PartnerRe's CEO Discusses Q2 2012 Results - Earnings Call Transcript

PartnerRe Ltd. (PRE)

Q2 2012 Earnings Call

July 31, 2012 10:00 am ET


Robin Sidders – Director-Investor Relations

Costas Miranthis – President & Chief Executive Officer

Bill Babcock – Executive Vice President & Chief Financial Officer


Jay Gelb – Barclays Capital

Mike Zaremski – Credit Suisse

Vinay Misquith – Evercore Partners

Joshua Shanker – Deutsche Bank

Greg Locraft – Morgan Stanley

Matthew Heimermann – J.P. Morgan

Cliff Gallant – KBW

Brian Meredith – UBS

Meyer Shields – Stifel Nicolaus

Amit Kumar – Macquarie

Ian Gutterman – Adage Capital



Good day everyone, and welcome to the PartnerRe Q2 2012 earnings conference call. Before we begin the call, I will remind all participants that they are in a listen-only mode. (Operator instructions).

If you haven’t received a copy of the press release, it is posted on the company's website, or you can call 212-687-8080 and one will be faxed to you right away. Once again the website is, or 212-687-8080.

I will now hand over to Robin Sidders, Director of Investor Relations at PartnerRe who will begin the call. Please go ahead.

Robin Sidders

Good morning and welcome to PartnerRe Ltd.'s second quarter and half year 2012 results conference call and web cast. As a reminder, our second quarter financial supplement can be found on our website at in the Investor Relations section by clicking on Supplementary Financial Data on the Financial Reports page. On today's call are Costas Miranthis, President and CEO of PartnerRe; and Bill Babcock, Executive Vice President and CFO of PartnerRe.

Costas will start the call with an overview of the quarter and year-to-date and hand over to Bill, who will provide more details on the results. And then as normal, Costas will come back at the end of the call to provide additional commentary on the market and then we'll open the call up for the question-and-answer session. I'll begin with the Safe Harbor statements.

Forward-looking statements contained in this call are based on the company's assumptions and expectations concerning future events and financial performance of the company 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 or other large property and casualty losses, adequacy of reserves, risks associated with implementing business strategies, levels and pricing of new and renewal business achieved, credit, interest, currency and other risks associated with the company's investment portfolio, changes in accounting policies and other factors identified in the company's filings with the Securities and Exchange Commission.

In light of the significant uncertainties inherent in the forward-looking information contained herein, listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The company disclaims any obligation to publicly update or revise any forward-looking information or statements. In addition, during the call, management will refer to some non-GAAP measures when talking about the company's performance. You can find a reconciliation of those measures to GAAP measures in the company's financial supplement. I'll now hand the call over to Costas.

Costas Miranthis

Thank you, Robin and welcome everybody to our second quarter results call. As you saw from our press release last night, during the second quarter we continued to have strong underwriting results. Our non-life combined ratio was 9.6% for the quarter and 87.8% for the half year. The underwriting results were driven primarily by continued low level of catastrophe and other large loss activity during the second quarter, and we had another quarter of favorable reserve development, which again is consistent with our long-standing prudent reserving philosophy.

I would also remind you that during the second quarter we recognized into earnings a relatively small portion of our catastrophe premium, as we earned premium for catastrophe in a pattern that reflects the seasonality of risks assumed. Taking this into account, we are very happy with the results of our non-life operation.

Our life business also had a positive contribution to the quarter, but results were tempered by volatility in the valuation of our GMDB product and the incidence of large claims, both of which are within the range of fluctuations that we expect from quarter to quarter. In what continues to be a challenging and volatile investment environment, we recorded modest gains during the second quarter on top of the significant gains we saw in the first quarter.

However, with interest rates being at the current levels, our investment income will continue to be under pressure even though during the quarter investment income was modestly up. So [all in], a satisfactory first half of 2012, with an annualized operating ROE of nearly 12% and 8% growth in book value per share.

We remained active on the capital management front during the second quarter and through July. Bill will give you the specifics on share repurchases.

I will now hand over the call to Bill, and I will come back at the end of the call to talk more about current market conditions and events.

Bill Babcock

Thank you Costas and good morning everyone. Our second quarter performance resulted in us reporting operating earnings of $142 million or $2.20 per diluted share. This translates to an annualized operating ROE of 10.4%. In the comparable quarter of 2011, which was impacted by catastrophe losses we generated operating earnings of $67 million or $0.98 per diluted share.

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