Claims payable for incurred but not reported losses are determined using case basis estimates and lag studies of past experience. These estimates are periodically reviewed and any adjustments to such estimates, if necessary, are reflected in current operations. The Company primarily invests in fixed maturity securities. The Company monitors its fixed maturity securities to determine  potential impairments in value. In conjunction with its external investment managers, the Company evaluates factors such as the financial condition of the issuer, payment performance, the extent to which the market value has been below amortized cost, compliance with covenants, general market and industry sector conditions, the intent and ability to hold securities, and various other subjective factors. Securities, based on management’s judgments, with an  other than temporary impairment in value are written down to  management’s estimate of fair value. Differences in actual experience compared with the assumptions and estimates utilized in the justification of the recoverability of DAC, in establishing reserves for future policy benefits and claim U.S. operations consist of two major sub-segments: Traditional and Non-T raditional. The Traditional sub-segment primarily specializes in mortality-risk reinsurance. The Non-Traditional category consists of Asset-Intensive and Financial Reinsurance.  (in thousands) liabilities, or in the determination of other than temporary impair- ments to investment securities can have a material impact on the Company’s results of operations and financial condition. The Company is currently a party to various litigation and arbitrations. While it is not feasible to predict or determine the ultimate outcome of the pending litigation or arbitrations or even provide reasonable ranges of potential losses, it is the opinion of management, after consultation with counsel, that the outcomes of such litigation and arbitrations, after consideration of the provisions made in the Company’s consolidated financial statements, would not have a material adverse effect on its consolidated financial position. See Note 21 to the Consolidated Financial Statements. Further discussion and analysis of the results for 2003 compared  to 2002 and 2001 are presented by segment. Certain prior-year amounts have been reclassified to conform to the current-  year presentation. References to income before income taxes exclude the effects of discontinued operations and the cumulative effect of changes in accounting principles. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Non-Traditional Asset- Financial Total FOR THE YEAR ENDED DECEMBER 31, 2003 Traditional Intensive Reinsurance U.S. Revenues: Net premiums $1,797,478 $ 4,315 $ – $1,801,793 Investment income, net of related expenses 181,897 164,127 105 346,129 Realized investment losses, net (5,715) (1,674) – (7,389) Change in value of embedded derivatives (net of  amounts allocable to deferred acquisition costs of $30,665) – 12,931 – 12,931 Other revenues 3,920 6,524 27,302 37,746 Total revenues 1,977,580 186,223 27,407 2,191,210 Benefits and expenses: Claims and other policy benefits 1,457,886 2,976 – 1,460,862 Interest credited 58,317 119,621 – 177,938 Policy acquisition costs and other insurance  expenses (excluding $30,665 allocated to embedded derivatives) 241,877 34,422 9,900 286,199 Other operating expenses 41,186 3,809 5,128 50,123 Total benefits and expenses 1,799,266 160,828 15,028 1,975,122 Income before income taxes $ 178,314 $ 25,395 $12,379 $ 216,088 THIS IS RGA. 2003 ANNUAL REPORT 24 U.S. OPERATIONS