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PartnerRe Ltd. Provides Update On January 2006 Non-Life Renewals
PEMBROKE, Bermuda: January 30, 2006 - PartnerRe Ltd. (NYSE:PRE) today announced that during the January 1 renewal season it had written and bound approximately $1.79 billion of estimated Non-Life premium. On a constant foreign exchange basis, that represents a 2 percent decline over total renewable expiring premium of $1.83 billion. As a result of shifting renewal patterns, the January 1, 2006 renewals are expected to represent less than 55 percent of the total annual Non-Life business bound by the Company, down from approximately 60 percent in previous years. The Non-Life renewal does not include PartnerRe's Life or ART operations.
PartnerRe President and Chief Executive Officer Patrick Thiele said, "Overall, we found the market to be healthy at January 1, but results varied by line and geography. A significant amount of business - close to 10 percent of our renewable premium - left the reinsurance market as cedants retained more risk or converted from quota share to excess of loss treaties. Despite this, competition was reasonable in most areas. PartnerRe had a good renewal, writing $241 million in new business, while maintaining overall priced profitability. We attribute this success to our financial stability and security, and the Company's professional and timely response in a transitional renewal period."
Renewable expiring premium of $1.83 billion excludes premiums for reinstatements and back-up covers written after the catastrophe events of the third and fourth quarters of 2005, as well as policies remaining in process or extended for renewal later in 2006. Of this amount, approximately $172 million, or 9 percent, was removed from the market as a result of cedant's decisions to retain more of their business, or restructure quota share coverages to excess of loss treaties, which provide less premium. In addition, PartnerRe declined to renew $104 million, or 6 percent of expiring premiums, due to terms and conditions, including pricing, that did not meet the Company's objectives.
In the U.S., the market saw significant price increases on business exposed to the recent loss events with mixed results in other lines. The U.S. P&C sub-segment achieved 7 percent growth, with the regional and national property business showing the most growth, while maintaining expected profitability.
In the Global P&C sub-segment, the Company saw both a significant increase in retentions, as well as an increase in competitive behavior. This increased competition, in a smaller premium environment, caused deterioration in several lines and markets, which resulted in PartnerRe significantly reducing its book of business. Accordingly, the sub-segment's premium shrank by $87 million or 12 percent, but expected profitability was maintained.
The Worldwide Specialty sub-segment, which includes the Company's catastrophe business, experienced divergent market conditions, with U.S. and northern European catastrophe exposed business, energy business and specialty property business showing excellent price momentum and good growth. Most other specialty lines, however, including credit and specialty casualty, showed pricing declines. Worldwide Specialty premiums increased over renewable expiring premium by approximately 3 percent to $810 million.
Mr. Thiele said, "There were significant variations between PartnerRe's business segments. Nevertheless, the Company was able to maintain or increase its participations in the bulk of its renewed treaties, both in the U.S. and globally. Given the wide range of conditions in the reinsurance marketplace, we are pleased with the quality, diversity and balance in the portfolio of risks that we created at this renewal. We expect this portfolio to achieve a mid-teens return on beginning shareholders' equity in 2006, assuming a normalized large loss experience, with no overall increase in our risk profile."
Below is a table outlining our January 1, 2006 Non-Life renewal:
PartnerRe January 2006 Non-Life Renewal
(amounts are in U.S. $ millions)
US P&C Global P&C Worldwide Specialty Total
Renewable Base $327 $718 $789 $1,834
Non-Renewed (57) (110) (109) (276)
Renewed $270 $608 $680 $1,558
Renewal Increases/(Decreases) 35 (19) (25) (9)
New Business 44 42 155 241
Total Expected Premium $349 $631 $810 $1,790
Growth % 7% -12% 3% -2%
PartnerRe is scheduled to release fourth quarter and full year 2005 results after the close of trading on Monday, February 6, 2006. PartnerRe Management will conduct a conference call and webcast on Tuesday, February 7, 2006 at 10:00 a.m. Eastern to discuss earnings and provide additional information on the January 1, 2006 renewal.
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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, redit/surety, engineering/energy, marine, special risks, other lines, life/annuity and health, and alternative risk transfer solutions. For the year ended December 31, 2004, total revenues were $4.2 billion. As of September 30, 2005 total assets were $13.2 billion, total capitalization was $3.5 billion and total shareholders' equity was $3.1 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.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.
Contacts: PartnerRe Ltd. Citigate Sard Verbinnen (441) 292-0888
(212) 687-8080 Investor Contact: Robin Sidders Jim Barron/Hallie Bozzi
Media Contact: Celia Powell