Partnerre (PREJF) 10-Q 2014 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    .

Commission file number 1-14536

PartnerRe Ltd.

(Exact name of registrant as specified in its charter)

Bermuda	Not Applicable
(State of incorporation)	(I.R.S. Employer Identification No.)

90 Pitts Bay Road, Pembroke, HM08, Bermuda

(Address of principal executive offices) (Zip Code)

(441) 292-0888

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of the registrant’s common shares (par value $1.00 per share) outstanding, net of treasury shares, as of April 29, 2014 was 50,517,202.

PartnerRe Ltd.

INDEX TO FORM 10-Q

		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Report of Independent Registered Public Accounting Firm		3
	Condensed Consolidated Balance Sheets—March 31, 2014 (Unaudited) and December 31, 2013		4
	Condensed Consolidated Statements of Operations and Comprehensive Income—Three Months Ended March  31, 2014 and 2013 (Unaudited)		5
	Condensed Consolidated Statements of Shareholders’ Equity—Three Months Ended March 31, 2014 and 2013 (Unaudited)		6
	Condensed Consolidated Statements of Cash Flows—Three Months Ended March 31, 2014 and 2013 (Unaudited)		7
	Notes to Condensed Consolidated Financial Statements (Unaudited)		8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		65
ITEM 4.	Controls and Procedures		68
PART II—OTHER INFORMATION
ITEM 1.	Legal Proceedings		68
ITEM 1A.	Risk Factors		68
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		69
ITEM 3.	Defaults upon Senior Securities		69
ITEM 4.	Mine Safety Disclosures		69
ITEM 5.	Other Information		69
ITEM 6.	Exhibits		69
	Signatures		70
	Exhibit Index		71

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of PartnerRe Ltd.

We have reviewed the accompanying condensed consolidated balance sheet of PartnerRe Ltd. and subsidiaries (the “Company”) as of March 31, 2014, and the related condensed consolidated statements of operations and comprehensive income for the three-month periods ended March 31, 2014 and 2013, and of shareholders’ equity, and of cash flows for the three-month periods ended March 31, 2014 and 2013. These condensed consolidated interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of PartnerRe Ltd. and subsidiaries as of December 31, 2013, and the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and of cash flows for the year then ended (not presented herein); and in our report dated February 27, 2014, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheets as of December 31, 2013 is fairly stated, in all material respects, in relation to the consolidated balance sheets from which it has been derived.

/s/ Deloitte & Touche Ltd.

Deloitte & Touche Ltd.

Hamilton, Bermuda

May 2, 2014

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

PartnerRe Ltd.

Condensed Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars, except parenthetical share and per share data)

	March 31, 2014			December 31, 2013
	(Unaudited)			(Audited)
Assets
Investments:
Fixed maturities, at fair value (amortized cost: 2014, $13,562,765; 2013, $13,376,455)	$	13,898,401		$	13,593,303
Short-term investments, at fair value (amortized cost: 2014, $28,820; 2013, $13,543)		28,821			13,546
Equities, at fair value (cost: 2014, $1,027,732; 2013, $1,009,286)		1,249,744			1,221,053
Other invested assets		302,495			320,981
Total investments		15,479,461			15,148,883
Funds held – directly managed (cost: 2014, $756,498; 2013, $778,569)		764,386			785,768
Cash and cash equivalents		1,269,037			1,496,485
Accrued investment income		190,169			185,717
Reinsurance balances receivable		3,064,301			2,465,713
Reinsurance recoverable on paid and unpaid losses		362,149			308,892
Funds held by reinsured companies		849,256			843,081
Deferred acquisition costs		725,584			644,952
Deposit assets		112,338			351,905
Net tax assets		11,217			14,133
Goodwill		456,380			456,380
Intangible assets		180,088			187,090
Other assets		53,137			149,296
Total assets	$	23,517,503		$	23,038,295
Liabilities
Unpaid losses and loss expenses	$	10,529,717		$	10,646,318
Policy benefits for life and annuity contracts		2,118,479			1,974,133
Unearned premiums		2,299,250			1,723,767
Other reinsurance balances payable		269,487			202,549
Deposit liabilities		92,099			328,588
Net tax liabilities		247,503			284,442
Accounts payable, accrued expenses and other		299,380			291,350
Debt related to senior notes		750,000			750,000
Debt related to capital efficient notes		70,989			70,989
Total liabilities		16,676,904			16,272,136
Shareholders’ Equity
Common shares (par value $1.00; issued: 2014, 86,879,432 shares; 2013, 86,657,045 shares)		86,879			86,657
Preferred shares (par value $1.00; issued and outstanding: 2014 and 2013, 34,150,000 shares; aggregate liquidation value: 2014 and 2013, $853,750)		34,150			34,150
Additional paid-in capital		3,907,347			3,901,627
Accumulated other comprehensive loss		(27,687	)		(12,238	)
Retained earnings		5,667,868			5,406,797
Common shares held in treasury, at cost (2014, 36,019,611 shares; 2013, 34,213,611 shares)		(2,887,629	)		(2,707,461	)
Total shareholders’ equity attributable to PartnerRe Ltd.		6,780,928			6,709,532
Noncontrolling interests		59,671			56,627
Total shareholders’ equity		6,840,599			6,766,159
Total liabilities and shareholders’ equity	$	23,517,503		$	23,038,295

See accompanying Notes to Condensed Consolidated Financial Statements.

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PartnerRe Ltd.

Condensed 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 March 31, 2014			For the three months ended March 31, 2013
Revenues
Gross premiums written	$	1,871,740		$	1,756,886
Net premiums written	$	1,738,494		$	1,636,431
Increase in unearned premiums		(484,712	)		(489,751	)
Net premiums earned		1,253,782			1,146,680
Net investment income		116,867			123,704
Net realized and unrealized investment gains		142,172			22,943
Other income		404			3,927
Total revenues		1,513,225			1,297,254
Expenses
Losses and loss expenses and life policy benefits		749,457			660,952
Acquisition costs		264,608			234,200
Other operating expenses		111,462			116,040
Interest expense		12,238			12,229
Amortization of intangible assets		7,002			7,046
Net foreign exchange gains		(670	)		(2,043	)
Total expenses		1,144,097			1,028,424
Income before taxes and interest in earnings of equity method investments		369,128			268,830
Income tax expense		62,305			41,675
Interest in earnings of equity method investments		6,064			7,215
Net income		312,887			234,370
Net income attributable to noncontrolling interests		(3,044	)		—
Net income attributable to PartnerRe Ltd.		309,843			234,370
Preferred dividends		14,184			14,699
Loss on redemption of preferred shares		—			9,135
Net income attributable to PartnerRe Ltd. common shareholders	$	295,659		$	210,536
Comprehensive income
Net income attributable to PartnerRe Ltd.	$	309,843		$	234,370
Change in currency translation adjustment		(15,223	)		(19,830	)
Change in unfunded pension obligation, net of tax		(1	)		996
Change in unrealized losses on investments, net of tax		(225	)		(233	)
Total other comprehensive loss, net of tax		(15,449	)		(19,067	)
Comprehensive income attributable to PartnerRe Ltd.	$	294,394		$	215,303
Per share data attributable to PartnerRe Ltd. common shareholders
Net income per common share:
Basic net income	$	5.72		$	3.60
Diluted net income	$	5.61		$	3.53
Weighted average number of common shares outstanding		51,652,177			58,423,898
Weighted average number of common shares and common share equivalents outstanding		52,727,573			59,590,044
Dividends declared per common share	$	0.67		$	0.64

See accompanying Notes to Condensed Consolidated Financial Statements.

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PartnerRe Ltd.

Condensed Consolidated Statements of Shareholders’ Equity

(Expressed in thousands of U.S. dollars)

(Unaudited)

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Common shares
Balance at beginning of period	$	86,657		$	85,460
Issuance of common shares		222			552
Balance at end of period		86,879			86,012
Preferred shares
Balance at beginning of period		34,150			35,750
Issuance of preferred shares		—			10,000
Redemption of preferred shares		—			(11,600	)
Balance at end of period		34,150			34,150
Additional paid-in capital
Balance at beginning of period		3,901,627			3,861,844
Issuance of common shares		5,720			21,937
Issuance of preferred shares		—			231,265
Redemption of preferred shares		—			(269,265	)
Balance at end of period		3,907,347			3,845,781
Accumulated other comprehensive loss
Balance at beginning of period		(12,238	)		10,597
Currency translation adjustment
Balance at beginning of period		977			32,755
Change in currency translation adjustment		(15,223	)		(19,830	)
Balance at end of period		(14,246	)		12,925
Unfunded pension obligation
Balance at beginning of period		(17,509	)		(27,370	)
Change in unfunded pension obligation, net of tax		(1	)		996
Balance at end of period (net of tax: 2014, $5,023; 2013, $7,468)		(17,510	)		(26,374	)
Unrealized gain on investments
Balance at beginning of period		4,294			5,212
Change in unrealized losses on investments, net of tax		(225	)		(233	)
Balance at end of period (net of tax: 2014 and 2013: $nil)		4,069			4,979
Balance at end of period		(27,687	)		(8,470	)
Retained earnings
Balance at beginning of period		5,406,797			4,952,002
Net income		312,887			234,370
Net income attributable to noncontrolling interests		(3,044	)		—
Dividends on common shares		(34,588	)		(37,365	)
Dividends on preferred shares		(14,184	)		(14,699	)
Loss on redemption of preferred shares		—			(9,135	)
Balance at end of period		5,667,868			5,125,173
Common shares held in treasury
Balance at beginning of period		(2,707,461	)		(2,012,157	)
Repurchase of common shares		(180,168	)		(159,775	)
Balance at end of period		(2,887,629	)		(2,171,932	)
Total shareholders’ equity attributable to PartnerRe Ltd.	$	6,780,928		$	6,910,714
Noncontrolling interests		59,671			36,844
Total shareholders’ equity	$	6,840,599		$	6,947,558

See accompanying Notes to Condensed Consolidated Financial Statements.

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PartnerRe Ltd.

Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)

(Unaudited)

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Cash flows from operating activities
Net income	$	312,887		$	234,370
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of net premium on investments		29,366			42,769
Amortization of intangible assets		7,002			7,046
Net realized and unrealized investment gains		(142,172	)		(22,943	)
Changes in:
Reinsurance balances, net		(581,275	)		(396,018	)
Reinsurance recoverable on paid and unpaid losses, net of ceded premiums payable		86,002			91,287
Funds held by reinsured companies and funds held – directly managed		17,627			6,240
Deferred acquisition costs		(79,315	)		(92,334	)
Net tax assets and liabilities		(33,973	)		(4,928	)
Unpaid losses and loss expenses including life policy benefits		13,732			(242,409	)
Unearned premiums		484,712			489,751
Other net changes in operating assets and liabilities		(35,852	)		1,831
Net cash provided by operating activities		78,741			114,662
Cash flows from investing activities
Sales of fixed maturities		1,734,246			1,788,507
Redemptions of fixed maturities		180,311			259,798
Purchases of fixed maturities		(1,963,428	)		(1,849,579	)
Sales and redemptions of short-term investments		15,830			99,769
Purchases of short-term investments		(31,141	)		(64,147	)
Sales of equities		9,094			156,123
Purchases of equities		(29,421	)		(144,865	)
Other, net		13,295			43,337
Net cash (used in) provided by investing activities		(71,214	)		288,943
Cash flows from financing activities
Dividends paid to common and preferred shareholders		(48,772	)		(52,064	)
Repurchase of common shares		(180,383	)		(175,211	)
Issuance of common shares, net of taxes paid		(2,581	)		15,193
Net proceeds from issuance of preferred shares		—			241,265
Repurchase of preferred shares		—			(290,000	)
Sale of shares to noncontrolling interests		—			36,844
Net cash used in financing activities		(231,736	)		(223,973	)
Effect of foreign exchange rate changes on cash		(3,239	)		(14,439	)
(Decrease) increase in cash and cash equivalents		(227,448	)		165,193
Cash and cash equivalents—beginning of period		1,496,485			1,121,705
Cash and cash equivalents—end of period	$	1,269,037		$	1,286,898
Supplemental cash flow information:
Taxes paid	$	95,871		$	46,525
Interest paid	$	—		$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

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PartnerRe Ltd.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization

PartnerRe Ltd. (PartnerRe or the Company) predominantly provides reinsurance and certain specialty insurance lines on a worldwide basis through its principal wholly-owned subsidiaries, including Partner Reinsurance Company Ltd. (PartnerRe Bermuda), Partner Reinsurance Europe SE and Partner Reinsurance Company of the U.S. Risks reinsured include, but are not limited to, property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, multiline and other lines, mortality, longevity, accident and health and alternative risk products. The Company’s alternative risk products include weather and credit protection to financial, industrial and service companies on a worldwide basis.

Effective December 31, 2012, the Company completed the acquisition of Presidio Reinsurance Group, Inc. (subsequently renamed and referred to as PartnerRe Health), a California-based U.S. specialty accident and health reinsurance and insurance writer. The Condensed Consolidated Statements of Operations and Cash Flows include PartnerRe Health’s results from January 1, 2013.

2. Significant Accounting Policies

The Company’s Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. The Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While Management believes that the amounts included in the Condensed Consolidated Financial Statements reflect its best estimates and assumptions, actual results could differ from those estimates. The Company’s principal estimates include:

• Unpaid losses and loss expenses;

• Policy benefits for life and annuity contracts;

• Gross and net premiums written and net premiums earned;

• Recoverability of deferred acquisition costs;

• Recoverability of deferred tax assets;

• Valuation of goodwill and intangible assets; and

• Valuation of certain assets and derivative financial instruments that are measured using significant unobservable inputs.

In the opinion of Management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of results for the interim periods have been made. As the Company’s reinsurance operations are exposed to low-frequency, high-severity risk events, some of which are seasonal, results for certain interim periods may include unusually low loss experience, while results for other interim periods may include significant catastrophic losses. Consequently, the Company’s results for interim periods are not necessarily indicative of results for the full year. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

3. Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board issued updated guidance on the accounting for investments in affordable housing projects that qualify for low-income housing tax credits by entities that manage or invest in such projects. The update modifies the conditions that an entity must meet to elect the effective yield or proportional amortization method to account for such investments. The guidance is effective for interim and annual periods beginning after December 15, 2014, with early adoption permitted. The Company does not expect the adoption of this guidance to have a significant impact on its Consolidated Financial Statements or disclosures.

4. Fair Value

(a) Fair Value of Financial Instrument Assets

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from

8

sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement.

The Company determines the appropriate level in the hierarchy for each financial instrument that it measures at fair value. In determining fair value, the Company uses various valuation approaches, including market, income and cost approaches. The hierarchy is broken down into three levels based on the observability of inputs as follows:

• Level 1 inputs—Unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

The Company’s financial instruments that it measures at fair value using Level 1 inputs generally include: equities and real estate investment trusts listed on a major exchange, exchange traded funds and exchange traded derivatives, including futures that are actively traded.

• Level 2 inputs—Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets and significant directly or indirectly observable inputs, other than quoted prices, used in industry accepted models.

The Company’s financial instruments that it measures at fair value using Level 2 inputs generally include: U.S. government issued bonds; U.S. government sponsored enterprises bonds; U.S. state, territory and municipal entities bonds; non-U.S. sovereign government, supranational and government related bonds consisting primarily of bonds issued by non-U.S. national governments and their agencies, non-U.S. regional governments and supranational organizations; investment grade and high yield corporate bonds; catastrophe bonds; mortality bonds; asset-backed securities; mortgage-backed securities; certain equities traded on foreign exchanges; certain fixed income mutual funds; foreign exchange forward contracts; over-the-counter derivatives such as foreign currency option contracts, credit default swaps, interest rate swaps and to-be-announced mortgage-backed securities (TBAs).

• Level 3 inputs—Unobservable inputs.

The Company’s financial instruments that it measures at fair value using Level 3 inputs generally include: inactively traded fixed maturities including U.S. state, territory and municipal bonds; privately issued corporate securities; special purpose financing asset-backed bonds; unlisted equities; real estate and certain other mutual fund investments; inactively traded weather derivatives; notes and loan receivables, notes securitizations, annuities and residuals, private equities and longevity and other total return swaps.

The Company’s policy is to recognize transfers between the hierarchy levels at the beginning of the period.

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The Company’s financial instruments measured at fair value include investments classified as trading securities, certain other invested assets and the segregated investment portfolio underlying the funds held – directly managed account. At March 31, 2014 and December 31, 2013, the Company’s financial instruments measured at fair value were classified between Levels 1, 2 and 3 as follows (in thousands of U.S. dollars):

March 31, 2014	Quoted prices in active markets for identical assets (Level 1)			Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)			Total
Fixed maturities
U.S. government and government sponsored enterprises	$	—		$	1,866,135		$	—		$	1,866,135
U.S. states, territories and municipalities		—			16,438			113,467			129,905
Non-U.S. sovereign government, supranational and government related		—			2,332,066			—			2,332,066
Corporate		—			5,989,320			—			5,989,320
Asset-backed securities		—			703,750			447,701			1,151,451
Residential mortgage-backed securities		—			2,384,629			—			2,384,629
Other mortgage-backed securities		—			44,895			—			44,895
Fixed maturities	$	—		$	13,337,233		$	561,168		$	13,898,401
Short-term investments	$	—		$	28,821		$	—		$	28,821
Equities
Real estate investment trusts	$	196,661		$	—		$	—		$	196,661
Energy		160,093			—			—			160,093
Insurance		136,040			—			—			136,040
Finance		97,863			9,569			22,706			130,138
Consumer noncyclical		112,721			—			—			112,721
Communications		83,724			—			2,111			85,835
Technology		55,263			—			7,400			62,663
Industrials		47,622			—			—			47,622
Consumer cyclical		45,709			—			—			45,709
Utilities		38,605			—			—			38,605
Other		20,929			—			—			20,929
Mutual funds and exchange traded funds		25,170			179,505			8,053			212,728
Equities	$	1,020,400		$	189,074		$	40,270		$	1,249,744
Other invested assets
Derivative assets
Foreign exchange forward contracts	$	—		$	4,404		$	—		$	4,404
Foreign currency option contracts		—			398			—			398
Futures contracts		18,814			—			—			18,814
Total return swaps		—			—			181			181
Other
Notes and loan receivables and notes securitization		—			—			42,243			42,243
Annuities and residuals		—			—			18,945			18,945
Private equities		—			—			42,655			42,655
Derivative liabilities
Foreign exchange forward contracts		—			(5,888	)		—			(5,888	)
Futures contracts		(5	)		—			—			(5	)
Insurance-linked securities		—			—			(740	)		(740	)
Total return swaps		—			—			(483	)		(483	)
Interest rate swaps		—			(5,797	)		—			(5,797	)
TBAs		—			(1,388	)		—			(1,388	)
Other invested assets	$	18,809		$	(8,271	)	$	102,801		$	113,339
Funds held – directly managed
U.S. government and government sponsored enterprises	$	—		$	153,426		$	—		$	153,426
U.S. states, territories and municipalities		—			—			301			301
Non-U.S. sovereign government, supranational and government related		—			178,839			—			178,839
Corporate		—			245,067			—			245,067
Short-term investments		—			3,477			—			3,477
Other invested assets		—			—			15,223			15,223
Funds held – directly managed	$	—		$	580,809		$	15,524		$	596,333
Total	$	1,039,209		$	14,127,666		$	719,763		$	15,886,638

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December 31, 2013	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)			Total
Fixed maturities
U.S. government and government sponsored enterprises	$	—	$	1,623,859		$	—		$	1,623,859
U.S. states, territories and municipalities		—		16,207			108,380			124,587
Non-U.S. sovereign government, supranational and government related		—		2,353,699			—			2,353,699
Corporate		—		6,048,663			—			6,048,663
Asset-backed securities		—		691,654			446,577			1,138,231
Residential mortgage-backed securities		—		2,268,517			—			2,268,517
Other mortgage-backed securities		—		35,747			—			35,747
Fixed maturities	$	—	$	13,038,346		$	554,957		$	13,593,303
Short-term investments	$	—	$	13,546		$	—		$	13,546
Equities
Real estate investment trusts	$	175,796	$	—		$	—		$	175,796
Energy		159,509		—			—			159,509
Insurance		144,020		—			—			144,020
Finance		108,944		9,556			20,207			138,707
Consumer noncyclical		108,663		—			—			108,663
Communications		70,792		—			2,199			72,991
Technology		53,768		—			7,752			61,520
Industrials		47,677		—			—			47,677
Consumer cyclical		45,915		—			—			45,915
Utilities		37,151		—			—			37,151
Other		19,993		—			—			19,993
Mutual funds and exchange traded funds		61,902		139,322			7,887			209,111
Equities	$	1,034,130	$	148,878		$	38,045		$	1,221,053
Other invested assets
Derivative assets
Foreign exchange forward contracts	$	—	$	1,249		$	—		$	1,249
Futures contracts		41,031		—			—			41,031
Total return swaps		—		—			79			79
Interest rate swaps		—		2,147			—			2,147
TBAs		—		2			—			2
Other
Notes and loan receivables and notes securitization		—		—			41,446			41,446
Annuities and residuals		—		—			24,064			24,064
Private equities		—		—			39,131			39,131
Derivative liabilities
Foreign exchange forward contracts		—		(8,648	)		—			(8,648	)
Foreign currency option contracts		—		(535	)		—			(535	)
Credit default swaps (protection purchased)		—		(71	)		—			(71	)
Insurance-linked securities		—		—			(268	)		(268	)
Total return swaps		—		—			(599	)		(599	)
Interest rate swaps		—		(2,558	)		—			(2,558	)
TBAs		—		(1,331	)		—			(1,331	)
Other invested assets	$	41,031	$	(9,745	)	$	103,853		$	135,139
Funds held – directly managed
U.S. government and government sponsored enterprises	$	—	$	157,296		$	—		$	157,296
U.S. states, territories and municipalities		—		—			286			286
Non-U.S. sovereign government, supranational and government related		—		137,186			—			137,186
Corporate		—		248,947			—			248,947
Short-term investments		—		2,426			—			2,426
Other invested assets		—		—			15,165			15,165
Funds held – directly managed	$	—	$	545,855		$	15,451		$	561,306
Total	$	1,075,161	$	13,736,880		$	712,306		$	15,524,347

11

At March 31, 2014 and December 31, 2013, the aggregate carrying amounts of items included in Other invested assets that the Company did not measure at fair value were $189.2 million and $185.8 million, respectively, which related to the Company’s investments that are accounted for using the cost method of accounting or equity method of accounting.

In addition to the investments underlying the funds held – directly managed account held at fair value of $596.3 million and $561.3 million at March 31, 2014 and December 31, 2013, respectively, the funds held – directly managed account also included cash and cash equivalents, carried at fair value, of $37.1 million and $84.8 million, respectively, and accrued investment income of $7.5 million and $6.7 million, respectively. At March 31, 2014 and December 31, 2013, the aggregate carrying amounts of items included in the funds held – directly managed account that the Company did not measure at fair value were $123.5 million and $133.0 million, respectively, which primarily related to other assets and liabilities held by Colisée Re related to the underlying business, which are carried at cost (see Note 5 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013).

At March 31, 2014 and December 31, 2013, substantially all of the accrued investment income in the Condensed Consolidated Balance Sheets relate to the Company’s investments and the investments underlying the funds held – directly managed account for which the fair value option was elected.

During the three months ended March 31, 2014 and 2013, there were no transfers between Level 1 and Level 2.

Disclosures about the fair value of financial instruments that the Company does not measure at fair value exclude insurance contracts and certain other financial instruments. At March 31, 2014 and December 31, 2013, the fair values of financial instrument assets recorded in the Condensed Consolidated Balance Sheets not described above, approximate their carrying values.

The reconciliations of the beginning and ending balances for all financial instruments measured at fair value using Level 3 inputs for the three months ended March 31, 2014 and 2013, were as follows (in thousands of U.S. dollars):

For the three months ended March 31, 2014	Balance at beginning of period			Realized and unrealized investment gains (losses) included in net income			Purchases and issuances (1)			Settlements and sales			Net transfers into/ (out of) Level 3		Balance at end of period			Change in unrealized investment gains (losses) relating to assets held at end of period
Fixed maturities
U.S. states, territories and municipalities	$	108,380		$	892		$	4,265		$	(70	)	$	—	$	113,467		$	890
Asset-backed securities		446,577			5,996			59,418			(64,290	)		—		447,701			6,259
Fixed maturities	$	554,957		$	6,888		$	63,683		$	(64,360	)	$	—	$	561,168		$	7,149
Equities
Finance	$	20,207		$	2,499		$	—		$	—		$	—	$	22,706		$	2,499
Communications		2,199			(88	)		—			—			—		2,111			(88	)
Technology		7,752			(352	)		—			—			—		7,400			(352	)
Mutual funds and exchange traded funds		7,887			166			—			—			—		8,053			166
Equities	$	38,045		$	2,225		$	—		$	—		$	—	$	40,270		$	2,225
Other invested assets
Derivatives, net	$	(788	)	$	466		$	(720	)	$	—		$	—	$	(1,042	)	$	466
Notes and loan receivables and notes securitization		41,446			600			720			(523	)		—		42,243			600
Annuities and residuals		24,064			89			—			(5,208	)		—		18,945			128
Private equities		39,131			433			5,066			(1,975	)		—		42,655			401
Other invested assets	$	103,853		$	1,588		$	5,066		$	(7,706	)	$	—	$	102,801		$	1,595
Funds held – directly managed
U.S. states, territories and municipalities	$	286		$	15		$	—		$	—		$	—	$	301		$	15
Other invested assets		15,165			(197	)		255			—			—		15,223			(197	)
Funds held – directly managed	$	15,451		$	(182	)	$	255		$	—		$	—	$	15,524		$	(182	)
Total	$	712,306		$	10,519		$	69,004		$	(72,066	)	$	—	$	719,763		$	10,787

(1) Purchases and issuances of derivatives include issuances of $0.7 million.

12

For the three months ended March 31, 2013	Balance at beginning of period		Realized and unrealized investment (losses) gains included in net income			Purchases and issuances		Settlements and sales(1)			Net transfers into/(out of) Level 3		Balance at end of period		Change in unrealized investment (losses) gains relating to assets held at end of period
Fixed maturities
U.S. states, territories and municipalities	$	233,235	$	(849	)	$	—	$	(94	)	$	—	$	232,292	$	(849	)
Corporate		100,904		(188	)		—		—			—		100,716		(188	)
Asset-backed securities		323,134		1,741			27,156		(26,372	)		—		325,659		1,781
Fixed maturities	$	657,273	$	704		$	27,156	$	(26,466	)	$	—	$	658,667	$	744
Equities
Finance	$	13,477	$	(924	)	$	—	$	—		$	—	$	12,553	$	(924	)
Technology		6,987		660			—		—			—		7,647		660
Mutual funds and exchange traded funds		7,264		178			—		—			—		7,442		178
Equities	$	27,728	$	(86	)	$	—	$	—		$	—	$	27,642	$	(86	)
Other invested assets
Derivatives, net	$	3,911	$	(3,679	)	$	—	$	2,500		$	—	$	2,732	$	(3,679	)
Notes and loan receivables and notes securitization		34,902		(61	)		1,360		(2,143	)		—		34,058		(61	)
Annuities and residuals		46,882		336			—		(11,562	)		—		35,656		826
Private equities		1,404		(3,065	)		19,425		—			—		17,764		(3,065	)
Other invested assets	$	87,099	$	(6,469	)	$	20,785	$	(11,205	)	$	—	$	90,210	$	(5,979	)
Funds held – directly managed
U.S. states, territories and municipalities	$	345	$	(4	)	$	—	$	—		$	—	$	341	$	(4	)
Other invested assets		17,976		(2,437	)		—		(71	)		—		15,468		(1,373	)
Funds held – directly managed	$	18,321	$	(2,441	)	$	—	$	(71	)	$	—	$	15,809	$	(1,377	)
Total	$	790,421	$	(8,292	)	$	47,941	$	(37,742	)	$	—	$	792,328	$	(6,698	)

(1) Settlements and sales of annuities and residuals include sales of $6.3 million.

The significant unobservable inputs used in the valuation of financial instruments measured at fair value using Level 3 inputs at March 31, 2014 and December 31, 2013 were as follows (fair value in thousands of U.S. dollars):

March 31, 2014	Fair value			Valuation techniques	Unobservable inputs	Range (Weighted average)
Fixed maturities
U.S. states, territories and municipalities	$	113,467		Discounted cash flow	Credit spreads	2.7% – 10.1%(5.4%)
Asset-backed securities – interest only		20		Discounted cash flow	Credit spreads	5.2% – 10.3%(8.5%)
Asset-backed securities – other		447,681		Discounted cash flow	Credit spreads	3.9% – 12.1%(6.9%)
Equities
Finance		17,316		Weighted market comparables	Net income multiple	14.6(14.6)
					Tangible book value multiple	1.1(1.1)
					Liquidity discount	25.0%(25.0%)
					Comparable return	12.0%(12.0%)
Finance		5,390		Profitability analysis	Projected return on equity	14.0%(14.0%)
Communications		2,111		Weighted market comparables	Adjusted earnings multiple	9.4(9.4)
					Comparable return	-4.0%(-4.0%)
Technology		7,400		Weighted market comparables	Revenue multiple	1.5(1.5)
					Adjusted earnings multiple	8.4(8.4)
Other invested assets
Total return swaps		(302	)	Discounted cash flow	Credit spreads	3.5% – 18.3%(14.3%)
Notes and loan receivables		22,038		Discounted cash flow	Credit spreads	17.5%(17.5%)
					Gross revenue/fair value	1.3 – 1.5(1.5)
Notes securitization		20,205		Discounted cash flow	Credit spreads	6.1%(6.1%)
Annuities and residuals		18,945		Discounted cash flow	Credit spreads	4.0% – 7.5%(5.8%)
					Prepayment speed	0% – 15.0% (6.1%)
					Constant default rate	0.3% – 23.0%(8.8%)
Private equity – direct		12,040		Discounted cash flow and weighted market comparables	Net income multiple	9.1(9.1)
					Tangible book value multiple	1.7(1.7)
					Recoverability of intangible assets	0%(0%)
Private equity funds		12,653		Lag reported market value	Net asset value, as reported	100.0%(100.0%)
					Market adjustments	-1.9% – 2.2%(1.2%)
Private equity – other		17,962		Discounted cash flow	Effective yield	5.8%(5.8%)
Funds held – directly managed
Other invested assets		15,223		Lag reported market value	Net asset value, as reported	100.0%(100.0%)
					Market adjustments	-15.7% – 0%(-13.6%)

13

December 31, 2013	Fair value			Valuation techniques	Unobservable inputs	Range (Weighted average)
Fixed maturities
U.S. states, territories and municipalities	$	108,380		Discounted cash flow	Credit spreads	2.9% – 9.9%(5.3%)
Asset-backed securities – interest only		21		Discounted cash flow	Credit spreads	5.5% – 10.7%(8.8%)
Asset-backed securities – other		446,556		Discounted cash flow	Credit spreads	4.0% – 12.2%(7.1%)
Equities
Finance		15,483		Weighted market comparables	Net income multiple	14.6(14.6)
					Tangible book value multiple	1.1(1.1)
					Liquidity discount	25.0%(25.0%)
					Comparable return	8.5%(8.5%)
Finance		4,724		Profitability analysis	Projected return on equity	14.0%(14.0%)
Communications		2,199		Weighted market comparables	Adjusted earnings multiple	9.4(9.4)
					Comparable return	0%(0%)
Technology		7,752		Weighted market comparables	Revenue multiple	0.9(0.9)
					Adjusted earnings multiple	4.4(4.4)
Other invested assets
Total return swaps		(520	)	Discounted cash flow	Credit spreads	2.8% – 18.9%(17.0%)
Notes and loan receivables		21,280		Discounted cash flow	Credit spreads	17.5%(17.5%)
					Gross revenue/fair value	1.5(1.5)
Notes securitization		20,166		Discounted cash flow	Credit spreads	6.2%(6.2%)
Annuities and residuals		24,064		Discounted cash flow	Credit spreads	4.0% – 7.9%(5.8%)
					Prepayment speed	0% – 15.0%(6.4%)
					Constant default rate	0.3% – 35.0%(12.4%)
Private equity – direct		11,742		Discounted cash flow and weighted market comparables	Net income multiple	8.3(8.3)
					Tangible book value multiple	1.6(1.6)
					Recoverability of intangible assets	0%(0%)
Private equity funds		8,993		Lag reported market value	Net asset value, as reported	100.0%(100.0%)
					Market adjustments	1.8% – 9.8%(8.3%)
Private equity – other		18,396		Discounted cash flow	Credit spreads	3.8%(3.8%)
Funds held – directly managed Other invested assets		15,165		Lag reported market value	Net asset value, as reported	100.0%(100.0%)
					Market adjustments	-22.9% – 0%(-15.5%)

14

The tables above do not include financial instruments that are measured using unobservable inputs (Level 3) where the unobservable inputs were obtained from external sources and used without adjustment. These financial instruments include mutual fund investments (included within equities) and certain insurance-linked securities (included within other invested assets).

The Company has established a Valuation Committee which is responsible for determining the Company’s invested asset valuation policy and related procedures, for reviewing significant changes in the fair value measurements of securities classified as Level 3 from period to period, and for reviewing in accordance with the invested asset valuation policy an independent internal peer analysis that is performed on the fair value measurements of significant securities that are classified as Level 3. The Valuation Committee is comprised of members of the Company’s senior management team and meets on a quarterly basis. The Company’s invested asset valuation policy is monitored by the Company’s Audit Committee of the Board of Directors (Board) and approved annually by the Company’s Risk and Finance Committee of the Board.

Changes in the fair value of the Company’s financial instruments subject to the fair value option during the three months ended March 31, 2014 and 2013 were as follows (in thousands of U.S. dollars):

	For the three months ended March 31, 2014		For the three months ended March 31, 2013
Fixed maturities and short-term investments	$	119,799	$	(71,670	)
Equities		10,325		50,066
Other invested assets		1,042		(4,834	)
Funds held – directly managed		736		(6,043	)
Total	$	131,902	$	(32,481	)

Substantially all of the above changes in fair value are included in the Condensed Consolidated Statements of Operations under the caption Net realized and unrealized investment gains.

The following methods and assumptions were used by the Company in estimating the fair value of each class of financial instrument recorded in the Condensed Consolidated Balance Sheets. There have been no material changes in the Company’s valuation techniques during the periods presented.

Fixed maturities

• U.S. government and government sponsored enterprises—U.S. government and government sponsored enterprises securities consist primarily of bonds issued by the U.S. Treasury, corporate debt securities issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Home Loan Bank and the Private Export Funding Corporation. These securities are generally priced by independent pricing services. The independent pricing services may use actual transaction prices for securities that have been actively traded. For securities that have not been actively traded, each pricing source has its own proprietary method to determine the fair value, which may incorporate option adjusted spreads (OAS), interest rate data and market news. The Company generally classifies these securities in Level 2.

• U.S. states, territories and municipalities—U.S. states, territories and municipalities securities consist primarily of bonds issued by U.S. states, territories and municipalities and the Federal Home Loan Mortgage Corporation. These securities are generally priced by independent pricing services using the techniques described for U.S. government and government sponsored enterprises above. The Company generally classifies these securities in Level 2. Certain of the bonds that are issued by municipal housing authorities and the Federal Home Loan Mortgage Corporation are not actively traded and are priced based on internal models using unobservable inputs. Accordingly, the Company classifies these securities in Level 3. The significant unobservable input used in the fair value measurement of these U.S. states, territories and municipalities securities classified as Level 3 is credit spreads. A significant increase (decrease) in credit spreads in isolation could result in a significantly lower (higher) fair value measurement.

• Non-U.S. sovereign government, supranational and government related—Non-U.S. sovereign government, supranational and government related securities consist primarily of bonds issued by non-U.S. national governments and their agencies, non-U.S. regional governments and supranational organizations. These securities are generally priced by independent pricing services using the techniques described for U.S. government and government sponsored enterprises above. The Company generally classifies these securities in Level 2.

• Corporate—Corporate securities consist primarily of bonds issued by U.S. and foreign corporations covering a variety of industries and issuing countries. These securities are generally priced by independent pricing services and brokers. The pricing provider incorporates information including credit spreads, interest rate data and market news into the valuation of each security. The Company generally classifies these securities in Level 2. When a corporate security is inactively traded or the valuation model uses unobservable inputs, the Company classifies the security in Level 3.

15

• Asset-backed securities—Asset-backed securities primarily consist of bonds issued by U.S. and foreign corporations that are predominantly backed by student loans, automobile loans, credit card receivables, equipment leases, and special purpose financing. With the exception of special purpose financing, these asset-backed securities are generally priced by independent pricing services and brokers. The pricing provider applies dealer quotes and other available trade information, prepayment speeds, yield curves and credit spreads to the valuation. The Company generally classifies these securities in Level 2. Special purpose financing securities are generally inactively traded and are priced based on valuation models using unobservable inputs. The Company generally classifies these securities in Level 3. The significant unobservable inputs used in the fair value measurement of these asset-backed securities classified as Level 3 are prepayment speeds and credit spreads. Significant increases (decreases) in these prepayment speeds and credit spreads in isolation could result in a significantly lower (higher) fair value measurement.

• Residential mortgage-backed securities—Residential mortgage-backed securities primarily consist of bonds issued by the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, as well as private, non-agency issuers. These residential mortgage-backed securities are generally priced by independent pricing services and brokers. When current market trades are not available, the pricing provider or the Company will employ proprietary models with observable inputs including other trade information, prepayment speeds, yield curves and credit spreads. The Company generally classifies these securities in Level 2.

• Other mortgage-backed securities—Other mortgage-backed securities primarily consist of commercial mortgage-backed securities. These securities are generally priced by independent pricing services and brokers. The pricing provider applies dealer quotes and other available trade information, prepayment speeds, yield curves and credit spreads to the valuation. The Company generally classifies these securities in Level 2.

In general, the methods employed by the independent pricing services to determine the fair value of the securities that have not been actively traded involve the use of “matrix pricing” in which the independent pricing source applies the credit spread for a comparable security that has traded recently to the current yield curve to determine a reasonable fair value. The Company uses a pricing service ranking to consistently select the most appropriate pricing service in instances where it receives multiple quotes on the same security. When fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Most of the Company’s fixed maturities are priced from the pricing services or dealer quotes. The Company will typically not make adjustments to prices received from pricing services or dealer quotes; however, in instances where the quoted external price for a security uses significant unobservable inputs, the Company will classify that security as Level 3. The methods used to develop and substantiate the unobservable inputs used are based on the Company’s valuation policy and are dependent upon the facts and circumstances surrounding the individual investments which are generally transaction specific. The Company’s inactively traded fixed maturities are classified as Level 3. For all fixed maturity investments, the bid price is used for estimating fair value.

To validate prices, the Company compares the fair value estimates to its knowledge of the current market and will investigate prices that it considers not to be representative of fair value. The Company also reviews an internally generated fixed maturity price validation report which converts prices received for fixed maturity investments from the independent pricing sources and from broker-dealers quotes and plots OAS and duration on a sector and rating basis. The OAS is calculated using established algorithms developed by an independent risk analytics platform vendor. The OAS on the fixed maturity price validation report are compared for securities in a similar sector and having a similar rating, and outliers are identified and investigated for price reasonableness. In addition, the Company completes quantitative analyses to compare the performance of each fixed maturity investment portfolio to the performance of an appropriate benchmark, with significant differences identified and investigated.

Short-term investments

Short-term investments are valued in a manner similar to the Company’s fixed maturity investments and are generally classified in Level 2.

Equities

Equity securities include U.S. and foreign common and preferred stocks, real estate investment trusts, mutual funds and exchange traded funds. Equities, real estate investment trusts and exchange traded funds are generally classified in Level 1 as the Company uses prices received from independent pricing sources based on quoted prices in active markets. Equities classified as Level 2 are generally mutual funds invested in fixed income securities, where the net asset value of the fund is provided on a daily basis, and common stocks traded in inactive markets. Equities classified as Level 3 are generally mutual funds invested in securities other than the common stock of publicly traded companies, where the net asset value is not provided on a daily basis, and inactively traded common stocks. The significant unobservable inputs used in the fair value measurement of inactively traded common stocks classified as Level 3 include market return information, weighted using management’s judgment, from comparable selected publicly traded companies in the same industry, in a similar region and of a similar size, including net income multiples, tangible book value multiples, comparable returns, revenue multiples, adjusted earnings multiples and projected return on equity ratios. Significant increases (decreases) in any of these inputs could result in a significantly higher (lower) fair value measurement. Significant unobservable inputs used in measuring the fair value measurement of inactively traded common stocks also include a liquidity discount. A significant increase (decrease) in the liquidity discount could result in a significantly lower (higher) fair value measurement.

16

To validate prices, the Company completes quantitative analyses to compare the performance of each equity investment portfolio to the performance of an appropriate benchmark, with significant differences identified and investigated.

Other invested assets

The Company’s exchange traded derivatives, such as futures are generally classified as Level 1 as their fair values are quoted prices in active markets. The Company’s foreign exchange forward contracts, foreign currency option contracts, credit default swaps, interest rate swaps and TBAs are generally classified as Level 2 within the fair value hierarchy and are priced by independent pricing services.

Included in the Company’s Level 3 classification, in general, are certain inactively traded weather derivatives, notes and loan receivables, notes securitizations, annuities and residuals, private equities and longevity and other total return swaps. For Level 3 instruments, the Company will generally (i) receive a price based on a manager’s or trustee’s valuation for the asset; (ii) develop an internal discounted cash flow model to measure fair value; or (iii) use market return information, adjusted if necessary and weighted using management’s judgment, from comparable selected publicly traded equity funds, in a similar region and of a similar size. Where the Company receives prices from the manager or trustee, these prices are based on the manager’s or trustee’s estimate of fair value for the assets and are generally audited on an annual basis. Where the Company develops its own discounted cash flow models, the inputs will be specific to the asset in question, based on appropriate historical information, adjusted as necessary, and using appropriate discount rates. The significant unobservable inputs used in the fair value measurement of other invested assets classified as Level 3 include credit spreads, prepayment speeds, constant default rates, gross revenue to fair value ratios, net income multiples, effective yields, tangible book value multiples and other valuation ratios. Significant increases (decreases) in any of these inputs in isolation could result in a significantly lower (higher) fair value measurement. Significant unobservable inputs used in the fair value measurement of other invested assets classified as Level 3 also include an assessment of the recoverability of intangible assets and market return information, weighted using management’s judgment, from comparable selected publicly traded companies in the same industry, in a similar region and of a similar size. Significant increase (decrease) in these inputs in isolation could result in a significantly higher (lower) fair value measurement. As part of the Company’s modeling to determine the fair value of an investment, the Company considers counterparty credit risk as an input to the model, however, the majority of the Company’s counterparties are investment grade rated institutions and the failure of any one counterparty would not have a significant impact on the Company’s consolidated financial statements.

To validate prices, the Company will compare them to benchmarks, where appropriate, or to the business results generally within that asset class and specifically to those particular assets.

Funds held – directly managed

The segregated investment portfolio underlying the funds held – directly managed account is comprised of fixed maturities and other invested assets which are fair valued on a basis consistent with the methods described above. Substantially all fixed maturities and short-term investments within the funds held – directly managed account are classified as Level 2 within the fair value hierarchy.

The other invested assets within the segregated investment portfolio underlying the funds held – directly managed account, which are classified as Level 3 investments, are primarily real estate mutual fund investments carried at fair value. For the real estate mutual fund investments, the Company receives a price based on the real estate fund manager’s valuation for the asset and further adjusts the price, if necessary, based on appropriate current information on the real estate market. Significant increases (decreases) to the adjustment to the real estate fund manager’s valuation could result in a significantly lower (higher) fair value measurement.

To validate prices within the segregated investment portfolio underlying the funds held – directly managed account, the Company utilizes the methods described above.

(b) Fair Value of Financial Instrument Liabilities

At March 31, 2014 and December 31, 2013, the fair values of financial instrument liabilities recorded in the Condensed Consolidated Balance Sheets approximate their carrying values, with the exception of the debt related to senior notes (Senior Notes) and the debt related to capital efficient notes (CENts).

The methods and assumptions used by the Company in estimating the fair value of each class of financial instrument liability recorded in the Condensed Consolidated Balance Sheets for which the Company does not measure that instrument at fair value were as follows:

• the fair value of the Senior Notes was calculated based on discounted cash flow models using observable market yields and contractual cash flows based on the aggregate principal amount outstanding of $250 million from PartnerRe Finance A LLC and $500 million from PartnerRe Finance B LLC at March 31, 2014 and December 31, 2013; and

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• the fair value of the CENts was calculated based on discounted cash flow models using observable market yields and contractual cash flows based on the aggregate principal amount outstanding of $63 million from PartnerRe Finance II Inc. at March 31, 2014 and December 31, 2013.

The carrying values and fair values of the Senior Notes and CENts at March 31, 2014 and December 31, 2013 were as follows (in thousands of U.S. dollars):

	March 31, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
Debt related to senior notes (1)	$	750,000	$	868,989	$	750,000	$	844,331
Debt related to capital efficient notes (2)		63,384		62,780		63,384		61,094

(1) PartnerRe Finance A LLC and PartnerRe Finance B LLC, the issuers of the Senior Notes, do not meet consolidation requirements under U.S. GAAP. Accordingly, the Company shows the related intercompany debt of $750 million in its Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013.

(2) PartnerRe Finance II Inc., the issuer of the CENts, does not meet consolidation requirements under U.S. GAAP. Accordingly, the Company shows the related intercompany debt of $71 million in its Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013.

At March 31, 2014 and December 31, 2013, the Company’s debt related to the Senior Notes and CENts was classified as Level 2 in the fair value hierarchy.

Disclosures about the fair value of financial instrument liabilities exclude insurance contracts and certain other financial instruments.

5. Derivatives

The Company’s derivative instruments are recorded in the Condensed Consolidated Balance Sheets at fair value, with changes in fair value recognized in either net foreign exchange gains and losses or net realized and unrealized investment gains and losses in the Condensed Consolidated Statements of Operations or accumulated other comprehensive income or loss in the Condensed Consolidated Balance Sheets, depending on the nature of the derivative instrument. The Company’s objectives for holding or issuing these derivatives are as follows:

Foreign Exchange Forward Contracts

The Company utilizes foreign exchange forward contracts as part of its overall currency risk management and investment strategies. From time to time, the Company also utilizes foreign exchange forward contracts to hedge a portion of its net investment exposure resulting from the translation of its foreign subsidiaries and branches whose functional currency is other than the U.S. dollar.

Foreign Currency Option Contracts and Futures Contracts

The Company utilizes foreign currency option contracts to mitigate foreign currency risk. The Company uses exchange traded treasury note futures contracts to manage portfolio duration and equity futures to hedge certain investments.

Credit Default Swaps

The Company purchases protection through credit default swaps to mitigate the risk associated with its underwriting operations, most notably in the credit/surety line, and to manage market exposures.

The Company also assumes credit risk through credit default swaps to replicate investment positions. The original term of these credit default swaps is generally five years or less and there are no recourse provisions associated with these swaps. While the Company would be required to perform under exposure assumed through credit default swaps in the event of a default on the underlying issuer. The counterparties on the Company’s assumed credit default swaps are all investment grade rated financial institutions.

Insurance-Linked Securities

The Company enters into various weather derivatives and longevity total return swaps for which the underlying risks reference parametric weather risks for the weather derivatives and longevity risk for the longevity total return swaps.

Total Return and Interest Rate Swaps and Interest Rate Derivatives

The Company enters into total return swaps referencing various project, investments and principal finance obligations. The Company enters into interest rate swaps to mitigate the interest rate risk on certain of the total return swaps and certain fixed maturity investments. The Company also uses other interest rate derivatives to mitigate exposure to interest rate volatility.

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To-Be-Announced Mortgage-Backed Securities

The Company utilizes TBAs as part of its overall investment strategy and to enhance investment performance.

The net fair values and the related net notional values of derivatives included in the Company’s Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013 were as follows (in thousands of U.S. dollars):

	Asset derivatives at fair value		Liability derivatives at fair value			Net derivatives
March 31, 2014						Net notional exposure		Fair value
Foreign exchange forward contracts	$	4,404	$	(5,888	)	$	2,270,300	$	(1,484	)
Foreign currency option contracts		398		—			103,887		398
Futures contracts		18,814		(5	)		3,271,970		18,809
Insurance-linked securities(1)		—		(740	)		170,252		(740	)
Total return swaps		181		(483	)		42,736		(302	)
Interest rate swaps(2)		—		(5,797	)		202,481		(5,797	)
TBAs		—		(1,388	)		143,110		(1,388	)
Total derivatives	$	23,797	$	(14,301	)			$	9,496

	Asset derivatives at fair value		Liability derivatives at fair value			Net derivatives
December 31, 2013						Net notional exposure		Fair value
Foreign exchange forward contracts	$	1,249	$	(8,648	)	$	1,957,409	$	(7,399	)
Foreign currency option contracts		—		(535	)		87,620		(535	)
Futures contracts		41,031		—			3,266,004		41,031
Credit default swaps (protection purchased)		—		(71	)		14,000		(71	)
Insurance-linked securities(1)		—		(268	)		168,724		(268	)
Total return swaps		79		(599	)		31,740		(520	)
Interest rate swaps(2)		2,147		(2,558	)		202,859		(411	)
TBAs		2		(1,331	)		183,835		(1,329	)
Total derivatives	$	44,508	$	(14,010	)			$	30,498

(1) At March 31, 2014 and December 31, 2013, insurance-linked securities include a longevity swap for which the notional amount is not reflective of the overall potential exposure of the swap. As such, the Company has included the probable maximum loss under the swap within the net notional exposure as an approximation of the notional amount.

(2) The Company enters into interest rate swaps to mitigate notional exposures on certain total return swaps and certain fixed maturities. Only the notional value of interest rate swaps on fixed maturities is presented separately in the table.

The fair value of all derivatives at March 31, 2014 and December 31, 2013 is recorded in Other invested assets in the Company’s Condensed Consolidated Balance Sheets. At March 31, 2014 and December 31, 2013, none of the Company’s derivatives were designated as hedges.

The gains and losses in the Condensed Consolidated Statements of Operations for derivatives not designated as hedges for the three months ended March 31, 2014 and 2013 were as follows (in thousands of U.S. dollars):

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	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Foreign exchange forward contracts	$	8,255		$	17,530
Foreign currency option contracts		395			(565	)
Total included in net foreign exchange gains and losses	$	8,650		$	16,965
Futures contracts	$	(16,073	)	$	(6,303	)
Credit default swaps (protection purchased)		(3	)		(98	)
Credit default swaps (assumed risks)		—			107
Insurance-linked securities		243			(3,019	)
Total return swaps		218			(671	)
Interest rate swaps		(5,385	)		777
TBAs		3,747			(1,334	)
Total included in net realized and unrealized investment gains and losses	$	(17,253	)	$	(10,541	)
Total derivatives	$	(8,603	)	$	6,424

Offsetting of Derivatives

The gross and net fair values of derivatives that are subject to offsetting in the Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013 were as follows (in thousands of U.S. dollars):

				Gross amounts offset in the balance sheet		Net amounts of assets/liabilities presented in the balance sheet			Gross amounts not offset in the balance sheet
March 31, 2014	Gross amounts recognized (1)								Financial instruments			Cash collateral received/pledged		Net amount
Total derivative assets	$	23,797		$	—	$	23,797		$	(5	)	$	—	$	23,792
Total derivative liabilities	$	(14,301	)	$	—	$	(14,301	)	$	5		$	1,806	$	(12,490	)
December 31, 2013
Total derivative assets	$	44,508		$	—	$	44,508		$	(2	)	$	—	$	44,506
Total derivative liabilities	$	(14,010	)	$	—	$	(14,010	)	$	2		$	4,341	$	(9,667	)

(1) Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

6. Net Income per Share

The reconciliation of basic and diluted net income per share for the three months ended March 31, 2014 and 2013 is as follows (in thousands of U.S. dollars, except share and per share data):

	For the three months ended March 31, 2014		For the three months ended March 31, 2013
Numerator:
Net income attributable to PartnerRe Ltd.	$	309,843	$	234,370
Less: preferred dividends		14,184		14,699
Less: loss on redemption of preferred shares		—		9,135
Net income attributable to PartnerRe Ltd. common shareholders	$	295,659	$	210,536
Denominator:
Weighted number of common shares outstanding – basic		51,652,177		58,423,898
Share options and other(1)		1,075,396		1,166,146
Weighted average number of common shares and common share equivalents outstanding – diluted		52,727,573		59,590,044
Basic net income per share	$	5.72	$	3.60
Diluted net income per share(1)	$	5.61	$	3.53

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(1) For the three months ended March 31, 2014 and 2013, share based awards to purchase 69.1 thousand and 103.0 thousand common shares, respectively, were excluded from the calculation of diluted weighted average number of common shares and common share equivalents outstanding because their exercise prices were greater than the average market price of the common shares.

7. Noncontrolling Interests

In March 2013, the Company formed with other third party investors, Lorenz Re Ltd. (Lorenz Re), a Bermuda domiciled special purpose insurer to provide additional capacity to the Company for a diversified portfolio of catastrophe reinsurance treaties over a multi-year period on a fully collateralized reinsurance basis. The original business was written by the Company and was ceded to Lorenz Re effective April 1, 2013.

Lorenz Re’s non-voting redeemable preferred share capital is redeemable at the option of the Company and is expected to be redeemed following the commutation of the portfolio back to the Company on or before June 1, 2016.

At March 31, 2014 and December 31, 2013, the total assets of Lorenz Re were $99.1 million and $99.6 million, respectively, primarily consisting of cash and investments. At March 31, 2014 and December 31, 2013, the total liabilities were $5.8 million and $11.1 million, respectively, primarily consisting of unpaid losses and loss expenses and other reinsurance balances payable for 2014 and unearned premiums and unpaid losses and loss expenses for 2013. The assets of Lorenz Re can only be used to settle the liabilities of Lorenz Re and there is no recourse to the Company for any liabilities of Lorenz Re.

The reconciliation of the beginning and ending balance of the noncontrolling interests in Lorenz Re for the three months ended March 31, 2014 and 2013 was as follows (in thousands of U.S. dollars):

	For the three months ended March 31, 2014		For the three months ended March 31, 2013
Balance at beginning of period	$	56,627	$	—
Net income attributable to noncontrolling interests		3,044		—
Sale of shares to noncontrolling interests		—		36,844
Balance at end of period	$	59,671	$	36,844

8. Commitments and Contingencies

(a) Concentration of Credit Risk

Financing receivables

Included in the Company’s Other invested assets are certain notes receivable which meet the definition of financing receivables and are accounted for using the cost method of accounting. These notes receivable are collateralized by commercial or residential property. The Company utilizes a third party consultant to determine the initial investment criteria and to monitor the subsequent performance of the notes receivable. The process undertaken prior to the investment in these notes receivable includes an examination of the underlying collateral. The Company reviews its receivable positions on at least a quarterly basis using actual redemption experience. At March 31, 2014 and December 31, 2013, based on the latest available information, the Company recorded an allowance for credit losses related to these notes receivable of $2.4 million and $2.8 million, respectively.

The Company monitors the performance of the notes receivable based on the type of underlying collateral and by assigning a “performing” or a “non-performing” indicator of credit quality to each individual receivable. At March 31, 2014, the Company’s notes receivable of $19.3 million were all performing and were collateralized by residential property and commercial property of $15.7 million and $3.6 million, respectively. At December 31, 2013, the Company’s notes receivable of $24.5 million were all performing and were collateralized by residential property and commercial property of $19.8 million and $4.7 million, respectively.

There were no significant purchases or sales of financing receivables during the three months ended March 31, 2014 and 2013, however, the outstanding balances were reduced by settlements of the underlying debt.

(b) Legal Proceedings

There has been no significant change in legal proceedings at March 31, 2014 compared to December 31, 2013. See Note 18(f) to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

(c) Other

At March 31, 2014, there were no restrictions on the Company’s ability to pay common and preferred shareholders’ dividends from retained earnings. The declaration of dividends by PartnerRe Bermuda is subject to prior regulatory approval through December 31, 2014.

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9. Segment Information

The Company monitors the performance of its operations in three segments, Non-life, Life and Health and Corporate and Other as described in Note 21 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The Non-life segment is further divided into four sub-segments: North America, Global (Non-U.S.) P&C, Global Specialty and Catastrophe.

The North America sub-segment includes agriculture, casualty, credit/surety, motor, multiline, property and other risks generally originating in the United States. The Global (Non-U.S.) P&C sub-segment includes casualty, motor and property business generally originating outside of the United States. The Global Specialty sub-segment is comprised of business that is generally considered to be specialized due to the sophisticated technical underwriting required to analyze risks, and is global in nature. This sub-segment consists of several lines of business for which the Company believes it has developed specialized knowledge and underwriting capabilities. These lines of business include agriculture, aviation/space, credit/surety, energy, engineering, marine, specialty casualty, specialty property and other lines. The Catastrophe sub-segment is comprised of the Company’s catastrophe line of business. The Life and Health segment includes mortality, longevity and accident and health lines of business. Corporate and Other is comprised of the capital markets and investment related activities of the Company, including principal finance transactions, insurance-linked securities and strategic investments, and its corporate activities, including other operating expenses.

Since the Company does not manage its assets by segment, net investment income is not allocated to the Non-life segment. However, because of the interest-sensitive nature of some of the Company’s Life and Health products, net investment income is considered in Management’s assessment of the profitability of the Life and Health segment. The following items are not considered in evaluating the results of the Non-life and Life and Health segments: net realized and unrealized investment gains and losses, interest expense, amortization of intangible assets, net foreign exchange gains and losses, income tax expense or benefit and interest in earnings and losses of equity method investments. Segment results are shown before consideration of intercompany transactions.

Management measures results for the Non-life segment on the basis of the loss ratio, acquisition ratio, technical ratio, other operating expense ratio and combined ratio (all defined below). Management measures results for the Non-life sub-segments on the basis of the loss ratio, acquisition ratio and technical ratio. Management measures results for the Life and Health segment on the basis of the allocated underwriting result, which includes revenues from net premiums earned, other income or loss and allocated net investment income for Life and Health, and expenses from life policy benefits, acquisition costs and other operating expenses.

The following tables provide a summary of the segment results for the three months ended March 31, 2014 and 2013 (in millions of U.S. dollars, except ratios):

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Segment Information

For the three months ended March 31, 2014

	North America			Global (Non-U.S.) P&C			Global Specialty			Catastrophe			Total Non-life segment			Life and Health segment			Corporate and Other			Total
Gross premiums written	$	530		$	364		$	479		$	210		$	1,583		$	289		$	—		$	1,872
Net premiums written	$	527		$	361		$	389		$	179		$	1,456		$	282		$	—		$	1,738
Increase in unearned premiums		(148	)		(182	)		(34	)		(100	)		(464	)		(20	)		—			(484	)
Net premiums earned	$	379		$	179		$	355		$	79		$	992		$	262		$	—		$	1,254
Losses and loss expenses and life policy benefits		(260	)		(94	)		(201	)		21			(534	)		(215	)		—			(749	)
Acquisition costs		(92	)		(54	)		(79	)		(8	)		(233	)		(32	)		—			(265	)
Technical result	$	27		$	31		$	75		$	92		$	225		$	15		$	—		$	240
Other income														1			1			(2	)		—
Other operating expenses														(65	)		(17	)		(29	)		(111	)
Underwriting result													$	161		$	(1	)		n/a		$	129
Net investment income																	15			102			117
Allocated underwriting result(1)																$	14			n/a			n/a
Net realized and unrealized investment gains																				142			142
Interest expense																				(12	)		(12	)
Amortization of intangible assets																				(7	)		(7	)
Net foreign exchange gains																				—			—
Income tax expense																				(62	)		(62	)
Interest in earnings of equity method investments																				6			6
Net income																				n/a		$	313
Loss ratio(2)		68.6	%		52.4	%		56.6	%		(26.5	)%		53.8	%
Acquisition ratio(3)		24.3			30.1			22.4			10.1			23.6
Technical ratio(4)		92.9	%		82.5	%		79.0	%		(16.4	)%		77.4	%
Other operating expense ratio(5)														6.5
Combined ratio(6)														83.9	%

(1) Allocated underwriting result is defined as net premiums earned, other income or loss 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 defined as the sum of the technical ratio and the other operating expense ratio.

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Segment Information

For the three months ended March 31, 2013

	North America			Global (Non-U.S.) P&C			Global Specialty			Catastrophe			Total Non-life segment			Life and Health segment			Corporate and Other			Total
Gross premiums written	$	447		$	372		$	445		$	238		$	1,502		$	254		$	1		$	1,757
Net premiums written	$	446		$	368		$	361		$	211		$	1,386		$	249		$	1		$	1,636
Increase in unearned premiums		(113	)		(202	)		(24	)		(124	)		(463	)		(25	)		(1	)		(489	)
Net premiums earned	$	333		$	166		$	337		$	87		$	923		$	224		$	—		$	1,147
Losses and loss expenses and life policy benefits		(240	)		(67	)		(184	)		11			(480	)		(182	)		1			(661	)
Acquisition costs		(72	)		(50	)		(75	)		(11	)		(208	)		(27	)		—			(235	)
Technical result	$	21		$	49		$	78		$	87		$	235		$	15		$	1		$	251
Other income														—			3			1			4
Other operating expenses														(66	)		(18	)		(32	)		(116	)
Underwriting result													$	169		$	—			n/a		$	139
Net investment income																	16			108			124
Allocated underwriting result																$	16			n/a			n/a
Net realized and unrealized investment gains																				23			23
Interest expense																				(12	)		(12	)
Amortization of intangible assets																				(7	)		(7	)
Net foreign exchange gains																				2			2
Income tax expense																				(42	)		(42	)
Interest in earnings of equity method investments																				7			7
Net income																				n/a		$	234
Loss ratio		72.0	%		40.4	%		54.6	%		(12.8	)%		52.0	%
Acquisition ratio		21.6			30.1			22.4			12.3			22.6
Technical ratio		93.6	%		70.5	%		77.0	%		(0.5	)%		74.6	%
Other operating expense ratio														7.1
Combined ratio														81.7	%

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

The Company is a leading global reinsurer and insurer, with a broadly diversified and balanced portfolio of traditional reinsurance and insurance risks and capital markets risks.

Successful risk management is the foundation of the Company’s value proposition, with diversification of risks at the core of its risk management strategy. The Company’s ability to succeed in the risk assumption and management business is dependent on its ability to accurately analyze and quantify risk, to understand volatility and how risks aggregate or correlate, and to establish the appropriate capital requirements and limits for the risks assumed. All risks, whether they are reinsurance related risks or capital market risks, are managed by the Company within an integrated framework of policies and processes to ensure the intelligent and consistent evaluation and valuation of risk, and to ultimately provide an appropriate return to shareholders. The Company’s Risk Management framework is discussed in Risk Management in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

For a discussion of the Company’s long-term objective and annualized growth in Diluted Tangible Book Value per Share plus dividends, the metric that Management uses to measure its success in achieving its long-term objective, see below in Key Financial Measures.

Overview of the Results of Operations for the Three Months Ended March 31, 2014

The Company measures its performance in several ways. Among the performance measures accepted under U.S. GAAP is diluted net income or loss per share, a measure that focuses on the return provided to the Company’s common shareholders. Diluted net income or loss per share is obtained by dividing net income or loss attributable to PartnerRe Ltd. common shareholders by the weighted average number of common shares and common share equivalents outstanding. Net income or loss attributable to PartnerRe Ltd. common shareholders is defined as net income or loss less preferred dividends and loss on redemption of preferred shares. The Company also utilizes certain non-GAAP measures to assess performance (see the discussion of these non-GAAP measures and the reconciliation of those non-GAAP measures to the most directly comparable GAAP measures in Key Financial Measures below).

Key Factors Affecting Period over Period Comparability

The following key factors affected the period over period comparison of the Company’s results and may continue to affect our results of operations and financial condition in the future. These factors are discussed in more detail in Review of Net Income below.

As the Company’s reinsurance operations are exposed to low frequency and high severity risk events, some of which are seasonal, results for certain periods may include unusually low loss experience, while results for other periods may include significant catastrophic losses. Consequently, the Company’s results for interim periods may be volatile from period to period and are not necessarily indicative of results for the full year. The results for the three months ended March 31, 2014 and 2013 include no significant catastrophic losses.

The results for the three months ended March 31, 2014 and 2013 were impacted by the volatility in the capital markets, primarily as a result of modest decreases in longer-term risk-free interest rates and a slight narrowing of credit spreads during 2014 and modest increases in risk-free interest rates during 2013.

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Overview of Net Income

Net income, net income attributable to noncontrolling interests, preferred dividends, loss on redemption of preferred shares, net income attributable to PartnerRe Ltd. common shareholders and diluted net income per share for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars, except per share data):

	For the three months ended March 31, 2014		% Change			For the three months ended March 31, 2013
Net income	$	313		34	%	$	234
Less: net income attributable to noncontrolling interests		3		NM			—
Net income attributable to PartnerRe Ltd.	$	310		32		$	234
Less: preferred dividends		14		(4	)		15
Less: loss on redemption of preferred shares		—		(100	)		9
Net income attributable to PartnerRe Ltd. common shareholders	$	296		40		$	210
Diluted net income per share attributable to PartnerRe Ltd. common shareholders	$	5.61		59		$	3.53

The increase in net income of $79 million, from $234 million in the three months ended March 31, 2013 to $313 million in the same period of 2014 resulted primarily from:

• an increase of $119 million in pre-tax net realized and unrealized investment gains, mainly as a result of modest decreases in longer-term risk-free interest rates and a slight narrowing of credit spreads in the three months ended March 31, 2014 compared to modest increases in risk-free interest rates in the same period of 2013; partially offset by

• an increase of $20 million in income tax expense, primarily resulting from a higher pre-tax net income;

• a decrease of $8 million in the Non-life underwriting result, which was mainly driven by a decrease in favorable prior year loss development, partially offset by a modestly lower level of mid-sized loss activity; and

• a decrease of $7 million in net investment income, driven by lower reinvestment rates.

The increase in net income attributable to PartnerRe Ltd. common shareholders and diluted net income per share for the three months ended March 31, 2014 compared to the same period of 2013 was primarily due to the above factors. For diluted net income per share specifically, the increase was also due to the accretive impact of a reduction in the diluted number of common shares and common share equivalents outstanding as a result of share repurchases.

Key Financial Measures

In addition to the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and Comprehensive Income, Management uses certain other key measures, some of which are non-GAAP financial measures within the meaning of Regulation G (see below), to evaluate its financial performance and the overall growth in value generated for the Company’s common shareholders.

The Company’s long-term objective is to manage a portfolio of diversified risks that will create total shareholder value. The Company measures its success in achieving its long-term objective by targeting a return, which is variable and can be adjusted by Management, in excess of a referenced risk-free rate over the reinsurance cycle. The return, which is currently targeted to exceed 700 basis points in excess of the referenced risk-free rate, is calculated using compound annual growth in diluted tangible book value per common share and common share equivalents outstanding plus dividends per common share (annualized growth in Diluted Tangible Book Value per Share plus dividends). Management uses annualized growth in Diluted Tangible Book Value per Share plus dividends as its prime measure of long-term financial performance and believes this measure aligns the Company’s stated long-term objective with the measure most investors use to evaluate total shareholder value creation given that it focuses on the tangible value of total shareholder returns, excluding the impact of goodwill and intangibles. Given the Company’s profitability in any particular quarterly or annual period can be significantly affected by the level of large catastrophic losses, Management assesses this long-term objective over the reinsurance cycle as the Company’s performance during any particular quarterly or annual period is not necessarily indicative of its performance over the longer-term reinsurance cycle.

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While annualized growth in Diluted Tangible Book Value per Share plus dividends is the Company’s prime financial measure, Management also uses other key financial measures to monitor performance. At March 31, 2014 and December 31, 2013 and for the three months ended March 31, 2014 and 2013 these were as follows:

	March 31, 2014			December 31, 2013
Diluted tangible book value per common share and common share equivalents outstanding (1)	$	103.10		$	98.49
Annualized growth in diluted tangible book value per common share and common share equivalents outstanding plus dividends (2)		21.4	%
	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Operating earnings attributable to PartnerRe Ltd. common shareholders (in millions of U.S. dollars) (3)	$	177		$	202
Diluted operating earnings per common share and common share equivalents outstanding(3)	$	3.36		$	3.39
Annualized operating return on beginning diluted book value per common share and common share equivalents outstanding (4)		12.3	%		13.5	%
Combined ratio (5)		83.9	%		81.7	%

(1) Diluted tangible book value per common share and common share equivalents outstanding (Diluted Tangible Book Value per Share) is calculated using common shareholders’ equity attributable to PartnerRe Ltd. (total shareholders’ equity less noncontrolling interests and the aggregate liquidation value of preferred shares) less goodwill and intangible assets, net of tax, divided by the weighted average number of common shares and common share equivalents outstanding (assuming exercise of all stock-based awards and other dilutive securities). The presentation of Diluted Tangible Book Value per Share is a non-GAAP financial measure within the meaning of Regulation G (see Comment on Non-GAAP Measures below) and is reconciled to the most directly comparable GAAP financial measure below.

(2) Annualized growth in diluted tangible book value per common share and common share equivalents outstanding plus dividends (annualized growth in Diluted Tangible Book Value per Share plus dividends) is calculated using Diluted Tangible Book Value per Share plus dividends per common share divided by Diluted Tangible Book Value per Share at the beginning of the year and annualizing. The presentation of annualized growth in Diluted Tangible Book Value per Share plus dividends is a non-GAAP financial measure within the meaning of Regulation G (see Comment on Non-GAAP Measures below) and is reconciled to the most directly comparable GAAP financial measure below.

(3) Operating earnings or loss attributable to PartnerRe Ltd. common shareholders (operating earnings or loss) is calculated as net income or loss available to PartnerRe Ltd. common shareholders excluding net realized and unrealized gains or losses on investments, net of tax (except where the Company has made a strategic investment in an insurance or reinsurance related investee), net foreign exchange gains or losses, net of tax, loss on redemption of preferred shares and the interest in earnings or losses of equity method investments, net of tax (except where the Company has made a strategic investment in an insurance or reinsurance related investee and where the Company does not control the investee’s activities), and is calculated after preferred dividends. Operating earnings or loss per common share and common share equivalent outstanding (diluted operating earnings or loss per share) are calculated using operating earnings or loss for the period divided by the weighted average number of common shares and common share equivalents outstanding. The presentation of operating earnings or loss and diluted operating earnings or loss per share are non-GAAP financial measures within the meaning of Regulation G (see Comment on Non-GAAP Measures below) and are reconciled to the most directly comparable GAAP financial measure below.

(4) Annualized operating return on beginning diluted book value per common share and common share equivalents outstanding (Operating ROE) is calculated using annualized operating earnings or loss, as defined above, per diluted common share and common share equivalents outstanding, divided by diluted book value per common share and common share equivalents outstanding as of the beginning of the year, as defined above. The presentation of Operating ROE is a non-GAAP financial measure within the meaning of Regulation G (see Comment on Non-GAAP Measures below) and is reconciled to the most directly comparable GAAP financial measure below.

(5) The combined ratio of the Non-life segment is calculated as the sum of the technical ratio (losses and loss expenses and acquisition costs divided by net premiums earned) and the other operating expense ratio (other operating expenses divided by net premiums earned).

Diluted Tangible Book Value per Share:Diluted Tangible Book Value per Share focuses on the underlying fundamentals of the Company’s financial position and performance without the impact of goodwill or intangible assets. As discussed above, the Company uses this measure as the basis for its prime measure of long-term shareholder value creation, growth in Diluted Tangible Book Value per Share plus dividends. Management believes that Diluted Tangible Book Value per Share aligns the Company’s stated long-term objectives with the measure most investors use to evaluate total shareholder value creation and that it focuses on the tangible value of shareholder returns, excluding the impact of goodwill and intangibles. Diluted Tangible Book Value per Share is impacted by the Company’s net income or loss, capital resources management and external factors such as foreign exchange, interest rates, credit spreads and equity markets, which can drive changes in realized and unrealized gains or losses on its investment portfolio.

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Diluted Tangible Book Value per Share at March 31, 2014 and December 31, 2013 and the calculation of the annualized growth in Diluted Tangible Book Value per Share plus dividends for the three months ended March 31, 2014 were as follows. As described above, this metric is a long-term performance measure, however, the below table shows the annualized total shareholder value creation for the current period in order for the shareholders to monitor performance.

	March 31, 2014			December 31, 2013
Diluted tangible book value per common share and share equivalents outstanding	$	103.10		$	98.49
Dividends per common share for the three months ended March 31, 2014		0.67
Diluted tangible book value per share plus dividends	$	103.77
Annualized growth in diluted tangible book value per share plus dividends		21.4	%

The Company’s Diluted Tangible Book Value per Share increased by 4.7%, from $98.49 at December 31, 2013 to $103.10 at March 31, 2014, primarily due to net income attributable to PartnerRe Ltd., which was partially offset by dividends on the common and preferred shares. The annualized growth in Diluted Tangible Book Value per Share plus dividends was 21.4% during the three months ended March 31, 2014. This growth was driven by net income attributable to PartnerRe Ltd. and dividends on the common shares.

Over the past five years, since March 31, 2009, the Company has generated a compound annualized growth in Diluted Tangible Book Value per Share plus dividends in excess of 15%.

The presentation of Diluted Tangible Book Value per Share is a non-GAAP financial measure within the meaning of Regulation G and should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP (see Comment on Non-GAAP Measures). The reconciliation of Diluted Tangible Book Value per Share to the most directly comparable GAAP financial measure, diluted book value per common share and common share equivalents outstanding, at March 31, 2014 and December 31, 2013 was as follows (in millions of U.S. dollars):

	March 31, 2014		December 31, 2013
Diluted book value per common share and common share equivalents outstanding (1)	$	114.13	$	109.26
Less: goodwill and other intangible assets, net of tax, per share		11.03		10.77
Diluted tangible book value per share	$	103.10	$	98.49

(1) Diluted book value per common share and common share equivalents outstanding (Diluted Book Value per Share) is calculated using common shareholders’ equity attributable to PartnerRe Ltd. (total shareholders’ equity less noncontrolling interests and the aggregate liquidation value of preferred shares) divided by the weighted average number of common shares and common share equivalents outstanding (assuming exercise of all stock-based awards and other dilutive securities).

Operating earnings or loss attributable to PartnerRe Ltd. common shareholders (operating earnings or loss) and operating earnings or loss per common share and common share equivalent outstanding (diluted operating earnings or loss per share):Management uses operating earnings or loss and diluted operating earnings or loss per share to measure its financial performance as these measures focus on the underlying fundamentals of the Company’s operations by excluding net realized and unrealized gains or losses on investments (except where the Company has made a strategic investment in an investee whose operations are insurance or reinsurance related and where the Company does not control the investee’s activities), net foreign exchange gains or losses, loss on redemption of preferred shares and certain interest in earnings or losses of equity method investments (except where the Company has made a strategic investment in an investee whose operations are insurance or reinsurance related and where the Company does not control the investee’s activities). Net realized and unrealized gains or losses on investments in any particular period are not indicative of the performance of, and distort trends in, the Company’s business as they predominantly result from general economic and financial market conditions, and the timing of realized gains or losses on investments is largely opportunistic. Net foreign exchange gains or losses are not indicative of the performance of, and distort trends in, the Company’s business as they predominantly result from general economic and foreign exchange market conditions. Loss on the redemption of preferred shares is not indicative of the performance of, and distorts trends in, the Company’s business as it resulted from general economic and financial market conditions, and the timing of the loss on redemption was largely opportunistic. Interest in earnings or losses of equity method investments are also not indicative of the performance of, or trends in, the Company’s business where the investee’s operations are not insurance or reinsurance related and where the Company does not control the investee companies’ activities. Management believes that the use of operating earnings or loss and diluted operating earnings or loss per share enables investors and other users of the Company’s financial information to analyze its performance in a manner similar to how Management analyzes performance. Management also believes that these measures follow industry practice and, therefore, allow the users of financial information to compare the Company’s performance with its industry peer group, and that the equity analysts and certain rating agencies which follow the Company, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons.

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Operating earnings decreased by $25 million, from $202 million in the three months ended March 31, 2013 to $177 million in the same period of 2014. The decrease in operating earnings was primarily due to:

• an increase in income tax expense on pre-tax operating earnings, driven by the distribution of the pre-tax operating earnings, with a relatively higher proportion recorded in taxable jurisdictions;

• a deterioration in the Non-life underwriting result, resulting primarily from a lower level of favorable prior year loss development, which was partially offset by a modestly lower level of mid-sized loss activity; and

• a decrease in net investment income, driven by lower reinvestment rates.

Diluted operating earnings per share decreased modestly, from $3.39 in the three months ended March 31, 2013 to $3.36 in the same period of 2014, primarily due to the decrease in operating earnings, partially offset by the accretive impact of the share repurchases.

The other lesser factors contributing to the increases or decreases in operating earnings and diluted operating earnings per share in the three months ended March 31, 2014 compared to the same period of 2013 are further described in Review of Net Income below.

Operating earnings or loss attributable to PartnerRe Ltd. common shareholders and diluted operating earnings or loss per share are non-GAAP financial measures within the meaning of Regulation G and should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP (see Comment on Non-GAAP Measures). The reconciliation of operating earnings and diluted operating earnings per share to the most directly comparable GAAP financial measure for the three months ended March 31, 2014 and 2013 was as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Net income attributable to PartnerRe Ltd.	$	310		$	234
Less:
Net realized and unrealized investment gains, net of tax		116			12
Net foreign exchange losses, net of tax		(1	)		(1	)
Interest in earnings of equity method investments, net of tax		4			6
Dividends to preferred shareholders		14			15
Operating earnings attributable to PartnerRe Ltd. common shareholders	$	177		$	202
Per diluted share:
Net income attributable to PartnerRe Ltd. common shareholders	$	5.61		$	3.53
Less:
Net realized and unrealized investment gains, net of tax		2.20			0.20
Net foreign exchange losses, net of tax		(0.02	)		(0.01	)
Loss on redemption of preferred shares		—			(0.15	)
Interest in earnings of equity method investments, net of tax		0.07			0.10
Operating earnings attributable to PartnerRe Ltd. common shareholders	$	3.36		$	3.39

Operating ROE:Management uses annualized Operating ROE as a measure of profitability that focuses on the return to common shareholders on an annual basis. To support the Company’s growth objectives, most economic decisions, including capital attribution and underwriting pricing decisions, incorporate an Operating ROE impact analysis. For the purpose of that analysis, an appropriate amount of capital (equity) is attributed to each transaction for determining the transaction’s priced return on attributed capital. Subject to an adequate return for the risk level as well as other factors, such as the contribution of each risk to the overall risk level and risk diversification, capital is attributed to the transactions generating the highest priced return on deployed capital. Management’s challenge consists of (i) attributing an appropriate amount of capital to each transaction based on the risk created by the transaction, (ii) properly estimating the Company’s overall risk level and the impact of each transaction on the overall risk level, (iii) assessing the diversification benefit, if any, of each transaction, and (iv) deploying available capital. The risk for the Company lies in mis-estimating any one of these factors, which are critical in calculating a meaningful priced return on deployed capital, and entering into transactions that do not contribute to the Company’s growth objectives. The Company’s Operating ROE’s for quarterly periods are annualized.

Annualized Operating ROE decreased from 13.5% in the three months ended March 31, 2013 to 12.3% in the same period of 2014. The decrease in annualized Operating ROE was primarily due to a higher beginning diluted book value per share at January 1, 2014 compared to January 1, 2013. The factors contributing to increases or decreases in operating earnings are described further in Review of Net Income below.

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The presentation of Operating ROE is a non-GAAP financial measure within the meaning of Regulation G and should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP (see Comment on Non-GAAP Measures). The reconciliation of Operating ROE to the most directly comparable GAAP financial measure for the three months ended March 31, 2014 and 2013 was as follows:

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Annualized return on beginning diluted book value per common share calculated with net income per share attributable to common shareholders		20.5	%		14.0	%
Less:
Annualized net realized and unrealized investment gains, net of tax, on beginning diluted book value per common share		8.0			0.8
Annualized net foreign exchange losses, net of tax, on beginning diluted book value per common share		(0.1	)		(0.1	)
Annualized net interest in earnings of equity method investments, net of tax, on beginning diluted book value per common share		0.3			0.4
Annualized loss on redemption of preferred shares, on beginning diluted book value per common share		—			(0.6	)
Annualized operating return on beginning diluted book value per common share		12.3	%		13.5	%

Combined ratio: The combined ratio is used industry-wide as a measure of underwriting profitability for Non-life business. A combined ratio under 100% indicates underwriting profitability, as the total losses and loss expenses, acquisition costs and other operating expenses are less than the premiums earned on that business. While an important metric of underwriting profitability, the combined ratio does not reflect all components of profitability, as it does not recognize the impact of investment income earned on premiums between the time premiums are received and the time loss payments are ultimately made to clients. The key challenges in managing the combined ratio metric consist of (i) focusing on underwriting profitable business even in the weaker part of the reinsurance cycle, as opposed to growing the book of business at the cost of profitability, (ii) diversifying the portfolio to achieve a good balance of business, with the expectation that underwriting losses in certain lines or markets may potentially be offset by underwriting profits in other lines or markets, and (iii) maintaining control over expenses.

The Non-life combined ratio increased by 2.2 points, from 81.7% in the three months ended March 31, 2013 to 83.9% in the same period of 2014. The increase in the combined ratio for the three months ended March 31, 2014 compared to the same period of 2013 primarily reflected the decrease in net favorable prior year loss development, partially offset by a modestly lower level of mid-sized loss activity and an increase in net premiums earned which reduced the other operating expense ratio.

The other lesser factors contributing to increases or decreases in the combined ratio are described further in Review of Net Income below.

The Company uses the combined ratio to measure its overall underwriting profitability for its Non-life segment as a whole. Given the Company does not allocate operating expenses to its Non-life sub-segments, Management measures the underwriting profitability of the Non-life sub-segments by using the technical result and technical ratio as described in Results by Segment below.

Other Key Financial Measures

In addition to using the annualized growth in Diluted Tangible Book Value per Share plus dividends as the Company’s prime financial long-term measure, and diluted tangible book value per common share and common share equivalents outstanding (Diluted Tangible Book Value per Share) as the basis for this measure, the Company uses other metrics to monitor its financial performance and to measure total shareholder value. Other such metrics used by Management include, but are not limited to, diluted book value per common share and common share equivalents outstanding (Diluted Book Value per Share) and Diluted Tangible Book Value per Share plus the discount in Non-life loss reserves per common share and common share equivalents outstanding (Diluted Tangible Book Value plus the discount in Non-life reserves). Diluted Book Value per Share is a similar metric to Diluted Tangible Book Value per Share, except that it includes the impact on book value of goodwill and intangible assets. Diluted Tangible Book Value plus the discount in Non-life loss reserves is a shorter-term metric that adjusts the Company’s Diluted Tangible Book Value per Share for the impact that changes in interest rates have on the time value of money that is embedded in the Company’s Non-life loss reserves.

Comment on Non-GAAP Measures

Throughout this filing, the Company’s results of operations have been presented in the way that Management believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use financial information in evaluating the performance of the Company. This presentation includes the use of Diluted Tangible Book Value per Share, Diluted Tangible Book Value per Share plus dividends, operating earnings or loss, diluted operating earnings or loss per share and Operating ROE that are not calculated under standards or rules that comprise U.S. GAAP. These measures are referred to as non-GAAP financial measures within the meaning of Regulation G. Management believes that these non-GAAP financial measures are important to investors, analysts, rating agencies and others who use the Company’s financial information and will help provide a consistent basis for comparison between years and for comparison with the Company’s peer group, although non-GAAP measures may be defined or calculated differently by other companies. Investors should consider these non-GAAP measures in addition to, and not as a substitute for,

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measures of financial performance prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable U.S. GAAP financial measures, diluted book value per share, net income or loss and return on beginning common shareholders’ equity calculated with net income or loss attributable to common shareholders, is presented above.

Risk Management

In the reinsurance industry, the core of the business model is the assumption and management of risk. A key challenge is to create total shareholder value through the intelligent and optimal assumption and management of reinsurance, insurance and investment risks while limiting and mitigating those risks that can destroy tangible as well as intangible value, those risks for which the organization is not sufficiently compensated, and those risks that could threaten the ability of the Company to achieve its objectives. While many companies start with a return goal and then attempt to shed risks that may derail that goal, the Company starts with a capital-based risk appetite and then looks for risks that meet its return targets within that framework. Management believes that this construct allows the Company to balance the cedants’ need for certainty of claims payment with the shareholders’ need for an adequate total return.

All business decisions entail a risk/return trade-off, and these decisions are applicable to the Company’s risks. In the context of assumed business risks, this requires an accurate evaluation of risks to be assumed, and a determination of the appropriate economic returns required as fair compensation for such risks.

The Company’s results are primarily determined by how well the Company understands, prices and manages assumed risk. Management also believes that every organization faces numerous risks that could threaten the successful achievement of a company’s goals and objectives. These include choice of strategy and markets, economic and business cycles, competition, changes in regulation, data quality and security, fraud, business interruption and management continuity; all factors which can be viewed as either strategic, financial, or operational risks that are common to any industry. See Risk Factors in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

For additional information related to the Company’s risk management approach, see Business—Risk Management in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Assumed Risks

Central to the Company’s assumed risk framework is its risk appetite. The Company’s risk appetite is a statement of how much and how often the Company will tolerate operating losses and economic losses during an annual period. The Company’s risk appetite is expressed as the maximum operating loss and the maximum economic loss that the Board of Directors (Board) is willing to incur. The Company’s risk appetite is approved by the Board on an annual basis.

The Company manages exposure levels from multiple risk sources to provide reasonable assurance that modeled operating or economic losses are contained within the risk appetite approved by the Board. Definitions for operating and economic losses in the context of the Company’s risk management framework are included in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

The Company establishes key risk limits for any risk source deemed by Management to have the potential to cause operating losses or economic losses greater than the Company’s risk appetite. The Risk and Finance Committee of the Board (Risk and Finance Committee) approves the key risk limits. Executive and Business and Support Unit Management may set additional specific and aggregate risk limits within the key risk limits approved by the Risk and Finance Committee. The actual level of risk is dependent on current market conditions and the need for balance in the Company’s portfolio of risks. On a quarterly basis, Management reviews and reports to the Risk and Finance Committee the actual limits deployed against the approved limits.

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Management established key risk limits that are approved by the Risk and Finance Committee for ten risk sources at March 31, 2014. For a detailed discussion of these ten risk sources see Business—Risk Management in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The limits approved by the Risk and Finance Committee and the actual limits deployed at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014 (2)				December 31, 2013 (2)
	Limit approved		Actual deployed		Limit approved		Actual deployed
Natural Catastrophe Risk	$	2.3 billion	$	1.4 billion	$	2.3 billion	$	1.5 billion
Long Tail Reinsurance Risk	$	1.2 billion	$	0.8 billion	$	1.2 billion	$	0.8 billion
Market Risk	$	3.4 billion	$	2.6 billion	$	3.4 billion	$	2.6 billion
Equity and equity-like sublimit	$	2.8 billion	$	2.0 billion	$	2.8 billion	$	1.8 billion
Interest Rate Risk (duration)—excess fixed income investment portfolio (1)		6.0 years		2.4 years		6.0 years		1.5 years
Default and Credit Spread Risk	$	9.5 billion	$	6.8 billion	$	9.5 billion	$	6.8 billion
Trade Credit Underwriting Risk	$	0.9 billion	$	0.8 billion	$	0.9 billion	$	0.7 billion
Longevity Risk	$	2.0 billion	$	1.3 billion	$	2.0 billion	$	1.2 billion
Pandemic Risk	$	1.3 billion	$	0.7 billion	$	1.3 billion	$	0.6 billion
Agriculture Risk	$	0.3 billion	$	0.1 billion	$	0.3 billion	$	0.1 billion
Mortgage Reinsurance Risk	$	0.7 billion	$	0.4 billion	$	0.7 billion	$	0.2 billion
Any one country sub-limit	$	0.5 billion	$	0.2 billion	$	0.5 billion	$	0.2 billion

(1) The excess fixed income investment portfolio relates to fixed income securities included in the Company’s capital funds, which are in excess of those included in the Company’s liability funds and which support the net reinsurance liabilities.

(2) The limits approved and the actual limits deployed in the table above are shown net of retrocession.

Natural Catastrophe Probable Maximum Loss (PML)

The following discussion of the Company’s natural catastrophe probable maximum loss (PML) information contains forward-looking statements based upon assumptions and expectations concerning the potential effect of future events that are subject to uncertainties. See Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a list of the Company’s risk factors. Any of these risk factors could result in actual losses that are materially different from the Company’s PML estimates below.

Natural catastrophe risk is a source of significant aggregate exposure for the Company and is managed by setting risk appetite and limits, as discussed above. The peril zones in the disclosure below are major peril zones for the industry. The Company has exposures in other peril zones that can potentially generate losses greater than the PML estimates below. The Company’s PMLs represent an estimate of loss for a single event for a given return period. The table below discloses the Company’s 1-in-250 and 1-in-500 year return period estimated loss for a single occurrence of a natural catastrophe event in a one-year period. In other words, the 1-in-250 and 1-in-500 year return period PMLs mean that there is a 0.4% and 0.2% chance, respectively, in any given year that an occurrence of a natural catastrophe in a specific peril zone will lead to losses exceeding the stated estimate.

The PML estimates below include all significant exposure from our Non-life and Life and Health business operations. This includes coverage for property, marine, energy, aviation, engineering, workers’ compensation and mortality and exposure to catastrophe from insurance-linked securities. The PML estimates do not include casualty coverage that could be exposed as a result of a catastrophic event. In addition, they do not include estimates for contingent losses to insureds that are not directly impacted by the event (e.g. loss of earnings due to disruption in supply lines).

For additional information related to the Company’s natural catastrophe PML information and definitions, see Business—Natural Catastrophe Probable Maximum Loss (PML) in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

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The Company’s single occurrence estimated net PML exposures (pre-tax and net of retrocession and reinstatement premiums) for certain selected peak industry natural catastrophe perils at January 1, 2014 were as follows (in millions of U.S. dollars):

		Single Occurrence Estimated Net PML Exposure
Zone	Peril	1-in-250 year PML		1-in-500 year PML (Earthquake Perils Only)
U.S. Southeast	Hurricane	$	908		—
U.S. Northeast	Hurricane		1,008		—
U.S. Gulf Coast	Hurricane		960		—
Caribbean	Hurricane		192		—
Europe	Windstorm		626		—
Japan	Typhoon		128		—
California	Earthquake		589	$	668
British Columbia	Earthquake		214		378
Japan	Earthquake		432		466
Australia	Earthquake		332		426
New Zealand	Earthquake		203		223

The Company estimates that the incremental loss at the 1-in-250 year return period from a U.S. hurricane impacting more than one of the three hurricane risk zones in the U.S. would be 20% higher than the PML of the largest zone impacted. In addition, there is the potential for a hurricane to impact the Caribbean peril zone and one or more U.S. hurricane peril zones.

Critical Accounting Policies and Estimates

Critical Accounting Policies and Estimates of the Company at March 31, 2014 have not changed materially compared to December 31, 2013. The following discussion updates specific information related to the Company’s estimates for losses and loss expenses and life policy benefits and valuation of investments and funds held – directly managed, including certain derivative financial instruments. See Critical Accounting Policies and Estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the Company’s other critical accounting policies which are not specifically updated in this report given they have not changed materially compared to December 31, 2013.

Losses and Loss Expenses and Life Policy Benefits

Losses and Loss Expenses

Because a significant amount of time can elapse between the assumption of risk, occurrence of a loss event, the reporting of the event to an insurance company (the primary company or the cedant), the subsequent reporting to the reinsurance company (the reinsurer) and the ultimate payment of the claim on the loss event by the reinsurer, the Company’s liability for unpaid losses and loss expenses (loss reserves) is based largely upon estimates. The Company categorizes loss reserves into three types of reserves: reported outstanding loss reserves (case reserves), additional case reserves (ACRs) and incurred but not reported (IBNR) reserves. The Company updates its estimates for each of the aforementioned categories on a quarterly basis using information received from its cedants. The Company also estimates the future unallocated loss adjustment expenses (ULAE) associated with the loss reserves and these form part of the Company’s loss adjustment expense reserves. The Company’s Non-life loss reserves for each category and sub-segment are reported in the table included later in this section.

The amount of time that elapses before a claim is reported to the cedant and then subsequently reported to the reinsurer is commonly referred to in the industry as the reporting tail. For all lines, the Company’s objective is to estimate ultimate losses and loss expenses. Total loss reserves are then calculated by subtracting losses paid. Similarly, IBNR reserves are calculated by subtraction of case reserves and ACRs from total loss reserves.

The Company analyzes its ultimate losses and loss expenses after consideration of the loss experience of various reserving cells. The Company assigns treaties to reserving cells and allocates losses from the treaty to the reserving cell. The reserving cells are selected in order to ensure that the underlying treaties have homogeneous loss development characteristics (e.g., reporting tail) but are large enough to make estimation of trends credible. The selection of reserving cells is reviewed annually and changes over time as the business of the Company evolves. For each reserving cell, the Company’s estimates of loss reserves are reached after a review of the results of several commonly accepted actuarial projection methodologies. In selecting its best estimate, the Company considers the appropriateness of each methodology to the individual circumstances of the reserving cell and underwriting year for which the projection is made.

See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for additional information on the reserving methodologies employed by the Company, the principal reserving methods used for the reserving lines, the principal parameter assumptions underlying the methods and the main underlying factors upon which the estimates of reserving parameters are predicated.

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The Company’s best estimate of total loss reserves is typically in excess of the midpoint of the actuarial ultimate liability estimate. The Company believes that there is potentially significant risk in estimating loss reserves for long-tail lines of business and for immature underwriting years that may not be adequately captured through traditional actuarial projection methodologies as these methodologies usually rely heavily on projections of prior year trends into the future. In selecting its best estimate of future liabilities, the Company considers both the results of actuarial point estimates of loss reserves as well as the potential variability of these estimates as captured by a reasonable range of actuarial liability estimates. The selected best estimates of reserves are always within the reasonable range of estimates indicated by the Company’s actuaries.

During the three months ended March 31, 2014 and 2013, the Company reviewed its estimate for prior year losses for the Non-life segment (defined below in Results by Segment) and, in light of developing data, adjusted its ultimate loss ratios for prior accident years. The net prior year favorable loss development for each sub-segment of the Company’s Non-life segment for the three months ended March 31, 2014 and 2013 was as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014		For the three months ended March 31, 2013
Net Non-life prior year favorable loss development:
North America	$	24	$	30
Global (Non-U.S.) P&C		47		58
Global Specialty		59		60
Catastrophe		34		35
Total net Non-life prior year favorable loss development	$	164	$	183

The net Non-life prior year favorable loss development for the three months ended March 31, 2014 and 2013 was driven by the following factors (in millions of U.S. dollars):

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Net Non-life prior year (adverse) favorable loss development:
Net prior year loss development due to changes in premiums (1)	$	(10	)	$	(11	)
Net prior year loss development due to all other factors (2)		174			194
Total net Non-life prior year favorable loss development	$	164		$	183

(1) Net prior year loss development due to changes in premiums includes, but it is not limited to, the impact to prior years’ reserves associated with (increases) decreases in the estimated or actual premium exposure reported by cedants.

(2) Net prior year loss development due to all other factors includes, but is not limited to, loss experience, changes in assumptions and changes in methodology.

For a discussion of net prior year favorable loss development by Non-life sub-segment, see Results by Segment below. See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for additional information by reserving lines.

The gross reserves reported by cedants (case reserves), those estimated by the Company (ACRs and IBNR reserves) and the total gross, ceded and net loss reserves recorded at March 31, 2014 for each Non-life sub-segment were as follows (in millions of U.S. dollars):

	Case reserves		ACRs		IBNR reserves		Total gross loss reserves recorded		Ceded loss reserves			Total net loss reserves recorded
North America	$	959	$	137	$	2,454	$	3,550	$	(18	)	$	3,532
Global (Non-U.S.) P&C		1,336		13		1,080		2,429		(17	)		2,412
Global Specialty		1,887		47		1,986		3,920		(173	)		3,747
Catastrophe		370		136		125		631		(44	)		587
Total Non-life reserves	$	4,552	$	333	$	5,645	$	10,530	$	(252	)	$	10,278

The net loss reserves represent the Company’s best estimate of future losses and loss expense amounts based on the information available at March 31, 2014. Loss reserves rely upon estimates involving actuarial and statistical projections at a given time that reflect the Company’s expectations of the costs of the ultimate settlement and administration of claims. Estimates of ultimate liabilities are contingent on many future events and the eventual outcome of these events may be different from the assumptions underlying the reserve estimates. In the event that the business environment and social trends diverge from historical trends, the Company may have to adjust its loss reserves to amounts falling significantly outside its current estimate. These estimates are regularly reviewed and the ultimate liability may be in excess of, or less than, the amounts provided, for which any adjustments will be reflected in the period in which the need for an adjustment is determined.

34

The Company’s best estimates are point estimates within a reasonable range of actuarial liability estimates. These ranges are developed using stochastic simulations and techniques and provide an indication as to the degree of variability of the loss reserves. The Company interprets the ranges produced by these techniques as confidence intervals around the point estimates for each Non-life sub-segment. However, due to the inherent volatility in the business written by the Company, there can be no assurance that the final settlement of the loss reserves will fall within these ranges.

The point estimates related to net loss reserves recorded by the Company and the range of actuarial estimates at March 31, 2014 for each Non-life sub-segment were as follows (in millions of U.S. dollars):

	Recorded Point Estimate		High		Low
Net Non-life sub-segment loss reserves:
North America	$	3,532	$	3,671	$	2,900
Global (Non-U.S.) P&C		2,412		2,621		2,024
Global Specialty		3,747		3,963		3,230
Catastrophe		587		597		475

It is not appropriate to add together the ranges of each sub-segment in an effort to determine a high and low range around the Company’s total Non-life carried loss reserves.

Of the Company’s $10,278 million of net Non-life loss reserves at March 31, 2014, net loss reserves for accident years 2005 and prior of $705 million are guaranteed by Colisée Re, pursuant to the Reserve Agreement. The Company is not subject to any loss reserve variability associated with the guaranteed reserves. See Business—Reserves in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the Reserve Agreement.

A significant amount of judgment was used to estimate the range of potential losses related to the New Zealand Earthquakes and the Japan Earthquake, and there remains a considerable degree of uncertainty related to the range of possible ultimate losses associated with the New Zealand Earthquakes. Loss estimates arising from earthquakes are inherently more uncertain than those from other catastrophic events and the Company believes the ultimate losses arising from the New Zealand Earthquakes and the Japan Earthquake may be materially in excess of, or less than, the amounts provided for in the Condensed Consolidated Balance Sheet at March 31, 2014.

The remaining significant risks and uncertainties related to the New Zealand Earthquakes include the ongoing cedant revisions of loss estimates for each of these events, the degree to which inflation impacts construction materials required to rebuild affected properties, the characteristics of the Company’s program participation for certain affected cedants and potentially affected cedants, and the expected length of the claims settlement period. In addition, there is additional complexity related to the New Zealand Earthquakes given multiple earthquakes occurred in the same region in a relatively short period of time, resulting in cedants continuing to revise their allocation of losses between the various events and between different treaties, under which the Company may provide different amounts of coverage.

While the Company remains cautious regarding the estimated ultimate losses from the Japan Earthquake, as time has passed the estimates received from the Company’s cedants have stabilized, paid losses have increased and the remaining complexities have been reduced.

In addition to the sum of the point estimates originally recorded for each of the New Zealand Earthquakes and Japan Earthquake, at December 31, 2011 the Company recorded additional gross reserves of $50 million (net reserves of $48 million after the impact of retrocession) specifically related to these events within its Catastrophe sub-segment. The additional gross reserves recorded were in consideration of the number of events, the complexity of certain events and the continuing uncertainties in estimating the ultimate losses for these events in the aggregate. The Company continues to evaluate the additional gross reserves that were recorded as part of its periodic reserving process and changes to the amounts recorded may either result in: (i) the reallocation of some or all of the additional reserves to one or more of the these events; or (ii) the release of some or all of the additional reserves to net income in future periods; or (iii) an increase in additional reserves recorded.

During the year ended December 31, 2013, the Company cautiously reduced the additional gross reserves by $10 million to $40 million, primarily reflecting the reduced level of uncertainty associated with the Japan Earthquake in the first half of 2013. As a result of further cedant revisions to loss estimates and cedants reallocating their losses between the different New Zealand Earthquakes during the latter half of 2013, the Company determined to maintain the additional gross reserves of $40 million at March 31, 2014 and December 31, 2013 and has primarily allocated this remaining reserve to the New Zealand Earthquakes to reflect the continuing uncertainty related to these events described above. Based upon information currently available and the estimated range of potential ultimate liabilities, the Company believes that unpaid loss and loss expense reserves contemplate a reasonable provision for the remaining exposure related to the New Zealand Earthquakes and Japan Earthquake.

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Life Policy Benefits

Policy benefits for life and annuity contracts relate to the business in the Company’s Life and Health segment, which predominantly includes:

• reinsurance of longevity, subdivided into standard and non-standard annuities;

• mortality business, which includes death and disability covers (with various riders) primarily written in Continental Europe, term assurance and critical illness primarily written in the United Kingdom and Ireland, and guaranteed minimum death benefit (GMDB) business primarily written in Continental Europe; and

• specialty accident and health business written by PartnerRe Health, including Health Maintenance Organizations (HMO) reinsurance, medical reinsurance and provider and employer excess of loss programs.

The Company categorizes life reserves into three types of reserves: case reserves, IBNR reserves and reserves for future policy benefits. Such liabilities are established based on methods and underlying assumptions in accordance with U.S. GAAP and applicable actuarial standards. Principal assumptions used in the establishment of reserves for future policy benefits have been determined based upon information reported by ceding companies, supplemented by the Company’s actuarial estimates of mortality, critical illness, persistency and future investment income, with appropriate provision to reflect uncertainty. Case reserves, IBNR reserves and reserves for future policy benefits are generally calculated at the treaty level. The Company updates its estimates for each of the aforementioned categories on a periodic basis using information received from its cedants.

The Company’s reserving practices begin with the categorization of the contracts written as short duration, long duration, or universal life business for U.S. GAAP reserving purposes. This categorization determines the Company’s reserving methodology. See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits—Life Policy Benefits in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for additional information on the reserving methodologies employed by the Company for its longevity, mortality and accident and health lines.

The Company’s gross and net policy benefits for life and annuity contracts by reserving line at March 31, 2014 were as follows (in millions of U.S. dollars):

	Case reserves		IBNR reserves		Reserves for future policy benefits		Total gross Life and Health reserves recorded		Ceded reserves			Total net Life and Health reserves recorded
Accident and Health	$	8	$	101	$	—	$	109	$	(3	)	$	106
Longevity		1		219		418		638		(4	)		634
Mortality		209		592		570		1,371		—			1,371
Total policy benefits for life and annuity contracts	$	218	$	912	$	988	$	2,118	$	(7	)	$	2,111

Valuation of Investments and Funds Held – Directly Managed, including certain Derivative Financial Instruments

The Company defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company measures the fair value of its financial instruments according to a fair value hierarchy that prioritizes the information used to measure fair value into three broad levels.

Under the fair value hierarchy, Management uses certain assumptions and judgments to derive the fair value of its investments, particularly for those assets with significant unobservable inputs, commonly referred to as Level 3 assets. At March 31, 2014, the Company’s financial instruments that were measured at fair value and categorized as Level 3 were as follows (in millions of U.S. dollars):

	March 31, 2014
Fixed maturities	$	561
Equities		40
Other invested assets (including certain derivatives)		103
Funds held – directly managed account		16
Total	$	720

For additional information on the valuation techniques, methods and assumptions that were used by the Company to estimate the fair value of its fixed maturities, short-term investments, equities, other invested assets and investments underlying the funds held – directly managed account, see Note 4 to Condensed Consolidated Financial Statements included in Item 1 of Part I of this report. For information on the Company’s use of derivative financial instruments, see Note 5 to Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

Results of Operations—for the Three Months Ended March 31, 2014 and 2013

The following discussion of Results of Operations contains forward-looking statements based upon assumptions and expectations concerning the potential effect of future events that are subject to uncertainties. See Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a complete list of the Company’s risk factors. Any of these risk factors could cause actual results to differ materially from those reflected in such forward-looking statements.

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The Company’s reporting currency is the U.S. dollar. The Company’s significant subsidiaries and branches have one of the following functional currencies: U.S. dollar, euro or Canadian dollar. As a significant portion of the Company’s operations is transacted in foreign currencies, fluctuations in foreign exchange rates may affect year over year comparisons. To the extent that fluctuations in foreign exchange rates affect comparisons, their impact has been quantified, when possible, and discussed in each of the relevant sections. See Note 2(m) to Consolidated Financial Statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of translation of foreign currencies.

The foreign exchange fluctuations for the principal currencies in which the Company transacts business were as follows:

• the U.S. dollar average exchange rate was weaker against most currencies, except the Japanese yen and Canadian dollar, in the three months ended March 31, 2014 compared to the same period of 2013; and

• the U.S. dollar ending exchange rate weakened against most currencies, except the Canadian dollar, at March 31, 2014 compared to December 31, 2013.

Review of Net Income

Management analyzes the Company’s net income or loss in three parts: underwriting result, investment result and other components of net income or loss. Underwriting result consists of net premiums earned and other income or loss less losses and loss expenses and life policy benefits, acquisition costs and other operating expenses. Investment result consists of net investment income, net realized and unrealized investment gains or losses and interest in earnings or losses of equity method investments. Net investment income includes interest and dividends, net of investment expenses, generated by the Company’s investment activities, as well as interest income generated on funds held assets. Net realized and unrealized investment gains or losses include sales of the Company’s fixed income, equity and other invested assets and investments underlying the funds held – directly managed account and changes in net unrealized gains or losses. Interest in earnings or losses of equity method investments includes the Company’s strategic investments. Other components of net income or loss include technical result and other income or loss, other operating expenses, interest expense, amortization of intangible assets, net foreign exchange gains or losses and income tax expense or benefit.

The components of net income for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			% Change			For the three months ended March 31, 2013
Underwriting result:
Non-life	$	161			(5	)%	$	169
Life and Health		(1	)		NM			—
Investment result:
Net investment income		117			(6	)		124
Net realized and unrealized investment gains		142			520			23
Interest in earnings of equity method investments (1)		6			(16	)		7
Corporate and Other:
Technical result (2)		—			NM			1
Other income(2)		(2	)		NM			1
Other operating expenses		(29	)		(10	)		(32	)
Interest expense		(12	)		—			(12	)
Amortization of intangible assets (3)		(7	)		(1	)		(7	)
Net foreign exchange gains		—			(67	)		2
Income tax expense		(62	)		50			(42	)
Net income	$	313			34		$	234

NM: not meaningful

(1) Interest in earnings or losses of equity method investments represents the Company’s aggregate share of earnings or losses related to several private placement investments and limited partnerships within the Corporate and Other segment.

(2) Technical result and other income primarily relate to income on insurance-linked securities and principal finance transactions within the Corporate and Other segment.

(3) Amortization of intangible assets relates to intangible assets acquired in the acquisition of Paris Re in 2009 and PartnerRe Health in 2012.

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Underwriting result is a measurement that the Company uses to manage and evaluate its Non-life and Life and Health segments, as it is a primary measure of underlying profitability for the Company’s core reinsurance operations, separate from the investment results. The Company believes that in order to enhance the understanding of its profitability, it is useful for investors to evaluate the components of net income or loss separately and in the aggregate. Underwriting result should not be considered a substitute for net income or loss and does not reflect the overall profitability of the business, which is also impacted by investment results and other items.

The components of the underwriting result and combined ratio for the Non-life segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014					For the three months ended March 31, 2013
Current accident year technical result and ratio	$	61		94.0	%	$	52		94.4	%
Prior accident years technical result and ratio
Net favorable prior year loss development		164		(16.6	)		183		(19.8	)
Technical result and ratio, as reported	$	225		77.4	%	$	235		74.6	%
Other income		1		—			—		—
Other operating expenses		(65	)	6.5			(66	)	7.1
Underwriting result and combined ratio, as reported	$	161		83.9	%	$	169		81.7	%

The underwriting result for the Non-life segment decreased by $8 million (corresponding to an increase of 2.2 points in the combined ratio), from $169 million (81.7 points on the combined ratio) in the three months ended March 31, 2013 to $161 million (83.9 points on the combined ratio) in the same period of 2014. The decrease in the Non-life underwriting result and the corresponding increase in the combined ratio in the three months ended March 31, 2014 compared to the same period of 2013 was primarily attributable to:

• Net favorable prior year loss development—a decrease of $19 million (increase of 3.2 points in the technical ratio) from $183 million (19.8 points on the technical ratio) in the three months ended March 31, 2013 to $164 million (16.6 points on the technical ratio) in the same period of 2014. The decrease in net favorable prior year loss development was due to decreases in all of the Company’s Non-life sub-segments. The components of the net favorable prior year loss development are described in more detail in the discussion of individual sub-segments in Results by Segment below.

This factor driving the decrease in the Non-life underwriting result and the corresponding increase in the combined ratio in the three months ended March 31, 2014 compared to the same period of 2013 was partially offset by:

• The current accident year technical result—an increase in the technical result primarily due to a modestly lower level of mid-sized loss activity in the North America and Catastrophe sub-segments, partially offset by an increase in the acquisition cost ratio related to new business written in the North America sub-segment.

The underwriting result for the Life and Health segment, which does not include allocated investment income, decreased by $1 million, from breakeven in the three months ended March 31, 2013 to a loss of $1 million in the same period of 2014. The decrease in the Life and Health underwriting result was primarily driven by a lower level of net favorable prior year loss development, partially offset by improved profitability from the PartnerRe Health and longevity business. See Results by Segment below.

Net investment income decreased by $7 million, from $124 million in the three months ended March 31, 2013 to $117 million in the same period of 2014. The decrease in net investment income was primarily attributable to a decrease in net investment income from fixed maturities due to lower reinvestment rates. See Corporate and Other – Net Investment Income below for more details.

Net realized and unrealized investment gains increased by $119 million, from $23 million in the three months ended March 31, 2013 to $142 million in the same period of 2014. The net realized and unrealized investment gains of $142 million in the three months ended March 31, 2014 were primarily due to modest decreases in longer-term risk-free interest rates and slightly narrowing credit spreads. See Corporate and Other – Net Realized and Unrealized Investment Gains below for more details.

Other operating expenses included in Corporate and Other decreased by $3 million, from $32 million in the three months ended March 31, 2013 to $29 million in the same period of 2014. The decrease was primarily due to lower personnel expenses.

Interest expense in the three months ended March 31, 2014 was comparable to the same period of 2013.

        Net foreign exchange gains decreased modestly from $2 million in the three months ended March 31, 2013 to breakeven in the same period of 2014. The net foreign exchange gain for the three months ended March 31, 2014 resulted primarily from the difference in the forward points embedded in the Company’s hedges, partially offset by losses arising from the impact of the Company’s hedging program. The Company hedges a significant portion of its currency risk exposure as discussed in Quantitative and Qualitative Disclosures about Market Risk in Item 3 of Part I of this report.

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Income tax expense increased by $20 million, from $42 million in the three months ended March 31, 2013 to $62 million in the same period of 2014, primarily reflecting an increase in the Company’s pre-tax net income in the three months ended March 31, 2014 compared to the same period of 2013. See Corporate and Other—Income Taxes below for more details.

Results by Segment

The Company monitors the performance of its operations in three segments, Non-life, Life and Health and Corporate and Other. The Non-life segment is further divided into four sub-segments, North America, Global (Non-U.S.) Property and Casualty (Global (Non-U.S.) P&C), Global Specialty and Catastrophe. Segments and sub-segments represent markets that are reasonably homogeneous in terms of geography, client types, buying patterns, underlying risk patterns and approach to risk management. See the description of the Company’s segments and sub-segments as well as a discussion of how the Company measures its segment results in Note 21 to Consolidated Financial Statements included in Item 8 of Part II of Form 10-K for the year ended December 31, 2013 and in Note 9 to Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

Non-life Segment

North America

The North America sub-segment is comprised of lines of business that are considered to be either short, medium or long-tail. The short-tail lines consist primarily of agriculture, property and motor business. Casualty is considered to be long-tail, while credit/surety and multiline are considered to have a medium tail. The casualty line typically tends to have a higher loss ratio and a lower technical result due to the long-tail nature of the risks involved. Casualty treaties typically provide for investment income on premiums invested over a longer period as losses are typically paid later than for other lines. Investment income, however, is not considered in the calculation of technical result.

The components of the technical result and the corresponding ratios for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			% Change			For the three months ended March 31, 2013
Gross premiums written	$	530			19	%	$	447
Net premiums written		527			18			446
Net premiums earned	$	379			13		$	333
Losses and loss expenses		(260	)		8			(240	)
Acquisition costs		(92	)		28			(72	)
Technical result (1)	$	27			26		$	21
Loss ratio (2)		68.6	%					72.0	%
Acquisition ratio (3)		24.3						21.6
Technical ratio (4)		92.9	%					93.6	%

(1) Technical result is defined as net premiums earned less losses and loss expenses and acquisition costs.

(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.

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Premiums

The North America sub-segment represented 30% and 27% of total net premiums written in the three months ended March 31, 2014 and 2013, respectively. The net premiums written and net premiums earned by line of business for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014								For the three months ended March 31, 2013
	Net premiums written				Net premiums earned				Net premiums written				Net premiums earned
Agriculture	$	162	31	%	$	104	28	%	$	101	23	%	$	99	30	%
Casualty		174	33			148	39			178	40			138	41
Credit/Surety		42	8			27	7			10	2			7	2
Motor		22	4			19	5			17	4			10	3
Multiline		46	9			24	6			44	10			22	7
Property		72	14			48	13			72	16			47	14
Other		9	1			9	2			24	5			10	3
Total	$	527	100	%	$	379	100	%	$	446	100	%	$	333	100	%

Business reported in this sub-segment is, to an extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly against other currencies and this should be considered when making period to period comparisons. The effect of foreign exchange fluctuations, described in the Results of Operations above, on gross and net premiums written and net premiums earned in the three months ended March 31, 2014 compared to the same period of 2013 was as follows:

	Gross premiums written			Net premiums written			Net premiums earned
Increase in original currency		19	%		19	%		14	%
Foreign exchange effect		—			(1	)		(1	)
Increase as reported in U.S. dollars		19	%		18	%		13	%

Gross and net premiums written increased by 19% and net premiums earned increased by 14% on a constant foreign exchange basis in the three months ended March 31, 2014 compared to the same period of 2013. The increases in gross and net premiums written were primarily attributable to the agriculture and credit/surety lines of business. The increase in the agriculture line was driven by the restructuring of a significant treaty, which resulted in the full annual premium being written in the three months ended March 31, 2014 compared to being written ratably over four quarters in 2013, and new business written, while the credit/surety line benefitted from new mortgage guaranty business. The increase in net premiums written was higher than the increase in net premiums earned due to the effect of the restructuring of the significant agriculture treaty, which was partially offset by the earning of new business written in 2013.

Technical result and technical ratio

The components of the technical result and ratio for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014				For the three months ended March 31, 2013
Current accident year technical result and ratio	$	3	99.4	%	$	(9	)	102.6	%
Prior accident years technical result and ratio
Net favorable prior year loss development		24	(6.5	)		30		(9.0	)
Technical result and ratio, as reported	$	27	92.9	%	$	21		93.6	%

The increase of $6 million in the technical result (and the corresponding decrease of 0.7 points in the technical ratio) in the three months ended March 31, 2014 compared to the same period of 2013 was primarily attributable to:

• The current accident year technical result—an increase in the technical result (and corresponding decrease in the technical ratio) primarily due to a lower level of mid-sized loss activity and normal fluctuations in profitability between periods. These increases in the technical result were partially offset by a higher acquisition cost ratio, which was driven by new business written in the credit/surety and property lines of business and generally increased pressure on terms and conditions during the recent January 1 renewals.

This factor driving the increase in the technical result in the three months ended March 31, 2014 compared to the same period of 2013 was partially offset by:

• Net favorable prior year loss development—a decrease of $6 million (increase of 2.5 points in the technical ratio) from $30 million (9.0 points on the technical ratio) in the three months ended March 31, 2013 to $24 million (6.5 points on the technical ratio) in the same period of 2014. The net favorable loss development for prior accident years in the three months ended March 31, 2014 was driven primarily by the casualty line, while the multiline, motor and agriculture lines

40

experienced combined adverse loss development for prior accident years of $17 million. The net favorable loss development for prior accident years in the three months ended March 31, 2013 was driven by most lines of business, with the casualty line being the most pronounced, while the agriculture and multiline lines experienced combined adverse loss development for prior accident years of $16 million.

Global (Non-U.S.) P&C

The Global (Non-U.S.) P&C sub-segment is composed of short-tail business, in the form of property and proportional motor business, that represented approximately 77% of net premiums written in the three months ended March 31, 2014 and 2013, and long-tail business, in the form of casualty and non-proportional motor business, that represented the balance of net premiums written.

The components of the technical result and the corresponding ratios for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			% Change			For the three months ended March 31, 2013
Gross premiums written	$	364			(2	)%	$	372
Net premiums written		361			(2	)		368
Net premiums earned	$	179			8		$	166
Losses and loss expenses		(94	)		41			(67	)
Acquisition costs		(54	)		8			(50	)
Technical result	$	31			(36	)	$	49
Loss ratio		52.4	%					40.4	%
Acquisition ratio		30.1						30.1
Technical ratio		82.5	%					70.5	%

Premiums

The Global (Non-U.S.) P&C sub-segment represented 21% and 23% of total net premiums written in the three months ended March 31, 2014 and 2013, respectively. The net premiums written and net premiums earned by line of business for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014								For the three months ended March 31, 2013
	Net premiums written				Net premiums earned				Net premiums written				Net premiums earned
Casualty	$	35	10	%	$	15	9	%	$	39	10	%	$	18	10	%
Motor		133	37			74	41			125	34			48	29
Property		193	53			90	50			204	56			100	61
Total	$	361	100	%	$	179	100	%	$	368	100	%	$	166	100	%

Business reported in this sub-segment is, to a significant extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly against other currencies and this should be considered when making period to period comparisons. The effect of foreign exchange fluctuations, described in the Results of Operations above, on gross and net premiums written and net premiums earned in the three months ended March 31, 2014 compared to the same period of 2013 was as follows:

	Gross premiums written			Net premiums written			Net premiums earned
(Decrease) increase in original currency		(3	)%		(3	)%		10	%
Foreign exchange effect		1			1			(2	)
(Decrease) increase as reported in U.S. dollars		(2	)%		(2	)%		8	%

Gross and net premiums written decreased by 3% and net premiums earned increased by 10% on a constant foreign exchange basis in the three months ended March 31, 2014 compared to the same period of 2013. The decreases in gross and net premiums written resulted primarily from increased retentions and share decreases by cedants and cancellations due to reductions in pricing in the property line, and were partially offset by new business written in the motor line. The increase in net premiums earned compared to the decreases in gross and net premiums written was driven by the earning of the new motor business written in 2013.

41

Technical result and technical ratio

The components of the technical result and ratio for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014					For the three months ended March 31, 2013
Current accident year technical result and ratio	$	(16	)	108.5	%	$	(9	)	105.3	%
Prior accident years technical result and ratio
Net favorable prior year loss development		47		(26.0	)		58		(34.8	)
Technical result and ratio, as reported	$	31		82.5	%	$	49		70.5	%

The decrease of $18 million in the technical result (and the corresponding increase of 12.0 points in the technical ratio) in the three months ended March 31, 2014 compared to the same period of 2013 was primarily attributable to:

• Net favorable prior year loss development—a decrease of $11 million (increase of 8.8 points in the technical ratio) from $58 million (34.8 points on the technical ratio) in the three months ended March 31, 2013 to $47 million (26.0 points on the technical ratio) in the same period of 2014. The net favorable loss development for prior accident years in the three months ended March 31, 2014 was driven by all lines of business, with the property line being the most pronounced. The net favorable loss development for prior accident years in the three months ended March 31, 2013 was driven by all lines of business, with the property line being the most pronounced and included favorable loss emergence related to certain catastrophic and large loss events.

• The current accident year technical result—a decrease in the technical result (and a corresponding increase in the technical ratio) due to higher downward premium adjustments and a modestly higher level of mid-sized loss activity in the three months ended March 31, 2014 compared to the same period of 2013, partially offset by normal fluctuations in profitability between periods.

Global Specialty

The Global Specialty sub-segment is primarily comprised of lines of business that are considered to be either short, medium or long-tail. The short-tail lines consist of agriculture, energy and specialty property. Aviation/space, credit/surety, engineering, marine and multiline are considered to have a medium tail, while specialty casualty is considered to be long-tail.

The components of the technical result and the corresponding ratios for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			% Change			For the three months ended March 31, 2013
Gross premiums written	$	479			8	%	$	445
Net premiums written		389			8			361
Net premiums earned	$	355			5		$	337
Losses and loss expenses		(201	)		9			(184	)
Acquisition costs		(79	)		5			(75	)
Technical result	$	75			(4	)	$	78
Loss ratio		56.6	%					54.6	%
Acquisition ratio		22.4						22.4
Technical ratio		79.0	%					77.0	%

42

Premiums

The Global Specialty sub-segment represented 23% and 22% of total net premiums written in the three months ended March 31, 2014 and 2013, respectively. The net premiums written and net premiums earned by line of business for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014								For the three months ended March 31, 2013
	Net premiums written				Net premiums earned				Net premiums written				Net premiums earned
Agriculture	$	49	13	%	$	26	8	%	$	35	10	%	$	19		6	%
Aviation/Space		32	8			46	13			37	10			46		14
Credit/Surety		76	19			69	19			76	21			67		20
Energy		11	3			19	5			15	4			25		7
Engineering		40	10			46	13			44	12			48		14
Marine		63	16			67	19			73	20			72		21
Multiline		38	10			15	4			11	3			1		—
Specialty casualty		52	14			31	9			50	14			24		7
Specialty property		24	6			36	10			20	6			36		11
Other		4	1			—	—			—	—			(1	)	—
Total	$	389	100	%	$	355	100	%	$	361	100	%	$	337		100	%

Business reported in this sub-segment is, to a significant extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly against other currencies and this should be considered when making period to period comparisons. The effect of foreign exchange fluctuations, described in the Results of Operations above, on gross and net premiums written and net premiums earned in the three months ended March 31, 2014 compared to the same period of 2013 was as follows:

	Gross premiums written			Net premiums written			Net premiums earned
Increase in original currency		8	%		8	%		6	%
Foreign exchange effect		—			—			(1	)
Increase as reported in U.S. dollars		8	%		8	%		5	%

Gross and net premiums written increased by 8% and net premiums earned increased by 6% on a constant foreign exchange basis in the three months ended March 31, 2014 compared to the same period of 2013. The increases in gross and net premiums written were primarily driven by new business written and share increases in the multiline line of business and new business and timing differences between periods in the agriculture line of business. These increases in gross and net premiums written were partially offset by decreases in various other lines of business due to increased retentions by cedants and cancellations due to reductions in pricing. The increase in net premiums earned was primarily driven by the earning of new business written in 2013.

Technical result and technical ratio

The following table provides the components of the technical result and ratio for this sub-segment for the three months ended March 31, 2014 and 2013 (in millions of U.S. dollars):

	For the three months ended March 31, 2014				For the three months ended March 31, 2013
Current accident year technical result and ratio	$	16	95.7	%	$	18	94.9	%
Prior accident years technical result and ratio
Net favorable prior year loss development		59	(16.7	)		60	(17.9	)
Technical result and ratio, as reported	$	75	79.0	%	$	78	77.0	%

The decrease of $3 million in the technical result (and the corresponding increase of 2.0 points in the technical ratio) in the three months ended March 31, 2014 compared to the same period of 2013 was primarily attributable to a modest decrease in the current accident year technical result (and corresponding increase in the technical ratio) due to normal fluctuations in profitability between periods.

Net favorable prior year loss development of $59 million (16.7 points on the technical ratio) in the three months ended March 31, 2014 was comparable to $60 million (17.9 points on the technical ratio) in the three months ended March 31, 2013. The net favorable loss development for prior accident years in the three months ended March 31, 2014 was driven by most lines of business, predominantly the marine and aviation/space lines, while the credit/surety line experienced adverse loss development of $15 million. The net favorable loss development for prior accident years in the three months ended March 31, 2013 was driven by most lines of business, predominantly the credit/surety and aviation/space lines, while the energy, agriculture and engineering lines experienced combined adverse loss development for prior accident years of $13 million.

43

Catastrophe

The Catastrophe sub-segment writes business predominantly on a non-proportional basis and is exposed to volatility resulting from catastrophic losses. The varying amounts of catastrophic losses from period to period can significantly impact the technical result and ratio of this sub-segment and affect period over period comparisons and as a result, profitability in any one quarter is not necessarily predictive of future profitability. The sub-segment’s results for both the three months ended March 31, 2014 and 2013 included no catastrophic loss activity.

The Catastrophe sub-segment results are presented before the inter-company quota share of a diversified portfolio of catastrophe treaties to the Company’s fully collateralized reinsurance vehicle, Lorenz Re Ltd. (see Note 9 to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this report).

The components of the technical result and the corresponding ratios for this sub-segment for the three months ended March 31, 2014 and 2013 (in millions of U.S. dollars) were as follows:

	For the three months ended March 31, 2014			% Change			For the three months ended March 31, 2013
Gross premiums written	$	210			(12	)%	$	238
Net premiums written		179			(15	)		211
Net premiums earned	$	79			(9	)	$	87
Losses and loss expenses		21			89			11
Acquisition costs		(8	)		(25	)		(11	)
Technical result	$	92			5		$	87
Loss ratio		(26.5	)%					(12.8	)%
Acquisition ratio		10.1						12.3
Technical ratio		(16.4	)%					(0.5	)%

Premiums

The Catastrophe sub-segment represented 10% and 13% of total net premiums written in the three months ended March 31, 2014 and 2013, respectively.

Business reported in this sub-segment is, to an extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly against other currencies and this should be considered when making period to period comparisons. The effect of foreign exchange fluctuations, described in the Results of Operations above, on gross and net premiums written and net premiums earned in the three months ended March 31, 2014 compared to the same period of 2013 was as follows:

	Gross premiums written			Net premiums written			Net premiums earned
Decrease in original currency		(11	)%		(14	)%		(6	)%
Foreign exchange effect		(1	)		(1	)		(3	)
Decrease as reported in U.S. dollars		(12	)%		(15	)%		(9	)%

Gross and net premiums written and net premiums earned decreased by 11%, 14% and 6% on a constant foreign exchange basis, respectively, in the three months ended March 31, 2014 compared to the same period of 2013. The decreases in gross and net premiums written and net premiums earned were primarily driven by cancellations and non-renewals due to reductions in pricing and the restructuring of certain treaties, which were partially offset by new business written. The decrease in net premiums earned was lower than the decrease in net premiums written as the reduction in net premiums written is yet to be reflected in net premiums earned.

Technical result and technical ratio

The components of the technical result and ratio for this sub-segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014				For the three months ended March 31, 2013
Current accident year technical result and ratio	$	58	26.6	%	$	52	39.6	%
Prior accident years technical result and ratio
Net favorable prior year loss development		34	(43.0	)		35	(40.1	)
Technical result and ratio, as reported	$	92	(16.4	)%	$	87	(0.5	)%

44

The increase of $5 million in the technical result (and the corresponding decrease of 15.9 points in the technical ratio) in the three months ended March 31, 2014 compared to the same period of 2013 was primarily attributable to an increase in the current accident year technical result (and the corresponding decrease in the technical ratio) due to a modestly lower level of mid-sized loss activity and normal fluctuations in profitability.

Net favorable prior year loss development of $34 million (43.0 points on the technical ratio) in the three months ended March 31, 2014 was comparable to $35 million (40.1 points on the technical ratio) in the three months ended March 31, 2013. The net favorable loss development for prior accident years in the three months ended March 31, 2014 and 2013 was primarily due to favorable loss emergence.

Life and Health Segment

The Company’s Life and Health segment includes the mortality, longevity and health lines of business written primarily in the U.K., Ireland and France and, following the acquisition of PartnerRe Health on December 31, 2012, accident and health business written in the U.S. At the time of the acquisition, PartnerRe Health operated as a Managing General Agent (MGA), writing all of its business on behalf of third party insurance companies and earning a fee for producing the business, as well as participating in a portion of the original business that was ceded to PartnerRe Health by these third parties based on quota share agreements. During 2013, the Company obtained the necessary licenses and approvals and began transitioning the portfolio to PartnerRe carriers. As of January 1, 2014, virtually all of the PartnerRe Health business is originated directly, without the use of third party insurance companies. As a result, this transition affects the period over period comparability with increased gross and net premiums written and net premiums earned and reduced MGA fee income, which is recorded in Other income, in the three months ended March 31, 2014 compared to the same period of 2013.

The components of the allocated underwriting result for this segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			% Change			For the three months ended March 31, 2013
Gross premiums written	$	289			14	%	$	254
Net premiums written		282			13			249
Net premiums earned	$	262			17		$	224
Life policy benefits		(215	)		18			(182	)
Acquisition costs		(32	)		19			(27	)
Technical result	$	15			(3	)	$	15
Other income		1			(55	)		3
Other operating expenses		(17	)		1			(18	)
Net investment income		15			(4	)		16
Allocated underwriting result (1)	$	14			(17	)	$	16

(1) Allocated underwriting result is defined as net premiums earned, other income or loss and allocated net investment income less life policy benefits, acquisition costs and other operating expenses.

Premiums

The Life and Health segment represented 16% and 15% of total net premiums written in the three months ended March 31, 2014 and 2013, respectively. The net premiums written and net premiums earned by line of business for this segment for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended             March 31, 2014								For the three months ended March 31, 2013
	Net premiums       written				Net premiums       earned				Net premiums       written				Net premiums       earned
Accident and Health	$	46	16	%	$	45	17	%	$	30	12	%	$	30	13	%
Longevity		69	25			70	27			63	25			63	28
Mortality		167	59			147	56			156	63			131	59
Total	$	282	100	%	$	262	100	%	$	249	100	%	$	224	100	%

45

Business reported in this segment is, to a significant extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly against other currencies and this should be considered when making period to period comparisons. The effect of foreign exchange fluctuations, described in the Results of Operations above, on gross and net premiums written and net premiums earned in the three months ended March 31, 2014 compared to the same period of 2013 was as follows:

	Gross premiums written			Net premiums written			Net premiums earned
Increase in original currency		12	%		12	%		15	%
Foreign exchange effect		2			1			2
Increase as reported in U.S. dollars		14	%		13	%		17	%

Gross and net premiums written increased by 12% and net premiums earned increased by 15% on a constant foreign exchange basis in the three months ended March 31, 2014 compared to the same period of 2013. The increases in gross and net premiums written and net premiums earned were due to increases in all lines of business, most notably in the accident and health and mortality lines. The increase in the accident and health line was primarily driven by PartnerRe Health’s business, due to its continuing transition from an MGA to a carrier, as described above, and new opportunities arising from the implementation of the Patient Protection and Affordable Care Act. The increase in the mortality line was driven by new business.

Allocated underwriting result

The allocated underwriting result decreased by $2 million, from $16 million in the three months ended March 31, 2013 to $14 million in the same period of 2014. The decrease was primarily driven by a lower level of net favorable prior year loss development in the three months ended March 31, 2014 compared to the same period of 2013. These factors driving the decrease in the allocated underwriting result were partially offset by improved profitability from the PartnerRe Health and longevity business.

The decrease in net favorable prior year loss development of $5 million resulted from net favorable loss development of $3 million in the three months ended March 31, 2014 compared to net favorable loss development of $8 million in the same period of 2013. The net favorable prior year loss development of $3 million during the three months ended March 31, 2014 was primarily related to the GMDB business, driven by improvements in the capital markets and favorable actual versus expected claims paid experience, and PartnerRe Health’s business. This favorable prior year loss development was partially offset by increased claims activity reported by cedants related to certain short-term mortality business. The net favorable prior year loss development of $8 million in the three months ended March 31, 2013 was primarily related to the GMDB business due to an improvement in the capital markets, and certain other short-term treaties in the mortality line of business.

Premium Distribution by Line of Business

The distribution of net premiums written by line of business for the three months ended March 31, 2014 and 2013 was as follows:

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Non-life
Property and casualty
Casualty		12	%		13	%
Motor		9			9
Multiline and other		5			5
Property		15			17
Specialty
Agriculture		12			8
Aviation / Space		2			2
Catastrophe		10			13
Credit / Surety		7			5
Energy		1			1
Engineering		2			3
Marine		4			5
Specialty casualty		3			3
Specialty property		2			1
Life and Health		16			15
Total		100	%		100	%

46

The changes in the distribution of net premiums written by line of business between the three months ended March 31, 2014 and the same period of 2013 reflected the Company’s response to existing market conditions and may also be affected by the timing of renewals of treaties, a change in treaty structure, premium adjustments reported by cedants and significant increases or decreases in other lines of business. In addition, foreign exchange fluctuations affected the comparison for all lines.

• Property: the decrease in the distribution of net premiums written in the three months ended March 31, 2014 compared to the same period of 2013 was primarily driven by more significant increases in other lines of business relative to property premiums, which decreased modestly.

• Agriculture: the increase in the distribution of net premiums written in the three months ended March 31, 2014 compared to the same period of 2013 was primarily driven by a restructuring of a significant treaty and new business written in the North America sub-segment and new business and timing differences between periods in the agriculture line of business in the Global Specialty sub-segment.

• Catastrophe: the decrease in the distribution of net premiums written in the three months ended March 31, 2014 compared to the same period of 2013 was driven by cancellations and non-renewals due to reductions in pricing and the restructuring of certain treaties, which were partially offset by new business written.

• Credit/Surety: the increase in the distribution of net premiums written in the three months ended March 31, 2014 compared to the same period of 2013 was driven by new mortgage guaranty business written in the North America sub-segment.

Premium Distribution by Reinsurance Type

The Company typically writes business on either a proportional or non-proportional basis. On proportional business, the Company shares proportionally in both the premiums and losses of the cedant. On non-proportional business, the Company is typically exposed to loss events in excess of a predetermined dollar amount or loss ratio. In both proportional and non-proportional business, the Company typically reinsures a large group of primary insurance contracts written by the ceding company. In addition, the Company writes business on a facultative basis. Facultative arrangements are generally specific to an individual risk and can be written on either a proportional or non-proportional basis. Generally, the Company has more influence over pricing, as well as terms and conditions, in non-proportional and facultative arrangements.

The distribution of gross premiums written by reinsurance type for the three months ended March 31, 2014 and 2013 was as follows:

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Non-life segment
Proportional		50	%		46	%
Non-proportional		30			35
Facultative		5			4
Life and Health segment
Proportional		12			11
Non-proportional		3			4
Total		100	%		100	%

The distribution of gross premiums written by reinsurance type is affected by changes in the allocation of capacity among lines of business, the timing of receipt by the Company of cedant accounts and premium adjustments reported by cedants. In addition, foreign exchange fluctuations affected the comparison for all treaty types.

The changes in the distribution of gross premiums written by reinsurance type between the three months ended March 31, 2014 and the same period of 2013 primarily reflect a shift from non-proportional business to proportional business in the Non-life segment. This shift was mainly driven by an increase in gross premiums written in the agriculture line of business in the North America sub-segment, which is predominantly written on a proportional basis, related to the restructuring of a significant treaty, and new proportional business written in the multiline line of business in the Global Specialty sub-segment.

47

Premium Distribution by Geographic Region

The geographic distribution of gross premiums written based on the location of the underlying risk for the three months ended March 31, 2014 and 2013 was as follows:

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Asia, Australia and New Zealand		9	%		9	%
Europe		45			46
Latin America, Caribbean and Africa		8			9
North America		38			36
Total		100	%		100	%

The increase in the distribution of gross premiums written in North America during the three months ended March 31, 2014 compared to the same period of 2013 was primarily due to an increase in gross premiums written in the Company’s North America Non-life sub-segment, mainly driven by the agriculture line, as described above.

Premium Distribution by Production Source

The Company generates its gross premiums written both through brokers and through direct relationships with cedants. The percentage of gross premiums written by production source for the three months ended March 31, 2014 and 2013 was as follows:

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Broker		71	%		71	%
Direct		29			29
Total		100	%		100	%

The percentage of gross premiums written through brokers in the three months ended March 31, 2014 was comparable to the same period of 2013.

Corporate and Other

Corporate and Other is comprised of the Company’s investment related activities, including principal finance transactions, insurance-linked securities and strategic investments, and its corporate activities, including other operating expenses.

Net Investment Income

Net investment income by asset source for the three months ended March 31, 2014 and 2013 was as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			% Change			For the three months ended March 31, 2013
Fixed maturities	$	111			(4	)%	$	116
Short-term investments, cash and cash equivalents		—			(69	)		1
Equities		7			49			5
Funds held and other		8			(10	)		9
Funds held – directly managed		4			(32	)		6
Investment expenses		(13	)		6			(13	)
Net investment income	$	117			(6	)	$	124

Because of the interest-sensitive nature of some of the Company’s life and health products, net investment income is considered in Management’s assessment of the profitability of the Life and Health segment (see Life and Health segment above). The following discussion includes net investment income from all investment activities, including the net investment income allocated to the Life and Health segment.

Net investment income decreased in the three months ended March 31, 2014 compared to the same period of 2013 due to:

• a decrease in net investment income from fixed maturities primarily as a result of lower reinvestment rates and, to a lesser extent, cash outflows from the fixed maturity portfolio primarily to finance the Company’s share repurchase activity; and

• a decrease in net investment income from funds held – directly managed primarily related to the lower average balance in the funds held – directly managed account, which was driven by the release of assets due to the run-off of the underlying liabilities and lower reinvestment rates; partially offset by

• an increase in net investment income from equities primarily as a result of higher dividend income.

48

Net Realized and Unrealized Investment Gains

The Company’s portfolio managers have dual investment objectives of optimizing current investment income and achieving capital appreciation. To meet these objectives, it is often desirable to buy and sell securities to take advantage of changing market conditions and to reposition the investment portfolios. Accordingly, recognition of realized gains and losses is considered by the Company to be a normal consequence of its ongoing investment management activities. In addition, the Company records changes in fair value for substantially all of its investments as unrealized investment gains or losses in its Condensed Consolidated Statements of Operations. Realized and unrealized investment gains and losses are generally a function of multiple factors, with the most significant being prevailing interest rates, credit spreads, and equity market conditions.

The components of net realized and unrealized investment gains for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Net realized investment gains on fixed maturities and short-term investments	$	25		$	42
Net realized investment gains on equities		1			19
Net realized investment gains on other invested assets		10			11
Change in net unrealized investment losses on other invested assets		(26	)		(22	)
Change in net unrealized investment gains (losses) on fixed maturities and short-term investments		120			(71	)
Change in net unrealized investment gains on equities		10			50
Net other realized and unrealized investment gains (losses)		1			(1	)
Net realized and unrealized investment gains (losses) on funds held – directly managed		1			(5	)
Net realized and unrealized investment gains	$	142		$	23

Net realized and unrealized investment gains increased by $119 million, from $23 million in the three months ended March 31, 2013 to $142 million in the same period of 2014. The net realized and unrealized investment gains of $142 million in the three months ended March 31, 2014 were primarily due to modest decreases in longer-term risk-free interest rates, slightly narrowing credit spreads and modest improvements in worldwide equity markets, which were partially offset by unrealized losses on treasury note futures. Net realized and unrealized investment gains were $23 million in the three months ended March 31, 2013 and were primarily due to growth in worldwide equity markets, which were partially offset by modest increases in U.S. and European risk-free interest rates and modest widening of credit spreads.

Net realized gains and the change in net unrealized investment losses on other invested assets were a combined loss of $16 million in the three months ended March 31, 2014 and primarily related to treasury note futures. Net realized gains and the change in net unrealized investment losses on other invested assets were a combined loss of $11 million in the three months ended March 31, 2013 and primarily related to net realized and unrealized losses on treasury note futures and certain non-publicly traded investments.

Net realized and unrealized investment gains (losses) on funds held – directly managed of $1 million gain and $5 million loss in the three months ended March 31, 2014 and 2013, respectively, primarily related to the change in net realized and unrealized investment gains and losses on fixed maturities and short-term investments in the segregated investment portfolio underlying the funds held – directly managed account and were driven by changes in risk-free interest rates.

Other Operating Expenses

The Company’s total other operating expenses for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014		% Change			For the three months ended March 31, 2013
Other operating expenses	$	111		(4	)%	$	116

Other operating expenses represent 8.9% and 10.1% of net premiums earned (Non-life and Life and Health) for the three months ended March 31, 2014 and 2013, respectively. Other operating expenses included in Corporate and Other were $29 million and $32 million, of which $28 million and $30 million are related to corporate activities for the three months ended March 31, 2014 and 2013, respectively.

Other operating expenses decreased by $5 million, or 4%, from $116 million in the three months ended March 31, 2013 to $111 million in the same period of 2014 primarily due to lower information technology and facilities costs.

49

Income Taxes

The Company’s effective income tax rate, which we calculate as income tax expense or benefit divided by net income or loss before taxes, may fluctuate significantly from period to period depending on the geographic distribution of pre-tax net income or loss in any given period between different jurisdictions with comparatively higher tax rates and those with comparatively lower tax rates. The geographic distribution of pre-tax net income or loss can vary significantly between periods due to, but not limited to, the following factors: the business mix of net premiums written and earned; the geographic location, quantum and nature of net losses and loss expenses incurred; the quantum and geographic location of other operating expenses, net investment income, net realized and unrealized investment gains and losses; and the quantum of specific adjustments to determine the income tax basis in each of the Company’s operating jurisdictions. In addition, a significant portion of the Company’s gross and net premiums are currently written and earned in Bermuda, a non-taxable jurisdiction, including the majority of the Company’s catastrophe business, which can result in significant volatility in the Company’s pre-tax net income or loss from period to period.

The Company’s income tax expense and effective income tax rate for the three months ended March 31, 2014 and 2013 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014			For the three months ended March 31, 2013
Income tax expense	$	62		$	42
Effective income tax rate		16.6	%		15.1	%

Income tax expense and the effective income tax rate during the three months ended March 31, 2014 were $62 million and 16.6%, respectively. Income tax expense and the effective income tax rate during the three months ended March 31, 2014 were primarily driven by the geographic distribution of the Company’s pre-tax net income between its various taxable and non-taxable jurisdictions. Specifically, the income tax expense and the effective income tax rate included a relatively even distribution of the Company’s pre-tax net income between its various jurisdictions. The Company’s pre-tax net income recorded in jurisdictions with comparatively higher tax rates was driven by net favorable prior year loss development and net realized and unrealized investment gains. The Company’s pre-tax net income recorded in non-taxable jurisdictions and jurisdictions with comparatively lower tax rates was driven by the absence of catastrophe losses, net favorable prior year loss development and net realized and unrealized investment gains.

Income tax expense and the effective income tax rate during the three months ended March 31, 2013 were $42 million and 15.1%, respectively. Income tax expense and the effective income tax rate during the three months ended March 31, 2013 were primarily driven by the geographic distribution of the Company’s pre-tax net income between its various taxable and non-taxable jurisdictions. Specifically, the income tax expense and the effective income tax rate included a relatively even distribution of the Company’s pre-tax net income between its various jurisdictions. The Company’s pre-tax net income recorded in non-taxable jurisdictions and jurisdictions with comparatively lower tax rates was driven by the absence of catastrophe losses and was partially offset by net realized and unrealized investment losses. The Company’s pre-tax net income recorded in jurisdictions with comparatively higher tax rates was driven by net favorable prior year loss development and net realized and unrealized investment gains.

Financial Condition, Liquidity and Capital Resources

The Company purchased, as part of its acquisition of Paris Re, an investment portfolio and a funds held – directly managed account. The discussion of the acquired Paris Re investment portfolio is included in the discussion of Investments below. The discussion of the segregated investment portfolio underlying the funds held – directly managed account is included separately in Funds Held – Directly Managed below.

Investments

Investment philosophy

The Company employs a prudent investment philosophy. It maintains a high quality, well balanced and liquid portfolio having the dual objectives of optimizing current investment income and achieving capital appreciation. The Company’s invested assets are comprised of total investments, cash and cash equivalents and accrued investment income. From a risk management perspective, the Company allocates its invested assets into two categories: liability funds and capital funds. For additional information on the Company’s capital and liability funds, see Financial Condition, Liquidity and Capital Resources—Investments in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

50

The Company’s total invested assets (including funds held – directly managed) at March 31, 2014 and December 31, 2013 were split between liability and capital funds as follows (in millions of U.S. dollars):

	March 31, 2014		% of Total Invested Assets			December 31, 2013		% of Total Invested Assets
Liability funds	$	10,250		58	%	$	10,366		59	%
Capital funds		7,330		42			7,118		41
Total invested assets	$	17,580		100	%	$	17,484		100	%

The increase of $96 million in total invested assets at March 31, 2014 compared to December 31, 2013 was primarily related to an increase in fixed maturities which was partially offset by a decrease in cash and cash equivalents. The increase in fixed maturities was primarily related to modest decreases in longer-term risk-free interest rates and the reinvestment of net investment income. The decrease in cash and cash equivalents was primarily related to payments for the Company’s share repurchases, dividends and taxes, which were partially offset by cash flow provided by underwriting activities.

The liability funds were comprised of cash and cash equivalents, accrued investment income and high quality fixed income securities. The decrease in the liability funds at March 31, 2014 compared to December 31, 2013 was primarily driven by an increase in net reinsurance assets related to business written during the three months ended March 31, 2014.

The capital funds were generally comprised of accrued investment income, investment grade and below investment grade fixed maturity securities, preferred and common stocks, private placement equity and bond investments, emerging markets and high-yield fixed income securities and certain other specialty asset classes. The increase in the capital funds at March 31, 2014 compared to December 31, 2013 was primarily driven by the increase in total invested assets and decrease in liability funds, as described above. At March 31, 2014, approximately 61% of the capital funds were invested in cash and cash equivalents and investment grade fixed income securities.

Overview

Total investments and cash (excluding the funds held – directly managed account) were $16.7 billion at March 31, 2014 compared to $16.6 billion at December 31, 2013. The major factors contributing to the increase in the three months ended March 31, 2014 were:

• an increase in net payable for securities purchased of $146 million;

• net realized and unrealized gains related to the investment portfolio of $141 million primarily resulting from an increase in the fixed maturity and short-term investment portfolios of $145 million, primarily reflecting modest decreases in longer-term risk-free interest rates and narrowing credit spreads, and an increase in the equity portfolio of $11 million, which were partially offset by a decrease in other invested assets of $16 million driven by losses on treasury note futures (see discussion related to duration below); and

• net cash provided by operating activities of $79 million; partially offset by

• a net decrease of $174 million, due to the repurchase of common shares of $180 million under the Company’s share repurchase program, partially offset by the issuance of common shares under the Company’s employee equity plans of $6 million;

• dividend payments on common and preferred shares totaling $49 million; and

• various other factors which net to approximately $39 million, the largest being the amortization of net premium on investments.

Trading securities

The following discussion relates to the composition of the Company’s trading securities, the Company’s other invested assets and the investments underlying the funds held – directly managed account are discussed separately below. Trading securities are carried at fair value with changes in fair value included in net realized and unrealized investment gains and losses in the Condensed Consolidated Statements of Operations.

At March 31, 2014, approximately 95% of the Company’s fixed maturity and short-term investments, which includes fixed income type mutual funds, were publicly traded and approximately 92% were rated investment grade (BBB- or higher) by Standard & Poor’s (or estimated equivalent).

51

The average credit quality, the average yield to maturity and the expected average duration of the Company’s fixed maturities and short-term investments, which includes fixed income type mutual funds, at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014			December 31, 2013
Average credit quality		A			A
Average yield to maturity		2.5	%		2.5	%
Expected average duration		3.2 years			3.0 years

The average credit quality and the average yield to maturity at March 31, 2014 were comparable to December 31, 2013.

The expected average duration on fixed maturities, short-term investments and cash and cash equivalents increased to 3.2 years at March 31, 2014 compared to 3.0 years at December 31, 2013 primarily due to increases in shorter-term risk-free interest rates. For the purposes of managing portfolio duration, the Company uses exchange traded treasury note futures. The use of treasury note futures reduced the expected average duration of the investment portfolio from 4.1 years to 3.2 years at March 31, 2014, and reflects the Company’s decision to continue to hedge against potential further rises in risk-free interest rates.

The Company’s investment portfolio generated a total accounting return (calculated based on the carrying value of all investments in local currency) of 1.7% in the three months ended March 31, 2014 compared to 1.0% in the same period of 2013. The total accounting return in the three months ended March 31, 2014 was mainly due to modest decreases in longer-term risk-free interest rates, narrowing credit spreads and modest improvements in equity markets. The total accounting return in the three months ended March 31, 2013 was mainly due to growth in equity markets which were partially offset by modest increases in U.S. and European risk-free interest rates.

The cost, fair value and credit ratings of the Company’s fixed maturities, short-term investments and equities classified as trading at March 31, 2014 were as follows (in millions of U.S. dollars):

					Credit Rating (2)
March 31, 2014	Cost (1)		Fair Value		AAA			AA			A			BBB			Below investment grade/ Unrated
Fixed maturities
U.S. government	$	1,851	$	1,850	$	—		$	1,850		$	—		$	—		$	—
U.S. government sponsored enterprises		17		16		—			16			—			—			—
U.S. states, territories and municipalities		126		130		8			6			—			—			116
Non-U.S. sovereign government, supranational and government related		2,248		2,332		972			1,255			95			10			—
Corporate		5,750		5,989		221			487			2,576			2,271			434
Asset-backed securities		1,132		1,151		296			215			153			2			485
Residential mortgage-backed securities		2,395		2,385		328			1,989			52			—			16
Other mortgage-backed securities		44		45		17			15			10			1			2
Fixed maturities		13,563		13,898		1,842			5,833			2,886			2,284			1,053
Short-term investments		29		29		6			4			—			15			4
Total fixed maturities and short-term investments	$	13,592	$	13,927	$	1,848		$	5,837		$	2,886		$	2,299		$	1,057
Equities		1,028		1,250
Total	$	14,620	$	15,177
% of Total fixed maturities and short-term investments						13	%		42	%		21	%		16	%		8	%

(1) Cost is amortized cost for fixed maturities and short-term investments and cost for equity securities.

(2) All references to credit rating reflect Standard & Poor’s (or estimated equivalent). Investment grade reflects a rating of BBB- or above.

The increase of $0.3 billion in the fair value of the Company’s fixed maturities from $13.6 billion at December 31, 2013 to $13.9 billion at March 31, 2014 primarily reflects decreases in longer-term risk-free interest rates and the reinvestment of net investment income. At March 31, 2014, there has been a modest shift in the distribution of the fixed maturity portfolio compared to December 31, 2013 as the Company decreased its holdings of corporate bonds (primarily due to narrowing credit spreads) and increased its holdings of U.S. government securities and residential mortgage-backed securities.

The U.S. government category includes U.S. treasuries which are not rated, however, they are generally considered to have a credit quality equivalent to or greater than AA+ corporate issues.

52

The U.S. government sponsored enterprises (GSEs) category includes securities that carry the implicit backing of the U.S. government and securities issued by U.S. government agencies (such as the Federal Home Loan Mortgage Corporation, or Freddie Mac as it is commonly known, and the Federal National Mortgage Association, or Fannie Mae as it is commonly known). At March 31, 2014, 63% of this category was rated AA with the remaining 37%, although not specifically rated, generally considered to have a credit quality equivalent to AA+ corporate issues.

The U.S. states, territories and municipalities category includes obligations of U.S. states, territories, or counties.

The non-U.S. sovereign government, supranational and government related category includes obligations of non-U.S. sovereign governments, political subdivisions, agencies and supranational debt. The fair value and credit ratings of non-U.S. sovereign government, supranational and government related obligations at March 31, 2014 were as follows (in millions of U.S. dollars):

	Non-U.S. Sovereign Government			Supranational Debt			Non-U.S. Government Related			Total Fair Value			Credit Rating (1)
March 31, 2014													AAA			AA			A			BBB
Non-European Union
Canada	$	119		$	—		$	333		$	452		$	192		$	165		$	95		$	—
New Zealand		101			—			—			101			—			101			—			—
Singapore		98			—			—			98			98			—			—			—
All Other		38			—			—			38			7			21			—			10
Total Non-European Union	$	356		$	—		$	333		$	689		$	297		$	287		$	95		$	10
European Union
France	$	437		$	—		$	18		$	455		$	—		$	455		$	—		$	—
Germany		367			—			—			367			367			—			—			—
Netherlands		229			—			—			229			227			2			—			—
Belgium		223			—			—			223			—			223			—			—
Austria		198			—			—			198			—			198			—			—
Supranational		—			117			—			117			27			90			—			—
All Other		54			—			—			54			54			—			—			—
Total European Union	$	1,508		$	117		$	18		$	1,643		$	675		$	968		$	—		$	—
Total	$	1,864		$	117		$	351		$	2,332		$	972		$	1,255		$	95		$	10
% of Total		80	%		5	%		15	%		100	%		42	%		54	%		4	%		—	%

(1) All references to credit rating reflect Standard & Poor’s (or estimated equivalent).

At March 31, 2014, the Company did not have any investments in securities issued by peripheral European Union (EU) sovereign governments (Portugal, Italy, Ireland, Greece and Spain).

53

Corporate bonds are comprised of obligations of U.S. and foreign corporations. The fair values of corporate bonds issued by U.S. and foreign corporations by economic sector at March 31, 2014 were as follows (in millions of U.S. dollars):

March 31, 2014	U.S.			Foreign			Total Fair Value			Percentage to Total Fair Value of Corporate Bonds
Sector
Finance	$	1,055		$	407		$	1,462			24	%
Consumer noncyclical		591			234			825			14
Communications		427			382			809			14
Utilities		302			277			579			10
Energy		228			277			505			8
Industrials		343			135			478			8
Consumer cyclical		322			43			365			6
Insurance		247			39			286			5
Basic materials		77			114			191			3
Government guaranteed corporate debt		—			144			144			2
Real estate investment trusts		126			8			134			2
Technology		118			—			118			2
All Other		3			90			93			2
Total	$	3,839		$	2,150		$	5,989			100	%
% of Total		64	%		36	%		100	%

At March 31, 2014, other than the U.S., no other country accounted for more than 10% of the Company’s corporate bonds.

At March 31, 2014, the ten largest issuers accounted for 18% of the corporate bonds held by the Company (7% of total investments and cash) and no single issuer accounted for more than 3% of total corporate bonds (1% of total investments and cash). Within the finance sector, substantially all (more than 99%) corporate bonds were rated investment grade and 78% were rated A- or better at March 31, 2014.

At March 31, 2014, the fair value of the Company’s corporate bond portfolio issued by companies in the European Union was as follows (in millions of U.S. dollars):

March 31, 2014	Government Guaranteed Corporate Debt			Finance Sector Corporate Bonds			Non-Finance Sector Corporate Bonds			Total Fair Value
European Union
United Kingdom	$	—		$	131		$	459		$	590
Netherlands		14			30			167			211
France		—			31			144			175
Spain		—			35			99			134
Germany		98			8			5			111
Italy		—			17			86			103
Luxembourg		—			—			83			83
All Other		—			18			77			95
Total	$	112		$	270		$	1,120		$	1,502
% of Total		7	%		18	%		75	%		100	%

At March 31, 2014, the Company did not hold any government guaranteed corporate debt issued in peripheral EU countries (Portugal, Italy, Ireland, Greece and Spain) and held less than $71 million in total finance sector corporate bonds issued by companies in those countries.

54

Asset-backed securities, residential mortgaged-backed securities and other mortgaged-backed securities include U.S. and non-U.S. originations. The fair value and credit ratings of asset-backed securities, residential mortgaged-backed securities and other mortgaged-backed securities at March 31, 2014 were as follows (in millions of U.S. dollars):

	Credit Rating (1)
March 31, 2014	GNMA (2)			GSEs (3)			AAA			AA			A			BBB			Below investment grade/ Unrated			Total Fair Value
Asset-backed securities
U.S.	$	—		$	—		$	139		$	138		$	106		$	1		$	464		$	848
Non-U.S.		—			—			157			77			47			1			21			303
Asset-backed securities	$	—		$	—		$	296		$	215		$	153		$	2		$	485		$	1,151
Residential mortgaged-backed securities
U.S.	$	458		$	1,463		$	4		$	—		$	—		$	—		$	16		$	1,941
Non-U.S.		—			—			324			68			52			—			—			444
Residential mortgaged-backed securities	$	458		$	1,463		$	328		$	68		$	52		$	—		$	16		$	2,385
Other mortgaged-backed securities
U.S.	$	6		$	—		$	8		$	9		$	10		$	1		$	2		$	36
Non-U.S.		—			—			9			—			—			—			—			9
Other mortgaged-backed securities	$	6		$	—		$	17		$	9		$	10		$	1		$	2		$	45
Total	$	464		$	1,463		$	641		$	292		$	215		$	3		$	503		$	3,581
% of Total		13	%		41	%		18	%		8	%		6	%		—	%		14	%		100	%

(1) All references to credit rating reflect Standard & Poor’s (or estimated equivalent).

(2) GNMA represents the Government National Mortgage Association. The GNMA, or Ginnie Mae as it is commonly known, is a wholly owned U.S. government corporation within the Department of Housing and Urban Development which guarantees mortgage loans of qualifying first-time home buyers and low-income borrowers.

(3) GSEs, or government sponsored enterprises, includes securities that are issued by U.S. government agencies, such as Freddie Mac and Fannie Mae.

Residential mortgage-backed securities includes U.S. residential mortgage-backed securities, which generally have a low risk of default and carry the implicit backing of the U.S. government. The issuers of these securities are U.S. government agencies or GSEs, which set standards on the mortgages before accepting them into the program. Although these U.S. government backed securities do not carry a formal rating, they are generally considered to have a credit quality equivalent to or greater than AA+ corporate issues. They are considered prime mortgages and the major risk is uncertainty of the timing of prepayments. While there have been market concerns regarding sub-prime mortgages, the Company did not have direct exposure to these types of securities in its own investment portfolio at March 31, 2014, other than $18 million of investments in distressed asset vehicles (included in Other invested assets). At March 31, 2014, the Company’s U.S. residential mortgage-backed securities included approximately $3 million (less than 1% of U.S. residential mortgage-backed securities) of collateralized mortgage obligations, where the Company deemed the entry point and price of the investment to be attractive.

Other mortgaged-backed securities includes U.S. and non-U.S. commercial mortgage-backed securities.

Short-term investments consisted of U.S. and non-U.S. government obligations and foreign corporate bonds. At March 31, 2014, the fair value and credit ratings of short-term investments were as follows (in millions of U.S. dollars):

													Credit Rating (1)
March 31, 2014	U.S. Government			Non-U.S. Government			Corporate			Total Fair Value			AAA			AA			A			BBB			Below investment grade/ Unrated
Country
Spain	$	—		$	—		$	9		$	9		$	—		$	—		$	—		$	9		$	—
Netherlands		—			—			6			6			—			—			—			6			—
Australia		—			5			—			5			5			—			—			—			—
All Other		4			1			4			9			1			4			—			—			4
Total	$	4		$	6		$	19		$	29		$	6		$	4		$	—		$	15		$	4
% of Total		14	%		20	%		66	%		100	%		20	%		14	%		—	%		52	%		14	%

(1) All references to credit rating reflect Standard & Poor’s (or estimated equivalent). Investment grade reflects a rating of BBB- or above.

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Equities are comprised of publicly traded common stocks, public exchange traded funds (ETFs), real estate investment trusts (REITs) and funds holding fixed income securities. The fair value of equities (including equities held in ETFs, REITs and funds holding fixed income securities) at March 31, 2014 were as follows (in millions of U.S. dollars):

March 31, 2014	Fair Value		Percentage to Total Fair Value of Equities
Sector
Real estate investment trusts	$	197		19	%
Energy		160		15
Insurance		136		13
Finance		130		13
Consumer noncyclical		113		11
Communications		86		8
Technology		63		6
All Other		152		15
Total	$	1,037		100	%
Mutual funds and exchange traded funds
Funds holding fixed income securities		188
Funds and ETFs holding equities		25
Total equities	$	1,250

At March 31, 2014, the Company’s “insurance sector” equities included an investment of $113 million in Essent Group Ltd. (Essent), the U.S. mortgage guaranty insurance company that conducted an initial public offering in the fourth quarter of 2013.

At March 31, 2014, U.S. issuers represented 62% of the publicly traded common stocks and ETFs. At March 31, 2014, the ten largest common stocks accounted for 27% of equities (excluding equities held in ETFs and funds holding fixed income securities). At March 31, 2014, other than the Company’s investment in Essent, no single common stock issuer accounted for more than 3% of total equities (excluding equities held in ETFs and funds holding fixed income securities) or more than 1% of the Company’s total investments and cash and cash equivalents. At March 31, 2014, approximately 96% (or $180 million) of the funds holding fixed income securities were emerging markets funds. At March 31, 2014, the Company did not hold any equities (excluding equities held in ETFs and funds holding fixed income securities) issued by finance sector institutions based in peripheral EU countries (Portugal, Ireland, Italy, Greece and Spain).

Maturity Distribution

The distribution of fixed maturities and short-term investments at March 31, 2014, by contractual maturity date, was as follows (in millions of U.S. dollars):

March 31, 2014	Cost		Fair Value
One year or less	$	379	$	383
More than one year through five years		5,203		5,359
More than five years through ten years		3,711		3,806
More than ten years		728		798
Subtotal		10,021		10,346
Mortgage/asset-backed securities		3,571		3,581
Total	$	13,592	$	13,927

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

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Other Invested Assets

The Company’s other invested assets consisted primarily of investments in non-publicly traded companies, asset-backed securities, notes and loan receivables, note securitizations, annuities and residuals and other specialty asset classes. These assets, together with the Company’s derivative financial instruments that were in a net unrealized gain or loss position are reported within Other invested assets in the Company’s Condensed Consolidated Balance Sheets. The fair value and notional value (if applicable) of other invested assets at March 31, 2014 were as follows (in millions of U.S. dollars):

March 31, 2014	Carrying Value (1)			Notional Value of Derivatives
Strategic investments	$	181		$	n/a
Asset-backed securities (including annuities and residuals)		38			n/a
Notes and loan receivables and notes securitizations		42			n/a
Total return swaps		—			43
Interest rate swaps (2)		(6	)		202
Insurance-linked securities (3)		(1	)		170
Futures contracts		19			3,272
Foreign exchange forward contracts		(1	)		2,270
Foreign currency option contracts		—			104
TBAs		(1	)		143
Other		31			n/a
Total	$	302

n/a: Not applicable

(1) Included in Other invested assets are investments that are accounted for using the cost method of accounting, equity method of accounting and fair value accounting.

(2) The Company enters into interest rate swaps to mitigate notional exposures on certain total return swaps and certain fixed maturities. Only the notional value of interest rate swaps on fixed maturities is presented separately in the table.

(3) Insurance-linked securities include a longevity swap for which the notional amount is not reflective of the overall potential exposure of the swap. As such, the Company has included the probable maximum loss under the swap within the net notional exposure as an approximation of the notional amount.

At March 31, 2014, the Company’s strategic investments included $181 million of investments classified in other invested assets. These strategic investments include investments in non-publicly traded companies, private placement equity and bond investments, notes and loan receivables, notes securitizations and other specialty asset classes, and the investments in distressed asset vehicles comprised of sub-prime mortgages, which were discussed above in the residential mortgaged-backed securities category of Investments—Trading Securities. In addition to the Company’s strategic investments that are classified in other invested assets, strategic investments of $152 million are recorded in equities at March 31, 2014.

At March 31, 2014, the Company’s principal finance activities included $97 million of investments classified in Other invested assets, which were comprised primarily of asset-backed securities, notes and loan receivables, notes securitizations, annuities and residuals and private placement equity investments, which were partially offset by the combined fair value of total return and interest rate swaps related to principal finance activities.

For total return swaps within the principal finance portfolio, the Company uses internal valuation models to estimate the fair value of these derivatives and develops assumptions that require significant judgment, such as the timing of future cash flows, credit spreads and the general level of interest rates. For interest rate swaps, the Company uses externally modeled quoted prices that use observable market inputs. At March 31, 2014, all of the Company’s principal finance total return and interest rate swap portfolio was related to tax advantaged real estate backed transactions.

Although the Company has not entered into any credit default swaps at March 31, 2014, the Company also utilizes credit default swaps to mitigate the risk associated with certain of its underwriting obligations, most notably in the credit/surety line, to replicate investment positions or to manage market exposures and to reduce the credit risk for specific fixed maturities in its investment portfolio. The Company uses externally modeled quoted prices that use observable market inputs to estimate the fair value of these swaps.

The Company has entered into various weather derivatives and longevity total return swaps for which the underlying risks reference parametric weather risks and longevity risks, respectively. The Company uses internal valuation models to estimate the fair value of these derivatives and develops assumptions that require significant judgment, except for exchange traded weather derivatives. In determining the fair value of exchange traded weather derivatives, the Company uses quoted market prices.

The Company uses exchange traded treasury note futures for the purposes of managing portfolio duration. The Company also uses equity futures to replicate equity investment positions.

The Company utilizes foreign exchange forward contracts and foreign currency option contracts as part of its overall currency risk management and investment strategies.

The Company utilizes to-be-announced mortgage-backed securities (TBAs) as part of its overall investment strategy and to enhance investment performance. TBAs represent commitments to purchase future issuances of U.S. government agency mortgage-

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backed securities. For the period between purchase of a TBA and issuance of the underlying security, the Company’s position is accounted for as a derivative. The Company’s policy is to maintain designated cash balances at least equal to the amount of outstanding TBA purchases.

At March 31, 2014, the Company’s other invested assets did not include any exposure to peripheral EU countries (Portugal, Italy, Ireland, Greece and Spain) and included direct exposure to mutual fund investments in other EU countries of less than $3 million. The counterparties to the Company’s foreign exchange forward contracts and foreign currency option contracts include European finance sector institutions rated A- or better by Standard & Poor’s and the Company manages its exposure to individual institutions. The Company also has exposure to the euro related to the utilization of foreign exchange forward contracts and other derivative financial instruments in its hedging strategy (see Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Risk in Item 3 of Part I of this report).

Funds Held – Directly Managed

For a discussion of the funds held – directly managed account and the related quota share retrocession agreement, see Business—Reserves—Reserve Agreement in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. See also Quantitative and Qualitative Disclosures about Market Risk—Counterparty Credit Risk in Item 7A of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and in Item 3 below. The composition of the investments underlying the funds held – directly managed account at March 31, 2014 is discussed below.

At March 31, 2014, approximately 98% of the fixed income investments underlying the funds held – directly managed account were publicly traded and substantially all (more than 99%) were rated investment grade (BBB- or higher) by Standard & Poor’s (or estimated equivalent).

The average credit quality, the average yield to maturity and the expected average duration of the fixed maturities, short-term investments and cash and cash equivalents underlying the funds held – directly managed account at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014			December 31, 2013
Average credit quality		AA			AA
Average yield to maturity		1.2	%		1.2	%
Expected average duration		3.3 years			2.9 years

The increase in the expected average duration of fixed maturities, short-term investments and cash and cash equivalents underlying the funds held – directly managed account at March 31, 2014 compared to December 31, 2013, was primarily due to increases in shorter-term risk-free interest rates. The average credit quality and the average yield to maturity of the fixed maturities underlying the funds held – directly managed account at March 31, 2014 were comparable to December 31, 2013.

The cost, fair value and credit rating of the investments underlying the funds held – directly managed account at March 31, 2014 were as follows (in millions of U.S. dollars):

					Credit Rating (2)
March 31, 2014	Cost (1)		Fair Value		AAA			AA			A			BBB
Fixed maturities
U.S. government	$	103	$	104	$	���		$	104		$	—		$	—
U.S. government sponsored enterprises		47		50		—			50			—			—
Non-U.S. sovereign government, supranational and government related		173		179		51			100			28			—
Corporate		234		245		34			80			94			37
Fixed maturities		557		578		85			334			122			37
Short-term investments		3		3		3			—			—			—
Total fixed maturities and short-term investments		560		581	$	88		$	334		$	122		$	37
Other invested assets		28		15
Total	$	588	$	596
% of Total fixed maturities and short-term investments						15	%		58	%		21	%		6	%

(1) Cost is amortized cost for fixed maturities and short-term investments.

(2) All references to credit rating reflect Standard & Poor’s (or estimated equivalent).

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The increase in the fair value of the investment portfolio underlying the funds held – directly managed account from $561 million at December 31, 2013 to $596 million at March 31, 2014 was primarily related to the investment of a portion of the cash and cash equivalents that underlie the funds held – directly managed account.

The U.S. government category includes U.S. treasuries which are not rated, however, they are generally considered to have a credit quality equivalent to or greater than AA+ corporate issues.

The U.S. government sponsored enterprises (GSEs) category includes securities that carry the implicit backing of the U.S. government and securities issued by U.S. government agencies (such as Freddie Mac and Fannie Mae). At March 31, 2014, 82% of this category was rated AA with the remaining 18%, although not specifically rated, generally considered to have a credit quality equivalent to AA+ corporate issues.

The non-U.S. sovereign government, supranational and government related category includes obligations of non-U.S. sovereign governments, political subdivisions, agencies and supranational debt. The fair value and credit ratings of non-U.S. sovereign government, supranational and government related obligations underlying the funds held – directly managed account at March 31, 2014 were as follows (in millions of U.S. dollars):

													Credit Rating (1)
March 31, 2014	Non-U.S. Sovereign Government			Supranational Debt			Non-U.S. Government Related			Total Fair Value			AAA			AA			A
Non-European Union
Canada	$	3		$	—		$	72		$	75		$	23		$	29		$	23
All Other		—			3			—			3			3			—			—
Total Non-European Union	$	3		$	3		$	72		$	78		$	26		$	29		$	23
European Union
France	$	14		$	—		$	27		$	41		$	—			41		$	—
Belgium		19			—			—			19			—			19			—
All Other		7			33			1			41			25			11			5
Total European Union	$	40		$	33		$	28		$	101		$	25		$	71		$	5
Total	$	43		$	36		$	100		$	179		$	51		$	100		$	28
% of Total		24	%		20	%		56	%		100	%		28	%		56	%		16	%

(1) All references to credit rating reflect Standard & Poor’s (or estimated equivalent).

At March 31, 2014, the investments underlying the funds held – directly managed account included less than $1 million of securities issued by peripheral European Union (EU) sovereign governments (Portugal, Italy, Ireland, Greece and Spain).

Corporate bonds underlying the funds held – directly managed account are comprised of obligations of U.S. and foreign corporations. The fair value of corporate bonds issued by U.S. and foreign corporations underlying funds held – directly managed account by economic sector at March 31, 2014 were as follows (in millions of U.S. dollars):

March 31, 2014	U.S.			Foreign			Total Fair Value			Percentage to Total Fair Value of Corporate Bonds
Sector
Finance	$	10		$	77		$	87			35	%
Consumer noncyclical		34			9			43			18
Energy		6			29			35			14
Utilities		6			16			22			9
Basic materials		7			9			16			6
Communications		5			9			14			6
Consumer cyclical		7			2			9			4
Government guaranteed corporate debt		—			8			8			3
All Other		10			1			11			5
Total	$	85		$	160		$	245			100	%
% of Total		35	%		65	%		100	%

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At March 31, 2014, other than the U.S., France, the Netherlands and the U.K., which accounted for 35%, 15%, 12% and 11% respectively, no other country accounted for more than 10% of the Company’s corporate bonds underlying the funds held – directly managed account.

At March 31, 2014, the ten largest issuers accounted for 33% of the corporate bonds underlying the funds held – directly managed account and no single issuer accounted for more than 5% of corporate bonds underlying the funds held – directly managed account (or more than 2% of the investments and cash underlying the funds held – directly managed account). At March 31, 2014, all of the finance sector corporate bonds held were rated investment grade (BBB- or higher) by Standard & Poor’s (or estimated equivalent) and 98% were rated A- or better.

At March 31, 2014, the fair value of corporate bonds underlying the funds held – directly managed account that were issued by companies in the European Union were as follows (in millions of U.S. dollars):

March 31, 2014	Government Guaranteed Corporate Debt			Finance Sector Corporate Bonds			Non-Finance Sector Corporate Bonds			Total Fair Value
European Union
France	$	—		$	17		$	19		$	36
Netherlands		—			14			16			30
United Kingdom		—			15			13			28
Germany		8			—			2			10
All Other		—			9			6			15
Total	$	8		$	55		$	56		$	119
% of Total		7	%		46	%		47	%		100	%

At March 31, 2014, corporate bonds underlying the funds held – directly managed account included less than $6 million of finance sector corporate bonds issued by companies in peripheral EU countries (Portugal, Italy, Ireland, Greece and Spain).

Other invested assets underlying the funds held – directly managed account consist primarily of real estate fund investments.

Maturity Distribution

The distribution of fixed maturities and short-term investments underlying the funds held – directly managed account at March 31, 2014, by contractual maturity date was as follows (in millions of U.S. dollars):

March 31, 2014	Cost		Fair Value
One year or less	$	98	$	99
More than one year through five years		285		298
More than five years through ten years		150		157
More than ten years		27		27
Total	$	560	$	581

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

European Exposures

For a discussion of the Company’s management of the recent uncertainties related to European sovereign debt exposures, the uncertainties surrounding Europe in general and the Company’s responses to them, see Financial Condition, Liquidity and Capital Resources—Investments—European exposures in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

There have not been any significant changes to the Company’s guidelines adopted in response to the European crisis during the three months ended March 31, 2014.

The Company’s exposures to European sovereign governments and other European related investment risks are discussed above within each category of the Company’s investment portfolio and the investments underlying the funds held – directly managed account. In addition, the Company’s other investment and derivative exposures to European counterparties are discussed in Other Invested Assets above. See Risk Factors in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for further discussion of the Company’s exposure to the European sovereign debt crisis.

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Funds Held by Reinsured Companies (Cedants)

In addition to the funds held – directly managed account described above, the Company writes certain business on a funds held basis. Funds held by reinsured companies at March 31, 2014 have not changed significantly since December 31, 2013. See Funds Held by Reinsured Companies (Cedants) in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Unpaid Losses and Loss Expenses

The Company establishes loss reserves to cover the estimated liability for the payment of all losses and loss expenses incurred with respect to premiums earned on the contracts that the Company writes. Loss reserves do not represent an exact calculation of the liability. Estimates of ultimate liabilities are contingent on many future events and the eventual outcome of these events may be different from the assumptions underlying the reserve estimates. The Company believes that the recorded unpaid losses and loss expenses represent Management’s best estimate of the cost to settle the ultimate liabilities based on information available at March 31, 2014.

At March 31, 2014 and December 31, 2013, the Company recorded gross and net Non-life reserves for unpaid losses and loss expenses as follows (in millions of U.S. dollars):

	March 31, 2014		December 31, 2013
Gross Non-life reserves for unpaid losses and loss expenses	$	10,530	$	10,646
Net Non-life reserves for unpaid losses and loss expenses		10,278		10,379
Net reserves guaranteed by Colisée Re		705		727

The net Non-life reserves for unpaid losses and loss expenses at March 31, 2014 and December 31, 2013 include $705 million and $727 million of reserves guaranteed by Colisée Re (see Item 1 of Part I and Note 8 to Consolidated Financial Statements included in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the Reserve Agreement).

The net Non-life reserves for unpaid losses and loss expenses for the three months ended March 31, 2014 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014
Net liability at December 31, 2013	$	10,379
Net incurred losses related to:
Current year		698
Prior years		(164	)
		534
Change in Paris Re Reserve Agreement		(11	)
Net paid losses		(635	)
Effects of foreign exchange rate changes		11
Net liability at March 31, 2014	$	10,278

The decrease in net Non-life reserves for unpaid losses and loss expenses from $10,379 million at December 31, 2013 to $10,278 million at March 31, 2014 primarily reflects the payment of losses which was partially offset by net incurred losses during the three months ended March 31, 2014.

See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits and Results by Segment above for a discussion of losses and loss expenses and prior years’ reserve developments. See also Business—Reserves in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the impact of foreign exchange on unpaid losses and loss expenses.

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Policy Benefits for Life and Annuity Contracts

At March 31, 2014 and December 31, 2013, the Company recorded gross and net policy benefits for life and annuity contracts as follows (in millions of U.S. dollars):

	March 31, 2014		December 31, 2013
Gross policy benefits for life and annuity contracts	$	2,118	$	1,974
Net policy benefits for life and annuity contracts		2,111		1,967

The net policy benefits for life and annuity contracts for the three months ended March 31, 2014 were as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014
Net liability at December 31, 2013	$	1,967
Net incurred losses related to:
Current year		219
Prior years		(3	)
		216
Net paid losses		(75	)
Effects of foreign exchange rate changes		3
Net liability at March 31, 2014	$	2,111

The increase in net policy benefits for life and annuity contracts from $1,967 million at December 31, 2013 to $2,111 million at March 31, 2014 is primarily due to net incurred losses, which were partially offset by paid losses.

See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits and Results by Segment above for a discussion of life policy benefits and prior years’ reserve developments. See also Business—Reserves in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Reinsurance Recoverable on Paid and Unpaid Losses

The Company has exposure to credit risk related to reinsurance recoverable on paid and unpaid losses. See Note 9 to Consolidated Financial Statements and Quantitative and Qualitative Disclosures about Market Risk—Counterparty Credit Risk in Item 7A of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the Company’s risk related to reinsurance recoverable on paid and unpaid losses and the Company’s process to evaluate the financial condition of its reinsurers.

Contractual Obligations and Commitments

In the normal course of its business, the Company is a party to a variety of contractual obligations, which are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. These contractual obligations are considered by the Company when assessing its liquidity requirements and the Company is confident in its ability to meet all of its obligations. Other than the commutation of one significant treaty accounted for using deposit accounting, the Company’s contractual obligations at March 31, 2014 have not changed materially compared to December 31, 2013.

Shareholders’ Equity and Capital Resources Management

Shareholders’ equity attributable to PartnerRe Ltd. common shareholders was $6.8 billion at March 31, 2014, a 1% increase compared to $6.7 billion at December 31, 2013. The major factors contributing to the increase in shareholders’ equity during the three months ended March 31, 2014 were:

• comprehensive income of $294 million, which was primarily related to net income of $310 million and was partially offset by the change in the currency translation adjustment of $15 million; partially offset by

• a net decrease of $174 million, due to the repurchase of common shares of $180 million under the Company’s share repurchase program, partially offset by the issuance of common shares under the Company’s employee equity plans of $6 million; and

• dividend payments of $49 million related to the Company’s common and preferred shares.

See Results of Operations and Review of Net Income above for a discussion of the Company’s net income for the three months ended March 31, 2014.

As part of its long-term strategy, the Company will continue to actively manage capital resources to support its operations throughout the reinsurance cycle and for the benefit of its shareholders, subject to the ability to maintain strong ratings from the major

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rating agencies and the unquestioned ability to pay claims as they arise. Generally, the Company seeks to increase its capital when its current capital position is not sufficient to support the volume of attractive business opportunities available. Conversely, the Company will seek to reduce its capital, through the payment of dividends on its common shares or share repurchases, when available business opportunities are insufficient or unattractive to fully utilize the Company’s capital at adequate returns. The Company may also seek to reduce or restructure its capital through the repayment or purchase of debt obligations, or increase or restructure its capital through the issuance of debt, when opportunities arise.

Management uses certain key measures to evaluate its financial performance and the overall growth in value generated for the Company’s common shareholders. For a discussion related to growth in Diluted Tangible Book Value per Share plus dividends see Key Financial Measures above.

The capital structure of the Company at March 31, 2014 and December 31, 2013 was as follows (in millions of U.S. dollars):

	March 31, 2014				December 31, 2013
Capital Structure:
Senior notes (1)	$	750	10	%	$	750	10	%
Capital efficient notes(2)		63	1			63	1
Preferred shares, aggregate liquidation value		854	11			854	11
Common shareholders’ equity attributable to PartnerRe Ltd.		5,927	78			5,856	78
Total Capital	$	7,594	100	%	$	7,523	100	%

(1) PartnerRe Finance A LLC and PartnerRe Finance B LLC, the issuers of the Senior Notes, do not meet consolidation requirements under U.S. GAAP. Accordingly, the Company shows the related intercompany debt of $750 million in its Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013.

(2) PartnerRe Finance II Inc., the issuer of the CENts, does not meet consolidation requirements under U.S. GAAP. Accordingly, the Company shows the related intercompany debt of $71 million in its Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013.

The increase in total capital during the three months ended March 31, 2014 was related to the same factors above describing the increase in shareholders’ equity attributable to PartnerRe Ltd.

Indebtedness

There was no change in the Company’s indebtedness at March 31, 2014 compared to December 31, 2013 and the Company did not enter into any short-term borrowing arrangements during the three months ended March 31, 2014. See Note 10 to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the Company’s indebtedness.

Shareholders’ Equity

Share Repurchases

In September 2013, the Board approved a new share repurchase authorization of up to a total of 6 million common shares. Unless terminated earlier by resolution of the Board, the program will expire when the Company has repurchased all shares authorized for repurchase thereunder. At March 31, 2014, the Company had approximately 3.1 million common shares remaining under its current share repurchase authorization and approximately 36.0 million common shares were held in treasury and are available for reissuance.

During the three months ended March 31, 2014, the Company repurchased approximately 1.8 million of its common shares under its authorized share repurchase program at a total cost of $180 million, representing an average cost of $99.76 per share. These shares were repurchased at a discount to diluted book value per share at December 31, 2013 of approximately 9%.

Subsequently, during the period from April 1, 2014 to April 29, 2014, the Company repurchased 0.5 million common shares at a total cost of $51 million, representing an average cost of $102.55 per share. Following these repurchases, the Company had approximately 2.6 million common shares remaining under its current share repurchase authorization and approximately 36.4 million common shares are held in treasury and are available for reissuance.

Liquidity

Liquidity is a measure of the Company’s ability to access sufficient cash flows to meet the short-term and long-term cash requirements of its business operations. Management believes that its significant cash flows from operations and high quality liquid investment portfolio will provide sufficient liquidity for the foreseeable future. At March 31, 2014 and December 31, 2013, cash and cash equivalents were $1.3 billion

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and $1.5 billion, respectively. The decrease in cash and cash equivalents was primarily due to the Company’s share repurchases, dividend payments and taxes paid, which were partially offset by net cash provided by underwriting activities.

Net cash provided by operating activities decreased to $79 million in the three months ended March 31, 2014 from $115 million in same period of 2013. The decrease was primarily due to higher taxes paid and modestly lower net investment income, which were partially offset by higher underwriting cash flows.

Net cash used in investing activities was $71 million in the three months ended March 31, 2014 compared to net cash provided by investing activities of $289 million in the same period of 2013. The net cash used in investing activities in the three months ended March 31, 2014 primarily reflects the reinvestment of net cash flows from operating activities.

Net cash used in financing activities was $232 million in the three months ended March 31, 2014 compared to $224 million in the same period of 2013. Net cash used in financing activities in the three months ended March 31, 2014 was primarily related to the Company’s share repurchases and dividend payments on common and preferred shares. Net cash used in financing activities in the three months ended March 31, 2013 was related to the Company’s redemption of the Series C preferred shares, share repurchases and dividend payments on common and preferred shares, which were partially offset by proceeds from the issuance of the Series F preferred shares.

At March 31, 2014, there were no restrictions on the Company’s ability to pay common and preferred shareholders’ dividends from retained earnings. The declaration of dividends by Partner Reinsurance Company Ltd. is subject to prior regulatory approval through December 31, 2014.

The Company believes that annual positive cash flows from operating activities will be sufficient to cover claims payments, absent a series of additional large catastrophic loss activity. In the event that paid losses accelerate beyond the ability to fund such payments from operating cash flows, the Company would use its cash balances available, liquidate a portion of its high quality and liquid investment portfolio or access certain uncommitted credit facilities. As discussed in Investments above, the Company’s investments and cash totaled $16.7 billion at March 31, 2014, the main components of which were investment grade fixed maturities, short-term investments and cash and cash equivalents totaling $14.1 billion.

Financial strength ratings and senior unsecured debt ratings represent the opinions of rating agencies on the Company’s capacity to meet its obligations. There was no change in the Company’s current financial strength ratings at March 31, 2014 compared to December 31, 2013. See also Shareholders’ Equity and Capital Resources Management—Liquidity in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Credit Agreements

In the normal course of its operations, the Company enters into agreements with financial institutions to obtain unsecured and secured credit facilities. These facilities are used primarily for the issuance of letters of credit, although a portion of these facilities may also be used for liquidity purposes. The Company’s credit facilities have not changed significantly since December 31, 2013. See Credit Agreements in Item 7 of Part II and Note 19 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for further information related to the credit facilities available to the Company.

Currency

See Results of Operations and Review of Net Income above for a discussion of the impact of foreign exchange and net foreign exchange gains and losses during the three months ended March 31, 2014 and 2013.

The foreign exchange gain or loss resulting from the translation of the Company’s subsidiaries’ and branches’ financial statements (expressed in euro or Canadian dollar functional currency) into U.S. dollars is classified in the currency translation adjustment account, which is a component of accumulated other comprehensive income or loss in shareholders’ equity. The currency translation adjustment account decreased by $15 million during the three months ended March 31, 2014 primarily due to the translation of the Company’s branches with a Canadian dollar functional currency.

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The reconciliation of the currency translation adjustment for the three months ended March 31, 2014 was as follows (in millions of U.S. dollars):

	For the three months ended March 31, 2014
Currency translation adjustment at December 31, 2013	$	1
Change in currency translation adjustment included in other comprehensive loss		(15	)
Currency translation adjustment at March 31, 2014	$	(14	)

From time to time, the Company enters into net investment hedges. At March 31, 2014, there were no outstanding foreign exchange contracts hedging the Company’s net investment exposure.

See Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Risk in Item 3 of Part I below for a discussion of the Company’s risk related to changes in foreign currency movements.

New Accounting Pronouncements

See Note 3 to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Overview

Management believes that the Company is principally exposed to five types of market related risk: interest rate risk, credit spread risk, foreign currency risk, counterparty credit risk and equity price risk. How these risks relate to the Company, and the process used to manage them, is discussed in Item 7A of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The following discussion of market risks at March 31, 2014 focuses only on material changes from December 31, 2013 in the Company’s market risk exposures, or how those exposures are managed.

Interest Rate Risk

The Company’s fixed maturity portfolio and the fixed maturity securities in the investment portfolio underlying the funds held – directly managed account are exposed to interest rate risk. Fluctuations in interest rates have a direct impact on the market valuation of these securities. The Company manages interest rate risk on liability funds by constructing bond portfolios in which the economic impact of a general interest rate shift is comparable to the impact on the related liabilities. The Company believes that this process of matching the duration mitigates the overall interest rate risk on an economic basis. The Company manages the exposure to interest rate volatility on capital funds by choosing a duration profile that it believes will optimize the risk-reward relationship. For additional information on liability funds and capital funds, see Financial Condition, Liquidity and Capital Resources in Item 7 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

At March 31, 2014, the Company estimates that the hypothetical case of an immediate 100 basis points or 200 basis points parallel shift in global bond curves would result in a change in the fair value of investments exposed to interest rate risk, the fair value of funds held – directly managed account exposed to interest rate risk, total invested assets, and shareholders’ equity attributable to PartnerRe Ltd. as follows (in millions of U.S. dollars):

	-200 Basis Points		% Change			-100 Basis Points		% Change			March 31, 2014		+100 Basis Points		% Change			+200 Basis Points		% Change
Fair value of investments exposed to interest rate risk (1)(2)	$	15,981		6	%	$	15,495		3	%	$	15,009	$	14,523		(3	)%	$	14,037		(6	)%
Fair value of funds held – directly managed account exposed to interest rate risk (2)		658		6			638		3			618		598		(3	)		578		(6	)
Total invested assets (3)		18,592		6			18,086		3			17,580		17,074		(3	)		16,568		(6	)
Shareholders’ equity attributable to PartnerRe Ltd.		7,793		15			7,287		7			6,781		6,275		(7	)		5,769		(15	)

(1) Includes certain other invested assets, certain cash and cash equivalents and funds holding fixed income securities.

(2) Excludes accrued interest.

(3) Includes total investments, cash and cash equivalents, the investment portfolio underlying the funds held – directly managed account and accrued interest.

The changes do not take into account any potential mitigating impact from the equity market, taxes or the corresponding change in the economic value of the Company’s reinsurance liabilities, which, as noted above, would substantially offset the economic impact on invested assets, although the offset would not be reflected in the Condensed Consolidated Balance Sheet.

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As discussed above, the Company strives to match the foreign currency exposure in its fixed income portfolio to its multicurrency liabilities. The Company believes that this matching process creates a diversification benefit. Consequently, the exact market value effect of a change in interest rates will depend on which countries experience interest rate changes and the foreign currency mix of the Company’s fixed maturity portfolio at the time of the interest rate changes. See Foreign Currency Risk below.

The impact of an immediate change in interest rates on the fair value of investments and funds held – directly managed exposed to interest rate risk, the Company’s total invested assets and shareholders’ equity attributable to PartnerRe Ltd., in both absolute terms and as a percentage of total invested assets and shareholders’ equity attributable to PartnerRe Ltd., has not changed significantly at March 31, 2014 compared to December 31, 2013.

For additional information related to the Company’s debt obligations and preferred securities, see Item 7A of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. For additional information related to the Company’s debt obligations also see Note 4 to the Condensed Consolidated Financial Statements in Item 1 of Part I of this report.

Credit Spread Risk

The Company’s fixed maturity portfolio and the fixed maturity securities in the investment portfolio underlying the funds held – directly managed account are exposed to credit spread risk. Fluctuations in market credit spreads have a direct impact on the market valuation of these securities. The Company manages credit spread risk by the selection of securities within its fixed maturity portfolio. Changes in credit spreads directly affect the market value of certain fixed maturity securities, but do not necessarily result in a change in the future expected cash flows associated with holding individual securities. Other factors, including liquidity, supply and demand, and changing risk preferences of investors, may affect market credit spreads without any change in the underlying credit quality of the security.

At March 31, 2014, the Company estimates that the hypothetical case of an immediate 100 basis points or 200 basis points parallel shift in global credit spreads would result in a change in the fair value of investments and the fair value of funds held – directly managed account exposed to credit spread risk, total invested assets and shareholders’ equity attributable to PartnerRe Ltd. as follows (in millions of U.S. dollars):

	-200 Basis Points		% Change			-100 Basis Points		% Change			March 31, 2014		+100 Basis Points		% Change			+200 Basis Points		% Change
Fair value of investments exposed to credit spread risk (1)(2)	$	15,861		6	%	$	15,435		3	%	$	15,009	$	14,583		(3	)%	$	14,157		(6	)%
Fair value of funds held – directly managed account exposed to credit spread risk (2)		636		3			627		1			618		609		(1	)		600		(3	)
Total invested assets (3)		18,450		5			18,015		2			17,580		17,145		(2	)		16,710		(5	)
Shareholders’ equity attributable to PartnerRe Ltd.		7,651		13			7,216		6			6,781		6,346		(6	)		5,911		(13	)

(1) Includes certain other invested assets, certain cash and cash equivalents and funds holding fixed income securities.

(2) Excludes accrued interest.

(3) Includes total investments, cash and cash equivalents, the investment portfolio underlying the funds held – directly managed account and accrued interest.

The changes above also do not take into account any potential mitigating impact from the equity market, taxes, and the change in the economic value of the Company’s reinsurance liabilities, which may offset the economic impact on invested assets.

The impact of an immediate change in credit spreads on the fair value of investments and funds held – directly managed exposed to credit spread risk, the Company’s total invested assets and shareholders’ equity attributable to PartnerRe Ltd., in both absolute terms and as a percentage of total invested assets and shareholders’ equity attributable to PartnerRe Ltd., has not changed significantly at March 31, 2014 compared to December 31, 2013.

Foreign Currency Risk

Through its multinational reinsurance operations, the Company conducts business in a variety of non-U.S. currencies, with the principal exposures being the euro, Canadian dollar, British pound, New Zealand dollar, and Australian dollar. As the Company’s reporting currency is the U.S. dollar, foreign exchange rate fluctuations may materially impact the Company’s Condensed Consolidated Financial Statements.

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The Company’s gross and net exposure in its Condensed Consolidated Balance Sheet at March 31, 2014 to foreign currency as well as the associated foreign currency derivatives the Company has entered into to manage this exposure, was as follows (in millions of U.S. dollars):

	euro			CAD			GBP			NZD			AUD			Other			Total (1)
Total assets	$	4,526		$	1,028		$	1,895		$	122		$	90		$	754		$	8,415
Total liabilities		(4,549	)		(598	)		(1,290	)		(207	)		(153	)		(1,420	)		(8,217	)
Total gross foreign currency exposure		(23	)		430			605			(85	)		(63	)		(666	)		198
Total derivative amount		(430	)		(18	)		(570	)		103			90			731			(94	)
Net foreign currency exposure	$	(453	)	$	412		$	35		$	18		$	27		$	65		$	104

(1) As the U.S. dollar is the Company’s reporting currency, there is no currency risk attached to the U.S. dollar and it is excluded from this table. The U.S. dollar accounted for the difference between the Company’s total foreign currency exposure in this table and the total assets and total liabilities in the Company’s Condensed Consolidated Balance Sheet at March 31, 2014.

The above numbers include the Company’s investment in PartnerRe Holdings Europe Limited, whose functional currency is the euro, and certain of its subsidiaries and branches, whose functional currencies are the euro or Canadian dollar.

At March 31, 2014, assuming all other variables remain constant and disregarding any tax effects, a change in the U.S. dollar of 10% or 20% relative to all of the other currencies held by the Company simultaneously would result in a change in the Company’s net assets of $10 million and $21 million, respectively, inclusive of the effect of foreign exchange forward contracts and other derivative financial instruments.

Counterparty Credit Risk

The Company has exposure to credit risk primarily as a holder of fixed maturity securities. The Company controls this exposure by emphasizing investment grade credit quality in the fixed maturity securities it purchases. At March 31, 2014, approximately 55% of the Company’s fixed maturity portfolio (including the funds held – directly managed account and funds holding fixed maturity securities) was rated AA (or equivalent rating) or better. At March 31, 2014, approximately 75% the Company’s fixed maturity and short-term investments (including funds holding fixed maturity securities and excluding the funds held – directly managed account) were rated A- or better and 8% were rated below investment grade or not rated. The Company believes this high quality concentration reduces its exposure to credit risk on fixed maturity investments to an acceptable level.

At March 31, 2014, the Company is not exposed to any significant credit concentration risk on its investments, excluding securities issued by the U.S. government which are rated AA+. The single largest non-U.S. sovereign government issuer accounted for less than 19% of the Company’s total non-U.S. sovereign government, supranational and government related category (excluding the funds held – directly managed account) and less than 3% of total investments and cash (excluding the funds held – directly managed account) at March 31, 2014. In addition, the single largest corporate issuer and the top 10 corporate issuers accounted for less than 3% and less than 19% of the Company’s total corporate fixed maturity securities (excluding the funds held – directly managed account), respectively, at March 31, 2014. Within the segregated investment portfolio underlying the funds held – directly managed account, the single largest corporate issuer and the top 10 corporate issuers accounted for less than 5% and less than 34% of total corporate fixed maturity securities underlying the funds held – directly managed account at March 31, 2014, respectively.

The Company keeps cash and cash equivalents in several banks and ensures that there are no significant concentrations at any point in time, in any one bank.

To a lesser extent, the Company is also exposed to the following credit risks:

• as a party to foreign exchange forward contracts and other derivative contracts;

• in its underwriting operations, most notably in the credit/surety line and for alternative risk products;

• the credit risk of its cedants in the event of their insolvency or their failure to honor the value of the funds held balances due to the Company;

• the credit risk of Colisée Re in the event of insolvency or Colisée Re’s failure to honor the value of the funds held balances for any other reason;

• the credit risk of AXA or its affiliates in the event of their insolvency or their failure to honor their obligations under the Acquisition Agreements (see Business—Reserves—Reserve Agreement in Item 1 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013);

• as it relates to its business written through brokers if any of the Company’s brokers is unable to fulfill their contractual obligations with respect to payments to the Company;

• as it relates to its reinsurance balances receivable and reinsurance recoverable on paid and unpaid losses; and

• under its retrocessional reinsurance contracts.

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The concentrations of the Company’s counterparty credit risk exposures have not changed materially at March 31, 2014, compared to December 31, 2013. See Counterparty Credit Risk in Item 7A of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for additional discussion of credit risks.

Equity Price Risk

The Company invests a portion of its capital funds in marketable equity securities (fair market value of $1,062 million, excluding funds holding fixed income securities of $188 million) at March 31, 2014. These equity investments are exposed to equity price risk, defined as the potential for loss in market value due to a decline in equity prices. The Company believes that the effects of diversification and the relatively small size of its investments in equities relative to total invested assets mitigate its exposure to equity price risk. The Company estimates that its equity investment portfolio has a beta versus the S&P 500 Index of approximately 0.92 on average. Portfolio beta measures the response of a portfolio’s performance relative to a market return, where a beta of 1 would be an equivalent return to the index. Given the estimated beta for the Company’s equity portfolio, a 10% and 20% movement in the S&P 500 Index would result in a change in the fair value of the Company’s equity portfolio, total invested assets and shareholders’ equity attributable to PartnerRe Ltd. at March 31, 2014 as follows (in millions of U.S. dollars):

	20% Decrease		% Change			10% Decrease		% Change			March 31, 2014		10% Increase		% Change			20% Increase		% Change
Equities (1)	$	866		(18	)%	$	964		(9	)%	$	1,062	$	1,160		9	%	$	1,258		18	%
Total invested assets (2)		17,384		(1	)		17,482		(1	)		17,580		17,678		1			17,776		1
Shareholders’ equity attributable to PartnerRe Ltd.		6,585		(3	)		6,683		(1	)		6,781		6,879		1			6,977		3

(1) Excludes funds holding fixed income securities of $188 million.

(2) Includes total investments, cash and cash equivalents, the investment portfolio underlying the funds held – directly managed account and accrued interest.

This change does not take into account any potential mitigating impact from the fixed maturity securities or taxes.

There was no material change in the absolute or percentage impact of an immediate change of 10% in the S&P 500 Index on the Company’s equity portfolio, total invested assets and shareholders’ equity attributable to PartnerRe Ltd. at March 31, 2014 compared to December 31, 2013.

ITEM 4. CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of Management, including the Chief Executive Officer and Chief Financial Officer, as of March 31, 2014, of the effectiveness of the design and operation of disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2014, the disclosure controls and procedures are effective such that information required to be disclosed by the Company in reports that it files or submits pursuant to the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and is accumulated and communicated to Management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures.

There have been no changes in the Company’s internal control over financial reporting identified in connection with such evaluation that occurred during the three months ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There has been no significant change in legal proceedings at March 31, 2014 compared to December 31, 2013. See Note 18(f) to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

ITEM 1A. RISK FACTORS

Cautionary Note Concerning Forward-Looking Statements

Certain statements contained in this document, including Management’s Discussion and Analysis, may be considered forward-looking statements as defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934. Forward-looking statements are based on the Company’s assumptions and expectations concerning

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future events and financial performance of the Company and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements, including our expectations regarding the restructuring of our business support operations and the related expected savings, 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. The Company’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 and integrating new acquisitions, 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.

The words believe, anticipate, estimate, project, plan, expect, intend, hope, forecast, evaluate, will likely result or will continue or words of similar impact generally involve forward-looking statements. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

See Risk Factors in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for complete review of important risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information about purchases by the Company during the three months ended March 31, 2014 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.

	Issuer Purchases of Equity Securities
Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of a publicly announced program(1)(2)		Maximum number of shares that may yet be purchased under the program (1)
01/01/2014-01/31/2014		615,000	$	99.69		615,000		4,339,300
02/01/2014-02/28/2014		620,000		99.11		620,000		3,719,300
03/01/2014-03/31/2014		571,000		100.54		571,000		3,148,300
Total		1,806,000	$	99.76		1,806,000

(1) On September 12, 2013, the Company’s Board of Directors approved a new share repurchase authorization up to a total of 6 million common shares. Unless terminated earlier by resolution of the Company’s Board of Directors, the program will expire when the Company has repurchased all shares authorized for repurchase thereunder.

(2) At March 31, 2014, approximately 36.0 million common shares were held in treasury and available for reissuance.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits—Included on page 71.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PartnerRe Ltd. (Registrant)
	By:	/S/    CONSTANTINOS MIRANTHIS
	Name:	Constantinos Miranthis
	Title:	President and Chief Executive Officer and Director (Principal Executive Officer)
Date: May 2, 2014
	By:	/S/    WILLIAM BABCOCK
	Name:	William Babcock
	Title:	Executive Vice President & Chief Financial Officer (Principal Financial Officer)

Date: May 2, 2014

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EXHIBIT INDEX

Exhibit Number	Exhibit
10.1	PartnerRe Ltd. Amended and Restated Employee Equity Plan, effective May 10, 2005.
10.2	PartnerRe Ltd. Amended and Restated Non-Employee Directors Share Plan, effective May 16, 2012.
10.3	Amended Executive Total Compensation Program.
10.4	Employment Agreement between PartnerRe Ltd. and Costas Miranthis, effective as of March 27, 2014.
10.5	Employment Agreement between PartnerRe Holdings Europe Limited, Zurich Branch and Emmanuel Clarke, effective as of March 27, 2014.
10.6	Employment Agreement between PartnerRe Ltd. and William Babcock, effective as of March 27, 2014.
10.7	Employment Agreement between PartnerRe Ltd. and Laurie Desmet, effective as of March 27, 2014.
10.8	Employment Agreement between Partner Reinsurance Company of the U.S. and Theodore C. Walker, effective as of March 27, 2014.
10.9	PartnerRe Ltd. Change In Control Policy (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed March 27, 2014).
10.10	Form of PartnerRe Ltd. Executive Restricted Share Unit Award Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed March 27, 2014).
10.11	Form of PartnerRe Ltd. Executive Share-Settled Share Appreciation Right Award Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed March 27, 2014).
10.12	Form of PartnerRe Ltd. Executive Performance Share Unit Award Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed March 27, 2014).
15	Letter Regarding Unaudited Interim Financial Information.
31.1	Section 302 Certification of Constantinos Miranthis.
31.2	Section 302 Certification of William Babcock.
32	Section 906 Certifications.
101.1	The following financial information from PartnerRe Ltd.’s Quarterly Report on Form 10–Q for the quarter ended March 31, 2014 formatted in XBRL: (i) Condensed Consolidated Balance Sheets at March 31, 2014, and December 31, 2013; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2014 and 2013; (iii) Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2014 and 2013; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013; and (v) Notes to Condensed Consolidated Financial Statements.

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