PartnerRe Ltd. Reports Second Quarter and Half Year 2006 Results

PEMBROKE, Bermuda, July 24 /PRNewswire-FirstCall/ -- PartnerRe Ltd. today reported net income of $77.5 million, or $1.20 per share on a fully diluted basis, for the second quarter of 2006. This net income includes net after-tax realized losses on investments of $47.0 million or $0.81 per share. Net income for the second quarter of 2005 including net after-tax realized gains on investments of $37.0 million or $0.67 per share, was $159.9 million or $2.72 per share. Operating earnings for the second quarter of 2006 were $115.9 million or $2.01 per share on a fully diluted basis. This compares to operating earnings of $114.3 million, or $2.05 per share, for the second quarter of 2005. Operating earnings exclude net after-tax realized investment gains and losses and are calculated after payment of preferred dividends. All references to per share amounts are on a fully diluted basis.

Summary unaudited consolidated financial data for the period is set out below.

U.S.$ thousands (except per Three months ended Six months ended share amounts and ratios) June 30 June 30 2006 2005 2006 2005 Net Premiums Written $815,893 $763,855 $2,160,497 $2,178,724 Net Premiums Earned $858,963 $880,259 $1,691,784 $1,776,671 Non-life Combined Ratio 90.3% 89.4% 89.1% 93.3% Net Income $77,531 $159,909 $270,774 $271,324 Net Income per share(a) $1.20 $2.72 $4.40 $4.56 Net Operating Earnings(a) $115,932 $114,304 $249,676 $181,857 Net Operating Earnings per share(a) $2.01 $2.05 $4.33 $3.26 (a) Net income per share is defined as net income available to common shareholders divided by the weighted average number of fully diluted shares outstanding for the period. Net income available to common shareholders is defined as net income less preferred dividends. Net operating earnings is net income available to common shareholders excluding after-tax net realized gains/losses on investments. Net operating earnings per share is defined as net operating earnings divided by the weighted average number of fully diluted shares outstanding for the period. Per share results referenced in the text of this press release are on a fully diluted basis.

Net premiums written for the second quarter 2006 were $815.9 million, a 7% increase from the second quarter of 2005. Total revenues for the quarter declined 10% as compared to the second quarter of 2005 to $921.1 million, including $859.0 million of net premiums earned, net investment income of $108.3 million, and net realized investment losses of $58.9 million.

For the first six months of 2006, net premiums written were $2.2 billion, representing a 1% decline from the same period in 2005. Net income was $270.8 million or $4.40 per share. Net income for the period includes a net after-tax realized gain on investments of $3.8 million or $0.07 per share. Operating earnings were $249.7 million, or $4.33 per share. Net income for the first six months of 2005 was $271.3 million or $4.56 per share including net after-tax realized gains of $72.2 million, or $1.30 per share. Operating earnings for the same period in 2005 were $181.9 million or $3.26 per share. Total revenues for the first six months of 2006 were $1.9 billion, including $1.7 billion of net premiums earned, net investment income of $208.3 million, and net realized investment losses of $3.8 million. Total revenues for the same period in 2005 were $2.1 billion.

Separately, the Company announced today that its Board of Directors declared a regular quarterly dividend of $0.40 per common share. The dividend will be payable on September 1, 2006, to common shareholders of record on August 22, 2006, with the stock trading ex-dividend commencing August 18, 2006.

Results by Segment

The Non-Life segment reported net premiums written of $706 million for the second quarter, up 9% as compared to the second quarter of 2005. The combined ratio was 90.3% for the second quarter of 2006, compared to 89.4% for the same period in 2005. The Non-Life technical result was $121 million for the second quarter of 2006, compared to $131 million in 2005. For the first six months, Non-Life net premiums written were $1.9 billion, down 3% from the same period in 2005. The six month technical result was $255 million, compared to $206 million for the same period in 2005. The combined ratio for the six month period was 89.1% compared to 93.3% in 2005.

The U.S. Property and Casualty business, which represents approximately 21% of total net premiums written for the quarter, reported net premiums written of $170 million, up 13% over the prior year's second quarter. Net premiums earned increased marginally to $205 million during the quarter when compared to the same period in 2005. The technical ratio for this sub-segment was 106.3%, compared to 94.4% in the second quarter of 2005. For the first six months of 2006, net premiums written were $466 million, essentially flat with the first six months of 2005. The six-month technical ratio was 102.0%, compared to 95.9% in 2005. The technical result for the half-year was a loss of $8 million compared to a gain of $17 million in 2005.

The Global (Non-U.S.) Property and Casualty business, which represents approximately 15% of total net premiums written for the quarter, reported net premiums written of $127 million for the second quarter of 2006, compared to $157 million for the same period in 2005. Net premiums earned during the quarter were $181 million, down 16% from $215 million in the same period last year. The technical ratio for this sub-segment was 79.2% compared to 96.9% for the same period in 2005. For the six months, net premiums written were down 16% to $491 million. The six-month technical ratio was 90.7%, compared to 92.2% in 2005. The technical result for the half-year was $34 million compared to $36 million in 2005.

The Worldwide Specialty business, which represents approximately 50% of total net premiums written for the quarter, reported net premiums written of $409 million for the second quarter, up 19% over the prior year quarter. Net premiums earned increased 2% during the quarter. This sub-segment's technical ratio was 73.2%, compared to 67.9% for the second quarter of 2005. For the six-month period, net premiums written were up 4% to $936 million. The six- month technical ratio was 66.4%, compared to 77.5% in 2005. The technical result for the half-year was $229 million compared to $153 million in 2005.

The Life segment, which markets coverages primarily in Europe, Canada and Latin America, and represents approximately 13% of total net premiums written for the quarter, reported net premiums written of $103 million for the quarter, down 3% over the prior year quarter. The allocated underwriting result for the quarter was a loss of $1 million, compared to a gain of $4 million for the comparable period in 2005. For the six-month period, net premiums written increased 9% to $242 million, with an allocated underwriting gain of $2 million, compared to a gain of $7 million for the comparable period in 2005.

The ART (Alternative Risk Transfer) segment comprises structured risk transfer, principal finance, weather related products, and the results of the Company's investment in Channel Re. The pre-tax contribution to net income, including the Company's interest in the earnings of Channel Re, was $15 million for the second quarter of 2006 compared to a breakeven result for the second quarter of 2005. For the first six months of 2006, the pre-tax contribution to net income was $22 million compared to $15 million for the same period in 2005.

Balance Sheet Items

During the second quarter of 2006, total investments and cash were essentially flat at $9.9 billion due to the effect of rising interest rates. Over a trailing 12-month period, total investments and cash increased 14% due to incremental cash flow, good returns on the equity portfolio, and proceeds of $549 million from a capital raise in October 2005. Gross Non-Life reserves were flat this quarter, but increased by 18% to $6.8 billion over the last 12 months. During the second quarter, the Company's estimate of Non-Life reserves for prior accident years developed favorably by $62 million, which is reflected in the quarter's results. The overall second quarter prior year reserve development in the Non-Life segment includes net adverse development of $18 million in the U.S. P&C sub-segment, net favorable development of $47 million in the Global (Non-U.S.) P&C sub-segment, and net favorable development of $33 million in the Worldwide Specialty sub-segment. In the second quarter of 2005, Non-Life reserves for prior years developed favorably by $66 million.

At June 30, 2006, total assets were $14.6 billion, total capitalization was $4.0 billion, and total shareholders' equity was $3.2 billion. This compares to total assets of $13.7 billion, total capitalization of $3.9 billion, and total shareholders' equity of $3.1 billion at December 31, 2005. Book value per common share at June 30, 2006 was $46.62 on a fully diluted basis, compared to $44.57 per share at December 31, 2005.

Commentary and Outlook

"PartnerRe's results and operating ROE during the second quarter and first half of 2006 are consistent with market conditions associated with the second half of the reinsurance cycle," PartnerRe President & CEO Patrick Thiele said. "Generally, we are seeing strong pricing in capacity-restricted areas such as U.S. wind and energy, and consequently, PartnerRe saw growth in overall premium volume in the second quarter, driven by a combinations of increased pricing and new business in those lines. We continue to see mixed pricing in other lines with longer-tailed lines, particularly in the U.S., holding up better than shorter-tailed lines."

Mr. Thiele added, "We continue to grow our GAAP book value despite the impact of rising interest rates, and we remain committed to our average book value growth target of 10% per year."

The Company uses operating earnings, diluted operating earnings per share and operating return on beginning common shareholders' equity to measure performance, as these measures focus on the underlying fundamentals of our operations without the influence of realized gains and losses from the sale of investments, which is driven by the timing of the disposition of investments and not by our operating performance. For planning purposes, the Company does not anticipate realized investment gains or losses. The Company also uses technical ratio and technical result as measures of underwriting performance. These metrics exclude other operating expenses. All references to per share amounts in the text of this press release are on the basis of fully diluted shares.

PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. Risks reinsured include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, other lines, life/annuity and health, and alternative risk transfer solutions. At December 31, 2005, total revenues were $4.2 billion. As of June 30, 2006 total assets were $14.6 billion, total capitalization was $4.0 billion and total shareholders' equity was $3.2 billion. Our major reinsurance operations have ratings of AA- (negative outlook) from Standard & Poor's, Aa3 (negative outlook) from Moody's, A+ (stable outlook) from A.M. Best, and AA (stable outlook) from Fitch.

PartnerRe on the Internet: http://www.partnerre.com/

Forward-looking statements contained in this press release are based on the Company's assumptions and expectations concerning future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. PartnerRe's forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments such as exposure to catastrophe, or other large property and casualty losses, adequacy of reserves, risks associated with implementing business strategies, levels and pricing of new and renewal business achieved, credit, interest, currency and other risks associated with the Company's investment portfolio, changes in accounting policies, and other factors identified in the Company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward- looking information contained herein, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company disclaims any obligation to publicly update or revise any forward-looking information or statements.

PartnerRe Ltd. Consolidated Statements of Operations and Comprehensive Income (Expressed in thousands of U.S. dollars, except share and per share data) (Unaudited) For the For the three three For the For the months months six months six months ended ended ended ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 Revenues Gross premiums written $817,610 $767,457 $2,190,456 $2,213,393 Net premiums written $815,893 $763,855 $2,160,497 $2,178,724 Decrease (increase) in unearned premiums 43,070 116,404 (468,713) (402,053) Net premiums earned 858,963 880,259 1,691,784 1,776,671 Net investment income 108,320 90,224 208,272 177,077 Net realized investment (losses) gains (58,928) 55,588 (3,830) 92,970 Other income (loss) 12,704 (1,143) 20,460 11,659 Total revenues 921,059 1,024,928 1,916,686 2,058,377 Expenses Losses and loss expenses and life policy benefits 541,377 546,171 1,040,195 1,160,036 Acquisition costs 199,425 203,426 398,682 413,351 Other operating expenses 76,482 74,500 150,912 147,190 Interest expense 13,200 7,363 25,921 14,691 Net foreign exchange losses 4,116 2,456 7,462 2,442 Total expenses 834,600 833,916 1,623,172 1,737,710 Income before taxes and interest in earnings of equity investments 86,459 191,012 293,514 320,667 Income tax expense 11,845 33,497 27,976 54,289 Interest in earnings of equity investments 2,917 2,394 5,236 4,946 Net income $77,531 $159,909 $270,774 $271,324 Preferred dividends $8,631 $8,631 $17,263 $17,263 Operating earnings available to common shareholders $115,932 $114,304 $249,676 $181,857 Comprehensive income, net of tax $50,691 $207,082 $161,609 $202,265 Per Share Data: Earnings per common share: Basic operating earnings $2.04 $2.09 $4.40 $3.31 Net realized investment (losses) gains, net of tax (0.83) 0.67 0.07 1.32 Basic net income $1.21 $2.76 $4.47 $4.63 Weighted average number of common shares outstanding 56,763.5 54,791.5 56,748.6 54,873.6 Diluted operating earnings $2.01 $2.05 $4.33 $3.26 Net realized investment (losses) gains, net of tax (0.81) 0.67 0.07 1.30 Diluted net income $1.20 $2.72 $4.40 $4.56 Weighted average number of common and common share equivalents outstanding 57,656.0 55,698.7 57,628.6 55,764.5 PartnerRe Ltd. Consolidated Balance Sheets (Expressed in thousands of U.S. dollars, except share, per share and parenthetical share data) (Unaudited) June 30, December 31, 2006 2005 Assets Investments: Fixed maturities, at fair value (amortized cost: 2006, $6,901,912; 2005, $6,682,243) $6,758,874 $6,686,822 Short-term investments, at fair value (amortized cost: 2006, $271,027; 2005, $231,442) 270,485 230,933 Equities, at fair value (cost: 2006, $995,508; 2005, $1,246,192) 1,059,029 1,334,374 Trading securities, at fair value (cost: 2006, $295,505; 2005, $210,432) 297,619 220,311 Other invested assets 98,321 104,920 Total investments 8,484,328 8,577,360 Cash and cash equivalents, at fair value, which approximates amortized cost 1,407,979 1,001,378 Accrued investment income 139,607 143,548 Reinsurance balances receivable 1,873,063 1,493,507 Reinsurance recoverable on paid and unpaid losses 196,539 217,948 Funds held by reinsured companies 988,127 970,614 Deferred acquisition costs 551,229 437,741 Deposit assets 302,598 289,459 Net tax assets 91,120 87,667 Goodwill 429,519 429,519 Other 87,291 95,389 Total assets $14,551,400 $13,744,130 Liabilities Unpaid losses and loss expenses $6,802,291 $6,737,661 Policy benefits for life and annuity contracts 1,279,769 1,223,871 Unearned premiums 1,650,518 1,136,233 Reinsurance balances payable 135,621 127,607 Ceded premiums payable 21,417 25,110 Funds held under reinsurance treaties 20,395 18,910 Deposit liabilities 348,951 333,820 Long-term debt 620,000 620,000 Net payable for securities purchased 123,962 93,318 Accounts payable, accrued expenses and other 132,518 128,627 Debt related to trust preferred securities 206,186 206,186 Total liabilities 11,341,628 10,651,343 Shareholders' Equity Common shares (par value $1.00, issued and outstanding: 2006, 56,799,778; 2005, 56,730,195) 56,800 56,730 Series C cumulative preferred shares (par value $1.00, issued and outstanding: 2006 and 2005, 11,600,000; aggregate liquidation preference: 2006 and 2005, $290,000,000) 11,600 11,600 Series D cumulative preferred shares (par value $1.00, issued and outstanding: 2006 and 2005, 9,200,000; aggregate liquidation preference: 2006 and 2005, $230,000,000) 9,200 9,200 Additional paid-in capital 1,391,816 1,373,992 Deferred compensation - (107) Accumulated other comprehensive income: Net unrealized (losses) gains on investments, net of tax (71,711) 77,049 Currency translation adjustment 52,209 12,614 Retained earnings 1,759,858 1,551,709 Total shareholders' equity 3,209,772 3,092,787 Total liabilities and shareholders' equity $14,551,400 $13,744,130 Shareholders' Equity Per Common Share $47.36 $45.35 Diluted Book Value Per Common and Common Share Equivalents Outstanding (assuming exercise of all stock-based awards) $46.62 $44.57 Number of Common and Common Share Equivalents Outstanding 57,692.2 57,724.1 PartnerRe Ltd. Supplementary Information (in millions of U.S. dollars) (Unaudited) SEGMENT INFORMATION For the three months ended June 30, 2006 Global Total (Non- World- Non- U.S. U.S.) wide Life P&C P&C Specialty Segment Gross premiums written $170 $128 $408 $706 Net premiums written $170 $127 $409 $706 Decrease (increase) in unearned premiums 35 54 (51) 38 Net premiums earned $205 $181 $358 $744 Losses and loss expenses and life policy benefits (170) (95) (192) (457) Acquisition costs (48) (48) (70) (166) Technical result $(13) $38 $96 $121 Other income n/a n/a n/a - Other operating expenses n/a n/a n/a (48) Underwriting result n/a n/a n/a $73 Net investment income n/a n/a n/a n/a Allocated underwriting result(1) n/a n/a n/a n/a Net realized investment losses n/a n/a n/a n/a Interest expense n/a n/a n/a n/a Net foreign exchange losses n/a n/a n/a n/a Income tax expense n/a n/a n/a n/a Interest in earnings of equity investments n/a n/a n/a n/a Net income n/a n/a n/a n/a Loss ratio(2) 83.0% 52.3% 53.7% 61.4% Acquisition ratio(3) 23.3 26.9 19.5 22.4 Technical ratio(4) 106.3% 79.2% 73.2% 83.8% Other operating expense ratio(5) 6.5 Combined ratio(6) 90.3% ART Life Segment(A) Segment Corporate Total Gross premiums written $7 $105 $- $818 Net premiums written $7 $103 $- $816 Decrease (increase) in unearned premiums 1 4 - 43 Net premiums earned $8 $107 $- $859 Losses and loss expenses and life policy benefits (3) (82) - (542) Acquisition costs (1) (32) - (199) Technical result $4 $(7) $- $118 Other income 13 - - 13 Other operating expenses (5) (7) (16) (76) Underwriting result $12 $(14) n/a $55 Net investment income - 13 95 108 Allocated underwriting result(1) n/a $(1) n/a n/a Net realized investment losses n/a n/a (59) (59) Interest expense n/a n/a (13) (13) Net foreign exchange losses n/a n/a (4) (4) Income tax expense n/a n/a (12) (12) Interest in earnings of equity investments 3 n/a n/a 3 Net income n/a n/a n/a $78 For the three months ended June 30, 2005 Global Total (Non- World- Non- U.S. U.S.) wide Life P&C P&C Specialty Segment Gross premiums written $150 $156 $345 $651 Net premiums written $150 $157 $344 $651 Decrease (increase) in unearned premiums 51 58 6 115 Net premiums earned $201 $215 $350 $766 Losses and loss expenses and life policy benefits (142) (157) (166) (465) Acquisition costs (48) (51) (71) (170) Technical result $11 $7 $113 $131 Other loss n/a n/a n/a - Other operating expenses n/a n/a n/a (49) Underwriting result n/a n/a n/a $82 Net investment income n/a n/a n/a n/a Allocated underwriting result(1) n/a n/a n/a n/a Net realized investment gains n/a n/a n/a n/a Interest expense n/a n/a n/a n/a Net foreign exchange losses n/a n/a n/a n/a Income tax expense n/a n/a n/a n/a Interest in earnings of equity investments n/a n/a n/a n/a Net income n/a n/a n/a n/a Loss ratio(2) 70.7% 73.0% 47.5% 60.7% Acquisition ratio(3) 23.7 23.9 20.4 22.3 Technical ratio(4) 94.4% 96.9% 67.9% 83.0% Other operating expense ratio(5) 6.4 Combined ratio(6) 89.4% ART Life Segment(A) Segment Corporate Total Gross premiums written $7 $109 $- $767 Net premiums written $7 $106 $- $764 Decrease (increase) in unearned premiums (4) 5 - 116 Net premiums earned $3 $111 $- $880 Losses and loss expenses and life policy benefits - (81) - (546) Acquisition costs - (33) - (203) Technical result $3 $(3) $- $131 Other loss (1) - - (1) Other operating expenses (4) (6) (16) (75) Underwriting result $(2) $(9) n/a $55 Net investment income - 13 77 90 Allocated underwriting result(1) n/a $4 n/a n/a Net realized investment gains n/a n/a 56 56 Interest expense n/a n/a (7) (7) Net foreign exchange losses n/a n/a (3) (3) Income tax expense n/a n/a (33) (33) Interest in earnings of equity investments 2 n/a n/a 2 Net income n/a n/a n/a $160 (A) The Company reports the results of Channel Re on a one-quarter lag. The 2006 and 2005 periods include the Company's share of Channel Re's net income in the amount of $2.8 million and $2.3 million, respectively. (1) Allocated underwriting result is defined as net premiums earned and allocated net investment income less life policy benefits, acquisition costs and other operating expenses. (2) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned. (3) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned. (4) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio. (5) Other operating expense ratio is obtained by dividing other operating expenses by net premiums earned. (6) Combined ratio is the sum of the technical ratio and the other operating expense ratio. PartnerRe Ltd. Supplementary Information (in millions of U.S. dollars) (Unaudited) SEGMENT INFORMATION For the six months ended June 30, 2006 Global Total (Non- World- Non- U.S. U.S.) wide Life P&C P&C Specialty Segment Gross premiums written $466 $493 $956 $1,915 Net premiums written $466 $491 $936 $1,893 Increase in unearned premiums (62) (126) (255) (443) Net premiums earned $404 $365 $681 $1,450 Losses and loss expenses and life policy benefits (313) (232) (319) (864) Acquisition costs (99) (99) (133) (331) Technical result $(8) $34 $229 $255 Other income n/a n/a n/a - Other operating expenses n/a n/a n/a (96) Underwriting result n/a n/a n/a $159 Net investment income n/a n/a n/a n/a Allocated underwriting result(1) n/a n/a n/a n/a Net realized investment losses n/a n/a n/a n/a Interest expense n/a n/a n/a n/a Net foreign exchange losses n/a n/a n/a n/a Income tax expense n/a n/a n/a n/a Interest in earnings of equity investments n/a n/a n/a n/a Net income n/a n/a n/a n/a Loss ratio(2) 77.5% 63.7% 46.8% 59.6% Acquisition ratio(3) 24.5 27.0 19.6 22.9 Technical ratio(4) 102.0% 90.7% 66.4% 82.5% Other operating expense ratio(5) 6.6 Combined ratio(6) 89.1% ART Life Segment(A) Segment Corporate Total Gross premiums written $26 $249 $- $2,190 Net premiums written $25 $242 $- $2,160 Increase in unearned premiums (10) (15) - (468) Net premiums earned $15 $227 $- $1,692 Losses and loss expenses and life policy benefits (7) (169) - (1,040) Acquisition costs (2) (66) - (399) Technical result $6 $(8) $- $253 Other income 20 - - 20 Other operating expenses (9) (14) (32) (151) Underwriting result $17 $(22) n/a $122 Net investment income - 24 184 208 Allocated underwriting result(1) n/a $2 n/a n/a Net realized investment losses n/a n/a (3) (3) Interest expense n/a n/a (26) (26) Net foreign exchange losses n/a n/a (7) (7) Income tax expense n/a n/a (28) (28) Interest in earnings of equity investments 5 n/a n/a 5 Net income n/a n/a n/a $271 For the six months ended June 30, 2005 Global Total (Non- World- Non- U.S. U.S.) wide Life P&C P&C Specialty Segment Gross premiums written $461 $589 $920 $1,970 Net premiums written $462 $587 $895 $1,944 Increase in unearned premiums (39) (130) (215) (384) Net premiums earned $423 $457 $680 $1,560 Losses and loss expenses and life policy benefits (304) (308) (386) (998) Acquisition costs (102) (113) (141) (356) Technical result $17 $36 $153 $206 Other income n/a n/a n/a - Other operating expenses n/a n/a n/a (102) Underwriting result n/a n/a n/a $104 Net investment income n/a n/a n/a n/a Allocated underwriting result(1) n/a n/a n/a n/a Net realized investment gains n/a n/a n/a n/a Interest expense n/a n/a n/a n/a Net foreign exchange losses n/a n/a n/a n/a Income tax expense n/a n/a n/a n/a Interest in earnings of equity investments n/a n/a n/a n/a Net income n/a n/a n/a n/a Loss ratio(2) 71.9% 67.4% 56.7% 63.9% Acquisition ratio(3) 24.0 24.8 20.8 22.9 Technical ratio(4) 95.9% 92.2% 77.5% 86.8% Other operating expense ratio(5) 6.5 Combined ratio(6) 93.3% ART Life Segment(A) Segment Corporate Total Gross premiums written $13 $230 $- $2,213 Net premiums written $13 $222 $- $2,179 Increase in unearned premiums (8) (11) - (403) Net premiums earned $5 $211 $- $1,776 Losses and loss expenses and life policy benefits - (162) - (1,160) Acquisition costs (1) (56) - (413) Technical result $4 $(7) $- $203 Other income 12 - - 12 Other operating expenses (6) (11) (28) (147) Underwriting result $10 $(18) n/a $68 Net investment income - 25 152 177 Allocated underwriting result(1) n/a $7 n/a n/a Net realized investment losses n/a n/a 93 93 Interest expense n/a n/a (15) (15) Net foreign exchange losses n/a n/a (3) (3) Income tax expense n/a n/a (54) (54) Interest in earnings of equity investments 5 n/a n/a 5 Net income n/a n/a n/a $271 (A) The Company reports the results of Channel Re on a one-quarter lag. The 2006 and 2005 periods include the Company's share of Channel Re's net income in the amount of $5.1 million and $4.8 million, respectively. (1) Allocated underwriting result is defined as net premiums earned and allocated net investment income less life policy benefits, acquisition costs and other operating expenses. (2) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned. (3) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned. (4) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio. (5) Other operating expense ratio is obtained by dividing other operating expenses by net premiums earned. (6) Combined ratio is the sum of the technical ratio and the other operating expense ratio. PartnerRe Ltd. Supplementary Information (Unaudited) For the For the For the For the three three six six months months months months ended ended ended ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 Distribution of Net Premiums Written by Line of Business: Non-Life Property and Casualty Property 15% 17% 19% 20% Casualty 18 16 19 19 Motor 3 7 6 9 Worldwide Specialty Agriculture 6 6 4 3 Aviation/Space 6 7 4 5 Catastrophe 16 11 16 13 Credit/Surety 7 8 5 6 Engineering 5 5 4 4 Energy 3 - 2 - Marine 3 3 3 3 Specialty property 2 2 3 3 Specialty casualty 2 3 3 4 ART 1 1 1 1 Life 13 14 11 10 Geographic Distribution of Gross Premiums Written: North America 50% 41% 43% 38% Europe 36 44 44 50 Asia, Australia and New Zealand 9 11 8 8 Latin America, Caribbean and Africa 5 4 5 4 As at June 30, 2006 Financial Strength Ratings: Standard & Poor's AA- Moody's Aa3 A.M. Best A+ Fitch AA As at As at June 30, December 31, 2006 2005 (in thousands of U.S. (in thousands of dollars) U.S. dollars) Capital Structure: Long-term debt $620,000 15% $620,000 16% Trust preferred securities, aggregate liquidation(1) 200,000 5 200,000 5 6.75% Series C cumulative preferred shares, aggregate liquidation 290,000 7 290,000 7 6.5% Series D cumulative preferred shares, aggregate liquidation 230,000 6 230,000 6 Common shareholders' equity 2,689,772 67 2,572,787 66 Total Capital $4,029,772 100% $3,912,787 100% (1) Neither the Trust that issued the securities nor PartnerRe Finance, which owns the Trust, meets the consolidation requirements of FIN 46(R). Accordingly, the Company shows the related intercompany debt of $206.2 million on its Consolidated Balance Sheets. PartnerRe Ltd. Supplementary Information (Unaudited) As at As at June 30, December 31, 2006 2005 Investment Portfolio: Credit Quality AAA 68% 65% AA 4 3 A 13 15 BBB 11 11 Below Investment Grade/Unrated 4 6 By Class U.S. Government 11% 8% U.S. Mortgage/Asset Backed 15 15 U.S. Corporates 20 20 Foreign Fixed Income 28 29 Equities and Equity Substitutes 13 16 Cash (net of pending transactions) 13 12 Expected average duration 3.3 Yrs 3.3 Yrs Average yield to maturity at market 5.1% 4.5% (fixed income securities and cash) Average Credit Quality AA AA For the For the three three For the For the months months six months six months ended ended ended ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 (in thousands of U.S. dollars except per share data) Reconciliation of GAAP and non-GAAP measures: Annualized return on beginning common shareholders' equity calculated with net income available to common shareholders 10.7% 21.4% 19.7% 17.9% Less: Net realized investment (losses) gains, net of tax (7.3) 5.3 0.3 5.1 Annualized operating return on beginning common shareholders' equity 18.0% 16.1% 19.4% 12.8% Net income $77,531 $159,909 $270,774 $271,324 Less: Net realized investment (losses) gains, net of tax (47,032) 36,974 3,835 72,204 Dividends to preferred shareholders 8,631 8,631 17,263 17,263 Operating earnings available to common shareholders $115,932 $114,304 $249,676 $181,857 Per diluted share: Net income $1.20 $2.72 $4.40 $4.56 Less: Net realized investment (losses) gains, net of tax (0.81) 0.67 0.07 1.30 Diluted operating earnings $2.01 $2.05 $4.33 $3.26 PartnerRe Ltd. Supplementary Information (in thousands of U.S. dollars except share and per share data) (Unaudited) As at As at June 30, December 31, 2006 2005 Reconciliation of GAAP and non-GAAP measures: Shareholders' equity $3,209,772 $3,092,787 Less: 6.75% Series C cumulative preferred shares, aggregate liquidation 290,000 290,000 6.5% Series D cumulative preferred shares, aggregate liquidation 230,000 230,000 Common shareholders' equity $2,689,772 $2,572,787 Less: Net unrealized (losses) gains on fixed income securities, net of tax (120,953) 4,382 Book value excluding net unrealized gains or losses on fixed income securities $2,810,725 $2,568,405 Divided by: Number of common and common share equivalents outstanding 57,692.2 57,724.1 Equals: Diluted book value per common and common share equivalents outstanding excluding net unrealized gains or losses on fixed income securities $48.72 $44.49