Fitch Ratings has assigned a 'BBB+' rating to the $650 million 5.75% senior notes due 2034 issuance by Reinsurance Group of America, Incorporated (RGA).

The new issuance ranks equally with RGA's existing senior notes and is thus rated equivalently.

Key Rating Drivers

The company expects to use the net proceeds from the offering for general corporate purposes. Pro forma for the $650 million new issuance, RGA's financial leverage ratio (FLR) increases to 34.4% from 31.4% as of March 31, 2024. This level is above Fitch's rating expectation of 32% or lower and could lead to a downgrade if sustained.

Consistent with Fitch's approach for RGA's other unsecured senior notes, the securities are rated one notch below RGA's Issuer Default Rating (IDR; A-/Stable) to reflect 'below average' recovery expectations, consistent with standard criteria assumptions. Fitch upgraded RGA's ratings on March 28, 2024 due to improved operating performance and higher fixed-charge coverage in recent years.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Improvement to a more favorable business profile;

Financial leverage maintained below 23%;

TFC ratio of 0.6x or below on a sustained basis;

GAAP operating return on equity sustained above 12%;

GAAP asset leverage below 6x.

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A decline in GAAP earnings as evidenced by ROE below 8% or fixed-charge coverage below 7x;

Holding company financial leverage above 32%;

Total financing and commitments (TFC) ratio maintained materially above 1x;

GAAP asset leverage of 12x or higher.

Date of Relevant Committee

27 March 2024

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

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