PartnerRe reports Q1 2018 loss

24-05-2018

PartnerRe has reported a net loss of $120 million for the first quarter of 2018, down from the profit of $38 million it made in the same period of 2017.

The company said that the net loss for the quarter includes net unrealised investment losses of approximately $222 million, mainly driven by an increase in risk-free rates.

“We had solid underwriting profits this quarter in both our non-life and life & health segments with improved pricing margins, a 14 percent increase in net premium earned to last year’s first quarter and improved combined ratio across various lines of business,” said Emmanuel Clarke, PartnerRe's president and chief executive officer. “These results, alongside positive April 1 renewals, where we continued to see increases in business margins, position the company well to deliver improved underwriting results during the course of 2018. Interest rate increases recorded during Q1 are positive news for our business longer-term, yet their accounting impact translated into a net loss.”

PartnerRe’s non-life segment saw net premiums written for the first quarter of 2018 up 14 percent compared to the same period of 2017, primarily driven by the P&C segment.

The non-life combined ratio was 94.7 percent for the first quarter of 2018 compared to 96.4 percent for the first quarter of 2017. The non-life combined ratio continued to benefit from net favourable prior years' reserve development of $41 million (5.0 points) for the first quarter of 2018 compared to $86 million (11.3 points) for the same period of 2017, with both the specialty and P&C segments experiencing net favourable development.

PartnerRe’s life and health premiums written were up 28 percent in the first quarter of 2018, primarily driven by the addition of Aurigen premiums of $36 million (or 12 percent of the increase in net premiums written) in the first quarter of 2018 following its acquisition in the second quarter of 2017, organic growth in life business and the positive impact of foreign exchange.

Net investment total return in the first quarter of 2018 was a loss of $102 million, or (0.6) percent, and included net realised and unrealised investment losses of $222 million, partially offset by net investment income of $103 million and interest in earnings of equity method investments of $17 million. This compares to a positive total return of $130 million, or 0.8 percent, for the first quarter of 2017, which included net realised and unrealised investment gains of $23 million, net investment income of $99 million and interest in earnings of equity method investments of $8 million.

Net investment income for the first quarter of 2018 was up $4 million, or 4 percent, compared to the same period of 2017, mainly due to higher reinvestment rates and certain asset allocation changes in the fixed income portfolio.

Net realised and unrealised investment losses of $222 million in the first quarter of 2018 were driven by a significant increase in risk-free rates (approximately $180 million, mainly in the US), coupled with a widening of credit spreads in US and Europe (approximately $50 million). Financial assets (mainly alternative credit, public and private equity) and real estate reported a $25 million gain for the quarter. The Company reported a net realised and unrealised investment gains of $23 million in the first quarter of 2017 driven by mark-to-market gains mostly generated by a narrowing of corporate spreads and a decrease in US risk-free rates at the longer end of the curve.

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