PartnerRe Continues Strong Numbers Growth

Bermuda-based PartnerRe Ltd. reported net income of $119.8 million, or $2.12 per share on a fully diluted basis, for the second quarter of 2004.

This net income includes net after-tax realized gains on investments of $10.1 million or $0.19 per share. Net income for the second quarter of 2003, including net after-tax realized gains on investments of $17.4 million or $0.33 per share, was $121.9 million or $2.00 per share. Operating earnings for the second quarter of 2004 were $104.9 million or $1.93 per share on a fully diluted basis. Operating earnings exclude net after-tax realized investment gains and losses and are
calculated after payment of preferred dividends. This compares to operating earnings of $89.9 million, or $1.67 per share, for the second quarter of 2003. All references to per share amounts are on a fully diluted basis.

PartnerRe President & Chief Executive Officer, Patrick Thiele, said, “We continued to achieve excellent results during the second quarter and first half of 2004, with an annualized operating return on equity of 18% and 19% respectively. Book value has grown 5% on a year-to-date basis, despite the significant rise in interest rates during the second quarter. Our results underscore the strength of PartnerRe’s financial position and technical capabilities, and reflect the real economic value that we are generating for our shareholders.”

Net premiums written for the second quarter 2004 were $840.7 million, a marginal increase over the comparable period in 2003. Quarterly comparisons are impacted by timing differences relating to the recording of written premiums, and therefore the year-to-date written premium growth rate is more reflective of the full year trends.

Total revenues for the quarter increased 10% over the second quarter in 2003 to $1.0 billion, including $954.8 million of net premiums earned – an increase of 11%; net investment income of $74.9 million – an increase of 19%; and net realized investment gains of $8.0 million.

For the first six months of 2004, net premiums written, net income, and operating earnings are all record results. For the six-month period, net premiums written were $2.4 billion, a 14% increase over the same period in 2003. Net income was $265.5 million or $4.71 per share. Net income for the period includes a net after-tax realized gain on investments of $41.1 million or $0.76 per share. Operating earnings were $214.6 million, or $3.95 per share.

Net income for the first six months of 2003 was $246.3 million or
$4.22 per share including net after-tax realized gains of $55.4 million, or $1.03 per share. Operating earnings for the same period in 2003 were $171.3 million or $3.19 per share. Total revenues for the first six months of 2004 were $2.0 billion, including $1.8 billion of net premiums earned, net investment income of $148.4 million, and net realized investment gains of $45.9 million. Total revenues for the same period in 2003 were $1.9 billion.

At June 30, 2004, total assets were $11.8 billion, total capitalization
was $3.3 billion, and total shareholders’ equity was $2.7 billion. This
compares to total assets of $10.9 billion, total capitalization of $3.2
billion, and total shareholders’ equity of $2.6 billion at December 31, 2003. Book value per common share at June 30, 2004 was $44.69 on a fully diluted basis, compared to $42.48 per share at December 31, 2003.

“We are very pleased with the performance of all our operations this
quarter, highlighted by a Non-Life combined ratio of 92.2%,” said Thiele. “Our excellent results for the quarter and the half year reflect our disciplined technical skills, as well as the strong pricing enjoyed over the last couple of years and the continued modest level of large losses.

Thiele added, “These market conditions have led to high levels of
industry profitability, which in turn have resulted in increasing competition, and prices declining in some lines, including property, catastrophe and aviation. Hence, our growth rate in written premiums has slowed considerably from the extremely strong growth enjoyed in 2002 and 2003. Nevertheless, expected profitability on currently written business remains quite good.”

The Non-Life segment reported net premiums written of $735 million for the quarter, down 5% as compared to last year. Timing differences in the recording of written premiums affect year-over-year comparisons. The combined ratio was 92.2% for the second quarter compared to 91.3% for the same period in 2003.

The Non-Life technical result remained flat at $112 million. The
results for this quarter include approximately $29.8 million of net reductions to prior period reserves, including a $27.5 million reduction to World Trade Center reserves principally relating to notifications from cedants that losses will not attach to the reinsurance layers on which PartnerRe participates.

For the first six months, Non-Life net premiums written were $2.2 billion, representing an increase of 13%. The six month technical result was $238 million, compared to $201 million for the same period in 2003. The combined ratio for the six month period was 91.5% compared to 92.3% in 2003.

The U.S. Property and Casualty business, which represented approximately 24% of total net premiums written for the quarter, reported net premiums written of $201 million, down 9% over the prior year’s second quarter.

Net premiums earned increased 9% during the quarter when compared to the same period in 2003. The technical ratio for this sub-segment was 94.5%, compared to 95.3% in the second quarter of 2003, reflecting strong results in property and casualty lines. For the first six months of 2004, net premiums written increased 7% to $577 million. The six-month technical ratio was 94.0%, compared to 95.6% in 2003. The technical result for the half-year increased to $28 million from $18 million in 2003.

The Global (Non-U.S.) Property and Casualty business, which represented approximately 24% of total net premiums written, reported net premiums written of $197 million for the second quarter of 2004, compared to $186 million for the same period in 2003. Net premiums earned during the quarter were $230 million, up 7% from $215 million in last year’s second quarter. The technical
ratio for this sub-segment was 105.2% compared to 94.2% for the same period in 2003, reflecting mixed results.

Strong results and reductions to prior year reserves in the property line were more than offset by moderate additions to reserves for prior years, primarily in European excess of loss motor and casualty business following recent increases in reported losses. For the six
months, net premiums written increased 36% to $666 million. The six-month technical ratio was 101.8%, compared to 93.2% in 2003. The technical result for the half-year was a loss of $9 million compared to a gain of $28 million in 2003.

The Worldwide Specialty business, which represented approximately 40% of total net premiums written for the quarter, reported net premiums written of $337 million for the second quarter, down 8% over the prior year period. Net premiums earned increased 4% during the quarter. This sub-segment’s technical ratio was 70.6%, compared to 75.2% for the second quarter of 2003, reflecting the low level of large loss activity during the quarter. The results for this quarter also include reductions in reserves for prior years of approximately
$49.0 million.

For the six-month period, net premiums written increased 4% to
$932 million. The six-month technical ratio was 69.8%, compared to 77.9% in 2003. The technical result for the half-year was $219 million compared to $155 million in 2003.

In conclusion, Thiele noted, “At the July 1 renewal, we saw pockets of strength in both U.S. and European casualty lines. However, the general trend is toward greater competition in both primary and reinsurance markets, and for the non-life reinsurance market as a whole, we expect to see flat to declining prices going forward.

“For 2004, we expect that, barring any unusually large loss events, we
will exceed our stated plan of a minimum of $6.90 in operating earnings per share, and an operating return on equity of at least 17%. We remain committed to increasing the economic value of this company.”