Partner Reinsurance Europe has been assigned a financial strength rating of A+ and an issuer credit rating of aa- by AM Best. The outlook for both ratings is stable.

The ratings are based on the company's initial strong risk-adjusted capitalisation, excellent business position, well-diversified portfolio and its prominent role within the Bermudian-based PartnerRe Group, together with the support of Partner Reinsurance (Bermuda) through a quota share retrocession agreement, accordin to AM Best.

The rating also factors excellent pro forma net income in 2006 and 2007.

Partner Reinsurance Europe will be fully operational from January 1 and will underwrite the existing portfolio of PartnerRe SA (France), and the Zurich branch of PartnerRe, with the exception of the Canadian life business, which will be directly managed by Partner Reinsurance Company.

AM Best expects Partner Reinsurance Europe's risk-adjusted capitalisation to reach a strong level in 2008, benefiting from approximately $1.38 billion initial capital and a 50 percent non-capped quota share retrocession treaty with Partner Reinsurance on all business lines except Canada non-life.

The existing stop loss for the Canadian non-life portfolio remains unchanged.

In AM Best's view, PartnerRe S.A. and PartnerRe's Zurich branch achieved excellent underwriting results in 2006 with a pro forma combined ratio of 87.7 percent, benefiting from a very mild windstorm and hurricane season, while the first half of 2007 was very strong with a pro forma combined ratio at 91.5 percent, despite losses from Windstorm Kyrill and the June UK floods.

AM Best expects a similar result for the second half of 2007. Partner Reinsurance Europe's business plan for 2008-2009 is factoring a potential further softening of the specialty and property markets.

AM Best expects the life segment to deliver a fair and sustainable technical result.

In AM Best's view, the setting up of Partner Reinsurance Europe will enhance the business profile in the European market.

The company will operate in all EU member states under a single regulatory framework, and other benefits will be to both simplify the capital structure and better manage the use and capital allocation within the PartnerRe group.

Partner Reinsurance Europe will have branches in Zurich, Paris, Toronto, and an operational office in Dublin.

The company will benefit from a highly diversified portfolio, with a strong emphasis on specialties (42 percent), the remaining being split between property (23 percent), life (24 percent), motor (six percent) and casualty (five percent). In the life business, the company is mainly focused on mortality protection (80 percent of the premium) with a smaller share in annuity business.

Partner Reinsurance Europe is expecting to write approximately 60 percent of PartnerRe Group's gross premiums written, amounting to $2.3 billion of GPW in 2008, remaining stable compared to the 2007 pro forma.