COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments

Funding of Investments

The Company's commitments to fund investments as of December 31, 2014 and 2013 are presented in the following table (dollars in thousands):



	December 31, 2014		December 31, 2013
Limited partnerships	$	254,314	$	239,453
Commercial mortgage loans	33,850		4,600
Private placements	—		22,000
Bank loans and revolving credit agreements	52,859		36,952
Equity release mortgages	8,549		—

The Company anticipates that the majority of its current commitments will be invested over the next five years; however, these commitments could become due any time at the request of the counterparties. Investments in limited partnerships and private placements are carried at cost or reported using the equity method and included in other invested assets in the consolidated balance sheets. Bank loans are carried at fair value and included in fixed maturities available-for-sale. Equity release mortgages are carried at unpaid principal balances, net of any amortized premium or discount and valuation allowance and included in other invested assets.

Letters of Credit

The Company has obtained bank letters of credit in favor of various affiliated and unaffiliated insurance companies from which the Company assumes business. These letters of credit represent guarantees of performance under the reinsurance agreements and allow ceding companies to take statutory reserve credits. Certain of these letters of credit contain financial covenant restrictions. At December 31, 2014 and 2013, there were approximately $176.5 million and $210.3 million, respectively, of undrawn outstanding bank letters of credit in favor of third parties. Additionally, the Company utilizes letters of credit primarily to secure reserve credits when it retrocedes business to its affiliated subsidiaries. The Company cedes business to its affiliates to help reduce the amount of regulatory capital required in certain jurisdictions such as the U.S. and the United Kingdom. As of December 31, 2014 and 2013, $1,035.0 million and $995.5 million, respectively, in undrawn letters of credit from various banks were outstanding, primarily backing reinsurance between the various subsidiaries of the Company. The banks providing letters of credit to the Company are included on the NAIC list of approved banks.

The Company maintains eight credit facilities, a syndicated revolving credit facility with a capacity of $850.0 million and seven letter of credit facilities with a combined capacity of $836.5 million. The Company may borrow cash and obtain letters of credit in multiple currencies under its syndicated revolving credit facility. The following table provides additional information on the Company’s existing credit facilities as of December 31, 2014 and 2013 (dollars in thousands):



			Amount Utilized⁽¹⁾ December 31,
Facility Capacity		Maturity Date	2014			2013	Basis of Fees
$	850,000	December 2019	$	204,774	$	67,561 ⁽³⁾	Senior unsecured long-term debt rating
120,000		May 2016	80,040			85,050	Fixed
270,000		November 2017	270,000			270,000	Fixed
100,000		June 2017	81,747			89,433	Fixed
74,623 ⁽²⁾		November 2015	74,623			58,351	Fixed
80,961 ⁽²⁾		March 2019	80,961			132,534	Fixed
150,000		June 2016	130,000			—	Fixed
40,875 ⁽²⁾		May 2016	28,612			—	Fixed


(1)	Represents issued but undrawn letters of credit. There was no cash borrowed for the periods presented.


(2)	Foreign currency facility, amounts presented are in U.S. dollars.


(3)	2013 represents amount under expired syndicated credit facility.

Fees associated with the Company’s other letters of credit are not fixed for periods in excess of one year and are based on the Company’s ratings and the general availability of these instruments in the marketplace. Total fees expensed associated with the Company’s letters of credit were $12.6 million, $9.8 million and $7.3 million for the years ended December 31, 2014, 2013 and 2012, respectively, and are included in policy acquisition costs and other insurance expenses.

Leases

The Company leases office space and furniture and equipment under non-cancelable operating lease agreements, which expire at various dates. Future minimum office space annual rentals under non-cancelable operating leases along with associated sublease income at December 31, 2014 are as follows (dollars in thousands):



	Operating Leases		Sublease Income
2015	$	12,140	$	706
2016	9,827		706
2017	8,647		663
2018	6,929		136
2019	4,809		—
Thereafter	18,253		—

Rent expenses amounted to approximately $19.3 million, $18.5 million and $19.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Off-Balance Sheet Arrangements

In 2013, the Company executed a series of incentive agreements with the County of St. Louis, Missouri (the “County”). Under these agreements, the Company transferred its newly constructed world headquarters to the County in exchange for taxable industrial revenue bonds (the “bonds”), in a series of bond issuances during 2013 and 2014, with a maximum amount of $150.0 million. As a result, the Company is able to reduce the cost of constructing and operating its world headquarters by reducing certain state and local tax expenditures. The Company simultaneously leased the world headquarters from the County and has an option to purchase the world headquarters for a nominal fee upon tendering the bonds back to the County. The payments due to the Company under the terms of the bonds and the amounts owed by the Company under the terms of the lease agreement qualify for the right of offset under GAAP. As such, neither the bonds nor the lease obligation is recorded on the consolidated balance sheets as an asset or liability, respectively. The world headquarters is recorded as an asset of the Company in “Other assets” on the consolidated balance sheets.

Contingencies

Litigation

The Company is subject to litigation in the normal course of its business. The Company currently has no material litigation. A legal reserve is established when the Company is notified of an arbitration demand or litigation or is notified that an arbitration demand or litigation is imminent, it is probable that the Company will incur a loss as a result and the amount of the probable loss is reasonably capable of being estimated.

Other

In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Since this indemnity generally is not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount due under this indemnity in the future.

Guarantees

RGA has issued guarantees to third parties on behalf of its subsidiaries for the payment of amounts due under certain reinsurance treaties, securities borrowing arrangements, financing arrangements and office lease obligations, whereby if a subsidiary fails to meet an obligation, RGA or one of its other subsidiaries will make a payment to fulfill the obligation. In limited circumstances, treaty guarantees are granted to ceding companies in order to provide them additional security, particularly in cases where RGA’s subsidiary is relatively new, unrated, or not of a significant size, relative to the ceding company. Liabilities supported by the treaty guarantees, before consideration for any legally offsetting amounts due from the guaranteed party are reflected on the Company’s consolidated balance sheets in a policy related liability. Potential guaranteed amounts of future payments will vary depending on production levels and underwriting results. Guarantees related to borrowed securities provide additional security to third parties should a subsidiary fail to return the borrowed securities when due. RGA’s guarantees issued as of December 31, 2014 and 2013 are reflected in the following table (dollars in thousands):



	December 31, 2014		December 31, 2013
Treaty guarantees	$	826,496	$	826,947
Treaty guarantees, net of assets in trust	664,913		647,941
Borrowed securities	201,050		93,000
Financing arrangements	100,000		—
Lease obligations	6,085		8,314

Manor Reinsurance, Ltd. ("Manor Re") has obtained $300.0 million of collateral financing through 2020 from an international bank which enabled Manor Re to deposit assets in trust to support statutory reserve credit for an affiliated reinsurance transaction. The bank has recourse to RGA should Manor Re fail to make payments or otherwise not perform its obligations under this financing. At the election of the Company, this transaction will terminate in March 2015.

RGA, through wholly-owned subsidiaries, has committed to provide statutory reserve support to third-parties through 2035, in exchange for a fee, by funding loans if certain defined events occur. Such statutory reserves are required under the U.S. Valuation of Life Policies Model Regulation (commonly referred to as Regulation XXX for term life insurance policies and Regulation A-XXX for universal life secondary guarantees). The third-parties have recourse to RGA should the subsidiary fail to provide the required funding, however, as of December 31, 2014, the Company does not believe that it will be required to provide any funding under these commitments as the occurrence of the defined events is considered remote. The following table presents information about these commitments (dollars in millions):



	Maximum Potential Obligation
Commitment Period	2014		2013
2026	$	500.0	$	500.0
2033	1,950.0		1,350.0
2034	2,000.0		—
2036	1,432.0		1,250.0