RGA receives stable outlook from AM Best

The company maintains a high-quality investment portfolio

RGA receives stable outlook from AM Best

Reinsurance

By Rod Bolivar

AM Best has upheld its top-tier ratings for Reinsurance Group of America, Incorporated (RGA) and its subsidiaries.

The reaffirmation includes an A+ (Superior) Financial Strength Rating (FSR) and an “aa-” (Superior) Long-Term Issuer Credit Rating (ICR) for several of RGA's subsidiaries, including RGA Reinsurance Company, RGA Americas Reinsurance Company Ltd, RGA Life Reinsurance Company of Canada, Aurora National Life Assurance Company, and RGA Life and Annuity Insurance Company.

Additionally, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) and all existing Long-Term Issue Credit Ratings (Long-Term IRs) on RGA’s debt securities. The outlook for these ratings is stable.

The reaffirmation of the ratings is based on RGA’s strong balance sheet, characterized by its robust risk-adjusted capitalization, as indicated by the Best’s Capital Adequacy Ratio (BCAR).

The company’s financial leverage is well within AM Best's established guidelines, and it maintains a high-quality investment portfolio, which has seen minimal impairments in recent years. RGA also reports stable liquidity measures.

RGA holds market positions across various regions, including the United States, Canada, Europe, and Asia, with nearly half of its revenue originating from international operations. The company’s enterprise risk management (ERM) framework, including stress testing and continuous risk monitoring, further strengthens its rating.

Despite these positive factors, RGA faces challenges, particularly volatility in earnings within some core segments, such as the U.S. individual mortality business. This was largely influenced by the adverse impacts of the COVID-19 pandemic. Although mortality losses have improved since 2022, the company’s earnings from other core businesses, including longevity reinsurance, have been generally positive.

Furthermore, RGA has increased its exposure to higher-risk products like annuities and longevity reinsurance, which could contribute to greater operating volatility over the long term.

In terms of debt, AM Best affirmed various long-term issuer ratings for RGA’s senior unsecured and subordinated debt, including $400 million in 3.95% senior unsecured notes due 2026, $600 million in 3.9% senior unsecured notes due 2029, and other related debt securities. The ratings for these debt issues also carry a stable outlook.

Do you think the company can manage its exposure to higher-risk products effectively? Share your opinions in the comments.

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