Fitch Ratings has affirmed and removed PartnerRe’s ratings from Rating Watch Positive, including its ‘A-‘ Issuer Default Rating and the ‘A+’ (Strong) Insurer Financial Strength rating of its principal reinsurance operating subsidiary. The Rating Outlook is Negative.
PartnerRe’s removal from Positive Watch follows news that EXOR N.V. and Covea’s $9 billion cash deal for the reinsurer will not be completed.
Fitch says the Rating Watch Positive reflected the potential for ownership by Covea, a larger property/casualty, health and life insurance business. Fitch views EXOR’s ownership as neutral to PartnerRe’s ratings.
PartnerRe’s first quarter results included a modest $18 million in pre-tax losses from event cancellation claims associated with coronavirus that reflect estimates on claims incurred as of March 31, with potentially more sizable losses to be incurred in future quarters.
Fitch’s pro forma analysis reflects exposure to somewhat higher potential mortality losses in its life reinsurance business due to the coronavirus.
PartnerRe’s operating results have been pressured recently with the non-life segment posting a three-year average combined ratio and operating ratio of 101.5% and 93.5%, respectively, driven by increased catastrophe losses and a declining benefit from favorable reserve development.
These results are inconsistent with both the company’s historical performance and Fitch’s expectations for the rating of combined ratios below 100% and operating ratios below 90%.
Fitch believes PartnerRe’s ratings continue to reflect the company’s moderate and diverse non-life and life and health reinsurance business profile, very strong capitalization with reasonable financial leverage, strong long-term financial performance and strong reserve position.