PartnerRe Ltd. Reports Full Year 2023 Results
PartnerRe Ltd. Reports Full Year 2023 Results
PEMBROKE,
Highlights
- Net income available to common shareholder of
$2,308 million for a retuon equity of 0% - Operating income of
$1,447 million for an operating income retuon equity of 0%, a 7.5% improvement - Net premiums earned grew by 9% reflecting 4% growth in Non-life and 26% growth in Life and Health
- Non-life underwriting result was
$1,071 million , with a combined ratio of 81.6% - Life and health allocated underwriting result, including allocated net investment income, of
$159 million - Net investment retuof
$1,148 million included unrealized gains on fixed maturities and short-term investments of$391 million . Net investment income increased by$247 million to$646 million - On
December 27, 2023 , theGovernment of Bermuda enacted the Corporate Income Tax Act 2023 ("CIT Act"), which will apply a 15% corporate income tax to certainBermuda businesses in fiscal years beginning on or afterJanuary 1, 2025 . The Company recognized a net deferred tax asset of$432 million related to the enactment of the CIT Act, including$487 million related to the Economic Transition Adjustment (ETA), which is intended to provide a fair and equitable transition into the tax regime, partially offset by a$55 million net deferred tax liability in relation to the future tax impact of temporary differences between book and tax value. - Cash flows from operating activities of
$2,236 million , reflecting growth of 52% - Long Duration Targeted Improvements ("LDTI") accounting standard adopted in Q1 2023; comparable periods have been updated to reflect the adoption
PartnerRe President and Chief Executive Officer
"2023 has proven to be one of the strongest years in our recent history. Favorable market conditions, combined with a continued focus on disciplined execution, resulted in operating income of
With my retirement announced to take effect at the end of
| Operating income and operating income retuon equity are non-GAAP financial measures. See "Non-GAAP Financial Measures - Regulation G" for a reconciliation of non-GAAP measures. |
| Life and health allocated underwriting result includes net premiums earned, loss and loss expenses, acquisition costs, other income, other expense and allocated net investment income. |
Consolidated Statements of Operations and
Comprehensive Income (Loss)
(Expressed in thousands of
(Unaudited)
| For the year ended | ||
| Revenues | ||
| Gross premiums written | ||
| Net premiums written | ||
| Increase in unearned premiums | (10,152) | (287,078) |
| Net premiums earned | 7,918,760 | 7,257,117 |
| Net investment income | 645,685 | 398,348 |
| Net realized and unrealized investment gains (losses) | 517,426 | (1,969,014) |
| Other income | 40,965 | 40,492 |
| Total revenues | 9,122,836 | 5,726,943 |
| Expenses | ||
| Losses and loss expenses (liability remeasurement loss (gain): 2023, |
4,990,208 | 4,725,872 |
| Market risk benefit gains | (7,079) | (121,211) |
| Acquisition costs | 1,563,107 | 1,537,213 |
| Other expenses | 463,385 | 414,876 |
| Interest expense | 57,532 | 55,185 |
| Amortization of intangible assets | 7,906 | 8,912 |
| Net foreign exchange losses | 42,542 | 14,774 |
| Total expenses | 7,117,601 | 6,635,621 |
| Income (loss) before taxes and interest in (losses) earnings of equity method investments | 2,005,235 | (908,678) |
| Income tax benefit (expense) | 327,924 | (41,895) |
| Interest in (losses) earnings of equity method investments | (15,040) | 10,821 |
| Net income (loss) | 2,318,119 | (939,752) |
| Preferred dividends | 9,750 | 9,750 |
| Net income (loss) attributable to common shareholder | ||
| Comprehensive income (loss) | ||
| Net income (loss) | ||
| Change in currency translation adjustment | (3,180) | 5,670 |
| Change in net unrealized gains or losses on investments, net of tax | (26) | - |
| Change in unfunded pension obligation, net of tax | (15,005) | 12,573 |
| Changes in discount rate for liability for future policy benefits, net of tax | (49,984) | 99,250 |
| Changes in instrument-specific credit risk for market risk benefits, net of tax | 4,843 | 49,794 |
| Comprehensive income (loss) |
(1) Amounts have been adjusted to reflect the adoption of LDTI.
PartnerRe Ltd.
Consolidated Balance Sheets
(Expressed in thousands of
(Unaudited)
| Assets | ||
| Investments: | ||
| Fixed maturities, at fair value | ||
| Short-term investments, at fair value | 1,020,257 | 523,510 |
| Equities, at fair value | 917,170 | 929,886 |
| Investments in real estate | 56,188 | 57,984 |
| Other invested assets | 3,464,839 | 3,355,106 |
| Total investments | 20,548,510 | 17,888,400 |
| Cash and cash equivalents | 1,097,423 | 1,251,596 |
| Accrued investment income | 122,107 | 103,752 |
| Reinsurance balances receivable | 3,377,324 | 3,342,612 |
| Reinsurance recoverable on paid and unpaid losses | 1,921,231 | 1,947,786 |
| Prepaid reinsurance premiums | 215,611 | 247,276 |
| Funds held by reinsured companies | 450,454 | 471,570 |
| Deferred acquisition costs | 1,020,704 | 1,012,067 |
| Market risk benefit assets, at fair value | 144,636 | 131,186 |
| Deposit assets | 164,189 | 81,053 |
| Net tax assets | 563,368 | 160,634 |
| 456,380 | 456,380 | |
| Intangible assets | 81,913 | 89,769 |
| Other assets | 324,639 | 203,119 |
| Total assets | ||
| Liabilities | ||
| Non-life reserves | ||
| Life and health reserves | 2,859,257 | 2,497,519 |
| Market risk benefit liabilities, at fair value | 5,062 | 9,170 |
| Unearned premiums | 2,741,755 | 2,745,371 |
| Other reinsurance balances payable | 655,240 | 632,336 |
| Debt | 1,883,585 | 1,848,003 |
| Deposit liabilities | 6,009 | 4,681 |
| Net tax liabilities | 57,584 | 38,576 |
| Accounts payable, accrued expenses and other (2) | 704,267 | 488,594 |
| Total liabilities | 22,064,068 | 20,989,881 |
| Shareholders' Equity | ||
| Common shares (par value |
- | - |
| Preferred shares (par value |
8,000 | 8,000 |
| Additional paid-in capital | 1,929,934 | 1,929,934 |
| Accumulated other comprehensive income | 7,527 | 70,879 |
| Retained earnings | 6,478,960 | 4,388,506 |
| Total shareholders' equity | 8,424,421 | 6,397,319 |
| Total liabilities and shareholders' equity |
(1) Amounts have been adjusted to reflect the adoption of LDTI.
(2) Includes payables for securities purchased of
Non-GAAP Financial Measures - Regulation G
In addition to the GAAP financial measures set forth herein, the Company has also included certain non-GAAP financial measures within the meaning of Regulation G. Management believes that these non-GAAP financial measures are useful to investors and other stakeholders and help provide a consistent basis for comparison between quarters and for comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by other companies outside of the insurance industry. These non-GAAP measures should be considered an addition to, and not a substitute for, measures of financial performance prepared in accordance with GAAP and investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance. The reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures in accordance with Regulation G is included within the relevant tables.
Operating Income (Loss) available to Common Shareholder (Operating Income (Loss)); Annualized Operating Retuon Average Common Shareholder's Equity (Annualized Operating ROE): The Company uses Operating income (loss) and Annualized Operating ROE to measure performance, as these measures focus on the underlying fundamentals of the Company's operations. Operating income (loss) is calculated after preferred dividends and excludes the impact of market risk benefit gains (losses), net realized and unrealized gains and losses on investments, net foreign exchange gains and losses, interest in earnings (losses) of equity method investments, favorable or adverse prior years' reserves development for which we have ceded the risk under an adverse development cover (ADC) and related changes in amortization of the deferred gain, the change in the deferred tax asset related to the Economic Transition Adjustment (ETA) under the Bermuda Corporate Income Tax Act 2023 (CIT Act), the impact of non-recurring transactions such as losses on the redemption of preferred shares, and the cumulative tax effects of these adjustments. The Company calculates Annualized Operating ROE using Operating income (loss) for the period divided by the average common shareholder's equity outstanding for the period. Operating income (loss) should not be viewed as a substitute for Net Income (Loss) prepared in accordance with GAAP. Annualized Operating ROE supplements GAAP information. The Company's management believes that Operating income (loss) is useful to stakeholders because it more accurately reflects the underlying fundamentals of the business by removing the variability arising from activity that is largely independent of its business and underwriting processes, such as: fluctuations in the fair value of market risk benefit assets and liabilities; the fluctuations in the fair value of the Company's investment portfolio; fluctuations in foreign exchange rates; fluctuations of returns on the Company's equity method investments; the impact of retroactive reinsurance agreements where the Company believes adjusting for this development shows the ultimate economic benefit of the ADC; the change in the deferred tax asset related to the ETA for transition provisions of the Bermuda CIT Act; and the impact of non-recurring transactions such as losses on the redemption of preferred shares.
| For the year ended | ||||
| $ | ROE (2) | $ | ROE (2) | |
| Net income (loss) attributable to common shareholder | 32.0 % | (14.2) % | ||
| Less: adjustments for non-operating items | ||||
| Market risk benefit gains | 7,079 | 0.1 | 121,211 | 1.8 |
| Net realized and unrealized investment gains (losses) | 517,426 | 7.2 | (1,969,014) | (29.5) |
| Net foreign exchange losses | (42,542) | (0.6) | (14,774) | (0.2) |
| Interest in (losses) earnings of equity method investments | (15,040) | (0.2) | 10,821 | 0.2 |
| Adverse prior years' reserve development subject to ADC | (51,662) | (0.7) | (26,897) | (0.4) |
| Change in net deferred tax asset related to the Bermuda ETA | 487,265 | 6.8 | - | - |
| Tax effects of adjustments (3) | (41,272) | (0.6) | 92,926 | 1.4 |
| Operating income | 20.0 % | 12.5 % |
| For the year ended | ||
| Calculation of average common shareholder's equity | ||
| Beginning of period common shareholder's equity | ||
| End of period common shareholder's equity | ||
| Average common shareholder's equity |
| Total shareholders' equity | ||
| Preferred shares, aggregate liquidation value at |
200,000 | 200,000 |
| Common shareholder's equity or book value | ||
| Capital structure: | ||
| Total debt | ||
| Preferred shares, aggregate liquidation value | 200,000 | 200,000 |
| Common shareholder's equity | 8,224,421 | 6,197,319 |
| Total capital |
(1) Amounts have been adjusted to reflect the adoption of LDTI.
(2) ROE is calculated as net income or loss attributable to common shareholder divided by average common shareholder's equity. The average common shareholder's equity is calculated using the sum of the beginning of period and end of period common shareholder's equity divided by two.
(3) Tax effects of adjustments for 2023 also includes non-operating impacts related to the recognition of the net deferred tax liability under the Bermuda CIT enactment for the future tax impact of temporary differences between book and tax value.
Please refer to the "Financial Information - Annual Reports" section of the Company's website for a copy of the Company's Annual Report on Form 20-F at: www.partnerre.com/financial-information/annual-reports/. Forward-looking statements contained in this press release, such as those related to company performance, 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, pandemic 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 reports filed or furnished with the
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