S&P, Best See Positive Outlook for PARIS RE Deal with PartnerRe

July 7, 2009

Both A.M. Best Co. and Standard & Poor’s Ratings Services have taken a positive outlook for their ratings on PARIS RE and its operating companies, following the announcement that the group would be acquired by PartnerRe.

Best said it has placed the financial strength rating (FSR) of ‘A-‘ (Excellent) and the issuer credit rating (ICR) of “a-” of PARIS RE (France) and the other rated operating subsidiaries of Swiss-based PARIS RE Holdings Limited (PRH), the ultimate parent company of the group, “under review with positive implications.” Best also placed the ICR of “bbb-” of PRH under review with positive implications.

S&P said it has placed its ‘A-‘ long-term counterparty credit and insurer financial strength ratings on the core and guaranteed operating subsidiaries of the Switzerland-based reinsurance group PARIS RE Group (PARIS RE), including PARIS RE SA and PARIS RE Switzerland Ltd., on CreditWatch with positive implications.

“The CreditWatch placement reflects our views on the announcement today by Bermuda-based reinsurance holding company PartnerRe Ltd. that it intends to acquire 100 percent of the shares in PARIS RE in an all-share offer for a total transaction value of about $1.7 billion,” said credit analyst Mark Coleman.

S&P added that “based on our assessment of its clearly articulated strategy and track record of successful execution, its strong competitive position, and strong financial profile. This includes PARIS RE’s strong capitalization, which includes extremely strong capital adequacy, no debt in the capital structure, strong asset quality, and limited exposure to reserving issues due to its short-tailed liability profile and the existence of an adverse development guarantee provided by COLISSE RE (formerly AXA RE; not rated) with respect to the net reserves carried forward at Jan. 1, 2006. We understand that the guarantee will remain in force should the transaction be completed.”

Coleman added: “We would expect to raise the ratings on PARIS RE to within one notch of the ratings on PRE following the closing of either the block purchase or, soon after, a successful tender offer to shareholders, absent any other relevant factors arising in the interim. We understand that this is likely to be within a three-to-six-month timeframe. If the transaction is not completed and PARIS RE remains a separate publicly listed reinsurer, we would likely affirm the ratings at the current level with a stable outlook all else being equal.”

Sources: A.M. Best – www.ambest.com and Standard & Poor’s – www.standardandpoors.com

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