PartnerRe has operating loss

PartnerRe has reported net income down 44% to $79.7m and an operating loss of $41.8m compared with a profit in Q1 2009 of $155.7m after a combined ratio of 116.9%, up from 87% in Q1 2009.

Non-life lost $89m compared with a profit of $147m. It blamed $334m in catastrophe claims that added 33 points to its technical ratio. It said absorbing volatility its insured clients did not want was exactly the purpose of insurance.

Q1 financial highlights $000s (2009 in brackets

• Net Premiums Written $1,784,165 ($1,308,058)
• Net Premiums Earned $1,153,779 ($866,450)
• Non-life Combined Ratio 116.9% (87.0%)
• Net Income $79,654 ($141,521)
• Operating Loss/Earnings -$41,782 ($155,742)

Chief executive officer Patrick Thiele said: "As a global, diversified reinsurer, we assume volatility that our insurance company clients don't want and, consequently, we expect to occasionally show that volatility in our own quarterly financial results.

“This quarter was an example of that with approximately $334m in catastrophes causing a small operating loss. Nevertheless, we reported positive net income, as our capital markets risks more than offset those losses, and GAAP book value per share was essentially flat with year-end 2009."

"We are progressing well with the integration of PARIS RE into PartnerRe and expect to meet our goal of operating as one entity at the July 1, 2010 renewals.

“There have been no surprises in the business or the balance sheet we purchased and we remain pleased with this acquisition and the business and talent it has added to PartnerRe."

Non-life segment

The Non-life segment reported net premiums written of $1.6bn, up 40% from $1.1bn in Q1 2009, primarily due to the inclusion of PARIS RE's net premiums written.

Non-life net premiums were boosted by foreign exchange, which contributed 5% of the increase. Net premiums earned were $989m, compared with $724m for Q1 in 2009. The combined ratio was 116.9%, compared to 87.0%.

This year's first quarter was impacted by significant catastrophes, totalling $329m or 33 points on the Non-life technical ratio, primarily in the Global (Non-U.S.) P&C, Global (Non-U.S.) Specialty, Catastrophe and PARIS RE sub-segments.

The Non-life technical result was a loss of $89m, compared to a gain of $147m in Q1 2009.

US market

The US business, which represented 16% of total net premiums written for the quarter, reported net premiums written of $293m, compared with $312m. Net premiums earned were $233m, compared to $241m.

The technical ratio for this sub-segment was 90.7%, compared to 93.1%. The technical result was $22m, compared to $16m.

The Global (Non-US) P&C business, which represented 19% of total net premiums written for the quarter, reported net premiums written of $339m, compared to $299m. Net premiums earned were $166m, compared to $157m.

The technical ratio for this sub-segment was 139.9%, including 60 points related to catastrophe losses, compared to 73.9. The technical result for the first quarter of 2010 was a loss of $66m, compared to a gain of $41m for Q1 2009.

Speciality

The Global (Non-US. Specialty business, which represented 20% of total net premiums written, reported net premiums written of $352m, compared to $331m. Net premiums earned were $255m, compared to $247m.

This sub-segment's technical ratio was 92.4%, including 10 points related to catastrophe losses, compared to 88.0%. The technical result $19m, compared to $30m for the same period in 2009.

Catastrophe

The Catastrophe business, which represented approximately 14% of total net premiums written, reported net premiums written of $246m, compared to $205m. Net premiums earned were $92m, compared to $79m.

This sub-segment's technical ratio was 142.9%, compared to 23.7%. The technical result was a loss of $39m, compared to a gain of $60m.

PARISRE

The PARIS RE business, which represented approximately 21% of total net premiums written for the quarter, reported net written premiums of $377m. Net premiums earned were $243m, while the technical ratio was 110.2%, including 33 points related to catastrophe losses. The technical result was a loss of $25m.

Life

The Life segment, which represented 10% of total net premiums written, reported net premiums written of $183m, compared to $160m. The allocated underwriting result was $12m for the first quarter of 2010, compared to $5m.

Outlook

Thiele said, "The current reinsurance market remains stable, and looking forward we see no significant changes in either pricing or loss trends in most of our markets with the exception of South American earthquake exposures where pricing is responding to the losses.

“In this environment, we will continue to optimise our larger, more diversified book of business, with the combined book priced at a low double digit return on deployed underwriting capital."