PEMBROKE, Bermuda, July 28, 2016 – PartnerRe Ltd. (“the Company”) today reported a net income of $136.7 million for the second quarter of 2016. This includes net after-tax realized and unrealized gains on investments of $162.2 million. Net loss for the second quarter of 2015 was $103.1 million, including net after-tax realized and unrealized losses on investments of $217.2 million. The Company reported operating losses of $65.6 million for the second quarter of 2016, which compares to operating earnings of $112.5 million for the second quarter of 2015.
Net income for the first six months of 2016 was $338.2 million. This includes net after-tax realized and unrealized gains on investments of $310.3 million. Net income for the first six months of 2015 was $128.6 million, including net after-tax realized and unrealized losses on investments of $116.9 million. Operating losses for the first six months of 2016 were $21.4 million, which compares to operating earnings of $263.0 million for the first six months of 2015.
Operating earnings or loss is a non-GAAP metric which excludes certain net after-tax realized and unrealized investment gains and losses, net after-tax foreign exchange gains and losses, certain net after-tax interest in results of equity method investments, and is calculated after the payment of preferred dividends.
Net income (loss), operating earnings (loss) and the associated annualized ROE’s for the second quarters and the first six months of 2016 and 2015 include various transaction related costs and severance costs which impact period over period comparability as follows:
| In US$ millions, except for percentages | Q2 2016 | Q2 2015 | Year to date 2016 | Year to date 2015 |
|---|---|---|---|---|
| Operating (loss) earnings adjusted by transaction(1) and severance costs, net of tax | (44) | 147 | 60 | 328 |
| Annualized Operating ROE adjusted by transaction(1) and severance costs, net of tax | (2.9)% | 9.3% | 2.0% | 10.6% |
| Net income (loss) adjusted by transaction(1) and severance costs, net of tax | 158 | (69) | 420 | 194 |
| Annualized Net income (loss) ROE adjusted by transaction(1) and severance costs, net of tax | 10.4% | (4.4)% | 13.7% | 6.2% |
(1)Transaction costs include costs incurred related to the EXOR acquisition, the terminated amalgamation with Axis and the negotiated ea-out consideration paid to the former shareholders of Presidio Reinsurance Group, Inc.
The Company’s results for the second quarter of 2016 include $27 million, pre-tax, related to severance costs associated with the reorganization of the Company’s business units, investment operations and certain executive changes.
The Company’s results for the second quarter of 2016 have also been impacted by a high level of catastrophe and weather-related loss activity, including the Fort McMurray wildfires (the largest catastrophe in Canadian history), the Japanese earthquake, floods in Germany and France, and hailstorms in Texas, and an energy loss for which the Company reported combined losses of $139 million, pre-tax, after reinsurance and reinstatement premiums. Notwithstanding the high frequency of catastrophe, weather-related and energy loss activity in the quarter, the reported losses of $139 million, pre-tax, represented only 2.3% of common shareholders’ equity and 1.8% of total capital at June 30, 2016.
Commenting on results, PartnerRe Chief Executive Officer Emmanuel Clarke said, “Our results for the quarter reflect a high frequency of catastrophe and large losses in the industry which has led us to post our first operating loss since the fourth quarter of 2011. Notwithstanding these events, we were able to report a positive net income and grow our book value by 1.9% due to our disciplined underwriting approach and use of retrocessional coverage – both of which have contributed to mitigate our losses – and due to the positive results from our investment portfolio. As previously announced, on July 1, 2016 we implemented a new organization of our Business Units. I am extremely confident this important milestone will allow us to deliver more value to our clients and better position PartnerRe in the evolving reinsurance market environment.”
