PartnerRe Notes Q4, Record Full Year 2004 Numbers
Bermuda-based PartnerRe Ltd. on Monday reported net income of $143.7 million, or $2.54 per share on a fully diluted basis, for the fourth quarter of 2004.
This net income includes net after-tax realized gains on investments of $16.1 million or $0.29 per share. Net income for the fourth quarter of 2003, including net after-tax realized gains on investments of $9.3 million or $0.17 per share, was $104.5 million or $1.84 per share.
Operating earnings for the fourth quarter of 2004 were $120.8 million or $2.25 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 $90.3 million, or $1.67 per share, for the fourth quarter of 2003. All references to per share amounts are on a fully diluted basis.
For the year ended Dec. 31, 2004, net income was $492.4 million or
$8.71 per share. Net income for the period includes a net after-tax realized gain on investments of $78.1 million or $1.44 per share. Operating earnings were $392.8 million, or $7.27 per share. Net income for the full year 2003 was $467.7 million or $8.13 per share including net after-tax realized gains of $80.0 million, or $1.48 per share. Operating earnings for the same period in 2003 were $358.3 million or $6.65 per share.
Commenting on the 2004 results, PartnerRe President & Chief Executive Officer Patrick Thiele said, “We had an excellent fourth quarter to close out 2004 with record results that are well ahead of our stated plan. Despite facing a challenging year in terms of the number of natural catastrophes and magnitude of losses associated with them, PartnerRe performed exceptionally well, achieving a full year operating return on equity of 17% and growing book value by 20% to year-end book value per share of $50.99. Our achievements in
2004 underscore the strength of the company both financially and
operationally.”
For the year ended Dec. 31, 2004, net premiums written were $3.9
billion, a 7% increase over the full year 2003. Total revenues for 2004 were $4.2 billion, including $3.7 billion of net premiums earned, net investment income of $298.0 million, and net realized investment gains of $117.3 million. Total revenues for 2003 were $3.9 billion.
At Dec. 31, 2004, total assets were $12.5 billion, total
capitalization was $3.8 billion, and total shareholders’ equity was
$3.4 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 Dec. 31, 2003. Book value per common share at December 31, 2004 was $50.99 on a fully diluted basis, compared to $42.48 per share at Dec. 31, 2003.
The company is continuing its share repurchase program which was initiated during the second quarter of 2004. During 2004, the company repurchased 2.9 million common shares, including 2 million common shares which were part of an accelerated share repurchase agreement executed on Dec. 30, 2004.
This partially offset the issuance of 3,478,400 common shares on Dec. 31, 2004, following settlement of the stock purchase contracts associated with the 8% Premium Equity Participating Security (PEPS) Units, which were subsequently retired.
Separately, the company announced today that its Board of Directors has increased the annual common share dividend by 12% to $1.52 per share from $1.36 per share. Today, the Board declared a regular quarterly dividend of $0.38 per common share, representing the increased level of dividend. The dividend will be payable on March 1, 2005, to common shareholders of record on Feb. 18, 2005, with the stock trading ex-dividend commencing Feb. 16, 2005.
Results of operations
“Our results this year clearly demonstrate the excellent level of
portfolio diversification that we have achieved,” said Thiele. “While
there were variations in results across operating units, overall we achieved excellent underwriting profitability with a Non-Life combined ratio of 94.3%.
“Our Worldwide Specialty operations posted an exceptional 71.2% technical ratio on $1.5 billion in net premiums earned for the year. These outstanding results helped to offset results in both our U.S. and Global Property & Casualty operations, which were impacted by reserve strengthening and the significant natural catastrophes of the third and fourth quarters. We continued to grow both our ART and Life segments, and they are increasingly important components of our overall diversification strategy.
“Our investment operations also added significant value during the year,” said Thiele. “Investment income increased 14% partially driven by our excellent cash flow of $1.3 billion, and we generated over $117 million in realized capital gains.”
Segment results
The Non-Life segment reported net premiums written of $561.8 million for the quarter, down 17% as compared to the same period in 2003. Timing differences in the recording of written premiums affect quarterly year-over-year comparisons, and therefore, the full year written premium growth rate is the more relevant measure.
For the full year, Non-Life net premiums written were $3.4 billion, representing an increase of 5%. The combined ratio was 94.5% for the fourth quarter compared to 95.1% for the same period in 2003.
The Non-Life technical result was $93.5 million in the fourth quarter of 2004 compared to $87.7 million for the prior year period. The results for this quarter include $26 million in estimated claims from the Indian Ocean tsunami, as well as $8 million of net reductions to prior year reserves. The full year technical result was $384.1 million, compared to $391.4 million for the same period in 2003. The combined ratio for the year was 94.3% compared to 93.2% in 2003.
The U.S. Property and Casualty business, which represented approximately 26% of total net premiums written for the year, reported net premiums written of $179.9 million, down 1% from the prior year’s fourth quarter. Net premiums earned decreased 5% during the quarter when compared to the same period in 2003. The technical ratio for this sub-segment was 97.9% compared to 112.8% in the fourth quarter of 2003. For the full year of 2004, net premiums written
increased 8% to $990.3 million. The full year technical ratio was 101.0% compared to 101.9% in 2003.
The Global (Non-U.S.) Property and Casualty business, which represented approximately 24% of total net premiums written for the year, reported net premiums written of $123.8 million for the fourth quarter of 2004, compared to $193.9 million for the same period in 2003. iming differences in the recording of premiums affect the quarterly comparison.
For the full-year 2004, net premiums written increased 11% to $944.8 million. Net premiums earned during the quarter were $231.5 million, up 1% from $229.6 million in the fourth quarter 2003. The technical ratio for this sub-segment was 113.3% for the fourth quarter compared to 98.2% for the same period in 2003, primarily reflecting $23 million in net additions to prior year reserves, as increases in motor excess of loss reserves were partially offset by reductions
in reserves for property business. The full year technical ratio was 104.2%, compared to 99.3% in 2003.
The Worldwide Specialty business, which represented approximately 39% of total net premiums written for the year, reported net premiums written of $258.1 million for the fourth quarter, down 14% from the fourth quarter of 2003. Net premiums earned were down 6% for the quarter, compared to the same period in 2003. This sub-segment’s technical ratio was 68.1%, compared to 72.3% for the fourth quarter of 2003, reflecting the low level of catastrophe activity during the quarter, as well as net reserve reductions for prior years of approximately $33 million. For the full year, net premiums written were
essentially flat with 2003 at $1.5 billion. The full year technical ratio was 71.2%, compared to 73.5% in 2003.
“Following an exceptional year in 2004, the January 2005 renewal season was mixed for PartnerRe in terms of pricing and potential future profitability,” Thiele said. “While the U.S. was rationally competitive with pricing in most lines at reasonable profitability levels, European and international markets were somewhat more competitive than expected. Our financial strength and franchise allowed us to gain a fair amount of new business.
“However, many customers increased their retentions and we also
reduced our participation in those instances where competitive pressures pushed prices and terms and conditions below our standards. As a result, we underwrote a diversified portfolio priced to achieve profitability above our long-term objective, but we expect total consolidated net written premiums to be flat to down 5% in 2005, barring unusual market conditions.”