PartnerRe Ltd. Provides Update on January 2009 Non-Life Renewals
PEMBROKE, Bermuda--([ BUSINESS WIRE ])--PartnerRe Ltd. (NYSE:PRE) today announced that during the January 1 renewal season it expects to write and bind approximately $2.1 billion of Non-Life premium. The Non-Life renewal does not include PartnerRe's Life operations as that renewal is distributed evenly throughout the year. Approximately 60-65 percent of the total annual Non-Life business is expected to renew on January 1. On a constant foreign exchange basis, the January 1, 2009 renewals would represent a 1 percent increase over total renewable expiring premium of $2.0 billion.
PartnerRe President & Chief Executive Officer Patrick Thiele said, "Overall, we are pleased with our performance in the January 1 renewal. We were able to marginally increase our production over 2008, while maintaining our portfolio balance and operating within our disciplined risk framework. We grew in markets where we saw the best opportunities from a risk/return perspective, and maintained our position in those areas where profitability has stabilized but not yet demonstrated improvement."
To date, from a renewable premium base of approximately $2.0 billion, $1.7 billion has been resolved with $296 million in process, where negotiations have not yet concluded. Approximately 85 percent of the in process business is U.S. agriculture, which traditionally renews later in the first quarter. Of the remaining $1.7 billion, $204 million was not renewed. This represents a 12 percent cancellation rate, the lowest seen over the last five years, and reflecting a reversal of the trend of increasing client retentions. The non-renewed premium includes approximately $99 million which was removed from the market as a result of cedants' decisions to retain more of their business, or restructure quota share coverages to excess of loss treaties. In addition, PartnerRe declined to renew approximately $105 million which did not meet the Company's portfolio objectives.
New business totaled $204 million, which was spread across most business lines, and reflective of cedants' desire for increased reinsurance protection.
Mr. Thiele said, "The Non-Life reinsurance market stabilized at January 1, reversing all of the deterioration seen in the first nine months of 2008, and in some areas - primarily catastrophe-exposed lines - priced profitability improved. The area of greatest uncertainty was U.S. specialty casualty, where, despite growing evidence of increasing loss trends, terms and conditions did not improve."
"Overall, we priced our January 1, 2009 business at approximately the same technical ratio level as we did at January 1, 2008, and we believe there is scope to improve on this level through the remainder of the year. We expect this renewal book to achieve our long-term goal of 13 percent operating return on beginning equity, barring unusual large loss events."
Below is a table outlining our January 1, 2009 Non-Life renewals followed by a table showing the allocation of our deployed underwriting risk capital, which is an internal measure the Company has determined to be necessary to support its underwriting risks:
PartnerRe January 1, 2009 Non-Life Renewal | |||||||||||||||
(amounts are in U.S. $ millions and are on a constant foreign exchange basis) | |||||||||||||||
U.S. | Global P&C | Global | Catastrophe | Total | |||||||||||
Renewable | 536 | 666 | 657 | 182 | 2,041 | ||||||||||
In Process / Extensions | 256 | 8 | 25 | 7 | 296 | ||||||||||
Renewable Base | 280 | 658 | 632 | 175 | 1,745 | ||||||||||
Non-Renewed | (22 | ) | (106 | ) | (58 | ) | (18 | ) | (204 | ) | |||||
Renewed | 258 | 552 | 574 | 157 | 1,541 | ||||||||||
Renewal Increases | 1 | (37 | ) | 31 | 26 | 21 | |||||||||
New Business | 98 | 34 | 43 | 29 | 204 | ||||||||||
Total Estimated Premium | 357 | 549 | 648 | 212 | 1,766 | ||||||||||
In Process / Potential New | 258 | 9 | 28 | 4 | 299 | ||||||||||
Total Potential | 615 | 558 | 676 | 216 | 2,065 | ||||||||||
Growth % | 15 | % | -16 | % | 3 | % | 19 | % | 1 | % |
Cancellations | ||||||
2007 | 2008 | 2009 | ||||
Client | 11% | 10% | 6% | |||
PartnerRe | 6% | 5% | 6% | |||
Total | 17% | 15% | 12% |
PartnerRe Underwriting Risk Capital Deployed in January 1 Renewals | ||||||
2007 | 2008 | 2009 | ||||
Casualty | 16% | 15% | 12% | |||
Property | 26% | 26% | 25% | |||
Specialty Lines | 22% | 23% | 28% | |||
Catastrophe | 31% | 32% | 31% | |||
Motor | 5% | 4% | 4% | |||
Total | 100% | 100% | 100% |
PartnerRe is scheduled to release fourth quarter and full year 2008 results after the close of trading on Monday, February 2, 2009. PartnerRe Management will conduct a conference call and webcast on Tuesday, February 3, 2009 at 10:00 a.m. Eastern to discuss earnings and provide additional information on the January 1, 2009 renewals.
PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. The Company, through its wholly owned subsidiaries, also offers capital markets products that include weather and credit protection to financial, industrial and service companies. Risks reinsured include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, multiline and other lines, life/annuity and health, and alternative risk products. For the year ended December 31, 2007, total revenues were $4.2 billion. At September 30, 2008, total assets were $16.3 billion, total capital was $5.0 billion and total shareholders' equity was $4.1 billion.
PartnerRe on the Internet: [ www.partnerre.com ]
Forward-looking statements contained in this press release 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 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 renewal 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, readers 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.