No change from rating agencies from PartnerRe sale
Neither PartnerRe nor Covéa looks likely to see changes to ratings due to the memorandum of understanding announced last week.
AM Best said its FSR of A+ (Superior) and the long-term ICR of “aa-” (Superior) for the members of PartnerRe Ltd (Bermuda) remained unchanged following the same announcement. Moody’s
Moody’s affirmed the A1 insurance financial strength (IFS) ratings of Partner Reinsurance Company Ltd and Partner Reinsurance Company of the US and the debt and preferred stock ratings of PartnerRe Ltd (PartnerRe, senior shelf (P)A3 stable) and its debt financing subsidiaries.
“The rating affirmation reflects Moody’s expectation that the change in ownership to Covéa will not meaningfully impact PartnerRe’s business strategy and credit profile and that the current management team and other key employees will remain in place,” said the agency.
“PartnerRe will benefit from being part of a larger insurance organization with substantial capital resources which could be used to alleviate capital strain in the event of large catastrophe losses or to help finance profitable growth opportunities,” it added.
“PartnerRe’s ratings reflect the group’s strong market position in specialty reinsurance lines, its broad international presence and operational platform, as well as its diversified book of business across a broad range of exposure classes, including life and health reinsurance. Other strengths include its strong capitalization, good core profitability and high-quality investment portfolio. Tempering these strengths are the potential for earnings volatility arising from PartnerRe’s meaningful property catastrophe reinsurance exposures and from claims inflation in its casualty reinsurance lines.”
AM Best also confirmed that its FSR of A (Excellent) and the long-term issuer ICR of “a+” (Excellent) for Covéa remain unchanged.
Under the memorandum of understanding announced, Covéa would acquire all ordinary shares of PartnerRe from current owners Exor for a total cash consideration of $9 billion. Preferred shares issued by PartnerRe and listed on the New York Stock Exchange would not be included in the proposed acquisition. The two intend to sign a definitive sale agreement by the end of the year, with the sale expected to close in mid-2022.
Exor and Covéa expect to continue their reinsurance cooperation, with Exor acquiring from Covéa interests in special purpose reinsurance vehicles managed by PartnerRe for approximately $725 million. These vehicles will invest in property catastrophe and other short-tail reinsurance contracts underwritten by PartnerRe. Covéa, Exor and PartnerRe would also continue to invest jointly in Exor-managed funds.
