Best Downgrades PartnerRe and Subs Ratings; Remains under Review

August 5, 2015

A.M. Best announced that it has downgraded the financial strength rating (FSR) to ‘A’ (Excellent) from ‘A+’ (Superior) and the issuer credit ratings (ICR) to “a+” from “aa-” of Partner Reinsurance Company Ltd. and its affiliates.

Best has also downgraded the ICR to “bbb+” from “a-” and the issue ratings of PartnerRe’s parent, PartnerRe Ltd. The rating agency noted that it took this rating action following “the announcement that PartnerRe Ltd and AXIS Capital Holdings Limited (AXIS) have terminated a definitive amalgamation agreement and that PartnerRe Ltd has entered into a definitive agreement to be acquired by Italian investment firm EXOR, S.p.A.

“The ratings remain under review with negative implications. PartnerRe Ltd and PartnerRe are domiciled in Hamilton, Bermuda.

Best said its rating actions are based on its existing “concerns regarding PartnerRe’s concentration in reinsurance and lack of a diversified product platform, in particular, the ability to provide both primary and reinsurance solutions.”

Best explained that while the “proposed merger with AXIS would have begun to address these issues,” now that this transaction has been terminated “these concerns are brought back to the forefront.”

Best also indicated that it is “concerned that any such diversification initiatives at PartnerRe have been delayed because of the now terminated merger agreement with AXIS. These concerns are magnified given the current challenging reinsurance market conditions.”

Best also explained that it is maintaining the under review status “due to remaining uncertainty regarding senior leadership at PartnerRe, particularly the role of CEO and additional information required regarding EXOR’s plans for PartnerRe. The under review status will be removed after the closing of the EXOR–PartnerRe transaction.”

Best summarized the ratings affected by its actions as follows:
The FSR has been downgraded to ‘A’ (Excellent) from ‘A+’ (Superior) and the ICRs have been downgraded to “a+” from “aa-” and remain under review with negative implications for Partner Reinsurance Company Ltd. and its following affiliates:
• Partner Reinsurance Company of the U.S.
• PartnerRe Insurance Company of New York
• PartnerRe Ireland Insurance Limited
• Partner Reinsurance Europe SE
• PartnerRe America Insurance Company

The following issue ratings have been downgraded and remain under review with negative implications:
PartnerRe Ltd.—
— to “bbb-” from “bbb” on $230 million 6.5% preferred shares, Series D
— to “bbb-” from “bbb” on $325 million 7.25% preferred shares, Series E
— to “bbb-” from “bbb” on $250 million 5.875% preferred shares, Series F

PartnerRe Finance A LLC—
— to “bbb+” from “a-” on $250 million 6.875% senior unsecured notes, due 2018

PartnerRe Finance B LLC—
— to “bbb+” from “a-” on $500 million 5.5% senior unsecured notes, due 2020

PartnerRe Financial II, Inc.—
— to “bbb-” from “bbb” on $250 million 6.44% junior subordinated capital efficient notes, due 2066

The following indicative ratings under the shelf registration have been downgraded and remain under review with negative implications:
PartnerRe Ltd.—
— to “bbb+” from “a-” on senior unsecured debt
— to “bbb” from “bbb+” on subordinated debt
— to “bbb-“from “bbb” on preferred stock

PartnerRe Financial II, Inc. (guaranteed by PartnerRe Ltd.)—
— to “bbb+” from “a-” on senior unsecured debt
— to “bbb” from “bbb+” on subordinated debt
— to “bbb-” from “bbb” on preferred stock

PartnerRe Capital Trust II and III (guaranteed by PartnerRe Ltd.)—
— to “bbb” from “bbb+” on trust preferred securities

Source A.M. Best

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