Standard & Poor’s Ratings Services has assigned its preliminary “A” senior debt, “A-” subordinated debt, and “BBB+” preferred stock ratings to PartnerRe Ltd.’s (PRE) $1 billion universal shelf registration, which was filed in May 2005.
S&P also said it has affirmed its “A” counterparty credit rating on PRE and its “AA-” counterparty credit and financial strength ratings on PRE’s operating subsidiaries Partner Reinsurance Co. Ltd., PartnerRe S.A., Partner Reinsurance Co. of U.S., and Partner Re Ireland Insurance Co. (collectively, PartnerRe). The outlook on all of these ratings is stable.
“The ratings on PRE are based on the group’s very strong operating performance, strong competitive position and capital adequacy, and conservative balance sheet,” noted S&P credit analyst Laline Carvalho.
The rating agency indicated, however, that “offsetting these positives is PRE’s potential underwriting volatility due to low retrocessional usage and developing U.S. and European franchises.” S&P said it “does not expect the current shelf issuance to lead to any significant changes in the group’s leverage position over the medium term, with PRE’s total debt plus preferreds to total capital ratio expected to remain 25 percent-29 percent in the next two years. As of March 31, 2005, this ratio was 25 percent.
“PRE’s stable outlook over the medium term will be partially driven by the continuation of very strong performance at the group level, as well as strong performance at PRE’s European and U.S. operations.” S&P said it “expects PRE’s 2005 consolidated combined ratio to be very strong at about 94 percent-96 percent. Premium volume is expected to be flat to down for full-year 2005 because of changing market conditions and PRE’s commitment to maintaining strict underwriting standards. Capital adequacy is expected to strengthen, reflecting strong earnings and flat or declining premiums for the year.”
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