Renaissance Reinsurance has been placed on negative watch by rating agencies AM Best and Moody’s.
This follows the recent announcement that the Bermudian will acquire Platinum Underwriters for $1.9 billion.
AM Best placed under review with negative implications the financial strength rating (FSR) of A+ (superior) and the issuer credit ratings (ICR) of "aa-" of RenRe.
Moody’s has affirmed the ratings of RenRe and changed the rating outlook to negative.
“This transaction would give RenaissanceRe additional scale and help broaden its product offering. However, this transaction also represents a significant commitment on the part of RenaissanceRe to continue its move into casualty business, which is outside of the organisation’s core competency of property catastrophe reinsurance,” said AM Best.
Kevin Lee, Moody's analyst for RenRe, said: "The negative outlook reflects our circumspect view of the benefits of the proposed transaction from a credit perspective. We see this transaction as a defensive move aimed at offsetting some of the pressures in RNR's core property catastrophe reinsurance line but financed in a way that is generally credit negative.”
Interestingly, Standard & Poor’s (S&P) and Fitch have affirmed the ratings of RenRe and placed it on a stable outlook.
S&P said: “The integration risk of the acquisition is mitigated by the relative simplicity of Platinum's organisational structure based on both legal entities and office locations, and the ease with which RenaissanceRe will be able to assimilate Platinum's property catastrophe portfolio onto its platform. Successful execution will accelerate the progress of RenaissanceRe's expansion into specialty and casualty reinsurance with the addition Platinum's profitable book of diversifying business.”
Fitch added that it viewed the transaction as a slight credit negative in the near team because of the execution and integration risk inherent in an acquisition.
Renaissance Re, Platinum Underwriters, Am Best, Moody's, Standard & Poor's, Fitch, Bermuda