PartnerRe Ltd. Reports Fourth Quarter and Full Year 2016 Results
- Fourth Quarter Net Loss of $191 million, resulting in an Annualized Net Loss ROE of (12.4)%
- Fourth Quarter Operating Earnings of $125 million, driven by Non-life combined ratio of 89.6%, resulting in an Annualized Operating ROE of 8.1%
- Book Value of common shareholders’ equity of $6.0 billion, a 5.0% decrease compared to Q3 2016
PEMBROKE, Bermuda, February 21, 2017 - PartnerRe Ltd. ("the Company") today reported a net loss attributable to PartnerRe common shareholders of $191 million for the fourth quarter of 2016 compared to a net income for the fourth quarter of 2015 of $162 million. Operating earnings was $125 million for the fourth quarter of 2016, compared to operating earnings of $184 million for the fourth quarter of 2015.
Net income attributable to PartnerRe common shareholders includes net realized and unrealized losses on investments of $388 million in the fourth quarter of 2016, which were largely driven by significant increases in treasury yields, partially offset by narrowing of credit spreads. This compares to a $24 million loss in the fourth quarter of 2015, primarily driven by increases in U.S. risk-free interest rates, partially offset by the narrowing credit spreads and increases in worldwide equity markets.
Net income attributable to PartnerRe common shareholders for the full year 2016 was $387 million compared to $48 million in 2015 primarily due to net realized and unrealized gains on investments in 2016 of $26 million compared to losses of $297 million in 2015.
Operating earnings for the full year 2016 were $289 million, compared to operating earnings of $658 million for 2015 primarily due to a lower Non-life technical result, higher transaction and severance costs and loss on redemption of senior notes. The lower Non-life technical result was primarily driven by lower favorable prior year loss development, higher mid-sized loss activity and increased losses from catastrophes.
Operating earnings is a non-GAAP financial measure which excludes certain net after-tax realized and unrealized investment gains and losses, net after-tax foreign exchange gains and losses, certain net after-tax interest in results of equity method investments, the amalgamation termination fee and reimbursement of expenses paid to Axis Capital in 2015 and net loss on redemption of preferred shares in 2016, and is calculated after the payment of preferred dividends.
Net income or loss and operating earnings attributable to PartnerRe common shareholders, and the associated annualized ROEs, for the fourth quarters and the full years 2016 and 2015 include various non-recurring transaction and severance related costs, which impact period over period comparability as follows:
|(In US$ millions, except for percentages)|
|Non-GAAP measures adjusted for transaction(1)
and severance costs(2), net of tax
|Annualized operating ROE||9.8%||13.7%||6.9%||12.2%|
|Net (loss) income attributable to PartnerRe common shareholders||(161)||184||517||453|
|Annualized net (loss) income attributable to PartnerRe common shareholders ROE||(10.5)%||12.3%||8.6%||7.4%|
(1)Transaction costs include costs incurred related to the Exor acquisition in 2016; the terminated amalgamation with Axis Capital in 2015; the losses on redemption of senior notes and preferred shares in the fourth quarter of 2016; and the negotiated earn-out consideration paid to the former shareholders of Presidio Reinsurance Group, Inc. in 2015.
(2)Severance costs include costs incurred associated with the reorganization of the Company's operations and costs related to certain executive changes.
Commenting on results, PartnerRe President and Chief Executive Officer Emmanuel Clarke said, “We delivered good operating results in the fourth quarter with an annualized adjusted Operating ROE of 9.8%. The Non-life combined ratio of 89.6%, notwithstanding losses related to Hurricane Matthew, highlights our underwriting discipline while favorable prior year development continues to remain strong. In the current market conditions, we are undertaking the right underwriting actions to better serve our core clients while preserving our long-term capital strength."