2015 Q4 Form 10-Q Financial Statement

#000091142115000046 Filed on October 30, 2015

View on sec.gov

Income Statement

Concept 2015 Q4 2015 Q3 2014 Q3
Revenue $1.379B $1.399B $1.643B
YoY Change -17.08% -14.85% 5.05%
Cost Of Revenue $767.0M $804.0M $960.0M
YoY Change -11.84% -16.25% 27.83%
Gross Profit $612.0M $261.0M $275.0M
YoY Change -22.82% -5.09% -28.94%
Gross Profit Margin 44.38% 18.66% 16.74%
Selling, General & Admin
YoY Change
% of Gross Profit
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $311.0M $347.0M $322.0M
YoY Change -4.31% 7.76% 13.78%
% of Gross Profit 50.82% 132.95% 117.09%
Operating Expenses
YoY Change
Operating Profit
YoY Change
Interest Expense $12.00M $12.00M $12.00M
YoY Change 0.0% 0.0% 0.0%
% of Operating Profit
Other Income/Expense, Net $120.0M $416.0M $108.0M
YoY Change -2.44% 285.19% 0.0%
Pretax Income $169.0M -$209.0M $242.0M
YoY Change -49.4% -186.36% -39.8%
Income Tax -$3.000M $17.00M $46.00M
% Of Pretax Income -1.78% 19.01%
Net Earnings $177.0M -$229.0M $196.0M
YoY Change -36.1% -216.84% -41.32%
Net Earnings / Revenue 12.84% -16.37% 11.93%
Basic Earnings Per Share $3.39 -$5.08 $3.68
Diluted Earnings Per Share $3.30 -$5.08 $3.60
COMMON SHARES
Basic Shares Outstanding 47.91M shares 47.87M shares 49.51M shares
Diluted Shares Outstanding 47.87M shares 50.68M shares

Balance Sheet

Concept 2015 Q4 2015 Q3 2014 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments
YoY Change
Cash & Equivalents $1.577B $1.256B $1.519B
Short-Term Investments
Other Short-Term Assets
YoY Change
Inventory
Prepaid Expenses
Receivables
Other Receivables
Total Short-Term Assets
YoY Change
LONG-TERM ASSETS
Property, Plant & Equipment
YoY Change
Goodwill $456.4M $456.4M $456.4M
YoY Change 0.0% 0.0%
Intangibles $133.0M $139.3M $166.1M
YoY Change -16.66% -16.13% -14.01%
Long-Term Investments
YoY Change
Other Assets
YoY Change
Total Long-Term Assets
YoY Change
TOTAL ASSETS
Total Short-Term Assets
Total Long-Term Assets
Total Assets $21.41B $22.03B $23.21B
YoY Change -3.88% -5.09% 0.3%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable
YoY Change
Accrued Expenses
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities
YoY Change
LONG-TERM LIABILITIES
Long-Term Debt
YoY Change
Other Long-Term Liabilities
YoY Change
Total Long-Term Liabilities
YoY Change
TOTAL LIABILITIES
Total Short-Term Liabilities
Total Long-Term Liabilities
Total Liabilities $14.50B $15.25B $16.14B
YoY Change -4.37% -5.53% -2.26%
SHAREHOLDERS EQUITY
Retained Earnings $6.147B $6.020B $6.041B
YoY Change -1.98% -0.35% 16.55%
Common Stock $87.24M $87.24M $87.14M
YoY Change 0.0% 0.11% 0.83%
Preferred Stock
YoY Change
Treasury Stock (at cost) $3.267B $3.269B $3.076B
YoY Change 0.24% 6.28% 18.01%
Treasury Stock Shares 39.30M shares 39.34M shares 37.79M shares
Shareholders Equity $6.901B $6.775B $7.014B
YoY Change
Total Liabilities & Shareholders Equity $21.41B $22.03B $23.21B
YoY Change -3.88% -5.09% 0.3%

Cashflow Statement

Concept 2015 Q4 2015 Q3 2014 Q3
OPERATING ACTIVITIES
Net Income $177.0M -$229.0M $196.0M
YoY Change -36.1% -216.84% -41.32%
Depreciation, Depletion And Amortization $311.0M $347.0M $322.0M
YoY Change -4.31% 7.76% 13.78%
Cash From Operating Activities
YoY Change
INVESTING ACTIVITIES
Capital Expenditures
YoY Change
Acquisitions
YoY Change
Other Investing Activities
YoY Change
Cash From Investing Activities
YoY Change
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities
YoY Change
NET CHANGE
Cash From Operating Activities
Cash From Investing Activities
Cash From Financing Activities
Net Change In Cash
YoY Change
FREE CASH FLOW
Cash From Operating Activities
Capital Expenditures
Free Cash Flow
YoY Change

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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:8px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company&#8217;s Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. The Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions have been eliminated.</font></div></div>
us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
DescriptionOfNewAccountingPronouncementsNotYetAdopted
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">3. Recent Accounting Pronouncements</font></div><div style="line-height:120%;padding-top:8px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In&#160;February 2015,&#160;the Financial Accounting Standards Board (FASB)&#160;issued updated guidance on the consolidation of voting interest entities and variable interest entities. The guidance is effective for interim and annual periods beginning after December&#160;15, 2015, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on its Consolidated Financial Statements and disclosures.</font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2015, the FASB issued updated guidance on disclosures related to short-duration insurance contracts. The update expands required disclosures in order to increase the transparency of significant estimates made in measuring the liability for unpaid losses and loss expenses, improve comparability and facilitate financial statement users' analysis of the cash flows arising from re/insurance contracts and the development of loss reserve estimates. The guidance is effective for annual periods beginning after December&#160;15, 2015 and interim periods within annual periods beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on its disclosures.</font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2015, the FASB issued updated guidance on disclosures for investments in certain entities that calculate net asset value (NAV) per share (or its equivalent). The update eliminates the requirement to categorize investments measured using the NAV practical expedient in the fair value hierarchy table. The guidance is applicable retrospectively and is effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on its disclosures.</font></div></div>
us-gaap Nature Of Operations
NatureOfOperations
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">1. Organization</font></div><div style="line-height:120%;padding-top:8px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">PartnerRe Ltd. (PartnerRe or the Company) predominantly provides reinsurance and certain specialty insurance lines on a worldwide basis through its principal wholly-owned subsidiaries, including Partner Reinsurance Company Ltd., Partner Reinsurance Europe SE, Partner Reinsurance Company of the U.S. and, effective April 1, 2015, Partner Reinsurance Asia Pte. Ltd (PartnerRe Asia). Risks reinsured include, but are not limited to, property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, multiline and other lines, mortality, longevity, accident and health and alternative risk products. The Company&#8217;s alternative risk products include weather and credit protection to financial, industrial and service companies on a worldwide basis.</font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2015, the Company announced that PartnerRe Asia was licensed by the Monetary Authority of Singapore (MAS) to operate as a non-life and life reinsurer in Singapore. As of April 1, 2015, PartnerRe Asia became the principal reinsurance carrier for the Company&#8217;s business underwritten in the Asia Pacific region. The establishment of PartnerRe Asia has enabled the Company's Asian reinsurance operations to be consolidated into one regional, well-capitalized entity and will support its growing underwriting presence in the region.</font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On January&#160;25, 2015, the Company entered into an Agreement and Plan of Amalgamation (as subsequently amended, the Amalgamation Agreement) with Axis Capital Holdings Limited, a Bermuda exempted company (AXIS), pursuant to which the Company would amalgamate with AXIS (Amalgamation), and the two companies would continue as a single Bermuda exempted company. </font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On April 14, 2015, the Company announced receipt of&#160;an unsolicited proposal from EXOR S.p.A. (EXOR), a European investment company controlled by the Agnelli family, to acquire </font><font style="font-family:inherit;font-size:10pt;">100%</font><font style="font-family:inherit;font-size:10pt;"> of the common shares of the Company for </font><font style="font-family:inherit;font-size:10pt;">$130</font><font style="font-family:inherit;font-size:10pt;"> per share in cash. </font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On May 3, 2015, the Company and AXIS amended the Amalgamation Agreement to allow the Company to pay a one-time special dividend of </font><font style="font-family:inherit;font-size:10pt;">$11.50</font><font style="font-family:inherit;font-size:10pt;"> per share to PartnerRe common shareholders in connection with the closing of the Amalgamation (one-time special dividend) and to increase the termination fee from </font><font style="font-family:inherit;font-size:10pt;">$250 million</font><font style="font-family:inherit;font-size:10pt;"> to </font><font style="font-family:inherit;font-size:10pt;">$280 million</font><font style="font-family:inherit;font-size:10pt;">.</font></div><div style="line-height:120%;padding-top:12px;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On May 12, 2015, the Company announced receipt of a revised proposal from EXOR to acquire all of the outstanding common shares of the Company for </font><font style="font-family:inherit;font-size:10pt;">$137.50</font><font style="font-family:inherit;font-size:10pt;"> per share in cash. </font><font style="font-family:inherit;font-size:10pt;">EXOR requested that the Board declare EXOR's proposal to be "reasonably likely a superior proposal" as a pre-condition to any further negotiations, which was rejected by the Company's Board. </font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On July 7, 2015, EXOR enhanced the terms of its proposal by providing (i) a </font><font style="font-family:inherit;font-size:10pt;">100</font><font style="font-family:inherit;font-size:10pt;"> basis points increase in the preferred share dividend rate, (ii) call protection until 2021, and (iii) a commitment to limit distributions to common shareholders to an amount not greater than </font><font style="font-family:inherit;font-size:10pt;">67%</font><font style="font-family:inherit;font-size:10pt;"> of net income until December 31, 2020. &#160;</font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On July 16, 2015, the Company and AXIS amended the Amalgamation Agreement further to increase the one-time special dividend to be paid by the Company to its common shareholders to </font><font style="font-family:inherit;font-size:10pt;">$17.50</font><font style="font-family:inherit;font-size:10pt;"> per share and, subject to certain conditions, to match the economic terms proposed by EXOR on July 7, 2015 in relation to the Company's preferred shares.</font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On July 20, 2015, EXOR announced an increase in its proposal to acquire </font><font style="font-family:inherit;font-size:10pt;">100%</font><font style="font-family:inherit;font-size:10pt;"> of the common shares of the Company for </font><font style="font-family:inherit;font-size:10pt;">$137.50</font><font style="font-family:inherit;font-size:10pt;"> per share in cash by adding a special dividend of </font><font style="font-family:inherit;font-size:10pt;">$3.00</font><font style="font-family:inherit;font-size:10pt;"> per share to be paid by the Company to its common shareholders pre-closing.</font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On July 21, 2015, the Company announced that it had determined that EXOR's enhanced proposal of July 20, 2015 would reasonably be likely to result in a superior proposal in accordance with the Amalgamation Agreement. As a result, the Board sought to engage in negotiations with EXOR, and offered EXOR the opportunity to conduct due diligence, to determine whether EXOR's proposal could be improved both in price and terms. </font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On August 3, 2015, the Company announced that it had reached a definitive agreement with EXOR under which EXOR would acquire all of the outstanding common shares of PartnerRe for an all-cash consideration of </font><font style="font-family:inherit;font-size:10pt;">$137.50</font><font style="font-family:inherit;font-size:10pt;"> per share and a special pre-closing dividend of </font><font style="font-family:inherit;font-size:10pt;">$3.00</font><font style="font-family:inherit;font-size:10pt;"> per share. The transaction would be effected by a merger of Pillar Ltd., a wholly owned subsidiary of EXOR N.V., with and into the Company, with the Company continuing as the surviving company and a wholly owned subsidiary of EXOR N.V. Pursuant to the terms of the merger agreement (Merger Agreement), each PartnerRe common share issued and outstanding immediately prior to the effective time of the merger shall (i) automatically be canceled and converted into the right to receive the acquisition consideration and (ii) be entitled to receive the special dividend. The declaration of the special dividend will occur prior to the effective time of the merger and is subject to compliance with the Bermuda Companies Act 1981 and will be conditional and contingent upon the issuance of the certificate of merger by the Bermuda Registrar of Companies (referred to as the effective time of the merger). The Merger Agreement is subject to approval by the Company's shareholders on November 19, 2015, regulatory clearance and other customary closing conditions.</font></div><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In connection with the execution of the Merger Agreement, the Company and AXIS terminated the Amalgamation Agreement. On August 3, 2015, in accordance with the terms of the Amalgamation Agreement, the Company paid a termination fee and reimbursement of expenses to AXIS of </font><font style="font-family:inherit;font-size:10pt;">$315 million</font><font style="font-family:inherit;font-size:10pt;"> which is included within Other expenses in the Condensed Consolidated Statements of Operations for the three months and </font><font style="font-family:inherit;font-size:10pt;">nine</font><font style="font-family:inherit;font-size:10pt;"> months ended </font><font style="font-family:inherit;font-size:10pt;">September&#160;30, 2015</font><font style="font-family:inherit;font-size:10pt;">.</font></div></div>
us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:12px;text-indent:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The preparation of financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While Management believes that the amounts included in the Condensed Consolidated Financial Statements reflect its best estimates and assumptions, actual results could differ from those estimates. The Company&#8217;s principal estimates include:</font></div><table cellpadding="0" cellspacing="0" style="padding-top:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:47px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:23px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Unpaid losses and loss expenses;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:47px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:23px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Policy benefits for life and annuity contracts;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:47px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:23px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Gross and net premiums written and net premiums earned;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:47px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:23px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Recoverability of deferred acquisition costs;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:47px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:23px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Recoverability of deferred tax assets;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:47px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:23px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Valuation of goodwill and intangible assets; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:47px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:23px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Valuation of certain assets and derivative financial instruments that are measured using significant unobservable inputs.</font></div></td></tr></table></div>

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