PartnerRe's third quarter earnings outpaced the Zacks Consensus
Estimate but lagged the year-ago quarter figure. While higher
premiums, lower catastrophe losses and favorable reserve drove
results, higher expenses and lower investment results deteriorated
the combined ratio, underwriting results and ROE. However, an
appreciated asset base, capital as well as above-average liquidity
and efficient capital deployment, also reflected strong balance
sheet and improved book value. Uncertainty from catastrophes,
weakening P&C cycle, credit spreads, stiff competition and
challenging interest rate environment are other laggards. Long run
though, diversified-risk model, stable ratings, improved pricing
and market stability will likely help mitigate the cyclical
declines, justifying our Outperform recommendation.
Founded in 1993 and based in Pembroke, Bermuda, PartnerRe Ltd.
through its subsidiaries commenced as a pure property reinsurer but
has become a dynamic and diversified property-casualty (P&C)
and life reinsurer over the years, covering catastrophe,
automobile, agricultural, credit and surety, marine, space and
aviation, miscellaneous casualty and life/health risks. The company
was formed by raising nearly $1 billion in an IPO following
Hurricane Andrew and the concurrent difficulties faced by Lloyds of
London, which generated ample opportunities to capitalize on the
untapped catastrophe reinsurance market.
Since 1997, the company has been a leading international
reinsurance company that writes multi-line reinsurance on a pro
rata as well as excess of loss basis and offers both treaty
(reinsurance of an entire class of risk) and facultative
(reinsurance on individual policy-by-policy basis) contracts, in
about 150 countries across the globe. PartnerRe operates in Asia,
Europe and South America and in the U.S. through its subsidiaries
Partner Reinsurance Co. Ltd, PartnerRe SA and Partner Reinsurance
Co. of the U.S. As of Dec 31, 2012, the company had 1,112
Over the years, PartnerRe has grown through acquisitions and
alliances. Following an agreement and a 6% share purchase of Paris
Re in Jul 2009, the company purchased another 57% of the shares in
Paris Re along with certain outstanding warrants in Oct 2009. This
was followed by two additional share purchases of approximately 6%
each, bringing the total stake of the company in Paris Re to 89%.
Again, in Dec 2009, PartnerRe acquired another 10% of Paris Re.
Additionally, in Dec 2012, PartnerRe acquired California-based
Presidio Reinsurance Group, a leading U.S. specialty accident and
health reinsurance and insurance writer, for $72 million and
tangible book value. This was renamed as PartnerRe Health.
The company has three primary revenue segments that generate net
written premiums (NWP):
Non-life accounted for 82% of total NWP in 2013 This
North America Property and Casualty 30% of total NWP
Global (Non-U.S.) Property and Casualty 15%
Global (Non-U.S.) Specialty 29%
Life accounted for 18% of total NWP in 2013 This includes:
Corporate and Other negligible NWP This includes:
Insurance Linked Securities
Geographically, Europe contributed 40% and North America
contributed 39% to gross written premiums in 2013. The balance came
from Asia, Australia and New Zealand (11%) and Latin America,
Caribbean Islands and Africa (10%).
PartnerRe Ltd. (PRE): Read the Full Research
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