Fitch cuts PartnerRe, notes, preferreds

Fitch Ratings said it downgraded PartnerRe Ltd.’s issuer default rating to A- from A, senior unsecured notes to BBB+ from A-, series D, E and F preferred securities to BBB from BBB+ and insurer financial strength rating to A+ from AA-.

This action follows Fitch’s updated analysis of PartnerRe concurrent with a credit quality review of EXOR SpA., an Italian-based listed investment company. EXOR closed on its $6.9 billion acquisition of PartnerRe on March 18. The review also considered EXOR's planned operating strategy for PartnerRe.

The outlook is stable and the ratings were removed from Rating Watch Negative.

Fitch said the one notch downgrade primarily reflects the agency's view that PartnerRe’s position in the challenging reinsurance market environment, which is expected to result in ongoing pressure on earnings, no longer supports the former ratings.

Further, while it does not view EXOR's credit quality as unsupportive of PartnerRe’s ratings, Fitch does not view the change in ownership to EXOR as improving PartnerRe’s near-term competitive position. The company will effectively maintain its current size, scale and reinsurance focused operating profile.

The agency expects EXOR to offer reasonable support to PartnerRe as needed and to conservatively manage the reinsurers' capitalization with PartnerRe continuing to manage its operations generally independent of EXOR.

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