AM Best confirms credit ratings of Reinsurance Group of America, Incorporated and its subsidiaries

AM Best confirmed the financial strength rating of A + (superior) and the long-term issuer credit rating (long-term ICR) of “aa-” (superior) of RGA Reinsurance Company (Chesterfield, MO), RGA Americas Reinsurance Company, Ltd (Bermuda) and its subsidiaries, RGA Life Reinsurance Company of Canada (Toronto, Canada) and RGA Atlantic Reinsurance Company, Ltd. (Barbados). These companies are collectively referred to as RGA. AM Best also confirmed the long-term ICR of “a-” (Excellent) and all long-term issue credit ratings (long-term IR) on debt securities and the indicative ratings of Reinsurance Group of America, Incorporated (Chesterfield, MO) [NYSE: RGA]. The outlook for these credit ratings (ratings) is stable. (See below for a detailed list of long-term IRs.)

The ratings reflect the strength of RGA’s balance sheet, which AM Best considers very strong, as well as its strong operational performance, favorable business profile and very good corporate risk management.

RGA’s balance sheet strength remains strong and its risk-adjusted consolidated capitalization remains at the highest level, as measured by Best’s Capital Adequacy Model (BCAR), despite the impacts of the COVID-19 pandemic. RGA had bolstered the strength of its balance sheet over the past year by ceasing share buybacks and closing a $ 500 million common share offering, resulting in a record level of cash flow and cash equivalents within the organization at the end of 2020. As a result, financial leverage has decreased. over the past year at around 22%, which is well within AM Best’s guidelines for current rating. Other factors supporting the very strong assessment of RGA’s balance sheet strength are its significant operating cash flow, good financial flexibility and a high quality investment portfolio. AM Best notes that RGA has suffered only a modest amount of write-downs and downgrades within its investment portfolio over the past year.

RGA also benefits from its leading positions in the United States, Canada, Europe and Asia with approximately 45% of its turnover coming from international operations. While the overall production of new business has been negatively affected by the pandemic, AM Best notes that overall premiums and in-force life insurance have increased in each of the past five years, mainly due to the growth in all geographies of its traditional reinsurance segment, and in particular in Asia. The company’s culture of innovation and its track record of providing innovative new solutions to the insurance industry is also a factor in the favorable assessment of its business profile.

Partly offsetting these positive scoring factors is earnings volatility in recent periods in some key segments, including its US individual mortality segment and its Australian business segment. AM Best notes that mortality increased significantly in 2020 and continued through the first part of 2021 due to the COVID-19 pandemic, resulting in losses in the individual life insurance segment. However, profits from its other core businesses have generally increased in recent periods and mortality has improved in recent months. While some earnings volatility may continue in the near term, AM Best expects earnings to gradually improve as death rates continue to decline with the rollout of vaccines. RGA has also increased its exposure to high-risk product lines, including annuities and longevity reinsurance, and maintains a moderate-sized block of long-term care business that may increase operational volatility in the medium to long term. RGA’s overall risk management framework, which is an integral part of its corporate culture, helps mitigate this concern in part.

The following long-term IRs have been confirmed with a stable outlook:

Reinsurance Group of America, Incorporated—

– “a-” (Excellent) on $ 400 million 4.7% senior unsecured notes, due 2023

– “a-” (Excellent) on $ 400 million of 3.95% senior unsecured notes, due 2026

– “a-” (Excellent) on $ 600 million of 3.9% senior unsecured notes, due 2029

– “a-” (Excellent) on $ 600 million of 3.15% senior unsecured notes, due 2030

– “bbb +” (Bond) on $ 400 million 6.2% fixed on floating subordinated debentures, maturing in 2042

– “bbb +” (Bon) on $ 400 million of 5.75% fixed and variable rate subordinated debentures, maturing in 2056

– “bbb” (Bon) on $ 400 million variable rate junior subordinated debentures, maturing in 2065

The following indicative long-term IRs available as part of off-the-shelf recordings have been confirmed with a stable outlook:

Reinsurance Group of America, Incorporated—

– “a-” (Excellent) on senior unsecured debt

– “bbb +” (Bon) on subordinated debt

– “bbb” (Bon) on the preferred shares

RGA Capital Trust III and IV—

– “bbb” (Bon) on preferred trust securities

This press release relates to credit ratings published on the AM Best website. For all rating information relating to the publication and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this publication, please see AM Best’s Recent Rating Activity webpage. . For more information on the use and limitations of credit rating reviews, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best Credit Ratings, Best Preliminary Credit Ratings, and AM Best press releases, please see the Guide to Appropriate Use of Best Ratings and Ratings.

AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based in the United States, the company operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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