Management Changes at PartnerRe - Analyst Blog

PartnerRe Ltd. (PRE) has announced key management changes with the appointment of a new Executive Vice President and CFO of PartnerRe, CEO of PartnerRe Capital Markets Group and CEO of PartnerRe Global. Following these changes, the rating agency A.M. Best Co. reiterated PartnerRe’s ratings, keeping the outlook stable.
 
Executive Vice President and CFO of PartnerRe
 
Bill Babcock, currently working as the Group Finance Director of PartnerRe, will assume the conjoint responsibilities of Executive Vice President and CFO of PartnerRe from October 1, 2010. He will succeed Albert Benchimol, who will leave the company on December 31, 2010. Benchimol has served the company as Executive Vice President and CFO since 2000, and took on the additional role of CEO of Capital Markets Group in 2007.
 
CEO of PartnerRe Capital Markets Group
 
Marvin Pestcoe, currently the deputy head of the capital markets group and head of capital assets, has been selected as the CEO of PartnerRe Capital Markets Group effective October 1, 2010. He will replace Albert Benchimol.
 
CEO of PartnerRe Global
 
Emmanuel Clarke, currently the deputy CEO and the head of the Specialty Line in PartnerRe Global will become the CEO of PartnerRe Global from September 1, 2010. He will succeed Costas Miranthis, who is currently the President and the Chief Operating Officer (COO) of PartnerRe, and the CEO of PartnerRe Global as well.
 
All three executives will be accountable to the COO, Costas Miranthis, and become members of PartnerRe’s Group Executive Committee.
 
A.M. Best Ratings
 
Following the changes in the executive management team, A.M. Best has reiterated the issuer credit ratings ICR of “a-" and debt ratings of PartnerRe unchanged. It has also kept the financial strength rating of A+ (Superior) and ICR of “aa-" of PartnerRe Group, subsidiary of PartnerRe and its member companies unchanged.
 
A.M. Best believes that executives’ experience, capability, leadership, decision-making and dedication towards the company will ease out any concerns about the transition. Further, this transition will carry out a proper succession plan, supported by PartnerRe’s strong enterprise risk management framework.
 
In addition, on Tuesday, PartnerRe successfully integrated all of its Paris Re employees related to the acquisition of Paris Re in 2009.
 
The company now expects to record additional pre-tax expenses of approximately $34 million, or $0.43 per share in its second quarter 2010 results. These expenses are related to the voluntary severance plan announced by PartnerRe for the Paris-based employees.
 
Participating employees in the plan will leave the company in the next 18 months, and they are entitled to receive salary and other employment benefits until they do so. These costs will be expensed over the corresponding periods as long as plan participants remain with the company.
 
Our Take
 
We believe that the organizational integration and the new management team will ensure future progress and success. Further, in the long run, the Paris Re acquisition is not only expected to lead to earnings accretion, but the increased capital base is also expected to enable the company to better position itself to achieve its long-term financial goals and generate shareholder value. A strong balance sheet, liquidity and the rating affirmation from A.M. Best suggest long-term stability.

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