Partner Re Reports Drop in Profits
Bermuda reinsurer PartnerRe Ltd. reported a sharp drop in fourth quarter 2010 profits, reflecting a decline in written premiums in the non-life segment and losses from last year’s New Zealand earthquake and the flooding in Australia. Investment results were also in the red for the quarter.
For the fourth quarter, PartnerRe’s net income dropped to $57.0 million or $0.65 per share from $354.4 million or $4.25 per share in the year-ago period.
The net income for the quarter includes net after-tax realized and unrealized losses on investments of $71.8 million or $0.96 per share. The prior-year net income included net after-tax realized and unrealized gains on investments of $17.6 million or $0.22 per share.
Operating earnings for the quarter slumped to $113.0 million or $1.52 per share from $315.0 million or $3.87 per share in the year-ago quarter.
Total revenues for the quarter dropped to $1.3 billion from $1.5 billion in the year-ago quarter.
Total expenses for the quarter increased to $1.22 billion from $1.15 billion last year. Expenses include other operating expenses of $133.2 million for the quarter and $146.5 million for the prior-year period.
Net premiums earned for the quarter declined to $1.20 billion from $1.33 billion in the year-ago period. Net investment income dropped to $160.8 million from $182.0 million last year. Pre-tax net realized and unrealized losses for the quarter totaled $83.2 million, compared to gains of $25.1 million a year ago.
Net premiums written for the quarter decreased to $820.6 million from $904.4 million in the fourth quarter of 2009.
Net premiums written for the non-life segment dropped nearly 20 percent for the quarter to $611 million. The combined ratio, a percentage of losses and expenses versus premiums, worsened to 94.6 percent from 80.3 percent last year. The combined ratio is a measure of profitability, a ratio above 100 percent indicates that the company is paying out more money in claims that it is receiving from premiums.
The bulk of the deterioration came from the upward revision of the New Zealand earthquake loss and the flooding in Australia, as well as an additional 4.6 points related to an aggregate cover loss. In contrast, the prior-year period did not include any significantly large loss.
Net written premiums as well as earned premiums decreased over North America segment, global P&C business, and the global specialty business.
For the Catastrophe business, which represented one percent of total net premiums written for the quarter, technical ratio, which includes acquisition expenses, worsened to 105.3 percent from 10.0 percent last year, reflecting the New Zealand earthquake loss and the flooding in Australia, as well as the aggregate cover loss during the fourth quarter.
The Life segment, which represented 26 percent of total net premiums written for the quarter reported net premiums written of $210 million, compared to $157 million in the year-ago quarter.
For the full year, PartneRe’s net income dropped to $852.6 million or $10.46 per share from $1.5 billion or $23.51 per share for fiscal year 2009.
Net after-tax realized and unrealized gains on investments for the year were $301.5 million or $3.86 per share, compared with $497.0 million or $7.78 per share for fiscal year 2009. The year-ago period also had a net after-tax gain of $57.0 million or $0.89 per share, from the purchase of about 75 percent of the company’s outstanding Capital Efficient Notes in the first quarter of 2009.
Operating earnings for the full year 2010 were $504.7 million or $6.45 per share, compared with $932.1 million or $14.59 per share in 2009. Operating earnings came in below Street estimates of $6.47 per share for the year.
Revenues for the full year grew to $5.9 billion from $5.4 billion in 2009. Net premiums written for the year increased to $4.70 billion from $3.94 billion in 2009.
The Pembroke, Bermuda-based company declared a quarterly dividend of $0.55 per common share.
