PEMBROKE, Bermuda, May 3, 2017 – PartnerRe Ltd. (“the Company”) today reported a net income available to common shareholder of $38 million for the first quarter of 2017 compared to $201 million for the same period of 2016. Operating earnings were $44 million for both first quarters of 2017 and 2016.
Net income available to common shareholder includes net realized and unrealized gains on investments of $23 million in the first quarter of 2017, mainly driven by a slight narrowing of corporate spreads and a decrease in U.S. interest rates at the longer end of the curve. This compares to gains of $167 million in the first quarter of 2016, primarily reflecting decreases in U.S. and European risk-free interest rates.
Operating earnings is a non-GAAP financial measure which excludes certain net after-tax realized and unrealized investment gains and losses, net after-tax foreign exchange gains and losses, certain net after-tax interest in results of equity method investments, and is calculated after the payment of preferred dividends.
Net income or loss and operating earnings available to common shareholder, and the associated annualized ROEs, for the first quarters of 2017 and 2016 include various non-recurring transaction and severance related costs, which impact period over period comparability as follows (in US$ millions, except for percentages):
| Non-GAAP measures adjusted for transaction and severance costs(1), net of tax | Q1 2017 | Q1 2016 |
| Operating earnings | 50 | 104 |
| Annualized operating ROE | 3.4% | 6.9% |
| Net income available to common shareholder | 45 | 261 |
| Annualized net income available to common shareholder ROE | 3.0% | 17.3% |
(1)The adjustment of $6 million, net of tax, for the first quarter of 2017 primarily represents severance costs associated with the reorganization of the Company’s operations. The adjustment of $60 million, net of tax, for the first quarter of 2016 includes transaction costs and accelerated stock-based compensation expenses incurred related to the closing of the acquisition by Exor in the first quarter of 2016.
Commenting on results, PartnerRe President and Chief Executive Officer Emmanuel Clarke said, “Our annualized adjusted Operating ROE of 3.4% in the first quarter of 2017 reflects prudent underwriting, de-risked investment portfolio, the impact of the change in the Ogden discount rate in the U.K., a decline in favorable prior year reserve development and lower profitability in our Health line of business. We reported a Non-Life combined ratio of 96.4% and an improved accident year combined ratio compared to the first quarter of 2016 driven by a lower level of mid-sized loss activity in P&C and reduced operating expenses.”
