Reinsurance Group of America : A.M. Best Affirms Ratings of Reinsurance Group of America, Incorporated and Its Subsidiaries
12/19/2011| 01:20pm US/Eastern
Recommend:
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A+ (Superior) and issuer credit ratings (ICR) of "aa-" of RGA
Reinsurance Company (RGA Re) (St. Louis, MO) and RGA Life
Reinsurance Company of Canada (RGA CN) (Montreal). A.M. Best has
also affirmed the ICR of "a-" and ratings on the existing debt
securities and indicative ratings of Reinsurance Group of America,
Incorporated (RGA) (St. Louis, MO) [NYSE: RGA]. The outlook for all
ratings is stable. (See below for a detailed listing of the companies
and ratings.)
The ratings of RGA and its two core North American insurance
subsidiaries are based upon the group's favorable risk-adjusted
capitalization and GAAP earnings trends, including those recorded
through the third quarter of 2011, and strong franchise in the global
reinsurance market. Earnings are primarily driven by both U.S. and
Canadian traditional (mortality) segments with select international
segments also providing earnings diversification. While RGA's North
American operations provide a strong earnings base, its international
presence has continued to expand. RGA maintains a leadership position in
the reinsurance marketplace, utilizing its technology infrastructure to
provide facultative services to its client base. RGA is recognized
favorably in industry surveys.
Offsetting factors include the potential challenges that RGA could face
in a highly competitive and consolidating reinsurance marketplace as
reflected in declining cession rates in its U.S. market. With cession
rates on the decline in the U.S. marketplace, RGA has been able to
capitalize on growth in the international marketplace despite current
global pressures. Credit market conditions, along with a low interest
environment, also could pressure RGA's balance sheet and earnings.
However, a strong capital and enterprise risk management program could
help to mitigate these risks.
A.M. Best views RGA's debt servicing capabilities favorably, with cash
flows supported by its consistently profitable operations. RGA's
financial leverage ratios remain within A.M. Best's guidelines for the
current ratings. Moreover, based upon A.M. Best's analytical review,
RGA's overall liquidity on a statutory basis is favorable to meet its
short-term funding needs, while long term liquidity is more closely
aligned with longer dated assets. RGA maintains strong asset liability
management capabilities and sufficient statutory risk-adjusted capital
positions.
The company is well positioned at its current ratings. Key rating
factors that could result in a negative rating action include a
sustained decline in absolute and/or risk-adjusted capital, operating
performance that is insufficient to service the debt at the holding
company or a decline in its market leadership position in its core
reinsurance markets.
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The ICR of "a-" has been affirmed for Reinsurance Group of
America, Inc.
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The following debt ratings have been affirmed:
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Reinsurance Group of America, Inc--
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-- "a-" on $300 million 5.625% senior unsecured notes, due 2017
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-- "a-" on $400 million 6.45% senior unsecured notes, due 2019
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-- "a-" on $400 million 5% senior unsecured notes, due 2021
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-- "bbb" on $400 million junior subordinated debentures, due 2065
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The following indicative ratings available under shelf registration
have been affirmed:
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Reinsurance Group of America, Inc--
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-- "a-" on senior debt
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-- "bbb+" on subordinated debt
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-- "bbb" on preferred stock
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RGA Capital Trust III and IV--
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-- "bbb" on trust preferred securities
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The principal methodology used in determining these ratings is Best's
Credit Rating Methodology -- Global Life and Non-Life Insurance Edition,
which provides a comprehensive explanation of A.M. Best's rating process
and highlights the different rating criteria employed. Additional key
criteria utilized include: "Risk Management and the Rating Process for
Insurance Companies"; "Understanding BCAR for Life/Health Insurers";
"Rating Members of Insurance Groups"; "Assessing Country Risk."; and
"A.M. Best's Ratings & the Treatment of Debt." Methodologies can be
found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2011 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.
A.M. Best Co.
Louis Savarese, 908-439-2200, ext. 5168
Senior
Financial Analyst
louis.savarese@ambest.com
or
Stephen
Irwin, 908-439-2200, ext. 5454
Vice President
stephen.irwin@ambest.com
or
Rachelle
Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim
Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public
Relations
james.peavy@ambest.com
© Business Wire 2011
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