AM Best Assigns Issue Credit Rating to Reinsurance Group of America, Incorporated’s New Senior Unsecured Notes

Rhea-AI Summary

AM Best has assigned a Long-Term Issue Credit Rating of “a-” (Excellent) to the $650 million, 5.75% senior unsecured notes issued by Reinsurance Group of America (RGA), due Sept. 15, 2034. The outlook for this rating is stable. The proceeds from these notes will be utilized for general corporate purposes. RGA’s financial leverage and interest coverage remain within AM Best’s guidelines, supporting the company’s current ratings. All other ratings for RGA and its subsidiaries remain unchanged.

Positive

• AM Best assigned an 'a-' (Excellent) rating to RGA's $650 million senior unsecured notes.
• The outlook for the credit rating is stable.
• RGA’s financial leverage and interest coverage remain within AM Best’s guidelines.
• The funds raised will be used for general corporate purposes, indicating strategic financial moves.

Negative

• The issuance of $650 million in senior unsecured notes could increase RGA’s debt obligations.
• No improvement in other ratings for RGA and its subsidiaries, indicating no significant positive changes in overall financial status.

Insights

Financial Analyst

The issuance of $650 million in senior unsecured notes by Reinsurance Group of America (RGA) is a significant financial event. These notes come with a 5.75% interest rate and are due in 2034. Senior unsecured notes are debt securities that do not have collateral backing; if the company defaults, noteholders’ claims are subordinated to those of secured creditors. However, the 'a-' rating by AM Best indicates strong financial health and a stable outlook, suggesting that RGA is well-positioned to meet its obligations.

From a financial perspective, the proceeds from these notes aimed at general corporate purposes could be beneficial if they are allocated effectively towards growth opportunities, debt repayment, or capital expenditures that yield a good return on investment. It's important to note that RGA’s financial leverage and interest coverage will stay within AM Best's guidelines. Maintaining these within acceptable ranges signals prudent financial management, which should be reassuring for investors.

In the short term, this could provide RGA with the liquidity needed for strategic initiatives. Over the long haul, the company's ability to service this debt will depend on its operational performance and market conditions. Investors should keep an eye on how RGA utilizes these funds and any impacts on its balance sheet and cash flows.

Credit Rating Expert

The credit rating assignment by AM Best provides a valuable indicator for investors regarding the creditworthiness of RGA. An 'a-' rating signals high credit quality with a low risk of default, but it's not the highest possible rating, meaning there are some risks inherent in the business or market conditions. The stable outlook means that AM Best does not foresee any imminent changes to this rating, which adds a layer of confidence for potential investors in these notes.

For retail investors, understanding the implications of a credit rating is crucial. This rating implies that RGA is capable of meeting its debt obligations but is still subject to risks, perhaps from operational or market dynamics. It's an essential piece of the puzzle when evaluating the overall risk profile of an investment in these 10-year notes.

This rating provides a benchmark against which investors can compare other potential investments in similar debt instruments. It's also worth noting that the stable outlook suggests no immediate threats, but investors should remain vigilant about future updates from AM Best or other rating agencies that could signal changing conditions.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “a-” (Excellent) to the $650 million, 5.75% senior unsecured notes, due Sept. 15, 2034, recently issued by Reinsurance Group of America, Incorporated (RGA) (Chesterfield, MO) [NYSE: RGA]. The outlook assigned to this Credit Rating (rating) is stable. All other ratings of RGA and its insurance subsidiaries remain unchanged.

The proceeds from the sale of the notes will be used to pay for general corporate purposes. RGA’s financial leverage and interest coverage will remain within AM Best’s guidelines to support the company’s current ratings.

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.

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240516394776/en/

Louis Silvers

Senior Financial Analyst

+1 908 882 2316

louis.silvers@ambest.com

Christopher Sharkey

Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Michael Porcelli

Senior Director

+1 908 882 2250

michael.porcelli@ambest.com

Al Slavin

Senior Public Relations Specialist

+1 908 882 2318

al.slavin@ambest.com

Source: AM Best

FAQ

What rating did AM Best assign to RGA's new senior unsecured notes?

AM Best assigned a Long-Term Issue Credit Rating of 'a-' (Excellent).

What is the outlook for RGA's new senior unsecured notes?

The outlook for RGA’s new senior unsecured notes is stable.

How much is RGA's new senior unsecured note issuance worth?

RGA’s new senior unsecured note issuance is valued at $650 million.

What will RGA use the proceeds from the new senior unsecured notes for?

The proceeds from the new senior unsecured notes will be used for general corporate purposes.

Will RGA’s financial leverage and interest coverage be affected by the new notes?

RGA’s financial leverage and interest coverage will remain within AM Best’s guidelines.

Have the ratings of RGA’s subsidiaries changed?

No, all other ratings of RGA and its insurance subsidiaries remain unchanged.