PartnerRe Reports First Quarter 2016 Results

May 4, 2016

Bermuda-based PartnerRe Ltd. reported net income of $201.4 million for the first quarter of 2016, or an annualized net income ROE of 13.3%. This includes net after-tax realized and unrealized gains on investments of $148.1 million.

Net income for the first quarter of 2015 was $231.7 million, or an annualized net income ROE of 14.8%, including net after-tax realized and unrealized gains on investments of $100.3 million. The Company reported operating earnings of $44.2 million for the first quarter of 2016, or an annualized operating ROE of 2.9%. This compares to operating earnings of $150.5 million for the first quarter of 2015, or an annualized operating ROE of 9.6%.

Operating earnings and net income for the first quarters of 2016 and 2015 include certain after-tax transaction related costs of $60.0 million and $30.9 million, respectively. Adjusting for these after-tax transaction related costs, the annualized operating ROE for the first quarters of 2016 and 2015 was 6.9% and 11.6%, respectively, and the annualized net income ROE for the first quarters of 2016 and 2015 was 17.3% and 16.8%, respectively.

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 is calculated after the payment of preferred dividends.

Commenting on results, PartnerRe Chief Executive Officer Emmanuel Clarke said, “We had a solid start to 2016 that culminated with the closing of the EXOR acquisition, which lands us on solid ground and enables us to move forward with our usual focus and determination.

“Our performance for the quarter resulted in an operating ROE of 6.9%, which reflects continuing difficult conditions across nearly all reinsurance markets, an absence of major catastrophes and continued favorable reserve development. With our new ownership now set, we look forward to leveraging our strong franchise and serving as a preferred reinsurer to our clients.”

Highlights for the first quarter of 2016 compared to the same period in 2015 include:

  • Net premiums written of $1.5 billion were down 9%. On a constant foreign exchange basis, net premiums written were down 5% with decreases recorded in all Non-life sub-segments, with the exception of the North America sub-segment, and the Life and Health segment.
  • Net premiums earned of $1.1 billion were down 8%. On a constant foreign exchange basis, net premiums earned were down 4% due to the same factors described above for net premiums written.
  • The Non-life combined ratio was 94.3%. The combined ratio benefited from favorable prior year development of 21.0 points [or $183 million]. All Non-life sub-segments experienced net favorable development from prior accident years during the first quarter of 2016.
  • For the first quarter of 2016, other expenses of $153 million include $66 million, pre-tax, of costs related to the closing of the Exor transaction [including the impact of accelerating all remaining share based compensation expense as a result of all awards vesting upon closing]. Other expenses of $125 million for the same period in 2015 included $31 million, pre-tax, of costs related to the terminated amalgamation with Axis.
  • Net investment income of $103 million was down 2%. On a constant foreign exchange basis, net investment income was up 1%.
  • Pre-tax net realized and unrealized investment gains were $167 million, primarily reflecting decreases in U.S. and European risk-free interest rates.
  • The effective tax rate on operating earnings and non-operating earnings was 23.6% and 7.6%, respectively.
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