Morgan Stanley Sees Strong Reserve Cushion for PartnerRe Ltd.

In a report published Tuesday, Morgan Stanley analyst Kai Pan reiterated an Equal-Weight rating on

. In the report, Morgan Stanley noted, “PRE released its annual 2013 Global Loss Reserve Triangles in September and our actuarial review reveals $1.5b of excess reserves. We estimate an actuarially reasonable range of reserves between $6.0b and $7.8b versus PRE carried reserves of $8.5b.This is up for the second year in a row and the excess is present across all major business segments. Our April 8th reserve report, Little Cushion Remaining, highlighted the significant YoY decline in the P&C industry's excess reserve position but it is clear that PRE has remained consistently conservative and is bucking the industry trend; in fact they have increased their excess reserves both of the last two years (up $107.5m YoY this year,and $37.8m last year). Other companies might be more willing to converge expected loss trend with actual in their pricing model in order to win business but PRE prefers to stay conservative which fuels the potential for future reserve releases should today's benign loss environment persist. We continue to project sizeable ongoing reserve releases in our EPS amounting to $1.7b in 2014-16e.” PartnerRe Ltd. closed on Monday at $111.23.