Fitch downgrades PartnerRe

Fitch Ratings said it downgraded the insurer financial strength rating of Partner Reinsurance Ltd. to AA- from AA.

The agency also said it downgraded the issuer default rating of PartnerRe Ltd. to A+ from AA-, along with its $290 million 6.75% series C cumulative redeemable perpetual preferred securities to BBB+ from A-, $230 million 6.5% series D cumulative redeemable perpetual preferred securities to BBB+ from A-, $63 million junior subordinated notes due Dec. 1, 2066 to BBB+ from A-, $250 million 6.875% senior unsecured notes due June 1, 2018 to A from A+ and $500 million 5.5% senior unsecured notes due June 1, 2020 to A from A+.

The outlook is stable.

The downgrades reflect a view that PartnerRe's earnings profile, while strong when observed over an extended period of time, includes variability that is modestly greater than previously considered within the rating rationale, Fitch said.

The agency said it recognizes that reinsurers with catastrophe exposure will periodically suffer losses of a magnitude sufficient to significantly impact earnings and reduce capital. As a result, Fitch said it believes that it is difficult for any reinsurer to maintain stable earnings, given that the nature of reinsurance is intended in large part to absorb earnings volatility on behalf of their clients.

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