PARTNERRE LTD (PRE-PJ)·Q3 2015 Earnings Summary

Executive Summary

• Q3 2015: Strong underwriting but reported loss due to one-time AXIS termination fee and investment losses; operating EPS $4.42, diluted EPS $(5.08). Underlying Non-life combined ratio improved to 82.8% on heavy favorable prior-year development; Tianjin added 5.4 pts ($60m) to catastrophe load .
• One-time items dominated: $315m AXIS amalgamation termination fee ($6.58/sh) in other expenses and net after-tax investment losses ($2.54/sh) drove the GAAP loss; operating ROE 14.0% in the quarter on solid technical performance .
• Dividend maintained at $0.70 per share payable Dec 1, 2015; no formal guidance issued .
• Potential stock catalysts: normalization after one-time AXIS fee, clarity on Tianjin ultimate loss (initial estimate $50–$70m pre-tax announced Oct 13), and continued reserve releases supporting combined ratio resilience into Jan renewals despite competitive market conditions .

What Went Well and What Went Wrong

• What Went Well

  • Underwriting outperformance: Non-life combined ratio improved to 82.8% (vs 84.2% YoY), with 22.2 pts (≈$246m) favorable prior-year reserve development across every Non-life sub-segment .
  • Life & Health steady: Allocated underwriting result $18m (vs $20m YoY), with favorable prior-year development in A&H partially offsetting GMDB adverse development .
  • Management tone on client positioning: “We continue to distinguish ourselves…as a stable and focused partner…with long-term financial flexibility” heading into the >60% January renewal season, highlighting franchise strength despite M&A noise .

• What Went Wrong

  • One-time transaction impact: $315m AXIS termination fee recorded in other expenses drove GAAP loss; per-share impact ~$(6.58) in Q3 .
  • Investment markets drag: Pre-tax net realized/unrealized losses of $133m on widening US/EU credit spreads and global equity declines pressured results (partially offset by lower risk-free rates); after-tax EPS impact ~$(2.54) .
  • Tianjin loss: Q3 included ~$60m related to Tianjin explosions (~5.4 pts on combined ratio), highlighting large-loss susceptibility in a competitive market .

Financial Results

Overall quarterly comparisons (oldest → newest)

Segment breakdown – Q3 2015

Key KPIs – Q3 2015

Guidance Changes

Note: Management highlighted competitive renewals and M&A distractions but provided no formal revenue or margin guidance .

Earnings Call Themes & Trends

Note: We were unable to locate the Q3 2015 earnings call transcript in filings or public archives; themes below are derived from the company’s press releases/financial supplements for Q1–Q3 2015.

Management Commentary

• “Despite the noise, and the impact of the Chinese Tianjin loss in August, our underlying results remain strong…we posted a 1.4 point improvement in our Non-life combined ratio to 82.8%…operating ROE of 14%” — Interim CEO David Zwiener .
• “As we look ahead to the important January renewal season…reinsurance markets remain competitive across the board…we continue to distinguish ourselves…as a stable and focused partner with long-term financial flexibility” — President Emmanuel Clarke .

Q&A Highlights

The Q3 2015 earnings call transcript could not be located in our document system or public web archives; as a result, specific Q&A themes and any guidance clarifications from the call are unavailable [functions.ListDocuments; Internet search yielded no transcript].

Estimates Context

Wall Street consensus estimates from S&P Global were unavailable for PRE-PJ due to missing SPGI/Capital IQ mapping, so beats/misses vs consensus cannot be assessed for Q3 2015 (GetEstimates error: missing mapping for PRE-PJ). Where estimate comparisons are absent, interpret results on an absolute and sequential/YoY basis using company disclosures [functions.GetEstimates].

Key Takeaways for Investors

• Core underwriting remains robust: combined ratio back to low-80s despite Tianjin, supported by broad-based favorable reserve releases; watch for sustainability of PYD into 2016 given competitive pricing .
• GAAP loss masks quality: large one-time AXIS fee and investment MTM losses drove negative EPS; operating EPS and ROE point to solid fundamentals .
• Cat exposure manageable: Tianjin net loss (~$60m) was dispersed across sub-segments; discipline in Cat and retro usage evident in low Cat technical ratio (33.6%) .
• Capital and BVPS dipped on losses/dividends; path to rebuild via earnings and calmer markets—monitor credit spreads and equity sensitivity .
• Dividend maintained at $0.70; absent formal guidance, near-term catalysts are Jan renewals, reserve development trajectory, and investment market stabilization .
• Trading lens: Expect the narrative to shift from one-offs to underwriting durability; stock may react to clarity on Tianjin ultimate loss and renewal outcomes given competitive backdrop .

Supporting Detail (Prior Quarter Context)

• Q2 2015: Operating EPS $2.35; diluted EPS $(2.16); Non-life combined ratio 90.3% on lower PYD vs Q3; investment losses driven by higher long-end rates .
• Q1 2015: Operating EPS $3.09; diluted EPS $4.76; Non-life combined ratio 82.8% with strong PYD and no major cats; tangible BVPS up 3.2% q/q .

Appendix: Q3 2015 Event and One-time Items

• AXIS termination fee & expenses: $315m in other expenses (~$6.58/sh) recorded in Q3 2015 .
• Tianjin explosion: initial pre-tax net loss estimate $50–$70m (announced Oct 13) and allocated across multiple Non-life lines; Q3 recorded ~$60m (~5.4 pts) .
• Investment markets: $133m pre-tax realized/unrealized losses on credit spread widening and equity declines .