A.M. Best Co. has affirmed the financial strength rating of A+ ("superior") of Bermuda-based PartnerRe Group Ltd.

Best said the rating reflected PartnerRe's excellent business profile, strong risk-adjusted capitalisation and very strong risk management practices.

In a statement released yesterday, Best said PartnerRe had consistently compared favourably to its peer group of global reinsurance companies and said the outlook for its rating was stable.

"In 2006, with the absence of significant catastrophe losses, PartnerRe generated record earnings and reported net income of approximately $750 million," Best's statement said.

"Driving this performance was very strong underwriting, as non-life business generated a combined ratio of 84.6 percent. This is in contrast to 2005, where approximately $925 million of pretax catastrophe losses led to PartnerRe reporting a modest net loss."

Offsetting the strong ratings, Best noted, was that PartnerRe's had a moderately above average risk profile, global reinsurance industry market conditions were softening and Partner Re Ltd had relatively high financial leverage.

"A.M. Best believes that PartnerRe's long standing strategy of cycle management through diversification should allow it to successfully manage through the current underwriting cycle, albeit at potentially reduced margins given rate softening and increased global capacity," added the statement.

"Moreover, A.M. Best will monitor the growth in the company's life and alternative risk transfer products as these products differ from PartnerRe's traditional property/casualty reinsurance operations.

"A.M. Best expects that PartnerRe will maintain or improve its financial leverage while maintaining a fixed charge coverage in the mid to upper single digit range."