AM Best has affirmed the A+ (superior) financial strength rating of Bermuda-based reinsurer PartnerRe Group and its subsidiaries.
At the same time, the ratings agency assigned debt ratings of ‘a-‘ senior debt, ‘bbb+’ subordinated debt, and ‘bbb’ preferred stock to the shelf registration of PartnerRe Ltd and PartnerRe Finance II, and the existing debt of PartnerRe Ltd and PartnerRe Capital Trust I.
AM Best also assigned a ‘bbb+’ debt rating to the preferred securities of PartnerRe Capital Trust II and III’s shelf registration.
The outlook for all the PartnerRe ratings is stable.
The ratings agency said it actions reflected PartnerRe’s prominent position as a leading global multi-line reinsurance organisation offering diversified products and international market capabilities.
PartnerRe has achieved solid consolidated operating returns through its client-oriented strategy, specialized underwriting expertise, diverse risk portfolio and conservative reserving practices, added AM Best.
Partially offsetting factors in the ratings are PartnerRe’s exposure to adverse loss development principally, for US casualty lines of business written from 1997 to 2001.
Although relatively small in relation to PartnerRe’s consolidated loss reserve position, the adverse development in U.S. casualty lines required reserve strengthening charges of approximately $90 million in 2002 and 2003, respectively.
A.M. Best said it anticipates additional adverse loss development for these lines of business and has included appropriate charges in both PartnerRe’s consolidated and PartnerRe US’ risk-based capital models.
Furthermore, PartnerRe’s earnings are susceptible to catastrophe exposure, which combined with the group’s modest use of retrocessional agreements, subjects PartnerRe to a higher degree of year-over-year earnings variability, said the ratings agency.
