KEY RATING DRIVERS
PRE has unconditionally and irrevocably guaranteed the notes issued by PRE Ireland, a wholly owned subsidiary of PRE. PRE Ireland's issuance ranks pari passu with PRE's currently outstanding senior unsecured notes, and are thus rated equivalent.
The company expects to use the net proceeds from the offering to refinance its
The affirmation reflects the company's large reinsurance market position, very strong capitalization with moderate operating leverage, reasonable financial leverage and favorable reserve adequacy. These favorable factors are partially offset by PRE's limited diversity outside of reinsurance and Fitch's negative sector outlook on global reinsurance with industry earnings pressured.
Fitch considers PRE to have a large reinsurance market position and scale, writing a diverse mix of reinsurance lines. However, its overall market position trails several of its larger, more diversified (re)insurance peers. Fitch views PRE's minimal presence in primary lines as a disadvantage relative to companies that have a more balanced platform of both reinsurance and insurance business. This limited business diversity outside of reinsurance renders PRE more susceptible to the currently unfavorable reinsurance market conditions.
Underwriting results deteriorated in the first six months of 2016, with a combined ratio of 101.7% compared to 86.7% in the first six months of 2015. This increase was primarily due to higher catastrophe and weather-related losses, including the
PRE's loss reserves have exhibited consistent redundant development experience. Over the most recent five-year period (2011-2015), the company produced prior year reserve releases totaling
The key rating triggers that could result in an upgrade include:
--Improved competitive position while demonstrating favorable run-rate earnings and low volatility in the challenging reinsurance environment, with a combined ratio in the low 90s;
--Growth in risk-adjusted capital while maintaining a net premiums written-to-equity ratio of 0.8x or lower and a financial leverage ratio at or below 20%, and fixed charge coverage (FCC) of at least 8x.
The key rating triggers that could result in a downgrade include:
--Changes to PRE's operating profile that Fitch views as increasing overall risk;
--Failure to maintain consistent underwriting profitability or
--Adverse loss reserve development of a magnitude that causes Fitch to question balance sheet strength;
--A net premiums written-to-equity ratio increase to more than 1.0x or a financial leverage ratio above 25%;
--Deterioration in EXOR S.p.A.'s (PRE's parent company) credit profile;
--Hybrid securities ratings could be lowered by one notch to reflect non-performance risk should Fitch view
FULL LIST OF RATING ACTIONS
Fitch has assigned the following rating:
PartnerRe Ireland Finance DAC
Fitch has affirmed the following ratings with a Stable Outlook:
--IDR at 'A-';
--Series D,E,G and H cumulative redeemable preferred securities at 'BBB';
--Series F and I non-cumulative redeemable preferred securities at 'BBB';
--IFS at 'A+'.
Additional information is available on www.fitchratings.com
Insurance Rating Methodology (pub.
Dodd-Frank Rating Information Disclosure Form
Source: Fitch Ratings