AM Besthas assigned a Long-Term Issue Credit Rating of "a-" to the $600 million 3.15% senior unsecured notes due June 15, 2030, issued by Reinsurance Group of America, Incorporated (RGA) (Chesterfield, MO) [NYSE: RGA]. The outlook assigned to this Credit Rating (rating) is stable.
Proceeds from the sale of the senior notes will be utilized primarily for general corporate purposes, including repayment of the $400 million 5.00% senior unsecured notes due June 2021. AM Best notes that RGA's financial leverage will remain at approximately 27%, as the recent $500 million common stock issuance has largely offset the increase in overall debt within the organization. AM Best views RGA's debt-servicing capabilities favorably, with sufficient liquidity to service its debt, a well-laddered debt maturity structure and strong interest coverage and financial leverage ratios that remain within AM Best's guidelines for its current ratings.
RGA's ratings recognize its historical track record of strong and relatively stable GAAP-adjusted operating earnings despite a persistently challenging market environment within the global reinsurance sector, which includes increased competition and the continuation of the low interest rate environment. While the company faces macroeconomic headwinds associated with the COVID-19 pandemic, AM Best believes RGA maintains the financial resources necessary to withstand a potential increase in credit losses within its investment portfolio and potential increase in mortality. The company also benefits from its leading market position and expansive global footprint as demonstrated by its strong top line growth.
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