RGA International Reinsurance Co. Ltd. Assigned 'AA-' Ratings; Outlook Stable.Business Editors NEW YORK--(BUSINESS WIRE)--April 28, 2004 On April 28, 2004, Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. assigned its 'AA-' counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and financial strength ratings to 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 International 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. Co. Ltd. (RGA International). The outlook is stable. The ratings are based on RGA International's position as a core member of the RGA Reinsurance Co. group (RGA), based in St. Louis, Mo. RGA has a No. 2 market position in life reinsurance in the U.S. and Canada, as well as strong and rapidly growing positions in several global markets through RGA International and other subsidiaries. The entire RGA group also benefits from its strategic importance to its majority owner, Metropolitan Life Insurance Co. Outlook RGA International is expected to grow very rapidly through 2006 as production from existing countries is moved onto its books, with continued rapid growth of 15%-20% thereafter. Capital adequacy will remain strong, supported by capital contributions from the parent and substantial reinsurance to affiliates. Business mix is expected to continue to emphasize proportional mortality reinsurance on an automatic and facultative facultative /fac·ul·ta·tive/ (fak´ul-ta?tiv) not obligatory; pertaining to the ability to adjust to particular circumstances or to assume a particular role. fac·ul·ta·tive adj. 1. basis. Major Rating Factors -- Strong growth and earnings track record. RGA International is the legal entity established in 2003, which over time will accept the majority of RGA's business written outside of the Americas. Although this entity is new, RGA has been in these businesses since 1994. That business, which is currently housed in various other RGA entities, combined for 24% of RGA's consolidated net premiums and 12% of net operating income in 2003. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: on international business improved to 6% in 2003 and should continue to grow as scale is achieved. -- Relationship to RGA. The division benefits from RGA's North American operations through significant shared services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. , underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and pricing oversight, and shared mortality expertise. RGA International will also benefit from significant amounts of reinsurance to RGA's other operations. -- Strong business position. Over time, RGA International will have meaningful positions in nine insurance markets. RGA has a substantial share of new business premiums in the U.K. and Australia/New Zealand markets, and strong growing positions in Japan and South Korea. Future growth will come from these markets, as well as growing positions in other emerging markets, particularly in Asia. -- Good capital position. As a start-up entity, RGA International does not yet have operational scale to support its growth through organic capital generation. The company currently maintains capital at strong levels, but is expected to require capital contributions from its parent in the next five years. Those total contributions are expected to be less than 10% of RGA's consolidated GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). equity. -- Ireland domicile domicile (dŏm`əsīl'), one's legal residence. This may or may not be the place where one actually resides at any one time. The domicile is the permanent home to which one is presumed to have the intention of returning whenever the purpose . The company is expected to benefit from certain advantages of its Ireland domicile, including favorable tax rates, a tax treaty with the U.S., and access to the EU market, which is expected to be a source of future growth. -- Regulatory risk. Given operations in many different markets, RGA International faces significant challenges around licensing and compliance in those jurisdictions. Somewhat offsetting these challenges is RGA's 10-year experience in international markets and the diversification of the international portfolio of businesses. Ratings List RGA International Reinsurance Co. Ltd. Counterparty credit rating AA-/Stable/-- Financial strength rating AA-/Stable Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar A set of buttons or graphic images typically in a row or column used as a central point that link you to major topic sections on a Web site. If the navigation bar is a single graphic image with multiple selections, it is known as an imagemap. See imagemap. , select Find Ratings, then Credit Ratings Search. |
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