Bermuda-based reinsurer PartnerRe has reported net income of $206 million for the third-quarter of 2020 on the back of net unrealised investment gains of $218 million, although its non-life segment fell to an underwriting loss of $20 million in the period.
Net income of $206 million in Q3 2020 represents a slight decline from the $216 million reported for the same period in 2019, with the unrealised investment gain reflecting a strong recovery in financial markets from Q1.
For the first-nine months of the year, PartnerRe’s net income has fallen dramatically from $998 million in 9M 2019 to just $2 million in 2020.
As of the end of September, 2020, PartnerRe has incurred pre-tax losses, net of retrocession and reinstatement premiums, of $366 million as a direct result of COVID-19 and the related effects of the economic downturn. The reinsurer notes that substantially all of these losses are classified as incurred but not reported (IBNR) reserves.
Included in this total, is $28 million of COVID-19-related losses the firm recorded in Q3 2020, which it attributes to financial risk lines as a result of the ongoing economic downturn.
In the firm’s non-life operation, net premiums written fell by 14% in Q3 and by 16% in 9M 2020, when compared with the same periods in 2019. PartnerRe attributes the dip to its focus on portfolio optimisation throughout the current year, as well as exposure adjustments driven by the current economic situation.
Overall, the impacts of COVID-19 and also a series of mid-sized catastrophe events and man-made losses, had a substantial negative impact on PartnerRe’s P&C and Specialty units during 2020.
The Bermudian’s non-life segment has reported an underwriting loss of $20 million for Q3 2020, with a combined ratio of 101.6%, and of $327 million, with a combined ratio of 109%, for the first nine months of the year.
The company explains that for Q3, the underwriting loss includes $28 million of COVID-19 losses, net of retrocession and reinstatement premiums, driven by the Specialty arm. For 9M 2020, the underwriting loss includes $351 million of COVID-19 losses, net of retrocession and reinstatement premiums, of which $160 million relates to P&C and $191 million to Specialty.
PartnerRe has also experienced losses from other catastrophe events in 2020 and reports cat losses, net of retrocession and reinstatement premiums, for Q3 2020 and 9M 2020 of $44 million related to Hurricane Laura, the majority of which falls within its P&C operation.
The company’s President and Chief Executive Officer (CEO), Jacques Bonneau, commented: “This year has brought many unprecedented challenges, with the ongoing COVID-19 crisis and significant financial market disruption. This has been compounded by exceptional levels of catastrophic events for the industry, with the most active Atlantic hurricane season on record.
“Despite this challenging operating environment, PartnerRe has emerged with an increased focus on providing valuable capacity and solutions to our clients and broker partners to assist them in growing their businesses. We are committed to being a strong and responsive reinsurance partner – at a time when it is needed more than ever.
“During the third quarter, we secured a €750 million third party capital commitment for future investments in our special purpose reinsurance vehicles, and successfully raised $500 million of debt, which will allow us to reduce our ongoing financing costs. With our strong capital, liquidity and solvency positions, I am confident that PartnerRe is well positioned to take advantage of the improving reinsurance market conditions.”
In Life and Health, PartnerRe has revealed that for Q3 and 9M 2020, net premiums written declined by 1% and were flat, respectively, when compared with the same periods last year.
The allocated underwriting result for Q3 2020 declined slightly to a profit of $26 million, as the favourable experience in PartnerRe’s longevity business was offset by an adverse experience in short-term life business, as well as higher expenses and a lower volume of net investment income, year-over-year.
For 9M 2020, the allocated underwriting result reached $49 million, compared with $75 million for the same period in 2019.
Turning to the asset side of the business, and the reinsurer has reported that net investment income fell by $9 million in Q3 2020 and by $64 million in 9M 2020, when compared with the same periods in 2019. The company attributes these decreases to the sales of higher yielding bank loan investments and the impact of lower reinvestment rates.