Moody’s analysts see a “significant degree of continuity” between PartnerRe’s senior management and underwriting teams and its overall corporate strategy following a potential $9 billion acquisition by French insurance group Covéa.
Already rumoured, parent company Exor SpA has confirmed that PartnerRe is the subject of sale talks.
Should such a transaction be completed, analysts say the credit implications for PartnerRe would largely depend on how Covéa intends to integrate and manage the acquisition.
The still-rumoured price of $9 billion would be a significant increase on the $6.9 billion all cash buyout when Exor acquired the reinsurer in an acquisition deal that completed in 2016.
Given the importance of maintaining PartnerRe’s strong reputation among both clients and brokers, Moody’s says it would view such continuity favorably from a credit perspective.
Moody’s describes PartnerRe as among the world’s leading global reinsurers, thanks in-part to a well-diversified book of business across a broad range of exposure classes, including numerous specialty P&C reinsurance lines and life and health reinsurance.
Other strengths listed by analysts include its strong capitalisation, good core profitability and high quality investment portfolio.
Additionally, a sale to Covéa would result in a continuation of the benefits of being part of a larger insurance organisation relative to a stand-alone company, which include the ability to better withstand volatility associated with catastrophe losses and the ups and downs of the P&C reinsurance pricing cycle.
In addition, Moody’s says PartnerRe’s credit profile would benefit from Covéa’s substantial capital resources which could be used to alleviate capital strain in the event of large losses or to help finance profitable growth opportunities.