Summary unaudited consolidated financial data for the period is set out below.
| U.S.$ thousands (except per share amounts and ratios) | Three months ended March 31 |
| | 2008 | 2007 |
| Net Premiums Written | $1,411,564 | $1,270,573 |
| Net Premiums Earned | $909,753 | $842,042 |
| Non-Life Combined Ratio | 92.3% | 84.8% |
| Net Income | $129,020 | $169,266 |
| Net Income per share (a) | $2.16 | $2.76 |
| Operating Earnings (a) | $110,211 | $154,924 |
| Operating Earnings per share (a) | $1.98 | $2.66 |
| (a) | Net income per share is defined as net income available to common shareholders divided by the weighted average number of fully diluted shares outstanding for the period. Net income available to common shareholders is defined as net income less preferred dividends. Operating earnings is defined as net income available to common shareholders excluding after-tax net realized gains/losses on investments and interest in earnings/losses of equity investments. Operating earnings per share is defined as operating earnings divided by the weighted average number of fully diluted shares outstanding for the period. |
Net premiums written for the first quarter of 2008 were $1.4 billion, compared to $1.3 billion for the first quarter of 2007. Total revenues for the quarter were $1.1 billion compared to $962 million for first quarter of 2007. Total revenues include $909.8 million of net premiums earned, net investment income of $137.0 million, and net realized investment gains of $25.1 million.
During the first quarter of 2008, the Company adopted FAS 159. As a result, the Company reclassified ‘available for sale securities’ as ‘trading securities’ which has the effect of recording market value movements of the Company’s investment portfolio through the net realized gains and losses line on the income statement.
Also during the first quarter of 2008, the Company repurchased 188,660 common shares at a total cost of approximately $15.0 million. There are approximately 4.3 million common shares remaining under the current repurchase authorization of November 2007.
Separately, the Company announced today that its Board of Directors declared a regular quarterly dividend of $0.46 per common share. The dividend will be payable on June 2,
PartnerRe Ltd. Wellesley House South 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com | |
2008, to common shareholders of record on May 23, 2008, with the stock trading ex-dividend commencing May 21, 2008.
Results by Segment
The Non-Life segment reported net premiums written of $1.2 billion for the first quarter of 2008, compared to $1.1 billion for the prior year’s first quarter. The combined ratio was 92.3% for the first quarter of 2008, compared to 84.8% for the same period in 2007. The Non-Life technical result was $116 million for the first quarter of 2008. This compares to $159 million in the first quarter of 2007.
The U.S. business, which represented approximately 24% of total net premiums written for the quarter, reported net premiums written of $332 million for the first quarter of 2008, compared to $295 million for the prior year’s first quarter. Net premiums earned were $266 million for the quarter, compared to $221 million in the same period in 2007. The technical ratio for this sub-segment was 89.1%, compared to 87.9% in the first quarter of 2007.
The Global (Non-U.S.) P&C business, which represented approximately 26% of total net premiums written for the quarter, reported net premiums written of $373 million for the first quarter of 2008 compared to $332 million for the same period in 2007. Net premiums earned during the quarter were $201 million, compared to $177 million in the prior year’s first quarter. The technical ratio for this sub-segment was 99.3% compared to 92.7% for the same period in 2007.
The Global (Non-U.S.) Specialty business, which represented approximately 24% of total net premiums written for the quarter, reported net premiums written of $333 million for the first quarter of 2008, compared to $284 million for the prior year period. Net premiums earned were $219 million for the quarter, flat with the same period in 2007. This sub-segment’s technical ratio was 92.3% compared to 71.0% for the first quarter of 2007.
The Catastrophe business, which represented approximately 14% of total net premiums written for the quarter, reported net premiums written of $198 million for the first quarter of 2008, compared to $212 million for the prior year period. Net premiums earned were $77 million for the current quarter, compared to $94 million for the same period in 2007. This sub-segment’s technical ratio was 11.1% for the quarter compared to 40.9% for the first quarter of 2007.
The Life segment, which writes business primarily in Europe, Canada and Latin America, and represented approximately 12% of total net premiums written for the quarter, reported
PartnerRe Ltd. Wellesley House South 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com | |
net premiums written of $170 million for the quarter, up 15% as compared with the first quarter of 2007. The allocated underwriting result for the quarter was $2 million, compared to $7 million for the comparable period in 2007.
The Company’s capital markets and investment activities are reported under the heading of “Corporate and Other”. Within Corporate and Other, capital markets and investment activities contributed $148 million to pre-tax income in the first quarter of 2008.
Balance Sheet Items
At March 31, 2008, total assets were $17.3 billion as compared to $16.0 billion at December 31, 2007. Over the trailing 12 month period, total investments and cash increased 11% to $12.2 billion. Gross Non-Life loss and loss expense reserves increased 9% year over year to $7.6 billion at March 31, 2008. During the first quarter of 2008, the Company’s estimate of Non-Life reserves for prior accident years developed favorably by $117 million. The overall first quarter prior year reserve development in the Non-Life segment includes net favorable development in all sub-segments, with $16 million in the U.S. sub-segment, $58 million in the Global (Non-U.S.) P&C sub-segment, $33 million in the Global (Non-U.S.) Specialty sub-segment, and $10 million in the Catastrophe sub-segment. In the first quarter of 2007, Non-Life reserves for prior years developed favorably by $122 million. Policy benefits for life and annuity contacts increased by 7% year over year to $1.6 billion at March 31, 2008. During the first quarter of 2008, the Company’s estimate of Life reserves for prior years developed adversely by $5 million, compared to favorable development of $7 million in 2007.
At March 31, 2008, total capital was $5.3 billion, and total shareholders’ equity was $4.5 billion. This compares to total capital of $5.2 billion, and total shareholders’ equity of $4.3 billion at December 31, 2007. Book value per common share at March 31, 2008 was $70.93 on a fully diluted basis compared to $67.96 per share at December 31, 2007.
For additional information, the Company has posted a first quarter 2008 financial supplement on its website www.partnerre.com in the Investor Relations section on the Financial Reports page under Supplementary Financial Data.
Commentary and Outlook
Mr. Thiele said, “We are experiencing a softening market in most of our lines of business as clients cut back on the size of their programs, competition increases, and prices decline. Inevitably, our underwriting profitability will decrease as these trends continue. However, we
PartnerRe Ltd. Wellesley House South 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com | |
are beginning to see opportunities in the capital markets and expect to deploy more capital in that area going forward.
“Despite these crosscurrents, we believe that PartnerRe is well-positioned strategically and financially to continue to achieve our long-term targets for operating return on equity of 13% over the cycle, and average annual book value per share growth in excess of 10%.”
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The Company uses operating earnings, diluted operating earnings per share and annualized operating return on beginning common shareholders’ equity to measure performance, as these measures focus on the underlying fundamentals of our operations without the impact of net realized gains/losses on investments, net of tax, nor the interest in earnings/losses of equity investments, net of tax, where the Company does not control the investee companies’ activities. The Company uses technical ratio and technical result as measures of underwriting performance. The technical ratio is defined as the sum of the loss and acquisition ratios. These metrics exclude other operating expenses. The Company also uses combined ratio to measure results for the Non-Life segment. The combined ratio is the sum of the technical and other operating expense ratios. The Company uses total capital, which is defined as total shareholders’ equity, long-term debt and capital efficient notes, to manage the capital structure of the Company.
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PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. The Company, through its wholly owned subsidiaries, 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, specialty property, specialty casualty, multiline and other lines, life/annuity and health, and alternative risk products. For the year ended December 31, 2007, total revenues were $4.2 billion. At March 31, 2008, total assets were $17.3 billion, total capital was $5.3 billion and total shareholders’ equity was $4.5 billion.
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,
PartnerRe Ltd. Wellesley House South 90 Pitts Bay Road Pembroke, Bermuda HM 08 | Telephone +1 441 292 0888 Fax +1 441 292 6080 www.partnerre.com | |
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.
| Contacts: | PartnerRe Ltd. | Sard Verbinnen & Co. |
| | (441) 292-0888 | (212) 687-8080 |
| | Investor Contact: Robin Sidders | Drew Brown/Jane Simmons |
| | Media Contact: Celia Powell | |
