PartnerRe Ltd. (PRE)

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PartnerRe Ltd. (PRE)

Q3 FY08 Earnings Call

October 23, 2008, 10:00 AM ET


Robin Sidders - Director of IR

Patrick Thiele - President and CEO and Director

Albert A. Benchimol - EVP and CFO


Joshua Shanker - Citigroup

Susan Spivak - Wachovia Capital Markets

Matthew Heimermann - J.P. Morgan

Ian Gutterman - Adage Capital

Jay Cohen - Merrill Lynch

Vinay Misquith - Credit Suisse

Jay Gelb - Barclay Capital



Before we begin the call, I would like to remind all participants that they are in a listen-only mode. [Operator Instructions] If you haven't received a copy of the press release, it is posted on the company's website or you can call 212-687-8080 and one will be faxed to you right away. I'll hand the call over Ms. Robin Sidders, Director of Investor Relations at PartnerRe, who will begin the call.

Robin Sidders - Director of Investor Relations

Good morning. And welcome to PartnerRe's Third Quarter and nine months 2008 Earnings Conference Call webcast. As a reminder our third quarter financial supplement can be found on our website at, in the Investor Relation's section by clicking on supplementary financial data on the Financial Reports page.

As usual on today's call are Patrick Thiele, President and CEO of PartnerRe and Albert Benchimol, Executive Vice President and CFO of PartnerRe. Patrick will start with an overview of the third quarter and year-to-date and then hand over to Albert, who'll provide more details on the results. Patrick will conclude with some additional commentary and then we'll open up the call up as normal for question and answer session.

I'll begin with the Safe Harbor Statements. Forward-looking statements contained in this call are based on the Company's assumptions and expectations concerning future events and financial performance, and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation and Reform Act of 1995. Such statements are subject to significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. PartnerRe's forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments such as exposure to catastrophe or other large property and casualty losses, adequacy of reserves, risks associated with implementing business strategies, levels and pricing of new and renewal business achieved, credit, interest, currency, and other risks associated with the company's investment portfolio, changes in accounting policies and other factors identified in the company's filings with the Securities and Exchange Commission.

In light of the significant uncertainties inherent in the forward-looking information contained herein, listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The company disclaims any obligation to publicly update or revise any forward-looking information or statement. In addition, during the call, management will refer to some non-GAAP measures when talking about the company's performance. You could find a reconciliation of those measures to GAAP measures in the company's financial supplement.

With that, I'll hand the call over to Patrick.

Patrick Thiele - President and Chief Executive Officer and Director

Thanks Robin and thanks everyone for dialing in to hear our story during this rather interesting time. I will keep my introductory remarks brief as Albert will spend more time on the details of the results. But there are three points I'd like to make, two relating to the metrics that we believe define fundamental performance and one relating to the velocity by which we manage our company.

First return on equity, 2008 certainly has been an extraordinary year for losses both in terms of severity losses such as hurricane Ike in the third quarter and a frequency of loses such as we saw the first quarter of 2008. Despite this we posted an operating return on our beginning equity of 15% for the first 9 months of the year. And we expect to finish the full year 2008 with an operating return on equity in excess of our long term target of 13%, provided of course there are no unusually large losses during the remainder of the fourth quarter. Second, book value, we like every other reinsurance [ph] in the industry are not immune to the severe financial turmoil that we've seen in the past several quarters.

Despite the magnitude of these crisis our book value per share was down just 4% year-to-date and is flat with our book value per share at September 30th 2007. This shows the balance and diversification we've achieved across our portfolio and the cautious view that we've taken in our divestment portfolio this year.

Finally and most importantly I believe the results we've delivered over the past several years and most notably in the current turbulent quarter clearly demonstrate the value and effectiveness of our integrated risk management framework which I considered to be a hallmark of our company. Our risk management approach on both the asset and liability side of the balance sheet fits within the context of a clearly defined risk tolerance we have established for each one of our major risk crisis. We are not over leveraged to the investment markets nor to the large catastrophic events nor to casualty loss trend.

It's this risk management philosophy that has led to the balance is clearly demonstrated in our results year-to-date. The stability combined with the strength of our balance sheet positions PartnerRe very well in these difficult times to continue to provide our clients with exceptionally secure capacity, and to provide continued value generation for our shareholders. Now I'll hand the call over to Albert to walk through the results of the third quarter, and our operating performance year-to-date.

Albert A. Benchimol - Executive Vice President and Chief Financial Officer

Thank you Patrick and good morning everyone. In this most turbulent quarter we witnessed continued softening of insurance and reinsurance markets, several hurricanes including Ike which will likely emerge as one of the top five catastrophe losses in history, and the most dislocated financial market with the great depression. In this environment we still delivered in underwriting profits meaningful growth of investment income and a respectable operating profit.

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