PartnerRe Ltd.’s (PRE) first-quarter operating loss per share of 50 cents came in narrower than the Zacks Consensus Estimate of a loss of 70 cents per share. However, this was substantially behind earnings of $2.72 per share in the year-ago quarter.
Operating earnings were calculated after payment of preferred dividends. This excluded after-tax net realized and unrealized investment gains and losses, after-tax net realized gain on the purchase of the CENts and after-tax interest in results of equity investments. Including these items, GAAP net income for PartnerRe was $79.7 million or 85 cents per share, compared with $141.5 million or $2.32 per share in the year-ago quarter.
Results reflected a robust growth in premiums written and earned and net investment income that led to strong top-line growth. However, total operating expenses increased 68% year over year to $1.37 billion. Moreover, non-life combined ratio deteriorated to 116.9% from 87.0% in the year-ago period. These factors adversely impacted the bottom-line, resulting in negative operating return on equity (ROE) and a decline in book value per share.
PartnerRe’s total revenues increased 44.1% to $1.47 billion from $1.02 billion in the year-ago quarter. This included net premiums earned of $1.15 billion (up 33.2% year-over-year), net investment income of $173.1 million (up 30.1% year over year) and pre-tax net realized and unrealized investment gains of $145.5 million, compared with losses of $70.1 million in the year-ago quarter. Net premiums written increased 36.4% to $1.78 billion from $1.31 billion in the year-ago quarter. Overall, premiums earned witnessed fair performance across all business segments.
The PARIS RE business, which represented approximately 21% of total net premiums written for the quarter, reported net written premiums of $377 million. Net premiums earned were $243 million, while the technical ratio was 110.2%. The technical result for the reported quarter was a loss of $25 million.
As of March 31, 2010, PartnerRe’s total assets were $24.8 billion, compared with $23.7 billion as of December 31, 2009. Total investments, cash and funds held and directly managed increased 2% to $18.5 billion. As of March 31, 2010, total capital was $8.2 billion and total shareholders’ equity was $7.4 billion (down from $7.6 billion as of December 31, 2010).
During the reported quarter, the company’s estimate of life reserves for prior years developed favorably by $11 million compared with adverse development of $7 million in the year-ago quarter. PartnerRe’s book value per common share as of March 31, 2010, was $84.12, compared with $84.51 as of December 31, 2009. Annualized operating ROE came in at a negative of 2.3% while annualized net income ROE came in at 4.0%.
Share Repurchase Update
During the reported quarter, PartnerRe bought back 3,006,873 common shares for approximately $231 million. In February 2010, the company announced an increase in its share repurchase authorization up to a total of 8 million common shares. Accordingly, in April 2010, PartnerRe repurchased 1,825,450 common shares for approximately $146 million. Consequently, the company has about 5 million common shares remaining under the current repurchase authorization.
Dividend Update
Concurrent with the earnings release, the Board of PartnerRe declared a regular quarterly dividend of 50 cents per common share. The dividend will be payable on June 1, 2010 to common shareholders as of May 21, 2010, with the stock trading ex-dividend commencing May 19, 2010.
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