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TEXT-Fitch affirms PartnerRe's ratings; outlook stable
April 4, 2012 / 3:55 PM / in 6 years

TEXT-Fitch affirms PartnerRe's ratings; outlook stable

April 4 - Fitch Ratings today affirmed PartnerRe's existing ratings,
including the 'A+' Issuer Default Rating (IDR) of PartnerRe and the 'AA-'
Insurer Financial Strength (IFS) rating of Partner Reinsurance Company Ltd., the
company's principal (re)insurance operating subsidiary. The Rating Outlook is
Stable. A complete list of rating actions appears below.	
	
The ratings affirmation follows Fitch's normal periodic review of PartnerRe's
financial profile and recent performance.	
	
The ratings affirmation reflects PartnerRe's continued strong competitive
position, solid balance sheet, and good long-term track record of earnings and
capital generation. The affirmation also considers Fitch's belief that the
company's risk management capabilities will enable it to maintain its strong and
liquid balance sheet during periods that experience heightened underwriting
losses and/or capital market volatility.	
	
Partially offsetting these favorable factors is PartnerRe's relatively higher
exposure to low-frequency but high-severity events. Most recently, PartnerRe's
2011 catastrophe losses (primarily from earthquakes in Japanese and New Zealand)
totaled in excess of $1.7 billion and resulted in a $642 million operating loss
for the period. This unfavorable result contributed to a 10% decline in total
equity that was among the largest observed in the universe of reinsurers rated
by Fitch.	
	
Fitch recognizes that reinsurers with catastrophe exposure will periodically
suffer losses of a magnitude sufficient to significantly impact earnings and
reduce capital.	
	
Fitch further believes that PartnerRe's worse than peer underwriting performance
in 2011 can be partially attributed to the fact that PartnerRe's assumed risks
are geographically dispersed and losses can arise from various large
international catastrophe events. Fitch notes that 2011 was the worst year in
history for insured catastrophe losses outside of the U.S.	
	
The Stable Outlook reflects Fitch's view that PartnerRe's capital strength
remains supportive of its current rating category in the aftermath of the losses
suffered in 2011 and that the company remains well positioned to take advantage
of anticipated pricing improvement in catastrophe-exposed business lines.	
Fitch also anticipates that recent steps taken by management to reduce its
exposure to large catastrophe events will result in lower earnings volatility in
the near to medium term.	
	
Due to PartnerRe's high current rating category, Fitch views a near-term ratings
upgrade as unlikely, in the absence of a material change in risk profile
resulting in significantly lower underwriting volatility observed over an
extended period.	
	
Key ratings triggers that, if observed over the next 12 - 18 months, could
result in a downgrade include a failure to return to operating profitability,
investment write downs or adverse loss reserve development of a magnitude that
caused Fitch to question the strength of PartnerRe's balance sheet, or if
PartnerRe were to report significantly worse underwriting results and overall
profitability than comparably rated peers.	
	
Additional ratings triggers that could result in a downgrade when viewed on a
run-rate or multi-year rolling average basis include:	
	
--Failure to report calendar year combined ratios in the mid 90%'s;	
--Operating-earnings-based interest and interest and preferred dividend coverage
ratios that fall below approximately 10 times (x) and 6x, respectively;	
--Barring a significant shift in business mix toward less volatile lines, an
increase in net written premium to GAAP equity ratios to levels that exceed
1.0x.	
	
Fitch has affirmed the following ratings with a Stable Outlook:	
	
Partner Reinsurance Ltd.	
--IFS at 'AA-'.	
	
PartnerRe Ltd.	
--IDR at 'A+';	
--$290 million 6.75% series C cumulative redeemable perpetual preferred
securities at 'BBB+';	
--$230 million 6.5% series D cumulative redeemable perpetual preferred
securities at 'BBB+';	
--$374 million 7.25% series E cumulative redeemable perpetual preferred
securities at 'BBB+';	
--$63 million junior subordinated notes due Dec. 1, 2066 at 'BBB+';	
--$250 million 6.875% senior unsecured notes due June 1, 2018 at 'A';	
--$500 million 5.5% senior unsecured notes due June 1, 2020 at 'A'.	
	
	
Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.	
	
Applicable Criteria and Related Research:	
--'Insurance Rating Methodology' (Sept. 22, 2011).	
	
Applicable Criteria and Related Research:	
Insurance Rating Methodology

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