AM Best Affirms Credit Ratings of Reinsurance Group of America, Incorporated and Its Subsidiaries
AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of RGA Reinsurance Company (Chesterfield, MO), RGA Americas Reinsurance Company, Ltd (Bermuda) and its subsidiaries, RGA Life Reinsurance Company of Canada (Toronto, Canada) and RGA Atlantic Reinsurance Company Ltd. (Barbados). These companies collectively are referred to as RGA. AM Best also has affirmed the Long-Term ICR of “a-” and all Long-Term Issue Credit Ratings (Long-Term IR) on the debt securities and indicative shelf ratings of Reinsurance Group of America, Incorporated (Chesterfield, MO) [NYSE: RGA]. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and Long-Term IRs.)
The ratings reflect RGA’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).
RGA’s balance sheet strength remains solid and the consolidated risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Model. The absolute level of capital and surplus has increased over the past several years within RGA Reinsurance Company, which is the primary U.S. statutory entity, due to the retention of favorable earnings. Overall balance sheet strength also benefits from significant operating cash flows, moderate financial leverage and a high quality investment portfolio composed of over 70 percent fixed-income securities, of which approximately 97% are investment grade. However, the company relies on captive finance solutions for its redundant reserves.
RGA’s operating results have been favorable, with strong premium growth reported in recent periods within the majority of its core segments and particularly in Asia. Total life reinsurance in-force also has continued to increase at a healthy pace in recent periods. RGA benefits from its leading market positions in the United States, Canada, Europe and Asia. AM Best notes that approximately 45% of revenues come from international operations. As one of the top five global life reinsurers, RGA enjoys the benefits of high barriers to entry from new start-ups, and the group continues to create innovative solutions for new and existing clients, resulting in continued global expansion. However, AM Best notes the increasing level of higher-risk product lines including annuities, longevity reinsurance and long-term care, which may result in increased levels of operating volatility over the medium to longer term.
The following Long-Term IRs have been affirmed with a stable outlook:
Reinsurance Group of America, Incorporated—
-- “a-” on $400 million 6.45% senior unsecured notes, due 2019
-- “a-” on $400 million 5% senior unsecured notes, due 2021
-- “a-” on $400 million 4.7% senior unsecured notes, due 2023
-- “a-” on $400 million 3.95% senior unsecured notes, due 2026
-- “a-” on $600 million 3.9% senior unsecured notes, due 2029
-- “bbb+” on $400 million 6.2% fixed to floating subordinated debentures, due 2042
-- “bbb+” on $400 million 5.75% fixed to floating rate subordinated debentures, due 2056
-- “bbb” on $400 million variable rate junior subordinated debentures, due 2065
The following indicative Long-Term IRs available under shelf registrations have been affirmed with a stable outlook:
Reinsurance Group of America, Incorporated—
-- “a-” on senior unsecured debt
-- “bbb+” on subordinated debt
--“bbb” on preferred stock
RGA Capital Trust III and IV—
-- “bbb” on trust preferred securities
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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