11 December 2023News

RGA Bermuda subsidiary's rating affirmed

The Bermuda subsidiary of Reinsurance Group of America has had its A+ rating affirmed by AM Best with a stable outlook. 

The affirmation came as the ratings agency affirmed the ratings of RGA Life and Annuity Insurance and its other subsidiaries around the world. 

AM Best said: "The ratings reflect RGA’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and very strong enterprise risk management (ERM).

"RGA’s balance sheet strength remains very strong, underpinned by its consolidated risk-adjusted capitalisation, which has consistently been at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). 

"Liquidity measures remain strong and financial leverage remains well within AM Best guidelines for the current ratings. In addition, RGA maintains a high-quality investment portfolio, which has experienced only a modest amount of impairments during the last several years."

It added: "RGA also benefits from its leading market positions in the United States, Canada, Europe and Asia with approximately 40%-50% of revenues coming from international operations. Overall net premiums have increased steadily over the last few years. 

"Premium growth has been driven by growth in all geographic areas. RGA’s extensive risk management framework, which includes a strong focus on operational and strategic risks in addition to performing stress testing and continual monitoring of risks, are key factors in its very strong ERM assessment.

"Partially offsetting these positive rating factors is the volatility of earnings in recent periods within certain core segments, including its US individual mortality segment and its Australian business segment, which was primarily driven by the adverse impacts of the COVID-19 pandemic. 

"AM Best notes that mortality increased in 2020 and 2021 due to COVID-19, leading to losses in the individual life insurance segment. Mortality has shown improvement in 2022 and 2023. Earnings generated from its other core businesses generally have been increasing. The mortality losses were partially offset by profits in the longevity business. 

"AM Best expects that earnings will continue to improve as COVID-19 moves into an endemic phase. RGA also has increased its exposure to higher-risk product lines, including annuities and longevity reinsurance, as well as maintains a moderate-sized block of long-term care business that may add to its operating volatility over the mid-to-long term."