PartnerRe(100% stake and voting rights on issued capital)




The data presented and commented below is derived from PartnerRe’s consolidated financial information for the first quarter ended March 31, 2016, prepared in accordance with US GAAP.

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Net premiums written of $1.5 billion were down 9% in the first quarter of 2016 compared to $1.7 billion in the same period of 2015. On a constant foreign exchange basis, net premiums written were down 5%, primarily driven by the Non-life business as a result of downward prior year premium adjustments, reduced participations and cancellations, mainly reflecting deteriorating pricing and market conditions in the Global (Non-U.S.) Property and Casualty lines of business, and higher premiums ceded under retrocessional contracts in the Catastrophe line of business. Net premiums written related to the Life and Health business were down as a result of downward prior year premium adjustments and non-renewals of certain significant treaties in the mortality line of business and increased client retentions related to the North American accident and health line of business.

Net premiums earned of $1.1 billion were down 8% in the first quarter of 2016 compared to $1.2 billion in the same period of 2015. On a constant foreign exchange basis, net premiums earned were down 4% due to the same factors described above for net premiums written.

Operating earnings were $44 million in the first quarter of 2016, down compared to $151 million in the same period of 2015. The decrease was primarily as a result of a lower Non-life result, driven primarily by challenging market conditions, and higher other expenses, partially offset by a lower tax expense associated with the decrease in the Non-life result.

Net realized and unrealized investment gains, pre-tax, are $167 million in the first quarter of 2016 compared to $116 million in the same period of 2015. The net realized and unrealized investment gains primarily reflect decreases in U.S. and European risk-free interest rates.

Other expenses were $153 million in the first quarter of 2016, compared to $125 million in the first quarter of 2015, and include $66 million, pre-tax, relating to the transaction with EXOR (including the impact of accelerating all remaining share based compensation expense as a result of all awards vesting upon closing). Other expenses included $31 million, pre-tax, in the same period of 2015 of costs related to the terminated amalgamation with AXIS. The increase in other expenses of $28 million is primarily related to the increase in transaction related costs.

Net investment income was $103 million, down 2% in the first quarter of 2016 compared to the same period in 2015. On a constant foreign exchange basis, net investment income was up 1%.

The effective tax rate on operating earnings and net income were 23.6% and 12.5%, respectively, in the first quarter of 2016.

Net income was $201 million in the first quarter of 2016 compared to $232 million in the same period of 2015. The decrease was primarily driven by lower operating earnings and was partially offset by higher net after-tax realized and unrealized gains on investments.

Annualized Operating ROE is 2.9% in the first quarter of 2016, down from 9.6% in the same period of 2015.  The decrease is primarily due to lower operating earnings, as described above, partially offset by lower average shareholders' equity balance. Excluding transactions related costs, annualized Operating ROE was 6.9% in the first quarter of 2016, down from 11.6% in the same period of 2015 due to the lower Non-life underwriting result which was partially offset by the associated lower tax expense and the lower average shareholders’ equity balance.

The Non-life combined ratio is 94.3% in the first quarter of 2016, an increase of 11.5 points compared to 82.8% in the same period of 2015. The increase in the Non-life combined ratio was primarily driven by a lower current accident year technical result, reflecting challenging pricing and difficult conditions across nearly all reinsurance markets, lower favorable prior year reserve development and higher other expenses. The Non-life result for the first quarter of 2016 reflects positive contributions from the Global (Non-U.S.) Specialty, North America and Catastrophe lines of business, partially offset by a loss from the Global (Non-U.S.) Property and Casualty lines of business.

The Life and Health allocated underwriting result was $24 million in the first quarter of 2016 comparable to $25 million in the same period of 2015. The allocated underwriting result for the first quarter of 2016 and 2015 was primarily driven by favorable prior year reserve development from the accident and health and mortality lines of business.

Balance sheet capitalization

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Total capital was $7.7 billion at March 31, 2016, which was flat compared to December 31, 2015, with net income for the quarter being offset by common and preferred share dividend payments (including the Special Dividend paid on the EXOR transaction).

Common shareholders’ equity attributable to PartnerRe (or book value) and tangible book value were $6.1 billion and $5.5 billion, respectively, at March 31, 2016, which were flat compared to December 31, 2015 due to the same factors as for total capital.

Significant events in the first quarter of 2016 and subsequent events

Acquisition of PartnerRe by EXOR

On March 18, 2016, following receipt of all regulatory approvals, EXOR S.p.A. completed the acquisition of PartnerRe Ltd. The transaction was effected by a merger of Pillar Ltd. (a wholly owned subsidiary of EXOR and incorporated specifically for the purpose of the merger) with and into PartnerRe. The common shareholders of PartnerRe, except for EXOR which held 9.9% of common share capital at the time of the transaction, upon cancellation of their shares, received $137.50 in cash per share and a special cash dividend of $3.00 per share (the latter also was paid to the shares held by EXOR). To complete the transaction, PartnerRe issued one common share at $1.00 par value to Exor N.V., representing 100% common share ownership of PartnerRe.

Exchange offer for preferred shares

On April 1, 2016, PartnerRe launched an exchange offer, in accordance with the Merger Agreement, whereby participating preferred shareholders could exchange any or all existing preferred shares for newly issued preferred shares reflecting an extended call date of the fifth anniversary from the date of issuance. The terms of the newly issued preferred shares would be otherwise identical in all material respects to PartnerRe’s existing preferred shares. The exchange offer provides for a restriction on the payment of dividends on common shares to an amount not exceeding 67% of net income until December 31, 2020. The exchange offer expired on April 29, 2016.

Sale of investment in Almacantar and certain other financial assets to PartnerRe

On March 24, 2016, PartnerRe agreed to purchase from EXOR a 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. As of April 29, 2016, PartnerRe has paid total cash consideration of $729 million for its investments in Almacantar and the third party funds. In addition to this amount, PartnerRe expects to pay a further amount of less than $10 million in the second quarter of 2016 related to the purchase of the remaining assets from EXOR. These transactions between related parties were entered into at arms-length.

Commercial Register No.64236277 Legal notes | Credits