A.M. Best Assigns Indicative Ratings to Reinsurance Group America, Incorporateds Shelf Registration

<p>A.M. Best Co. has assigned indicative ratings of “a-” to senior unsecured debt, “bbb+” to subordinated debt and “bbb” to preferred stock of a $1.5 billion shelf registration recently filed with the Securities and Exchange Commission by Reinsurance Group of America, Incorporated (RGA) (St. Louis, MO) [NYSE: RGA]. The current $1 billion shelf registration originally filed in July 2004 has been withdrawn by RGA. Concurrently, A.M. Best has assigned a debt rating of “bbb” to the indicative ratings on the trust preferred securities that may be issued by RGA Capital Trust III and RGA Capital Trust IV.</p> <p>A.M. Best has affirmed RGA’s debt ratings on the outstanding senior notes and junior subordinated debentures. Concurrently, A.M. Best has adjusted the debt rating to “bbb” from “bbb+” on $225 million 5.75% trust preferred income equity redeemable securities (PIERS) of RGA Capital Trust I, which is the same level as the preferred stock. This one notch rating adjustment does not reflect a change in the creditworthiness or the financial fundamentals of the organization, but rather reflects the relative default probability and ultimate recovery of these securities given the industry’s increasing financial leverage, reduced fixed charge coverage and equity-like characteristics of these instruments. The outlook on all ratings is stable. (See below for a detailed listing of the companies and ratings.)</p> <p>The shelf registration filing does not impact RGA’s current debt-to-total capitalization of roughly 29%, which is within tolerance for its current ratings. The financial strength ratings of RGA and its subsidiaries are unaffected.</p> <p>A.M. Best views RGA’s debt servicing capabilities and liquidity posture favorably, with cash flows supported by its profitable operations and strong life reinsurance franchise. The ratings also reflect its long history in the life reinsurance marketplace, favorable risk-based capital position and continued growth in select international markets.</p> <p>Despite strong operating fundamentals, RGA has recorded fluctuations in its results due to mortality fluctuations and variations in accounting treatment of certain reinsurance transactions and statutory strain associated with new business growth. In particular, RGA reported heightened adverse mortality experience in the United States in first quarter 2008. However, over the longer term, mortality experience has proven to be in line with the company’s pricing expectations. Third quarter reported net premiums and pre-tax earnings were adversely affected by foreign currency exchange fluctuations. Due to the poor equity market performance, A.M. Best expects some potential write-downs or impairments despite RGA’s overall conservative invested asset portfolio.</p> <p>The following debt ratings have been affirmed: Reinsurance Group of America, Incorporated—</p> <p>-- “a-”on $200 million 6.75% senior unsecured notes, due 2011</p> <p>-- “a-” on $300 million 5.625% senior unsecured notes, due 2017</p> <p>-- “bbb” on $400 million junior subordinated debentures, due 2065</p> <p>The following debt rating has been adjusted: RGA Capital Trust I (guaranteed by Reinsurance Group of America, Inc)—</p> <p>-- to “bbb” from “bbb+” on $225 million 5.75% trust preferred income equity redeemable</p> <p>securities (PIERS), due 2051</p> <p>The following indicative ratings available under shelf registration have been assigned: Reinsurance Group of America, Incorporated—</p> <p>-- “a-” on senior debt</p> <p>-- “bbb+” on subordinated debt</p> <p>-- “bbb” on preferred stock RGA Capital Trust III and IV—</p> <p>-- “bbb” on trust preferred securities Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit <a href="http://www.ambest.com"> www.ambest.com</a>.</p>