S&P Affirms PartnerRe Ratings; Raises Outlook to Stable

May 31, 2007

Standard & Poor’s Ratings Services has revised its outlook on PartnerRe Ltd. and its operating subsidiaries– Partner Reinsurance Co. Ltd., PartnerRe S.A., and Partner Reinsurance Co. of U.S. (collectively, PRE) to stable from negative. S&P also affirmed its “A” counterparty credit and senior debt ratings on Partner Re Ltd. and affirmed its “AA-” counterparty credit and financial strength ratings on the operating subsidiaries.

“The outlook revision to stable reflects PRE’s significantly improved capital adequacy at year-end 2006,” explained S&P credit analyst Laline Carvalho. “In addition, we believe PRE’s enterprise risk management (ERM) capabilities are excellent, which should enable this group to continue to employ prudent cycle-management strategies and post strong earnings on a prospective basis.” This should contribute to healthy and sustainable capital growth in future years.

S&P based its ratings affirmation on PRE’s “very strong competitive position, disciplined underwriting, strong operating performance, excellent ERM, and improved capital adequacy in 2006.”

However the rating agency indicated that “potential underwriting volatility because of low retrocessional usage, historically lower-than-peer-group capital adequacy, and risks associated with further diversification into alternative risk transfer (ART) businesses and to a lesser extent certain areas within life reinsurance,” should be considered as offsetting factors.

PRE’s full-year 2007 operating performance is expected to “remain strong.” This assumes a “normalized level of catastrophe losses.” Unless there are excessive cat losses, S&P expects a combined ratio in the 90 to 92 percent range and “ROR of more than 15 percent.”

Premium volume is expected to be flat or modestly declining for the year, which reflects “management’s continued prudence amid the expectation of moderately softening market conditions in property/casualty (P/C) during 2007.”

Again, if there are no abnormal cat losses, S&P expects PRE’s 2007 earnings to remain “strong,” while “flat or declining premiums should lead PRE to maintain operating capital adequacy in the 140 to 145 percent range assuming no major capital management initiatives are executed.

“Over the long-term, the group’s CAR is expected to range between 130 percent-140 percent. Financial leverage—as measured by total debt plus preferred to total capital—is expected to remain supportive of the rating at about 30 percent.”

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