PartnerRe, M&A Focused, Suffers Large Investment Losses in Q2

July 28, 2015

PartnerRe has enough on its plate juggling a proposed merger with AXIS Capital Holdings Ltd. and an unsolicited bid from the Italian investment firm EXOR SpA. Now there is a sizable second-quarter loss with which to contend, due to a big hit from investment losses.

Additionally, premium related revenue was stagnant.

“We continued to see challenging market conditions during the second quarter, both in terms of persistent competitive reinsurance pressures and difficult financial markets,” PartnerRe interim CEO David Zweitner said in prepared remarks.

At the same time, however, Zweitner noted that PartnerRe’s tangible book value is up 1 percent, and that June/July renewals have been promising.

The Bermuda-based reinsurer said it lost $103.1 million, or $2.16 per share in the 2015 second quarter, compared to $257.7 million in net income over the same period last year. PartnerRe explained its Q2 numbers included net after-tax realized and unrealized investment losses of $217.23 million, or $4.55 per share. Over the 2014 second quarter, by contrast, investment gains hit $123.7 million, or $2.41 per share.

Gross written premiums came in at $1.43 billion, essentially flat from $1.46 billion generated in the 2014 first quarter. Net written premiums landed at $1.3 billion during Q2, down 7 percent from just over $1.4 billion in 2014. Net premiums earned came in at more than $1.32 billion, a 2 percent dip from $1.35 billion in the same year-ago period.

PartnerRe said it saw some net premium increases in its North America non-life business and its life and health segment, but those were offset by decreases in its catastrophe non-life arm.

PartnerRe’s non-life combined ratio was 90.3 during the quarter, benefiting from favorable prior-year development of 17.1 points, or $173 million.

PartnerRe also reported other expenses of $130 million during the quarter, including $9 million stemming from its ongoing merger process with AXIS.

PartnerRe/AXIS shareholders plan to vote on the AXIS deal on Aug. 7. They sweetened the terms of their deal and EXOR also added more to its $6.8 billion offer for Partnerre. PartnerRe’s Board said it would meet with EXOR if it would improve its offer again, but also pledged to go ahead with the AXIS deal.

Source: PartnerRe

This article first appeared in Carrier Management, Insurance Journal’s sister publication.

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