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 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.
RGA’s balance sheet strength remains solid, and its consolidated risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This excess capital along with significant operating cash flows, good financial flexibility, and adequate liquidity at the holding company, as well as a high quality investment portfolio provide a buffer for potential investment losses caused by the COVID-19 pandemic. In addition, RGA’s operating results have generally been favorable, with strong premium growth reported in recent periods within the majority of its core segments and particularly in Asia. RGA’s 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 with approximately 45% of revenues coming from international operations. RGA also continues to create innovative solutions for new and existing clients, resulting in continued global expansion.
While the company’s balance sheet position remains very strong, RGA relies on captive finance solutions for its redundant reserves, which has resulted in a moderate level of operating leverage, although it remains within AM Best’s guidelines. In addition, the company has experienced some earnings volatility within certain core segments including its U.S. Individual Mortality segment and its Australian business segment. AM Best notes that mortality increased materially in the first half of 2020 due to the COVID-19 pandemic, leading to losses in the individual life insurance segment. However, earnings generated from its other core businesses have generally been increasing in recent periods. RGA also has increased its exposure to higher-risk product lines including annuities and, longevity reinsurance and also maintains a moderate-sized block of 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 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
-- "a-" on $600 million 3.15% senior unsecured notes, due 2030
-- "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 Guide to 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.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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