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PartnerRe hit by Q3 cats, but non-life segment on track year-to-date

15th November 2018 - Author: Luke Gallin

Bermuda-based reinsurer PartnerRe Ltd. has reported a net loss of $106 million for the third-quarter of 2018, driven by pre-tax catastrophe losses of $120 million. At the same time, the company’s non-life segment fell to an underwriting loss in the quarter, although, for the first nine months of the year, the segment has recorded a profit.

PartnerRe logoPartnerRe’s third-quarter net loss of $106 million includes $53 million of net unrealized investment losses on fixed income securities, and net foreign exchange losses of $17 million. In comparison, the firm reported a net loss of $84 million for Q3 2017, which included net unrealized investment losses on fixed income securities of $27 million, and net foreign exchange losses of $41 million.

For the first nine months of the year, PartnerRe has recorded a net loss of $101 million, which compares to a net income of $145 million in the same period in 2017.

The $120 million of pre-tax catastrophe losses, net of retrocession and reinstatement premiums, is a result of the impacts of typhoons Jebi and Trami, as well as hurricane Florence. The losses contributed 10.7 points to the non-life combined ratio, which, reached 107.8% in the third-quarter as the segment fell to an $87 million underwriting loss.

The high combined ratio within its non-life segment was driven by a 114.7% combined ratio within its P&C unit, and a specialty segment combined ratio of 97.4%.

While certainly not benign, cat losses did come down year-on-year for PartnerRe, although the reinsurer states that this was partially offset by higher attritional losses on the current accident year.

However, and despite falling to an underwriting loss in Q3, for the first nine months of the year, the firm’s non-life segment has recorded an underwriting profit of $20 million and a combined ratio of 99.4%, compared with a $21 million loss and a combined ratio of 100.7% in 2017.

Net premiums written (NPW) in the non-life segment increased 7% in Q3 as a result of new business written in the P&C segment, although this was partially offset by lower reinstatement premiums. For the first nine months of 2018, NPW increased 13% when compared with the same period in 2017.

PartnerRe President and Chief Executive Officer (CEO), Emmanuel Clarke, commented on the firm’s results: “The third quarter of 2018 was an active period of catastrophic and man-made loss events which impacted the Company’s Non-life combined ratio. Despite these events, in the first nine months of 2018, the Company’s Non-life segment reported an underwriting profit, while our Life and Health segment significantly improved its underwriting profit and margin compared to the prior year.

“This performance – excluding the net unrealized losses primarily driven by increases in risk free rates – has helped produce a solid profitability in the first nine months of 2018.”

In the life and health segment, PartnerRe notes that NPW increased 22% in Q3 and 27% for the nine month period, when compared with last year. The unit’s allocated underwriting result was $18 million for the quarter and $69 million for the first nine months of the year, which is up in both periods on 2017.

Looking at investments, and PartnerRe recorded a net investment return of $63 million for the third-quarter, and included net investment income of $104 million. For the first nine months of the year, the reinsurer produced a net investment return of $3 million, which included net investment income of $312 million, although this was offset by net realized and unrealized investment losses of $337 million.

“Our enhanced market positions with clients and brokers led to a double digit increase in net premium written compared to the last year. This, coupled with our strong total capital position, positions our Company well for the upcoming January renewal season,” said Clarke.

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