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TMCNet:  A.M. Best Affirms Credit Ratings of Reinsurance Group of America, Incorporated and Its Subsidiaries

[August 09, 2018]

A.M. Best Affirms Credit Ratings of Reinsurance Group of America, Incorporated and Its Subsidiaries

A.M. 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), collectively referred to as RGA Re. A.M. Best also has affirmed the Long-Term ICR of "a-" and all Long-Term Issue Credit Ratings (Long-Term IR) on the existing debt securities and indicative shelf ratings of Reinsurance Group of America, Incorporated (RGA) (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 Re's balance sheet strength, which A.M. Best categorizes as strong, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).

RGA Re continues to demonstrate a track record of strong and relatively stable GAAP-adjusted operating earnings despite a persistently challenging market environment within the global reinsurance sector that includes increased competition and the continuation of the historically low interest rate environment. Operating results have been driven primarily by underwriting results that have remained within pricing parameters over the longer term in the company's core business lines, as well as increasing earnings from its interest-sensitive lines of business, which include fixed annuities, variable annuities and pension risk transfers. The company also benefits from its leading market position and expansive global footprint as demonstrated by its strong top line growth. The ratings also acknowledge RGA Re's highly developed ERM framework, which includes analyzing and reporting its risks on an aggregated basis, ensuring that risks remain within its acceptable appetites and limits, and utilizing economic capital modeling to determine appropriate risk-adjusted capital levels to maintain within the organization. In addition, 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.

These srengths are offset partially by a shift in RGA Re's 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 creditworthiness in the company's product continuum. Although RGA Re maintains a large block of annuities that lack surrender charge protection and relatively higher minimum crediting rates, A.M. Best notes that interest rate sensitivities currently remain at manageable levels. However, A.M. Best believes a further material shift in its business mix away from protection business could lead to higher levels of operating volatility. While risk-adjusted capital levels remain strong, RGA Re, on a statutory basis, maintains a dependence on captive finance solutions for its redundant reserves. This has resulted in a somewhat elevated level of operating leverage but remains within A.M. Best guidelines. Additionally, the company has increased its exposure to higher risk and less liquid investments in its general account investment portfolio on a statutory basis, but remains within industry averages on a GAAP consolidated basis.

The following Long-Term IRs have been affirmed 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
-- "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 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 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. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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