PartnerRe(99.57% of voting rights; 100% interest in common shareholder’s equity through EXOR Nederland N.V.)

 

 

 

Data presented and commented below are derived from PartnerRe’s consolidated financial information for the six months ended 30 June 2019 prepared in accordance with US GAAP.

 First-Half
$ million   2019  2018
Net premiums written   3,783  3,143
Non-life combined ratio(a) (e)  95.0%  94.9%
Life and Health allocated underwriting result(b) (e)  44  52
Net investment return  5.3%  0.42%
Other expenses  175  164
Net (loss) income attributable to PartnerRe common shareholders(c)  782  5
Net Income ROE(d)  25.3%  0.2%
(a) The Company uses a combined ratio to measure results for the Non-life P&C and Specialty segments. The combined ratio is the sum of the technical and other expense ratios. (b) The Company uses allocated underwriting result as a measure of underwriting performance for its Life and Health segment. This metric is defined as net premiums earned, other income or loss and allocated net investment income less life policy benefits, acquisition costs and other expenses. (c) Net income/loss attributable to PartnerRe common shareholders is defined as net income/loss attributable to PartnerRe less preferred dividends. (d) Net income ROE is calculated as net income return on average common shareholders’ equity. (e) Effective 1 July 2018 the executive management responsibility and reporting for U.S. Health business was reallocated from the Life and Health segment to the P&C segment as part of an internal organizational change, comparatives have been updated accordingly.

Net premiums written of $3.8 billion were up 23% for the first half of 2019 compared to $3.1 billion in the same period of 2018. The increase was driven by a 27% increase in the P&C segment and 8% increase in the Specialty segment. Life & Health segment net premiums were up 23% compared to the same periods of 2018.

The Non-life combined ratio was 95.0% for the half year 2019 compared to 94.9% for the same period of 2018. The Non-life combined ratio was adversely affected by net unfavorable prior year development of $15 million (0.6 points) for the half year 2019, compared to net favorable development of $56 million (2.7 points) in the prior year period.

Allocated underwriting result in the Life and Health segment was a profit of $44 million for the half year 2019 compared to $52 million for the same period of 2018, with the decline primarily driven by an increase in other expenses and in mortality experience.

Other expenses decreased to $164 million in the first half of 2018 compared to $180 million in the same period of 2017, primarily due to lower personnel costs, lower facilities expenses and transaction and reorganization costs incurred in 2017.

Net investment return for the half year 2019 was $917 million, or 5.3%, which included net investment income of $231 million, net realized and unrealized investment gains of $651 million and interest in earnings of equity method investments of $35 million. This compares to a negative net investment return of $60 million, or (0.4%), for the half year 2018, which included net investment income of $208 million, net realized and unrealized investment losses of $296 million, and interest in earnings of equity method investments of $28 million.
Net investment income was up $23 million, or 11% for the half year 2019, compared to the same period of 2018, driven primarily by actions undertaken in the fourth quarter of 2018 and the first quarter of 2019 to increase the yield within the investment grade fixed income portfolio.
Net realized and unrealized investment gains ($651 million) were driven by $443 million of net realized and unrealized investment gains on fixed maturities and short-term investments, due to decreases in worldwide risk free rates and credit spreads, and $208 million of net realized and unrealized investment gains on equities,investments in real estate and other invested assets.
This compared to net realized and unrealized investment losses of $296 million in the second half of 2018, which included $334 million of net realized and unrealized investment losses on fixed maturities and short-term investments and $38 million of net realized and unrealized investment gains on equities, investments in real estate, other invested assets and funds held-directly managed.

Other Income Statement items

The expense ratio of 5.7% for the half year 2019 (Other expenses of $175 million) was down 0.5 percentage points compared to the expense ratio of 6.2% (Other expenses of $164 million) for the same period of 2018.

Net foreign exchange losses were $47 million for the half year 2019, compared to gains of $70 million for the same periods of 2018. Losses in the first half of 2019 were mainly driven by the depreciation of the U.S. dollar against certain major currencies and by hedging costs, while gains in the first half of 2018 were driven by the appreciation of the U.S. dollar against certain foreign currencies, partially offset by hedging costs.

Income tax expense was $75 million on pre-tax income of $880 million for the half year 2019 compared to a benefit of $6 million on pre-tax income of $22 million for the half year 2018. These amounts were primarily driven by the geographical distribution of pre-tax profits and losses.

Balance sheet and capitalization

$ million   06/30/2019  12/31/2018
Debt 1,9041,412
Preferred shares, aggregate liquidation value704704
Common shareholders’ equity6,5505,812
Total Capital 9,1587,928

At 30 June 2019 total capital was $9.2 billion, up 15.5% compared to 31 December 2018, primarily due to net income for the half year 2019 and the issuance of the $500 million Senior Notes due 2029 during the second quarter of 2019, partially offset by dividends on preferred and common shares.

Common shareholder's equity (or book value) of $6.6 billion and tangible book value of $6.0 billion at 30 June 2019 increased by 12.7% and 14.2% respectively compared to 31 December 2018, primarily due to the net income available to common shareholders for the half year 2019 and the foreign currency translation adjustment, partially offset by dividends on common shares. Book value, excluding dividends on common shares for half year 2019, was up 14.1% compared to 31 December 2018.

Total investments and cash and cash equivalents were $18.5 billion at 30 June 2019, up 13.6% compared to 31 December 2018. The increase was primarily driven by the $917 million net investment return 2019, the increase in payables for securities purchased to $916 million as at 30 June 2019 from $80 million as at 31 December 2018, and the issuance of $500 million Senior Notes due 2029.

Cash and cash equivalents, fixed maturities, and short-term investments, which are government issued or investment grade fixed income securities, were $14.2 billion at 30 June 2019, representing 77% of total investments and cash and cash equivalents.

The average credit rating of the fixed income portfolio at 30 June 2019 was AA, an increase compared to the Arated average credit rating at 31 December 2018. The improvement in the average credit quality of the fixed income portfolio was due to a $2.5 billion reduction in the investment grade corporate bond portfolio (primarily in BBB-rated credit) and a $2.1 billion increased allocation to AAA-rated fixed income securities undertaken during the second quarter of 2019. The expected average duration of the fixed income portfolio at 30 June 2019 was 3.3 years, while the average duration of the Company’s liabilities was 4.7 years.

Reconciliation of reported US GAAP financial information to IFRS financial information used for line-by-line consolidation purposes

The differences between the US GAAP net income ($782 million) and the IFRS net income ($779 million) are immaterial and related only to the economic effects of the application of the acquisition method by EXOR to account for the acquisition.

2019 Outlook

Excluding the impacts of any significant catastrophe and other large losses and/or increases in interest rates or credit spreads, PartnerRe expects to continue to generate positive underwriting and investing returns. PartnerRe, and its peers within the reinsurance industry, do not provide earnings guidance given its reinsurance results are largely exposed to low frequency and high severity risk events. Some of these risk events are seasonal, such that results for certain periods may include unusually low loss experience, while results for other periods may include modest or significant catastrophe losses. In addition, PartnerRe’s investment results are exposed to changes in interest rates, credit spreads, and capital markets in general, which result from fluctuations in general economic and financial market conditions. As a result, PartnerRe’s profitability in any one period or year is not necessarily predictive or indicative of future profitability or performance.

Commercial Register No.64236277 Legal notes | Credits