AM Best Upgrades Credit Ratings Of PartnerRe
New Jersey-based international credit agency AM Best has upgraded the Financial Strength Rating [FSR] to A+ [Superior] from A [Excellent] and the Long-Term Issuer Credit Ratings [Long-Term ICR] to “aa-” from “a+” of the operating subsidiaries of Bermuda reinsurer PartnerRe Ltd.
The subsidiaries comprise: Partner Reinsurance Company Ltd.; Partner Reinsurance Company of the US; PartnerRe Ireland Insurance Designated Activity Company; Partner Reinsurance Europe SE; PartnerRe America Insurance Company; PartnerRe Life Reinsurance Company of Canada, and PartnerRe Life Reinsurance Company of America
AM Best also has upgraded the Long-Term ICR to “a-” from “bbb+” of PartnerRe and its existing Long-Term Issue Credit Ratings [Long-Term IR]. The outlook of the Credit Ratings [ratings] has been revised to stable from positive.
PartnerRe is domiciled in Hamilton, Bermuda.
The ratings reflect PartnerRe’s balance sheet strength, which AM Best categories as strongest, as well as its adequate operating performance, very favourable business profile and appropriate enterprise risk management [ERM].
The rating upgrades reflect PartnerRe’s successful demonstration of its ERM functions and framework over the past several years. In particular, PartnerRe’s underwriting performance in 2017 and 2018 was well within expectations during a period when the industry experienced a significant level of catastrophe loss activity.
AM Best attributes this to prudent risk selection and retrocession usage, which has kept PartnerRe’s net probable maximum losses at manageable levels but still allowing the group to provide meaningful market capacity. Additionally, PartnerRe has built its life book of business in a selective and measured manner that is reflective of the group’s risk culture.
AM Best considers PartnerRe’s balance sheet strength and risk-adjusted capitalization to be at the strongest level. The group’s quality of capital is considered in line with peers but has a superior history of favourable prior-year reserve development.
The PartnerRe group maintains a highly diversified book of reinsurance business across non-life and life lines of business, as well as a balanced geographic spread of risk. AM Best believes that PartnerRe’s current focus to build out of life and health operations could provide additional diversification to help navigate challenging market conditions while enhancing earning stability over the medium to long term.
PartnerRe’s operating performance is unpinned by stable and profitable underwriting results and complimented by net investment income. Net investment income has generally trended lower over the past five years, although it did experience a slight uptick in 2018. Overall earnings in 2018 were impacted adversely by realised and unrealised losses. The unrealised portion was offset largely by unrealised gains in the first quarter of 2019.
