A.M. Best has affirmed the financial strength rating of
A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of
RGA Reinsurance Company (St. Louis, MO), RGA Americas
Reinsurance Company, Ltd (Bermuda) and its subsidiaries; RGA
Life Reinsurance Company of Canada (Montreal, Canada) and
RGA Atlantic Reinsurance Company Ltd. (Barbados),
collectively referred to as RGA Re. A.M. Best also has affirmed the
ICR of “a-” and all issue ratings on the existing debt securities
and indicative shelf ratings of Reinsurance Group of America,
Incorporated (RGA) (St. Louis, MO) [NYSE: RGA]. The outlook for
each rating is stable. Additionally, A.M. Best has assigned an
issue rating of “a-” to RGA’s $400 million senior unsecured notes
due 2026 and assigned an issue rating of “bbb+” to the $400 million
subordinated debentures, due 2056. The outlook assigned to each of
these ratings is stable. (See below for a detailed listing of the
companies and ratings.)
The ratings of RGA Re reflect its leading North American life
reinsurance market positions, stable risk-adjusted capitalization,
and favorable, albeit lower GAAP-adjusted operating earnings
trends. RGA Re has very strong brand recognition as a leading
provider of underwriting and facultative capabilities with an
expanding geographical presence in Asia and emerging markets.
Historically, U.S. and Latin America GAAP operating results have
been stable with declines in traditional business offset by growth
within its asset-intensive business segment. More recently, RGA Re
has experienced adverse U.S. mortality, although this volatility is
expected to remain manageable. On a consolidated basis, premium
trends remain strong after adjusting for currency headwinds
associated with a strong U.S. dollar, although they appear flat on
a reported basis. RGA Re continues to be viewed favorably by A. M.
Best for its strong technological platform, and sophisticated and
highly integrated global enterprise risk management framework that
includes comprehensive risk tolerance limits, economic capital
modeling and stochastic stress testing.
These strengths are partially offset by expansion of its
business profile from mortality-risk into higher-risk product lines
including longevity reinsurance, long-term care and annuities,
which A.M. Best views as of lower credit worthiness in its product
continuum. Consistent with other North American reinsurers, RGA
Re’s mortality in-force metrics remain relatively flat given
ongoing challenges in the highly competitive U.S.-traditional
marketplace, which has experienced declining cession rates in
recent years, although the pace of decline has stabilized. Slow
U.S.-business growth has been partially offset by increased
reliance on international growth and the ability to secure highly
competitive deal flow to generate organic earnings growth. While
its operating profile is increasingly diversified amongst
morbidity, mortality, longevity and spread-based earnings, there is
the potential for higher levels of operating volatility given the
more recent changes in the reserve mix. Additionally, there has
been an increase in higher-risk assets (mortgage loans,
below-investment grade bonds) relative to statutory capital in
recent years, and RGA Re’s statutory capital structure remains
heavily supported by surplus notes and dependent on access to
low-cost funding to support redundant reserves or provide capital
market solutions.
A.M. Best views RGA’s debt servicing capabilities favorably,
with sufficient liquidity to service its debt, a well-laddered debt
maturity structure, strong interest coverage ratios and financial
leverage ratios that remain within A.M. Best’s guidelines for its
current ratings.
A positive rating action could occur if there is an improvement
in RGA Re’s risk-adjusted capitalization and operating performance
while maintaining its leadership position. A decline in
risk-adjusted capital or adverse trends in operating performance
could result in a negative rating action. A material decline in RGA
Re’s market leadership position with diminishing new business could
result in a negative rating action.
The following issue ratings have been assigned with a stable
outlook.
Reinsurance Group of America, Incorporated—
-- “a-” on $400 million 3.95% senior unsecured notes, due
2026
-- “bbb+” on $400 million 5.75% fixed to floating rate
subordinated debentures, due 2056
The following issue ratings have been affirmed with a stable
outlook:
Reinsurance Group of America, Incorporated—
-- “a-” on $300 million 5.625% senior unsecured notes, due
2017
-- “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
-- “bbb+” on $400 million 6.2% fixed to floating subordinated
debentures, due 2042
-- “bbb” on $400 million 6.75 % fixed to floating junior
subordinated debentures, due 2065
The following indicative ratings available under shelf
registration 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 rating(s) that have been
published on A.M. 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 A.M.
Best’s Recent Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source.
For more information, visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20160610005563/en/
A.M. BestWilliam PargeansAssistant Vice President+1 908 439
2200, ext. 5359william.pargeans@ambest.comorRosemarie
MirabellaAssistant Vice President+1 908 439 2200, ext.
5892rosemarie.mirabella@ambest.comorChristopher
SharkeyManager, Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comorJim PeavyAssistant Vice
President, Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com
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