Bermuda-based reinsurer PartnerRe has reported a net loss of $1.1 billion for the full year 2022, citing unrealized losses on fixed maturities and short-term investments of $1.8 billion as a key driver.
This compares to a net income of $679 million for the same period in 2021.
Meanwhile, operating income for the full year 2022 was $809 million, compared to an operating income of $545 million for the same period of 2021, an increase of 48%.
For Q4 alone, the operating income was $370 million, a $70 million increase from 2021.
PartnerRe states that these numbers were a result of improvements in the underwriting results.
The firm saw non-life underwriting profit of $368 million and a combined ratio of 75.3% in Q4. For the full year, non-life underwriting profit stood at $749 million, with a combined ratio of 86.6%, a 3.9 point improvement over the prior year.
The Life and Health sector allocated an underwriting profit of $29 million for Q4 and $121 million for the full year. The full year allocated underwriting profit increased 25% year-over-year.
PartnerRe’s losses for catastrophic and man-made events for the full year 2022 were $489 million.
These related to Hurricane Ian, the ongoing conflict between Russia and Ukraine, the Natal Floods, the Australian Floods, the French Hailstorms and losses on aggregate covers associated with these events.
The firm’s P&C segment reported a combined ratio of 79.5% and 88.5% for Q4 and full year 2022, respectively, compared to 80.0% and 94.3% for the fourth quarter and full year 2021, respectively.
For Q4 2022, excluding the impact of catastrophic and man-made events, PartnerRe states that the deterioration in the combined ratio was driven primarily by a lower level of favourable prior years’ reserve development, which was 4.0 points favourable compared to 12.6 points favourable for Q4 of 2021.
For the full year 2022, again excluding the impact of catastrophic and man-made events, PartnerRe notes that the improvement in the combined ratio was driven by a lower current accident year attritional loss ratio due to rate increases and reductions in less profitable lines as well as a 1.9 point improvement in prior years’ reserve development, which was 3.9 points favourable in 2022.
The net realized and unrealized investment losses of $1.8 billion on fixed maturities and short-term investments, which were primarily unrealized, were driven by increases in worldwide risk free rates, widening corporate credit and mortgage-backed security spreads, and losses on real estate sector investments in the firm’s Asia high yield portfolio.
However, in Q4 alone, PartnerRe reported a net investment return of $306 million, or 1.6%, and included net investment income of $114 million, net realized and unrealized investment gains of $188 million, and interest in earnings of equity method investments of $4 million.
This compares to a net investment return of $156 million, or 0.8%, for the fourth quarter of 2021, which included net investment income of $93 million, net realized and unrealized investment losses of $6 million and interest in earnings of equity method investments of $69 million.
PartnerRe President and Chief Executive Officer Jacques Bonneau commented, “Our operating
performance for the fourth quarter of 2022 was excellent, with an operating income of $370 million. Our annual operating performance also maintained its positive momentum, and operating income ROE was 12.0% for the year.
“In addition to solid underwriting results, during 2022 we grew net investment income by almost 6% as we continued to reinvest available cash at rates that are meaningfully higher than our existing book yield.”
He continued, “Looking to 2023, we were able to capitalize on the attractive rate environment for the January 1st renewals.
“We grew our production premium base by 9% over January 1st, 2022 levels while at the same time improving the portfolio through higher attachment points on our property catastrophe portfolio, tighter terms and conditions and increased rates above inflation trends over a meaningful portion of the portfolio.
“We continued to execute on responding to our clients and our distribution partners once we received the necessary data to complete our analysis of risk.”