Fitch Ratings averred the financial and credit strength of
), maintaining its confidence in this Zacks Rank #3 (Hold) stock.
The outlook remained stable.
Accordingly, the ratings agency asserted the issuer default
rating (IDR) of "A+" on PartnerRe and insurer financial strength
(IFS) rating of its principal insurance operating subsidiary -
Partner Reinsurance Company Ltd. at "AA-." Moreover, Fitch
affirmed the "BBB+" rating on the company's perpetual preferred
securities andjunior subordinated notes along with an "A" rating
on its senior unsecured notes.
Fitch remains assured of PartnerRe's steady earnings growth
potential on the heels of improved pricing and underwriting
capabilities as well as superior risk management. Although
catastrophe losses deter the desired upside in the company's
results, the ratings agency projects lower catastrophe losses in
the second half of 2013. Subsequently, this should boost the
underwriting results and earnings in 2013.
Further, PartnerRe's impressive balance sheet, competitive
strength and steady capital generation reflect adequate liquidity
and operating leverage, thereby enjoying a high credit rating.
Even the modest debt levels keep the financial leverage in
control. These factors also help overcome the volatile phases in
capital markets, which directly affects the company's investment
Although high investment and catastrophe losses deteriorated
PartnerRe's earnings, combined ratio and annualized operating
return on equity during the first half of 2013, combined ratio
was still in the 90% range, which considered favorable by
Nonetheless, a downgrade is possible in the upcoming 12-18
months if PartnerRe witnesses weak operating results, investment
portfolio and balance sheet over a long frame of time.
Additionally, if the run-rate of PartnerRe's combined ratios
falls below the mid-90s, the net leverage exceeds 3.0x as well as
interest and preferred dividend coverage ratios decline below 8x,
any of these factors could lead to a downward rating.
While we remain neutral on PartnerRe at present, other strong
performers in the insurance sector include
Global Indemnity Plc
EMC Insurance Group Inc.
).All these stocks carry a Zacks Rank #1 (Strong Buy).
EMC INSURANCE (EMCI): Free Stock Analysis
GLOBAL INDEMNTY (GBLI): Free Stock Analysis
PARTNERRE LTD (PRE): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
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