PartnerRe Q4 Earnings Beat on Lower Expenses, Down Y/Y
PartnerRe Ltd. PRE reported fourth-quarter 2015 operating earnings of $3.74 per share that surpassed the Zacks Consensus Estimate of $2.44. With this, the company succeeded in maintaining the streak of positive earnings surprises in each of the last four quarters, with an average beat of 35.64%.
However, earnings decreased from $4.37 per share reported in the year-ago quarter.
While the expenses declined in the quarter, revenues too decreased on lower premiums and investment income.
Including net realized and unrealized losses on investments of 46 cents per share, net foreign exchange losses of 7 cents per share and interest in earnings of equity method investments of 9 cents per share, the company reported net income of $3.30 per share in the quarter. The company had posted net income of $5.26 per share a year ago.
Full-Year 2015 Highlights
PartnerRe’s full-year operating earnings came in at $13.45 per share, down 8.9% year over year.
Total revenues for 2015 plunged 17% year over year to $1.4 billion.
Quarter in Detail
Total operating revenue decreased 10.3% year over year to $1.4 billion. The decline was attributable to lower net premiums earned (down 10.5% year over year) and decline in net investment income (down 6%).
Net premiums written fell 12.8% year over year to $1.1 billion. Net premiums written on a constant foreign exchange basis were down 8%, primarily due to underperformance by the Global Specialty and North America Non-life sub-segments.
Total expenses declined 8.9% year over year to $1.21 billion. This was due to lower other expenses that include transaction-related expenses, acquisition costs, and losses and loss expenses and life policy benefits.
Net investment income of $108 million slipped 6%. On a constant foreign exchange basis, net investment income was down 2% due to lower reinvestment rates. Howeevr additional income from higher yielding securities was partial offset.
Moreover, non-life combined ratio was 86.5%. The combined ratio benefited from favorable prior-year development of 18.7 basis points.
Financial Update
As of Dec 31, 2015, PartnerRe’s total assets were $21.4 billion compared with $22.3 billion as of Dec 31, 2014. Total investments, cash and funds that are directly managed totaled $16.5 billion as of Dec 31, 2015, down 4% from year-end 2014, due to foreign exchange impacts and decline in cash flows to fund the termination fee and reimbursement of expenses associated with Axis Capital.
As of Dec 31, 2015, total capital was $7.7 billion, down 1.9% from the 2014-end level due to common and preferred dividend payments, partly offset by comprehensive income in 2015. Total shareholder equity was $6.9 billion, down 2.8% from $7.10 billion at the end of 2014.
The company’s book value per common share was down 2.5% to $123.05 as of Dec 31, 2015, from $126.21 at the end of 2014.
Zacks Rank and Performance of Other P&C Insurers
PartnerRe currently sports a Zacks Rank #1 (Strong Buy). Other P&C insurers too recently released their fourth-quarter earnings results. While the bottom line at The Travelers Companies, Inc. TRV and Progressive Corp. PGR beat their respective Zacks Consensus Estimates, RLI Corp. RLI missed the same in the fourth quarter.
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