NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company adopted the RGA Flexible Stock Plan (the “Plan”)  in February 1993 and the Flexible Stock Plan for Directors (the “Directors Plan”) in January 1997 (collectively, the “Stock Plans”). The Stock Plans provide for the award of benefits (collectively “Benefits”) of various types, including stock options, stock appreci- ation rights (“SARs”), restricted stock, performance shares, cash awards, and other stock-based awards, to key employees, officers, directors and others performing significant services for the benefit of the Company or its subsidiaries. In general, options granted under the Plan become exercisable over vesting periods ranging per share weighted-average fair value of stock options granted during 2003, 2002, and 2001 was $9.51, $11.71, and  35% over the expected life of the options; 2001-expected dividend yield of 0.8%, risk-free interest rate of 5.04%, expected life of  5.8 years, and an expected rate of volatility of the stock of 35% over the expected life of the options. $11.87 on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: 2003- expected dividend yield of .95%, risk-free interest rate of 2.79%, expected life of 6.0 years, and an expected rate of volatility of the stock of 35% over the expected life of the options; 2002-expected dividend yield of 0.8%, risk-free interest rate of 5.00%, expected life of 5.0 years, and an expected rate of volatility of the stock of Prior to January 1, 2003, the Company applied APB Opinion  No. 25 in accounting for its Stock Plans and, accordingly, no  compensation cost was recognized for its stock options in the  financial statements. Had the Company determined compensation cost based on the fair value at the grant date for its stock options 75 THIS IS RGA. 2003 ANNUAL REPORT from one to eight years while options granted under the Directors Plan become exercisable after one year. As of December 31, 2003, shares authorized for the granting of Benefits under the Plan and the Directors Plan totaled 6,260,077 and 112,500, respectively. Options are generally granted with an exercise price equal to the stock’s fair value at the date of grant and expire 10 years after the date of grant. Information with respect to option grants under the Stock Plans follows. 2003 2002 2001 Weighte d - Weighted- Weighted- Avera g e Average Average Exer cise Exercise Exercise Options Pri c e Options Price Options Price Balance at beginning of year 2,700,333 $26.36 2,326,808 $24.42 2,065,731 $22.03 Granted 735,654 $27.29 554,233 $31.90 493,037 $30.05 Exercised (627,822) $18.51 (147,927) $15.59 (224,892) $14.00 Forfeited (113,512) $29.10 (32,781) $29.63 (7,068) $34.37 Balance at end of year 2,694,653 $28.34 2,700,333 $26.36 2,326,808 $24.42 Options Outstanding Options Exercisable Weighted- Weighted- Weighted- Outstanding Average Average Exercisable Average as of Remaining Exercise as of Exercise Range of Exercise Prices 12/31/2003 Contractual Life Price 12/31/2003 Price $10.00 – $14.99 5,481 1.0 $12.22 5,481 $12.22 $15.00 – $19.99 30,522 2.0 $15.61 30,522 $15.61 $20.00 – $24.99 524,325 4.9 $22.27 379,400 $21.91 $25.00 – $29.99 1,315,228 7.7 $28.04 356,358 $28.19 $30.00 – $34.99 527,401 7.8 $31.90 137,711 $31.87 $35.00 – $39.99 291,696 4.7 $35.81 257,856 $35.78 Totals 2,694,653 6.7 $28.34 1,167,328 $27.86 The