Exhibit 99.2

 

Reinsurance Group of America, Incorporated^®

Financial Supplement

Fourth Quarter 2012

(Unaudited)

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Reinsurance Group of America, Incorporated^®

 

		Quarterly Financial Supplement

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Reinsurance Group of America, Incorporated

Financial Supplement

4th Quarter 2012

Table of Contents

 

		Page
Non-GAAP Disclosure			1
2013 Management Guidance			2
Consolidated
Financial Highlights			3
Consolidated Income Statement (incl. Operating Income Reconciliation)			4
Consolidated Operating Income Statement			5
Consolidated Balance Sheets			6
Segment Pre-tax Operating Income Summaries and Reconciliations to U.S. GAAP
U.S. Operations			7
Canada Operations			11
Europe & South Africa Operations			12
Asia Pacific Operations			13
Corporate and Other			14
Summary of Pre-tax Segment Operating Income			15
Investments
Cash and Invested Assets, Yield Summary			16
Amortized cost, Gross Unrealized Gains and Losses, Estimated Fair Values of Fixed Maturity and Equity Securities			17
Corporate Securities by Sector (Fixed Maturities and Equities)			18
Quality of Fixed Maturity Securities and Structured Fixed Maturity Securities			19
CMBS Exposure (Including Funds Withheld Portfolios)			20
Gross Unrealized Losses Aging			21
Fixed Maturity and Equity Securities Below Amortized Cost			22
Consolidated Gross Gains and Losses			23

 

		Quarterly Financial Supplement

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Reinsurance Group of America, Incorporated

Financial Supplement

This Financial Supplement is for information purposes only and includes unaudited figures. This report should be read in conjunction with documents filed by Reinsurance Group of America, Incorporated with the SEC.

Non-GAAP Disclosures

RGA uses a non-GAAP financial measure called operating income as a basis for analyzing financial results. This measure also serves as a basis for establishing target levels and awards under RGA’s management incentive programs. Management believes that operating income, on a pre-tax and after-tax basis, better measures the ongoing profitability and underlying trends of the company’s continuing operations, primarily because that measure excludes substantially all of the effect of net investment related gains and losses, as well as changes in the fair value of certain embedded derivatives and related deferred acquisition costs. These items can be volatile, primarily due to the credit market and interest rate environment and are not necessarily indicative of the performance of the company’s underlying businesses. Additionally, operating income excludes any net gain or loss from discontinued operations, the cumulative effect of any accounting changes, and other items that management believes are not indicative of the company’s ongoing operations. The definition of operating income can vary by company and is not considered a substitute for GAAP net income. A reconciliation of income before income taxes of the operating segments to pre-tax operating income (loss) is presented herein.

RGA evaluates its stockholder equity position excluding the impact of Accumulated Other Comprehensive Income (“AOCI”) since the net unrealized gains or losses included in AOCI primarily relate to changes in interest rates, credit spreads on its investment securities and foreign currency fluctuations that are not permanent and can fluctuate significantly from period to period.

Additionally, RGA uses a non-GAAP financial measure called operating return on equity, which is calculated as operating income divided by average shareholders’ equity excluding AOCI.

 

				Quarterly Financial Supplement		Page 1

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Reinsurance Group of America, Incorporated

Company Guidance

The company has determined it is more meaningful to issue guidance regarding expected intermediate-term earnings growth rates and target operating returns rather than simply a range of expected annual earnings per share for the upcoming year. That determination is driven by the long-term nature of the business and any effects of potential block acquisition transactions, the timing of which can be difficult to project. The company accepts risks over very long periods of time, up to 30 years or longer in some cases. While more predictable over longer-term horizons, the business is subject to inherent short-term volatility. Although no specific 2013 operating earnings per share guidance is being provided, the company expects that near-term growth in premiums and operating income will be consistent with that exhibited over the last several years.

Over the intermediate term, the company targets operating earnings growth in the five to eight percent range, and operating return on equity of 11 to 12 percent. These targets presume no significant changes in the investment environment and the deployment of $200 - $400 million of excess capital, on average, annually.

 

				Quarterly Financial Supplement		Page 2

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Reinsurance Group of America, Incorporated

Financial Highlights

 

(USD thousands, except inforce & per share data)		Three Months Ended or As of																				Current Qtr vs. PY Quarter				Year-to-Date
		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Net premiums		$	2,179,707			$	1,912,746			$	1,950,661			$	1,863,482			$	2,034,716			$	144,991			$	7,906,596			$	7,335,687			$	570,909
Net income			222,989				144,475				141,111				123,318				138,579				84,410				631,893				546,045				85,848
Operating income			181,830				99,902				122,273				112,377				120,772				61,058				516,382				485,596				30,786
Operating return on equity (ex AOCI)—annualized			15.5	%			8.9	%			11.2	%			10.6	%			11.7	%			3.8	%
Operating return on equity (ex AOCI)—trailing 12 months			11.6	%			10.5	%			11.8	%			12.0	%			12.2	%			-0.6	%
Total assets			40,360,438				39,924,013				38,344,323				32,286,082				31,633,973				8,726,465
Assumed Life Reinsurance in Force (in billions)
U.S.		$	1,395.6			$	1,403.3			$	1,405.8			$	1,406.1			$	1,348.5			$	47.1
Canada			389.7				384.8				365.1				364.5				344.9				44.8
Europe & South Africa			602.5				559.4				525.2				529.7				513.4				89.1
Asia Pacific			539.8				533.5				486.2				470.7				457.6				82.2
Total Life Reinsurance in Force		$	2,927.6			$	2,881.0			$	2,782.3			$	2,771.0			$	2,664.4			$	263.2
Assumed New Business Production (in billions)
U.S.		$	19.2			$	23.1			$	24.2			$	84.9			$	24.8			$	(5.6	)		$	151.4			$	110.5			$	40.9
Canada			12.0				11.3				12.6				13.1				11.3				0.7				49.0				51.1				(2.1	)
Europe & South Africa			58.4				37.3				25.5				14.8				24.9				33.5				136.0				148.3				(12.3	)
Asia Pacific			12.8				47.2				24.5				5.7				74.0				(61.2	)			90.2				119.0				(28.8	)
Total New Business Production		$	102.4			$	118.9			$	86.8			$	118.5			$	135.0			$	(32.6	)		$	426.6			$	428.9			$	(2.3	)
Per Share and Shares Data
Basic earnings per share
Net income		$	3.02			$	1.96			$	1.91			$	1.68			$	1.89			$	1.13			$	8.57			$	7.42			$	1.15
Operating income		$	2.46			$	1.35			$	1.66			$	1.53			$	1.65			$	0.81			$	7.00			$	6.60			$	0.40
Diluted earnings per share
Net income		$	3.00			$	1.95			$	1.91			$	1.67			$	1.88			$	1.12			$	8.52			$	7.37			$	1.15
Operating income		$	2.44			$	1.35			$	1.65			$	1.52			$	1.64			$	0.80			$	6.96			$	6.55			$	0.41
Wgt. average common shares outstanding (basic)			73,880				73,776				73,718				73,575				73,304				576				73,737				73,586				151
Wgt. average common shares outstanding (diluted)			74,375				74,138				74,054				74,043				73,812				563				74,153				74,108				45
Common shares issued			79,138				79,138				79,138				79,138				79,138				—				79,138				79,138				—
Treasury shares			5,211				5,286				5,416				5,426				5,770				(559	)			5,211				5,770				(559	)
Common shares outstanding			73,927				73,852				73,722				73,712				73,368				559				73,927				73,368				559
Book value per share		$	93.47			$	91.18			$	84.75			$	80.44			$	79.31
Per share effect of accumulated other comprehensive income (AOCI)		$	28.52			$	29.13			$	24.41			$	21.87			$	22.06
Book value per share, excluding AOCI		$	64.95			$	62.05			$	60.34			$	58.57			$	57.25
Shareholder dividends paid		$	17,724.7			$	17,696.2			$	13,268.6			$	13,255.3			$	13,189.3			$	4,535.4			$	61,944.8			$	44,228.8			$	17,716.0

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

 

				Quarterly Financial Supplement		Page 3

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Reinsurance Group of America, Incorporated

Consolidated GAAP Income Statement (incl. Operating Income Reconciliations)

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Revenues:
Net premiums		$	2,179,707			$	1,912,746			$	1,950,661			$	1,863,482			$	2,034,716			$	144,991			$	7,906,596			$	7,335,687			$	570,909
Investment income, net of related expenses			370,151				396,781				328,334				340,940				304,511				65,640				1,436,206				1,281,197				155,009
Investment related gains (losses), net
OTTI on fixed maturity securities			(4,346	)			(1,996	)			(1,959	)			(7,607	)			(11,824	)			7,478				(15,908	)			(30,873	)			14,965
OTTI on fixed maturity securities transferred to/from AOCI			—				(559	)			162				(7,221	)			543				(543	)			(7,618	)			3,924				(11,542	)
Other investment related gains (losses), net			115,108				78,608				25,598				58,348				(36,183	)			151,291				277,662				(9,107	)			286,769
Total investment related gains (losses), net			110,762				76,053				23,801				43,520				(47,464	)			158,226				254,136				(36,056	)			290,192
Other revenue			62,482				63,501				72,957				45,033				56,456				6,026				243,973				248,710				(4,737	)
Total revenues			2,723,102				2,449,081				2,375,753				2,292,975				2,348,219				374,883				9,840,911				8,829,538				1,011,373
Benefits and expenses:
Claims and other policy benefits			1,797,779				1,662,625				1,625,446				1,580,149				1,720,956				76,823				6,665,999				6,225,183				440,816
Interest credited			94,835				130,341				66,697				88,042				78,884				15,951				379,915				316,394				63,521
Policy acquisition costs and other insurance expenses			344,791				318,106				335,939				307,634				204,883				139,908				1,306,470				990,021				316,449
Other operating expenses			132,334				103,786				105,541				110,098				122,000				10,334				451,759				419,340				32,419
Interest expense			28,917				29,749				23,360				23,322				25,226				3,691				105,348				102,638				2,710
Collateral finance facility expense			3,357				2,995				2,878				2,967				3,019				338				12,197				12,391				(194	)
Total benefits and expenses			2,402,013				2,247,602				2,159,861				2,112,212				2,154,968				247,045				8,921,688				8,065,967				855,721
Income before income taxes			321,089				201,479				215,892				180,763				193,251				127,838				919,223				763,571				155,652
Income tax expense			98,100				57,004				74,781				57,445				54,672				43,428				287,330				217,526				69,804
Net income		$	222,989			$	144,475			$	141,111			$	123,318			$	138,579			$	84,410			$	631,893			$	546,045			$	85,848
Pre-tax Operating Income Reconciliation:
Income before income taxes			321,089				201,479				215,892				180,763				193,251				127,838				919,223				763,571				155,652
Investment and derivative losses (gains)—non-operating (2)			(3,404	)			(16,940	)			(102,184	)			94,098				(5,360	)			1,956				(28,430	)			(265,607	)			237,177
Change in value of modified coinsurance and funds withheld embedded derivatives (2)			(74,054	)			(54,836	)			4,453				9,428				85,722				(159,776	)			(115,009	)			87,236				(202,245	)
GMXB embedded derivatives (2)			(30,588	)			(2,579	)			74,929				(146,375	)			(29,261	)			(1,327	)			(104,613	)			224,184				(328,797	)
Funds withheld losses (gains)—investment income			(6,447	)			(6,400	)			(5,323	)			1,040				(194	)			(6,253	)			(17,130	)			(5,144	)			(11,986	)
Funds withheld losses (gains)—policy acq. costs			55				122				152				209				47				8				538				949				(411	)
EIA embedded derivatives—interest credited			7,711				(167	)			(1,685	)			39,239				9,490				(1,779	)			45,098				41,289				3,809
EIA embedded derivatives—policy acq. costs			—				—				—				—				6,908				(6,908	)			—				4,115				(4,115	)
DAC offset, net			44,308				13,705				1,490				(13,148	)			(82,837	)			127,145				46,355				(113,821	)			160,176
Gain on repurchase of collateral finance facility securities			—				—				—				—				(9,725	)			9,725				—				(65,565	)			65,565
Loss on retirement of Preferred Income Equity Redeemable Securities (“PIERS”)			—				—				—				—				—				—				—				4,391				(4,391	)
Operating Income Before Income Taxes		$	258,670			$	134,384			$	187,724			$	165,254			$	168,041			$	90,629			$	746,032			$	675,598			$	70,434
After-tax Operating Income Reconciliation:
Net Income			222,989				144,475				141,111				123,318				138,579				84,410				631,893				546,045				85,848
Investment and derivative losses (gains)—non-operating (2)			(2,801	)			(11,972	)			(66,949	)			60,304				(4,906	)			2,105				(21,418	)			(175,911	)			154,493
Change in value of modified coinsurance and funds withheld embedded derivatives (2)			(48,135	)			(35,644	)			2,895				6,128				55,719				(103,854	)			(74,756	)			56,703				(131,459	)
GMXB embedded derivatives (2)			(19,882	)			(1,676	)			48,704				(95,144	)			(19,019	)			(863	)			(67,998	)			145,720				(213,718	)
Funds withheld losses (gains)—investment income			(4,190	)			(4,160	)			(3,460	)			676				(126	)			(4,064	)			(11,134	)			(3,344	)			(7,790	)
Funds withheld losses (gains)—policy acq. costs			36				79				99				136				31				5				350				617				(267	)
EIA embedded derivatives—interest credited			5,012				(108	)			(1,095	)			25,505				6,169				(1,157	)			29,314				26,838				2,476
EIA embedded derivatives—policy acq. costs			—				—				—				—				4,490				(4,490	)			—				2,675				(2,675	)
DAC offset, net			28,801				8,908				968				(8,546	)			(53,844	)			82,645				30,131				(73,984	)			104,115
Gain on repurchase of collateral finance facility securities			—				—				—				—				(6,321	)			6,321				—				(42,617	)			42,617
Loss on retirement of PIERS			—				—				—				—				—				—				—				2,854				(2,854	)
Operating Income		$	181,830			$	99,902			$	122,273			$	112,377			$	120,772			$	61,058			$	516,382			$	485,596			$	30,786

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

(2)	Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement

 

				Quarterly Financial Supplement		Page 4

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Reinsurance Group of America, Incorporated

Consolidated Operating Income Statement

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands, except per share data)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Revenues:
Net premiums		$	2,179,707			$	1,912,746			$	1,950,661			$	1,863,482			$	2,034,716			$	144,991			$	7,906,596			$	7,335,687			$	570,909
Investment income, net of related expenses			363,704				390,381				323,011				341,980				304,317				59,387				1,419,076				1,276,053				143,023
Investment related gains (losses), net			2,716				1,698				999				671				3,637				(921	)			6,084				9,757				(3,673	)
Other revenue			62,482				63,501				72,957				45,033				46,731				15,751				243,973				183,145				60,828
Total revenues			2,608,609				2,368,326				2,347,628				2,251,166				2,389,401				219,208				9,575,729				8,804,642				771,087
Benefits and expenses:
Claims and other policy benefits			1,797,779				1,662,625				1,625,446				1,580,149				1,720,956				76,823				6,665,999				6,225,183				440,816
Interest credited			87,124				130,508				68,382				48,803				69,394				17,730				334,817				275,105				59,712
Policy acquisition costs and other insurance expenses			300,428				304,279				334,297				320,573				280,765				19,663				1,259,577				1,098,778				160,799
Other operating expenses			132,334				103,786				105,541				110,098				122,000				10,334				451,759				414,949				36,810
Interest expense			28,917				29,749				23,360				23,322				25,226				3,691				105,348				102,638				2,710
Collateral finance facility expense			3,357				2,995				2,878				2,967				3,019				338				12,197				12,391				(194	)
Total benefits and expenses			2,349,939				2,233,942				2,159,904				2,085,912				2,221,360				128,579				8,829,697				8,129,044				700,653
Operating income before income taxes			258,670				134,384				187,724				165,254				168,041				90,629				746,032				675,598				70,434
Operating income tax expense			76,840				34,482				65,451				52,877				47,269				29,571				229,650				190,002				39,648
Operating income		$	181,830			$	99,902			$	122,273			$	112,377			$	120,772			$	61,058			$	516,382			$	485,596			$	30,786
Wgt. Average Common Shares Outstanding (Diluted)			74,375				74,138				74,054				74,043				73,812				563				74,153				74,108				45
Diluted Earnings Per Share—Operating Income		$	2.44			$	1.35			$	1.65			$	1.52			$	1.64			$	0.80			$	6.96			$	6.55			$	0.41
Foreign currency effect (2):
Net premiums		$	14,105			$	(25,972	)		$	(45,800	)		$	(4,924	)		$	(5,509	)		$	19,614			$	(62,591	)		$	167,654			$	(230,245	)
Operating income before income taxes		$	1,799			$	(4,165	)		$	(3,471	)		$	(387	)		$	(2,407	)		$	4,206			$	(6,224	)		$	14,786			$	(21,010	)

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

(2)	Compared to comparable prior year period

 

				Quarterly Financial Supplement		Page 5

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Reinsurance Group of America, Incorporated

Consolidated Balance Sheets

 

(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)
Assets
Fixed maturity securities, available-for-sale		$	22,291,614			$	21,658,414			$	17,244,192			$	16,794,057			$	16,200,950
Mortgage loans on real estate			2,300,587				2,256,881				1,157,049				1,040,733				991,731
Policy loans			1,278,175				1,243,498				1,250,238				1,260,070				1,260,400
Funds withheld at interest			5,594,182				5,608,640				5,457,888				5,472,532				5,410,424
Short-term investments			288,082				90,789				49,981				75,425				88,566
Investment receivable			—				—				5,406,898				—				—
Other invested assets			1,159,543				1,236,616				940,605				867,507				1,012,541
Total investments			32,912,183				32,094,838				31,506,851				25,510,324				24,964,612
Cash and cash equivalents			1,259,892				1,603,730				957,341				873,933				962,870
Accrued investment income			201,344				250,048				182,586				173,629				144,334
Premiums receivable and other reinsurance balances			1,356,087				1,179,687				1,104,176				1,131,334				1,059,572
Reinsurance ceded receivables			620,901				623,954				626,734				597,508				626,194
Deferred policy acquisition costs			3,619,274				3,630,877				3,605,008				3,629,424				3,543,925
Other assets			390,757				540,879				361,627				369,930				332,466
Total assets		$	40,360,438			$	39,924,013			$	38,344,323			$	32,286,082			$	31,633,973
Liabilities and Stockholders’ Equity
Future policy benefits		$	11,372,856			$	11,093,483			$	10,725,096			$	10,413,361			$	9,903,886
Interest-sensitive contract liabilities			13,353,502				13,254,859				13,352,601				8,252,995				8,394,468
Other policy claims and benefits			3,160,250				3,132,526				3,026,467				2,984,681				2,841,373
Other reinsurance balances			233,630				218,057				249,336				132,389				118,219
Deferred income taxes			2,120,501				1,806,186				1,785,614				1,728,765				1,679,834
Other liabilities			742,249				1,217,788				890,687				777,678				810,775
Short-term debt			—				—				—				—				—
Long-term debt			1,815,253				1,815,111				1,414,969				1,414,829				1,414,688
Collateral finance facility			652,010				651,968				651,936				652,029				652,032
Total liabilities			33,450,251				33,189,978				32,096,706				26,356,727				25,815,275
Stockholders’ Equity:
Common stock, at par value			791				791				791				791				791
Additional paid-in-capital			1,755,421				1,743,822				1,740,415				1,736,184				1,727,774
Retained earnings			3,357,255				3,154,317				3,033,505				2,906,310				2,818,429
Treasury stock			(312,182	)			(316,542	)			(326,292	)			(325,732	)			(346,449	)
Accumulated other comprehensive income (AOCI):
Accumulated currency translation adjustment, net of income taxes			267,477				273,258				237,010				253,875				229,795
Unrealized appreciation of securities, net of income taxes			1,877,655				1,907,512				1,591,647				1,388,597				1,419,318
Pension and postretirement benefits, net of income taxes			(36,230	)			(29,123	)			(29,459	)			(30,670	)			(30,960	)
Total stockholders’ equity			6,910,187				6,734,035				6,247,617				5,929,355				5,818,698
Total liabilities and stockholders' equity		$	40,360,438			$	39,924,013			$	38,344,323			$	32,286,082			$	31,633,973
Total stockholders’ equity, excluding AOCI		$	4,801,285			$	4,582,388			$	4,448,419			$	4,317,553			$	4,200,545

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

 

				Quarterly Financial Supplement		Page 6

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Reinsurance Group of America, Incorporated

U.S. Traditional Sub-segment Pre-tax Operating Income

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Revenues:
Net premiums		$	1,159,106			$	1,045,767			$	1,082,400			$	1,021,507			$	1,099,409			$	59,697			$	4,308,780			$	3,979,489			$	329,291
Investment income, net of related expenses			133,988				135,532				133,652				132,417				125,528				8,460				535,589				495,650				39,939
Other revenue			2,448				764				401				1,003				1,571				877				4,616				3,401				1,215
Total revenues			1,295,542				1,182,063				1,216,453				1,154,927				1,226,508				69,034				4,848,985				4,478,540				370,445
Benefits and expenses:
Claims and other policy benefits			973,185				917,264				934,807				907,461				952,609				20,576				3,732,717				3,458,279				274,438
Interest credited			11,421				14,637				14,555				15,054				15,174				(3,753	)			55,667				59,891				(4,224	)
Policy acquisition costs and other insurance expenses			145,437				156,995				150,958				145,485				152,246				(6,809	)			598,875				555,511				43,364
Other operating expenses			25,890				20,684				20,586				24,001				23,971				1,919				91,161				85,106				6,055
Total benefits and expenses			1,155,933				1,109,580				1,120,906				1,092,001				1,144,000				11,933				4,478,420				4,158,787				319,633
Operating income before income taxes			139,609				72,483				95,547				62,926				82,508				57,101				370,565				319,753				50,812
Operating to U.S. GAAP Reconciliation:
Operating income before income taxes			139,609				72,483				95,547				62,926				82,508				57,101				370,565				319,753				50,812
Investment and derivative (losses) gains—non-operating			11,752				(1,927	)			789				(13,084	)			30,075				(18,323	)			(2,470	)			44,211				(46,681	)
Income before income taxes		$	151,361			$	70,556			$	96,336			$	49,842			$	112,583			$	38,778			$	368,095			$	363,964			$	4,131
Loss and Expense Ratios:
Claims and other policy benefits			84.0	%			87.7	%			86.4	%			88.8	%			86.6	%			-2.6	%			86.6	%			86.9	%			-0.3	%
Policy acquisition costs and other insurance expenses			12.5	%			15.0	%			13.9	%			14.2	%			13.8	%			-1.3	%			13.9	%			14.0	%			-0.1	%
Other operating expenses			2.2	%			2.0	%			1.9	%			2.3	%			2.2	%			0.0	%			2.1	%			2.1	%			0.0	%

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

 

				Quarterly Financial Supplement		Page 7

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Reinsurance Group of America, Incorporated

U.S. Asset Intensive Sub-segment Pre-tax Operating Income

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Revenues:
Net premiums		$	3,521			$	3,623			$	3,355			$	3,596			$	3,619			$	(98	)		$	14,095			$	13,189			$	906
Investment income, net of related expenses			127,812				154,789				90,527				111,501				79,604				48,208				484,629				357,578				127,051
Investment related gains (losses), net			—				—				(18	)			(30	)			(82	)			82				(48	)			(132	)			84
Other revenue			30,893				31,976				29,254				19,893				20,154				10,739				112,016				87,518				24,498
Total revenues			162,226				190,388				123,118				134,960				103,295				58,931				610,692				458,153				152,539
Benefits and expenses:
Claims and other policy benefits			2,892				2,828				5,102				1,902				2,766				126				12,724				14,277				(1,553	)
Interest credited			74,992				115,645				53,611				33,511				53,965				21,027				277,759				214,065				63,694
Policy acquisition costs and other insurance expenses			39,527				42,200				44,955				72,004				16,858				22,669				198,686				151,474				47,212
Other operating expenses			3,977				2,596				2,807				3,062				2,434				1,543				12,442				8,217				4,225
Total benefits and expenses			121,388				163,269				106,475				110,479				76,023				45,365				501,611				388,033				113,578
Operating income before income taxes			40,838				27,119				16,643				24,481				27,272				13,566				109,081				70,120				38,961
Operating to U.S. GAAP Reconciliation:
Operating income before income taxes			40,838				27,119				16,643				24,481				27,272				13,566				109,081				70,120				38,961
Investment and derivative gains (losses)—non-operating (2)			(13,667	)			2,039				92,008				(96,355	)			(23,077	)			9,410				(15,975	)			206,430				(222,405	)
Change in value of modified coinsurance and funds withheld embedded derivatives (2)			76,778				54,257				(4,593	)			(9,387	)			(86,759	)			163,537				117,055				(89,648	)			206,703
GMXB embedded derivatives (2)			30,588				2,579				(74,929	)			146,375				29,261				1,327				104,613				(224,184	)			328,797
Funds withheld gains (losses)—investment income			3,944				5,652				5,430				(2,224	)			194				3,750				12,802				5,144				7,658
Funds withheld gains (losses)—policy acq. costs			(55	)			(122	)			(152	)			(209	)			(47	)			(8	)			(538	)			(949	)			411
EIA embedded derivatives—interest credited			(7,711	)			167				1,685				(39,239	)			(9,490	)			1,779				(45,098	)			(41,289	)			(3,809	)
EIA embedded derivatives—policy acq. costs			—				—				—				—				(6,908	)			6,908				—				(4,115	)			4,115
DAC offset, net			(44,308	)			(13,705	)			(1,490	)			13,148				82,837				(127,145	)			(46,355	)			113,821				(160,176	)
Income before income taxes		$	86,407			$	77,986			$	34,602			$	36,590			$	13,283			$	73,124			$	235,585			$	35,330			$	200,255

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

(2)	Included in “Investment related gains (losses), net” on Consolidated GAAP Income Statement

 

				Quarterly Financial Supplement		Page 8

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Reinsurance Group of America, Incorporated

U.S. Asset Intensive Sub-segment

(Cont'd)

 

		Three Months Ended
(USD millions)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011
Annuity account values:
Fixed annuities (deferred)		$	5,690			$	5,815			$	5,942			$	897			$	879
Net interest spread (fixed annuities):			2.2	%			1.1	%			1.0	%			2.4	%			2.8	%
Equity-indexed annuities		$	4,833			$	4,882			$	4,867			$	4,895			$	4,881
Variable annuities:
No riders		$	948			$	957			$	944			$	1,040			$	986
GMDB only			79				80				79				82				85
GMIB only			6				6				6				6				6
GMAB only			54				55				54				57				55
GMWB only			1,662				1,667				1,620				1,704				1,538
GMDB / WB			455				461				451				460				498
Other			31				31				30				32				31
Total VA account values		$	3,235			$	3,257			$	3,184			$	3,381			$	3,199
Fair value of liabilities associated with living benefit riders		$	172			$	203			$	205			$	130			$	277
Interest-sensitive contract liabilities associated with:
Guaranteed investment contracts		$	200			$	200			$	200			$	198			$	198
Bank-owned life insurance (BOLI)		$	522			$	519			$	515			$	512			$	508
Other asset-intensive business		$	75			$	76			$	77			$	78			$	78

 

				Quarterly Financial Supplement		Page 9

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Reinsurance Group of America, Incorporated

U.S. Financial Reinsurance Sub-segment Pre-tax Operating Income

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011								Dec. 31, 2012				Dec. 31, 2011				Change
Revenues:
Investment income, net of related expenses		$	361			$	364			$	179			$	164			$	131			$	230			$	1,068			$	164			$	904
Other revenue			13,796				11,565				11,734				8,910				9,558				4,238				46,005				36,373				9,632
Total revenues			14,157				11,929				11,913				9,074				9,689				4,468				47,073				36,537				10,536
Benefits and expenses:
Policy acquisition costs and other insurance expenses			1,081				2,012				704				770				743				338				4,567				3,191				1,376
Other operating expenses			4,555				1,635				1,593				1,852				2,025				2,530				9,635				6,875				2,760
Total benefits and expenses			5,636				3,647				2,297				2,622				2,768				2,868				14,202				10,066				4,136
Operating income before income taxes			8,521				8,282				9,616				6,452				6,921				1,600				32,871				26,471				6,400
Operating to U.S. GAAP Reconciliation:
Operating income before income taxes			8,521				8,282				9,616				6,452				6,921				1,600				32,871				26,471				6,400
Investment and derivative gains (losses)—non-operating			112				(146	)			32				(139	)			(87	)			199				(141	)			(128	)			(13	)
Income before income taxes		$	8,633			$	8,136			$	9,648			$	6,313			$	6,834			$	1,799			$	32,730			$	26,343			$	6,387

 

				Quarterly Financial Supplement		Page 10

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Reinsurance Group of America, Incorporated

Canadian Segment Pre-tax Operating Income

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Revenues:
Net premiums		$	248,443			$	227,944			$	221,167			$	218,210			$	224,763			$	23,680			$	915,764			$	835,298			$	80,466
Investment income, net of related expenses			45,928				46,016				46,349				47,716				42,604				3,324				186,009				188,304				(2,295	)
Investment related gains (losses), net			1,041				1,003				995				1,323				1,579				(538	)			4,362				5,198				(836	)
Other revenue			41				3,288				3,205				(30	)			(9	)			50				6,504				5,433				1,071
Total revenues			295,453				278,251				271,716				267,219				268,937				26,516				1,112,639				1,034,233				78,406
Benefits and expenses:
Claims and other policy benefits			169,959				191,275				184,857				160,625				165,456				4,503				706,716				673,105				33,611
Interest credited			6				22				—				—				—				6				28				—				28
Policy acquisition costs and other insurance expenses			58,786				49,790				47,476				50,285				52,140				6,646				206,337				180,712				25,625
Other operating expenses			12,664				9,022				8,876				9,650				10,645				2,019				40,212				37,261				2,951
Total benefits and expenses			241,415				250,109				241,209				220,560				228,241				13,174				953,293				891,078				62,215
Operating income before income taxes			54,038				28,142				30,507				46,659				40,696				13,342				159,346				143,155				16,191
Operating to U.S. GAAP Reconciliation:
Operating income before income taxes			54,038				28,142				30,507				46,659				40,696				13,342				159,346				143,155				16,191
Investment and derivative gains (losses)—non-operating			2,817				8,630				4,630				7,220				6,545				(3,728	)			23,297				21,798				1,499
Funds withheld gains (losses)—investment income			2,503				748				(107	)			1,184				—				2,503				4,328				—				4,328
Income before income taxes		$	59,358			$	37,520			$	35,030			$	55,063			$	47,241			$	12,117			$	186,971			$	164,953			$	22,018
Loss and Expense Ratios:
Loss ratios (creditor business)			6.1	%			40.4	%			38.0	%			34.1	%			36.3	%			-30.2	%			28.5	%			37.9	%			-9.4	%
Loss ratios (excluding creditor business)			87.5	%			96.8	%			95.5	%			83.8	%			85.5	%			2.0	%			90.9	%			92.1	%			-1.2	%
Claims and other policy benefits / (net premiums + investment income)			57.7	%			69.8	%			69.1	%			60.4	%			61.9	%			-4.2	%			64.1	%			65.8	%			-1.7	%
Policy acquisition costs and other insurance expenses (creditor business)			60.0	%			58.2	%			58.5	%			57.1	%			59.2	%			0.8	%			58.6	%			56.6	%			2.0	%
Policy acquisition costs and other insurance expenses (excluding creditor business)			12.5	%			11.1	%			11.8	%			14.2	%			10.9	%			1.6	%			12.4	%			11.3	%			1.1	%
Other operating expenses			5.1	%			4.0	%			4.0	%			4.4	%			4.7	%			0.4	%			4.4	%			4.5	%			-0.1	%
Foreign currency effect (2):
Net premiums		$	7,617			$	(3,413	)		$	(9,838	)		$	(3,328	)		$	(2,669	)		$	10,286			$	(8,962	)		$	31,257			$	(40,219	)
Operating income before income taxes		$	1,785			$	919			$	(2,905	)		$	(554	)		$	(641	)		$	2,426			$	(755	)		$	5,404			$	(6,159	)
Creditor reinsurance net premiums		$	58,340			$	52,038			$	45,883			$	44,810			$	54,227			$	4,113			$	201,071			$	177,319			$	23,752

Note: The loss ratios on creditor reinsurance business are normally lower than traditional reinsurance, while allowances are normally higher as a percentage of premiums.

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

(2)	Compared to comparable prior year period

 

				Quarterly Financial Supplement		Page 11

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Reinsurance Group of America, Incorporated

Europe & South Africa Segment Pre-tax Operating Income

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Revenues:
Net premiums		$	402,515			$	303,101			$	310,075			$	292,771			$	356,284			$	46,231			$	1,308,462			$	1,194,477			$	113,985
Investment income, net of related expenses			11,560				11,437				11,248				11,331				11,709				(149	)			45,576				44,351				1,225
Other revenue			1,386				1,576				1,464				2,253				1,035				351				6,679				5,031				1,648
Total revenues			415,461				316,114				322,787				306,355				369,028				46,433				1,360,717				1,243,859				116,858
Benefits and expenses:
Claims and other policy benefits			357,190				251,553				263,992				261,484				293,126				64,064				1,134,219				1,001,921				132,298
Policy acquisition costs and other insurance expenses			7,937				14,697				13,550				15,052				13,329				(5,392	)			51,236				59,217				(7,981	)
Other operating expenses			36,075				24,809				26,810				25,195				29,511				6,564				112,889				105,619				7,270
Total benefits and expenses			401,202				291,059				304,352				301,731				335,966				65,236				1,298,344				1,166,757				131,587
Operating income before income taxes			14,259				25,055				18,435				4,624				33,062				(18,803	)			62,373				77,102				(14,729	)
Operating to U.S. GAAP Reconciliation:
Operating income before income taxes			14,259				25,055				18,435				4,624				33,062				(18,803	)			62,373				77,102				(14,729	)
Investment and derivative gains (losses)—non-operating			1,325				7,111				1,156				1,982				2,951				(1,626	)			11,574				6,000				5,574
Income before income taxes		$	15,584			$	32,166			$	19,591			$	6,606			$	36,013			$	(20,429	)		$	73,947			$	83,102			$	(9,155	)
Loss and Expense Ratios:
Claims and other policy benefits			88.7	%			83.0	%			85.1	%			89.3	%			82.3	%			6.4	%			86.7	%			83.9	%			2.8	%
Policy acquisition costs and other insurance expenses			2.0	%			4.8	%			4.4	%			5.1	%			3.7	%			-1.7	%			3.9	%			5.0	%			-1.1	%
Other operating expenses			9.0	%			8.2	%			8.6	%			8.6	%			8.3	%			0.7	%			8.6	%			8.8	%			-0.2	%
Foreign currency effect (2):
Net premiums		$	(129	)		$	(17,157	)		$	(22,973	)		$	(11,362	)		$	(9,136	)		$	9,007			$	(51,621	)		$	31,250			$	(82,871	)
Operating income before income taxes		$	(305	)		$	(2,989	)		$	(1,013	)		$	(1,417	)		$	(1,605	)		$	1,300			$	(5,724	)		$	1,009			$	(6,733	)
Critical illness net premiums		$	66,211			$	58,793			$	62,001			$	61,548			$	61,564			$	4,647			$	248,553			$	244,824			$	3,729

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

(2)	Compared to comparable prior year period

 

				Quarterly Financial Supplement		Page 12

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Reinsurance Group of America, Incorporated

Asia Pacific Segment Pre-tax Operating Income

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Revenues:
Net premiums		$	362,620			$	330,415			$	331,945			$	325,350			$	348,358			$	14,262			$	1,350,330			$	1,304,490			$	45,840
Investment income, net of related expenses			20,782				19,316				20,711				22,578				21,666				(884	)			83,387				84,837				(1,450	)
Investment related gains (losses), net			1,460				468				(164	)			(809	)			1,237				223				955				3,958				(3,003	)
Other revenue			11,269				10,052				24,109				7,408				9,741				1,528				52,838				34,073				18,765
Total revenues			396,131				360,251				376,601				354,527				381,002				15,129				1,487,510				1,427,358				60,152
Benefits and expenses:
Claims and other policy benefits			294,564				299,782				236,733				248,620				306,802				(12,238	)			1,079,699				1,076,833				2,866
Interest Credited			653				204				216				238				254				399				1,311				1,149				162
Policy acquisition costs and other insurance expenses			58,419				52,779				89,996				50,847				58,713				(294	)			252,041				201,130				50,911
Other operating expenses			34,040				28,234				26,929				27,913				30,254				3,786				117,116				109,068				8,048
Total benefits and expenses			387,676				380,999				353,874				327,618				396,023				(8,347	)			1,450,167				1,388,180				61,987
Operating income (loss) before income taxes			8,455				(20,748	)			22,727				26,909				(15,021	)			23,476				37,343				39,178				(1,835	)
Operating to U.S. GAAP Reconciliation:
Operating income before income taxes			8,455				(20,748	)			22,727				26,909				(15,021	)			23,476				37,343				39,178				(1,835	)
Investment and derivative gains (losses)—non-operating			(2,520	)			4,265				1,132				5,158				5,309				(7,829	)			8,035				3,056				4,979
Income (loss) before income taxes		$	5,935			$	(16,483	)		$	23,859			$	32,067			$	(9,712	)		$	15,647			$	45,378			$	42,234			$	3,144
Loss and Expense Ratios:
Claims and other policy benefits			81.2	%			90.7	%			71.3	%			76.4	%			88.1	%			-6.9	%			80.0	%			82.5	%			-2.5	%
Policy acquisition costs and other insurance expenses			16.1	%			16.0	%			27.1	%			15.6	%			16.9	%			-0.8	%			18.7	%			15.4	%			3.3	%
Other operating expenses			9.4	%			8.5	%			8.1	%			8.6	%			8.7	%			0.7	%			8.7	%			8.4	%			0.3	%
Foreign currency effect (2):
Net premiums		$	6,609			$	(5,401	)		$	(12,998	)		$	9,756			$	6,296			$	313			$	(2,034	)		$	105,251			$	(107,285	)
Operating income before income taxes		$	(508	)		$	(1,280	)		$	(614	)		$	1,529			$	325			$	(833	)		$	(873	)		$	5,816			$	(6,689	)
Critical illness net premiums		$	68,963			$	68,356			$	46,700			$	40,333			$	40,566			$	28,397			$	224,352			$	157,326			$	67,026

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

(2)	Compared to comparable prior year period

 

				Quarterly Financial Supplement		Page 13

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Reinsurance Group of America, Incorporated

Corporate and Other Segment Pre-tax Operating Income

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
Revenues:
Net premiums		$	3,502			$	1,896			$	1,719			$	2,048			$	2,283			$	1,219			$	9,165			$	8,744			$	421
Investment income, net of related expenses			23,273				22,927				20,345				16,273				23,075				198				82,818				105,169				(22,351	)
Investment related gains (losses), net			215				227				186				187				903				(688	)			815				733				82
Other revenue			2,649				4,280				2,790				5,596				4,681				(2,032	)			15,315				11,316				3,999
Total revenues			29,639				29,330				25,040				24,104				30,942				(1,303	)			108,113				125,962				(17,849	)
Benefits and expenses:
Claims and other policy benefits			(11	)			(77	)			(45	)			57				197				(208	)			(76	)			768				(844	)
Interest credited			52				—				—				—				1				51				52				—				52
Policy acquisition costs and other insurance expenses			(10,759	)			(14,194	)			(13,342	)			(13,870	)			(13,264	)			2,505				(52,165	)			(52,457	)			292
Other operating expenses			15,133				16,806				17,940				18,425				23,160				(8,027	)			68,304				62,803				5,501
Interest expense			28,917				29,749				23,360				23,322				25,226				3,691				105,348				102,638				2,710
Collateral finance facility expense			3,357				2,995				2,878				2,967				3,019				338				12,197				12,391				(194	)
Total benefits and expenses			36,689				35,279				30,791				30,901				38,339				(1,650	)			133,660				126,143				7,517
Operating income (loss) before income taxes			(7,050	)			(5,949	)			(5,751	)			(6,797	)			(7,397	)			347				(25,547	)			(181	)			(25,366	)
Operating to U.S. GAAP Reconciliation:
Operating income (loss) before income taxes			(7,050	)			(5,949	)			(5,751	)			(6,797	)			(7,397	)			347				(25,547	)			(181	)			(25,366	)
Investment and derivative gains (losses)—non-operating			861				(2,453	)			2,577				1,079				(15,319	)			16,180				2,064				(13,348	)			15,412
Gain on repurchase of collateral finance facility securities			—				—				—				—				9,725				(9,725	)			—				65,565				(65,565	)
Loss on retirement of PIERS			—				—				—				—				—				—				—				(4,391	)			4,391
Income (loss) before income taxes		$	(6,189	)		$	(8,402	)		$	(3,174	)		$	(5,718	)		$	(12,991	)		$	6,802			$	(23,483	)		$	47,645			$	(71,128	)
Foreign currency effect (2):
Net premiums		$	8			$	(1	)		$	9			$	10			$	—			$	8			$	26			$	(104	)		$	130
Operating income before income taxes		$	827			$	(815	)		$	1,061			$	55			$	(486	)		$	1,313			$	1,128			$	2,557			$	(1,429	)

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

(2)	Compared to comparable prior year period

 

				Quarterly Financial Supplement		Page 14

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Reinsurance Group of America, Incorporated

Summary of Pre-tax Segment Operating Income

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
(USD thousands)		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011(1)								Dec. 31, 2012				Dec. 31, 2011(1)				Change
U.S. Traditional		$	139,609			$	72,483			$	95,547			$	62,926			$	82,508			$	57,101			$	370,565			$	319,753			$	50,812
U.S. Asset Intensive			40,838				27,119				16,643				24,481				27,272				13,566				109,081				70,120				38,961
U.S. Financial Reinsurance			8,521				8,282				9,616				6,452				6,921				1,600				32,871				26,471				6,400
Total U.S. Segment			188,968				107,884				121,806				93,859				116,701				72,267				512,517				416,344				96,173
Canadian Segment			54,038				28,142				30,507				46,659				40,696				13,342				159,346				143,155				16,191
Europe & South Africa Segment			14,259				25,055				18,435				4,624				33,062				(18,803	)			62,373				77,102				(14,729	)
Asia Pacific Segment			8,455				(20,748	)			22,727				26,909				(15,021	)			23,476				37,343				39,178				(1,835	)
Corporate and Other			(7,050	)			(5,949	)			(5,751	)			(6,797	)			(7,397	)			347				(25,547	)			(181	)			(25,366	)
Consolidated		$	258,670			$	134,384			$	187,724			$	165,254			$	168,041			$	90,629			$	746,032			$	675,598			$	70,434

 

(1)	Certain amounts in December 2011 have been revised in connection with the retrospective adoption of ASU 2010-26 in the first quarter of 2012.

 

				Quarterly Financial Supplement		Page 15

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Reinsurance Group of America, Incorporated

Investments

(USD thousands)

Cash and Invested Assets

 

		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011
Fixed maturity securities, available-for-sale		$	22,291,614			$	21,658,414			$	17,244,192			$	16,794,057			$	16,200,950
Mortgage loans on real estate			2,300,587				2,256,881				1,157,049				1,040,733				991,731
Policy loans			1,278,175				1,243,498				1,250,238				1,260,070				1,260,400
Funds withheld at interest			5,594,182				5,608,640				5,457,888				5,472,532				5,410,424
Short-term investments			288,082				90,789				49,981				75,425				88,566
Investment Receivable			—				—				5,406,898				—				—
Other invested assets			1,159,543				1,236,616				940,605				867,507				1,012,541
Cash and cash equivalents			1,259,892				1,603,730				957,341				873,933				962,870
Total cash and invested assets		$	34,172,075			$	33,698,568			$	32,464,192			$	26,384,257			$	25,927,482

Investment Income and Yield Summary

(USD thousands)

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011								Dec. 31, 2012				Dec. 31, 2011				Change
Average invested assets at amortized cost (1)		$	17,510,541			$	17,030,794			$	16,539,380			$	16,342,741			$	15,792,721			$	1,717,820			$	16,555,144			$	15,288,576			$	1,266,568
Net investment income (1)		$	207,567			$	208,346			$	205,471			$	202,603			$	200,702			$	6,865			$	823,987			$	806,655			$	17,332
Annualized investment yield (ratio of net investment income to average invested assets) (1)			4.83	%			4.98	%			5.06	%			5.05	%			5.18	%			-0.35	%			4.98	%			5.28	%			-0.30	%

 

(1)	Excludes funds withheld and other spread related business (e.g. coinsurance of annuities).

 

				Quarterly Financial Supplement		Page 16

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Reinsurance Group of America, Incorporated

Investments

(USD thousands)

Amortized cost, gross unrealized gains and losses, and estimated fair values of fixed maturity and equity securities

(Excludes Funds Withheld Portfolios)

 

		December 31, 2012
		Amortized Cost				Unrealized Gains				Unrealized Losses				Estimated Fair Value				% of Total				Other- than- temporary Impairment in AOCI
Available-for-sale:
Corporate securities		$	11,333,431			$	1,085,973			$	39,333			$	12,380,071				55.5	%		$	—
Canadian and Canadian provincial governments			2,676,777				1,372,731				174				4,049,334				18.2	%			—
Residential mortgage-backed securities			969,267				76,520				3,723				1,042,064				4.7	%			(241	)
Asset-backed securities			700,455				19,898				28,798				691,555				3.1	%			(2,259	)
Commercial mortgage-backed securities			1,608,376				142,369				51,842				1,698,903				7.6	%			(6,125	)
U.S. government and agencies			231,256				33,958				24				265,190				1.2	%			—
State and political subdivisions			270,086				38,058				5,646				302,498				1.4	%			—
Other foreign government, supranational, and foreign government-sponsored enterprises			1,769,784				94,929				2,714				1,861,999				8.3	%			—
Total fixed maturity securities		$	19,559,432			$	2,864,436			$	132,254			$	22,291,614				100.0	%		$	(8,625	)
Non-redeemable preferred stock			68,469				6,542				170				74,841				33.6	%
Other equity securities			148,577				416				1,134				147,859				66.4	%
Total equity securities		$	217,046			$	6,958			$	1,304			$	222,700				100.0	%

 

		December 31, 2011
		Amortized Cost				Unrealized Gains				Unrealized Losses				Estimated Fair Value				% of Total				Other- than- temporary Impairment in AOCI
Available-for-sale:
Corporate securities		$	6,931,958			$	654,519			$	125,371			$	7,461,106				46.0	%		$	—
Canadian and Canadian provincial governments			2,507,802				1,362,160				29				3,869,933				23.9	%			—
Residential mortgage-backed securities			1,167,265				76,393				16,424				1,227,234				7.6	%			(1,042	)
Asset-backed securities			443,974				11,692				53,675				401,991				2.5	%			(5,256	)
Commercial mortgage-backed securities			1,233,958				87,750				79,489				1,242,219				7.7	%			(12,225	)
U.S. government and agencies			341,087				32,976				61				374,002				2.3	%			—
State and political subdivisions			184,308				24,419				3,341				205,386				1.3	%			—
Other foreign government, supranational, and foreign government-sponsored enterprises			1,372,528				50,127				3,576				1,419,079				8.7	%			—
Total fixed maturity securities		$	14,182,880			$	2,300,036			$	281,966			$	16,200,950				100.0	%		$	(18,523	)
Non-redeemable preferred stock			82,488				4,677				8,982				78,183				68.6	%
Other equity securities			35,352				1,903				1,538				35,717				31.4	%
Total equity securities		$	117,840			$	6,580			$	10,520			$	113,900				100.0	%

 

				Quarterly Financial Supplement		Page 17

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Reinsurance Group of America, Incorporated

Investments

(USD thousands)

Corporate Securities by Sector (Fixed Maturities and Equities)

(Excludes Funds Withheld Portfolios)

 

		December 31, 2012														December 31, 2011
		Amortized Cost				Estimated Fair Value				% of Total				Average Credit Ratings		Amortized Cost				Estimated Fair Value				% of Total				Average Credit Ratings
Financial Institutions
Banking		$	2,114,425			$	2,260,382				17.9	%		A		$	1,477,638			$	1,454,124				19.2	%		A
Brokerage			120,139				131,664				1.0	%		A-			59,288				63,101				0.8	%		A
Finance Comp.			181,430				193,892				1.5	%		A			158,271				161,992				2.1	%		A
Insurance			592,109				654,647				5.2	%		A-			391,092				413,339				5.5	%		A-
REITs			485,469				523,370				4.2	%		BBB			300,401				316,192				4.2	%		BBB+
Other Finance			342,929				358,897				2.9	%		BBB+			130,984				135,812				1.8	%		A-
Total Financial Institutions			3,836,501				4,122,852				32.7	%					2,517,674				2,544,560				33.6	%
Industrials
Basic			803,353				861,547				6.8	%		BBB			367,323				402,225				5.3	%		BBB+
Capital Goods			637,479				692,218				5.5	%		BBB			360,309				396,150				5.2	%		BBB+
Communications			1,044,374				1,169,000				9.3	%		BBB+			674,182				745,064				9.8	%		BBB+
Consumer Cyclical			727,324				786,726				6.2	%		BBB+			407,873				438,034				5.8	%		BBB+
Consumer Noncyclical			969,589				1,084,295				8.6	%		BBB+			691,245				784,819				10.4	%		A-
Energy			728,354				807,087				6.4	%		BBB+			405,317				454,727				6.0	%		BBB+
Technology			475,697				502,123				4.0	%		BBB			245,954				269,301				3.6	%		BBB+
Transportation			378,808				415,283				3.3	%		BBB+			219,605				234,822				3.1	%		BBB+
Other Industrial			116,989				125,567				1.0	%		BBB			41,266				46,053				0.6	%		BBB
Total Industrials			5,881,967				6,443,846				51.1	%					3,413,074				3,771,195				49.8	%
Utilities
Electric			1,081,451				1,196,527				9.5	%		BBB+			673,725				756,033				10.0	%		BBB+
Natural Gas			656,357				733,422				5.8	%		BBB			398,648				447,617				5.9	%		BBB
Other Utility			61,850				72,662				0.6	%		A-			43,377				51,921				0.7	%		A-
Total Utilities			1,799,658				2,002,611				15.9	%					1,115,750				1,255,571				16.6	%
Other Sectors			32,351				33,462				0.3	%		AA			3,300				3,680				0.0	%		AA-
Total		$	11,550,477			$	12,602,771				100.0	%		BBB+		$	7,049,798			$	7,575,006				100.0	%		BBB+

 

				Quarterly Financial Supplement		Page 18

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Reinsurance Group of America, Incorporated

Investments

(USD thousands)

Ratings of Fixed Maturity Securities

(Excludes Funds Withheld Portfolios)

 

				December 31, 2012												September 30, 2012												June 30, 2012												March 31, 2012												December 31, 2011
NAIC Designation		Rating Agency Designation		Amortized Cost				Estimated Fair Value				% of Total				Amortized Cost				Estimated Fair Value				% of Total				Amortized Cost				Estimated Fair Value				% of Total				Amortized Cost				Estimated Fair Value				% of Total				Amortized Cost				Estimated Fair Value				% of Total
1		AAA		$	1,857,190			$	1,980,164				8.9	%		$	2,222,818			$	2,364,081				10.9	%		$	1,979,353			$	2,092,043				12.1	%		$	2,090,606			$	2,196,118				13.1	%		$	2,205,406			$	2,304,991				14.2	%
1		AA			5,286,082				6,541,670				29.4	%			5,265,613				6,572,815				30.4	%			4,578,944				5,708,472				33.1	%			4,727,343				5,764,579				34.3	%			4,675,653				5,815,846				35.9	%
1		A			4,915,882				5,778,737				25.9	%			4,666,113				5,525,476				25.5	%			3,919,020				4,705,816				27.3	%			3,646,110				4,263,802				25.4	%			3,206,553				3,822,796				23.6	%
2		BBB			6,186,536				6,692,929				30.0	%			5,716,281				6,185,558				28.6	%			3,667,640				3,974,486				23.1	%			3,539,967				3,814,367				22.7	%			3,283,937				3,522,411				21.8	%
3		BB			694,349				712,712				3.2	%			583,622				608,439				2.8	%			421,128				428,875				2.5	%			428,543				430,002				2.6	%			446,610				436,001				2.7	%
4		B			444,996				444,035				2.0	%			322,040				306,871				1.4	%			269,970				248,850				1.4	%			240,603				220,924				1.3	%			244,645				210,222				1.3	%
5		CCC and lower			118,738				95,906				0.4	%			92,149				68,193				0.3	%			89,665				64,812				0.4	%			106,637				80,660				0.5	%			95,128				71,410				0.4	%
6		In or near default			55,659				45,461				0.2	%			36,647				26,981				0.1	%			31,445				20,838				0.1	%			35,050				23,605				0.1	%			24,948				17,273				0.1	%
		Total		$	19,559,432			$	22,291,614				100.0	%		$	18,905,283			$	21,658,414				100.0	%		$	14,957,165			$	17,244,192				100.0	%		$	14,814,859			$	16,794,057				100.0	%		$	14,182,880			$	16,200,950				100.0	%

Structured Fixed Maturity Securities

 

		December 31, 2012								September 30, 2012								June 30, 2012								March 31, 2012								December 31, 2011
		Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value
Residential mortgage-backed securities:
Agency		$	497,918			$	555,535			$	511,887			$	571,894			$	511,985			$	571,821			$	523,206			$	576,045			$	561,156			$	619,010
Non-agency			471,349				486,529				468,768				483,914				495,808				506,741				551,867				562,183				606,109				608,224
Total residential mortgage-backed securities			969,267				1,042,064				980,655				1,055,808				1,007,793				1,078,562				1,075,073				1,138,228				1,167,265				1,227,234
Commercial mortgage-backed securities			1,608,376				1,698,903				1,663,493				1,740,391				1,308,668				1,348,047				1,302,734				1,342,421				1,233,958				1,242,219
Asset-backed securities			700,455				691,555				588,851				572,700				469,616				441,051				448,688				414,527				443,974				401,991
Total		$	3,278,098			$	3,432,522			$	3,232,999			$	3,368,899			$	2,786,077			$	2,867,660			$	2,826,495			$	2,895,176			$	2,845,197			$	2,871,444

 

				Quarterly Financial Supplement		Page 19

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Reinsurance Group of America, Incorporated

Investments

(USD thousands)

CMBS Exposure

(Includes Funds Withheld Portfolios)

 

		December 31, 2012
		AAA								AA								A
Underwriting Year		Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value
2005 & Prior		$	69,810			$	75,706			$	129,430			$	141,189			$	99,840			$	103,112
2006			243,222				270,756				59,773				66,862				85,198				93,688
2007			182,456				201,131				32,810				37,542				69,266				77,657
2008			7,674				7,672				53,510				67,624				14,387				17,098
2009			1,655				1,820				17,399				19,483				3,463				5,599
2010			27,984				29,956				47,085				53,027				13,273				14,405
2011			15,748				16,411				16,069				18,184				40,546				42,726
2012			28,324				29,080				36,340				36,925				58,376				59,595
Total		$	576,873			$	632,532			$	392,416			$	440,836			$	384,349			$	413,880

 

		BBB								Below Investment Grade								Total
Underwriting Year		Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value
2005 & Prior		$	110,887			$	113,801			$	42,838			$	37,720			$	452,805			$	471,528
2006			83,565				84,689				67,131				65,645				538,889				581,640
2007			93,414				108,902				115,028				91,505				492,974				516,737
2008			—				—				22,416				17,386				97,987				109,780
2009			3,880				5,547				—				—				26,397				32,449
2010			—				—				—				—				88,342				97,388
2011			33,242				33,757				—				—				105,605				111,078
2012			43,346				43,811				—				—				166,386				169,411
Total		$	368,334			$	390,507			$	247,413			$	212,256			$	1,969,385			$	2,090,011

NOTE: Totals include directly held investments with amortized cost of $1,608.4 million and fair value of $1,698.9 million as well as investments in funds withheld with amortized cost of $361.0 million and fair value of $391.1 million.

 

		December 31, 2011
		AAA								AA								A
Underwriting Year		Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value
2005 & Prior		$	92,275			$	98,213			$	130,890			$	143,609			$	32,504			$	31,187
2006			260,765				277,959				52,883				59,727				52,805				55,074
2007			201,228				214,510				23,565				18,700				116,898				122,945
2008			8,975				9,053				48,818				59,536				17,012				19,237
2009			1,664				1,709				12,367				13,684				7,060				9,515
2010			27,946				28,872				49,323				53,480				19,434				20,727
2011			20,047				20,002				11,146				12,079				7,563				7,594
Total		$	612,900			$	650,318			$	328,992			$	360,815			$	253,276			$	266,279

 

		BBB								Below Investment Grade								Total
Underwriting Year		Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value
2005 & Prior		$	24,750			$	24,295			$	52,475			$	40,753			$	332,894			$	338,057
2006			27,995				26,563				53,205				43,559				447,653				462,882
2007			102,604				108,047				113,946				77,718				558,241				541,920
2008			—				—				24,916				17,554				99,721				105,380
2009			—				—				—				—				21,091				24,908
2010			—				—				—				—				96,703				103,079
2011			—				—				—				—				38,756				39,675
Total		$	155,349			$	158,905			$	244,542			$	179,584			$	1,595,059			$	1,615,901

NOTE: Totals include directly held investments with amortized cost of $1,234.0 million and fair value of $1,242.2 million as well as investments in funds withheld with amortized cost of $361.1 million and fair value of $373.7 million.

 

				Quarterly Financial Supplement		Page 20

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Reinsurance Group of America, Incorporated

Investments

(USD thousands)

Gross Unrealized Losses Aging

Fixed Maturity Securities

 

		December 31, 2012								September 30, 2012								June 30, 2012								March 31, 2012								December 31, 2011
		Gross Unrealized Losses				% of Total				Gross Unrealized Losses				% of Total				Gross Unrealized Losses				% of Total				Gross Unrealized Losses				% of Total				Gross Unrealized Losses				% of Total
Less than 20%		$	53,648				40.2	%		$	55,097				35.9	%		$	75,539				38.5	%		$	88,526				41.3	%		$	126,250				43.1	%
20% or more for less than six months			734				0.5	%			509				0.3	%			5,924				3.0	%			9,803				4.6	%			46,386				15.9	%
20% or more for six months or greater			77,872				58.3	%			97,260				63.3	%			112,362				57.2	%			111,830				52.2	%			109,330				37.4	%
Total		$	132,254				99.0	%		$	152,866				99.5	%		$	193,825				98.7	%		$	210,159				98.1	%		$	281,966				96.4	%

Equity Securities

 

		December 31, 2012								September 30, 2012								June 30, 2012								March 31, 2012								December 31, 2011
		Gross Unrealized Losses				% of Total				Gross Unrealized Losses				% of Total				Gross Unrealized Losses				% of Total				Gross Unrealized Losses				% of Total				Gross Unrealized Losses				% of Total
Less than 20%		$	1,303				1.0	%		$	833				0.5	%		$	1,659				0.9	%		$	3,511				1.6	%		$	4,905				1.7	%
20% or more for less than six months			—				0.0	%			—				0.0	%			815				0.4	%			183				0.1	%			5,117				1.7	%
20% or more for six months or greater			1				0.0	%			1				0.0	%			—				0.0	%			499				0.2	%			498				0.2	%
Total		$	1,304				1.0	%		$	834				0.5	%		$	2,474				1.3	%		$	4,193				1.9	%		$	10,520				3.6	%

 

				Quarterly Financial Supplement		Page 21

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Reinsurance Group of America, Incorporated

Investments

(USD thousands)

Fixed Maturities and Equity Securities Below Amortized Cost

(Excludes Funds Withheld Portfolios)

 

		As of December 31, 2012
		Less than 12 months								Equal to or greater than 12 months								Total
		Estimated Fair Value				Gross Unrealized Losses				Estimated Fair Value				Gross Unrealized Losses				Estimated Fair Value				Gross Unrealized Losses
Investment grade securities:
Corporate securities		$	786,203			$	13,276			$	108,187			$	17,386			$	894,390			$	30,662
Canadian and Canadian provincial governments			12,349				174				—				—				12,349				174
Residential mortgage-backed securities			22,288				97				19,394				3,199				41,682				3,296
Asset-backed securities			59,119				449				96,179				9,508				155,298				9,957
Commercial mortgage-backed securities			89,507				797				29,181				7,974				118,688				8,771
U.S. government and agencies			7,272				24				—				—				7,272				24
State and political subdivisions			20,602				1,514				11,736				4,132				32,338				5,646
Other foreign government, supranational, and foreign government-sponsored enterprises			244,817				1,953				7,435				761				252,252				2,714
Investment grade securities			1,242,157				18,284				272,112				42,960				1,514,269				61,244
Non-investment grade securities:
Corporate securities			181,168				3,170				39,123				5,501				220,291				8,671
Residential mortgage-backed securities			15,199				80				2,633				347				17,832				427
Asset-backed securities			3,421				26				31,938				18,815				35,359				18,841
Commercial mortgage-backed securities			3,317				764				68,405				42,307				71,722				43,071
State and political subdivisions			—				—				—				—				—				—
Non-investment grade securities			203,105				4,040				142,099				66,970				345,204				71,010
Total fixed maturity securities		$	1,445,262			$	22,324			$	414,211			$	109,930			$	1,859,473			$	132,254
Non-redeemable preferred stock			5,577				52				5,679				118				11,256				170
Other equity securities			85,374				1,134				—				—				85,374				1,134
Total Equity securities		$	90,951			$	1,186			$	5,679			$	118			$	96,630			$	1,304

 

		As of December 31, 2011
		Less than 12 months								Equal to or greater than 12 months								Total
		Estimated Fair Value				Gross Unrealized Losses				Estimated Fair Value				Gross Unrealized Losses				Estimated Fair Value				Gross Unrealized Losses
Investment grade securities:
Corporate securities		$	790,758			$	40,180			$	286,244			$	63,117			$	1,077,002			$	103,297
Canadian and Canadian provincial governments			3,094				29				—				—				3,094				29
Residential mortgage-backed securities			128,622				3,549				58,388				10,382				187,010				13,931
Asset-backed securities			101,263				3,592				93,910				29,036				195,173				32,628
Commercial mortgage-backed securities			109,455				3,538				58,979				22,001				168,434				25,539
U.S. government and agencies			1,764				61				—				—				1,764				61
State and political subdivisions			21,045				1,845				12,273				1,268				33,318				3,113
Other foreign government, supranational, and foreign government-sponsored enterprises			148,416				1,085				16,588				2,491				165,004				3,576
Investment grade securities			1,304,417				53,879				526,382				128,295				1,830,799				182,174
Non-investment grade securities:
Corporate securities			212,795				10,852				47,310				11,222				260,105				22,074
Residential mortgage-backed securities			23,199				712				10,459				1,781				33,658				2,493
Asset-backed securities			2,363				940				21,275				20,107				23,638				21,047
Commercial mortgage-backed securities			34,918				7,220				62,357				46,730				97,275				53,950
State and political subdivisions			4,000				228				—				—				4,000				228
Non-investment grade securities			277,275				19,952				141,401				79,840				418,676				99,792
Total fixed maturity securities		$	1,581,692			$	73,831			$	667,783			$	208,135			$	2,249,475			$	281,966
Non-redeemable preferred stock			19,516				4,478				15,694				4,504				35,210				8,982
Other equity securities			1,662				602				5,905				936				7,567				1,538
Total Equity securities		$	21,178			$	5,080			$	21,599			$	5,440			$	42,777			$	10,520

 

				Quarterly Financial Supplement		Page 22

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Reinsurance Group of America, Incorporated

Investments

(USD thousands)

Consolidated Investment Related Gains and Losses

 

		Three Months Ended																				Current Qtr vs. PY Quarter				Year-to-Date
		Dec. 31, 2012				Sept. 30, 2012				June 30, 2012				March 31, 2012				Dec. 31, 2011								Dec. 31, 2012				Dec. 31, 2011				Change
Fixed Maturity and Equity Securities:
Other-than-temporary impairment losses on fixed maturities		$	(4,346	)		$	(1,996	)		$	(1,959	)		$	(7,607	)		$	(11,824	)		$	7,478			$	(15,908	)		$	(30,873	)		$	14,965
Portion of loss recognized in accumulated other comprehensive income (before taxes)			—				(559	)			162				(7,221	)			543				(543	)			(7,618	)			3,924				(11,542	)
Net other-than-temporary impairment losses on fixed maturities recognized in earnings			(4,346	)			(2,555	)			(1,797	)			(14,828	)			(11,281	)			6,935				(23,526	)			(26,949	)			3,423
Impairment losses on equity securities			—				—				(2,186	)			(839	)			(436	)			436				(3,025	)			(4,116	)			1,091
Gain on investment activity			43,190				53,173				26,593				22,312				39,622				3,568				145,268				132,045				13,223
Loss on investment activity			(4,384	)			(6,668	)			(8,918	)			(7,504	)			(6,247	)			1,863				(27,474	)			(26,996	)			(478	)
Net gain/(loss) on fixed maturity and equity securities			34,460				43,950				13,692				(859	)			21,658				12,802				91,243				73,984				17,259
Other impairment losses and change in mortgage loan provision			(2,220	)			(10,301	)			1,762				(5,843	)			(5,258	)			3,038				(16,602	)			(10,238	)			(6,364	)
Other non-derivative gain/(loss), net			4,868				5,563				5,628				6,641				7,318				(2,450	)			22,700				22,357				343
Free-standing Derivatives:
Credit Default Swaps			3,523				7,819				(4,794	)			11,813				8,075				(4,552	)			18,361				(63	)			18,424
Interest Rate Swaps—non-hedged			(9,866	)			(1,437	)			73,342				(47,352	)			20,818				(30,684	)			14,687				178,338				(163,651	)
Interest Rate Swaps—hedged			(40	)			(4	)			29				(26	)			28				(68	)			(41	)			617				(658	)
Futures			(9,932	)			(3,977	)			11,073				(17,408	)			(22,866	)			12,934				(20,244	)			(945	)			(19,299	)
CPI Swaps			1,543				422				(1,431	)			(802	)			726				817				(268	)			1,821				(2,089	)
Equity options			(11,146	)			(23,916	)			3,367				(37,983	)			(22,063	)			10,917				(69,678	)			7,818				(77,496	)
Currency Forwards			(5,070	)			519				515				(1,608	)			561				(5,631	)			(5,644	)			1,675				(7,319	)
Total free-standing derivatives			(30,988	)			(20,574	)			82,101				(93,366	)			(14,721	)			(16,267	)			(62,827	)			189,261				(252,088	)
Embedded Derivatives:
Modified coinsurance and funds withheld treaties			74,054				54,836				(4,453	)			(9,428	)			(85,722	)			159,776				115,009				(87,236	)			202,245
GMXB			30,588				2,579				(74,929	)			146,375				29,261				1,327				104,613				(224,184	)			328,797
Total embedded derivatives			104,642				57,415				(79,382	)			136,947				(56,461	)			161,103				219,622				(311,420	)			531,042
Net gain/(loss) on total derivatives			73,654				36,841				2,719				43,581				(71,182	)			144,836				156,795				(122,159	)			278,954
Total investment related gains / (losses), net		$	110,762			$	76,053			$	23,801			$	43,520			$	(47,464	)		$	158,226			$	254,136			$	(36,056	)		$	290,192

 

				Quarterly Financial Supplement		Page 23