PartnerRe Ltd. (PRE)

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PartnerRe Ltd (PRE)

Q4 2012 Earnings Conference Call

February 7, 2013 10:00 am ET

Executives

Robin Sidders – Director-Investor Relations

Costas Miranthis – President and Chief Executive Officer

William Babcock – Executive Vice President and Chief Financial Officer

Analysts

Amit Kumar – Macquarie Capital

Jay Gelb – Barclays Capital

Michael Zaremski – Credit Suisse

Vinay Misquith – Evercore Partners

Jay A. Cohen – Bank of America Merrill Lynch

Meyer Shields – Stifel, Nicolaus & Co., Inc.

Ian Gutterman – Adage Capital

Presentation

Operator

Before we start today’s call, I will remind all participants that they are in a listen-only mode. (Operator Instructions) If you have not received the copy of the press release, it is posted on the Company’s website at www.partnerre.com or you can call 212-687-8080, and one will be faxed to you right away.

I’ll now hand the conference over to Ms. Robin Sidders, Director of Investor Relations at PartnerRe who will begin the call.

Robin Sidders

Good morning, and welcome to PartnerRe’s Fourth Quarter and Full Year 2012 Results Conference Call and Webcast. As a reminder, our fourth quarter financial supplement can be found on our website in the Investor Relations section by clicking on Supplementary Financial Data on the Financial Reports Page.

On today’s call are Costas Miranthis, President and CEO of PartnerRe and Bill Babcock, Executive Vice President and CFO of PartnerRe. Costas will start with an overview of the quarter and the year and then hand over to Bill who will provide more details on the results. Costas will come back at the end and provide additional commentary on the market on the January 1 renewal, then we’ll open the call up for a question-and-answer session.

I’ll begin with the Safe Harbor statement. Forward-looking statements contained in this call are based on the Company’s assumptions and expectations concerning future events and financial performance of the company and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation 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 development 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 those 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 statements. In addition, during the call, management will refer to some non-GAAP measures when talking about the Company's performance. You can find the reconciliation of those measures to GAAP measures in the Company's financial supplement.

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

Costas Miranthis

Thank you, Robin, and good morning, everybody. The strong fourth results capped a very successful year for PartnerRe on a number of fronts. Financially we achieved a very satisfying full year operating ROE of 7.3% driven primarily by a strong underwriting results despite continuing to be challenged by the low interest rate environment. We achieved a normalized combined ratio of 87.8% despite a major loss activity in U.S. agriculture and Superstorm Sandy; both of these losses were high end digit and the fact that we were able to absorb during the fourth quarter, a loss like Sandy, and still produce a very good results reflects the increased balance in our portfolio.

Our book value growth was even more interesting, as market value through the year by positioning well our portfolio led to significant gains.

I’m also pleased with the work that we did last year, which enabled us profitably grow our top line in both life and non-life during 2012. A trend we continue at January 1? Which I will discuss after Bill take you through the numbers in more detail. We were active in capital management during the year, allocating capital to alliance where we saw opportunities, continuing to optimize our capital funding by alliance, and investing new capabilities such as our recently announced acquisition of Presidio, and repurchasing a substantial portion of our capital at very attractive and accretive prices.

All of these factors contributed to an excellent 2012, which culminated in us closing out the year with the highest book value per share in our 20 year history. But what gives me even greater pleasure, is that I feel we have better position to face the challenges that lie ahead of us.

I’ll hand over the call to Bill, and I’ll come back at the end of the call to talk more about the January 1 renewals in tenant market conditions.

William Babcock

Thanks, Costas and good morning everyone. We capped a strong 2012, with the solid fourth quarter result. Operating income for the quarter was $96 million or $1.55 per diluted share, which translates to an annualized operating ROE of 7.3%. We finished 2012 with the full year operating ROE of 12.3%. We grew diluted book value per share during the year by 19% or 22% after adjusting for dividends paid closing the year at $100.84 which as Costas mentioned the record high for us.

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