PartnerRe Ltd. Reports Record Second Quarter and First Half 2003 Results

PartnerRe President & Chief Executive Officer, Patrick Thiele, commented, "We had an exceptional second quarter. In addition to setting a new record for operating income, we continued to achieve significant levels of written premium and book value growth, clearly indicating that we are benefiting from both our operating strategies and the current attractive market conditions."

For the three months ended June 30, 2003, net income was $121.9 million, or $2.00 per share on a fully diluted basis. Net income includes a net after-tax realized gain on investments of $23.1 million or $0.43 per share. This quarter's per share result includes one-time preferred share charges of $9.6 million or $0.18 per share relating to the issuance of new Series C Preferred Shares and redemption of the Series A Preferred Shares. The Company also began recognizing compensation expense relating to its stock incentive plans under the fair-value method of Financial Accounting Standard No. 123 "Accounting for Stock-Based Compensation" (FAS 123). This added $1.1 million or $0.02 per share to operating expenses during the second quarter. Net income for the second quarter of 2002, including a net after-tax realized loss on investments of $9.7 million or $0.19 per share, was $66.6 million or $1.19 per share.

Operating earnings for the second quarter 2003 were $84.2 million or $1.57 per share on a fully diluted basis. Operating earnings exclude net realized investment gains or losses and are calculated after payment of preferred dividends. Operating results for this quarter also reflect the impact of the refinancing of the Series A Preferred Shares and the expense related to stock incentives. This compares to operating earnings of $71.3 million, or $1.38 per share for the second quarter of 2002.

Summary unaudited consolidated financial data for the period is set out below.

U.S.$ thousands (except per share amounts) Three months ended June 30 Six months ended June 30

2003 (b) 2002 2003 (b) 2002

Net Premiums Written $838,860 $563,300 $2,073,607 $1,387,773

Net Premiums Earned $862,848 $565,669 $1,669,084 $1,045,143

Non-life Combined Ratio 92.6% 94.4% 93.5% 93.5%

Net Income $121,915 $66,589 $246,284 $129,844

Net Income per share (a) $2.00 $1.19 $4.22 $2.32

Net Operating Earnings (a) $84,209 $71,320 $165,127 $138,107

Net Operating Earnings per share (a) $1.57 $1.38 $3.07 $2.67

(a) Net income per share is defined as net income available to common shareholders divided by the number of fully diluted shares. Net income available to common shareholders is defined as net income less preferred dividends. Net operating earnings is net income available to common shareholders excluding after-tax net realized gains/losses on investments. Per share results are on a fully-diluted basis.

(b) As a result of the refinancing of the Series A Preferred Shares and issuance of the Series C Preferred Shares, the Company recognized a charge of $7.8 million relating to the redemption of the Series A Preferred Shares as well as $1.8 million in additional preferred dividends as a result of the overlap of the two securities. Net income per share, operating earnings and operating earnings per share include the total impact of $9.6 million or $0.18 per share.

Net premiums written for the second quarter were $838.9 million, a 49% increase over the comparable period in 2002. Total revenues increased 54% in the quarter to $952.9 million, including $862.8 million of net premiums earned - an increase of 53%, net investment income of $63.8 million - an increase of 7%, and net realized investment gains of $24.5 million. For the second quarter of 2002, revenues were $620.3 million, with $565.7 million of net premiums earned, net investment income of $59.5 million, and net realized investment losses of $6.3 million.

For the six months ended June 30, 2003, net premiums written were $2.1 billion, an increase of 49% from the prior year. Net income was $246.3 million or $4.22 per share. Net income for the period includes a net after-tax realized gain on investments of $61.6 million or $1.15 per share. Operating earnings were $165.1 million or $3.07 per share on a fully diluted basis. These results also include the impact of the refinancing of the Series A Preferred Shares and the expense related to stock incentives. Net income for the first six months of 2002 was $129.8 million, or $2.32 per share after net after-tax realized losses of $18.3 million or $0.35 per share. Operating earnings for the same period in 2002 were $138.1 million or $2.67 per share on a fully diluted basis.

At June 30, 2003, total assets were $10.5 billion, total capitalization was $3.0 billion, and total shareholders' equity was $2.4 billion. This compares to total assets of $8.7 billion, total capitalization of $2.7 billion, and total shareholders' equity of $2.1 billion at December 31, 2002. Book value per common share was $38.98 on a fully diluted basis, compared to $34.02 per share at December 31, 2002, representing an increase of 15% for the first six months of 2003.

Separately, the Company announced in June that its Board of Directors had increased the annual common share dividend by 7% to $1.24 from $1.16. Today, the Board declared a quarterly dividend of $0.31 per share representing this increased level of dividend. The dividend will be payable on September 2, 2003, to common shareholders of record on August 22, 2003, with the stock trading ex-dividend commencing August 20, 2003.

Results of Operations

"Growth in net written premium during the second quarter continued to be strong, representing a 49% increase over the second quarter of 2002," Mr. Thiele said. "Given our strong second quarter growth on top of the 50% growth in the first three months of 2003, we now expect a higher level of growth for 2003, closer to 30%.

"Again, this level of growth reflects our solid and differentiated market position, both in the US and in Europe," Mr. Thiele continued. "It is indicative of our ability to attract quality business across a diversified portfolio of reinsurance lines, our broad geographical spread and the access we have to both the direct and broker markets.

"Our Non-Life segment continued to perform very well, with a combined ratio of 92.6%. This represents the high volume of profitable business written over the last several quarters, and a moderate level of catastrophe losses during the quarter.

"In the Life segment, we continued to take advantage of opportunities in European life business, virtually doubling life premiums for the first six months of 2003 over the comparable period in 2002. We are confident we are building value which will benefit our income statement in future periods."

Results by Segment

The Non-Life segment reported net premiums written of $772.9 million for the quarter, an increase of 46%, reflecting growth in all lines of business. The Non-Life technical result increased 70% to $113.3 million. The combined ratio was 92.6% for the second quarter compared to 94.4% for the same period in 2002. For the first six months of 2003, Non-Life net premiums written were $1.9 billion, representing an increase of 47% over the first half year of 2002. The Non-Life technical result increased 51% to $201.0 million. The combined ratio was steady at 93.5% for the first six months.

The U.S. Property and Casualty business, which represented approximately 26% of total net premiums written for the quarter, reported net premiums written of $221.3 million, a 26% increase over the prior year's second quarter, with substantial growth in specialty casualty lines. Net premiums earned increased 57% during the quarter when compared to the same period in 2002. The technical result for the second quarter increased to $10.1 million from a loss of $4.3 million in 2002, representing both higher premiums earned and a lower technical ratio. The technical ratio for this segment was 95.3%, compared to 103.1% in the second quarter of 2002, reflecting solid underwriting results in most lines. For the six-month period, net premiums written increased 54% to $539.1 million, with a technical ratio of 95.6% as compared to 98.5% for the prior year period. The technical result increased to $18.0 million for the first half of 2003 from $3.8 million in 2002.

The Global (Non-U.S.) Property and Casualty business, which represented approximately 22% of total net premiums written, reported net premiums written of $185.5 million for the second quarter of 2003, a 69% increase over the prior year, with the strongest growth in property business. Net premiums earned during the quarter increased 56%. The technical result for the second quarter grew to $12.6 million from $2.7 million in 2002, representing both higher premiums earned and improvements in most lines of business. The technical ratio for this segment was 94.2% compared to 98.1% for the same period in 2002. For the six-month period, net premiums written increased 58% to $490.3 million with a technical ratio of 93.2% as compared to 97.8% for the first six months of 2002. The six month technical result increased five-fold to $28.2 million from $5.6 million in 2002.

The Worldwide Specialty business, which represented approximately 44% of total net premiums written for the quarter, reported net premiums written of $366.1 million for the second quarter, a 50% increase over the prior year period. Net premiums earned increased 42% during the quarter. The technical result for the quarter increased 33% to $90.6 million compared to $68.1 million in 2002. This unit's technical ratio of 75.2%, compared to 73.5% for the second quarter of 2002, reflects strong results across most lines, most significantly in catastrophe, aviation, and energy. For the six-month period, net premiums written increased 37% to $896.4 million with a technical ratio of 77.9% compared to 73.2% for the comparable period in 2002. The six-month technical result grew to $154.8 million from $124.1 million in 2002.

The Life segment, which markets coverages primarily in Europe, Canada and Latin America, and represented approximately 8% of total net premiums written, reported net premiums written of $66.0 million for the quarter, as compared to $33.4 million for the second quarter 2002, representing an increase of 98%. The net technical result for the quarter was a gain of $5.4 million, compared to $4.3 million for the comparable period in 2002. For the first six months, net premium written increased 100% to $147.8 million, with a net technical result of $10.5 million as compared to $7.2 million for the first six months of 2002.

Commentary and Outlook

"Virtually all of our operations are performing well this year, our tenth anniversary year," Mr. Thiele said. "The current market is allowing PartnerRe to demonstrate its strengths in underwriting, financial capacity and client relationships.

"These strengths were exhibited in our July 1 renewals where we experienced 17% growth in estimated premium production over the expiring premium base. The growth of well-priced business plus expected growth in our non-life investment income account makes us optimistic about results through this year and next.

"We remain confident that we will achieve our plan results for 2003 of operating ROE of a minimum of 17% and earnings per share of at least $5.70, absent a large loss in the third or fourth quarter of 2003. We expect net written premium will be in excess of $3.5 billion for the year."

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The Company uses operating earnings, diluted operating earnings per share and operating return on beginning equity to measure performance, as these measures focus on the underlying fundamentals of our operations without the influence of realized gains and losses from the sale of investments, which is driven by the timing of the disposition of investments and not by our operating performance. For planning purposes, the Company does not anticipate realized investment gains or losses. The Company also uses technical ratio and technical result as measures of underwriting performance. These metrics exclude overhead expenses. All references to per share amounts in this press release are on the basis of fully diluted shares.

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PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. Risks reinsured include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering/energy, marine, special risks, other lines, life/annuity and health. At year-end 2002, total revenues were $2.7 billion. As of June 30, 2003, total assets were $10.5 billion, total capitalization was $3.0 billion and total shareholders' equity was $2.4 billion.

PartnerRe on the Internet: www.partnerre.com

Forward-looking statements contained in this press release are based on the Company's assumptions and expectations concerning future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. PartnerRe's forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments such as exposure to catastrophe or other large losses, adequacy of reserves, risks associated with implementing business strategies, levels and pricing of new and renewal business achieved, credit, interest, currency and other risks associated with the Company's investment portfolio and other factors identified in the Company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking information contained herein, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company disclaims any obligation to publicly update or revise any forward-looking information or statements.