Good day and welcome to the Reinsurance Group of America Fourth Quarter Conference Call. Today's call is being recorded. At this time, I would like to introduce the President and Chief Executive Officer, Mr. Greig Woodring and Senior Executive Vice President and Chief Financial Officer, Mr. Jack Lay. Please go ahead, Mr. Lay.

Okay, thank you and good morning. Welcome to RGA's fourth quarter 2007 conference call. I will turn the call over to Greig Woodring, our CEO in just a minute. Our Chief Operating Officer Dave Atkinson is also with us this morning. Greig will comment on our results and provide guidelines or rather guidance for 2008 and then we will respond to any questions from participants. As a reminder, during the call we plan to make certain statements and discuss certain subjects that will contain forward-looking information, including among other things, investment performance, statements relating to projections of revenue or earnings, and future financial performance and growth potential for RGA and its subsidiaries. You are cautioned that actual results could differ materially from expected results. A list of important factors that could cause those actual results to differ from expected results is included in the earnings release issued yesterday. In addition, during the course of this call we will make comments about our results based upon operating income, both on a pre-tax and after tax basis. Under SEC regulations, operating income is considered a non-GAAP financial measure. We believe this measure better reflects the ongoing profitability and underlying trends of our continuing operations. Please refer to the tables in our press release for more information on this measure, and reconciliations of operating income to net income for our various business segments. With that, I will turn it over to Greig for his comments.

Good morning and thank you for joining us. I will make some brief comments on results, provide guidance for 2008 and then we will open the line for questions. Overall, results were strong for the quarter capping off what we consider to be a successful year. On a consolidated basis operating income for the quarter increased 13% and totaled $91.2 million. That's a particularly strong rate of growth given the strength of the prior year result. On a per share basis, the increase was 12% to $1.42 per share for the quarter. For the year operating income per share increased 18%, a very strong result. Reported net income for the quarter totaled $63.6 million or $0.99 per diluted share compared to $81.5 million or $1.28 per diluted share. Net income in the current quarter includes approximately 15 million in unrealized losses after DAC and after tax due to the decline in value of embedded derivatives associated with certain funds withheld annuity treaties. That loss is a result of the impact of widening credit spreads on the underlying investments held from the ceding company books. Remember this is a non-cash unrealized loss, it does not affect current treaty cash flows or profit spread performance. Net income for the quarter also includes about $8 million in losses associated with our discontinued accident and health business. We made significant progress in settling claims in this quarter and have reduced our exposure on disputed claims to approximately $8.5 million. We expect to further reduce this balance in 2008. Turning to the top line, consolidated net premium flow was good increasing 12%. For the year net premiums increased 13% with about 3% of that growth due to favorable currency exchange rates. Net investment income declined to $227 million from $241million due to a decline in…

Thank you, sir. The question-and-answer session will be conducted electronically. [Operator Instructions] And we will take our first question from Jimmy Bhullar with J.P. Morgan.

Hi, thank you. Good morning. I just have a few questions. The first one if you... you spoke briefly about pricing, but if you can talk about pricing in a little bit more detail, especially in the U.S. market whether you are still getting rate increases or are rates starting to go down? Secondly, with the turmoil in the current markets and securitization activity being halted, do you expect the benefit from that in your U.S. business in the near-term? And finally on capital, based on your growth projections, do you expect the need... a capital injection over the next several quarters or not? That's all I have.

In terms of pricing in the U.S. market, what we see seems to be holding up very well. In fact, we would view the flow of business coming into RGA on U.S. side right now to be at a relatively high return rate given historical levels and that doesn't seem to be changing. We are very happy with the way that is working out. Opportunities coming from a dearth of securitization possibilities by ceding companies may have some impact, but it seems to us that over the course of the year that markets may return... there will perhaps be opportunities to do securitizations of some sort. I would... we are not counting on any big change there. In terms of capital, Jack, do you want to --?

Yes, maybe I can comment on that. We really don't expect to issue anything absent any particularly large opportunities on the M&A front. We really don't expect to issue anything in terms of common equity or really any kind of convert or I think like that. We just have to monitor the cash situations of holding company. There is a possibility we could lever up a little bit with respect to debt or some sort of a hybrid, but certainly don't expect to issue any common equity in the foreseeable future.

Okay. Thank you.

Our next question is with Nigel Dally with Morgan Stanley.

Great, thank you and good morning. First, with your living benefits variable annuity reinsurance, a lot of companies have had problems in hedging those guarantees. I know you have just entered that business, but perhaps some comments on how that's progressing. Second, with long-term interest rates down significantly, guys, if you can comment on how that impacts your fundamental outlook as well? Thanks.

Nigel, our hedging worked just as we expected it to. We were not hedging volatility for most of the last quarter. But we came away with a profit on that contract overall. We are pleased with the way it's performed and as we look forward we will adjust things as we go along to changing conditions, but so far so good in our opinion. In terms of long-term rates coming down, credit spreads are widening. We have had a very conservative investment practice over the last couple of years as we didn't think the market was allowing payment for taking risk. We actually saw a little marginal bump upwards in our portfolio yields in 07 versus 06. So we are actually seeing a little bit of lift, not much. I mean, it's fairly insignificant, but it's going in the positive direction.

Okay, thank you.

Next we will hear from Jeff Schuman with KBW. Jeffrey R. Schuman - Keefe, Bruyette & Woods, Inc.: Good morning. Greig, I wanted to ask you a few questions about your guidance and your outlook, which seems to be very positive. If I look at the 08 guidance, mid point of the range, you were talking about 14% EPS growth and that's associated with about 10% to 13% premium growth. So right off the bat it would appear that you are anticipating some margin expansion on top of... but I thought were pretty good margins in 2007. So, first of all, I am wondering if you can talk about the optimism about... with regard to margins in 08. Secondly, also interested in your comment about sustaining a 14% ROE. I think historically that kind of ROE has been sort of in the range of what you have contemplated, but maybe towards the higher end. So you seem to be I think incrementally maybe more positive there as well and I am wondering what's driving that.

Okay. Sort of a lot of things to comment on there Jeff. First of all, 14% as we sort of look forward is pretty much what we have achieved over the last five years compounded. In fact, the last couple of years have been higher than that. You are correct in stating that last year was a good year. We are not expecting to reproduce the 18% growth that we had last year. We had some uplift from mortality. Remember, when we talk about profits in 08, we are expecting that somewhere around 97% or 98% of those profits come from business that's already in-force. Even when you go out as far as 2010, something like 92% of the profits come from business in-force. So, it's a much bigger factor just projecting out flows... operating flows from insurance in-force portfolios and investment income rather than sales and market conditions at the current time. So, it's such a long stream of earnings for us. So, that's one comment. On the ROE front, and I should add though, of course whether we hit that target, $6.25 next year, whether we fall under it or go above it will depend mostly on mortality results, not on sales or market conditions in 2008 for pricing. That 14% ROE next year is just consistent with that $6.25 sort of center point of that range. We have actually been moving up in ROE slightly as we slow down the growth rate of the company and are seeing less pressure on ROEs from slugs of new business coming on the books.

Next we hear from Steven Schwartz with Raymond James.

Good morning. I got a few. Firstly, a couple of number questions, Asia-Pacific, did I see that right in-force dropped dramatically from the third quarter?

Yes, do you want me to go ahead and take that right now?

Sure, yes. If you could, I will just go in order.

Yes, unfortunately that was a reporting issue. If you take... we have actually restated for Asia-Pacific none of the other segments, but we had a problem with and it didn't affect any of the financial statements or reserving or anything like that. But we did have a problem as we reflected the total amount in-force. We had an anomaly in the systems that we were rolling up those amounts and fortunately we were overstating the amount in-force and corrected that. Came to our attention this quarter and we corrected it this quarter and in fact in the press release went back and corrected the prior quarters.

Okay. All right, I didn't catch the restatement. Okay, all right, very good. Spread income and asset intensive, Jack, it looks like it was very high and basically I am just... I know the index annuities, you are going to have the offsets, but just investment income less interest credited, just looks like a very high number to me, maybe $31 million difference versus $19 million in the third quarter, something along those lines? Should we look at it that way, how should we look at that number?

Well, you almost have to look at bottom line and then look at the reconciliation of operating earnings we have in the table. I think that's the best way because so many things affecting that line. Unfortunately, it's probably the most cluttered of all those things that we present. So, I would direct you to that table and look at the operating earnings.

And then, okay. And then just on... just on international; if I remember correctly, the third quarter, U.K. mortality was pretty bad in the third quarter. It looks like it was just lousy in the fourth quarter. Is there anything there... I mean, what gives you comfort that this is just one of those things that happens in insurance, because it seems to be continuing a little bit here? And then if maybe you could talk about the outlook for Europe, you are talking about a pick up in that premium. What countries do you see that coming from? I think Greig mentioned the Europe outside of the U.K.?

Yes, the mortality in the U.K. in the third quarter was also not particularly good. The first half was excellent actually. So, it is strong, especially the first quarter is very strong, and then really fell off towards the end. It seems to be both frequency and severity. We of course in situations like this will be looking at this every which way we possibly can to make sure that we ultimately don't see any real trends here that concern us. When we get a quarter or even two quarters in a row of a bad mortality, it doesn't necessarily alarm us. We normally think that that's probably a statistical fluctuation, especially when we have had both ups and downs over the prior, say, six or seven quarters. And that the business on an inception-to-date basis is in the ballpark of where we expect it to be. But it is something we always will look at and we will be following what happens and we would be looking at it in terms of companies and its [ph] cohorts and types of products in everyway we can. In terms of our growth in Europe, we have opened offices in places like Italy and France and in Holland over the last 18 months. We set up an office in Germany recently. We are not expecting spectacular growth in revenues from those places, but we are growing from zero. So, we will expect that those offices will contribute nicely to the growth and be additive.

Okay, great. Thank you.

[Operator Instructions]. And we will go next to Mr. Eric Berg with Lehman Brothers.

Thanks very much. A few questions. First, returning to the securitization question, I would have thought that with the financial guarantors struggling as they are and therefore in an ability of... or at a minimum a greatly reduced ability of term life insurance writers and writers of universal life insurance to get reps on their securitizations, I would think that securitizations would be grinding to a halt of the redundant reserves under Triple-X and AXXX and that this would in fact be very good news for RGA. So I was a little surprised by Greig's earlier response; could you --?

Yes, Eric, you might be right, we are not projecting that. You might be right, there certainly are private transactions with long-term letters of credit that banks are making available in the past and whether those come back to the market, we don't know. But you might be right that there is hiatus here. It's very difficult to see it lasting for too long or to count on it lasting for too long; but if it does, that will be generally good news.

Next, I have a general question about a weakening economy. If it were declared or it was [ph] whether it's declared or not; if we did go into a serious recession with rising unemployment, deteriorating credit, weakening consumer spending, is RGA's business... I mean, you are not in the business of selling to consumers. You sell to life insurance companies, who in turn sell to consumers and they are selling life insurance in annuities, but how should we think in general about the state of the U.S. economy and its impact on RGA?

Again, Eric, I don't believe anybody is really recession-proof, but we are not a typically recession prone company to ups and downs. We weather recessions historically quite well in our business, it doesn't really affect. And it sort of relates to maybe a question I didn't quite directly answer that Jeff raised earlier. It does look like there is some margin expansion if you just sort of look at gross numbers. And you ought to think about some of the impacts on... some of the reasons that that maybe... may lead you to that conclusion. First of all, our business has been priced at better levels over the last, say, four years, and that's weighing into the streams more. Plus our growth rates are slowing down. And that means that wider margins emerging. So you should expect maybe from those two factors at least some margin expansion and say our U.S. business. If we have a recession and business slows down a... the new business slows down a little bit, it doesn't typically affect our bottom line in the current year or it just sort of slowly merges into the profit streams in subsequent years. But it actually may improve margins in the current year's bottom line as well. So, there is a lot of effects. We really are projecting that sales in terms of, say, U.S. production volumes this year are going to be close to the run rate level, ignoring noise for reporting lags and so forth, or bulk reporting catch-ups at times. Just the run rate is going to be fairly similar to where it was in 07.

Last question, can you remind us why does new business production, all else the same, sort of depressed profitability if acquisition costs such as commissions and other acquisition costs are deferred under U.S. GAAP?

Well, because in GAAP accounting, the way it works for us is that at the outset of the contract, you put provisions for adverse deviations into all your GAAP assumptions, and you release those over time. So, your profitability is narrow at the beginning and widens as time goes on. Contract that might have an average, say, pick a number, 15% return might start at 8 and go 20.

Very good. Thank you.

This is Dave Atkinson. I would add also there is a theoretical flaw in GAAP and that there is no interest on deferred taxes built into it. So, as you have deferred taxes build, you earn interest on those.

[Operator Instructions]. We go again to Mr. Jeff Schuman of KBW. Jeffrey R. Schuman - Keefe, Bruyette & Woods, Inc.: Thank you guys. Seemed to get dropped off earlier, but Greig, I think one thing I want to do was come back to the issue of the margin expansion, which I think you just addressed with Eric. So to be clear, couple of things that work, first of all, you are layering in what you believe to be more profitable new business at the margin; and then secondly, we do have a sort of natural margin expansion as business sort of matures on a GAAP basis. Are those kind of the two main things we should think about?

Yes, especially if you look at the U.S., those are probably the main two things that come to mind. We really believe that over time top line and bottom line growth rates are the same, but for us the top line has been growing faster than the bottom line many times over the last five or six years, not always, but many times. And you would expect the bottom line start catching up ultimately. That's not surprising to us that there will be periods of time when the bottom line grows faster than the top line. Jeffrey R. Schuman - Keefe, Bruyette & Woods, Inc.: And is there a bit of a FAS 97, FAS 60 phenomenon here, I mean, to the extent that you do the variable annuity stuff, because that's FAS 97 stuff that wouldn't really get captured in the premium growth rate, right? Is that a factor as well --?

Right, and what I am talking about mostly is also just our core business, our mortality business. When you talk about the annuity businesses, those of course have different characteristics. But remember, we make more than 95% of our profits at this point on our mortality businesses and that's the dominant factor in our profitability. Jeffrey R. Schuman - Keefe, Bruyette & Woods, Inc.: Sure. And one other thing I wanted to revisit was the subject of volatility. If we look back to the second quarter of 2005 that was the time you really had a big kind of a variation in your U.S. traditional business. And on that call, we talked a lot about volatility. And I think your view and David's view was that although that was somewhat unusual quarter, it wasn't really way out of down statistically. But since that time, we have now had 10 quarters in a row, and you can look at pretty much any metric in the U.S. traditional business whether it's a loss ratio type metric or just a margin metric, and it seems that the results have fallen in a somewhat tighter band. I guess we would like to think that may be that represents something that's sustainable, but has the business kind of grown and matured to the point where you dampened out a little volatility or should we be cautious in making that assumption?

Be cautious in making that assumption. First of all, you would expect that fluctuation like that that's sort of noticeably bad to occur about once every 16 to 20 quarters. We had one in the second quarter of 05, we had one in the fourth quarter of 01; we had back in the 90s before that. And you can sort of look at our results and see historically and see where those points occur, and you can also see that they smooth over time into a very nice pattern. It is probably true that there is some dampening effect on that by the diversification geographically we have gotten. As the international businesses grow more sizable, you do see diversification benefits because we don't see that typically mortality and when part of the world follows another part of the world. They all seem to go independently. So there is some benefit to that. But it's certainly true that the U.S. is still going to be subject just statistically to large claims coming through in a particular quarter that will make for bad results in that quarter. It can happen in 2008, in one of the quarters this year. There is nothing that says that it will or it won't. Jeffrey R. Schuman - Keefe, Bruyette & Woods, Inc.: And one last question on that subject. I know historically one of the things that contributed to volatility has been sort of client reporting patterns that haven't always been even. Has there been any improvement over the years due to technology or other factors and clients being sort of more timely and more consistent in their reporting? Has that been helpful or not?

Yes, reporting has improved quite a bit; especially if you look at a little bit longer timeframe. If you go back, say, between now and 10 years ago, the ability to deal with and anticipate fluctuations is a lot better. We will look at claims supporting by company X, and we haven't gotten enough claims in a quarter compared to what we think. We will give them a call and find out if they have got any backlogs or things like that. We do a lot now to sort of anticipate and work with companies to make sure that we get everything in exactly the right time period when we can. And while we are still not perfect on that, we are always subject to lumpiness in terms of reporting by clients. It has gotten a lot better. It's less idyllic in international markets, but that's something that will evolve over times as well. Jeffrey R. Schuman - Keefe, Bruyette & Woods, Inc.: Great, thank you very much.

It appears there are no further questions at this time. Mr. Lay, I would like to turn the conference back over to you for any additional or closing remarks.

Okay. Well, thanks to everyone who joined us this morning for the conference call. To the extent any other questions come up, feel free to give us a call here in St. Louis. And with that, we will end the formal conference call. Thank you very much.

That does end today's conference. Once again we thank you for your participation.