A.M. Best Upgrades Financial Strength Rating on RGA Operating Cos.; Assigns Initial Debt Rating.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 8, 2000 A.M. Best Co. has upgraded the financial strength rating of Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Group of America, Inc.'s lead operating companies--RGA Reinsurance Company and RGA RGA Reinsurance Group of America RGA Return Goods Authorization RGA Republican Governors Association RGA Residual Gas Analyzer RGA Royal Garrison Artillery RGA Restricted Growth Association (UK) RGA Rate Gyro Assembly Life Reinsurance Company of Canada--to A+ (Superior) from A (Excellent) and has assigned an initial "a" rating on RGA's existing senior notes. The rating actions reflect RGA's strong franchise in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. life reinsurance market, high level of expertise in assessing mortality risk--which has led to sustained earnings growth in its core businesses--high quality balance sheet and strong risk-adjusted capitalization. In addition, the ratings reflect the implicit and explicit benefits RGA derives from its strategic affiliation with MetLife, the second largest life insurance company in the U.S., based on assets. Partially offsetting these strengths is an increasingly competitive pricing environment in the life reinsurance market, which may pressure margins in the near term. However, A.M. Best believes that RGA is well positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. its underwriting expertise and operational efficiencies as primary writers continue to outsource mortality risk, particularly given the breadth and quality of its traditional and non-traditional product development and service capabilities and its growing presence in the global reinsurance marketplace. Through its initial investment of $125 million in RGA's common stock in November 1999 and the subsequent acquisition of GenAmerica and its subsidiaries in January 2000, MetLife's ownership position in RGA has risen to 58%. MetLife has provided RGA with substantial financial flexibility and operational stability, which A.M. Best believes were significant factors in retaining its reinsurance in force and client relationships following the liquidity crisis experienced by GenAmerica in mid-1999. A.M. Best believes RGA will also benefit from the asset/liability management Asset/Liability Management A technique companies employ in coordinating the management of assets and liabilities so that an adequate return may be earned. Also known as "surplus management. expertise provided by MetLife, which should further enhance RGA's overall risk profile. Over the past several years, RGA's management has successfully executed a focused business plan emphasizing superior operating performance in its core businesses. As a result of strong revenue growth achieved in its traditional reinsurance activities and improving persistency, complemented by its financial reinsurance Financial Reinsurance, also known as 'fin re', is a form of reinsurance which is focused more on capital management than on risk transfer. In the non-life segment of the insurance industry this class of transactions is often referred to as finite reinsurance. businesses, the company has continued to increase market share in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and expand its presence internationally. A.M. Best believes these favorable operating fundamentals, which complement MetLife's existing businesses, will enable RGA to sustain stable earnings growth in its core operations and widen its diverse client base. A.M. Best also believes continued growth in RGA's businesses, supported by strong cash flow and increasing profit levels associated with its business expansion, will continue to provide above average interest coverage to support its modest debt service requirements. A.M. Best anticipates RGA will maintain conservative financial leverage and solid statutory surplus in its U.S. and Canadian operating units to support the ratings. RGA, domiciled dom·i·cile n. 1. A residence; a home. 2. One's legal residence. v. dom·i·ciled, dom·i·cil·ing, dom·i·ciles v.tr. 1. in Missouri, is a member of the MetLife Group. RGA offers a broad array of reinsurance products targeting life insurance and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. companies. As of September 30, 2000, RGA reported assets of approximately $ 5.9 billion, life insurance in-force of approximately $500 billion, and stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. of $830 million. The following debt rating has been assigned to RGA's existing senior notes: - Reinsurance Group of America, Inc.--"a" rating on $100 million 7.25% senior notes, due 2006 A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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