Summary unaudited consolidated financial data for the period is set out below.
| News Release |  |
operating earnings per share is defined as net operating earnings 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.
Net premiums written for the second quarter 2006 were $815.9 million, a 7% increase from the second quarter of 2005. Total revenues for the quarter declined 10% as compared to the second quarter of 2005 to $921.1 million, including $859.0 million of net premiums earned, net investment income of $108.3 million, and net realized investment losses of $58.9 million.
For the first six months of 2006, net premiums written were $2.2 billion, representing a 1% decline from the same period in 2005. Net income was $270.8 million or $4.40 per share. Net income for the period includes a net after-tax realized gain on investments of $3.8 million or $0.07 per share. Operating earnings were $249.7 million, or $4.33 per share. Net income for the first six months of 2005 was $271.3 million or $4.56 per share including net after-tax realized gains of $72.2 million, or $1.30 per share. Operating earnings for the same period in 2005 were $181.9 million or $3.26 per share. Total revenues for the first six months of 2006 were $1.9 billion, including $1.7 billion of net premiums earned, net investment income of $208.3 million, and net realized investment losses of $3.8 million. Total revenues for the same period in 2005 were $2.1 billion.
Separately, the Company announced today that its Board of Directors declared a regular quarterly dividend of $0.40 per common share. The dividend will be payable on September 1, 2006, to common shareholders of record on August 22, 2006, with the stock trading ex-dividend commencing August 18, 2006.
Results by SegmentThe Non-Life segment reported net premiums written of $706 million for the second quarter, up 9% as compared to the second quarter of 2005. The combined ratio was 90.3% for the second quarter of 2006, compared to 89.4% for the same period in 2005. The Non-Life technical result was $121 million for the second quarter of 2006, compared to $131 million in 2005. For the first six months, Non-Life net premiums written were $1.9 billion, down 3% from the same period in 2005. The six month technical result was $255 million, compared to $206 million for the same period in 2005. The combined ratio for the six month period was 89.1% compared to 93.3% in 2005.
The U.S. Property and Casualty business, which represents approximately 21% of total net premiums written for the quarter, reported net premiums written of $170 million, up 13% over the prior year’s second quarter.Net premiums earned increased marginally to $205
| | 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 | |
million during the quarter when compared to the same period in 2005. The technical ratio for this sub-segment was 106.3%, compared to 94.4% in the second quarter of 2005. For the first six months of 2006, net premiums written were $466 million, essentially flat with the first six months of 2005. The six-month technical ratio was 102.0%, compared to 95.9% in 2005. The technical result for the half-year was a loss of $8 million compared to a gain of $17 million in 2005.
The Global (Non-U.S.) Property and Casualty business, which represents approximately 15% of total net premiums written for the quarter, reported net premiums written of $127 million for the second quarter of 2006, compared to $157 million for the same period in 2005. Net premiums earned during the quarter were $181 million, down 16% from $215 million in the same period last year. The technical ratio for this sub-segment was 79.2% compared to 96.9% for the same period in 2005. For the six months, net premiums written were down 16% to $491 million. The six-month technical ratio was 90.7%, compared to 92.2% in 2005. The technical result for the half-year was $34 million compared to $36 million in 2005.
The Worldwide Specialty business, which represents approximately 50% of total net premiums written for the quarter, reported net premiums written of $409 million for the second quarter, up 19% over the prior year quarter. Net premiums earned increased 2% during the quarter. This sub-segment’s technical ratio was 73.2%, compared to 67.9% for the second quarter of 2005. For the six-month period, net premiums written were up 4% to $936 million. The six-month technical ratio was 66.4%, compared to 77.5% in 2005. The technical result for the half-year was $229 million compared to $153 million in 2005.
The Life segment, which markets coverages primarily in Europe, Canada and Latin America, and represents approximately 13% of total net premiums written for the quarter, reported net premiums written of $103 million for the quarter, down 3% over the prior year quarter. The allocated underwriting result for the quarter was a loss of $1 million, compared to a gain of $4 million for the comparable period in 2005. For the six-month period, net premiums written increased 9% to $242 million, with an allocated underwriting gain of $2 million, compared to a gain of $7 million for the comparable period in 2005.
The ART (Alternative Risk Transfer) segment comprises structured risk transfer, principal 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 $15 million for the second quarter of 2006 compared to a breakeven result for the second quarter of 2005. For the first six months of 2006, the pre-tax contribution to net income was $22 million compared to $15 million for the same period in 2005.
| | 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 | |
Balance Sheet Items
During the second quarter of 2006, total investments and cash were essentially flat at $9.9 billion due to the effect of rising interest rates. Over a trailing 12-month period, total investments and cash increased 14% due to incremental cash flow, good returns on the equity portfolio, and proceeds of $549 million from a capital raise in October 2005. Gross Non-Life reserves were flat this quarter, but increased by 18% to $6.8 billion over the last 12 months. During the second quarter, the Company’s estimate of Non-Life reserves for prior accident years developed favorably by $62 million, which is reflected in the quarter’s results. The overall second quarter prior year reserve development in the Non-Life segment includes net adverse development of $18 million in the U.S. P&C sub-segment, net favorable development of $47 million in the Global (Non-U.S.) P&C sub-segment, and net favorable development of $33 million in the Worldwide Specialty sub-segment. In the second quarter of 2005, Non-Life reserves for prior years developed favorably by $66 million.
At June 30, 2006, total assets were $14.6 billion, total capitalization was $4.0 billion, and total shareholders’ equity was $3.2 billion. This compares to total assets of $13.7 billion, total capitalization of $3.9 billion, and total shareholders’ equity of $3.1 billion at December 31, 2005. Book value per common share at June 30, 2006 was $46.62 on a fully diluted basis, compared to $44.57 per share at December 31, 2005.
Commentary and Outlook“PartnerRe’s results and operating ROE during the second quarter and first half of 2006 are consistent with market conditions associated with the second half of the reinsurance cycle,” PartnerRe President & CEO Patrick Thiele said. “Generally, we are seeing strong pricing in capacity-restricted areas such as U.S. wind and energy, and consequently, PartnerRe saw growth in overall premium volume in the second quarter, driven by a combinations of increased pricing and new business in those lines. We continue to see mixed pricing in other lines with longer-tailed lines, particularly in the U.S., holding up better than shorter-tailed lines.”
Mr. Thiele added, “We continue to grow our GAAP book value despite the impact of rising interest rates, and we remain committed to our average book value growth target of 10% per year.”
| | 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 our 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. Risks reinsured include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, other lines, life/annuity and health, and alternative risk transfer solutions. At December 31, 2005, total revenues were $4.2 billion. As of June 30, 2006 total assets were $14.6 billion, total capitalization was $4.0 billion and total shareholders’ equity was $3.2 billion. Our major reinsurance operations have ratings of AA- (negative outlook) from Standard & Poor’s, Aa3 (negative outlook) from Moody’s, A+ (stable outlook) from A.M. Best, and AA (stable outlook) 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. 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.
| | 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 | |
| Contacts: | PartnerRe Ltd. | Citigate Sard Verbinnen |
| (441) 292-0888 | (212) 687-8080 |
| Investor Contact: Robin Sidders | Drew Brown/Robin Weinberg |
| 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 share and per share data)
(Unaudited)
| | | For the three
months ended
June 30,
2006 | | For the three
months ended
June 30,
2005 | | For the six
months ended
June 30,
2006 | | For the six
months ended
June 30,
2005 |
| | | | | | | | | | | | | | | | | |
| Revenues | | | | | | | | | | | | | | | | |
| | Gross premiums written | | $ | 817,610 | | | $ | 767,457 | | | $ | 2,190,456 | | | $ | 2,213,393 | |
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|
|
| | Net premiums written | | $ | 815,893 | | | $ | 763,855 | | | $ | 2,160,497 | | | $ | 2,178,724 | |
| | Decrease (increase) in unearned premiums | | | 43,070 | | | | 116,404 | | | | (468,713 | ) | | | (402,053 | ) |
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| | Net premiums earned | | | 858,963 | | | | 880,259 | | | | 1,691,784 | | | | 1,776,671 | |
| | Net investment income | | | 108,320 | | | | 90,224 | | | | 208,272 | | | | 177,077 | |
| | Net realized investment (losses) gains | | | (58,928 | ) | | | 55,588 | | | | (3,830 | ) | | | 92,970 | |
| | Other income (loss) | | | 12,704 | | | | (1,143 | ) | | | 20,460 | | | | 11,659 | |
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|
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| | Total revenues | | | 921,059 | | | | 1,024,928 | | | | 1,916,686 | | | | 2,058,377 | |
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| Expenses | | | | | | | | | | | | | | | | |
| | Losses and loss expenses and life policy benefits | | | 541,377 | | | | 546,171 | | | | 1,040,195 | | | | 1,160,036 | |
| | Acquisition costs | | | 199,425 | | | | 203,426 | | | | 398,682 | | | | 413,351 | |
| | Other operating expenses | | | 76,482 | | | | 74,500 | | | | 150,912 | | | | 147,190 | |
| | Interest expense | | | 13,200 | | | | 7,363 | | | | 25,921 | | | | 14,691 | |
| | Net foreign exchange losses | | | 4,116 | | | | 2,456 | | | | 7,462 | | | | 2,442 | |
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|
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|
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|
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|
| | Total expenses | | | 834,600 | | | | 833,916 | | | | 1,623,172 | | | | 1,737,710 | |
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| Income before taxes and interest in earnings of equity investments | | | 86,459 | | | | 191,012 | | | | 293,514 | | | | 320,667 | |
| | Income tax expense | | | 11,845 | | | | 33,497 | | | | 27,976 | | | | 54,289 | |
| | Interest in earnings of equity investments | | | 2,917 | | | | 2,394 | | | | 5,236 | | | | 4,946 | |
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| Net income | | $ | 77,531 | | | $ | 159,909 | | | $ | 270,774 | | | $ | 271,324 | |
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| Preferred dividends | | $ | 8,631 | | | $ | 8,631 | | | $ | 17,263 | | | $ | 17,263 | |
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| Operating earnings available to common shareholders | | $ | 115,932 | | | $ | 114,304 | | | $ | 249,676 | | | $ | 181,857 | |
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| Comprehensive income, net of tax | | $ | 50,691 | | | $ | 207,082 | | | $ | 161,609 | | | $ | 202,265 | |
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| Per Share Data: | | | | | | | | | | | | | | | | |
| | Earnings per common share: | | | | | | | | | | | | | | | | |
| | Basic operating earnings | | $ | 2.04 | | | $ | 2.09 | | | $ | 4.40 | | | $ | 3.31 | |
| | Net realized investment (losses) gains, net of tax | | | (0.83 | ) | | | 0.67 | | | | 0.07 | | | | 1.32 | |
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| | Basic net income | | $ | 1.21 | | | $ | 2.76 | | | $ | 4.47 | | | $ | 4.63 | |
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| | Weighted average number of common shares | | | | | | | | | | | | | | | | |
| | outstanding | | | 56,763.5 | | | | 54,791.5 | | | | 56,748.6 | | | | 54,873.6 | |
| | | | | | | | | | | | | | | | | | |
| | Diluted operating earnings | | $ | 2.01 | | | $ | 2.05 | | | $ | 4.33 | | | $ | 3.26 | |
| | Net realized investment (losses) gains, net of tax | | | (0.81 | ) | | | 0.67 | | | | 0.07 | | | | 1.30 | |
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| | Diluted net income | | $ | 1.20 | | | $ | 2.72 | | | $ | 4.40 | | | $ | 4.56 | |
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| | Weighted average number of common and | | | | | | | | | | | | | | | | |
| | common share equivalents outstanding | | | 57,656.0 | | | | 55,698.7 | | | | 57,628.6 | | | | 55,764.5 | |
7
PartnerRe Ltd.
Consolidated Balance Sheets
(Expressed in thousands of U.S dollars, except share, per share and parenthetical share data)
(Unaudited)
| | | June 30,
2006 | | December 31,
2005 |
| | | | | | | | | |
| Assets | | | | | | | | |
| | Investments: | | | | | | | | |
| | Fixed maturities, at fair value | | | | | | | | |
| | (amortized cost: 2006, $6,901,912; 2005, $6,682,243) | | $ | 6,758,874 | | | $ | 6,686,822 | |
| | Short-term investments, at fair value | | | | | | | | |
| | (amortized cost: 2006, $271,027; 2005, $231,442) | | | 270,485 | | | | 230,933 | |
| | Equities, at fair value | | | | | | | | |
| | (cost: 2006, $995,508; 2005, $1,246,192) | | | 1,059,029 | | | | 1,334,374 | |
| | Trading securities, at fair value (cost: 2006, $295,505; 2005, $210,432) | | | 297,619 | | | | 220,311 | |
| | Other invested assets | | | 98,321 | | | | 104,920 | |
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| | Total investments | | | 8,484,328 | | | | 8,577,360 | |
| | Cash and cash equivalents, at fair value, which approximates amortized cost | | | 1,407,979 | | | | 1,001,378 | |
| | Accrued investment income | | | 139,607 | | | | 143,548 | |
| | Reinsurance balances receivable | | | 1,873,063 | | | | 1,493,507 | |
| | Reinsurance recoverable on paid and unpaid losses | | | 196,539 | | | | 217,948 | |
| | Funds held by reinsured companies | | | 988,127 | | | | 970,614 | |
| | Deferred acquisition costs | | | 551,229 | | | | 437,741 | |
| | Deposit assets | | | 302,598 | | | | 289,459 | |
| | Net tax assets | | | 91,120 | | | | 87,667 | |
| | Goodwill | | | 429,519 | | | | 429,519 | |
| | Other | | | 87,291 | | | | 95,389 | |
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| Total assets | | $ | 14,551,400 | | | $ | 13,744,130 | |
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| Liabilities | | | | | | | | |
| | Unpaid losses and loss expenses | | $ | 6,802,291 | | | $ | 6,737,661 | |
| | Policy benefits for life and annuity contracts | | | 1,279,769 | | | | 1,223,871 | |
| | Unearned premiums | | | 1,650,518 | | | | 1,136,233 | |
| | Reinsurance balances payable | | | 135,621 | | | | 127,607 | |
| | Ceded premiums payable | | | 21,417 | | | | 25,110 | |
| | Funds held under reinsurance treaties | | | 20,395 | | | | 18,910 | |
| | Deposit liabilities | | | 348,951 | | | | 333,820 | |
| | Long-term debt | | | 620,000 | | | | 620,000 | |
| | Net payable for securities purchased | | | 123,962 | | | | 93,318 | |
| | Accounts payable, accrued expenses and other | | | 132,518 | | | | 128,627 | |
| | Debt related to trust preferred securities | | | 206,186 | | | | 206,186 | |
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| Total liabilities | | | 11,341,628 | | | | 10,651,343 | |
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| Shareholders’ Equity | | | | | | | | |
| | Common shares (par value $1.00, issued and outstanding: | | | | | | | | |
| | 2006, 56,799,778; 2005, 56,730,195) | | | 56,800 | | | | 56,730 | |
| | Series C cumulative preferred shares (par value $1.00, issued and outstanding: | | | | | | | | |
| | 2006 and 2005, 11,600,000; aggregate liquidation preference: 2006 and 2005, $290,000,000) | | | 11,600 | | | | 11,600 | |
| | Series D cumulative preferred shares (par value $1.00, issued and outstanding: | | | | | | | | |
| | 2006 and 2005, 9,200,000; aggregate liquidation preference: 2006 and 2005, $230,000,000) | | | 9,200 | | | | 9,200 | |
| | Additional paid-in capital | | | 1,391,816 | | | | 1,373,992 | |
| | Deferred compensation | | | - | | | | (107 | ) |
| | Accumulated other comprehensive income: | | | | | | | | |
| | Net unrealized (losses) gains on investments, net of tax | | | (71,711 | ) | | | 77,049 | |
| | Currency translation adjustment | | | 52,209 | | | | 12,614 | |
| | Retained earnings | | | 1,759,858 | | | | 1,551,709 | |
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| Total shareholders' equity | | | 3,209,772 | | | | 3,092,787 | |
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| Total liabilities and shareholders' equity | | $ | 14,551,400 | | | $ | 13,744,130 | |
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| Shareholders’ Equity Per Common Share | | $ | 47.36 | | | $ | 45.35 | |
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| Diluted Book Value Per Common and Common Share Equivalents | | | | | | | | |
| | Outstanding (assuming exercise of all stock-based awards) | | $ | 46.62 | | | $ | 44.57 | |
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| Number of Common and Common Share Equivalents Outstanding | | | 57,692.2 | | | | 57,724.1 | |
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8
PartnerRe Ltd.
Supplementary Information
(in millions of U.S. dollars)
(Unaudited)
SEGMENT INFORMATION
For the three months ended June 30, 2006
| | | | 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 | | $ | 170 | | | $ | 128 | | | $ | 408 | | | $ | 706 | | | $ | 7 | | | $ | 105 | | | $ | - | | | $ | 818 | |
| Net premiums written | | $ | 170 | | | $ | 127 | | | $ | 409 | | | $ | 706 | | | $ | 7 | | | $ | 103 | | | $ | - | | | $ | 816 | |
| Decrease (increase) in unearned premiums | | | 35 | | | | 54 | | | | (51 | ) | | | 38 | | | | 1 | | | | 4 | | | | - | | | | 43 | |
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| Net premiums earned | | $ | 205 | | | $ | 181 | | | $ | 358 | | | $ | 744 | | | $ | 8 | | | $ | 107 | | | $ | - | | | $ | 859 | |
| Losses and loss expenses and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| life policy benefits | | | (170 | ) | | | (95 | ) | | | (192 | ) | | | (457 | ) | | | (3 | ) | | | (82 | ) | | | - | | | | (542 | ) |
| Acquisition costs | | | (48 | ) | | | (48 | ) | | | (70 | ) | | | (166 | ) | | | (1 | ) | | | (32 | ) | | | - | | | | (199 | ) |
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| Technical result | | $ | (13 | ) | | $ | 38 | | | $ | 96 | | | $ | 121 | | | $ | 4 | | | $ | (7 | ) | | $ | - | | | $ | 118 | |
| Other income | | | n/a | | | | n/a | | | | n/a | | | | - | | | | 13 | | | | - | | | | - | | | | 13 | |
| Other operating expenses | | | n/a | | | | n/a | | | | n/a | | | | (48 | ) | | | (5 | ) | | | (7 | ) | | | (16 | ) | | | (76 | ) |
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| Underwriting result | | | n/a | | | | n/a | | | | n/a | | | $ | 73 | | | $ | 12 | | | $ | (14 | ) | | | n/a | | | $ | 55 | |
| Net investment income | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | - | | | | 13 | | | | 95 | | | | 108 | |
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| Allocated underwriting result(1) | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | $ | (1 | ) | | | n/a | | | | n/a | |
| Net realized investment losses | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (59 | ) | | | (59 | ) |
| Interest expense | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (13 | ) | | | (13 | ) |
| 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 | | | | (12 | ) | | | (12 | ) |
| Interest in earnings of equity investments | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 3 | | | | n/a | | | | n/a | | | | 3 | |
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| Net income | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | $ | 78 | |
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| Loss ratio (2) | | | 83.0 | % | | | 52.3 | % | | | 53.7 | % | | | 61.4 | % | | | | | | | | | | | | | | | | |
| Acquisition ratio (3) | | | 23.3 | | | | 26.9 | | | | 19.5 | | | | 22.4 | | | | | | | | | | | | | | | | | |
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| Technical ratio (4) | | | 106.3 | % | | | 79.2 | % | | | 73.2 | % | | | 83.8 | % | | | | | | | | | | | | | | | | |
| Other operating expense ratio (5) | | | | | | | | | | | | | | | 6.5 | | | | | | | | | | | | | | | | | |
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| Combined ratio (6) | | | | | | | | | | | | | | | 90.3 | % | | | | | | | | | | | | | | | | |
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| For the three months ended June 30, 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 | | $ | 150 | | | $ | 156 | | | $ | 345 | | | $ | 651 | | | $ | 7 | | | $ | 109 | | | $ | - | | | $ | 767 | |
| Net premiums written | | $ | 150 | | | $ | 157 | | | $ | 344 | | | $ | 651 | | | $ | 7 | | | $ | 106 | | | $ | - | | | $ | 764 | |
| Decrease (increase) in unearned premiums | | | 51 | | | | 58 | | | | 6 | | | | 115 | | | | (4 | ) | | | 5 | | | | - | | | | 116 | |
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| Net premiums earned | | $ | 201 | | | $ | 215 | | | $ | 350 | | | $ | 766 | | | $ | 3 | | | $ | 111 | | | $ | - | | | $ | 880 | |
| Losses and loss expenses and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| life policy benefits | | | (142 | ) | | | (157 | ) | | | (166 | ) | | | (465 | ) | | | - | | | | (81 | ) | | | - | | | | (546 | ) |
| Acquisition costs | | | (48 | ) | | | (51 | ) | | | (71 | ) | | | (170 | ) | | | - | | | | (33 | ) | | | - | | | | (203 | ) |
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| Technical result | | $ | 11 | | | $ | 7 | | | $ | 113 | | | $ | 131 | | | $ | 3 | | | $ | (3 | ) | | $ | - | | | $ | 131 | |
| Other loss | | | n/a | | | | n/a | | | | n/a | | | | - | | | | (1 | ) | | | - | | | | - | | | | (1 | ) |
| Other operating expenses | | | n/a | | | | n/a | | | | n/a | | | | (49 | ) | | | (4 | ) | | | (6 | ) | | | (16 | ) | | | (75 | ) |
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| Underwriting result | | | n/a | | | | n/a | | | | n/a | | | $ | 82 | | | $ | (2 | ) | | $ | (9 | ) | | | n/a | | | $ | 55 | |
| Net investment income | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | - | | | | 13 | | | | 77 | | | | 90 | |
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| Allocated underwriting result(1) | | | 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 | | | | 56 | | | | 56 | |
| Interest expense | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (7 | ) | | | (7 | ) |
| Net foreign exchange losses | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (3 | ) | | | (3 | ) |
| Income tax expense | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (33 | ) | | | (33 | ) |
| Interest in earnings of equity investments | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 2 | | | | n/a | | | | n/a | | | | 2 | |
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| Net income | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | $ | 160 | |
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| Loss ratio (2) | | | 70.7 | % | | | 73.0 | % | | | 47.5 | % | | | 60.7 | % | | | | | | | | | | | | | | | | |
| Acquisition ratio (3) | | | 23.7 | | | | 23.9 | | | | 20.4 | | | | 22.3 | | | | | | | | | | | | | | | | | |
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| Technical ratio (4) | | | 94.4 | % | | | 96.9 | % | | | 67.9 | % | | | 83.0 | % | | | | | | | | | | | | | | | | |
| Other operating expense ratio (5) | | | | | | | | | | | | | | | 6.4 | | | | | | | | | | | | | | | | | |
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| Combined ratio (6) | | | | | | | | | | | | | | | 89.4 | % | | | | | | | | | | | | | | | | |
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(A) The Company reports the results of Channel Re on a one-quarter lag. The 2006 and 2005 periods include the Company's share of Channel Re's net income in the amount of $2.8 million and $2.3 million, respectively.
| (1) | Allocated underwriting result is defined as net premiums earned and allocated net investment income less life policy benefits, acquisition costs and other operating expenses. |
| (2) | Loss ratio is obtained by dividing losses and loss expenses by net premiums earned. |
| (3) | Acquisition ratio is obtained by dividing acquisition costs by net premiums earned. |
| (4) | Technical ratio is defined as the sum of the loss ratio and the acquisition ratio. |
| (5) | Other operating expense ratio is obtained by dividing other operating expenses by net premiums earned. |
| (6) | Combined ratio is the sum of the technical ratio and the other operating expense ratio. |
| |
9
PartnerRe Ltd.
Supplementary Information
(in millions of U.S. dollars)
(Unaudited)
SEGMENT INFORMATION
For the six months ended June 30, 2006
| | | | 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 | | $ | 466 | | | $ | 493 | | | $ | 956 | | | $ | 1,915 | | | $ | 26 | | | $ | 249 | | | $ | - | | | $ | 2,190 | |
| Net premiums written | | $ | 466 | | | $ | 491 | | | $ | 936 | | | $ | 1,893 | | | $ | 25 | | | $ | 242 | | | $ | - | | | $ | 2,160 | |
| Increase in unearned premiums | | | (62 | ) | | | (126 | ) | | | (255 | ) | | | (443 | ) | | | (10 | ) | | | (15 | ) | | | - | | | | (468 | ) |
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| Net premiums earned | | $ | 404 | | | $ | 365 | | | $ | 681 | | | $ | 1,450 | | | $ | 15 | | | $ | 227 | | | $ | - | | | $ | 1,692 | |
| Losses and loss expenses and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| life policy benefits | | | (313 | ) | | | (232 | ) | | | (319 | ) | | | (864 | ) | | | (7 | ) | | | (169 | ) | | | - | | | | (1,040 | ) |
| Acquisition costs | | | (99 | ) | | | (99 | ) | | | (133 | ) | | | (331 | ) | | | (2 | ) | | | (66 | ) | | | - | | | | (399 | ) |
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| Technical result | | $ | (8 | ) | | $ | 34 | | | $ | 229 | | | $ | 255 | | | $ | 6 | | | $ | (8 | ) | | $ | - | | | $ | 253 | |
| Other income | | | n/a | | | | n/a | | | | n/a | | | | - | | | | 20 | | | | - | | | | - | | | | 20 | |
| Other operating expenses | | | n/a | | | | n/a | | | | n/a | | | | (96 | ) | | | (9 | ) | | | (14 | ) | | | (32 | ) | | | (151 | ) |
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| Underwriting result | | | n/a | | | | n/a | | | | n/a | | | $ | 159 | | | $ | 17 | | | $ | (22 | ) | | | n/a | | | $ | 122 | |
| Net investment income | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | - | | | | 24 | | | | 184 | | | | 208 | |
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| Allocated underwriting result(1) | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | $ | 2 | | | | n/a | | | | n/a | |
| Net realized investment losses | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (3 | ) | | | (3 | ) |
| Interest expense | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (26 | ) | | | (26 | ) |
| Net foreign exchange losses | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (7 | ) | | | (7 | ) |
| Income tax expense | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (28 | ) | | | (28 | ) |
| Interest in earnings of equity investments | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 5 | | | | n/a | | | | n/a | | | | 5 | |
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| Net income | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | $ | 271 | |
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| Loss ratio (2) | | | 77.5 | % | | | 63.7 | % | | | 46.8 | % | | | 59.6 | % | | | | | | | | | | | | | | | | |
| Acquisition ratio (3) | | | 24.5 | | | | 27.0 | | | | 19.6 | | | | 22.9 | | | | | | | | | | | | | | | | | |
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| Technical ratio (4) | | | 102.0 | % | | | 90.7 | % | | | 66.4 | % | | | 82.5 | % | | | | | | | | | | | | | | | | |
| Other operating expense ratio (5) | | | | | | | | | | | | | | | 6.6 | | | | | | | | | | | | | | | | | |
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| Combined ratio (6) | | | | | | | | | | | | | | | 89.1 | % | | | | | | | | | | | | | | | | |
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For the six months ended June 30, 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 | | $ | 461 | | | $ | 589 | | | $ | 920 | | | $ | 1,970 | | | $ | 13 | | | $ | 230 | | | $ | - | | | $ | 2,213 | |
| Net premiums written | | $ | 462 | | | $ | 587 | | | $ | 895 | | | $ | 1,944 | | | $ | 13 | | | $ | 222 | | | $ | - | | | $ | 2,179 | |
| Increase in unearned premiums | | | (39 | ) | | | (130 | ) | | | (215 | ) | | | (384 | ) | | | (8 | ) | | | (11 | ) | | | - | | | | (403 | ) |
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| Net premiums earned | | $ | 423 | | | $ | 457 | | | $ | 680 | | | $ | 1,560 | | | $ | 5 | | | $ | 211 | | | $ | - | | | $ | 1,776 | |
| Losses and loss expenses and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| life policy benefits | | | (304 | ) | | | (308 | ) | | | (386 | ) | | | (998 | ) | | | - | | | | (162 | ) | | | - | | | | (1,160 | ) |
| Acquisition costs | | | (102 | ) | | | (113 | ) | | | (141 | ) | | | (356 | ) | | | (1 | ) | | | (56 | ) | | | - | | | | (413 | ) |
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| Technical result | | $ | 17 | | | $ | 36 | | | $ | 153 | | | $ | 206 | | | $ | 4 | | | $ | (7 | ) | | $ | - | | | $ | 203 | |
| Other income | | | n/a | | | | n/a | | | | n/a | | | | - | | | | 12 | | | | - | | | | - | | | | 12 | |
| Other operating expenses | | | n/a | | | | n/a | | | | n/a | | | | (102 | ) | | | (6 | ) | | | (11 | ) | | | (28 | ) | | | (147 | ) |
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| Underwriting result | | | n/a | | | | n/a | | | | n/a | | | $ | 104 | | | $ | 10 | | | $ | (18 | ) | | | n/a | | | $ | 68 | |
| Net investment income | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | - | | | | 25 | | | | 152 | | | | 177 | |
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| Allocated underwriting result(1) | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | $ | 7 | | | | n/a | | | | n/a | |
| Net realized investment gains | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 93 | | | | 93 | |
| Interest expense | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (15 | ) | | | (15 | ) |
| Net foreign exchange losses | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (3 | ) | | | (3 | ) |
| Income tax expense | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | (54 | ) | | | (54 | ) |
| Interest in earnings of equity investments | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 5 | | | | n/a | | | | n/a | | | | 5 | |
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| Net income | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | $ | 271 | |
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| Loss ratio (2) | | | 71.9 | % | | | 67.4 | % | | | 56.7 | % | | | 63.9 | % | | | | | | | | | | | | | | | | |
| Acquisition ratio (3) | | | 24.0 | | | | 24.8 | | | | 20.8 | | | | 22.9 | | | | | | | | | | | | | | | | | |
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| Technical ratio (4) | | | 95.9 | % | | | 92.2 | % | | | 77.5 | % | | | 86.8 | % | | | | | | | | | | | | | | | | |
| Other operating expense ratio (5) | | | | | | | | | | | | | | | 6.5 | | | | | | | | | | | | | | | | | |
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| Combined ratio (6) | | | | | | | | | | | | | | | 93.3 | % | | | | | | | | | | | | | | | | |
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(A) The Company reports the results of Channel Re on a one-quarter lag. The 2006 and 2005 periods include the Company's share of Channel Re's net income in the amount of $5.1 million and $4.8 million, respectively.
| (1) | Allocated underwriting result is defined as net premiums earned and allocated net investment income less life policy benefits, acquisition costs and other operating expenses. |
| (2) | Loss ratio is obtained by dividing losses and loss expenses by net premiums earned. |
| (3) | Acquisition ratio is obtained by dividing acquisition costs by net premiums earned. |
| (4) | Technical ratio is defined as the sum of the loss ratio and the acquisition ratio. |
| (5) | Other operating expense ratio is obtained by dividing other operating expenses by net premiums earned. |
| (6) | Combined ratio is the sum of the technical ratio and the other operating expense ratio. |
10
PartnerRe Ltd.
Supplementary Information
(Unaudited)
| | | | | For the three
months ended
June 30,
2006 | | | For the three
months ended
June 30,
2005 | | | For the six
months ended
June 30,
2006 | | | For the six
months ended
June 30,
2005 | |
| Distribution of Net Premiums Written by | | | | | | | | | | | | |
| Line of Business: | | | | | | | | | | | | |
| | Non-Life | | | | | | | | | | | | |
| | | Property and Casualty | | | | | | | | | | | | |
| | | | Property | | 15 | % | | 17 | % | | 19 | % | | 20 | % |
| | | | Casualty | | 18 | | | 16 | | | 19 | | | 19 | |
| | | | Motor | | 3 | | | 7 | | | 6 | | | 9 | |
| | | Worldwide Specialty | | | | | | | | | | | | |
| | | | Agriculture | | 6 | | | 6 | | | 4 | | | 3 | |
| | | | Aviation/Space | | 6 | | | 7 | | | 4 | | | 5 | |
| | | | Catastrophe | | 16 | | | 11 | | | 16 | | | 13 | |
| | | | Credit/Surety | | 7 | | | 8 | | | 5 | | | 6 | |
| | | | Engineering | | 5 | | | 5 | | | 4 | | | 4 | |
| | | | Energy | | 3 | | | - | | | 2 | | | - | |
| | | | Marine | | 3 | | | 3 | | | 3 | | | 3 | |
| | | | Specialty property | | 2 | | | 2 | | | 3 | | | 3 | |
| | | | Specialty casualty | | 2 | | | 3 | | | 3 | | | 4 | |
| | ART | | 1 | | | 1 | | | 1 | | | 1 | |
| | Life | | 13 | | | 14 | | | 11 | | | 10 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Geographic Distribution of Gross Premiums Written: | | | | | | | | | | | | |
| | | | North America | | 50 | % | | 41 | % | | 43 | % | | 38 | % |
| | | | Europe | | 36 | | | 44 | | | 44 | | | 50 | |
| | | | Asia, Australia and New Zealand | | 9 | | | 11 | | | 8 | | | 8 | |
| | | | Latin America, Caribbean and Africa | | 5 | | | 4 | | | 5 | | | 4 | |
| | As at
June 30,
2006 | |
| Financial Strength Ratings: | | |
| Standard & Poor's | AA- | |
| Moody's | Aa3 | |
| A.M. Best | A+ | |
| Fitch | AA | |
| | | | As at
June 30,
2006 | | | As at
December 31,
2005 |
| | | | (in thousands of U.S. dollars) | | | (in thousands of U.S. dollars) |
| Capital Structure: | | | | | | | | | | | | |
| Long-term debt | | $ | 620,000 | | 15 | % | | $ | 620,000 | | 16 | % |
| Trust preferred securities, aggregate liquidation(1) | | | 200,000 | | 5 | | | | 200,000 | | 5 | |
| 6.75% Series C cumulative preferred shares, aggregate liquidation | | | 290,000 | | 7 | | | | 290,000 | | 7 | |
| 6.5% Series D cumulative preferred shares, aggregate liquidation | | | 230,000 | | 6 | | | | 230,000 | | 6 | |
| Common shareholders' equity | | | 2,689,772 | | 67 | | | | 2,572,787 | | 66 | |
| |
|
| |
| | |
|
| |
| |
| Total Capital | | $ | 4,029,772 | | 100 | % | | $ | 3,912,787 | | 100 | % |
| |
|
| |
| | |
|
| |
| |
| | | | | | | | | | | | | |
| (1) Neither the Trust that issued the securities nor PartnerRe Finance, which owns the Trust, meets the consolidation requirements of FIN 46(R). Accordingly, the Company shows the related intercompany debt of $206.2 million on its Consolidated Balance Sheets. |
11
PartnerRe Ltd.
Supplementary Information
(Unaudited)
| | | | As at
June 30,
2006 | | | As at
December 31,
2005 | |
| Investment Portfolio: | | | | | | | | |
| Credit Quality | | AAA | | 68 | % | | 65 | % |
| | AA | | 4 | | | 3 | |
| | A | | 13 | | | 15 | |
| | BBB | | 11 | | | 11 | |
| | Below Investment Grade/Unrated | | 4 | | | 6 | |
| | | | | | | | | |
| By Class | | U.S. Government | | 11 | % | | 8 | % |
| | U.S. Mortgage/Asset Backed | | 15 | | | 15 | |
| | U.S. Corporates | | 20 | | | 20 | |
| | Foreign Fixed Income | | 28 | | | 29 | |
| | Equities and Equity Substitutes | | 13 | | | 16 | |
| | Cash (net of pending transactions) | | 13 | | | 12 | |
| Expected average duration | | | | 3.3 | Yrs | | 3.3 | Yrs |
| Average yield to maturity at market | | | | 5.1 | % | | 4.5 | % |
| (fixed income securities and cash) | | | | | | | | |
| Average Credit Quality | | | | AA | | | AA | |
| | | | For the three
months ended
June 30,
2006 | | | | For the three
months ended
June 30,
2005 | | | For the six
months ended
June 30,
2006 | | | For the six
months ended
June 30,
2005 | |
| | | | (in thousands of U.S. dollars except per share data) | |
| Reconciliation of GAAP and non-GAAP measures: | | | | | | | | | | | | | | |
| Annualized return on beginning common shareholders' equity | | | | | | | | | | | | | | |
| calculated with net income available to common shareholders | | | 10.7 | % | | | 21.4 | % | | 19.7 | % | | 17.9 | % |
| Less: | | | | | | | | | | | | | | |
| Net realized investment (losses) gains, net of tax | | | (7.3 | ) | | | 5.3 | | | 0.3 | | | 5.1 | |
| |
|
|
| | |
| | |
| | |
| |
| Annualized operating return on beginning common shareholders' equity | | | 18.0 | % | | | 16.1 | % | | 19.4 | % | | 12.8 | % |
| |
|
|
| | |
| | |
| | |
| |
| Net income | | $ | 77,531 | | | $ | 159,909 | | $ | 270,774 | | $ | 271,324 | |
| Less: | | | | | | | | | | | | | | |
| Net realized investment (losses) gains, net of tax | | | (47,032 | ) | | | 36,974 | | | 3,835 | | | 72,204 | |
| Dividends to preferred shareholders | | | 8,631 | | | | 8,631 | | | 17,263 | | | 17,263 | |
| |
|
|
| | |
| | |
| | |
| |
| Operating earnings available to common shareholders | | $ | 115,932 | | | $ | 114,304 | | $ | 249,676 | | $ | 181,857 | |
| |
|
|
| | |
| | |
| | |
| |
| Per diluted share: | | | | | | | | | | | | | | |
| Net income | | $ | 1.20 | | | $ | 2.72 | | $ | 4.40 | | $ | 4.56 | |
| Less: | | | | | | | | | | | | | | |
| Net realized investment (losses) gains, net of tax | | | (0.81 | ) | | | 0.67 | | | 0.07 | | | 1.30 | |
| |
|
|
| | |
| | |
| | |
| |
| Diluted operating earnings | | $ | 2.01 | | | $ | 2.05 | | $ | 4.33 | | $ | 3.26 | |
| |
|
|
| | |
| | |
| | |
| |
12
PartnerRe Ltd.
Supplementary Information
(in thousands of U.S. dollars except share and per share data)
(Unaudited)
| | | As at
June 30,
2006 | | | As at
December 31,
2005 |
| Reconciliation of GAAP and non-GAAP measures: | | | | | | |
| Shareholders' equity | | $ | 3,209,772 | | $ | 3,092,787 |
| Less: | | | | | | |
| 6.75% Series C cumulative preferred shares, aggregate liquidation | | | 290,000 | | | 290,000 |
| 6.5% Series D cumulative preferred shares, aggregate liquidation | | | 230,000 | | | 230,000 |
| | |
|
| |
|
| Common shareholders' equity | | $ | 2,689,772 | | $ | 2,572,787 |
| Less: | | | | | | |
| Net unrealized (losses) gains on fixed | | | | | | |
| income securities, net of tax | | | (120,953 | ) | | 4,382 |
| | |
|
| |
|
| Book value excluding net unrealized gains or losses | | | | | | |
| on fixed income securities | | $ | 2,810,725 | | $ | 2,568,405 |
| | |
|
| |
|
| Divided by: | | | | | | |
| Number of common and common share equivalents outstanding | | | 57,692.2 | | | 57,724.1 |
| Equals: | | | | | | |
| Diluted book value per common and common share equivalents | | | | | | |
| outstanding excluding net unrealized gains or losses on | | | | | | |
| fixed income securities | | $ | 48.72 | | $ | 44.49 |
| | |
|
| |
|
13
