PartnerRe Ltd. Reports Q1 2014 Results (Excerpt)

PEMBROKE, Bermuda – 29 April, 2014 - PartnerRe Ltd. (Ticker: PRE.BH) reported a net income of $295.7 million, or $5.61 per share for the first quarter of 2014. This includes net after-tax realized and unrealized gains on investments of $115.8 million, or $2.20 per share. Net income for the first quarter of 2013 was $210.5 million, or $3.53 per share, including net after-tax realized and unrealized gains on investments of $12.3 million, or $0.20 per share. The Company reported operating earnings of $176.9 million, or $3.36 per share, for the first quarter of 2014. This compares to operating earnings of $202.1 million, or $3.39 per share, for the first quarter of 2013.

·         First Quarter Operating Earnings per share of $3.36; Net Income per share of $5.61

·         First Quarter Annualized Operating ROE of 12.3%; Annualized Net Income ROE of 20.5%

·         Book Value of $114.13 per share, up 4.5% for the quarter

·         Tangible Book Value of $103.10 per share, up 4.7% for the quarter

Operating earnings or loss excludes certain net after-tax realized and unrealized investment gains and losses, net after-tax foreign exchange gains and losses, certain net after-tax interest in results of equity method investments and the loss on redemption of preferred shares, and is calculated after the 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 results, PartnerRe President & Chief Executive Officer Costas Miranthis said, “I am pleased to report a strong start to 2014, with first quarter results reflecting solid underwriting performance and improved financial markets. On a dividend adjusted basis, we grew tangible book value per share by 5.4%. We are beginning to see the effect of our efforts to profitably diversify our portfolio into new lines such as health and mortgage business. I am confident that our ability to find new, attractive businesses coupled with our excellent franchise, strong client relationships and superior balance sheet position us to compete effectively in an otherwise challenging operating environment.”

Highlights for the first quarter of 2014 compared to the same period in 2013 include:

Results of operations:

·         Net premiums written of $1.7 billion were up 6%. The increase was driven by the North America and Global Specialty Non-life sub-segments, and the Life and Health segment. The increase was primarily driven by the agriculture and credit/surety lines of business in the North America Non-life sub-segment, the multi-line and agriculture lines of business in the Global Specialty Non-life sub-segment and PartnerRe Health’s accident and health line of business in the Life and Health segment. These increases were partially offset by decreases in the Catastrophe and Global (Non-U.S.) P&C Non-life sub-segments.

·         Net premiums earned of $1.3 billion were up 9%, or 10% on a constant foreign exchange basis. The increase was primarily driven by the earning of new business written in 2013 in the North America, Global (Non-U.S.) P&C and Global Specialty Non-life sub-segments and the Life and Health segment.

·         The Non-life combined ratio was 83.9%. The combined ratio benefited from favorable prior year development of 16.6 points (or $164 million). All Non-life sub-segments experienced net favorable development on prior accident years during the first quarter of 2014.

·         Net investment income of $117 million was down 6%. The decrease in net investment income primarily reflects lower reinvestment rates.

·         Pre-tax net realized and unrealized investment gains were $142 million primarily reflecting decreases in longer-term risk-free interest rates and narrowing credit spreads.

·         The effective tax rate on operating earnings and non-operating earnings was 14% and 20%, respectively.

Balance sheet and capitalization:

·         Total investments, cash and funds held – directly managed were $17.5 billion at March 31, 2014, comparable to December 31, 2013.

·         Net Non-life loss and loss expense reserves were $10.3 billion at March 31, 2014, down 1% compared to December 31, 2013.

·         Net policy benefits for life and annuity contracts were $2.1 billion at March 31, 2014, up 7% compared to December 31, 2013.

·         Total capital was $7.6 billion at March 31, 2014, up 1% compared to December 31, 2013 primarily driven by net income for the quarter, which was partially offset by share repurchases and common and preferred dividend payments.

·         The Company repurchased approximately 1.8 million common shares at a total cost of approximately $180 million during the first quarter of 2014. The average repurchase price of $99.76 per share represents an 8.7% discount to diluted book value per share at December 31, 2013. Since April 1, 2014, the Company has repurchased 450 thousand common shares at a total cost of approximately $46 million. As of April 28, 2014, approximately 2.7 million common shares remained under the current repurchase authorization.

·         Total shareholders’ equity attributable to PartnerRe was $6.8 billion at March 31, 2014, up 1% compared to December 31, 2013. The increase was driven by the factors described above for total capital.

·         Book value per common share was $114.13 at March 31, 2014, a record high for PartnerRe, up 4.5% compared to $109.26 at December 31, 2013. Tangible book value per common share was $103.10 at March 31, 2014, up 4.7% compared to $98.49 at December 31, 2013. The increases were primarily driven by net income, which was partially offset by common and preferred dividend payments.

Segment and sub-segment highlights for the first quarter of 2014 compared to the same period in 2013 include:

Non-life:

·         The Non-life segment’s net premiums written were up 5%. The increase was reported in the North America and Global Specialty sub-segments and was partially offset by decreases in the Catastrophe and Global (Non-U.S.) P&C sub-segments.

·         The North America sub-segment’s net premiums written were up 18%, or 19% on a constant foreign exchange basis, primarily driven by the restructuring of a significant treaty and new business in the agriculture line of business and new mortgage guaranty business in the credit/surety line of business. This sub-segment reported a technical ratio of 92.9%, which included 6.5 points (or $24 million) of net favorable prior year loss development.

·         The Global (Non-U.S.) P&C sub-segment’s net premiums written were down 2%, or 3% on a constant foreign exchange basis, primarily due to increased retentions, share decreases and cancellations in the property line of business, partially offset by new business written in the motor line of business. This sub-segment reported a technical ratio of 82.5%, which included 26.0 points (or $47 million) of net favorable prior year loss development.

·         The Global Specialty sub-segment’s net premiums written were up 8% primarily due to new business and renewal increases in the multi-line line of business and new business and upward premium adjustments in the agriculture line of business. These increases were partially offset by decreases in net premiums written in most of the other lines of business, predominantly due to increased retentions and cancellations. This sub-segment reported a technical ratio of 79.0%, which included 16.7 points (or $59 million) of net favorable prior year loss development.

·         The Catastrophe sub-segment’s net premiums written were down 15%, or 14% on a constant foreign exchange basis, primarily driven by cancellations, non-renewals and the restructuring of certain treaties, which was, partially offset by new business. This sub-segment reported a favorable technical ratio of (16.4)%, which included 43.0 points (or $34 million) of net favorable prior year loss development.

Life and Health:

·         The Life and Health segment’s net premiums written were up 13%, or 12% on a constant foreign exchange basis. The increase was primarily driven by PartnerRe Health’s accident and health line of business and, to a lesser extent, the mortality and longevity lines of business.

·         The Life and Health segment’s allocated underwriting result, which includes allocated investment income and operating expenses, decreased to $14 million compared to $16 million in the same period of 2013 primarily due to a modestly lower level of net favorable prior year loss development.

Corporate and Other:

Investment and capital markets activities contributed income of $247 million to pre-tax net income, excluding investment income allocated to the Life and Health segment. Of this amount, income of $99 million was included in pre-tax operating earnings and income of $148 million related to net realized and unrealized gains on investments and earnings from equity method investee companies was included in pre-tax non-operating earnings.

Separately, as announced by the Company earlier, the Board of Directors declared a quarterly dividend of $0.67 per common share. The dividend will be payable on May 30, 2014 to common shareholders of record on May 19, 2014.

The Company has posted its first quarter 2014 financial supplement on its website www.partnerre.com  in the Investor Relations section on the Financial Reports page under Supplementary Financial Data, which includes a reconciliation of GAAP and non-GAAP measures.

PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. The Company, through its wholly owned subsidiaries, also offers capital markets 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, multiline and other lines in its Non-life operations, mortality, longevity and accident and health in its Life and Health operations, and alternative risk products. For the year ended December 31, 2013, total revenues were $5.5 billion. At March 31, 2014, total assets were $23.5 billion, total capital was $7.6 billion and total shareholders’ equity attributable to PartnerRe was $6.8 billion.

PartnerRe on the Internet: www.partnerre.com

PartnerRe Ltd.

Investors: Robin Sidders

Media: Celia Powell                            441-292-0888

or

Sard Verbinnen & Co

Drew Brown/Daniel Goldstein                        212-687-8080