A.M. Best Affirms A+ (Superior) Rating of PartnerRe Group

January 23, 2003

A.M. Best Co. has affirmed the group financial strength rating of A+ (Superior) of Bermuda-based PartnerRe Group and its core subsidiaries, Partner Reinsurance Company Ltd. (Bermuda), Partner Reinsurance Company of the U.S., PartnerRe Insurance Company of New York and PartnerRe SA (Paris) with a stable outlook.

“The rating recognizes the superior management, underwriting and risk control of the overall operation,” said Best. It pointed out that PartnerRe is a “leading global multi-line reinsurance organization offering diversified products and international market capabilities.” Shareholders’ equity of $1.9 billion as of September 30, 2002 and 2001 net premiums of $ 1.8 billion “rank it among the top reinsurance companies in the world.”

“Operating in an intensely competitive environment, PartnerRe has achieved generally strong consolidated operating returns through its client-oriented strategy, specialized underwriting expertise, diverse risk portfolio and strong operational discipline. The group maintains superior capitalization and conservative statutory leverage measures, which are supported by sound investment and reserving strategies. Each subsidiary receives capital and retrocessional support from the parent,” said Best.

The rating agency noted that offsetting factors are “earnings susceptibility to catastrophe exposure and the group’s modest use of retrocessional agreements, which subject PartnerRe to a higher degree of year-over-year variability.” However, it also indicated that these “factors are mitigated by PartnerRe’s disciplined and analytical underwriting approach, resulting in controlled risk commitments along with successful diversification initiatives that improve overall earnings stability. ”

Best’s analysis was conducted on each of the group’s operating subsidiaries. Among the findings reported was the conclusion that “PartnerRe US maintains solid stand-alone capitalization despite losses attributable to the events of September 11 and Enron.” The rating agency said it “expects operating earnings to improve in 2002 and 2003 as PartnerRe US benefits from higher rates and a flight to quality.”

Best noted that the Bermuda Company “writes the bulk of PartnerRe’s worldwide catastrophe coverage along with multi-line property/casualty and life business through its branches, which include Zurich, Singapore and Hong Kong.” It has maintained “strong capitalization and generally solid operating results. Moreover, it provides capital support to other group members through calendar year stop loss protection and direct contributions.”

“Paris-based PartnerRe SA, the fourth-largest French reinsurer, has an excellent business franchise, “said Best. “Although its level of capitalization is slightly less robust than other group members, PartnerRe SA is afforded group member status due to the support of its parent in the form of capital contributions and reinsurance protection. Historically, PartnerRe SA’s performance has been weak; however, A.M. Best expects a significant improvement for full-year 2002 and prospectively in 2003.”

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