Ratings Recap: PartnerRe (notes), Mariah Re (notes), Montana Re (notes)

A.M. Best Co. has assigned a debt rating of “bbb” to the $325 million 7.25 percent Series E cumulative preferred shares of Bermuda-base PartnerRe, Ltd. ,with a stable outlook. The proceeds from the issuance will be used by PartnerRe for general corporate purposes. “The company’s debt-to-adjusted capital ratio and rolling three-year fixed charge coverage remain comfortably within the range that is commensurate with the assigned rating,” said Best.

Standard & Poor’s Ratings Services has placed its ‘B (sf)’ rating on Mariah Re Ltd.’s Series 2010-1 notes on CreditWatch with negative implications. S&P explained that in May, 10, 2011, “we indicated that the tornados that occurred in the covered area through the end of April could affect the rating on the notes. Estimated losses from Catastrophe Series Numbers 44, 45, and 46 brought the estimate of total covered losses through the end of April up to approximately $177 million. On a modeled basis, using the attachment level of $825 million, it is expected that covered events totaling $157 million have occurred through the end of April, so the estimate of total losses was approximately $20 million higher than expected. The losses related to these three events were not reported until the end of May, at which time modeled losses were expected to equal $302 million, so the estimate of covered losses was below that of expected modeled losses.” S&P said the “the CreditWatch placement is related to the Catastrophe Series Number 48, the tornado that affected Joplin, Mo., and other covered areas. Although we do not have an estimate of total losses from this event, it would not be unexpected for covered losses to equal the note event limit of $300 million. In addition S&P indicated that “if Catastrophe Series Number 48 were a full event limit loss, we could lower the rating by one to three notches. However, depending on when the loss amount from this event is reported, the total amount of covered losses, if the previous estimates on any of the existing covered events increase, and if there are any additional events, the rating outcome could be different. If there are no additional events over the next two months and loss estimates on existing covered events do not increase, we would expect to affirm the rating on the notes and remove it from CreditWatch. As we receive updated information, we will take the appropriate rating action. The initial annual risk period for the notes ends Dec. 31, 2011. If covered losses do not exceed the attachment point by that date (to the extent there aren’t any covered events for which a covered loss amount needs to be determined), the annual aggregate loss amount will go to zero, and the notes will be reset to a probability of attachment not greater than 2.57 percent.

Standard & Poor’s Ratings Services said today that it lowered its rating on Montana Re Ltd.’s Series 2010-1 Class E notes to ‘CCC(sf)’ from ‘B-(sf)’ and removed the rating from CreditWatch, where it had been placed on March 28, 2011, with negative implications. S&P explained: “We put the rating on CreditWatch when the issuer submitted an activation notice to Risk Management Solutions (RMS) related to the March 11, 2011, Tohoku earthquake. RMS, as calculation agent, has determined that the earthquake was a covered event. As a result, the note holders are now at risk for any subsequent covered events until the initial Class E annual risk period ends on Dec. 31, 2011. If there aren’t any further covered events during this time, the notes will revert back to providing coverage from second and subsequent events on an annual aggregate basis. In addition, at that time, the probability of attachment will be reset to be no greater than 6.06 percent, and we will likely raise the rating back to ‘B-(sf)’.”