PartnerRe President & Chief Executive Officer, Patrick Thiele, commented, "Overall, we are pleased with our second quarter results, both in terms of growth and profitability. The reinsurance market continues to improve in response to increasing loss costs and to restrained growth in industry capital. In this environment, PartnerRe continues to excel."
For the three months ended June 30, 2002, operating earnings, which exclude net realized
investment gains or losses and are calculated after payment of preferred dividends, were $71.3 million or $1.38 per share on a fully diluted basis. This compares to operating earnings of $47.5 million, or $0.92 per share for the second quarter of 2001.
Net income for the three months ended June 30, 2002 was $66.6 million, or $1.19 per share on a fully diluted basis. Net income includes net (after tax) realized investment losses of $9.7 million. Net income for the second quarter of 2001 was $53.2 million or $0.93 per share, which included net investment gains of $0.7 million.
Total revenues for the quarter were $620.3 million, comprised of $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 second quarter of 2001, revenues were $452.6 million, with $386.3
million of net premiums earned, net investment income of $60.8 million, and net realized
investment gains of $5.5 million.
For the six months ended June 30, 2002, operating earnings were $138.1 million or $2.67 per
share on a fully diluted basis. Net premiums written were nearly $1.4 billion, an increase of
38% from the prior year. Net income for the six months was $129.8 million, or $2.32 per share. Net income for the period includes net (after-tax) realized losses of $18.3 million. Operating earnings for the six months ended June 30, 2001 were $103.1 million or $2.00 per share. Net income for the first six months of 2001 was $149.1 million or $2.70 per share after net (after-tax) realized gains of $8.2 million and the cumulative effect of adopting FAS
133 of $27.8 million.
In 2002, the company adopted Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets." As a result, it ceased amortizing goodwill on January 1, 2002, which resulted in the elimination of quarterly charges of $5.6 million after tax, or 11 cents per share, and $11.2 million or 22 cents per share for the six months.
At June 30, 2002, total assets were $7.9 billion, total capitalization was $2.5 billion, and
shareholders' equity was $1.9 billion. Book value per common share was $31.52 on a fully
diluted basis, compared to $29.24 per share on March 31, 2002.
Separately, the Company announced that the Board of Directors declared a regular quarterly
dividend of $0.29 per common share, payable on September 3, 2002, to shareholders of record on August 23, 2002. The stock will trade ex-dividend commencing August 21, 2002.
Results of Operations
"The Company again experienced strong growth in net written premiums, a trend that started in the first quarter of 2001," Mr. Thiele said. "Year over year, our total net written premiumswere up 37% for the quarter and 38% for the half-year. This was driven by both price increases and real growth in treaties and participations."
Mr. Thiele continued, "Profitability remains acceptable with a combined ratio for the quarter
of 94.4% and an annualized return on equity in excess of 18%. This results from better pricing, improved terms and conditions and PartnerRe's good risk selection and balanced book of business.
"In general, our shorter-tail lines of business, such as catastrophe and aviation, performed
exceptionally well but were counter-balanced somewhat by continuing loss issues in credit &
surety as well as higher reported losses in the quarter in casualty and motor lines."
Results by Segment
The U.S. Property and Casualty segment, which represents 31% of total premiums, reported
net written premiums of $176.0 million, a 44% increase over the prior year's second quarter,
with substantial growth in casualty and property lines. High loss activity in the casualty and
motor lines contributed to a quarterly technical ratio of 103.1%.
The Non-U.S. Property and Casualty segment, which represents 19% of total premiums, reported net written premiums of $109.6 million, a 16% increase over the prior year, with strong growth in property lines offset by reductions in the motor business. This segment's technical ratio of 98.1% reflects improvement in property results, offset by higher losses in casualty and motor business.
The Worldwide Specialty segment, which represents 44% of total premiums, reported net written premiums of $244.3 million, a 58% increase over the prior year period. All lines experienced growth except for agriculture, with the largest growth generated in the engineering and energy risks, aviation, and catastrophe, as these markets have exhibited the most significant improvements in terms and conditions. This segment's technical ratio of 73.5% reflects high profitability in catastrophe and aviation, partially offset by continued high loss experience in the credit and surety line, reflecting the ongoing weakness in the global economy.
The Life segment, which provides coverages in all markets except the U.S. and represents 6% of total premiums, reported net written premiums of $33.4 million, a 14% decrease from the prior period. New business development was more than offset by the shift in business mix to more excess of loss treaties from proportional treaties. The net technical result of $4.3
million for the quarter represents a return to normal profitability levels for this segment.
Commentary and Outlook
Mr. Thiele concluded, "Consistent with earlier commentary, we believe our net written
premium increases for the year will exceed our 30% objective. We are also comfortable that,
absent unusual loss events, we will meet our 2002 plan of operating earnings per share of at
least $5.50 and a return on beginning equity in excess of 17%."