Fitch Expects to Rate PartnerRe's Series F Perpetual Preferred Offering 'BBB+'

NEW YORK--()--Fitch Ratings expects to assign a 'BBB+' rating to PartnerRe Ltd.'s (PartnerRe) proposed issue of series F non-cumulative redeemable perpetual preferred shares. The rating on the planned issuance is equivalent to the ratings on PartnerRe's existing perpetual preferred securities. The Rating Outlook is Stable.

A complete list of PartnerRe's ratings follows at the end of this release.

KEY RATING DRIVERS

Fitch expects that PartnerRe will use the net proceeds from the sale of the series F preferred shares for general corporate purposes, including the redemption of the company's $290 million of outstanding series C preferred shares.

Following the redemption of PartnerRe's series C preferred shares, Fitch expects that PartnerRe's equity credit adjusted financial leverage could decline modestly from its year-end 2012 level of 18.7%. This expected decrease results from the planned series F securities being eligible for 100% equity credit due to their non-cumulative feature. PartnerRe's series C perpetual preferred shares currently receive 50% equity credit.

RATING SENSITIVITIES

Due to PartnerRe's high current rating category, Fitch views a near-term rating upgrade as unlikely, in the absence of a material change in risk profile resulting in significantly lower underwriting volatility observed over an extended period.

Key ratings triggers that, if observed over the next 12-18 months, could result in a downgrade include a sustained period of poor operating results, investment write downs or adverse loss reserve development of a magnitude that caused Fitch to question the strength of PartnerRe's balance sheet, or if PartnerRe were to report significantly worse underwriting results and overall profitability than comparably rated peers.

Additional ratings triggers that could result in a downgrade when viewed on a run-rate or multi-year rolling average basis include:

--Failure to report calendar-year combined ratios in the mid 90%'s or better;

--Operating-earnings-based interest and interest and preferred dividend coverage ratios that fall below approximately 10x and 6x, respectively;

--Barring a significant shift in business mix toward less volatile lines, an increase in net written premium to GAAP equity ratios to levels that exceed 1.0x.

Fitch currently rates PartnerRe's entities as follows, with a Stable Rating Outlook:

Partner Reinsurance Ltd.

--IFS at 'AA-'.

PartnerRe Ltd.

--IDR at 'A+';

--$290 million 6.75% series C cumulative redeemable perpetual preferred securities at 'BBB+';

--$230 million 6.5% series D cumulative redeemable perpetual preferred securities at 'BBB+';

--$374 million 7.25% series E cumulative redeemable perpetual preferred securities at 'BBB+';

--$63 million junior subordinated notes due Dec. 1, 2066 at 'BBB+';

--$250 million 6.875% senior unsecured notes due June 1, 2018 at 'A';

--$500 million 5.5% senior unsecured notes due June 1, 2020 at 'A'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Jan. 11, 2013);

--'Fitch Affirms PartnerRe's Ratings; Outlook Stable ' (Jan. 9, 2013).

Applicable Criteria and Related Research:

Insurance Rating Methodology -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698731

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Contacts

Fitch Ratings
Primary Analyst
Greg Dickerson, +1-212-908-0220
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Brian Schneider, CPA, CPCU, ARe, +1-312-606-2321
Senior Director
or
Committee Chairperson
Andrew Davidson, CFA, +1-312-368-3144
Senior Director
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