PartnerRe Releases 3Q and 9 Months 2009 Results

PartnerRe has reported net income of $566.7 million, or $9.44 per share on a fully diluted basis for the third quarter of 2009.

In a release on October 26, the Company noted that this net income includes after-tax net realized and unrealized gains on investments of $274.4 million, or $4.64 per share. Net loss for the third quarter of 2008 was $(151.7) million, or $(3.01) per share, including after-tax net realized and unrealized losses on investments of $(281.1) million, or $(5.27) per share. Operating earnings for the third quarter of 2009 were $282.1 million, or $4.77 per share on a fully diluted basis. This compares to operating earnings of $121.3 million, or $2.27 per share, for the third quarter of 2008.

Net income for the first nine months of 2009 was $1.2 billion, or $19.95 per share. This net income includes after-tax net realized and unrealized gains on investments of $479.4 million, or $8.27 per share, as well as an after-tax net gain of $57.0 million or $0.98 per share from the purchase of approximately 75 percent of the Company's outstanding Capital Efficient Notes (CENts) in the first quarter of 2009. Net loss for the first nine months of 2008 was $(48.7) million, or $(1.38) per share, including after-tax net realized and unrealized losses on investments of $(491.3) million, or $(9.10) per share. Operating earnings for the first nine months of 2009 were $617.1 million, or $10.64 per share on a fully diluted basis. This compares to operating earnings of $415.4 million, or $7.70 per share, for the first nine months of 2008.

Operating earnings exclude after-tax net realized and unrealized investment gains and losses, after-tax net realized gain on the purchase of the CENts and after-tax interest in results of equity investments, 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 third quarter and nine month 2009 results, PartnerRe President & Chief Executive Officer Patrick Thiele said, "PartnerRe had another excellent quarter and first nine months of 2009, with both its reinsurance and capital markets activities performing well. For the first nine months of 2009, we achieved an operating return on beginning equity of 22 percent, and 30 percent growth in GAAP book value per share. Our reinsurance results benefited from a low level of large losses while our investment operations continued to participate fully in the improvement experienced by the global capital markets."

Net premiums written for the third quarter of 2009 were $891.5 million, compared to $869.2 million in the third quarter of 2008. Total revenues for the third quarter of 2009 were $1.6 billion, compared to $896.6 million in the third quarter of 2008, and included $1.1 billion of net premiums earned, reflecting a slight increase over the third quarter of 2008; net investment income of $145.3 million, essentially flat with the third quarter of 2008; and pre-tax net realized and unrealized investment gains of $330.2 million, as compared to pre-tax net realized and unrealized investment losses of $(324.2) million for the third quarter of 2008. Foreign exchange negatively impacted comparisons as a result of the year-over-year strengthening of the U.S. dollar. Excluding the impact of foreign exchange, net premiums written, net premiums earned and net investment income would have increased relative to the amounts reported for the third quarter of 2008 by 8 percent, 6 percent and 3 percent, respectively.

For the first nine months of 2009, net premiums written were $3.0 billion, compared to $3.2 billion in the first nine months of 2008. Total revenues for the first nine months of 2009 were $3.9 billion, compared to $2.8 billion for the first nine months of 2008, and included $2.8 billion of net premiums earned, compared to $2.9 billion in the first nine months of 2008; net investment income of $414.1 million, which compares to $428.6 million for the first nine months of 2008; pre-tax net realized and unrealized investment gains of $566.6 million as compared to pre-tax net realized and unrealized investment losses of $(595.3) million for the first nine months of 2008; and a pre-tax gain of $88.4 million ($57.0 million after-tax) from the purchase of approximately 75 percent of the Company's outstanding CENts during the first quarter of 2009. Foreign exchange negatively impacted comparisons as a result of the year-over-year strengthening of the U.S. dollar. Excluding the impact of foreign exchange, net premiums written would have increased approximately 1 percent while net premiums earned and net investment income would have increased approximately 2 percent, relative to the amounts reported for the first nine months of 2008.

Separately, the Company announced that its Board of Directors declared a quarterly dividend of $0.47 per common share. The dividend will be payable on December 1, to common shareholders of record on November 20, with the stock trading ex-dividend commencing November 18.

Balance Sheet Items

At September 30, total assets were $17.8 billion as compared to $16.3 billion at December 31, 2008. Over the trailing 12 month period, total investments and cash increased 13 percent to $13.1 billion at September 30. Gross Non-life loss and loss expense reserves were $7.6 billion at September 30, compared to $7.5 billion at December 31, 2008. During the third quarter of 2009, the Company's estimate of Non-life reserves for prior accident years was reduced by $122 million due to favorable development. The overall third quarter prior year reserve development in the Non-life segment includes net favorable development in all sub-segments, with reductions of $43 million in the U.S. sub-segment, $46 million in the Global (Non-U.S.) P&C sub-segment, $18 million in the Global (Non-U.S.) Specialty sub-segment, and $15 million in the Catastrophe sub-segment. In the third quarter of 2008, Non-life reserves for prior years developed favorably by $103 million. Policy benefits for life and annuity contracts increased by 10 percent year-to-date to $1.6 billion at September 30. During the third quarter of 2009, the Company's estimate of Life reserves for prior years developed favorably by $14 million, while there was $5 million adverse development on prior estimates in the third quarter of 2008.

At September 30, total capital was $5.8 billion, and total shareholders' equity was $5.4 billion. This compares to total capital of $4.9 billion and total shareholders' equity of $4.2 billion at December 31, 2008. Total capital and shareholders' equity at September 30, reflect the initial purchase by PartnerRe of 6 percent of PARIS RE common shares. Book value per common share at September 30, was $83.07 on a fully diluted basis compared to $63.95 per diluted share at December 31, 2008.

For additional information, the Company has posted a third quarter 2009 financial supplement on its website partnerre.com in the Investor Relations section on the Financial Reports page under Supplementary Financial Data.

Commentary and Outlook

"As we move toward the end of 2009, the non-life market overall remains unchanged - stable to gradually deteriorating; and without any precipitating events, there will likely be a continuation of those trends in 2010," said Thiele. "Despite that trend, PartnerRe continues to perform well, and we expect that to continue through the remainder of the year and into 2010, barring any unusually large loss events."

Thiele added: "Our acquisition of PARIS RE enhances an already well-balanced portfolio of attractively priced risks. The integration of PARIS RE into the PartnerRe group will provide us with both increased diversification of reinsurance and capital markets risk, and, with expanded capital and resources, significant growth opportunities at a time when industry demand is likely to remain stagnant. We are confident that the larger and stronger PartnerRe will be better able to achieve its financial goals, with reduced risk."

PartnerRe is a global reinsurer, providing multi-line reinsurance to insurance companies.