PartnerRe gets an outlook upgrade courtesy of Standard & Poor’s, due in part to the ratings agency’s admission that the reinsurer remains relatively autonomous from its new owner, EXOR.

Standard & Poor’s revised its outlook to stable, up from negative, for PartnerRe and its operating companies.

“We have delinked the ratings on [PartnerRe] from those on EXOR. In our opinion, despite its 100 percent ownership of [PartnerRe], EXOR doesn’t exert full control due to the existence of substantial creditor protections,” Standard & Poor’s said in its ratings update.

S&P noted that PartnerRe, as a Bermuda-based reinsurer, is already “prudently regulated by the Bermuda Monetary Authority,” subjected to rules that, in part, require it to “maintain capital solvency on a group consolidated basis.”

In other words, Standard & Poor’s believes PartnerRe will do well, even though it, and ratings agencies such as Fitch Ratings, had expressed concern in the past about the tough reinsurance market. There was also some industry worry that EXOR, an Italian investment firm, would not be able to improve PartnerRe’s fortunes.

“The outlook revision reflects our view that [PartnerRe] will preserve its very strong business risk profile and strong financial risk profile,” Standard and Poor’s said.

Standard & Poor’s added that its ratings are also based on PartnerRe’s “very strong” business risk and financial risk profile, as well as its “extremely strong” capital and earnings,” S&P Global Ratings analyst Taoufik Gharib said in prepared remarks.

S&P’s assessment is partially offset, however, by the reinsurer’s “high-risk position arising from the company’s substantial exposure to severity risk such as property catastrophe,” Gharib added.

S&P cited positives in the post/acquisition situation for PartnerRe, including the fact that EXOR doesn’t typically try to micromanage the companies it buys. Another plus: PartnerRe “is separately managed and maintains an arm’s length relationship with EXOR and other EXOR investees.”

With reinsurance pricing expected to remain soft, Standard & Poor’s said it expects PartnerRe’s premium growth to be flat or slightly down for 2016-2017.

Beyond the positive change for PartnerRe’s outlook, S&P affirmed its ‘A-‘ long-term counterparty credit rating for PartnerRe, and its ‘A+’ long-term counterparty credit and financial strength ratings for PartnerRe’s core operating subsidiaries.

Source: Standard & Poor’s