PartnerRe Ltd. (PRE)

PRE 
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PartnerRe Ltd. (PRE)

Q1 2009 Earnings Call

April 28, 2009, 10:00 am ET

Executives

Robin Sidders - IR

Patrick Thiele - President and CEO

Albert Benchimol - EVP and CFO

Analysts

Jay Gelb - Barclays Capital

Josh Shanker - Citi

Matthew Heimermann - J.P. Morgan

Vinay Misquith - Credit Suisse

Mark Dwelle - RBC Capital Markets

Brian Meredith - UBS

Presentation

Operator

Ladies and gentlemen before we begin the call I will remind all participants that they are in a listen-only mode. (Operator Instructions).

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

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

Robin Sidders

Good morning. And welcome to PartnerRe's first quarter 2009 earnings conference call and webcast. As a remainder our first quarter financial supplement can be found on our website at www.partnerre.com, in the Investor Relations section by clicking on 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 then handover 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 normal 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 can 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, equity and other risks associated with the Company's investment portfolio, adequacy of reserves, levels and pricing of new and renewals 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 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 over call over to Patrick.

Patrick Thiele

Thanks Robin, and welcome to the first quarter 2009 earnings conference call for us. Despite some modest noise we believe that the first quarter 2009 was the first for ParternRe that reflects a more normal overall environment. While it was some continued volatility in the capital markets both it and the reinsurance market began to stabilize over the last three months. Helping us to report the strong results you saw in our press release. For the quarter we had a 17% operating ROE and 87% combined ratio. And a 2.5% increase in our book value per share after payment of our recently increased dividend.

Our ability to successfully manage our way through the turmoil in the last eighteen months with minimal damage to our capital means that we have the right people, systems and strategy to succeed and whatever comes over the next few years. I'll turn it over to Albert who will give some additional flavor on the results and then I'll come back with some additional commentary.

Albert Benchimol

Thank you Patrick and good day everyone. We're pleased to report a good start to 2009 with a 37% increase in operating income per diluted share to $2.72 this quarter.

Net income increased 10% year-over-year to $2.32 per share leading to an annualized net income ROE of 14.4%. In addition to the items impacting our operating earnings, our net income reflects a change in the market value of our investment portfolio and our successful tender for our hybrid debt.

As we noted in our press release the stronger US dollar had significant impact on our financial results. Between March of '08 and March of '09, the US dollar strengthened 16% against the Euro and 18% against the Canadian dollar. This affected year-over-year comparisons from most income statement items including premiums written and earned and investment income. This also touched the balance sheet with a meaningful portion of our assets and liabilities translated at lower exchange rates.

Our Non-Life segment comprised of the US, Global P&C, Global Specialty and Catastrophe sub-segments, reported lower net premiums written and net premiums earned. However, this decrease was entirely due to FX. Without changes in currency, net premiums would have been flat.

The stable overall production figures belie significant changes in various lines and markets. As we increased writings in those lines of markets with improved conditions, while we made meaningful reductions where terms and conditions did not meet our standards.

Most importantly we reported a 27% increase in our Non-Life technical result, mainly due to a lower frequency and severity of mid-size losses in '09 as compared to the prior year.

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