NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net Earnings Per Share . Basic earnings per share exclude any  dilutive effects of options and warrants. Diluted earnings per share include the dilutive effects assuming outstanding stock options and warrants were exercised.  Various RGA insurance subsidiaries retrocede amounts in excess  of their retention to RGA Reinsurance, RGA Barbados and RGA Americas. Retrocessions are arranged through the Company’s  retrocession pools for amounts in excess of the Company’s retention limit. As of December 31, 2003, all rated retrocession pool  participants followed by the A.M. Best Company were rated B++  or better. For a majority of the retrocessionaires that were not rated, security in the form of letters of credit or trust assets has been given as additional security in favor of RGA Reinsurance. In addition, the Company performs annual financial reviews of its retrocession- aires to evaluate financial stability and performance.  New Accounting Pronouncements . Effective December 31, 2003, the Company adopted Emerging Issues Task Force (“EITF”) Issue No. 03-1,  The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments , (“EITF 03-01”). EITF 03-1 provides guidance on the disclosure requirements for other-than- temporary impairments of debt and marketable equity investments that are accounted for under Statement of Financial Accounting Standards (“SFAS”) No. 115,  Accounting for Certain Investments in Debt and Equity Securities . The adoption of EITF 03-1 requires the Company to include certain quantitative and qualitative  disclosures for debt and marketable equity securities classified  as available-for-sale or held-to-maturity under SFAS 115 that are impaired at the balance sheet date but for which an other-than- temporary impairment has not been recognized. The initial adoption of EITF 03-1 did not have a material impact on the Company’s  consolidated financial statements. The Company has never experienced a material default in connection with retrocession arrangements, nor has it experienced any  difficulty in collecting claims recoverable from retrocessionaires; however, no assurance can be given as to the future performance  of such retrocessionaires or as to recoverability of any such claims. Recognition of Revenues and Related Expenses . Life and health premiums are recognized as revenue when due from the insured, and are reported net of amounts retroceded. Benefits and expenses are reported net of amounts retroceded and are associated with earned premiums so that profits are recognized over the life of the related contract. This association is accomplished through the  provision for future policy benefits and the amortization of deferred policy acquisition costs. Other revenue includes items such as treaty recapture fees, and profit and risk fees associated with  financial reinsurance. Any fees that are collected in advance of  the period benefited are deferred and recognized over the period benefited. Initial reserve changes are netted against premiums when an in force block of business is reinsured. Revenues for interest-sensitive and investment-type products consist of investment income, policy charges for the cost of insurance,  policy administration, and surrenders that have been assessed against policy account balances during the period. Interest-sensitive contract liabilities for these products represent policy account  balances before applicable surrender charges. Deferred policy acquisition costs are recognized as expenses over the term of the policies. Policy benefits and claims that are charged to expenses include claims incurred in the period in excess of related policy account balances and interest credited to policy account balances. The weighted average interest-crediting rates for interest-sensitive products were 4.7%, 4.2% and 6.1%, during 2003, 2002  and 2001, respectively. Interest crediting rates for U.S. dollar- denominated investment-type contracts ranged from 4.0% to 9.5% during 2003, 2.8% to 6.8% during 2002 and 3.6% to 7.3%  during 2001. Weighted average interest crediting rates for Mexican peso-denominated investment-type contracts were 21.8%, 15.9% and 12.8% for 2003, 2002 and 2001, respectively. In May 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”)  No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 In July 2003, the Accounting Standards Executive Committee issued Statement of Position (“SOP”) 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional  Long-Duration Contracts and for Separate Accounts.” SOP 03-1 provides guidance on separate account presentation and valuation, the accounting for sales inducements and the classification and  valuation of long-duration contract liabilities. SOP 03-1 is effective for fiscal years beginning after December 15, 2003. The Company estimates the impact of SOP 03-1 will be less than a $1.0 million increase to future policy benefits. In December, 2003, the Financial Accounting Standards Board (“FASB”) revised SFAS No. 132, “Employers’ Disclosures about Pensions and Other Post Retirement Benefits—an Amendment  of FASB Statements No. 87, 88 and 106” (“SFAS 132(r)”). SFAS 132(r) retains most of the disclosure requirements of SFAS 132 and requires additional disclosure about assets, obligations, cash flows and net periodic cost of defined benefit pension plans and other defined post retirement plans. SFAS 132(r) is primarily  effective for fiscal years ending after December 15, 2003; however, certain disclosures about foreign plans and estimated future benefit payments are effective for fiscal years ending after June 15, 2004. The Company’s adoption of SFAS 132(r) on December 31, 2003 did not have a significant impact on its consolidated financial  statements since it only revises disclosure requirements. 56 THIS IS RGA. 2003 ANNUAL REPORT