Fitch Ratings has singled out Bermuda reinsurer Partner Re as the outlier in company profile strength among a peer group of top reinsurers.

In its latest peer review of large global reinsurers, the agency said: “Fitch considers all peers, but PartnerRe, to be in the top tier of global reinsurers by company profile and among the largest by premium volumes.

“A high degree of diversification underpins our assessment of their ‘very strong’ company profiles. We view PartnerRe’s strong company profile as ’moderate’ compared with its global reinsurance peers, driven by a moderate operating scale and business risk profile.”

The PartnerRe comparison, which involved Hannover Re, Lloyd’s, Munich Re, Scor and Swiss Re, was part of a report by Fitch Ratings senior director Brian Schneider and director Robert Mazzuoli.

Fitch expects all reinsurance peers will continue to reserve with prudence and discipline, two factors that underpin its high reserving standards. All peers set aside additional reserves in 2022 to counter mounting risks from higher inflation.

In addition to prudent reserving standards, Fitch also observed strong to very strong capitalisation, moderate leverage, through the period of elevated large losses and improved earnings.

The report said: “We assess the financial leverage ratios of the peer group as low to moderate, ranging from 16 per cent to 33 per cent at end-2022 (“aa” to “bbb” categories).

“This was almost unchanged from end-2021, as reinsurers increasingly financed growth in a hardening market environment through retained earnings.”

Fitch noted that most global reinsurance peers had large losses in 2022 caused by natural catastrophes and aggravated by the high-inflation environment. However, excess mortality claims linked to the Covid-19 pandemic declined substantially.

The review observed: “Reinsurers generally reported a strong rise in net income return on equity of 18 percentage points to 21 per cent on average (for the first nine months of 2023). Property and casualty reinsurance benefited from lower natural catastrophe claims, better pricing and strong revenue growth.

“Life and health reinsurance showed a better operating margin on average, mainly due to lower Covid-19-related mortality claims.

“Investment income also improved significantly. In 2022, markdowns on investments, high inflation and elevated levels of large losses led to a significant decline in profits in 2022.

“The average return on equity fell to 1.2 per cent from 8.5 per cent a year ago.”