AM Best Affirms Credit Ratings of Reinsurance Group of America, Incorporated and Subsidiaries
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financial strength ratingfinancial
A financial strength rating is an assessment of an organization's overall financial health, indicating how well it can meet its financial commitments. Think of it as a report card that shows whether a company or institution is financially stable and capable of withstanding economic challenges. This rating helps investors gauge the level of risk involved in engaging with or investing in that organization.
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Long-term issuer credit ratings are assessments of a borrower's ability to repay debt over a period longer than one year. They help investors understand the level of risk involved in lending to that entity, similar to how a credit score indicates trustworthiness. These ratings influence borrowing costs and investment decisions, guiding investors on the safety and stability of their investments.
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A.M. Best’s Capital Adequacy Ratio (BCAR) is a proprietary measure that compares an insurance company’s available financial cushion with the risks on its books, like checking how much emergency savings a household has relative to its monthly bills. Investors watch it because a higher ratio indicates the insurer is better positioned to absorb unexpected losses, which supports stronger credit assessments and lowers the chance of capital shortfalls affecting returns.
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Enterprise Risk Management is a process companies use to identify, assess, and prepare for potential problems that could disrupt their success, like financial losses or reputation damage. It’s like a safety plan that helps a business stay strong and adapt quickly when unexpected challenges come up. This helps the company protect its future and keep running smoothly.
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A subordinated debenture is a type of long-term loan a company issues that ranks below other debts when paying creditors, so holders are paid only after higher-priority lenders if the company defaults. It matters to investors because this lower repayment priority raises the risk of loss, which companies typically offset by offering higher interest, making it a trade-off between yield and safety—like standing later in line for a bigger tip.
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A junior subordinated debenture is a long-term loan a company issues to investors that sits low in the repayment order: holders get paid after most other creditors but usually before shareholders. Because it offers higher interest to compensate for greater risk, it can boost income for investors but also carries bigger chances of loss if the issuer faces financial trouble. Think of it as standing near the back of a line for repayment — you get a bigger reward but a smaller guarantee.
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Preferred stock is a type of ownership in a company that typically offers investors higher and more consistent dividend payments than common stock. Unlike regular shares, preferred stock usually doesn’t come with voting rights but provides a priority claim on the company’s assets and profits, making it a more stable and predictable investment option. This makes preferred stock attractive to those seeking steady income with lower risk.
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Trust preferred securities are a hybrid investment that blends features of bonds and stocks: an issuing company places assets into a separate trust which sells these securities and passes regular payments to holders much like bond interest. They can behave like equity for regulatory or accounting purposes while still offering a fixed-income stream, so they matter to investors because they carry higher income than plain bonds but also higher risk and potential sensitivity to issuer capital and credit moves.
OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa-” (Superior) of RGA Reinsurance Company (Chesterfield, MO), RGA Americas Reinsurance Company Ltd (Bermuda), RGA Life Reinsurance Company of Canada (Toronto, Canada), Aurora National Life Assurance Company (Chesterfield, MO) and RGA Life and Annuity Insurance Company (RLAC) (Chesterfield, MO). These companies are subsidiaries of Reinsurance Group of America, Incorporated (Chesterfield, MO) [NYSE: RGA] and collectively referred to as RGA. AM Best also has affirmed the Long-Term ICR of “a-” (Excellent) and all Long-Term Issue Credit Ratings (Long-Term IR) on the debt securities and indicative shelf ratings of Reinsurance Group of America, Incorporated. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the Long-Term IRs.)
The ratings reflect RGA’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).
RGA’s balance sheet strength remains at the very strong level, driven by its consolidated risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). RGA maintains a high-quality investment portfolio, which has experienced a modest amount of impairments during the past several years. The group’s liquidity measures remain stable, and its financial leverage remains well within AM Best’s guidelines for the current ratings.
RGA continues to maintain strong market positions in the United States and international markets with approximately half of its revenue coming from international operations. Overall premiums have increased steadily in recent years. Premium growth has been driven by growth in all the group’s geographic areas. RGA’s extensive risk management framework, which has been enhancing its strategic and operational risk management capabilities, in addition to its stress testing and continual monitoring of risks, is a key factor in its very strong ERM assessment.
Partially offsetting these positive rating factors is the volatility of earnings in recent periods within certain segments over the past decade. RGA also has increased its exposure to higher-risk and long-dated product lines, including annuities and longevity reinsurance, and it maintains a moderate-sized block of long-term care business that may add to its operating volatility over the mid-to-long term.
The following Long-Term IRs have been affirmed with a stable outlook:
Reinsurance Group of America, Incorporated—
-- “a-” (Excellent) on $400 million3.95% senior unsecured notes, due 2026
-- “a-” (Excellent) on $600 million3.9% senior unsecured notes, due 2029
-- “a-” (Excellent) on $600 million3.15% senior unsecured notes, due 2030
-- “a-” (Excellent) on $400 million6% senior unsecured notes, due 2033
-- “a-” (Excellent) on $650 million5.75% senior unsecured notes, due 2034
-- “bbb+” (Good) on $700 million7.125% fixed to floating subordinated debentures, due 2052
-- “bbb+” (Good) on $400 million5.75% fixed to floating rate subordinated debentures, due 2056
-- “bbb” (Good) on $400 million variable rate junior subordinated debentures, due 2065 ($319 million remains outstanding)
The following indicative Long-Term IRs available under shelf registrations have been affirmed with a stable outlook:
Reinsurance Group of America, Incorporated—
-- “a-” (Excellent) on senior unsecured debt
-- “bbb+” (Good) on subordinated debt
-- “bbb” (Good) on preferred stock
RGA Capital Trust III and IV—
-- “bbb” (Good) on trust preferred securities
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
