Market Overview

PartnerRe Ltd. Reports Fourth Quarter and Full Year 2016 Results

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PartnerRe Ltd. ("the Company") today reported a net loss attributable to
PartnerRe common shareholders of $191 million for the fourth quarter of
2016 compared to a net income for the fourth quarter of 2015 of $162
million. Operating earnings was $125 million for the fourth quarter of
2016, compared to operating earnings of $184 million for the fourth
quarter of 2015.

Net income attributable to PartnerRe common shareholders includes net
realized and unrealized losses on investments of $388 million in the
fourth quarter of 2016, which were largely driven by significant
increases in treasury yields, partially offset by narrowing of credit
spreads. This compares to a $24 million loss in the fourth quarter of
2015, primarily driven by increases in U.S. risk-free interest rates,
partially offset by the narrowing credit spreads and increases in
worldwide equity markets.

Net income attributable to PartnerRe common shareholders for the full
year 2016 was $387 million compared to $48 million in 2015 primarily due
to net realized and unrealized gains on investments in 2016 of $26
million compared to losses of $297 million in 2015.

Operating earnings for the full year 2016 were $289 million, compared to
operating earnings of $658 million for 2015 primarily due to a lower
Non-life technical result, higher transaction and severance costs and
loss on redemption of senior notes. The lower Non-life technical result
was primarily driven by lower favorable prior year loss development,
higher mid-sized loss activity and increased losses from catastrophes.

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, the
amalgamation termination fee and reimbursement of expenses paid to Axis
Capital in 2015 and net loss on redemption of preferred shares in 2016,
and is calculated after the payment of preferred dividends.

Net income or loss and operating earnings attributable to PartnerRe
common shareholders, and the associated annualized ROEs, for the fourth
quarters and the full years 2016 and 2015 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(1)

and severance costs(2), net of tax

  Q4     Full Year
    2016   2015 2016   2015
Operating earnings 151   206 413   749
Annualized operating ROE 9.8 % 13.7 % 6.9 % 12.2 %
Net (loss) income attributable to PartnerRe common shareholders (161 ) 184 517 453
Annualized net (loss) income attributable to PartnerRe common
shareholders ROE
    (10.5 )%   12.3 %     8.6 %   7.4 %
   

(1)

 

Transaction costs include costs incurred related to the Exor
acquisition in 2016; the terminated amalgamation with Axis Capital
in 2015; the losses on redemption of senior notes and preferred
shares in the fourth quarter of 2016; and the negotiated earn-out
consideration paid to the former shareholders of Presidio
Reinsurance Group, Inc. in 2015.

(2)

Severance costs include costs incurred associated with the
reorganization of the Company's operations and costs related to
certain executive changes.

 

Commenting on results, PartnerRe President and Chief Executive Officer
Emmanuel Clarke said, "We delivered good operating results in the fourth
quarter with an annualized adjusted Operating ROE of 9.8%. The Non-life
combined ratio of 89.6%, notwithstanding losses related to Hurricane
Matthew, highlights our underwriting discipline while favorable prior
year development continues to remain strong. In the current market
conditions, we are undertaking the right underwriting actions to better
serve our core clients while preserving our long-term capital strength."

Highlights for the fourth quarter of 2016 compared to the same period in
2015 include the following:

Non-Life:

  • Non-Life net premiums written were flat compared to the fourth quarter
    of 2015 and increased by 2% on a constant currency basis.
  • The Non-Life combined ratio of 89.6% was 3.1 points higher than the
    ratio reported in the fourth quarter of 2015, of 86.5%, primarily due
    to losses from Hurricane Matthew in Q4 2016 of $45 million (4.6
    points) and lower favorable prior years' reserve development. The
    decreases were partially offset by lower mid-sized loss activity.
  • The Non-Life combined ratio continued to benefit from strong net
    favorable development from prior accident years of $172 million (17.6
    points) in the P&C and Specialty segments as actual reported losses
    were below expectations. The combined ratio for the fourth quarter of
    2015 included favorable prior year development of $187 million (18.7
    points).

Life and Health:

  • Net premiums written were flat, but were up 6% on a constant currency
    basis primarily driven by new business in the mortality line of
    business and, to a lessor extent, the health line of business, which
    saw a marginal increase despite increasing competition.
  • Allocated underwriting result, which includes allocated investment
    income and other expenses, was $12 million compared to $24 million in
    the fourth quarter of 2015. This decrease primarily reflects a lower
    technical result in the health line of business due to an increase in
    loss ratio in a small number of accounts, mainly related to 2015 and
    2016 underwriting years.

Investments:

  • Total net investment return in the fourth quarter of 2016 was negative
    1.9%, based on a total net loss of $312 million, which was largely
    driven by the realized and unrealized investment losses of $388
    million, partially offset by net investment income of $105 million.
    This compares to a positive total net investment return of $88
    million, or 0.5%, for the fourth quarter of 2015.
  • The negative total net investment return in the fourth quarter of 2016
    was primarily generated by fixed income securities, driven by the
    significant increase in U.S. risk-free rates (85 basis points on the
    10-year US Treasury in the quarter), partially offset by narrowing
    credit spreads.
  • Net investment income of $105 million was down $3 million, or 3%,
    compared to the fourth quarter of 2015 mainly reflecting the reduction
    in risk within the investment portfolio, including the increased
    allocation to U.S. government fixed income securities and the change
    in asset mix with a lower amount of higher yielding fixed income
    securities and dividend yielding equity securities, and lower
    reinvestment rates. These decreases were partially offset by lower
    investment expenses following the reorganization of the Company's
    investment operations.
  • Reinvestment rates are currently 2.7%, which compares to our existing
    fixed income yield of 2.6%.

Other Income Statement Items:

  • Other expenses of $105 million in the fourth quarter of 2016 and $120
    million for same period of 2015, included transaction and severance
    related costs associated with the reorganization of the Company's
    operations. Excluding these one-time costs, other expenses were $91
    million in the fourth quarter of 2016, compared to $97 million in the
    same period of 2015.
  • Net foreign exchange gains in the quarter were $48 million ($81
    million including the change in currency translation adjustment of $33
    million), mainly driven by the strengthening of the U.S. dollar, and
    acted as a hedge to the mark-to-market losses linked to the increase
    in risk-free rates.
  • Interest expense was $12 million, in line with the fourth quarter of
    2015.
  • On November 1, 2016 the Company redeemed $250 million of senior notes
    and incurred a $22 million loss on redemption as a result of a make
    whole payment to the note holders representing the present value of
    the remaining scheduled payments on the notes following their early
    redemption.
  • On November 1, 2016, the Company also redeemed $150 million of its
    Series D and E preferred shares and incurred a $5 million loss on
    redemption. The preferred dividends of $12 million, excluding the loss
    on redemption of $5 million, were down $2 million compared to the same
    period of 2015 as a result of this redemption during the quarter.
  • For the fourth quarter of 2016, the effective tax rate on operating
    earnings was negative 8.9% (a tax benefit on earnings) mainly due to
    the geographical split of pretax income and losses recorded in tax
    jurisdictions with high income tax rates and earnings recorded in
    jurisdictions with low or nil tax rates. The effective tax rate on
    non-operating earnings was 15.1% (a tax benefit on losses) for the
    fourth quarter of 2016 as a result of losses recorded in taxable
    jurisdictions.

Balance Sheet and Capitalization:

  • Total investments, cash and cash equivalents and funds held – directly
    managed were $16.9 billion at December 31, 2016, up 2.4% compared to
    December 31, 2015.
  • The balance sheet continued to be de-risked during the quarter through
    a partial sale of the principal finance portfolio. Cash and cash
    equivalents and fixed maturities, which are government issued or
    investment grade fixed income securities, were $14.8 billion at
    December 31, 2016, representing 91% of the total cash and cash
    equivalents and total investments.
  • The average rating and the average duration of the fixed income
    portfolio at December 31, 2016 was A and 4.9 years respectively, while
    the average duration of the Company's liabilities was 5.2 years.
  • Exposure to Euro government bonds ($595 million) and Euro corporate
    credit ($313 million) remains low, representing 5.3% of the Investment
    portfolio.
  • Total capital was $8.0 billion at December 31, 2016, up 4.0% compared
    to December 31, 2015, primarily due to the issuance of Euro 750
    million senior debt in September 2016 and net income for the year,
    partially offset by common dividends paid (including a special
    dividend paid to former shareholders on the closing of the Exor
    transaction) and the redemption of $250 million of senior notes and
    $150 million of preferred shares.
  • Common shareholders' equity attributable to PartnerRe (or book value)
    and tangible book value were $6.0 billion and $5.5 billion,
    respectively, at December 31, 2016, down 1.0% and 0.8%, respectively,
    compared to December 31, 2015 primarily due to common dividends paid,
    partially offset by net income for the year.
  • During the fourth quarter of 2016, the Company paid a dividend of $160
    million to Exor, its parent company.

Cash Flows:

  • Cash provided by operating activities was $129 million in the fourth
    quarter of 2016 compared to $211 million in the fourth quarter of
    2015, which included cash provided by underwriting operations of $29
    million in the fourth quarter of 2016, compared to $114 million in the
    fourth quarter of 2015. This decrease in underwriting cash flow was
    largely driven by a lower Non-life technical result. The operating
    cash flow in the fourth quarter of 2016, generated by investment
    income, was $151 million compared to $131 million for the same period
    in 2015.
  • Cash provided by investing activities was $207 million in the fourth
    quarter of 2016, compared to $158 million in the same period in 2015
    primary due to proceeds from sales and redemptions exceeding purchases
    of fixed maturities during the quarter.
  • Cash used in financing activities was $598 million in the fourth
    quarter of 2016, compared to $43 million in the same period in 2015,
    largely driven by the redemption of the senior notes and preferred
    shares and higher dividends paid in the fourth quarter of 2016
    compared to 2015.

The data and comments provided above are from, or have been derived
from, PartnerRe's U.S. GAAP consolidated balance sheets as of
December 31, 2016 and 2015 and the related consolidated statements of
operations for the three months and years ended December 31, 2016 and
2015. The Company has included Supplementary Financial Information
below, which includes a reconciliation of GAAP and non-GAAP measures.

_______________________________________

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,
2016, total revenues were $5.4 billion. At December 31, 2016, total
assets were $21.9 billion, total capital was $8.0 billion and total
shareholders' equity was $6.7 billion. PartnerRe enjoys strong financial
strength ratings as follows: A.M. Best A / Moody's A1 / Standard &
Poor's A+.

PartnerRe on the Internet: www.partnerre.com

Forward-looking statements contained in this press release 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, 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.

 
 

PartnerRe Ltd.

Consolidated Statements of Operations and Comprehensive (Loss)
Income (1)

(Expressed in thousands of U.S. dollars)  
(Unaudited)

         

For the three

months ended

December 31,

2016

For the three

months ended

December 31,

2015

For the year

ended

December 31,

2016

For the year

ended

December 31,

2015

Revenues
Gross premiums written $ 1,102,695   $ 1,098,618   $ 5,356,942   $ 5,547,525  
Net premiums written $ 1,067,095 $ 1,063,636 $ 4,953,470 $ 5,229,548
Decrease in unearned premiums 196,958   230,865   16,126   39,630  
Net premiums earned 1,264,053 1,294,501 4,969,596 5,269,178
Net investment income 104,922 107,908 410,864 449,784
Net realized and unrealized investment (losses) gains (388,416 ) (24,373 ) 26,266 (297,479 )
Other income 3,660   1,560   15,232   9,144  
Total revenues 984,219   1,379,596   5,421,958   5,430,627  
Expenses
Losses and loss expenses 778,008 767,026 3,248,091 3,157,420
Acquisition costs 321,441 311,228 1,186,602 1,217,003
Other expenses (2) 104,465 120,389 471,905 790,723
Interest expense 11,837 12,246 48,603 48,988
Loss on redemption of senior notes (3) 22,203 22,203
Amortization of intangible assets 6,156 6,290 25,919 26,593
Net foreign exchange (gains) losses (48,137 ) (6,195 ) (77,515 ) 9,461  
Total expenses 1,195,973   1,210,984   4,925,808   5,250,188  
(Loss) income before taxes and interest in (losses) earnings of
equity method investments
(211,754 ) 168,612 496,150 180,439
Income tax (benefit) expense (66,445 ) (3,326 ) 25,923 79,664
Interest in (losses) earnings of equity method investments (28,388 ) 4,811   (22,919 ) 6,375  
Net (loss) income (173,697 ) 176,749 447,308 107,150
Net income attributable to noncontrolling interests   (238 )   (2,769 )
Net (loss) income attributable to PartnerRe (173,697 ) 176,511 447,308 104,381
Preferred dividends 12,492 14,184 55,043 56,735
Loss on redemption of preferred shares 4,908     4,908    
Net (loss) income attributable to PartnerRe common shareholders $ (191,097 ) $ 162,327   $ 387,357   $ 47,646  
Comprehensive (loss) income attributable to PartnerRe $ (143,707 ) $ 162,055   $ 456,022   $ 55,181  
 

(1)

 

On March 18, 2016, Exor N.V. acquired 100% of the Company's
common shares. As such, per share data is no longer meaningful and
has been excluded. PartnerRe common shares are no longer traded on
the NYSE.

(2)

Other expenses for the three months ended December 31, 2016 and
2015 include $14 million and $24 million, respectively, of
transaction and severance related costs associated with the Exor
acquisition, the terminated amalgamation with Axis, the
reorganization of the Company's operations, and certain executive
changes. Other expenses for the year ended December 31, 2016
include $128 million of transaction and severance related costs
associated with the reorganization of the Company's business
units, investment operations and certain executive changes. Other
expenses for the year ended December 31, 2015 include $386 million
of costs related to the Exor transaction and terminated
amalgamation with Axis, in addition to $25 million related to the
negotiated earn-out consideration paid to the former shareholders
of Presidio Reinsurance Group, Inc.

(3)

Loss on redemption of senior notes for the three months and
year ended December 31, 2016 of $22 million relates to a
make-whole payment paid to the note holders, representing the
present value of the remaining scheduled payments on the notes
following their early redemption.

 
 

PartnerRe Ltd.

Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars, except parenthetical
share data)

(Unaudited)

     
December 31, December 31,
2016 2015
Assets
Investments:
Fixed maturities, at fair value $ 13,432,501 $ 13,448,262
Short-term investments, at fair value 21,697 46,688
Equities, at fair value 38,626 443,861
Other invested assets 1,075,637   399,204  
Total investments 14,568,461 14,338,015
Funds held – directly managed 511,324 539,743
Cash and cash equivalents 1,773,328 1,577,097
Accrued investment income 112,580 141,672
Reinsurance balances receivable 2,492,069 2,428,020
Reinsurance recoverable on paid and unpaid losses 331,704 282,916
Funds held by reinsured companies 685,069 657,815
Deferred acquisition costs 597,239 629,372
Deposit assets 74,273 88,152
Net tax assets 194,170 102,596
Goodwill 456,380 456,380
Intangible assets 107,092 133,011
Other assets 35,105   31,254  
Total assets $ 21,938,794   $ 21,406,043  
Liabilities
Non-life reserves $ 8,985,434 $ 9,064,711
Life and health reserves 1,984,096 2,051,935
Unearned premiums 1,623,796 1,644,757
Other reinsurance balances payable 281,973 246,089
Deposit liabilities 15,026 44,420
Net tax liabilities 166,113 218,652
Accounts payable, accrued expenses and other 849,572 411,539
Debt related to senior notes 1,273,883 750,000
Debt related to capital efficient notes 70,989   70,989  
Total liabilities 15,250,882   14,503,092  
Shareholders' Equity
Common shares (2016, par value $0.00000001; issued: 100,000,000
shares; 2015, par value $1.00; issued: 87,237,220 shares)
87,237
Preferred shares (par value $1.00; issued and outstanding: 2016,
28,169,062 shares; 2015, 34,150,000 shares; aggregate liquidation
value: 2016, $704,227; 2015, $853,750)
28,169 34,150
Additional paid-in capital 2,396,530 3,982,147
Accumulated other comprehensive loss (74,569 ) (83,283 )
Retained earnings 4,337,782 6,146,802
Common shares held in treasury, at cost (2016, nil shares; 2015,
39,303,068 shares)
  (3,266,552 )
Total shareholders' equity attributable to PartnerRe 6,687,912 6,900,501
Noncontrolling interests   2,450  
Total shareholders' equity 6,687,912   6,902,951  
Total liabilities and shareholders' equity $ 21,938,794   $ 21,406,043  
 
 

PartnerRe Ltd.

Condensed Consolidated Statements of Cash Flows

(Expressed in millions of U.S. dollars)

(Unaudited)

       
For the three months ended For the year ended
December 31,   September 30,   June 30,   March 31,   December 31, December 31,   December 31,
2016 2016 2016 2016 2015 2016 2015
Net cash provided by operating activities:
Underwriting operations $ 29 $ 95 $ (43 ) $ (5 ) $ 114 $ 75 $ 265
Investment income 151 119 130 132 131 531 554
Taxes and foreign exchange and other (1) (51 ) (17 ) (59 ) (35 ) (34 ) (161 ) (500 )
Net cash provided by operating activities $ 129   $ 197   $ 28   $ 92   $ 211   $ 445   $ 319  
Net cash provided by (used in) investing activities 207 (811 ) 232 338 158 (34 ) 295
Net cash (used in) provided by financing activities (598 ) 723 (16 ) (263 ) (43 ) (153 ) (309 )
Effect of foreign exchange rate changes on cash (44 ) 13   (37 ) 6   (5 ) (62 ) (41 )
(Decrease) increase in cash and cash equivalents (306 ) 122 207 173 321 196 264
Cash and cash equivalents - beginning of period 2,079   1,957   1,750   1,577   1,256   1,577   1,313  
Cash and cash equivalents - end of period $ 1,773   $ 2,079   $ 1,957   $ 1,750   $ 1,577   $ 1,773   $ 1,577  
 

(1)

Taxes and foreign exchange and other for the year ended
December 31, 2015 include the amalgamation termination fee and
reimbursement of expenses paid to Axis Capital of $315 million.

 
 

PartnerRe Ltd.

Consolidated Statements of Comprehensive (Loss) Income

(Expressed in thousands of U.S. dollars)

(Unaudited)

       
For the three months ended For the year ended
December 31,   December 31, December 31,   December 31,
2016 2015 2016 2015
Net (loss) income attributable to PartnerRe $ (173,697 ) $ 176,511 $ 447,308 $ 104,381
Change in currency translation adjustment 33,022 (12,119 ) 12,202 (46,055 )
Change in net unrealized gains or losses on investments, net of tax (959 ) (216 ) (1,579 ) (860 )
Change in unfunded pension obligation, net of tax (2,073 ) (2,121 ) (1,909 ) (2,285 )
Comprehensive (loss) income attributable to PartnerRe $ (143,707 ) $ 162,055   $ 456,022   $ 55,181  
 
 

PartnerRe Ltd.

Segment Information

(Expressed in millions of U.S. dollars)

(Unaudited)

   
For the three months ended December 31, 2016
         

P&C

segment

Specialty

segment

Total

Non-life

Life

and Health

segment

Corporate

and Other

Total
Gross premiums written $ 397 $ 407 $ 804 $ 299 $ $ 1,103
Net premiums written $ 394 $ 389 $ 783 $ 284 $ $ 1,067
Decrease in unearned premiums 144   45   189   8     197  
Net premiums earned $ 538 $ 434 $ 972 $ 292 $ $ 1,264
Losses and loss expenses (315 ) (214 ) (529 ) (249 ) (778 )
Acquisition costs (156 ) (133 ) (289 ) (32 )   (321 )
Technical result $ 67 $ 87 $ 154 $ 11 $ $ 165
Other income 3 3
Other expenses (54 ) (17 ) (34 ) (105 )
Underwriting result $ 100 $ (3 ) n/a $ 63
Net investment income 15   90   105  
Allocated underwriting result (1) $ 12 n/a n/a
Net realized and unrealized investment losses (388 ) (388 )
Interest expense (12 ) (12 )
Loss on redemption of senior notes (22 ) (22 )
Amortization of intangible assets (6 ) (6 )
Net foreign exchange gains 48 48
Income tax benefit 66 66
Interest in losses of equity method investments (28 ) (28 )
Net loss n/a $ (174 )
Loss ratio (2) 58.4 % 49.4 % 54.4 %
Acquisition ratio (3) 29.1   30.6   29.7  
Technical ratio (4) 87.5 % 80.0 % 84.1 %
Other expense ratio (5) 5.5  
Combined ratio (6) 89.6 %
 
 
For the three months ended December 31, 2015
 

P&C

segment

Specialty

segment

Total

Non-life

Life

and Health

segment

Corporate

and Other

Total
Gross premiums written $ 380 $ 421 $ 801 $ 298 $ $ 1,099
Net premiums written $ 377 $ 403 $ 780 $ 284 $ $ 1,064
Decrease in unearned premiums 176   46   222   8     230  
Net premiums earned $ 553 $ 449 $ 1,002 $ 292 $ $ 1,294
Losses and loss expenses (287 ) (264 ) (551 ) (216 ) (767 )
Acquisition costs (150 ) (110 ) (260 ) (51 )   (311 )
Technical result $ 116 $ 75 $ 191 $ 25 $ $ 216
Other income (loss) 2 (1 ) 1
Other expenses (56 ) (17 ) (47 ) (120 )
Underwriting result $ 135 $ 10 n/a $ 97
Net investment income 14   94   108  
Allocated underwriting result (1) $ 24 n/a n/a
Net realized and unrealized investment losses (24 ) (24 )
Interest expense (12 ) (12 )
Amortization of intangible assets (6 ) (6 )
Net foreign exchange gains 6 6
Income tax benefit 3 3
Interest in earnings of equity method investments 5   5  
Net income n/a $ 177  
Loss ratio (2) 51.9 % 58.7 % 54.9 %
Acquisition ratio (3) 27.2   24.5   26.0  
Technical ratio (4) 79.1 % 83.2 % 80.9 %
Other expense ratio (5) 5.6  
Combined ratio (6) 86.5 %
 

(1)

Allocated underwriting result is defined as net premiums
earned, other income or loss and allocated net investment income
less life policy benefits, acquisition costs and other expenses.

(2)

Loss ratio is obtained by dividing losses and loss expenses by
net premiums earned.

(3)

Acquisition ratio is obtained by dividing acquisition costs by
net premiums earned.

(4)

Technical ratio is defined as the sum of the loss ratio and the
acquisition ratio.

(5)

Other expense ratio is obtained by dividing other expenses by
net premiums earned.

(6)

Combined ratio is defined as the sum of the technical ratio and
the other expense ratio.

 
 

PartnerRe Ltd.

Segment Information

(Expressed in millions of U.S. dollars)

(Unaudited)

   
For the year ended December 31, 2016
         

P&C

segment

Specialty

segment

Total

Non-life

Life

and Health

segment

Corporate

and Other

Total
Gross premiums written $ 2,269 $ 1,920 $ 4,189 $ 1,168 $ $ 5,357
Net premiums written $ 2,061 $ 1,776 $ 3,837 $ 1,117 $ $ 4,954
Decrease (increase) in unearned premiums 25   (9 ) 16       16  
Net premiums earned $ 2,086 $ 1,767 $ 3,853 $ 1,117 $ $ 4,970
Losses and loss expenses (1,248 ) (1,073 ) (2,321 ) (927 ) (3,248 )
Acquisition costs (556 ) (500 ) (1,056 ) (131 )   (1,187 )
Technical result $ 282 $ 194 $ 476 $ 59 $ $ 535
Other income 2 10 3 15
Other expenses (229 ) (66 ) (177 ) (472 )
Underwriting result $ 249 $ 3 n/a $ 78
Net investment income 58   353   411  
Allocated underwriting result (1) $ 61 n/a n/a
Net realized and unrealized investment gains 26 26
Interest expense (49 ) (49 )
Loss on redemption of senior notes (22 ) (22 )
Amortization of intangible assets (26 ) (26 )
Net foreign exchange gains 78 78
Income tax expense (26 ) (26 )
Interest in losses of equity method investments (23 ) (23 )
Net income n/a $ 447  
Loss ratio (2) 59.8 % 60.8 % 60.3 %
Acquisition ratio (3) 26.7   28.3   27.4  
Technical ratio (4) 86.5 % 89.1 % 87.7 %
Other expense ratio (5) 5.9  
Combined ratio (6) 93.6 %
 
 
For the year ended December 31, 2015
 

P&C

segment

Specialty

segment

Total

Non-life

Life

and Health

segment

Corporate

and Other

Total
Gross premiums written $ 2,371 $ 1,906 $ 4,277 $ 1,271 $ $ 5,548
Net premiums written $ 2,236 $ 1,786 $ 4,022 $ 1,208 $ $ 5,230
Decrease in unearned premiums 4   34   38   1     39  
Net premiums earned $ 2,240 $ 1,820 $ 4,060 $ 1,209 $ $ 5,269
Losses and loss expenses (1,129 ) (1,064 ) (2,193 ) (964 ) (3,157 )
Acquisition costs (570 ) (494 ) (1,064 ) (153 )   (1,217 )
Technical result $ 541 $ 262 $ 803 $ 92 $ $ 895
Other income 6 3 9
Other expenses (219 ) (63 ) (509 ) (791 )
Underwriting result $ 584 $ 35 n/a $ 113
Net investment income 59   391   450  
Allocated underwriting result (1) $ 94 n/a n/a
Net realized and unrealized investment losses (297 ) (297 )
Interest expense (49 ) (49 )
Amortization of intangible assets (27 ) (27 )
Net foreign exchange losses (9 ) (9 )
Income tax expense (80 ) (80 )
Interest in earnings of equity method investments 6   6  
Net income n/a $ 107  
Loss ratio (2) 50.4 % 58.5 % 54.0 %
Acquisition ratio (3) 25.4   27.1   26.2  
Technical ratio (4) 75.8 % 85.6 % 80.2 %
Other expense ratio (5) 5.4  
Combined ratio (6) 85.6 %
 
 

PartnerRe Ltd.

Investment Portfolio

(Expressed in millions of U.S. dollars)

(Unaudited)

                       
December 31, September 30, June 30, March 31, December 31, December 31,
2016 2016 2016 2016 2015 2014
Investments:
Fixed maturities
U.S. government $ 3,489 24 % $ 2,924 19 % $ 3,408 24 % $ 2,690 19 % $ 2,810 20 % $ 2,277 15 %
U.S. government sponsored enterprises 52 104 1 104 1 105 1 63 39
U.S. states, territories and municipalities 685 5 785 5 801 6 780 5 778 5 531 3
Non-U.S. sovereign government, supranational and government related 1,136 8 1,185 8 1,307 9 1,197 9 1,333 9 1,976 13
Corporates 5,705 39 5,900 40 4,887 34 4,978 36 5,086 36 5,604 37
Mortgage/asset-backed securities 2,365   16   2,800   19   2,536   18   3,270   24   3,378   24   3,492   23  
Total fixed maturities 13,432 92 13,698 92 13,043 92 13,020 94 13,448 94 13,919 91
Short-term investments 22 29 16 34 47 25
Equities 39 42 39 324 2 444 3 1,057 7
Other invested assets 1,076   8   1,142   8   1,138   8   459   4   399   3   299   2  
Total investments $ 14,569   100 % $ 14,911   100 % $ 14,236   100 % $ 13,837   100 % $ 14,338   100 % $ 15,300   100 %
Cash and cash equivalents 1,773 2,079 1,957 1,750 1,577 1,313
Total investments and cash and cash equivalents 16,342 16,990 16,193 15,587 15,915 16,613
Maturity distribution:
One year or less $ 264 2 % $ 237 2 % $ 371 3 % $ 431 3 % $ 556 4 % $ 313 2 %
More than one year through five years 5,381 40 5,215 38 4,964 38 4,521 35 4,609 34 5,169 37
More than five years through ten years 3,703 27 3,587 26 3,391 26 3,224 25 3,342 25 3,719 27
More than ten years 1,741   13   1,888   14   1,797   14   1,608   12   1,610   12   1,251   9  
Subtotal 11,089 82 10,927 80 10,523 81 9,784 75 10,117 75 10,452 75
Mortgage/asset-backed securities 2,365   18   2,800   20   2,536   19   3,270   25   3,378   25   3,492   25  
Total $ 13,454   100 % $ 13,727   100 % $ 13,059   100 % $ 13,054   100 % $ 13,495   100 % $ 13,944   100 %
 
Credit quality by market value (Total
investments excluding Other invested assets):
AAA 6 % 7 % 8 % 11 % 11 % 11 %
AA 52 47 51 47 47 46
A 15 16 14 15 15 19
BBB 24 24 20 20 20 16
Below Investment Grade/Unrated 3   6   7   7   7   8  
100 % 100 % 100 % 100 % 100 % 100 %
Expected average duration (1) 4.9

 Yrs

3.9

 Yrs

4.1

 Yrs

4.0

 Yrs

3.6

 Yrs

3.7

 Yrs

Average yield to maturity at market (1) 2.7 % 2.2 % 2.1 % 2.4 % 2.9 % 2.4 %
Average credit quality A A A A A A
 

(1)

Includes funds holding fixed income securities that are
classified with equities under U.S. GAAP and futures used for the
purpose of managing duration

 
 

PartnerRe Ltd.

Distribution of Corporate Bonds

(Expressed in thousands of U.S. dollars)

(Unaudited)

   
December 31, 2016
Fair Value  

Percentage to

Total Fair Value of

Corporate Bonds

 

Percentage to

Invested Assets

and cash

 

Largest single issuer

as a percentage of

Invested Assets

and cash

   
Distribution by sector - Corporate bonds
Finance $ 1,128,838 19.8 % 6.9 % 1.0 %
Consumer noncyclical 1,098,087 19.2 6.7 0.5
Consumer cyclical 610,813 10.7 3.7 0.5
Industrials 586,175 10.3 3.6 0.3
Energy 473,559 8.3 2.9 0.5
Communications 340,039 5.9 2.1 0.4
Utilities 307,419 5.4 1.9 0.2
Insurance 270,536 4.7 1.7 0.2
Real estate investment trusts 250,100 4.4 1.5 0.5
Technology 232,858 4.1 1.5 0.3
Basic materials 232,825 4.1 1.4 0.2
Catastrophe bonds 106,212 1.9 0.6 0.1
Longevity and mortality bonds 49,537 0.9 0.3 0.2
Government guaranteed corporate debt 18,524   0.3   0.1   0.1
Total Corporate bonds $ 5,705,522   100.0 % 34.9 %
Finance sector - Corporate bonds
Banks $ 693,505 12.2 % 4.2 %
Investment banking and brokerage 305,303 5.3 1.9
Financial services 78,374 1.4 0.5
Commercial and consumer finance 39,696 0.7 0.2
Other 11,960   0.2   0.1  
Total finance sector - Corporate bonds $ 1,128,838   19.8 % 6.9 %
AAA AA A BBB

Non-Investment

Grade/Unrated

 

Total
Credit quality of finance sector - Corporate bonds
Banks $ 28,756 $ $ 356,589 $ 308,160 $ $ 693,505
Investment banking and brokerage 26,910 277,215 1,178 305,303
Financial services 41,021 8,498 28,855 78,374
Commercial and consumer finance 25,135 14,561 39,696
Other       11,960     11,960  
Total finance sector - Corporate bonds $ 28,756   $ 41,021   $ 417,132   $ 640,751   $ 1,178   $ 1,128,838  
% of total 2 % 4 % 37 % 57 % % 100 %
 

Concentration of investment risk

The top 10 Corporate bond issuers account for 18.0% of the Company's
total corporate bonds. The single largest issuer accounts for 2.9% of
the Company's total Corporate bonds.

 
 

PartnerRe Ltd.

Analysis of Non-Life Reserves

(Expressed in thousands of U.S. dollars)

(Unaudited)

       
As at and for the three months ended As at and for the year ended
December 31,   September 30,   June 30,   March 31, December 31,   December 31,
2016 2016 2016 2016 2016 2015
Reconciliation of beginning and ending Non-life reserves:
Gross liability at beginning of period $ 9,566,472 $ 9,457,499 $ 9,331,087 $ 9,064,711 $ 9,064,711 $ 9,745,806
Reinsurance recoverable at beginning of period (290,151 ) (262,411 ) (192,877 ) (189,234 ) (189,234 ) (214,349 )
Net liability at beginning of period 9,276,321 9,195,088 9,138,210 8,875,477 8,875,477 9,531,457
Net incurred losses related to:
Current year 700,438 716,426 887,462 693,069 2,997,394 3,023,704
Prior years (171,501 ) (173,254 ) (148,382 ) (183,437 ) (676,574 ) (830,705 )
528,937 543,172 739,080 509,632 2,320,820 2,192,999
Change in reserve agreement (1) (2,153 ) (20,553 ) 28,224 5,518 (8,771 )
Net losses paid (834,047 ) (465,912 ) (592,489 ) (370,469 ) (2,262,916 ) (2,422,603 )
Effects of foreign exchange rate changes (250,366 ) 24,526   (89,713 ) 95,346   (220,207 ) (417,605 )
Net liability at end of period 8,718,692 9,276,321 9,195,088 9,138,210 8,718,692 8,875,477
Reinsurance recoverable at end of period 266,742   290,151   262,411   192,877   266,742   189,234  
Gross liability at end of period $ 8,985,434   $ 9,566,472   $ 9,457,499   $ 9,331,087   $ 8,985,434   $ 9,064,711  
Breakdown of gross liability at end of period:
Case reserves $ 3,883,926 $ 4,016,213 $ 3,898,396 $ 3,780,317 $ 3,883,926 $ 3,716,195
Additional case reserves 166,913 176,248 192,861 215,238 166,913 190,183
Incurred but not reported reserves 4,934,595   5,374,011   5,366,242   5,335,532   4,934,595   5,158,333  
Gross liability at end of period $ 8,985,434   $ 9,566,472   $ 9,457,499   $ 9,331,087   $ 8,985,434   $ 9,064,711  
Gross liability at end of period by Non-life segment:
P&C 6,187,460 6,428,472 6,428,331 6,401,452 6,187,460 6,245,217
Specialty 2,797,974   3,138,000   3,029,168   2,929,635   2,797,974   2,819,494  
Gross liability at end of period $ 8,985,434   $ 9,566,472   $ 9,457,499   $ 9,331,087   $ 8,985,434   $ 9,064,711  
Unrecognized time value of non-life reserves (2) $ 439,351 $ 316,168 $ 283,361 $ 372,792 $ 439,351 $ 508,269
Non-life paid loss ratio data:
Non-life paid losses to incurred losses ratio 157.7 % 85.8 % 80.2 % 72.7 % 97.5 % 110.5 %
Non-life paid losses to net premiums earned ratio 85.8 % 45.0 % 61.0 % 42.5 % 58.7 % 59.7 %
 

(1)

The change in the reserve agreement is due to (favorable)
adverse development on Paris Re's reserves which are guaranteed by
Axa under the reserve agreement.

(2)

The unrecognized time value of non-life reserves represents the
difference between the recorded gross/net liability for non-life
reserves and the amount of gross/net liability for non-life
reserves that would be recorded if the underlying non-life
reserves were discounted. The unrecognized time value, or
discount, in the non-life reserves is calculated by applying
appropriate risk-free rates by currency and duration to the
underlying non-life reserves.

 
 

PartnerRe Ltd.

Life Value In Force

The Company calculates Value in Force (VIF) for its Life portfolio,
which represents the value of the Life portfolio that is not recognized
in the Consolidated Balance Sheets prepared under generally accepted
accounting principles in the United States (U.S. GAAP). Accordingly,
there is no corresponding measure that is prepared in accordance with
U.S. GAAP. Management believes that this is useful information for
investors, analysts, rating agencies and others. The Life VIF
calculation includes the business written in the Company's Life and
Health segment, except for the PartnerRe Health business.

The Company's Life VIF calculation uses market consistent techniques,
but primarily differs from a full Market Consistent Embedded Value
(MCEV) calculation, as defined in the European Insurance CFO Forum MCEV
principles, due to: (i) different methodologies used; and ii) the Life
VIF is only a component of MCEV and, specifically, the tangible assets
backing the liabilities are not considered in the Company's calculation.

The Company's Life VIF, which is calculated on a going concern basis, is
the sum of:

  • present value of future profits - which is defined as the net present
    value of shareholders' projected after-tax cash flows from the
    in-force business on a best-estimate assumption basis. The discount
    rates used reflect currency-specific market yields on zero coupon
    government bonds at given durations and are applied to projected
    deterministic cash flows and to calculate risk-free investment
    returns. The best-estimate is defined as median biometric assumptions
    and does not include any provision for adverse deviation. The Company
    attributes no value to future new business or renewals of short-term
    business. Allocated inflated-adjusted expenses are projected on a best
    estimate basis;
  • cost of non-hedgeable risks - which is defined as the cost of holding
    capital for non-hedgeable financial and non-hedgeable non-financial
    risks, such as a mortality deviation from shocks or changes in trends.
    The non-hedgeable risk capital has been determined using an internal
    economic capital model calibrated to a 99.6% Value at Risk (VaR)
    corresponding to a 1 in 250 year event;
  • frictional costs - which is defined as the cost of double taxation or
    investment management charges on assets backing required capital;
  • time value of options and guarantees (TVOG) - which is defined as the
    difference between the market value and the intrinsic value of the
    option calculated using stochastic techniques. The TVOG is significant
    to the guaranteed minimum death benefit (GMDB) portfolio where the
    Company covers death claims on savings plans, where the sum reinsured
    is the difference between the invested premium amount and the current
    fund value; and
  • cost of non-economic excess encumbered capital - which is defined as
    the cost of any encumbered capital in excess of economic capital
    required by local regulations.

Actuarial non-economic assumptions, such as current and future
mortality, are based on the most recent experience available, combined
with internal and industry benchmarks, including trend expectation where
appropriate.

The Life VIF is sensitive to changes in assumptions. In particular, the
Life VIF is sensitive to changes in yield curves that are used for
discounting, changes in equity market value assumptions and implied
volatilities.

The Company performs a detailed Life VIF calculation on an annual basis
and performs a roll-forward approach on an interim quarterly basis.

 
 

PartnerRe Ltd.

Analysis of Life and Health Reserves

(Expressed in thousands of U.S. dollars)

(Unaudited)

       
As at and for the three months ended As at and for the year ended
December 31,   September 30,   June 30,   March 31, December 31,   December 31,
2016 2016 2016 2016 2016 2015
Reconciliation of beginning and ending life and health reserves:
Gross liability at beginning of period $ 2,050,970 $ 2,046,248 $ 2,089,055 $ 2,051,935 $ 2,051,935 $ 2,050,107
Reinsurance recoverable at beginning of period (29,459 ) (35,269 ) (43,236 ) (42,773 ) (42,773 ) (29,495 )
Net liability at beginning of period 2,021,511 2,010,979 2,045,819 2,009,162 2,009,162 2,020,612
Net incurred losses related to:
Current year 249,538 227,201 246,732 219,450 942,922 1,010,937
Prior years (467 ) 2,587   (2,957 ) (14,814 ) (15,651 ) (46,516 )
249,071 229,788 243,775 204,636 927,271 964,421
Net losses paid (221,838 ) (215,432 ) (219,005 ) (187,881 ) (844,156 ) (835,190 )
Effects of foreign exchange rate changes (96,020 ) (3,824 ) (59,610 ) 19,902   (139,553 ) (140,681 )
Net liability at end of period 1,952,724 2,021,511 2,010,979 2,045,819 1,952,724 2,009,162
Reinsurance recoverable at end of period 31,372   29,459   35,269   43,236   31,372   42,773  
Gross liability at end of period $ 1,984,096   $ 2,050,970   $ 2,046,248   $ 2,089,055   $ 1,984,096   $ 2,051,935  
Life value in force $ 176,200 $ 140,400 $ 153,100 $ 191,800 $ 176,200 $ 204,300
 
 

PartnerRe Ltd.

Natural Catastrophe Probable Maximum Losses (PMLs)

(Expressed in millions of U.S. dollars)

(Unaudited)

           

Single occurrence estimated net PML exposure (1)

 
October 1, 2016 July 1, 2016 April 1, 2016 January 1, 2016 October 1, 2015
Zone Peril 1-in-250
year PML
 

1-in-500
year PML
(Earthquake
perils
only)

1-in-250
year PML
 

1-in-500
year PML
(Earthquake
perils
only)

1-in-250
year PML
 

1-in-500
year PML
(Earthquake
perils
only)

1-in-250
year PML

 

1-in-500
year PML
(Earthquake
perils
only)

1-in-250
year PML

 

1-in-500
year PML
(Earthquake
perils
only)

U.S. Southeast Hurricane $ 496 $ 496 $ 501 $ 580 $ 533
U.S. Northeast Hurricane 560 560 598 701 708
U.S. Gulf Coast Hurricane 502 502 502 596 577
Caribbean Hurricane 165 165 154 180 174
Europe Windstorm 387 387 375 461 544
Japan Typhoon 190 190 178 195 195
California Earthquake 462 $ 595 462 $ 595 476 $ 592 553 $ 699 469 $ 588
British Columbia Earthquake 161 317 161 317 165 313 196 358 199 379
Japan Earthquake 315 349 315 349 302 341 335 383 377 421
Australia Earthquake 187 258 187 258 214 295 241 325 236 350
New Zealand Earthquake 147 211 147 211 125 182 133 197 161 205
 

(1)

The PML estimates are pre-tax and net of retrocession and
reinstatement premiums. The peril zones in this disclosure are
major peril zones for the industry. The Company has exposures in
other peril zones that can potentially generate losses greater
than the PML estimates in this disclosure.

 

For more information regarding cautionary language related to
the Natural Catastrophe PML disclosure and the forward-looking
statements, as well as uncertainties and limitations associated
with certain assumptions and the methodology used, you must refer
to the Company's natural catastrophe PML information and
definitions, see Business - Natural Catastrophe Probable Maximum
Loss (PML) in Item 1 of Part 1 of the Company's Annual Report on
Form 10-K for the year ended December 31, 2015.

 
 

PartnerRe Ltd.

Non-GAAP Financial Measures - Regulation G

In addition to the GAAP financial measures set forth herein, the Company
has also included certain non-GAAP financial measures within the meaning
of Regulation G. Management believes that these non-GAAP financial
measures are important to certain stakeholders (including clients,
investors, analysts, rating agencies and others) who use the Company's
financial information and will help provide a consistent basis for
comparison between quarters and for comparison with other companies
within the industry. However, these non-GAAP measures should be
considered an addition to, and not a substitute for, measures of
financial performance prepared in accordance with GAAP.

The reconciliation of non-GAAP financial measures to the most comparable
GAAP financial measures in accordance with Regulation G is included
within the relevant tables.

Operating Earnings (Loss) available to PartnerRe Common Shareholders
(Operating Earnings (Loss)); Operating Earnings (Loss), adjusted by
transaction and severance costs' Annualized Operating Return on Average
Common Shareholders' Equity (Annualized Operating ROE); Annualized
Operating ROE, adjusted by transaction and severance costs; net income
(loss), adjusted by transaction and severance costs; and annualized net
income (loss) ROE, adjusted by transaction and severance costs:
The
Company uses Operating Earnings (Loss) and Annualized Operating ROE to
measure performance, as these measures focus on the underlying
fundamentals of the Company's operations. Operating Earnings (Loss)
exclude the impact of net realized and unrealized gains and losses on
investments, net of tax (except where the Company has made a strategic
investment in an insurance or reinsurance related investee), net foreign
exchange gains and losses, net of tax, loss on redemption of preferred
shares and the interest in earnings (losses) of equity method
investments, net of tax (except where the Company has made a strategic
investment in an insurance or reinsurance related investee and where the
Company does not control the investee's activities), and the
amalgamation termination fee and reimbursement of expenses paid to Axis
Capital (included in other expenses) and are calculated after preferred
dividends. The Company calculates Annualized Operating ROE using
Operating Earnings (Loss) for the period divided by the average common
shareholders' equity outstanding for the period. Operating Earnings
(Loss) should not be viewed as a substitute for Net Income (Loss)
prepared in accordance with GAAP. Annualized Operating ROE supplements
GAAP information. Operating Earnings (Loss), adjusted by transaction and
severance costs and Annualized Operating ROE, adjusted by transaction
and severance costs exclude the impact of transaction costs related to
the Company's merger and acquisition activity; severance costs related
to the reorganization of its business units, investment operations and
certain executive changes; and the loss on redemption of senior notes.
Net income (loss) adjusted by transaction and severance costs, and
annualized net income (loss) ROE, adjusted by transaction and severance
costs, also exclude the loss on preferred shares.

Tangible Book Value: The Company calculates Tangible Book Value
using common shareholders' equity attributable to PartnerRe less
goodwill and intangible assets, net of tax.

Total Capital: The Company calculates Total Capital as the sum of
total shareholders' equity attributable to PartnerRe, and debt related
to senior notes and capital efficient notes issued externally. The
Company uses Total Capital as a measure to manage the capital structure
of the Company.

Basis of presentation: On March 18, 2016 Exor N.V. acquired 100%
ownership of the Company's common shares. The common shares were
delisted and no longer traded on the NYSE. On October 27, 2016, Exor
N.V. changed its name to EXOR Nederland N.V. Accordingly, all net income
per share, operating earnings per share and book value per share data
for the current year and prior year periods is no longer meaningful and
has been excluded. As a result of these changes, the Company also
redefined its calculation of Annualized Operating ROE to be based on
average common shareholders' equity. Accordingly, comparative data have
been recast to conform to the current presentation.

As a result of recent organizational changes, effective July 1, 2016 the
Company redefined its financial reporting segments into the following
three segments: Property & Casualty (P&C), Specialty, and Life and
Health. Data shown for all periods in the segment information tables has
been recast to conform to the new presentation. The Company uses
technical ratio and technical result as measures of underwriting
performance. The technical ratio is defined as the sum of the loss and
acquisition ratios. These metrics exclude other expenses. The Company
also uses combined ratio to measure results for the total Non-life P&C
and Specialty segments. The combined ratio is the sum of the technical
and other expense ratios. The Company uses allocated underwriting result
as a measure of underwriting performance for its Life and Health
segment. This metric is defined as net premiums earned, other income or
loss and allocated net investment income less life policy benefits,
acquisition costs and other expenses.

 
 

PartnerRe Ltd.

Reconciliation of GAAP and non-GAAP measures

(in thousands of U.S. dollars)

(Unaudited)

   
For the three months ended
December 31,   September 30,   June 30,   March 31,   December 31,
2016 2016 2016 2016 2015
 
Beginning of period common shareholders' equity $ 6,299,886 $ 6,169,310 $ 6,056,435 $ 6,046,751 $ 5,921,387
End of period common shareholders' equity 5,983,685   6,299,886   6,169,310   6,056,435   6,046,751  
Average common shareholders' equity(1) $ 6,141,786   $ 6,234,598   $ 6,112,873   $ 6,051,593   $ 5,984,069  
 
Annualized return on average common shareholders' equity calculated
with net (loss) income attributable to PartnerRe common shareholders
(2)
(12.4 )% 15.4 % 8.9 % 13.3 % 10.9 %
Less:
Annualized net realized and unrealized investment (losses) gains,
net of tax, on average common shareholders' equity(1)
(20.6 ) 3.6 10.6 9.8 (1.5 )
Annualized net foreign exchange gains (losses), net of tax, on
average common shareholders' equity(1)
2.3 (0.3 ) 2.3 0.6 (0.2 )
Annualized net loss on redemption of preference shares (0.3 )
Annualized net interest in (losses) earnings of equity method
investments, net of tax, on average common shareholders' equity(1)
(1.9 ) 0.2   0.3     0.3  
Annualized operating return on average common shareholders' equity(1) 8.1 % 11.9 % (4.3 )% 2.9 % 12.3 %
Net (loss) income attributable to PartnerRe(3) $ (173,697 ) $ 254,464 $ 150,915 $ 215,626 $ 176,511
Less:
Net realized and unrealized investment (losses) gains, net of tax (316,808 ) 56,370 162,195 148,060 (22,757 )
Net foreign exchange gains (losses), net of tax 35,234 (4,458 ) 35,669 9,643 (3,406 )
Interest in (losses) earnings of equity method investments, net of
tax
(29,599 ) 3,384 4,491 (499 ) 4,632
Dividends to preferred shareholders 12,492   14,184   14,184   14,184   14,184  
Operating earnings (loss) attributable to PartnerRe common
shareholders
$ 124,984   $ 184,984   $ (65,624 ) $ 44,238   $ 183,858  
 

(1)

Average common shareholders' equity is calculated by using the
sum of the beginning of period and end of period common
shareholders' equity divided by two.

(2)

Net (loss) income attributable to PartnerRe common shareholders
is calculated after preferred dividends and the loss on redemption
of preferred shares

(3)

Net (loss) income attributable to PartnerRe is calculated
before preferred dividends and the loss on redemption of preferred
shares

 
 

PartnerRe Ltd.

Reconciliation of GAAP and non-GAAP measures

(in thousands of U.S. dollar (Unaudited)

     
For the year ended
December 31,     December 31,
2016 2015
 
Beginning of period common shareholders' equity $ 6,046,751 $ 6,195,160
End of period common shareholders' equity 5,983,685   6,046,751  
Average common shareholders' equity (1) $ 6,015,218   $ 6,120,956  
 
Return on average common shareholders' equity(1) calculated
with net income attributable to common shareholders(2)
6.4 % 0.8 %
Less:
Net realized and unrealized investment gains (losses), net of tax,
on average common shareholders' equity(1)
0.8 (4.3 )
Net foreign exchange gains (losses), net of tax, on average common
shareholders' equity(1)
1.3 (0.7 )
Net loss on redemption of preference shares (0.1 )
Net interest in (losses) earnings of equity method investments, net
of tax, on average common shareholders' equity(1)
(0.4 ) 0.1
Amalgamation termination fee and reimbursement of expenses, on
average common shareholders' equity(1)
  (5.1 )
Operating return on average common shareholders' equity (1) 4.8 % 10.8 %
Net income attributable to PartnerRe(3) $ 447,308 $ 104,381
Less:
Net realized and unrealized investment gains (losses), net of tax 49,817 (261,434 )
Net foreign exchange gains (losses), net of tax 76,088 (40,198 )
Interest in (losses) earnings of equity method investments, net of
tax
(22,222 ) 5,806
Amalgamation termination fee and reimbursement of expenses (315,000 )
Dividends to preferred shareholders 55,043   56,735  
Operating earnings attributable to PartnerRe common shareholders $ 288,582   $ 658,472  
 

(1)

Average common shareholders' equity is calculated by using the
sum of the beginning of period and end of period common
shareholders' equity divided by two.

(2)

Net income attributable to PartnerRe common shareholders is
calculated after preferred dividends and the loss on redemption of
preferred shares

(3)

Net (loss) income attributable to PartnerRe is calculated
before preferred dividends and the loss on redemption of preferred
shares

 
 

PartnerRe Ltd.

Reconciliation of GAAP and non-GAAP measures

(in thousands of U.S. dollars)

(Unaudited)

       
For the three months ended For the year ended
December 31,   December 31, December 31,   December 31,
2016 2015 2016 2015
Annualized return on average common shareholders' equity(1)
calculated with net (loss) income attributable to common shareholders
(12.4 )% 10.9 % 6.4 % 0.8 %
Add:
Transaction(3) and severance related costs, net of tax 1.9   1.4   2.2   6.6  
Annualized return on average common shareholders' equity(1)
calculated with net (loss) income attributable to common
shareholders, adjusted by transaction and severance costs
(10.5 )% 12.3 % 8.6 % 7.4 %
 
Net (loss) income attributable to PartnerRe common shareholders(2) $ (191,097 ) $ 162,327 $ 387,357 $ 47,646
Add:
Transaction(3) and severance related costs, net of tax 30,465   21,791   129,530   405,074  
Net (loss) income attributable to PartnerRe common shareholders(2),
adjusted by transaction and severance costs
$ (160,632 ) $ 184,118   $ 516,887   $ 452,720  
 
Annualized operating return on average common shareholders' equity(1) 8.1 % 12.3 % 4.8 % 10.8 %
Add:
Transaction(3) and severance related costs, net of tax 1.7   1.4   2.1   1.4  
Annualized operating return on average common shareholders' equity(1),
adjusted by transaction and severance costs
9.8 % 13.7 % 6.9 % 12.2 %
 
Operating earnings attributable to PartnerRe common shareholders $ 124,984 $ 183,858 $ 288,582 $ 658,472
Add:
Transaction(3) and severance related costs, net of tax 25,557   21,791   124,622   90,074  
Operating earnings attributable to PartnerRe common shareholders,
adjusted by transaction(3) and severance costs
$ 150,541   $ 205,649   $ 413,204   $ 748,546  
 

(1)

Average common shareholders' equity is calculated by using the
sum of the beginning of period and end of period common
shareholders' equity divided by two.

(2)

Net income attributable to PartnerRe common shareholders is
calculated after preferred dividends and the loss on redemption of
preferred shares

(3)

Transaction costs include costs incurred related to the EXOR
acquisition, the terminated amalgamation with Axis Capital, the
loss on redemption of senior notes and preferred shares, and the
negotiated earn-out consideration paid to the former shareholders
of Presidio Reinsurance Group, Inc.

 
 

PartnerRe Ltd.

Reconciliation of GAAP and non-GAAP measures

(in thousands of U.S. dollars)

(Unaudited)

             
December 31, September 30, June 30, March 31, December 31, December 31,
2016 2016 2016 2016 2015 2014
 
Total shareholders' equity $ 6,687,912 $ 7,153,636 $ 7,023,060 $ 6,910,185 $ 6,902,951 $ 7,104,411
Less:
Preferred shares, aggregate liquidation value 704,227 853,750 853,750 853,750 853,750 853,750
Noncontrolling interests       2,450   55,501
Common shareholders' equity attributable to PartnerRe 5,983,685 6,299,886 6,169,310 6,056,435 6,046,751 6,195,160
Less:
Goodwill 456,380 456,380 456,380 456,380 456,380 456,380
Intangible assets, net of tax 73,022   77,431 82,811   86,846   90,326   105,652
Tangible book value $ 5,454,283   $ 5,766,075 $ 5,630,119   $ 5,513,209   $ 5,500,045   $ 5,633,128

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