News Release | ![]() |
PartnerRe Ltd. Reports Fourth Quarter and Full Year 2005 Results and
Increase in Dividend
- Fourth Quarter Net Loss per share of $0.76; Operating Loss per share of $1.42
- Full Year Net Loss per share of $1.56; Operating Loss per share of $4.42
- Year-End Book Value per share of $44.57
- Annual Common Stock Dividend Increased 5% to $1.60 per share
PEMBROKE, Bermuda, February 6, 2006 -- PartnerRe Ltd. (NYSE:PRE) today reported a net loss of $33.6 million, or $0.76 per share, for the fourth quarter of 2005. This net loss includes net after-tax realized gains on investments of $37.0 million or $0.66 per share. Net income for the fourth quarter of 2004, including net after-tax realized gains on investments of $16.1 million or $0.29 per share, was $143.7 million or $2.54 per share on a fully diluted basis. The operating loss for the fourth quarter of 2005 was $79.3 million or $1.42 per share. This compares to operating earnings of $120.8 million, or $2.25 per share on a fully diluted basis, for the fourth quarter of 2004. Operating earnings exclude net after-tax realized investment gains and losses and are calculated after payment of preferred dividends.
For the year ended December 31, 2005, the net loss was $51.1 million or $1.56 per share. Net loss includes net after-tax realized gains on investments of $157.1 million or $2.86 per share. The operating loss was $242.6 million or $4.42 per share. Net income for the full year 2004 was $492.4 million or $8.71 per share on a fully diluted basis. Net income included net after-tax realized gains on investments of $78.1 million or $1.44 per share. Operating earnings for the full year 2004 were $392.8 million or $7.27 per share on a fully diluted basis.
Commenting on the full year results, PartnerRe President & Chief Executive Officer, Patrick Thiele, said, “2005 was an extraordinary year on many levels. It was the worst year in history for natural disasters with more than $80 billion in insured damage for the industry and approximately $900 million for PartnerRe. During 2004, which previously had been the record year for industry catastrophe losses, our five largest cat losses (four Atlantic hurricanes and the southeast Asian tsunami) aggregated $175 million, net of reinstatement premiums.Our current estimates, net of reinstatement premiums, for the five significant losses of 2005 are: Hurricane Katrina: $511 million, Hurricane Wilma: $174 million, Hurricane Rita: $88 million, Winter Storm Erwin: $61 million, and the European floods: $66 million. These events in total represent a very unusual frequency and severity, but not so unusual that they were outside of our modeled risk exposures nor our pricing.”
PartnerRe Ltd. | Telephone +1 441 292 0888 |
Chesney House, | Fax +1 441 292 6080 |
96 Pitts Bay Road | www.partnerre.com |
Pembroke, Bermuda HM 08 |
News Release | ![]() |
“We believe that the results of 2005, while disappointing, are consistent with our role as a premier global reinsurer and with our longer-term risk/return model,” Mr. Thiele added. “We have grown our book value per share at an average annual rate of 11.3% over the last four years, despite a decline of 12.6% in 2005. In addition, we have returned significant capital to our shareholders through share repurchases and shareholder dividends. I am pleased to announce that we once again increased our annual common share dividend. This marks the twelfth consecutive year that we have increased our dividend.”
Summary unaudited consolidated financial data for the period is set out below.
U.S.$ thousands (except per share amounts and ratios) | Three months ended December 31 | Twelve months ended December 31 | ||
2005 | 2004 | 2005 | 2004 | |
Net Premiums Written | $666,345 | $682,998 | $3,615,878 | $3,852,672 |
Net Premiums Earned | $907,031 | $942,332 | $3,599,189 | $3,733,740 |
Non-life Combined Ratio | 119.9% | 94.5% | 115.9% | 94.3% |
Net (Loss)/Income | $(33,640) | $143,669 | $(51,064) | $492,353 |
Net (Loss)/Income per share (a) | $(0.76) | $2.54 | $(1.56) | $8.71 |
Net Operating (Loss)/Earnings (a) | $(79,320) | $120,813 | $(242,639) | $392,751 |
Net Operating (Loss)/Earnings per share (a) | $(1.42) | $2.25 | $(4.42) | $7.27 |
(a) | Net income/(loss) per share is defined as net income/(loss) available to common shareholders divided by the weighted average number of fully diluted shares outstanding for the period. Net income/(loss) available to common shareholders is defined as net income/(loss) less preferred dividends. Net operating earnings/(loss) is net income/(loss) available to common shareholders excluding after-tax net realized gains/(losses) on investments. Net operating earnings/(loss) per share is defined as net operating earnings/(loss) divided by the weighted average number of fully diluted shares outstanding for the period. Per share results referenced in the text of this press release are on a fully diluted basis. As the effect of dilutive securities would have been antidilutive in the three months and twelve months of 2005, the fully diluted per share figures for these periods were compiled using the basic weighted average number of common shares outstanding. |
Net premiums written for the fourth quarter 2005 were $666.3 million, a decrease of 2% from the fourth quarter of 2004. Total revenues for the quarter of $1.1 billion increased marginally over the fourth quarter of 2004. Total revenues include $907.0 million of net premiums earned, net investment income of $94.1 million, and net realized investment gains of $57.9 million.
PartnerRe Ltd. | Telephone +1 441 292 0888 |
Chesney House, | Fax +1 441 292 6080 |
96 Pitts Bay Road | www.partnerre.com |
Pembroke, Bermuda HM 08 |
News Release | ![]() |
For the full year 2005, net premiums written were $3.6 billion, representing a 6% decline from 2004. Total revenues for the full year 2005 were $4.2 billion, including $3.6 billion of net premiums earned, net investment income of $364.5 million, and net realized investment gains of $206.9 million. Total revenues in 2004 were $4.2 billion.
Separately, the Company announced today that its Board of Directors has increased the annual common share dividend by 5 percent to $1.60 per share from $1.52 per share. Today, the Board declared a regular quarterly dividend of $0.40 per common share. The dividend will be payable on March 1, 2006, to common shareholders of record on February 17, 2006, with the stock trading ex-dividend commencing February 15, 2006.
Results by Segment
The Non-Life segment reported net premiums written of $552 million for the fourth quarter of 2005, down 2% as compared to the prior year. The combined ratio was 119.9% for the fourth quarter compared to 94.5% for the same period in 2004. The Non-Life technical result was a loss of $115 million for the fourth quarter of 2005, primarily reflecting the impact of Hurricane Wilma. This compares to a gain of $93 million in the fourth quarter of 2004. For the full year, Non-Life net premiums written were $3.2 billion, down 8% from the same period in 2004. The full year technical result was a loss of $316 million, compared to a gain of $384 million for the same period in 2004. The combined ratio for the full year was 115.9% compared to 94.3% in 2004.
Hurricane Wilma impacted the technical results of all of the Non-Life sub-segments and the ART segment. In total, the fourth quarter results contain approximately $174 million in estimated losses from Hurricane Wilma, down from the Company’s initial estimate of between $190-$210 million, and total incremental charges of approximately $44 million for third quarter events. All estimates are pre-tax and after reinstatement premiums.
The U.S. Property and Casualty business, which represented approximately 25% of total net premiums written for the quarter, reported net premiums written of $170 million, down 5% over the prior year’s fourth quarter, resulting from prior underwriting year premium adjustments. Net premiums earned decreased 2% during the quarter when compared to the same period in 2004. The technical ratio for this sub-segment was 120.6%, compared to 97.9% in the fourth quarter of 2004, primarily reflecting the impact of Hurricane Wilma on Florida property covers. For the full year 2005, net premiums written declined by 17% to $819 million. The full year technical ratio was 116.4% compared to 101.0% in 2004. The
PartnerRe Ltd. | Telephone +1 441 292 0888 |
Chesney House, | Fax +1 441 292 6080 |
96 Pitts Bay Road | www.partnerre.com |
Pembroke, Bermuda HM 08 |
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technical result for the full year was a loss of $136 million compared to a loss of $10 million in 2004.
The Global (Non-U.S.) Property and Casualty business, which represented approximately 17% of total net premiums written, reported net premiums written of $111 million for the fourth quarter of 2005 compared to $124 million for the same period in 2004. Net premiums earned during the quarter were $213 million, down 8% from $231 million in the prior year’s fourth quarter. The technical ratio for this sub-segment was 124.7% compared to 113.3% for the same period in 2004, reflecting the impact of Hurricane Wilma in Mexico. For the full year, net premiums written were down 12% to $835 million. The full year technical ratio was 99.4% compared to 104.2% in 2004. The technical result for the full year was a gain of $6 million compared to a loss of $39 million in 2004.
The Worldwide Specialty business, which represented approximately 41% of total net premiums written for the quarter, reported net premiums written of $271 million for the fourth quarter, up 5% from the prior year period, reflecting the impact of reinstatement premiums and back-up covers related to the catastrophe losses, as well as significant new business in the energy and marine lines following hurricanes Katrina and Rita. Net premiums earned decreased 2% during the quarter. This sub-segment’s technical ratio was 105.5% compared to 68.1% for the fourth quarter of 2004. For the full year, net premiums written were essentially flat at $1.5 billion. The full year technical ratio was 112.8% compared to 71.2% in 2004. The technical result for the full year was a loss of $186 million compared to a gain of $433 million in 2004.
The Life segment, which writes business primarily in Europe, Canada and Latin America, and represented approximately 16% of total net premiums written in the quarter, reported net premiums written of $108 million for the quarter, down 10% when compared with the fourth quarter of 2004. Strong growth in the Life segment’s mortality lines was offset by a reduction in longevity and health lines. The allocated underwriting result for the quarter was a gain of $5 million compared to a loss of $1 million for the comparable period in 2004. For the full year, net premiums written increased 7% to $434 million, with an allocated underwriting gain of $15 million, compared to a loss of $4 million for the comparable period in 2004.
The ART (Alternative Risk Transfer) segment comprises structured risk business, structured finance, weather related products, and the results of the Company’s investment in Channel Re. The pre-tax contribution to net income, including the Company’s interest in the earnings of Channel Re, was a gain of $1 million in the fourth quarter of 2005, in line with the $1 million gain in the fourth quarter of 2004. For the full year 2005, the pre-tax contribution to net income was a gain of $18 million compared to a gain of $2 million for the same period in
PartnerRe Ltd. | Telephone +1 441 292 0888 |
Chesney House, | Fax +1 441 292 6080 |
96 Pitts Bay Road | www.partnerre.com |
Pembroke, Bermuda HM 08 |
News Release | ![]() |
2004, primarily due to strong results in the weather and structured finance business lines as compared to the prior year.
During the fourth quarter of 2005, invested assets increased 7% to $9.6 billion due to strong cash flow from operations, strong investment results and proceeds from the Company’s capital raise, offset partially by the effects of rising interest rates and the stronger U.S. dollar on foreign currency denominated securities. Gross Non-Life loss and loss expense reserves increased by 4% to $6.7 billion in the fourth quarter, reflecting the loss activity for the fourth quarter, including Hurricane Wilma and additional reserves for third quarter 2005 events, as well as net prior year reserve reductions of $10 million. The overall prior year adjustments to Non-Life reserves include $20 million in reserve additions to the U.S. P&C sub-segment and $5 million in the Global (Non-U.S.) P&C sub-segment and reserve reductions of $35 million in the Worldwide Specialty sub-segment.
At December 31, 2005, total assets were $13.7 billion, total capitalization was $3.9 billion, and total shareholders’ equity was $3.1 billion. This compares to total assets of $12.7 billion, total capitalization of $3.8 billion, and total shareholders’ equity of $3.4 billion at December 31, 2004. Book value per common share at December 31, 2005 was $44.57 on a fully diluted basis compared to $50.99 per share at December 31, 2004. During the quarter, the Company received $550 million in proceeds after securing $400 million in debt through a loan agreement and selling $150 million in PartnerRe Ltd. common stock. The Company also entered into a forward sale agreement, which allows the Company to issue approximately 6.7 million shares of common stock for minimum proceeds of $400 million.
Commentary and OutlookMr. Thiele said, “Following the exceptional events of 2005, PartnerRe was well-positioned for the January 1 renewal. We not only maintained or increased our participation in the majority of our renewed treaties, but we wrote $241 million of new business. The result is a high quality balanced book of business that has no overall increase in risk profile and that we expect will generate good profitability in 2006.”
Mr. Thiele added, “Assuming a reasonable level of large losses, stable foreign exchange and interest rates in 2006, we continue to expect to achieve a mid-teens operating return on beginning shareholders’ equity and fully diluted book value per share growth in excess of 10% after dividends. This is in line with our long-term goal of delivering a 13% operating return on beginning shareholders’ equity over the cycle.”
PartnerRe Ltd. | Telephone +1 441 292 0888 |
Chesney House, | Fax +1 441 292 6080 |
96 Pitts Bay Road | www.partnerre.com |
Pembroke, Bermuda HM 08 |
News Release | ![]() |
The Company uses operating earnings, diluted operating earnings per share and operating return on beginning common shareholders’ equity to measure performance, as these measures focus on the underlying fundamentals of our operations without the influence of realized gains and losses from the sale of investments, which is driven by the timing of the disposition of investments and not by the Company’s operating performance. For planning purposes, the Company does not anticipate realized investment gains or losses. The Company also uses technical ratio and technical result as measures of underwriting performance. These metrics exclude other operating expenses. All references to per share amounts in the text of this press release are on the basis of fully diluted shares.
PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. The Company also offers alternative risk products that include weather and credit protection to financial, industrial and service companies. Risks reinsured include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering/energy, marine, special risks, other lines, life/annuity and health, and alternative risk transfer solutions. For the year ended December 31, 2005, total revenues were $4.2 billion, total assets were $13.7 billion, total capitalization was $3.9 billion and total shareholders’ equity was $3.1 billion. Our major reinsurance operations have ratings of AA- from Standard & Poor’s, Aa3 from Moody’s, A+ from A.M. Best, and AA from Fitch.
PartnerRe on the Internet:www.partnerre.com
Forward-looking statements contained in this press release 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, or other large property and casualty losses, adequacy of reserves, risks associated with implementing business strategies, levels and pricing of new and renewal business achieved, credit, interest, currency and other risks associated with the Company’s investment portfolio, changes in accounting policies, and other factors identified in the Company’s filings with the Securities and Exchange Commission. This year’s results are impacted by losses associated with Hurricane Katrina and other catastrophes. The Company’s loss estimates for Katrina are subject to a level of uncertainty arising out of these losses’ extremely complex and unique
PartnerRe Ltd. | Telephone +1 441 292 0888 |
Chesney House, | Fax +1 441 292 6080 |
96 Pitts Bay Road | www.partnerre.com |
Pembroke, Bermuda HM 08 |
News Release | ![]() |
causation and related coverage issues associated with the attribution of losses to wind or flood damage or other perils. We expect that these issues will not be resolved for a considerable period of time and may be influenced by evolving legal and regulatory developments. 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.
Contacts: | PartnerRe Ltd. | Citigate Sard Verbinnen |
(441) 292-0888 | (212) 687-8080 | |
Investor Contact: Robin Sidders | Drew Brown/Hallie Bozzi | |
Media Contact: Celia Powell |
PartnerRe Ltd. | Telephone +1 441 292 0888 |
Chesney House, | Fax +1 441 292 6080 |
96 Pitts Bay Road | www.partnerre.com |
Pembroke, Bermuda HM 08 |
PartnerRe Ltd.
Consolidated Statements of Operations and Comprehensive Income
(Expressed in thousands of U.S dollars, except per share data)
(Unaudited)
For the three months ended December 31, 2005 | For the three months ended December 31, 2004 | For the year ended December 31, 2005 | For the year ended December 31, 2004 | |||||||||
Revenues | ||||||||||||
Gross premiums written | $ | 671,377 | $ | 686,551 | $ | 3,665,238 | $ | 3,887,516 | ||||
Net premiums written | $ | 666,345 | $ | 682,998 | $ | 3,615,878 | $ | 3,852,672 | ||||
Decrease (increase) in unearned premiums | 240,686 | 259,334 | (16,689 | ) | (118,932 | ) | ||||||
Net premiums earned | 907,031 | 942,332 | 3,599,189 | 3,733,740 | ||||||||
Net investment income | 94,106 | 79,961 | 364,508 | 297,997 | ||||||||
Net realized investment gains | 57,895 | 38,646 | 206,874 | 117,339 | ||||||||
Other income | 14,702 | 4,343 | 34,920 | 17,293 | ||||||||
Total Revenues | 1,073,734 | 1,065,282 | 4,205,491 | 4,166,369 | ||||||||
Expenses | ||||||||||||
Losses and loss expenses and life policy benefits | 815,409 | 625,268 | 3,086,730 | 2,475,743 | ||||||||
Acquisition costs | 215,935 | 227,798 | 848,714 | 901,554 | ||||||||
Other operating expenses | 60,574 | 67,791 | 271,504 | 271,331 | ||||||||
Interest expense | 10,780 | 10,204 | 32,869 | 40,744 | ||||||||
Net foreign exchange (gains) losses | (377 | ) | (14,680 | ) | 3,543 | (16,586 | ) | |||||
Total Expenses | 1,102,321 | 916,381 | 4,243,360 | 3,672,786 | ||||||||
(Loss) income before taxes and interest in earnings of equity investments | (28,587 | ) | 148,901 | (37,869 | ) | 493,583 | ||||||
Income tax expense | 7,775 | 7,778 | 22,924 | 7,560 | ||||||||
Interest in earnings of equity investments | 2,722 | 2,546 | 9,729 | 6,330 | ||||||||
Net (loss) income | $ | (33,640 | ) | $ | 143,669 | $ | (51,064 | ) | $ | 492,353 | ||
Preferred dividends | $ | 8,631 | $ | 6,804 | $ | 34,525 | $ | 21,485 | ||||
Operating (loss) earnings available to common shareholders | $ | (79,320 | ) | $ | 120,813 | $ | (242,639 | ) | $ | 392,751 | ||
Comprehensive (loss) income | $ | (96,779 | ) | $ | 245,827 | $ | (228,486 | ) | $ | 576,289 | ||
Per Share Data: | ||||||||||||
(Loss) earnings per common share: | ||||||||||||
Basic operating (loss) earnings | $ | (1.42 | ) | $ | 2.27 | $ | (4.42 | ) | $ | 7.34 | ||
Net realized investment gains, net of tax | 0.66 | 0.31 | 2.86 | 1.46 | ||||||||
Basic net (loss) income | $ | (0.76 | ) | $ | 2.58 | $ | (1.56 | ) | $ | 8.80 | ||
Weighted average number of common shares | ||||||||||||
outstanding | 55,776.2 | 53,130.0 | 54,951.2 | 53,490.8 | ||||||||
Diluted operating (loss) earnings | $ | (1.42 | ) | $ | 2.25 | $ | (4.42 | ) | $ | 7.27 | ||
Net realized investment gains, net of tax | 0.66 | 0.29 | 2.86 | 1.44 | ||||||||
Diluted net (loss) income | $ | (0.76 | ) | $ | 2.54 | $ | (1.56 | ) | $ | 8.71 | ||
Weighted average number of common and | ||||||||||||
common equivalent shares outstanding | 55,776.2 | 53,809.0 | 54,951.2 | 54,047.4 |
8
PartnerRe Ltd.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars, except per share data and parenthetical share data)
(Unaudited)
December 31, 2005 | December 31, 2004 | ||||||
Assets | |||||||
Investments and cash | |||||||
Fixed maturities, at fair value | |||||||
(amortized cost: 2005, $6,682,243; 2004, $6,611,683) | $ | 6,686,822 | $ | 6,723,580 | |||
Short-term investments, at fair value | |||||||
(amortized cost: 2005, $231,442; 2004, $28,691) | 230,933 | 28,694 | |||||
Equities, at fair value | |||||||
(cost: 2005, $1,246,192; 2004, $887,006) | 1,334,374 | 1,010,777 | |||||
Trading securities, at fair value (cost: 2005, $210,432; 2004, $102,371) | 220,311 | 108,402 | |||||
Cash and cash equivalents, at fair value, which approximates amortized cost | 1,001,378 | 436,003 | |||||
Other invested assets | 104,920 | 90,268 | |||||
Total investments and cash | 9,578,738 | 8,397,724 | |||||
Accrued investment income | 143,548 | 151,871 | |||||
Reinsurance balances receivable | 1,493,507 | 1,522,989 | |||||
Reinsurance recoverable on paid and unpaid losses | 217,948 | 183,149 | |||||
Funds held by reinsured companies | 970,614 | 1,100,107 | |||||
Deferred acquisition costs | 437,741 | 409,332 | |||||
Deposit assets | 289,459 | 299,408 | |||||
Tax assets | 87,667 | 81,235 | |||||
Goodwill | 429,519 | 429,519 | |||||
Other | 95,389 | 104,564 | |||||
Total Assets | $ | 13,744,130 | $ | 12,679,898 | |||
Liabilities | |||||||
Unpaid losses and loss expenses | $ | 6,737,661 | $ | 5,766,629 | |||
Policy benefits for life and annuity contracts | 1,223,871 | 1,277,101 | |||||
Unearned premiums | 1,136,233 | 1,194,778 | |||||
Reinsurance balances payable | 127,607 | 166,218 | |||||
Ceded premiums payable | 25,110 | 2,439 | |||||
Funds held under reinsurance treaties | 18,910 | 21,875 | |||||
Deposit liabilities | 333,820 | 344,202 | |||||
Long-term debt | 620,000 | 220,000 | |||||
Net payable for securities purchased | 93,318 | 1,580 | |||||
Accounts payable, accrued expenses and other | 128,627 | 127,026 | |||||
Debt related to trust preferred securities | 206,186 | 206,186 | |||||
Total Liabilities | 10,651,343 | 9,328,034 | |||||
Shareholders’ Equity | |||||||
Common shares (par value $1.00, issued and outstanding: | |||||||
2005, 56,730,195; 2004, 54,854,398) | 56,730 | 54,854 | |||||
Series C cumulative preferred shares (par value $1.00, issued and outstanding: | |||||||
2005 and 2004, 11,600,000; aggregate liquidation preference: 2005 and 2004, $290,000,000) | 11,600 | 11,600 | |||||
Series D cumulative preferred shares (par value $1.00, issued and outstanding: | |||||||
2005 and 2004, 9,200,000; aggregate liquidation preference: 2005 and 2004, $230,000,000) | 9,200 | 9,200 | |||||
Additional paid-in capital | 1,373,992 | 1,288,292 | |||||
Deferred compensation | (107 | ) | (199 | ) | |||
Accumulated other comprehensive income: | |||||||
Net unrealized gains on investments, net of tax | 77,049 | 194,575 | |||||
Currency translation adjustment | 12,614 | 72,510 | |||||
Retained earnings | 1,551,709 | 1,721,032 | |||||
Total Shareholders’ Equity | 3,092,787 | 3,351,864 | |||||
Total Liabilities and Shareholders’ Equity | $ | 13,744,130 | $ | 12,679,898 | |||
Shareholders’ Equity Per Common Share | $ | 45.35 | $ | 51.63 | |||
Diluted Book Value Per Common and Common Equivalent | |||||||
Share (assuming exercise of all stock-based awards) | $ | 44.57 | $ | 50.99 | |||
Number of Diluted Common Shares Outstanding | 57,724.1 | 55,533.4 | |||||
9
PartnerRe Ltd.
Supplementary Information
(in millions of U.S. dollars)
(Unaudited)
SEGMENT INFORMATION
For the three months ended December 31, 2005
U.S. P&C | Global (Non- U.S. P&C) | Worldwide Specialty | Total Non-LifeSegment | ART Segment(A) | Life Segment | Corporate | Total | |||||||||||||||||
Gross premiums written | $ | 170 | $ | 111 | $ | 271 | $ | 552 | $ | 6 | $ | 113 | $ | - | $ | 671 | ||||||||
Net premiums written | $ | 170 | $ | 111 | $ | 271 | $ | 552 | $ | 6 | $ | 108 | $ | - | $ | 666 | ||||||||
Decrease in unearned premiums | 34 | 102 | 99 | 235 | 3 | 3 | - | 241 | ||||||||||||||||
Net premiums earned | $ | 204 | $ | 213 | $ | 370 | $ | 787 | $ | 9 | $ | 111 | $ | - | $ | 907 | ||||||||
Losses and loss expenses and life policy benefits | (195 | ) | (211 | ) | (315 | ) | (721 | ) | (18 | ) | (76 | ) | - | (815 | ) | |||||||||
Acquisition costs | (51 | ) | (55 | ) | (75 | ) | (181 | ) | (1 | ) | (34 | ) | - | (216 | ) | |||||||||
Technical Result | $ | (42 | ) | $ | (53 | ) | $ | (20 | ) | $ | (115 | ) | $ | (10 | ) | $ | 1 | $ | - | $ | (124 | ) | ||
Other income | n/a | n/a | n/a | 4 | 11 | - | - | 15 | ||||||||||||||||
Other operating expenses | n/a | n/a | n/a | (42 | ) | (3 | ) | (5 | ) | (11 | ) | (61 | ) | |||||||||||
Underwriting Result | n/a | n/a | n/a | $ | (153 | ) | $ | (2 | ) | $ | (4 | ) | n/a | $ | (170 | ) | ||||||||
Net investment income | n/a | n/a | n/a | n/a | - | 9 | 85 | 94 | ||||||||||||||||
Allocated Underwriting Result(6) | n/a | n/a | n/a | n/a | n/a | $ | 5 | n/a | n/a | |||||||||||||||
Net realized investment gains | n/a | n/a | n/a | n/a | n/a | n/a | 58 | 58 | ||||||||||||||||
Interest expense | n/a | n/a | n/a | n/a | n/a | n/a | (11 | ) | (11 | ) | ||||||||||||||
Net foreign exchange gains | n/a | n/a | n/a | n/a | n/a | n/a | - | - | ||||||||||||||||
Income tax expense | n/a | n/a | n/a | n/a | n/a | n/a | (8 | ) | (8 | ) | ||||||||||||||
Interest in earnings of equity investments | n/a | n/a | n/a | n/a | 3 | n/a | n/a | 3 | ||||||||||||||||
Net loss | n/a | n/a | n/a | n/a | n/a | n/a | n/a | $ | (34 | ) | ||||||||||||||
Loss ratio (1) | 95.8 | % | 98.8 | % | 85.2 | % | 91.6 | % | ||||||||||||||||
Acquisition ratio (2) | 24.8 | 25.9 | 20.3 | 23.0 | ||||||||||||||||||||
Technical ratio (3) | 120.6 | % | 124.7 | % | 105.5 | % | 114.6 | % | ||||||||||||||||
Other operating expense ratio (4) | 5.3 | |||||||||||||||||||||||
Combined ratio (5) | 119.9 | % | ||||||||||||||||||||||
For the three months ended December 31, 2004
U.S. P&C | Global (Non- U.S. P&C) | Worldwide Specialty | Total Non-LifeSegment | ART Segment(A) | Life Segment | Corporate | Total | |||||||||||||||||
Gross premiums written | $ | 180 | $ | 124 | $ | 258 | $ | 562 | $ | 1 | $ | 124 | $ | - | $ | 687 | ||||||||
Net premiums written | $ | 180 | $ | 124 | $ | 258 | $ | 562 | $ | 1 | $ | 120 | $ | - | $ | 683 | ||||||||
Decrease in unearned premiums | 28 | 107 | 119 | 254 | - | 5 | - | 259 | ||||||||||||||||
Net premiums earned | $ | 208 | $ | 231 | $ | 377 | $ | 816 | $ | 1 | $ | 125 | $ | - | $ | 942 | ||||||||
Losses and loss expenses and | ||||||||||||||||||||||||
life policy benefits | (150 | ) | (203 | ) | (172 | ) | (525 | ) | 1 | (101 | ) | - | (625 | ) | ||||||||||
Acquisition costs | (54 | ) | (60 | ) | (84 | ) | (198 | ) | - | (30 | ) | - | (228 | ) | ||||||||||
Technical Result | $ | 4 | $ | (32 | ) | $ | 121 | $ | 93 | $ | 2 | $ | (6 | ) | $ | - | $ | 89 | ||||||
Other income (loss) | n/a | n/a | n/a | 6 | (2 | ) | - | - | 4 | |||||||||||||||
Other operating expenses | n/a | n/a | n/a | (48 | ) | (2 | ) | (6 | ) | (12 | ) | (68 | ) | |||||||||||
Underwriting Result | n/a | n/a | n/a | $ | 51 | $ | (2 | ) | $ | (12 | ) | n/a | $ | 25 | ||||||||||
Net investment income | n/a | n/a | n/a | n/a | - | 11 | 69 | 80 | ||||||||||||||||
Allocated Underwriting Result(6) | n/a | n/a | n/a | n/a | n/a | $ | (1 | ) | n/a | n/a | ||||||||||||||
Net realized investment gains | n/a | n/a | n/a | n/a | n/a | n/a | 39 | 39 | ||||||||||||||||
Interest expense | n/a | n/a | n/a | n/a | n/a | n/a | (10 | ) | (10 | ) | ||||||||||||||
Net foreign exchange gains | n/a | n/a | n/a | n/a | n/a | n/a | 15 | 15 | ||||||||||||||||
Income tax expense | n/a | n/a | n/a | n/a | n/a | n/a | (8 | ) | (8 | ) | ||||||||||||||
Interest in earnings of equity investments | n/a | n/a | n/a | n/a | 3 | n/a | n/a | 3 | ||||||||||||||||
Net income | n/a | n/a | n/a | n/a | n/a | n/a | n/a | $ | 144 | |||||||||||||||
Loss ratio(1) | 72.3 | % | 87.5 | % | 45.7 | % | 64.3 | % | ||||||||||||||||
Acquisition ratio(2) | 25.6 | 25.8 | 22.4 | 24.2 | ||||||||||||||||||||
Technical ratio(3) | 97.9 | % | 113.3 | % | 68.1 | % | 88.5 | % | ||||||||||||||||
Other operating expense ratio(4) | 6.0 | |||||||||||||||||||||||
Combined ratio(5) | 94.5 | % | ||||||||||||||||||||||
(A) The Company reports the results of Channel Re on a one-quarter lag. The 2005 period includes the Company's share of Channel Re's net income in the amount of $2.6 million while the 2004 period includes the Company's share of Channel Re's net income in the amount of $2.5 million.
(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 operating expense ratio is obtained by dividing other operating expenses by net premiums earned. |
(5) | Combined ratio is the sum of the technical ratio and the other operating expense ratio. |
(6) | Allocated Underwriting Result is defined as net premiums earned and allocated net investment income less life policy benefits, acquisition costs and other operating expenses. |
10
PartnerRe Ltd.
Supplementary Information
(in millions of U.S. dollars)
(Unaudited)
SEGMENT INFORMATION
For the year ended December 31, 2005
U.S. P&C | Global (Non- U.S. P&C) | Worldwide Specialty | Total Non- Life Segment | ART Segment(A) | Life Segment | Corporate | Total | |||||||||||||||||||||||||
Gross premiums written | $ | 820 | $ | 837 | $ | 1,533 | $ | 3,190 | $ | 27 | $ | 448 | $ | - | $ | 3,665 | ||||||||||||||||
Net premiums written | $ | 819 | $ | 835 | $ | 1,501 | $ | 3,155 | $ | 27 | $ | 434 | $ | - | $ | 3,616 | ||||||||||||||||
Decrease (increase) in unearned premiums | 9 | 25 | (45 | ) | (11 | ) | (2 | ) | (4 | ) | - | (17 | ) | |||||||||||||||||||
Net premiums earned | $ | 828 | $ | 860 | $ | 1,456 | $ | 3,144 | $ | 25 | $ | 430 | $ | - | $ | 3,599 | ||||||||||||||||
Losses and loss expenses and | ||||||||||||||||||||||||||||||||
life policy benefits | (764 | ) | (637 | ) | (1,334 | ) | (2,735 | ) | (32 | ) | (320 | ) | - | (3,087 | ) | |||||||||||||||||
Acquisition costs | (200 | ) | (217 | ) | (308 | ) | (725 | ) | (3 | ) | (120 | ) | - | (848 | ) | |||||||||||||||||
Technical Result | $ | (136 | ) | $ | 6 | $ | (186 | ) | $ | (316 | ) | $ | (10 | ) | $ | (10 | ) | $ | - | $ | (336 | ) | ||||||||||
Other income | n/a | n/a | n/a | 4 | 31 | - | - | 35 | ||||||||||||||||||||||||
Other operating expenses | n/a | n/a | n/a | (185 | ) | (13 | ) | (23 | ) | (51 | ) | (272 | ) | |||||||||||||||||||
Underwriting Result | n/a | n/a | n/a | $ | (497 | ) | $ | 8 | $ | (33 | ) | n/a | $ | (573 | ) | |||||||||||||||||
Net investment income | n/a | n/a | n/a | n/a | - | 48 | 317 | 365 | ||||||||||||||||||||||||
Allocated Underwriting Result(6) | n/a | n/a | n/a | n/a | n/a | $ | 15 | n/a | n/a | |||||||||||||||||||||||
Net realized investment gains | n/a | n/a | n/a | n/a | n/a | n/a | 207 | 207 | ||||||||||||||||||||||||
Interest expense | n/a | n/a | n/a | n/a | n/a | n/a | (33 | ) | (33 | ) | ||||||||||||||||||||||
Net foreign exchange losses | n/a | n/a | n/a | n/a | n/a | n/a | (4 | ) | (4 | ) | ||||||||||||||||||||||
Income tax expense | n/a | n/a | n/a | n/a | n/a | n/a | (23 | ) | (23 | ) | ||||||||||||||||||||||
Interest in earnings of equity investments | n/a | n/a | n/a | n/a | 10 | n/a | n/a | 10 | ||||||||||||||||||||||||
Net loss | n/a | n/a | n/a | n/a | n/a | n/a | n/a | $ | (51 | ) | ||||||||||||||||||||||
Loss ratio (1) | 92.2 | % | 74.1 | % | 91.6 | % | 86.9 | % | ||||||||||||||||||||||||
Acquisition ratio (2) | 24.2 | 25.3 | 21.2 | 23.1 | ||||||||||||||||||||||||||||
Technical ratio (3) | 116.4 | % | 99.4 | % | 112.8 | % | 110.0 | % | ||||||||||||||||||||||||
Other operating expense ratio (4) | 5.9 | |||||||||||||||||||||||||||||||
Combined ratio (5) | 115.9 | % | ||||||||||||||||||||||||||||||
For the year ended December 31, 2004
U.S. P&C | Global (Non- U.S. P&C) | Worldwide Specialty | Total Non-Life Segment | ART Segment(A) | Life Segment | Corporate | Total | |||||||||||||||||||||||||
Gross premiums written | $ | 991 | $ | 944 | $ | 1,531 | $ | 3,466 | $ | 5 | $ | 417 | $ | - | $ | 3,888 | ||||||||||||||||
Net premiums written | $ | 990 | $ | 945 | $ | 1,509 | $ | 3,444 | $ | 5 | $ | 404 | $ | - | $ | 3,853 | ||||||||||||||||
(Increase) decrease in unearned premiums | (97 | ) | (16 | ) | (9 | ) | (122 | ) | 1 | 2 | - | (119 | ) | |||||||||||||||||||
Net premiums earned | $ | 893 | $ | 929 | $ | 1,500 | $ | 3,322 | $ | 6 | $ | 406 | $ | - | $ | 3,734 | ||||||||||||||||
Losses and loss expenses and | - | |||||||||||||||||||||||||||||||
life policy benefits | (699 | ) | (730 | ) | (744 | ) | (2,173 | ) | (7 | ) | (296 | ) | - | (2,476 | ) | |||||||||||||||||
Acquisition costs | (204 | ) | (238 | ) | (323 | ) | (765 | ) | (1 | ) | (136 | ) | - | (902 | ) | |||||||||||||||||
Technical Result | $ | (10 | ) | $ | (39 | ) | $ | 433 | $ | 384 | $ | (2 | ) | $ | (26 | ) | $ | - | $ | 356 | ||||||||||||
Other income | n/a | n/a | n/a | 6 | 11 | - | - | 17 | ||||||||||||||||||||||||
Other operating expenses | n/a | n/a | n/a | (194 | ) | (13 | ) | (22 | ) | (42 | ) | (271 | ) | |||||||||||||||||||
Underwriting Result | n/a | n/a | n/a | $ | 196 | $ | (4 | ) | $ | (48 | ) | n/a | $ | 102 | ||||||||||||||||||
Net investment income | n/a | n/a | n/a | n/a | - | 44 | 254 | 298 | ||||||||||||||||||||||||
Allocated Underwriting Result(6) | n/a | n/a | n/a | n/a | n/a | $ | (4 | ) | n/a | n/a | ||||||||||||||||||||||
Net realized investment gains | n/a | n/a | n/a | n/a | n/a | n/a | 117 | 117 | ||||||||||||||||||||||||
Interest expense | n/a | n/a | n/a | n/a | n/a | n/a | (41 | ) | (41 | ) | ||||||||||||||||||||||
Net foreign exchange gains | n/a | n/a | n/a | n/a | n/a | n/a | 17 | 17 | ||||||||||||||||||||||||
Income tax expense | n/a | n/a | n/a | n/a | n/a | n/a | (7 | ) | (7 | ) | ||||||||||||||||||||||
Interest in earnings of equity investments | n/a | n/a | n/a | n/a | 6 | n/a | n/a | 6 | ||||||||||||||||||||||||
Net income | n/a | n/a | n/a | n/a | n/a | n/a | n/a | $ | 492 | |||||||||||||||||||||||
Loss ratio (1) | 78.2 | % | 78.6 | % | 49.6 | % | 65.4 | % | ||||||||||||||||||||||||
Acquisition ratio (2) | 22.8 | 25.6 | 21.6 | 23.0 | ||||||||||||||||||||||||||||
Technical ratio (3) | 101.0 | % | 104.2 | % | 71.2 | 88.4 | % | |||||||||||||||||||||||||
Other operating expense ratio (4) | 5.9 | |||||||||||||||||||||||||||||||
Combined ratio (5) | 94.3 | % | ||||||||||||||||||||||||||||||
(A) The Company reports the results of Channel Re on a one-quarter lag. The 2005 period includes the Company's share of Channel Re's net income in the amount of $9.4 million for the period of October 2004 to September 2005 while the 2004 period includes the Company's share of Channel Re's net income in the amount of $6.0 million for the period of February (when Channel Re commenced business) to September 2004. | |
(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 operating expense ratio is obtained by dividing other operating expenses by net premiums earned. |
(5) | Combined ratio is the sum of the technical ratio and the other operating expense ratio. |
(6) | Allocated Underwriting Result is defined as net premiums earned and allocated net investment income less life |
policy benefits, acquisition costs and other operating expenses. |
11
PartnerRe Ltd.
Supplementary Information
(Unaudited)
For the three months ended December 31, 2005 | For the three months ended December 31, 2004 | For the year ended December 31, 2005 | For the year ended December 31, 2004 | ||||||||||
Distribution of Net Premiums Written by | |||||||||||||
Line of Business: | |||||||||||||
Non-Life | |||||||||||||
Property and Casualty | |||||||||||||
Property | 16 | % | 18 | % | 19 | % | 19 | % | |||||
Casualty | 20 | 19 | 19 | 21 | |||||||||
Motor | 6 | 7 | 8 | 10 | |||||||||
Worldwide Specialty | |||||||||||||
Agriculture | 3 | 5 | 3 | 4 | |||||||||
Aviation/Space | 9 | 10 | 6 | 6 | |||||||||
Catastrophe | 6 | 2 | 11 | 9 | |||||||||
Credit/Surety | 8 | 8 | 7 | 6 | |||||||||
Engineering/Energy | 6 | 6 | 5 | 6 | |||||||||
Marine | 4 | 3 | 3 | 2 | |||||||||
Special Risk | 5 | 4 | 6 | 6 | |||||||||
ART | 1 | - | 1 | - | |||||||||
Life | 16 | 18 | 12 | 11 | |||||||||
Geographic Distribution of Gross Premiums Written: | |||||||||||||
Europe | 43 | % | 43 | % | 46 | % | 45 | % | |||||
North America | 45 | 43 | 41 | 40 | |||||||||
Asia, Australia and New Zealand | 6 | 8 | 8 | 9 | |||||||||
Latin America, Caribbean and Africa | 6 | 6 | 5 | 6 |
As at December 31, 2005 | |||
Credit Ratings (Financial Strength Ratings): | |||
Standard & Poor's | AA- | ||
Moody's | Aa3 | ||
A.M. Best | A+ | ||
Fitch | AA |
As at December 31, 2005 (in thousands of U.S. dollars) | As at December 31, 2004 (in thousands of U.S. dollars) | |||||||||||
Capital Structure: | ||||||||||||
Long-term debt | $ | 620,000 | 16 | % | $ | 220,000 | 6 | % | ||||
Trust preferred securities(1) | 200,000 | 5 | 200,000 | 5 | ||||||||
6.75% Series C cumulative preferred shares, aggregate liquidation | 290,000 | 7 | 290,000 | 8 | ||||||||
6.5% Series D cumulative preferred shares, aggregate liquidation | 230,000 | 6 | 230,000 | 6 | ||||||||
Common shareholders' equity | 2,572,787 | 66 | 2,831,864 | 75 | ||||||||
Total Capital | $ | 3,912,787 | 100 | % | $ | 3,771,864 | 100 | % | ||||
(1)Neither the Trust that issued the securities nor PartnerRe Finance, which owns the Trust, meet the consolidation requirements of FIN 46(R). Accordingly, the Company shows the related intercompany debt of $206.2 million on its Consolidated Balance Sheets.
12
PartnerRe Ltd.
Supplementary Information
(Unaudited)
As at December 31, 2005 | As at December 31, 2004 | |||||||
Investment Portfolio: | ||||||||
Credit Quality | AAA | 65 | % | 62 | % | |||
AA | 3 | 2 | ||||||
A | 15 | 18 | ||||||
BBB | 11 | 12 | ||||||
Below Investment Grade/Unrated | 6 | 6 | ||||||
By Class | U.S. Government | 8 | % | 5 | % | |||
U.S. Mortgage/Asset Backed | 15 | 16 | ||||||
U.S. Corporates | 20 | 23 | ||||||
Foreign Fixed Income | 29 | 34 | ||||||
Equities and Equity Substitutes | 16 | 16 | ||||||
Cash (net of pending transactions) | 12 | 6 | ||||||
Expected average duration | 3.3 | Yrs | 3.4 | Yrs | ||||
Average yield to maturity at market | 4.5 | % | 3.8 | % | ||||
(fixed income securities and cash) | ||||||||
Average Credit Quality | AA | AA |
For the three months ended December 31, 2005 | For the three months ended December 31, 2004 | For the year ended December 31, 2005 | For the year ended December 31, 2004 | |||||||||||||
(in thousands of U.S. dollars except per share data) | ||||||||||||||||
Reconciliation of GAAP and non-GAAP measures: | ||||||||||||||||
Net (loss) income | $ | (33,640 | ) | $ | 143,669 | $ | (51,064 | ) | $ | 492,353 | ||||||
Less: | ||||||||||||||||
Net realized investment gains, net of tax | 37,049 | 16,052 | 157,050 | 78,117 | ||||||||||||
Dividends to preferred shareholders | 8,631 | 6,804 | 34,525 | 21,485 | ||||||||||||
Operating (loss) earnings available to common shareholders | $ | (79,320 | ) | $ | 120,813 | $ | (242,639 | ) | $ | 392,751 | ||||||
Diluted net (loss) income per common share | $ | (0.76 | ) | $ | 2.54 | $ | (1.56 | ) | $ | 8.71 | ||||||
Less: | ||||||||||||||||
Net realized investment gains, net of tax, per common share | 0.66 | 0.29 | 2.86 | 1.44 | ||||||||||||
Diluted operating (loss) earnings per common share | $ | (1.42 | ) | $ | 2.25 | $ | (4.42 | ) | $ | 7.27 | ||||||
Annualized return on beginning common shareholders' equity | ||||||||||||||||
calculated with net (loss) income | (6.0 | )% | 23.8 | % | (3.0 | )% | 20.4 | % | ||||||||
Less: | ||||||||||||||||
Net realized investment gains, net of tax | 5.2 | 2.8 | 5.6 | 3.4 | ||||||||||||
Annualized operating return on equity | (11.2 | )% | 21.0 | % | (8.6 | )% | 17.0 | % | ||||||||
13
PartnerRe Ltd.
Supplementary Information
(Unaudited)
(in thousands of U.S. dollars except per share data)
As at December 31, 2005 | As at December 31, 2004 | |||||
Reconciliation of GAAP and non-GAAP measures: | ||||||
Shareholders' equity | $ | 3,092,787 | $ | 3,351,864 | ||
Less: | ||||||
Liquidation value of Series C cumulative preferred shares | 290,000 | 290,000 | ||||
Liquidation value of Series D cumulative preferred shares | 230,000 | 230,000 | ||||
Common shareholders' equity | $ | 2,572,787 | $ | 2,831,864 | ||
Less: | ||||||
Net unrealized gains on fixed | ||||||
income securities, net of tax | 4,382 | 95,884 | ||||
Diluted book value excluding net unrealized | ||||||
gains on fixed income securities | $ | 2,568,405 | $ | 2,735,980 | ||
Divided by: | ||||||
Number of diluted common shares outstanding | 57,724.1 | 55,533.4 | ||||
Equals: | ||||||
Diluted book value per common and common equivalent | ||||||
share excluding net unrealized gains on fixed income securities | $ | 44.49 | $ | 49.27 | ||
14