A.M. Best has placed under review with negative implications the financial strength rating (FSR) of “A+” and the issuer credit rating (ICR) of "aa-" of Partner Reinsurance Company (PartnerRe) and its affiliates.
The agency has also placed under review with negative implications the ICR of "a-" and debt ratings of PartnerRe's parent, PartnerRe Ltd, following the announcement that it signed a definitive merger agreement with AXIS Capital Holdings Limited. All companies are domiciled in Hamilton, Bermuda.
The “under review” status reflects A.M. Best's concerns regarding the complexity and scale of the merger.
A.M. Best stated: “The new combined organisation will face execution risk and challenges relating to the integration, retention of key management and the merging of infrastructure, as well as company cultures.”
“Despite the aforementioned challenges, A.M. Best acknowledges the potential upside of the combined organisation, including its diversified product offering, increased scale and business profile.”
The under review status will be removed once A.M. Best reviews the final integration plan and the transaction closes.
Factors that could lead to a negative outlook or rating downgrade include A.M. Best's view that the transaction and integration plan represent a potentially material risk to the organisation.
Stabilisation of the ratings can be achieved, according to A.M. Best, by a comprehensive and timely integration plan and the retention of key personnel.
PartnerRe’s affiliates under review are: Partner Reinsurance Company of the US; PartnerRe Insurance Company of New York; PartnerRe Ireland Insurance Limited; Partner Reinsurance Europe; and PartnerRe America Insurance Company.
As a result of the merger, the FSR and ICR of a number of AXIS affiliates (AXIS Re SE; AXIS Reinsurance Company; AXIS Specialty Europe SE; AXIS Surplus Insurance Company; and AXIS Insurance Company) have also been placed under review with “negative implications”.
