PartnerRe (PRE) Beats Q2 Earnings Estimates, Falls Y/Y - Analyst Blog
PartnerRe Ltd.PRE reported second-quarter 2015 operating earnings of $2.35 per share that surpassed the Zacks Consensus Estimate of $2.31 by 1.7%. With this, the company succeeded in maintaining its streak of positive earnings surprise in all of the last four quarters with an average beat of 19.8%. However, earnings decreased 9.6% year over year due to continued competitive pressure across all reinsurance lines of business and complex financial markets.
Including net realized and unrealized losses on investments of $4.55 per share, the company reported net loss of $2.16 per share in the quarter, which compared unfavorably with net earnings of $5.02 per share reported a year ago.
Quarter in Detail
Total operating revenue decreased 2.9% to $1.45 billion attributable to lower net premiums earned (down 1.9% year over year), net investment income (down 7.5%) and other income (plunging 97.5%). The top line also missed the Zacks Consensus Estimate of $1.57 billion.
Net premiums written fell 6.8% year over year to $1.32 billion. Net premiums written on a constant foreign exchange basis remained in line with the prior-year quarter result. Improvement in the Life and Health segment and modest growth in the North America and Global (Non-U.S.) P&C Non-life sub-segments was offset by weak results in Catastrophe Non-life sub-segment.
Total expenses were down 0.5% year over year to $1.30 billion. This was on account of lower losses and loss expenses and life policy benefits and acquisition costs.
Subsequently, technical result for the reported quarter was $180 million, up 8.4% from the year-ago quarter.
Moreover, combined ratio improved 120 basis points year over year to 90.3% attributable to favorable prior-year development.
As of June 30, 2015, PartnerRe's total assets were $22.5 billion, up from $22.3 billion at year-end 2014. Total investments, cash and funds that are directly managed totaled $16.80 billion as of Jun 30, 2015, down from $17.22 billion at the end of 2014, due to the foreign exchange impacts and higher risk free rates of U.S. and Europe in long term.
As of Jun 30, 2015, total capital of $7.90 billion, remained almost unchanged from that at year-end 2014 due to dividend payments and share repurchase activities. Total shareholder equity was $7.08 billion, down 0.3% from $7.10 billion at the end of 2014.
PartnerRe's net non-life loss and loss expense reserves were down 2% from the 2014-end level to $9.30 billion at Jun 30, 2015, due to the effects of foreign exchange. The company's book value per common share improved 0.8% to $127.24 as of Jun 30, 2015, from $126.21 at the end of 2014.
On Jul 27, 2015 PartnerRe's board of directors declared its regular quarterly dividend of 70 cents per share, which is payable on Sep 1, to shareholders on record as of Aug 7, 2015.
PartnerRe currently carries a Zacks Rank #3 (Hold). Among the others in the property and casualty insurance space, the bottom line at The Travelers Companies, Inc. TRV , ACE Ltd. ACE and RLI Corp. RLI outpaced the Zacks Consensus Estimate for the second quarter.
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