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A.M. Best Revises Outlooks to Positive for PartnerRe Ltd and Its Main Operating Subsidiaries

A.M. Best has revised the outlooks to positive from stable and
affirmed the Financial Strength Rating (FSR) of A (Excellent) and the
Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” for most of the
operating subsidiaries of PartnerRe Ltd (collectively referred to
as PartnerRe). Concurrently, A.M. Best has upgraded the Long-Term ICR to
“a+” from “a” and affirmed the FSR of A (Excellent) of PartnerRe Life
Reinsurance Company of Canada (Toronto, Canada) and PartnerRe
Life Reinsurance Company of America (Little Rock, AR). The outlook
of the FSR has been revised to positive from stable, while the outlook
of the Long-Term ICR remains positive. A.M. Best also has revised the
outlooks to positive from stable and affirmed the Long-Term ICR of
“bbb+” of PartnerRe and its existing Long-Term Issue Credit Ratings
(Long-Term IR). PartnerRe Ltd is domiciled in Hamilton, Bermuda. (See
below for a detailed list of the companies and Credit Ratings (ratings.)

The ratings reflect PartnerRe’s balance sheet strength, which A.M. Best
categories as strongest, as well as its adequate operating performance,
very favorable business profile and marginal enterprise risk management
(ERM).

While PartnerRe’s ERM is categorized currently as marginal, A.M. Best’s
improving view of the group’s ERM function is the primary driver behind
the group’s positive outlook. This is due to, in part, PartnerRe’s
strong non-life underwriting performance during 2017, where the industry
experienced a significant level of catastrophic activity. Despite the
catastrophic activity, PartnerRe was able to produce a small non-life
underwriting profit, while the vast majority of peers had underwriting
losses of varying degrees. 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.

PartnerRe’s balance sheet strength and risk-adjusted capitalization are
considered to be at the strongest level. The group’s quality of capital
is considered in line with peers but has a superior history of favorable
prior year reserve development. Under EXOR N.V. ownership, A.M.
Best believes that PartnerRe’s financial flexibility remains more than
sufficient, as it still has access to the capital markets on a
stand-alone basis, as well as potentially through EXOR N.V., which is a
publicly traded company in Italy.

The group maintains a highly diversified book of reinsurance business
across non-life and life lines of business, as well as a balanced
geographic spread of risk. A.M. Best believes that PartnerRe’s current
focus to build out life and health operations could provide additional
diversification to help navigate challenging market conditions while
enhancing earnings stability over the medium to long term.

PartnerRe’s overall earnings in recent years have been impacted by
several non-operating activities and has seen net investment income
trend lower over the current five-year period. However, PartnerRe’s
overall underwriting results have proven to be consistently stable and
profitable.

Factors that could lead to a rating upgrade are continued consistently
favorable operating profitability and maintaining excellent
risk-adjusted capital levels through various market conditions. Factors
that could lead to a negative outlook or a rating downgrade include
unfavorable operating results, outsized insurance or investment losses,
or a significant decline in risk-adjusted capital to a level that no
longer supports the current ratings.

A.M. Best has revised the outlooks to positive from stable and affirmed
the FSR of A (Excellent) and the Long-Term ICRs of “a+” of the operating
subsidiaries of PartnerRe Ltd.:

The following Long-Term IRs have been affirmed. The outlooks have been
revised to positive from stable:

PartnerRe Ltd—– “bbb-” on $250 million 5.875% preferred
shares, Series F

PartnerRe Finance B LLC—– “bbb+” on $500 million 5.5%
senior unsecured notes, due 2020

PartnerRe Financial II, Inc.—– “bbb-” on $250 million
6.44% junior subordinated capital efficient notes, due 2066

This press release relates to Credit Ratings that have been published
on A.M. Best’s website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and A.M. Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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