PartnerRe Ltd. (NYSE: PRE) today reported net income of $129.0 million, or $2.16 per share, for the first quarter of 2008. This net income includes net realized gains on investments and earnings from the Company's interest in the results of equity investments aggregating $10.2 million after-tax, or $0.18 per share.
Net income for the first quarter of 2007 was $169.3 million or $2.76 per share, including $5.7 million after-tax, or $0.10 per share, in net realized gains on investments and earnings from the Company's interest in the results of equity investments.
Operating earnings for the first quarter of 2008 were $110.2 million or $1.98 per share. This compares to operating earnings of $154.9 million, or $2.66 per share, for the first quarter of 2007. Operating earnings exclude net after-tax realized investment gains and losses, and interest in results of equity investments, and are calculated after payment of preferred dividends. All references to per share amounts are on a fully diluted basis.
PartnerRe Ltd. President & CEO Patrick Thiele said, "PartnerRe continues to post solid results despite an increasingly competitive non-life reinsurance market. We were able to achieve net written premium growth of approximately 11% in a softening market because of the continuing weakness of the U.S. dollar, our acquisition last year of the renewal rights to the international reinsurance operations of the French Monceau Group, as well as significant growth in our agricultural book in the U.S. This new business helps to maintain the superior level of diversification we have built over the last cycle."
Mr. Thiele added, "Our solid underwriting performance, combined with good results from our investment operations, allowed us to grow GAAP book value per share by $2.97 in the quarter, which represents a 4% increase in the quarter and 21% increase year over year."
Net premiums written for the first quarter of 2008 were $1.4 billion, compared to $1.3 billion for the first quarter of 2007. Total revenues for the quarter were $1.1 billion compared to $962 million for first quarter of 2007. Total revenues include $909.8 million of net premiums earned, net investment income of $137.0 million, and net realized investment gains of $25.1 million.
During the first quarter of 2008, the Company adopted FAS 159. As a result, the Company reclassified 'available for sale securities' as 'trading securities' which has the effect of recording market value movements of the Company's investment portfolio through the net realized gains and losses line on the income statement.
Also during the first quarter of 2008, the Company repurchased 188,660 common shares at a total cost of approximately $15.0 million. There are approximately 4.3 million common shares remaining under the current repurchase authorization of November 2007.
Separately, the Company announced today that its Board of Directors declared a regular quarterly dividend of $0.46 per common share. The dividend will be payable on June 2, 2008, to common shareholders of record on May 23, 2008, with the stock trading ex-dividend commencing May 21, 2008.
Results by Segment
The Non-Life segment reported net premiums written of $1.2 billion for the first quarter of 2008, compared to $1.1 billion for the prior year's first quarter. The combined ratio was 92.3% for the first quarter of 2008, compared to 84.8% for the same period in 2007. The Non-Life technical result was $116 million for the first quarter of 2008. This compares to $159 million in the first quarter of 2007.
The U.S. business, which represented approximately 24% of total net premiums written for the quarter, reported net premiums written of $332 million for the first quarter of 2008, compared to $295 million for the prior year's first quarter. Net premiums earned were $266 million for the quarter, compared to $221 million in the same period in 2007. The technical ratio for this sub-segment was 89.1%, compared to 87.9% in the first quarter of 2007.
The Global (Non-U.S.) P&C business, which represented approximately 26% of total net premiums written for the quarter, reported net premiums written of $373 million for the first quarter of 2008 compared to $332 million for the same period in 2007. Net premiums earned during the quarter were $201 million, compared to $177 million in the prior year's first quarter. The technical ratio for this sub-segment was 99.3% compared to 92.7% for the same period in 2007.
The Global (Non-U.S.) Specialty business, which represented approximately 24% of total net premiums written for the quarter, reported net premiums written of $333 million for the first quarter of 2008, compared to $284 million for the prior year period. Net premiums earned were $219 million for the quarter, flat with the same period in 2007. This sub-segment's technical ratio was 92.3% compared to 71.0% for the first quarter of 2007.
The Catastrophe business, which represented approximately 14% of total net premiums written for the quarter, reported net premiums written of $198 million for the first quarter of 2008, compared to $212 million for the prior year period. Net premiums earned were $77 million for the current quarter, compared to $94 million for the same period in 2007. This sub-segment's technical ratio was 11.1% for the quarter compared to 40.9% for the first quarter of 2007.
The Life segment, which writes business primarily in Europe, Canada and Latin America, and represented approximately 12% of total net premiums written for the quarter, reported net premiums written of $170 million for the quarter, up 15% as compared with the first quarter of 2007. The allocated underwriting result for the quarter was $2 million, compared to $7 million for the comparable period in 2007.
The Company's capital markets and investment activities are reported under the heading of "Corporate and Other". Within Corporate and Other, capital markets and investment activities contributed $148 million to pre-tax income in the first quarter of 2008.
Balance Sheet Items
At March 31, 2008, total assets were $17.3 billion as compared to $16.0 billion at December 31, 2007. Over the trailing 12 month period, total investments and cash increased 11% to $12.2 billion. Gross Non-Life loss and loss expense reserves increased 9% year over year to $7.6 billion at March 31, 2008. During the first quarter of 2008, the Company's estimate of Non-Life reserves for prior accident years developed favorably by $117 million. The overall first quarter prior year reserve development in the Non-Life segment includes net favorable development in all sub-segments, with $16 million in the U.S. sub-segment, $58 million in the Global (Non-U.S.) P&C sub-segment, $33 million in the Global (Non-U.S.) Specialty sub-segment, and $10 million in the Catastrophe sub-segment. In the first quarter of 2007, Non-Life reserves for prior years developed favorably by $122 million. Policy benefits for life and annuity contacts increased by 7% year over year to $1.6 billion at March 31, 2008. During the first quarter of 2008, the Company's estimate of Life reserves for prior years developed adversely by $5 million, compared to favorable development of $7 million in 2007.
At March 31, 2008, total capital was $5.3 billion, and total shareholders' equity was $4.5 billion. This compares to total capital of $5.2 billion, and total shareholders' equity of $4.3 billion at December 31, 2007. Book value per common share at March 31, 2008 was $70.93 on a fully diluted basis compared to $67.96 per share at December 31, 2007. -- PartnerRe Ltd.
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