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PartnerRe Ltd. Reports First Quarter 2005 Results
PartnerRe Ltd. Reports First Quarter 2005 Results
PEMBROKE, Bermuda: April 26, 2005 -
PartnerRe Ltd. (NYSE:PRE) today reported net income of $111.4 million, or $1.84 per share on a fully diluted basis, for the first quarter of 2005. This net income includes net after-tax realized gains on investments of $35.2 million or $0.63 per share. Net income for the first quarter of 2004, including net after-tax realized gains on investments of $31.0 million or $0.57 per share, was $145.6 million or $2.59 pershare. Operating earnings for the first quarter of 2005 were $67.6 million or $1.21 per share on a fully diluted basis. Operating earnings exclude net after-tax realized investment gains and losses and are calculated after payment of preferred dividends. This compares to operating earnings of $109.7 million, or $2.02 per share, for the first quarter of 2004. All references to per share amounts in the text of this press release are on a fully diluted basis.Commenting on the first quarter 2005 results, PartnerRe President & Chief Executive Officer Patrick Thiele said, "Our results this quarter reflect a high level of large loss activity. The single largest loss was Winterstorm Erwin at $63 million which hit Northern Europe in early January; our results were also impacted by a $20 million energy loss in Canada. Our experience is within the volatility pattern we expect in a year.
"Our GAAP book value per share was negatively impacted by rising interest rates as we mark our assets to market, but not our liabilities," Mr. Thiele added. "Nevertheless, we continue to build economic shareholder value."
Summary unaudited consolidated financial data for the period is set out below.
U.S.$ thousands (except per share amounts and ratios)
Three months ended March 312005 2004
Net Premiums Written $1,414,869 $1,523,701
Net Premiums Earned $896,412 $892,787
Non-Life Combined Ratio 97.0% 90.7%
Net Income $111,415 $145,644
Net Income per share (a) $1.84 $2.59
Net Operating Earnings (a) $67,553 $109,740
Net Operating Earnings per share (a) $1.21 $2.02
(a) Net income per share is defined as net income available to common shareholders divided by the weighted average number of fully diluted shares outstanding for the period. Net income available to common shareholders is defined as net income less preferred dividends. Net operating earnings is net income available to common shareholders excluding after-tax net realized gains/losses on investments. Net operating earnings per share is defined as net operating earnings divided by the weighted average number of fully diluted shares outstanding for the period. Per share results referenced in the text of this press release are on a fully diluted basis.
Net premiums written for the first quarter 2005 were $1.4 billion, a 7% decrease over the comparable period in 2004. Total revenues for the quarter were $1.0 billion, an increase of 3% over total revenues for the first quarter of 2004. Total revenues for the first quarter 2005 included $896.4 million of net premiums earned; net investment income of $86.9 million - an increase of 18%; and pre-tax net realized investment gains of $37.4 million.
At March 31, 2005, total assets were $13.1 billion, total capitalization was $3.7 billion, and total shareholders' equity was $3.3 billion. This compares to total assets of $12.5 billion, total capitalization of $3.8 billion and total shareholders' equity of $3.4 billion at December 31, 2004. Book value per common share at March 31, 2005 was $50.20 on a fully diluted basis, up 10.1% from the first quarter of 2004, and down 1.5% from $50.99 per share at December 31, 2004.
Separately, the Company announced today that its Board of Directors declared a regular quarterly dividend of $0.38 per common share. The dividend will be payable on June 1, 2005, to common shareholders of record on May 20, 2005, with the stock trading exdividend commencing May 18, 2005.
Results by Segment
The Non-Life segment reported net premiums written of $1.3 billion for the quarter, down 10% as compared to the same period in 2004. The combined ratio was 97.0% for the first quarter compared to 90.7% for the same period in 2004. The Non-Life technical result was $76 million in the first quarter of 2005 compared to $125 million for the prior year period.
The results for this quarter reflect a high level of large loss activity including $63 million in estimated claims from Winterstorm Erwin, which hit Northern Europe in early January and a $20 million energy loss in Canada, as well as $65 million of net reductions to prior year reserves.
The U.S. Property and Casualty business, which represented approximately 22% of total net premiums written for the quarter, reported net premiums written of $311 million, down 17% from the prior year's first quarter. Net premiums earned were essentially flat with the same period in 2004. The technical ratio for this sub-segment was 97.2%, compared to 93.3% in the first quarter of 2004.
The Global (Non-U.S.) Property and Casualty business, which represented approximately 31% of total net premiums written for the quarter, reported net premiums written of $431 million for the first quarter of 2005, compared to $469 million for the same period in 2004.
Net premiums earned during the quarter were $242 million, down 5% from $255 million in the first quarter 2004. The technical ratio for this sub-segment was 88.0% for the first quarter compared to 98.7% for the same period in 2004, reflecting $28 million in net reductions to prior year reserves primarily for property business.
The Worldwide Specialty business, which represented approximately 39% of total net premiums written for the quarter, reported net premiums written of $550 million for the first quarter, down 8% from the first quarter of 2004. Net premiums earned were down 4% for the quarter, compared to the same period in 2004. This sub-segment's technical ratio was 87.7%, compared to 68.9% for the first quarter of 2004, reflecting the high level of large loss activity during the quarter, as well as net reserve reductions for prior years of $42 million.
The Life segment, which markets coverages primarily in Europe, Canada and Latin America, and represented approximately 8% of total net premiums written for the quarter, reported net premiums written of $116 million for the quarter, representing 40% growth over the first quarter of 2004. The allocated underwriting result was a gain of $2 million, compared to a loss of $4 million for the first quarter 2004, which included a $5 million charge to reduce deferred acquisition costs for a U.S. life annuity treaty retained during the sale of the Company's life business.
The ART (Alternative Risk Transfer) segment comprises structured risk transfer, structured finance, weather related products, and the results of the Company's investment in Channel Re. The pre-tax contribution to net income, including the Company's interest in the earnings of Channel Re, was a gain of $13 million for the first quarter of 2005, compared to a gain of $1 million in the first quarter of 2004.
Commentary and Outlook
"As previously reported, the January 2005 renewal was mixed in terms of both pricing and profitability," said Mr. Thiele. "The decline in premiums written in the first quarter reflects an increasingly competitive marketplace and primary carriers retaining more business. In the April 1 renewal, we saw a continuation of a weakening marketplace, but again at a gradual pace.
"Notwithstanding the normal volatility that we expect as a result of large losses, PartnerRe remains well-placed to succeed in this more difficult market, and we are committed to continuing to build shareholder value throughout the remainder of 2005 and over the long term."
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The Company uses operating earnings, diluted operating earnings per share and operating return on beginning common shareholders' equity to measure performance, as these measures focus on the underlying fundamentals of our operations without the influence of realized gains and losses from the sale of investments, which is driven by the timing of the disposition of investments and not by our operating performance. For planning purposes, the Company does not anticipate realized investment gains or losses. The Company also uses technical ratio and technical result as measures of underwriting performance. These metrics exclude other operating expenses. All references to per share amounts in the text of this press release are on the basis of fully diluted shares.
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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, and alternative risk transfer solutions. At December 31, 2004, total revenues were $4.2 billion. As of March 31, 2005 total assets were $13.1 billion, total capitalization was $3.7 billion and total shareholders' equity was $3.3 billion. Our major reinsurance operations have ratings of AA- from Standard & Poor's, Aa3 from Moody's, A+ from A.M. Best, and AA from Fitch.
PartnerRe on the Internet:
www.partnerre.comForward-looking statements contained in this press release are based on the Company's assumptions and expectations concerning future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. PartnerRe's forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments such as exposure to catastrophe, or other large property and casualty losses, adequacy of reserves, risks associated with implementing business strategies, levels and pricing of new and renewal business achieved, credit, interest, currency and other risks associated with the Company's investment portfolio, changes in accounting policies, and other factors identified in the Company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking information contained herein, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company disclaims any obligation to publicly update or revise any forwardlooking information or statements.
Contacts: PartnerRe Ltd. Citigate Sard Verbinnen
(441) 292-0888 (212) 687-8080
Investor Contact: Robin Sidders Jim Barron/Hallie Bozzi
Media Contact: Celia Powell