PartnerRe retains Exor third-party capital, grows P&C book at profitable combined ratio

PartnerRe, the Bermuda headquartered reinsurance company, has retained an important investment into its third-party capital vehicles from former owner Exor and reported a growing P&C reinsurance business at a profitable combined ratio.

French mutual insurer Covéa completed its acquisition of PartnerRe from Italian holding company EXOR in July.

In reporting its first-half results late yesterday, PartnerRe confirmed that the reinsurance-linked investment cooperation between the companies will continue, with Exor set to continue the investment into its third-party capital vehicles, having taken it over from new owner Covéa.

PartnerRe President and Chief Executive Officer Jacques Bonneau commented on this, “With the completion of Covéa’s acquisition of PartnerRe in early July, we are excited to join a group with such an established history, strong brand and robust financial strength. As our financial results for the half year demonstrate, with an annualized operating return on equity of 15.0%, an improvement in our non-life combined ratio of 10.5 points year-over-year, and our growing life operations and third party capital management, we believe we can make an immediate contribution to the Covéa group.

“I am thankful for our relationship with Exor, which we will continue through their meaningful contribution to our third-party capital platform. We look forward to our future with Covéa and to further increasing the value that we provide to all of our clients, distribution partners, capital partners and other stakeholders.”

Covéa had originally invested EUR 750 million of capital into special purpose reinsurance vehicles managed by PartnerRe, so effectively private collateralised reinsurance sidecar type structures.

As part of the now finalised acquisition, Exor acquired those interests in the special purpose reinsurance vehicles managed by PartnerRe for approximately $725 million from Covéa.

After the completion of the change in ownership, the reinsurance-linked investments into PartnerRe’s structures continue and the company said yesterday that, “Third-party capital managed by the Company remains unchanged as a result of the transaction, as Exor acquired Covéa’s interest in the Company’s third-party capital vehicles.”

Which sustained PartnerRe’s third-party capital assets under management at somewhere around the US $1.1 billion mark, we understand.

PartnerRe announced a strong underwriting quarter, reporting operating income of $328 million for the second quarter and $502 million for the half year.

However, investment losses drove the company to a net loss, as PartnerRe suffered from the broader macro-economic environment.

But the non-life underwriting result deliver a profit of $282 million against a combined ratio of 79.3%, which was a 9.3 point improvement for the second quarter and $481 million against a combined ratio of 81.9%, which was a 10.5 point improvement for the half year.

At the same time, PartnerRe has also been expanding, growing non-life net premiums written by 8% for the second quarter of 2022 and 13% for the half year 2022, compared to the same periods of 2021, driven by P&C segment growth.

Large losses, after retrocession and reinstatement premiums, came out at $45 million for the second quarter of 2022, with $41 million related to the Natal Floods and only $4 million related to the Australian Floods.

For the first-half, large losses, after accounting for retrocession and reinstatement premiums, were $131 million for the half year 2022, with $50 million related to the war between Russia and Ukraine, $41 million for the Natal Floods and $40 million for the Australian Floods.

Favourable prior year development helped the P&C combined ratio, with reserves developing favourably to the tune of 9 points on the CR for Q2 2022 and 6.4 points for H1.