A.M. Best Affirms Ratings of Reinsurance Group of America, Inc

Business Wire,  Oct 5, 2007  

Tags: A.M. Best Co.

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OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the 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 also has affirmed the ICR of "a-"and the debt ratings of Reinsurance Group of America, Inc's (RGA) [NYSE: RGA] (St. Louis, MO) existing debt securities and indicative ratings. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The affirmation of the ratings is based upon RGA's strong franchise position in the North American life reinsurance market and new business generated from the North American markets, enhanced by continued favorable growth in select international markets. The ratings also reflect RGA's sufficient risk-adjusted capitalization, profitable operations and improving spread of risk resulting from international expansion. Despite strong operating fundamentals, the group has recorded fluctuations in its statutory results due to variations in accounting treatment of certain reinsurance transactions and statutory strain associated with new business growth. In addition, overall results are subject to currency fluctuations as the majority of RGA's foreign exchange exposures are unhedged.

A.M. Best continues to view RGA on a stand-alone basis as the lack of strong parental commitment places the company in a position to rely heavily on organic growth and pressures its ability to access the capital markets.

A.M. Best views RGA's debt servicing capabilities favorably, with cash flows supported by its profitable operations and strong franchise in the North American life reinsurance market. RGA's financial leverage ratios remain within tolerance levels for the current rating. Moreover, RGA maintains a favorable liquidity position, reflecting the high quality of its asset portfolio, strong asset liability management capabilities and sufficient statutory risk-adjusted capital position.

Although the outlook on the ratings is stable, A.M. Best believes the potential for future earnings volatility exists as the life reinsurance market remains highly competitive, along with a lack of a long-term track record outside of North America. In addition, A.M. Best believes there are potential challenges inherent in raising capital as a pure stand-alone company.

The FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for RGA Reinsurance Company and RGA Life Reinsurance Company of Canada.

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 $200 million 6.75% senior unsecured notes, due 2011
-- "a-" on $300 million 5.625% senior unsecured notes, due 2017
-- "bbb" on $400 million junior subordinated debentures, due 2065

RGA Capital Trust I--(guaranteed by Reinsurance Group of America, Inc)
-- "bbb+" 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, Inc--
-- "a-" on senior debt
-- "bbb+" on subordinated debt
-- bbb" on preferred stock

RGA Capital Trust III and IV--
-- "bbb+" on trust preferred securities

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

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