PartnerRe Ltd.’s PRE first-quarter 2015 operating earnings per share of $3.09 outpaced the Zacks Consensus Estimate of $2.52 by 22.6%. With this, the company has succeeded in delivering positive earnings surprise in three of the last four quarters with an average beat of 17.7%. However, earnings decreased 8% year over year due to continued pressure across all reinsurance lines of business.
Including net realized and unrealized investment gains, net foreign exchange losses, and interest in losses of equity method investments, net income came in at $4.76 per share, down 15.2% year over year.
Quarter in Detail
Total revenue decreased 3.6% to $1.5 billion. The figure also missed the Zacks Consensus Estimate of $1.57 billion.
This included net premiums earned worth $1.2 billion (down 1.5% year over year), net investment income of $104.6 million (down 10.7%), net realized and unrealized investment gains of $115.6 million (down 18.7%), and other income of $4.3 million, up from $0.4 million in the year-ago period.
Net premiums written fell 4.9% year over year to $1.7 billion. Net premiums written on a constant foreign exchange basis increased 1% due to improvement in the Life and Health segment and modest growth in the Catastrophe and Global (Non-U.S.) P&C Non-life sub-segments.
Total expenses were down 1.4% year over year to $1.1 billion, mainly on account of lower losses and loss expenses and life policy benefits.
Consequently, technical result for the reported quarter was $238 million, down 0.8% from the year-ago quarter. Underwriting results decreased 9.3% to $117 million.
Moreover, technical ratio improved to 77.3% from 77.4%. Non-life combined ratio improved to 82.2% from 83.9% in the year-ago period. This was largely attributable to a favourable prior year development.
Financial Update
As of Mar 31, 2015, PartnerRe’s total assets were $22.5 billion, up from $22.3 billion at year-end 2014. Total investments, cash, and funds held that are directly managed totaled $17.1 billion as of Mar 31, 2015, down from $17.22 billion at the end of 2014, due to the foreign exchange impacts.
As of Mar 31, 2015, total capital was $8 billion, representing a 2% increase from that at year-end 2014. This was largely boosted by comprehensive income for the quarter. Total shareholder equity was $7.3 billion, up from $7.1 billion at the end of 2014.
PartnerRe's net non-life loss and loss expense reserves were down 3% from the 2014-end level to $9.2 billion at Mar 31, 2015, due to the effects of foreign exchange. The company’s book value per common share improved 2.9% to $129.86 as of Mar 31, 2015, from $126.21 at the end of 2014.
Share Repurchase Update
PartnerRe bought back about 0.5 million shares for $59 million during the first quarter leaving about 2.9 million shares available for repurchase as of Apr 27, 2015, under the current authorization.
Dividend Update
On Apr 27, 2015, PartnerRe’s board of directors declared its regular quarterly dividend of 70 cents per share, which is payable on Jun 1, to shareholders on record as of May 8, 2015.
Zacks Rank
Currently, PartnerRe holds a Zacks Rank #2 (Buy). Investors interested in the property & casualty insurance sector could also consider other stocks like AXIS Capital Holdings Limited AXS, Aspen Insurance Holdings Ltd. AHL and Fidelity National Financial, Inc. FNF. All three stocks sport a Zacks Rank #1 (Strong Buy).
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