Effective Structure, Process and Controls

Our organizational structure is designed with a significant emphasis on the effective and efficient management of the Company’s risks. The Executive Management and the Board are responsible for managing strategic risks, and individual business units manage our assumed risks, subject to Group oversight and control. The operational risks that are part of running any business are managed by designated functions within the organization.

There are interrelationships and dependencies between the various categories of risk. Each must be viewed in the context of the whole if their potential impact on the organization is to be fully understood and effectively managed within a well defined and integrated framework.

PartnerRe's Integrated Risk Management framework is designed to clarify and document our risk philosophy, policies, processes and controls. It is a common framework for identifying, evaluating and managing risk across different risk categories and business units and group functions. The framework provides a platform to communicate the potential economic impact of risk on the successful execution of our strategy and objectives across the organization, and ensures risk management activities are aligned to our organizational structure and the way PartnerRe conducts its business.

Top Strategic and Assumed Risks

Risk Definition PartnerRe's Response Risk Owner Risk Oversight
Poor decision making processes or values may lead to bad business decisions or questionable behavior that could impair the Company's financial position, reputation or credibility. Experienced independent board and diverse executive team work within established structures and governance processes to foster the highest professional and ethical standards; ensure objective and consistent decision making; a clear vision of acceptable behavior (Tone at the Top, Code of Conduct) with appropriate accountability and action. CEO Governance Committee of the Board
Inappropriate business strategy may result in suboptimal results, lower profitability and potential loss of economic value. Transparent strategy development and review processes. Extensive due diligence, underwriting, actuarial, legal and financial analyses of opportunities. Strategy is reviewed, approved and assessed periodically by the Board. CEO Board of Directors
Excessive exposure to capital markets risks may lead to a loss of economic value resulting from severe reductions in market values due to significant fluctuations in interest rates, equity prices, credit spreads or defaults. Prudent investment policy that distinguishes between funds that support reinsurance liabilities and those that support capital. High quality, liquid and diversified portfolio managed within limits imposed by asset class, rating level, industry and issuer. Professional investment operation that is compliant with all best practices and controls. Chief Financial Officer Finance & Risk Committee of the Board
Assuming inappropriate levels of risk (too much or too little) may lead to failure to achieve the strategic return targets set by Management and the Board, or potential loss of economic value. Disciplined processes to identify risk classes that are likely to provide targeted risk-adjusted returns across the reinsurance and economic cycles. Establish clear limits to risks that individually, or in the aggregate, could impair the Company’s ability to operate as a going concern. Adjust risk appetite within established limits in response to market conditions. CEO Board of Directors
Inappropriate loss reserves, due to ineffective analytical models, data, reserving strategies or process execution, may expose the Company to significant adverse loss development, impairing our ability to compete effectively. Establish prudent loss reserves that are, in aggregate, in excess of the actuarial mid-estimate. Well defined policies, processes and controls are executed by an experienced group of actuaries. Regular peer reviews and periodic third party reviews. Chief Actuarial Officer Finance & Risk Committee of the Board
Failure to effectively evaluate exposures, or assume risk at adequate prices, terms and conditions may prevent the Company from achieving expected financial results and could impair economic value. Knowledgeable and experienced underwriters work in multi-disciplinary teams, with pricing actuaries, claims professionals and lawyers, to identify, evaluate, accept and manage profitable risk transfer prospects. Underwriting process includes guidelines, limits, referral requirements and peer reviews. Business Unit Heads Finance & Risk Committee of the Board

Top Operational Risks

Risk Definition PartnerRe's Response Risk Owner Risk Oversight
Failure to comply with laws, regulations and Company policies may result in fines, sanctions, prosecution, adverse publicity or loss of reputation, potentially affecting our ability to compete effectively. Legal staff in all major offices and external advisors ensure that all applicable laws and regulations are known, understood and followed. Formal compliance process and procedures identify all the filing and legal requirements and necessary actions. Group Legal Director Audit Committee of the Board
Inaccurate or delayed filing of financial statements; financial statements not compliant with U.S. GAAP, SEC or local statutory requirements, leading to potential restatements, fines and loss of investor confidence. A financial closing process with multiple levels of technical accounting and management reviews; checklists to ensure all financial statement filing requirements are met. Experienced, highly qualified staff and continuing training programs to ensure all new pronouncements are understood and applied. Chief Accounting Officer Audit Committee of the Board
Significant fluctuations in foreign exchange (FX) rates may lead to a loss of economic value due to an ineffective hedging program resulting from ineffective data, analytics, applications, strategies or execution. The Company reduces FX risk by either matching assets and liabilities by currency or using FX hedging products. A qualified treasury staff monitors currency exposures, evaluates market risks and develops and executes currency hedging strategies. Group Treasurer Finance & Risk Committee of the Board
Intentional misstatement of the Company’s financial statements or management information, or the misuse of assets for personal gain, could expose the Company to fines, civil or criminal prosecution and loss of credibility or reputation, impairing our ability to compete effectively. Create and maintain an operating environment and culture of good business practice and behavior which fosters compliance with laws, regulations and internal policies and procedures. Code of Conduct and business practices, including how to report potential bad acts, is acknowledged annually by all employees. Chief Financial Officer Audit Committee of the Board
Poor systems design or ineffective system security or access controls may lead to compromised, lost or unreliable data, leading to poor business decisions. Systems breakdowns in conjunction with inadequate contingency plans could lead to disruption of business operations. Effective IT systems design, security policies and controls – including risk mitigation strategies to support business operating requirements in the event of unexpected system outages – ensure a sound and reliable operating environment. Chief Information Officer Audit Committee of the Board
Overly aggressive interpretation and implementation of tax laws could expose the Company to audit adjustments, interest, penalties or civil/criminal prosecution and accompanying reputation risk. An overly conservative approach could result in suboptimal tax strategy. In-house tax professionals and external advisors ensure awareness and compliance with all significant regulations in the various jurisdictions in which the Company operates. All large transactions require a tax review and concurrence. Operating guidelines established by Group tax department to ensure that everyday business practices do not create tax liabilities. Group Tax Director Audit Committee of the Board