Market Overview

PartnerRe Ltd. Reports Second Quarter and Half Year 2017 Results

Share:
  • Second Quarter Net Income of $191 million, resulting in an
    Annualized Net Income ROE of 12.6%
  • Second Quarter Operating Earnings of $97 million, driven by
    Non-life combined ratio of 87.7%, resulting in an Annualized Operating
    ROE of 6.4%
  • Book Value or common shareholder's equity of $6.2 billion, a 3.0%
    increase compared to December 31, 2016

PartnerRe Ltd. ("the Company") today reported a net income available to
common shareholder of $191 million for the second quarter of 2017
compared to $137 million for the same period in 2016. Net income
available to common shareholder includes net realized and unrealized
gains on investments of $129 million in the second quarter of 2017
compared to a $192 million gain in the same period of 2016. Operating
earnings were $97 million for the second quarter of 2017 compared to
operating losses of $66 million for the same period of 2016.

Net income available to common shareholder for the first six months of
2017 was $229 million compared to $338 million in the same period of
2016. Net income available to common shareholder includes net realized
and unrealized gains on investments of $152 million compared to $359
million in the same period of 2016. Operating earnings for the first six
months of 2017 were $140 million compared to operating losses of $21
million for the same period of 2016.

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 dividends to preferred shareholders.

Operating earnings and net income available to common shareholder, and
the associated annualized ROEs, for the second quarters and the first
six months 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 related costs, net of tax
(1):
Q2 2017 Q2 2016 Half Year
2017
Half Year
2016
Operating earnings $ 103 $ (44 ) $ 154 $ 60
Annualized Operating ROE 6.8 % (2.9 )% 5.1 % 2.0 %
Net income available to common shareholder(2) $ 198 $ 158 $ 243 $ 420
Annualized net income available to common shareholder ROE 13.0 % 10.4 % 8.0 % 13.7 %
 

_______________________

(1)

 

The adjustments of $7 million and $13 million for the three and
six months ended June 30, 2017, respectively, primarily
represented transaction costs related to the Aurigen acquisition
and reorganization related severance costs. The adjustment of $22
million for the three months ended June 30, 2016 represented
reorganization related severance costs and costs related to
certain executive changes. The adjustment of $82 million for the
six months ended June 30, 2016 primarily represented transaction
costs and accelerated stock-based compensation expense related to
the closing of the acquisition by Exor as well as reorganization
related severance costs.

(2)

Net income available to common shareholder is calculated after
preferred dividends.

 

Commenting on results, PartnerRe President and Chief Executive Officer
Emmanuel Clarke said, "We delivered good results in the second quarter
with an annualized adjusted Net Income ROE of 13.0% driven by strong
Non-Life underwriting results and Investments contribution. The Non-life
combined ratio of 87.7% was driven by a strong performance in our
Specialty segment, with a technical ratio of 77.9%, highlighting the
quality and diversification of our Specialty portfolio, but also by an
improvement in our P&C non-CAT accident year technical ratio compared to
the second quarter of 2016. Having successfully completed the
acquisition of Aurigen in the quarter, we will now work on leveraging
this platform to expand our footprint in North America, consistent with
our strategy to increase our revenues and profitability in the broader
Life and Health segment."

Highlights for the second quarter of 2017 compared to the same period of
2016 include the following:

Non-Life:

  • Non-life net premiums written were down 2% compared to the same period
    of 2016, primarily as a result of cancellations and non-renewals,
    higher premiums ceded and foreign exchange movements.
  • The Non-life combined ratio of 87.7% was 20.6 points lower than the
    ratio reported in the second quarter of 2016, due to: (i) the absence
    of catastrophic or large loss events in 2017 compared to a high level
    of catastrophe and weather-related activity and a significant energy
    loss impacting the second quarter of 2016; and (ii) improvements in
    attritional accident year technical ratio in both Specialty and P&C
    segments.
  • The Non-life combined ratio continued to benefit from strong net
    favorable prior years' reserve development of $110 million (12.6
    points), with both the P&C and Specialty segments experiencing net
    favorable development from prior accident years primarily due to
    actual reported losses emerging below expectations. The combined ratio
    for the second quarter of 2016 included favorable prior year
    development of $148 million (15.3 points).

Life and Health:

  • Net premiums written were up 21% in the second quarter of 2017
    compared to the same period of 2016, primarily driven by the inclusion
    of the Aurigen premiums, growth in health business and new longevity
    business, partially offset by the impact of foreign exchange.
  • Allocated underwriting result, which includes allocated investment
    income and other expenses, was a loss of $13 million in the second
    quarter of 2017 compared to a gain of $12 million in the same period
    of 2016. This decrease primarily reflects lower profitability in the
    health line of business due to a high frequency of mid-sized losses in
    underwriting years 2015 and 2016.

Investments:

  • Total net investment return in the second quarter of 2017 was 1.4%,
    based on a total net gain of $234 million, which includes the realized
    and unrealized investment gains of $129 million, net investment income
    of $103 million and interest in earnings of equity method investments
    of $2 million. This compares to a positive total net investment return
    of $298 million, or 1.8%, for the second quarter of 2016.
  • The total net investment return in the second quarter of 2017 was
    primarily generated by fixed income securities, where portfolio yield
    was complemented by mark-to-market gains mostly generated by a
    narrowing of investment grade corporate spreads and a $21 million
    positive contribution from public equity funds.
  • Net investment income of $103 million was up $2 million, or 2%,
    compared to the second quarter of 2016, mainly reflecting lower
    investment expenses.
  • Reinvestment rates are currently 2.7%, which compares to our existing
    fixed income yield of 2.7%.

Other Income Statement Items:

  • Other expenses of $90 million in the second quarter of 2017 decreased
    by $33 million compared to $123 million for same period of 2016. Other
    expenses, adjusted for transaction and severance related costs, of $7
    million in the second quarter of 2017 compared to $27 million in the
    second quarter of 2016 decreased by $13 million.
  • Interest expense was $11 million, down $1 million compared to the
    second quarter of 2016 due to the redemption of $250 million of senior
    notes in the fourth quarter of 2016, partially offset by a subsequent
    issuance of debt at a lower interest rate.
  • The preferred dividends of $12 million were down $3 million compared
    to the second quarter of 2016 as a result of the redemption of $150
    million of Series D and E preferred shares during the fourth quarter
    of 2016.
  • Net foreign exchange losses in the quarter were $29 million, mainly
    driven by the losses on revaluation of unhedged liabilities.
  • For the second quarter of 2017, the effective tax rate on operating
    earnings was 9.3% (a tax expense on earnings) mainly due to the
    geographical split of pretax income and losses. The effective tax rate
    on non-operating earnings was 10.0% (a tax expense on earnings) for
    the second quarter of 2017.

Balance Sheet and Capitalization:

  • Total investments, cash and cash equivalents and funds held – directly
    managed were $16.9 billion at June 30, 2017, up 0.3% compared to
    December 31, 2016.
  • Cash and cash equivalents and fixed maturities, which are government
    issued or investment grade fixed income securities, were $14.3 billion
    at June 30, 2017, representing 87% of the cash and cash equivalents
    and total investments.
  • The average rating and the average duration of the fixed income
    portfolio at June 30, 2017 was A and 4.8 years respectively, while the
    average duration of the Company's liabilities was 4.6 years.
  • Total capital was $8.3 billion at June 30, 2017, up 3.1% compared to
    December 31, 2016, primarily due to net income for the first six
    months of 2017.
  • Common shareholder's equity (or book value) and tangible book value
    were $6.2 billion and $5.6 billion, respectively, at June 30, 2017, up
    3.0% and 2.1%, respectively, compared to December 31, 2016, primarily
    due to net income for the first six months of 2017.
  • During the second quarter of 2017, the Company paid a dividend of $25
    million to Exor, its parent company.
  • On May 22, 2017, the Company's Long-term Incentive (LTI) Committee of
    the Board of Directors approved the designation of a new class of
    common shares known as the Class B Common Shares. The Class B Common
    Shares rank junior to the preferred shares of the Company and pari
    passu with the existing common shares, and are only available for
    issue to executive committee members of the Company in lieu of LTI
    cash awards, at the Company's sole discretion. The Class B Shares may
    only be repurchased by the Company and are not permitted to be sold or
    otherwise transferred. The Class B shares are treated as liability
    awards and must be held for a period of three years from the date of
    grant before they are eligible for repurchase by the Company. The
    compensation cost for Class B shares recorded in the first six months
    of 2017 was $0.6 million.
  • On June 30, 2017, the Company submitted its first required Financial
    Condition Report (FCR) for the year ended December 31, 2016 to the
    Company's Group regulator, the Bermuda Monetary Authority. The FCR
    includes, among other disclosures, the Group's required and available
    statutory capital. The Company uses the standard Bermuda Solvency
    Capital Requirement (BSCR) model to assess the Enhanced Capital
    Requirement (ECR), the required statutory capital and surplus. In the
    FCR, the Company reported an ECR of $2,484 million, Available
    Statutory Economic Capital and Surplus of $8,252 million, and a BSCR
    ratio of 332% as at December 31, 2016. Effective January 1, 2016,
    Bermuda was deemed Solvency II equivalent under the European Union's
    (EU) Solvency II initiative.

Cash Flows:

  • Cash provided by operating activities was $129 million in the second
    quarter of 2017 compared to $28 million in the second quarter of 2016.
    This cashflow was primarily driven by investment income.
  • Cash used in investing activities was $637 million in the second
    quarter of 2017 compared to cash provided by investing activities of
    $232 million in the same period in 2016. The cash outflows in the
    second quarter of 2017 were primarily due to the acquisition of
    Aurigen Capital Ltd. (Aurigen) and investments in public equity funds.
  • Cash used in financing activities was $244 million in the second
    quarter of 2017 compared to $16 million in the same period in 2016.
    The cash outflows in the second quarter of 2017 were driven by a debt
    redemption of debt acquired in the Aurigen acquisition as well as the
    dividends paid to common and preferred shareholders.

The data and comments provided above are from, or have been derived
from, PartnerRe's U.S. GAAP consolidated balance sheets as of June 30,
2017 and December 31, 2016 and the related consolidated statements of
operations for the three months and six months ended June 30, 2017 and
2016. 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 June 30, 2017, total assets
were $22.8 billion, total capital was $8.3 billion and total
shareholders' equity was $6.9 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 Income (1)

(Expressed in thousands of U.S. dollars)

(Unaudited)

 
For the three months ended For the six months ended
June 30, 2017   June 30, 2016 June 30, 2017   June 30, 2016
Revenues
Gross premiums written $ 1,459,689   $ 1,380,927   $ 2,962,357   $ 3,009,936  
Net premiums written $ 1,297,781 $ 1,254,398 $ 2,649,881 $ 2,755,115
Increase in unearned premiums (81,055 ) (151 ) (380,178 ) (359,152 )
Net premiums earned 1,216,726 1,254,247 2,269,703 2,395,963
Net investment income 102,811 101,182 201,381 204,170
Net realized and unrealized investment gains 129,389 191,941 152,257 359,134
Other income 4,028   3,467   7,437   8,307  
Total revenues 1,452,954   1,550,837   2,630,778   2,967,574  
Expenses
Losses and loss expenses 806,416 982,855 1,573,565 1,697,123
Acquisition costs 287,600 283,534 512,300 566,508
Other expenses (2) 90,198 123,508 179,841 276,183
Interest expense 11,121 12,256 21,374 24,515
Amortization of intangible assets 6,322 6,587 12,026 13,175
Net foreign exchange losses (gains) 28,479   (35,666 ) 66,130   (37,740 )
Total expenses 1,230,136   1,373,074   2,365,236   2,539,764  
Income before taxes and interest in earnings of equity method
investments
222,818 177,763 265,542 427,810
Income tax expense 21,673 32,387 22,960 63,341
Interest in earnings of equity method investments 1,623   5,539   9,989   2,072  
Net income 202,768 150,915 252,571 366,541
Preferred dividends 11,604   14,184   23,208   28,367  
Net income available to common shareholder $ 191,164   $ 136,731   $ 229,363   $ 338,174  
Comprehensive income $ 189,558   $ 129,032   $ 225,014   $ 364,749  
 

(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 and six months ended June 30, 2017
include $7 million and $16 million, respectively, of transaction
costs primarily related to the Aurigen acquisition and
reorganization related severance costs. Other expenses for the
three months ended June 30, 2016 include $27 million of
reorganization related severance costs and costs related to
certain executive changes. Other expenses for the six months ended
June 30, 2016 include $92 million of transaction costs and
accelerated stock-based compensation expense related to the
closing of the acquisition by Exor as well as reorganization
related severance costs.

 
 

PartnerRe Ltd.

Consolidated Balance Sheets

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

(Unaudited)

       
June 30, 2017 December 31, 2016
Assets
Investments:
Fixed maturities, at fair value $ 13,532,140 $ 13,432,501
Short-term investments, at fair value 61,951 21,697
Equities, at fair value 557,762 38,626
Other invested assets 1,117,537   1,075,637  
Total investments 15,269,390 14,568,461
Funds held – directly managed 523,631 511,324
Cash and cash equivalents 1,118,129 1,773,328
Accrued investment income 116,522 112,580
Reinsurance balances receivable 3,035,277 2,492,069
Reinsurance recoverable on paid and unpaid losses 504,749 331,704
Funds held by reinsured companies 727,026 685,069
Deferred acquisition costs 690,538 597,239
Deposit assets 76,104 74,273
Net tax assets 116,857 194,170
Goodwill 456,380 456,380
Intangible assets 172,855 107,092
Other assets and receivables 40,083   35,105  
Total assets $ 22,847,541   $ 21,938,794  
Liabilities
Non-life reserves $ 9,196,466 $ 8,985,434
Life and health reserves 2,271,323 1,984,096
Unearned premiums 2,191,899 1,623,796
Other reinsurance balances payable 313,534 281,973
Deposit liabilities 12,590 15,026
Net tax liabilities 180,537 166,113
Accounts payable, accrued expenses and other 400,088 849,572
Debt related to senior notes 1,345,397 1,273,883
Debt related to capital efficient notes 70,989   70,989  
Total liabilities 15,982,823   15,250,882  
Shareholders' Equity
Common shares (par value $0.00000001; issued: 100,000,000 shares)
Preferred shares (par value $1.00; issued and outstanding:
28,169,062 shares; aggregate liquidation value: $704,227)
28,169 28,169
Additional paid-in capital 2,396,530 2,396,530
Accumulated other comprehensive loss (102,127 ) (74,569 )
Retained earnings 4,542,146   4,337,782  
Total shareholders' equity 6,864,718   6,687,912  
Total liabilities and shareholders' equity $ 22,847,541   $ 21,938,794  
 
 

PartnerRe Ltd.

Condensed Consolidated Statements of Cash Flows

(Expressed in millions of U.S. dollars)

(Unaudited)

       
For the three months ended For the six months ended
June 30,   June 30, June 30,   June 30,
2017 2016 2017 2016
Net cash provided by operating activities $ 129 $ 28 $ 128 $ 119
Net cash (used in) provided by investing activities(1)(2) (637 ) 232 (551 ) 570
Net cash used in financing activities(3)(4) (244 ) (16 ) (256 ) (279 )
Effect of foreign exchange rate changes on cash 19   (37 ) 24   (30 )
(Decrease) increase in cash and cash equivalents (733 ) 207 (655 ) 380
Cash and cash equivalents - beginning of period 1,851   1,750   1,773   1,577  
Cash and cash equivalents - end of period $ 1,118   $ 1,957   $ 1,118   $ 1,957  
 

(1)

 

Net cash provided by investing activities in the six months
ended June 30, 2016 includes cash generated through investment
activities in order to fund the payment of the special dividend
upon closing of the merger with Exor N.V. (Special Dividend).

(2)

Net cash used in investing activities in the three months and
six months ended June 30, 2017 reflects cash used to fund the
Aurigen acquisition and investments in public equity funds.

(3)

Net cash used in financing activities in the six months ended
June 30, 2016 includes the payment of the Special Dividend and the
settlement of certain share-based awards.

(4)

Net cash used in financing activities in the three months and
six months ended June 30, 2017 reflects a redemption of debt by
Aurigen.

 
 

PartnerRe Ltd.

Consolidated Statements of Comprehensive Income

(Expressed in thousands of U.S. dollars)

(Unaudited)

       
For the three months ended For the six months ended
June 30, 2017   June 30, 2016 June 30, 2017   June 30, 2016
Net income $ 202,768 $ 150,915 $ 252,571   $ 366,541
Change in currency translation adjustment (11,775 ) (22,997 ) (25,142 ) (1,874 )
Change in net unrealized gains or losses on investments, net of tax (76 ) (207 ) (153 ) (410 )
Change in unfunded pension obligation, net of tax (1,359 ) 1,321   (2,262 ) 492  
Comprehensive income $ 189,558   $ 129,032   $ 225,014   $ 364,749  
 
 

PartnerRe Ltd.

Segment Information

(Expressed in millions of U.S. dollars, except percentages)

(Unaudited)

   
For the three months ended June 30, 2017
 

P&C
segment

 

Specialty
segment

 

Total
Non-life

  Life
and Health
segment
  Corporate
and Other
  Total
Gross premiums written $ 618 $ 484 $ 1,102 $ 358 $ $ 1,460
Net premiums written $ 526 $ 428 $ 954 $ 344 $ $ 1,298
Increase in unearned premiums (74 ) (6 ) (80 ) (1 )   (81 )
Net premiums earned $ 452 $ 422 $ 874 $ 343 $ $ 1,217
Losses and loss expenses (281 ) (208 ) (489 ) (317 ) (806 )
Acquisition costs (129 ) (121 ) (250 ) (38 )   (288 )
Technical result $ 42 $ 93 $ 135 $ (12 ) $ $ 123
Other income 3 1 4
Other expenses (27 ) (18 ) (45 ) (90 )
Underwriting result $ 108 $ (27 ) n/a $ 37
Net investment income 14   89   103  
Allocated underwriting result (1) $ (13 ) n/a n/a
Net realized and unrealized investment gains 129 129
Interest expense (11 ) (11 )
Amortization of intangible assets (6 ) (6 )
Net foreign exchange losses (29 ) (29 )
Income tax expense (22 ) (22 )
Interest in earnings of equity method investments 2   2  
Net income n/a $ 203  
Loss ratio (2) 62.2 % 49.4 % 56.0 %
Acquisition ratio (3) 28.6   28.5   28.6  
Technical ratio (4) 90.8 % 77.9 % 84.6 %
Other expense ratio (5) 3.1  
Combined ratio (6) 87.7 %
 
For the three months ended June 30, 2016

P&C
segment

Specialty
segment

Total
Non-life
Life
and Health
segment
Corporate
and Other
  Total
Gross premiums written $ 570 $ 515 $ 1,085 $ 296 $ $ 1,381
Net premiums written $ 482 $ 488 $ 970 $ 284 $ $ 1,254
Decrease (increase) in unearned premiums 5   (3 ) 2   (2 )    
Net premiums earned $ 487 $ 485 $ 972 $ 282 $ $ 1,254
Losses and loss expenses (396 ) (343 ) (739 ) (244 ) (983 )
Acquisition costs (128 ) (130 ) (258 ) (25 )   (283 )
Technical result $ (37 ) $ 12 $ (25 ) $ 13 $ $ (12 )
Other income 1 2 3
Other expenses (56 ) (17 ) (50 ) (123 )
Underwriting result $ (80 ) $ (2 ) n/a $ (132 )
Net investment income 14   87   101  
Allocated underwriting result (1) $ 12 n/a n/a
Net realized and unrealized investment gains 192 192
Interest expense (12 ) (12 )
Amortization of intangible assets (7 ) (7 )
Net foreign exchange gains 36 36
Income tax expense (32 ) (32 )
Interest in earnings of equity method investments 5   5  
Net income n/a $ 151  
Loss ratio (2) 81.5 % 70.6 % 76.0 %
Acquisition ratio (3) 26.2   26.8   26.5  
Technical ratio (4) 107.7 % 97.4 % 102.5 %
Other expense ratio (5) 5.8  
Combined ratio (6) 108.3 %
 

(1)

 

Allocated underwriting result is defined as net premiums
earned, other income or loss and allocated net investment income
less losses and loss expenses on life and health contracts,
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, except percentages)

(Unaudited)

     
For the six months ended June 30, 2017

P&C
segment

 

Specialty
segment

  Total
Non-life
  Life

and Health

segment

  Corporate

and Other

  Total
Gross premiums written $ 1,344 $ 952 $ 2,296 $ 666 $ $ 2,962
Net premiums written $ 1,170 $ 837 $ 2,007 $ 643 $ $ 2,650
Increase in unearned premiums (311 ) (58 ) (369 ) (11 )   (380 )
Net premiums earned $ 859 $ 779 $ 1,638 $ 632 $ $ 2,270
Losses and loss expenses (568 ) (437 ) (1,005 ) (569 ) (1,574 )
Acquisition costs (219 ) (223 ) (442 ) (70 )   (512 )
Technical result $ 72 $ 119 $ 191 $ (7 ) $ $ 184
Other income 1 6 7
Other expenses (56 ) (31 ) (93 ) (180 )
Underwriting result $ 136 $ (32 ) n/a $ 11
Net investment income 27   174   201  
Allocated underwriting result (1) $ (5 ) n/a n/a
Net realized and unrealized investment gains 152 152
Interest expense (21 ) (21 )
Amortization of intangible assets (12 ) (12 )
Net foreign exchange losses (66 ) (66 )
Income tax expense (23 ) (23 )
Interest in earnings of equity method investments 10   10  
Net income n/a $ 252  
Loss ratio (2) 66.2 % 56.0 % 61.3 %
Acquisition ratio (3) 25.5   28.6   27.0  
Technical ratio (4) 91.7 % 84.6 % 88.3 %
Other expense ratio (5) 3.4  
Combined ratio (6) 91.7 %
 
For the six months ended June 30, 2016

P&C
segment

Specialty
segment

Total
Non-life

Life
and Health
segment
Corporate

and Other

Total
Gross premiums written $ 1,375 $ 1,047 $ 2,422 $ 588 $ $ 3,010
Net premiums written $ 1,227 $ 967 $ 2,194 $ 561 $ $ 2,755
Increase in unearned premiums (260 ) (90 ) (350 ) (9 )   (359 )
Net premiums earned $ 967 $ 877 $ 1,844 $ 552 $ $ 2,396
Losses and loss expenses (669 ) (580 ) (1,249 ) (448 ) (1,697 )
Acquisition costs (259 ) (243 ) (502 ) (65 )   (567 )
Technical result $ 39 $ 54 $ 93 $ 39 $ $ 132
Other income 2 4 2 8
Other expenses (124 ) (35 ) (117 ) (276 )
Underwriting result $ (29 ) $ 8 n/a $ (136 )
Net investment income 28   176   204  
Allocated underwriting result (1) $ 36 n/a n/a
Net realized and unrealized investment gains 359 359
Interest expense (24 ) (24 )
Amortization of intangible assets (13 ) (13 )
Net foreign exchange gains 38 38
Income tax expense (63 ) (63 )
Interest in earnings of equity method investments 2   2  
Net income n/a $ 367  
Loss ratio (2) 69.2 % 66.2 % 67.7 %
Acquisition ratio (3) 26.8   27.7   27.3  
Technical ratio (4) 96.0 % 93.9 % 95.0 %
Other expense ratio (5) 6.7  
Combined ratio (6) 101.7 %
 
 

PartnerRe Ltd.

Investment Portfolio

(Expressed in millions of U.S. dollars)

(Unaudited)

       
June 30, 2017 December 31, 2016
Investments:
Fixed maturities
U.S. government $ 2,424 16 % $ 3,489 24 %
U.S. government sponsored enterprises 49 52
U.S. states, territories and municipalities 701 5 685 5
Non-U.S. sovereign government, supranational and government related 1,685 11 1,136 8
Corporates 6,320 41 5,705 39
Mortgage/asset-backed securities 2,353     16   2,365   16  
Total fixed maturities 13,532 89 13,432 92
Short-term investments 62 22
Equities 558 4 39
Other invested assets 1,118     7   1,076   8  
Total investments $ 15,270     100 % $ 14,569   100 %
Cash and cash equivalents 1,118 1,773
Total investments and cash and cash equivalents 16,388 16,342
Maturity distribution:
One year or less $ 285 2 % $ 264 2 %
More than one year through five years 4,837 36 5,381 40
More than five years through ten years 3,898 29 3,703 27
More than ten years 2,221     16   1,741   13  
Subtotal 11,241 83 11,089 82
Mortgage/asset-backed securities 2,353     17   2,365   18  
Total $ 13,594     100 %   $ 13,454   100 %
Credit quality by market value (Total
investments excluding Other invested assets):
AAA 8 % 6 %
AA 45 52
A 19 15
BBB 25 24
Below Investment Grade/Unrated 3         3  
100 %       100 %
Expected average duration (1) 4.8 Yrs 4.9 Yrs
Average yield to maturity at market (1) 2.7 % 2.7 %
Average credit quality 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)

June 30, 2017
      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 $ 1,265,461 20.0 % 7.7 % 1.0 %
Consumer noncyclical 1,305,181 20.7 8.0 0.7
Consumer cyclical 514,110 8.1 3.1 0.4
Industrials 680,044 10.8 4.1 0.3
Energy 568,340 9.0 3.6 0.5
Communications 364,441 5.8 2.2 0.5
Utilities 335,328 5.3 2.0 0.2
Insurance 355,125 5.6 2.2 0.3
Real estate investment trusts 297,194 4.7 1.8 0.3
Technology 283,888 4.5 1.7 0.4
Basic materials 235,214 3.7 1.4 0.3
Catastrophe bonds 76,321 1.2 0.5
Longevity and mortality bonds 27,372 0.4 0.2 0.2
Government guaranteed corporate debt 11,796   0.2   0.1   0.1
Total Corporate bonds $ 6,319,815   100.0 % 38.6 %
Finance sector - Corporate bonds
Banks $ 722,584 11.4 % 4.4 %
Investment banking and brokerage 346,109 5.4 2.1
Financial services 93,982 1.5 0.6
Commercial and consumer finance 55,716 0.9 0.3
Other 47,070   0.7   0.3  
Total finance sector - Corporate bonds $ 1,265,461   19.9 % 7.7 %
AAA AA A BBB

Non-Investment

Grade/Unrated

Total
Credit quality of finance sector - Corporate bonds
Banks $ 20,180 $ 22,068 $ 382,116 $ 298,220 $ $ 722,584
Investment banking and brokerage 59,878 285,002 1,229 346,109
Financial services 33,757 26,826 33,399 93,982
Commercial and consumer finance 40,428 15,288 55,716
Other   6,289   25,742   15,039     47,070  
Total finance sector - Corporate bonds $ 20,180   $ 62,114   $ 534,990   $ 646,948   $ 1,229   $ 1,265,461  
% of total 2 % 5 % 42 % 51 % % 100 %
 

Concentration of investment risk

The top 10 Corporate bond issuers account for 17.9% of the Company's
total corporate bonds. The single largest issuer accounts for 2.6% 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 six months ended
June 30, 2017   June 30, 2016 June 30, 2017   June 30, 2016
Reconciliation of beginning and ending Non-life reserves:
Gross liability at beginning of period $ 9,044,854 $ 9,331,087 $ 8,985,434 $ 9,064,711
Reinsurance recoverable at beginning of period (273,860 ) (192,877 ) (266,742 ) (189,234 )
Net liability at beginning of period 8,770,994 9,138,210 8,718,692 8,875,477
Net incurred losses related to:
Current year 599,822 887,462 1,200,895 1,580,531
Prior years (110,123 ) (148,382 ) (196,185 ) (331,819 )
489,699 739,080 1,004,710 1,248,712
Change in reserve agreement (1) (6 ) 7,494 28,224
Net losses paid (564,735 ) (592,489 ) (1,136,297 ) (962,958 )
Effects of foreign exchange rate changes 173,086   (89,713 ) 274,439   5,633  
Net liability at end of period 8,869,038 9,195,088 8,869,038 9,195,088
Reinsurance recoverable at end of period 327,428   262,411   327,428   262,411  
Gross liability at end of period $ 9,196,466   $ 9,457,499   $ 9,196,466   $ 9,457,499  
 
Breakdown of gross liability at end of period:
Case reserves $ 4,063,374 $ 3,898,396 $ 4,063,374 $ 3,898,396
Additional case reserves 159,895 192,861 159,895 192,861
Incurred but not reported reserves 4,973,197   5,366,242   4,973,197   5,366,242  
Gross liability at end of period $ 9,196,466   $ 9,457,499   $ 9,196,466   $ 9,457,499  
Gross liability at end of period by Non-life segment:
P&C 6,305,478 6,426,127 6,305,478 6,426,127
Specialty 2,890,988   3,031,372   2,890,988   3,031,372  
Gross liability at end of period $ 9,196,466   $ 9,457,499   $ 9,196,466   $ 9,457,499  
Unrecognized time value of Non-life reserves (2) $ 472,683 $ 283,361 $ 472,683 $ 283,361
Non-life paid loss ratio data:
Non-life paid losses to incurred losses ratio 115.3 % 80.2 % 113.1 % 77.1 %
Non-life paid losses to net premiums earned ratio 64.6 % 61.0 % 69.4 % 52.2 %
 

(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 six months ended
June 30, 2017   June 30, 2016 June 30, 2017   June 30, 2016
Reconciliation of beginning and ending life and health reserves:
Gross liability at beginning of period $ 2,069,083 $ 2,089,055 $ 1,984,096 $ 2,051,935
Reinsurance recoverable at beginning of period (29,585 ) (43,236 ) (31,372 ) (42,773 )
Net liability at beginning of period 2,039,498 2,045,819 1,952,724 2,009,162
Liability acquired related to the acquisition of Aurigen 67,916 67,916
Net incurred losses related to:
Current year 301,871 246,732 584,599 466,182
Prior years 14,846   (2,957 ) (15,744 ) (17,771 )
316,717 243,775 568,855 448,411
Net losses paid (263,802 ) (219,005 ) (472,405 ) (406,886 )
Effects of foreign exchange rate changes 75,953   (59,610 ) 119,192   (39,708 )
Net liability at end of period 2,236,282 2,010,979 2,236,282 2,010,979
Reinsurance recoverable at end of period 35,041   35,269   35,041   35,269  
Gross liability at end of period $ 2,271,323   $ 2,046,248   $ 2,271,323   $ 2,046,248  
Life value in force $ 255,500 $ 153,100 $ 255,500 $ 153,100
 
 

PartnerRe Ltd.

Natural Catastrophe Probable Maximum Losses (PMLs)

(Expressed in millions of U.S. dollars)

(Unaudited)

 

Single occurrence estimated net PML exposure

         
April 1, 2017 January 1, 2017
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)
U.S. Southeast Hurricane $ 557 $ 631
U.S. Northeast Hurricane 567 616
U.S. Gulf Coast Hurricane 557 583
Caribbean Hurricane 184 196
Europe Windstorm 394 404
Japan Typhoon 204 198
California Earthquake 480 $ 633 488 $ 665
British Columbia Earthquake 159 312 166 307
Japan Earthquake 316 350 309 352
Australia Earthquake 150 211 148 184
New Zealand Earthquake 137 200 131 171
 

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, refer to the Company's natural
catastrophe PML information and definitions (see Risk Management—Natural
Catastrophe PML in Item 3 of the Company's Annual Report on Form 20-F
for the year ended December 31, 2016).

PartnerRe Ltd.

Definitions

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 Common Shareholders (Operating
Earnings (Loss)); Operating Earnings (Loss), adjusted by transaction and
severance costs; Annualized Operating Return on Average Common
Shareholder's 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, 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 are
calculated after preferred dividends. The Company calculates Annualized
Operating ROE using Operating Earnings (Loss) for the period divided by
the average common shareholder's 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.

Tangible Book Value: The Company calculates Tangible Book Value
using common shareholder's equity less goodwill and intangible assets,
net of tax.

Total Capital: The Company calculates Total Capital as the sum of
total shareholders' equity 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.

Other Items

Available Statutory Economic Capital and Surplus: The Company
calculates Available Statutory Economic Capital and Surplus as the total
shareholder's equity plus the debt related to senior and capital
efficient notes and any economic balance sheet adjustments (pursuant to
the Bermuda Insurance (Prudential Standards)(Insurance Group Solvency
Requirement) Rules 2011), less non-admitted assets such as goodwill and
other similar intangible assets which are not considered admissible for
statutory purposes.

Basis of presentation: On March 18, 2016, Exor N.V. (subsequently
renamed to EXOR Nederland N.V.) acquired 100% ownership of the Company's
common shares. The common shares were delisted and are no longer traded
on the NYSE. Accordingly, all net income per share, operating earnings
per share and book value per share data for the current year and prior
year periods are no longer meaningful and have been excluded. As a
result of these changes, the Company also redefined its calculation of
Annualized Operating ROE to be based on average common shareholder's
equity. Accordingly, comparative data has 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 and health losses and
loss expenses, 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 For the six months ended
June 30, 2017   June 30, 2016 June 30, 2017   June 30, 2016
 
Beginning of period common shareholder's equity $ 6,007,536 $ 6,056,435 $ 5,983,685 $ 6,046,751
End of period common shareholder's equity 6,160,491   6,169,310   6,160,491   6,169,310  
Average common shareholder's equity(1) $ 6,084,014   $ 6,112,873   $ 6,072,088   $ 6,108,031  
 
Annualized return on average common shareholders' equity
calculated with net income available to common shareholder

(2)
12.6 % 8.9 % 7.6 % 11.1 %
Less:
Annualized net realized and unrealized investment gains, net of tax,
on average common shareholder's equity(1)
7.6 10.6 4.5 10.2
Annualized net foreign exchange (losses) gains, net of tax, on
average common shareholder's equity(1)
(1.6 ) 2.3 (1.8 ) 1.5
Annualized net interest in earnings of equity method investments,
net of tax, on average common shareholder's equity(1)
0.2   0.3   0.3   0.1  
Annualized operating return on average common shareholder's equity(1) 6.4 % (4.3 )% 4.6 % (0.7 )%
 
Net income $ 202,768 $ 150,915 $ 252,571 $ 366,541
Less: Dividends to preferred shareholders 11,604   14,184   23,208   28,367  
Net income available to common shareholder 191,164 136,731 229,363 338,174
 
Less:
Net realized and unrealized investment gains, net of tax 115,811 162,195 135,262 310,255
Net foreign exchange (losses) gains, net of tax (24,122 ) 35,669 (54,979 ) 45,313
Interest in earnings of equity method investments, net of tax 2,754   4,491   8,583   3,992  
Operating earnings (losses) available to common shareholder $ 96,721   $ (65,624 ) $ 140,497   $ (21,386 )
 

(1)

 

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

(2)

Net income available to common shareholder is calculated after
preferred dividends.

 
 

PartnerRe Ltd.

Reconciliation of GAAP and non-GAAP measures

(in thousands of U.S. dollars)

(Unaudited)

       
For the three months ended For the six months ended
June 30, 2017   June 30, 2016 June 30, 2017   June 30, 2016
Annualized return on average common shareholder's equity(1)
calculated with net income available to common shareholder
12.6 % 8.9 % 7.6 % 11.1 %
Add:
Transaction and severance related costs(2), net of tax 0.4   1.5   0.4   2.6  
Annualized return on average common shareholder's equity(1)
calculated with net income available to common shareholder, adjusted
by transaction and severance costs
13.0 % 10.4 % 8.0 % 13.7 %
 
Net income available to common shareholder(3) $ 191,164 $ 136,731 $ 229,363 $ 338,174
Add:
Transaction and severance related costs(2), net of tax 6,730   21,678   13,219   81,678  
Net income available to common shareholder(3),
adjusted by transaction and severance costs
$ 197,894   $ 158,409   $ 242,582   $ 419,852  
 
Annualized operating return on average common shareholder's equity(1) 6.4 % (4.3 )% 4.6 % (0.7 )%
Add:
Transaction and severance related costs(2), net of tax 0.4   1.4   0.5   2.7  
Annualized operating return on average common shareholder's equity(1),
adjusted by transaction and severance costs
6.8 % (2.9 )% 5.1 % 2.0 %
 
Operating earnings (losses) available to common shareholder $ 96,722 $ (65,624 ) $ 140,497 $ (21,386 )
Add:
Transaction and severance related costs(2), net of tax 6,730   21,678   13,219   81,678  
Operating earnings (losses) available to common shareholder,
adjusted by transaction
and severance costs
$ 103,452   $ (43,946 ) $ 153,716   $ 60,292  
 

(1)

 

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

 

(2)

The adjustment of $7 million ($7 million pre-tax) and $13
million ($16 million pre-tax) for the three and six months ended
June 30, 2017, respectively, primarily represents transaction
costs related to the Aurigen acquisition and reorganization
related severance costs. The adjustment of $22 million ($27
million pre-tax) for the three months ended June 30, 2016
represents reorganization related severance costs and costs
related to certain executive changes. The adjustment of $82
million ($92 million pre-tax) for the six months ended June 30,
2016 primarily represented transaction costs and accelerated
stock-based compensation expense related to the closing of the
acquisition by Exor as well as reorganization related severance
costs.

 

(3)

Net income available to common shareholder is calculated after
preferred dividends.

 
 

PartnerRe Ltd.

Reconciliation of GAAP and non-GAAP measures

(in thousands of U.S. dollars)

(Unaudited)

       
June 30, 2017 December 31, 2016
Tangible book value:
Total shareholders' equity $ 6,864,718 $ 6,687,912
Less:
Preferred shares, aggregate liquidation value 704,227   704,227
Common shareholder's equity 6,160,491 5,983,685
Less:
Goodwill (1) 456,380 456,380
Intangible assets, net of tax (1) 137,620   73,022
Tangible book value $ 5,566,491   $ 5,454,283
 
Capital Structure:
Senior notes $ 1,345,397 $ 1,273,883
Capital efficient notes (2) 63,384 63,384
Preferred shares, aggregate liquidation value 704,227 704,227
Common shareholder's equity 6,160,491   5,983,685
Total Capital $ 8,273,499   $ 8,025,179
 

(1)

 

The increase in intangible assets, net of tax, relates to the
recognition of the fair value of business acquired (VOBA) and
certain insurance licenses upon the acquisition of Aurigen, net of
amortization expense. There was no related increase in goodwill as
a bargain purchase gain of less than $1 million was recorded in
other income in the Consolidated Statement of Operations.

 

(2)

Non-consolidated debt issued externally related to CENts of
$63m does not appear in the debt line of the Consolidated Balance
Sheet as the finance entity that issued the debt (PartnerRe
Finance II Inc.) does not meet the U.S. GAAP criteria for
consolidation. The Consolidated Balance Sheet includes the related
intercompany notes of $71m issued by PartnerRe U.S. Corporation to
PartnerRe Finance II Inc.

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