2009-11-11 18:42:05 -
Fitch Ratings has assigned a 'BBB+' rating to the Reinsurance Group of America, Inc.'s (RGA, Inc.) issuance of $400 million in senior notes due in 2019. RGA's other ratings are not affected by this rating action. The Outlook remains Negative. A complete list of ratings follows at the end of this release.
Fitch anticipates that RGA's pro forma Sept. 30, 2009
equity-adjusted leverage will increase to 20.3% from actual of 13.4% but remain within expectations for the rating. GAAP earnings coverage was strong at about 10 times (x) at the end of the third quarter.
On Oct. 16, 2009, RGA announced an agreement with ReliaStar Life Insurance Company, a subsidiary of ING Groep N.V., to acquire ReliaStar's U.S. and Canadian group life, accident and health reinsurance business. The acquisition will be structured as an indemnity coinsurance agreement and is expected to be effective Jan. 1, 2010, subject to regulatory approvals.
The Negative Outlook reflects Fitch's concern for higher-than-expected investment losses given that the company has material exposure to structured securities, in particular, commercial mortgage backed securities (CMBS). The company's gross unrealized loss position, including for CMBS, has improved significantly in 2009 - from $1.3 billion at year-end 2008 to $657 million as of Sept. 30, 2009. The company's consolidated investment portfolio was in a net unrealized gain position at the end of the third quarter. Fitch will continue to monitor the development of investment losses, particularly as they affect statutory capital.
Fitch estimates that the risk-based capital ratio of RGA Reinsurance Co.
strengthened to approximately 360% as of June 30, 2009 from 321% at year-end 2008 due in part to a capital contribution from the parent and to reserve adjustments on reinsurance ceded. Statutory capital did not benefit from permitted practices.
RGA Inc.'s ratings reflect its well-established and successful North American traditional life reinsurance operations, underwriting expertise and facultative focus, sound risk-based capitalization, liquid investment portfolio and expanding geographic diversification beyond well-established North American operations. Performance from continuing operations continues to demonstrate pricing discipline, as well as the company's strong facultative focus where pricing is less competitive.
Fitch assigns the following rating with a Negative Outlook.
Reinsurance Group of America, Inc.
--6.45% senior note due Nov. 15, 2019 'BBB+'.
The following ratings are unaffected.
Reinsurance Group of America, Inc.
--Issuer Default Rating (IDR) 'A-';
--6.75% senior notes due Dec. 15, 2011 'BBB+';
--5.625% senior notes due March 15, 2017 'BBB+';
--6.75% million junior unsubordinated debentures due Dec. 15, 2065 'BBB'.
RGA Capital Trust I
--Convertible trust preferred securities (PIERS) 'BBB'.
RGA Reinsurance Company (The)
--Insurance Financial Strength (IFS) 'A+'.
Additional information is available at ' www.fitchratings.com :
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The issuer did not participate in the rating process other than through the medium of its public disclosure.
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Fitch RatingsCynthia J. Crosson, +1-212-908-0863 (New York)Tana
Higman, +1-312-368-3122 (Chicago)Media Relations, New York:Brian
Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com : mailto:brian.bertsch@fitchratings.com
