A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of RGA Reinsurance Company (St. Louis, MO) and RGA Life Reinsurance Company of Canada (Montreal, Canada). A.M. Best also has affirmed the ICR of “a-” and all ratings on the existing debt securities and indicative shelf 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 its stable risk-adjusted capitalization, favorable GAAP earnings trends, including those recorded through the third quarter of 2012 and strong franchise in the global reinsurance market. Earnings are primarily driven by both its U.S. and Canadian traditional (mortality) segments. The group’s business profile is expanding from the continued growth and diversification benefits it derived from its international market segment along with the recent expansion of its U.S. based asset intensive business. RGA maintains a leadership position in the reinsurance marketplace, utilizing its technology infrastructure to provide facultative services to its client base. RGA continues to be recognized favorably in industry surveys and has a well-developed enterprise risk management program. Offsetting rating factors include the potential challenges in the highly competitive and consolidating reinsurance marketplace as reflected in declining cession rates in RGA’s U.S. market and a business profile, which is dependent on the utilization of operating leverage to secure reserve credits for noneconomic Regulation AXXX and XXX reserves. With cession rates on the decline in the U.S. marketplace, RGA has been able to capitalize on growth in the international marketplace despite global economic challenges and some recent adverse mortality and morbidity experience within its Asia Pacific business segment. Low interest rates could pressure RGA’s balance sheet and earnings, particularly in its asset intensive segment.
A.M. Best views RGA’s debt servicing capabilities favorably, with cash flows supported by its consistently profitable operations and its financial leverage ratios remain within A.M. Best’s guidelines for its current ratings. RGA also maintains strong overall liquidity.The company is well positioned at its current rating level. Key rating factors that could result in negative rating actions include a sustained decline in RGA and its subsidiaries risk-adjusted capital and /or operating performance or a material adverse change in RGA’s market leadership position in its core reinsurance markets. 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 6.2% fixed to floating subordinated debentures, due 2042- “bbb” on $400 million 6.75 % fixed to floating 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 methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.