Partner Re Reports Record Operating Results

August 6, 2002

Bermuda-based PartnerRe Ltd. reported record operating results for the second quarter 2002, and reaffirmed its prior earnings guidance for the full year.

PartnerRe President & CEO, Patrick Thiele, commented, “Overall, we are pleased with our second quarter results, both in terms of growth and profitability. The reinsurance market continues to improve in response to increasing loss costs and to restrained growth in industry capital. In this environment, PartnerRe continues to excel.”

For the three months ended June 30, 2002, operating earnings, which exclude net realized investment gains or losses and are calculated after payment of preferred dividends, were $71.3 million or $1.38 per share on a fully diluted basis. This compares to operating earnings of $47.5 million, or $0.92 per share for the second quarter of 2001. Net income for the three months ended June 30, 2002 was $66.6 million, or $1.19 per share on a fully diluted basis. Net income includes net (after tax) realized investment losses of $9.7 million. Net income for the second quarter of 2001 was $53.2 million or $0.93 per share, which included net investment gains of $0.7 million.

Total revenues for the quarter were $620.3 million, comprised of $565.7 million of net premiums earned, net investment income of $59.5 million, and net realized investment losses of $6.3 million. For the second quarter of 2001, revenues were $452.6 million, with $386.3 million of net premiums earned, net investment income of $60.8 million, and net realized investment gains of $5.5 million.

For the six months ended June 30, 2002, operating earnings were $138.1 million or $2.67 per share on a fully diluted basis. Net premiums written were nearly $1.4 billion, an increase of 38 percent from the prior year. Net income for the six months was $129.8 million, or $2.32 per share. Net income for the period includes net (after-tax) realized losses of $18.3 million. Operating earnings for the six months ended June 30, 2001 were $103.1 million or $2.00 per share. Net income for the first six months of 2001 was $149.1 million or $2.70 per share after net (after-tax) realized gains of $8.2 million.

“The Company again experienced strong growth in net written premiums, a trend that started in the first quarter of 2001,” Thiele said. “Year over year, our total net written premiums were up 37 percent for the quarter and 38 percent for the half-year. This was driven by both price increases and real growth in treaties and participations.

“Profitability remains acceptable with a combined ratio for the quarter of 94.4 percent and an annualized return on equity in excess of 18 percent. This results from better pricing, improved terms and conditions and PartnerRe’s good risk selection and balanced book of business. In general, our shorter-tail lines of business, such as catastrophe and aviation, performed exceptionally well but were counter-balanced somewhat by continuing loss issues in credit & surety as well as higher reported losses in the quarter in casualty and motor lines.”

The U.S. Property and Casualty segment, which represents 31 percent of total premiums, reported net written premiums of $176.0 million, a 44 percent increase over the prior year’s second quarter, with substantial growth in casualty and property lines. High loss activity in the casualty and motor lines contributed to a quarterly technical ratio of 103.1 percent.

The Non-U.S. Property and Casualty segment, which represents 19 percent of total premiums, reported net written premiums of $109.6 million, a 16 percent increase over the prior year, with strong growth in property lines offset by reductions in the motor business. This segment’s technical ratio of 98.1 percent reflects improvement in property results, offset by higher losses in casualty and motor business.

The Worldwide Specialty segment, which represents 44 percent of total premiums, reported net written premiums of $244.3 million, a 58 percent increase over the prior year period.

All lines experienced growth except for agriculture, with the largest growth generated in the engineering and energy risks, aviation, and catastrophe, as these markets have exhibited the most significant improvements in terms and conditions. This segment’s technical ratio of 73.5 percent reflects high profitability in catastrophe and aviation, partially offset by continued high loss experience in the credit and surety line, reflecting the ongoing weakness in the global economy.