PartnerRe Ltd. Reports Fourth Quarter and Full Year 2021 Results
▪Net income available to common shareholder of $362 million for the fourth quarter and $679 million for the year drove the full year return on equity to common shareholder to 9.7%, a significant improvement from 3.1% in 2020
▪Non-life underwriting profit of $313 million (combined ratio of 77.5%) for the fourth quarter and $507 million (combined ratio of 90.5%) for the full year
▪Life and Health allocated underwriting profit of $32 million for the fourth quarter and $97 million for the full year
▪Gross written premium increased 7% for the quarter and 19% for the year, and net premiums written were up 5% for the fourth quarter and 13% for the year
▪Cash flows from operating activities of $373 million for the quarter and $1.2 billion for the year were up 8.5% and 9.6% compared to the same periods of 2020
▪On December 16, 2021, EXOR Nederland N.V. and Covéa Coopérations S.A. (Covéa) announced they have signed a definitive agreement for the sale of PartnerRe to Covéa, subject to required approvals, with an expected completion in mid-2022
PEMBROKE, Bermuda, March 2, 2022 - PartnerRe Ltd. ("the Company") today reported net income available to common shareholder of $362 million for the fourth quarter of 2021, compared to income of $204 million for the same period of 2020. Net income available to common shareholder was $679 million for the full year 2021, compared to income of $206 million for the same period of 2020.
Operating income1 was $300 million for the fourth quarter of 2021, compared to operating income of $19 million for the same period of 2020. Operating income for the full year 2021 was $545 million compared to an operating loss of $190 million for the same period of 2020. Operating income for the fourth quarter and the full year 2021 improved over the same periods of 2020 as a result of improvements in the underwriting results for both non-life segments.
1 Operating income (loss) is a non-GAAP financial measure. See "Non-GAAP Financial Measures - Regulation G" for a reconciliation of non-GAAP measures.
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PartnerRe Ltd. Wellesley House, 5th Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com
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PartnerRe President and Chief Executive Officer Jacques Bonneau commented, “In an active year of catastrophic losses for the industry we were able to achieve strong performance in 2021. We grew gross written premiums by 19%, driven by meaningful rate increases in lines like casualty and professional lines and we also benefited from improved economic activity in other lines of business. Our non-life combined ratio improved by 15.5 points to 90.5% driven by our continuous focus on portfolio optimization.
We built on the momentum we've established with a successful January 1, 2022 renewal, providing solutions to our business partners while maintaining the strength and stability of our platform. Our approach remains disciplined, supported by third party capital, and we will grow exposures in lines where it is supported by rate. We look forward to the year ahead and to further increasing the value that we provide to all of our clients, capital partners and shareholders."
Highlights for the fourth quarter and full year 2021 compared to the same periods of 2020 are included below.
Non-Life:
▪Non-life net premiums written were up 3% for the fourth quarter of 2021 and were up 14% for the full year 2021 compared to the same periods of 2020, driven by the P&C segment, which increased by 6% and 22%, respectively. The current year included favorable premium adjustments from prior underwriting years, compared to the prior year which included adverse premium adjustments related to the economic downturn.
▪The Non-life underwriting profit was $313 million (combined ratio of 77.5%) for the fourth quarter of 2021 and $507 million (combined ratio of 90.5%) for the full year 2021. This compares to Non-life underwriting profit of $21 million (combined ratio of 98.6%) and a loss of $304 million (combined ratio of 106.0%) for the fourth quarter and full year 2020, respectively.
▪Large catastrophic losses, net of retrocession and reinstatement premiums, were $66 million for the fourth quarter of 2021 related to the refinement of estimates on Hurricane Ida, Winter Storm Uri, the European Floods and related losses under aggregated covers. This adversely impacted the P&C and Specialty combined ratios by 5.4 points and 3.5 points, respectively. This compared to large catastrophic losses of 1.1 points and 4.9 points on the P&C and Specialty combined ratios, respectively, for the same quarter of 2020 from COVID-19 and Hurricane Laura. Large catastrophic losses were $483 million for the full year 2021 and included losses for Hurricane Ida, Winter Storm Uri, the European Floods, and related losses under aggregate covers, which adversely impacted the P&C and Specialty combined ratios by 12.1 points and 3.3 points, respectively. This compared to large catastrophic losses of 6.5 points and 11.6 points on the P&C and Specialty combined ratios, respectively, for the full year 2020 from COVID-19 and Hurricane Laura. There were no changes in the Company's net non-life COVID-19 ultimate loss estimates that were established in 2020.
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PartnerRe Ltd. Wellesley House, 5th Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com
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▪The P&C segment reported a combined ratio of 80.0% and 94.3% for the fourth quarter and full year 2021, respectively, compared to 97.6% and 102.2% for the fourth quarter and full year 2020, respectively. While large catastrophic losses increased across comparative periods, this was offset by an aggregation of mid-size loss events during 2020. Excluding large catastrophic losses, the combined ratio improved across both comparative periods as the current accident year attritional loss ratio benefited as a result of portfolio reshaping in prior periods and rate increases. For the fourth quarter of 2021, the combined ratio also improved from favorable prior years' reserve development of 12.6 points primarily on prior year large catastrophic losses compared to 1.9 points for the same period of 2020.
▪During the second quarter of 2021, the Company entered into a loss portfolio transfer and adverse development cover agreement related to certain prior underwriting years on the Company's U.S. casualty and auto business within the P&C segment. As a result of adverse prior years' reserve development ceded under this agreement during the second half of 2021, a deferred gain of $20 million is recorded in Accounts payable, accrued expense and other in the Consolidated Balance Sheet as at December 31, 2021.
▪The Specialty segment reported a combined ratio of 72.5% and 83.1% for the fourth quarter and full year 2021, respectively, compared to 100.2% and 112.2% for the fourth quarter and full year 2020, respectively. In addition to the decrease in large catastrophic losses, the improvement in the combined ratio across both comparative periods was driven by improvements in the current accident year attritional loss ratio resulting from strategic reductions in less profitable lines and favorable prior years' reserve development, which was 17.1 points and 6.9 points favorable for the fourth quarter and full year 2021, respectively, primarily driven by financial risks and aviation lines. This compared to adverse prior years' reserve development of 2.8 points and 7.2 points, respectively, for the same periods of 2020.
Life and Health:
▪Net premiums written were up 11% for the fourth quarter and up 10% for the full year 2021, compared to the same periods of 2020, reflecting growth in long-term life business, partially offset by reductions in the short-term business.
▪Allocated underwriting result was a profit of $32 million in the fourth quarter of 2021, compared to a profit of $22 million in the fourth quarter of 2020. The quarterly result for 2021 included $4 million of COVID-19 related losses, compared to $11m for the fourth quarter of 2020. Excluding COVID-19, the increase for the quarter was driven primarily by improvements in the short-term protection and longevity business due to positive experience reported during the quarter, partially offset by a decrease in the guaranteed minimum death benefits line of business for less favorable equity market activity in 2021 compared to 2020.
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PartnerRe Ltd. Wellesley House, 5th Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com
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▪Allocated underwriting result was a profit of $97 million for the full year 2021, compared to a profit $70 million for 2020. Losses on protection products due to COVID-19 increased by $10 million, with $36 million for the full year 2021 compared to $26 million for the full year 2020. Excluding COVID-19, the increase in allocated underwriting result was driven by improvement in the short-term protection business, which was partially offset by a lower level of gains related to recaptures of business compared to the full year 2020.
Investments:
▪Net investment return in the fourth quarter of 2021 was $156 million, or 0.8%, and included net investment income of $93 million, net realized and unrealized investment losses of $6 million, and interest in earnings of equity method investments of $69 million. This compares to a net investment return of $372 million, or 1.9%, for the fourth quarter of 2020, which included net investment income of $85 million and net realized and unrealized investment gains of $269 million, and interest in earnings of equity method investments of $18 million.
▪Net investment return for the full year 2021 was $541 million, or 2.7%, which included net investment income of $376 million, net realized and unrealized investment gains of $38 million, and interest in earnings of equity method investments of $127 million. This compares to a net investment return of $839 million, or 4.6%, for 2020, which included net investment income of $361 million, net realized and unrealized investment gains of $454 million, and interest in earnings of equity method investments of $24 million.
▪Net investment income increased $8 million, or 9.3%, for the fourth quarter of 2021 and $15 million, or 4.4%, for the full year 2021, compared to the same periods of 2020, primarily due to the impact of re-allocations to investment grade corporate bonds, and higher reinvestment rates driven by increases in worldwide risk-free rates in 2021.
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PartnerRe Ltd. Wellesley House, 5th Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com
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▪Net realized and unrealized investment losses of $6 million for the fourth quarter of 2021 (2020: $269 million gain) included:
◦Net realized and unrealized investment losses of $186 million (2020: $20 million gain) on fixed maturities and short-term investments, which were primarily unrealized and driven by increases in U.S. and Canadian risk-free rates and losses on real estate sector investments in the Company's Asia high yield portfolio.
◦Net realized and unrealized investment gains on equities of $22 million (2020: $158 million gain). Gains on equities were driven by a realized gain on the sale of a preferred share investment.
◦Net realized and unrealized investment gains of $158 million (2020: $91 million gain) on other invested assets and investments in real estate, which resulted from unrealized investment gains on private equity funds.
▪Net realized and unrealized investment gains of $38 million for the full year 2021 (2020: $454 million gain) included:
◦Net realized and unrealized investment losses of $539 million (2020: $245 million gain) on fixed maturities and short-term investments, which were primarily unrealized and driven by increases in worldwide risk free rates and losses on real estate sector investments in the Company's Asia high yield portfolio, partially offset by narrowing credit spreads.
◦Net realized and unrealized investment gains on equities of $277 million (2020: $189 million), which were also primarily unrealized, resulted from increases in worldwide equity markets and also included a large realized gain on the sale of a preferred share investment in the fourth quarter of 2021.
◦Net realized and unrealized gains on other invested assets and investments in real estate of $300 million (2020: $20 million). Gains on other invested assets were primarily driven by unrealized gains on private equity investments.
▪Interest in earnings of equity method investments of $69 million in the fourth quarter of 2021 primarily reflects the appreciation in value of certain real estate investments held by an investee, Almacantar Group S.A. (Almacantar). Interest in earnings of equity method investments of $127 million for full year of 2021 primarily reflects the unrealized Almacantar gain recorded in the fourth quarter and realized and unrealized gains on private equity funds and New York real estate funds.
▪As of December 31, 2021, reinvestment rates were 2.7% compared to the Company's fixed income investment portfolio yield of 2.3% for the fourth quarter of 2021.
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PartnerRe Ltd. Wellesley House, 5th Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com
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Other Income Statement Items:
▪Other expense ratio was 6.6% for the fourth quarter of 2021 and 5.7% for the full year 2021. This compared to an other expense ratio of 4.9% and 5.4% for the same periods of 2020. The increase across both comparative periods was driven primarily by increased personnel expenses, including higher annual incentive and long term incentives due to the higher growth in book value reported by the Company in 2021.
▪Net foreign exchange losses were $19 million for the fourth quarter of 2021, driven by the appreciation of the U.S. dollar against the Euro, partially offset by the depreciation against the Canadian Dollar and the Swiss Franc. Net foreign exchange losses were $103 million for the fourth quarter of 2020, driven by the depreciation of the U.S. dollar against almost all major currencies. Net foreign exchange losses were $31 million for the full year 2021 and driven by the appreciation of the U.S. dollar against certain major currencies (primary the Euro, British Pound and Swiss Franc), while net foreign exchange losses were $52 million for the full year 2020 were driven by the depreciation of the U.S. dollar against the same currencies.
▪Interest expense was $14 million and $56 million for the fourth quarter and full year 2021, respectively, compared to $14 million and $39 million for the same periods of 2020. The increase for the full year 2021 was driven by the issuance of $500 million 4.50% Fixed-Rate Reset Junior Subordinated Notes due 2050 during the third quarter of 2020.
▪Preferred dividends of $2 million and $23 million for the fourth quarter and full year 2021, respectively, compared to $11 million and $46 million for the same periods of 2020. In May 2021, the Company fully redeemed its Series G, H and I preferred shares for a liquidation value of $637 million. The Company also incurred a loss on redemption of $21 million, related to the preferred share issuance costs that were included in Additional paid-in-capital at issuance, and upon redemption were expensed, with no net impact to Common shareholder's equity. Following the redemption, only Series J preferred shares remain.
▪Income tax expense was $17 million on pre-tax income of $381 million in the fourth quarter of 2021 compared to an expense of $10 million on pre-tax income of $228 million for the same period of 2020. Income tax expense was $38 million on pre-tax income of $762 million for the full year 2021 compared to a benefit of $13 million on pre-tax income of $241 million in 2020. These amounts were primarily driven by the geographical distribution of pre-tax profits and losses.
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PartnerRe Ltd. Wellesley House, 5th Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com
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Balance Sheet, Capitalization and Cash Flows:
▪Total investments and cash and cash equivalents were $20.4 billion at December 31, 2021, up 1.4% compared to December 31, 2020. The increase to December 31, 2021 was primarily driven by cash provided by operating activities of $1,233 million, partially offset by cash used for the net redemptions of preferred shares with a liquidation value of $437 million, common and preferred dividends paid of $130 million and net decreases in payables for securities purchased.
▪Cash and cash equivalents, fixed maturities, and short-term investments, which are government issued or investment grade fixed income securities, were $14.5 billion at December 31, 2021, representing 71% of the total investments and cash and cash equivalents.
▪The average credit rating of the fixed income portfolio was AA- as of December 31, 2021. The expected average duration of the public fixed income portfolio at December 31, 2021 was 4.0 years, while the average duration of the Company’s liabilities was 4.3 years.
▪There were no dividends declared and paid to common shareholders during the fourth quarter of 2021 or the fourth quarter of 2020. Dividends declared and paid to common shareholders were $107 million for the full year 2021, compared to $50 million for the full year 2020.
▪Common shareholder's equity (or book value) of $7.3 billion and tangible book value of $6.8 billion at December 31, 2021 increased by 9.8% and 10.8%, respectively, compared to December 31, 2020, primarily due to the comprehensive income for the full year 2021, partially offset by dividends on common and preferred shares. Book value, excluding dividends on common shares for 2021, was up 11.4% compared to December 31, 2020.
▪Total capital was $9.4 billion at December 31, 2021, up 1.6% compared to December 31, 2020, primarily due to the increase in book value described above and the issuance of the Series J Preferred Shares, partially offset by the redemption of Series G, H and I preferred shares and a decrease in the U.S dollar value of the Company's Euro denominated debt, as the U.S dollar strengthened against the Euro during the year.
▪Cash provided by operating activities was $373 million and $1,233 million for the fourth quarter and full year 2021, respectively, compared to $344 million and $1,125 million for the fourth quarter and full year 2020, respectively. The increases for the fourth quarter and full year 2021 over the same periods of 2020 were primarily driven by cash flows from underwriting operations, which benefited from increased premium volume and an improved technical result across both comparative periods, and were net of the premium paid for the loss portfolio transfer and adverse development cover entered into during the second quarter of 2021. This resulted in an increase in Reinsurance recoverable on paid and unpaid losses of $357 million as at December 31, 2021 and a cash transfer for the premium at inception of the agreement.
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PartnerRe Ltd. Wellesley House, 5th Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com
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PartnerRe Ltd. is a leading global reinsurer that helps insurance companies reduce their earnings volatility, strengthen their capital and grow their businesses through reinsurance solutions. Risks are underwritten on a worldwide basis through the Company’s three segments: P&C, Specialty, and Life and Health. For the year ended December 31, 2021, total revenues were $7.4 billion. At December 31, 2021, total assets were $28.0 billion, total capital was $9.4 billion and total shareholders’ equity was $7.5 billion. PartnerRe maintains strong financial strength ratings as follows: A.M. Best A+ / Moody’s A1 / Standard & Poor’s A+.
On December 16, 2021, EXOR Nederland N.V. (Exor) and Covéa Coopérations S.A. (Covéa) announced they entered into a Definitive Agreement for Covéa to acquire the Company (the Covéa Acquisition). The Covéa Acquisition is subject to customary closing conditions, including antitrust, regulatory and other approvals.
PartnerRe on the Internet: www.partnerre.com
Please refer to the "Financial Information - Annual Reports" section of the Company's website for a copy of the Company's Annual Report on Form 20-F at: www.partnerre.com/financial-information/annual-reports/
Forward-looking statements contained in this press release, such as those related to company performance, including the impact of the ongoing COVID-19 pandemic (including the related impact on the U.S. and global economies), are based on the Company’s assumptions and expectations concerning future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. PartnerRe’s forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments such as exposure to catastrophe, pandemic or other large property and casualty losses, credit, interest, currency and other risks associated with the Company’s investment portfolio, adequacy of reserves, levels and pricing of new and renewal business achieved, changes in accounting policies, risks associated with implementing business strategies, and other factors identified in the Company’s reports filed or furnished with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking information contained herein, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company disclaims any obligation to publicly update or revise any forward-looking information or statements.
The Company’s estimate for recent catastrophic and pandemic losses is based on a preliminary analysis of the Company’s exposures, the current assumption of total insured industry losses and preliminary information received from certain cedants to date. There is material uncertainty associated with the Company's loss estimates given the nature, magnitude and recency of these loss events and the limited claims information received to date. The ultimate loss therefore may differ materially from the current preliminary estimate.
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| Contacts: | | PartnerRe Ltd. |
| | (441) 292-0888 |
| | Investor Contact: Ryan Lipschutz |
| | Media Contact: Celia Powell |
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PartnerRe Ltd. Wellesley House, 5th Floor 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com
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PartnerRe Ltd.
Consolidated Statements of Operations and Comprehensive Income (1)
(Expressed in thousands of U.S. dollars)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended | | For the year ended |
| December 31, 2021 | | December 31, 2020 | | December 31, 2021 | | December 31, 2020 |
| Revenues | | | | | | | |
| Gross premiums written | $ | 1,798,956 | | | $ | 1,674,930 | | | $ | 8,203,925 | | | $ | 6,875,925 | |
| Net premiums written | $ | 1,679,453 | | | $ | 1,597,521 | | | $ | 7,134,018 | | | $ | 6,300,858 | |
| Decrease (increase) in unearned premiums | 139,865 | | | 183,858 | | | (177,496) | | | 235,968 | |
| Net premiums earned | 1,819,318 | | | 1,781,379 | | | 6,956,522 | | | 6,536,826 | |
| Net investment income | 92,987 | | | 85,046 | | | 376,469 | | | 360,668 | |
| Net realized and unrealized investment (losses) gains | (5,599) | | | 269,007 | | | 37,797 | | | 454,319 | |
| Other income | 8,957 | | | 4,713 | | | 28,748 | | | 13,491 | |
| Total revenues | 1,915,663 | | | 2,140,145 | | | 7,399,536 | | | 7,365,304 | |
| Expenses | | | | | | | |
| Losses and loss expenses | 1,038,017 | | | 1,350,366 | | | 4,883,984 | | | 5,334,900 | |
| Acquisition costs | 411,086 | | | 373,358 | | | 1,386,832 | | | 1,356,118 | |
Other expenses | 120,385 | | | 87,299 | | | 398,542 | | | 355,647 | |
| Interest expense | 13,684 | | | 13,929 | | | 55,606 | | | 39,200 | |
| | | | | | | |
| Amortization of intangible assets | 2,200 | | | 2,519 | | | 8,861 | | | 9,988 | |
| Net foreign exchange losses | 18,573 | | | 103,260 | | | 30,883 | | | 51,964 | |
| Total expenses | 1,603,945 | | | 1,930,731 | | | 6,764,708 | | | 7,147,817 | |
| Income before taxes and interest in earnings of equity method investments | 311,718 | | | 209,414 | | | 634,828 | | | 217,487 | |
| Income tax (expense) benefit | (16,542) | | | (10,179) | | | (38,219) | | | 13,091 | |
| Interest in earnings of equity method investments | 69,329 | | | 18,190 | | | 126,795 | | | 23,611 | |
| Net income | 364,505 | | | 217,425 | | | 723,404 | | | 254,189 | |
| | | | | | | |
| | | | | | | |
| Preferred dividends | 2,438 | | | 11,178 | | | 22,693 | | | 45,990 | |
| Loss on redemption of preferred shares | — | | | 2,341 | | | 21,234 | | | 2,341 | |
| Net income available to common shareholder | $ | 362,067 | | | $ | 203,906 | | | $ | 679,477 | | | $ | 205,858 | |
| Comprehensive income | | | | | | | |
| Net income | $ | 364,505 | | | $ | 217,425 | | | $ | 723,404 | | | $ | 254,189 | |
| Change in currency translation adjustment | 9,348 | | | 65,155 | | | 43,120 | | | (5,884) | |
| Change in net unrealized gains or losses on investments, net of tax | — | | | 265 | | | (128) | | | 187 | |
| Change in unfunded pension obligation, net of tax | 21,830 | | | (13,595) | | | 23,307 | | | (14,383) | |
| Comprehensive income | $ | 395,683 | | | $ | 269,250 | | | $ | 789,703 | | | $ | 234,109 | |
(1) The Company's common shares included in shareholders' equity are owned by EXOR Nederland N.V. and are not publicly traded. As such, per share data is not meaningful to present.
PartnerRe Ltd.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars, except parenthetical share data)
(Unaudited)
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
| Assets | | | |
| Investments: | | | |
| Fixed maturities, at fair value | $ | 14,071,274 | | | $ | 12,786,380 | |
| Short-term investments, at fair value | 205,146 | | | 416,350 | |
| Equities, at fair value | 1,751,584 | | | 1,496,441 | |
| Investments in real estate | 67,539 | | | 67,980 | |
| Other invested assets | 3,601,245 | | | 2,967,738 | |
| Total investments | 19,696,788 | | | 17,734,889 | |
| Cash and cash equivalents | 660,897 | | | 2,350,833 | |
| Accrued investment income | 94,997 | | | 92,058 | |
| Reinsurance balances receivable | 3,063,153 | | | 3,118,870 | |
| Reinsurance recoverable on paid and unpaid losses | 1,787,493 | | | 901,063 | |
| Prepaid reinsurance premiums | 216,338 | | | 115,986 | |
| Funds held by reinsured companies | 561,576 | | | 704,768 | |
| Deferred acquisition costs | 920,779 | | | 819,971 | |
| Deposit assets | 109,528 | | | 139,818 | |
| Net tax assets | 154,472 | | | 182,077 | |
| Goodwill | 456,380 | | | 456,380 | |
| Intangible assets | 98,818 | | | 107,669 | |
| Other assets | 208,652 | | | 174,193 | |
| Total assets | $ | 28,029,871 | | | $ | 26,898,575 | |
| Liabilities | | | |
| Non-life reserves | $ | 12,047,792 | | | $ | 11,395,321 | |
| Life and health reserves | 2,638,086 | | | 2,704,229 | |
| Unearned premiums | 2,501,161 | | | 2,265,214 | |
| Other reinsurance balances payable | 744,735 | | | 482,468 | |
| Debt | 1,897,499 | | | 1,974,731 | |
| Deposit liabilities | 5,077 | | | 5,925 | |
| Net tax liabilities | 90,974 | | | 131,621 | |
Accounts payable, accrued expenses and other (1) | 560,561 | | | 612,069 | |
| Total liabilities | 20,485,885 | | | 19,571,578 | |
| Shareholders’ Equity | | | |
Common shares (par value $0.00000001; issued and outstanding: 100,000,000 shares) | — | | | — | |
| Preferred shares (par value $1.00; issued and outstanding: 2021, 8,000,000 shares; 2020, 25,489,636 shares; aggregate liquidation value: 2021, $200,000; 2020, $637,241) | 8,000 | | | 25,490 | |
| Additional paid-in capital | 1,929,934 | | | 2,334,564 | |
| Accumulated other comprehensive loss | (29,706) | | | (96,005) | |
| Retained earnings | 5,635,758 | | | 5,062,948 | |
| | | |
| | | |
| | | |
| Total shareholders’ equity | 7,543,986 | | | 7,326,997 | |
| Total liabilities and shareholders’ equity | $ | 28,029,871 | | | $ | 26,898,575 | |
(1) Includes payables for securities purchased of $202 million as at December 31, 2021 compared to $286 million as at December 31, 2020.
PartnerRe Ltd.
Condensed Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the three months ended | | For the year ended |
| | | December 31, 2021 | | December 31, 2020 | | December 31, 2021 | | December 31, 2020 |
| Net cash provided by operating activities | | $ | 372,946 | | | $ | 343,831 | | | $ | 1,232,590 | | | $ | 1,124,893 | |
| Net cash (used in) provided by investing activities | | (359,802) | | | 274,092 | | | (2,329,122) | | | (632,748) | |
| Net cash (used in) provided by financing activities | | (2,438) | | | (76,823) | | | (573,295) | | | 328,362 | |
| Effect of foreign exchange rate changes on cash | | (3,805) | | | 32,151 | | | (20,109) | | | 45,863 | |
| Increase (decrease) in cash and cash equivalents | | 6,901 | | | 573,251 | | | (1,689,936) | | | 866,370 | |
| Cash and cash equivalents - beginning of period | | 653,996 | | | 1,777,582 | | | 2,350,833 | | | 1,484,463 | |
| Cash and cash equivalents - end of period | | $ | 660,897 | | | $ | 2,350,833 | | | $ | 660,897 | | | $ | 2,350,833 | |
PartnerRe Ltd.
Segment Information
(Expressed in millions of U.S. dollars, except percentages)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended December 31, 2021 |
| | | P&C segment | | Specialty segment | | Total
Non-life | | Life and Health
segment | | Corporate
and Other | | Total |
| Gross premiums written | | $ | 846 | | | $ | 520 | | | $ | 1,366 | | | $ | 433 | | | $ | — | | | $ | 1,799 | |
| Net premiums written | | $ | 773 | | | $ | 481 | | | $ | 1,254 | | | $ | 425 | | | $ | — | | | $ | 1,679 | |
| Decrease (increase) in unearned premiums | | 150 | | | (14) | | | 136 | | | 4 | | | — | | | 140 | |
| Net premiums earned | | $ | 923 | | | $ | 467 | | | $ | 1,390 | | | $ | 429 | | | $ | — | | | $ | 1,819 | |
| Losses and loss expenses | | (475) | | | (177) | | | (652) | | | (386) | | | — | | | (1,038) | |
| Acquisition costs | | (243) | | | (152) | | | (395) | | | (16) | | | — | | | (411) | |
| Technical result | | $ | 205 | | | $ | 138 | | | $ | 343 | | | $ | 27 | | | $ | — | | | $ | 370 | |
| Other income | | — | | | — | | | — | | | 7 | | | 2 | | | 9 | |
| Other expenses | | (20) | | | (10) | | | (30) | | | (23) | | | (67) | | | (120) | |
| Underwriting result | | $ | 185 | | | $ | 128 | | | $ | 313 | | | $ | 11 | | | n/a | | $ | 259 | |
| Net investment income | | | | | | | | 21 | | | 72 | | | 93 | |
| Allocated underwriting result | | | | | | | | $ | 32 | | | n/a | | n/a |
| Net realized and unrealized investment losses | | | | | | | | | | (6) | | | (6) | |
| Interest expense | | | | | | | | | | (14) | | | (14) | |
| | | | | | | | | | | | |
| Amortization of intangible assets | | | | | | | | | | (2) | | | (2) | |
| Net foreign exchange losses | | | | | | | | | | (18) | | | (18) | |
| Income tax expense | | | | | | | | | | (16) | | | (16) | |
| Interest in earnings of equity method investments | | | | | | | | | | 69 | | | 69 | |
| Net income | | | | | | | | | | n/a | | $ | 365 | |
Loss ratio (1) | | 51.5 | % | | 37.9 | % | | 46.9 | % | | | | | | |
Acquisition ratio (2) | | 26.3 | | | 32.5 | | | 28.4 | | | | | | | |
Technical ratio (3) | | 77.8 | % | | 70.4 | % | | 75.3 | % | | | | | | |
Other expense ratio (4) | | 2.2 | | | 2.1 | | | 2.2 | | | | | | | |
Combined ratio (5) | | 80.0 | % | | 72.5 | % | | 77.5 | % | | | | | | |
| | | | | | | | | | | | |
| | For the three months ended December 31, 2020 |
| | | P&C segment | | Specialty segment | | Total
Non-life | | Life and Health
segment | | Corporate
and Other | | Total |
| Gross premiums written | | $ | 774 | | | $ | 514 | | | $ | 1,288 | | | $ | 387 | | | $ | — | | | $ | 1,675 | |
| Net premiums written | | $ | 727 | | | $ | 489 | | | $ | 1,216 | | | $ | 382 | | | $ | — | | | $ | 1,598 | |
| Decrease in unearned premiums | | 175 | | | 4 | | | 179 | | | 4 | | | — | | | 183 | |
| Net premiums earned | | $ | 902 | | | $ | 493 | | | $ | 1,395 | | | $ | 386 | | | $ | — | | | $ | 1,781 | |
| Losses and loss expenses | | (633) | | | (378) | | | (1,011) | | | (339) | | | — | | | (1,350) | |
| Acquisition costs | | (235) | | | (109) | | | (344) | | | (29) | | | — | | | (373) | |
| Technical result | | $ | 34 | | | $ | 6 | | | $ | 40 | | | $ | 18 | | | $ | — | | | $ | 58 | |
| Other income | | — | | | — | | | — | | | 4 | | | 1 | | | 5 | |
| Other expenses | | (12) | | | (7) | | | (19) | | | (18) | | | (50) | | | (87) | |
| Underwriting result | | $ | 22 | | | $ | (1) | | | $ | 21 | | | $ | 4 | | | n/a | | $ | (24) | |
| Net investment income | | | | | | | | 18 | | | 67 | | | 85 | |
| Allocated underwriting result | | | | | | | | $ | 22 | | | n/a | | n/a |
| Net realized and unrealized investment gains | | | | | | | | | | 269 | | | 269 | |
| Interest expense | | | | | | | | | | (14) | | | (14) | |
| | | | | | | | | | | | |
| Amortization of intangible assets | | | | | | | | | | (4) | | | (4) | |
| Net foreign exchange losses | | | | | | | | | | (103) | | | (103) | |
| Income tax expense | | | | | | | | | | (10) | | | (10) | |
| Interest in earnings of equity method investments | | | | | | | | | | 18 | | | 18 | |
| Net income | | | | | | | | | | n/a | | $ | 217 | |
Loss ratio (1) | | 70.2 | % | | 76.7 | % | | 72.5 | % | | | | | | |
Acquisition ratio (2) | | 26.1 | | | 22.1 | | | 24.7 | | | | | | | |
Technical ratio (3) | | 96.3 | % | | 98.8 | % | | 97.2 | % | | | | | | |
Other expense ratio (4) | | 1.3 | | | 1.4 | | | 1.4 | | | | | | | |
Combined ratio (5) | | 97.6 | % | | 100.2 | % | | 98.6 | % | | | | | | |
(1) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned.
(2) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned.
(3) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio.
(4) Other expense ratio is obtained by dividing other expenses by net premiums earned.
(5) Combined ratio is defined as the sum of the technical ratio and the other expense ratio.
PartnerRe Ltd.
Segment Information
(Expressed in millions of U.S. dollars, except percentages)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the year ended December 31, 2021 |
| | | P&C segment | | Specialty segment | | Total
Non-life | | Life
and Health
segment | | Corporate
and Other | | Total |
| Gross premiums written | | $ | 4,541 | | | $ | 2,016 | | | $ | 6,557 | | | $ | 1,647 | | | $ | — | | | $ | 8,204 | |
| Net premiums written | | $ | 3,722 | | | $ | 1,789 | | | $ | 5,511 | | | $ | 1,623 | | | $ | — | | | $ | 7,134 | |
| (Increase) decrease in unearned premiums | | (194) | | | 13 | | | (181) | | | 4 | | | — | | | (177) | |
| Net premiums earned | | $ | 3,528 | | | $ | 1,802 | | | $ | 5,330 | | | $ | 1,627 | | | $ | — | | | $ | 6,957 | |
| Losses and loss expenses | | (2,391) | | | (1,052) | | | (3,443) | | | (1,441) | | | — | | | (4,884) | |
| Acquisition costs | | (864) | | | (415) | | | (1,279) | | | (108) | | | — | | | (1,387) | |
| Technical result | | $ | 273 | | | $ | 335 | | | $ | 608 | | | $ | 78 | | | $ | — | | | $ | 686 | |
| Other income | | — | | | — | | | — | | | 26 | | | 3 | | | 29 | |
| Other expenses | | (71) | | | (30) | | | (101) | | | (88) | | | (210) | | | (399) | |
| Underwriting result | | $ | 202 | | | $ | 305 | | | $ | 507 | | | $ | 16 | | | n/a | | $ | 316 | |
| Net investment income | | | | | | | | 81 | | | 295 | | | 376 | |
Allocated underwriting result | | | | | | | | $ | 97 | | | n/a | | n/a |
| Net realized and unrealized investment gains | | | | | | | | | | 38 | | | 38 | |
| Interest expense | | | | | | | | | | (56) | | | (56) | |
| | | | | | | | | | | | |
| Amortization of intangible assets | | | | | | | | | | (9) | | | (9) | |
| Net foreign exchange losses | | | | | | | | | | (31) | | | (31) | |
| Income tax expense | | | | | | | | | | (38) | | | (38) | |
| Interest in earnings of equity method investments | | | | | | | | | | 127 | | | 127 | |
| Net income | | | | | | | | | | n/a | | $ | 723 | |
Loss ratio | | 67.8 | % | | 58.4 | % | | 64.6 | % | | | | | | |
| Acquisition ratio | | 24.5 | | | 23.0 | | | 24.0 | | | | | | | |
| Technical ratio | | 92.3 | % | | 81.4 | % | | 88.6 | % | | | | | | |
Other expense ratio | | 2.0 | | | 1.7 | | | 1.9 | | | | | | | |
| Combined ratio | | 94.3 | % | | 83.1 | % | | 90.5 | % | | | | | | |
| | | | | | | | | | | | |
| | | For the year ended December 31, 2020 |
| | | P&C segment | | Specialty segment | | Total
Non-life | | Life
and Health
segment | | Corporate
and Other | | Total |
| Gross premiums written | | $ | 3,442 | | | $ | 1,935 | | | $ | 5,377 | | | $ | 1,499 | | | $ | — | | | $ | 6,876 | |
| Net premiums written | | $ | 3,044 | | | $ | 1,782 | | | $ | 4,826 | | | $ | 1,475 | | | $ | — | | | $ | 6,301 | |
| Decrease in unearned premiums | | 119 | | | 110 | | | 229 | | | 7 | | | — | | | 236 | |
| Net premiums earned | | $ | 3,163 | | | $ | 1,892 | | | $ | 5,055 | | | $ | 1,482 | | | $ | — | | | $ | 6,537 | |
| Losses and loss expenses | | (2,389) | | | (1,628) | | | (4,017) | | | (1,318) | | | — | | | (5,335) | |
| Acquisition costs | | (784) | | | (470) | | | (1,254) | | | (102) | | | — | | | (1,356) | |
| Technical result | | $ | (10) | | | $ | (206) | | | $ | (216) | | | $ | 62 | | | $ | — | | | $ | (154) | |
| Other (loss) income | | (1) | | | — | | | (1) | | | 13 | | | 1 | | | 13 | |
| Other expenses | | (61) | | | (26) | | | (87) | | | (73) | | | (196) | | | (356) | |
| Underwriting result | | $ | (72) | | | $ | (232) | | | $ | (304) | | | $ | 2 | | | n/a | | $ | (497) | |
| Net investment income | | | | | | | | 68 | | | 293 | | | 361 | |
| Allocated underwriting result | | | | | | | | $ | 70 | | | n/a | | n/a |
| Net realized and unrealized investment gains | | | | | | | | | | 454 | | | 454 | |
| Interest expense | | | | | | | | | | (39) | | | (39) | |
| | | | | | | | | | | | |
| Amortization of intangible assets | | | | | | | | | | (10) | | | (10) | |
| Net foreign exchange losses | | | | | | | | | | (52) | | | (52) | |
| Income tax benefit | | | | | | | | | | 13 | | | 13 | |
| Interest in earnings of equity method investments | | | | | | | | | | 24 | | | 24 | |
| Net income | | | | | | | | | | n/a | | $ | 254 | |
| Loss ratio | | 75.5 | % | | 86.0 | % | | 79.5 | % | | | | | | |
| Acquisition ratio | | 24.8 | | | 24.8 | | | 24.8 | | | | | | | |
| Technical ratio | | 100.3 | % | | 110.8 | % | | 104.3 | % | | | | | | |
Other expense ratio | | 1.9 | | | 1.4 | | | 1.7 | | | | | | | |
| Combined ratio | | 102.2 | % | | 112.2 | % | | 106.0 | % | | | | | | |
Supplementary Financial Information
PartnerRe Ltd.
Investment Portfolio
(Expressed in thousands of U.S. dollars, except percentages)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2021 | | December 31, 2020 | | |
| Investments: | | | | | | | | | |
| Fixed maturities | | | | | | | | | |
| U.S. government | $ | 1,210,113 | | | 6 | % | | $ | 1,096,133 | | | 7 | % | | |
| U.S. government sponsored enterprises | 908,659 | | | 5 | | | 1,313,407 | | | 7 | | | |
| U.S. states, territories and municipalities | 108,059 | | | 1 | | | 137,968 | | | 1 | | | |
| Non-U.S. sovereign government, supranational and government related | 2,181,127 | | | 11 | | | 2,180,762 | | | 12 | | | |
| Corporate bonds | 5,441,908 | | | 28 | | | 3,341,854 | | | 19 | | | |
| Mortgage/asset-backed securities | 4,221,408 | | | 21 | | | 4,716,256 | | | 27 | | | |
| Total fixed maturities | 14,071,274 | | | 72 | | | 12,786,380 | | | 73 | | | |
| Short-term investments | 205,146 | | | 1 | | | 416,350 | | | 2 | | | |
| Equities | 1,751,584 | | | 9 | | | 1,496,441 | | | 8 | | | |
| Investments in real estate | 67,539 | | | — | | | 67,980 | | | — | | | |
Other invested assets (1) | 3,601,245 | | | 18 | | | 2,967,738 | | | 17 | | | |
| Total investments | $ | 19,696,788 | | | 100 | % | | $ | 17,734,889 | | | 100 | % | | |
| Cash and cash equivalents | 660,897 | | | | | 2,350,833 | | | | | |
| Total investments and cash and cash equivalents | 20,357,685 | | | | | 20,085,722 | | | | | |
| Maturity distribution: | | | | | | | | | |
| One year or less | $ | 1,086,283 | | | 8 | % | | $ | 1,563,748 | | | 12 | % | | |
| More than one year through five years | 4,235,065 | | | 29 | | | 3,346,398 | | | 25 | | | |
| More than five years through ten years | 2,971,089 | | | 21 | | | 1,915,703 | | | 15 | | | |
| More than ten years | 1,762,575 | | | 12 | | | 1,660,625 | | | 13 | | | |
| Subtotal | 10,055,012 | | | 70 | | | 8,486,474 | | | 65 | | | |
| Mortgage/asset-backed securities | 4,221,408 | | | 30 | | | 4,716,256 | | | 35 | | | |
| Total fixed maturities and short-term investments | $ | 14,276,420 | | | 100 | % | | $ | 13,202,730 | | | 100 | % | | |
Credit quality by market value (Total fixed maturities and short-term investments): | | |
| AAA | $ | 1,902,640 | | | 13 | % | | $ | 1,845,444 | | | 14 | % | | |
| AA | 6,751,903 | | | 47 | | | 7,663,467 | | | 58 | | | |
| A | 1,750,574 | | | 13 | | | 1,694,276 | | | 13 | | | |
| BBB | 3,398,661 | | | 24 | | | 1,362,247 | | | 10 | | | |
| Below Investment Grade/Unrated | 472,642 | | | 3 | | | 637,296 | | | 5 | | | |
| $ | 14,276,420 | | | 100 | % | | $ | 13,202,730 | | | 100 | % | | |
| Expected average duration | | | 4.0Yrs | | | 2.3Yrs | |
| Average yield to maturity at market | | | 2.7 | % | | | | 1.6 | % | | |
| Average credit quality | | | AA- | | | | AA | | |
(1) Other invested assets at December 31, 2021 and December 31, 2020 include $1.0 billion and $0.9 billion, respectively, of U.S. bank loans managed under an externally managed mandate. The mandate primarily invests in U.S. floating rate, first lien, senior secured broadly syndicated loans with a focus on facility sizes greater than $300 million. The weighted average credit rating as at December 31, 2021 was BB/BB- with the single largest issuer being 2.7% of the Company's bank loan portfolio.
Supplementary Financial Information
PartnerRe Ltd.
Distribution of Corporate Bonds
(Expressed in thousands of U.S. dollars, except percentages)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| | Fair Value | | Percentage of
Fair Value of
Corporate Bonds | | Percentage to
Invested Assets
and cash | | Largest single issuer
as a percentage of
Invested Assets
and cash | | | | |
| Distribution by sector - Corporate bonds | | | | | | | | | | | |
| Financial services | $ | 1,633,354 | | | 30.0 | % | | 8.0 | % | | 0.5 | % | | | | |
| Consumer cyclical | 631,303 | | | 11.6 | | | 3.1 | | | 0.3 | % | | | | |
| Real estate | 505,307 | | | 9.3 | | | 2.5 | | | 0.2 | % | | | | |
| Utilities | 465,711 | | | 8.6 | | | 2.3 | | | 0.3 | % | | | | |
| Consumer non-cyclical | 459,705 | | | 8.4 | | | 2.3 | | | 0.2 | % | | | | |
| Industrial | 453,477 | | | 8.3 | | | 2.2 | | | 0.2 | % | | | | |
| Energy | 352,294 | | | 6.5 | | | 1.7 | | | 0.2 | % | | | | |
| Communications | 292,341 | | | 5.4 | | | 1.4 | | | 0.3 | % | | | | |
| Technology | 290,035 | | | 5.3 | | | 1.4 | | | 0.3 | % | | | | |
| | | | | | | | | | | |
| Insurance | 223,468 | | | 4.1 | | | 1.1 | | | 0.1 | % | | | | |
| Basic materials | 112,321 | | | 2.1 | | | 0.6 | | | 0.2 | % | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Diversified | 22,592 | | | 0.4 | | | 0.1 | | | 0.1 | % | | | | |
| Total Corporate bonds | $ | 5,441,908 | | | 100.0 | % | | 26.7 | % | | | | | | |
| Finance sector - Corporate bonds | | | | | | | | | | | |
| Banks | $ | 831,237 | | | 15.3 | % | | 4.1 | % | | | | | | |
| Financial services | 491,762 | | | 9.0 | | | 2.4 | | | | | | | |
| Investment banking and brokerage | 310,355 | | | 5.7 | | | 1.5 | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total finance sector - Corporate bonds | $ | 1,633,354 | | | 30.0 | % | | 8.0 | % | | | | | | |
| | AAA | | AA | | A | | BBB | | Non-Investment
Grade/Unrated | | Total |
| Credit quality of finance sector - Corporate bonds | | | | | | | | | | | |
| Banks | $ | — | | | $ | 31,042 | | | $ | 313,301 | | | $ | 449,481 | | | $ | 37,413 | | | $ | 831,237 | |
| Financial services | — | | | 35,012 | | | 259,097 | | | 153,706 | | | 43,947 | | | 491,762 | |
| Investment banking and brokerage | — | | | 1,592 | | | 36,509 | | | 265,402 | | | 6,852 | | | 310,355 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total finance sector - Corporate bonds | $ | — | | | $ | 67,646 | | | $ | 608,907 | | | $ | 868,589 | | | $ | 88,212 | | | $ | 1,633,354 | |
| % of total | — | % | | 4.1 | % | | 37.3 | % | | 53.2 | % | | 5.4 | % | | 100.0 | % |
Concentration of investment risk - The top 10 Corporate bond issuers account for 12.1% of the Company’s total corporate bonds. The single largest issuer accounts for 2.0% of the Company’s total Corporate bonds and is included in the Financial sector above.
Supplementary Financial Information
PartnerRe Ltd.
Composition of Net Investment Income and Net Realized and Unrealized Investment (Losses) Gains
(Expressed in thousands of U.S. dollars, except percentages)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended | | For the year ended |
| December 31, 2021 | | December 31, 2020 | | December 31, 2021 | | December 31, 2020 |
| Fixed maturities | $ | 70,509 | | | $ | 70,017 | | | $ | 301,391 | | | $ | 290,259 | |
| Short-term investments and cash and cash equivalents | 968 | | | 1,485 | | | 4,860 | | | 12,000 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Equities, investments in real estate, funds held and other | 32,454 | | | 25,310 | | | 120,999 | | | 109,606 | |
| Investment expenses | (10,944) | | | (11,766) | | | (50,781) | | | (51,197) | |
| Net investment income | $ | 92,987 | | | $ | 85,046 | | | $ | 376,469 | | | $ | 360,668 | |
| Net realized investment (losses) gains on fixed maturities and short-term investments | $ | (589) | | | $ | 13,528 | | | $ | 19,893 | | | $ | 24,828 | |
| Net realized investment gains on equities | 62,065 | | | 9,765 | | | 78,501 | | | 21,538 | |
| Net realized investment gains (losses) on other invested assets | 4,268 | | | 3,663 | | | 103,011 | | | (30,436) | |
| | | | | | | |
| Net realized investment gains | $ | 65,744 | | | $ | 26,956 | | | $ | 201,405 | | | $ | 15,930 | |
| Change in net unrealized investment (losses) gains on fixed maturities and short-term investments | $ | (185,166) | | | $ | 6,429 | | | $ | (558,466) | | | $ | 219,946 | |
| Change in net unrealized investment (losses) gains on equities | (39,804) | | | 148,586 | | | 198,780 | | | 167,456 | |
| Change in net unrealized investment gains on other invested assets | 153,983 | | | 91,000 | | | 196,926 | | | 58,452 | |
| | | | | | | |
| Net other realized and unrealized investment (losses) gains | (356) | | | 2,155 | | | (848) | | | (1,346) | |
| Change in net unrealized investment (losses) gains | $ | (71,343) | | | $ | 248,170 | | | $ | (163,608) | | | $ | 444,508 | |
| Impairment loss on investments in real estate | — | | | (6,119) | | | — | | | (6,119) | |
| Net realized and unrealized investment (losses) gains | $ | (5,599) | | | $ | 269,007 | | | $ | 37,797 | | | $ | 454,319 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Supplementary Financial Information
PartnerRe Ltd.
Analysis of Non-Life Reserves
(Expressed in thousands of U.S. dollars)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As at and for the three months ended | | As at and for the year ended | | | | | | | | | | |
| | December 31, 2021 | | December 31, 2020 | | December 31, 2021 | | December 31, 2020 | | | | | | | | | | | | |
| Reconciliation of beginning and ending non-life reserves: | | | | | | | | | | | | | | | | | | | |
| Gross liability at beginning of period | $ | 12,291,545 | | | $ | 11,133,368 | | | $ | 11,395,321 | | | $ | 10,363,383 | | | | | | | | | | | | | |
| Reinsurance recoverable at beginning of period | (1,583,174) | | | (771,787) | | | (782,330) | | | (754,795) | | | | | | | | | | | | | |
| Net liability at beginning of period | 10,708,371 | | | 10,361,581 | | | 10,612,991 | | | 9,608,588 | | | | | | | | | | | | | |
Net incurred losses related to: (1) | | | | | | | | | | | | | | | | | | | |
| Current year | 847,823 | | | 1,013,819 | | | 3,637,671 | | | 3,945,248 | | | | | | | | | | | | | |
| Prior years | (195,752) | | | (3,101) | | | (194,426) | | | 71,456 | | | | | | | | | | | | | |
| 652,071 | | | 1,010,718 | | | 3,443,245 | | | 4,016,704 | | | | | | | | | | | | | |
| Net losses paid | (784,442) | | | (951,257) | | | (2,972,995) | | | (3,232,604) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Retroactive reinsurance recoverable (1) | (714) | | | — | | | (357,864) | | | — | | | | | | | | | | | | | |
| Effects of foreign exchange rate changes and other | (60,160) | | | 191,949 | | | (210,251) | | | 220,303 | | | | | | | | | | | | | |
| Net liability at end of period | 10,515,126 | | | 10,612,991 | | | 10,515,126 | | | 10,612,991 | | | | | | | | | | | | | |
| Reinsurance recoverable at end of period | 1,532,666 | | | 782,330 | | | 1,532,666 | | | 782,330 | | | | | | | | | | | | | |
| Gross liability at end of period | $ | 12,047,792 | | | $ | 11,395,321 | | | $ | 12,047,792 | | | $ | 11,395,321 | | | | | | | | | | | | | |
| Breakdown of gross liability at end of period: | | | | | | | | | | | | | | | | | | | |
| Case reserves | $ | 4,881,892 | | | $ | 4,646,633 | | | $ | 4,881,892 | | | $ | 4,646,633 | | | | | | | | | | | | | |
| Additional case reserves | 140,464 | | | 171,381 | | | 140,464 | | | 171,381 | | | | | | | | | | | | | |
| Incurred but not reported reserves | 7,025,436 | | | 6,577,307 | | | 7,025,436 | | | 6,577,307 | | | | | | | | | | | | | |
| Gross liability at end of period | $ | 12,047,792 | | | $ | 11,395,321 | | | $ | 12,047,792 | | | $ | 11,395,321 | | | | | | | | | | | | | |
| Gross liability at end of period by Non-life segment: | | | | | | | | | | | | | | | | | | | |
| P&C | 8,746,449 | | | 7,937,823 | | | 8,746,449 | | | 7,937,823 | | | | | | | | | | | | | |
| Specialty | 3,301,343 | | | 3,457,498 | | | 3,301,343 | | | 3,457,498 | | | | | | | | | | | | | |
| Gross liability at end of period | $ | 12,047,792 | | | $ | 11,395,321 | | | $ | 12,047,792 | | | $ | 11,395,321 | | | | | | | | | | | | | |
Unrecognized time value of non-life reserves (2) | $ | 314,949 | | | $ | 120,908 | | | $ | 314,949 | | | $ | 120,908 | | | | | | | | | | | | | |
(1) In the second quarter of 2021, the Company entered into a loss portfolio transfer and adverse development cover agreement in relation to prior underwriting years on the Company's U.S. casualty and auto business. During the second half of 2021 there was adverse prior years' development on reserves ceded under this agreement, and as a result the Company established a deferred gain of $20 million, net of accumulated amortization, which is recorded in Accounts payable, accrued expense and other in the Consolidated Balance Sheet at December 31, 2021.
(2) The unrecognized time value, or discount, is the difference between the undiscounted liability for non-life reserves recorded and the discounted amount of these reserves. This discount is calculated by applying appropriate risk-free rates by currency and duration to the underlying non-life reserves.
Supplementary Financial Information
PartnerRe Ltd.
Analysis of Life and Health Reserves
(Expressed in thousands of U.S. dollars)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As at and for the three months ended | | As at and for the year ended | | | | | | | | | | |
| | December 31, 2021 | | December 31, 2020 | | December 31, 2021 | | December 31, 2020 | | | | | | | | | | | | |
| Reconciliation of beginning and ending life and health reserves: | | | | | | | | | | | | | | | | | | | |
| Gross liability at beginning of period | $ | 2,658,035 | | | $ | 2,453,438 | | | $ | 2,704,229 | | | $ | 2,417,044 | | | | | | | | | | | | | |
| Reinsurance recoverable at beginning of period | (24,832) | | | (14,483) | | | (35,662) | | | (16,183) | | | | | | | | | | | | | |
| Net liability at beginning of period | 2,633,203 | | | 2,438,955 | | | 2,668,567 | | | 2,400,861 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Net incurred losses | 385,946 | | | 339,648 | | | 1,440,739 | | | 1,318,196 | | | | | | | | | | | | | |
| Net losses paid | (388,683) | | | (289,661) | | | (1,413,316) | | | (1,230,383) | | | | | | | | | | | | | |
| Effects of foreign exchange rate changes and other | (13,380) | | | 179,625 | | | (78,904) | | | 179,893 | | | | | | | | | | | | | |
| Net liability at end of period | 2,617,086 | | | 2,668,567 | | | 2,617,086 | | | 2,668,567 | | | | | | | | | | | | | |
| Reinsurance recoverable at end of period | 21,000 | | | 35,662 | | | 21,000 | | | 35,662 | | | | | | | | | | | | | |
| Gross liability at end of period | $ | 2,638,086 | | | $ | 2,704,229 | | | $ | 2,638,086 | | | $ | 2,704,229 | | | | | | | | | | | | | |
Life value in force (1) | $ | 757,000 | | | $ | 289,000 | | | $ | 757,000 | | | $ | 289,000 | | | | | | | | | | | | | |
(1) The life value in force (Life VIF) is the value that will emerge from life policies over time that is not recognized in the Company's tangible book value. The Company’s Life VIF is calculated on a going concern basis and is the sum of: (i) present value of future profits which represents the net present value of projected after-tax cash flows net of Life reserves, net of deferred acquisition costs and gross of value of business acquired; (ii) cost of economic capital; (iii) time value of options and guarantees; and (iv) cost of non-economic excess encumbered capital. The Company made changes to its VIF calculation methodology during 2021. The VIF balance at December 31, 2020 calculated under the updated methodology would have been approximately $571 million.
Supplementary Financial Information
PartnerRe Ltd.
Natural Catastrophe Probable Maximum Losses (PMLs)
(Expressed in millions of U.S. dollars)
(Unaudited)
Single occurrence estimated net PML exposure
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | December 31, 2021 | | | | | | | | | |
| Zone | | Peril | | 1-in-250
year PML | | 1-in-500
year PML
(Earthquake
perils only) | | | | | | | | | | | | | | | | | | | |
| U.S. Southeast | | Hurricane | | $ | 1,084 | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Northeast | | Hurricane | | 1,028 | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Gulf Coast | | Hurricane | | 1,004 | | | | | | | | | | | | | | | | | | | | | | |
| Caribbean | | Hurricane | | 231 | | | | | | | | | | | | | | | | | | | | | | |
| Europe | | Windstorm | | 527 | | | | | | | | | | | | | | | | | | | | | | |
| Japan | | Typhoon | | 331 | | | | | | | | | | | | | | | | | | | | | | |
| California | | Earthquake | | 927 | | | $ | 1,255 | | | | | | | | | | | | | | | | | | | | |
| Japan | | Earthquake | | 361 | | | 413 | | | | | | | | | | | | | | | | | | | | |
| Australia | | Earthquake | | 298 | | | 428 | | | | | | | | | | | | | | | | | | | | |
| New Zealand | | Earthquake | | 245 | | | 404 | | | | | | | | | | | | | | | | | | | | |
| British Columbia | | Earthquake | | 161 | | | 327 | | | | | | | | | | | | | | | | | | | | |
The PML estimates are pre-tax and net of retrocession and reinstatement premiums. The peril zones in this disclosure are major peril zones for the industry. The Company has exposures in other peril zones that can potentially generate losses greater than the PML estimates in this disclosure.
For more information regarding cautionary language related to the Natural Catastrophe PML disclosure and the forward-looking statements, as well as uncertainties and limitations associated with certain assumptions and the methodology used, refer to the Company’s natural catastrophe PML information and definitions in the Company’s Annual Report on Form 20-F for the year ended December 31, 2021 (see Risk Management—Natural Catastrophe PML in Item 4 of the 20-F).
Supplementary Financial Information
PartnerRe Ltd.
Non-GAAP Financial Measures - Regulation G
In addition to the GAAP financial measures set forth herein, the Company has also included certain non-GAAP financial measures within the meaning of Regulation G. Management believes that these non-GAAP financial measures are useful to investors and other stakeholders and help provide a consistent basis for comparison between quarters and for comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by other companies outside of the insurance industry. These non-GAAP measures should be considered an addition to, and not a substitute for, measures of financial performance prepared in accordance with GAAP and investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company’s overall financial performance.
The reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures in accordance with Regulation G is included within the relevant tables.
Operating Income (Loss) available to Common Shareholder (Operating Income (Loss)); Annualized Operating Return on Average Common Shareholder's Equity (Annualized Operating ROE): The Company uses Operating income (loss) and Annualized Operating ROE to measure performance, as these measures focus on the underlying fundamentals of the Company’s operations. Operating income (loss) is calculated after preferred dividends and excludes the impact of net realized and unrealized gains and losses on investments, net of tax, net foreign exchange gains and losses, net of tax, interest in earnings (losses) of equity method investments, net of tax, favorable or adverse prior years' reserves development for which we have ceded the risk under an adverse development cover (ADC), net of tax and related changes in amortization of the deferred gain, and loss on redemption of preferred shares. The Company calculates Annualized Operating ROE using Operating income (loss) for the period divided by the average common shareholder's equity outstanding for the period. Operating income (loss) should not be viewed as a substitute for Net Income (Loss) prepared in accordance with GAAP. Annualized Operating ROE supplements GAAP information. The Company's management believes that Operating income (loss) is useful to stakeholders because it more accurately reflects the underlying fundamentals of the business by removing the variability arising from activity that is largely independent of its business and underwriting processes, such as: fluctuations in the fair value of the Company's investment portfolio; fluctuations in foreign exchange rates; fluctuations of returns on the Company's equity method investments; the impact of retroactive reinsurance agreements where the Company believes adjusting for this development shows the ultimate economic benefit of the ADC; and the impact of non-recurring transactions such as losses on the redemption of preferred shares.
Tangible Book Value: The Company calculates Tangible Book Value using common shareholder's equity less goodwill and intangible assets, net of tax. The Company's management believes Tangible Book Value is useful to stakeholders because it provides a more accurate measure of realizable value of shareholder returns.
Supplementary Financial Information
PartnerRe Ltd.
Return on Common Shareholder's Equity (ROE)
(Expressed in thousands of U.S. dollars, except percentages)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended | | For the year ended | | | | | | |
| | December 31, 2021 | | December 31, 2020 | | December 31, 2021 | | December 31, 2020 | | | | | | |
| $ | ROE (1) | | $ | ROE (1) | | $ | ROE (1) | | $ | ROE (1) | | | | | | |
| Net income available to common shareholder | $ | 362,067 | | 20.3 | % | | $ | 203,906 | | 12.4 | % | | $ | 679,477 | | 9.7 | % | | $ | 205,858 | | 3.1 | % | | | | | | |
| Less: adjustments for non-operating items | | | | | | | | | | | | | | | | | |
| Net realized and unrealized investment (losses) gains | (5,599) | | (0.3) | % | | 269,007 | | 16.4 | % | | 37,797 | | 0.5 | % | | 454,319 | | 6.9 | % | | | | | | |
| Net foreign exchange losses | (18,573) | | (1.0) | % | | (103,260) | | (6.3) | % | | (30,883) | | (0.4) | % | | (51,964) | | (0.8) | % | | | | | | |
| Interest in earnings of equity method investments | 69,329 | | 3.9 | % | | 18,190 | | 1.1 | % | | 126,795 | | 1.8 | % | | 23,611 | | 0.4 | % | | | | | | |
| Favorable (adverse) prior years' reserve development subject to ADC | 585 | | — | % | | — | | — | % | | (20,364) | (0.3) | % | | — | | — | % | | | | | | |
| Loss on redemption of preferred shares | — | | — | % | | (2,341) | | (0.1) | % | | (21,234) | | (0.3) | % | | (2,341) | | — | % | | | | | | |
| Tax effects of adjustments | 16,128 | | 0.9 | % | | 3,778 | | 0.2 | % | | 42,021 | | 0.6 | % | | (27,690) | | (0.5) | % | | | | | | |
Operating income (loss) | $ | 300,197 | | 16.8 | % | | $ | 18,532 | | 1.1 | % | | $ | 545,345 | | 7.8 | % | | $ | (190,077) | | (2.9) | % | | | | | | |
(1) ROE is calculated as net income or loss attributable to common shareholder divided by average common shareholder's equity, annualized for the quarter. The following is the average common shareholder's equity calculated using the sum of the beginning of period and end of period common shareholder's equity divided by two.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended | | For the year ended | | |
| Calculation of average common shareholder's equity | December 31, 2021 | | December 31, 2020 | | December 31, 2021 | | December 31, 2020 | | | | |
| Beginning of period common shareholder's equity | $ | 6,950,741 | | | $ | 6,431,684 | | | $ | 6,689,756 | | | $ | 6,565,942 | | | | | |
| End of period common shareholder's equity | $ | 7,343,986 | | | $ | 6,689,756 | | | $ | 7,343,986 | | | $ | 6,689,756 | | | | | |
| Average common shareholder's equity | $ | 7,147,364 | | | $ | 6,560,720 | | | $ | 7,016,871 | | | $ | 6,627,849 | | | | | |
Supplementary Financial Information
PartnerRe Ltd.
Reconciliation of GAAP and non-GAAP measures
(Expressed in thousands of U.S. dollars)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 | | | | | | | | | | | | |
| Tangible book value: | | | | | | | | | | | | | | | |
| Total shareholders' equity | $ | 7,543,986 | | | $ | 7,326,997 | | | | | | | | | | | | | |
| Less: | | | | | | | | | | | | | | | |
Preferred shares, aggregate liquidation value at $25 per share (1) | 200,000 | | | 637,241 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Common shareholder’s equity or book value | 7,343,986 | | | 6,689,756 | | | | | | | | | | | | | |
| Less: | | | | | | | | | | | | | | | |
| Goodwill | 456,380 | | | 456,380 | | | | | | | | | | | | | |
Intangible assets, net of tax (2) | 89,702 | | | 97,200 | | | | | | | | | | | | | |
| Tangible book value | $ | 6,797,904 | | | $ | 6,136,176 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Capital structure: | | | | | | | | | | | | | | | |
| Senior notes | | | | | | | | | | | | | | | |
| Senior notes due 2029 | $ | 496,620 | | | $ | 496,168 | | | | | | | | | | | | | |
Senior notes due 2026 (3) | 843,950 | | | 914,223 | | | | | | | | | | | | | |
| Junior subordinated notes | | | | | | | | | | | | | | | |
| Junior subordinated notes due 2050 | 494,445 | | | 494,251 | | | | | | | | | | | | | |
Capital efficient notes due 2066 (4) | 62,484 | | | 62,484 | | | | | | | | | | | | | |
| Total debt | 1,897,499 | | | 1,967,126 | | | | | | | | | | | | | |
Preferred shares, aggregate liquidation value (1) | 200,000 | | | 637,241 | | | | | | | | | | | | | |
| Common shareholder's equity | 7,343,986 | | | 6,689,756 | | | | | | | | | | | | | |
| Total capital | $ | 9,441,485 | | | $ | 9,294,123 | | | | | | | | | | | | | |
(1) During the first quarter of 2021, the Company issued 8 million shares of 4.875% Fixed Rate Non-Cumulative Redeemable Preferred Shares, Series J, with an aggregate liquidation value of $25 per share, for total gross proceeds of $200 million. During the second quarter of 2021, the Company fully redeemed the Series G, H and I Preferred Shares at a redemption value of $637 million.
(2) The intangible assets are presented in the table above net of tax of $9 million and $10 million at December 31, 2021 and December 31, 2020, respectively.
(3) The decrease relates primarily to the foreign exchange impact of remeasuring the Euro debt into U.S. dollars at the balance sheet date.
(4) The difference of $8 million between Total debt and Debt on the Consolidated Balance Sheet at December 31, 2020 is due to the Capital efficient notes (CENts). Non-consolidated debt issued externally related to CENts of $62 million does not appear in the Debt line of the Consolidated Balance Sheet as the finance entity that issued the debt (PartnerRe Finance II Inc.) was not consolidated at December 31, 2020. As a result, the Consolidated Balance Sheet at December 31, 2020 included the related intercompany notes of $70 million issued by PartnerRe U.S Corporation to PartnerRe Finance II Inc. PartnerRe Finance II Inc. was consolidated during 2021 and the externally issued debt is included in Debt on the Consolidated Balance Sheet at December 31, 2021.
