AM Best has upgraded PartnerRe’s financial strength rating to A+ (Superior) from A (Excellent).
The agency said the decision reflects PartnerRe’s balance sheet strength, which AM Best categories as strongest, as well as its adequate operating performance. It added that it has a very favourable business profile and appropriate enterprise risk management (ERM).
It said the revision is also due to the reinsurer’s successful demonstration of its ERM functions and framework over the past several years and, 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 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 favorable prior-year reserve development,” the agency said.
Under the ownership of Italian investment fund EXOR, the agency said it believed PartnerRe’s financial flexibility remains more than sufficient because it has retained access to the capital markets on a stand-alone basis, as well as potentially through EXOR.
It added: “The 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 realized and unrealized losses. The unrealized portion was offset largely by unrealized gains in the first quarter of 2019.”
PartnerRe, AM Best, Ratings, Insurance, Reinsurance, Bermuda