PartnerRe reports net income drop, mum on competing merger bids

Amid uncertainty created by competing acquisition offers, Pembroke, Bermuda-based PartnerRe Ltd. reported first-quarter net income of $231.7 million, a 21.6% decline from the same period one year ago.

Net written premiums also fell 4.9% from the prior-year period to $1.65 billion, while the company’s combined ratio improved to 82.8% for the first quarter, compared with in 83.9% in the first quarter of 2014.

During a conference call Tuesday with analysts, Bill Babcock, executive vice president and chief financial officer at PartnerRe, said a lack of major catastrophes as well as reserve releases helped limit the decline in net income.

“During the quarter, we reported favorable prior development across all our nonlife subsegments,” Mr. Babcock said. “In addition to cancellations and nonrenewals, lower premiums were bound in the agriculture line of business due to the delayed renewal of some significant contracts that remained in process at quarter’s end.”

PartnerRe interim CEO David Zwiener said the reinsurer also has become more selective as rates remain soft, especially in markets such as hurricane-prone Florida.

“There is excess cat capacity in the market, and this is clearly having an impact on terms,” Mr. Zwiener said. In “global specialty lines, where we write multiple lines of business, we also experienced general deterioration in general reinsurance terms, although the picture is a little more variable.”

Accordingly, the company is focusing on high-growth markets such as international agriculture, property/casualty business in China, and expanding existing client business in the U.S. and Japan, he said.

No discussion of competing bids

Moreover, Mr. Zwiener said the company has received favorable response from clients during the April 1 renewals regarding PartnerRe’s proposed merger with Axis Capital Holdings Ltd. announced in January.

However, Mr. Zwiener said he was not at liberty to discuss the surprise $6.4 billion all-cash bid Italy’s Exor S.p.A. made in mid-April.

Laurie Desmet, executive vice president and chief operating officer at PartnerRe, said the company’s board was weighing the offer and will announce its decision “in due course.”

“We were disappointed not to hear an update from the board regarding their consideration of the Exor offer, although we understand that a thorough process is underway” Cliff Gallant, an analyst at Nomura Securities International Inc. in San Francisco, said in a research note.