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$1.4bn cat losses push PartnerRe to $500mn 2011 YTD net loss

Bermudian reinsurer PartnerRe suffered a bruising $1.35bn of catastrophe losses in 2011, resulting in a net loss of $502.6mn for the first nine months of the year.

The reinsurer confirmed its pre-announced third quarter cat losses of $165mn as it announced its earnings today (31 October), primarily linked to Japan's Tohoku earthquake and February's Christchurch quake in New Zealand.

For the first nine months of 2011, the non-life combined ratio was 126.7 percent and included 47.1 points - or $1.35bn - related to cat events including the Japan earthquake, February's New Zealand earthquake, the April and May US tornado outbreak, the Australian cyclone and flood events and "losses related to an aggregate contract covering events in Australia and New Zealand".

The firm released $479mn from prior-year reserves to bolster the result.

PartnerRe reported 2011 as a capital-depleting year, with total capital at $7.5bn at the end of Q3 - down 6 percent on year-end 2010 levels mainly due to the net loss of $503mn and a decrease of $11mn in the currency translation account, PartnerRe said.

Shareholders equity fell 10 percent from $7.2bn at the end of 2010 to $6.5bn at 30 September this year. Cat losses for the year to date translate into a massive 20.15 percent of total shareholders' equity at the end of Q3 and 18.75 percent of equity at year-end 2010.

PartnerRe president and CEO Costas Miranthis pointed to a "respectable" third quarter, citing a benign loss environment, portfolio repositioning and increased net premiums written in all non-life sub-segments of the business.

"We had respectable third quarter results overall, with a 10.3 percent annualised operating ROE," Miranthis said, stating that he was "cautiously optimistic" on market conditions for 1 January renewals.

"We are beginning to see price increases in many lines, particularly short tail lines, as well as increased demand for reinsurance. Our strong capital base positions us well to take advantage of any opportunities. We will assess such opportunities, as well as other capital management alternatives, with the objective of maximising the growth of our economic value per share over the medium term."

PartnerRe produced net income of $180.1mn, or $2.43 per share on a fully diluted basis for the third quarter of 2011. It made $6.2mn of investment income in the period.

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