PartnerRe expects $63 million net charge in third quarter from U.S. drought losses

Global reinsurer PartnerRe Ltd. is expecting a net charge of about $63 million related to losses within its North American agriculture business in the third quarter of this year, mainly due to severe drought in the United States.

The net charge equates to a pre-tax charge of $85 million and includes premiums, losses, commissions, brokerage and fees within its agriculture portfolio in North America, “and also reverses any prior profit recognition during the year,” the Bermuda-based company noted in a statement.

PartnerRe is expecting underwriting year premiums for that part of its business to be about $200 million with losses of about $255 million for 2012. It also expects no net profit or loss during the fourth quarter of the year.

Its loss estimates are uncertain since crop yields aren’t yet finalized, it noted. “Estimates are further uncertain given commodity prices that will be used for calculating loss of revenue products will be established in the future and may differ from current estimates,” the statement said.

PartnerRe also noted that “there were no other individual loss events that occurred during the third quarter which were in excess of $35 million and, in the aggregate, other large loss experience was below average expectations.”

Earlier this month Switzerland-based Allied World Assurance Company announced it expected a loss of about $40 million in the third quarter related to drought in the U.S. Both Moody’s and Standard and Poor’s have estimated major losses for the reinsurance industry from this year’s drought.