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PartnerRe’s income dips in 2020 as COVID-19 dents underwriting result

26th February 2021 - Author: Luke Gallin

Bermuda-based reinsurer PartnerRe has reported net income of $204 million and $206 million for the fourth-quarter and full-year 2020, respectively, while the impacts of catastrophe events during the year and the ongoing pandemic pushed down its underwriting performance.

PartnerReNet income for the quarter improved from the net loss posted a year earlier and included net realised and unrealised investment gains of $20 million on fixed maturities and short-term investments, and $103 million of net foreign exchange losses.

For the year, net income declined significantly from the $890 million reported in 2019, and included net realised and unrealised investment gains on fixed maturities and short-term investments of $245 million, and net foreign exchange losses of $52 million.

Throughout 2020, PartnerRe’s operations were impacted by the COVID-19 pandemic as well as a series of natural catastrophe events and man-made losses.

For the full-year, PartnerRe has reported $397 million of losses, pre-tax, net of retrocession and reinstatement premiums, as a direct result of the COVID-19 pandemic and the related effects of the economic downturn. The reinsurer notes that the majority of this total is classified as IBNR reserves.

RMS

The $397 million figure includes $31 million of pandemic losses recorded in Q4 2020, driven by $20 million in Specialty financial risks lines and $11 million of losses in the firm’s Life and Health segment.

The 2020 COVID-19 total consists of $160 million of losses in P&C, $211 million of losses in Specialty and $26 million of losses in Life and Health, net of retrocession and reinstatement premiums. These losses are attributable to business interruption and event cancellation lines, credit exposures in financial risks lines, and life and health business.

Turning to the performance of the non-life segment during the periods, and PartnerRe has reported net premiums written growth of 7% for the quarter and a decline of 11% for the full-year. The quarterly rise was driven by a 15% rise in the P&C arm, while the 2020 decline reflects premium exposure adjustments.

For Q4 2020, PartnerRe has reported a non-life underwriting result of $21 million and a combined ratio of 98.6%, which is an improvement on the 113.8% combined ratio posted for the same period in 2019.

The P&C arm produced a combined ratio of 97.6% for Q4 2020 compared with 117.7% for Q4 2019, which PartnerRe attributes to a decrease in large catastrophic losses.

The Specialty arm reported an improved but still unprofitable combined ratio of 100.2% for the fourth-quarter of 2020, driven by a lower current accident year attritional loss ratio.

For the full-year, PartnerRe has fallen to a non-life underwriting loss of $304 million with a combined ratio of 106%, against a $20 million loss in 2019 and a combined ratio of 100.3%.

The P&C unit fell to a loss in the period with a combined ratio of 102.2%, which the reinsurer attributes to the $160 million of COVID-19 related losses. Additionally, Hurricane Laura drove losses of $55 million in the year, net of retrocession and reinstatement premiums, primarily within P&C.

PartnerRe notes that its P&C segment was also adversely impacted by an aggregation of mid-sized catastrophic man-made losses during the year.

For 2020, the Specialty division recorded a combined ratio of 112.2% against 103% for 2019, driven by COVID-19 related losses of $211 million and higher adverse prior years’ reserve development.

Jacques Bonneau, PartnerRe President and Chief Executive Officer (CEO), commented: “The 2020 year brought exceptional challenges, and I am proud of our ability to remain resilient and deliver value to our clients, despite the ongoing COVID-19 pandemic and a record-breaking year of midsized weather events for the industry.

“The 2021 underwriting year has started on a very positive note, and we have remained focused on the continued execution of our strategies to improve profitability in our January renewals. We are seeing positive rate movement in most, if not all of our lines of business and have also achieved significant growth in our third party capital vehicles, with total assets over $1 billion. We are positioned well by geographic and product line to capitalize on the improving underwriting environment and deliver value to our clients, capital partners and shareholder in the year ahead.”

In Life and Health, net premiums written increased by 1% for the quarter and were flat for the full-year. The allocated underwriting profit reached $22 million in Q4 2020 against a loss of $3 million for Q4 2019, driven by improvements in the firm’s short term business, somewhat offset by quarterly COVID-19 losses of $11 million.

For the full-year 2020, the allocated underwriting profit fell slightly to $70 million from the prior year’s $73 million result. PartnerRe attributes the year-on-year decline to $26 million of pandemic losses.

On its investment performance, PartnerRe has announced Q4 and full-year 2020 realised and unrealised investment gains of $269 million and $454 million, respectively.

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