Background
PartnerRe
is one of the world’s largest international reinsurance groups.
The company is an intelligent provider of risk assumption products for
the global insurance and capital markets. PartnerRe provides multi-line
reinsurance to insurance companies on a worldwide basis through principal
offices in Bermuda, Greenwich, Paris and Zurich, branch offices or subsidiaries
in Hong Kong, Singapore, Toronto and Dublin and representative offices
in Mexico, Montreal, Santiago, Seoul and Tokyo.
Risks
reinsured include motor, catastrophe, life, alternative risk transfer and specialty
lines: agriculture, aviation and space, credit and surety, energy onshore,
engineering, marine and energy offshore, specialty casualty and specialty property.
PartnerRe
was established in 1993 as a specialty catastrophe reinsurer, one of the “Class
of ’93” companies formed after Hurricane Andrew. Recognising the
limitations and inherent volatility in writing a single line of business,
the company subsequently made a strategic shift to diversify its risk
portfolio. It began pursuing acquisition opportunities, and in 1997 acquired
French reinsurer SAFR, and the following year acquired the reinsurance
operations of the Winterthur Group.
Through these acquisitions and organic growth, PartnerRe has evolved
into a leading multi-line reinsurer. Through its broad product and geographic
diversification, its excellent execution capabilities, and its local
presence in most major markets, the company is able to respond quickly
to market needs, and to capitalise on business opportunities virtually
anywhere in the world. Today, PartnerRe has more than 900 employees and
does business in more than 120 countries around the world.
The company
writes business through its wholly-owned subsidiaries: Partner Reinsurance
Company, PartnerRe SA, and Partner Reinsurance Company of the US.
The parent company, PartnerRe Ltd., reports on three operating segments:
non-life, which includes its traditional property and casualty business
in the US and the rest of the world, and its significant specialty lines
business; life; and alternative risk transfer (ART).
Spotlight – Five-pronged strategy
PartnerRe’s
operating strategy is based on five key principles:
- Diversifying
risk across products and geographies, the company’s
most valuable risk management tool, means accessing superior business
opportunities worldwide, which increases return per unit of risk and
reduces overall volatility. PartnerRe is one of the most diversified
multi-line reinsurers in the world, writing almost every business line
in more than 120 countries.
- Maintaining
risk appetite moderately above the market means PartnerRe
is prepared
to assume more volatile and higher-risk lines, but only if it can properly
structure and manage the risk, and if it can earn an appropriate risk-adjusted
return.
- Actively
managing capital across the portfolio and over the cycle is
part of PartnerRe’s strong capital management philosophy. The company
equates capital to risk, and manages capital dynamically across its
portfolio and over a market cycle.
- Adding value through underwriting and transactional
excellence, which have been key drivers of PartnerRe’s
development.
- Using internal financial capabilities to achieve superior return.
Analysis
For the
first half of 2005, PartnerRe’s non-life segment reported net premiums
written of $1.9 billion, down by 11 percent from the same period in 2004. The
six month technical result was $206 million, compared to $238 million for the
same period in 2004. The combined ratio for the six month period was 93.3 percent
compared to 91.5 percent in 2004.
For the
first six months of 2005, net premiums written in the company’s US property
and casualty business sub-segment declined by 20 percent to $462 million. Net
premiums written in the global (non-US) property and casualty sub-segment were
down by 12 percent to $587 million. And net premiums written in the worldwide
specialty business were down by four percent to $895 million.
Revenues
in the property and casualty business fell in 2005 as a result of higher retentions
on the part of cedants and PartnerRe declining to write business that did not
meet its profitability and/or terms and conditions targets. In a softening
market, it is difficult to retain or grow market share while maintaining the
highest underwriting standards. The reductions in PartnerRe’s business
in the first half of 2005 are evidence of its willingness to decline unattractive
business.
For the
half-year, net premiums written in the company’s life segment,
which markets coverages primarily in Europe, Canada and Latin America,
increased by 19 percent to $222 million.
The ART (Alternative Risk Transfer)
segment comprises structured risk transfer, structured finance, weather
related products, and the results of the company’s investment in
Bermuda reinsurer Channel Re. ART’s
pre-tax contribution to net income, for the first six months of 2005,
was $15 million, compared to $1 million for the same period in 2004.
Senior management
Chairman: John A. Rollwagen
President and CEO: Patrick Thiele
CFO: Albert Benchimol
Financial data
(half-year to June 30, 2005)
Gross premiums written: $2.214 billion, down 8 percent
Net premiums earned: $1.777 billion, down 4 percent
Net income: $271.3 million, up 2 percent
Shareholders’ equity: $3.482 billion, up 28 percent
Website
www.partnerre.com
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