Standard & Poor’s Ratings Services announced that it has assigned its “AA-” financial strength rating to Partner Re Ireland Insurance Co. (PRII), a newly formed subsidiary of Bermuda-based PartnerRe Ltd. (PRE).
The rating agency also affirmed its “A” counterparty credit rating on PRE and its ‘AA-‘ counterparty credit and financial strength ratings on Partner Reinsurance Co. Ltd., Partner Reinsurance Co. of U.S., and PartnerRe S.A. The outlook on all these companies is stable.
“The ratings on PRII are based on explicit group support via an 85 percent quota-share reinsurance arrangement as well as a whole-account stop-loss arrangement that is expected to be provided by one of PRE’s main operating subsidiaries, Bermuda-based Partner Reinsurance Co. Ltd.,” explained S&P credit analyst Laine Carvalho.
S&P also said that it expects the group to consistently maintain PRII’s capital levels at or above minimum regulatory levels. Over the medium term, PRII is expected to have substantial excess capital relative to its net writings. “The ratings on PRE and its other operating subsidiaries are based on PRE’s very strong operating results, strong competitive position, well-diversified franchise, conservative balance sheet, and strong capital adequacy,” Carvalho added. “Partially offsetting these positive factors are the group’s potential volatility in underwriting performance because of low retrocessional usage as well as its developing U.S. and European franchises.”
The announcement noted: “Premium volume is expected to be flat to down in 2005 because of changing market conditions and PRE’s commitment to maintaining strict underwriting standards. Capital adequacy is expected to strengthen, reflecting strong earnings and flat or declining premiums for the year. PRE ranked 10th among global reinsurance groups in 2003, an increase in market share from a ranking of 13th in 2001. The improvement reflected the group’s ability to take advantage of considerable market dislocation within the global reinsurance industry in the past three years. PRE has significantly expanded its platform in recent years, moving from its original position as a monoline catastrophe writer in the mid-1990s to offering a wide range of property/casualty reinsurance products worldwide. Reflecting management’s desire to maintain strict underwriting guidelines, PRE’s growth rate slowed to a more conservative level of 7.3 percent in 2004 (compared with 34 percent in 2003), reflecting softening market conditions in property and casualty lines.”
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