Prudent Capital Management

At PartnerRe, we manage our capital to ensure we are able to cover the risks we assume and to optimize shareholder returns over the cycle. We employ a consistent capital charge methodology across the Group that equates capital to risk, allowing us to evaluate the level of capital required and where returns on capital are most attractive. At the same time, we monitor the level of capital we require to meet all risk scenarios and to preserve our continuity of capacity and risk appetite, and we ensure that we maintain our financial strength with a high quality balance sheet and a prudent reserving philosophy. When our capital needs change, we are able to respond appropriately. An important part of our capital management strategy has been to return capital to our shareholders during the soft phase of the reinsurance cycle, as we did in 2004 and early 2005. Conversely, when capital needs and opportunities exceed our current level of capital, we respond by raising capital, as we did in October 2005.