Debt

12 Months Ended

Dec. 31, 2020

DEBT

Long-Term Debt

The Company’s long-term debt consists of the following as of December 31, 2020 and 2019 (dollars in millions):


	2020		2019
$400 million 5.00% Senior Notes due 2021	$	400	$	400
$400 million 4.70% Senior Notes due 2023	399		399
$400 million 3.95% Senior Notes due 2026	400		400
$600 million 3.90% Senior Notes due 2029	599		599
$600 million 3.15% Senior Notes due 2030	597		—
$100 million 4.09% Promissory Note due 2039	83		86
$400 million 6.20% Subordinated Debentures due 2042	400		400
$400 million 5.75% Subordinated Debentures due 2056	400		400
$400 million Variable Rate Junior Subordinated Debentures due 2065	319		319
Sub-total	3,597		3,003
Unamortized issuance costs	(24)		(22)
Long-term Debt	$	3,573	$	2,981

RGA has entered into an interest rate swap on its Variable Rate Junior Subordinated Debentures that effectively fixes the interest rate on these securities at 4.82% until December 2037.

On June 9, 2020, RGA issued 3.15% Senior Notes due June 15, 2030, with a face amount of $600 million. This security has been registered with the Securities and Exchange Commission. The net proceeds were approximately $593 million and will be used in part to repay the Company’s $400 million 5.00% Senior Notes due in 2021, and the remainder will be used for general corporate purposes. Capitalized issue costs were approximately $5 million.

On May 15, 2019, RGA issued 3.9% Senior Notes due May 15, 2029 with a face amount of $600 million. This security has been registered with the Securities and Exchange Commission. The net proceeds were approximately $594 million and was used in part to repay upon maturity the Company’s $400 million 6.45% Senior Notes that matured in November 2019. The remainder will be used for general corporate purposes. Capitalized issue costs were approximately $5 million.

Certain of the Company’s debt agreements contain financial covenant restrictions related to, among others, liens, the issuance and disposition of stock of restricted subsidiaries, minimum requirements of consolidated net worth, maximum ratios of debt to capitalization and change of control provisions. A material ongoing covenant default could require immediate payment of the amount due, including principal, under the various agreements. Additionally, the Company’s debt agreements contain cross-default covenants, which would make outstanding borrowings immediately payable in the event of a material uncured covenant default under any of the agreements, including, but not limited to, non-payment of indebtedness when due for an amount in excess of the amounts set forth in those agreements, bankruptcy proceedings, or any other event that results in the acceleration of the maturity of indebtedness. As of December 31, 2020 and 2019, the Company had $3,597 million and $3,003 million, respectively, in outstanding borrowings under its debt agreements and was in compliance with all covenants under those agreements. As of December 31, 2020 and 2019, the average interest rate on long-term debt outstanding was 4.54% and 4.82%, respectively.

The ability of the Company to make debt principal and interest payments depends on the earnings and surplus of subsidiaries, investment earnings on undeployed capital proceeds, and the Company’s ability to raise additional funds. Future principal payments due on long-term debt, excluding discounts, as of December 31, 2020, were as follows (dollars in millions):


	Calendar Year
	2021		2022		2023		2024		2025		Thereafter
Long-term debt	$	403	$	3	$	403	$	3	$	4	$	2,787

Credit and Committed Facilities

The Company has obtained bank letters of credit in favor of various affiliated and unaffiliated insurance companies from which the Company assumes business. These letters of credit represent guarantees of performance under the reinsurance agreements and allow ceding companies to take statutory reserve credits. Certain of these letters of credit contain financial covenant restrictions. At December 31, 2020 and 2019, there were approximately $23 million and $62 million, respectively, of undrawn outstanding bank letters of credit in favor of third parties. Additionally, the Company utilizes letters of credit primarily to secure reserve credits when it retrocedes business to its affiliated subsidiaries. The Company cedes business to its affiliates to help reduce the amount of regulatory capital required in certain jurisdictions such as the U.S. and the United Kingdom. As of December 31, 2020 and 2019, $1,508 million and $1,224 million, respectively, in undrawn letters of credit from various banks

were outstanding, primarily backing reinsurance between the various subsidiaries of the Company. The banks providing letters of credit to the Company are included on the NAIC list of approved banks.

The Company maintains eight committed credit facilities, a syndicated revolving credit facility and seven letter of credit facilities. The committed credit facilities have a combined capacity of $1,132 million while the syndicated revolving credit facility is for $850 million and the remaining credit facilities have a capacity of $932 million. The Company may borrow cash and obtain letters of credit in multiple currencies under its syndicated revolving credit facility. The following table provides additional information on the Company’s existing committed credit facilities as of December 31, 2020 and 2019 (dollars in millions):


			Amount Utilized(1) December 31,
Current Capacity		Maturity Date	2020		2019		Basis of Fees
$	75	June 2021	$	51	$	15	Fixed
100		August 2021	100		—		Fixed
150		September 2021	150		—		Fixed
107		March 2022	107		99		Fixed
500		May 2022	210		375		Debt rating and utilization %
100 (2)		December 2022	100		105		Fixed
100		May 2023	75		61		Fixed
850		August 2023	21		20		Senior unsecured long-term debt rating

(1)Represents issued but undrawn letters of credit. There was no cash borrowed for the periods presented.

(2)Foreign currency denominated facility, amounts presented are in U.S. dollars.

Fees associated with the Company’s other letters of credit are not fixed for periods in excess of one year and are based on the Company’s ratings and the general availability of these instruments in the marketplace. Total fees expensed associated with the Company’s letters of credit were $10 million, $8 million and $10 million for the years ended December 31, 2020, 2019 and 2018, respectively, and are included in policy acquisition costs and other insurance expenses.