PartnerRe losses soar as investments bite; CEO bullish on ‘attractive’ rates
Bermuda-headquartered reinsurer PartnerRe improved its underwriting result and combined ratio but its net loss for the first quarter increased more than eight times on the prior year period. Management blamed “mark-to-market investment losses on fixed maturities” as the sole driver for the loss but showed optimism in “attractive” rates particularly in casualty and professional lines.
PartnerRe reported a net loss of $539 million for the first quarter of 2022, compared with a net loss of $66 million for the same period of 2021. It said this was driven by unrealised losses of $821 million on fixed maturities and short-term investments resulting from increases in interest rates.
Gross premiums written was $2.83 billion, up from $2.5 billion seen in the first quarter of 2021.
Operating income improved by $132 million to $174 million for an annualised operating return on equity of 9.9%, an increase of 7.4 points compared to the first quarter of 2021. Non-life saw a 12-point improvement year on year, with a combined ratio of 84.7% and an underwriting profit of $199 million.
PartnerRe president and chief executive officer Jacques Bonneau (pictured) said: “On the back of a successful January 1st renewal and benefiting from our disciplined focus on profitable growth, we had an improved underwriting result for the first quarter of 2022, which led to the strong improvement in operating income.
“We continued to grow our premium base where rates are attractive, particularly in casualty and professional lines. With an annualised operating return on equity of 9.9% and an improvement in our non-life combined ratio of 12 points year-over-year, it is clear that our continuous focus on underwriting profitability provides PartnerRe the stability that our clients, capital partners and shareholder expect, despite a challenging macroeconomic and geopolitical backdrop.
“The industry continues to be impacted by increases in interest rates. While mark-to-market investment losses on fixed maturities, which we include in net income, were the sole driver of our net loss for the quarter, management's approach of holding most of our fixed maturity investments to their maturity means that changes in interest rates do not immediately put our capital at risk."
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