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.

The ICR of “a-” has been affirmed for Reinsurance Group of America, Inc.
The following debt ratings have been affirmed:

Reinsurance Group of America, Inc—
-- “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
-- “bbb” on $400 million junior subordinated debentures, due 2065
The following indicative ratings available under shelf registration have been affirmed:

Reinsurance Group of America, Inc—
-- “a-” on senior debt
-- “bbb+” on subordinated debt
-- “bbb” on preferred stock

RGA Capital Trust III and IV—
-- “bbb” on trust preferred securities

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.

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