subject to the provisions of the deposit agreement, whenever
- any cash dividend or other cash distribution becomes payable,
- any distribution other than cash is made,
- any rights, preferences or privileges are offered with respect to the
preferred stock,
- the preferred stock depositary receives notice of any meeting at which
holders of preferred stock are entitled to vote or of which holders of
preferred stock are entitled to notice, or
- the preferred stock depositary receives notice of the mandatory
conversion of or any election by us to call for the redemption of any
preferred stock,
the preferred stock depositary will in each instance fix a record date, which
will be the same as the record date for the preferred stock, for the
determination of the holders of depositary receipts:
- who will be entitled to receive dividend, distribution, rights,
preferences or privileges or the net proceeds of any sale, or
- who will be entitled to give instructions for the exercise of voting
rights at any such meeting or to receive notice of the meeting or the
redemption or conversion.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of depositary receipts at the principal office of the
preferred stock depositary, upon payment of any unpaid amount due the preferred
stock depositary, and subject to the terms of the deposit agreement, the owner
of the depositary shares evidenced by the depositary receipts is entitled to
delivery of the number of whole shares of preferred stock and all money and
other property, if any, represented by the depositary shares. Partial shares of
preferred stock will not be issued. If the depositary receipts delivered by the
holder evidence a number of depositary shares in excess of the number of
depositary shares representing the number of whole shares of preferred stock to
be withdrawn, the preferred stock depositary will deliver to the holder at the
same time a new depositary receipt evidencing the excess number of depositary
shares. Holders of preferred stock that are withdrawn will not be entitled to
deposit the shares that have been withdrawn under the deposit agreement or to
receive depositary receipts.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
We and the preferred stock depositary may at any time agree to amend the
form of depositary receipt and any provision of the deposit agreement. However,
any amendment that materially and adversely alters the rights of holders of
depositary shares will not be effective unless the amendment has been approved
by the holders of at least a majority of the depositary shares then outstanding.
The deposit agreement may be terminated by us or by the preferred stock
depositary only if all outstanding shares have been redeemed or
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if a final distribution in respect of the underlying preferred stock has been
made to the holders of the depositary shares in connection with the liquidation,
dissolution or winding up of us.
CHARGES OF PREFERRED STOCK DEPOSITARY
We will pay all charges of the preferred stock depositary including charges
in connection with the initial deposit of the preferred stock, the initial
issuance of the depositary receipts, the distribution of information to the
holders of depositary receipts with respect to matters on which preference stock
is entitled to vote, withdrawals of the preferred stock by the holders of
depositary receipts or redemption or conversion of the preferred stock, except
for taxes (including transfer taxes, if any) and other governmental charges and
any other charges expressly provided in the deposit agreement to be at the
expense of holders of depositary receipts or persons depositing preferred stock.
MISCELLANEOUS
Neither we nor the preferred stock depositary will be liable if either of
us is prevented or delayed by law or any circumstance beyond our control in
performing any obligations under the deposit agreement. The obligations of the
preferred stock depositary under the deposit agreement are limited to performing
its duties under the agreement without negligence or bad faith. Our obligations
under the deposit agreement are limited to performing our duties in good faith.
Neither we nor the preferred stock depositary is obligated to prosecute or
defend any legal proceeding in respect of any depositary shares or preferred
stock unless satisfactory indemnity is furnished. We and the preferred stock
depositary may rely on advice of or information from counsel, accountants or
other persons that they believe to be competent and on documents that they
believe to be genuine.
The preferred stock depositary may resign at any time or be removed by us,
effective upon the acceptance by its successor of its appointment. If we have
not appointed a successor preferred stock depositary and the successor
depositary has not accepted its appointment within 60 days after the preferred
stock depositary delivered a resignation notice to us, the preferred stock
depositary may terminate the deposit agreement. See "-- Amendment and
Termination of the Deposit Agreement" above.
DESCRIPTION OF WARRANTS AND WARRANT UNITS OF RGA
We may issue warrants to purchase debt securities, common stock, preferred
stock or other securities. We may issue warrants independently or as part of a
unit with other securities, including, without limitation, preferred securities
issued by the RGA trusts. Warrants sold with other securities as a unit may be
attached to or separate from the other securities. We will issue warrants under
one or more warrant agreements between us and a warrant agent that we will name
in the applicable prospectus supplement.
The prospectus supplement relating to any warrants we are offering will
include specific terms relating to the offering, including a description of any
other securities sold together with the warrants. These terms will include some
or all of the following:
- the title of the warrants;
- the aggregate number of warrants offered;
- the price or prices at which the warrants will be issued;
- the currency or currencies, including composite currencies, in which the
prices of the warrants may be payable;
- the designation, number and terms of the debt securities, common stock,
preferred stock or other securities or rights, including rights to
receive payment in cash or securities based on the value, rate or price
of one or more specified commodities, currencies or indices, purchasable
upon exercise of the warrants and procedures by which those numbers may
be adjusted;
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- the exercise price of the warrants and the currency or currencies,
including composite currencies, in which such price is payable;
- the dates or periods during which the warrants are exercisable;
- the designation and terms of any securities with which the warrants are
issued as a unit;
- if the warrants are issued as a unit with another security, the date on
and after which the warrants and the other security will be separately
transferable;
- if the exercise price is not payable in U.S. dollars, the foreign
currency, currency unit or composite currency in which the exercise
price is denominated;
- any minimum or maximum amount of warrants that may be exercised at any
one time;
- any terms relating to the modification of the warrants; and
- any other terms of the warrants, including terms, procedures and
limitations relating to the transferability, exchange, exercise or
redemption of the warrants.
Warrants issued for securities other than our debt securities, common stock
or preferred stock will not be exercisable until at least one year from the date
of sale of the warrant.
The applicable prospectus supplement will describe the specific terms of
any warrant units.
The descriptions of the warrant agreements in this prospectus and in any
prospectus supplement are summaries of the material provisions of the applicable
agreements. These descriptions do not restate those agreements in their entirety
and do not contain all of the information that you may find useful. We urge you
to read the applicable agreements because they, and not the summaries, define
your rights as holders of the warrants or any warrant units. For more
information, please review the form of the relevant agreements, which will be
filed with the SEC promptly after the offering of warrants or warrant units and
will be available as described under the heading "Where You Can Find More
Information" above.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS OF RGA
As may be specified in a prospectus supplement, we may issue stock purchase
contracts obligating holders to purchase from us, and us to sell to the holders,
a number of shares of our common stock, preferred stock or depositary shares at
a future date or dates. The stock purchase contracts may require us to make
periodic payments to the holders of stock purchase contracts. These payments may
be unsecured or prefunded on some basis to be specified in the applicable
prospectus supplement. The stock purchase contracts may be issued separately or
as part of stock purchase units consisting of a stock purchase contract and an
underlying security that is pledged by the holder of a stock purchase contract
to secure its obligations under the stock purchase contract.
The prospectus supplement relating to any stock purchase contracts or stock
purchase units we are offering will specify the material terms of the stock
purchase contracts, the stock purchase units and any applicable pledge or
depository arrangements, including one or more of the following:
- The stated amount that a holder will be obligated to pay under the stock
purchase contract in order to purchase our common stock, preferred stock
or depositary shares, or the formula by which such amount shall be
determined.
- The settlement date or dates on which the holder will be obligated to
purchase shares of our common stock, preferred stock or depositary
shares. The prospectus supplement will specify whether the occurrence of
any events may cause the settlement date to occur on an earlier date and
the terms on which an early settlement would occur.
- The events, if any, that will cause our obligations and the obligations
of the holder under the stock purchase contract to terminate.
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- The settlement rate, which is a number that, when multiplied by the
stated amount of a stock purchase contract, determines the number of
shares of our common stock, preferred stock or depositary shares that we
will be obligated to sell and a holder will be obligated to purchase
under that stock purchase contract upon payment of the stated amount of
that stock purchase contract. The settlement rate may be determined by
the application of a formula specified in the prospectus supplement. If
a formula is specified, it may be based on the market price of our
common stock, preferred stock or depositary shares over a specified
period or it may be used on some other reference statistic.
- Whether the stock purchase contracts will be issued separately or as
part of stock purchase units consisting of a stock purchase contract and
an underlying security with an aggregate principal amount equal to the
stated amount. Any underlying securities will be pledged by the holder
to secure its obligations under a stock purchase contract.
- The type of underlying security, if any, that is pledged by the holder
to secure its obligations under a stock purchase contract. Underlying
securities may be our debt securities, depositary shares, preferred
securities, or debt obligations, or trust preferred securities of an RGA
trust.
- The terms of the pledge arrangement relating to any underlying
securities, including the terms on which distributions or payments of
interest and principal on any underlying securities will be retained by
a collateral agent, delivered to us or be distributed to the holder.
- The amount of the contract fee, if any, that may be payable by us to the
holder or by the holder to us, the date or dates on which the contract
fee will be payable and the extent to which we or the holder, as
applicable, may defer payment of the contract fee on those payment
dates. The contract fee may be calculated as a percentage of the stated
amount of the stock purchase contract or otherwise.
The descriptions of the stock purchase contracts, stock purchase units and
any applicable underlying security or pledge or depository arrangements in this
prospectus and in any prospectus supplement are summaries of the material
provisions of the applicable agreements. These descriptions do not restate those
agreements in their entirety. We urge you to read the applicable agreements
because they, and not the summaries, define your rights as holders of the stock
purchase contracts or stock purchase units. We will make copies of the relevant
agreements available as described under the heading "Where You Can Find More
Information" above.
DESCRIPTION OF PREFERRED SECURITIES OF THE RGA TRUSTS
Each RGA trust may issue, from time to time, one series of preferred
securities having terms described in the prospectus supplement. Preferred
securities may be issued either independently or as part of a unit with other
securities, including, without limitation, warrants to purchase common stock of
RGA. Preferred securities sold with other securities as a unit may be attached
to or separate from the other securities. The proceeds from the sale of each
trust's preferred and common securities will be used by such trust to purchase a
series of junior subordinated debt securities issued by RGA. The junior
subordinated debt securities will be held in trust by the trust's property
trustee for the benefit of the holders of such preferred and common securities.
Each amended and restated trust agreement has been or will be qualified as an
indenture under the Trust Indenture Act. The property trustee for each trust,
The Bank of New York, an independent trustee, will act as indenture trustee for
the preferred securities for purposes of compliance with the provisions of the
Trust Indenture Act. The preferred securities will have the terms, including
distributions, redemption, voting, liquidation rights, maturity date or dates
and the other preferred, deferred or other special rights or restrictions as are
established by the administrative trustees in accordance with the applicable
amended and restated trust agreement or as are set forth in the amended and
restated trust agreement or made part of the amended and restated trust
agreement by the Trust Indenture Act. Such terms, rights and restrictions will
mirror the terms of the junior subordinated debt securities held by the
applicable trust and will be described in the applicable prospectus supplement.
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The prospectus supplement relating to the preferred securities of the
applicable RGA trust will provide specific terms, including:
- the distinctive designation of the preferred securities;
- the number of preferred securities issuable by the RGA trust;
- the annual distribution rate, or method of determining the rate, for
preferred securities issued by the RGA trust and the date or dates upon
which distributions will be payable; provided, however, that
distributions on the preferred securities will, subject to any deferral
provisions and any provisions for payment of defaulted distributions, be
payable on a quarterly basis to holders of the preferred securities as
of a record date in each quarter during which the preferred securities
are outstanding and any provisions relating to the resetting or
adjustment of the distribution rate;
- any right of the RGA trust to defer quarterly distributions on the
preferred securities as a result of an interest deferral right exercised
by us on the junior subordinated debt securities held by the RGA trust;
- whether distributions on preferred securities will be cumulative, and,
in the case of preferred securities having cumulative distribution
rights, the date or dates or method of determining the date or dates
from which distributions on preferred securities will be cumulative;
- the amount or amounts which will be paid out of the assets of the RGA
trust to the holders of preferred securities upon voluntary or
involuntary dissolution, winding-up or termination of the RGA trust;
- the obligation or option, if any, of the RGA trust to purchase or redeem
preferred securities and the price or prices at which, the period or
periods within which, and the terms and conditions upon which preferred
securities will be purchased or redeemed, in whole or in part, under
this obligation or option with the redemption price or formula for
determining the redemption price to be specified in the applicable
prospectus supplement;
- the voting rights, if any, of preferred securities in addition to those
required by law, including the number of votes per preferred security
and any requirement for the approval by the holders of preferred
securities as a condition to specified action or amendments to the
amended and restated trust agreement;
- the terms and conditions, if any, upon which junior subordinated debt
securities held by the RGA trust may be distributed to holders of
preferred securities;
- whether such preferred securities are convertible into our common stock,
and the terms of any such conversion, including whether we have the
option to convert such preferred securities into cash instead of common
stock;
- the title or designation and terms of any securities with which the
preferred securities are issued as a unit; and
- any other relevant terms, rights, preferences, privileges, limitations
or restrictions of preferred securities consistent with the amended and
restated trust agreement or applicable law.
All preferred securities offered by the prospectus will be guaranteed by us
to the extent set forth below under "Description of the Preferred Securities
Guarantees of RGA." The guarantee issued by us to each RGA trust, when taken
together with our obligations under the junior subordinated debt securities
issued to any RGA trust and under the applicable indenture and any applicable
supplemental indentures, and our obligations under each amended and restated
trust agreement, including the obligation to pay expenses of each RGA trust,
will provide a full and unconditional guarantee by us of amounts due on the
preferred securities issued by each RGA trust. The payment terms of the
preferred securities will be the same as the junior subordinated debt securities
issued to the applicable RGA trust by us.
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Each amended and restated trust agreement authorizes the administrative
trustees to issue on behalf of the applicable trust one series of common
securities having terms, including distributions, redemption, voting and
liquidation rights, and restrictions that are established by the administrative
trustees in accordance with the amended and restated trust agreement or that are
otherwise set forth in the amended and restated trust agreement. The terms of
the common securities issued by each RGA trust will be substantially identical
to the terms of the preferred securities issued by the RGA trust. The common
securities will rank equally, and payments will be made proportionately, with
the preferred securities of that trust. However, if an event of default under
the amended and restated trust agreement of the RGA trust has occurred and is
continuing, the cash distributions and liquidation, redemption and other amounts
payable on the common securities will be subordinated to the preferred
securities in right of payment. The common securities will also carry the right
to vote and to appoint, remove or replace any of the trustees of the RGA trust.
RGA will own, directly or indirectly, all of the common securities of each RGA
trust.
The financial statements of any RGA trust that issues preferred securities
will be reflected in our consolidated financial statements with the preferred
securities shown as company-obligated mandatorily-redeemable preferred
securities of a subsidiary trust under "minority interest." We will include in a
footnote to our audited financial statements, statements that the applicable RGA
trust is wholly-owned by us and that the sole asset of the RGA trust is the
junior subordinated debt securities, indicating the principal amount, interest
rate and maturity date of the junior subordinated debt securities.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an event of default occurs, and is continuing, under the amended and
restated trust agreement of either RGA trust, the holders of the preferred
securities of that trust may rely on the property trustee to enforce its rights
as a holder of the subordinated debt securities against RGA. Additionally, those
who together hold a majority of the aggregate stated liquidation amount of an
RGA trust's preferred securities will have the right to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the property trustee; or
- direct the exercise of any trust or power that the property trustee
holds under the amended and restated trust agreement, including the
right to direct the property trustee to exercise the remedies available
to it as a holder of the junior subordinated debt securities.
If such a default occurs and the event is attributable to RGA's failure to
pay interest or principal on the junior subordinated debt securities when due,
including any payment on redemption, and this debt payment failure is
continuing, a preferred securities holder of the trust may directly institute a
proceeding for the enforcement of this payment. Such a proceeding will be
limited, however, to enforcing the payment of this principal or interest only up
to the value of the aggregate liquidation amount of the holder's preferred
securities as determined after the due date specified in the applicable series
of junior subordinated debt securities. RGA will be subrogated to the holder's
rights under the applicable amended and restated trust agreement to the extent
of any payment it makes to the holder in connection with such a direct action,
and RGA may setoff against any such payment that it makes under the applicable
preferred securities guarantee.
The descriptions of the preferred securities in this prospectus and any
prospectus supplement are summaries of the material provisions of the applicable
amended and restated trust agreement. These descriptions do not restate those
agreements in their entirety. We urge you to read the applicable amended and
restated trust agreement because it, and not the summaries, defines your rights
as holders of the preferred securities. For more information, please review the
form of the applicable agreements, which will be filed with the SEC promptly
after the offering of preferred securities and will be available as described
under the heading "Where You Can Find More Information" above.
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DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES OF RGA
Set forth below is a summary of information concerning the guarantees that
will be executed and delivered by us for the benefit of the holders, from time
to time, of preferred securities. Summaries of any other terms of any guarantee
that are issued will be set forth in the applicable prospectus supplement. Each
guarantee has been or will be qualified as an indenture under the Trust
Indenture Act. Unless otherwise specified in the applicable prospectus
supplement, The Bank of New York will act as the preferred securities guarantee
trustee. The terms of each guarantee will be set forth in the guarantee and will
include the terms made part of the guarantee by the Trust Indenture Act and will
be available as described under the heading "Where You Can Find More
Information" above. The following is a summary of the material terms of the
guarantees. You should refer to the provisions of the form of guarantee, a copy
of which has been or will be filed as an exhibit to the registration statement
of which this prospectus is a part, and the Trust Indenture Act. Each guarantee
will be held by the preferred securities guarantee trustee for the benefit of
the holders of the preferred securities of the applicable RGA trust.
Unless otherwise specified in the applicable prospectus supplement, we will
agree, to the extent set forth in each guarantee, to pay in full to the holders
of the preferred securities, the payments and distributions to be made with
respect to the preferred securities, except to the extent paid by the applicable
RGA trust, as and when due, regardless of any defense, right of set-off or
counterclaim which the RGA trust may have or assert. The following payments or
distributions with respect to the preferred securities, to the extent not paid
by the RGA trust and to the extent that such RGA trust has funds available for
these payments or distributions, will be subject to the guarantee:
- any accrued and unpaid distributions that are required to be paid on the
preferred securities;
- the redemption price for any preferred securities called for redemption
by the RGA trust; and
- upon a voluntary or involuntary dissolution, winding-up or termination
of the RGA trust, other than in connection with the distribution of
junior subordinated debt securities to the holders of preferred
securities in exchange for preferred securities or the redemption of all
of the preferred securities upon maturity or redemption of the
subordinated debt securities, the lesser of
(i) the sum of the liquidation amount and all accrued and unpaid
distributions on the preferred securities to the date of payment,
or
(ii) the amount of assets of the RGA trust remaining for distribution to
holders of the preferred securities in liquidation of the RGA
trust.
We may satisfy our obligation to make a guarantee payment by making a
direct payment of the required amounts to the holders of preferred securities or
by causing the applicable RGA trust to pay the amounts to the holders.
Each guarantee will not apply to any payment of distributions except to the
extent the applicable RGA trust has funds available to make the payment. If we
do not make interest or principal payments on the junior subordinated debt
securities purchased by the RGA trust, the RGA trust will not pay distributions
on the preferred securities issued by the RGA trust and will not have funds
available to make the payments.
COVENANTS OF RGA
Unless otherwise specified in the applicable prospectus supplement, in each
guarantee of the payment obligations of an RGA trust with respect to preferred
securities, we will covenant that, so long as any preferred securities issued by
the RGA trust remain outstanding, if there has occurred any event which would
constitute an event of default under the guarantee or under the amended and
restated trust agreement of the RGA trust, then we will not:
- declare or pay any dividend on, make any other distributions on, or
redeem, purchase, acquire or make a liquidation payment regarding, any
of our capital stock, except:
(1) purchases or acquisitions of our capital stock in connection with
the satisfaction of our obligations under any employee or agent
benefit plans or the satisfaction of our obligations
45
under any contract or security outstanding on the date of the event
requiring us to purchase our capital stock;
(2) as a result of a reclassification of our capital stock or the
exchange or conversion of one class or series of our capital stock
for another class or series of our capital stock;
(3) the purchase of fractional interests in shares of our capital stock
in connection with the conversion or exchange provisions of our
capital stock or the security being converted or exchanged;
(4) dividends or distributions in our capital stock, or rights to
acquire our capital stock, or repurchases or redemptions of capital
stock solely from the issuance or exchange of capital stock; or
(5) redemptions or repurchases of any rights outstanding under a
shareholder rights plan;
- make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by us which rank junior
to the subordinated debt securities issued to the applicable RGA trust;
and
- make any guarantee payments regarding the foregoing, other than under a
guarantee of the payment obligations of an RGA trust with respect to
preferred securities.
MODIFICATION OF THE GUARANTEES; ASSIGNMENT
Except for any changes that do not adversely affect the rights of holders
of preferred securities, in which case no consent of the holders will be
required, each guarantee of the payment obligations of an RGA trust with respect
to preferred securities may be amended only with the prior approval of the
holders of at least a majority in aggregate liquidation amount of the
outstanding preferred securities of the RGA trust. The manner of obtaining any
approval of holders of the preferred securities will be set forth in an
accompanying prospectus supplement. All guarantees and agreements contained in a
guarantee of the obligations of an RGA trust with respect to preferred
securities will bind the successors, assigns, receivers, trustees and
representatives of RGA and will inure to the benefit of the holders of the
preferred securities of the applicable RGA trust then outstanding.
EVENTS OF DEFAULT
An event of default under a preferred securities guarantee will occur upon
our failure to perform any of our payment or other obligations under the
guarantee. The holders of a majority in aggregate liquidation amount of the
preferred securities to which the preferred securities guarantee relates will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the preferred securities guarantee trustee with
respect to the guarantee or to direct the exercise of any trust or power
conferred upon the preferred securities guarantee trustee under the guarantee.
If we have failed to make a guarantee payment under a guarantee, a record
holder of preferred securities to which the guarantee relates may directly
institute a proceeding against us for enforcement of the guarantee for the
payment to the record holder of the preferred securities to which the guarantee
relates of the principal of or interest on the applicable subordinated debt
securities on or after the respective due dates specified in the junior
subordinated debt securities, and the amount of the payment will be based on the
holder's proportionate share of the amount due and owing on all of the preferred
securities to which the guarantee relates. We have waived any right or remedy to
require that any action be brought first against the applicable RGA trust or any
other person or entity before proceeding directly against us. The record holder
in the case of the issuance of one or more global preferred securities
certificates will be The Depository Trust Company, or its nominee, acting at the
direction of the beneficial owners of the preferred securities.
46
We will be required to provide annually to the preferred securities
guarantee trustee a statement as to the performance of our obligations under
each outstanding preferred securities guarantee and as to any default in our
performance.
TERMINATION
Each preferred securities guarantee will terminate as to the preferred
securities issued by the applicable RGA trust:
- upon full payment of the redemption price of all preferred securities of
the RGA trust;
- upon distribution of the junior subordinated debt securities held by the
RGA trust to the holders of all of the preferred securities of the RGA
trust; or
- upon full payment of the amounts payable in accordance with the amended
and restated trust agreement of the RGA trust upon termination and
liquidation of the RGA trust.
Each preferred securities guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of preferred
securities issued by the applicable RGA trust must restore payment of any sums
paid under the preferred securities or the preferred securities guarantee.
STATUS OF THE GUARANTEES
The preferred securities guarantees will constitute our unsecured
obligations and, unless otherwise indicated in an applicable prospectus
supplement, will rank as follows:
- subordinated and junior in right of payment to all of RGA's present and
future liabilities, including subordinated debt securities issued under
RGA's subordinated indenture and described above under "Description of
Debt Securities of RGA -- Subordination under the Subordinated Indenture
and the Junior Subordinated Indenture," except those liabilities made
equivalent by their terms;
- equivalently with:
(1) the most senior preferred or preference stock now or hereafter
issued by us and with any guarantee now or hereafter entered into by
us in respect of any preferred or preference stock of any of our
affiliates;
(2) the applicable junior subordinated debt securities; and
(3) any other liabilities or obligations made equivalent by their terms;
and
- senior to our common stock and any preferred or preference stock or
other liabilities made equivalent or subordinate by their terms.
The terms of the preferred securities provide that each holder of preferred
securities by acceptance of the preferred securities agrees to the subordination
provisions and other terms of our guarantee relating to the preferred
securities.
Each preferred securities guarantee will constitute a guarantee of payment
and not of collection. This means that the guaranteed party may institute a
legal proceeding directly against us to enforce its rights under the guarantee
without instituting a legal proceeding against any other person or entity.
INFORMATION CONCERNING THE PREFERRED SECURITIES GUARANTEE TRUSTEE
The preferred securities guarantee trustee, before the occurrence of a
default under a preferred securities guarantee, undertakes to perform only the
duties that are specifically set forth in the guarantee and, after a default
under a guarantee, will exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to this
provision, the preferred securities guarantee trustee is under no obligation to
exercise any of the powers vested in it by a preferred securities
47
guarantee at the request of any holder of preferred securities to which the
guarantee relates unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred by the preferred securities
guarantee trustee in exercising any of its powers; but the foregoing shall not
relieve the trustee, upon the occurrence of an event of default under such
guarantee, from exercising the rights and powers vested in it by such guarantee.
EXPENSE AGREEMENT
We will, pursuant to an agreement as to expenses and liabilities entered
into by us and each RGA trust under its amended and restated trust agreement,
irrevocably and unconditionally guarantee to each person or entity to whom the
trust becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the trust, other than obligations of the trust to pay to the
holders of the preferred securities or other similar interests in the trust the
amounts due to the holders pursuant to the terms of the preferred securities or
other similar interests, as the case may be. Third party creditors of the trust
may proceed directly against us under the expense agreement, regardless of
whether they had notice of the expense agreement.
GOVERNING LAW
The preferred securities guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBT SECURITIES
AND THE PREFERRED SECURITIES GUARANTEES
As set forth in the amended and restated trust agreements of each RGA
trust, the sole purpose of the RGA trusts is to issue the preferred securities
and common securities evidencing undivided beneficial interests in the assets of
each of the trusts, and to invest the proceeds from such issuance and sale in
RGA's junior subordinated debt securities.
As long as payments of interest and other payments are made when due on the
junior subordinated debt securities held by the RGA trusts, such payments will
be sufficient to cover distributions and payments due on the preferred
securities and common securities because of the following factors:
- the aggregate principal amount of such junior subordinated debt
securities will be equal to the sum of the aggregate stated liquidation
amount of the preferred securities and common securities;
- the interest rate and the interest and other payment dates on such
junior subordinated debt securities will match the distribution rate and
distribution and other payment dates for the preferred securities;
- RGA shall pay, and the trusts shall not be obligated to pay, directly or
indirectly, all costs, expenses, debt, and obligations of the trusts,
other than with respect to the preferred securities and common
securities; and
- the amended and restated trust agreement of each trust will further
provide that the trustees shall not take or cause or permit the trust
to, among other things, engage in any activity that is not consistent
with the purposes of the applicable trust.
Payments of distributions, to the extent funds for such payments are
available, and other payments due on the preferred securities, to the extent
funds for such payments are available, are guaranteed by RGA as and to the
extent set forth under "Description of the Preferred Securities Guarantees of
RGA." If RGA does not make interest payments on the junior subordinated debt
securities purchased by the applicable trust, it is expected that the applicable
trust will not have sufficient funds to pay distributions on the preferred
securities and the preferred securities guarantee will not apply, since the
preferred securities guarantee covers the payment of distributions and other
payments on the preferred securities only if and to the extent that RGA has made
a payment of interest or principal on the junior subordinated debt
48
securities held by the applicable trust as its sole asset. However, the
preferred securities guarantee, when taken together with RGA's obligations under
the junior subordinated debt securities and the junior subordinated indenture
and its obligations under the respective amended and restated trust agreements,
including its obligations to pay costs, expenses, debts and liabilities of the
trust, other than with respect to the preferred securities and common
securities, provide a full and unconditional guarantee, on a subordinated basis,
by RGA of amounts due on the preferred securities.
If RGA fails to make interest or other payments on the junior subordinated
debt securities when due, taking account of any extension period, the amended
and restated trust agreement provide a mechanism whereby the holders of the
preferred securities affected thereby, using the procedures described in any
accompanying prospectus supplement, may direct the property trustee to enforce
its rights under the junior subordinated debt securities. If a debt payment
failure has occurred and is continuing, a holder of preferred securities may
institute a direct action for payment after the respective due date specified in
the junior subordinated debt securities. In connection with such direct action,
RGA will be subrogated to the rights of such holder of preferred securities
under the amended and restated trust agreement to the extent of any payment made
by RGA to such holder of preferred securities in such direct action. RGA, under
the guarantee, acknowledges that the guarantee trustee shall enforce the
guarantee on behalf of the holders of the preferred securities. If RGA fails to
make payments under the guarantee, the guarantee provides a mechanism whereby
the holders of the preferred securities may direct the trustee to enforce its
rights thereunder. Any holder of preferred securities may institute a legal
proceeding directly against RGA to enforce the guarantee trustee's rights under
the guarantee without first instituting a legal proceeding against the trust,
the guarantee trustee, or any other person or entity.
RGA and each of the RGA trusts believe that the above mechanisms and
obligations, taken together, provide a full and unconditional guarantee by RGA
on a subordinated basis of payments due on the preferred securities. See
"Description of the Preferred Securities Guarantees of RGA."
Upon any voluntary or involuntary termination, winding-up or liquidation of
an RGA trust involving the liquidation of the junior subordinated debt
securities, the holders of the preferred securities will be entitled to receive,
out of assets held by such RGA trust, the liquidation distribution in cash. Upon
our voluntary or involuntary liquidation or bankruptcy, the property trustee, as
holder of the junior subordinated debt securities, would be a subordinated
creditor of ours. Therefore, the property trustee would be subordinated in right
of payment to all of our senior and subordinated debt, but is entitled to
receive payment in full of principal and interest before any of our shareholders
receive payments or distributions. Since we are the guarantor under the
preferred securities guarantees and have agreed to pay for all costs, expenses
and liabilities of the RGA trusts other than the obligations of the trusts to
pay to holders of the preferred securities the amounts due to the holders
pursuant to the terms of the preferred securities, the positions of a holder of
the preferred securities and a holder the junior subordinated debt securities
relative to our other creditors and to our shareholders in the event of
liquidation or bankruptcy are expected to be substantially the same.
PLAN OF DISTRIBUTION
We or any RGA trust may sell any of the securities being offered by this
prospectus in any one or more of the following ways from time to time:
- through agents;
- to or through underwriters;
- through dealers; and
- directly by us to purchasers.
The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
49
Agents designated by us or the applicable RGA trust may solicit offers to
purchase the securities from time to time. The prospectus supplement will name
any such agent involved in the offer or sale of the securities and will set
forth any commissions payable by us or the applicable RGA trust to such agent.
Unless otherwise indicated in such prospectus supplement, any such agent will be
acting on a reasonable best efforts basis for the period of its appointment. Any
such agent may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the securities so offered and sold.
If the securities are sold by means of an underwritten offering, we and the
applicable RGA trust will execute an underwriting agreement with an underwriter
or underwriters at the time an agreement for such sale is reached. A prospectus
supplement will be used by the underwriters to make resales of the securities to
the public and will set forth the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transaction, including commissions, discounts and any other compensation of the
underwriters and dealers, if any. If underwriters are utilized in the sale of
the securities, the securities will be acquired by the underwriters for their
own account and may be resold from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices determined by the underwriter at the time of sale. The securities may be
offered to the public either through underwriting syndicates represented by
managing underwriters or directly by the managing underwriters. If any
underwriter or underwriters are utilized in the sale of the securities, unless
otherwise indicated in the prospectus supplement, the underwriting agreement
will provide that the obligations of the underwriters are subject to certain
conditions precedent and that the underwriters will be obligated to purchase all
such securities if any are purchased.
If a dealer is utilized in the sale of the securities, we or the applicable
RGA trust will sell such securities to the dealer as principal. The dealer may
then resell such securities to the public at varying prices to be determined by
such dealer at the time of resale. Any such dealer may be deemed to be an
underwriter, as such term is defined in the Securities Act, of the securities so
offered and sold. The prospectus supplement will set forth the name of the
dealer and the terms of the transaction.
We or the applicable RGA trust may directly solicit offers to purchase the
securities and may sell such securities directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The prospectus supplement
will describe the terms of any such sales.
We or the applicable RGA trust may determine the price or other terms of
the securities offered under this prospectus by use of an electronic auction. We
will describe how any auction will determine the price or any other terms, how
potential investors may participate in the auction and nature of the
underwriters' obligations in the related supplement to this prospectus.
Agents, underwriters and dealers may be entitled under relevant agreements
with us or the applicable RGA trust to indemnification by us or the applicable
RGA trust against certain liabilities, including liabilities under the
Securities Act, or to any contribution with respect to payments which such
agents, underwriters and dealers may be required to make.
Each series of securities will be a new issue with no established trading
market, other than the common stock which is listed on the New York Stock
Exchange. Any common stock sold pursuant to a prospectus supplement will be
listed on such exchange, subject to official notice of issuance. We may elect to
list any series of debt securities, preferred stock, depositary shares,
warrants, stock purchase contracts or stock purchase units on an exchange, and
the applicable RGA trust may elect to list any series of preferred securities on
an exchange, but neither we nor the trusts will be obligated to do so. It is
possible that one or more underwriters may make a market in a series of the
securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. Therefore, we can give no assurance as to the
liquidity of the trading market for the securities.
Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for, us and our subsidiaries or an RGA
trust in the ordinary course of business.
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The securities may also be offered and sold, if so indicated in the
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms, which we refer to as "remarketing firms," acting as
principals for their own accounts or as agents for us or the applicable RGA
trust. The prospectus supplement will identify any remarketing firm and will
describe the terms of its agreement, if any, with us or the applicable RGA trust
and its compensation. Remarketing firms may be deemed to be underwriters, as
such term is defined in the Securities Act, in connection with the securities
remarketed thereby. Under agreements which may be entered into with us or the
applicable RGA trust, we or the applicable RGA trust may be required to provide
indemnification or contribution to remarketing firms against certain civil
liabilities, including liabilities under the Securities Act. Remarketing firms
may also be customers of, engage in transactions with or perform services for us
and our subsidiaries or an RGA trust in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we or the
applicable RGA trust may authorize agents, underwriters or dealers to solicit
offers by certain institutions to purchase the securities from us or the
applicable RGA trust at the public offering prices set forth in the applicable
prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date or dates. The applicable prospectus
supplement will indicate the commission to be paid to underwriters, dealers and
agents soliciting purchases of the securities pursuant to contracts accepted by
us or the applicable RGA trust.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement, James
E. Sherman, Esq., General Counsel and Secretary of RGA, will issue an opinion
about the legality of the common stock, preferred stock, depositary shares,
warrants, stock purchase contracts and stock purchase units of RGA under
Missouri law, and Bryan Cave LLP, St. Louis, Missouri, will issue an opinion
about the legality of the debt securities of RGA and the preferred securities
guarantees of RGA. Mr. Sherman is paid a salary by RGA, is a participant in
various employee benefit plans offered by RGA to employees of RGA generally and
owns and has options to purchase shares of RGA common stock. John C. Danforth, a
partner of Bryan Cave LLP, is on the Board of Directors of MetLife and two of
its subsidiaries, General American Life Insurance Company and GenAmerica
Financial Corporation, which are, collectively, our majority shareholder. Unless
otherwise indicated in the applicable prospectus supplement, Richards, Layton &
Finger, P.A., our special Delaware counsel, will issue an opinion about the
legality of the trust preferred securities.
EXPERTS
The consolidated financial statements and the related financial statement
schedules as of and for the year ended December 31, 2000 incorporated in this
prospectus by reference from RGA's Annual Report on Form 10-K for the year ended
December 31, 2000 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The consolidated financial statements and the related financial statement
schedules as of December 31, 1999, and for the two-year period ended December
31, 1999, included or incorporated by reference in RGA's Annual Report on Form
10-K for the year ended December 31, 2000, incorporated by reference in this
prospectus, have been incorporated by reference herein in reliance on the
reports of KPMG LLP, given on the authority of that firm as experts in
accounting and auditing.
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$225,000,000
[RGA LOGO]
TRUST PREFERRED INCOME EQUITY REDEEMABLE
SECURITIES (PIERS*) UNITS
----------------------------
PROSPECTUS SUPPLEMENT
DECEMBER 12, 2001
----------------------------
LEHMAN BROTHERS
BANC OF AMERICA SECURITIES LLC
* "Preferred Income Equity Redeemable Securities(SM)" and "PIERS(SM)" are
service marks owned by Lehman Brothers Inc.
LOGO