N@N

A.M. Best Affirms Ratings of Reinsurance Group of America, Incorporated and Its Subsidiaries

^{Published on 2010-12-14 08:00:27 - Market Wire}
 

OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of aaa-a of RGA Reinsurance Company (RGA Re) (St. Louis, MO) and RGA Life Reinsurance Company of Canada (RGA CN) (Toronto, ON). A.M. Best also has affirmed the ICR of aa-aand all existing ratings on debt securities 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.)

"A.M. Besta™s Liquidity Model for U.S. Life Insurers"

The ratings of RGA and its two primary operating subsidiaries are based upon their strong franchise in the North American life reinsurance marketplace, favorable GAAP earnings and sufficient risk-adjusted statutory capital position. The ratings also consider the continued growth and diversification benefits derived from RGAa™s international reinsurance segments and opportunities for growth in select international markets. While fluctuations in mortality have historically affected RGAa™s earnings performance, volatility in mortality results tempered in recent quarters, resulting in more favorable earnings performance. RGAa™s strong position in the North American life reinsurance market combined with its good persistency, international expansion opportunities and consistent contributions from its financial reinsurance and asset-intensive business segments support its consistently favorable operating results.

Offsetting factors include challenges facing RGAa™s ability to improve market share in North America at a time when cession rates are very low, current tight credit market conditions and the highly competitive nature of the life reinsurance market. In addition, A.M. Best expects RGAa™s earnings over the next cycle to be pressured by the low interest rate environment.

A.M. Best views RGAa™s debt servicing capabilities favorably, with cash flows supported by profitable operations. RGAa™s financial leverage ratios remain within A.M. Besta™s guidelines for the current ratings. Moreover, based upon A.M. Besta™s analytical results, RGAa™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 historically maintains strong asset liability management capabilities and sufficient statutory risk-adjusted capital positions.

The ICR of aa-a has been affirmed for Reinsurance Group of America, Incorporated.

The following debt ratings have been affirmed:

Reinsurance Group of America, Incorporateda"

-- aa-aon $200 million 6.75% senior unsecured notes, due 2011

-- aa-a on $300 million 5.625% senior unsecured notes, due 2017

-- aa-a on $400 million 6.45% senior unsecured notes, due 2019

-- abbba on $400 million junior subordinated debentures, due 2065

RGA Capital Trust Ia"(guaranteed by Reinsurance Group of America, Inc)

-- abbba on $225 million 5.75% trust preferred income equity redeemable securities (PIERS), due 2051

The following indicative ratings available under shelf registration have been affirmed:

Reinsurance Group of America, Incorporateda"

-- aa-a on senior debt

-- abbb+a on subordinated debt

-- abbba on preferred stock

RGA Capital Trust III and IVa"

-- abbba on trust preferred securities

The principal methodology used in determining these ratings is [ Besta™s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition ], which provides a comprehensive explanation of A.M. Besta™s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: aRisk Management and the Rating Process for Insurance Companiesa; aUnderstanding BCAR for Life and Health Insurersa; a[ Rating Members of Insurance Groups ]a; a[ A.M. Besta™s Perspective on Operating Leverage ]a; a[ Equity Credit for Hybrid Securities ]a; aAssessing Country Riska; aA.M. Besta™s Liquidity Model for U.S. Life Insurersa; aReview of BCAR Treatment for XXX Captivesa; and a[ A.M. Besta™s Ratings & the Treatment of Debt ].a Methodologies can be found at [ www.ambest.com/ratings/methodology ].

Founded in 1899, A.M. Best Company is the worlda™s oldest and most authoritative insurance rating and information source. For more information, visit [ www.ambest.com. ]

Copyright © 2010 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.