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PartnerRe Ltd. Reports Second Quarter and Half Year 2007 Results
Pembroke, Bermuda: July 23, 2007 -- PartnerRe Ltd. (NYSE: PRE) today reported net income of $105.0 million, or $1.66 per share on a fully diluted basis, for the second quarter of 2007. This net income includes net after-tax realized losses on investments of $42.8 million, or $0.73 per share. Net income for the second quarter of 2006, including net after-tax realized losses on investments of $47.0 million, or $0.81 per share, was $77.5 million, or $1.20 per share. Operating earnings for the second quarter of 2007 were $139.2 million, or $2.39 per share on a fully diluted basis. This compares to operating earnings of $115.9 million, or $2.01 per share, for the second quarter of 2006. Operating earnings exclude net after- tax realized investment gains and losses and are calculated after payment of preferred dividends. All references to per share amounts in the text of this press release are on a fully diluted basis.
Commenting on the second quarter and half year 2007 results, PartnerRe President & Chief Executive Officer Patrick Thiele said, "PartnerRe had another strong quarter with an operating return on beginning shareholders' equity of 17%. On a six-month basis, we achieved an 18% operating return on beginning shareholders' equity. Despite the impact of rising interest rates, which had a negative effect on the market value of our bond portfolio, we grew GAAP book value per share by 1% during the quarter and 26% year over year to $58.96."
Summary unaudited consolidated financial data for the period is set out below.
U.S.$ thousands (except per Three months ended Six months ended
share amounts and ratios) June 30 June 30
2007 2006 2007 2006
Net Premiums Written $898,686 $815,893 $2,169,2 $2,160,4
58 97
Net Premiums Earned $889,277 $858,963 $1,731,3 $1,691,7
18 84
Non-life Combined Ratio 85.7 % 90.3 % 85.6 % 89.1 %
Net Income $105,021 $77,531 $274,288 $270,774
Net Income per share (a) $1.66 $1.20 $4.42 $4.40
Operating Earnings (a)
$139,165 $115,932 $297,114 $249,676
Operating Earnings per
share (a) $2.39 $2.01 $5.11 $4.33
(a)Net income per share is defined as net income available to common shareholders divided by the weighted average number of fully diluted shares outstanding for the period. Net income available to common shareholders is defined as net income less preferred dividends. Operating earnings is defined as net income available to common shareholders excluding after-tax net realized gains/losses on investments. Operating earnings per share is defined as operating earnings divided by the weighted average number of fully diluted shares outstanding for the period.
Net premiums written for the second quarter of 2007 were $898.7 million, up 10% from $815.9 million in the second quarter of 2006, essentially driven by the Life segment and mix of business and timing issues in the Non-Life book. Total revenues for the second quarter 2007 were $957.6 million, up 4% from $921.1 million in the second quarter of 2006, and included $889.3 million of net premiums earned, which were up 4% over the second quarter of 2006; net investment income of $130.9 million - an increase of 21% over the second quarter of 2006; and pre-tax net realized investment losses of $53.6 million as compared to pre-tax net realized investment losses of $58.9 million for the second quarter of 2006.
For the first six months of 2007, net premiums written were $2.2 billion, essentially flat with the first six months of 2006. Net income was $274.3 million or $4.42 per share. Net income for the period includes net after-tax realized losses on investments of $40.1 million or $0.69 per share. Operating earnings were $297.1 million, or $5.11 per share. Net income for the first six months of 2006 was $270.8 million or $4.40 per share including net after-tax realized gains of $3.8 million, or $0.07 per share. Operating earnings for the same period in 2006 were $249.7 million or $4.33 per share. Total revenues for the first six months of 2007 were $1.9 billion, including $1.7 billion of net premiums earned, net investment income of $249.9 million, and net realized investment losses of $52.9 million. Total revenues for the same period in 2006 were $1.9 billion, including $1.7 billion of net premiums earned, net investment income of $208.3 million, and net realized investment losses of $3.8 million.
During the second quarter of 2007, the Company repurchased 585,800 common shares at a total cost of approximately $44.2 million. To date this year, the Company has repurchased 1,073,100 common shares at a total cost of $77.9 million. The Company has approximately 4.4 million common shares remaining under its current repurchase authorization.
Separately, the Company announced today that its Board of Directors declared a quarterly dividend of $0.43 per common share. The dividend will be payable on August 31, 2007, to common shareholders of record on August 21, 2007, with the stock trading ex-dividend commencing August 17, 2007.
Results by Segment
The Non-Life segment reported net premiums written of $755 million for the quarter, up 7% as compared to the same period in 2006. The increase in net premiums written was driven by growth in the Worldwide Specialty sub-segment. Both the U.S. P&C and Global (Non-U.S.) P&C sub-segment net premiums written were flat for the second quarter of 2007 when compared with the same period in 2006. The combined ratio was 85.7% for the second quarter of 2007 compared to 90.3% for the same period in 2006. The Non-Life technical result was $157 million for the second quarter of 2007 compared to $121 million for the prior year period. For the first six months, Non-Life net premiums written were $1.9 billion, down 1% from the same period in 2006. The six month technical result was $311 million, compared to $255 million for the same period in 2006. The combined ratio for the six month period was 85.6% compared to 89.1% in 2006.
The U.S. Property and Casualty business, which represented 19% of total net premiums written for the quarter, reported net premiums written of $170 million for the second quarter of 2007, flat with last year's second quarter. Net premiums earned were down 8% to $187 million in the second quarter of 2007 when compared with the same period in 2006. The technical ratio for this sub- segment was 89.1% for the 2007 second quarter, compared to 106.3% in the second quarter of 2006. The technical result for the second quarter 2007 was a gain of $20 million, compared to a loss of $13 million for the same period in 2006. For the first six months of 2007, net premiums written were $429 million, down 8% from the first six months of 2006. The six-month technical ratio was 91.1%, compared to 102.0% in 2006. The technical result for the half-year was a gain of $34 million compared to a loss of $8 million in 2006.
The Global (Non-U.S.) Property and Casualty business, which represented 14% of total net premiums written for the quarter, reported net premiums written of $127 million for the second quarter of 2007, flat with the same period in 2006. Net premiums earned during the quarter were $173 million, down 5% from $181 million in the second quarter 2006. The technical ratio for this sub-segment was 101.2% for the second quarter of 2007 compared to 79.2% for the same period in 2006, reflecting a higher-than-usual frequency of mid-sized loss events. For the six months, net premiums written were down 6% to $459 million. The six-month technical ratio was 96.9%, compared to 90.7% in 2006. The technical result for the half-year was $11 million compared to $34 million in 2006.
The Worldwide Specialty business, which represented 51% of total net premiums written for the quarter, reported net premiums written of $458 million for the second quarter of 2007, up 12% from the second quarter of 2006. Net premiums earned were up 6% to $380 million for the quarter, compared to the same period in 2006. This sub-segment's technical ratio was 63.3% for the second quarter of 2007 compared to 73.2% for the second quarter of 2006. For the six-month period, net premiums written were up 4% to $978 million. The six-month technical ratio was 62.7%, compared to 66.4% in 2006. The technical result for the half-year was $266 million in 2007 compared to $229 million in 2006.
The Life segment, which represented 15% of total net premiums written for the quarter, reported net premiums written of $136 million for the quarter, representing 32% growth over the second quarter of 2006. The allocated underwriting result was a gain of $4 million, compared to a loss of $1 million for the second quarter of 2006. For the six-month period, net premiums written increased 17% to $283 million, with an allocated underwriting result of $11 million, compared to $2 million for the comparable period in 2006.
The ART (Alternative Risk Transfer) segment comprises structured risk transfer, principal finance, weather related products, and strategic investments. The pre-tax contribution to net income, including the Company's interest in the earnings of Channel Re, was a loss of $2 million for the second quarter of 2007, compared to a gain of $15 million in the second quarter of 2006, as results for the second quarter of 2007 were impacted by the write-down of certain transactions in the principal finance unit. For the first six months of 2007, the pre-tax contribution to net income was $4 million compared to $22 million for the same period in 2006.
Balance Sheet Items
During the second quarter of 2007, total investments and cash declined slightly to $10.9 billion due to the impact of rising interest rates, and increased 11% over a trailing 12 month period, due primarily to incremental cash flow. Gross Non-Life loss and loss expense reserves were $6.9 billion. During the second quarter, the Company's estimate of Non-Life losses for prior accident years developed favorably by $107 million, which is reflected in the quarter's operating results. The overall prior year reserve development in the Non-Life segment includes net favorable reserve development of $12 million in the U.S. P&C sub-segment, $20 million in the Global (Non-U.S.) P&C sub- segment, and $75 million in the Worldwide Specialty sub-segment. During the second quarter of 2006, the Company's estimate of Non-Life losses for prior year reserves developed favorably by $62 million.
At June 30, 2007, total assets were $15.7 billion, total capital was $4.8 billion, and total shareholders' equity was $3.9 billion. This compares to total assets of $14.9 billion, total capital of $4.7 billion and total shareholders' equity of $3.8 billion at December 31, 2006. Book value per common share at June 30, 2007 was $58.96 on a fully diluted basis, up 5% from $56.07 per share at December 31, 2006, and 26% from $46.62 per share at June 30, 2006.
Commentary and Outlook
"As expected, the non-life market is continuing its slow decline as cedants retain a greater portion of their business and competition at the reinsurance level intensifies," Mr. Thiele said. "Despite this more competitive market environment, pricing declines are being broadly offset by continued favorable loss trends, and PartnerRe is benefiting from cedants' movement to higher quality reinsurers, which is consistent with this stage of the reinsurance pricing cycle. Given that, we are more sanguine about the outlook for 2007 premiums than we were at the start of the year."
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 the Company's operating performance. The Company uses technical ratio and technical result as measures of underwriting performance. The technical ratio is defined as the sum of the loss and acquisition ratios. These metrics exclude other operating expenses. The Company also uses combined ratio to measure results for the Non-Life segment. The combined ratio is the sum of the technical and other operating expense ratios. The Company uses total capital, which is defined as total shareholders' equity, long-term debt and capital efficient notes, to manage the capital structure of the Company.
PartnerRe is a leading global reinsurer, providing multi-line reinsurance to insurance companies. The Company through its wholly owned subsidiaries also offers alternative risk products that include weather and credit protection to financial, industrial and service companies. Risks reinsured include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, other lines, life/annuity and health, and alternative risk products. For the year ended December 31, 2006, total revenues were $4.2 billion. At June 30, 2007, total assets were $15.7 billion, total capital was $4.8 billion and total shareholders' equity was $3.9 billion.
PartnerRe on the Internet: www.partnerre.com
Forward-looking statements contained in this press release are based on the Company's assumptions and expectations concerning future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. PartnerRe's forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments such as exposure to catastrophe, or other large property and casualty losses, adequacy of reserves, risks associated with implementing business strategies, levels and pricing of new and renewal business achieved, credit, interest, currency and other risks associated with the Company's investment portfolio, changes in accounting policies, and other factors identified in the Company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward- looking information contained herein, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company disclaims any obligation to publicly update or revise any forward-looking information or statements.
PartnerRe Ltd.
Consolidated Statements of Operations and Comprehensive Income
(Expressed in thousands of U.S dollars, except share and per share data)
(Unaudited)
For the For the
three three For the six For the six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
Revenues
Gross premiums written $907,758 $817,610 $2,209,521 $2,190,456
Net premiums written $898,686 $815,893 $2,169,258 $2,160,497
(Increase) decrease in
unearned premiums (9,409) 43,070 (437,940) (468,713)
Net premiums earned 889,277 858,963 1,731,318 1,691,784
Net investment income 130,894 108,320 249,911 208,272
Net realized investment
losses (53,647) (58,928) (52,879) (3,830)
Other (loss) income (8,911) 12,704 (8,393) 20,460
Total revenues 957,613 921,059 1,919,957 1,916,686
Expenses
Losses and loss expenses
and life policy benefits 524,038 541,377 1,002,772 1,040,195
Acquisition costs 206,313 199,425 407,037 398,682
Other operating expenses 79,947 76,482 158,931 150,912
Interest expense 13,484 13,200 26,994 25,921
Net foreign exchange
losses 9,308 4,116 13,554 7,462
Total expenses 833,090 834,600 1,609,288 1,623,172
Income before taxes and
interest in earnings of
equity investments 124,523 86,459 310,669 293,514
Income tax expense 22,716 11,845 42,620 27,976
Interest in earnings of
equity investments 3,214 2,917 6,239 5,236
Net income $105,021 $77,531 $274,288 $270,774
Preferred dividends $8,631 $8,631 $17,263 $17,263
Operating earnings available
to common shareholders $139,165 $115,932 $297,114 $249,676
Comprehensive income, net of
tax $82,613 $50,691 $267,524 $161,609
Per Share Data:
Earnings per common share:
Basic operating earnings $2.46 $2.04 $5.23 $4.40
Net realized
investment (losses)
gains, net of tax (0.76) (0.83) (0.71) 0.07
Basic net income $1.70 $1.21 $4.52 $4.47
Weighted average
number of common
shares outstanding 56,682.8 56,763.5 56,820.8 56,748.6
Diluted operating
earnings $2.39 $2.01 $5.11 $4.33
Net realized
investment (losses)
gains, net of tax (0.73) (0.81) (0.69) 0.07
Diluted net income $1.66 $1.20 $4.42 $4.40
Weighted average
number of common and
common share
equivalents
outstanding 58,148.7 57,656.0 58,173.7 57,628.6
PartnerRe Ltd.
Consolidated Balance Sheets
(Expressed in thousands of U.S dollars, except share, per share and
parenthetical share data)
(Unaudited)
June 30, December 31,
2007 2006
Assets
Investments:
Fixed maturities, at fair value
(amortized cost: 2007,
$8,264,873; 2006, $7,852,798) $8,172,868 $7,835,680
Short-term investments, at fair
value
(amortized cost: 2007, $86,701;
2006, $133,872) 86,604 133,751
Equities, at fair value
(cost: 2007, $1,309,364; 2006,
$920,913) 1,417,013 1,015,144
Trading securities, at fair
value (cost: 2007, $69,934;
2006, $578,445) 72,525 599,972
Other invested assets 141,097 105,390
Total investments 9,890,107 9,689,937
Cash and cash equivalents, at
fair value, which approximates
amortized cost 1,052,192 988,788
Accrued investment income 170,541 157,923
Reinsurance balances receivable 1,899,596 1,573,566
Reinsurance recoverable on paid
and unpaid losses 167,037 168,840
Funds held by reinsured
companies 989,702 1,002,402
Deferred acquisition costs 644,653 542,698
Deposit assets 338,482 306,212
Net tax assets 11,099 17,826
Goodwill 429,519 429,519
Other assets 72,610 70,514
Total assets $15,665,538 $14,948,225
Liabilities
Unpaid losses and loss expenses $6,944,959 $6,870,785
Policy benefits for life and
annuity contracts 1,494,205 1,430,691
Unearned premiums 1,694,517 1,215,624
Reinsurance balances payable 122,275 115,897
Ceded premiums payable 17,811 17,213
Funds held under reinsurance
treaties 22,933 21,257
Deposit liabilities 375,751 350,763
Net payable for securities
purchased 35,916 90,331
Accounts payable, accrued
expenses and other 142,324 172,212
Long-term debt 620,000 620,000
Debt related to capital
efficient notes 257,605 257,605
Total liabilities 11,728,296 11,162,378
Shareholders' Equity
Common shares (par value $1.00,
issued: 2007, 57,079,534; 2006,
57,076,312) 57,080 57,076
Series C cumulative preferred
shares (par value $1.00, issued
and outstanding:
2007 and 2006, 11,600,000;
aggregate liquidation
preference: 2007 and 2006,
$290,000,000) 11,600 11,600
Series D cumulative preferred
shares (par value $1.00, issued
and outstanding:
2007 and 2006, 9,200,000;
aggregate liquidation
preference: 2007 and 2006,
$230,000,000) 9,200 9,200
Additional paid-in capital 1,417,009 1,413,977
Accumulated other comprehensive
income:
Net unrealized gains on
investments, net of tax 9,507 56,913
Currency translation
adjustment 109,331 68,734
Unfunded pension obligation,
net of tax (7,232) (7,277)
Retained earnings 2,374,902 2,175,624
Common shares held in treasury,
at cost (2007, 585,800 shares;
2006, nil) (44,155) -
Total shareholders' equity 3,937,242 3,785,847
Total liabilities and shareholders'
equity $15,665,538 $14,948,225
Shareholders' Equity Per Common Share
(excluding cumulative
preferred shares: 2007 and 2006,
$520,000,000) $60.49 $57.22
Diluted Book Value Per Common and
Common Share Equivalents
Outstanding (assuming exercise
of all stock-based awards) $58.96 $56.07
Number of Common and Common Share
Equivalents Outstanding 57,959.6 58,248.8
PartnerRe Ltd.
Supplementary Information
(in millions of U.S. dollars)
(Unaudited)
SEGMENT INFORMATION
For the three months ended June 30, 2007
Total
Global Worldwide Non-
(Non-U.S.) Specialty Life
U.S. P&C P&C Segment
Gross premiums written $170 $129 $457 $756
Net premiums written $170 $127 $458 $755
Decrease (increase) in unearned
premiums 17 46 (78) (15)
Net premiums earned $187 $173 $380 $740
Losses and loss expenses and
life policy benefits (120) (131) (156) (407)
Acquisition costs (47) (44) (85) (176)
Technical result $20 $(2) $139 $157
Other loss n/a n/a n/a -
Other operating expenses n/a n/a n/a (51)
Underwriting result n/a n/a n/a $106
Net investment income n/a n/a n/a -
Allocated underwriting result (1) n/a n/a n/a n/a
Net realized investment losses n/a n/a n/a n/a
Interest expense n/a n/a n/a n/a
Net foreign exchange losses n/a n/a n/a n/a
Income tax expense n/a n/a n/a n/a
Interest in earnings of equity
investments n/a n/a n/a n/a
Net income n/a n/a n/a n/a
Loss ratio (2) 64.2 % 75.6 % 40.9 % 54.9 %
Acquisition ratio (3) 24.9 25.6 22.4 23.8 %
Technical ratio (4) 89.1 % 101.2 % 63.3 % 78.7 %
Other operating expense ratio (5) 7.0 %
Combined ratio (6) 85.7 %
PartnerRe Ltd.
Supplementary Information
(in millions of U.S. dollars)
(Unaudited)
SEGMENT INFORMATION
For the three months ended June 30, 2007
ART
Segment Life
(A) Segment Corporate Total
Gross premiums written $8 $144 $- $908
Net premiums written $8 $136 $- $899
Decrease (increase) in unearned (2) 7 - (10)
premiums
Net premiums earned $6 $143 $- $889
Losses and loss expenses and
life policy benefits - (117) - (524)
Acquisition costs (1) (29) - (206)
Technical result $5 $(3) $- $159
Other loss (9) - - (9)
Other operating expenses (2) (8) (19) (80)
Underwriting result $(6) $(11) n/a $70
Net investment income 1 15 115 131
Allocated underwriting result (1) $(5) $4 n/a n/a
Net realized investment losses n/a n/a (54) (54)
Interest expense n/a n/a (13) (13)
Net foreign exchange losses n/a n/a (9) (9)
Income tax expense n/a n/a (23) (23)
Interest in earnings of equity
investments 3 n/a n/a 3
Net income n/a n/a n/a $105
For the three months ended June 30, 2006
Global Total
(Non- Non-
U.S. P&C U.S.) Worldwide Life
P&C Specialty Segment
Gross premiums written $170 $128 $408 $706
Net premiums written $170 $127 $409 $706
Decrease (increase) in unearned
premiums 35 54 (51) 38
Net premiums earned $205 $181 $358 $744
Losses and loss expenses and
life policy benefits (170) (95) (192) (457)
Acquisition costs (48) (48) (70) (166)
Technical result $(13) $38 $96 $121
Other income n/a n/a n/a -
Other operating expenses n/a n/a n/a (48)
Underwriting result n/a n/a n/a $73
Net investment income n/a n/a n/a -
Allocated underwriting result (1) n/a n/a n/a n/a
Net realized investment losses n/a n/a n/a n/a
Interest expense n/a n/a n/a n/a
Net foreign exchange losses n/a n/a n/a n/a
Income tax expense n/a n/a n/a n/a
Interest in earnings of equity
investments n/a n/a n/a n/a
Net income n/a n/a n/a n/a
Loss ratio (2) 83.0 % 52.3 % 53.7 % 61.4 %
Acquisition ratio (3) 23.3 26.9 19.5 22.4 %
Technical ratio (4) 106.3 % 79.2 % 73.2 % 83.8 %
Other operating expense ratio (5) 6.5 %
Combined ratio (6) 90.3 %
(A) The Company reports the results of Channel Re on a one-quarter lag.
The 2007 and 2006 periods include the Company's share of Channel Re's
net income in the amount of
$3.2 million and $2.8 million, respectively.
(1) Allocated underwriting result is defined as net premiums earned,
other income or loss and allocated net investment income less losses and
loss expenses and 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.
For the three months ended June 30, 2006
ART
Segment Life
(A) Segment Corporate Total
Gross premiums written $7 $105 $- $818
Net premiums written $7 $103 $- $816
Decrease (increase) in unearned
premiums 1 4 - 43
Net premiums earned $8 $107 $- $859
Losses and loss expenses and
life policy benefits (3) (82) - (542)
Acquisition costs (1) (32) - (199)
Technical result $4 $(7) $- $118
Other income 13 - - 13
Other operating expenses (5) (7) (16) (76)
Underwriting result $12 $(14) n/a $55
Net investment income - 13 95 108
Allocated underwriting result (1) $12 $(1) n/a n/a
Net realized investment losses n/a n/a (59) (59)
Interest expense n/a n/a (13) (13)
Net foreign exchange losses n/a n/a (4) (4)
Income tax expense n/a n/a (12) (12)
Interest in earnings of equity
investments 3 n/a n/a 3
Net income n/a n/a n/a $78
(A) The Company reports the results of Channel Re on a one-quarter lag.
The 2007 and 2006 periods include the Company's share of Channel Re's
net income in the amount of
$3.2 million and $2.8 million, respectively.
(1) Allocated underwriting result is defined as net premiums earned,
other income or loss and allocated net investment income less losses and
loss expenses and 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.
PartnerRe Ltd.
Supplementary Information
(in millions of U.S. dollars)
(Unaudited)
SEGMENT INFORMATION
For the six months ended June 30, 2007
Global Total
(Non- Worldwide Non-Life
U.S. P&C U.S.)P&C Specialty Segment
Gross premiums written $429 $462 $999 $1,890
Net premiums written $429 $459 $978 $1,866
Increase in unearned premiums (46) (110) (264) (420)
Net premiums earned $383 $349 $714 $1,446
Losses and loss expenses and
life policy benefits (252) (248) (290) (790)
Acquisition costs (97) (90) (158) (345)
Technical result $34 $11 $266 $311
Other loss n/a n/a n/a -
Other operating expenses n/a n/a n/a (102)
Underwriting result n/a n/a n/a $209
Net investment income n/a n/a n/a -
Allocated underwriting result (1) n/a n/a n/a n/a
Net realized investment losses n/a n/a n/a n/a
Interest expense n/a n/a n/a n/a
Net foreign exchange losses n/a n/a n/a n/a
Income tax expense n/a n/a n/a n/a
Interest in earnings of equity
investments n/a n/a n/a n/a
Net income n/a n/a n/a n/a
Loss ratio (2) 65.7 % 71.2 % 40.6 % 54.7%
Acquisition ratio (3) 25.4 25.7 22.1 23.8
Technical ratio (4) 91.1 % 96.9 % 62.7 % 78.5%
Other operating expense ratio (5) 7.1
Combined ratio (6) 85.6%
PartnerRe Ltd.
Supplementary Information
(in millions of U.S. dollars)
(Unaudited)
SEGMENT INFORMATION
For the six months ended June 30, 2007
ART
Segment Life
(A) Segment Corporate Total
Gross premiums written $20 $300 $- $2,210
Net premiums written $20 $283 $- $2,169
Increase in unearned premiums (8) (10) - (438)
Net premiums earned $12 $273 $- $1,731
Losses and loss expenses and
life policy benefits - (213) - ( 1,003)
Acquisition costs (2) (60) - (407)
Technical result $10 $- $- $321
Other loss (8) - - (8)
Other operating expenses (5) (15) (37) ( 159)
Underwriting result $(3) $(15) n/a $154
Net investment income 1 26 223 250
Allocated underwriting result (1) $(2) $11 n/a n/a
Net realized investment losses n/a n/a (53) (53)
Interest expense n/a n/a (27) (27)
Net foreign exchange losses n/a n/a (13) (13)
Income tax expense n/a n/a (43) (43)
Interest in earnings of equity
investments 6 n/a n/a 6
Net income n/a n/a n/a $274
For the six months ended June 30, 2006
Global Total
(Non- Worldwide Non-Life
U.S. P&C U.S.) P&C Specialty Segment
Gross premiums written $466 $493 $956 $1,915
Net premiums written $466 $491 $936 $1,893
Increase in unearned premiums (62) (126) (255) (443)
Net premiums earned $404 $365 $681 $1,450
Losses and loss expenses and
life policy benefits (313) (232) (319) (864)
Acquisition costs (99) (99) (133) (331)
Technical result $(8) $34 $229 $255
Other income n/a n/a n/a -
Other operating expenses n/a n/a n/a (96)
Underwriting result n/a n/a n/a $159
Net investment income n/a n/a n/a -
Allocated underwriting result (1) n/a n/a n/a n/a
Net realized investment losses n/a n/a n/a n/a
Interest expense n/a n/a n/a n/a
Net foreign exchange losses n/a n/a n/a n/a
Income tax expense n/a n/a n/a n/a
Interest in earnings of equity
investments n/a n/a n/a n/a
Net income n/a n/a n/a n/a
Loss ratio (2) 77.5 % 63.7 % 46.8 % 59.6%
Acquisition ratio (3) 24.5 27.0 19.6 22.9%
Technical ratio (4) 102.0 % 90.7 % 66.4 % 82.5%
Other operating expense ratio (5) 6.6%
Combined ratio (6) 89.1%
(A) The Company reports the results of Channel Re on a one-quarter lag.
The 2007 and 2006 periods include the Company's share of Channel Re's
net income in the amount of
$6.1 million and $5.1 million, respectively.
(1) Allocated underwriting result is defined as net premiums earned,
other income or loss and allocated net investment income less losses and
loss expenses and 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.
For the six months ended June 30, 2006
ART
Segment Life
(A) Segment Corporate Total
Gross premiums written $26 $249 $- $2,190
Net premiums written $25 $242 $- $2,160
Increase in unearned premiums (10) (15) - (468)
Net premiums earned $15 $227 $- $1,692
Losses and loss expenses and
life policy benefits (7) (169) - (1,040)
Acquisition costs (2) (66) - (399)
Technical result $6 $(8) $- $253
Other income 20 - - 20
Other operating expenses (9) (14) (32) (151)
Underwriting result $17 $(22) n/a $122
Net investment income - 24 184 208
Allocated underwriting result (1) $17 $2 n/a n/a
Net realized investment losses n/a n/a (3) (3)
Interest expense n/a n/a (26) (26)
Net foreign exchange losses n/a n/a (7) (7)
Income tax expense n/a n/a (28) (28)
Interest in earnings of equity
investments 5 n/a n/a 5
Net income n/a n/a n/a $271
(A) The Company reports the results of Channel Re on a one-quarter lag.
The 2007 and 2006 periods include the Company's share of Channel Re's
net income in the amount of
$6.1 million and $5.1 million, respectively.
(1) Allocated underwriting result is defined as net premiums earned,
other income or loss and allocated net investment income less losses and
loss expenses and 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.
PartnerRe Ltd.
Supplementary Information
(Unaudited)
For the For the For the For the
three three six six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
Distribution of Net Premiums
Written by
Line of Business:
Non-Life
Property and
Casualty
Property 15 % 15 % 19 % 19 %
Casualty 14 18 16 19
Motor 4 3 6 6
Worldwide Specialty
Agriculture 6 6 3 4
Aviation/Space 6 6 4 4
Catastrophe 15 16 16 16
Credit/Surety 7 7 6 5
Engineering 6 5 4 4
Energy 2 3 2 2
Marine 3 3 3 3
Specialty
property 2 2 3 3
Specialty
casualty 4 2 4 3
ART 1 1 1 1
Life 15 13 13 11
100 % 100 % 100 % 100 %
Distribution of Gross Premiums
Written by
Geography:
North America 47 % 50 % 42 % 43 %
Europe 40 36 46 44
Asia, Australia
and New Zealand 8 9 7 8
Latin America,
Caribbean and
Africa 5 5 5 5
100 % 100 % 100 % 100 %
As at
June 30,
2007
Financial Strength Ratings:
Standard & Poor's AA-
Moody's Aa3
A.M. Best A+
Fitch AA
As at As at
June 30, December 31,
2007 2006
(in thousands of U.S. (in thousands of
dollars) U.S. dollars)
Capital Structure:
Long-term debt $620,000 13 % $620,000 13 %
Capital efficient notes(1) 250,000 5 250,000 6
6.75% Series C cumulative
preferred shares, aggregate
liquidation 290,000 6 290,000 6
6.5% Series D cumulative
preferred shares, aggregate
liquidation 230,000 5 230,000 5
Common shareholders' equity 3,417,242 71 3,265,847 70
Total Capital $4,807,242 100 % $4,655,847 100 %
(1) PartnerRe Finance II, the issuer of the capital efficient notes,
does not meet the consolidation requirements of FIN 46(R).
Accordingly, the Company shows the related intercompany debt of $257.6
million on its Consolidated Balance Sheets.
PartnerRe Ltd.
Supplementary Information
(Unaudited)
As at As at
June 30, December 31,
2007 2006
Investment Portfolio:
Credit
Quality AAA 70 % 69 %
AA 5 4
A 12 13
BBB 10 10
Below Investment
Grade/Unrated 3 4
100 % 100 %
By Class U.S. Government 14 % 12 %
U.S. Mortgage/Asset
Backed 16 16
U.S. Corporates 19 20
Foreign Fixed
Income 30 29
Equities and Equity
Substitutes 13 14
Cash (net of
pending
transactions) 8 9
100 % 100 %
Expected average duration 3.9 Yrs 4.1 Yrs
Average yield to maturity at
market 5.2 % 4.9 %
(fixed income securities and cash)
Average Credit Quality AA AA
For the
For the three three For the six For the six
months months
months ended ended months ended ended
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
(in thousands of U.S. dollars except per share data)
Reconciliation of GAAP
and non-GAAP measures:
Annualized return on
beginning common
shareholders' equity (1)
calculated with net
income available to
common shareholders 11.8 % 10.7 % 15.7 % 19.7 %
Less:
Annualized net realized
investment (losses)
gains return, net of
tax, on beginning
common shareholders'
equity (1) (5.2) (7.3) (2.5) 0.3
Annualized operating
return on beginning
common shareholders'
equity(1) 17.0 % 18.0 % 18.2 % 19.4 %
Net income $105,021 $77,531 $274,288 $270,774
Less:
Net realized
investment (losses)
gains, net of tax (42,775) (47,032) (40,089) 3,835
Dividends to
preferred
shareholders 8,631 8,631 17,263 17,263
Operating earnings
available to common
shareholders $139,165 $115,932 $297,114 $249,676
Per diluted share:
Net income $1.66 $1.20 $4.42 $4.40
Less:
Net realized
investment (losses)
gains, net of tax (0.73) (0.81) (0.69) 0.07
Operating earnings $2.39 $2.01 $5.11 $4.33
(1) Excluding cumulative preferred shares: 2007 and 2006, $520,000
PartnerRe Ltd.
Supplementary Information
(in thousands of U.S. dollars except share and per share data)
(Unaudited)
As at As at
June 30, December 31,
2007 2006
Reconciliation of GAAP and non-GAAP
measures:
Shareholders' equity $3,937,242 $3,785,847
Less:
6.75% Series C cumulative
preferred shares, aggregate
liquidation 290,000 290,000
6.5% Series D cumulative
preferred shares, aggregate
liquidation 230,000 230,000
Common shareholders' equity $3,417,242 $3,265,847
Less:
Net unrealized losses on fixed
income securities, net of tax (79,079) (18,694)
Book value excluding net unrealized
losses on fixed income securities $3,496,321 $3,284,541
Divided by:
Number of common and common share
equivalents outstanding 57,959.6 58,248.8
Equals:
Diluted book value per common and
common share equivalents
outstanding excluding net
unrealized losses on fixed
income securities $60.32 $56.39
SOURCE PartnerRe Ltd