PartnerRe has a "strong competitive position and solid operating profitability", according to Fitch Ratings, which has affirmed the Bermuda reinsurer's financial strength rating at AA.

In a statement released yesterday, Fitch said it expected PartnerRe's management to be able to "maintain its strong and liquid balance sheet during periods of heightened capital market volatility".

The ratings agency said it viewed views the company's three percent reduction in reported GAAP basis common shareholders' equity in 2008 as "a comparatively modest decline", given the year's very difficult capital market conditions and significant catastrophe-related losses. PartnerRe's favourable factors are partially offset by its relatively higher exposure to low-frequency but high-severity events - an exposure highlighted by material hurricane losses in 2008. "Importantly, Fitch views PartnerRe's investment portfolio as high-quality and liquid with 95 percent of the portfolio in cash and fixed income securities," Fitch said.

"The company's portfolio is dominated by agency mortgage-backed securities, government issued debt, and highly rated corporate bonds. At year-end 2008 PartnerRe's fixed income had a weighted average credit rating of AA."

Fitch said that under stress test scenarios, PartnerRe's portfolio and capitalisation remained supportive of its current ratings.

Fitch also affirmed PartnerRe's AA- Issuer Default Rating (IDR), as well as the A+ rating assigned to PartnerRe's senior unsecured notes and A ratings assigned to PartnerRe's cumulative redeemable preferred securities and junior subordinated debt. The rating outlook is stable.