PartnerRe’s Profit Rockets

PartnerRe Ltd.’s (PRE: 76.27 0.00 0.00%) fourth quarter operating earnings per share of $3.87 were way ahead of both the Zacks Consensus Estimate of $2.80 and the year-ago quarter earnings of 95 cents. This excluded after-tax net realized and unrealized investment gains and losses, after-tax net realized gain on the purchase of the CENts and after-tax interest in results of equity investments.

Operating earnings were calculated after payment of preferred dividends. Including these items, GAAP net income for PartnerRe was $354.4 million or $4.25 per share compared to $95.3 million or $1.53 per share in the year-ago quarter.
 
Results reflected a robust growth in premiums written and earned and net investment income that led to a strong growth in return on equity and 6% increase in dividend. However, total operating expenses increased 11.5% year-over-year to $1.16 billion.
 
PartnerRe’s total revenue increased 25% to $1.5 billion from $1.2 billion in the year-ago quarter. This included net premiums earned of $1.3 billion (up 36% year-over-year), net investment income of $182.0 million (also up 36% year-over-year) and pre-tax net realized and unrealized investment gains of $25.1 million, compared to $64.0 million in the year-ago quarter. Net premiums written increased 20.2% to $904.4 million from $752.4 million in the year-ago quarter.
 
The PARIS RE business, which represented approximately 20% of total net premiums written for the quarter, reported net written premiums of $178 million. Net premiums earned were $312 million, while the technical ratio was 81.4%. The technical result for the reported quarter was $58 million.
 
For full year 2009, PartnerRe’s total revenues increased 35% over 2008 to $5.4 billion, which included net premiums earned of $4.1 billion, net investment income of $596.1 million, pre-tax net realized and unrealized investment gains of $591.7 million and a pre-tax gain of $88.4 million from the purchase of the CENts. Operating earnings per share were $14.59 compared to $8.43 in 2008. GAAP net income was $1.54 billion or $23.51 per share compared to $46.6 million or 22 cents in 2008.
 
As of December 31, 2009, PartnerRe’s total assets were $23.7 billion, compared to $16.3 billion as of December 31, 2008. Total investments, cash and funds held and directly managed increased 55% to $18.2 billion. As of December 31, 2009, total capital was $8.0 billion and total shareholders’ equity was $7.6 billion, both of which include approximately $2.0 billion of new shares issued as part of the acquisition of PARIS RE.
 
PartnerRe’s book value per common share as of December 31, 2009, was $84.51 compared to $63.95 on December 31, 2008. Operating return on equity (ROE) came in at 22.3%. Net income ROE came in at 37.5%.
 
Business Update

During the reported quarter, PartnerRe completed its acquisition of PARIS RE with the proceeds from the issue of 24.2 million shares to complete the acquisition.
 
Dividend Update
 
Concurrent with the earnings release, the Board of PartnerRe announced the increase of the annual dividend to $2.00 per common share from $1.88 per common share. When compared to the dividend payout in 2009, the annual dividend payout on common shares increased 41% to $165 million. This is the seventeenth consecutive year that the company has increased the common share dividend since its inception in 1993.
 
Alongside, the Board of PartnerRe declared a regular quarterly dividend of 50 cents per common share. The dividend will be payable on March 1, 2010, to common shareholders of record as of February 19, 2010, with the stock trading ex-dividend commencing February 17, 2010.
 
During 2009, the company issued approximately 26 million common shares to facilitate the acquisition of PARIS RE, bringing the total number of common shares outstanding to approximately 83 million.