NOTES TO CONSOLIDATED FINANCIAL STATEMENTS “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” The adoption of these provisions did not materially affect the Company’s financial position or results of operations. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure, an amendment of FASB Statement No. 123.” Effective January 1, 2003, the Company prospectively adopted the fair value-based employee stock-based compensation expense recognition provisions of SFAS No. 123, as amended by SFAS No. 148. The Company formerly applied the intrinsic value-based expense provisions set forth in APB Opinion No. 25, Accounting for Stock Issued to Employees, (“APB 25”). For the year ended December 31, 2003, the Company recorded pre-tax compensation expense of approximately $1.6 million associated with stock option grants issued during January 2003. See Note 18—“Stock Options” for pro forma  information. Reclassification . The Company has reclassified the presentation  of certain prior period information to conform to the 2003  presentation.  On November 13, 2003, RGA issued 10,500,000 shares of  its common stock at $36.65 per share. On December 4, 2003, underwriters for the public offering exercised their entire option to purchase an additional 1,575,000 newly issued shares of common stock, also at a price of $36.65 per share. After giving effect to the exercise of the option, RGA sold 12,075,000 shares of its common stock and received proceeds of approximately $426.7 million, net of expenses. MetLife, Inc. purchased 3,000,000 million of these newly issued shares. On September 18, 2001, the Board of Directors approved a  repurchase program authorizing the Company to purchase up to $25 million of its shares of stock. Subsequent to December 31, 2001 the Board of Directors approved an additional repurchase of $25 million, for a total of up to $50 million of its shares of stock, as conditions warrant. The Board’s action allows management, in its discretion, to purchase shares on the open market. As of December 31, 2003, the Company purchased 225,500 shares of treasury stock under this program at an aggregate cost of $6.6 million. All purchases were made during 2002. The Company generally uses treasury shares to support the future exercise of options granted under its stock option plans. NOTE 3 STOCK TRANSACTIONS NOTE 4 SIGNIFICANT TRANSACTION THIS IS RGA. 2003 ANNUAL REPORT 58 During December 2003, the Company completed a large coinsurance  agreement with Allianz Life Insurance Company of North America (“Allianz Life”). Under this agreement, RGA Reinsurance assumed the traditional life reinsurance business of Allianz Life, including yearly renewable term reinsurance and coinsurance of term policies. The business assumed does not include any accident and health risk, annuities or related guaranteed minimum death benefits or guaranteed minimum income benefits. This transaction adds  additional scale to our U.S. traditional business, but does not  significantly add to our client base since most of the underlying ceding companies are already our clients. The Company has agreed to use commercially reasonable efforts to novate the underlying treaties from Allianz Life to RGA Reinsurance. Novation results in the underlying client companies reinsuring the business directly  to RGA Reinsurance versus passing through Allianz Life. The  profitability of the business is not dependent on novation. The transaction was effective retroactive to July 1, 2003. Under  the agreement, Allianz Life transferred to RGA Reinsurance  $425.7 million in cash and statutory reserves. RGA Reinsurance paid Allianz Life a ceding commission of $310.0 million. As a  result of this transaction, during the fourth quarter of 2003 our U.S. traditional sub-segment reflected $246.1 million in net  premiums and approximately $6.8 million of net income, after  tax. Additionally, as of December 31, 2003, we reflected  $217.6 million in invested assets and cash, $264.0 million in deferred policy acquisition costs and $455.5 million in future  policy benefits on our consolidated balance sheet. 