PartnerRe Reorganizes, Posts $354.4 Million Fourth-Quarter Net Income

Buoyed by profitable underwriting, few major catastrophes and the acquisition of Paris Re, reinsurer PartnerRe Ltd. posted more than a three-fold increase in its fourth-quarter net income, plus announced a reorganization to accommodate the Paris Re business.

Fourth quarter net income grew to $354.4 million, up from $95.3 million for the same quarter in 2008. Operating earnings for the fourth quarter of 2009 were $315 million, up from $53.9 million for the fourth quarter of 2008.

For the full-year 2009, net income rose to $1.5 billion, from $46.6 million for 2008.

"We had an exceptional year in 2009 for PartnerRe on several levels," including achieving an operating return on beginning equity of 22% and GAAP book value per share growth of 32%, PartnerRe President and Chief Executive Officer Patrick Thiele said in a conference call. "We did this despite starting the year off in the worst economic and financial environment the company has ever faced."

The company's combined ratio improved to 80.3 for the fourth quarter from 102.2 a year earlier. For the year, the combined ratio was 81.8, an improvement over 94.1 for 2008.

Also, the company announced it had changed its organizational structure after the acquisition of Paris Re.

The company said it would maintain its existing three major operating units: PartnerRe North America (formerly known as PartnerRe U.S.), PartnerRe Global and PartnerRe Capital Markets.

Within those three operating structure, Partner Re made the following changes:

-- PartnerRe Global, which includes reinsurance written outside the United States and Canada, will expand to include a new facultative unit. This reflects the company's increased business, infrastructure and expertise as a result of the combined PartnerRe and Paris Re facultative operations.

Michel Plecy, formerly head of treaty underwriting and marketing at Paris Re, will be appointed deputy CEO, global, and oversee the catastrophe and global P&C business units.

Emmanuel Clarke, head of the specialty lines business unit, will also be appointed deputy CEO, Global, and will oversee the specialty lines and facultative business units.

Christophe Boizard, chief financial officer of Paris Re, will join the executive management team for PartnerRe Global. All three of these new positions will report directly to Costas Miranthis, CEO of PartnerRe Global.

The new facultative business unit will be led by Dom Tobey, who joined PartnerRe in 2001 and was the former head of risk management and reserves for PartnerRe Global. Most recently, Tobey was deputy head of specialty lines for PartnerRe Global. He will report to Clarke.

Paris Re's other businesses outside of the United States and Canada will be integrated into one of the five business units within PartnerRe Global: catastrophe, global P&C specialty lines, facultative and life.

-- PartnerRe U.S. will expand to include Canada business and will become PartnerRe North America. PartnerRe's Canada operations, formerly part of the Global P&C business unit will combine with the Paris Re Canada operations, and will become one business unit. This change recognizes PartnerRe's increased presence in Canada and aligns the Canadian business under one North America underwriting and management structure.

The Canada business unit will be led by Herve Castella. Castella joined PartnerRe in 1999. Most recently, he has held the position of head account executive. Castella will be based in the Toronto office and will report to Tad Walker, president and CEO, PartnerRe North America.

With the addition of Canada and the former Paris Re U.S. business, the PartnerRe North America operations will increase in size and will consist of four business units: standard lines, specialty lines, managed programs and Canada.

-- Also, the company announced that Paris Re management board members Hans-Peter Gerhardt, president and CEO; Jean-Luc Gourgeon, chief underwriting officer; Marie-Helene Autem, head of human resources and Frank Papalia, general counsel have decided to leave the organization to pursue other opportunities. All members of the Paris Re management board will maintain their management responsibilities, throughout the integration period, until June 30, 2010.

In the conference call, Thiele said the company will be operating as one integrated group on July 1.

PartnerRe Ltd. completed the $2 billion acquisition of Paris Re Holdings Ltd. (BestWire, Dec. 8, 2009).

PartnerRe was the ninth-largest global reinsurer by 2008 gross written premiums, according to Best's Review's annual ranking of the top 35 global reinsurers. Paris Re was the 22nd largest.

PartnerRe Group currently has a Best's Financial Strength Rating of A+ (Superior). Paris Re currently has a Best's Financial Strength Rating of A (Excellent).

Shares of PartnerRe (NYSE: PRE) were trading at $76.01 a share on the afternoon of Feb. 12, down 0.34% from the previous close.

(By Meg Green, senior associate editor, BestWeek: [email protected])