PartnerRe Ltd. Reports Third Quarter 2005 Results

PEMBROKE, Bermuda, Oct. 24 /PRNewswire-FirstCall/ -- PartnerRe Ltd. today reported a net loss of $288.7 million, or $5.48 per share, for the third quarter of 2005. This net loss includes net after-tax realized gains on investments of $47.8 million or $0.88 per share. Net income for the third quarter of 2004 including net after-tax realized gains on investments of $21.0 million or $0.39 per share, was $83.2 million or $1.46 per share on a fully diluted basis. The operating loss for the third quarter of 2005 was $345.2 million or $6.36 per share. This compares to operating earnings of $57.3 million, or $1.07 per share on a fully diluted basis, for the third quarter of 2004. Operating earnings exclude net after-tax realized investment gains and losses and are calculated after payment of preferred dividends.

PartnerRe President & Chief Executive Officer, Patrick Thiele, said, "The third quarter was unprecedented in terms of natural disasters, with Hurricane Katrina the largest insured event in history. In addition, there were two other significant Atlantic hurricanes, three Asian typhoons, six airline accidents, and devastating floods in India and Central Europe. These events have led to the largest quarterly loss load experienced by our Company in its 12-year history."

"Notwithstanding the worst quarter in the history of the industry, our capital position and shareholders' equity remain above levels reported at September 30 last year," Mr. Thiele added. "The events of this quarter not only serve to reaffirm the risk management processes and exposure controls that we have in place, but also the significant benefits of our diversification and investment strategies."

Summary unaudited consolidated financial data for the period is set out below.

U.S.$ thousands (except Three months ended Nine months ended per share amounts September 30 September 30 and ratios) 2005 2004 2005 2004 Net Premiums Written $ 770,808 $805,252 $2,949,533 $3,169,674 Net Premiums Earned $ 915,487 $943,785 $2,692,158 $2,791,408 Non-life Combined Ratio 156.3% 99.5% 114.6% 94.2% Net (Loss)/Income/ $(288,748) $ 83,205 $ (17,424) $ 348,684 Net (Loss)/Income per share (a) $ (5.48) $ 1.46 $ (0.79) $ 6.17 Net Operating (Loss)/Earnings (a) $(345,176) $ 57,332 $ (163,319) $ 271,938 Net Operating (Loss)/Earnings per share (a) $ (6.36) $ 1.07 $ (2.99) $ 5.02 (a) Net income/(loss) per share is defined as net income/(loss) available to common shareholders divided by the weighted average number of fully diluted shares outstanding for the period. Net income/(loss) available to common shareholders is defined as net income/(loss) less preferred dividends. Net operating earnings/(loss) is net income/(loss) available to common shareholders excluding after-tax net realized gains/losses on investments. Net operating earnings/(loss) per share is defined as net operating earnings/(loss) divided by the weighted average number of fully diluted shares outstanding for the period. Per share results referenced in the text of this press release are on a fully diluted basis. As the effect of dilutive securities would have been antidilutive in the three months and nine months of 2005, the fully diluted per share figures for these periods were compiled using the basic weighted average number of common shares outstanding.

Net premiums written for the third quarter 2005 were $770.8 million, a decrease of 4% from the third quarter of 2004. Total revenues for the quarter increased 2% to $1.1 billion as compared to the third quarter of 2004. Total revenues include $915.5 million of net premiums earned, net investment income of $93.3 million, and net realized investment gains of $56.0 million.

For the first nine months of 2005, net premiums written were $2.9 billion, representing a 7% decline from the same period in 2004. The net loss was $17.4 million or $0.79 per share. The net loss for the period includes a net after-tax realized gain on investments of $120.0 million or $2.20 per share. The operating loss was $163.3 million, or $2.99 per share. Net income for the first nine months of 2004 was $348.7 million or $6.17 per share including net after-tax realized gains of $62.1 million, or $1.15 per share. Operating earnings for the same period in 2004 were $271.9 million or $5.02 per share. Total revenues for the first nine months of 2005 were $3.1 billion, including $2.7 billion of net premiums earned, net investment income of $270.4 million, and net realized investment gains of $149.0 million. Total revenues for the same period in 2004 were $3.1 billion.

Separately, the Company announced today that its Board of Directors declared a regular quarterly dividend of $0.38 per common share. The dividend will be payable on December 1, 2005, to common shareholders of record on November 21, 2005, with the stock trading ex-dividend commencing November 17, 2005.

Results by Segment

The Non-Life segment reported net premiums written of $660 million for the third quarter, down 7% as compared to last year. The combined ratio was 156.3% for the third quarter compared to 99.5% for the same period in 2004. The Non-Life technical result was a loss of $407 million for the third quarter of 2005, reflecting the impact of Hurricane Katrina and the other significant losses of the quarter. This compares to a gain of $53 million in the third quarter of 2004. For the first nine months, Non-Life net premiums written were $2.6 billion, down 10% from the same period in 2004. The nine month technical result was a loss of $201 million, compared to a gain of $291 million for the same period in 2004. The combined ratio for the nine month period was 114.6% compared to 94.2% in 2004.

Hurricane Katrina, as well as the other losses of the third quarter, impacted the technical results of both the U.S. Property and Casualty and the Worldwide Specialty sub-segments. In total, the results contain approximately $510 million in estimated losses from Hurricane Katrina, approximately $65 million in estimated losses from the Central European floods, and approximately $35 million in estimated losses from Hurricane Rita. All estimates are pre-tax and after reinstatement premiums. In total, these three events accounted for approximately 77 points to the combined ratio. In the third quarter of 2004, the combined ratio of 99.5% included $137 million or 16 points from the four Florida/Caribbean hurricanes.

The U.S. Property and Casualty business, which represented approximately 24% of total net premiums written for the quarter, reported net premiums written of $187 million, down 20% over the prior year's third quarter. The reduction is the result of prior underwriting year premium adjustments, with the balance due to higher retentions by cedants and PartnerRe's decision to decline some business. Net premiums earned decreased 12% during the quarter when compared to the same period in 2004. The technical ratio for this sub-segment was 155.5%, compared to 118.1% in the third quarter of 2004. For the first nine months of 2005, net premiums written declined by 20% to $649 million. The nine-month technical ratio was 115.0% compared to 102.0% in 2004. The technical result for the nine months was a loss of $94 million compared to a loss of $13 million in 2004.

The Global (Non-U.S.) Property and Casualty business, which represented approximately 18% of total net premiums written, reported net premiums written of $137 million for the third quarter of 2005 compared to $154 million for the same period in 2004. Net premiums earned during the quarter were $191 million, down 11% from $213 million in last year's third quarter. The technical ratio for this sub-segment was 88.1% compared to 99.7% for the same period in 2004. For the nine months, net premiums written were down 12% to $724 million. The nine-month technical ratio was 91.0% compared to 101.2% in 2004. The technical result for the nine months was a gain of $58 million compared to a loss of $8 million in 2004.

The Worldwide Specialty business, which represented approximately 44% of total net premiums written for the quarter, reported net premiums written of $336 million for the third quarter, up 5% over the prior year period. Net premiums earned increased 2% during the quarter. This sub-segment's technical ratio was 178.4% compared to 76.4% for the third quarter of 2004. For the nine-month period, net premiums written were down 2% to $1.2 billion. The nine-month technical ratio was 115.2% compared to 72.2% in 2004. The technical result for the nine months was a loss of $165 million compared to a gain of $312 million in 2004.

The Life segment, which markets coverages primarily in Europe, Canada and Latin America, and represented approximately 13% of total net premiums written in the quarter, reported net premiums written of $103 million for the quarter, up 6% when compared with the third quarter of 2004. The allocated underwriting result for the quarter was a gain of $3 million compared to a breakeven result for the comparable period in 2004. For the nine month period, net premiums written increased 15% to $325 million, with an allocated underwriting gain of $9 million, compared to a loss of $4 million for the comparable period in 2004.

The ART (Alternative Risk Transfer) segment comprises structured risk transfer, structured finance, weather related products, and the results of the Company's investment in Channel Re. The pre-tax contribution to net income, including the Company's interest in the earnings of Channel Re, was a gain of $4 million for the third quarter of 2005 compared to $1 million for the third quarter of 2004. For the first nine months of 2005, the pre-tax contribution to net income was a gain of $17 million compared to $2 million for the same period in 2004.

Balance Sheet Items

During the third quarter, invested assets increased 3% to $9.0 billion as strong investment results and incremental cash flow offset the effects of rising interest rates. Gross Non-life loss and loss expense reserves increased by 12% to $6.5 billion reflecting initial reserves for Hurricanes Katrina and Rita and the central European floods, as well as prior year reserve reductions of $90 million. The overall prior year adjustments to Non-life reserves include $24 million in reserve additions to the U.S. P&C sub-segment, and reserve reductions of $25 million in the Global (Non-U.S.) P&C sub-segment and $89 million in the Worldwide Specialty sub-segment.

At September 30, 2005, total assets were $13.2 billion, total capitalization was $3.5 billion, and total shareholders' equity was $3.1 billion. This compares to total assets of $12.5 billion, total capitalization of $3.8 billion, and total shareholders' equity of $3.4 billion at December 31, 2004. Book value per common share at September 30, 2005 was $46.68 on a fully diluted basis compared to $50.99 per share at December 31, 2004. During the third quarter, the Company repurchased and cancelled 604,949 shares at an aggregate purchase price of $38 million.

Commentary and Outlook

Mr. Thiele said, "Following the events of this quarter, we expect to see a price rebound in all loss affected lines, including aviation, marine, energy, property and particularly catastrophe. Additionally, we believe that other lines will at a minimum show price stabilization."

Mr. Thiele added, "This experience underscores the financial integrity and stability of PartnerRe and the excellent portfolio diversification we have achieved. We expect no change in our risk capacity or our risk appetite in the upcoming renewal season. It has been and continues to be our goal to deliver a 13% operating return on equity over the cycle, despite the unprecedented losses experienced in this quarter. Given the Company's solid balance sheet, strong franchise, dual distribution channels, and local market presence, we remain well-positioned to capitalize on the opportunities on January 1 and to continue to build shareholder value for the long term."

The Company uses operating earnings, diluted operating earnings per share and operating return on beginning common shareholders' equity to measure performance, as these measures focus on the underlying fundamentals of our operations without the influence of realized gains and losses from the sale of investments, which is driven by the timing of the disposition of investments and not by our operating performance. For planning purposes, the Company does not anticipate realized investment gains or losses. The Company also uses technical ratio and technical result as measures of underwriting performance. These metrics exclude other operating expenses. All references to per share amounts in the text of this press release are on the basis of fully diluted shares.

PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. Risks reinsured include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering/energy, marine, special risks, other lines, life/annuity and health, and alternative risk transfer solutions. For the year ended December 31, 2004, total revenues were $4.2 billion. As of September 30, 2005 total assets were $13.2 billion, total capitalization was $3.5 billion and total shareholders' equity was $3.1 billion. Our major reinsurance operations have ratings of AA- from Standard & Poor's, Aa3 from Moody's, A+ from A.M. Best, and AA from Fitch.

PartnerRe on the Internet: http://www.partnerre.com/

Forward-looking statements contained in this press release are based on the Company's assumptions and expectations concerning future events and financial performance 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. This quarter's results are impacted by losses associated with Hurricane Katrina and other catastrophes. The Company's loss estimates are subject to a level of uncertainty arising out of these losses' extremely complex and unique causation and related coverage issues associated with the attribution of losses to wind or flood damage or other perils. We expect that these issues will not be resolved for a considerable period of time and may be influenced by evolving legal and regulatory developments. In light of the significant uncertainties inherent in the forward-looking information contained herein, readers 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.

PartnerRe Ltd. Consolidated Statements of Operations and Comprehensive Income (Expressed in thousands of U.S dollars, except per share data) (Unaudited) For the For the For the For the three three nine nine months months months months ended ended ended ended September September September September 30, 30, 30, 30, 2005 2004 2005 2004 Revenues Gross premiums written $ 780,468 $ 805,410 $2,993,861 $3,200,966 Net premiums written $ 770,808 $ 805,252 $2,949,533 $3,169,674 Decrease (increase) in unearned premiums 144,679 138,533 (257,375) (378,266) Net premiums earned 915,487 943,785 2,692,158 2,791,408 Net investment income 93,325 69,648 270,402 218,036 Net realized investment gains 56,009 32,838 148,979 78,693 Other income 8,638 6,822 20,457 13,188 Total Revenues 1,073,459 1,053,093 3,131,996 3,101,325 Expenses Losses and loss expenses and life policy benefits 1,111,285 660,948 2,271,321 1,850,475 Acquisition costs 219,428 242,608 632,779 673,756 Other operating expenses 63,740 68,093 210,930 203,539 Interest expense 7,399 10,204 22,089 30,540 Net foreign exchange losses (gains) 1,478 (766) 3,921 (1,905) Total Expenses 1,403,330 981,087 3,141,040 2,756,405 (Loss) income before taxes and interest in equity investment (329,871) 72,006 (9,044) 344,920 Income tax (benefit) expense (39,141) (8,323) 15,149 (218) Interest in earnings of equity investment 1,982 2,876 6,769 3,546 Net (loss) income $(288,748) $ 83,205 $ (17,424) $ 348,684 Preferred dividends $ 8,631 $ 4,894 $ 25,894 $ 14,681 Operating (loss) earnings available to common shareholders $(345,176) $ 57,332 $(163,319) $ 271,938 Comprehensive (loss) income $(333,972) $ 158,012 $(131,707) $ 330,462 Per Share Data: (Loss) earnings per common share: Basic operating (loss) earnings $ (6.36) $ 1.08 $ (2.99) $ 5.07 Net realized investment gains, net of tax 0.88 0.39 2.20 1.16 Basic net (loss) income $ (5.48) $ 1.47 $ (0.79) $ 6.23 Weighted average number of common shares outstanding 54,278.9 53,311.2 54,673.2 53,633.0 Diluted operating (loss) earnings $ (6.36) $ 1.07 $ (2.99) $ 5.02 Net realized investment gains, net of tax 0.88 0.39 2.20 1.15 Diluted net (loss) income $ (5.48) $ 1.46 $ (0.79) $ 6.17 Weighted average number of common and common equivalent shares outstanding 54,278.9 53,721.7 54,673.2 54,148.8 PartnerRe Ltd. Consolidated Balance Sheets (Expressed in thousands of U.S. dollars, except per share data and parenthetical share data) (Unaudited) September 30, December 31, 2005 2004 Assets Investments and cash Fixed maturities, at fair value (amortized cost: 2005, $6,612,825; 2004, $6,611,683) $ 6,662,289 $ 6,723,580 Short-term investments, at fair value (amortized cost: 2005, $240,223; 2004, $28,691) 239,966 28,694 Equities, at fair value (cost: 2005, $1,086,713; 2004, $887,006) 1,204,579 1,010,777 Trading securities, at fair value (cost: 2005, $213,328; 2004, $102,371) 219,754 108,402 Cash and cash equivalents, at fair value, which approximates amortized cost 528,224 436,003 Other invested assets 102,907 90,268 Total investments and cash 8,957,719 8,397,724 Accrued investment income 128,346 151,871 Reinsurance balances receivable 1,521,273 1,356,771 Reinsurance recoverable on paid and unpaid losses 205,519 180,710 Funds held by reinsured companies 990,650 1,100,107 Deferred acquisition costs 459,105 409,332 Deposit assets 297,737 299,408 Tax assets 75,582 81,235 Goodwill 429,519 429,519 Other 97,340 104,564 Total Assets $13,162,790 $12,511,241 Liabilities Unpaid losses and loss expenses $ 6,452,432 $ 5,766,629 Policy benefits for life and annuity contracts 1,237,066 1,277,101 Unearned premiums 1,389,864 1,194,778 Funds held under reinsurance treaties 18,412 21,875 Deposit liabilities 341,524 344,202 Long-term debt 220,000 220,000 Net payable for securities purchased 90,543 1,580 Accounts payable, accrued expenses and other 121,890 127,026 Debt related to trust preferred securities 206,186 206,186 Total Liabilities 10,077,917 9,159,377 Shareholders' Equity Common shares (par value $1.00, issued and outstanding: 2005, 54,054,247; 2004, 54,854,398) 54,054 54,854 Series C cumulative preferred shares (par value $1.00, issued and outstanding: 2005 and 2004, 11,600,000; aggregate liquidation preference: 2005 and 2004, $290,000,000) 11,600 11,600 Series D cumulative preferred shares (par value $1.00, issued and outstanding: 2005 and 2004, 9,200,000; aggregate liquidation preference: 2005 and 2004, $230,000,000) 9,200 9,200 Additional paid-in capital 1,241,883 1,288,292 Deferred compensation (130) (199) Accumulated other comprehensive income: Net unrealized gains on investments, net of tax 132,349 194,575 Currency translation adjustment 20,453 72,510 Retained earnings 1,615,464 1,721,032 Total Shareholders' Equity 3,084,873 3,351,864 Total Liabilities and Shareholders' Equity $13,162,790 $12,511,241 Shareholders' Equity Per Common Share $ 47.45 $ 51.63 Diluted Book Value Per Common and Common Equivalent Share (assuming exercise of all stock-based awards) $ 46.68 $ 50.99 Number of Diluted Common Shares Outstanding 54,950.9 55,533.4 PartnerRe Ltd. Supplementary Information (in millions of U.S. dollars) (Unaudited) SEGMENT INFORMATION For the three months ended September 30, 2005 Global (Non- Total ART U.S. Worldwide Non-Life Segment U.S. P&C P&C) Specialty Segment (A) Gross premiums written $ 187 $ 137 $ 343 $ 667 $ 8 Net premiums written $ 187 $ 137 $ 336 $ 660 $ 8 Decrease in unearned premiums 13 54 70 137 2 Net premiums earned $ 200 $ 191 $ 406 $ 797 $ 10 Losses and loss expenses and life policy benefits (263) (120) (633) (1,016) (13) Acquisition costs (48) (48) (92) (188) (1) Technical Result $(111) $ 23 $(319) $(407) $ (4) Other income n/a n/a n/a - 9 Other operating expenses n/a n/a n/a (42) (3) Underwriting Result n/a n/a n/a $(449) $ 2 Net investment income n/a n/a n/a n/a - Allocated Underwriting Result (6) n/a n/a n/a n/a n/a Net realized investment gains n/a n/a n/a n/a n/a Interest expense n/a n/a n/a n/a n/a Net foreign exchange losses n/a n/a n/a n/a n/a Income tax benefit n/a n/a n/a n/a n/a Interest in earnings of equity investment n/a n/a n/a n/a 2 Net loss n/a n/a n/a n/a n/a Loss ratio (1) 131.5 % 62.6 % 155.8 % 127.5 % Acquisition ratio (2) 24.0 25.5 22.6 23.6 Technical ratio (3) 155.5 % 88.1 % 178.4 % 151.1 % Other operating expense ratio (4) 5.2 Combined ratio (5) 156.3 % Life Segment Corporate Total Gross premiums written $ 105 $ - $ 780 Net premiums written $ 103 $ - $ 771 Decrease in unearned premiums 5 - 144 Net premiums earned $ 108 $ - $ 915 Losses and loss expenses and life policy benefits (82) - (1,111) Acquisition costs (30) - (219) Technical Result $ (4) $ - $ (415) Other income - - 9 Other operating expenses (6) (13) (64) Underwriting Result $ (10) $(13) $ (470) Net investment income 13 80 93 Allocated Underwriting Result (6) $ 3 n/a n/a Net realized investment gains n/a 56 56 Interest expense n/a (7) (7) Net foreign exchange losses n/a (2) (2) Income tax benefit n/a 39 39 Interest in earnings of equity investment n/a n/a 2 Net loss n/a n/a $ (289) For the three months ended September 30, 2004 Global Total (Non- Non- ART U.S. Worldwide Life Segment U.S. P&C P&C) Specialty Segment (A) Gross premiums written $ 234 $ 154 $ 317 $ 705 $ 1 Net premiums written $ 234 $ 154 $ 319 $ 707 $ 1 (Increase) decrease in unearned premiums (6) 59 78 131 1 Net premiums earned $ 228 $ 213 $ 397 $ 838 $ 2 Losses and loss expenses and life policy benefits (214) (158) (225) (597) (8) Acquisition costs (55) (54) (79) (188) - Technical Result $ (41) $ 1 $ 93 $ 53 $ (6) Other income n/a n/a n/a - 7 Other operating expenses n/a n/a n/a (49) (3) Underwriting Result n/a n/a n/a $ 4 $ (2) Net investment income n/a n/a n/a n/a - Allocated Underwriting Result (6) n/a n/a n/a n/a n/a Net realized investment gains n/a n/a n/a n/a n/a Interest expense n/a n/a n/a n/a n/a Net foreign exchange gains n/a n/a n/a n/a n/a Income tax benefit n/a n/a n/a n/a n/a Interest in earnings of equity investment n/a n/a n/a n/a 3 Net income n/a n/a n/a n/a n/a Loss ratio (1) 94.0 % 74.2 % 56.7 % 71.3 % Acquisition ratio (2) 24.1 25.5 19.7 22.4 Technical ratio (3) 118.1 % 99.7 % 76.4 % 93.7 % Other operating expense ratio (4) 5.8 Combined ratio (5) 99.5 % For the three months ended September 30, 2004 Life Segment Corporate Total Gross premiums written $ 99 $ - $ 805 Net premiums written $ 97 $ - $ 805 (Increase) decrease in unearned premiums 7 - 139 Net premiums earned $ 104 $ - $ 944 Losses and loss expenses and life policy benefits (56) - (661) Acquisition costs (55) - (243) Technical Result $ (7) $ - $ 40 Other income - - 7 Other operating expenses (5) (11) (68) Underwriting Result $ (12) n/a $ (21) Net investment income 12 58 70 Allocated Underwriting Result (6) $ - n/a n/a Net realized investment gains n/a 33 33 Interest expense n/a (10) (10) Net foreign exchange gains n/a - - Income tax benefit n/a 8 8 Interest in earnings of equity investment n/a n/a 3 Net income n/a n/a $ 83 (A) The Company reports the results of Channel Re on a one-quarter lag. The 2005 period includes the Company's share of Channel Re's net income in the amount of $2.0 million while the 2004 period includes the Company's share of Channel Re's net income in the amount of $2.9 million. (1) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned. (2) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned. (3) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio. (4) Other operating expense ratio is obtained by dividing other operating expenses by net premiums earned. (5) Combined ratio is the sum of the technical ratio and the other operating expense ratio. (6) Allocated Underwriting Result is defined as net premiums earned and allocated net investment income less life policy benefits, acquisition costs and other operating expenses. PartnerRe Ltd. Supplementary Information (in millions of U.S. dollars) (Unaudited) SEGMENT INFORMATION For the nine months ended September 30, 2005 Global (Non- Total Non- ART U.S. Worldwide Life Segment U.S. P&C P&C) Specialty Segment (A) Gross premiums written $ 649 $ 726 $1,262 $2,637 $ 21 Net premiums written $ 649 $ 724 $1,231 $2,604 $ 21 Increase in unearned premiums (25) (77) (145) (247) (5) Net premiums earned $ 624 $ 647 $1,086 $2,357 $ 16 Losses and loss expenses and life policy benefits (568) (427) (1,018) (2,013) (14) Acquisition costs (150) (162) (233) (545) (2) Technical Result $ (94) $ 58 $ (165) $ (201) $ - Other income n/a n/a n/a n/a 20 Other operating expenses n/a n/a n/a (143) (10) Underwriting Result n/a n/a n/a $ (344) $ 10 Net investment income n/a n/a n/a n/a - Allocated Underwriting Result (6) n/a n/a n/a n/a n/a Net realized investment gains n/a n/a n/a n/a n/a Interest expense n/a n/a n/a n/a n/a Net foreign exchange losses n/a n/a n/a n/a n/a Income tax expense n/a n/a n/a n/a n/a Interest in earnings of equity investment n/a n/a n/a n/a 7 Net loss n/a n/a n/a n/a n/a Loss ratio (1) 91.0 % 66.0 % 93.7 % 85.4 % Acquisition ratio (2) 24.0 25.0 21.5 23.1 Technical ratio (3) 115.0 % 91.0 % 115.2 % 108.5 % Other operating expense ratio (4) 6.1 Combined ratio (5) 114.6 % For the nine months ended September 30, 2005 Life Segment Corporate Total Gross premiums written $ 336 $ - $ 2,994 Net premiums written $ 325 $ - $ 2,950 Increase in unearned premiums (6) - (258) Net premiums earned $ 319 $ - $ 2,692 Losses and loss expenses and life policy benefits (244) - (2,271) Acquisition costs (86) - (633) Technical Result $ (11) $ - $ (212) Other income - - 20 Other operating expenses (18) (40) (211) Underwriting Result $ (29) n/a $ (403) Net investment income 38 232 270 Allocated Underwriting Result (6) $ 9 n/a n/a Net realized investment gains n/a 149 149 Interest expense n/a (22) (22) Net foreign exchange losses n/a (3) (3) Income tax expense n/a (15) (15) Interest in earnings of equity investment n/a n/a 7 Net loss n/a n/a $ (17) For the nine months ended September 30, 2004 Global Total Non- ART (Non-U.S. Worldwide Life Segment U.S. P&C P&C) Specialty Segment (A) Gross premiums written $ 811 $ 820 $1,273 $2,904 $ 4 Net premiums written $ 810 $ 821 $1,251 $2,882 $ 4 Increase (decrease) in unearned premiums (125) (123) (129) (377) 1 Net premiums earned $ 685 $ 698 $1,122 $2,505 $ 5 Losses and loss expenses and life policy benefits (548) (528) (571) (1,647) (8) Acquisition costs (150) (178) (239) (567) (1) Technical Result $ (13) $ (8) $ 312 $ 291 $ (4) Other income n/a n/a n/a - 13 Other operating expenses n/a n/a n/a (145) (11) Underwriting Result n/a n/a n/a $ 146 $ (2) Net investment income n/a n/a n/a n/a - Allocated Underwriting Result (6) n/a n/a n/a n/a n/a Net realized investment gains n/a n/a n/a n/a n/a Interest expense n/a n/a n/a n/a n/a Net foreign exchange gains n/a n/a n/a n/a n/a Income tax benefit n/a n/a n/a n/a n/a Interest in earnings of equity investment n/a n/a n/a n/a 4 Net income n/a n/a n/a n/a n/a Loss ratio (1) 80.1 % 75.6 % 50.9 % 65.8 % Acquisition ratio (2) 21.9 25.6 21.3 22.6 Technical ratio (3) 102.0 % 101.2 % 72.2 % 88.4 % Other operating expense ratio (4) 5.8 Combined ratio (5) 94.2 % For the nine months ended September 30, 2004 Life Segment Corporate Total Gross premiums written $ 293 $ - $ 3,201 Net premiums written $ 284 $ - $ 3,170 Increase (decrease) in unearned premiums (3) - (379) Net premiums earned $ 281 $ - $ 2,791 Losses and loss expenses and life policy benefits (195) - (1,850) Acquisition costs (106) - (674) Technical Result $ (20) $ - $ 267 Other income - - 13 Other operating expenses (17) (31) (204) Underwriting Result $ (37) n/a $ 76 Net investment income 33 185 218 Allocated Underwriting Result (6) $ (4) n/a n/a Net realized investment gains n/a 79 79 Interest expense n/a (30) (30) Net foreign exchange gains n/a 2 2 Income tax benefit n/a - - Interest in earnings of equity investment n/a n/a 4 Net income n/a n/a $ 349 (A) The Company reports the results of Channel Re on a one-quarter lag. The 2005 period includes the Company's share of Channel Re's net income in the amount of $6.8 million for the period of October 2004 to June 2005 while the 2004 period includes the Company's share of Channel Re's net income in the amount of $3.5 million for the period of February (when Channel Re commenced business) to June 2004. (1) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned. (2) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned. (3) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio. (4) Other operating expense ratio is obtained by dividing other operating expenses by net premiums earned. (5) Combined ratio is the sum of the technical ratio and the other operating expense ratio. (6) Allocated Underwriting Result is defined as net premiums earned and allocated net investment income less life policy benefits, acquisition costs and other operating expenses. PartnerRe Ltd. Supplementary Information (Unaudited) For the For the For the For the three three nine nine months months months months ended ended ended ended September September September September 30, 30, 30, 30, 2005 2004 2005 2004 Distribution of Net Premiums Written by Line of Business: Non-Life Property and Casualty Property 16 % 17 % 19 % 19 % Casualty 18 22 19 21 Motor 8 9 9 11 Worldwide Specialty Agriculture 3 4 3 3 Aviation/Space 8 8 6 6 Catastrophe 11 5 12 10 Credit/Surety 8 8 6 6 Engineering/Energy 7 8 5 6 Marine 3 3 3 2 Special Risk 4 4 6 7 ART 1 - 1 - Life 13 12 11 9 Geographic Distribution of Gross Premiums Written: Europe 40 % 41 % 47 % 46 % North America 45 46 40 40 Asia, Australia and New Zealand 8 6 8 9 Latin America, Caribbean and Africa 7 7 5 5 As at September 30, 2005 Credit Ratings (Financial Strength Ratings): Standard & Poor's AA- Moody's Aa3 A.M. Best A+ Fitch AA As at As at September 30, December 31, 2005 2004 (in thousands of (in thousands of U.S. dollars) U.S. dollars) Capital Structure: Long-term debt $ 220,000 6 % $ 220,000 6 % Trust preferred securities (1) 200,000 6 200,000 5 6.75% Series C cumulative preferred shares, aggregate liquidation 290,000 8 290,000 8 6.5% Series D cumulative preferred shares, aggregate liquidation 230,000 7 230,000 6 Common shareholders' equity 2,564,873 73 2,831,864 75 Total Capital $3,504,873 100 % $3,771,864 100 % (1) Neither the Trust that issued the securities nor PartnerRe Finance, which owns the Trust, meet the consolidation requirements of FIN 46(R). Accordingly, the Company shows the related intercompany debt of $206.2 million on its Consolidated Balance Sheets. PartnerRe Ltd. Supplementary Information (Unaudited) As at As at September 30, December 31, 2005 2004 Investment Portfolio: Credit Quality AAA 63 % 62 % AA 4 2 A 15 18 BBB 11 12 Below Investment Grade/Unrated 7 6 By Class U.S. Government 7 % 5 % U.S. Mortgage/Asset Backed 16 16 U.S. Corporates 21 23 Foreign Fixed Income 32 34 Equities and Equity Substitutes 16 16 Cash (net of pending transactions) 8 6 Expected average duration 3.4 Yrs 3.4 Yrs Average yield to maturity at market 4.2 % 3.8 % (fixed income securities and cash) Average Credit Quality AA AA For the For the For the For the three three nine nine months ended months ended months ended months ended September 30, September 30, September 30, September 30, 2005 2004 2005 2004 (in thousands of U.S. dollars except per share data) Reconciliation of GAAP and non-GAAP measures: Net (loss) income $(288,748) $ 83,205 $ (17,424) $ 348,684 Less: Net realized investment gains, net of tax 47,797 20,979 120,001 62,065 Dividends to preferred shareholders 8,631 4,894 25,894 14,681 Operating (loss) earnings available to common shareholders $(345,176) $ 57,332 $(163,319) $ 271,938 Diluted net (loss) income per common share $ (5.48) $ 1.46 $ (0.79) $ 6.17 Less: Net realized investment gains, net of tax, per common share 0.88 0.39 2.20 1.15 Diluted operating (loss) earnings per common share $ (6.36) $ 1.07 $ (2.99) $ 5.02 Annualized return on beginning common shareholders' equity calculated with net (loss) income (42.0)% 13.6 % (2.0)% 19.3 % Less: Net realized investment gains, net of tax 6.8 3.6 5.7 3.6 Annualized operating return on equity (48.8)% 10.0 % (7.7)% 15.7 % PartnerRe Ltd. Supplementary Information (Unaudited) (in thousands of U.S. dollars except per share data) As at As at September 30, December 31, 2005 2004 Reconciliation of GAAP and non-GAAP measures: Shareholders' equity $3,084,873 $3,351,864 Less: Liquidation value of Series C cumulative preferred shares 290,000 290,000 Liquidation value of Series D cumulative preferred shares 230,000 230,000 Common shareholders' equity $2,564,873 $2,831,864 Less: Net unrealized gains on fixed income securities, net of tax 42,662 95,884 Diluted book value excluding net unrealized gains on fixed income securities $2,522,211 $2,735,980 Divided by: Number of diluted common shares outstanding 54,950.9 55,533.4 Equals: Diluted book value per common and common equivalent share excluding net unrealized gains on fixed income securities $ 45.90 $ 49.27