PartnerRe’s non-life unit drives solid growth; investments boost profits in Q1 2019 results

PartnerRe enjoyed solid growth and a big increase in profits in the first quarter of 2019 driven largely by net unrealized investments gains - but the Bermuda reinsurer’s CEO also highlighted improvements in the pricing environment.

The company made a net profit of $497 million for the quarter which included net unrealized investments gains of $257 million on fixed maturities and short-term investments, primarily due to decreases in world-wide risk-free rates and credit spreads, and $25 million net foreign exchange losses.

This compared to net loss of $120 million for the first quarter of 2018, which included net unrealized investment losses of $222 million on fixed maturities and short-term investments, primarily driven by increases in risk-free rates, and $13 million net foreign exchange losses.

The reinsurer’s non-life net premiums written for the quarter were up 24 percent compared to the first quarter of 2018, driven by a 30 percent increase in the P&C segment, and a 13 percent increase in the specialty segment.

The non-life underwriting arm made a profit of $24 million (combined ratio of 97.7 percent) for the quarter compared to $44 million (combined ratio of 95.2 percent) for the first quarter of 2018.

The reinsurer’s P&C combined ratio was 87.7 percent for the quarter compared to 100.2 percent for the first quarter of 2018, driven by an improvement in the current accident year technical ratio and higher prior year favorable reserve development.

The specialty unit’s combined ratio was 116 percent for the quarter due to $38 million (10.4 points) of adverse prior year reserve development, primarily related to the Lloyd's net quota share portfolio, and a loss of $27 million (7.3 points) in the aviation book for the current accident year. This compares with a combined ratio of 86.9 percent for the first quarter of 2018, which included no mid-sized losses and favorable prior year reserve development of $23 million (6.8 points).

The reinsurer’s life and health division posted an 18 percent increase in net premiums written in the quarter compared to the first quarter of 2018, primarily driven by organic growth in life business.

Allocated underwriting result was a gain of $30 million for the quarter compared to $29 million for the first quarter of 2018, driven by 17 percent growth in net premium earned and 30 percent growth in technical result (technical ratio down 0.8 points), partially offset by a $4 million other expense increase to support future business growth.

Emmanuel Clarke, PartnerRe’s CEO, said: “In the first quarter of 2019, we delivered strong results in our P&C and Life and Health segments, and in our investments portfolio, while reporting an underwriting loss in our specialty segment, driven by a combination of mid-sized losses and negative reserve development, and where we are undertaking portfolio actions to improve future underwriting performance."

Clarke added: “Positive momentum continued in our April 1 non-life renewals with business production up double-digits on the back of continued improvements in the overall pricing environment, further solidifying the company's improved underwriting performance outlook for the remainder of the year.”

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