PartnerRe’s strong earnings performance contributed to Moody’s Investors Service affirming the Baa1 preferred stock rating of PartnerRe Ltd. and the Aa3 insurance financial strength ratings of its principal reinsurance subsidiaries.

Moody’s has also revised the outlook on the company’s ratings to stable from negative.

According to Moody’s, the restoration of the stable outlook is based primarily on PartnerRe’s strong earnings performance and the commensurate replenishment of capital during the first nine months of 2006.

The agency said this has led to a better alignment of the company’s financial and risk-adjusted parameters with key rating expectations, adding PartnerRe’s consolidated earnings and dividend capacity measures relative to interest and preferred dividend expenses are very good.

“The company’s financial leverage has improved and is expected to remain in the mid-20 percent range, consistent with our expectations. The stable outlook also reflects Moody’s comfort with PartnerRe’s risk management practices.”

Moody’s said one of PartnerRe’s distinguishing characteristics to be its focused approach to risk analysis and exposure management, a discipline that is essential to underwriting severity-intensive lines of business.

Key aspects of its underwriting risk management framework which includes setting aggregate limit caps on catastrophe exposures and net written premium caps on casualty based business and applying computer based statistical modelling to the pricing and structuring of its contracts.

Moody’s said the management of its in-force portfolio and capital have contributed to establish PartnerRe as a leading international property-casualty reinsurer.

PartnerRe also distinguishes itself from many of its peers by its sparing purchase of retrocessional protection.

The agency generally views the company’s gross-lines underwriting strategy as being a credit positive, as it suggests that risk tolerances are managed directly, rather than through counterparty transactions and as it provides an incentive for positive — rather than negative — risk selection.

The rating affirmations reflect the group’s sound fundamentals, including its leadership in specialty reinsurance lines, as well as its diversified book by both geography and line of business and its strong presence and franchise in Europe.

Beyond the portfolio diversification benefits, the breadth of its business provides PartnerRe with the ability to identify and adapt to changes rapidly in the marketplace.

At the current rating level, Moody’s expects that the company will continue to maintain basket-adjusted debt (also adjusted for leases) at or below 25 percent of total capitalisation.