April 28, 2015 by Canadian Underwriter
Commercial insurance carrier and reinsurer PartnerRe Ltd. released Monday its financial results for the three months ending March 31, reporting a 2% drop in net premiums earned, a 1.1-point improvement in its combined ratio and a 20.8% drop in net income.
Pembroke, Bermuda-based PartnerRe has a branch office in Toronto and is licensed to write property & casualty insurance in Ontario and Quebec. Worldwide, PartnerRe provides reinsurance in several lines, including property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy and marine. Its primary insurance coverages include aviation, energy, engineering and marine. [click image below to enlarge]
PartnerRe reported Monday a combined ratio of 82.8% in Q1 2015, down 1.1 points from the same period in 2014.
Gross written premiums were $1.749 billion in Q1 2015, down 6.6% from $1.872 billion in 2014. All figures are in United States dollars. PartnerRe reported net premiums earned – including life insurance – of $1.235 billion in the most recent quarter, down from $1.254 billion in the same period in 2014.
Net premiums earned actually rose 3% on a constant foreign exchange basis, “primarily due to the Life and Health segment and the earning of business written in prior periods in the Global Specialty Non-life sub-segment,” PartnerRe said in a press release. “These increases were partially offset by a decrease in the North America Non-life sub-segment.”
PartnerRe reported net premiums earned, in North America, of $339 million in the three months ending March 31, down 10.6% from $379 million in Q1 2014.
“The decrease was primarily driven by cancellations, non-renewals and participation decreases across various lines of business and lower premiums bound in the agriculture line of business due to the delayed renewal of some significant contracts that remain in process,” PartnerRe stated. “These decreases were partially offset by new business written in prior periods and at the January 1, 2015 renewal in the property and casualty lines of business. This sub-segment reported a technical ratio of 78.2%, which included 24.3 points (or $82 million) of net favorable prior year loss development.”
In other segments, net premiums earned for the latest quarter were $174 million in global (non US) P&C, $365 million in global specialty and $58 million in catastrophe.
PartnerRe’s loss ratio in non-life was 51.4% in the most recent quarter, a 1.4-point improvement from Q1 2014. Broken down by segment, its loss ratios were 50.7% in North America, 68.4% in global (non-U.S.) P&C, 46.7% in global specialty and 33.7% in catastrophe.
Total revenue was $1.459 billion in Q2 2015, down 3.6% from was $1.513 billion in Q1 2014. The company reported losses, loss expenses and life policy benefits of $721 million in the latest quarter, down 3.8% from was $749 million in 2014.
Net income dropped 20.8%, from $313 million in Q1 2014 to $248 million in the most recent quarter.
“Net investment income of $105 million was down 10%, or 8% on a constant foreign exchange basis, primarily driven by lower reinvestment rates,” PartnerRe stated. “The Global Specialty sub-segment’s net premiums written were down 7%. On a constant foreign exchange basis, net premiums written were flat which reflects new business in the agriculture and multi-line lines of business and lower ceded premiums under the Company’s retrocessional program as a result of optimizing our coverage and lower retrocessional pricing. These increases were partially offset by decreases in the marine, credit/surety and specialty casualty lines of business primarily due to cancellations, downward premium adjustments and reduced participations.”
The earnings announcement comes two weeks after PartnerRe’s board of directors received a proposal – from EXOR S.p.A. – to acquire all share of PartnerRe for about $6.4 billion, and three months after PartnerRe agreed to merge with Bermuda insurer Axis Capital Holdings Ltd.
EXOR, an investment firm that holds nearly half the voting rights of Fiat-Chrysler Automobile, stated on April 14 that its offer, to buy all PartnerRe shares for $130, “is envisaged to be friendly (and) can be completed expeditiously.”
PartnerRe stated at the time that its board of directors plans to “review the EXOR proposal to determine the course of action that it believes is in the best interests of PartnerRe and its shareholders,” and “will announce its position regarding the EXOR proposal following its review, which will be completed in due course.”
Turin, Italy-based EXOR, which is controlled by the Agnelli family, also holds a majority interest in real estate firm Cushman Wakefield and a significant minority of CNH Industrial N.V., whose products include Case and New Holland farm and construction equipment.
PartnerRe’s agreement to merge with Axis Capital – announced Jan. 25 – was approved by each firm’s board of directors and is subject to approval from shareholders and regulators. At the time PartnerRe and Axis Capital announced their agreement, Costas Miranthis stepped down as PartnerRe CEO and resigned from the board. David Zwiener – chairman of the PartnerRe board of directors’ audit committee – assumed the position of interim CEO last January.