A.M. Best has revised the outlooks on the financial strength rating for most of the operating subsidiaries of PartnerRe Ltd to positive from stable, attributing the outlook change on the A (excellent) rating to an improving view of the reinsurer’s enterprise risk management function.

While PartnerRe’s ERM is still categorized currently as marginal, A.M. Best’s said its improving view of the group’s ERM functions is due to, in part, PartnerRe’s strong non-life underwriting performance during 2017—when the industry experienced a significant level of catastrophic activity.

PartnerRe produced a small non-life underwriting profit in spite of cat activity, while the vast majority of peers had underwriting losses of varying degrees, the rating agency said.

“A.M. Best attributes this to prudent risk selection and retrocession usage, which has kept PartnerRe’s net probable maximum loss at manageable levels but still allowing the group to provide meaningful market capacity,” Best said in a statement.

Overall, PartnerRe’s ratings reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, and very favorable business profile, in addition to ERM.

Best also noted PartnerRe’s financial flexibility, with access to the capital markets on a standalone basis, as well as potentially through owner EXOR N.V., which is a publicly traded company in Italy.

A highly diversified book of reinsurance business across non-life and life lines, and geographies, and a focus on building out life and health operations to provide added diversification will help the reinsurer to navigate challenging market conditions, the rating agency added.

PartnerRe’s overall underwriting results have proven to be consistently stable and profitable in recent years, Best said.

Best also affirmed the A financial strength rating for PartnerRe Life Reinsurance Company of Canada (Toronto, Canada) and PartnerRe Life Reinsurance Company of America (Little Rock, AR), moving those outlooks to positive, and revised the outlooks of various long-term issuer credit ratings for the various operations to positive as well.

Source: A.M. Best