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PartnerRe Beats Earnings, Rev Lags

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PartnerRe Ltd.’s first-quarter 2013 operating earnings per share of $3.39 noticeably topped the Zacks Consensus Estimate of $2.47 and the year-ago earnings of $2.76. Operating net income escalated 11.2% year over year to $202.1 million.

Operating earnings were calculated after payment of preferred dividends. This also excluded after-tax net realized and unrealized investment gain of 20 cents per share and interest income of 1 cent per share from equity investments in the reported quarter, which was offset by net foreign exchange loss of 1 cent per share and a loss on redemption of preferred shares of 15 cents.

Including these items, GAAP net income for PartnerRe stood at $210.5 million or $3.53 per share against $344.7 million or $5.24 per share in the year-ago quarter.

PartnerRe’s total revenue inched down 2.6% to $1.3 billion from $1.33 billion in the year-ago quarter. However, total revenue edged past the Zacks Consensus Estimate of $1.29 billion.

This included net premiums earned of $1.15 billion (up 15.9% year over year), net investment income of $123.7 million (down 15.8% year over year), pre-tax net realized and unrealized investment gains of $22.9 million against $192.7 million in the year-ago quarter and other income of $3.9 million, up from $2.7 million in the year-ago period. Meanwhile, net premiums written increased 11.1% year over year to $1.64 billion.

During the reported quarter, total expense surged 13% year over year to $1.03 billion. Non-life combined ratio also recovered to 81.7% from 84.7% in the year-ago period. This reflects 19.8 points or $183 million related to net favourable development on prior accident years across most non-life segments.

Moreover, technical ratio improved across most non-life segments. The technical result for the reported quarter was a positive of $251 million, improving 24.3% from the year-ago quarter.

Financial Update

As of Mar 31, 2013, PartnerRe’s total assets were $23.14 billion, up from $22.98 billion at 2012-end. Total investments, cash and funds held and directly managed stood at $17.7 billion, down 1.7% from $18 billion at 2012-end. As of Mar 31, 2013, total capital was $7.7 billion (in line with 2012-end) and total shareholder equity was $6.95 billion, up from $6.93 billion at 2012-end.

However, PartnerRe's net non-life loss and loss expense reserves reduced by 4% to $10 billion from 2012-end, primarily due to the impact of catastrophic events during 2011 and 2012. The company’s book value per common share improved 2.1% to $102.96, compared with $100.84 at the end of 2012.

Annualized operating ROE soared to 13.5% in the reported quarter from 7.3% at the end of the prior quarter, while annualized net income ROE stood at 14%, significantly higher than 7.4% in the prior quarter.

Share Repurchase Update

On Mar 6, 2013, the board approved a stock repurchase authorization of up to 6.0 million shares, effective immediately. This replaced the previous authorization of 6.0 million shares that was approved in Aug 2012.

Accordingly, the company bought back about 1.8 million shares for $160 million during the reported quarter. Moreover, an additional 0.45 million shares have been repurchased for $41 million so far in the second quarter of 2013, until Apr 29, 2013, leaving about 4.7 million shares available for repurchases under the current authorization.

Dividend Update

Concurrently, the board of PartneRe declared a regular quarterly dividend of 64 cents per share, which is payable on May 31, 2013, to shareholders of record as on May 20, 2013.

On Feb 4, 2013, the board of PartneRe hiked its regular dividend by 3% to 64 cents per share from the prior payout of 62 cents. The hiked dividend was paid on Mar 1, 2013, to the shareholders of record as on Feb 19, 2013.


Along with PartnerRe, other strong performers in the insurance sector include Chubb Corp. (CB - Free Report) , Hilltop Holdings Inc. (HTH - Free Report) and Montpelier Re . All these stocks carry a Zacks Rank #1 (Strong Buy).

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