Look for More PartnerRe Strength

PartnerRe, Ltd's (PRE - Analyst Report) first-quarter operating earnings of $110.2 million or $1.98 per diluted share were substantially short of estimates. The results benefited from a moderate level of incurred losses, strong investment income growth, and a weakening U.S. dollar, which were more than offset by a softening in reinsurance pricing and higher costs. We are maintaining our Buy recommendation on the shares.

We expect PRE to continue delivering strong results for the coming quarters based on its excellent underwriting abilities, strong capitalization, solid ratings and reputation in the market, though we suspect that the current negative sentiment for the financials as a whole may somewhat weigh on the share price momentum.

After reviewing the results, we are moderating our FY08 and FY09 estimates slightly to $9.79 per share and $10.00 per share, respectively. At the current price, the shares of PRE trade at 1.04x its 1Q08 book value of $70.93 per share, well below the middle of its 10-year range, and at a 17.8% discount to the peer group median. Our six-month price target of $82.00 per share reflects a slightly expanded multiple of approximately 1.12x to our estimated September 2008 book value of $73.50 per share.

Read the full analyst report on PRE