S&P puts RenRe’s ratings on outlook negative post TMR deal

S&P Global Ratings has revised its outlook on Bermuda-based RenaissanceRe Holdings and its operating subsidiaries to negative from stable following its  acquisition of Tokio Marine Holdings' reinsurance platform for $1.5 billion.

The rating agency expressed concerns about the prospective level of capitalization after the transaction closes, as well as the inherent integration risks arising from the announced acquisition.

S&P rates RenRe long-term issuer credit and senior debt rating 'A-' and its long-term counterparty credit and financial strength ratings 'A+'.

S&P said the negative outlook on RenRe reflects a one-in-three likelihood of it lowering the ratings over the next two years.

“We could lower the ratings by one notch if RenRe faces challenges in integrating TMR because of potential cultural concerns, earnings volatility, or difficulty in achieving the appropriate level of redundancy at the 'AAA' level of capitalization,” it said.

“We could also lower the ratings if: The company suffers significant property-catastrophe losses that hurt capital adequacy or its relationships with third-party capital providers, or underperforms its peers; it suffers sustained deterioration in operating performance, including because of any setbacks in its casualty business; or its ERM weakens relative to its risk profile.

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