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Growing Together ® Reinsurance Group of America, Incorporated ® Annual Report 2007 Growing Together. ® ® Reinsurance Group of America, Incorporated® 1370 Timberlake Manor Parkway, Chesterfi eld, MO 63017-6039 U.S.A. The security of experience. The power of innovation. 2007 Annual Report RGA ANNUAL REPORT Contents 2 Letter to Shareholders ® 6 Highlights 8 Operations 20 Leadership The security of experience. The power of innovation. 22 Selected Consolidated Financial and Operating Data 24 Management’s Discussion and Analysis of Financial Condition and Results of Operations 66 Consolidated Financial Statements 71 Notes to Consolidated Financial Statements 116 Report of Independent Registered Public Accounting Firm 119 Quarterly Data 120 Comparison of Five-Year Cumulative Total Return 121 Shareholder Information 122 Worldwide Operations 125 Glossary of Terms FFrontront ccover:over: AAnnanna MManning,anning, VViceice PPresidentresident aandnd AActuary,ctuary, TTraditionalraditional PProducts,roducts, RRGAGA IInternational.nternational. AAbove:bove: LLefteft ttoo rright,ight, LLeonardeonard AArokium,rokium, SSeniorenior VViceice PPresident,resident, OOperationsperations aandnd TTechnology,echnology, RRGAGA IInternational;nternational; KKathrynathryn CCox,ox, VViceice PPresident,resident, SSales,ales, UU.S..S. DDivision,ivision, RRGAGA RReinsuranceeinsurance Company.Company. OOpposite:pposite: LLefteft ttoo rright,ight, JJohnohn DDii FFederico,ederico, MManaginganaging DDirector,irector, RRGAGA IInternationalnternational RReinsuranceeinsurance CCompanyompany LLimited,imited, RRappresentanzaappresentanza pperer ll’Italia;’Italia; EEduardoduardo AAlzamora,lzamora, VViceice PPresident,resident, BBusiness/ITusiness/IT AAlignmentlignment & SStrategy,trategy, RRGAGA IInternational;nternational; LLeeee TTang,ang, EExecutivexecutive VViceice PPresident,resident, CCorporate,orporate, RRGAGA International.International. 1 Growing Together. Reinsurance Group of America, Incorporated, has grown to become an industry leader by working closely with clients to advance our common interests and to achieve consistently strong results. We share our knowledge and expertise, drawing on the experience and insight of our associates around the world. Together, we uncover opportunities, create solutions, develop new markets, build new products, and deliver growth for our clients and stakeholders. 2 RGA ANNUAL REPORT Growing Together. “ Our talented associates exemplify A. Greig Woodring PPresidentresident & CChiefhief EExecutivexecutive OOffiffi cercer our dedication to helping our clients to prosper, in both established and new markets, as we continue to steadily build RGA into an extraordinary life reinsurer.” LETTER TO SHAREHOLDERS 3 Results in RGA’s U.S. mortality business were outstanding – a testament to the skill and discipline of the underwriters, actuaries and managers involved. To Our Shareholders: At times, although the global business environment appears stable and generally benign, the life reinsurance business may be undergoing signifi cant transformation, with changes in products and structure, new and different types of competition, and rapidly evolving customer demand. Then, there are years like 2007 that seem quite the opposite. While fi nancial markets were violently shaken and remained unsettled at the close of the year, the life reinsurance business sailed along smoothly, with little in the way of major change. In this relatively stable environment, RGA concentrated primarily on executing existing strategies. RGA has continued to avoid major problems in our portfolio of invested assets, which now total $16 billion. Over the past several years, we refrained from chasing yield as the risk/reward in the market appeared to be at unattractive levels. As a result, the overall average quality of our assets gradually increased from early 2005 until mid-2007. As asset risk prices readjust, we will have the ability to react. Nevertheless, our overall investment philosophy will remain conservative and prudent. RGA’s U.S. mortality business, our largest company operation, enjoyed a strong year in 2007. Financial results in this business always depend upon mortality experience. While results in any given quarter can vary randomly, statistical fl uctuations smooth out over longer periods. The long-term results of this core portion of the RGA enterprise have been outstanding – a testament to the skill and discipline of the underwriters, actuaries and managers involved. The 2007 Flaspöhler customer survey, conducted in the U.S. life reinsurance indus- try, again presented RGA very favorably, refl ecting our clients’ high regard for our service and solutions. New business fl ows also speak of customer satisfaction: RGA had the largest new business volume market share in the U.S. in 2005 and 2006, and our 2007 volume, exceeding $160 billion, is expected to lead the fi eld again. RGA’s U.S. facultative business, a clear market leader and an important part of RGA’s business, chalked up an impressive year, with more than 100,000 cases underwritten. This marked the fi rst time that we have surpassed that threshold. RGA places a lot of focus on delivering unparalleled facultative service to the life insurance industry. Our talented team deserves a lot of credit for executing so well in an often-diffi cult business. 4 RGA ANNUAL REPORT RGA’s international operations, despite impressive progress, still present the growth potential of young businesses. RGA’s facultative support involves not only case underwriting but, increasingly, the technology to provide new capabilities to our clients. Programs such as our Automated Selection and Assessment Program (ASAP), which uses our Automated Underwriting and Risk Analysis (AURA®) suite of products to provide nearly instantaneous alternatives for diffi cult cases, have consistently gained momentum and scale. AURA’s electronic underwriting decision-making technology has proven wonderfully adaptive as one of the tools RGA has applied in proposing solutions to business needs. RGA Canada contributed strong results in 2007, with great mortality experience and robust operations. While premiums have more than doubled over the last four years, RGA Canada’s underwriters processed more than 31,000 facultative applications in in U.S. dollar terms, operating income has more than tripled in the same period. 2007. From left: Natacha Dubois, Director, Although 2007 represents an exceptionally strong result, any examination of the Underwriting; Kim Vale, Senior Underwriting long-term trend of operating earnings at RGA Canada suggests a pattern of Consultant; Daisy Hernandez, Senior Underwriting Consultant; Norm Scully, consistently solid results. Chief Underwriter. While RGA’s North American operations have been large and mature for many years, our International operations, despite impressive progress, still present the growth potential of young businesses. In our ESA business segment [which includes Europe, South Africa, India and Latin America], fi nancial results fell short of our expectations, due in part to heavy U.K. claims fl ow, especially in the latter part of the year. We expect fl uctuations like these in our business, and are not concerned provided long-term results exhibit proper levels of growth and development – which is the case in our ESA business. Premium growth in this segment recorded a 15% increase in 2007, and we foresee signifi cant opportunities ahead. Over the course of the last eighteen months RGA has opened offi ces in Poland, Italy, France and Germany, and we are pleased with their progress. RGA’s Asia Pacifi c business segment enjoyed solid fi nancial results in 2007, after a spectacular year in 2006, and continued its rapid growth and development. Premiums increased by 28% over the previous year and, in fact, have grown at a compound rate of 35% per year since 2003. The life insurance business in Asia is a growth business. In some markets, life reinsurance tracks the underlying life insur- ance growth, while in others, such as Japan and South Korea, they have begun to use reinsurance more effectively. We view the Asia Pacifi c market as being increas- ingly important for the next several decades, as countries such as India and China build thriving life insurance industries. RGA stands well-positioned to participate and assist in this Asian growth. In an NMG Financial Services Consulting Study in LETTER TO SHAREHOLDERS 5 Over the fi ve-year period from 2003–2007, RGA delivered 14%* compounded annual growth 14% in operating EPS and 14%* compounded annual growth in book value per share. March, 2007, RGA was cited as the region-wide leader in new individual life reinsurance and second in group life reinsurance. RGA Asia Pacifi c will become a billion-dollar revenue business in 2008 – and this is just the beginning. At RGA, we generate most of our revenues and well over 90% of our profi ts by assuming mortality risk. RGA has, however, diversifi ed into annuity reinsurance over the last several years, and completed another successful year. For the fi rst time, in 2007, we coinsured variable annuity living benefi ts. Our fi rst foray into variable annuity coinsurance was successful, as this treaty met our expectations despite 2007’s turbulent markets. We expect to continue diversifying and expanding our annuity reinsurance in coming years. RGA took cautious steps in other diversifi cation initiatives in 2007. We began a long-term care reinsurance effort and are pleased with market reception so far. In another initiative, we quoted on longevity risks
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