PartnerRe(100.0% of common share capital through Exor N.V.)




The data presented and commented below are derived from PartnerRe’s consolidated financial information for the first half ended June 30, 2016, prepared in accordance with US GAAP.

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(a) Excluding transaction and severance costs.

PartnerRe’s results for the first half of 2016 have been impacted by a high level of catastrophe and weather-related loss activity, including the Fort McMurray wildfires (the largest catastrophe in Canadian history), the Taiwan and Japanese earthquakes, drought in Morocco, floods in Germany and France, and hailstorms in Texas, and an energy loss, for which PartnerRe reported combined losses of $160 million, pre-tax, after reinsurance and reinstatement premiums. Notwithstanding the high frequency of catastrophe, weather-related and energy loss activity, the reported losses of $160 million, pre-tax, represent only 2.6% of common shareholders’ equity and 2.0% of total capital at June 30, 2016.

PartnerRe's results for the first half of 2016 also include other expenses of $66 million, pre-tax, related to transaction costs associated with the closing of the acquisition by EXOR and $27 million, pre-tax, related to severance costs associated with the reorganization of its business units, investment operations and certain executive changes.

Net premiums written of $2.8 billion were down 7% in the first half of 2016 compared to $3.0 billion in the same period of 2015. On a constant foreign exchange basis, net premiums written were down 5%, primarily driven by continued competitive pricing and market conditions across almost all lines of the Non-life business which resulted in PartnerRe reducing participations and cancelling business, as well as by higher premiums ceded under retrocessional contracts and downward prior year premium adjustments. These decreases were partially offset by new business, which was mainly written in certain casualty and specialty lines. In addition, net premiums written in the Life and Health business decreased due to downward prior year premium adjustments in the mortality line and an increased participation in the first half of 2015 on a significant longevity treaty.

Other expenses were $276 million in the first half of 2016 compared to $254 million in the same period of 2015, and include $93 million and $65 million of transaction and severance related costs, respectively. Excluding transaction and severance related costs, other expenses decreased 3% to $183 million in the first half of 2016 compared to $189 million in the same period of 2015.

Net investment income was $204 million, down 9% in the first half of 2016 compared to the same period of 2015. On a constant foreign exchange basis, net investment income was down 7%. The decrease mainly reflects the impact of the reduction in risk within the investment portfolio, an increased allocation to U.S. government fixed income securities, a change in asset mix with a lower amount of high yield fixed income securities and dividend yielding equity securities, and lower reinvestment rates. These decreases were partially offset by a reduction in investment expenses associated with the reorganization of PartnerRe's investment operations.

Total investment return in the first half of 2016 was 3.8%, for a total net contribution of $565 million, of which $515 million was generated by fixed income securities (government bonds and investment grade credit) and $50 million was generated by other securities (mainly principal finance and third party private equity funds). The net contribution from fixed income securities was driven by a decrease in U.S. and European risk-free rates and net investment income.

The effective tax rate on pre-tax operating earnings and net income were 72.6% and 14.7%, respectively, in the first half of 2016. The effective tax rate on pre-tax operating earnings of 72.6% was primarily driven by pre-tax operating earnings in taxable jurisdictions and pre-tax operating losses in non-taxable jurisdictions, as well as certain permanent adjustments.

Net income for the first half of 2016 was $338 million. This includes net after-tax realized and unrealized gains on investments of $310 million. Net income for the first half of 2015 was $129 million, including net after-tax realized and unrealized losses on investments of $117 million.

Operating losses for the first half of 2016 were $21 million, which compares to operating earnings of $263 million for the same period of 2015.

The Non-life combined ratio was 101.7% in the first half of 2016, an increase of 15.0 points compared to 86.7% in the same period of 2015. The increase in the Non-life combined ratio reflects a relatively high level of reported large and mid-sized loss activity, with the most significant losses being related to the Canadian wildfires (4.0 points or $73 million, net of reinsurance and reinstatement premiums) and an energy loss (2.3 points or $42 million, net of reinsurance and reinstatement premiums). The Non-life combined ratio continued to benefit from strong favorable prior year development of 18.0 points (or $332 million) with most lines of business experiencing net favorable development from prior accident years as actual reported losses from cedants were below expectations.

The Life and Health allocated underwriting result decreased to $36 million in the first half of 2016 compared to $51 million in the same period of 2015, primarily as a result of lower favorable prior year reserve development, the increasingly competitive U.S. health market and profit commission adjustments that were higher than expected for prior years.

Some details related to the balance sheet are as follows:

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Total capital of $7.8 billion at June 30, 2016 increased by 1.6% compared to December 31, 2015, primarily due to net income for the first half of 2016, which was partially offset by common dividends and the special closing dividend paid in the first quarter of 2016.

Common shareholders’ equity attributable to PartnerRe (or book value) and tangible book value were $6.2 billion and $5.6 billion, respectively, at June 30, 2016, an increase of 2.0% and 2.4%, respectively, compared to December 31, 2015 due to the same factors described above for total capital.

Total investments, cash and cash equivalents and funds held - directly managed were $16.8 billion at June 30, 2016, up 1.9% compared to December 31, 2015.

Reconciliation with the IFRS data presented in the line-by-line half-year consolidated financial statements

The US GAAP net income ($338 million) refers to the entire first half of 2016 (January 1, to June 30, 2016). The IFRS figure ($169 million) refers to the result for the period from the acquisition date (March 18, 2016) to June 30, 2016, as well as the effects on the half-year consolidated income statement of the application of the acquisition method by EXOR to account for the acquisition.

Significant events in the second quarter of 2016

Exchange Offer for Outstanding Preferred Shares

In April 2016, PartnerRe completed its previously announced exchange offer whereby participating preferred shareholders exchanged any and all of their outstanding redeemable preferred shares for newly issued preferred shares. The terms of the newly issued preferred shares reflect an extended call date of the fifth anniversary from the date of issuance, otherwise the terms are identical in all material respects to the existing preferred shares not exchanged.

Assets Transferred from EXOR

During the second quarter of 2016, PartnerRe purchased EXOR’s 36% shareholding in the privately held United Kingdom real estate investment and development group, Almacantar Group S.A. (Almacantar), as well as certain financial investments, mainly third party funds, based upon the net asset value of these investments. PartnerRe paid total cash consideration of $741 million for these investments. These transactions between related parties were entered into at arms-length.

A.M. Best removes from under review and affirms ratings of PartnerRe Ltd and its subsidiaries

On May 13, 2016, A.M. Best has removed from under review with negative implications and affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of “a+” of Partner Reinsurance Company Ltd and its affiliates (collectively referred to as PartnerRe).

A.M. Best has also removed from under review with negative implications affirmed the ICR of “bbb+” of PartnerRe Ltd. and its existing issue ratings. The outlook assigned to each rating is stable.

Commercial Register No.64236277 Legal notes | Credits