PartnerRe Ltd. (PRE)

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PartnerRe Ltd. (PRE)

Q4 2008 Earnings Call

February 03, 2009 10:00 AM ET

Executives

Robin Sidders - Director of Investor Relations

Patrick Thiele - President and Chief Executive Officer

Albert Benchimol - Executive Vice President and Chief Financial Officer

Analysts

Jay H. Gelb - Barclay Capital

Joshua Shanker - Citigroup

Larry Greenberg - Langen McAlenney

Doug Mewherter - RBC Capital Markets

Matthew Heimermann - JPMorgan

Vinay Misquith - Credit Suisse

Brian Meredith - UBS

Ian Gutterman - Adage Capital

Terry Shu - Pioneer Investments

Presentation

Operator

Good morning and welcome to today's ParternRe Conference Call. Before we begin the call, I would to remind that all participants are in a listen-only mode. (Operator Instructions).

If you haven't received a copy of the press release, it is posted on our company's website at www.partnerre.com or you can call 212-687-8080 and one will be faxed to you right away. This call is being recorded.

I'd now like to hand the call over Robin Sidders, Manager of Investor Relations at PartnerRe, who will begin the call.

Robin Sidders

Good morning, and welcome to PartnerRe's fourth quarter and full year 2008 earnings conference call webcast. As a reminder our fourth quarter financial supplements can be found on our website at www.partnerre.com, in the Investor Relations section and the supplementary financial data on the Financial Reports page.

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 quarter and full year 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 the call up as usual for a 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, credit, interest, currency, and other risks associated with the company's investment portfolio, adequacy of reserves, levels and pricing of new and old business achieved, changes in accounting policies, risks associated with implementing business strategies 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 these measures to GAAP measures in the company's financial supplement.

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

Patrick Thiele

Thanks and welcome to the fourth quarter and full year 2008 earnings conference call for PartnerRe. 2008 was truly an extraordinary year. Given the environment we faced PartnerRe performed well, finishing the year with a 12% operating return beginning shareholders equity, maintaining our strong balance sheet, and generating a positive return on our assets.

And looking at the fourth quarter you can see that we were significantly impacted by 3 external events. First, the dollar appreciated relative to other currencies which hurt our book value per share through our currency translation account. Second, our and the industry's view of losses from Ike increased substantially as more data was gathered from seeding (ph). And third, the ongoing financial crisis intensified in the quarter, impacting our credit and surety book and our life book.

It had impacted our view of D&O and E&O profitability throughout the year. We are not and cannot be immune to these macro events. And we believe we've been transparent on the fact that we're exposed in various parts of our financial statement. But if you filter out the noise there are three overriding themes to the year.

First, our balance sheet, year-over-year, our balance sheet was stable, which is a significant achievement in the year like 2008. Invested assets and cash are up 1.3% to $11.7 billion from $11.6 billion at December 31, 2007.

Non-Life reserves increased 4% to 7.5 billion and our common shareholders' equity was down only 3% to 3.7 billion and that's after including $163 million charge in our currency translation account and $100 million in common dividend. I can honestly say that our balance sheet is as strong as it's ever been.

Second, our book of business; because we're diversified in all levels we will always see losses from a variety of sources. But the impact is usually relatively small and is always well controlled. This is the result of the balance we've achieved across our portfolio; balance between our traditional reinsurance risks and our capital market risks and balance across business lines, geographies and distribution systems. We continue to have a high quality, well priced, stable book of business.

Third, our reputation and creditability in the market. This is the result of the consistently prudent way we approach our business, our institutionalized risk management culture, and the level of transparency we strive for in our disclosures. These are the foundations of our business and I would focus on these and the resulting stability that's created for PartnerRe over the longer term rather than the volatility in any given quarter.

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