PartnerRe now has a negative outlook from Fitch Ratings, largely over concerns about potentially expanding coronavirus-related reinsurance claims.

Fitch’s decision comes less than a week after French insurer Covea abandoned its planned $9 billion purchase of the Bermuda-based reinsurer from Exor, citing an inability to conclude the acquisition due to financial uncertainty stemming from the pandemic.

At the same time, Fitch also affirmed and removed PartnerRe from Rating Watch Positive as a result of the abandoned acquisition, including its “A+” (Strong) insurer financial strength rating for PartnerRe.

Why the negative outlook? Fitch cites, in part, the assumption of increased coronavirus-related claims, though it said those claims are “manageable.” Another point of concern: PartnerRe’s 103.8 combined ratio in Q1 2020, up from 97.7 in the 2019 first quarter, due mostly to $69 million in adverse prior year reserve development. Fitch acknowledged PartnerRe’s “modest” $18 million in pretax losses from event cancellation claims due to the coronavirus, but added there are “potentially more sizable losses to be incurred in future quarters.”

As well, Fitch said it was also concerned about PartnerRe’s exposure to “somewhat higher potential mortality losses in its life reinsurance business due to the coronavirus.”

Source: Fitch Ratings