Moody’s Changes PartnerRe’s Outlook To Negative Due To Cat Losses

NU Online News Service, May 25, 3:01 p.m. EDT

Moody’s Investors Service has changed PartnerRe Ltd.’s outlook to negative from stable due to the company’s “outsized” first-quarter catastrophe losses relative to its peers.

The rating agency notes that the first-quarter losses reduce available capital to deal with any shock losses resulting from the upcoming Atlantic hurricane season.

Moody’s says PartnerRe recorded $1.07 billion in pretax, net catastrophe losses from January events in Australia, the February New Zealand earthquake, and the March earthquake and tsunami in Japan. These losses “were the primary driver of the $735 million operating loss attributable to common shareholders.”

PartnerRe’s Aa3 rating remains unchanged, reflecting the company's “strong franchise as a leading international [property and casualty] reinsurer, the group's leadership position in specialty reinsurance lines, its diversified book both by geography and by line of business, as well as its high-quality investment portfolio and prudent reserving philosophy,” according to Moody’s.

But the company may be downgraded over the next 12-18 months, Moody’s adds, if there is further meaningful deterioration in equity capital. The outlook could return to stable if there is significant recovery in equity capital.