PartnerRe upgraded by Fitch post $9bn Covéa merger

Bermuda-based global reinsurer  PartnerRe's financial strength rating has been upgraded by  Fitch following its  acquisition by French mutual insurer Covéa Group.

Fitch Ratings has upgraded  PartnerRe's issuer default rating (IDR) to 'A' from 'A-' and senior unsecured debt ratings to 'A-' from 'BBB+'. The insurer financial strength (IFS) rating of the company's principal reinsurance operating subsidiary has been upgraded to 'AA-' from 'A+'. The rating outlook is said to be stable.

According to the agency, the upgrade reflects a one-notch ratings uplift due to the change in ownership to Covéa.  Fitch considers Covéa's consolidated credit quality to be superior to  PartnerRe's standalone 'A+' IFS assessment.

It believes the ownership by Covéa, a larger property/casualty (P&C), health and life insurance organisation, benefits  PartnerRe's ratings under a group credit approach. Fitch viewed its former owner Exor's ownership as neutral to  PartnerRe's ratings and as less strategic than the new ownership by Covea.

Fitch views  PartnerRe's strategic importance to Covéa as "very important" as the reinsurer's size makes it a “significant addition” to Covéa with potential synergies with the larger insurance group as a whole.

Furthermore,  PartnerRe provides Covéa diversification outside of France, as Covéa maintains a leading market position in French P&C, but has minimal global reinsurance business.  PartnerRe writes a diverse international mix of property, casualty, specialty, and life and health reinsurance products.

Fitch expects Covéa to offer reasonable support to  PartnerRe as needed and to conservatively manage the reinsurers' capitalisation.  Fitch also expects  PartnerRe to continue to manage its operations generally independent of Covéa.

Covéa acquired  PartnerRe from Exor for total cash consideration of $9.1 billion.

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