PartnerRe

(100.0% of common share capital through EXOR Nederland N.V.)

The data presented and commented below are derived from PartnerRe’s consolidated financial information for the year ended December 31, 2017 and December 31, 2016 prepared in accordance with US GAAP.

Net premiums written of $5.1 billion were up 3% in 2017 compared to $5.0 billion in 2016 primarily due to an increase in Life and Health premium written, primarily driven by the inclusion of the Aurigen life premiums and growth in Health business. This was partially offset by a decrease in Non-Life premium written, primarily driven by cancellations in the P&C segment.

The Non-life combined ratio of 99.3% for 2017 was driven primarily by losses related to hurricanes Harvey, Irma and Maria (HIM) and California wildfires of $569 million, net of retrocession and reinstatement premiums, or 15.4 points on the combined ratio. The Non-life combined ratio for 2016 was 93.6% and included losses from Canadian wildfires, hurricane Matthew and an energy loss of $156 million, net of retrocession and reinstatement premiums, or 4.0 points on the combined ratio. The Non-life combined ratio continued to benefit from net favorable prior year development for 2017 of $448 million (12.2 points) compared to $677 million (17.6 points) for 2016, with both the P&C and Specialty segments experiencing net favorable development.

The Life and Health allocated underwriting result was a loss of $52 million in 2017, driven by a loss of $119 million in the health line of business, partially offset by a gain of $67 million from the Life business. The loss in the Health business resulted from an increase in frequency of large claims activity in underwriting years 2015 to 2017 primarily in Affordable Care Act related programs. This compares to a gain of $61 million in 2016, with the Life business contributing $49 million and the Health business contributing $12 million.

Net investment return for 2017 was $720 million, or 4.2%, and included net realized and unrealized investment gains of $232 million, net investment income of $402 million and interest in earnings of equity method investments of $86 million. This compares to $414 million, or 2.4%, for 2016, which included net realized and unrealized investment gains of $26 million, net investment income of $411 million and interest in losses of equity method investments of $23 million.

Other expenses of $348 million in 2017 were down $124 million, or 26.2%, compared to $472 million in 2016 primarily due to the efficiency actions undertaken following the closing of the Exor acquisition and lower severance and transaction costs, partially offset by the inclusion of Aurigen expenses.

Interest expense of $42 million and preferred dividends of $46 million in 2017 were down compared to $49 million and $55 million, respectively, in 2016. These decreases were due to the optimization of the Company's capital structure through the issuance of a 750 million Euro-denominated bond in September 2016 and the redemption of certain high coupon senior notes and preferred shares during the fourth quarter of 2016.

Income tax expense was $10 million on pre-tax earnings of $274 million in 2017 compared to $26 million on pre-tax earnings of $473 million in 2016. The 2017 amounts were primarily driven by the geographical distribution of pre-tax profits and losses with profits recorded in taxable jurisdictions with low or nil tax rates and losses recorded in tax jurisdictions with higher income tax rates. The recent enactment of the Tax Cuts and Jobs Act in the U.S. resulted in a charge of $5 million in the fourth quarter of 2017.

Some details related to the balance sheet are as follows:

Total capital of $8.2 billion at December 31, 2017 increased by 2.1% compared to December 31, 2016, primarily due to net income for the year, and included foreign exchange movements on the Euro denominated debt.

Debt increased by $111 million, or 8%, primarily due to the foreign exchange impact of remeasuring the Company’s Euro denominated debt into U.S. dollars at the balance sheet date.

Common shareholder's equity (or book value) was $6.0 billion at December 31, 2017, up 1.0% compared to December 31, 2016, primarily due to net income for 2017, partially offset by dividends on common shares held by EXOR.

Total investments, funds held–directly managed and cash and cash equivalents were $17.0 billion at December 31, 2017, up 0.7% compared to December 31, 2016.

Cash and cash equivalents and fixed maturities, which are government issued or investment grade fixed income securities, were $14.1 billion at December 31, 2017, representing 85% of the cash and cash equivalents and total investments.

The average credit rating and expected average duration of the fixed income portfolio at December 31, 2017 was A and 4.7 years, respectively, while the average duration of the Company’s liabilities was 4.8 years.

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

The difference between the US GAAP net income ($218 million) and the IFRS net income ($189 million) only reflects the economic effects of the application of the acquisition method by EXOR to account for the acquisition.

Significant evets in 2017 and subsequent events

On April 3, 2017, PartnerRe completed the acquisition of 100% of the outstanding ordinary shares of Aurigen Capital Limited, a North American life reinsurance company. The consideration paid was CAD $370 million or US$278 million and the fair value of net assets acquired was $277 million, including intangible assets of $78 million. The results of Aurigen Capital Limited were included in the results of PartnerRe from the acquisition date of April 3, 2017.

During 2017, the Company declared and paid to EXOR Nederland N.V. common share dividends of approximately $145 million.

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.