Nat cat events bleed PartnerRe Q3 results
PartnerRe reported a net loss of $84 million for the third quarter of 2017 a fall from the $240 million profit it reported for the same period of 2016.
“The third quarter of 2017 was a very active period of severe catastrophe events, with a series of hurricanes impacting the Caribbean and the US and two earthquakes in Mexico,” said Emmanuel Clarke, president and chief executive officer of PartnerRe. “Our first thoughts go to the victims of these catastrophes. PartnerRe is paying losses promptly and continue to provide coverage to our clients, demonstrating the value of our reinsurance product, which ultimately contributes to fund reconstruction efforts in devastated regions.
“Despite the impact of these losses on the catastrophe exposed lines in our portfolio, PartnerRe book value declined by only 0.9 percent during the quarter, thanks to discipline in deploying capital in catastrophe exposed classes, solid performance in our Specialty portfolio, an improvement in our P&C non-CAT accident year technical ratio compared to the third quarter of 2016 and good investments performance. These results highlight our underwriting discipline and the quality and diversification of our underwriting portfolio. We are approaching the January 1 renewals season with a strong capital position which will allow us to benefit from improving pricing conditions in the market.”
Net income includes net realised and unrealised investment gains of $61 million in the third quarter of 2017 compared to $56 million in the same period of 2016. Operating losses totalled $113 million for the third quarter of 2017 compared to operating gains of $185 million for the same period of 2016.
Looking at net income for the first nine months of 2017, this came to $145 million, again down on the $578 million PartnerRe made over the same period of 2016. Net income available to common shareholder includes net realised and unrealised investment gains of $214 million compared to $415 million in the same period of 2016. Operating earnings for the first nine months of 2017 were $27 million compared to $164 million for the same period of 2016.
However, the company said that non-life net premiums written were up 7 percent compared to the same period of 2016, primarily as a result of new business written and reinstatement premiums, partially offset by cancellations and non-renewals. Excluding reinstatement premiums, net premiums written increased by 2 percent.
According to PartnerRe, the non-life combined ratio of 109.8 percent was driven by large catastrophic losses related to the hurricanes Harvey, Irma and Maria of $472 million, pre-tax, net of retrocession and reinstatement premiums, or 44.7 points on the combined ratio. The non-life combined ratio in the third quarter of 2016 was 82.7 percent and did not include any large catastrophic losses. Excluding large catastrophic losses, the non-life combined ratio in the third quarter of 2017 was 17.6 percentage points lower than the combined ratio in the third quarter of 2016, with the improvement mainly driven by an improved current accident year technical ratio, higher contributions from net prior years' reserve development and a lower expense ratio.
In PartnerRe’s life and health segment net premiums written were up 22 percent in the third quarter of 2017 compared to the same period of 2016, primarily driven by the inclusion of the Aurigen life premiums and growth in health business.
However, the allocated underwriting result, which includes allocated investment income and other expenses, was a loss of $10 million in the third quarter of 2017 compared to a gain of $11 million in the same period of 2016. The company said that this decrease primarily reflects lower profitability in the health line of business.
