Bermudian reinsurer PartnerRe recorded an improved non-life combined ratio of 92.8% for the second-quarter of 2019 as a strong performance in its property and casualty (P&C) segment more than offset a decline in specialty.
Overall, PartnerRe’s net income increased by $160 million to $285 million in the second-quarter of 2019 when compared with the prior year second-quarter, underpinned by a non-life combined ratio of 92.8% and a 15% increase in net investment income to $121 million.
At $95 million, PartnerRe’s Q2 non-life underwriting profit jumped by more than $30 million year-on-year, resulting in an almost 2% strengthening of its non-life combined ratio. The reinsurer attributes the growth in profit to the strong performance of its P&C segment in the period, which recorded a combined ratio of 86.1%, compared with 96.9% a year earlier. This improvement was mostly a result of a reduction in the attritional loss ratio, says PartnerRe.
Somewhat offsetting the strong P&C performance, the firm’s specialty segment was hit by high frequency losses in the aviation, energy, engineering, and surety lines of business, resulting in a combined ratio of 101.4%, compared with 92% in Q2 2018.
Discussing the specialty segment’s H1 2019 result, and PartnerRe explains that the even higher increase in the segment combined ratio to 107.1% is a result of a large loss on Ethiopian Airlines and Boeing of $39 million, net of retrocession and reinstatement premiums.
The P&C segment also recorded a stronger half-year result, with a combined ratio of 86.9% compared with 98.5% for the same period a year earlier. Overall, the non-life segment’s underwriting profit increased from $107 million in the first-half of 2018 to $119 million in the first-half of this year, and with a relatively flat 95% combined ratio.
Commenting on the firm’s performance in Q2 and H1 2019, PartnerRe President and Chief Executive Officer (CEO), Emmanuel Clarke said: “We delivered solid second quarter results, driven by strong performance in our P&C segment and excellent investments results, more than offsetting loss activity in our Specialty and Life segments. This demonstrates the value of our well-diversified book of business and the positive impact of actions we took in 2018 to improve performance of our P&C and Investments portfolios.”
It seems the reinsurer also took advantage of the improved price environment in the quarter, expanding its non-life premiums by 15%, driven by a 24% increase in P&C premiums and 5% growth in specialty. For the half-year, PartnerRe’s non-life premiums increased 20%, which it attributes to 27% growth in P&C and 8% growth in the specialty segment.
“I am encouraged by the better market conditions we are seeing in large portions of our Non-Life business. PartnerRe is well-positioned to benefit from this improved margin environment, as demonstrated by our 15% Non-Life premium growth over 2018. At the same time, we are pursuing our strategy to grow our Life and Health business, with 28% growth in premium over the past year. I am confident this positions us to deliver a strong performance for 2019 and beyond,” said Clarke.
The firm’s Life and Health unit also performed well in the quarter, although it was negatively impacted by increased mortality experience. Net premiums written increased by 28% for Q2 and by 23% for the first-half of the year, while the allocated underwriting result for the quarter resulted in a profit of $14 million, compared with $23 million in Q2 2018.
For the half-year period, allocated underwriting result was a profit of $44 million, down from the $52 million recorded for the same period a year earlier.
At $317 million, PartnerRe’s significantly improved net investment return benefited from net investment income of $121 million and $182 million of net realised and unrealised investment gains, and also interest earnings of equity method investments of $14 million.