PartnerRe today reported net income available to common shareholder of $206 million for the third quarter of 2020, which included net realized and unrealized investment gains of $14 million on fixed maturities and short-term investments, primarily due to decreases in worldwide credit spreads, and $44 million of net foreign exchange losses. This compared to a net income available to common shareholder of $216 million in the third quarter of 2019, which included net realized and unrealized investment gains on fixed maturities and short-term investments of $41 million and $39 million of net foreign exchange gains.
Net income available to common shareholder was $2 million for the first nine months of 2020, which included net realized and unrealized investment gains on fixed maturities and short-term investments of $225 million, primarily due todecreases in worldwide risk-free rates, partially offset by the widening of worldwide credit spreads, and net foreign exchange gains of $51 million. This compared to a net income available to common shareholder of $998 million for the first nine months of 2019, which included net realized and unrealized investment gains on fixed maturities and short-term investments of $484 million and $8 million of net foreign exchange losses.
PartnerRe President and Chief Executive Officer Jacques Bonneau commented, “This year has brought many unprecedented challenges, with the ongoing COVID-19 crisis and significant financial market disruption. This has been compounded by exceptional levels of catastrophic events for the industry, with the most active Atlantic hurricane season on record. Despite this challenging operating environment, PartnerRe has emerged with an increased focus on providing valuable capacity and solutions to our clients and broker partners to assist them in growing their businesses. We are committed to being a strong and responsive reinsurance partner – at a time when it is needed more than ever.”
Mr. Bonneau continued: “During the third quarter, we secured a €750 million third party capital commitment for future investments in our special purpose reinsurance vehicles, and successfully raised $500 million of debt, which will allow us to reduce our ongoing financing costs. With our strong capital, liquidity and solvency positions, I am confident that PartnerRe is well positioned to take advantage of the improving reinsurance market conditions.”
The COVID-19 pandemic and the related economic downturn is ongoing, and there continues to be significant uncertainty surrounding the full extent of the impact. The Company incurred $366 million of pre-tax losses, net of retrocession and reinstatement premiums, as a direct result of COVID-19 and the related effects of the economic downturn in the first nine months of 2020, with substantially all of the losses classified as incurred but not reported (IBNR) reserves. This is inclusive of $28 million of COVID-19 related losses recorded during the third quarter, driven by financial risks lines as a result of the continued economic downturn. The total COVID-19 related losses for the first nine months of 2020 reflect the Company’s estimates on claims incurred as of September 30, 2020 and include $160 million, $191 million and $15 million of pre-tax losses, net of retrocession and reinstatement premiums, in its P&C, Specialty and Life and Health segments, respectively. These losses are attributable to business interruption and event cancellation related coverages, credit exposures in financial risks lines, and life and health business. Despite the recent market conditions, the Company’s solvency position has remained strong and total capital has increased during the third quarter of 2020, primarily due to the issuance of $500 million 4.50% Fixed-Rate Reset Junior Subordinated Notes due 2050. The Company also maintains ample liquidity, with cash and cash equivalents of $1.8 billion at the end of the third quarter of 2020.
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