Fitch upgrades PartnerRe on Covéa deal

Fitch Ratings has upgraded PartnerRe's issuer default rating (IDR) to A from A- and senior unsecured debt ratings to A- from BBB+. Fitch has also upgraded the insurer financial strength (IFS) rating of Partner Reinsurance Company, the company's principal reinsurance operating subsidiary, to AA- (‘very strong’) from A+ (‘strong’), and removed all ratings from rating watch positive. The rating outlook is stable.

Fitch's upgrade follows the recently completed acquisition of PartnerRe by Covéa Cooperations, a French mutual insurer, from EXOR, for total cash consideration of $9.1 billion. EXOR purchased PartnerRe for $6.9 billion in March 2016.

“The upgrade reflects a one-notch ratings uplift due to the change in ownership to Covéa,” Fitch said, adding that it does not maintain public ratings on Covéa but does internally monitor the company's consolidated credit quality, which Fitch considers to be superior to PartnerRe 's standalone A+ IFS assessment.

“As such, ownership by Covéa, a larger property/casualty (P/C), health and life insurance organisation, benefits PartnerRe 's ratings under a group credit approach. Fitch viewed EXOR's ownership as neutral to PRE's ratings and as less strategic than the new ownership by Covéa,” the rating agency said.

Fitch views PartnerRe 's strategic importance to Covéa as “very important" per Fitch's group rating methodology as PartnerRe 's size makes it a significant addition to Covéa with potential synergies with the larger insurance group as a whole. It added that this assessment could improve to "core".

PartnerRe provides Covéa diversification outside of France, as Covéa maintains a leading market position in French P/C, but has minimal global reinsurance business, Fitch noted. PartnerRe writes a diverse international mix of property, casualty, specialty, and life and health reinsurance products, it added.