PartnerRe Ltd. Reports First Quarter 2021 Results

May 11, 2021

  • Net loss attributable to common shareholder of $66 million, driven by $344 million of net unrealized losses on fixed maturities due to risk free rate movements which are recorded at fair value. This mark to market volatility was partially offset by $83 million of realized gains on private equities and $107 million of net unrealized gains on equities and other invested assets. The first quarter was also impacted by $104 million of net losses from Winter Storm Uri
  • Net premiums written were up 9% at $2,048 million. P&C increased by 12%, generally driven by rate improvements, and Life and Health increased 11%, driven by growth in our long-term business
  • Non-life underwriting result of $40 million (combined ratio of 96.7%) despite the impact of Winter Storm Uri of $104 million (8.7 points on the combined ratio), and Life and Health underwriting profit, including allocated net investment income, of $20 million
  • In Q1 2021, $200 million of 4.875% Fixed Rate Non-Cumulative Redeemable Perpetual Series J Preferred Shares were issued and the proceeds were used to refinance the outstanding preferred shares. In May 2021, fully redeemed the Series G, H and I Preferred Shares at a redemption value of $637 million. Estimated annual savings of over $18 million after tax.
  • Cash provided by operating activities was $369 million for the quarter

PEMBROKE, Bermuda, May 11, 2021 – PartnerRe Ltd. (“the Company”) today reported net loss attributable to common shareholder of $66 million for the first quarter of 2021.

PartnerRe President and Chief Executive Officer Jacques Bonneau commented, “The 2021 underwriting year started on a positive note from a pricing perspective, and we have seen continued momentum throughout our April 1 non-life renewals, while remaining focused on the execution of our strategy to improve profitability. We are seeing positive rate movement in most, if not all, of our lines of business while achieving price improvements in new and renewal business of approximately 9% for our non-life portfolio through April 1. We were also able to reduce our exposures on poorly performing lines and programs as we continue to drive for increased margins. The underwriting improvements in the first quarter were masked by Winter Storm Uri. The favorable pricing conditions, combined with the benefits we are seeing from our re-underwriting actions and significant growth in third party capital, position us well to deliver improvements in our underwriting and financial results during the remainder of 2021.”

Highlights for the first quarter of 2021 compared to the same period of 2020 are included below.

Non-Life:

  • Non-life net premiums written were up 8% for the first quarter of 2021 compared to the same period of 2020. The increase in the first quarter of 2021 was driven by a 12% increase in the P&C segment and was supported by improved pricing conditions during the quarter.
  • The Non-life underwriting profit was $40 million (combined ratio of 96.7%) for the first quarter of 2021 compared to a loss of $46 million (combined ratio of 103.8%) for the same period of 2020. There was no change to the Company’s Non-life net loss estimate of $371 million established for the COVID-19 pandemic in 2020.
  • The P&C segment reported a combined ratio of 97.7% for the first quarter of 2021 compared to 94.3% for the first quarter of 2020. Despite improvements in the technical ratio from business mix changes, the loss ratio increased relative to the first quarter of 2020 due to $97 million (12.6 points) of catastrophic losses for Winter Storm Uri, net of retrocession and reinstatement premiums. There was no net impact from prior years’ reserve development during the first quarter of 2021.
  • The Specialty segment reported a combined ratio of 94.8% for the first quarter of 2021 compared to 121.1% for the first quarter of 2020. The improvement was driven by lower adverse prior years’ reserve development, which decreased 13.7 points compared to the first quarter of 2020. The technical ratio also decreased from a 9.8 point reduction in the acquisition cost ratio, as well as a decrease in catastrophic losses, with the first quarter of 2021 including $7 million (1.6 points) of losses related to Winter Storm Uri compared to $18 million (4.2 points) of COVID-19 related losses during the first quarter of 2020.

Life and Health:

  • Net premiums written were up 11% for the first quarter of 2021, compared to the same period of 2020.
  • The underwriting result, including allocated net investment income, was a profit of $20 million in the first quarter of 2021, compared to a profit of $18 million in the first quarter of 2020. The increase for the quarter was driven primarily by favorable movements in the guaranteed minimum death benefits (GMDB) line of business resulting from equity market increases and improvements in the longevity business, partially offset by higher claims in the long-term protection business and $12 million of COVID-19 related losses incurred in the first quarter of 2021.

Investments:

  • Net investment return in the first quarter of 2021 was a loss of $19 million, or (0.1)%, and included net realized and unrealized investment losses of $136 million, which were partially offset by net investment income of $87 million and interest in earnings of equity method investments of $30 million. This compares to a net investment loss of $503 million, or (2.9)%, for the first quarter of 2020, which included net realized and unrealized investment losses of $602 million and losses from equity method investments of $4 million, which were partially offset by net investment income of $103 million.
  • Net investment income of $87 million was down $16 million, or 16%, for the first quarter of 2021, compared to the same period of 2020, primarily due to the impact of lower reinvestment rates, driven by the significant decreases in worldwide risk-free rates in the first quarter of 2020 and the impact of portfolio reallocations during 2020.
  • Net realized and unrealized investment losses of $136 million (2020: $602 million loss) included:
  • Net realized and unrealized investment losses of $339 million (2020: $27 million loss) on fixed maturities and short-term investments, which were primarily unrealized and driven by a significant increase in worldwide risk-free rates.
  • Net realized and unrealized investment gains on equities of $152 million (2020: $362 million loss), which were also primarily unrealized and were driven by increases in worldwide equity markets.
  • Net realized and unrealized investment gains of $50 million (2020: $213 million loss) on other invested assets were driven by realized investment gains on private equities.
  • Interest in earnings of equity method investments of $30 million in the first quarter of 2021 primarily reflects gains on real estate funds, driven by a UK commercial real estate fund. This compared to losses from equity method investments of $4 million in the first quarter of 2020.
  • As of March 31, 2021, reinvestment rates were 8% compared to the Company’s fixed income investment portfolio yield of 2.1% for the first quarter of 2021.

Other Income Statement Items:

  • Other expense for the first quarter of 2021, with an expense ratio of 5.6%, were comparable to the same period of 2020, which had an expense ratio of 5.5%.
  • Net foreign exchange losses were $29 million for the first quarter of 2021, driven primarily by the appreciation of the U.S. dollar against the Euro and the cost of hedging, compared to gains of $130 million for the first quarter of 2020, driven by the appreciation of the U.S. dollar against the British pound and Canadian dollar, partially offset by the cost of hedging.
  • Interest expense was $14 million for the first quarter of 2021 increased compared to $8 million for the same period of 2020. The increase was driven by the issuance of $500 million 4.50% Fixed-Rate Reset Junior Subordinated Notes due 2050 during the third quarter of 2020.
  • Preferred dividends of $11 million for the first quarter of 2021 were comparable to the same period of 2020. In May 2021, the Company fully redeemed its Series G, H and I preferred shares for a liquidation value of $637 million.
  • Income tax benefit was $15 million on pre-tax losses of $70 million in the first quarter of 2021 compared to a benefit of $45 million on pre-tax losses of $467 million for the same period of 2020. These amounts were primarily driven by the geographical distribution of pre-tax results.

Balance Sheet, Capitalization and Cash Flows:

  • Total investments and cash and cash equivalents were $20.2 billion at March 31, 2021, up 0.8% compared to December 31, 2020. The increase was primarily driven by the issuance of 8 million 4.875% Fixed Rate Non-Cumulative Redeemable Perpetual Preferred Shares (the Series J Preferred Shares) at a liquidation value per share of $25 for total gross proceeds of $200 million.
  • Cash and cash equivalents, fixed maturities, and short-term investments, which are government issued or investment grade fixed income securities, were $14.8 billion at March 31, 2021, representing 73% of the total investments and cash and cash equivalents.
  • The average credit rating of the fixed income portfolio was AA as of March 31, 2021. The expected average duration of the public fixed income portfolio at March 31, 2021 was 3.9 years, while the average duration of the Company’s liabilities was 4.2 years.
  • Common shareholder’s equity (or book value) of $6.7 billion and tangible book value of $6.1 billion at March 31, 2021 both decreased by 0.3% compared to December 31, 2020, primarily due to net loss attributable to common shareholder, partially offset by an increase in the foreign currency translation adjustment during the first quarter of 2021.
  • Total capital was $9.4 billion at March 31, 2021, up 1.5% compared to December 31, 2020, primarily due to the issuance of the Series J Preferred Shares, partially offset by the decrease in common shareholder’s equity and a decrease in the U.S dollar value of the Company’s Euro denominated debt, as the U.S dollar strengthened against the Euro during the first quarter of 2021.
  • Cash provided by operating activities was $369 million for the first quarter of 2021, compared to $237 million for the first quarter of 2020. The increase was primarily driven by cash flows from underwriting operations.

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PartnerRe Ltd. is a leading global reinsurer that helps insurance companies reduce their earnings volatility, strengthen their capital and grow their businesses through reinsurance solutions. Risks are underwritten on a worldwide basis through the Company’s three segments: P&C, Specialty, and Life and Health. For the year ended December 31, 2020, total revenues were $7.4 billion. At March 31, 2021, total assets were $28.0 billion, total capital was $9.4 billion and total shareholders’ equity was $7.5 billion. PartnerRe maintains strong financial strength ratings as follows: A.M. Best A+ / Moody’s A1 / Standard & Poor’s A+. 

Forward-looking statements contained in this press release, such as those related to company performance, including the impact of the ongoing COVID-19 pandemic (including the related impact on the U.S. and global economies), are based on the Company’s assumptions and expectations concerning future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. PartnerRe’s forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments such as exposure to catastrophe, pandemic or other large property and casualty losses, credit, interest, currency and other risks associated with the Company’s investment portfolio, adequacy of reserves, levels and pricing of new and renewal business achieved, changes in accounting policies, risks associated with implementing business strategies, and other factors identified in the Company’s reports filed or furnished with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking information contained herein, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company disclaims any obligation to publicly update or revise any forward-looking information or statements.

The Company’s estimate for COVID-19 pandemic losses and recent catastrophic events, is based on a preliminary analysis of the Company’s exposures, the current assumption of total insured industry losses and preliminary information received from certain cedants to date. There is material uncertainty associated with the Company’s loss estimates given the nature, magnitude and recency of these loss events and the limited claims information received to date. The ultimate loss therefore may differ materially from the current preliminary estimate.

Contacts:PartnerRe Ltd.
(441) 292-0888
Media Contact: Celia Powell
Investor Contact: Ryan Lipschutz

 

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