Letter from the CEO
Patrick Thiele
President and Chief Executive Officer
2008 and Beyond
Current financial and reinsurance market conditions promise a future of both challenge and opportunity. The non-life reinsurance market continues on its trajectory of slowly declining priced profitability. Our January 1 renewals, which represent almost 60% of our annual business, were stable in terms of premium volume (as we found enough new business to offset continuing increases in clients’ retention of premium) but lower than expected profitability. Because decreased demand and increased supply are likely to be with us until the next unexpected surge in insured losses, I would expect that trend to continue throughout 2008.
While the softening non-life market will present challenges, we are confident that we have built strong and enduring relationships with our clients and brokers that will serve us well. First, we will continue to have access to the business we want to write. Second, we will be in a preferred position when the pricing cycle inevitably improves. At the same time, we will leverage our expertise, infrastructure and platform to assume a diversified array of risks, and look to long-term growth opportunities that will help prepare us for the future. We have opened an office in China and are opening an office in Brazil. We are also looking to refocus on the U.S. regional marketplace.
In the capital markets, the remarkable volatility we saw in 2007 will likely continue well into 2008. As awareness of risk grows, risk is re-priced. This is good news for us. Having reduced exposures in a poor market, we should be able to put more capital at risk in markets where price decreases provide better prospects for adequate risk-adjusted returns. We expect to see a number of attractive opportunities in the credit and equity markets in 2008.
Regardless of the short-term volatility and valuation trends in the reinsurance and capital markets, you can be assured that PartnerRe will hold true to its risk and return philosophy and policies and will attempt to make an adequate risk-adjusted return for our shareholders. Next >
