Item 7.01 Regulation FD Disclosure.
On June 29, 2012, RGA Reinsurance Company ("RGA Re"), a subsidiary of
Reinsurance Group of America, Incorporated (the "Company") entered into a
binding letter of intent (the "LOI") with John Hancock Life Insurance Company
(U.S.A.) ("John Hancock"). Pursuant to the LOI, RGA Re and John Hancock will
enter into a definitive coinsurance agreement (the "Coinsurance Agreement")
whereby RGA Re will reinsure, on an indemnity basis, a 90 percent quota share of
a block of John Hancock's fixed deferred annuity business.
Under the Coinsurance Agreement, which upon execution will be deemed effective
as of April 1, 2012, RGA Re will receive approximately $5.4 billion in invested
assets, primarily investment grade fixed income securities and commercial
mortgage loans. This amount represents the initial reinsurance premium and other
amounts payable by John Hancock to RGA Re. RGA Re will reinsure John Hancock for
90 percent of death benefits, withdrawals, surrenders and other benefits related
to the annuities covered under the Coinsurance Agreement. RGA Re's obligations
to John Hancock under the Coinsurance Agreement will be secured by assets in a
trust maintained for the benefit of John Hancock. John Hancock will remain the
direct insurer of the annuities and will manage the business subject to
standards agreed to in the Coinsurance Agreement. The Company currently
anticipates that the Coinsurance Agreement and related documents will be
executed on or before July 31, 2012.
To support the business underlying the Coinsurance Agreement, the Company
expects to invest approximately $350 million of capital from existing resources.
Given the spread-based nature of the reinsured fixed deferred annuities, the
transaction is expected to be immediately accretive to the Company's
consolidated earnings per share, beginning in the quarter ending June 30, 2012.
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 including, among others,
statements relating to projections of the strategies, earnings, revenues, income
or loss, ratios, future financial performance, and growth potential of the
Company. The words "intend," "expect," "project," "estimate," "predict,"
"anticipate," "should," "believe," and other 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 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 important factors could cause actual results and events to differ
materially from those expressed or implied by forward-looking statements
including, without limitation, (1) adverse capital and credit market conditions
and their impact on the Company's liquidity, access to capital and cost of
capital, (2) the impairment of other financial institutions and its effect on
the Company's business, (3) requirements to post collateral or make payments due
to declines in market value of assets subject to the Company's collateral
arrangements, (4) the fact that the determination of allowances and impairments
taken on the Company's investments is highly subjective, (5) adverse changes in
mortality, morbidity, lapsation or claims experience, (6) changes in the
Company's financial strength and credit ratings and the effect of such changes
on the Company's future results of operations and financial condition,
(7) inadequate risk analysis and underwriting, (8) general economic conditions
or a prolonged economic downturn affecting
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the demand for insurance and reinsurance in the Company's current and planned
markets, (9) the availability and cost of collateral necessary for regulatory
reserves and capital, (10) market or economic conditions that adversely affect
the value of the Company's investment securities or result in the impairment of
all or a portion of the value of certain of the Company's investment securities,
that in turn could affect regulatory capital, (11) market or economic conditions
that adversely affect the Company's ability to make timely sales of investment
securities, (12) risks inherent in the Company's risk management and investment
strategy, including changes in investment portfolio yields due to interest rate
or credit quality changes, (13) fluctuations in U.S. or foreign currency
exchange rates, interest rates, or securities and real estate markets,
(14) adverse litigation or arbitration results, (15) the adequacy of reserves,
resources and accurate information relating to settlements, awards and
terminated and discontinued lines of business, (16) the stability of and actions
by governments and economies in the markets in which the Company operates,
including ongoing uncertainties regarding the amount of United States sovereign
debt and the credit ratings thereof, (17) competitive factors and competitors'
responses to the Company's initiatives, (18) the success of the Company's
clients, (19) successful execution of the Company's entry into new markets,
(20) successful development and introduction of new products and distribution
opportunities, (21) the Company's ability to successfully integrate and operate
reinsurance business that the Company acquires, (22) action by regulators who
have authority over the Company's reinsurance operations in the jurisdictions in
which it operates, (23) the Company's dependence on third parties, including
those insurance companies and reinsurers to which the Company cedes some
reinsurance, third-party investment managers and others, (24) the threat of
natural disasters, catastrophes, terrorist attacks, epidemics or pandemics
anywhere in the world where the Company or its clients do business, (25) changes
in laws, regulations, and accounting standards applicable to the Company, its
subsidiaries, or its business, (26) the effect of the Company's status as an
insurance holding company and regulatory restrictions on its ability to pay
principal of and interest on its debt obligations, and (27) other risks and
uncertainties described in this document and in the Company's other filings with
the Securities and Exchange Commission ("SEC").
Forward-looking statements should be evaluated together with the many risks and
uncertainties that affect the Company's business, including those mentioned in
this document and the cautionary statements described in the periodic reports
the Company files with the SEC. These forward-looking statements speak only as
of the date on which they are made. The Company does not undertake any
obligations to update these forward-looking statements, even though the
Company's situation may change in the future. The Company qualifies all of its
forward-looking statements by these cautionary statements. For a discussion of
these risks and uncertainties that could cause actual results to differ
materially from those contained in the forward-looking statements, you are
advised to see Item 1A - "Risk Factors" in the 2011 Annual Report on Form 10-K
filed with the SEC on February 29, 2012.
Pursuant to General Instruction B.2. of Form 8-K, the information provided
pursuant to this Item 7.01 shall be deemed to be "filed" (not furnished) under
the Securities Exchange Act of 1934, as amended ("Exchange Act") and
incorporated by reference in those SEC filings of the Company that provide for
the incorporation by reference of all reports and documents filed by the Company
under the Exchange Act.
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