A.M. Best Affirms Ratings of PartnerRe Group, Its Members and PartnerRe Ltd

Business Wire, Jan 20, 2009

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Superior) and issuer credit ratings of "aa-" of PartnerRe Group (PartnerRe) (Hamilton, Bermuda) and its members. Concurrently, A.M. Best has affirmed the ICR of "a-" and debt ratings of PartnerRe's parent, PartnerRe Ltd. (Hamilton, Bermuda) [NYSE: PRE]. The outlook for all ratings is stable. (See link below for a detailed listing of the companies and ratings.)

The ratings reflect PartnerRe's excellent business profile, strong risk-adjusted capitalization and strong enterprise risk management practices. PartnerRe is a global provider of multi-line reinsurance, and its competitive position benefits from diversification on both a geographic and product lines basis. Despite an active natural catastrophe year of loss events including Hurricanes Ike and Gustav, PartnerRe reported a solid nine-month combined ratio of 91.4%. However, widening credit spreads and the write-down of investments, such as holdings in Lehman Brothers, led to realized and unrealized losses of $595 million through nine months 2008 results. Additionally, PartnerRe's investment losses as well as common share repurchases led to a decline in shareholders' equity of 5.5% through nine months 2008 results. Nonetheless, PartnerRe maintains a conservative investment portfolio with greater than 95% of fixed income holdings rated investment grade or better, which together with strong operating cash flows, increases the positive effect of net investment income on earnings. Somewhat offsetting these rating strengths are PartnerRe's moderately above average risk profile and the financial leverage of PartnerRe Ltd., which is at the upper end of the acceptable range for its rating.

As an assumer of risk, PartnerRe's earnings and capitalization are subject to large shock losses including natural catastrophes. In order to mitigate overall exposure to large losses, PartnerRe manages catastrophe exposure on a zonal aggregate basis and limits its exposure as a percentage of total capital within identified zones. Furthermore, as part of its strong enterprise risk management process, PartnerRe continually assesses its overall risk position, including loss reserve risk, investment risk and credit risk and runs various scenarios to highlight any potential correlation exposure.

A.M. Best believes that PartnerRe's long standing strategy of cycle management through diversification should allow it to successfully manage through the current underwriting cycle. Moreover, A.M. Best will monitor the growth in the company's life and capital market segments as these product offerings differ from PartnerRe's traditional property/casualty reinsurance operations and are expected to be areas of growth for the company.

At September 30, 2008, PartnerRe Ltd. maintained unadjusted total debt, preferred and hybrid securities to total capital of approximately 28% prior to the partial equity credit provided under A.M. Best's debt rating criteria. A.M. Best expects that PartnerRe Ltd. will maintain its current level of financial leverage while maintaining a fixed charge coverage in the mid to upper single-digit range.

For a complete listing of PartnerRe Group's and PartnerRe Ltd.'s FSRs, ICRs and debt ratings, please visit www.ambest.com/press/012005partnerre.pdf.> Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.