<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-11848
REINSURANCE GROUP OF AMERICA, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 43-1627032
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1370 TIMBERLAKE MANOR PARKWAY
CHESTERFIELD, MISSOURI 63017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(636) 736-7439
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
---
COMMON STOCK OUTSTANDING ($.01 PAR VALUE) AS OF APRIL 30, 2000: 49,819,353
SHARES
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
PART I - FINANCIAL INFORMATION
<S> <C> <C>
1 Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)
March 31, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Income (Unaudited)
Three months ended March 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31, 2000 and 1999 5
Notes to Condensed Consolidated Financial
Statements (Unaudited) 6-8
2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-22
3 Qualitative and Quantitative Disclosures About Market Risk 22
PART II - OTHER INFORMATION
1 Legal Proceedings 23
6 Exhibits and Reports on Form 8-K 23
Signatures 24
Index to Exhibits 25
</TABLE>
2
<PAGE> 3
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Fixed maturity securities
Available for sale-at fair value (amortized cost of $2,290,219 and
$2,087,540 at March 31, 2000, and December 31, 1999, respectively) $ 2,169,068 $ 1,876,166
Mortgage loans on real estate 220,753 213,187
Policy loans 660,064 660,062
Funds withheld at interest 864,849 797,949
Short-term investments 92,336 238,424
Other invested assets 28,510 26,069
----------- -----------
Total investments 4,035,580 3,811,857
Cash and cash equivalents 75,516 24,316
Accrued investment income 51,536 37,175
Premiums receivable 257,357 295,153
Funds withheld 17,157 13,294
Reinsurance ceded receivables 273,039 295,460
Deferred policy acquisition costs 502,749 478,389
Other reinsurance balances 147,718 151,000
Other assets 24,551 17,099
----------- -----------
Total assets $ 5,385,203 $ 5,123,743
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Future policy benefits $ 1,931,260 $ 1,870,099
Interest sensitive contract liabilities 1,630,356 1,545,893
Other policy claims and benefits 533,586 582,066
Other reinsurance balances 57,237 53,866
Deferred income taxes 111,243 67,914
Other liabilities 126,572 83,238
Long-term debt 184,764 183,954
----------- -----------
Total liabilities 4,575,018 4,387,030
Minority interest 4,361 3,765
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock (par value $.01 per share; 10,000,000 shares authorized; no
shares issued or outstanding) -- --
Common stock (par value $.01 per share; 75,000,000 shares authorized,
51,053,273 shares issued at March 31, 2000 and December 31, 1999,
respectively) 511 511
Additional paid in capital 611,040 611,016
Retained earnings 299,814 282,389
Accumulated other comprehensive income:
Accumulated currency translation adjustment, net of taxes (10,771) (9,909)
Unrealized appreciation (depreciation) of securities, net of taxes (73,565) (131,341)
----------- -----------
Total stockholders' equity before treasury stock 827,029 752,666
Less treasury shares held of 1,183,920 and 1,112,820 at cost at
March 31, 2000, and December 31, 1999, respectively (21,205) (19,718)
----------- -----------
Total stockholders' equity 805,824 732,948
----------- -----------
Total liabilities and stockholders' equity $ 5,385,203 $ 5,123,743
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
----------------------------------------
2000 1999
--------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C>
REVENUES:
Net premiums $ 329,543 $ 353,759
Investment income, net of related expenses 74,010 85,043
Realized investment gains/(losses), net (4,632) (83)
Other revenue 3,213 4,388
--------- ---------
Total revenues 402,134 443,107
BENEFITS AND EXPENSES:
Claims and other policy benefits 265,739 300,427
Interest credited 21,299 39,552
Policy acquisition costs and other insurance expenses 51,483 49,211
Other operating expenses 19,965 16,204
Interest expense 3,534 1,956
--------- ---------
Total benefits and expenses 362,020 407,350
--------- ---------
Income before income taxes and minority interest 40,114 35,757
Provision for income taxes 15,648 13,670
--------- ---------
Income from continuing operations before minority interest 24,466 22,087
Minority interest in earnings of consolidated subsidiaries 562 109
--------- ---------
Income from continuing operations 23,904 21,978
Discontinued operations:
(Loss) on discontinued accident and health operations,
net of taxes (3,482) (21)
--------- ---------
Net income $ 20,422 $ 21,957
========= =========
Earnings per share from continuing operations:
Basic earnings per share $ 0.48 $ 0.48
========= =========
Diluted earnings per share $ 0.48 $ 0.48
========= =========
Earnings per share from net income:
Basic earnings per share $ 0.41 $ 0.48
========= =========
Diluted earnings per share $ 0.41 $ 0.48
========= =========
Weighted average number of diluted shares outstanding
(in thousands) 50,135 45,874
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------------
2000 1999
----------- -----------
(Dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 20,422 $ 21,957
Adjustments to reconcile net income to net cash provided by
operating activities:
Change in:
Accrued investment income (14,361) (15,628)
Premiums receivable 37,440 (48,232)
Deferred policy acquisition costs (23,381) (29,227)
Funds withheld (3,863) 5,055
Reinsurance ceded balances 21,699 (29,375)
Future policy benefits, other policy claims and benefits, and
other reinsurance balances 20,056 141,786
Deferred income taxes 7,126 1,756
Other assets and other liabilities 33,370 73,265
Amortization of goodwill and value of business acquired 133 202
Amortization of net investment discounts (6,249) 721
Realized investment (gains)/losses, net 4,632 83
Minority interest in earnings 562 109
Other, net (3,744) (3,275)
---------- ----------
Net cash provided by operating activities 93,842 119,197
INVESTING ACTIVITIES:
Sales of investments:
Fixed maturity securities - Available for sale 31,180 392,613
Mortgage loans 1,859 1,736
Maturities of fixed maturity securities - Available for sale 1,241 17,512
Purchases of fixed maturity securities - Available for sale (225,748) (408,820)
Cash invested in:
Mortgage loans (10,334) (11,474)
Policy loans (2) -
Funds withheld at interest (66,900) (21,820)
Principal payments on:
Mortgage loans 1,313 2,338
Change in short-term and other invested assets 144,770 (64,463)
---------- ----------
Net cash used by investing activities (122,621) (92,378)
FINANCING ACTIVITIES:
Dividends to stockholders (2,996) (2,285)
Purchase of treasury stock (1,487) -
Reissuance of treasury stock 24 438
Excess deposits (withdraws) on universal life and other
investment type policies and contracts 84,463 (10,047)
---------- ----------
Net cash provided (used) by financing activities 80,004 (11,894)
Effect of exchange rate changes (25) (259)
---------- ----------
Change in cash and cash equivalents 51,200 14,666
Cash and cash equivalents, beginning of period 24,316 15,966
---------- ----------
Cash and cash equivalents, end of period $ 75,516 $ 30,632
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited, condensed, consolidated financial statements of
Reinsurance Group of America, Incorporated and Subsidiaries (the "Company") have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's Annual Report
for the year ended December 31, 1999.
The Company has reclassified the presentation of certain prior period segment
information to conform to the 2000 presentation.
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share on income from continuing operations (in thousands except per share
information):
<TABLE>
<CAPTION>
------------------------------------
THREE MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999
------------------------------------
<S> <C> <C>
Earnings:
Income from continuing operations (numerator for
basic and diluted calculations) $23,904 $21,978
Shares:
Weighted average outstanding shares (denominator for
basic calculation) 49,937 45,334
Equivalent shares from outstanding stock options
(denominator for diluted calculation) 198 540
------------------------------------
Denominator for diluted calculation 50,135 45,874
Earnings per share:
Basic $0.48 $0.48
Diluted $0.48 $0.48
------------------------------------
</TABLE>
The calculation of diluted earnings per share does not include common stock
equivalent shares, the impact of which would be antidilutive. For the three
months ended March 31, 2000, approximately 1.0 million outstanding stock options
were not included in the calculation of
6
<PAGE> 7
common equivalent shares as their respective exercise prices were greater than
the average market price. These options were outstanding at the end of period.
3. COMPREHENSIVE INCOME
The following schedule reflects the change in accumulated other comprehensive
income (loss) for the three month periods ending March 31, 2000 and 1999
(dollars in thousands):
<TABLE>
<CAPTION>
------------------------------------
THREE MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999
------------------------------------
<S> <C> <C>
Net income $20,422 $21,957
Accumulated other comprehensive
Income (expense), net of tax:
Unrealized gains (losses) on securities 57,776 (31,947)
Foreign currency items (861) 460
------------------------------------
Comprehensive income (loss) $77,337 $(9,530)
------------------------------------
</TABLE>
4. SEGMENT INFORMATION
The accounting policies of the segments are the same as those described in the
Summary of Significant Accounting Policies in Note 2 of the 1999 Annual Report.
The Company measures segment performance based on profit or loss from operations
before income taxes and minority interest. There are no intersegment
transactions and the Company does not have any material long-lived assets.
Investment income is allocated to the segments based upon average assets and
related capital levels deemed appropriate to support the segment business
volumes.
The Company's reportable segments are strategic business units that are
segregated by geographic region. Total revenues are primarily from external
customers with significant intercompany activity eliminated through
consolidation. Information related to revenues and income (loss) before income
taxes and minority interest of the Company's continuing operations are
summarized below (in thousands).
<TABLE>
<CAPTION>
INCOME (LOSS) BEFORE INCOME
REVENUES TAXES AND MINORITY INTEREST
----------------------------------- -------------------------------------
THREE MONTHS ENDING MARCH 31 THREE MONTHS ENDING MARCH 31
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
U.S. $296,954 $337,074 $33,977 $37,296
Canada 55,634 47,539 12,230 5,198
Latin America 22,260 32,009 1,856 1,551
Asia Pacific 20,132 17,104 (718) (7,764)
Other international 6,842 5,119 (941) (600)
Corporate 312 4,262 (6,290) 76
----------------------------------- -------------------------------------
Total from continuing operations $402,134 $443,107 $40,114 $35,757
----------------------------------- -------------------------------------
</TABLE>
There have been no material changes in reportable segment assets from the
amounts disclosed in Note 17 of the 1999 Annual Report.
7
<PAGE> 8
5. STOCK REPURCHASE PROGRAM
On March 16, 2000, the Company's Board of Directors approved a stock repurchase
program under which the Company may use up to $20 million to purchase
outstanding shares of stock. The Company plans to use the repurchased shares to
support the future exercise of options granted under its stock option plan.
Under the program, 71,100 shares at an aggregate cost of $1.5 million were
repurchased and transferred to the Company's treasury during the first quarter
of 2000.
6. SUBSEQUENT EVENT
Sale of Chilean Operations
As of April 1, 2000, the Company reached an agreement with Ohio National
Financial Services Inc., whereby Ohio National would purchase the Company's
interest in several Chilean operations including: RGA Sudamerica, S.A., RGA
Reinsurance Company Chile, S.A. and Bhif America Seguros de Vida, S.A. Ohio
National also purchased the remaining share of Bhif America Seguros de Vida,
S.A. from Chilean investors. The transaction closed on April 27, 2000.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company has five main operating 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
primarily include reinsurance of bank-owned life insurance and annuities. The
Canada operations provide insurers with traditional reinsurance as well as
assistance with capital management activity. The Latin America operations
include traditional reinsurance, reinsurance of privatized pension products
primarily in Argentina, and direct life insurance through a joint venture and
subsidiaries in Chile and Argentina. Asia Pacific operations provide primarily
traditional life reinsurance through RGA Reinsurance Company of Australia,
Limited ("RGA Australia") and RGA Reinsurance. Other international operations
include traditional business from Europe and South Africa, in addition to other
markets being developed by the Company. The operational segment results do not
include the corporate investment activity, general corporate expenses, interest
expense of RGA, and the provision for income tax expense (benefit). In addition,
the Company's discontinued accident and health operations are not reflected in
the continuing operations of the Company. The Company measures segment
performance based on profit or loss from operations before income taxes and
minority interest.
Consolidated income from continuing operations before income taxes and minority
interest for the first quarter of 2000 increased $4.4 million as compared to the
prior-year period. After tax diluted earnings per share from continuing
operations was flat at $0.48 for the first quarters of 2000 and 1999. Diluted
shares outstanding reflect the private placement of 4.8 million shares of
Company common stock with Metropolitan Life Insurance Company in November 1999.
For the first quarter of 2000, reinsurance arrangements with MetLife and its
affiliates represented approximately 9% of the Company's income from continuing
operations before income taxes and minority interest.
Further discussion and analysis of the results for 2000 compared to 1999 are
presented by segment.
9
<PAGE> 10
U.S. OPERATIONS (dollars in thousands)
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
------------------------------------------------------------------
TRADITIONAL NON-TRADITIONAL TOTAL
ASSET- FINANCIAL U.S.
INTENSIVE REINSURANCE
------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Net premiums $ 246,742 $ 618 $ - $ 247,360
Investment income, net of related expenses 33,111 17,435 - 50,546
Realized investment gains (losses), net (2,819) (84) - (2,903)
Other revenue 293 (44) 1,702 1,951
------------------------------------------------------------------
Total revenues 277,327 17,925 1,702 296,954
BENEFITS AND EXPENSES:
Claims and other policy benefits 199,559 108 0 199,667
Interest credited 11,426 9,381 0 20,807
Policy acquisition costs and other insurance
expenses 28,681 6,317 1,124 36,122
Other operating expenses 6,223 139 19 6,381
------------------------------------------------------------------
Total benefits and expenses 245,889 15,945 1,143 262,977
Income before income taxes and minority
interest $ 31,438 $ 1,980 $ 559 $ 33,977
------------------------------------------------------------------
</TABLE>
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------
TRADITIONAL NON-TRADITIONAL TOTAL
ASSET- FINANCIAL U.S.
INTENSIVE REINSURANCE
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Net premiums $ 268,049 $ 312 $ - $ 268,361
Investment income, net of related expenses 29,493 35,664 - 65,157
Realized investment gains (losses), net (423) 299 - (124)
Other revenue (272) - 3,952 3,680
--------------------------------------------------------------------
Total revenues 296,847 36,275 3,952 337,074
BENEFITS AND EXPENSES:
Claims and other policy benefits 215,374 112 - 215,486
Interest credited 7,894 31,019 - 38,913
Policy acquisition costs and other insurance
expenses 34,197 1,444 2,857 38,498
Other operating expenses 6,681 170 30 6,881
-------------------------------------------------------------------
Total benefits and expenses 264,146 32,745 2,887 299,778
Income before income taxes and minority
interest $ 32,701 $ 3,530 $ 1,065 $ 37,296
-------------------------------------------------------------------
</TABLE>
During the first quarter of 2000, income before income taxes and minority
interest for U.S. operations decreased 8.9%, to $34.0 million from $37.3 million
for the same period in 1999. The decrease is due in part to the realized loss
recognized on the write down of one security, and to a lower level of premium
revenues in the current quarter. The net premiums decrease during the first
quarter of 2000, compared to the same period in 1999, is primarily attributable
to two large inforce blocks of business processed in the first quarter of 1999,
while no similarly significant blocks were processed during the first quarter of
2000.
10
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Traditional Reinsurance
The U.S. traditional reinsurance subsegment is the oldest and largest subsegment
of the Company. This subsegment provides life reinsurance to domestic clients
for a variety of life products through yearly renewable term agreements,
coinsurance, and modified coinsurance arrangements. These reinsurance
arrangements may be either facultative or automatic agreements. During the first
quarter of 2000, production totaled $23.5 billion compared to $34.7 billion for
the same period in 1999. The decrease from last year is due to the processing of
two large inforce blocks of business representing over $15 billion of production
during the first quarter of 1999. Production levels are significantly influenced
by large transactions and reporting practices of ceding companies and,
therefore, can fluctuate from period to period. Management believes industry
consolidation, demutualizations, and the trend towards reinsuring mortality
risks should continue to provide reinsurance opportunities, although the timing
and level of production is uncertain.
Income before income taxes and minority interest for U.S. traditional
reinsurance decreased 3.9% in the first quarter of 2000. The decrease in income
for the quarter was primarily due to the realized losses of $2.8 million on
securities transactions and to a lower lever of premium revenues in the current
quarter.
Net premiums for U.S. traditional reinsurance decreased 8.0% in the first
quarter of 2000. The decrease is primarily related to the processing of two
large in force blocks of business totaling over $55 million in premium in the
first quarter of 1999. Premium levels are significantly influenced by large
transactions and reporting practices of ceding companies and therefore can
fluctuate from period to period.
Net investment income increased 12.3% in the first quarter of 2000. The increase
was due to the growth in the invested asset base, primarily due to increased
operating cash flows on traditional reinsurance and interest on the growth of
funds withheld at interest.
The amount of claims and other policy benefits decreased 7.3% in the first
quarter of 2000. Claims and other policy benefits, as a percentage of net
premiums, were 80.9% and 80.3%, in the first quarter of 2000 and 1999,
respectively. Mortality results during the first quarter of 2000 were consistent
with expectations. Mortality is expected to fluctuate somewhat from period to
period, but remains fairly constant over the long term.
Interest credited relates to amounts credited on the Company's cash value
products in this subsegment, which have a significant mortality component. The
increase in the first quarter of 2000 as compared to 1999 was primarily due to
increased interest crediting rates and deposits on certain universal life
policies. This amount fluctuates with the changes in deposit levels, cash
surrender values and interest crediting rates.
As a percentage of net premiums, policy acquisition costs and other insurance
expenses were 11.6% and 12.8% for the first quarter of 2000 and 1999,
respectively. The decrease was primarily attributable to a change in the mix of
the business that resulted in less acquisition cost
11
<PAGE> 12
in the current period.
Other operating expenses for the first quarter of 2000 remained relatively
constant as a percentage of net premiums.
Asset-Intensive Reinsurance
The U.S. asset-intensive reinsurance subsegment includes the reinsurance of
annuities, and bank-owned life insurance. As of September 30, 1999, the Company
no longer reinsures funding agreement products. Most of these agreements are
coinsurance or modified coinsurance of non-mortality risks such that the Company
recognized profits or losses primarily from the spread between the investment
earnings and the interest credited on the underlying deposit liabilities.
Income before income taxes and minority interest for the first quarter of 2000
decreased significantly compared to the prior-year period. The recapture of the
funding agreement business in 1999 was primarily responsible for the decrease in
investment income, interest credited and earnings. Net premiums reported in this
subsegment relate to a yearly renewable term treaty that reinsures the mortality
risk of a bank-owned life insurance product. Policy acquisition costs and other
insurance expenses relate primarily to the commission payments and premium taxes
(if applicable) on deposits received.
Financial Reinsurance
The U.S. financial reinsurance subsegment includes net fees earned on financial
reinsurance agreements and the equity in the unconsolidated results from the
Company's ownership in RGA/Swiss Financial Group, L.L.C. ("RGA/Swiss").
Financial reinsurance agreements represent low mortality risk business that the
Company assumes and subsequently retrocedes with a net fee earned on the
transaction. The fees earned from the assumption of the financial reinsurance
contracts are reflected in other revenues, and the fees paid to
retrocessionaires are reflected in policy acquisition costs and other insurance
expenses.
Income before income taxes and minority interest decreased to $0.6 million in
the first quarter of 2000, as compared to $1.1 million in the prior-year period.
These results were primarily attributable to the decrease in earnings from
RGA/Swiss and the net fees earned on financial reinsurance agreements. A
decrease in outstanding statutory financial reinsurance also contributed to the
earnings decrease. Policy acquisition costs and other insurance expenses include
fees paid for the subsequent retrocession of these financial reinsurance
transactions.
12
<PAGE> 13
CANADA OPERATIONS (dollars in thousands)
<TABLE>
<CAPTION>
---------------------------------------
THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
---------------------------------------
<S> <C> <C>
REVENUES:
Net premiums $41,027 $35,620
Investment income, net of related expenses 14,983 11,937
Realized investment gains (losses), net (446) -
Other revenue 70 (18)
---------------------------------------
Total revenues 55,634 47,539
BENEFITS AND EXPENSES:
Claims and other policy benefits 37,264 35,885
Interest credited 345 459
Policy acquisition costs and other insurance expenses 3,646 4,405
Other operating expenses 2,149 1,592
--------------------------------------
Total benefits and expenses 43,404 42,341
Income before income taxes and minority interest $12,230 $ 5,198
--------------------------------------
</TABLE>
Income before income taxes and minority interest increased to $12.2 million in
the first quarter of 2000. Excluding realized investment gains, income before
income taxes and minority interest increased to $12.7 million in the first
quarter of 2000. The increases were driven by a growth in premiums and
investment income together with favorable mortality for the quarter.
Net premiums increased 15% to $41 million during 2000. The increase was
primarily the result of a normal increase generated by the segment's production
throughout 1999. Premium levels are significantly influenced by large
transactions and reporting practices of ceding companies and therefore can
fluctuate from period to period. Net investment income increased 25.5% in the
first quarter of 2000 due to an increase in the invested asset base. The
invested asset base growth was due to operating cash flows on traditional
reinsurance, proceeds from capital contributions made to the segment in 1999,
and interest on the growth of funds withheld at interest.
Claims and other policy benefits increased by 3.8% during first quarter of 2000.
Claims and other policy benefits as a percentage of net premiums were 90.8% in
the first quarter of 2000 compared to 100.7% in 1999. The lower percentage in
the first quarter of 2000 is the result better than expected mortality for the
quarter. Mortality is expected to fluctuate somewhat from period to period but
remains fairly constant over the long term.
Policy acquisition costs and other insurance expenses as a percentage of net
premiums totaled 8.9% for the first quarter of 2000 compared to 12.4% in the
prior year period. The decrease in this ratio is primarily due to the changing
mix of business in the segment.
13
<PAGE> 14
LATIN AMERICA OPERATIONS (dollars in thousands)
FOR THE THREE MONTH PERIOD ENDING MARCH 31, 2000
<TABLE>
<CAPTION>
---------------------------------------------------
TOTAL LATIN
REINSURANCE DIRECT AMERICA
---------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Net premiums $ 6,726 $ 9,927 $ 16,653
Investment income, net of related expenses 1,479 4,191 5,670
Realized investment (losses) gains, net (252) 16 (236)
Other revenue 1 172 173
---------------------------------------------------
Total revenues 7,954 14,306 22,260
BENEFITS AND EXPENSES:
Claims and other policy benefits 5,509 8,524 14,033
Interest credited 7 140 147
Policy acquisition costs and other insurance expenses 890 2,072 2,962
Other operating expenses 787 2,475 3,262
---------------------------------------------------
Total benefits and expenses 7,193 13,211 20,404
Income before income taxes and minority interest $ 761 $ 1,095 $ 1,856
---------------------------------------------------
</TABLE>
FOR THE THREE MONTH PERIOD ENDING MARCH 31, 1999
<TABLE>
<CAPTION>
---------------------------------------------------
TOTAL LATIN
REINSURANCE DIRECT AMERICA
---------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Net premiums $ 14,796 $ 14,030 $ 28,826
Investment income, net of related expenses 1,261 1,868 3,129
Realized investment gains, net - 12 12
Other revenue - 42 42
---------------------------------------------------
Total revenues 16,057 15,952 32,009
BENEFITS AND EXPENSES:
Claims and other policy benefits 13,672 13,092 26,764
Interest credited - 180 180
Policy acquisition costs and other insurance expenses 393 993 1,386
Other operating expenses 856 1,272 2,128
---------------------------------------------------
Total benefits and expenses 14,921 15,537 30,458
Income before income taxes and minority interest $ 1,136 $ 415 $ 1,551
---------------------------------------------------
</TABLE>
For the Latin America operations, income before income taxes and minority
interest increased 19.7% in the first quarter compared to the same period in
1999. Profit from the reinsurance operations decreased primarily as a result of
a decline in the reinsurance of privatized pensions in
14
<PAGE> 15
Argentina as management seeks traditional reinsurance opportunities in other
areas. This had a negative impact on net premiums compared to the prior year due
to reduced quota share participation in several privatized pension contracts in
Argentina, effective July 1, 1999, and refunds to ceding companies related
experience on existing treaties.
For the direct operations, business in Chile continued to be profitable with
overall results offset by losses in Argentina. Premiums decreased in the direct
operations as a result of decreased Chilean production due in part to sluggish
market conditions. Argentine direct individual life and group life sales have
grown compared to the same period in prior year but are expected to grow at
reduced rates during 2000.
The Company reached an agreement on April 1, 2000, to sell its interests in RGA
Sudamerica, S.A., Bhifamerica Seguros de Vida, S.A., and RGA Reinsurance Company
Chile S.A. The Company's decision to sell is an effort to focus on the
reinsurance business in that market as opposed to direct distribution.
ASIA PACIFIC OPERATIONS (dollars in thousands)
<TABLE>
<CAPTION>
---------------------------------------
THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
---------------------------------------
<S> <C> <C>
REVENUES:
Net premiums $19,077 $16,409
Investment income, net of related expenses 954 415
Realized investment gains (losses), net 17 (12)
Other revenue 84 292
---------------------------------------
Total revenues 20,132 17,104
BENEFITS AND EXPENSES:
Claims and other policy benefits 11,519 18,739
Policy acquisition costs and other insurance expenses 6,738 4,269
Other operating expenses 2,473 1,747
Interest expense 120 113
---------------------------------------
Total benefits and expenses 20,850 24,868
Loss before income taxes and minority interest $ (718) $(7,764)
---------------------------------------
</TABLE>
The Company conducts reinsurance business in the Asia Pacific region through a
branch operation in Hong Kong, and offices located in Japan and Taiwan. Business
is also conducted through RGA Australia, a wholly owned subsidiary in Australia.
The principal types of reinsurance provided in the region are life, critical
care, superannuation, and financial reinsurance.
The first quarter of 2000 showed an increase in premiums of 16.3% compared to
the first quarter of 1999. Renewal premiums from the existing block of business,
new business premiums from facultative and automatic treaties, and premium flows
from larger blocks of business all contributed to the premium increase. Business
premium levels are significantly influenced by
15
<PAGE> 16
large transactions and reporting practices of ceding companies and therefore can
fluctuate from period to period. Investment income and realized investment gains
for RGA Reinsurance are allocated to the various operating segments on the basis
of average net capital and investment performance varies with the composition of
investments and the relative allocation of capital to units. Other revenue
during 1999 represented profit and risk fees associated with the financial
reinsurance in Japan. This treaty was discontinued after the first quarter of
1999. Included in the first quarter 2000 results are profit and risks fees for a
financial reinsurance treaty in Taiwan. As the financial reinsurance provided
under the Taiwan treaty is less than the Japanese treaty, the fees earned are
substantially less.
Claims and other policy benefits decreased by 38.5% in the first quarter of 2000
compared to the first quarter of 1999. Claims and other policy benefits include
claims paid, claims in the course of payment and establishment of additional
reserves to provide for unreported claims. Claims and other policy benefits as a
percentage of net premiums decreased to 60.4% in the first quarter of 2000 from
114.2% in 1999. The decrease in the first quarter was caused by claims returning
to the expected levels versus an exceptionally high amount for the first quarter
of 1999. The Company expects mortality to fluctuate somewhat from period to
period, but believes it is fairly constant over longer periods of time. The
Company continues to monitor mortality trends to evaluate the appropriateness of
reserve levels and adjusts the reserve levels on a periodic basis.
Policy acquisition costs and other insurance expenses as a percentage of net
premiums were 35.3% in the first quarter of 2000 versus 26.0% in the prior year
period. These percentages fluctuate due to the timing of client company
reporting and variations in the mixture of business being written. Other
operating expenses for the first quarter of 2000 increased to $2.4 million. As a
percentage of premiums, other operating expenses increased to 13.0% in the first
quarter 2000 from 10.6% in the prior year. The Company believes that sustained
growth in premiums should lessen the burden of start-up expenses and expansion
costs over time.
OTHER INTERNATIONAL OPERATIONS (dollars in thousands)
<TABLE>
<CAPTION>
------------------------------------
THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------ -----------------
<S> <C> <C>
REVENUES:
Net premiums $5,426 $4,542
Investment income, net of related expenses 218 165
Realized investment gains, net 264 40
Other revenue 934 372
------------------ -----------------
Total revenues 6,842 5,119
BENEFITS AND EXPENSES:
Claims and other policy benefits 3,257 3,552
Policy acquisition costs and other insurance expenses 2,015 653
Other operating expenses 2,511 1,514
------------------ -----------------
Total benefits and expenses 7,783 5,719
Loss before income taxes and minority interest $ (941) $ (600)
------------------ -----------------
</TABLE>
16
<PAGE> 17
The other international segment includes business received from reinsurance
clients located in Europe and South Africa in addition to business received as a
Corporate Name supporting a life syndicate at Lloyd's of London. The principal
type of reinsurance being provided has been life reinsurance for a variety of
life products through yearly renewable term and coinsurance agreements. These
agreements may be either facultative or automatic.
Net premiums increased 19.4%, to $5.4 million in the first quarter of 2000
compared to $4.5 million in the same quarter of 1999, primarily as a result of
business generated from an automatic treaty in the United Kingdom. The Company's
offices in Cape Town and Johannesburg, South Africa contributed to new business
premium in 2000 mainly through the facultative market. Investment income for the
segment is allocated on the basis of average net capital and the investment
performance varies with the composition of investments.
Claims and other policy benefits decreased as a percentage of premiums to 60.0%
from 78.2% in the first quarter of 2000. Year to year comparisons of premiums
and claims and other policy benefits are not considered meaningful due to the
start-up nature of this segment. Other operating expenses increased 65% to $2.5
million in the first quarter 2000 compared to $1.5 million in the same quarter
of 1999. The overall increase in operating expenses was attributed to increases
in costs associated with the expansion efforts within the segment.
CORPORATE AND OTHER SELECTED CONSOLIDATED INFORMATION
Corporate activity generally represents investment income on the undeployed
proceeds from the Company's capital raising efforts and corporate investment
income allocation, corporate expenses that include unallocated overhead and
executive costs, as well as the interest on corporate debt. In addition, the
provision for income taxes is generally calculated based on the overall
operations of the Company.
Consolidated investment income from continuing operations decreased 13.0% during
the first quarter of 2000. Investment income was negatively affected by a
reduction in invested assets related to the recapture of the funding agreement
business by General American on September 29, 1999. The average yield earned on
investments was 7.36% and 6.69% for the first three months of 2000 and 1999,
respectively. The increase in overall yield reflected a general increase in
interest rates and the impact on the first quarter of 1999 of the funding
agreements reinsurance product that were generally of a shorter duration and
carried a lower average yield. Investment income has been allocated to the
operational segments on the basis of average required capital per segment.
Consolidated other expenses represent general corporate expenses that are not
allocated to the operational segments.
Consolidated provision for income taxes for continuing operations increased
14.5% for the first quarter of 2000, primarily a result of higher pre-tax income
for the quarter.
17
<PAGE> 18
DISCONTINUED OPERATIONS
At December 31, 1998, the Company formally reported its accident and health
division as a discontinued operation for financial reporting purposes. The
accident and health division was placed into run-off with all treaties
(contracts) being terminated at the earliest possible date. This discontinued
segment reported an after tax loss of $3.5 million for the first quarter of 2000
compared to break-even results for the comparable prior year period, primarily a
result of adverse development on the treaties in run-off. The nature of the
underlying risks is such that the claims may take years to reach the reinsurers
involved. Thus, the Company expects to pay claims out of existing reserves over
a number of years as the level of business diminishes. The experience on this
block of business will continue to be monitored as the business runs off.
LIQUIDITY AND CAPITAL RESOURCES
During the first three months of 2000, the Company generated $93.8 million in
cash from operating activities, used $122.6 million in cash from investing
activities and generated $80.0 million in cash in financing activities,
primarily deposits received on asset intensive products. The sources of funds of
the Company's operating subsidiaries consist of premiums received from ceding
insurers, investment income, and proceeds from sales and redemption of
investments. Premiums are generally received in advance of related claim
payments. Funds are primarily applied to policy claims and benefits, operating
expenses, income taxes, and investment purchases.
As the Company continues its expansion efforts, management continually analyzes
capital adequacy issues. The Company has access to a $25.0 million demand line
of credit. At March 31, 2000, $15.0 million was drawn upon that line. This
liability is included in other liabilities on the balance sheet at March 31,
2000. As of May 8, 2000, the Company was negotiating the terms of a senior
unsecured revolving credit facility for approximately $140 million. The Company
expects the facility to close in the second quarter of 2000. The ability of the
Company and its subsidiaries to make principal and interest payments, and of the
Company to continue to pay dividends to stockholders, is ultimately dependent on
the earnings and surplus of the Company's subsidiaries, the investment earnings
on the undeployed funds at the Company, and the Company's ability to raise
additional capital. At March 31, 2000, RGA Reinsurance and RGA Canada had
statutory capital and surplus of $440.0 million and $148.9 million,
respectively. The transfer of funds from the subsidiaries to the Company is
subject to applicable insurance laws and regulations. The Company expects any
future increases in liquidity needs due to relatively large policy loans or
unanticipated material claim levels would be met first by operating cash flows
and then by selling fixed-income securities or short-term investments.
The Company has several treaties that provide clients the right to recapture,
generally subject to 90 days written notice, if the Company's ratings fall below
certain thresholds. The extent of any realized gains or losses associated with
such recaptures would depend on market conditions at the time of recapture.
INVESTMENTS
Invested assets increased to $4.0 billion at March 30, 2000, compared to $3.8
billion at
18
<PAGE> 19
December 31, 1999. The increase resulted primarily from positive operating cash
flows and excess deposits on universal life and other investment type policies
and contracts. The Company has historically generated positive cash flows from
operations.
At March 31, 2000, the Company's portfolio of fixed maturity securities
available for sale had net unrealized losses before tax of $119.9 million.
MARKET RISK
Market risk is the risk of loss that may occur when fluctuations in interest and
currency exchange rates and equity and commodity prices change the value of a
financial instrument. Both derivative and nonderivative financial instruments
have market risk so the Company's risk management extends beyond derivatives to
encompass all financial instruments held that are sensitive to market risk. RGA
is primarily exposed to interest rate risk and foreign currency risk.
Interest Rate Risk
The Company manages interest rate risk and credit risk to maximize the return on
the Company's capital and to preserve the value created by its business
operations. As such, certain management monitoring processes are designed to
minimize the impact of sudden and sustained changes in interest rates on fair
value, cash flows, and net interest income.
The Company's exposure to interest rate price risk and interest rate cash flow
risk is reviewed on a quarterly basis. Interest rate price risk exposure is
measured using interest rate sensitivity analysis to determine the change in
fair value of the Company's financial instruments in the event of a hypothetical
change in interest rates. Interest rate cash flow risk exposure is measured
using interest rate sensitivity analysis to determine the Company's variability
in cash flows in the event of a hypothetical change in interest rates. If
estimated changes of fair value, net interest income, and cash flows are not
within the limits established by the Board, the Board may direct management to
adjust its asset and liability mix to bring interest rate risk within
Board-approved limits.
Interest rate sensitivity analysis is used to measure the Company's interest
rate price risk by computing estimated changes in fair value of fixed rate
assets in the event of a range of assumed changes in market interest rates. This
analysis assesses the risk of loss in market risk sensitive fixed rate
instruments in the event of a sudden and sustained 100 to 300 basis points
increase or decrease in the market interest rates. The following table presents
the Company's projected change in fair value of all financial instruments for
the various rate shock levels at March 31, 2000. All market risk sensitive
instruments presented in this table are available for sale. RGA has no trading
securities.
The calculation of fair value is based on the net present value of estimated
discounted cash flows expected over the life of the market risk sensitive
instruments, using market prepayment assumptions and market rates of interest
provided by independent broker quotations and other public sources as of March
31, 2000, with adjustments made to reflect the shift in the Treasury yield curve
as appropriate.
19
<PAGE> 20
<TABLE>
<CAPTION>
Estimated Fair Value Percentage
-------------------- ----------
of Fixed Rate Hypothetical Hypothetical
------------- ------------ ------------
Percentage Change in Interest Rates Instruments Change Change
- ----------------------------------- ----------- ------ ------
(Dollars in thousands)
<S> <C> <C> <C>
300 basis point rise $ 1,681,384 $(548,876) -24.61%
200 basis point rise $ 1,833,817 $(396,443) -17.78%
100 basis point rise $ 2,014,656 $(215,604) -9.67%
Base Scenario $ 2,230,260 $ - 0.00%
100 basis point decline $ 2,489,013 $ 258,753 11.60%
200 basis point decline $ 2,802,877 $ 572,617 25.67%
300 basis point decline $ 3,192,900 $ 962,640 43.16%
</TABLE>
Interest rate sensitivity analysis is also used to measure the Company's
interest rate cash flow risk by computing estimated changes in the annual cash
flows expected attributable to floating rate assets, liabilities, and
off-balance sheet items in the event of a range of assumed changes in market
interest rates. This analysis assesses the risk of loss in cash flows of market
risk sensitive floating rate instruments in the event of a sudden and sustained
100 to 300 basis points increase or decrease in the market interest rates. The
following table presents the Company's estimated change in annual cash flows
associated with floating-rate instruments for various rate shock levels at March
31, 2000. All floating rate interest sensitive instruments presented in this
table are classified as available for sale.
<TABLE>
<CAPTION>
Estimated Annual Cash Percentage
--------------------- ----------
Flows of Floating Rate Hypothetical Hypothetical
---------------------- ------------ ------------
Percentage Change in Interest Rates Instruments Change Change
- ----------------------------------- ----------- ------ ------
(Dollars in thousands)
<S> <C> <C> <C>
300 basis point rise $ 49,766 $ 4,773 10.61%
200 basis point rise $ 48,298 $ 3,305 7.35%
100 basis point rise $ 46,828 $ 1,835 4.08%
Base Scenario $ 44,993 $ - 0.00%
100 basis point decline $ 43,909 $(1,084) -2.41%
200 basis point decline $ 42,552 $(2,441) -5.43%
300 basis point decline $ 41,240 $(3,753) -8.34%
</TABLE>
Computations of prospective effects of hypothetical interest rate changes are
based upon numerous assumptions, including relative levels of market interest
rates and mortgage prepayments, and should not be relied upon as indicative of
future results. Further, the
20
<PAGE> 21
computations do not contemplate any actions management could undertake in
response to changes in interest rates.
Certain shortcomings are inherent in the method of analysis presented in the
computation of the estimated fair value of fixed rate instruments and the
estimated cash flows of floating rate instruments, which estimates constitute
forward-looking statements. Actual values may differ materially from the
projections presented due to a number of factors, including, without limitation,
market conditions that may vary from assumptions used in the calculation of the
fair value. In the event of a change in interest rates, prepayments could
deviate significantly from those assumed in the calculation of fair value.
Finally, the desire of many borrowers to repay their fixed-rate mortgage loans
may decrease in the event of interest rate increases.
FOREIGN CURRENCY RISK
The Company is subject to foreign currency translation, transaction, and net
income exposure. The Company generally does not hedge the foreign currency
translation exposure related to its investment in foreign subsidiaries as it
views these investments to be long-term. Translation differences resulting from
translating foreign subsidiary balances to U.S. dollars are reflected in equity.
The Company generally does not hedge the foreign currency exposure of its
subsidiaries transacting business in currencies other than their functional
currency (transaction exposure). Currently, the Company believes its foreign
currency transaction exposure is not material to the consolidated results of
operations. Net income exposure which may result from the strengthening of the
U.S. dollar to foreign currencies will adversely affect results of operations
since the income earned in the foreign currencies is worth less in U.S. dollars.
When evaluating investments in foreign countries, the Company considers the
stability of the political and currency environment. Devaluation of the currency
after an investment decision has been made will affect the value of the
investment when translated to U.S. dollars for financial reporting purposes.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The statements included in this Form 10-Q regarding the Company's business which
are not historical facts, including, without limitation, statements and
information relating to future financial performance, growth potential and
expectations, the effect of mortality rates and experience, claims levels, and
other statements related to the Company's business are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These "forward-looking" statements include, without limitation, certain
statements in the "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Such statements also may include, but are not
limited to, projections of earnings, revenues, income or loss, estimated fair
values of fixed rate instruments, estimated cash flows of floating rate
instruments, capital expenditures, plans for future operations and financing
needs or plans, growth prospects and targets, industry trends, trends in or
expectations regarding operations and capital commitments, the sufficiency of
claims reserves and assumptions relating to the foregoing. The words "expect,"
"project," "estimate," "anticipate," "should," "believe" and similar expressions
also are intended to identify forward-looking statements. Forward-looking
statements are inherently subject to risks and uncertainties, some of which
cannot be predicted or
21
<PAGE> 22
quantified. Future events and actual results, performance and achievements could
differ materially from those set forth in, contemplated by or underlying the
forward-looking statements.
Numerous factors could cause actual results and events to differ materially from
those expressed or implied by forward-looking statements including, without
limitation, (1) impact of the acquisition of GenAmerica by MetLife, (2) market
conditions and the timing of sales of investment securities, (3) regulatory
action taken by the New York or Missouri Departments of Insurance with respect
to MetLife or General American or the Company or its subsidiaries, (4) changes
in the Company's credit ratings and the effect of such changes on the Company's
future results of operations and financial condition, (5) material changes in
mortality and claims experience, (6) competitive factors and competitors'
responses to the Company's initiatives, (7) general economic conditions
affecting the demand for insurance and reinsurance in the Company's current and
planned markets, (8) successful execution of the Company's entry into new
markets, (9) successful development and introduction of new products, (10) the
stability of governments and economies in foreign markets, (11) fluctuations in
U.S. and foreign currency exchange rates, interest rates and securities and real
estate markets, (12) the success of the Company's clients, including MetLife and
its affiliates, and (13) changes in laws, regulations, and accounting standards
applicable to the Company and its subsidiaries.
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. ALL SUBSEQUENT WRITTEN AND
ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON
ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THIS CAUTIONARY
STATEMENT. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO RELEASE PUBLICLY ANY
REVISIONS TO SUCH FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS AND CIRCUMSTANCES
AFTER THE DATE HEREOF TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
See "Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations - Market Risk" and " - Foreign Currency Risk" which are
incorporated by reference herein.
22
<PAGE> 23
PART II - OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
From time to time, the Company is subject to litigation and arbitration related
to its reinsurance business and to employment-related matters in the normal
course of its business. Management does not believe that the Company is a party
to any such pending litigation or arbitration that would have a material adverse
effect on its future operations.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) See index to exhibits.
(b) The following reports on Form 8-K were filed with the Securities and
Exchange Commission during the three months ended March 31, 2000:
1. The Company filed a Current Report on Form 8-K on January 21, 2000,
dated as of January 6, 2000, to report under Item 1 that MetLife completed the
acquisition of GenAmerica and purchased all of the outstanding shares of common
stock of GenAmerica, resulting in a change in control of the registrant. The
Company additionally reported under Item 3 that the Director of the Missouri
Department of Insurance lifted the order of administrative supervision of
General American.
2. The Company filed a Current Report on Form 8-K on March 21, 2000,
dated as of March 16, 2000, to report under Item 5 that the Company's Board of
Directors approved a stock repurchase program under which the Company may use up
to $20 million to purchase outstanding shares of stock.
3. The Company filed a Current Report on Form 8-K on April 6, 2000,
dated as of March 30, 2000, to report under Item 4 that the Company had changed
its certifying accountant. The Company additionally reported under Item 5 that
it reached an agreement with Ohio National Financial Services Inc., whereby Ohio
National will purchase the Company's interest in several Chilean operations.
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Reinsurance Group of America, Incorporated
By: /s/ A. Greig Woodring May 12, 2000
-------------------------------------------
A. Greig Woodring
President & Chief Executive Officer
(Principal Executive Officer)
/s/ Jack B. Lay May 12, 2000
-------------------------------------------
Jack B. Lay
Executive Vice President & Chief Financial Officer
(Principal Financial and Accounting Officer)
24
<PAGE> 25
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.1 Restated Articles of Incorporation of Reinsurance Group of America, Incorporated, as amended,
incorporated by reference to Form 10-Q for the quarter ended September 30, 1999 (No. 1-11848) filed
on November 12, 1999 at the corresponding exhibit.
3.2 Bylaws of Reinsurance Group of America, Incorporated, as amended, incorporated by reference to Form
10-Q for the quarter ended September 30, 1999 (No. 1-11848) filed on November 12, 1999 at the
corresponding exhibit.
3.3 Form of Certificate of Designations for Series A Junior Participating Preferred Stock, incorporated
by reference to Exhibit 3.3 to Amendment No. 1 to Form 10-Q for the quarter ended March 31, 1997
(No. 1-11848) filed May 21, 1997.
4.1 Form of Specimen Certificate for Common Stock of RGA, incorporated by reference to Amendment No. 1
to Registration Statement on Form S-1 (No. 33-58960), filed on 14 April 1993 at the corresponding
exhibit.
4.2 Rights Agreement dated as of May 4, 1993, between RGA and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent, incorporated by reference to Amendment No. 1 to Form 10-Q for the quarter ended
March 31, 1997 (No. 1-11848) filed on 21 May 1997 at the corresponding exhibit.
4.3 Second Amendment to Rights Agreement, dated as of April 22, 1998, between RGA and ChaseMellon
Shareholder Services, L.L.C. (as successor to Boatmen's Trust Company), as Rights Agent,
incorporated by reference to Registration Statement on Form S-3 (No. 333-5177) filed on 4 June 1998
at the corresponding exhibit.
4.4 Third Amendment to Rights Agreement dated as of August 12, 1999, between Reinsurance Group of
America, Incorporated and ChaseMellon Shareholder Services, L.L.C. (as successor to Boatmen's Trust
Company), as Rights Agent, incorporated by reference to Exhibit 4.4 to Form 8-K dated
August 10, 1999 (No. 1-11848), filed August 25, 1999.
4.5 Fourth Amendment to Rights Agreement dated as of August 23, 1999, between Reinsurance Group of
America, Incorporated and ChaseMellon Shareholder Services, L.L.C. (as successor to Boatmen's Trust
Company), as Rights Agent, incorporated by reference to Exhibit 4.1 to Form 8-K dated
August 26, 1999 (No. 1-11848), filed September 10, 1999.
</TABLE>
25
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE REGISTRANT AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000898174
<NAME> REINSURANCE GROUP OF AMERICA
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<DEBT-HELD-FOR-SALE> 2,169,068
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 6,758
<MORTGAGE> 220,753
<REAL-ESTATE> 3,313
<TOTAL-INVEST> 4,035,580
<CASH> 75,516
<RECOVER-REINSURE> 273,039
<DEFERRED-ACQUISITION> 502,749
<TOTAL-ASSETS> 5,385,203
<POLICY-LOSSES> 3,561,616
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 533,586
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 184,764
0
0
<COMMON> 511
<OTHER-SE> 826,517
<TOTAL-LIABILITY-AND-EQUITY> 5,385,203
329,543
<INVESTMENT-INCOME> 74,010
<INVESTMENT-GAINS> (4,632)
<OTHER-INCOME> 3,213
<BENEFITS> 287,038
<UNDERWRITING-AMORTIZATION> 29,434
<UNDERWRITING-OTHER> 22,049
<INCOME-PRETAX> 40,114
<INCOME-TAX> 15,648
<INCOME-CONTINUING> 23,904
<DISCONTINUED> (3,482)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,422
<EPS-BASIC> 0.41
<EPS-DILUTED> 0.41
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
