The impact of catastrophe events in the third and fourth-quarter of 2018 significantly dented the 2018 underwriting result for Bermuda-based reinsurer PartnerRe, with the firm recording a net loss of $132 million for the year.
The $132 million net loss compares with net income of $218 million in 2017, and is driven in part by losses of $386 million related to Typhoons Jebi and Trami, Hurricanes Florence and Michael, and the California wildfires.
Net realized and unrealized investment losses on fixed maturities and short-term investments of $376 million also hit the firm’s 2018 result, although this was somewhat offset by net foreign exchange gains of $119 million.
For the fourth-quarter of 2018, PartnerRe has reported a net loss of $32 million, down from net income of $72 million in the final quarter of 2017.
A $282 million catastrophe loss bill driven by Hurricane Michael and the California wildfires had a significant impact on the firm’s Q4 result, although the reinsurer states this was somewhat offset by net realized and unrealized investment gains on fixed maturities and short-term investments of $31 million, and net foreign exchange gains of $66 million.
The company’s Chief Executive Officer (CEO), Emmanuel Clarke said: “The third and fourth quarters of 2018 were active periods of catastrophic loss events which impacted the Company’s Non-life combined ratio. In the face of another year of above normal insured catastrophic loss activity for the industry, PartnerRe was able to deliver once again a profit, excluding the volatility of our investment grade fixed income portfolio and the foreign exchange impact, thanks to our diversified and profitable book of business and our gross-to-net strategy.”
As a result of the catastrophe events, PartnerRe’s non-life segment recorded an underwriting loss of $67 million in Q4 and $47 million for the full-year, and a combined ratio of 108.7% and 101.9%, respectively.
The Property and Casualty (P&C) unit recorded a combined ratio of 120.1% in Q4 and 108.7% for the full-year, with catastrophes having a 40.6 and 15.1 percentage point impact, respectively.
Non-life net premiums written increased slightly (1%) in Q4, driven mainly by a 14% increase in the P&C segment, somewhat offset by a 11% decline in the Specialty segment. For the full-year 2018, non-life net premiums written expanded by 11% as a result of 15% growth in its P&C segment, as well as a 5% increase in the Specialty sector.
The reinsurer’s Life and Health segment also recorded net premium written growth in both Q4 and the full-year 2018, of 21% and 25%, respectively. The unit recorded an allocated underwriting gain of $15 million in the fourth-quarter of 2018, and a gain of $86 million for the full-year.
PartnerRe’s net investment income hit $104 million in the fourth-quarter and increased by $14 million for the full-year 2018.
Looking forward, Clarke underlined an expectation of further margin improvement in 2019.
“We are seeing increasing opportunities to deploy our capital at our target return across our portfolio and the 2019 year has started on a positive note, with strong execution at the January renewals where we reported double-digit year-on-year growth in Non-Life premium production with improved margins across several classes and geographies.
“With further improvement in margins expected throughout the year, I am confident that we will continue to build on these achievements, alongside our expected continued growth in Life and Health and improved income generation in our Investments portfolio, to deliver solid returns to our shareholder in 2019,” said Clarke.