Covéa acquisition could be credit positive for PartnerRe: Moody’s

17-02-2020

The possible acquisition of PartnerRe by Covéa could benefit the Bermuda reinsurer’s credit profile, according to Moody’s, if Covéa’s substantial capital resources were used to alleviate capital strain in the event of large losses, or to finance profitable growth opportunities. 

On February 9, EXOR confirmed it had entered into exclusive discussions with Covéa regarding the possible sale of PartnerRe. Moody’s said the move could prove advantageous for PartnerRe, though “the credit implications for PartnerRe would largely depend on how Covéa intends to integrate and manage the acquisition.”. 

Crucially, the implications for PartnerRe would depend on whether it maintained its high exposure to catastrophe, and Covéa’s plans regarding PartnerRe’s invested assets, capital adequacy and operational and financial leverage targets. 

It remains unclear how much implicit and explicit support Covéa would provide to PartnerRe following an acquisition. PartnerRe has benefited from being part of a larger organisation since it was acquired by EXOR in March 2016, Moody’s noted, and it would continue to enjoy similar benefits from its new owner. This ownership structure allows PartnerRe to better withstand the volatility associated with catastrophe losses and property and casualty reinsurance pricing, the rating agency said. 

“Since there is virtually no overlap between the business operations of Covéa and PartnerRe, we would expect there to be a significant degree of continuity with respect to PartnerRe’s senior management and underwriting teams and its overall corporate strategy following a potential acquisition,” Moody’s said. “Given the importance of maintaining PartnerRe’s strong reputation among both clients and brokers, we would view such continuity favorably from a credit perspective.”

Covea, Moody's, PartnerRe, EXOR

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