A.M. Best Removes From Under Review and Assigns Negative Outlook to Ratings of PartnerRe Ltd. and Its Subsidiaries

A.M. Best Co. has removed from under review with negative implications and assigned a negative outlook to the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of Partner Reinsurance Company Ltd. (Hamilton, Bermuda) and its affiliates. A.M. Best also has removed from under review with negative implications and assigned a negative outlook to the ICR of "a-" and debt ratings ofits parent, PartnerRe Ltd. (PartnerRe) (Hamilton, Bermuda) [NYSE: PRE]. (See below for a detailed listing of the companies and ratings.)

The negative outlook reflects PartnerRe's 2011 financial performance, which was not in line with other Superior-rated companies and below A.M. Best's expectations. While one year's operating performance does not indicate a trend, the accumulation of catastrophe losses experienced by PartnerRe in 2011 has strained average historical profitability measures. A.M. Best believes that PartnerRe has a solid risk management framework that identifies and measures risks to its organization. However, as for the crucial component of managing risk, A.M. Best believes that PartnerRe's mitigation of risk to an outsized market loss during the integration of the acquired PARIS RE portfolio was contemplated, and accepted by the company, but represented a risk appetite that led to greater earnings volatility as compared to prior years and similarly rated peers. PartnerRe has made meaningful changes to its catastrophe risk profile, and going forward the anticipation is that operating results will be consistent with this adjusted profile and not outsized compared to other peer companies.

The ratings reflect the group's strong risk-adjusted capitalization, solid long-term track record and the company's strong business profile as a truly global reinsurance organization. PartnerRe has a talented management team with the resources, access and ability to write multiple lines of business in various geographies around the world. PartnerRe remains capable of delivering strong prospective operating results.

Factors that could result in a downgrading of PartnerRe's ratings include unfavorable operating profitability relative to the market. Additional factors that could place downward pressure on the ratings would be an altered view of PartnerRe's risk management capability or a material decline in its risk-adjusted capital as a result of catastrophe or investment losses.

Factors that could lead to a stable outlook would be evidence of a return of PartnerRe's long-term, strong operating profitability and maintenance of strong risk-adjusted capital levels.

The FSR of A+ (Superior) and ICRs of "aa-" have been removed from under review with negative implications and assigned a negative outlook for Partner Reinsurance Company Ltd. and its following affiliates:

• Partner Reinsurance Company of the U.S.
• PartnerRe Insurance Company of New York
• PartnerRe Ireland Insurance Limited
• Partner Reinsurance Europe Public Limited Company

The FSR of A- (Excellent) and ICRs of "a-" have been removed from under review with negative implications and assigned a negative outlook for the following subsidiariesof PartnerRe Ltd.:

• PARIS RE America Insurance Company
• PARIS RE Asia Pacific Pte. Ltd.

The following debt ratings have been removed from under review with negative implications and assigned a negative outlook:

PartnerRe Ltd.—

--"bbb" on $290 million 6.75% preferred shares, Series C

-- "bbb" on $230 million 6.5% preferred shares, Series D

-- "bbb" on $325 million 7.25% preferred shares, Series E

PartnerRe Finance A LLC—

-- "a-" on $250 million 6.875% senior unsecured notes, due 2018

PartnerRe Finance B LLC—

-- "a-" 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

The following indicative ratings under the shelf registration have been removed from under review with negative implications and assigned a negative outlook:

PartnerRe Ltd.—

-- "a-" on senior debt

-- "bbb+" on subordinated debt

-- "bbb" on preferred stock

PartnerRe Financial II, Inc. (guaranteed by PartnerRe Ltd.)—

-- "a-" on senior debt

-- "bbb+" on subordinated debt

-- "bbb" on preferred stock

PartnerRe Capital Trust II and III (guaranteed by PartnerRe Ltd.)—

-- "bbb+" on trust preferred securities

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding Universal BCAR"; "Catastrophe Analysis in A.M. Best Ratings"; and "Rating Members of Insurance Groups." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts:

A.M. Best Co.
Greg Reisner
Senior Financial Analyst
[phone], ext. 5224
[e-mail]
or
Peter Dickey
Assistant Vice President
[phone], ext. 5053
[e-mail]
or
Rachelle Morrow
Senior Manager, Public Relations
[phone], ext. 5378
[e-mail]
or
Jim Peavy
Assistant Vice President, Public Relations
[phone], ext. 5644
[e-mail]