A change in the measure used to calculate lump sum awards in bodily injury cases in Britain had an impact on PartnerRe Ltd.’s financial results, which the Hamilton, Bermuda insurer released Wednesday.
PartnerRe, which has a Toronto branch office, reported a non-life combined ratio of 96.4% in the three months ending March 31, up 2.1 points from 94.3% in Q1 2016.
The deterioration was “primarily due to lower favorable prior years’ reserve development, partially offset by lower other operating expenses, acquisition costs and mid-sized loss activity. The prior years’ reserve development was impacted by a $35-million charge (4.6 points) related to the change in the Ogden discount rate” in the United Kingdom, PartnerRe said in a release. All figures are in United States dollars.
The Ogden Rate is “used to calculate lump sum awards” in bodily injury cases in the U.K., insurer Markel Corp. reported earlier.
“Effective March 20, 2017, the Ogden Rate decreased from plus 2.5% to minus 0.75%, which represents the first rate change since 2001,” Markel said April 26 when it released its Q1 financials. Markel said the reduction in the Ogden Rate increased expected claims payments on its auto casualty exposures in Britain.
PartnerRe said Wednesday its net premiums written were $1.35 billion during the first three months of 2017, down 10% from $1.5 billion in the same period in 2016.
Of its Q1 net premiums written, $1.053 billion was in non-life (down 14% from $1.224 billion in the first quarter of 2016). Of that, $410 million was in the specialty segment and $643 million was in the property and casualty segment.
PartnerRe writes both reinsurance and commercial primary coverages, such as auto, agriculture, aviation, surety, energy and marine, among others.
The firm was acquired in March, 2016 by EXOR NV of Turin, Italy, an investment firm whose holdings include a large minority of Fiat-Chrysler Automobile. In January, 2015 PartnerRe’s its board of directors was recommending a merger with Axis Capital Holdings Ltd. Axis was recommending the same things to its shareholders, but EXOR made a takeover offer later in 2015.
PartnerRe reported severance and transaction-related costs of $8 million, related to the EXOR acquisition, in the most recent quarter, compared to $153 million in Q1 2016.
PartnerRe said Wednesday its underwriting result in non-life was $28 million for the first quarter of this year, down from $52 million in Q1 2016.
PartnerRe reported a loss ratio in non-life of 67.4% in the latest quarter, up from 58.5% in Q1 2016. Its loss ratios in non-life were 70.5% in the P&C segment (up from 56.7% in Q1 2016) and 63.9% in the specialty segment (up from 60.6% in Q1 2016).
Net investment income dropped 7.2%, from $103 million in Q1 2016 to $95.6 million in the latest quarter.
Total revenues dropped 17%, from $1.42 billion in Q1 2016 to $1.18 billion in the first three months of 2017. Net income dropped from $215.6 million in Q1 2016 to $49.8 million in the most recent quarter. The net foreign exchange loss in the latest quarter was $37.7 million, while PartnerRe reported a net foreign exchange gain of $2.1 million in Q1 2016.