UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM 20-F
____________________________________
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 001-14536
___________________________________
PartnerRe Ltd.
(Exact name of registrant as specified in its charter)
______________________________________
Bermuda
(Jurisdiction of incorporation or organization)
90 Pitts Bay Road, Pembroke, HM08, Bermuda
(Address of principal executive offices)
Abina Kealy
Executive Vice President and Chief Financial Officer
90 Pitts Bay Road, Pembroke, HM 08, Bermuda Telephone: +1 441-292-0888, Email: abina.kealy@partnerre.com
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
____________________________________
Securities registered pursuant to Section 12(b) of the Act:
4.875% Series J Fixed Rate Non-Cumulative Preferred Shares, $1.00 par value
PRE-J
Title of each class
Trading Symbol
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
_________________________________
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
100,000,000 common shares and 59,847 Class C common shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ý
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934. Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer” and “emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
Emerging growth company ☐
Non-accelerated filer ý
Accelerated filer ¨
extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards
Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ý
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý
International Financial Reporting Standards as issued by the International Accounting Standards Board ¨
Other ¨
TABLE OF CONTENTS
Page
PART I
Item 1.
Identity of Directors, Senior Management and Advisers
Item 2.
Offer Statistics and Expected Timetable
Item 3.
Key Information
Item 4.
Information on the Company
Item 4A. Unresolved Staff Comments
Item 5.
Operating and Financial Review and Prospects
Item 6.
Item 7.
Item 8.
Item 9.
Directors, Senior Management and Employees
Major Shareholders and Related Party Transactions
Financial Information
The Offer and Listing
Item 10.
Item 11.
Additional Information
Quantitative and Qualitative Disclosures About Market Risk
Item 12.
Description of Securities Other than Equity Securities
PART II
Defaults, Dividend Arrearages and Delinquencies
Item 13.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 15.
Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions from the Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 16F. Change in Registrant’s Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item 16J.
Item 16K. Cybersecurity
Insider Trading Policies
PART III
Item 17.
Item 18.
Item 19.
Financial Statements
Financial Statements
Exhibits
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
We expose ourselves to significant risks that can impact our financial strength as measured by United States generally
accepted accounting principles (U.S. GAAP) or regulatory and rating agencies' capital requirements. Risk sources for which
management has established key risk limits approved by the Board of Directors (the “Board”), and the related approved limits and
actual limits deployed, at December 31, 2023 and 2022 are presented in the Risk Management section below in Item 4.B.
The following risks should be read in conjunction with the safe harbor statement and the Operating and Financial Review and
Prospects section in Item 5, and the Notes to the Consolidated Financial Statements in Item 18 of this report. These risks may affect
our financial condition and operating results and, individually or in the aggregate, could cause our actual results to differ materially
from past and projected future results. Some of these risks and uncertainties could affect particular business operations or segments,
while others could affect all of our businesses. Although risks are discussed separately, many are interrelated.
Except as may be required by law, we undertake no obligation to publicly update forward-looking statements, whether as a
result of new information, future events, or otherwise. It is impossible to predict or identify all risk factors and, consequently, the
following factors should not be construed as a complete discussion of risks and uncertainties that may affect us.
As used in these Risk Factors, the terms “the Company”, “PartnerRe”, “we”, “our” or “us” may, depending upon the context,
refer solely to the Company, to one or more of the Company’s consolidated subsidiaries or to all of them taken as a whole. The term
Covéa Coopérations relates to the Company’s direct parent, Covéa Coopérations S.A. (see information on the Company in Item 4 of
this report).
Risks Related to Our Company
The catastrophe business that we underwrite will result in volatility of our earnings and could impair our financial condition.
Catastrophic losses result from events such as windstorms, hurricanes, typhoons, tsunamis, earthquakes, floods, hailstorms,
tornadoes, severe winter weather, fires, drought, explosions, and other natural and man-made disasters, the incidence and severity of
which are inherently unpredictable. We also have substantial exposure to unexpected, large losses resulting from future man-made
catastrophic events, such as acts of terrorism, acts of war, nuclear accidents and political instability, or from other perils. Because
catastrophe reinsurance accumulates large aggregate exposures to both man-made and natural disasters, our loss experience in this
line of business could be characterized as low frequency and high severity. Although we may attempt to exclude losses from
terrorism and certain other similar risks from some coverage we write, we continue to have exposure to such unforeseen or
unpredictable events. Irrespective of the clarity and inclusiveness of policy language, there can be no assurance that a court or
arbitration panel will not limit enforceability of policy language or otherwise issue a ruling adverse to us.
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This is likely to result in substantial volatility in our financial results and potentially significant net losses from time to time,
and may also result in a material decline of our book value or impairment of our financial condition that may limit our ability to
make dividend, interest, or principal payments on our preferred shares and debt securities and may limit the funds available to make
payments on policyholder claims.
Should we incur a very large catastrophic loss or a series of catastrophic losses, our ability to write future business may be
adversely impacted if we are unable to replenish our capital.
Changing climate conditions, and the trend towards increasingly frequent and severe catastrophic events, may adversely affect
our financial condition and results.
In recent years, changing weather patterns and climatic conditions, such as global warming, appear to have contributed to the
unpredictability, frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures.
There is a scientific consensus that global warming and other climate changes are increasing the frequency and severity of
catastrophic weather events, such as hurricanes, tornadoes, windstorms, floods and other natural disasters. Such changes make it
more difficult for us to predict and model catastrophic events, reducing our ability to accurately price our exposure to such events
and mitigate our risks. Any increase in the frequency or severity of natural disasters may adversely affect our financial condition and
results.
Epidemics and pandemics or other disasters could materially and adversely affect our business, financial condition and results
of operations.
Epidemics and pandemics, including the COVID-19 pandemic and new or emerging variants, or other disasters, have and
could adversely affect our business, financial condition and results of operations because they could exacerbate mortality and
morbidity risk. The likelihood, timing, and severity of these events cannot be predicted. A pandemic or other disaster could have a
major impact on the global economy or the economies of particular countries or regions, including travel, trade, tourism, the health
system, food supply, consumption, overall economic output, as well as on the financial and insurance and reinsurance markets. In
addition, a pandemic or other disaster that affected our employees or the employees of companies with which we do business could
disrupt our business operations. These events could cause a material adverse effect on our results of operations in any period and,
depending on their severity, could also materially and adversely affect our financial condition.
The emergence and spread of new variants of COVID-19 or of other epidemics and pandemics or disasters could result in the
reimposition of various measures, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns,
which would have a substantial negative impact on business around the world and on global, regional and national economies.
Given the dynamic nature of epidemics and pandemics or other disasters, it is difficult to predict the impact that any such
future epidemics or pandemics will ultimately have on the global economy, markets or our business. These circumstances have
introduced, and similar circumstances caused by future epidemics and pandemics or disasters could introduce, significant risks and
uncertainty with respect to our business and heighten the potential adverse effects on our business, reputation, results of operation,
financial condition or liquidity, including without limitation the following:
•
In the event of an economic downturn resulting from epidemics and pandemics or disasters, such downturn has the
potential to cause elevated numbers of claims and increases in claims sizes for the insurance and reinsurance industry as a
whole. Among other things, we incurred losses attributable to business interruption and event cancellation related
coverages and life and health business as a direct result of epidemics, pandemics or disasters and the related effects of the
economic downturn;
• Ultimate losses from epidemic, pandemic or disaster related claims could be greater than our reserves for those losses;
• Reduced access to capital, if needed, and an increased cost of external capital could be elevated;
•
•
Increased claims, losses, litigation and related expenses, including litigation challenging whether insurers (and, by
consequence, reinsurers) should be responsible for business interruption losses from insured's policies, notwithstanding the
requirement of "physical loss or damage" and other policy limitations and exclusions;
Increased losses due to legislative, regulatory and judicial actions in response to epidemics, pandemics or disasters, such as
proposals to retroactively mandate business interruption coverage despite policy language "pooling" mechanisms to apply
certain assessments more broadly to property and casualty insureds doing business in that state to cover business
interruption claims;
• Certain of our policyholders, intermediaries and reinsurance and retrocession counterparties may not pay premiums or
other amounts owed to us due to insolvency or other distressed financial conditions due to the impact of an epidemic,
pandemic or disaster. If refunds or non-payments as a result of such epidemics, pandemic or disaster become widespread,
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whether as a result of insolvency, lack of liquidity, adverse economic conditions, operational failure or otherwise, it could
have a material adverse impact on our revenues and results of operations; and
•
Increased risk that weaknesses or failures in our business continuity plans could lead to disruption of operations, liability to
clients, exposure to disciplinary action or harm to our reputation.
If actual losses exceed our estimated loss reserves, our net income and capital position will be reduced.
Our success depends upon our ability to accurately assess the risks associated with the businesses that we reinsure. We
establish loss reserves to cover our estimated liability for the payment of all losses and loss expenses incurred with respect to
premiums earned on the reinsurance contracts that we write. Loss reserves are estimates involving actuarial and statistical
projections at a given time to reflect our expectation of the costs of the ultimate settlement and administration of claims. Although
we use actuarial models as well as historical reinsurance and insurance industry loss statistics, we also rely heavily on data provided
by counterparties and on management’s experience and judgment to assist in the establishment of appropriate claims and claim
expense reserves. Because of the many assumptions and estimates involved in establishing reserves, the reserving process is
inherently uncertain. Our estimates and judgments are based on numerous factors, and may be revised as additional experience and
other data become available and are reviewed as new or improved methodologies are developed, as loss trends and claims inflation
impact future payments, or as current laws or interpretations thereof change.
Estimates of losses are based on, among other things, a review of potentially exposed contracts, information reported by and
discussions with counterparties and our estimate of losses related to those contracts and are subject to change as more information is
reported and becomes available. Losses for casualty and liability lines often take a long time to be reported and frequently can be
impacted by lengthy, unpredictable litigation and by the inflation of loss costs over time. Changes in the level of inflation can also
result in an increased level of uncertainty in our estimation of loss reserves, particularly for long-tail lines of business. As a
consequence, actual losses and loss expenses paid may deviate substantially from the reserve estimates reflected in our financial
statements.
Through various acquisitions, we assumed certain asbestos and environmental exposures. Our non-life reserves include an
estimate of our ultimate liability for asbestos and environmental claims for which we cannot estimate the ultimate value using
traditional reserving techniques, and for which there are significant uncertainties in estimating the amount of our potential losses.
These liabilities are especially hard to estimate for many reasons, including the long delays between exposure and manifestation of
any bodily injury or property damage, difficulty in identifying the source of the asbestos or environmental contamination, long
reporting delays and difficulty in properly allocating liability for the asbestos or environmental damage. As of December 31, 2023,
the Company’s net non-life reserves included $40 million related to asbestos and environmental claims.
It is difficult to predict the timing of loss events or estimate the amount of loss any given occurrence will generate. Under U.S.
GAAP, we are not permitted to establish reserves for potential losses associated with catastrophic events until an event that may
give rise to such losses occurs. If such an event were to occur, our reported income would decrease in the affected period. In
particular, unforeseen large losses could reduce our results of operations or impair our financial condition.
If ultimate losses and loss expenses exceed the reserves currently established, we will be required to increase loss reserves in
the period in which we identify the deficiency to cover any such claims. As a result, even when losses are identified and reserves are
established for any line of business, ultimate losses and loss expenses may deviate, perhaps substantially, from estimates reflected in
loss reserves in our financial statements. Variations between our loss reserve estimates and actual emergence of losses could be
material and could have a material adverse effect on our results of operations and financial condition.
See Notes 9 and 10 to the Consolidated Financial Statements in Item 18 of this report for further details.
Given the inherent uncertainty of models, the usefulness of our proprietary and third-party models as a tool to evaluate risk is
subject to a high degree of uncertainty that could result in actual losses that are materially different than our estimates,
including probable maximum losses (PMLs), significantly impacting our financial results and condition.
We use our own proprietary catastrophe models and third-party vendor analytic and modeling capabilities to provide risk
assessment for our reinsurance portfolio. We use these models to help us control risk accumulation and inform management and
other stakeholders of capital requirements and to improve the risk/return profile or minimize the amount of capital required to cover
the risks in each reinsurance contract in our overall portfolio of reinsurance contracts. However, given the inherent uncertainty of
modeling techniques and the application of such techniques, these models and databases may not accurately address a variety of
matters that might impact certain of our coverages.
For example, catastrophe models that simulate loss estimates based on a set of assumptions are important tools used by us to
estimate our PMLs. These assumptions address a number of factors that impact loss potential including, but not limited to, the
characteristics of the natural catastrophe event; demand surge resulting from an event; the types, function, location and
characteristics of exposed risks; susceptibility of exposed risks to damage from an event with specific characteristics; and the
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financial and contractual provisions of the reinsurance contracts that cover losses arising from an event. We run many model
simulations in order to understand the impact of these assumptions on its catastrophe loss potential. Furthermore, there are risks
associated with catastrophic events, which are either poorly represented or not represented at all by catastrophe models. Each
modeling assumption or un-modeled risk introduces uncertainty into PML estimates that management must consider. These
uncertainties can include, but are not limited to, the following:
• The models do not address all the possible hazard characteristics of a catastrophe peril (e.g., the precise path and wind
speed of a hurricane);
• The models may not accurately reflect the true frequency of events;
• The models may not accurately reflect a risk’s vulnerability or susceptibility to damage for a given event characteristic;
• The models may not accurately represent loss potential to reinsurance contract coverage limits, terms and conditions; and
• The models may not accurately reflect the impact on the economy of the area affected or the financial, judicial, political, or
regulatory impact on insurance claim payments during or following a catastrophe event.
Our PMLs are selected after assessment of multiple third-party vendor model outputs, internally constructed independent
models, including our CatFocus® suite of models, and other qualitative and quantitative assessments by management, including
assessments of exposure not typically modeled in vendor or internal models. Our methodology for estimating PMLs may differ from
methods used by other companies and external parties given the various assumptions and judgments required to estimate a PML.
As a result of these factors and contingencies, our reliance on assumptions and data used to evaluate our entire reinsurance
portfolio, and specifically to estimate a PML, is subject to a high degree of uncertainty that could result in actual losses that are
materially different from our PML estimates and, as a result, our financial results and financial condition may be significantly and
adversely impacted. See further information on PMLs in the Risk Management section in Item 4.B below for further details.
Our Life products expose us to volatility in net income arising from changes in the value of the Life and Health reserves and
market risk benefit assets and liabilities that are directly affected by market risk and other factors and are based upon various
assumptions.
The liability for future policy benefits (LFPB) is included in Life and health reserves on the Consolidated Balance Sheets with
changes in these reserves included in Losses and loss expenses, except the portion related to discount rate assumption updates which
is included in Other comprehensive income, both within the Consolidated Statements of Operations and Comprehensive Income or
Loss. The pricing and establishment of reserves for our Life and Health segment related to future policy benefits and the valuation
of life insurance and annuity products are based upon various assumptions, including but not limited to market changes, mortality
rates, morbidity rates and policyholder behavior. The process of establishing the LFPB relies on our ability to accurately estimate
insured events that have not yet occurred but that are expected to occur in future periods, using current assumptions that include
discount rate, mortality, morbidity and persistency. These current assumptions are based on judgments which consider actual
historical experience, industry data and other factors. Significant deviations in actual experience from assumptions used for pricing
and for establishing LFPB could have an adverse effect on the profitability of our products, our business and our financial results
and condition.
Under reinsurance programs covering variable annuity guarantees, we assume the risk of guaranteed minimum death benefits
(GMDB). Reserves for GMDB are included in the Market risk benefit (MRB) asset or liability on the Consolidated Balance Sheets.
Changes in the MRB asset or liability balances are included in Market risk benefit gains or losses, except the portion of change in
reserve due to instrument-specific credit risk which is included in Other comprehensive income, both within the Consolidated
Statements of Operations and Comprehensive Income or Loss. Reported assets and liabilities for market risk benefits are measured
at fair value using option-based valuation models. Such valuations require considerable judgment and are subject to significant
uncertainty. The valuation of these products is subject to fluctuations arising from, among other factors, changes in interest rates,
changes in equity markets, changes in equity index volatility, changes in instrument-specific credit risk and assumptions regarding
future policyholder behavior. Adverse changes in market factors and policyholder behavior will have an impact on net income.
In addition, the reserves that we have established may be inadequate. If ultimate losses and loss expenses exceed the reserves
currently established, we will be required to increase loss reserves in the period in which we identify the deficiency to cover any
such claims. As a result, even when losses are identified and reserves are established for any line of business, ultimate losses and
loss expenses may deviate, perhaps substantially, from estimates reflected in loss reserves in our financial statements. Variations
between our loss reserve estimates and actual emergence of losses could be material and could have a material adverse effect on our
results of operations and financial condition. These risks may increase as we seek to expand our Life and Health business.
See Liquidity and Capital Resources—Reserves in Item 5 and Notes 2(b), 2(c), 10 and 11 to the Consolidated Financial
Statements in Item 18 of this report for further details. Refer also to Item 11 below in this report for quantitative and qualitative
disclosures about market risk.
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We rely on a few reinsurance brokers for a large percentage of our business; loss of business provided by these brokers would
reduce our premium volume and net income.
We produce our business both through brokers and through direct relationships with insurance company clients. For the year
ended December 31, 2023, more than 70% of our gross premiums written were produced through brokers. The Company has two
brokers that each individually accounted for 26% and 25% of the Company's total gross premiums written for 2023 (see Note 22 to
the Consolidated Financial Statements in Item 18 of this report for further details). Because broker-produced business is
concentrated with a small number of brokers, we are exposed to concentration risk. A significant reduction in the business produced
by these brokers could potentially reduce our premium volume and net income.
We are exposed to credit risk relating to our reinsurance brokers and cedants.
In accordance with industry practice, we may pay amounts owed under our reinsurance policies to brokers, and they in turn
pay these amounts to the ceding insurer. In some jurisdictions, if the broker fails to make such an onward payment, we might remain
liable to the ceding insurer for the deficiency. Conversely the ceding insurer may pay premiums to the broker for onward payment to
us in respect of reinsurance policies issued by us. In certain jurisdictions, these premiums are considered to have been paid to us at
the time that payment is made to the broker, and the ceding insurer will no longer be liable to us for those amounts, whether or not
we have actually received the premiums. We may not be able to collect all premiums receivable due from any particular broker at
any given time. We also assume credit risk by writing business on a funds-withheld basis. At December 31, 2023, Funds held by
reinsured companies recorded in the Consolidated Balance Sheet was $450 million. Under such arrangements, the cedant retains the
premium they would otherwise pay to us to cover future loss payments.
If we are downgraded by rating agencies, our standing with brokers and customers could be negatively impacted and may
adversely impact our results of operations.
Rating agencies assess and rate the claims-paying ability and financial strength of insurers and reinsurers, such as our principal
operating subsidiaries. These ratings are based upon criteria established by the rating agencies and have become an important factor
in establishing our competitive position in the market. Insureds, insurers, ceding insurers and intermediaries use these ratings as one
measure by which to assess the financial strength and quality of insurers and reinsurers. However, these ratings are not an evaluation
directed to investors of our preferred shares or debt securities, and are not a recommendation to buy, sell or hold our preferred
shares or debt securities.
Our financial strength ratings are subject to periodic review as rating agencies evaluate us to confirm that we continue to meet
their criteria for ratings assigned to us by them. Such ratings may be revised downward or revoked at the sole discretion of such
ratings agencies in response to a variety of factors, including capital adequacy, management strategy, operating earnings and risk
profile. In addition, from time to time, one or more rating agencies may effect changes in their capital models and rating
methodologies that could have a detrimental impact on our ratings. It is also possible that rating agencies may in the future heighten
the level of scrutiny they apply when analyzing companies in our industry, may increase the frequency and scope of their reviews,
may request additional information from the companies that they rate, and may adjust upward the capital and other requirements
employed in their models for maintenance of certain rating levels. There can be no assurance that our ratings will remain at their
current levels.
If our ratings were downgraded, our competitive position in the reinsurance industry may suffer, and it could result in a
reduction in demand for our products. In addition, certain business that we write contains terms that give the ceding company or
derivative counterparty the right to terminate cover and/or require collateral if our ratings are downgraded.
See Liquidity and Capital Resources—Shareholders’ Equity and Capital Resources Management in Item 5 of this report for
our current financial strength ratings. The status of any further changes to ratings or outlooks will depend on various factors.
The availability of retrocessional reinsurance to limit our exposure to risks may be limited and counterparty credit and other
risks associated with our retrocession arrangements may result in losses which could adversely affect our financial condition
and results of operations.
For the purposes of managing risk, we use retrocessional reinsurance. The availability and cost of retrocessional protection is
subject to market conditions, which are beyond our control. As a result of such market conditions and other factors, we may not be
able to successfully mitigate risk through retrocessional and other arrangements.
We are subject to credit risk with respect to our retrocessions because the ceding of risk to retrocessionaires does not relieve us
of our liability to the clients or companies we reinsure. Although we have not experienced any material credit losses to date, an
inability of our retrocessionaires to meet their obligations to us could have a material adverse effect on our financial condition and
results of operations. Our losses for a given event or occurrence may increase if our retrocessionaires dispute or fail to meet their
obligations to us or the retrocessional protections purchased by us are exhausted or are otherwise unavailable for any reason.
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Our failure to establish adequate retrocessional arrangements or the failure of our existing retrocessional or capital market
arrangements to protect us from overly concentrated risk exposure could adversely affect our financial condition and results of
operations.
We are exposed to risks in connection with our management of capital on behalf of investors in entities we manage.
Certain of our operating subsidiaries and affiliates owe contractual and other legal obligations (including reporting,
governance and allocation obligations) to third-party investors and are subject to laws and regulations relating to the management of
third-party capital. Complying with these obligations, laws and regulations requires significant management time and attention.
Faulty judgments, simple errors or mistakes, or the failure of our personnel to adhere to established policies and procedures could
result in our failure to comply with applicable obligations, laws or regulations, which could result in significant liabilities, penalties
or other losses to us and seriously harm our business and results of operations. In addition, our third-party capital providers may,
subject to restrictions, redeem their interests in entities we manage or we may be unable to attract and raise additional third-party
capital for our existing or potential new managed entities. The loss, or alteration in a negative manner, of any of this capital support
could materially impact our financial condition and results of operations. Moreover, we can provide no assurance that we will be
able to attract and raise additional third-party capital for our existing side cars and managed funds or for potential new side cars and
managed funds and therefore we may forego existing and/or potentially attractive fee income and other income generating
opportunities.
We may require additional capital in the future, which may not be available or may only be available on unfavorable terms.
Our future capital requirements depend on many factors, including rating agencies and regulatory requirements, our ability to
write new business successfully, the frequency and severity of catastrophic events, and our ability to establish premium rates and
reserves at levels sufficient to cover losses. We may need to raise additional funds through financings or curtail our growth and/or
reduce our assets. Any equity or debt financing, if available at all, may be on terms that are not favorable to us. Financings could
result in the issuance of securities that have rights, preferences and privileges that are senior to those of our other securities.
Disruption in the increasingly volatile financial markets may limit our ability to access capital required to operate our business and
we may be forced to delay raising capital or bear a higher cost of capital, which could decrease our profitability and significantly
reduce our financial flexibility. Large amounts of industry-wide catastrophe losses can make access to certain sources of capital
more challenging, potentially making it more difficult and more expensive for us to raise additional financing if necessary. In
addition, if we experience a credit rating downgrade, withdrawal or negative watch/outlook in the future, we could incur higher
borrowing costs and may have more limited means to access capital. If we cannot obtain adequate capital on favorable terms or at
all, our business, operating results and financial condition could be adversely affected. In such a severe event, we may be reliant on
our parent company, Covéa Coopérations, to provide a further capital injection or contribution to us. However, there can be no
guarantee that Covéa Coopérations would provide any additional capital.
Our investments are subject to interest rate, credit, equity and real estate related risks, which may adversely affect our net income
and may adversely affect the adequacy of our capital.
We invest the net premiums we receive unless, or until such time as, we pay out losses and/or until they are made available for
distribution to common and preferred shareholders, to pay interest on or redemption of debt and preferred shares, or otherwise used
for general corporate purposes. Investment results comprise a substantial portion of our income. For the year ended December 31,
2023, we had net investment income of $646 million, which represented approximately 7% of total revenues. In addition, we
recorded net realized and unrealized gains on investments of $517 million during 2023, which is included in the net income for the
year. We are accordingly exposed to significant financial and capital market risks, including changes in interest rates, credit spreads,
equity and real estate prices, foreign exchange rates, market volatility, the performance of the economy in general and other factors
outside our control.
Interest rates are highly sensitive to many factors, including fiscal and monetary policies of major economies, inflation,
economic and political conditions and other factors outside our control. Changes in interest rates can negatively affect net
investment income in that, in a declining interest rate environment, investments in fixed maturities and short-term investments
(fixed maturity portfolio) would earn interest income at lower rates. In a declining interest rate environment, the market value of our
fixed income portfolio would increase; however, in a rising interest rate environment, the market value of our fixed income portfolio
will decline. Depending on our liquidity needs and investment strategy, we may liquidate investments prior to maturity at a loss in
order to cover liabilities as they become due or to invest in other investment opportunities that have better expected longer term
profitability.
Our fixed maturity portfolio is primarily invested in high quality, investment grade securities. However, we invest a portion of
the portfolio in securities that are below investment grade. We also invest a portion of our portfolio in other investments such as
fixed income type funds, notes receivable, loans receivable, private placement bond investments, derivatives and other specialty
asset classes. These securities generally pay a higher rate of interest or return and may have a higher degree of credit or default risk.
These securities may also be less liquid in times of economic weakness or market disruptions.
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We also invest a portion of our portfolio in preferred and common stocks or equity-like securities. The value of these assets
fluctuate with equity market movements, which could be volatile. In times of economic weakness, the market value and liquidity of
these assets may decline, and may impact net income and capital. We use the term equity-like investments to describe our
investments that have market risk characteristics similar to equities and are not investment grade fixed maturity securities. This
category includes high-yield and convertible fixed maturity investments and private placement equity investments. Fluctuations in
the fair value of our equity-like investments may reduce our income in any period or year and cause a reduction in our capital. There
can be no assurance that our equity-like investments will maintain their current valuations.
In addition, we invest directly and indirectly in real estate assets, which are subject to overall market conditions. We have
investments in real estate in various locations (including the United Kingdom, New York, France and Brazil) through investments in
limited partnerships, trust deeds, as well as through directly-owned investments in real estate and an investment in a privately held
real estate investment and development group, Almacantar Group Limited (Almacantar) in London. These real estate assets are
exposed to various risks, including the supply and demand of leasable commercial and residential space and fluctuations in real
estate prices globally. See also Item 4.D and Note 5 to the Consolidated Financial Statements in Item 18 below in this report for
further details.
Refer to Item 11 below in this report for quantitative and qualitative disclosures about market risk.
Foreign currency fluctuations may reduce our net income and our capital levels.
Through our multinational reinsurance operations, we conduct business in or have exposures to a variety of foreign (non-U.S.)
currencies, the principal exposures being the Euro, British pound, Canadian dollar, Japanese yen and Swiss Franc. Accordingly, we
are subject to market risks associated with devaluations and fluctuations in currency exchange rates. Our assets and liabilities
denominated in foreign currencies are therefore exposed to changes in currency exchange rates, which may be material. Our
reporting currency is the U.S. dollar, and exchange rate fluctuations relative to the U.S. dollar may materially impact our financial
results and condition. We employ various strategies, including the use of foreign exchange forward contracts and other derivative
financial instruments, to manage our exposure to foreign currency exchange risk. To the extent that these exposures are not fully
offset or hedged, or the hedges are ineffective at mitigating adverse effects, our financial results and condition may be negatively
impacted by fluctuations in foreign currency exchange rates.
We may suffer losses due to defaults by various counterparties, including issuers of investment securities, reinsurance contracts
and derivatives.
Issuers or borrowers whose securities we hold, reinsurers, clearing agents, clearing houses, joint venture partners, derivative
instrument counterparties and other financial intermediaries may default on their obligations to us due to bankruptcy, insolvency,
lack of liquidity, adverse economic conditions, operational failure, fraud or other reasons. Even if we are entitled to collateral when
a counterparty defaults, such collateral may be illiquid or proceeds from such collateral when liquidated may not be sufficient to
recover the full amount of the obligation. All or any of these types of default could have a material adverse effect on our results of
operations, financial condition and liquidity.
Our debt, credit and International Swap Dealers Association (ISDA) agreements may limit our financial and operational
flexibility, which may affect our ability to conduct our business.
We have incurred indebtedness, and may incur additional indebtedness in the future. At December 31, 2023, our total debt
liabilities related to senior notes and junior subordinated notes were approximately $1.88 billion.
Additionally, we have entered into letter of credit facilities and ISDA agreements with various institutions.
The agreements relating to our debt, letter of credit facilities and ISDA agreements contain various covenants that may limit
our ability, among other things, to borrow money, make particular types of investments or other restricted payments, sell assets,
merge or consolidate. Some of these agreements also require us to maintain specified ratings. If we fail to comply with these
covenants, the lenders or counterparties under these agreements could declare a default and demand immediate repayment of all
amounts owed to them. See Liquidity and Capital Resources—Shareholders’ Equity and Capital Resources Management—Credit
Agreements in Item 5 of this report.
If we are in default under the terms of these agreements, we may also be restricted in our ability to declare or pay any
dividends, redeem, purchase or acquire any shares or make a liquidation payment.
If any one of the financial institutions that we use in our operations, including those that participate in our credit facilities, fails
or is otherwise unable to meet their commitments, we could incur substantial losses and reduced liquidity.
We maintain cash balances significantly in excess of the U.S. Federal Deposit Insurance Corporation insurance limits at
various depository institutions. We also have funding commitments from a number of banks and financial institutions that
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participate in our credit facilities. See Liquidity and Capital Resources—Shareholders’ Equity and Capital Resources Management
—Credit Agreements in Item 5 and Note 20 to the Consolidated Financial Statements in Item 18 of this report for details. Access to
funds under these existing credit facilities is dependent on the ability of the banks that are parties to the facilities to meet their
funding requirements. Those banks may not be able to meet their funding requirements if they experience shortages of capital and
liquidity or if they experience excessive volumes of borrowing requests within a short period of time, and we might be forced to
replace credit sources in a difficult market. If we cannot obtain adequate financing or sources of credit on favorable terms, or at all,
our business, operating results and financial condition could be adversely impacted.
Strategic investments and merger and acquisition (M&A) activities could disrupt our ongoing business and present risks not
originally contemplated.
We have made, and in the future may make, strategic investments or acquisitions. Such endeavors involve significant risks and
uncertainties, including those related to distraction of management from current operations, greater than expected liabilities and
expenses, inadequate return of capital and unidentified issues not discovered in due diligence. In addition, the integration of any
acquired companies may place significant demands on our management, systems, internal controls and financial and physical
resources. These new ventures or M&A activities are inherently risky and may not achieve the expected benefits.
Operational risks, including human or systems failures, are inherent in our business.
Operational risks and losses can result from many sources including fraud, errors by employees, failure to document
transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements or information
technology failures.
Our modeling, underwriting and information technology and application systems are critical to our business and reputation.
Moreover, our technology and applications are an important part of our underwriting process and our ability to compete
successfully. We have also licensed certain systems and data from third parties. We cannot be certain that we will have access to
these, or comparable service providers, or that our technology or applications will continue to operate as intended. In addition, we
cannot be certain that we would be able to replace these service providers or consultants without slowing our underwriting response
time. A major defect or failure in our internal controls or information technology and application systems could result in
management distraction, harm to our reputation, a loss or delay of revenues or increased expense.
Cybersecurity events could disrupt our business operations, result in the loss of critical and confidential information, and
adversely impact our reputation and results of operations.
We are dependent upon the effective functioning and availability of our information technology and application systems
platforms. These platforms include, but are not limited to, our proprietary software programs such as catastrophe models as well as
those licensed from third-party vendors including financial, analytic and modeling systems. We rely on the security, confidentiality,
integrity and availability of such platforms for the secure processing, storage and transmission of sensitive business information and
of confidential information, including personal information. Although we have implemented and maintained what we believe to be
reasonable organizational and technical security controls, and have taken protective measures to reduce the risk of cybersecurity
incidents, we cannot anticipate or prevent all cybersecurity incidents. A cybersecurity event — such as unauthorized access to our
systems or data, computer viruses, deceptive communications (phishing), data loss, malware, ransomware or other malicious code or
cyber-attack, destructive attack, system failures and disruptions and other events that could have security consequences — could
materially impact our ability to adequately price products and services, establish reserves, provide efficient and secure services to
our clients, brokers, vendors and regulators, value our investments and timely and accurately report our financial results. Moreover,
cybersecurity incidents, could expose us to a risk of loss or misuse of our information, regulatory scrutiny and enforcement action,
litigation, reputational damage, violations of applicable privacy and other laws, fines, penalties or losses that are either not insured
against or not fully covered by the insurance we maintain. We may be required to expend significant additional resources to modify
our protective measures or to investigate and remediate vulnerabilities.
We observe frequent attempts to breach our cybersecurity measures. We cannot assure that our systems and processes will be
able to identify and prevent such attempts in the future.
The loss of key management and other qualified personnel could adversely affect us.
Our success has depended, and will continue to depend, partly upon our ability to attract and retain management and other
qualified personnel. If any of these key management or other employees ceased to continue in their present role, we could be
adversely affected.
Our ability to execute our business strategy is dependent on our ability to attract and retain a staff of qualified executive
officers, underwriters, actuaries and other key personnel. The skills, experience and knowledge of the reinsurance industry of our
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management team constitute important competitive strengths. If some or all of these key personnel leave their positions, and even if
we were able to find persons with suitable skills to replace them, our operations could be adversely affected.
We may be adversely impacted by inflation.
The global economy has experienced higher levels of inflation in recent periods, which has been exacerbated by deficit
spending by governments in our major markets and monetary stimulus provided by central banks. We monitor the risk that the
principal markets in which we operate could continue to experience increased inflationary conditions, which would, among other
things, cause policyholder loss costs to increase, and negatively impact the performance of our investment portfolio. Inflation
related to medical costs, construction costs and tort issues in particular have impacted and continue to impact the property and
casualty industry, and broader market inflation has increased and may continue to increase overall loss costs. The impact of inflation
on loss costs could be more pronounced for those lines of business that are considered to be long-tail in nature, as they require a
relatively long period of time to finalize and settle claims. Changes in the level of inflation also result in an increased level of
uncertainty in our estimation of loss reserves, particularly for long-tail lines of business. The onset, duration and severity of an
inflationary period cannot be estimated with precision.
The current and continued threat of increased global conflict, terrorism and military actions, including the ongoing Russia/
Ukraine war, may adversely affect the value of our investment portfolio and results of operations.
Our financial condition and results of operations, including the performance of our investment portfolio, the value of our real
estate investments, and our reinsurance loss ratios, could be negatively impacted due to current and future potential increased global
conflict, terrorism and military actions, heightened security measures and sanctions or other restrictive actions resulting from such
events, and perceived risks associated with such developments. Such threats may cause volatility in global markets and financial
systems generally, which could harm our business, assets and results of operations. Such risks, including those relating to the current
war between Russia and Ukraine, may adversely affect our business and financial performance, including impairing assets in our
investment portfolio (which, as of December 31, 2023, include immaterial exposure to Russia-related investments and Ukrainian
real estate) and increasing our reinsurance claims exposure.
Our profitability is affected by the cyclical nature of the reinsurance industry.
Risks Related to Our Industry
Historically, the reinsurance industry has experienced significant fluctuations in operating results due to competition, levels of
available capacity, trends in cash flows and losses, general economic conditions and other factors, particularly in the non-life lines
of business. Demand for reinsurance is influenced significantly by underwriting results of primary insurers, including catastrophe
losses, and prevailing general economic conditions. The supply of reinsurance is related directly to prevailing prices and levels of
capacity that, in turn, may fluctuate in response to changes in rates of return on investments being realized in the reinsurance
industry. In addition, the cycle of our industry may fluctuate as a result of changes in the economic, legal, political and social
landscape. Since cyclicality is due in large part to the collective actions of insurers, reinsurers and general economic conditions and
the occurrence of unpredictable events, we cannot predict the timing or duration of changes in the market cycle. If any of these
factors were to result in a decline in the demand for reinsurance or an overall increase in reinsurance capacity, our profitability could
be impacted. In the recent past, we experienced a prolonged period of a generally softening market cycle, with increased
competition, surplus underwriting capacity, deteriorating rates and less favorable terms and conditions, all having an impact on our
ability to write business. While the current reinsurance market has shifted toward a hard market phase and we expect this to persist,
we have seen an increase in competition as supply of traditional reinsurance capital and investor capital has increased. As a result,
we may return to a soft market in the future.
Although we are currently experiencing improving market conditions with increased or constant pricing in most non-life
classes, as a result of the persisting competition and excess capacity in the industry, it is not possible to forecast if improving pricing
conditions will continue.
Competition, pricing pressure and any other negative factors noted above may adversely affect our profitability and results of
operations in future periods, and the impact may be material.
We operate in a highly competitive environment.
The reinsurance industry is highly competitive and we compete with a number of worldwide reinsurance companies,
including, Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft (Munich Re), Swiss Re Ltd. (Swiss Re), Hannover Rück
SE (Hannover Re), SCOR SE, Transatlantic Reinsurance Company Inc. (Transatlantic), General Reinsurance Corporation (GenRe),
Reinsurance Group of America, Incorporated (RGA), Everest Re Group, Ltd. (Everest Re) and RenaissanceRe Holdings Ltd.
(RenRe).
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The lack of strong barriers to entry into the reinsurance business means that we may also compete with new companies that
may be formed to enter the reinsurance market. In addition, we may experience increased competition as a result of the
consolidation in the insurance and reinsurance industry. These consolidated entities may try to use their enhanced market power and
relationships to negotiate price reductions for our products and services and/or obtain a larger market share through increased line
sizes. Consolidated companies may also purchase less reinsurance product and services, due to increased levels of capital.
Competition in the types of reinsurance that we underwrite is based on many factors, including the perceived and relative
financial strength, pricing and other terms and conditions, services provided, ratings assigned by independent rating agencies, speed
of claims payment, geographic scope of business, client and broker relationships, reputation and experience in the lines of business
to be written. If competitive pressures reduce our prices, we may expect to write less business. In addition, competition for
customers would become more intense and we could incur additional expenses relating to customer acquisition and retention,
further reducing our operating margins.
Further, insurance-linked securities, derivatives and other non-traditional risk transfer mechanisms and alternative vehicles are
being developed and offered, which could impact the demand for traditional insurance or reinsurance. A number of new, proposed
or potential industry or legislative developments could further increase competition in our industry. New competition from these
developments could cause the demand for reinsurance and/or prices to fall or the costs related to client acquisition and retention to
increase, either of which could have a material adverse effect on our growth and profitability.
All of the above factors may adversely affect our profitability and results of operations in future periods, the impact of which
may be material, and may adversely affect our ability to successfully execute our strategy as a global diversified reinsurance
company.
Political, regulatory, governmental and industry initiatives could adversely affect our business.
Legal and Regulatory Risks
Our reinsurance operations are subject to extensive laws and regulations that are administered and enforced by a number of
different governmental and non-governmental self-regulatory authorities and associations in each of their respective jurisdictions
and internationally. Our businesses in each jurisdiction are subject to varying degrees of regulation and supervision. The laws and
regulations of the jurisdictions in which our subsidiaries and parent are domiciled require, among other things, maintenance of
minimum levels of statutory capital, surplus, and liquidity; compliance with various solvency standards; and periodic examinations
of financial condition. In some jurisdictions, laws and regulations also restrict payments of dividends and reductions of capital.
Applicable statutes, regulations, and policies may also restrict the ability of our subsidiaries and/or parent to write insurance and
reinsurance policies, to make certain investments, and to distribute funds.
Some of these authorities regularly consider enhanced or new regulatory requirements intended to prevent future crises or
otherwise assure the stability of institutions under their supervision. These authorities may also seek to exercise their supervisory
authority in new and more robust ways, and new regulators could become authorized to oversee parts of our business.
It is not possible to predict all future impacts of these types of changes but they could affect the way we conduct our business
and manage our capital, and may require us to satisfy increased capital requirements or to incur additional expenses, any of which,
in turn, could affect our results of operations, financial condition and liquidity. Our material subsidiaries’ regulatory environments
are described in detail in Business Overview—Regulation in Item 4.B of this report.
If our compliance with any particular regulatory regime is challenged, we may be subject to monetary or other penalties. In
addition, in order to ensure compliance with applicable regulatory requirements or as a result of any investigation, including
remediation efforts, we could be required to incur expenses and undertake additional work, which in turn may divert resources from
our business. These, and other regulations relating to each of our material subsidiaries may in effect restrict each of those
subsidiaries’ ability to write new business, to make certain investments and to distribute funds or assets to us. For further
information see Business Overview—Regulation in Item 4.B of this report.
The possibility of future government intervention has created uncertainty in the insurance and reinsurance markets.
Government regulators are generally concerned with the protection of policyholders to the exclusion of other interested parties,
including shareholders and debt holders of reinsurers. We believe it is likely there will continue to be increased regulation of, and
other forms of government participation in, our industry in the future, which could materially adversely affect our business by,
among other things:
• Providing reinsurance capacity in markets and to clients that we target or requiring our participation in industry pools and
guaranty associations;
• Further restricting our operational or capital flexibility;
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• Expanding the scope of coverage under existing policies;
• Regulating the terms of reinsurance policies;
• Adopting further or changing compliance requirements resulting in additional costs which may adversely impact our results
of operation; or
• Disproportionately benefiting the companies domiciled in one country over those domiciled in another.
Legislative and regulatory activity in healthcare may affect our profitability as a provider of accident and health reinsurance
products.
We derive revenues, in part, from the provision of accident and health reinsurance in the U.S. to institutions that participate in
the U.S. healthcare delivery infrastructure. The Patient Protection and Affordable Care Act of 2010 (the Healthcare Act) made
significant changes to the regulation of health insurance and may negatively affect our U.S. health reinsurance business including,
but not limited to, the healthcare delivery system and the healthcare cost reimbursement structure in the U.S. In addition, we may be
subject to regulations, guidance or determinations emanating from the various regulatory authorities authorized under the Healthcare
Act. It is difficult to predict the effect that the Healthcare Act, any regulatory pronouncement made thereunder or changes to the
Healthcare Act will have on our results of operations or financial condition. In addition, it is not possible to predict whether new
legislation, rules or regulatory changes (such as the proposed "Medicare for all" plans) will be adopted or enacted in the future or
what impact, if any, such legislation, rules or changes could have on our business, financial condition or results of operations.
Legal and enforcement activities relating to the insurance industry could affect our business and our industry.
The insurance industry has experienced substantial volatility as a result of litigation, investigations and regulatory activity by
various insurance, governmental and enforcement authorities concerning certain practices within the insurance industry.
These investigations have resulted in changes in the insurance and reinsurance markets and industry business practices. While
at this time, none of these changes have caused an adverse effect on our business, we are unable to predict the potential effects, if
any, that future investigations may have upon our industry. As noted above, because we frequently assume the credit risk of the
counterparties with whom we do business throughout our insurance and reinsurance operations, our results of operations could be
adversely affected if the credit quality of these counterparties is severely impacted by investigations in the reinsurance or insurance
industry or by changes to industry practices.
Emerging claim and coverage issues could adversely affect our business.
Unanticipated developments in the law, as well as changes in social and environmental conditions could potentially result in
unexpected claims for coverage under our reinsurance and other contracts. These developments and changes may adversely affect
our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. With
respect to our casualty businesses, these legal, social and environmental changes may not become apparent until sometime after their
occurrence. Our exposure to these uncertainties could be exacerbated by an increase in insurance and reinsurance contract disputes,
arbitration and litigation.
The full effects of these and other unforeseen emerging claim and coverage issues are extremely hard to predict. In some
instances, these coverage changes may not become apparent until after we have issued reinsurance contracts that are affected by
such changes. As a result, the full extent of our liability under such reinsurance contracts and, in particular, our casualty reinsurance
contracts, may not be known for many years after a contract is issued.
The reinsurance industry is also affected by political, judicial and legal developments that may create new and expanded
theories of liability, which may result in unexpected claim frequency and severity and delays or cancellations of products and
services we provide, which could adversely affect our business.
The U.K. leaving the EU ("Brexit") could adversely affect our business.
Our U.K. business could be adversely impacted by Brexit, which may have reduced the attractiveness of the U.K. market as a
commercial center. Following the imposition of trade barriers between the U.K. and the European Union (“EU”) due to the U.K.
leaving the EU single market, the level of trade between the two markets has decreased, as has the level of the U.K.’s overall trade
exports.
Brexit may also have regulatory ramifications for our U.K. business. Prior to Brexit, the U.K. and EU insurance prudential
regimes were broadly identical as both derive from the Solvency II Directive. However, the laws and regulations of the U.K. and the
EU will diverge in the near future, and we may be required to utilize additional resources to ensure compliance with the different
rules in each regime. In particular, the U.K. has announced that it intends to amend certain Solvency II-derived rules that it has
transposed into its domestic legislation and the EU is in the process of reviewing the Solvency II Directive.
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The U.K. has undertaken a review of Solvency II and of the regulatory regime applicable to U.K. authorized insurers and
reinsurers. Following this review, the U.K.’s HM Treasury proposed to the U.K. Parliament two statutory instruments that amended
various parts of the U.K.’s prudential regime, which covers a range of areas including the risk margin, matching adjustment
requirements and regulatory reporting obligations. HM Treasury’s legislative reforms relating to the risk margin took effect from
December 31, 2023, and the other areas of reform will take effect throughout 2024.
Similarly, the EU’s legislative bodies have undertaken their own review of the Solvency II. On September 22, 2021, the
European Commission published a package of proposed legislative reforms for amending the existing regulatory framework. The
European Council and European Parliament subsequently published their own positions on the proposed reforms in June 2022 and
July 2023 respectively. The legislative bodies reached a provisional agreement on the revised text of Solvency II in December 2023.
A finalized set of rules will now be prepared, which EU member states will implement into their domestic legislation. More will be
known about the full extent of these changes once the package of legislative reforms is finalized.
We cannot anticipate the effects on our results of operations or financial condition of these actual and proposed changes to the
regulatory regimes in the U.K. and the EU.
Our business is subject to applicable laws and regulations relating to sanctions, anti-bribery and anti-money laundering,
the violation of which could adversely affect our operations.
Our activities are subject to applicable economic and trade sanctions, anti-bribery and anti-money laundering laws and
regulations in the jurisdictions where we operate including the U.S. and the EU, among others. Compliance with these regulations
may impose significant costs, limit or restrict our ability to do business or engage in certain activities, or subject us to the possibility
of civil or criminal actions or proceedings. Although we have policies and controls in place designed to comply with applicable laws
and regulations, there can be no assurance that we, or an employee or agent acting on our behalf, would fully comply with
applicable laws and regulations as interpreted by the relevant authorities. The divergence of regulatory requirements between the
U.S. and the EU regarding business with certain jurisdictions, particularly Cuba, Iran and Russia, which can result in conflicting
obligations for business involving these specified jurisdictions, has increased these risks. Failure to accurately interpret, comply with
or obtain appropriate authorizations and/or exemptions under such laws or regulations could expose us to investigations, civil
penalties, criminal penalties and other sanctions, including fines, injunctions, loss of licenses or other punitive actions. In addition,
such violations could damage our business and/or our reputation. Such criminal or civil sanctions, penalties, other sanctions, or
damage to our business and/or reputation could have a material adverse effect on our financial condition and results of operations.
Our business is subject to applicable laws and regulations relating to data privacy and protection and cybersecurity, changes to,
or the violation of which, could adversely affect our operations.
Regulatory authorities around the world have implemented or are considering legislative changes or regulations concerning
data protection and cybersecurity which have required or may require us to incur additional expenses. We are subject to numerous
U.S. federal and state laws and non-U.S. regulations governing the protection of personal and confidential information of our clients
or employees, including in relation to medical records and financial information. Existing data protection and cybersecurity
regulations vary by region or country in which PartnerRe operates and cover different aspects of our business operations.
Our business is subject to the General Data Protection Regulation (Regulation (EU) 2016/679 (EU GDPR) which regulates the
collection and processing of personal data for individuals within the EU, including by foreign companies that offer services in the
EU and process EU residents’ personal data. Our business is also subject to The Data Protection Act 2018 and the GDPR as retained
in UK law by virtue of the European Union (Withdrawal) Act 2018 and as amended by the Data Protection, Privacy and Electronic
Communications (Amendments etc.) (EU Exit) Regulations 2019 (UK GDPR and together with, the EU GDPR, the 'GDPR'). The
GDPR sets out a number of requirements that must be complied with when handling personal data including: the obligation to
appoint data protection officers in certain circumstances, the principal of accountability, the obligation to notify regulators in the
event of a personal data breach, and to affected individuals if such breach is likely to result in a high risk to the individuals' rights
and freedoms, and the obligation to respond to requests from individuals to access, delete, or correct their personal data. The GDPR
also provides for potentially significant penalties in the event of violation.
The interpretation and application of data protection laws and regulations in Europe, the U.K., U.S and elsewhere are
developing and are often uncertain and in flux. It is possible that these laws or cybersecurity regulations may be interpreted and
applied in a manner that is inconsistent with our data protection or security practices. If so, in addition to the possibility of
regulatory scrutiny, enforcement action, and/or fines, this may result in an order requiring that we change our data practices, which
could have an adverse effect on our business and results of operations. Complying with these various laws, or with new law or
regulation, may cause us to incur additional costs and could require us to change our business practices.
As a group operating worldwide, we strive to comply with all applicable data protection laws and regulations. It is however
possible that we fail to comply with all applicable laws and regulations. The failure or perceived failure to comply with such
obligations may result in inquiries and other proceedings or actions against us by government entities or others, including monetary
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fees, or could cause reputational harm that may result in the loss of clients, and which could potentially have an adverse effect on
our business and results of operations.
See also Business Overview—Regulation in Item 4.B for further details on cybersecurity requirements.
Changes in current accounting practices and future pronouncements may materially impact our reported financial results.
Developments in accounting practices may require considerable additional time and cost to comply, particularly if we are
required to prepare information relating to prior periods for comparative purposes or to apply the new requirements retroactively.
The impact of changes in current accounting practices and future pronouncements may be significant. The impact may affect the
results of our operations, including among other things, the calculation of net income, and may affect our financial position,
including among other things, the calculation of unpaid losses and loss expenses, policy benefits for life and annuity contracts and
total shareholders’ equity. The changes to accounting standards could affect the way we manage and report significant areas of our
business and could impose demands on us in the areas of governance, employee training, internal controls and disclosures.
Our Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United
States (U.S. GAAP), and accordingly, we are required to adopt new or revised accounting standards issued by the Financial
Accounting Standards Board (FASB). The FASB issued Accounting Standards Update (ASU) 2018-12, Targeted Improvements to
the Accounting for Long-Duration Contracts (LDTI), which resulted in changes in how we account for long-duration contracts,
including recognition, measurement, presentation and disclosure requirements. The Company adopted this accounting guidance and
required disclosures on January 1, 2023, with a transition date of January 1, 2021. Refer to Note 3 in the Consolidated Financial
Statements in Item 18 for further details, including the impact on the Company's Consolidated Financial Statements as of the
transition date.
In addition, the Company is required to adopt new or revised accounting standards issued by other recognized authoritative
bodies for purposes of reporting to our controlling shareholder or for the preparation of the Company's subsidiaries' statutory
financial statements.
See Note 2(t) to the Consolidated Financial Statements in Item 18 in this report for details of recent accounting
pronouncements.
Risks Related to Our Preferred Shares
PartnerRe Ltd. is a holding company, and if our subsidiaries do not pay dividends or make other distributions to us, we may not
be able to pay dividends on our preferred shares or settle principal payments as they become due.
PartnerRe Ltd. is a holding company with no operations to generate income to provide liquidity other than the cash received
for issuance of common shares and preferred shares. We have cash outflows in the form of other expenses and dividends to both
common and preferred shareholders. We expect future dividends and other permitted payments from our subsidiaries to be the
principal source of funds to pay expenses and dividends. The ability of our subsidiaries to pay dividends or to advance or repay
funds to us is subject to general economic, financial, competitive, regulatory and other factors beyond our control. In particular, the
payment of dividends by our reinsurance subsidiaries is limited under Bermuda, Irish and Singapore laws and certain statutes of
U.S. states in which our U.S. subsidiaries are domiciled, which statutes include minimum solvency and liquidity thresholds (see
Note 15 to the Consolidated Financial Statements in Item 18 of this report for a description of various regulatory and statutory
restrictions on dividend payments applicable to our reinsurance subsidiaries). Because PartnerRe Ltd. is a holding company, our
right, and hence the right of our creditors and shareholders, to participate in any distribution of assets by any of our subsidiaries,
upon our liquidation or reorganization or otherwise, is subject to the prior claims of policyholders and creditors of these subsidiaries.
Our controlling shareholder owns a significant majority of our common shares, and its interest may differ from the interests of
our preferred shareholders.
Covéa Coopérations owns approximately 99.94% of the outstanding common shares of the Company. As a result, Covéa
Coopérations has power to elect our directors and to determine the outcome of any action requiring shareholder approval. Covéa
Coopérations' interests may differ from the interests of the holders of our preferred shares and, given Covéa Coopérations’s majority
controlling interest in the Company, circumstances may arise under which Covéa Coopérations may exercise its control in a manner
that is not favorable to the interests of the holders of the preferred shares.
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Preferred shareholders may encounter difficulties in service of process and enforcement of judgments against us in the United
States.
We are a Bermuda company and some of our directors and officers are residents of various jurisdictions outside the U.S. All,
or a substantial portion, of the assets of our officers and directors and of our assets are or may be located in jurisdictions outside the
U.S. Although we have appointed an agent and irrevocably agreed that the agent may be served with process in New York with
respect to actions against us arising out of violations of the U.S. Federal securities laws in any Federal or state court in the U.S., it
could be difficult for investors to effect service of process within the U.S. on our directors and officers who reside outside the U.S. It
could also be difficult for investors to enforce against us or our directors and officers judgments of a U.S. court predicated upon
civil liability provisions of U.S. Federal securities laws.
There is no treaty in force between the U.S. and Bermuda providing for the reciprocal recognition and enforcement of
judgments in civil and commercial matters. As a result, whether a U.S. judgment would be enforceable in Bermuda against us or our
directors and officers depends on whether the U.S. court that entered the judgment is recognized by the Bermuda court as having
jurisdiction over us or our directors and officers, as determined by reference to Bermuda conflict of law rules. A judgment debt from
a U.S. court that is final and for a sum certain based on U.S. Federal securities laws will not be enforceable in Bermuda unless the
judgment debtor had submitted to the jurisdiction of the U.S. court, and the issue of submission and jurisdiction is a matter of
Bermuda law and not U.S. law.
In addition to and irrespective of jurisdictional issues, Bermuda courts will not enforce a U.S. Federal securities law that is
either penal or contrary to public policy. An action brought pursuant to a public or penal law, the purpose of which is the
enforcement of a sanction, power or right at the instance of the state in its sovereign capacity will not be entered by a Bermuda
court. Certain remedies available under the laws of U.S. jurisdictions, including certain remedies under U.S. Federal securities laws,
would not be available under Bermuda law or enforceable in Bermuda court, as they would be contrary to Bermuda public policy.
Further, no claim can be brought in Bermuda against us or our directors and officers in the first instance for violation of U.S.
Federal securities laws because these laws have no extra jurisdictional effect under Bermuda law and do not have force of law in
Bermuda. A Bermuda court may, however, impose civil liability on us or our directors and officers if the facts alleged in a
complaint constitute or give rise to a cause of action under Bermuda law.
Changes in our effective income tax rate could affect our results of operations.
Taxation Risks
Our effective income tax rate could be adversely affected in the future by net income being lower than anticipated in
jurisdictions where we have a relatively lower statutory tax rate and net income being higher than anticipated in jurisdictions where
we have a relatively higher statutory tax rate, or by changes in corporate tax rates and tax regulations in any of the jurisdictions in
which we operate. We are subject to regular audit by tax authorities in the various jurisdictions in which we operate. Any adverse
outcome of such an audit could have an adverse effect on our net income, effective income tax rate and financial condition.
In addition, the determination of our provisions for income taxes requires significant judgment, and the ultimate tax
determination related to some tax positions taken is uncertain. Although we believe our provisions are reasonable, the ultimate tax
outcome may differ from the amounts recorded in our Consolidated Financial Statements and may materially affect our net income
and effective income tax rate in the period such determination is made.
If our non-U.S. operations become subject to U.S. income taxation, our net income will decrease.
We believe that we and our non-U.S. subsidiaries, other than certain business sourced by Partner Reinsurance Europe SE
(PartnerRe Europe) and PartnerRe Ireland Insurance dac (PartnerRe Ireland) through the U.S., and PartnerRe Insurance Solutions
Bermuda Ltd. (PRISBe), a foreign reinsurance entity that has elected under I.R.C Section 953(d) to be treated as a domestic
corporation, have operated, and will continue to operate, our respective businesses in a manner that will not cause us to be viewed as
engaged in a trade or business in the U.S. and, on this basis, we do not expect that either we or our non-U.S. subsidiaries (other than
PartnerRe Europe, PartnerRe Ireland, and PRISBe) will be required to pay U.S. corporate income taxes (other than potential
withholding taxes on certain types of U.S. source passive income) or branch profits taxes. Because there is considerable uncertainty
as to the activities that constitute being engaged in a trade or business within the U.S., the IRS may contend that either we or our
non-U.S. subsidiaries are engaged in a trade or business in the U.S. In addition, legislation regarding the scope of non-U.S. entities
and operations subject to U.S. income tax has been proposed in the past and may be proposed again in the future. If either we or our
non-U.S. subsidiaries are subject to U.S. income tax, our net income and shareholders’ equity will be reduced by the amount of such
taxes, which could be material.
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The Organization for Economic Co-operation and Development’s (OECD) initiative to limit harmful tax competition may result
in higher taxation and increased complexity, burden and cost of compliance.
Pillar Two addresses the risk of profit shifting to entities in low tax jurisdictions by introducing a global minimum tax on
groups with consolidated revenues of at least €750 million. These groups will be required to calculate the effective tax rate of each
group company operating in a relevant jurisdiction under the Global Anti-Base Erosion Model Rules (GloBE) and, where a group
company has a GloBE effective tax rate below 15%, on a jurisdiction-by-jurisdiction basis, pay an additional top-up tax to bring the
relevant jurisdictions' effective tax rate to 15%.
On December 20, 2021, the OECD published model rules for the implementation of Pillar Two and in March 2022 the OECD
released detailed commentary on those Pillar Two model rules.
The OECD has released additional administrative guidance on the global minimum tax in February, July and December of
2023. Under the European Union’s minimum tax directive, unanimously agreed by the member states in 2022, each member state
was required to adopt domestic legislation implementing the minimum tax rules for periods beginning on or after December 31,
2023, with the “under-taxed profit rule” to take effect for periods beginning on or after December 31, 2024. Legislatures in multiple
countries outside of the European Union have also drafted and/or enacted legislation to implement the OECD’s minimum tax
proposal. Given the OECD’s continued release of guidance regarding Pillar Two, and that jurisdictions may interpret such laws in
different manners, the overall implementation of Pillar Two remains uncertain and subject to change, possibly on a retroactive basis.
However, domestic legislation enacted to implement Pillar Two may have an adverse effect on our results of operations going
forward. In particular, since France enacted domestic Pillar Two legislation under the Finance Act for 2024 №2023-1322 of 29
December 2023, which adopted the income inclusion rule (our ultimate parent entity being a tax resident of France), we expect to be
significantly affected by Pillar Two implementation. We will continue to evaluate the impact of Pillar Two on our operations as
further information and guidance becomes available.
Legislation enacted in Bermuda as to Corporate Income Tax may affect our operations, and our net income could decrease.
Bermuda recently enacted the Corporate Income Tax Act 2023 on December 27, 2023 (the "CIT Act"). Entities subject to tax
under the CIT Act are the Bermuda constituent entities of multi-national groups. A multi-national group is defined under the CIT
Act as a group with entities in more than one jurisdiction with consolidated revenues of at least €750 million for two of the four
previous fiscal years. If Bermuda constituent entities of a multi-national group are subject to tax under the CIT Act, such tax is
charged at a rate of 15 percent of the net income of such constituent entities (as determined in accordance with the CIT Act,
including after adjusting for any relevant foreign tax credits applicable to the Bermuda constituent entities). No tax is chargeable
under the CIT Act until tax years starting on or after January 1, 2025. It is likely that the CIT Act will have an adverse effect on our
results of operations going forward. We are considering the CIT Act and will evaluate the impact of the CIT Act on our operations
and on our Bermuda GloBE effective tax rate from a Pillar Two perspective as further information and guidance becomes available.
Our tax position could be adversely impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or
enforcement thereof.
We could be adversely impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement
thereof by taxation authorities. Changes could have a material and adverse change in our worldwide effective tax rate and we may
have to take further action to seek to mitigate the effect of such changes. Any future amendments to existing income tax treaties
between the jurisdictions in which we operate, could subject us to increased taxation and/or potentially significant expense.
See Business Overview—Taxation in Item 4.B and Note 16 to the Consolidated Financial Statements in Item 18 of this report
for further details.
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ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
PartnerRe Ltd., an exempted company incorporated under the laws of Bermuda in 1993 with liability limited by shares, is the
holding company for our international reinsurance group. The principal office is located at 90 Pitts Bay Road, Pembroke HM08,
Bermuda (telephone number: +1 441-292-0888). PartnerRe Ltd. and its subsidiaries (the Company, PartnerRe, or the PartnerRe
Group) predominantly provides reinsurance on a worldwide basis through its principal wholly-owned subsidiaries, including Partner
Reinsurance Company Ltd. (PartnerRe Bermuda), Partner Reinsurance Europe SE (PartnerRe Europe), Partner Reinsurance
Company of the U.S. (PartnerRe U.S.), Partner Reinsurance Asia Pte. Ltd. (PartnerRe Asia) and PartnerRe Life Reinsurance
Company of Canada (PartnerRe Canada). The Company’s principal office in the U.S. is located at 200 First Stamford Place,
Stamford, Connecticut (telephone number: +1 203-485-4200).
The Company maintains an internet site at www.partnerre.com that contains the Company's Annual Reports on Form 20-F
filed with the U.S. Securities and Exchange Commission (SEC) and Current Reports on Form 6-K furnished with the SEC. These
Reports are also available on the internet site maintained by the SEC at www.sec.gov.
The Company completed the acquisition of Societe Anonyme Francaise de Reassurances (SAFR, subsequently renamed
PartnerRe SA) in 1997, the acquisition of Winterthur Re in 1998, the acquisition of PARIS RE Holdings Limited (Paris Re) in 2009,
the acquisition of Presidio Reinsurance Group, Inc. (Presidio) in 2012, and the acquisition of Aurigen Capital Limited (Aurigen) in
2017.
On March 18, 2016, the Company's publicly held common shares were acquired by Exor N.V. (subsequently renamed to
EXOR Nederland N.V), whose ultimate parent is EXOR N.V. (Exor), which is listed on the Milan Stock Exchange. As a result of
the acquisition, PartnerRe's publicly issued common shares were cancelled and are no longer publicly traded.
On December 16, 2021, Exor announced that it had signed a definitive agreement with Covéa Coopérations, pursuant to which
Covéa Coopérations agreed to purchase all of PartnerRe Ltd.’s common shares held by Exor. Preferred shares issued by PartnerRe
Ltd. were not included in the transaction. On July 12, 2022, Covéa Coopérations completed the acquisition of PartnerRe Ltd. from
Exor. The Company’s preferred shares continue to be traded on the New York Stock Exchange NYSE.
At December 31, 2023 and 2022, the Company's 100 million common shares (Class A shares) are owned by Covéa
Coopérations and at December 31, 2021, the Company’s Class A shares were owned by Exor and included in Shareholders' Equity
in the Consolidated Balance Sheets. The Company has also issued Class B common shares (Class B shares) and Class C common
shares (Class C shares) to certain executives and directors of the Company which are included in Accounts payable, accrued
expenses and other in the Consolidated Balance Sheets (see Share Ownership section in Item 6.E and Notes 14 and 17 to the
Consolidated Financial Statements in Item 18 of this report for further details).
B. Business Overview
The Company predominantly provides reinsurance for its clients globally. The Company’s principal offices are located in
Pembroke (Bermuda), Dublin, Stamford (Connecticut, U.S.), Toronto, Paris, Singapore and Zurich.
The Company provides reinsurance of risks to ceding companies (cedants or reinsureds). Risks reinsured include, but are not
limited to, agriculture, aviation/space, casualty, catastrophe, energy, engineering, financial risks, marine, motor, multiline, U.S.
health and property as well as mortality, morbidity, longevity, financial reinsurance solutions, and accident and health.
Reinsurance is offered on either a proportional or non-proportional basis through treaties or facultative reinsurance:
•
•
In a proportional (or quota share) treaty reinsurance agreement, the reinsurer assumes a proportional share of the original
premiums and losses incurred by the cedant. The reinsurer pays the ceding company a commission, which is generally
based on the ceding company’s cost of acquiring the business being reinsured (including commissions, premium taxes,
assessments and miscellaneous administrative expenses) and may also include a profit commission.
In a non-proportional (or excess of loss) treaty reinsurance agreement, the reinsurer indemnifies the reinsured against all or
a specified portion of losses on underlying insurance policies in excess of a specified amount, which is called a retention or
attachment point. Non-proportional business is written in layers and a reinsurer or group of reinsurers accepts a band of
coverage up to a specified amount. The total coverage purchased by the cedant is referred to as a program and is typically
placed with predetermined reinsurers in pre-negotiated layers. Any liability exceeding the upper limit of the program
reverts to the ceding company.
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•
In a facultative (proportional or non-proportional) reinsurance agreement the reinsurer assumes individual risks. The
reinsurer separately rates and underwrites each risk rather than assuming all or a portion of a class of risks, as in the case of
treaty reinsurance.
The majority of the Company’s gross premiums written were written on a proportional basis for each of the years ended
December 31, 2023, 2022 and 2021.
The Company monitors the performance of its operations in three worldwide business units comprised of Property & Casualty
(P&C), Specialty, and Life and Health, which represent its segments. The P&C segment is comprised of property and casualty
business underwritten, including property catastrophe, facultative risks and U.S. health. The Specialty segment is comprised of
specialty business, including treaty and facultative contracts. The combined business included in the P&C and Specialty segments is
collectively referred to in this report as Non-life business. The Company’s Life and Health segment includes mortality, morbidity,
longevity, and financial reinsurance solutions business.
See Results by Segment in Item 5 of this report and Note 22 to the Consolidated Financial Statements in Item 18 of this report
for further details on Segments.
Premium Distribution
The Company’s businesses are geographically diversified with premiums written on a worldwide basis. The Company’s gross
premiums written by segment for the years ended December 31, 2023, 2022 and 2021 were as follows (in millions of U.S. dollars):
2023
2022
2021
$
%
$
%
$
%
Non-life business:
P&C segment
Specialty segment
Total Non-life business
Life and Health segment
Distribution Channels
$
$
$
4,771
2,223
6,994
2,108
9,102
52 % $
25
77 % $
23
100 % $
5,025
1,990
7,015
1,674
8,689
58 % $
23
81 % $
19
100 % $
4,541
2,016
6,557
1,647
8,204
55 %
25
80 %
20
100 %
The Company generates business through brokers and through direct relationships with insurance companies. For the years
ended December 31, 2023, 2022 and 2021, the Company had two brokers that individually accounted for 10% or more of the
Company’s total gross premiums written. These two brokers individually accounted for 26% and 25%, respectively, of the
Company's total gross premiums written for 2023, 26% and 30%, respectively, for 2022, and 24% and 28%, respectively, for 2021.
No one cedant accounted for more than 10% of the Company's total gross premiums written for each of the years ended
December 31, 2023, 2022 and 2021.
The gross premiums written in each of the Company's segments for the years ended December 31, 2023, 2022 and 2021, and
the year-over-year comparisons, are described in Operating Results—Results by Segment in Item 5 of this report. See also Note 22
to the Consolidated Financial Statements in Item 18 of this report for further details on distribution channels and for the geographic
distribution of the Company’s total gross premiums written for the years ended December 31, 2023, 2022 and 2021.
Competition
The Company competes with other reinsurers, some of which have greater financial, marketing and management resources
than the Company, and also competes with new market entrants, and, specifically in the catastrophe line of business, with alternative
capital sources and insurance-linked securities. Competition in the types of reinsurance that the Company underwrites is based on
many factors, including the perceived and relative financial strength, pricing and other terms and conditions, services provided,
ratings assigned by independent rating agencies, speed of claims payment, and reputation and experience in the lines of business to
be written.
The Company ranks among the world’s largest professional reinsurers, and management believes the Company is well
positioned in terms of client services and highly technical underwriting expertise. Management also believes that the Company’s
global franchise and diversified platform allows the Company to provide broad risk solutions across many lines of business and
geographies and is increasingly attractive to cedants who are choosing to utilize fewer reinsurers by consolidating their reinsurance
panels and focusing on those reinsurers who can cover more than one line of business. Furthermore, the Company’s capitalization
and strong financial ratios allow the Company to demonstrate a solid balance sheet to its clients.
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Management believes that the Company’s major competitors for the Company's Non-life business are the larger European,
U.S. and Bermuda-based international reinsurance companies, as well as specialty reinsurers and regional companies in certain local
markets. These competitors include Munich Re, Swiss Re, Hannover Re, SCOR SE, Transatlantic, GenRe, Everest Re and RenRe.
For the Company’s Life business, the competition differs by location but generally includes multi-national reinsurers and local
reinsurers or state-owned insurers in the U.K., Ireland, Continental Europe and North America for its mortality and longevity lines
of business. The competition specifically related to the Health business generally includes departments of worldwide reinsurance
companies. These competitors include Munich Re, RGA, Swiss Re, Hannover Re, SCOR SE and GenRe.
Risk Management
In the reinsurance industry, the core of the business model is the assumption and management of risk. A key challenge is to
create shareholder value through the efficient management of reinsurance and investment risks while limiting and mitigating those
risks that can deteriorate the value of the Company or threaten its ability to achieve its objectives. The Company defines a capital-
based risk appetite and identifies risks that meet its return targets within that framework. Management believes that this construct
allows the Company to fulfill its obligation to pay policyholders’ claims, while ensuring appropriate margins to deliver an adequate
risk adjusted return to shareholders.
Successful risk management is the foundation of the Company’s value proposition. The Company’s ability to succeed in risk
assumption and business management is dependent on its ability to accurately identify, analyze and quantify risks as well as to
understand how risks aggregate and to establish the appropriate capital requirements and limits for the risks assumed. All risks are
managed by the Company within an integrated framework of policies and processes to ensure the consistent evaluation of risk
holistically.
The Company’s ability to meet its risk adjusted return objectives over the long term are primarily determined by how well the
Company understands, prices and manages assumed risk. Management also believes that every organization faces numerous risks
that could threaten the successful achievement of its goals and objectives. These include strategic, underwriting, market and credit,
financial, capital management and operational risks that are common to all industries, such as choice of strategy and markets,
economic and business cycles, competition, changes in regulation, data quality and security, fraud, business disruption and
management continuity. See also Risk Factors above.
The Enterprise Risk Management (ERM) Framework sets forth a cycle that fosters continuous review of the Company’s risk
profile with tools and processes to effectively manage the Company’s risks. The ERM cycle consists of the following components:
Risk Governance and Risk Culture is achieved through establishing clear responsibilities of risk ownership and values for
managing risks across the organization.
Risk Identification and Performance: Risk Universe is the ability to identify, assess and prioritize risks that could have a
significant impact on the Company.
Risk Strategy: Risk Appetite and Risk Tolerance Framework defines an appropriate risk appetite and risk tolerance to achieve
the Company’s business objectives.
Risk Reporting provides management with key risk information such as top risk exposures, changes in risk profile and
sensitivities to risk exposures in order to monitor compliance with its risk appetite.
Risk Governance
The Company has a governance structure for risk management that promotes a culture of risk ownership throughout levels of
the organization. The objective of the approach is to increase transparency over the roles and responsibilities that supports clear risk
ownership.
The Company utilizes a multi-level risk management structure where the Executive Leadership Team (ELT) and Board are
responsible for the establishment of the critical exposure limits, capital-at-risk and key policies through the Underwriting Risk
Committee (URC), a committee of the Board, and the Enterprise Risk Committee (ERC), a sub-committee of the ELT.
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The URC is comprised of members of the Board. The role of the URC in the governance of Risk Management includes
reviewing the ERM framework effectiveness and to discuss appropriate practices for the Company, including the Company's
policies, guidelines and processes relating to the underwriting of reinsurance risks and assumptions of investment risks undertaken
by the Company. Each of the Company’s risk policies relates to a specific risk and describes the Company’s approach to risk
management, defines roles and responsibilities relating to the assumption, mitigation, and control processes for that risk, and an
escalation process for exceptions. Risk management policies and processes are coordinated by the Capital & Risk department and
compliance is verified by Internal Audit on a periodic basis. The audit results are monitored by the Audit Committee of the Board.
Additionally, the URC also reviews the capital requirements and advises the Board on capital modelling matters.
The ERC is responsible for setting the Company’s risk appetite and return expectations. The ERC is comprised of sub-set of
ELT members, the Head of Capital & Risk and is chaired by the Chief Executive Officer. The ERC provides oversight through the
quarterly monitoring of the Company’s Risk Tolerance, periodic review of internal capital modelling techniques including stress and
scenario testing, capital allocation as well as internal audit plans and results.
The Business Units (BUs) and support functions are responsible for the execution of business activities and related risk
mitigation strategies. These activities are represented in risk control practices embedded in the BUs which support the risk policies.
Reporting on the Company’s capital and top risk exposures is integrated within the Company’s quarterly monitoring of risk
tolerance limits, annual planning and risk assessment process as well as regulatory solvency assessments which are reported to the
ELT and Board. The BUs are responsible for these activities and Internal Audit periodically evaluates the effectiveness of the risk
control procedures.
Risk Culture
The Company’s risk culture drives the Company’s attitude toward managing risks through a set of values and behaviors. The
Company’s risk culture is shaped through the risk governance structure, risk management practices and risk models. The risk
oversight committees such as the ERC and URC, in addition to the dedicated local Chief Risk Officers as part of the Legal Entity
Management Teams at the Tier 1 legal entities, sets the Company’s tone in terms of the importance and relevance of appropriately
monitoring and managing risks. Risk Management practices such as limit frameworks and risk guidelines provide tools to ensure the
Company’s risk-taking values are aligned with the Company’s risk appetite. Finally, risk models support the measurement of risks
under stressed scenarios which promotes responsible behaviors and informed risk-taking.
PartnerRe's risk culture prepares for the future by embedding Environmental, Social, and Governance (ESG) risks throughout
the ERM Framework. The way we manage these issues today impacts the future of our society as well as the financial strength of
our Company. ERM enables the organization to manage all key risks, including those risks associated with ESG. The regulatory
environment on ESG in terms of scope, standards, and assessment continues to evolve and drive new advancements that will be
reflected within the ERM Framework.
Risk Identification and Performance: Risk Universe
The Company performs a risk identification and assessment process that is used to identify and assess the Company’s key
risks. The assessment of the material risks is achieved through the performance of risk stresses and scenarios in line with the
Company’s Stress Testing Framework.
The Company structures its risks within a Risk Universe which is comprised of the following risk categories: Strategic,
Underwriting, Market and Credit, Financial, Capital Management and Operational.
Strategic Risk
Strategic risk is the risk of inadequate decision-making, poor execution of the Company’s strategic objectives and the risk of a
misalignment between the Company’s existing strategy and the external environment that could threaten the competitive position
and the ability to ensure ongoing profitability and viability.
Strategic risks are discussed and agreed to between the CEO and the Board and managed by the CEO including the direction
and governance of the Company. Managing strategic risk includes the Company's response to risks to the business strategy and
Company's reputation as well as key external factors faced by the reinsurance industry including emerging and ESG risks.
Management considers that strong governance procedures, including a robust system of processes and internal controls, are
appropriate to manage risks related to its reputation and risks related to new initiatives, including acquisitions, new products or
markets. The Company seeks to preserve its reputation through high professional and ethical standards and manages the impact of
identified risks through the adoption and implementation of a sound and comprehensive assumed risk framework.
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Emerging risks are new risks or previously known risks that are evolving in unexpected ways with unanticipated
consequences. They are monitored and managed by the ERC, which is tasked to evaluate and prioritize these risks based on the
likelihood of occurrence and the potential impact on the Company.
Underwriting Risk
The Company’s underwriting is conducted at the BU level through specialized underwriting teams with the support of
technical staff in disciplines such as actuarial, claims, legal, risk management and finance.
The Company’s underwriters develop close working relationships with their ceding company counterparts and brokers through
regular communication and collaboration, gathering detailed information about the cedant’s business and local market conditions
and practices. As part of the underwriting process, the underwriters also focus on the reputation and quality of the proposed cedant,
the likelihood of establishing a long-term relationship with the cedant, the geographic area in which the cedant does business and the
cedant’s market share, historical loss data for the cedant and, where available, historical loss data for the industry as a whole in the
relevant regions, in order to compare the cedant’s historical loss experience to industry averages, and to gauge the perceived
insurance and reinsurance expertise and financial strength of the cedant. The Company trains its underwriters and strives to maintain
continuity of underwriters within specific geographic markets and areas of specialty.
The Company generally underwrites risks with specified limits per treaty program or facultative contract. Like other
reinsurance companies, the Company is exposed to multiple insured losses arising out of a single occurrence, whether a natural
event such as hurricane, windstorm, tornado, typhoon, flood or earthquake, pandemic or man-made events. Any such catastrophic
event could generate insured losses in one or many of the Company’s reinsurance treaties and facultative contracts and in one or
more lines of business and/or segment. The Company considers such event scenarios as part of its evaluation and monitoring of its
aggregate exposures to catastrophic events.
Market and Credit Risk
Financial market risk is defined as the risk of a significant financial loss resulting from changes in financial markets such as
changes in equity prices, interest rates, credit spreads, delinquency and default rates, foreign exchange rates or real estate prices.
Financial market risk typically originates from investment activities, underwriting activities for certain product segments, and from
the sensitivity of the economic value of liabilities to interest rate movements. Credit risk is defined as the risk of a significant
financial loss due to default or downgrade of a counterparty. The Company is exposed to financial market and credit risk primarily
through investment activities, structured transactions, business clients and brokers, retrocession as well as financial risks including
GMDB, mortgage and credit and surety reinsurance lines of business.
Financial market and credit risk management follows both top-down and bottom-up approaches. The top-down approach
begins with the PartnerRe Group Risk Tolerance Framework. The framework dictates an overarching PartnerRe Group Board risk
limit with sub-limits for important quantifiable risk pillars including investment risks and other financial risks. Additionally, it limits
downside economic risk resulting from deterministic cross-risk pillar severe stress scenarios (e.g., financial crisis or inflation spike
scenarios) before being further delineated and extended to policies and guidelines, limits and investment risk standards at all levels
of the Company. At the same time, guidelines and limits are constructed for each investments portfolio then for each Tier 1 legal
entity up to the PartnerRe Group level in a consistent manner. These contain comprehensive specifications and limits that span
credit quality, net interest rate risk, liquidity, liability coverage, capital funds quality and concentration (geographic, asset sub-class,
single exposure, sector, etc.) among other considerations.
The Company utilizes external and internal tools to quantify financial market and credit risks. In addition to regularly
assessing portfolio sensitivities to predetermined changes in market factors (e.g., interest rates and credit spreads), the Company has
developed internally several single-year and multi-year scenarios with the goal of quantifying the impact of severe macroeconomic
events (e.g., real estate crisis, financial crisis and inflation/interest rate spike) on invested assets, economically sensitive reinsurance
business (e.g., mortgage, credit & surety, GMDB, etc.) and inflation sensitive reserves. These scenarios are often augmented by
reinsurance shocks (e.g., Natural Catastrophe event) to assess the impact on the Company’s liquidity and/or solvency at the
PartnerRe Group and legal entity levels.
Furthermore, Risk Management employs an external real-world Economic Scenario Generator tool to regularly quantify and
monitor the evolution of total return distributions by asset classes, subclass and by risk type (e.g., interest rate risk, equity risk,
private equity, spread risk including default and migration risks, currency risk and real estate risk).
Net interest rate risk is monitored and managed holistically through asset liability management, asset reallocation and/or
derivatives to ensure that large movements in interest rates do not result in significant loss of economic capital, in excess of
PartnerRe Group and legal entity risk tolerances.
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Counterparty credit risk is monitored and managed by major source of risk (e.g., corporate credit, derivatives, retrocession,
funds withheld, etc.) and in aggregate across sources of risk. Limits are put in place at the PartnerRe Group level to ensure that
losses due to the default of any single counterparty do not place an excessive strain on PartnerRe’s capital and/or solvency positions.
Lastly, currency risk is monitored and hedged through foreign exchange forward contracts whenever deemed necessary and
appropriate.
See Quantitative and Qualitative Disclosures about Market Risk in Item 11 of this report for further details.
Financial Risk
The Company’s key financial risks include, but are not limited to, failures or weaknesses in financial reporting (including
internal controls over financial reporting), regulatory non-compliance, risks related to the valuation of assets and liabilities, liquidity
risk, foreign exchange (FX) risk and risks related to taxation.
Capital Management Risk
Capital Management Risk is the risk of holding insufficient levels of regulatory or economic capital to support regulatory and
internal requirements and the business strategy. The Company has defined target capitalization levels for its regulated legal entities.
The ERC monitors the actual capitalization vs. the target levels on a quarterly basis.
Operational Risk
Operational risks are inherent to conducting business and represent a potential for a financial loss or reputational impact as a
result of operational failures caused by people, processes, systems and external events. The more significant operational risk topics,
include but are not limited to, information technology (including cyber security and data integrity), business disruption, execution
and process management, outsourcing, legal and regulatory compliance, fraud and human resources management. The Company
seeks to minimize these risks through robust processes and controls and monitoring throughout the organization.
Risk Strategy: Risk Appetite and Risk Tolerance Framework
Risk Appetite
Risk appetite is an integral part of an effective risk management system that defines the overall level of risk the Company is
prepared to accept in pursuit of its strategic objectives, and which is managed through a robust Risk Tolerance Framework of risk
limits. The ERC regularly reviews the Company’s deployment and may decide to adjust the amount of capacity deployed for each
risk driver (within the established risk tolerance) based on strategic considerations and changes in market conditions.
Risk Tolerance Framework
The Company’s risk tolerance is expressed as the maximum economic loss that the Company is willing to incur based on
various modeled probability return periods. To mitigate the chance of economic losses exceeding the risk tolerance, the Company
relies upon diversification of risk sources and risk limits to manage exposures. Diversification enables losses from one risk source to
be offset by profits from other risk sources so that the chance of overall losses exceeding the Company’s risk tolerance is reduced.
The Company’s risk tolerance is approved by the Board and is expected to remain stable. Any changes to the risk tolerance are
to be approved by the Board. Definitions for the maximum economic loss and available economic capital are as follows:
Economic Loss. The Company defines an economic loss as a decrease in the Company’s available economic capital.
Available Economic Capital. The Company defines economic capital as the Solvency II own funds plus the market value of
senior debt.
The Maximum Economic Loss. The maximum economic loss is a loss expressed as a percentage of available economic capital
under various modeled probability return periods.
The Company establishes key risk limits net of any retrocession for any risk source deemed by management to have the
potential to cause economic losses greater than the Company’s risk tolerance. The Risk Tolerance Framework is approved by the
Board in order to drive consistency in the application of the following Company limits: Overall PartnerRe Group Risk Tolerance,
Market Risk, and Reinsurance Risk Tiers, each of which are described as follows:
Overall PartnerRe Group Risk Tolerance. The overall PartnerRe Group risk tolerance limit is a loss of 35% of available
economic capital based on the internal model 99% Value at Risk (VaR). Additionally, this limit is also monitored through a number
of stress scenarios which impact both assets and liabilities on the balance sheet.
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Market Risk. Market risk is the risk of potential losses due to the impact of changes in the economic and financial market
environment on the valuation of the investments portfolio (interest rate risk, spread risk including default risk, equity risk, real estate
risk and FX risk) and economic liabilities (interest rate risk and FX risk) net of any hedging activities. The risk tolerance limit for
this risk is a loss of 25% of available economic capital based on the internal model 99% VaR. At December 31, 2023, the
deployment of market risk was at $0.8 billion against the approved limit of $2.6 billion.
Reinsurance Risk Tiers. This category includes reinsurance risks for which we have defined three risk tiers based on the
classification of risk drivers considering the following criteria:
• Materiality
• Risk driver expertise, and
• Potential for superior risk-adjusted return over the cycle.
Tier 1 Reinsurance Risks
Tier 1 risks consist of risk drivers that meet all three criteria of the Risk Tolerance Framework. Additionally, the risk tolerance
limit for this risk tier is a loss of 20% of available economic capital (annually defined). For the short term risks (Natural
Catastrophe, Pandemic) the underlying metric is the 99% VaR of the one year economic impact measured either through the internal
model or a corresponding scenario. For the long term risk (Mortality Trend) the metric is the 95% VaR of the full runoff
distribution. The following are Tier 1 Risks:
Natural Catastrophe Risk. The risk that the aggregate losses from natural perils materially exceed the net premiums that are
received to cover such risks. The Company considers both catastrophe losses due to a single large event and catastrophe losses that
would occur from multiple (but potentially smaller) events in any year.
Mortality Trend Risk. The risk that over time, mortality rates deviate from the rates estimated at pricing which affects the Long
Term Mortality (through deteriorating mortality) and Longevity portfolio (through improving mortality). The natural hedge between
the Long Term Mortality portfolio and the Longevity portfolio depends on the differences in age groups, socio-economic classes,
geographies, and lapse behavior.
Pandemic Risk. The risk of increase in mortality over an annual period associated with a rapidly spreading virus (either within
a highly populated geographic area or on a global basis) with a high mortality rate.
The ERC monitors Tier 1 risks on a quarterly periodic basis. The approved limits and the actual limits deployed at
December 31, 2023 and 2022 were as follows (in billions of U.S. dollars):
Tier 1 Risks
Natural Catastrophe Risk
Mortality Trend Risk
Pandemic Risk
December 31, 2023
December 31, 2022
Actual deployed (1)
Approved limit (1)
Approved limit (1)
$
2.1 $
$
$
2.1 $
2.1 $
1.6 $
1.3 $
0.6 $
Actual deployed (1)
1.4
1.8 $
1.8 $
1.8 $
1.2
0.5
(1) The limits approved and the actual limits deployed in the table above are shown net of retrocession.
Tier 2 Reinsurance Risks
Tier 2 risks consist of risk drivers which meet two of the three Risk Tolerance Framework criteria. Tier 2 risks are monitored
by the ERC. The following are the Tier 2 risks:
U.S. Mortgage Risk. The risk that losses from mortgage reinsurance materially exceed the net premiums that are received to
cover such risks, which may result in operating and economic losses to the Company.
Credit and Surety Risk. The risk that aggregated trade credit losses materially exceed the net premiums that are received to
cover such risks, which may result in operating and economic losses to the Company.
Critical Illness Risk. The risk that losses from critical illness reinsurance materially exceed the net premiums that are received
to cover such risks, which may result in operating and economic losses to the Company.
Affirmative Cyber Risk. The risk that losses from cyber reinsurance materially exceed the net premiums that are received to
cover such risks, which may result in operating and economic losses to the Company.
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The risk tolerance limits for Tier 2 risks are smaller or equal to a loss of 10% of the available economic capital. The metric is
the 1-in-100 Scenario for Mortgage and Affirmative Cyber, the 1-in-100 Value at Risk of the 1 year risk for Credit and Surety, and
the 1-in-20 Value at Risk of the full run-off risk for Critical Illness.
Risk Reporting
The Company monitors risks that could adversely impact operating and economic results. The risk reporting dashboard
provides the ERC with key risk exposure analysis in order to monitor the Company’s risk tolerance limits and risk profile.
Natural Catastrophe PML
The following discussion of the Company’s natural catastrophe PML information contains forward-looking statements based
upon assumptions and expectations concerning the potential effect of future events that are subject to uncertainties. See Item 3.D for
a list of the Company’s risk factors. Any of these risk factors could result in actual losses that are materially different from the
Company’s PML estimates below.
Natural catastrophe risk is a source of significant aggregate exposure for the Company and is managed by setting risk
tolerance and limits, as discussed above. Natural catastrophe perils can impact geographic regions of varying size and can have
economic repercussions beyond the geographic region directly impacted.
The Company considers a peril zone to be an area within a geographic region, continent or country in which losses from
insurance exposures are likely to be highly correlated to a single catastrophic event. The Company defines peril zones to capture the
vast majority of exposures likely to be incorporated by typical modeled events. There is, however, no industry standard and the
Company’s definitions of peril zones may differ from those of other parties.
The Company has exposures in other peril zones that can potentially generate losses greater than the PML estimates below.
The Company’s PMLs represent an estimate of loss for a single event for a given return period. The table below discloses the
Company’s 1-in-250 and 1-in-500 year (earthquake perils only) return period estimated loss for a single occurrence of a natural
catastrophe event in a one-year period. In other words, the 1-in-250 and 1-in-500 year return period PMLs mean that there is a 0.4%
and 0.2% chance, respectively, in any given year that an occurrence of a natural catastrophe in a specific peril zone will lead to
losses exceeding the stated estimate.
The PML estimates below include all significant exposure from our Non-life and Life and Health business operations. This
includes coverage for property, marine, energy, engineering, workers’ compensation, mortality, and exposure to catastrophe losses
from insurance-linked securities. The PML estimates do not include casualty coverage that could be exposed as a result of a
catastrophic event. In addition, they do not include estimates for contingent losses to insureds that are not directly impacted by the
event (e.g. loss of earnings due to disruption in supply lines).
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The Company’s single occurrence estimated net PML exposures (net of retrocession and reinstatement premiums) of the main
peril zones as at December 31, 2023 and 2022 were as follows (in millions of U.S. dollars):
December 31, 2023
December 31, 2022
1-in-250
year PML
1-in-500
year PML
(Earthquake
perils only)
1-in-250
year PML
1-in-500
year PML
(Earthquake
perils only)
$
1,307
1,270
1,208
302
614
314
$
1,376
1,267
1,209
239
654
408
1,181 $
1,578
1,128 $
1,519
322
289
203
189
384
430
348
457
365
401
329
213
425
577
537
427
Peril
Hurricane
Hurricane
Hurricane
Hurricane
Windstorm
Typhoon
Earthquake
Earthquake
Earthquake
Earthquake
Earthquake
Zone
U.S. Northeast
U.S. Southeast
U.S. Gulf Coast
Caribbean
Europe
Japan
California
Japan
Australia
New Zealand
British Columbia
Risk Mitigation
Retrocessional Reinsurance
The Company uses retrocessional reinsurance agreements to reduce its exposure on certain reinsurance risks assumed and to
mitigate the effect of any single major event or the frequency of medium-sized events. These agreements provide for the recovery of
a portion of losses and loss expenses from retrocessionaires. The majority of the Company’s retrocessional reinsurance agreements
cover property and specialty lines exposures, predominantly those that are catastrophe exposed. From time-to-time the Company
also utilizes retroactive retrocession to manage exposures on prior underwriting years for certain lines of business. The Company
also utilizes retrocessions in the Life and Health segment to manage the amount of per-event and per-life risks to which it is
exposed. Retrocessionaires must be pre-approved based on their financial condition and business practices, with stability, solvency
and credit ratings considered to be important criteria. Strict limits per retrocessionaire are also put into place and monitored to
mitigate counterparty credit risk.
The Company remains liable to its cedants to the extent that the retrocessionaires do not meet their obligations under
retrocessional agreements, and therefore retrocessions are subject to credit risk in all cases and to aggregate loss limits in certain
cases. The Company holds collateral, including escrow funds, trusts, securities and letters of credit under certain retrocessional
agreements. Provisions are made for amounts considered potentially uncollectible and reinsurance losses recoverable from
retrocessionaires are reported after allowances for uncollectible amounts.
Regulation
The business of reinsurance is regulated in all countries in which we operate, although the degree and type of regulation varies
significantly from one jurisdiction to another. The laws and regulations of the jurisdictions in which our reinsurance subsidiaries are
domiciled impose complex regulatory requirements such as maintenance of minimum levels of statutory capital, surplus, and
liquidity; various solvency standards; and periodic examinations of subsidiaries’ financial condition. See Risk Factors—Legal and
Regulatory Risks in Item 3.D of this report.
Bermuda has been deemed Solvency II equivalent under the EU's Solvency II Directive, effective January 1, 2016. Bermuda
has been granted equivalence for an unlimited period for all three relevant equivalence areas: Articles 172, 227 and 260, with the
exception of rules on captives or limited purpose insurers (Class 1, Class 2, Class 3, Class A and Class B), special purpose insurers
and collateralized insurers, which are subject to a different regulatory regime in Bermuda. This determination has resulted in
Bermuda-based reinsurers being exempt from the requirement to post collateral in the EU and allows reinsurance contracts
concluded with undertakings having their head office in Bermuda to be treated in the same manner as reinsurance contracts
concluded with undertakings authorized in accordance with the Directive (Article 172); EU insurance groups can conduct their EU
prudential reporting for a subsidiary in Bermuda under local rules instead of Solvency II if deduction and aggregation is allowed as
the method of consolidation of group accounts (Article 227); and Bermuda insurance groups which are active in the EU are exempt
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from some aspects of group supervision in the EU as Member States will rely on the equivalent supervision exercised by the
Bermuda Monetary Authority (BMA) (Article 260).
Group Supervision. One of the key concepts of Solvency II is the principal of one “home” regulator over all the operating
entities in a particular insurance or reinsurance group (referred to as Group Supervision). The Insurance Act 1978 of Bermuda and
related regulations, as amended (the Insurance Act) sets out provisions regarding Group Supervision, including the power of the
BMA to include or exclude specified entities from Group Supervision, the power of the BMA to withdraw as group supervisor, the
functions of the BMA as Group Supervisor and the power of the BMA to make rules regarding Group Supervision for, among other
things (1) assessing the financial situation and the solvency position of the insurance group and/or its members and (2) regulating
intra-group transactions, risk concentration, governance procedures, risk management and regulatory reporting and disclosure. In
addition to being tasked with assessing the financial condition of the PartnerRe Ltd. and its subsidiaries, the BMA has the power to
impose restrictions on the ability of PartnerRe Ltd.'s subsidiaries to declare dividends to PartnerRe Ltd., and the ability of PartnerRe
Ltd. to pay dividends to shareholders. This Group Supervision regime is in addition to the regulation of PartnerRe Ltd.'s various
operating subsidiaries in their local jurisdictions. The Insurance (Group Supervision) Rules 2011 (the “Group Supervision Rules”)
set out the rules in respect of the assessment of the financial situation and solvency of an insurance group, the system of governance
and risk management, and supervisory reporting and disclosures of an insurance group. The Insurance (Prudential Standards)
(Insurance Group Solvency Requirement) Rules 2011 (together with the Group Supervision Rules, the “Group Rules”) set out the
rules in respect of the preparation of the annual group financial statements, capital and solvency return and enhanced capital
requirements for an insurance group. The BMA currently acts as Group Supervisor of PartnerRe Ltd. and its various operating
subsidiaries (the PartnerRe Group) and PartnerRe Bermuda is the designated insurer for the purposes of the BMA's Group
Supervision. As Group Supervisor, the BMA will perform a number of supervisory functions including (1) coordinating the
gathering and dissemination of information which is of importance for the supervisory task of other competent authorities; (2)
carrying out a supervisory review and assessment of the PartnerRe group; (3) carrying out an assessment of the PartnerRe Group’s
compliance with the rules on solvency, risk concentration, intra-group transactions and good governance procedures; (4) planning
and coordinating, with other competent authorities, supervisory activities in respect of the PartnerRe Group, both as a going concern
and in emergency situations; (5) taking into account the nature, scale and complexity of the risks inherent in the business of all
companies that are part of the PartnerRe Group; (6) coordinating any enforcement action that may need to be taken against the
PartnerRe Group or any of its members and (7) planning and coordinating meetings of colleges of supervisors (consisting of
insurance regulators) in order to facilitate the carrying out of the functions described above.
PartnerRe Ltd. is not a registered insurer; however, pursuant to its functions as Group Supervisor, the BMA includes the
Company and may include any member of the PartnerRe Group within its Group Supervision. PartnerRe Ltd. is majority owned by
Covéa Cooperations, a French stock corporation, and it together with its material related reinsurance and insurance entities, are
regulated by the French Prudential Control and Resolution Authority.
Significant aspects of the Group Rules imposed on Insurance and Reinsurance Groups include the solvency assessment. The
Company in respect of the PartnerRe Group must annually perform an assessment of its own risk and solvency requirements,
referred to as a Group’s Solvency Self-Assessment (GSSA). The GSSA allows the BMA to obtain an insurance group’s view of the
capital resources required to achieve its business objectives and to assess a group’s governance, risk management and controls
surrounding this process.
The BMA imposes the group Enhanced Capital Requirement (ECR) on the PartnerRe Group pursuant to its function as the
Company’s Group Supervisor. Insurance groups are required to maintain available statutory economic capital and surplus that is
equal to or exceeds the value of its ECR. The PartnerRe Group’s ECR may be calculated by reference to either (a) the standard
model developed by the BMA known as the Bermuda Solvency Capital Requirement model (BSCR), or (b) an internal group capital
model which the BMA has approved for use for this purpose. The PartnerRe Group currently uses the BSCR model in calculating its
group ECR requirements. In addition, the PartnerRe Group is required to prepare and submit annual audited group U.S. GAAP
financial statements, annual group statutory financial statements, annual group statutory financial return, annual group capital and
solvency return (including an economic balance sheet (EBS)) and quarterly group unaudited financial returns. An insurance group
must further ensure that the value of the insurance group's assets exceeds the amount of the insurance group's liabilities by the
aggregate of: (i) the individual minimum solvency margin (MSM) of each qualifying member of the group controlled by the parent
company; and (ii) the parent company's percentage shareholding in the member multiplied by the member's MSM, where the parent
company exercises significant influence over a member of the group but does not control the member. A member is a qualified
member of the insurance group if it is subject to solvency requirements in the jurisdiction in which it is registered. The PartnerRe
Group is also required to submit annual group actuarial opinions in respect of its general business and long-term insurance business
when filing its group capital and solvency return. The PartnerRe Group is required to appoint individuals approved by the BMA to
be group actuaries for both general business and long-term business. The PartnerRe Group actuary must provide an opinion on the
PartnerRe Group's technical provisions as recorded in the PartnerRe Group statutory EBS.
The BSCR model is a risk-based capital model which provides a method for determining an insurer’s capital requirements
(statutory capital and surplus) by taking into account the risk characteristics of different aspects of the insurer’s business. The BSCR
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formula establishes, on a consolidated basis, capital requirements for eleven categories of risk: fixed income investment risk, equity
investment risk, interest rate/liquidity risk, currency risk, concentration risk, credit risk, premium risk, reserve risk, catastrophe risk,
long-term insurance risk and operational risk.
We are currently completing our 2023 PartnerRe Group BSCR, which must be filed with the BMA on or before May 31, 2024,
and at this time, we expect we will exceed the ECR. Our 2022 PartnerRe Group BSCR exceeded the target level of required
statutory capital.
In addition, the BMA may, after consultation with other competent authorities, determine whether an insurance group, for
which the BMA is the group supervisor, is an internationally active insurance group under the Insurance Act. The Insurance Act
also provides for a framework pursuant to which the BMA may designate a member of an Internationally Active Insurance Group
(IAIG) as its ‘head of the IAIG’ for the purposes of IAIG supervision. In determining the member of an IAIG to be designated as the
Head of the IAIG, the BMA shall have regard to the member that exercises control over all insurers in the group and other members
of the group which may pose a risk to the insurance business of the group.
Public Disclosure. Pursuant to the Insurance (Public Disclosure) Rules 2015, the BMA requires commercial insurers and
insurance groups to prepare and publish a Financial Condition Report (FCR). The FCR provides an overview of the PartnerRe
Group’s financial condition including business performance, governance structure, risk profile, solvency valuation and capital
management process. The FCR includes, among other disclosures, the respective company’s required and available statutory capital.
The FCR is required to be filed with the BMA annually and published on the PartnerRe website within 14 days of filing with the
BMA. The FCR must be signed by the CEO and any senior executive responsible for the actuarial, or risk management, or internal
audit, or compliance function who will declare that to the best of their knowledge and belief the FCR fairly represents the financial
condition of the PartnerRe Group in all material respects.
Bermuda
All Bermuda companies must comply with the provisions of the Bermuda Companies Act 1981, as amended (the Companies
Act). In addition, the Insurance Act regulates the businesses of our Bermuda reinsurance subsidiaries, comprised of (i) PartnerRe
Bermuda, a Class 4 general business insurer and Class E long-term business insurer and (ii) PRISBe (formerly PRE Life Bermuda
Re Ltd.) a Class 3B general business insurer and Class C long-term business insurer. Partner Reinsurance Life Company of
Bermuda Ltd. was merged into PartnerRe Bermuda on February 15, 2022. The Insurance Act distinguishes between long-term
business, special purpose business and general business. The Insurance Act does not distinguish between insurers and reinsurers:
companies are registered (licensed) under the Insurance Act as “insurers” and the Insurance Act uses the defined term “insurance
business” to include reinsurance business. In addition, the Bermuda Investment Business Act 2003, as amended (the IBA) regulates
the business of PartnerRe Capital Management Ltd. (PRCML), an investment manager registered with the Bermuda Monetary
Authority as a Class B Registered Person under the IBA. PRCML is also an exempt reporting adviser pursuant to the U.S.
Investment Advisers Act of 1940, as amended and is required to file certain reports with the U.S. Securities and Exchange
Commission..
The continued registration of an insurer is subject to the insurer complying with the terms of its registration and such other
conditions as the BMA may impose from time to time. The Insurance Act also grants to the BMA powers to supervise, investigate
and intervene in the affairs of insurance companies.
The Insurance Act imposes solvency and liquidity standards and auditing and reporting requirements on Bermuda insurance
companies.
PartnerRe Bermuda is dual licensed as a Class 4 general business insurer and Class E long-term business insurer and PRISBe
is dual licensed as a Class 3B general business insurer and Class C long-term business insurer in Bermuda; and, therefore, both are
authorized to carry on general business and long-term insurance business.
During the course of 2023, the BMA issued consultation papers and received feedback from stakeholders, on certain proposed
enhancements to Bermuda’s regulatory regime for commercial insurers. The enhancements are aimed at ensuring that the regime
continues to remain fit and proper for purpose, in line with international standards and keeps pace with market developments. In
addition to potential enhancements to technical provisions and the computation of the Bermuda Solvency Capital Requirement, the
BMA is seeking to strengthen supervisory cooperation and exchange of information and increased publication of regulatory
information to further develop good governance and risk management practices, transparency and market discipline. As at the end
of 2023, draft rules and guidance notes were published for each commercial insurer class and insurance groups with the new
requirements expected to come into force on March 31, 2024.
Significant aspects of the Bermuda insurance regulatory framework and requirements imposed on insurers such as PartnerRe
Bermuda and PRISBe include the following:
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Minimum Solvency Margin and Enhanced Capital Requirements. The Insurance Act provides that the value of the statutory
assets of an insurer must exceed the value of its statutory liabilities by an amount greater than its prescribed MSM. Statutory assets
are defined as the total assets reported on an insurer’s balance sheet in the relevant year less non-admitted assets, including goodwill
and other intangible assets, not considered admissible for solvency purposes.
The MSM that must be maintained by PartnerRe Bermuda with respect to its Class 4 general business license is the greater of
(i) $100 million, (ii) 50% of net premiums written (with a credit for reinsurance ceded not exceeding 25% of gross premiums), or
(iii) 15% of net aggregate loss and loss expense provisions and other insurance reserves, or (iv) 25% of its ECR as reported at the
end of the relevant year. The MSM that must be maintained by PartnerRe Bermuda with respect to its Class E long-term business
license is the greater of (i) $8 million, (ii) 2% of the first $500 million of assets plus 1.5% of assets above $500 million or (iii) 25%
of its ECR as reported at the end of the relevant year.
The MSM that must be maintained for PRISBe with respect to its Class 3B general business license is the greater of (i) $1
million, (ii) where the net premium written does not exceed $6,000,000, 20% of the net premiums written or where the net
premiums written exceeds $6,000,000, $1,200,000 plus 15% of the net premium which exceeds $6,000,000, (iii) 15% of the net
aggregate and loss expense provisions and other insurance reserve, or (iv) 25% of its ERC as reported at the end of the relevant year.
The MSM that must be maintained by PRISBe with respect to its Class C long-term business license is equal to the greater of (i)
$500,000, (ii) 1.5% of the total statutory assets or 25% of its ECR as reported at the end of the relevant year.
Minimum Liquidity Ratio. An insurer engaged in general business, such as PartnerRe Bermuda and PRISBe, is required to
maintain the value of its relevant assets at not less than 75% of the amount of its relevant liabilities.
Minimum Capital Requirements. While not specifically referred to in the Insurance Act, the BMA has also established a Target
Capital Level (TCL) equal to 120% of its ECR. While an insurer is not currently required to maintain its statutory capital and
surplus at this level, the TCL serves as an early warning tool for the BMA and failure to maintain statutory capital at least equal to
the TCL will likely result in increased regulatory oversight.
Any applicable insurer which at any time fails to meet the MSM requirements must, upon becoming aware of such failure,
immediately notify the BMA and, within 14 days thereafter, file a written report with the BMA describing the circumstances that
gave rise to the failure and setting out its plan detailing specific actions to be taken and the expected time frame in which the
company intends to rectify the failure.
Any applicable insurer which at any time fails to meet the ECR applicable to it will upon becoming aware of that failure, or of
having reason to believe that such a failure has occurred, immediately notify the BMA in writing and, within 14 days of such
notification, file with the BMA a written report containing particulars of the circumstances leading to the failure; and a plan
detailing the manner, specific actions to be taken and time within which the insurer intends to rectify the failure and within 45 days
of becoming aware of that failure, or of having reason to believe that such a failure has occurred, furnish the BMA with: (1)
unaudited statutory economic balance sheets and unaudited interim financial statements prepared in accordance with GAAP
covering such period as the BMA may require, (2) the opinion of a loss reserve specialist, where applicable, (3) a general business
solvency certificate in respect of those financial statements, where applicable, (4) a capital and solvency return(s) reflecting an ECR
prepared using post-failure data, where applicable, (5) a long-term business solvency certificate in respect of those statements,
where applicable and (6) the opinion of an approved actuary, where applicable. An insurer to whom this applies shall not declare or
pay any dividends until the failure is rectified.
To enable the BMA to better assess the quality of the insurer’s capital resources, applicable insurers are required to disclose
the makeup of its capital in accordance with the “3-tiered capital system”. Under this system, all of the insurer’s capital instruments
will be classified as either basic or ancillary capital which in turn will be classified into one of three tiers based on their “loss
absorbency” characteristics. Highest quality capital will be classified as Tier 1 Capital and lesser quality capital will be classified as
either Tier 2 Capital or Tier 3 Capital. Under this regime, up to certain specified percentages of Tier 1, Tier 2, and Tier 3 Capital
may be used to support the insurer’s MSM, ECR and TCL.
The characteristics of the capital instruments that must be satisfied to qualify as Tier 1 Capital, Tier 2 Capital, and Tier 3
Capital are set out in the Insurance (Eligible Capital) Rules 2012, as amended. Under these rules, Tier 1 Capital, Tier 2 Capital, and
Tier 3 Capital may, until January 1, 2026, include capital instruments that do not satisfy the requirement that the instrument be non-
redeemable or settled only with the issuance of an instrument of equal or higher quality upon a breach, or if it would cause a breach,
of the ECR.
While the BMA has previously approved the use of certain instruments for capital purposes, the BMA’s consent will need to
be obtained if such instruments are to remain eligible for use in satisfying the MSM and the ECR.
The BMA implemented an EBS framework which is used as the basis to determine the ECR for all general business and long-
term commercial insurers and insurance groups, including PartnerRe Bermuda and PRISBe. The EBS framework applies prudential
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filters and other EBS valuation adjustments to an insurer's GAAP balance sheet to produce an economic valuation of the assets and
liabilities of the insurer in accordance with the prudential standards made under the Insurance Act. The Insurance (Prudential
Standards) (Class 4 and Class 3B Solvency Requirement) Rules 2008, as amended, the Insurance (Prudential Standards) (Class C,
Class D and Class E Solvency Requirement) Rules 2011, as amended and the Insurance (Prudential Standards) (Insurance Group
Solvency Requirement) Rules 2011, as amended provide applicable guidance for PartnerRe Bermuda, PRISBe and the PartnerRe
Group pertaining to certain aspects of the EBS framework, including, but not limited to, technical information required for the
preparation of the financial statements and opinions of the loss reserve specialist and approved actuary. The Insurance (Prudential
Standards) Amendment Rules 2018 provide updates to certain aspects of the EBS framework and increase the ECR over a 3-year
transition period for general business and a 10-year transition period for long-term business.
Reporting Requirements. PartnerRe Bermuda and PRISBe must prepare and submit, on an annual basis, both audited GAAP
and statutory financial statements. The Insurance Act prescribes rules for the preparation and substance of statutory financial
statements (which include, in statutory form, a balance sheet, income statement, a statement of capital and surplus, and notes
thereto). The statutory financial statements include detailed information and analysis regarding premiums, claims, reinsurance and
investments of the insurer. The statutory financial statements contain statements both on a consolidated and unconsolidated basis.
The unconsolidated information forms the basis for assessing PartnerRe Bermuda and PRISBe's liquidity ratio and MSM.
Every insurer is also required to deliver to the BMA a declaration of compliance declaring whether or not that insurer has, with
respect to the preceding financial year, (i) complied with the minimum margin of solvency as at its financial year-end, (ii) complied
with the applicable enhanced capital requirements as at its financial year-end, (iii) complied with the minimum liquidity ratio for
general business as at its financial year-end, and (iv) where an insurer’s license has been issued subject to limitations, restrictions or
conditions, that the insurer has observed such limitations, restrictions or conditions. The declaration of compliance must be signed
by two directors and filed at the same time the insurer submits its statutory financial statements.
Insurance Code of Conduct. Every Bermuda registered insurer must comply with the Insurance Code of Conduct (Code of
Conduct) which prescribes the duties and standards that must be complied with to ensure sound corporate governance, risk
management and internal controls are implemented. The BMA will assess an insurer’s compliance with the Code of Conduct in a
proportionate manner relative to the nature, scale and complexity of its business. Failure to comply with the requirements of the
Code of Conduct will be a factor the BMA considers in determining whether an insurer is meeting its obligations to conduct its
business soundly and prudently as prescribed by the Insurance Act, may result in the BMA exercising its powers of intervention and
investigation and will be a factor in calculating the operational risk charge under the insurer’s BSCR or approved internal model
(where applicable).
At the end of 2021, the BMA released a consultation paper on the revisions to the Code of Conduct and following a review of
the public consultation feedback, the revisions to the Code of Conduct were finalized and became effective on September 1, 2022
(with a six-month transition period for conduct-related additions and a 12-month transition period to comply with the new
provisions/amendments of all other sections of the document). The most significant changes to the Code of Conduct related to
corporate governance, including introducing a requirement that an insurer’s board include an appropriate number of non-executive
directors and independent directors without executive responsibility. The BMA clarified that the revisions would not create a
requirement for independent non-executive directors for all boards, but that subsidiary boards of a Bermuda group would determine
the appropriate number of non-executive and independent non-executive directors required for the entity based on the nature, scale
and complexity of the insurer’s operations. The Code of Conduct was also amended to require board members to review and assess
the fitness and propriety of board membership, committees, and chief and senior executives at least every three (3) years and/or
upon a material change to business activities or risk profile. Other changes include a requirement for insurers to demonstrate the
economic impact of risk mitigation techniques originating from reinsurance contracts and the addition of “Sustainability Risk” as a
material risk that should be considered in risk management strategies, and enhanced requirements for outsourcing.
Insurance Sector Operational Cyber Risk Management Code of Conduct. All Bermuda insurers, insurance managers and
intermediaries under the Insurance Act are required to comply with the Insurance Sector Operational Cyber Risk Management Code
of Conduct (Cyber Code), which was established in October 2020 and sets forth the duties, requirements, standards, procedures and
principles to be complied with in relation to operational cyber risk management. This requires insurers to develop a cyber-risk
policy that is approved by the board of directors of the insurer at least annually, and which is to be delivered pursuant to an
operational cyber risk management program. Under the Cyber Code, an insurer is also required to appoint an appropriately qualified
member of staff or outsourced resource to the role of Chief Information Security Officer. Failure to comply with the Cyber Code
will be a factor taken into account by the BMA in determining whether an insurer is meeting its obligation to conduct business in a
sound and prudent manner as prescribed by the Insurance Act and may result in the BMA exercising its powers of intervention and
investigation.
Dividends and Distributions. As a Bermuda-domiciled holding company, PartnerRe Ltd. has limited operations of its own and
its assets consist primarily of investments in its subsidiaries. Accordingly, the Company’s future cash flows largely depend on the
availability of dividends or other statutorily permissible payments from subsidiaries. The ability to pay such dividends is limited by
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the applicable laws and regulations of the various countries and states in which these subsidiaries operate, including, among others,
Bermuda, various states of the U.S., Singapore, Canada and Ireland. The Company’s ability to pay dividends or make distributions
and to make dividends to shareholders is limited by solvency requirements of the Companies Act.
In addition to the solvency requirements under the Companies Act, the Insurance Act prohibits PartnerRe Bermuda and
PRISBe from declaring or paying any dividends during any financial year if it is in breach of its MSM or if the declaration or
payment of such dividends would cause such a breach. PartnerRe Bermuda and PRISBe are also prohibited from declaring or
paying a dividend where it has failed to comply with the ECR, until such noncompliance is rectified. The Insurance Act also
provides that our Bermuda reinsurance subsidiaries shall not in any financial year pay dividends which would exceed 25% of its
total statutory capital and surplus, as shown on its statutory balance sheet in relation to the previous financial year, unless at least 7
days before payment of those dividends it files with the BMA an affidavit signed by at least two directors (one of whom must be a
director resident in Bermuda if the insurer has a director so resident), and by its principal representative in Bermuda, which states
that in the opinion of those signing, declaration of those dividends has not caused the insurer to fail to meet its relevant margins.
Further, with respect to the distributions of any contributed surplus, each of PartnerRe Bermuda and PRISBe must also submit an
affidavit and obtain the BMA’s prior approval before reducing its total statutory capital as shown in its previous financial year
statutory balance sheet by 15% or more.
In connection with their registration as a Class E and Class C insurer respectively, PartnerRe Bermuda and PRISBe must
maintain accounts in respect of their long-term business separate from any accounts kept in respect of any other business and all
receipts of its long-term business shall form part of their long-term business fund. In addition to the aforementioned restrictions on
commercial insurers ability to pay dividends and make distributions under the Insurance Act generally, an insurer carrying on long-
term business, such as PartnerRe Bermuda and PRISBe, may not declare or pay a dividend to any person other than a policyholder
unless the value of the assets of its long-term business fund (as certified by the insurer’s approved actuary) exceeds the extent (as so
certified) of the liabilities of its long-term business and the amount of any such dividend shall not exceed the aggregate of that
excess and any other funds properly available for the payment of dividends arising out of the business of the insurer other than long-
term business
Further, under the Companies Act, as amended, PartnerRe Ltd., PartnerRe Bermuda and PRISBe may only declare or pay a
dividend, or make a distribution out of contributed surplus, if it has no reasonable grounds for believing that: (1) it is, or would after
the payment be, unable to pay its liabilities as they become due or (2) the realizable value of its assets would be less than its
liabilities.
Fit and Proper Controllers. The BMA maintains supervision over controllers (as defined herein) of all Bermuda registered
insurers. For these purposes, a controller includes (1) the managing director of the registered insurer or its parent company, (2) the
chief executive officer of the registered insurer or of its parent company, (3) a shareholder controller (as defined below) and (4) any
person in accordance with those directions or instructions the directors of the registered insurers or its parent company are
accustomed to act.
The definition of shareholder controller is set out in the Insurance Act but generally refers to (1) a person who holds 10% or
more of the shares carrying rights to vote at a shareholders' meeting of the registered insurer or its parent company, (2) a person who
is entitled to exercise 10% or more of the voting power at any shareholders' meeting of such registered insurer or its parent company
or (3) a person who is able to exercise significant influence over the management of the registered insurer or its parent company by
virtue of its shareholding or its entitlement to exercise, or control the exercise of, the voting power at any shareholders' meeting.
Where the shares of a registered insurer, or the shares of its parent company, are not traded on any recognized stock exchange,
no person shall become a 10%, 20%, 33% or 50% shareholder controller of the insurer unless (a) he/she has served on the BMA a
notice in writing that he/she intends to become a controller of the insurer and (b) either the BMA has, before the end of a period of
45 days beginning with the date of service of that notice, notified such person in writing that there is no objection to such person
becoming such a controlling shareholder. Likewise, no person who is a shareholder controller shall reduce or dispose of his/her
holding in the insurer where the proportion of voting rights held by the shareholder controller in the insurer will reach or fall below
10%, 20%, 33% or 50% as the case may be unless that shareholder controller has served on the BMA a notice in writing not later
than 45 days of such disposal.
Material Change. All registered insurers are required to give the BMA 30 days' notice of their intention to effect a material
change within the meaning of the Insurance Act, and shall not take any steps to give effect to a material change unless, before the
end of the notice period the registered insurer has been notified by the BMA in writing that it has no objection to such change or the
period has lapsed without the BMA issuing a notice of objection.
Similarly, each designated insurer is required to give notice to the BMA of any material change in respect of the insurance
group of which it is a member.
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Policyholder Priority. As of January 1, 2019, the Insurance Amendment (No. 2) Act 2018 amended the Insurance Act to
provide for the prior payment of policyholders' liabilities ahead of general unsecured creditors in the event of the liquidation or
winding up of an insurer. The amendments provide, among other things, that subject to the prior payment of preferential debt under
the Employment Act 2000 and the Companies Act, the insurance debts of an insurer must be paid in priority to all other unsecured
debts of the insurer.
Economic Substance Act 2018 (ESA) and Economic Substance Regulations 2018 (Substance Regulations). Under the ESA, if a
Bermuda company is engaged in one or more “relevant activities” (which is defined to include insurance) it is required to maintain a
substantial economic presence in Bermuda and to comply with the economic substance requirements (ES Requirements) set forth in
the ESA and the Substance Regulations. A company will comply with those economic substance requirements if it: (a) is managed
and directed in Bermuda; (b) undertakes “core income generating activities” (as may be prescribed under the ESA) in Bermuda in
respect of the relevant activity; (c) maintains adequate physical presence in Bermuda; (d) has adequate full time employees in
Bermuda with suitable qualifications; and (e) incurs adequate operating expenditure in Bermuda in relation to the relevant activity
undertaken by it. Pursuant to the ESA, certain PartnerRe entities registered in Bermuda are required to demonstrate compliance with
economic substance requirements by filing an annual economic substance declaration with the Registrar of Companies in Bermuda
(Registrar). Any entity that fails to satisfy economic substance requirements could face automatic disclosure to competent
authorities in the EU of information filed by the entity with the Registrar in connection with the economic substance requirements
and may also face financial penalties, restriction or regulation of its business activities and/or may be struck off as a registered entity
in Bermuda.
Personal Information Protection Act 2016 (PIPA). At present, the majority of the operative provisions of PIPA, which include:
conditions for use and consent to use of personal information, specific obligations on organizations that use personal information,
overseas data transfer assessment obligations and access, rectification and erasure rights for individuals, are not yet in force in
Bermuda. In June 2023, the Bermuda Government and the Office of the Privacy Commissioner for Bermuda announced that the
remaining operative provisions of PIPA will become fully implemented on January 1, 2025. PIPA, once in force, applies to every
organization (which includes any individual, entity or public authority) that uses personal information in Bermuda where that
personal information is used by automated or other means which form or are intended to form, part of a structured filing system. For
the purposes of PIPA, “personal information” means any information about an identified or identifiable individual (meaning a
natural person), and “use” or “using” are very broadly defined and effectively include possessing or carrying out any operation on
personal information. Many of PartnerRe Ltd.’s Bermuda subsidiaries which use and hold personal information will be in scope and
must comply with the provisions of PIPA.
Representative Offices. PartnerRe Bermuda maintains a representative office in Mexico.
Ireland
The Central Bank of Ireland (the Central Bank) regulates insurance and reinsurance companies authorized in Ireland, including
PartnerRe Europe and PartnerRe Ireland. PartnerRe Ireland Finance DAC as an Irish resident Section 110 Company is obliged to
report data to the Central Bank of Ireland on a quarterly basis. PartnerRe Holdings Europe Limited, a holding company for
PartnerRe Europe, and PartnerRe Ireland are not subject to regulation by the Central Bank. PartnerRe Europe is a reinsurance
company incorporated under the laws of Ireland and is duly authorized as a reinsurance undertaking to carry on reinsurance business
in accordance with the European Union (Insurance and Reinsurance) Regulations 2015. PartnerRe Ireland is an insurance company
incorporated under the laws of Ireland and is authorized as an insurance undertaking to carry on non-life insurance business in
accordance with the European Union (Insurance and Reinsurance) Regulations 2015.
Significant aspects of the Irish re/insurance regulatory framework and requirements imposed on PartnerRe Europe and
PartnerRe Ireland include the following:
Solvency Requirements. The Solvency II Directive, transposed into Irish law by the European Union (Insurance and
Reinsurance) Regulations 2015, sets out solvency standards applicable to insurers and reinsurers, and prescribes, at the level of
PartnerRe Europe and PartnerRe Ireland, the minimum amounts of financial resources that both companies are required to have in
order to cover the risks to which they are exposed and the principles that should guide their overall risk management and reporting.
This Directive became effective January 1, 2016. Under the Solvency II Directive requirements, PartnerRe Europe and PartnerRe
Ireland have similar requirements to those of PartnerRe Bermuda and PRISBe such as an EBS, Own Risk and Solvency Assessment
(ORSA), Solvency and Financial Condition Report and a Regular Supervisory Report.
Reporting Requirements. PartnerRe Europe and PartnerRe Ireland must file and submit annual audited financial statements and
related reports to the Irish Companies Registration Office (CRO), together with an annual return of certain corporate information in
accordance with the Companies Act 2014. Changes to corporate information during the year must also be notified to the CRO.
These requirements also apply to PartnerRe Holdings Europe Limited and PartnerRe Ireland Finance DAC, while PartnerRe Europe
and PartnerRe Ireland must also file and submit annual certifications to the Central Bank in relation to the following:
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1. Corporate Governance Requirements for Insurance Undertakings 2015 (the Requirements): The Requirements impose
obligations in respect of corporate governance on insurance and reinsurance companies authorized by the Central Bank.
PartnerRe Europe and PartnerRe Ireland submit an attestation that the respective company has materially complied, or not
complied, with the Requirements.
2. ORSA Report: The ORSA Report sets out the qualitative and quantitative results and conclusions draw by the respective
company from the ORSA, as well as the methods and main assumptions used during the ORSA process. It also includes
information on the respective company's overall solvency needs and a comparison between those solvency needs, the
regulatory capital requirements and the respective company's own funds. PartnerRe Europe and PartnerRe Ireland must
submit an attestation that the information contained in the ORSA Report is accurate subject to permitted estimations and
approximations.
3. Solvency II Compliance Statement: PartnerRe Europe and PartnerRe Ireland submit an attestation asserting that the
respective company has materially complied or not complied with the obligation set out in the European Union (Insurance
and Reinsurance) Regulations 2015 and applicable European Commission Delegated Regulations and European
Commission Implementing Regulations designed as designated enactments in section 2(2A) of the Central Bank Act 1942.
4. Quantitative Reporting Templates (QRTs): The QRTs set out, inter alia, the respective company's technical provisions,
EBS, solvency capital requirement and minimum capital requirement. PartnerRe Europe and PartnerRe Ireland must submit
an attestation that the information contained in the annual QRTs is accurate subject to permitted estimations and
approximations.
5. Regular Supervisory Reports (RSR): PartnerRe Europe and PartnerRe Ireland are required to submit a full RSR to the
Central Bank every 3 years and a summary RSR in the intervening years. The RSR contains details of the respective
company's performance from an underwriting and investment perspective, the business strategy and any material
information on income and expenses. PartnerRe Europe and PartnerRe Ireland must submit an attestation that the
information contained in the RSR or summary RSR is accurate subject to permitted estimations and approximations.
These requirements are in addition to the regulatory returns required to be filed annually with the Central Bank and
additionally, in the case of PartnerRe Ireland, with the National Association of Insurance Commissioners (NAIC) in the U.S.
ESG Requirements. Under Solvency II, PartnerRe Europe and PartnerRe Ireland are obliged to identify, assess and manage
sustainability risk, i.e., any environmental, social or governance event whose occurrence could cause an actual or potential negative
material impact on the respective company's assets or liabilities. As a subsidiary of the Covéa Group, PartnerRe complies with
various legal obligations related to the European Corporate Sustainability Reporting Directive (CSRD) and otherwise.
Cyber Security and Digital Operational Resilience. PartnerRe Europe and PartnerRe Ireland will be subject to the European
Regulation on Digital Operational Resilience (DORA). PartnerRe Europe and PartnerRe Ireland must comply with DORA by
January 17, 2025. DORA, once implemented, will prescribe risk management rules, specific to Information and Communication
Technology and seek to harmonize such rules across the European financial services sector.
Dividends and Distributions. Pursuant to Irish company law, PartnerRe Europe and PartnerRe Ireland are restricted to
declaring dividends only out of “profits available for distribution”. Profits available for distribution are, broadly, a company’s
accumulated realized profits less its accumulated realized losses. Such profits may not include profits previously utilized.
International Branches & Representative Offices. In addition to the above, PartnerRe Europe has also established operating
branches in the U.K., France, Switzerland and Hong Kong, and a representative office in Brazil, which are subject to Irish
reinsurance supervision regulations. In addition, the Hong Kong branch, a composite branch, is subject to regulation by the
Insurance Authority of Hong Kong. Following Brexit, the existing U.K. branch is also subject to local regulation under the Financial
Conduct Authority (FCA) and Prudential Regulation Authority (PRA). PartnerRe Ireland, pursuant to the Non-admitted and
Reinsurance Reform Act of 2010 (part of the Dodd-Frank Act), is a non-admitted alien insurer in the U.S. and is eligible to write
business as an excess and surplus lines insurer in all U.S. states.
PartnerRe Ireland has an operating branch in the U.K. that is subject to both CBI and local regulation under the U.K FCA and
PRA.
United States
PartnerRe U.S. Corporation is a Delaware domiciled holding company for its wholly-owned (re)insurance subsidiaries,
PartnerRe U.S. and PartnerRe America Insurance Company (PRAIC) (PartnerRe U.S. and PRAIC together being the PartnerRe U.S.
Insurance Companies). The PartnerRe U.S. Insurance Companies are subject to regulation under the insurance statutes and
regulations of their domiciliary states (New York in the case of PartnerRe U.S. and Delaware in the case of PRAIC, and all states
where they are licensed, accredited approved to underwrite insurance and reinsurance or commercially domiciled).
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Currently, the PartnerRe U.S. Insurance Companies are licensed, accredited or approved reinsurers and/or insurers in all fifty
states and the District of Columbia, and are subject to the requirements described below.
PRAIC is authorized to transact reinsurance in 12 Latin American countries and Puerto Rico. Additionally, PRAIC is
authorized to transact surplus lines insurance in the U.S. Virgin Islands.
The Company also, through its 100% owned subsidiary, PartnerRe U.S. Corporation, owns 100% of PartnerRe Life
Reinsurance Company of America (PLRA) a life reinsurance company which is subject to regulation under the insurance statutes
and regulations of Arkansas, its state of domicile, and all states where PLRA is licensed, accredited or approved to underwrite
reinsurance.
Risk-Based Capital Requirements. The Risk-Based Capital (RBC) for Insurers Model Act (the Model RBC Act) or similar
legislation has been adopted by all states in the U.S. The main purpose of the Model RBC Act is to provide a tool for insurance
regulators to evaluate the capital of insurers with respect to the risks assumed by them and to determine whether there is a need for
possible corrective action. U.S. insurers and reinsurers are required to report the results of their RBC calculations as part of the
statutory annual statements that such insurers and reinsurers file with state insurance regulatory authorities. The Model RBC Act
provides for four different levels of regulatory actions, each of which may be triggered if an insurer’s Total Adjusted Capital (as
defined in the Model RBC Act) is less than a corresponding level of risk-based capital. Decreases in an insurer’s Total Adjusted
Capital as a percentage of its Authorized Control Level (as defined in the Model RBC Act) triggers increasing regulatory actions.
Such regulatory actions include but are not limited to issuance of orders for corrective action by the insurer, rehabilitation or
liquidation of the insurer. No such actions have been taken with respect to the PartnerRe U.S. Insurance Companies or PLRA.
Insurance Regulatory Information System (IRIS) Ratios. A committee of state insurance regulators developed the NAIC’s IRIS
primarily to assist state insurance departments in executing their statutory mandates to oversee the financial condition of insurance
or reinsurance companies operating in their respective states. IRIS identifies thirteen industry ratios for property/casualty insurers
and twelve industry ratios for life insurers, and specifies usual values for each ratio. Generally, a company will become subject to
regulatory scrutiny if it falls outside the usual ranges with respect to four or more of the ratios, and regulators may then act, if the
company has insufficient capital, to constrain the company’s underwriting capacity. No such action has been taken with respect to
the PartnerRe U.S. Insurance Companies or PLRA.
Reporting Requirements. Regulations vary from state to state, but generally require insurance holding companies and insurers
and reinsurers that are subsidiaries of insurance holding companies to register and file with their state domiciliary regulatory
authorities certain reports, including information concerning their capital structure, ownership, financial condition and general
business operations. State regulatory authorities monitor compliance with, and periodically conduct examinations with respect to,
state mandated standards of solvency, licensing requirements, investment limitations, and restrictions on the size of risks which may
be reinsured, deposits of securities for the benefit of policyholders and creditors, such as reinsureds, methods of accounting for
assets, reserves for unearned premiums and losses, and other purposes. In general, such regulations are for the protection of
reinsureds and, ultimately, their policyholders and creditors, rather than security holders. In the U.S., the New York State
Department of Financial Services (NYDFS) is the domiciliary regulator of PartnerRe U.S., the Delaware Department of Insurance is
the domiciliary regulator of PRAIC and the Arkansas Insurance Department is the domiciliary regulator of PLRA.
Dividends and Distributions. Under New York law, the NYDFS must approve any dividend declared or paid by PartnerRe
U.S. that, together with all dividends declared or distributed by it during the preceding twelve months, exceeds the lesser of 10% of
its statutory surplus as shown on the latest statutory financial statements on file with the NYDFS, or 100% of its adjusted net
investment income. Under Delaware law the Delaware Commissioner of Insurance must approve any dividend declared or paid by
PRAIC that, together with all dividends or distributions made within the preceding 12 months exceeds the greater of (i) ten percent
of PRAIC’s surplus as regards policyholders as of the preceding December 31 or (ii) the net income, not including realized capital
gains, for the 12-month period ending the preceding December 31. In connection with the acquisition by Covéa Coopérations, it was
agreed that PartnerRe US would not take action to declare or distribute any dividend for the two year period from July 12, 2022 to
July 12, 2024 without the prior approval of the NYDFS. Under Arkansas law the Arkansas Insurance Commissioner must approve
any dividend declared or paid by PLRA that, together with all dividends and distributions made within the preceding 12 months
exceeds the greater of (i) ten percent of PLRA's surplus as regards policyholders as of the preceding December 31 or (ii) the net gain
from operations not including capital gains for the twelve-month period ending on the preceding December 31. Arkansas, Delaware
and New York do not permit a dividend to be declared or distributed, except out of earned surplus.
Financial Risks of Climate Change Guidance. On November 15, 2021, the NYDFS issued final guidance for New York-
regulated domestic insurers, such as PartnerRe US, detailing NYDFS expectations related to insurers’ management of the financial
risks from climate change (Guidance). The Guidance sets out NYDFS’s expectations that all New York insurers start integrating the
consideration of the financial risks from climate change into their governance frameworks, business strategies, risk management
processes and scenario analysis, and developing their approach to climate-related financial disclosure. The Guidance also sets out
specific timelines for implementing its various expectations, acknowledging that the substance and nature of disclosures will
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develop over time and thus, permitting implementation over different time periods. The NYDFS set an August 15, 2022 deadline for
New York insurers to meet the NYDFS expectations regarding board governance and to have specific plans in place to address the
NYDFS expectations regarding organizational structure.
Cybersecurity Requirements. Under the NYDFS' Cybersecurity Requirements for Financial Service Companies, regulated
entities, including PartnerRe U.S. Insurance Companies, are required to establish and maintain a cybersecurity program designed to
protect consumer information and the information technology systems of entities subject to NYDFS' oversight and to ensure the
safety and soundness of New York’s financial services industry. Among the requirements are the maintenance of a cybersecurity
program with governance controls, risk-based minimum data security standards for technology systems, cyber breach preparedness
and response requirements, including reporting obligations, vendor oversight, training, and program record keeping and certification
obligations. On November 1, 2023, the NYDFS adopted amendments to its cybersecurity regulation, which include new
requirements for a cybersecurity risk assessment, business continuity planning and testing, notification to the NYDFS in the event of
certain “ransomware” incidents” and an independent audit of the cybersecurity program. These new cybersecurity regulation
requirements come into effect in phases over 2023 through 2025. The SEC also adopted new cybersecurity disclosure rules for SEC
reporting companies that, among other things, require disclosure of material cybersecurity incidents as well as regarding companies’
cybersecurity policies and procedures, and cybersecurity governance and oversight policies. See Item 16K below.
Canada
PartnerRe Life Reinsurance Company of Canada (PartnerRe Canada) is a Canadian incorporated life reinsurer that is a
subsidiary of the Company and is domiciled in Canada. PartnerRe Canada is authorized to insure, in Canada, risks falling within the
classes of Life and Accident and Sickness, limited to the business of reinsurance.
PartnerRe Canada is required to maintain capital in Canada in a custodial account to meet minimum statutory solvency
requirements as required by the Canadian Insurance Act, its regulations and applicable guidelines issued by OSFI. Certain statutory
information is filed with OSFI in respect of the life business written by PartnerRe Canada. This information includes, among other
things, an annual business plan and FCT report from the Appointed Actuary of PartnerRe Canada that tests the adequacy of assets
under various scenarios or "stress tests". It is also necessary for an ORSA to be prepared each year.
On February 15, 2022, all of the reinsurance liabilities and most of the assets and other liabilities of the Canadian branch of
PartnerRe Bermuda were transferred to PartnerRe Canada. On August 22, 2022, OSFI issued an order approving the withdrawal
submission of the Canadian Branch of PartnerRe Bermuda, releasing the branch’s assets in Canada and revoking the order
approving the branch to insure risks in Canada.
The Canadian branch of PartnerRe U.S. holds a license to write reinsurance business in Canada for property and casualty and
accident and sickness business, limited to reinsurance. The Canadian branch of PartnerRe U.S. is subject to local regulation for its
Canadian branch business, specified principally pursuant to Part XIII of the Insurance Companies Act (the Canadian Insurance Act)
applicable to foreign property and casualty companies and to foreign life companies as well as relevant provincial insurance acts.
OSFI supervises the application of the Canadian Insurance Act.
PartnerRe U.S. maintains sufficient assets, vested in trust at a Canadian financial institution, approved by OSFI, to allow its
branch to meet minimum statutory solvency requirements as required by the Canadian Insurance Act, its regulations and applicable
guidelines issued by OSFI. The Canadian branch of PartnerRe U.S. is required to file certain statutory information with OSFI in
respect of the property and casualty reinsurance business written by the branch. This information includes, among other things, an
annual Financial Condition Testing (FCT) report from the Appointed Actuary of the branch that tests the adequacy of the assets that
are vested under various adverse scenarios or "stress tests". It is also necessary for an ORSA to be prepared each year. The branch is
required to have a Chief Agent in Canada to act as its local representative.
Singapore
The Monetary Authority of Singapore (MAS) regulates insurance and reinsurance companies authorized in Singapore,
including PartnerRe Asia.
PartnerRe Asia is the principal reinsurance carrier for the Company’s business underwritten in the Asia Pacific region,
conducting general insurance and life insurance business as a reinsurer. PartnerRe Asia established a representative office in Tokyo,
Japan in February 2022 to promote PartnerRe’s Life and Health capabilities.
Significant aspects of the Singapore reinsurance regulatory framework and requirements include the following:
Corporate Governance. PartnerRe Asia has adopted relevant governance practices and procedures in accordance with its status
as a Tier 1 insurer under the Insurance (Corporate Governance) Regulations 2013. PartnerRe Asia’s corporate governance structure
broadly comprises its Board of Directors, Risk Committee and Audit Committee. The Board consists of 6 directors and includes 3
independent directors. The Risk and Audit Committees are chaired by independent directors.
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Solvency Requirements. PartnerRe Asia is required to establish and maintain separate insurance funds for Singapore policies
and offshore policies. The solvency requirement in respect of each insurance fund at the adjusted fund level shall at all times be not
less than the total risk requirement of the fund (determined by reference to three components being insurance risks, asset risks and
operational risks). In addition, the solvency requirement in respect of PartnerRe Asia as a whole shall at all times be not less than the
total risk requirement of PartnerRe Asia plus a company-specific supervisory capital add-on or SGD 5million, whichever is higher.
The MAS is entitled to require that a licensed reinsurer holds assets of a certain type and prescribed value in Singapore.
Reporting Requirements. PartnerRe Asia must file and submit annual audited financial statements in accordance with
Singapore Financial Reporting Standards and related reports to the Accounting and Corporate Regulatory Authority (ACRA)
together with an annual return of certain core corporate information. Changes to core corporate information during the year must
also be notified to ACRA. These requirements are in addition to the quarterly and annual regulatory returns required to be filed with
the MAS.
Dividends and Distribution. Dividends are generally declared from unappropriated profits. The declaration of a dividend by
PartnerRe Asia is subject to relevant conditions and requirements being met as specified under the Insurance Act (Singapore) and its
associated regulations. Any proposed reduction of capital or redemption of preference shares requires the prior approval of the
MAS. As a licensed reinsurer, PartnerRe Asia is required to maintain minimum paid-up capital of SGD25 million.
In addition to the above, the laws and initiatives issued by the MAS regarding Anti-Money Laundering, Cyber Security,
Outsourcing, Technology Risk Management and Environmental Risk Management currently impact, or may impact, PartnerRe Asia
in the future.
Taxation of the Company and its Subsidiaries
Certain subsidiaries, branch offices and representative offices of the Company are subject to taxation related to operations in
Brazil, Canada, Chile, China, France, Hong Kong, Ireland, Labuan, Mexico, Singapore, Switzerland, the United Kingdom and the
U.S. The discussion below covers the significant locations for which the Company or its subsidiaries are subject to taxation and is
based upon current law. Legislative, judicial or administrative changes may be forthcoming that could affect this summary.
In addition to local taxation, the PartnerRe Group is within scope of the OECD Pillar Two model rules. The Company's
ultimate parent is Covéa (the parent company of the Covéa Group, whose legal form is "SGAM" i.e. a mutual insurance group
company) domiciled in France. Pillar Two legislation was enacted in France's domestic legislation in 2023 and came into effect
from January 1, 2024. Based on French domestic legislation, Covéa SGAM is liable to pay a top up tax for the difference between
its GloBE effective tax rate per tax jurisdiction and the 15% minimum tax rate, except if there is a Qualified Domestic Minimum
Top-Up Tax (QDMTT) enacted in the jurisdiction.
Bermuda
On December 27, 2023, the Government of Bermuda enacted the CIT Act. Entities subject to tax under the CIT Act are the
Bermuda constituent entities of multi-national groups. A multi-national group is defined under the CIT Act as a group with entities
in more than one jurisdiction with consolidated revenues of at least €750 million for two of the four previous fiscal years. If
Bermuda constituent entities of a multi-national group are subject to tax under the CIT Act, such tax is charged at a rate of 15% of
the net income of such constituent entities (as determined in accordance with the CIT Act, including after adjusting for any relevant
foreign tax credits applicable to the Bermuda constituent entities). The CIT Act includes a provision referred to as the economic
transition adjustment, which is intended to provide a fair and equitable transition into the tax regime. Although the commencement
date of the CIT Act is January 1, 2024, no tax is chargeable under the CIT Act until tax years starting on or after January 1, 2025.
PartnerRe Ltd., PartnerRe Bermuda and PRISBe are each subject to this new corporate income tax at a rate of 15% of taxable profit.
Taxable profit will be based on the ultimate parent company accounting standard, which is French GAAP for the Covéa Group, on
one hand, and on the other hand on specific adjustments created by CIT Act, such as the economic transition adjustment.
See Note 16 to the Consolidated Financial Statements in Item 18 of this report for further details including the impact of the
enactment of the CIT Act for the year ended December 31, 2023.
PRISBe has elected under I.R.C Section 953(d) to be treated as a U.S. domestic corporation. See also the discussion of
taxation in United States below.
The Bermuda government has not released any plans to implement Pillar Two. Instead, in response to Pillar Two and as
detailed above, the Bermuda government opted to enact a 15% corporate income tax from January 1, 2025.
Canada
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The Canadian non-life branch of PartnerRe U.S. and PartnerRe Canada are subject to Canadian taxation on their profits. Their
profits are taxed at the federal level, as well as the Ontario provincial level at a combined rate of 26.5% in 2023. See also the
discussion of taxation in the United States below.
The Canadian government has released proposed legislation to implement Pillar Two including both the Income Inclusion
Rule (IIR) and the QDMTT.
France
The French branch of PartnerRe Europe is conducting business in and is subject to taxation in France. The tax on corporate
profits in France has been 25.83% since 2022.
On December 29, 2023, the French government enacted final legislation implementing Pillar Two, including both the IIR and
the QDMTT, to take effect for financial years starting on or after December 31, 2023.
Ireland
The Company’s Irish subsidiaries, PartnerRe Holdings Europe Limited, PartnerRe Europe, PartnerRe Ireland and PartnerRe
Ireland Finance dac conduct business in and are subject to taxation in Ireland. Profits of an Irish trade or business are subject to Irish
corporation tax at the rate of 12.5%, whereas profits arising from other than a trade or business are taxable at the rate of 25%. The
Swiss, U.S. and French branches and subsidiaries of PartnerRe Europe are subject to taxation in Ireland at the Irish corporation tax
rate of 12.5%. However, under Irish domestic tax law, the amount of tax paid in Switzerland, U.S. and France can be credited or
deducted against the Irish corporation tax. As a result, the Company does not expect to incur significant taxation in Ireland with
respect to the Swiss, U.S. and French branches.
On December 18, 2023, the Irish government enacted final legislation implementing Pillar Two, including both the IIR and the
QDMTT, to take effect for financial years starting on or after December 31, 2023.
Singapore
The Company’s Singapore subsidiary, PartnerRe Asia, is subject to corporate taxation in Singapore at the rate of 10% on
profits arising from onshore and offshore business. In previous years (up to the year ended December 31, 2021), certain exemptions
were available to profits derived from certain lines of business. However, commencing from January 1, 2022 these exemptions were
no longer available in respect of these specific lines of business to PartnerRe Asia.
The Singaporean government has released plans to implement Pillar Two, including both the IIR and QDMTT, for financial
years beginning on or after January 1, 2025.
Switzerland
The Swiss branch of PartnerRe Europe is subject to Swiss taxation, mainly on profits and capital. To the extent that net profits
are generated, profits are taxed at a rate of 19.65%. Following federal tax reform, the statutory corporate income tax rate decreased
from 21.15% to 19.7% in 2021 and to 19.65% in 2022. The branch pays capital taxes at a rate of approximately 0.17% on its
imputed branch capital calculated according to a procured taxation ruling. See also the discussion of taxation in Ireland above.
On December 28, 2023, the Swiss government enacted final legislation implementing Pillar Two in the form of the QDMTT to
take effect for financial years from January 1, 2024.
United Kingdom
The Company's operations in the United Kingdom, including the United Kingdom branches of PartnerRe Europe and
PartnerRe Ireland, are subject to United Kingdom taxation on their profits at a rate of 25% for the financial year beginning April 1,
2023 (19% for the financial year beginning April 1, 2022).
On July 11, 2023, the United Kingdom government enacted final legislation implementing Pillar Two, including both the IIR
and the QDMTT, to take effect for financial years starting on or after December 31, 2023.
United States
PartnerRe U.S. Corporation and its subsidiaries, including PLRA, (collectively PartnerRe U.S. Companies) transact business
in and are subject to taxation in the U.S. The Canadian non-life branch of PartnerRe U.S. conducts business in Canada and is subject
to taxation in Canada as discussed above. Under U.S. tax law, the amount of tax paid in Canada by the Canadian non-life branch of
PartnerRe U.S. can be credited or deducted against U.S. corporation tax.
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In addition, PartnerRe Europe and PartnerRe Ireland write certain U.S. and Latin American business through their U.S.
reinsurance intermediaries. As a result, PartnerRe Europe and PartnerRe Ireland are deemed to be engaged in a U.S. trade or
business and thus are subject to taxation in the U.S. The current statutory rate of tax on corporate profits in the U.S. is 21%. See the
discussion of U.S. branch taxation below and the discussion of taxation in Ireland above.
On this basis, the Company does not expect that it and its subsidiaries, other than the PartnerRe U.S. Companies, PartnerRe
Europe and PartnerRe Ireland for business conducted through their U.S. intermediaries, and PRISBe, will be required to pay U.S.
corporate income taxes (other than withholding taxes as described below). However, because there is considerable uncertainty as to
the activities that constitute a trade or business in the U.S., there can be no assurance that the IRS will not contend successfully that
the Company or its non-U.S. subsidiaries (other than PartnerRe Europe, PartnerRe Ireland, and PRISBe) are engaged in a trade or
business in the U.S. The maximum federal tax rate is currently 21% for a corporation’s income that is effectively connected with a
trade or business in the U.S. In addition, U.S. branches of foreign corporations may be subject to the branch profits tax, which
imposes a tax on U.S. branch after-tax earnings that are deemed repatriated out of the U.S., for a potential maximum effective
federal tax rate of approximately 45% on the net income connected with a U.S. trade or business.
Foreign corporations not engaged in a trade or business in the U.S. are subject to U.S. income tax, effected through
withholding by the payer, on certain fixed or determinable annual or periodic gains, profits and income derived from sources within
the U.S. as enumerated in Section 881(a) of the Internal Revenue Code, such as dividends and interest on certain investments.
The U.S. imposes a base erosion and anti-abuse tax (BEAT) on certain payments from entities subject to U.S. tax to related
foreign persons, also referred to as base erosion payments. Base erosion payments generally include any amounts that are
deductible, including reinsurance premiums ceded to a related foreign person. Entities that meet certain thresholds are required to
pay the minimum BEAT. The minimum BEAT is based on the excess of a percentage of the entities’ modified taxable income over
its regular tax liability for the year. Modified taxable income is the taxpayer’s regular taxable income increased by any base erosion
tax benefit with respect to any "base erosion payment" and an adjustment for the taxpayer’s net operating loss deduction, if any. The
modified taxable income is taxed at 10% in 2019 through 2025, and 12.5% thereafter. This provision generally applies to entities
that are subject to US net income tax with average annual gross receipts of at least $500 million and that have made foreign related-
party deductible payments totaling 3% or more of the entities’ total deductions for the year.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022, which applies to tax years
commencing after December 31, 2022, which among other things implements a 15% minimum tax on book income of certain large
U.S. domestic groups (with a three year annual average book income of $1 billion or greater) or certain large non-U.S. parented
groups that have U.S domestic corporations (with a three year annual average book income of $1 billion or greater at the
consolidated non-U.S. parent level and $100 million or greater at the U.S domestic level). Should the PartnerRe U.S. Companies,
PartnerRe Europe and PartnerRe Ireland for business conducted through their U.S. intermediaries, or PRISBe ever have an effective
corporate income tax rate of less than 15% and the above thresholds are met for a non-U.S. parented group, they may be subject to
the 15% minimum tax on book income.
The U.S. also imposes an excise tax on insurance and reinsurance premiums paid to foreign insurers or reinsurers with respect
to risks located in the U.S. The rate of tax applicable to reinsurance premiums paid to PartnerRe Bermuda is 1% of gross premiums.
The U.S. government has not released any plans to implement Pillar Two.
Legal Proceedings
The Company’s reinsurance subsidiaries, and the insurance and reinsurance industry in general, are subject to litigation and
arbitration in the normal course of their business operations. In addition to claims litigation and disputes, the Company and its
subsidiaries may be subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly
relate to claims on reinsurance contracts. While the outcome of any such litigation cannot be predicted with certainty, the Company
will dispute all allegations against the Company and/or its subsidiaries that management believes are without merit.
For information regarding legal proceedings, see Note 19(d) to the Consolidated Financial Statements in Item 18 of this report.
C. Organizational Structure
The Company's Class A common shares are owned by Covéa Coopérations, a French stock corporation (société anonyme),
which is part of the Covéa Group. Five French mutual insurance companies own all the shares of Covéa Coopérations. The
shareholders of Covéa Coopérations are: (i) MMA IARD Assurances Mutuelles (21.528%), (ii) MMA Vie Assurances Mutuelles
(11.805%), (iii) AM-GMF (33.333%), (iv) MAAF Assurances (33.161%) and (v) MAAF Santé (0.173%). The five mutual entities,
shareholders of Covéa Coopérations, have no shareholding link with Covéa (the parent company of the Covéa Group, whose legal
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form is "SGAM" i.e. a mutual insurance group company) but are subject to its control through affiliation contracts. Consequently
Covéa (SGAM) does not hold voting rights in the five mutual entities.
The Company’s principal operating subsidiaries at December 31, 2023 are as follows:
Partner Reinsurance Company Ltd.
Partner Reinsurance Europe SE
Partner Reinsurance Company of the U.S.
Partner Reinsurance Asia Pte. Ltd.
PartnerRe Life Reinsurance Company of Canada
Jurisdiction
Bermuda
Ireland
New York, United States
Singapore
Canada
Percentage Interest Held
100%
100%
100%
100%
100%
See History and Development of the Company section above and also Share Ownership section in Item 6.E and Notes 1, 14
and 17 to the Consolidated Financial Statements in Item 18 of this report for further details.
See Exhibit 8.1 to this annual report on Form 20-F for a listing of the Company’s subsidiaries.
D. Property, Plants and Equipment
The Company leases office space in Pembroke (Bermuda) where its principal executive offices are located. Additionally, the
Company leases office space in various other locations, principally in Dublin, Stamford (Connecticut, U.S.), Toronto, Paris,
Singapore and Zurich.
The Company directly holds certain real estate investments located in London, U.K. Refer to Note 2(h) to the Consolidated
Financial Statements in Item 18 of this report for further details.
ITEM 4.A UNRESOLVED STAFF COMMENTS
None.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The financial information for the years ended December 31, 2023, 2022 and 2021 presented below is based on, or has been
derived from, and should be read in conjunction with, the U.S. GAAP Consolidated Financial Statements presented in Item 18 of
this report. The financial results below are presented in U.S. dollars as the reporting currency.
PartnerRe Ltd. has made statements in this annual report on Form 20-F that are forward-looking statements. In some cases,
you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” the negative of these terms and other comparable
terminology. These forward-looking statements, which are subject to various risks, uncertainties and assumptions about us, may
include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business.
These statements are only predictions based on our current expectations and projections about future events. There are important
factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level
of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors described
in Risk Factors in Item 3.D of this report.
Accordingly, we cannot guarantee future results, level of activity, performance or achievements. Forward-looking statements,
subject to the risks, uncertainties and assumptions described above, speak only as of the date on which they are made, and we
assume no obligation to update or revise any forward-looking statements or other information contained herein, whether as a result
of new information, future events or otherwise. You are cautioned not to put undue reliance on these forward-looking statements.
Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-
looking statements.
The Company's Consolidated Financial Statements are prepared in accordance with U.S. GAAP, and accordingly, we are
required to adopt new or revised accounting standards issued by the FASB. The FASB issued Accounting Standards Update (ASU)
2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts, which resulted in changes in how we account for
long-duration contracts, including recognition, measurement, presentation and disclosure requirements. The Company adopted this
accounting guidance and required disclosures for the year ended December 31, 2023. In accordance with the transition guidance, we
have updated our prior period Consolidated Financial Statements presented herein to reflect LDTI. Refer to Notes 2 and 3 in the
Consolidated Financial Statements in Item 18 for further details.
Executive Overview
The Company is a leading global reinsurer, with a broadly diversified and balanced portfolio of traditional reinsurance risks
and capital markets risks. The Company has three segments: P&C, Specialty, and Life and Health (see Results by Segment below).
The Company is in the business of assessing and assuming risk for an appropriate return. The Company creates value through
its ability to understand, evaluate, diversify and distribute risk. The Company's strategy is formulated on a capital-based risk appetite
and the selected risks that management believes will allow the Company to meet its goals for appropriate profitability and risk
management within that appetite. Management believes that this construct allows the Company to balance the cedant’s need for
confidence of claims payment with shareholder needs for an appropriate return on capital.
The Company’s long-term objective is to provide reinsurance capacity to clients and manage a portfolio of diversified risks
that will create shareholder value. The Company’s profitability in any particular period can be significantly affected by large
catastrophic or other large losses and the impact of changes in interest rates, credit spreads and equity markets on the fair value of
investments, future policy benefit liabilities, and the fair value of MRB assets or liabilities (see Key Factors Affecting Year-over-
Year Comparability below). Accordingly, the Company’s performance during any particular period is not necessarily indicative of
its performance over the longer-term reinsurance cycle.
Non-life Reinsurance Operations
The Company generates its non-life reinsurance revenue from premiums. Premium rates and overall terms and conditions vary
depending on market conditions. The Company writes a large majority of its non-life business on a treaty basis with the majority
renewing on January 1. The remainder of this business renews at other times during the year. In addition to treaty business, the
Company writes direct and facultative business which renews throughout the year.
In an increasingly competitive market environment, and considering increased regulatory and rating agency expectations, the
Company continues to focus on its risk management strategy, financial strength, underwriting selection process and global presence.
The Company removes the volatility associated with those risks from the client and then manages those risks and the risk-related
volatility. The Company's global presence and broad product offerings allows it to achieve portfolio diversification of risks.
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Pricing cycles are driven by supply of capital in the industry and demand for reinsurance and insurance and other risk transfer
products. The reinsurance business is also influenced by several other factors, including variations in interest rates and financial
markets, changes in legal, regulatory and judicial environments, loss trends, inflation, foreign exchange rate changes and general
economic conditions.
A key challenge facing the Company is successfully managing risk through all phases of the reinsurance cycle. The Company
believes that its long-term strategy of closely monitoring and being selective in the business that it writes, and maintaining the
diversification and balance of its portfolio, will optimize returns over the reinsurance cycle. Individual businesses and markets have
their own unique characteristics and are at different stages of the reinsurance pricing cycle at any given point in time. Management
believes the Company has an appropriate portfolio diversification by product, geography, type of business, length of tail and
distribution channel. Further, management believes that this diversification, in addition to the financial strength of the Company and
its strong global franchise, will help to mitigate cyclical declines in underwriting profitability.
The non-life reinsurance market has historically been highly cyclical in nature as evidenced by hard and soft markets. For
many years, with the exception of lines and markets impacted by specific catastrophic or large loss events, the Company has
experienced soft market conditions with either general decreases, no changes, or marginal improvements, in pricing and
profitability. During 2022, following continued large losses for events such as Hurricane Ian, together with a challenging
macroeconomic environment, the market continued to harden. At the January 1st, 2023 renewals, the Company continued to
improve its portfolio through higher attachment points on its property catastrophe portfolio and tighter terms and conditions and
increased rates above inflation trends. During 2023, the Company benefited from its shift to higher attachment points which saw a
reduction in catastrophe activity impacting earnings, while seeing premium growth in its property and catastrophe portfolios.
Life and Health Reinsurance Operations
The Company’s Life and Health segment derives revenues primarily from premiums. Within the Life and Health segment, the
Company writes mortality, morbidity, longevity and financial reinsurance solutions products. The Life and Health business provides
the Company with diversification benefits and balance to its portfolio as they are generally not correlated to the Company’s Non-life
business.
The profitability of the Life and Health business mainly depends on the volume and amount of death and disability claims
incurred, medical claims and expenses, and the ability to adequately price the risk the Company assumes. The majority of the life
premium arises from long-term in-force contracts. The life reinsurance policies are often in force for the remaining lifetime of the
underlying individuals insured, with premiums earned typically over a period of 10 to 30 years. The volume of the business may be
reduced each year by lapses, voluntary surrenders, death of insureds and recaptures by ceding companies. While death claims are
reasonably estimated over a period of many years, claims become less predictable over shorter periods and can fluctuate
significantly from period to period. Similarly, while the volume of medical claims can be predicted to a certain extent, the amount of
claims and expenses depends on various factors, primarily healthcare inflation rates, driven by a shift towards the older population,
reliance on expensive medical equipment and technology and changes in demand for healthcare services over time. Compared to the
Non-life markets, the Life and Health reinsurance markets are more concentrated, with fewer market participants.
During 2023, the Company continued to execute its growth strategy in the Life and Health segment by continuing to increase
new business volume in life business and hiring additional employees to support further growth in this segment.
Industry Environment
The reinsurance environment has become more and more complex, as traditional forms of risk are increasingly exposed to
globalization and urbanization and as new forms of risks have developed (such as cyber, geopolitical and supply chain). The need
for reinsurance is further supported by factors such as primary insurers' needs to reduce volatility in earnings and a high protection
gap in the non-life and life and health reinsurance and emerging markets.
Strategic Initiatives
The Company's key strategy is to focus on reinsurance of business written by our cedants, and where supported by market
conditions, opportunistically expand our direct insurance business through strategic partnerships with MGAs. The Company is
focused on striking the right balance between top down and bottom up risk selection by broadening scope and client penetration for
well-understood, efficient risk classes and keeping a selective approach for less predictable risk patterns. Among the Company's
strategic priorities are growing the non-life footprint with selected clients and brokers, including through retrocession to third-party
capital vehicles and using retrocession to enhance balance sheet strength and growing the Life and Health book in targeted product
segments and geographies. The Company will continue to execute its growth strategy in the Life and Health segment by continuing
to increase new business volume and leveraging new talent hired to support further growth in this segment.
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Reinsurance Market Outlook
The Company believes that overall, reinsurance will broadly remain a cyclical market, primarily as a result of capital inflows
and outflows, and that the cycles will become more specific and local, with less global amplitude. Large loss activity over the last
years and current economic conditions have led to favorable rate movements across lines of business, though more particularly
pronounced for property, and the Company expects these conditions to persist over the near term even as competition increases.
The outlooks for 2024 for each of the Company's segments are summarized as follows:
2024 Non-life Outlook
The January 1, 2024 renewals were more orderly than the previous year. While there was more competition on higher layers
for property catastrophe lines, factors such as the increased retentions achieved at last year's renewal, continuous growth of
exposure, ongoing uncertainty about level of impact from climate change and a tempered insurance linked securities market
expansion combined to maintain attractive market conditions. In casualty lines, despite ample supply, reinsurers were able to push
for better pricing and lower ceding commissions with a growing focus around reserve adequacy on older underwriting years in the
context of economic and social inflation. In Specialty lines, we continue to observe positive rate pressure on the lines that are
impacted by political violence, terror and war.
2024 Life and Health Outlook
Life and Health premiums are written through out the year, with only a limited portion of short-term business premiums
written associated with the January 1, 2024 renewal. Management expects continued growth in the Company’s life portfolio in 2024
at constant foreign exchange rates, across all regions. Pricing conditions are not expected to materially differ from 2023.
Investment Operations
The Company generates revenue from its investment portfolio through net investment income, including interest on fixed
maturities and dividends on equity securities, interest in earnings of equity method investments, and realized and unrealized gains
on investments.
For the Company’s investment risks, which include public and private markets and real estate investments, diversification of
risk is critical to achieving the risk and return objectives of the Company.
From a risk management perspective, the Company allocates its invested assets into two categories: liability funds and capital
funds. The Company’s investment policy distinguishes between liquid, high quality (investment grade) assets that support the
Company’s liabilities, and the more diversified, higher risk asset classes that are allowed within the Company’s capital funds.
Liability funds represent invested assets supporting the net reinsurance liabilities, and are invested primarily in investment-
grade fixed maturity securities and cash and cash equivalents. The preservation of liquidity and protection of capital are the primary
investment objectives for these assets. The portfolio managers are required to adhere to investment guidelines as to minimum ratings
and issuer and sector concentration limitations. Liability funds are invested in a way that generally matches them to the
corresponding liabilities (referred to as asset-liability matching) in terms of both duration and major currency composition to
provide the Company with a natural hedge against changes in interest and foreign exchange rates. In addition, the Company utilizes
certain derivatives to further protect against changes in interest and foreign exchange rates. Liability funds represented
approximately 55% and 59% of the total invested assets at December 31, 2023 and 2022, respectively.
Capital funds represent total capital of the Company, which includes shareholders' equity and debt liabilities, and are invested
in a diversified portfolio with the objective of maximizing investment return, subject to prudent risk constraints. Capital funds
contain most of the asset classes typically viewed as offering a higher risk and higher return profile, subject to risk assumption and
portfolio diversification guidelines which include issuer and sector concentration limitations. Capital funds may be invested in
investment grade and below investment grade fixed maturity securities, publicly listed and private equities, bond and loan
investments, real estate investments, structured credit and certain other specialty asset classes. Capital funds represented
approximately 45% and 41% of the total invested assets at December 31, 2023 and 2022, respectively.
While there will be periods where capital fund investments may earn less than the risk-free rate of return, or potentially
produce negative results, the Company believes the rewards for assuming these risks in a disciplined and measured way will
produce a positive excess return to the Company over time. Additionally, since a portion of our investment risks are not fully
correlated with the Company’s reinsurance risks, this increases the overall diversification of the Company’s total risk portfolio.
The Company employs a prudent investment philosophy. It maintains a high quality, well-balanced and liquid portfolio with
total investment return achieved through a combination of optimizing current investment income and pursuing capital appreciation.
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The Company’s investment strategy allows for the use of certain derivative instruments, subject to strict limitations. The
Company may utilize various derivative instruments, such as treasury note and equity futures contracts, credit default swaps, foreign
currency option contracts, equity option contracts, foreign exchange forward contracts, total return and interest rate swaps,
insurance-linked securities, and to-be-announced mortgage-backed securities (TBAs) for the purpose of managing and hedging
currency risk, market exposure and portfolio duration, hedging certain investments, mitigating the risk associated with underwriting
operations, or enhancing investment performance that would be allowed under the Company’s investment policy if implemented in
other ways. The use of financial leverage, whether achieved through derivatives or margin borrowing, requires approval from the
Board. At December 31, 2023, the Company had no significant financial leverage achieved through derivatives and no margin
borrowing has been approved by the Board.
The Company follows prudent investment guidelines through a strategy that seeks to maximize returns while managing
investment risk in line with the Company’s overall objectives of earnings stability and long-term book value growth. A key
challenge for the Company is achieving the right balance in changing market conditions. The Company regularly reviews the
allocation of investments to asset classes within its investment portfolio and allocates investments to those asset classes the
Company anticipates will outperform in the future, subject to limits and guidelines. Similarly, the Company reduces its exposure to
asset classes where returns are deemed unattractive. The Company may also lengthen or shorten the duration of its fixed maturity
portfolio in anticipation of changes in interest rates, or increase or decrease the amount of credit risk it assumes, depending on credit
spreads and anticipated economic conditions.
In 2023, the investment portfolio benefited from significant reinvestment of maturities on short-duration investments made
when rates were significantly lower as well as positive net operating income resulting in higher net investment income. With current
market yields above book yields, management expects higher net investment income in 2024.
A. Operating Results
At December 31, 2023, Covéa Coopérations held 100% of the 100 million Class A shares of $0.00000001 par value each for a
total share capital of $1.00. The Class A shares were acquired from EXOR Nederland N.V. on July 12, 2022. The common shares
are not listed.
Key Factors Affecting Year-over-Year Comparability
The key factors affecting the year-over-year comparability of the Company’s net income or loss for the years ended December
31, 2023, 2022 and 2021 include the following:
• Volatility in capital markets impacting investment results and market risk benefit gains
• Large catastrophic and man-made loss events impacting Non-life segment underwriting results, including the effects of the
events discussed below
• Foreign exchange rate fluctuations
•
Income tax changes, including the enactment of the Bermuda CIT Act in 2023, which led to a net deferred tax benefit
recognized in 2023.
These factors, as well as other factors described below, may continue to affect our results of operations and financial condition
in the future. Each of these key factors is discussed further in the Review of Net Income or Loss section below for each of the years
ended December 31, 2023, 2022 and 2021.
Review of Net Income or Loss
The components of net income or loss for the years ended December 31, 2023, 2022 and 2021 are presented in the Company’s
Consolidated Statements of Operations, and in the breakdown by segment in Note 22 to the Consolidated Financial Statements, in
Item 18 of this report.
Management analyzes the Company’s net income or loss in three parts: underwriting result, investment result, and corporate
and other, which comprises the other components of net income or loss not allocated to the Company’s P&C, Specialty and Life and
Health segments.
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The net income or loss for the years ended December 31, 2023, 2022 and 2021 was comprised as follows (in millions of U.S.
dollars):
Underwriting result by segment
P&C
Specialty
Total Non-life
Life and Health (1)
Investment result
Corporate and other
Net income (loss)
2023
2022
2021
$
$
$
698 $
452 $
373
297
1,071 $
749 $
86
72
1,157 $
821 $
1,148
13
$
2,318 $
(1,560)
(201)
(940) $
202
305
507
44
551
541
(328)
764
(1) Underwriting result excludes net investment income allocated to Life and Health as part of the allocated underwriting result of
$73 million, $74 million and $81 million for the years ended December 31, 2023, 2022 and 2021, respectively. Allocated
underwriting result is the metric management uses to measure results for the Life and Health segment, as described below.
The components of net income (loss), and changes for the years presented above, are described below.
Underwriting Result
Underwriting result consists of technical result (which is net premiums earned less losses and loss expenses and acquisition
costs) and other income (loss), less other expenses that are attributable to the respective segment. Underwriting result is a primary
measure of underlying profitability for the Company’s core reinsurance operations, separate from the investment results, and is used
to manage and evaluate the Company's Non-life segments (P&C and Specialty). Management measures results for the Life and
Health segment on the basis of the allocated underwriting result, which includes underwriting result and net investment income
allocated to Life and Health business. The Company believes that in order to enhance the understanding of its profitability, it is
useful for our shareholders and other users of this report to evaluate the components of net income or loss separately and in the
aggregate. Underwriting result should not be considered a substitute for net income or loss and does not reflect the overall
profitability of the business, which is also impacted by investment results and other items included in Corporate and other above and
discussed in more detail below in the Corporate and Other section.
Results by Segment
The Company monitors the performance of its operations in three segments: P&C, Specialty and Life and Health. See Note 22
to the Consolidated Financial Statements included in Item 18 of this report for a description of the Company’s segments, a
discussion on how the Company measures its segment results (including definitions and quantification of loss ratio, acquisition
ratio, technical ratio, other expense ratio and combined ratio) and a breakdown of net income or loss, including underwriting results
by segment, for each of the years ended December 31, 2023, 2022 and 2021. Business reported in each segment is, to a significant
extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly
against other currencies and this should be considered when making year-over-year comparisons. See Corporate and Other—
Foreign exchange movements section below for further details of movements in foreign exchange.
Non-life Results
The Non-life underwriting results for 2023, 2022 and 2021 are comprised of premiums earned reduced for losses and loss
expenses (which included losses from large catastrophic losses and large loss events, partially offset by net favorable prior year
development), acquisition costs and other expenses, as more fully described below.
Large catastrophic and man-made loss events
As the Company’s reinsurance operations are exposed to low-frequency and high-severity risk events, some of which are
seasonal and climate related, results for certain periods may include unusually low loss experience, while results for other periods
may include modest or significant loss experience driven by catastrophic losses. The Company generally considers large
catastrophic or man-made loss events greater than $35 million, net of retrocession and reinstatement premiums, to be named events.
The table below also includes losses for individual catastrophic or man-made events greater than $10 million but below $35 million,
net of retrocession and reinstatement premiums, as well as losses under aggregate covers. Collectively, these amounts are hereinafter
referred to as large losses.
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The impact of large losses on the Company’s underwriting results for the years ended December 31, 2023, 2022 and 2021 was
as follows (in millions of U.S. dollars, except ratios):
2023
P&C
Segment
Specialty
Segment
Total
Non-life
P&C
Segment
2022
Specialty
Segment
Total
Non-life
P&C
Segment
2021
Specialty
Segment
Total
Non-life
Large losses
$
99 $ 119 $ 218 $ 409 $ 137 $ 546 $ 450 $ 117 $ 567
Impact on combined ratio
2.5 % 6.3 % 3.7 % 10.4 %
8.2 %
9.7 % 12.8 %
6.5 % 10.6 %
Named large catastrophic and man-made events, individually above $35 million net of retrocession and reinstatement
premiums, and related losses on aggregate covers were comprised as follows:
•
•
•
2023: $37 million related to Hurricane Otis
2022: $489 million related to Hurricane Ian, the ongoing conflict between Russia and Ukraine, the Natal Floods, the
Australian Floods, and the French Hailstorms
2021: $483 million related to Hurricane Ida, Winter Storm Uri, the European Floods
Losses and loss expenses for 2023, 2022 and 2021 were also impacted by non-life prior years' reserve development. Non-life
net favorable prior years' reserve development was $47 million (0.8 points reduction to the combined ratio) for 2023, $220 million
(3.9 points reduction to the combined ratio) for 2022 and $194 million (3.6 points reduction to the combined ratio) for 2021. See
Note 9 to the Consolidated Financial Statements in Item 18 of this report for a further discussion of the reserve development related
to prior accident years.
P&C Segment
The components of underwriting result and the corresponding ratios for the P&C segment for the years ended December 31,
2023, 2022 and 2021 were as follows (in millions of U.S. dollars, except ratios):
Gross premiums written
Premiums ceded
Net premiums written
Net premiums earned
Losses and loss expenses
Acquisition costs
Technical result
Other expenses (1)
Underwriting result
Loss ratio
Acquisition ratio
Technical ratio
Other expense ratio
Combined ratio
$
$
$
$
$
2023
2022
2021
$
$
$
$
$
4,771
(862)
3,909
3,946
(2,196)
(960)
790
(92)
698
55.7 %
24.3
80.0 %
2.3
82.3 %
$
$
$
$
$
5,025
(791)
4,234
3,941
(2,410)
(995)
536
(84)
452
61.2 %
25.2
86.4 %
2.1
88.5 %
4,541
(819)
3,722
3,528
(2,391)
(864)
273
(71)
202
67.8 %
24.5
92.3 %
2.0
94.3 %
(1) The Company allocates certain other expenses that vary with business written by its operating segments. See Other expenses in
Corporate and Other section below.
The P&C segment represented 49%, 56% and 52% of total net premiums written in 2023, 2022 and 2021, respectively.
46
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2023 compared to 2022
The underwriting result increased $246 million year-over-year, an improvement in the combined ratio of 6.2 points, driven by
a decrease in the loss ratio of 5.5 points.
Gross premiums written decreased by $254 million, or 5%. The decrease was driven primarily by reductions in casualty
business, partially offset by growth in catastrophe business, where market conditions continued to be favorable. Premiums ceded
increased 9.0% year-over-year, driven by an increase in retrocession purchasing.
Net premiums earned were stable year-over-year, primarily driven by the earn-in of prior year increases in premiums written
and from premium exposure adjustments on prior underwriting years.
The loss ratio improved by 5.5 points, driven by an improvement in the current accident year loss ratio, which primarily
benefited from a reduction in large losses, partially offset by a lower level of favorable prior years' reserve development. Large
losses for 2023, which included impacts from Hurricane Otis and other large losses, decreased compared to large losses incurred in
2022, which included impacts from Hurricane Ian, the Australian Floods, the Natal Floods, and the French Hailstorms, and losses on
aggregate covers associated with these events. Prior years' reserve development was 0.2 points favorable for 2023 as compared to
3.9 points favorable for 2022.
The acquisition cost ratio of 24.3% and the other expense ratio of 2.3% for 2023 were comparable to the same ratios for 2022.
2022 compared to 2021
The underwriting result increased $250 million year-over-year, an improvement in the combined ratio of 5.8 points, driven by
a decrease in the loss ratio of 6.6 points.
Gross premiums written increased by $484 million, or 11%. This increase was driven by growth in both the casualty and
catastrophe business, where market conditions continued to be favorable. Ceded premiums written were relatively stable, declining
3.4% year-over-year, driven by a slight decrease in retrocession purchasing.
Net premiums earned increased 12%, primarily driven by increased current underwriting year contribution from production
volume increases, the earn-in of prior year increases in premiums written and from premium exposure adjustments on prior
underwriting years.
The loss ratio improved by 6.6 points, driven by an improvement in the current accident year attritional loss ratio, which
benefited from continued portfolio reshaping as well as rate increases, a reduction in large losses and a higher level of favorable
prior years' reserve development. Large losses for 2022, which included impacts from Hurricane Ian, the Australian Floods, the
Natal Floods, and the French Hailstorms, and losses on aggregate covers associated with these events during 2022 decreased
compared to large losses incurred in 2021, which was impacted by Hurricane Ida, Winter Storm Uri, the European Floods and losses
on aggregate covers associated with those events. Prior years' reserve development was 3.9 points favorable for 2022 as compared to
2.0 points favorable for 2021.
The acquisition cost ratio of 25.2% and the other expense ratio of 2.1% for 2022 were comparable to the same ratios for 2021.
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Specialty Segment
The components of underwriting result and the corresponding ratios for the Specialty segment for the years ended
December 31, 2023, 2022 and 2021 were as follows (in millions of U.S. dollars, except ratios):
Gross premiums written
Premiums ceded
Net premiums written
Net premiums earned
Losses and loss expenses
Acquisition costs
Technical result
Other expenses (1)
Underwriting result
Loss ratio
Acquisition ratio
Technical ratio
Other expense ratio
Combined ratio
$
$
$
$
$
2023
2022
2021
$
$
$
$
$
2,223
(284)
1,939
1,892
(986)
(494)
412
(39)
373
52.1 %
26.1
78.2 %
2.1
80.3 %
$
$
$
$
$
1,990
(325)
1,665
1,670
(903)
(435)
332
(35)
297
54.1 %
26.0
80.1 %
2.1
82.2 %
2,016
(227)
1,789
1,802
(1,052)
(415)
335
(30)
305
58.4 %
23.0
81.4 %
1.7
83.1 %
(1) The Company allocates certain other expenses that vary with business written by its operating segments. See Other expenses in
Corporate and Other section below.
The Specialty segment represented 25%, 22% and 25% of total net premiums written in 2023, 2022 and 2021, respectively.
2023 compared to 2022
The underwriting result increased $76 million year-over-year, an improvement in the combined ratio of 1.9 points, driven by
an improvement in the loss ratio of 2.0 points.
Gross written premiums increased by $233 million, or 12%, driven by growth in property and energy lines of business,
partially offset by continued strategic reductions in agriculture. Premiums ceded decreased 13% year-over-year, driven by a
decrease in retrocession purchasing. Net premiums earned increased 13% in line with gross written premiums discussed above.
The loss ratio improved by 2.0 points, driven by an improvement in the current accident year attritional loss ratio due to
strategic changes in the mix of business to more profitable lines and a decrease in large losses, partially offset by a lower level of
favorable prior years' reserve development. Prior years' reserve development was 2.1 points favorable for 2023 compared to 4.1
points favorable for 2022, with favorable development in 2023 driven by reserve releases in agriculture, financial risks and
multiline, partially offset by adverse development in marine and aviation lines.
The acquisition cost ratio of 26.1% and the other expense ratio of 2.1% for 2023 were comparable to the same ratios for 2022.
2022 compared to 2021
The underwriting result decreased $8 million year-over-year, or 3%. Despite this decrease, the combined ratio improved 0.9
points, driven by an improvement in the loss ratio of 4.3 points, partially offset by an increase in the acquisition ratio of 3.0 points.
Gross written premiums decreased by $26 million, or 1%, as reductions in agriculture, engineering and aviation lines resulting
from strategic business mix decisions were partly offset by growth in the financial risks, marine and energy lines of business.
Premiums ceded increased 43% year-over-year, driven by an increase in retrocession purchasing, including from the Company's
third party capital vehicles. Net premiums earned decreased 7% primarily due to the Company's focus on portfolio optimization and
reflected the changes in the mix of business discussed above.
The loss ratio improved by 4.3 points, driven by an improvement in the current accident year attritional loss ratio due to
strategic changes in the mix of business to more profitable lines, partially offset by a lower level of favorable prior years' reserve
development and an increase in large losses. Prior years' reserve development was 4.1 points favorable for 2022 compared to 6.9
points favorable for 2021, with favorable development in 2022 driven by reserve releases in property, marine and energy lines.
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The increase in the acquisition cost ratio of 3.0 points was primarily driven by changes in the mix of business discussed above,
as well as an increase in profit commission associated with favorable prior year reserve development during 2022.
Life and Health Segment
The Company provides reinsurance of life and health related risks including mortality, morbidity, longevity and financial
reinsurance solutions. Reinsurance coverage is mainly provided to primary life insurers to protect against individual and group
mortality and disability risks. The Company also provides reinsurance coverage mainly to primary life insurers who provide
pensions or issue annuity contracts offering long-term retirement benefits to consumers, who, in turn, seek protection against
outliving their financial resources.
Mortality and morbidity business is written primarily on a proportional basis through treaty agreements and is subdivided into
death and disability covers (with various riders), term assurance and critical illness (TCI) and GMDB. The Company also writes
certain treaties on a non-proportional basis.
Longevity business is written on a long-term, proportional basis. The Company’s longevity portfolio is subdivided into
standard and non-standard annuities. The non-standard annuities are sold by insurance companies to consumers with aggravated
health conditions and are usually medically underwritten on an individual basis.
The components of the allocated underwriting result for the Life and Health segment for the years ended December 31, 2023,
2022 and 2021 were as follows (in millions of U.S. dollars):
Gross premiums written
Premiums ceded
Net premiums written
Net premiums earned
Losses and loss expenses
Acquisition costs
Technical result
Other income (1)
Other expenses (2)
Underwriting result
Net investment income
Allocated underwriting result
2023
2022
2021
$
$
$
$
$
$
2,108 $
(27)
2,081 $
2,081 $
(1,808)
(109)
164 $
40
(118)
86 $
73
159 $
1,674 $
(29)
1,645 $
1,646 $
(1,413)
(107)
126 $
39
(93)
72 $
74
146 $
1,647
(24)
1,623
1,627
(1,408)
(113)
106
26
(88)
44
81
125
(1) Other income represents fee income on longevity swaps and deposit accounted contracts, including the Company's financial
reinsurance solutions business.
(2) The Company allocates certain other expenses that vary with business written by its operating segments. See Other expenses in
Corporate and Other section below.
The Life and Health segment represented 26%, 22% and 23% of total net premiums written in 2023, 2022 and 2021,
respectively.
Allocated underwriting result
The underwriting result for Life and Health is increased by net investment income, related to both assets backing reserves and
assets backing capital, allocated to this segment to determine allocated underwriting result. See Investments Results section below
for further details on net investment income.
2023 compared to 2022
The allocated underwriting result increased $13 million, or 9%, year-over-year, driven by an improved technical result, which
was partially offset by an increase in other expenses.
Gross premiums written increased by $434 million, or 26%. Premium growth during 2023 was driven primarily by growth in
longevity business, and to a lesser extent, long-term and short-term protection business. This was partially offset by a negative
foreign exchange impact.
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Table of Contents
Losses and loss expenses increased by $395 million driven primarily by growth in longevity business, partially offset by a
positive foreign exchange impact, mortality improvements in longevity business and lower COVID-19 claims.
Acquisition costs remained relatively flat year-over-year, as the growth in business primarily related to new longevity business
which does not incur acquisition costs.
Other income increased by $1 million, or 3%, remaining relatively flat year-over-year. Other expenses increased by $25
million, or 27%, due to an increase in employees and consulting costs to support growth, and higher incentive accruals driven by
segment and company performance.
2022 compared to 2021
The allocated underwriting result increased $21 million, or 17%, year-over-year, driven by an increase in the underwriting
result, which was partially offset by a decrease in net investment income.
Gross premiums written increased by $27 million, or 2%, and net premiums written increased by $22 million, or 1%. Net
premiums written increased from growth in longevity and long-term protection business, offset by negative foreign exchange
impacts and a decrease in short-term protection business.
Losses and loss expenses increased by $5 million, remaining relatively flat year-over-year, as the impact of 2022 premium
growth and non-recurring prior year recapture gains in the long-term protection and short-term protection business were mostly
offset by changes in foreign exchange rates.
Acquisition costs decreased 5% during the year due to changes in foreign exchange rates partially offset by the impact of
2022 premium growth.
Other income increased by $13 million, or 50%, driven primarily by growth in the financial reinsurance solutions business.
Other expenses increased by $5 million, or 6%, due to a higher number of employees to support growth.
Allocated net investment income decreased $7 million, or 9%, as a lower average reserve balance during 2022 compared to
2021 led to a reduction in the allocated asset base and investment income.
Investment Result
Investment result consists of net investment income, net realized and unrealized investment gains or losses and interest in
earnings or losses of equity method investments. Net investment income primarily includes interest and amortization of premium
and discount on fixed maturities, short-term investments, cash and cash equivalents and certain other invested assets (including
corporate loans), dividend income and income distributions from equities and certain other invested assets, as well as investment
income on funds held, offset by investment expenses and withholding taxes. Net realized and unrealized investment gains or losses
primarily include amounts realized from sales and redemptions of the Company’s fixed maturities, short-term investments, equities
and other invested assets; changes in net unrealized investment gains or losses on these investments; and impairment losses on real
estate. Interest in earnings or losses of equity method investments represents the Company’s aggregate share of earnings or losses
related to several private placement investments and limited partnership interests.
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The components of the investment result for the years ended December 31, 2023, 2022 and 2021 were as follows (in millions
of U.S. dollars):
Net investment income (1)
Net realized and unrealized investment gains (losses)
Interest in (losses) earnings of equity method investments
Total investment result
2023
2022
2021
$
646 $
398 $
517
(15)
(1,969)
11
$
1,148 $
(1,560) $
376
38
127
541
(1) Includes amounts allocated to the Life and Health segment as presented in Results by Segment above.
Net Investment Income
Net investment income by asset type for the years ended December 31, 2023, 2022 and 2021 is included in Note 5(b) to the
Consolidated Financial Statements in Item 18 of this report and is summarized below (in millions of U.S. dollars):
Fixed maturities, short-term investments and cash and cash equivalents
$
500 $
328 $
306
2023
2022
2021
Other invested assets
Equities
Funds held and other
Investment expenses
Net investment income
176
20
7
99
11
11
(57)
646 $
(51)
398 $
$
90
13
18
(51)
376
Net investment income increased in 2023 compared to 2022 due to the redeployment of short-duration assets invested in 2022
and 2021 into the higher reinvestment rate environment of the year, combined with the impact of a higher average invested asset
base throughout 2023. The increase in 2023 compared to 2022 was also due to a dividend of $31 million received on a real estate
company investment, which was offset by a decrease in market value recorded in Net realized and unrealized investment gains
(losses).
Net investment income increased in 2022 compared to 2021 driven by the impact of re-allocations to investment grade
corporate bonds and higher reinvestment rates due to increases in worldwide risk-free rates. The increase in 2022 compared to 2021
also reflected an increase in credit spreads during 2022.
Net Realized and Unrealized Investment (Losses) Gains
The Company’s portfolio managers have an income and capital appreciation investment objective, achieved through a
combination of optimizing current investment income and pursuing capital appreciation. To meet this objective, it is often desirable
to buy and sell securities to take advantage of changing market conditions and to reposition the investment portfolios. It is the
intention of the Company to make optimal decisions to avoid realizing losses due to interest rate fluctuation, while maintaining
necessary flexibility to manage risk and take advantage of opportunities for future income enhancement. In addition, the Company
recognizes changes in fair value for substantially all of its investments as changes in unrealized investment gains or losses in its
Consolidated Statements of Operations. Realized and unrealized investment gains and losses are generally a function of multiple
factors, with the most significant being prevailing interest rates, credit spreads and equity market conditions.
See Note 5(a) to the Consolidated Financial Statements in Item 18 of this report for details of realized investment gains and
losses and changes in unrealized investment gains and losses by investment type. Investment results for the years ended
December 31, 2023, 2022 and 2021 were significantly impacted by the volatility in the capital markets, although 2022 was impacted
much more significantly than 2023 or 2021, with the Company reporting Net realized and unrealized investment gains or losses,
included in net income or loss, as follows (in millions of U.S. dollars):
2023
2022
2021
Net realized investment gains
Change in net unrealized investment gains (losses)
Impairment loss on investments in real estate
Net realized and unrealized investment gains (losses)
$
$
111 $
411
472 $
(2,439)
(2)
517 $ (1,969) $
(5)
201
(163)
—
38
The net realized and unrealized investment gains of $517 million in 2023 were driven by net realized and unrealized
investment gains of $387 million on fixed maturities and short term investments and net realized and unrealized investment gains on
equities of $164 million, partially offset by net realized and unrealized investment losses on other invested assets of $29 million and
51
Table of Contents
an impairment loss on London-based real estate owned directly by the Company of $5 million. Substantially all gains on fixed
maturities and short-term investments were unrealized and driven by decreases in worldwide risk free rates and narrowing of
corporate credit spreads. Losses on other invested assets primarily reflected mark-to-market losses on private equity funds. Gains on
equities largely reflected mark-to-market gains on public equity funds, which also includes the redemption of an Asian equity fund,
where the realized gains of $101 million were largely offset by a decrease in unrealized gains.
The net realized and unrealized investment losses of $1,969 million in 2022 were driven by net realized and unrealized
investment losses of $1,806 million on fixed maturities and short term investments, as well as net realized and unrealized investment
losses of $119 million on other invested assets, and net realized and unrealized investment losses on equities of $44 million.
Substantially all losses on fixed maturities and short-term investments were unrealized and driven by increases in worldwide risk
free rates, widening corporate credit and MBS spreads, and losses on real estate sector investments in the Company's Asia high yield
portfolio. Losses on other invested assets primarily reflected mark-to-market losses on private equity funds. Losses on equities
largely reflected mark-to-market losses on public equity funds. The net realized investment gains in 2022 were primarily driven by
the partial sale of Exor public equity funds at the close of the acquisition of the Company by Covéa Coopérations. This sale
generated total consideration of $772 million, resulting in a realized gain of $450 million, the majority of which was included in
unrealized gains in prior periods. The $2 million impairment loss on investments in real estate was driven by a write-down in value
of London-based real estate investments directly owned by the Company.
The net realized and unrealized investment gains of $38 million in 2021 were driven by net realized and unrealized investment
gains of $300 million on other invested assets and net realized and unrealized investment gains on equities of $277 million, partially
offset by net realized and unrealized investment losses of $539 million on fixed maturities and short-term investments. Gains on
other invested assets were primarily driven by unrealized gains on private equity investments. Gains on equities were also primarily
unrealized and were due to increases in worldwide equity markets, and also included a large realized gain on the sale of a preferred
share investment. Losses on fixed maturities and short-term investments were primarily unrealized and driven by increases in
worldwide risk free rates and losses on real estate sector investments in the Company's Asia high yield portfolio, partially offset by
narrowing credit spreads.
See also Notes 4 and 5(a) to the Consolidated Financial Statements in Item 18 for further details.
Interest in (Losses) Earnings of Equity Method Investments
The interest in losses of equity method investments for 2023 of $15 million primarily reflected mark-to-market losses on
private equity funds. The interest in earnings of equity method investments in 2022 of $11 million primarily reflected mark-to-
market gains on real estate funds. The interest in earnings of equity method investments in 2021 of $127 million primarily reflected
unrealized gains in the value of real estate assets held by investees, as well as realized and unrealized gains on private equity funds
and New York real estate fund.
Corporate and Other
The following are components of net income (in millions of U.S. dollars), excluding amounts that the Company includes in
investment results or allocates to segments, in line with the way the Company manages its business, as described above.
Market risk benefit gains
Other expenses, net of other income, not allocated to the segments (1)
Interest expense
Amortization of intangible assets
Net foreign exchange losses
Income tax benefit (expense)
Corporate and Other
2023
2022
2021
$
7 $
(213)
(58)
(8)
(43)
328
121 $
(202)
(55)
(9)
(14)
(42)
20
(207)
(56)
(9)
(36)
(40)
$
13 $
(201) $
(328)
(1) The Company allocates certain other expenses that vary with business written to its operating segments. Refer to Underwriting
Results section above for tables that include Other expense and Other income amounts allocated to each of the three segments.
Market Risk Benefit Gains
MRB gains represent the changes in fair value of MRBs, which relate to our GMDB business, excluding the impacts of
changes in our own credit risk which are included in Other comprehensive income or loss. Changes in the fair value of MRBs may
fluctuate significantly in a given period based on market interest rates, equity prices, market volatility and other factors, creating
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Table of Contents
volatility within net income. Changes in the fair value of MRBs are excluded from the Life and Health segment results and included
with Corporate and Other.
MRB gains were $7 million in 2023 and included $15 million and $12 million of gains resulting from an increase in equity
markets and a decrease in equity index volatility, respectfully, both of which reduce the chance of GMDB being at risk and increase
the net MRB asset. This was partially offset by the impact of decreases in interest rates of $13 million and other factors including
the recognition of the actual policyholder behavior different from expected behaviors and a change in future expected policyholder
behavior, leading to a reduction of the MRB fair value.
MRB gains were $121 million in 2022 which were primarily a result of a sharp increase in interest rates in the year which
increased the MRB gains by $197 million, partially offset by a decrease in equity markets and an increase in equity index volatility,
which decreased the MRB gains by $58 million and $25 million, respectively.
MRB gains of $20 million in 2021 were driven by increases in interest rates and improvements in the equity markets which
reduced the chance of the GMDB being at risk and increased the net MRB asset, offset by the impact of changes in other future
assumptions.
Refer to Liquidity and Capital Resources—Market Risk Benefits in Item 5 and Note 11 to the Consolidated Financial
Statements in Item 18 of this report for further details.
Other Expenses
The Company's Other expenses are included in the underwriting result and in Corporate and Other, as described above. The
Company’s total Other expenses in the Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and
2021 were as follows (in millions of U.S. dollars, except ratios):
Other expenses
Other expenses, as a % of total net premiums earned
2023
2022
2021
$
463
$
415
$
399
5.8 %
5.7 %
5.7 %
Other expenses of $463 million for 2023 increased by $48 million compared to 2022, though the expense ratio remained
relatively stable. The increase in other expenses was primarily driven by higher personnel costs due to additional full-time
equivalent employees, a higher bonus accrual and, to a lesser extent, an increase in IT costs. These increases were partially offset by
decreases in consulting and professional fees.
Other expenses of $415 million for 2022 increased by $16 million compared to 2021 though the expense ratio remained
unchanged. The increase in other expenses was primarily driven by higher personnel costs due to additional full-time equivalent
employees, a higher bonus accrual and, to a lesser extent, an increase in IT costs and travel and entertainment expenses. These
increases were partially offset by a decrease in other expenses and consulting and professional fees for accounting standard
implementation projects.
Interest Expense
Interest expense for 2023 was comparable to 2022 and 2021. See Note 13 to the Consolidated Financial Statements in Item 18
of this report for further details.
Amortization of Intangible Assets
Amortization of intangible assets relates to intangible assets acquired upon acquisition of Paris Re in 2009, Presidio in 2012,
Aurigen in 2017 and Claim Analytics Inc. in 2018. Amortization expense for 2023 was comparable to 2022 and 2021. See Note 7 to
the Consolidated Financial Statements in Item 18 for further details.
Foreign Exchange Movements
The Company’s reporting currency is the U.S. dollar. The Company’s significant subsidiaries and branches have one of the
following functional currencies: U.S. dollar, Euro or Canadian dollar. As a significant portion of the Company’s operations is
transacted in foreign currencies, fluctuations in foreign exchange rates may affect year-over-year comparisons. To the extent that
fluctuations in foreign exchange rates affect comparisons, their impact has been quantified, when possible, and discussed throughout
this annual report. See Note 2(n) to the Consolidated Financial Statements in Item 18 of this report for a discussion of
remeasurement and translation of foreign currencies.
Net foreign exchange losses were $43 million for 2023 compared to losses of $14 million for 2022 and losses of $36 million
for 2021. The losses in 2023 were driven by the weakening of the U.S. dollar against most major currencies and by the cost of
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hedging. The losses in 2022 were driven by the strengthening of the U.S. dollar against the Euro and the cost of hedging, while
losses in 2021 were driven by the strengthening of the U.S. dollar against certain major currencies (primarily the Euro, British
Pound and Swiss Franc), and the cost of hedging.
The foreign exchange fluctuations for the principal currencies in which the Company transacts business were as follows:
•
•
•
•
the U.S. dollar ending exchange rate weakened against all major currencies, with the exception of the Japanese yen at
December 31, 2023 compared to December 31, 2022.
the U.S. dollar average exchange rate for the year strengthened against most major currencies, with the exception of the
Swiss franc and the Euro in 2023 compared to 2022.
the U.S. dollar ending exchange rate strengthened against all major currencies at December 31, 2022 compared to
December 31, 2021.
the U.S. dollar average exchange rate for the year strengthened against all major currencies in 2022 compared to 2021.
The above fluctuations impacted individual line items of the Company’s Consolidated Balance Sheets and Consolidated
Statement of Operations as well as the Change in currency translation adjustment included in Accumulated other comprehensive
loss in the Consolidated Balance Sheets. The Company hedges a significant portion of its currency risk exposure as discussed in
Quantitative and Qualitative Disclosures about Market Risk in Item 11 of this report and in Notes 2(o) and 6 to the Consolidated
Financial Statements in Item 18 of this report. See also section B. Liquidity and Capital Resources—Currency for a discussion of
the impact of foreign exchange movements on the Consolidated Balance Sheets.
Income Taxes
The effective income tax rate, which the Company calculates as income tax expense or benefit divided by net income or loss
before taxes, may fluctuate significantly from period to period depending on the geographic distribution of pre-tax net income or
loss in any given period between different jurisdictions. The geographic distribution of pre-tax net income or loss can vary
significantly between periods due to, but not limited to, the following factors: the business mix of net premiums earned, the
geographic location, quantum and nature of net losses and loss expenses incurred, the quantum and geographic location of other
expenses, net investment income, net realized and changes in unrealized investment gains and losses and the quantum of specific
adjustments to determine the income tax basis in each of the Company’s operating jurisdictions.
In addition, a significant portion of the Company’s gross and net premiums have been written and earned in Bermuda, which
did not previously have a corporate income tax. This includes the majority of the Company’s catastrophe business, which can result
in significant volatility in the Company’s pre-tax net income or loss from period to period. However, on December 27, 2023, the
Government of Bermuda enacted the CIT Act, which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal
years beginning on or after January 1, 2025. The tax legislation includes a provision referred to as the economic transition
adjustment, which is intended to provide a fair and equitable transition into the tax regime, which resulted in the Company
recognizing a $487 million deferred tax asset in 2023. The Company also recorded a $55 million deferred tax liability in 2023
related to the future tax impact of temporary differences between book and tax value. The Company expects the $432 million net
deferred tax asset related to Bermuda CIT to be utilized to reduce taxes predominantly over a 10-year period. The Company expects
to incur increased taxes in Bermuda beginning in 2025.
The Company’s income tax benefit (expense) and effective income tax rate for the years ended December 31, 2023, 2022 and
2021 were as follows (in millions of U.S. dollars, except ratios):
Income tax benefit (expense)
Effective income tax rate
2023
2022
2021
$
$
328
(16.5) %
$
(42)
(4.7) %
(40)
5.0 %
The impact of the Bermuda CIT Act had a 21.9 point reduction on the effective tax rate in 2023. Excluding the impact of the
Bermuda CIT Act in 2023, the Company's income tax benefit (expense) and the effective income tax rate during 2023, 2022 and
2021 were driven by the geographic distribution of the Company’s pre-tax income and losses between its various jurisdictions.
See Taxation of the Company and its Subsidiaries in Item 4.B and Note 16 to the Consolidated Financial Statements in Item 18
of this report for further details.
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B. Liquidity and Capital Resources
The following discussion on liquidity and capital resources principally focuses on the Company’s Consolidated Balance
Sheets and Consolidated Statements of Cash Flows. See Risk Factors in Item 3.D for additional information concerning risks related
to our business, strategy and operations.
Capital Adequacy
A key priority for management is to hold sufficient capital to meet all of the Company’s obligations to cedants, meet
regulatory and rating agency requirements of the PartnerRe Group and the Company's regulated subsidiaries and support its position
as one of the stronger reinsurers in the industry. Management closely monitors its capital needs and capital level throughout the
reinsurance cycle and, in times of volatility and turmoil in global capital markets, actively takes steps to optimize the Company’s
capital in order to achieve an appropriate balance of financial strength and shareholder returns. Capital management is achieved by
either deploying or curtailing capital to fund business opportunities and, during times when the Company has excess capital and
business opportunities are not so attractive, returning capital to its shareholders by way of dividends.
Shareholders’ Equity and Capital Resources Management
As part of its long-term strategy, the Company will seek to grow capital resources to support its operations throughout the
reinsurance cycle, maintain strong ratings from the major rating agencies (see ratings summarized below) and maintain the ability to
pay claims as they arise. The Company may also seek to restructure its capital through the repayment or purchase of debt
obligations or preferred shares, or increase or restructure its capital through the issuance of debt or preferred shares, when
opportunities arise.
The Company's total capital (defined as total of debt liabilities and preferred and common shareholders’ equity) at
December 31, 2023 and 2022 was as follows (in millions of U.S. dollars, except percentages):
Senior notes due 2026
Senior notes due 2029
Junior subordinated notes due 2050
Capital efficient notes due 2066
Total debt
Preferred shareholders’ equity, aggregate liquidation value
Common shareholder’s equity
Total shareholders' equity
Total capital
December 31, 2023
December 31, 2022
$
$
$
$
$
829
498
495
62
1,884
200
8,224
8,424
10,308
8 % $
5
5
1
794
497
495
62
19 % $
1,848
2 % $
79
81 % $
100 % $
200
6,197
6,397
8,245
10 %
6
6
1
23 %
2 %
75
77 %
100 %
Total capital of $10.3 billion at December 31, 2023 increased 25.0% compared to December 31, 2022 primarily due to an
increase in common shareholder's equity and foreign exchange movements on Euro denominated debt, described as follows:
• Common shareholder's equity increased 32.7% during 2023, driven by comprehensive income of $2,255 million for the
year partially offset by common and preferred share dividends totaling $228 million.
• The increase in senior notes due 2026 is due to the foreign exchange impact of translating the Euro denominated debt into
U.S. dollars, the Company's reporting currency.
Regular interest payments on debt, which are expected to be approximately $57 million per annum based on interest rates at
December 31, 2023, include payments on Senior notes due 2026 of $10 million, Senior notes due 2029 of $19 million, Junior
subordinated notes due 2050 of $23 million and junior subordinated Capital Efficient Notes (CENts) of $5 million. Other than the
Senior notes due 2026, the Company has no other contractual debt repayment obligations during the next five years.
Dividend payments on the Series J Preferred Shares are non-cumulative and the shares will remain outstanding into perpetuity
unless called by the Company, which is first permissible, without regulatory approval on March 15, 2026. The Company expects to
pay dividends on these preferred shares of approximately $10 million per annum in the period during which they remain
outstanding.
The Company’s dividend policy is to declare and pay a dividend on its common shares at consistent levels each quarter. The
annual interest and common and preferred share dividend obligations are expected to be funded using net cash flows from operating
activities.
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PartnerRe Ltd. has fully and unconditionally guaranteed the obligations related to debt issued to third parties by its finance
subsidiaries as follows:
•
•
•
•
senior notes with an aggregate principal amount of €750 million issued by PartnerRe Ireland Finance DAC
senior notes with an aggregate principal of $500 million issued by PartnerRe Finance B LLC
junior subordinated notes with an aggregate principal of $500 million issued by PartnerRe Finance B LLC
junior subordinated CENts with a remaining aggregate principal amount of $62 million issued by PartnerRe Finance II Inc.
In March 2020, the SEC updated guidance on financial disclosures about Guarantors and Issuers of Guaranteed Securities and
Affiliates Whose Securities Collateralize a Registrant’s Securities. We adopted the new disclosure requirements under the updated
guidance effective for the year ended December 31, 2021. The issuers of the guaranteed securities are finance subsidiaries, and
PartnerRe Ltd. has provided a full and unconditional guarantee for the securities, and none of PartnerRe Ltd.'s subsidiaries provides
a guarantee on the debt obligations.
See Notes 13 and 14 to the Consolidated Financial Statements in Item 18 of this report, for a further discussion related to the
Company's indebtedness, guarantees and shareholders' equity and Operating Results above for a discussion of the Company’s net
income for the year ended December 31, 2023. See also Consolidated Statements of Shareholders' Equity within the Consolidated
Financial Statements in Item 18 of this report.
Liquidity and Cash Flows
Liquidity is a measure of the Company’s ability to access sufficient cash flows to meet the short-term and long-term cash
requirements of its business operations.
The Company aims to be a reliable and financially secure partner to its cedants. This means that the Company must maintain
sufficient liquidity at all times so that it can support its cedants by settling claims quickly. The Company generates cash flows
primarily from its underwriting and investment operations. Management believes that a profitable, well-run reinsurance organization
will generate sufficient cash from premium receipts and investment income to pay claims, acquisition costs and other expenses in
most years. To the extent that underwriting cash flows are not sufficient to cover operating cash outflows in any year, the Company
may utilize cash flows generated from investments and may ultimately liquidate assets from its investment portfolio. Management
ensures that its liquidity requirements are supported by maintaining a high quality, well balanced and liquid investment grade
investment portfolio, and by matching within certain risk tolerance limits the duration and currency of its investments with that of its
net reinsurance liabilities.
Management believes that its significant cash flows from operations and high quality liquid investment portfolio will provide
sufficient liquidity for the foreseeable future to meet its present requirements. At December 31, 2023 and 2022, the Company held
cash and cash equivalents of $1,097 million and $1,252 million, respectively.
The Company’s Consolidated Statements of Cash Flows are included in the Consolidated Financial Statements in Item 18 of
this report. Explanations of the cash flows presented in the Consolidated Statements of Cash Flows are as follows:
Net cash provided by operating activities, which includes cash flows related to underwriting operations and net investment
income, was $2,236 million in 2023 compared to $1,468 million in 2022 and $1,233 million in 2021. The increase in 2023
compared to 2022 was primarily driven by increased cash flow from underwriting operations and net investment income. The
increase in 2022 was primarily driven by increased cash flow from underwriting operations, as the comparative period included a
premium paid for the loss portfolio transfer and adverse development cover entered into during the second quarter of 2021, partially
offset by an increase in other operating cash outflows.
Net cash used in investing activities was $2,173 million in 2023 compared to $665 million in 2022 and $2,329 million in 2021.
Net cash used in investing activities in 2023 was primarily driven by net purchases of fixed maturities and short-term investments.
The net cash used in investing activities in 2022 was primarily driven by net purchases of fixed maturities, short-term investments
and other invested assets, offset by net sales of equities. The net cash used in investing activities in 2021 was primarily driven by net
purchases of fixed maturities and other invested assets, partially offset by net sales and redemptions of short term investments.
Net cash used in financing activities was $228 million in 2023, $195 million in 2022 and $573 million in 2021. The net cash
used in financing activities in 2023 related to the payment of dividends to common and preferred shareholders. The net cash used in
financing activities in 2022 was driven primarily by the payment of dividends to common and preferred shareholders. The net cash
used in financing activities in 2021 was driven primarily by the redemption of the Company's Series G, H and I preferred shares and
payment of common and preferred dividends, partially offset by the issuance of Series J preferred shares.
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In 2024, the Company expects to continue to generate positive operating cash flows, absent unknown events or catastrophic
events or unanticipated factors that could result in negative operating cash flows in the future. Specifically, the Company expects
cash flows from operating activities to continue to be sufficient to cover claims payments.
The Company’s ability to pay common and preferred shareholder dividends, interest payments on debt, and certain corporate
expenses is dependent mainly on cash dividends from PartnerRe Bermuda, PartnerRe Europe, PartnerRe U.S., PartnerRe Asia and
PartnerRe Canada (collectively, the reinsurance subsidiaries), which are the Company’s most significant subsidiaries. The payment
of such dividends by the reinsurance subsidiaries to the Company is limited under Bermuda, Irish, Singapore and Canadian laws and
certain statutes of various U.S. states in which PartnerRe U.S. is licensed to transact business. The restrictions are generally based
on net income and/or certain levels of surplus as determined in accordance with the relevant statutory framework. The reinsurance
subsidiaries’ dividend restrictions at December 31, 2023 are described in Note 15 to the Consolidated Financial Statements in Item
18 of this report.
The reinsurance subsidiaries of the Company depend upon cash inflows from the collection of premiums as well as investment
income and proceeds from the sales and maturities of investments to meet their obligations. Cash outflows are in the form of claims
payments, purchases of investments, other expenses, income tax payments, intercompany payments as well as dividend payments to
the respective parent company.
Historically, the Company, through its operating subsidiaries, has generated sufficient cash flows to meet its obligations.
Because of the inherent volatility of the business written by the Company, the seasonality in the timing of payments by cedants, the
irregular timing of loss payments, the impact of a change in interest rates and credit spreads on the investment income as well as
variability in coupon payment dates for fixed income securities, cash flows from operating activities may vary significantly between
periods. In the event that paid losses accelerate beyond the ability to fund such payments from operating cash flows, the Company
would use its cash and cash equivalents balances available or liquidate a portion of its high quality and liquid investment portfolio.
As discussed in the Investments section below, the Company’s investments and cash and cash equivalents totaled $22 billion at
December 31, 2023, of which $17 billion were cash and cash equivalents and government issued or investment grade fixed income
securities.
Financial strength ratings and senior unsecured debt ratings represent the opinions of rating agencies on the Company’s
capacity to meet its obligations. In the event of a significant downgrade in ratings, the Company’s ability to write business and to
access the capital markets could be impacted. Some of the Company’s reinsurance treaties contain special funding and termination
clauses that would be triggered in the event the Company or one of its subsidiaries is downgraded by one of the major rating
agencies to levels specified in the treaties, or the Company’s capital is significantly reduced. If such an event were to occur, the
Company would be required, in certain instances, to post collateral in the form of letters of credit and/or trust accounts against
existing outstanding losses, if any, related to the treaty. In a limited number of instances, the subject treaties could be canceled
retroactively or commuted by the cedant.
The Company’s current financial strength ratings are as follows:
Standard & Poor’s
Moody’s (2)
A.M. Best
Rating (1)
A+
A1
A+
(1) The Company's outlook from each rating agency in the table above is stable.
(2) Applies to Partner Reinsurance Company Ltd. and Partner Reinsurance Company of the U.S.
Credit Agreements
In the normal course of its operations, the Company enters into agreements with financial institutions to obtain unsecured and
secured letter of credit facilities. These facilities are used for the issuance of letters of credit. Certain agreements require the letters
of credit to be fully secured with cash, government bonds and/or investment grade bonds. The agreements include default covenants,
which could require the Company to fully secure the outstanding letters of credit to the extent that the facility is not already fully
secured and/or result in the Company not being allowed to issue any new letters of credit. See Note 20 to the Consolidated Financial
Statements in Item 18 of this report for further details.
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Leases and Other Operating Agreements
The Company leases office space under operating leases expiring in various years through 2038. At the lease commencement,
the Company determines the classification of each lease as either a finance lease or an operating lease. The Company currently only
has leases classified as operating. Lease payments are expected to be funded using net cash flows from operating activities. The
table below shows the Company's expected obligations under the operating lease agreements at December 31, 2023 (in millions of
U.S. dollars):
Operating leases
Total
< 1 year
1-3 years
3-5 years
> 5 years
$
86 $
15 $
29 $
22 $
20
The Company has entered into maintenance agreements and service agreements that provide for business and information
technology support and computer equipment. Future payments under these contracts amount to $34 million, which are expected to
be funded using net cash flows from operating activities. The table below shows the expected obligations under the operating
agreements at December 31, 2023 (in millions of U.S. dollars):
Other operating agreements
Investments
Total
< 1 year
1-3 years
3-5 years
> 5 years
$
34 $
23 $
8 $
3 $
—
The Company’s total invested assets of $21,768 million and $19,244 million at December 31, 2023 and 2022, respectively, are
comprised of total investments, cash and cash equivalents, and accrued interest. The components and carrying values of the
Company’s total investments, and the percentages of total investments, at December 31, 2023 and 2022 were as follows (in millions
of U.S. dollars, except percentages):
Fixed maturities
Short-term investments
Equities
Investments in real estate
Other invested assets
Total investments (1)
December 31, 2023
December 31, 2022
$
15,090
73 % $
13,022
72 %
1,020
917
56
3,465
5
5
—
17
523
930
58
3,355
4
5
—
19
$
20,548
100 % $
17,888
100 %
(1) In addition to the total investments shown in the above table, the Company held cash and cash equivalents of $1,097 million and
$1,252 million at December 31, 2023 and 2022, respectively, and accrued interest of $122 million and $104 million at
December 31, 2023 and 2022, respectively.
The majority of the Company’s investments are carried at fair value with changes in fair value included in Net realized and
unrealized investment gains or losses in the Consolidated Statements of Operations. Refer to Investment Result above in the
Operating results section and Notes 4, 5 and 6 to the Consolidated Financial Statements for further details of the composition of the
investments and changes in unrealized gains or losses on investments. The total fixed maturities and short-term investments
portfolio of $16,110 million at December 31, 2023 increased compared to December 31, 2022 of $13,545 million, driven by the
investment of positive cash flows from operating activities throughout the year and mark-to-market gains as a result of the
significant reinvestment of maturities on short-duration investments made when rates were significantly lower.
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Table of Contents
The cost, fair value and credit ratings of the Company’s fixed maturities and short-term investments carried at fair value at
December 31, 2023 were as follows (in millions of U.S. dollars, except percentages):
December 31, 2023
Fixed maturities
Amortized
cost
Fair
Value
AAA
AA
A
BBB
Below
investment
grade
Unrated
Credit Rating (1)
U.S. government and sponsored
enterprises
U.S. states, territories and
municipalities
Non-U.S. sovereign government,
supranational and government related
Corporate
Asset-backed securities
Residential mortgage-backed
securities
$ 1,973 $ 1,737
$ —
$ 1,737
$ —
$ —
$
—
$ —
51
52
—
9
—
—
—
43
1,909
1,780
1,259
7,310
6,778
5
367
225
154
—
—
—
2,389
3,969
152
38
15
15
—
—
—
—
15
—
5,347
4,728
320
4,408
—
—
—
—
Fixed maturities
$ 16,605 $ 15,090 $ 1,584
$ 6,746
$ 2,543
$ 3,969
$
167
$
81
Short-term investments
Total fixed maturities and short-term
investments
% of Total fixed maturities and short-term
investments
1,033
1,020
337
521
92
55
15
—
$ 17,638 $ 16,110 $ 1,921
$ 7,267
$ 2,635
$ 4,024
$
182
$
81
12 %
45 %
16 %
25 %
1 %
1 %
(1) All references to credit rating reflect Standard & Poor’s (or estimated equivalent) ratings. Investment grade reflects a rating of
BBB- or above.
At December 31, 2023, approximately 100% of the Company’s fixed maturity and short-term investments were publicly
traded and approximately 98% were rated investment grade (BBB- or higher) by Standard & Poor’s (or estimated equivalent). The
average credit quality, average yield to maturity and expected average duration of the Company’s fixed maturities and short-term
investments at December 31, 2023 and 2022 were as follows:
Average credit quality
Average yield to maturity
Expected average duration
December 31, 2023
A+
4.8 %
3.2 years
December 31, 2022
A+
5.1 %
3.5 years
The average credit quality of fixed maturities and short-term investments at December 31, 2023 has remained unchanged
compared to December 31, 2022. The average yield to maturity on fixed maturities and short-term investments decreased by 0.3%
primarily due to the narrowing of credit spreads and decreases in worldwide risk-free interest rates in 2023. At December 31, 2023
and 2022, the expected average duration of fixed maturities and short-term investments was 3.2 years and 3.5 years, respectively,
compared to the weighted average economic duration of reinsurance liabilities of approximately 1.6 years and 1.9 years at
December 31, 2023 and 2022, respectively. The decrease in expected average duration of fixed maturities and short-term
investments reflects short-dated investments (less than 3 years) made in the first half of 2023 before we began allocating materially
to longer dated maturities as the curve became less inverted and offered an attractive opportunity to increase resilience of investment
income through longer maturities. Our modeled duration moved lower on the agency residential mortgage-backed securities as
interest rates came off the highs of the year offsetting the duration added through longer dated investments.
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Maturity Distribution
The distribution of fixed maturities and short-term investments at December 31, 2023 by contractual maturity date was as
follows (in millions of U.S. dollars):
December 31, 2023
One year or less
More than one year through five years
More than five years through ten years
More than ten years
Subtotal
Mortgage/asset-backed securities
Total
Cost
$
3,009 $
6,114
2,020
1,133
Fair
Value
2,793
5,801
1,808
965
$
$
12,276 $
11,367
5,362
4,743
17,638 $
16,110
Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain
obligations with or without call or prepayment penalties.
Corporate bonds included in Fixed maturities
Corporate bonds are comprised of obligations of U.S. and foreign corporations. The fair values of corporate bonds issued by
U.S. and foreign corporations by economic sector at December 31, 2023 were as follows (in millions of U.S. dollars, except
percentages):
December 31, 2023
Sector
Financial services
Consumer cyclical
Real estate
Consumer non-cyclical
Industrial
Utilities
Communications
Energy
Technology
Insurance
Basic materials
Other
Total
% of Total
U.S.
Foreign
Total Fair
Value
Percentage to Total
Fair Value of
Corporate Bonds
$
$
992
586
661
538
415
349
404
235
304
168
104
—
4,756
$
$
989
165
48
153
162
148
56
115
3
92
87
4
2,022
$
$
1,981
751
709
691
577
497
460
350
307
260
191
4
6,778
70 %
30 %
100 %
29 %
11
10
10
9
7
7
5
5
4
3
—
100 %
At December 31, 2023, other than the U.S., no country accounted for more than 10% of the Company’s corporate bonds. At
December 31, 2023, the ten largest issuers accounted for 14% of the corporate bonds held by the Company (4% of total investments
and cash and cash equivalents) and no single issuer accounted for more than 2% of total corporate bonds (1% of total investments
and cash and cash equivalents).
Within the finance sector, 98% of corporate bonds were rated investment grade and 57% were rated A- or better at
December 31, 2023.
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Asset-backed and Residential Mortgage-backed Securities included in Fixed maturities
Asset-backed securities and residential MBS by U.S. and non-U.S. originations and the related fair value and credit ratings at
December 31, 2023 were as follows (in millions of U.S. dollars, except percentages):
Credit Rating (1)
December 31, 2023
GNMA (2)
GSEs (3)
AAA
AA
A
Below
investment
grade /
Unrated
Fair Value
Asset-backed securities, non-U.S.
$ —
$ —
$ —
$ —
$ —
$
15
$
15
Residential mortgage-backed securities
U.S.
Non-U.S.
Total
% of Total
$ 376
$ 4,029
$ 318
$ —
$ —
$ —
$ 4,723
—
—
2
$ 376
$ 4,029
$ 320
3
3
3
—
—
5
$ —
$ —
$ 4,728
$ —
$
15
$ 4,743
$
$
8 %
85 %
7 %
— %
— %
— %
100 %
Residential mortgage-backed securities
$ 376
$ 4,029
$ 320
(1) All references to credit rating reflect Standard & Poor’s (or estimated equivalent).
(2) GNMA represents the Government National Mortgage Association. GNMA, or Ginnie Mae as it is commonly known, is a
wholly-owned U.S. government corporation within the Department of Housing and Urban Development which guarantees
mortgage loans of qualifying first-time home buyers and low-income borrowers.
(3) GSEs, or government sponsored enterprises, includes securities that carry the implicit backing of the U.S. government and
securities issued by U.S. government agencies.
Residential MBS include U.S. residential MBS, which generally have a low risk of default. The main issuers of these
securities are U.S. government agencies or GSEs, which set standards on the mortgages before accepting them into the program.
Although these U.S. government backed securities do not carry a formal rating, they are generally considered to have a credit
quality equivalent to or greater than AA+ corporate issues. They are considered prime mortgages and the major risk is uncertainty of
the timing of prepayments.
Short-term Investments
Short-term investments include U.S. and non-U.S. government obligations and corporate bonds. Short-term investments were
$1,020 million at December 31, 2023, up from $523 million at December 31, 2022, primarily due to continued allocations within
public fixed income, and shifting further out the yield curve in governments and investment grade corporate bonds to add
marginally to duration. At December 31, 2023, 99% of short-term investments were rated BBB or higher by Standard & Poor’s (or
estimated equivalent).
Equities
Investments in equities decreased to $917 million at December 31, 2023 from $930 million at December 31, 2022. The
reduction was driven by net unrealized losses on real estate investment trusts and redemption of an Asian equity fund of $150
million, partially offset by net unrealized gains on public equity funds during 2023. See also Notes 4, 5 and 21 to the Consolidated
Financial Statements in Item 18 of this report for further details for Equities.
Investments in Real Estate
Investments in real estate relate to the Company's London-based real estate investments and are valued at cost, less any write
down for impairment when the changes in circumstances indicate the carrying value may not be recoverable and exceeds its
estimated fair value. The carrying value of the investments in real estate at December 31, 2023 and December 31, 2022 was $56
million and $58 million, respectively. The reduction in carrying value during 2023 was driven by a $5 million impairment loss,
partially offset by the impact of the strengthening in the British Pound to U.S. dollar exchange rate as investments in real estate are
denominated in the British pound. See also Note 2(h) to the Consolidated Financial Statements in Item 18 of this report for further
details.
Other Invested Assets
Other invested assets are comprised of investments in corporate loans, notes and loans receivable and notes securitization, real
estate company investments, fund investments, derivative instruments accounted for at fair value and certain investments that are
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accounted for using the equity method of accounting. At December 31, 2023 and 2022, Other invested assets totaled $3,465 million
and $3,355 million, respectively.
Other invested assets includes a portfolio of third-party, individually managed privately issued corporate loans carried at fair
value of $1,373 million at December 31, 2023, which increased from $1,303 million at December 31, 2022, driven primarily by net
purchases during 2023. These corporate loans include $1,141 million and $973 million at December 31, 2023 and 2022,
respectively, of U.S. bank loans under externally managed mandates. The mandates primarily invest in U.S. floating rate, first lien,
senior secured broadly syndicated loans with a focus on facility sizes greater than $300 million. The weighted average credit rating
as at December 31, 2023 was BB/BB- with the single largest issuer being 2.6% of the Company's individually managed corporate
loan portfolio. The corporate loan portfolio also included $232 million and $330 million, respectively, of other privately issued
corporate loans at December 31, 2023 and 2022.
The Company's largest single investment in Other invested assets is an investment in Almacantar of $471 million at December
31, 2023, which is recorded at fair value and decreased from $492 million at December 31, 2022. The primary driver of the decrease
was net unrealized losses of $48 million recognized during 2023, which included the impact of a $31 million dividend distribution
(recorded within Net investment income). This was partially offset by foreign exchange gains of $27 million from the strengthening
of the British Pound against the U.S. dollar in 2023.
Other invested assets also includes fund investments with a total carrying value of $1,391 million at December 31, 2023,
which increased from $1,308 million at December 31, 2022. The increase in carrying value from December 31, 2022 to December
31, 2023 was primarily driven by funding of capital commitments.
The Company's equity method investments are comprised primarily of passive investment interests focusing in the real estate
sector and totaled $213 million and $237 million at December 31, 2023 and 2022, respectively.
The Company has entered into certain investments, including investments in VIEs (see Note 5(e) to the Consolidated Financial
Statements in Item 18 of this report for further details), with unfunded capital commitments. As of December 31, 2023, the
Company expects to fund capital commitments totaling $522 million with $230 million, $105 million, $66 million, $43 million, and
$39 million to be paid during 2024, 2025, 2026, 2027 and 2028, respectively. These obligations are expected to be funded using net
cash flows from operating and investing activities.
See Notes 4, 5, 6, 19 and 21 to the Consolidated Financial Statements in Item 18 of this report for further details.
Receivables for Securities Sold and Payables for Securities Purchased
Receivables for securities sold and payables for securities purchased arise primarily due to timing differences between the
trade date and the settlement date for securities sold and purchased, and are expected to be received and paid in less than one year.
At December 31, 2023 and 2022, the Company had outstanding balances related to receivables for securities sold totaling $187
million and $52 million, respectively, and payables for securities purchased totaling $221 million and $149 million, respectively,
which are expected to be funded using net cash flows from investing activities.
Funds Held by Reinsured Companies
The Company writes certain business on a funds held basis. Under funds held contractual arrangements, the cedant retains the
net funds that would have otherwise been remitted to the Company and credits the net fund balance with investment income. The
Company does not legally own or directly control the investments underlying its funds held assets and only has recourse to the
cedant for the receivable balances and no claim to the underlying securities that support the balances. Decisions as to purchases and
sales of assets underlying the funds held balances are made by the cedant; in some circumstances, investment guidelines regarding
the minimum credit quality of the underlying assets may be agreed upon between the cedant and the Company as part of the
reinsurance agreement, or the Company may participate in an investment oversight committee regarding the investment of the net
funds, but investment decisions are not otherwise influenced by the Company.
At December 31, 2023 and 2022, the Company recorded $450 million and $472 million, respectively, of funds held assets,
which declined in 2023 primarily as a result of a decrease in non-life funds held balances held by reinsured companies, related to
regular transactional activity such as commissions and losses. The majority of the funds held assets relate to contracts that earned
investment income based upon a predetermined interest rate, either fixed contractually at the inception of the contract or based upon
a recognized market index (e.g. SOFR). Under these contractual arrangements, there are no specific assets linked to the funds held
assets, and the Company is only exposed to the credit risk of the cedant.
See Note 19(a) to the Consolidated Financial Statements in Item 18 of this report for a discussion of credit risk related to funds
held assets and the Company’s process to evaluate the financial condition of its counterparties.
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Non-life and Life and Health Reserves
See Notes 2(b), 9 and 10 to the Consolidated Financial Statements in Item 18 of this report for details of the Company’s loss
reserves, including disclosures required by the SEC Industry Guide 4: Disclosures concerning unpaid claims and claim adjustment
expenses of property-casualty insurance underwriters.
Non-life Reserves
Loss reserves represent estimates of amounts an insurer or reinsurer ultimately expects to pay in the future on claims incurred
at a given time, based on facts and circumstances known at the time that the loss reserves are established. It is possible that the total
future payments may exceed, or be less than, such estimates. There is significant uncertainty in loss reserve estimates as, among
other things, they are based on predictions of future developments and estimates of future trends in claim severity, frequency and
other variable factors such as inflation. During the loss settlement period, it often becomes necessary to refine and adjust the
estimates of liability on a claim either upward or downward. Despite such adjustments, the ultimate future liability may exceed or be
less than the revised estimates.
As part of the reserving process, insurers and reinsurers review historical data and anticipate the impact of various factors such
as legislative enactments and judicial decisions that may affect potential losses from casualty claims, changes in social and political
attitudes that may increase exposure to losses, mortality and morbidity trends and trends in general economic conditions. This
process assumes that past experience, adjusted for the effects of current developments, is an appropriate basis for anticipating future
events.
The Company’s gross reserves by segment and the total ceded and net non-life reserves at December 31, 2023 and 2022 were
as follows (in millions of U.S. dollars):
P&C segment
Specialty segment
Gross non-life reserves
Ceded non-life reserves
Net non-life reserves
December 31, 2023
December 31, 2022
$
$
$
9,821 $
3,330
13,151 $
(1,765)
11,386 $
9,488
3,238
12,726
(1,852)
10,874
Gross non-life reserves increased from December 31, 2022 to December 31, 2023, primarily driven by an increase in casualty
reserves resulting from growth in this line of business in recent years and adverse development on prior underwriting years. A
portion of the adverse development is covered under an adverse development cover the Company entered into during 2021. The
benefit of this coverage is not fully reflected in the current period income statement, but rather deferred on the balance sheet and
recognized over the estimated remaining settlement period of the contract. See Note 9 to the Consolidated Financial Statements in
Item 18 of this report for further details. The effects of foreign exchange rate changes contributed to increases of $156 million and
decreases of $261 million in non-life reserves during 2023 and 2022, respectively. Ceded non-life reserves decreased from
December 31, 2022 to December 31, 2023 due to a decrease in events impacting our catastrophe line of business.
The changes in these reserves and the reconciliation of the gross and net total non-life reserves for the years ended
December 31, 2023, 2022 and 2021 are presented and discussed further in Note 9 to the Consolidated Financial Statements in Item
18 of this report.
The net favorable loss development on prior accident years was $47 million for the year ended December 31, 2023, resulting
from favorable loss emergence primarily in the Specialty segment. See Note 9 to the Consolidated Financial Statements in Item 18
for further details related to the 2023 net favorable loss development compared to net favorable development in 2022 and 2021,
respectively.
See Note 9 to the Consolidated Financial Statements in Item 18 of this report for details of the net incurred and paid losses and
loss expenses development by accident year, the total of incurred but not reported liabilities plus expected development on reported
claims, and the net liability as at December 31, 2023 for total non-life and each of the P&C and Specialty segments.
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The gross reserves reported by cedants (case reserves), those estimated by the Company, including additional case reserves
(ACRs) and amounts for losses incurred but not yet reported to the Company (IBNR), and the total gross, ceded and net loss
reserves recorded for the Company’s non-life operations were as follows at December 31, 2023 (in millions of U.S. dollars):
Segment
P&C
Specialty
Total Non-life reserves
Case reserves
$
$
$
3,620 $
1,529 $
5,149 $
ACRs
IBNR
reserves
Total gross
loss reserves
recorded
Ceded loss
reserves
Net non-
life reserves
recorded
53 $
137 $
190 $
6,148 $
1,664 $
7,812 $
9,821 $
3,330 $
13,151 $
(1,461) $
(304) $
(1,765) $
8,360
3,026
11,386
The net non-life loss reserves represent the Company’s best estimate of future losses and loss expense amounts based on the
information available at December 31, 2023. Loss reserves rely upon estimates involving actuarial and statistical projections at a
given time that reflect the Company’s expectations of the costs of the ultimate settlement and administration of claims. Estimates of
ultimate liabilities are contingent on many future events and the eventual outcome of these events may be different from the
assumptions underlying the reserve estimates. In the event that the business environment and social trends diverge from historical
trends, the Company may have to adjust its loss reserves to amounts falling significantly outside its current estimate. These
estimates are regularly reviewed and the ultimate liability may be in excess of, or less than, the amounts provided, for which any
adjustments will be reflected in the period in which the need for an adjustment is determined.
The Company’s best estimates are point estimates within a reasonable range of actuarial liability estimates. These ranges are
developed using stochastic simulations and other techniques and provide an indication as to the degree of variability of the loss
reserves. The Company interprets the ranges produced by these techniques as confidence intervals around the point estimates for
each Non-life sub-segment. However, due to the inherent volatility in the business written by the Company, there can be no
assurance that the final settlement of the loss reserves will fall within these ranges.
The point estimates related to net non-life reserves recorded by the Company and the range of actuarial estimates at
December 31, 2023 were as follows (in millions of U.S. dollars):
P&C
Specialty
Total net non-life reserves
Recorded Point
Estimate
$
$
$
8,360 $
3,026 $
11,386
High
Low
9,617 $
3,507 $
7,161
2,569
It is not appropriate to add together the ranges of each segment in an effort to determine a high and low range around the
Company’s total carried loss reserves.
Of the Company’s $11,386 million of net non-life reserves at December 31, 2023, a portion of this is considered to have a long
reporting tail, including the Company’s exposure to asbestos and environmental claims. See Note 9 to the Consolidated Financial
Statements in Item 18 of this report for further details.
The timing of actual loss payments related to the non-life reserves is not contractual and may vary significantly from the
Company's current estimate of the expected timing and amounts of loss payments based on many factors, including large individual
losses as well as general market conditions. The expected payout timing of non-life reserves are shown in the table below (in
millions of U.S. dollars):
Total Non-life reserves
$
13,151 $
4,280 $
4,335 $
1,926 $
2,610
Total
< 1 year
1-3 years
3-5 years
> 5 years
Non-life Reserving Methodology
Because a significant amount of time can elapse between the assumption of risk, occurrence of a loss event, the reporting of
the event to an insurance company (the primary company or the cedant), the subsequent reporting to the reinsurance company (the
reinsurer) and the ultimate payment of the claim on the loss event by the reinsurer, the Company’s non-life reserves (loss reserves)
are based largely upon estimates.
The Company categorizes loss reserves into three types of reserves: reported outstanding loss reserves (case reserves), ACRs
and IBNR. The Company updates its estimates for each of the aforementioned categories on a quarterly basis using information
received from its cedants.
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Case reserves represent unpaid losses reported by the Company’s cedants and recorded by the Company.
ACRs are established for particular circumstances where, on the basis of individual loss reports, the Company estimates that
the particular loss or collection of losses covered by a treaty may be greater than those advised by the cedant.
IBNR reserves represent a provision for claims that have been incurred but not yet reported to the Company, as well as future
loss development on losses already reported, in excess of the case reserves and ACRs. Unlike case reserves and ACRs, IBNR
reserves are often calculated at an aggregated level and cannot usually be directly identified as reserves for a particular loss or treaty.
The Company also estimates the future unallocated loss adjustment expenses (ULAE) associated with the loss reserves and
these form part of the Company’s loss adjustment expense reserves.
The amount of time that elapses before a claim is reported to the cedant and then subsequently reported to the reinsurer is
commonly referred to in the industry as the reporting tail. Lines of business for which claims are reported quickly are commonly
referred to as short-tail lines and lines of business for which a longer period of time elapses before claims are reported to the
reinsurer are commonly referred to as long-tail lines. In general, for reinsurance, the time lags are longer than for primary business
due to the delay that occurs between the cedant becoming aware of a loss and reporting the information to its reinsurer(s). The delay
varies by reinsurance market (country of cedant), type of treaty, whether losses are first paid by the cedant and the size of the loss.
The delay could vary from a few weeks to a year or sometimes longer. For all lines, the Company’s objective is to estimate ultimate
losses and loss expenses. Total loss reserves are then calculated by subtracting losses paid. Similarly, IBNR reserves are calculated
by subtraction of case reserves and ACRs from total loss reserves.
The Company analyzes its ultimate losses and loss expenses after consideration of the loss experience of various reserving
cells. The Company assigns treaties to reserving cells and allocates losses from the treaty to the reserving cell. The reserving cells
are selected in order to ensure that the underlying treaties have homogeneous loss development characteristics (e.g., reporting tail)
but are large enough to make estimation of trends credible. The selection of reserving cells is reviewed annually and changes over
time as the business of the Company evolves. For each reserving cell, the Company tabulates losses in reserving triangles that show
the total reported or paid claims at each financial year end by underwriting year cohort. An underwriting year is the year during
which the reinsurance treaty was entered into as opposed to the year in which the loss occurred (accident year), or the calendar year
for which financial results are reported. For each reserving cell, the Company’s estimates of loss reserves are reached after a review
of the results of several commonly accepted actuarial projection methodologies. In selecting its best estimate, the Company
considers the appropriateness of each methodology to the individual circumstances of the reserving cell and underwriting year for
which the projection is made. The methodologies that the Company employs include, but may not be limited to, paid and reported
Chain Ladder methods, Expected Loss Ratio method and paid and reported Bornhuetter-Ferguson (B-F) methods. In addition, the
Company uses other methodologies to estimate liabilities for specific types of claims. For example, reserves established for the
catastrophe line are primarily a function of the presence or absence of catastrophic events during the year, and the complexity and
uncertainty associated with estimating unpaid losses from these large disclosed events. Internal and vendor catastrophe models are
typically used in the estimation of loss and loss expenses at the early stages of catastrophe losses before loss information is reported
to the reinsurer. In addition, reserves are also established in consideration of mid-sized and attritional loss events that occur during a
year. In the case of asbestos and environmental claims, the Company has established reserves for future losses and allocated loss
expenses based on the results of periodic actuarial studies, which consider the underlying exposures of the Company’s cedants.
The reserve methodologies employed by the Company are dependent on data that the Company collects. This data consists
primarily of loss amounts and loss payments reported by the Company’s cedants, and premiums written and earned reported by
cedants or estimated by the Company. The actuarial methods used by the Company to project loss reserves that it will pay in the
future do not generally include methodologies that are dependent on claim counts reported, claim counts settled or claim counts
open as, due to the nature of the Company’s business, this information is not routinely provided by cedants for every treaty.
For a description of the reserving methods commonly employed by the Company see Note 9 to the Consolidated Financial
Statements in Item 18 of this report. Each of these methods have certain advantages and disadvantages which the Company takes
into consideration when determining which methods to use and method weights.
The main strengths of the Chain Ladder (CL) Development method are that it is reactive to loss emergence (payments) and
that it makes full use of historical experience on claim emergence (payments). For homogeneous low volatility lines, under stable
economic conditions, the method can often produce good estimates of ultimate liabilities and reserves. However, the method has
weaknesses when the underlying assumption of stable patterns is not true. This may be the consequence of changes in the mix of
business, changes in claim inflation trends, changes in claim reporting practices or the presence of large claims, among other things.
Furthermore, the method tends to produce volatile estimates of ultimate liabilities in situations where there is volatility in reported
(paid) patterns. In particular, when the expected percentage reported (paid) is low, small deviations between actual and expected
claims can lead to very volatile estimates of ultimate liabilities and reserves. Consequently, this method is often unsuitable for
projections at early development stages of an underwriting year. Finally, the method fails to incorporate any information regarding
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market conditions, pricing, etc., which could improve the estimate of liabilities and reserves. It therefore tends not to perform very
well in situations where there are rapidly changing market conditions.
The Expected Loss Ratio (ELR) method is insensitive to actual reported or paid losses therefore it is usually inappropriate at
later stages of development, but can often be useful at the early stages of development when very few losses have been reported or
paid, and the principal sources of information available to the Company consist of information obtained during pricing and
qualitative information supplied by the cedant.
The Bornhuetter-Ferguson (B-F) methods (Reported or Paid) tend to provide less volatile indications at early stages of
development and reflect changes in the external environment, however, this method can be slow to react to emerging loss
development (payment). In particular, to the extent that the a priori loss ratios prove to be inaccurate (and are not revised), the B-F
methods will produce loss estimates that take longer to converge with the final settlement value of loss liabilities.
The reserving methods used by the Company are dependent on a number of key parameter assumptions. The principal
parameter assumptions underlying the methods used by the Company are:
•
•
•
•
the loss development factors used to form an expectation of the evolution of reported and paid claims for several years
following the inception of the underwriting year. These are often derived by examining the Company’s data after due
consideration of the underlying factors listed below. In some cases, where the Company lacks sufficient volume to have
statistical credibility, external benchmarks are used to supplement the Company’s data;
the tail factors used to reflect development of paid and reported losses after several years have elapsed since the inception
of the underwriting year;
the a priori loss ratios used as inputs in the B-F methods; and
the selected loss ratios used as inputs in the Expected Loss Ratio method.
As an example of the sensitivity of the Company’s reserves to reserving parameter assumptions by reserving line, the effect on
the Company’s reserves of higher/lower a priori loss ratio selections, higher/lower loss development factors and higher/lower tail
factors based on amounts recorded at December 31, 2023 was as follows (in millions of U.S. dollars):
A Priori Loss Ratio +5%
Loss Development Factors (up to 10 years) 6 months longer
Tail Loss Development Factors higher by 5% (1)
A Priori Loss Ratio -5%
Loss Development Factors (up to 10 years) 6 months faster
Tail Loss Development Factors lower by 5% (1)
P&C
Specialty
652
733
409
(652)
(472)
(349)
220
446
133
(220)
(221)
(76)
(1) Tail factors are defined as aggregate development factors after 10 years from the inception of an underwriting year.
The Company believes that the illustrated sensitivities to the reserving parameter assumptions are indicative of the potential
variability inherent in the estimation process of those parameters. Some reserving lines show little sensitivity to a priori loss ratio,
loss development factor or tail factor as the Company may use reserving methods such as the Expected Loss Ratio method in several
of its reserving cells within those lines. It is not appropriate to sum the total impact for a specific factor or the total impact for a
specific reserving line as the lines of business are not perfectly correlated.
The validity of all parameter assumptions used in the reserving process is reaffirmed annually as part of our deep dive process.
Each portfolio is subject to a deep dive on an annual basis. The outcome of the deep dive is a selected loss ratio for each
underwriting year within a reserving segment. Reaffirmation of the parameter assumptions means that the actuaries determine that
the parameter assumptions continue to form a sound basis for projection of future liabilities. Parameter assumptions used in
projecting future liabilities are themselves estimates based on historical information. As new information becomes available (e.g.,
additional losses reported), the Company’s actuaries determine whether a revised estimate of the parameter assumptions that reflects
all available information is consistent with the previous parameter assumptions employed. In general, to the extent that the revised
estimate of the parameter assumptions are within a close range of the original assumptions, the Company determines that the
parameter assumptions employed continue to form an appropriate basis for projections and continue to use the original assumptions
in its models. In this case, any differences could be attributed to the imprecise nature of the parameter estimation process. However,
to the extent that the deviations between the two sets of estimates are not within a close range of the original assumptions, the
Company reacts by adopting the revised assumptions as a basis for its reserve models. Notwithstanding the above, even where the
Company has experienced no material deviations from its original assumptions during any quarter, the Company will generally
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review and appropriately revise the reserving parameter assumptions at least once a year to reflect all accumulated available
information.
In addition to examining the data, the selection of the parameter assumptions is dependent on several underlying factors. The
Company’s actuaries review these underlying factors and determine the extent to which these are likely to be stable over the time
frame during which losses are projected, and the extent to which these factors are consistent with the Company’s data. If these
factors are determined to be stable and consistent with the data, the estimation of the reserving parameter assumptions are mainly
carried out using actuarial and statistical techniques applied to the Company’s data. To the extent that the actuaries determine that
they cannot continue to rely on the stability of these factors, the statistical estimates of parameter assumptions are modified to reflect
the direction of the change. The main underlying factors upon which the estimates of reserving parameters are predicated are:
•
•
•
•
•
•
•
•
the cedant’s business practices will proceed as in the past with no material changes either in submission of accounts or cash
flows;
any internal delays in processing accounts received by the cedant are not materially different from that experienced
historically, and hence the implicit reserving allowance made in loss reserves through the methods continues to be
appropriate;
case reserve reporting practices, particularly the methodologies used to establish and report case reserves, are unchanged
from historical practices;
the Company’s internal claim practices, particularly the level and extent of use of ACRs, are unchanged;
historical levels of claim inflation can be projected into the future and typically will have no material effect on either the
acceleration or deceleration of claim reporting and payment patterns. In periods of higher than normal inflation,
incremental impacts of inflation are quantified and included through the annual deep drive process mentioned above;
the selection of reserving cells results in homogeneous and credible future expectations for all business in the cell and any
changes in underlying treaty terms are either reflected in cell selection or explicitly allowed in the selection of trends;
in cases where benchmarks are used, they are derived from the experience of similar business; and
the Company can form a credible initial expectation of the ultimate loss ratio of recent underwriting years through a review
of pricing information, supplemented by qualitative information on market events.
The Company’s best estimate of total loss reserves is typically in excess of the midpoint of the actuarial ultimate liability
estimate. The Company believes that there is potentially significant risk in estimating loss reserves for long-tail lines of business and
for immature underwriting years that may not be adequately captured through traditional actuarial projection methodologies as these
methodologies usually rely heavily on projections of prior year trends into the future. In selecting its best estimate of future
liabilities, the Company considers both the results of actuarial point estimates of loss reserves as well as the potential variability of
these estimates as captured by a reasonable range of actuarial liability estimates. The selected best estimates of reserves are always
within the reasonable range of estimates indicated by the Company’s actuaries. In determining the appropriate best estimate, the
Company reviews (i) the position of overall reserves within the actuarial reserve range, (ii) the result of bottom up analysis by
underwriting year reflecting the impact of parameter uncertainty in actuarial calculations, and (iii) specific qualitative information
that may have an effect on future claims but which may not have been adequately reflected in actuarial estimates, such as potential
for outstanding litigation, claims practices of cedants, etc.
During 2023, 2022 and 2021, the Company reviewed its estimate for prior year losses for the P&C and Specialty segments
and, in light of developing data, adjusted its ultimate loss ratios for prior accident years. The net prior years' reserve development for
each segment for the years ended December 31, 2023, 2022 and 2021 is presented in Note 9 to the Consolidated Financial
Statements in Item 18 of this report.
Actual losses paid and reported compared with the Company’s expectations, and the changes of the Company’s reserving
parameter assumptions in response to the emerging development during the year ended December 31, 2023 were as follows:
• P&C: The Company reported net favorable loss development for prior accident years resulting from favorable loss
emergence in the P&C segment across multiple accident years, mainly driven by the catastrophe and health lines of
business, partially offset by adverse loss emergence in casualty business.
• Specialty: The Company reported net favorable loss development for prior accident years resulting from favorable loss
emergence in the Specialty segment across multiple accident years, predominantly from the property, agriculture and
financial risks lines of business, which was partially offset by adverse loss emergence in the marine and aviation business.
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Life and Health Reserves
Life and Health reserves relate to the Company’s Life and Health segment, which predominantly includes:
• mortality and morbidity business, covering death, critical illness and disability risks (with various riders) written in
Continental Europe, the U.K., the United States, Ireland, Canada and Asia Pacific;
•
longevity business, subdivided into standard annuities written in the U.K, the U.S. and Canada and non-standard annuities
written in the U.K.
The Company's gross and net Life and health reserves at December 31, 2023 and 2022 were as follows (in millions of U.S.
dollars):
Long-term protection
Longevity
Total traditional and limited payment long-duration life and health reserves
Other long-duration life and health reserves
Short-term life and health reserves
Total life and health reserves, net
Ceded reserves
Life and health reserves, gross
December 31, 2023
December 31, 2022
$
$
$
$
1,432 $
466
1,898 $
117
817
2,832 $
28
2,860 $
1,250
304
1,554
128
796
2,478
20
2,498
The increase in the Life and Health reserves in 2023 was primarily due to growth in long-term protection and longevity
business and foreign exchange movements.
The expected payout timing of Life and Health reserves on an undiscounted basis are shown in the table below (in millions of
U.S. dollars). The timing of actual loss payments related to Life and Health reserves is not contractual and may vary significantly
from the Company's current estimate of the expected timing and amounts of loss payments based on many factors.
Life and health reserves
$
3,185 $
424 $
387 $
275 $
2,099
Total
< 1 year
1-3 years
3-5 years
> 5 years
Life and Health Reserving Methodology
The Company’s reserving methodologies are as follows:
• Mortality:
Short-term life and health reserves: The reserves for the short-term mortality/morbidity business consist of case reserves
calculated at the treaty level based upon cedant information. Similar treaties are grouped to calculate IBNR using the ELR
method described above for non-life business.
Traditional and limited payment long-duration life and health reserves: The liability for future policy benefits (LFPB) for
traditional and limited payment long-duration contracts is established based upon accepted actuarial valuation methods
which require us to make certain assumptions regarding future premiums, claims and policy benefits. The LFPB uses the
Company's current best estimate assumption of future cash flows discounted at a rate that approximates a single A rated
corporate bond yield. Contracts are generally grouped into cohorts by product type, issue year, geographical region,
currency, and other factors. Cash flows estimates used to set the net premiums ratio, which is the proportion of present
value of gross premiums required to provide for all benefits and certain expenses, are reviewed quarterly using actual
historical experience and current future best estimate assumptions, and if the cash flows change, the LFPB is updated using
the revised net premium ratio. This revised net premium ratio will derive a remeasurement gain or loss that is presented as
a component of Losses and loss expenses within the Consolidated Statements of Operations. If the net premium ratio
exceeds 100% for a given cohort, a corresponding adjustment is recognized immediately in net income. The calculated
LFPB cannot be less than zero for a given cohort.
The net premium ratio is not updated for changes in discount rate assumptions, as the impact of changes in quarterly
discount rates are recorded in Comprehensive income or loss. The current discount rate assumption for all contracts is
derived from a yield curve based on upper-medium grade fixed income securities (single A rated credit). For unobservable
discount rates, the Company uses estimates consistent with fair value guidance, maximizing the use of relevant, observable
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market prices and minimizing the use of unobservable inputs. The locked-in discount rate assumption is utilized for
purposes of interest accretion recognized in Losses and loss expenses within the Consolidated Statements of Operations
and for updating the net premium ratio. The locked-in discount rate assumption is based on the weighted average upper-
medium grade fixed income yields during the first calendar year of the contract.
The most significant cash flow assumptions used are mortality, morbidity and persistency. The Company has elected to
lock-in claims expense assumptions at contract inception and those assumptions are not subsequently reviewed or updated.
• Longevity: Reserves for longevity reinsurance contracts are established following the reserving methodology discussed
above for traditional and limited payment long-duration contracts. Some of these contracts subject the Company to risks
arising from policyholder mortality over a period that extends beyond the periods in which premiums are collected. For
longevity reinsurance contracts, the main risk is a higher than expected increase in life span beyond our current best
estimate.
An example of the sensitivity of the Company’s best estimate reserves for Life and Health contracts, net of retrocession, to
reserving assumptions by product line at December 31, 2023 was as follows (in millions of U.S. dollars, except percentages):
Reserving lines
Mortality
Long-term and TCI
Longevity
Factors
Mortality
Standard and non-standard annuities
Mortality improvements per annum
Change
Increase to best
estimate reserves, net
+10% $
+1% $
898
462
The mortality sensitivities demonstrate the impact to the Company's best estimate reserves, net of retrocession, based on
current mortality assumptions. Changes in assumptions shown in the table above may not be fully recognized in the U.S. GAAP
reserves and net income in the period of such an assumption change, due to the nature of the net premium ratio calculations
described above for traditional and limited payment contracts. It is not appropriate to sum the total impact for a specific reserving
line or the total impact for a specific factor because the reinsurance portfolios are not perfectly correlated.
The net premium ratio for traditional and limited payment contracts is not updated for changes in discount rate assumptions, as
the impact of changes in discount rates are recorded in Other comprehensive income or loss. The Company recognized a $50 million
loss, net of tax, within Other comprehensive income for the change in discount rate for liability for future policy benefits for the
year ended December 31, 2023 as a result of decreases in interest rates during the year. This compared to gains of $99 million and
$53 million, net of tax, for the years ended December 31, 2022 and 2021, respectively, as a result of increases in interest rates.
See Item 11 Quantitative and Qualitative Disclosures about Market Risk below in this report for disclosures on market risk
impacts to the to the valuation of Life and Health reserves. Refer to Note 10 to the Consolidated Financial Statements in Item 18 of
this report for disclosures on Life and Health reserves.
Market Risk Benefits
Market Risk Benefits are contracts or contract features that both provide protection to the contract holder from other-than-
nominal capital market risk and expose the Company to other-than-nominal capital market risk. MRBs include certain contract
features that provide minimum guarantees to policyholders, such as guaranteed minimum death benefits (GMDB). MRBs can be in
either an asset or a liability position, and are presented separately on the Consolidated Balance Sheets as the criteria for right of
offset is not met. MRBs are measured at fair value using an option-based valuation model based on current net amounts at risk,
market data, Company experience, and other factors. Consistent with a fair value income approach, all contractual cash flows
specified within the GMDB treaties and expense cash flows that are consistent with the expected expense levels, are projected on a
prospective basis. Risk neutral scenarios are used to project and discount cash flows.
The Company's MRBs at December 31, 2023 and 2022 were as follows (in millions of U.S. dollars):
Market risk benefits
$
145 $
5 $
140 $
131 $
9 $
122
December 31, 2023
December 31, 2022
Asset
Liability
Net
Asset
Liability
Net
Changes in fair value related to MRBs are recognized as Market risk benefit gains (losses) except for the portion of the change
in fair value due to a change in the instrument-specific credit risk, which is recognized in Other comprehensive income or loss, both
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within the Consolidated Statements of Operations and Comprehensive Income (Loss). Refer to Operating results—Corporate and
Other in Item 5 of this report for more information on the Market risk benefit gains (losses). The Company also recorded gains of $5
million, $50 million and $4 million, net of tax, within Other comprehensive income as a result of changes in the instrument-specific
credit risk for the years ended December 31, 2023, 2022, and 2021 respectively.
Refer to Item 11 Quantitative and Qualitative Disclosures about Market Risk below in this report for disclosures on market
risk impact to the MRBs. Refer to Note 2 and 11 to the Consolidated Financial Statements in Item 18 of this report for disclosures
on MRBs.
Reinsurance Recoverable on Paid and Unpaid Losses
The Company has exposure to credit risk related to reinsurance recoverable on paid and unpaid losses. See Note 12 to the
Consolidated Financial Statements in Item 18 and Quantitative and Qualitative Disclosures about Market Risk—Counterparty
Credit Risk in Item 11 of this report for a discussion of the Company’s risk related to reinsurance recoverable on paid and unpaid
losses and the Company’s process to evaluate the financial condition of its reinsurers.
At December 31, 2023 and 2022, the Company recorded $1,921 million and $1,948 million, respectively, of reinsurance
recoverable on paid and unpaid losses in its Consolidated Balance Sheets, of which $1,793 million and $1,872 million, respectively,
represents reinsurance recoverable on unpaid losses related to the total Non-life and Life and health reserves. The decrease in the
reinsurance recoverable during 2023 was primarily due to reduced amount of ceded losses from large catastrophic and man-made
events as discussed in the Results by Segment in Item 5.A above.
At December 31, 2023, the distribution of the Company’s reinsurance recoverable on paid and unpaid losses on total Non-life
and Life and health reserves categorized by Standard & Poor’s rating of the reinsurer was as follows:
Rating Category
AA- or better
A- to A+
Less than A-
Unrated
Total
% of total reinsurance recoverable on
unpaid losses
10 %
8 %
— %
82 %
100 %
At December 31, 2023, 18% of the Company’s reinsurance recoverable on total Non-life and Life and health reserves were
due from reinsurers with A- or better rating from Standard & Poor’s, compared to 19% at December 31, 2022. The remaining
amounts included in Unrated were all collateralized as at December 31, 2023 and 2022. Refer to Note 12 to the Consolidated
Financial Statements in Item 18 of this report for further details on collateralized reinsurance recoverables.
Currency
The Company’s reporting currency is the U.S. dollar. The Company has exposure to foreign currency risk in part due to its
ownership of its Irish, French and Canadian subsidiaries and branches, whose functional currencies are the Euro and the Canadian
dollar.
At December 31, 2023, the value of the U.S. dollar weakened against all major currencies, except for Japanese Yen, compared
to December 31, 2022, which resulted in an increase in the U.S. dollar value of the assets and liabilities denominated in non-U.S.
dollar currencies.
The currency translation adjustment account is a component of Accumulated other comprehensive income or loss in
Shareholders’ equity. The reconciliation of the currency translation adjustment for the years ended December 31, 2023, 2022 and
2021 was as follows (in millions of U.S. dollars):
Currency translation adjustment at beginning of year
Change in foreign currency translation adjustment included in accumulated other
comprehensive loss
Currency translation adjustment at end of year
$
$
2023
2022
2021
(17) $
(23) $
(66)
(3)
(20) $
6
(17) $
44
(22)
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The currency translation adjustment account decreased by $3 million during the year ended December 31, 2023 compared to
an increase of $6 million during the year ended December 31, 2022 and an increase of $44 million during the year ended
December 31, 2021, due to the translation of net assets of the Company’s subsidiaries and branches into U.S. dollars.
In addition, the Company has underwriting reinsurance exposures, collecting premiums and paying claims and other expenses
in currencies other than the U.S. dollar and holding certain net assets in such currencies. See Operating Results above for a
discussion of the impact of foreign exchange and net foreign exchange gains and losses during the years ended December 31, 2023,
2022 and 2021.
See Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk in Item 11 for a discussion of the
Company’s risk related to changes in foreign currency movements as well as details of the Company's gross and net foreign
currency exposures and the associated foreign currency derivatives the Company has entered into the manage these exposures. See
also Note 2(n) to the Consolidated Financial Statements in Item 18 of this report for a discussion of currencies to which the
Company is exposed.
Effects of Inflation
General economic inflation as well as social inflation have increased, and there is a risk of inflation remaining elevated for an
extended period, which could further increase claims and claim expenses, impact the performance of our investment portfolio or
have other adverse effects. The actual effects of the current and potential future increase in inflation on our results cannot be
accurately known until, among other items, claims are ultimately settled. The onset, duration and severity of an inflationary period
cannot be estimated with precision. We consider the anticipated effects of inflation on us in our loss reserves and on our investment
portfolio. Our estimates of the potential effects of inflation are also considered in pricing and in estimating reserves for unpaid
claims and claim expenses. The potential exists, after a large catastrophic loss, for the development of inflationary pressures in a
local economy.
C. Research and Development, Patents and Licenses, etc.
Not applicable.
D. Trend Information
For a discussion of known trends, uncertainties and other events that are reasonably likely to have a material impact on the
Company, see Operating Results in Item 5.B, Liquidity and Capital Resources of this report.
E. Critical Accounting Estimates
The Company’s Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. 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. The following are the Company’s accounting estimates that management believes are the most critical
to its operations and require the most difficult, subjective and complex judgment. If actual events differ significantly from the
underlying assumptions and estimates used by management, there could be material adjustments to prior estimates that could
potentially adversely affect the Company’s results of operations, financial condition and liquidity. These critical accounting policies
and estimates should be read in conjunction with Note 2 to the Consolidated Financial Statements in Item 18 of this report.
Non-life and Life and Health Reserves and Reinsurance Recoverable for Unpaid Losses
The Company’s Non-life and Life and health reserves and the related reinsurance recoverable for unpaid losses are significant
accounting estimates. These estimates are continually reviewed with any required adjustments reflected in the periods in which they
are determined, which may affect the Company’s results in future periods. On January 1, 2023, the Company adopted LDTI for its
traditional and limited payment long-duration contracts, and the Company updated the critical accounting estimates impacted by the
LDTI guidance. See Liquidity and Capital Resources—Reserves and Liquidity and Capital Resources—Reinsurance Recoverable
on Paid and Unpaid Losses above and Notes 2(b), 2(e), 9, 10, 11, and 12 to the Consolidated Financial Statements in Item 18 of this
report for further details.
Premium Estimates
The Company provides proportional and non-proportional reinsurance coverage to cedants (insurance companies). In most
cases, cedants seek protection for business that they have not yet written at the time they enter into reinsurance agreements and thus
have to estimate the volume of premiums they will cede to the Company. Reporting delays are inherent in the reinsurance industry
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and vary in length by reinsurance market (country of cedant) and type of treaty. As delays can vary from a few weeks to a year or
sometimes longer, the Company produces accounting estimates to report premiums and acquisition costs until it receives the
cedants’ actual premium reported data.
Under proportional treaties, which represented 75% of the Company’s total gross premiums written for the year ended
December 31, 2023, the Company shares proportionally in both the premiums and losses of the cedant and pays the cedant a
commission to cover the cedant’s acquisition costs. Under this type of treaty, the Company’s ultimate premiums written and earned
and acquisition costs are not known at the inception of the treaty. As such, reported premiums written and earned and acquisition
costs on proportional treaties are generally based upon reports received from cedants and brokers, supplemented by the Company’s
own estimates of premiums written and acquisition costs for which ceding company reports have not been received. Premium and
acquisition cost estimates are determined at the individual treaty level. The determination of premium estimates requires a review of
the Company’s experience with cedants, familiarity with each market, an understanding of the characteristics of each line of
business and management’s assessment of the impact of various other factors on the volume of business written and ceded to the
Company. Premium and acquisition cost estimates are updated as new information is received from the cedants and differences
between such estimates and actual amounts are recorded in the period in which estimates are changed or the actual amounts are
determined.
Under non-proportional treaties, which represented the remaining 25% of the Company’s total gross premiums written for the
year ended December 31, 2023, the Company is typically exposed to loss events in excess of a predetermined dollar amount or loss
ratio and receives a fixed or minimum premium, which is subject to upward adjustment depending on the premium volume written
by the cedant. In addition, many of the non-proportional treaties include reinstatement premium provisions. Reinstatement
premiums are recognized as written and earned at the time a loss event occurs, where coverage limits for the remaining life of the
contract are reinstated under pre-defined contract terms. The accrual of reinstatement premiums is based on management’s estimate
of losses and loss expenses associated with the loss event.
The magnitude and impact of changes in premium estimates differs for proportional and non-proportional treaties. Although
proportional treaties may be subject to larger changes in premium estimates compared to non-proportional treaties, as the Company
generally receives cedant statements in arrears and must estimate all premiums for periods ranging from one month to more than
one year (depending on the frequency of cedant statements), the impact is mitigated by changes in the cedant’s related reported
acquisition costs and losses. The impact of the change in estimate on premiums earned and net income varies depending on when
the change becomes known during the risk period and the underlying profitability of the treaty. Non-proportional treaties generally
include a fixed minimum premium and an adjustment premium. While the fixed minimum premiums require no estimation,
adjustment premiums are estimated and could be subject to changes in estimates. Changes in premium estimates can be material to
net premiums earned in the period to which they are determined as the adjustments may be substantially or fully earned.
See Notes 2(a), 12 and 22 to the Consolidated Financial Statements in Item 18 of this report and Operating Results—Results
by Segment in Item 5 of this report for accounting policies or further details regarding premiums.
Valuation and Recoverability of Deferred Tax Assets
Under U.S. GAAP, a deferred tax asset or liability is to be recognized for the estimated future tax effects attributable to
temporary differences and carryforwards. U.S. GAAP also establishes procedures to assess whether a valuation allowance should be
established for deferred tax assets. All available evidence, both positive and negative, is considered to determine whether, based on
the weight of that evidence, a valuation allowance is needed for some portion or all of a deferred tax asset. Management must use its
judgment in considering the relative impact of positive and negative evidence.
The Company has projected future taxable income in the tax jurisdictions in which the deferred tax assets arise based on
management’s projections of premium and investment income, capital gains and losses, and technical and expense ratios. Based on
these projections and an analysis of the ability to utilize loss and foreign tax credits carryforwards at the taxable entity level,
management evaluates the need for a valuation allowance. The Company has estimated the future tax effects attributed to temporary
differences and had deferred tax assets at December 31, 2023 of $636 million, after a valuation allowance of $325 million.
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The most significant component of the Company's deferred tax asset (after valuation allowance) relates to the adoption of
Bermuda corporate income tax. The Bermuda CIT Act includes a provision referred to as the economic transition adjustment, which
is intended to provide a fair and equitable transition into the tax regime, which resulted in the Company recognizing a $487 million
deferred tax asset in 2023. The economic transition adjustment allows Bermuda constituent entities to establish fair values as tax
basis for their assets and liabilities as of September 30, 2023, which results in future reduction of taxable income, reflected as a net
deferred tax asset in the financial statements. The amount of the adjustment for each asset and liability generally reflects the
difference, as of September 30, 2023, between the fair market value and the carrying value of the item in the financial statements
reported under the Company's ultimate parent company's accounting standard. The economic transition adjustment is assessed only
as of September 30, 2023 and is not subsequently reassessed or subject to further changes in fair value. The Company expects this
net deferred tax asset to be utilized to reduce taxes predominantly over a 10-year period and the Company has not recorded a
valuation allowance against this net deferred tax asset as of December 31, 2023.
Changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by taxation authorities, could
have an impact on the provision for income tax and the effective tax rate and could significantly affect the amounts reported on the
financial statements in the year these changes occur.
In accordance with U.S. GAAP, the Company has assumed that the future reversal of deferred tax liabilities will result in an
increase in taxes payable in future years. Underlying this assumption is an expectation that the Company will continue to be subject
to taxation in the various tax jurisdictions and that the Company will continue to generate taxable revenues in excess of deductions.
See Notes 2(m) and 16 to the Consolidated Financial Statements in Item 18 of this report for further details.
Valuation of Certain Financial Instrument Assets
As more fully described in Note 2(h)and 4 to the Consolidated Financial Statements in Item 18 of this report, the Company
measures the fair value of its financial instruments according to a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value by maximizing the use of observable inputs and minimizing the use of unobservable inputs by
requiring that the most observable inputs be used when available. Unobservable inputs are inputs that reflect the Company’s
assumptions about what market participants would use in pricing the asset or liability based on the best information available in the
circumstances. Level 3 financial instruments have the least use of observable market inputs used to determine fair value. As at
December 31, 2023, the Company classified $846 million of investments as Level 3 as a result of significant unobservable inputs
used to determine fair value. See Note 4 to the Consolidated Financial Statements in Item 18 of this report for a breakdown of these
investments by fair value level as well as more detail on the valuation techniques, methods and assumptions that were used by the
Company to estimate the fair value of its fixed maturities, short-term investments, equities, and other invested assets (including
derivatives). See Notes 2(o) and 6 to the Consolidated Financial Statements in Item 18 of this report for further details on the
Company’s use of derivative financial instruments.
See also Quantitative and Qualitative disclosures About Market Risk in Item 11 of this report for further details on interest rate
and credit spread risk and a sensitivity analysis of interest rate and credit spread variances on the valuation of the Company’s
investments.
Valuation of Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations
(PartnerRe SA, Winterthur Re, Paris Re and Presidio). The Company assesses the appropriateness of its valuation of goodwill on an
annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. If,
as a result of the assessment, the Company determines that the value of its goodwill is impaired, goodwill will be written down in
the period in which the determination is made. In making an assessment of the value of its goodwill, the Company uses both market
based and non-market based valuations. The fair value of the reporting units is determined based on the price-to-earnings multiples,
book value multiples, and present value of estimated cash flows methods. Significant changes in the data underlying these
assumptions could result in an assessment of impairment of the Company’s goodwill asset. In addition, if the current economic
environment and/or the Company’s financial performance were to deteriorate significantly, this could lead to an impairment of
goodwill, the write-off of which would be recorded against net income in the period such deterioration occurred.
Based upon the Company’s assessment, there was no impairment of the Company’s goodwill asset of $456 million at
December 31, 2023 or 2022.
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See Notes 2(k) and 7 to the Consolidated Financial Statements in Item 18 of this report for further details.
New Accounting Pronouncements
See Note 2(t) to the Consolidated Financial Statements included in Item 18 of this report.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following are the directors and Executive Leadership Team of the Company as of March 25, 2024.
Name
Thierry Derez
Brian Dowd
Mary Ann Brown
Hermann Pohlchristoph
Maud Petit
Reuben Jeffery III
Emmanuel Dubreuil
François Bucchini
Jacques Bonneau
Philippe Meyenhofer
Jonathan Colello
Abina Kealy
Marc Archambault
James Beedle
Greg Haft
Andrew Gibbs
Simon Clifford
Christian Mitterer
Andrew Hughes
Tom Leone
Gerd Maxl
Sima Ruparelia
Lisa Bolger
Markus Frank
Sylvain Jarrier
Ingrid Gjonaj
Position with the Company
Director, Chair of the Board, Member of the Investment Committee
Lead Independent Director, Chair of Investment Committee, Member of
Underwriting and Risk Committee, Member of the Audit Committee
Director, Chair of the Audit Committee, Member of the Underwriting and Risk
Committee
Director, Chair of the Underwriting and Risk Committee, Member of the Audit
Committee
Director, Member of the Underwriting and Risk Committee, Member of the
Investment Committee
Director, Member of Audit Committee, Member of the Investment Committee,
Member of the Underwriting and Risk Committee
Director, Member of the Underwriting and Risk Committee (1)
Director, Member of the Underwriting and Risk Committee (1)
Director, President and CEO, PartnerRe Ltd., Member of the Underwriting and
Risk Committee and Member of the Investment Committee (2)
Incoming Director and CEO, PartnerRe Ltd. (3)
Incoming President, PartnerRe Ltd. & CEO P&C Americas (4)
Executive Vice President and CFO, PartnerRe Ltd.
CEO Life and Health
CEO P&C APAC
CEO Global Catastrophe
Chief Operations Officer (5)
CUO Life & Health
CEO Specialty Lines (6)
CEO Third Party Capital
Chief Investment Officer
Chief Legal Counsel
Chief Actuarial & Risk Officer
Chief People Officer
Chief Information Officer
CUO Non-Life (7)
CEO P&C EMEA (8)
Date Appointed
July 12, 2022
March 18, 2016
September 1, 2018
February 4, 2021
July 12, 2022
November 10, 2022
November 7, 2023
November 7, 2023
July 28, 2020
April 1, 2024
April 1, 2024
September 6, 2022
April 1, 2017
April 1, 2019
April 1, 2019
October 14, 2019
October 30, 2020
January 9, 2024
February 1, 2021
February 18, 2021
February 18, 2021
June 27, 2022
July 1, 2022
July 1, 2022
June 1, 2023
January 9, 2024
(1) Sylvestre Frézal was a Director and member of the Underwriting and Risk Committee for part of 2023 and resigned effective
September 29, 2023. Thierry Francq was a Director and member of the Underwriting and Risk Committee for part of 2023 and
resigned effective November 7, 2023. Emmanuel Dubreuil and François Bucchini were appointed as Directors and Members of
the Underwriting and Risk Committee effective November 7, 2023.
(2) Jacques Bonneau is retiring as Director, President and CEO, PartnerRe Ltd. effective April 1, 2024.
(3) Philippe Meyenhofer was CEO Specialty Lines for 2023 and part of 2024. He will join the PartnerRe Ltd. Board as Director
and will become CEO, PartnerRe Ltd. effective April 1, 2024.
(4) Jonathan Colello was appointed CEO, P&C America effective July 1, 2019, and will also become President, PartnerRe Ltd.
effective April 1, 2024.
(5) Andrew Gibbs is retiring as Chief Operations Officer, PartnerRe Ltd. effective March 31, 2024.
(6) Christian Mitterer served as CEO P&C EMEA for 2023 and a part of 2024. Mr. Mitterer was originally appointed as CEO
P&C EMEA on December 10, 2020. He was appointed as CEO Specialty Lines effective January 9, 2024.
(7) Scott Altstadt was PartnerRe Group Non-Life CUO for a portion of 2023. Sylvain Jarrier assumed the role as the PartnerRe
Group Non-Life CUO effective June 1, 2023.
(8) Ingrid Gjonaj was appointed CEO P&C EMEA effective January 9, 2024.
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Biographical information
• Thierry Derez, Director, Chair of the Board, Member of the Investment Committee
Thierry Derez is Chairman of the Board of PartnerRe and Chief Executive Officer of Covéa, parent company of Covéa Group,
the leading P&C insurance group in France. Mr. Derez was appointed Chairman of AM-GMF (previously La Garantie Mutuelle
des Fonctionnaires) in 2001, Chairman of MAAF Assurances in 2005 and Chairman of MMA in 2007. He has served as
Chairman and Chief Executive Officer of Covéa from 2008 to 2022, at which point the offices of Chairman of the Board and
CEO were separated. Covéa brings together AM-GMF, MAAF Assurances and MMA. Prior to joining the AM-GMF Group in
1995, Mr. Derez was a practicing lawyer at the Paris Court of Appeals and is a former Secretary of the Conference of the
French Bar Association.
• Brian Dowd, Director, Chair of the Investment Committee, Member of the Underwriting and Risk Committee and
Member of the Audit Committee (Lead Independent Director)
Brian Dowd was formerly Vice Chairman of ACE Limited and a member of the ACE Group’s Office of the Chairman before
his retirement in 2015. Mr. Dowd focused on underwriting-related matters including oversight of the Group’s product boards,
the general underwriting disciplines of the company’s profit centers, outward reinsurance placements and run-off operations, as
well as special strategic projects. Mr. Dowd previously held relevant positions at ACE from 1997 until his appointment as
Chairman of ACE’s Insurance – North America business segment in 2006. He held the role of Vice Chairman, ACE Limited
from 2009. Prior to 1997, Mr. Dowd held underwriting positions of increasing responsibility at Arkwright Mutual Insurance
Company over a seven-year period. He is Chairman of the Board for ABR Reinsurance Ltd. Mr. Dowd holds a Bachelor of
Science in Finance from Northern Illinois University as well as the Chartered Property Casualty Underwriter (CPCU)
professional designation.
• Mary Ann Brown, Director, Chair of the Audit Committee and Member of the Underwriting and Risk Committee
(Independent)
Mary Ann Brown was Chair of Pacific Life Re and held multiple roles at Pacific Life before her retirement in 2017. As Chair of
Pacific Life Re Ltd., Ms. Brown directed strategy and growth of the global reinsurance division. Prior to joining Pacific Life,
Ms. Brown held multiple executive roles at MetLife, Swiss Re and New York Life. She holds a Bachelors and Masters of Arts
in Education from Emory University, USA as well as a Masters of Actuarial Science from Georgia State University.
• Hermann Pohlchristoph, Director, Chair of the Underwriting and Risk Committee and Member of the Audit
Committee (Independent)
Hermann Pohlchristoph has held multiple executive roles, most recently at Munich Re as a Member of the Board of
Management from 2017 to 2020 and as CFO Reinsurance, Munich Re from 2006 to 2017. Prior to that, he served as Head of
Financial Reporting and Accounting, Munich Re for two years. Prior to joining Munich Re, Mr. Pohlchristoph held senior roles
at GE Insurance from 1998 to 2002. He also served as an Auditor at Ernst & Young, Stuttgart from 1994 to 1998. He obtained a
degree in business administration at the Universities Bayreuth and Mainz, Germany.
• Maud Petit, Director, Member of the Underwriting and Risk Committee, Member of the Investment Committee
Maud Petit is Deputy CEO of Covéa, CEO of Covéa Coopérations and Deputy Managing Director of Covéa Group. With over
25 years of experience in the re/insurance industry, Ms. Petit was named Chief Financial Officer and Deputy CEO of Covéa in
2018 and CEO of Covéa Coopérations effective February 14, 2024. Prior to joining Covéa in 2008 as Combined Accounts
Manager, Ms. Petit held various positions with PwC and as Head of Insurance with the French Accounting Standards Authority.
Ms. Petit holds a Master’s in Management Sciences and Accounting from Panthéon Sorbonne and an advanced diploma in
Accounting and Management.
• Reuben Jeffery III, Director, Member of the Audit Committee, Member of the Investment Committee, Member of the
Underwriting and Risk Committee (Independent)
Reuben Jeffery is the former President and Chief Executive Officer of Rockefeller & Co. He served as Under Secretary of State
for Economic, Energy and Agricultural Affairs and as Chairman of the Commodity Futures Trading Commission during the
George W. Bush administration. Previously, Mr. Jeffery was at Goldman, Sachs & Co. where he was Managing Director and
head of the European Financial Institutions Group. He began his career as a lawyer at Davis, Polk and Wardwell. He received a
B.A. from Yale University and an M.B.A. and J.D. from Stanford University.
• Emmanuel Dubreuil, Director, Member of the Underwriting and Risk Committee
Emmanuel Dubreuil is Chief Insurance and Reinsurance Initiatives Officer at Covéa. He joined Covéa in 2019, as Head of
Reinsurance Cessions. Prior to joining Covéa, he served as a Partner at PwC France in the Risk and Value Measurement
Services, from 2015 to 2019 and he occupied various positions in the reinsurance broking industry (Benfield, Aon, Guy
Carpenter) between 1996 and 2015.
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• François Bucchini, Director, Member of the Underwriting and Risk Committee
François Bucchini is Chief International and Commercial Lines Officer at Covéa. He joined Covéa in 2022. Previously, he held
various senior management positions. He served as France Deputy CEO and member of Group Risk Committee at Willis
Towers Watson (2015 to 2020), Groupama as Head of Insurance, AXA as Chairman and CEO of AXA Cessions, P&C France
General Manager, Deputy CEO and CFO of AXA Corporate Solutions.
•
Jacques Bonneau, Director, President and CEO, PartnerRe Ltd., Member of the Underwriting and Risk Committee and
Member of the Investment Committee
Jacques Bonneau is a member of PartnerRe’s Executive Leadership Team and is responsible for the strategic direction and
management of the Company. Prior to becoming CEO and President of PartnerRe Ltd. in July 2020, he served as an
independent director of the Company's Board of Directors and a member of the Audit Committee. He has held multiple
executive roles, most recently at Chubb Ltd. as Group Chief Underwriting Officer from 2015 to 2017 and as CEO, Chubb
Tempest Re Group from 2005 to 2014. Prior to that, he served as CEO, Chubb Tempest Re USA from 1999 to 2005. He holds a
Bachelor’s degree of Commerce from Carleton University, Ontario as well as a Masters of Business Administration from
Queen’s University, Ontario. Jacques Bonneau is retiring as Director, President and CEO, PartnerRe Ltd. effective April 1,
2024.
• Philippe Meyenhofer, Incoming CEO, PartnerRe Ltd.
Philippe Meyenhofer is a member of PartnerRe’s Executive Leadership Team and will join the Board as a Director and become
CEO, PartnerRe Ltd. effective April 1, 2024. Mr. Meyenhofer joined PartnerRe in 2010 as Head of Financial & Professional
Lines PartnerRe Global. He was appointed to Head of Specialty Casualty PartnerRe Global in 2013, to Head of Europe P&C in
2016, and gained the additional responsibility of Deputy CEO P&C in 2018. In 2019, he was named CEO of the Company’s
P&C EMEA regional unit. Prior to his appointment as CEO, PartnerRe Ltd. he was CEO Specialty Lines with executive
responsibility for the Company’s Specialty Lines business unit. Mr. Meyenhofer is also Chairman of the Board of PartnerRe
Europe. Mr. Meyenhofer was previously with Transatlantic Re, has over 17 years of industry experience and strong, proven
business leadership skills. He holds a Master of Law degree from the University of Fribourg, Switzerland, and a MBA from the
University of Chicago Booth School of Business.
•
Jonathan Colello, Incoming President, PartnerRe Ltd.
Jonathan Colello is a member of PartnerRe’s Executive Leadership Team and will become President, PartnerRe Ltd. effective
April 1, 2024. Mr. Colello has executive responsibility for all Non-Life underwriting globally. Mr. Colello is also President of
Partner Reinsurance Company of the U.S. Mr. Colello has extensive reinsurance experience. Most recently, he was President
North America at AXIS Re in the US where he had overall responsibility for underwriting platforms in Bermuda, Canada and
the United States, and served as a member of the Reinsurance Leadership Team. Prior to that, he held several leadership
positions within AXIS Re since joining the company in 2004. Mr. Colello holds an MBA from New York University’s Stern
School of Business and a Bachelor of Science in Business from the University of Vermont.
• Abina Kealy, Executive Vice President and CFO, PartnerRe Ltd.
Abina Kealy is a member of PartnerRe’s Executive Leadership Team and is responsible for the Company’s finance functions.
Since joining PartnerRe in 2009, Ms. Kealy has held a number of senior finance roles most recently Group Chief Accounting
Officer and Head of External Reporting. Prior to that she was CFO of Europe & APAC and Controller for the P&C BU and
Head of Group Planning within the Financial Planning & Analysis team. Prior to joining PartnerRe, Ms. Kealy was an audit
manager in the Insurance practice of PricewaterhouseCoopers Dublin. Ms. Kealy is a Fellow of the Institute of Chartered
Accountants in Ireland and holds a Bachelor’s degree in Commerce from University College Cork.
• Marc Archambault, CEO Life and Health
Marc Archambault is a member of PartnerRe’s Executive Leadership Team and is responsible for the Company’s worldwide
Life & Health business segment. Mr. Archambault has extensive experience in life reinsurance, most recently as CEO of SCOR
Global Life Asia-Pacific, where he led the company’s regional growth strategy in those markets, and as a member of the senior
management team for Global Life. Prior to that, Mr. Archambault held a number of senior management positions at SCOR
where he implemented growth strategies and product development initiatives across multiple international markets in Europe,
North America, Asia and Africa. Mr. Archambault holds a Bachelor of Actuarial Science from Laval University in Quebec,
Canada and is an Associate with the Canadian Institute of Actuaries.
•
James Beedle, CEO P&C APAC
James Beedle is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s P&C
Asia-Pacific regional business unit and its Global Clients and Broker Management unit. Mr. Beedle is also CEO of Partner
Reinsurance Asia Pte. Ltd. Mr. Beedle has extensive experience in reinsurance and reinsurance broking, strong strategic
leadership capabilities and deep regional knowledge of Asia-Pacific markets. Mr. Beedle joined PartnerRe in 2017 as Head of
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Asia-Pacific P&C & CEO Partner Reinsurance Asia Pte. Ltd. from Willis Re, most recently as Senior Managing Director of
Willis Re Asia-Pacific. His previous roles within Willis Re include COO Willis Re Australia and CEO Willis Re Japan. Mr.
Beedle has a BA (Hons) in Economics from the University of York, England, is an Associate of the Chartered Insurance
Institute and Executive Committee member of the Singapore Reinsurers’ Association.
• Greg Haft, CEO Global Catastrophe
Greg Haft is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s Global
Catastrophe business unit. Mr. Haft has extensive industry experience, combining a strong skill-set of actuarial, reinsurance
business and leadership capabilities spanning property, casualty and specialty lines. Mr. Haft joined PartnerRe in 2013 as Head
of Catastrophe, Bermuda. In 2016, he was appointed to Head of Global Cat and Property North America, and thereafter to
Deputy CEO Specialty Lines and leader of Specialty Lines’ Property, Marine and Energy (PME) unit. In 2019, he was named
CEO of Specialty Lines. Prior to joining PartnerRe, Mr. Haft was Managing Director, Head of U.S. Property Catastrophe
Underwriting at Markel Corporation. Mr. Haft holds a B.S. Mathematics and Statistics from the University of Michigan, is a
Fellow of the Casualty Actuarial Society and a Certified Cat Risk Analyst.
• Andrew Gibbs, Chief Operations Officer
Andrew Gibbs is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s
end-to-end underwriting support processes which includes: underwriting support, reinsurance accounting, claims, payments and
collections, as well as transformation, third party management and procurement. Mr. Gibbs has extensive experience in
insurance, reinsurance, regulatory compliance and financial services, having held senior positions with the Bermuda Monetary
Authority, Validus Holdings Ltd., ACE Group of Companies (now Chubb Group of Companies) and Ernst & Young. Prior to
joining PartnerRe, Mr. Gibbs held the position of Executive Chairman at Maiden Reinsurance Ltd. Mr. Gibbs has a BA in
Economics from the University of Essex in England and is a Chartered Accountant and a Chartered Insurer, a Fellow of the
Institute of Chartered Accountants in England & Wales and holds an Advanced Diploma in Insurance from the Chartered
Insurance Institute and a Diploma in Company Direction from the Institute of Directors. Andrew Gibbs is retiring as Chief
Operations Officer, PartnerRe Ltd. effective March 31, 2024.
• Simon Clifford, CUO Life & Health
Simon Clifford is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s
Life and Health underwriting functions. He has extensive experience in life insurance, with deep experience in actuarial and
financial analysis and management. Prior to joining PartnerRe in 2020, Mr. Clifford was with Zurich Insurance Group, where
he most recently held the position of Head of Life Legacy UK for Zurich UK Life. Prior to that, he held various positions,
including Global Head of Life Technical Excellence, Global Head of Proposition Management and CFO of Zurich International
Life. Simon is an actuary and graduated with a Bachelor’s degree in mathematics and a Master’s degree in applied statistics
from the University of Oxford.
• Christian Mitterer, CEO Specialty Lines
Christian Mitterer is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company's
Specialty Lines business unit business unit. Mr. Mitterer has extensive experience in both the reinsurance and banking
industries with proven business leadership skills and strong focus on execution. Mr. Mitterer joined the Company in 2012 as
Senior Underwriter, Specialty Casualty. In 2015, he was named Head of Financial & Professional Lines and thereafter Head of
Specialty Casualty, Europe P&C in 2016 and Head of Specialty Casualty, P&C EMEA in 2019. In 2020, he was named Head of
EMEA P&C followed by this appointment as CEO P&C EMEA and appointed as CEO Specialty Lines effective January 9,
2024. Prior to joining the Company, Mr. Mitterer was with AIG in Zurich and London. Mr. Mitterer holds a degree in business
administration from the University of Passau, Germany.
• Andrew Hughes, CEO Third Party Capital
Andrew Hughes is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company's
third party capital business initiatives. Prior to joining the Company, Mr. Hughes worked at Hiscox ILS, where he held various
roles between 2015 and 2020, most recently as Managing Principal where he was responsible for strategy and operations of the
ILS platform. Prior to that, he was counsel at QIC Limited, an Australian diversified alternatives asset manager, and various
international law firms. Mr. Hughes is a triple qualified attorney (England & Wales; Queensland, Australia; Bermuda) with a
background in insurance linked securities, alternative asset management, banking securitization and structured finance. Mr.
Hughes holds a B.A. in Law and Information from the University of Exeter, England.
• Tom Leone, Chief Investment Officer
Tom Leone is a member of PartnerRe's Executive Leadership Team and is responsible for the Company's investments. Mr.
Leone joined PartnerRe in 2013 as Portfolio Manager, Global Governments. He was appointed to Head of Public Fixed Income
in 2019. Prior to joining PartnerRe, Mr. Leone spent seven years at Genworth Financial on the derivatives desk performing
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group asset liability management. He holds a Bachelor's degree in Finance from Bryant College and a Master's degree from The
Rensselaer Polytechnic Institute.
• Gerd Maxl, Chief Legal Counsel
Gerd Maxl is a member of PartnerRe's Executive Leadership Team and has overall responsibility for the legal and compliance
functions of the Company. Mr. Maxl has extensive experience in life and non-life (re)insurance. Mr. Maxl joined the Company
in November 2012 as General Counsel Global looking after PartnerRe's legal and compliance matters outside of Bermuda and
North America and was promoted to Chief Legal Counsel in August 2017. Prior to joining PartnerRe, Mr. Maxl was an
associate in a law firm in Switzerland and thereafter worked for over nine years for the Zurich Insurance Group in a number of
positions in Switzerland and the U.S. Mr. Maxl has a law degree from the University of Basel, Switzerland and was admitted to
the bar in Switzerland in 2001.
• Sima Ruparelia, Chief Actuarial & Risk Officer
Sima Ruparelia is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s
Risk & Capital, Life and Non-life Reserving and Pricing functions. Prior to joining PartnerRe in 2022, Ms. Ruparelia held the
role of Chief Actuary and Portfolio Manager for UK, Europe, Global Specialty and Talbot for AIG, from 2016 to 2021. Prior to
that, she served as Group Actuary for Catlin and as UK Chief Actuary for XL Catlin, and held actuarial positions at Ernst and
Young, Equitas and Pinnacle Insurance. She currently serves as the Chair of the Racial Justice Working Group of the ISC. Ms.
Ruparelia is a fellow of the Institute and Faculty of Actuaries. She earned her Bachelor’s degree in mathematics from
Loughborough University.
• Lisa Bolger, Chief People Officer
Lisa Bolger is a member of PartnerRe’s Executive Leadership Team and is responsible for the Company’s HR, Corporate
Communications, Culture and Leadership functions. Ms. Bolger has held many senior leadership roles in Finance, HR and in
the Office of the CEO, most notably: Deputy Head Financial Planning and Analysis 2009-2013; CFO PartnerRe Europe
2013-2017, Global Financial Operations Director 2017-2018, and HR Operations Director 2018-2021. Ms. Bolger joined
PartnerRe in 2004 from ESG Re and prior to that worked for KPMG. Ms. Bolger is a Fellow of the Chartered Accountants in
Ireland and has a MSc in Business and Personal Coaching from University College Cork, Ireland.
• Markus Frank, Chief Information Officer
Markus Frank is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s
Information Technology and Facilities Management functions. Mr. Frank joined PartnerRe in 2003 as Senior Project Manager
and was appointed Head Global Business Operations Support (Business Analysis, Project Management and Application
Management) in 2005, becoming the Head Global Operations Office in 2010. He was appointed to the position Head Non-Life
Technical Accounting and Claims in 2013 and assumed responsibility for the Company’s facility management. In 2017 Mr.
Frank was named Group Chief Information Officer. Prior to joining PartnerRe Mr. Frank spent seven years at Accenture as
consultant for IT and process projects in the (re)insurance industry. He began his career at Frankona Re. He has extensive
industry experience and holds a Master’s degree in Mathematical Economics from the University of Augsburg, Germany, and a
PhD in Applied Mathematics from the University of St. Gallen, Switzerland.
• Sylvain Jarrier, CUO: Non-Life
Sylvain Jarrier is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s
non-life underwriting function. Mr. Jarrier has extensive reinsurance experience in the industry. Since joining PartnerRe in
2003, Mr. Jarrier has held numerous leadership roles, most recently as Head of Worldwide Pricing & Analytics overseeing non-
life pricing across all business units. Prior to that, he led various actuarial functions and served as Head of Customized
Solutions. He holds a Master's in Actuarial Science from the University of Lyon in France and he is a fellow of the French and
Swiss Institute of Actuaries.
•
Ingrid Gjonaj, CEO P&C EMEA
Ingrid Gjonaj is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s P&C
EMEA regional business unit. Ms. Gjonaj has extensive experience in the reinsurance industry with proven leadership skills
and strong focus on execution. Ms. Gjonaj started with PartnerRe in 2006, and during this time, she has held senior positions in
Legal, and Underwriting in Specialty Casualty, P&C and previously served as Head of Region, Western and Southern Europe.
Ms. Gjonaj holds an Executive MBA from Columbia Business School and London Business School. She also holds a MSc in
Management from EM Lyon Business School and Master's Degree in Business Law from Universite Paris II Assas.
The Directors referred to above as "Independent" are considered independent in accordance with the definition of the
applicable NYSE and SEC Rules.
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B. Compensation
Executive Compensation
Executive compensation is comprised of salary, annual incentives, long-term incentive and other benefits. The long-term
incentive (LTI) program consists of awards in the form of deferred cash, restricted share units and performance share units issued to
certain executives. In 2021, the Company designated a new class of voting Class C shares and the adoption of a related restricted
share unit plan, which provides for the award of restricted share units and performance share units (collectively referred to as RSUs)
to certain executives of the Company. Upon vesting, the RSUs convert into Class C Shares. RSUs are eligible for imputed dividends
which are subject to the same forfeiture provisions as the related RSUs.
For the year ended December 31, 2023, the Company recorded compensation expense of $27 million paid or payable to
executives as a form of cash compensation. In addition, for the year ended December 31, 2023, certain executives were granted
RSUs. The Company recorded compensation expense of $20 million related to Class C shares and RSUs held by certain executives.
The compensation expense for the RSUs is recognized at fair value and expensed over the period for which the executives are
required to provide services in exchange for the award, up to three years from the date of grant. See Note 17 to the Consolidated
Financial Statements in Item 18 of this report for further details. See also Item 6.E below for details of share ownership and Item
10.D regarding restrictions on share transfers.
PartnerRe Ltd. has adopted, effective November 8, 2023, its Policy for the Recovery of Erroneously Awarded Compensation
in accordance with Rule 10D-1 of the Securities Exchange Act of 1934 and Section 303A.14 of the NYSE Listed Company Manual.
This policy has been incorporated by reference as Exhibit 97.1 to this Annual Report.
Director Compensation
The Company paid approximately $2 million in cash as compensation to non-executive directors of the Company for their
services as directors in 2023. For the year ended December 31, 2023, certain non-executive directors of the Company were issued
Class C shares and the Company recorded compensation expense of less than $1 million related to these shares. Executive directors
do not receive any compensation for their services as directors. All directors are reimbursed for travel and other related expenses
personally incurred while attending Board or committee meetings.
See Note 17 to the Consolidated Financial Statements in Item 18 of this report for further details. See also Item 6.E below for
details of share ownership related to the Class C shares and Item 10.D regarding restrictions on share transfers.
C. Board Practices
The Board currently consists of nine directors (see Item 6.A above for details). The current Board have been elected to serve
until the next Annual General Meeting of the Company or until their respective successors are appointed. As provided in our Bye-
Laws, the number of Directors shall be such number not less than three as the Company by resolution of the shareholders entitled to
vote may, from time to time, determine (see also Item 10.B for the details of the Company's Bye-laws).
There are no service contracts between the Company and any of the Company’s directors providing for benefits upon
termination of their employment or service.
Audit Committee
The Board has established an Audit Committee comprised of Ms. Brown (Chair), Mr. Dowd, Mr. Pohlchristoph and Mr.
Jeffery who are independent in accordance with the definition of the applicable NYSE and SEC Rules. Ms. Brown is designated as
the Audit Committee financial expert as noted in Item 16.A of this report.
Pursuant to its charter, the Audit Committee’s primary responsibilities are to assist Board oversight of:
•
the integrity of PartnerRe’s financial statements;
• PartnerRe’s compliance with legal and regulatory requirements;
•
•
•
the Company's system of internal controls;
the qualifications and independence of the external auditors; and
the performance of the Company's internal and external audit functions.
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The Audit Committee regularly meets with management, the Chief Audit Officer and the Company's independent registered
public accounting firm to review matters relating to the quality of financial reporting and internal accounting controls, including the
nature, extent and results of their audits.
Underwriting and Risk Committee
The Board, in 2019, established an Underwriting and Risk Committee. The URC is comprised of Mr. Pohlchristoph (Chair),
Mr. Bonneau, Mr. Dowd, Ms. Brown, Ms. Petit, Mr. Jeffery, Mr. Bucchini and Mr. Dubreuil.
The purpose of the URC, as per its charter, is to review the Company's (i) policies, guidelines and processes relating to the
underwriting of reinsurance risks and assumption of investment risks and (ii) Enterprise Risk Management Framework. The URC
meets regularly with management.
Investment Committee
The Board, in November 2020, established an Investment Committee. The Investment Committee is comprised of Mr. Dowd
(Chair), Mr. Bonneau, Mr. Derez, Ms. Petit and Mr. Jeffery.
The purpose of the Investment Committee is to (i) consider and advise the Board on certain investment matters that the Board
and the Investment Committee each believe are more appropriately considered by the Investment Committee rather than the Board
and (ii) discuss appropriate practices for the Company, including the Company's policies, guidelines, performance, risk management
and processes relating to the investment operations undertaken by the Company.
D. Employees
The Company had 1,248 employees at December 31, 2023. The following table shows the breakdown of the number of
employees by geographic location as of December 31, 2023, 2022 and 2021:
Geographic location
Asia, Australia and New Zealand
Europe
Latin America, Caribbean and Africa
North America
Total
December 31,
2023
December 31,
2022
December 31,
2021
104
688
3
453
101
622
3
432
92
589
3
425
1,248
1,158
1,109
In addition to the above, the Company employed an average of 34 temporary employees during 2023.
The increase in the number of employees in 2023 compared to 2022 and 2021 was primarily driven by growth in the Life and
Health segment and additional employees as a result of the Covéa Coopérations integration.
E. Share ownership
As more fully described in section B. Compensation above, and in Note 17 to the Consolidated Financial Statements in Item
18 of this report, the Company has designated, granted and issued Class C shares and RSUs to certain executives and directors of
the Company.
As of March 25, 2024:
•
•
100,000,000 Class A common shares are held by Covéa Coopérations.
62,888 Class C shares and 517,833 RSUs are held by certain executive officers and directors of the Company. This
includes RSUs granted in March 2024 at their target levels for personal and Company performance.
The RSUs do not entitle the holder to any voting rights of the Company. Except as otherwise required by law or the Restricted
Share Unit Plan, or any sub-plan or addendum thereto, holders of Class C shares have the same voting rights as the holders of Class
A common shares. Class C shares issued and outstanding and RSUs cumulatively represent less than 1% of the beneficial ownership
and voting rights of the Company as of March 25, 2024.
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F. Action to recover erroneously awarded compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
As more fully described in Note 1 to the Consolidated Financial Statements in Item 18 of this report, 100% of the Company's
Class A shares are owned by Covéa Coopérations.
On December 16, 2021, Exor Nederland N.V. signed a definitive agreement with Covéa Coopérations, pursuant to which
Covéa Coopérations agreed to purchase all of the common shares of PartnerRe Ltd. held by Exor. Preferred shares issued by
PartnerRe Ltd. were not included in the transaction. Consummation of this transaction occurred on July 12, 2022.
B. Related Party Transactions
As at December 31, 2023, Covéa Coopérations held 100% of the Class A shares and more than 99% of the total voting shares
(Class A and Class C) of the Company and therefore has the power to make decisions that impact the Company. Prior to the
acquisition of the common shares of PartnerRe Ltd. by Covéa Coopérations in 2022, Exor was a related party to PartnerRe.
The Company has entered into certain related party transactions as disclosed in Notes 12 and 21 to the Consolidated Financial
Statements in Item 18 of this report.
C. Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See the Consolidated Financial Statements, Notes to the Consolidated Financial Statements and Financial Statements
Schedules in Item 18 of this report. Refer to Liquidity and Capital Resources—Shareholders’ Equity and Capital Resources
Management in Item 5 for details of the Company's dividend policy.
B. Significant Changes
See Note 23 to the Consolidated Financial Statements in Item 18 for a disclosure of events subsequent to year end and prior to
the date of filing.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
PartnerRe Ltd.'s common shares are not listed. PartnerRe Ltd.'s preferred shares are listed on the NYSE under the symbol
PRE-J. Refer to Note 14 to the Consolidated Financial Statements in Item 18 of this report for further details.
B. Plan of Distribution
Not applicable.
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C. Markets
PartnerRe Ltd.'s 4.875% Series J Non-Cumulative Preferred Shares began trading on March 15, 2021 and are listed and traded
on the NYSE. The 6.50% Series G Cumulative Preferred Shares, the 7.25% Series H Cumulative Preferred Shares and the 5.875%
Series I Non-Cumulative Preferred Shares, which began trading on May 6, 2016, were fully redeemed on May 3, 2021.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
PartnerRe Ltd.'s Amended Memorandum of Association has been filed as Exhibit 3.1 to Form F-3 (File No. 333-7094) filed
with the SEC on June 20, 1997, and is hereby incorporated by reference into this Annual Report.
The Company’s amended Bye-Laws were adopted on July 12, 2022, and have been incorporated by reference as Exhibit 1.2 to
this Annual Report.
Corporate Registration and Objectives
PartnerRe Ltd. is incorporated under the laws of Bermuda. The Company is registered at the Bermuda Registrar of Companies
under registration number 18620. The objects and powers of the Company are set forth in the Memorandum of Association of the
Company.
Board of Directors
The Companies Act authorizes the directors of a company, subject to its bye-laws, to exercise all powers of the company
except those that are required by the Companies Act or its bye-laws to be exercised by the shareholders. The Company's Bye-Laws
provide that its business is to be generally managed and conducted by the Board and that the Board shall be such number not less
than three as the Company by resolution of the shareholders entitled to vote may, from time to time, determine. The Directors shall
be elected or appointed at the Annual General Meeting, at any Special General Meeting called for that purpose or by resolution of
the shareholders entitled to vote. Directors shall hold office for such term as the Shareholders may determine or, in the absence of
such determination, until the next Annual General Meeting or until their successors are elected or appointed or their office is
otherwise vacated.
Under the Insurance Act, the Company must serve notice to the BMA of the fact that any person has become or ceased to be a
director or officer of the Company. Such notice shall be served before the end of forty-five days beginning with the day on which
the designated insurer becomes aware of the relevant facts.
Under the Company’s Bye-Laws and subject to the Companies Act, a Director is not prohibited from being a party to or
otherwise have an interest in, any transaction or arrangement with the Company or in which the Company is otherwise interested. A
Director who has complied with the Companies Act and with the Company’s Bye-Laws with regard to declaring the nature of his
interest in a transaction or arrangement with the Company, or in which the Company is otherwise interested, may be counted in the
quorum and vote at any meeting at which such transaction or arrangement is considered by the Board.
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Under the Company’s Bye-laws, the amount, if any, of Directors’ fees and any additional remuneration shall from time to time
be determined by the Majority Common Shareholder. In addition to its powers granted under Bye-Law 27, the Board for and on
behalf of the Company may provide benefits, whether by the payment of gratuities or pensions or otherwise, for any person
including any Director or former Director who has held any executive office or employment with the Company or with any body
corporate which is or has been a subsidiary or Affiliate of the Company or a predecessor in the business of the Company or of any
such subsidiary or Affiliate, and to any member of his family or any person who is or was dependent on him, and may contribute to
any fund and pay premiums for the purchase or provision of any such gratuity, pension or other benefit, or for the insurance of any
such person.
The Company may in a Special General Meeting called for that purpose remove a Director, provided notice of any such
meeting shall be served upon the Director concerned not less than fourteen (14) days before such meeting and s/he shall be entitled
to be heard at such meeting. The Shareholders may authorize the Directors to fill any vacancy in their number, from time to time.
Under the Company’s Bye-Laws the quorum necessary for the transaction of the business of the Board may be fixed by the
Board and, unless so fixed at any other number, shall be three (3) individuals and requires the presence of at least one Majority
Shareholder Director Designee for so long as the Board consists of at least one Majority Shareholder Director Designee. Any
Director who ceases to be a Director at a meeting of the Board may continue to be present and to act as a Director and be counted in
the quorum until the termination of the meeting if no other Director objects and if otherwise a quorum of Directors would not be
present.
A resolution in writing signed by all the Directors for the time being entitled to receive notice of a meeting of the Board shall
be valid and effectual as a resolution passed at a meeting of the Board.
A meeting of the Board or a committee appointed by the Board may be held by means of such telephone, electronic or other
communication facilities (including, without limiting the generality of the foregoing, by telephone or by video conferencing) as to
permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously and participation
in such a meeting shall constitute presence in person at such meeting. Such a meeting shall be deemed to take place where the
largest group of those Directors participating in the meeting is physically assembled, or, if there is no such group, where the
chairman of the meeting then is.
Among the powers of the Company which the Board may exercise, the Board is allowed to borrow money and to mortgage or
charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company. The Board
may also issue debentures and other securities (whether outright or as collateral security for any debt, liability or obligation of the
Company or of any other persons).
Bermuda law provides that the Directors owe a fiduciary duty to the Company to act in good faith in their dealings with or on
behalf of the Company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following
essential elements:
•
•
•
•
a duty to act in good faith in the best interests of the Company;
a duty not to make a personal profit from opportunities that arise from the office of director;
a duty to avoid situations in which there is an actual or potential conflict between a personal interest or the duties owed to
third parties and/or the Director's duty to the Company; and
a duty to exercise powers for the purpose for which such powers were intended.
The Companies Act imposes a duty on the Directors and Officers to:
•
•
act honestly and in good faith with a view to the best interests of the Company; and
exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
The Companies Act also imposes various duties on the Directors and Officers with respect to certain matters of management
and administration of the Company.
Under Bermuda law, the Directors and Officers generally owe fiduciary duties to the Company itself, not to the Company's
individual shareholders, members, or creditors.
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Shares and Share Rights
Subject to any special rights conferred on the holders of any Share or class of Shares, any Share in the Company may be issued
with or have attached thereto such preferred, deferred, qualified or other special rights or such restrictions, whether in regard to
dividend, voting, return of capital or otherwise, as the Board may determine.
Subject to the general provisions of Bermuda law, the Board may, at its discretion and without the sanction of a resolution of
the shareholders entitled to vote, authorize the acquisition by the Company of its own Shares, of any class, at any price (whether at
par or above or below par). Under Bermuda law, the Company must pay for such share purchases out of capital paid-up for these
shares, out of funds that would otherwise be available for a dividend or distribution or out of proceeds of the issue of additional
shares for the purpose of the purchase. However, to the extent that any premium over the par value is payable on the purchase, the
premium must be provided out of funds that would otherwise be available for a dividend or distribution or out of the Company's
share premium account.
Any Shares to be purchased may be selected in any manner whatsoever, to be either cancelled or held as Treasury Shares,
upon such terms as the Board may in its discretion determine, provided always that such acquisition is effected in accordance with
the provisions of the Companies Act. The whole or any part of the amount payable on any such acquisition may be paid or satisfied
otherwise than in cash, to the extent permitted by the Companies Act.
As provided in our Bye-Laws and subject to the Companies Act, all or any of the special rights for the time being attached to
any class of Shares for the time being issued may from time to time (whether or not the Company is being wound up) be altered or
abrogated with the consent in writing of the holders of not less than seventy five percent (75%) of the issued Shares of that class or
with the sanction of a resolution passed at a separate general meeting of the holders of not less than seventy five percent (75%) of
the issued Shares of that class, voting in person or by proxy. To any such separate general meeting, all the provisions of these Bye-
Laws as to general meetings of the Company shall mutatis mutandis apply, but so that the necessary quorum shall be two (2) or
more persons holding or representing by proxy any of the Shares of the relevant class, that every holder of Shares of the relevant
class shall be entitled on a poll to one vote for every such Share held by him and that any holder of Shares of the relevant class
present in person or by proxy may demand a poll; provided however, that if the Company or a class of Shareholders shall have only
one Shareholder, one Shareholder present in person or by proxy shall constitute the necessary quorum.
Subject to Bermuda law and except insofar as the rights attaching to, or the terms of issue of, any Share otherwise provide, the
Board may from time to time declare dividends or distributions out of contributed surplus to be paid to the Shareholders according
to their rights and interests, including such interim dividends as appear to the Board to be justified by the position of the Company.
The Board, in its discretion, may determine that any dividend shall be paid in cash or shall be satisfied, subject to the Bye-Laws, in
paying up in full Shares in the Company to be issued to the Shareholders credited as fully paid or partly paid or partly in one way
and partly the other. The Board may also pay any fixed cash dividend which is payable on any Shares of the Company half yearly or
on such other dates, whenever the position of the Company, in the opinion of the Board, justifies such payment.
The Board may from time to time resolve to capitalize all or any part of any amount for the time being standing to the credit of
any reserve or fund which is available for distribution or to the credit of any Share premium account and accordingly that such
amount be set free for distribution amongst the Shareholders or any class of Shareholders who would be entitled thereto.
If the Company shall be wound up, the liquidator may, with the sanction of a resolution of the Company of the shareholders
entitled to vote and any other sanction required by the Companies Act, divide amongst the Shareholders in specie or kind the whole
or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purposes
set such values as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried
out as between the Shareholders or different classes of Shareholders. The liquidator may, with the like sanction, vest the whole or
any part of such assets in trustees upon such trust for the benefit of the contributories as the liquidator, with the like sanction, shall
think fit, but so that no Shareholder shall be compelled to accept any Shares or other assets upon which there is any liability.
See Notes 14 and 17 to the Consolidated Financial Statements in Item 18 of this report for details of rights, preferences and
restrictions attached to common and preferred shares.
General Meetings of Shareholders and Voting Rights
If required under the Companies Act, the Board shall convene and the Company shall hold general meetings as Annual
General Meetings in accordance with the requirements of the Companies Act at such times and places as the Board shall appoint or,
if requested in writing signed by the Majority Common Shareholder, at such times and places as the Majority Common Shareholder
shall request. The Board may, whenever it thinks fit, and shall, when required by the Companies Act or when requested by the
Majority Common Shareholder, convene general meetings other than Annual General Meetings which shall be called Special
General Meetings, at such time and place as the Board may appoint or, if requested in writing signed by the Majority Common
Shareholder, at such time and place as the Majority Common Shareholder shall request. Except as required by the Companies Act or
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when requested by the Majority Common Shareholder, Special General Meetings may not be called by any person other than the
Board. Save where a greater majority is required by the Companies Act or the Bye-Laws, any question proposed for consideration at
any general meeting shall be decided on by a simple majority of votes cast.
Except in the case of the removal of auditors or Directors, anything which may be done by resolution of the Shareholders in
general meeting or by resolution of any class of Shareholders in a separate general meeting may be done by resolution in writing.
Any such resolution of the shareholders entitled to vote shall be signed by such number of Shareholders (or the holders of such class
of Shares) as would be required if the resolution of the shareholders entitled to vote had been voted on at a meeting of Shareholders
or, all the Shareholders, or such other majority of the Shareholders as may be provided by the Bye-Laws. Such resolution in writing
may be signed by the Shareholder or its proxy, or in the case of a Shareholder that is a corporation (whether or not a company
within the meaning of the Companies Act) by its representative on behalf of such Shareholder, in as many counterparts as may be
necessary.
Under our Bye-Laws should any person (other than Covéa Coopérations) be a Ten Percent Shareholder, notwithstanding any
provision to the contrary in these Bye-Laws, the votes conferred by the Controlled Shares of such person are hereby reduced (and
shall be automatically reduced in the future) by whatever amount is necessary so that after any such reduction such person shall not
be a Ten Percent Shareholder. Notwithstanding the foregoing, the Board may waive the restrictions in its discretion and on a case by
case basis.
Mergers and Amalgamations
Subject to the Companies Act and pursuant to our Bye-Laws, in addition to the approval of the Board, any resolution proposed
for consideration at any general meeting to approve the amalgamation or merger of the Company with any other company, wherever
incorporated, shall require the approval of a simple majority of votes cast at such meeting. A poll may be demanded in respect of
such resolution in accordance with the Bye-Laws. Under Bermuda law, in the event of an amalgamation or a merger of a Bermuda
Company with another, a shareholder of the Bermuda company who has not voted in favor of the amalgamation or merger and is not
satisfied that a fair value has been offered for such shareholder’s shares, may apply to the Supreme Court of Bermuda, within one
month’s notice of the special general meeting, to appraise the fair value of the shares.
Changes in Capital
Subject to the Companies Act, Bye-Laws and Amended Memorandum of Association, the Company may from time to time by
resolution of the shareholders entitled to vote authorize the reduction of its issued share capital or any share premium account.
C. Material Contracts
For the two years immediately preceding the date of this annual report, the Company has not entered into any material
contracts other than in the ordinary course of business.
D. Exchange Controls
Securities may be offered or sold in Bermuda only in compliance with the provisions of the Companies Act, Investment
Business Act 2003, Investment Funds Act 2006, and the Exchange Control Act 1972 and related regulations, each as amended,
which regulate the sale of securities in Bermuda. In particular, specific permission is required from the BMA, pursuant to the
provisions of the Exchange Change Control Act 1972 and related regulations (Exchange Control Act), for all issuances and transfers
of securities of Bermuda companies, other than in cases where the BMA has granted a general permission. The BMA, in its Notice
to the Public dated June 1, 2005, (Notice) provides that where any equity securities of a Bermuda company are listed on an
appointed stock exchange (the NYSE is deemed to be an appointed stock exchange under Bermuda law), general permission is
given for the issue and subsequent transfer of any equity securities of such company from and/or to a non-resident of Bermuda, for
as long as any equity securities of the company remain so listed. Our common shares are not listed on the NYSE, and accordingly,
the general permission will not apply to them.
In addition, the BMA, in its Notice provides in the case of a Bermuda company which does not have equity securities listed on
an appointed stock exchange, or whose equity securities become delisted from such an exchange, general permission is given for the
issue and subsequent transfer of any securities, other than equity securities, from and/or to non-residents.
Under the Insurance Act, where the shares of the insurer or the shares of its parent company are not traded on any stock
exchange, no person shall become a 10%, 20%, 33% or 50% shareholder controller of the insurer unless (a) he has served on the
BMA a notice in writing that he intends to become a controller of the insurer and (b) either the BMA has, before the end of the
period of 45 days beginning with the date of service of that notice, notified him in writing that there is no objection to his becoming
such a controller of the insurer or that period has elapsed without the BMA having served him with a written notice of objection to
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his becoming such as controller of the insurer. Likewise, no person who is a shareholder controller shall reduce or dispose of his
holding in the insurer where the proportion of the voting rights held by the shareholder controller in the insurer will reach or fall
below 10%, 20%, 33% or 50% as the case may be unless that shareholder controller has served on the BMA a notice in writing
stating that he intends to reduce or dispose of such holdings. As described herein, our Bye-Laws contain restrictions on the transfer
of shares that generally would have the effect of prohibiting any shareholder, other than Covéa Coopérations, from owning 10% or
more of our common shares.
Any person or entity who contravenes the Insurance Act by failing to give notice or knowingly becoming a controller of any
description before the required 45 days has elapsed is guilty of an offense under Bermuda law and liable to a fine of $25,000 on
summary conviction.
The BMA may file a notice of objection to any person or entity who has become a controller of any category when it appears
that such person or entity is not, or is no longer, fit and proper to be a controller of the registered insurer. Before issuing a notice of
objection, the BMA is required to serve upon the person or entity concerned a preliminary written notice stating the BMA’s
intention to issue formal notice of objection. Upon receipt of the preliminary written notice, the person or entity served may, within
28 days, file written representations with the BMA which shall be taken into account by the BMA in making its final determination.
Any person or entity who continues to be a controller of any description after having received a notice of objection is guilty of an
offense and liable on summary conviction to a fine of $25,000 (and a continuing fine of $500 per day for each day that the offense is
continuing) or, if convicted on indictment, to a fine of $100,000 and/or 2 years in prison.
E. Taxation
PartnerRe Ltd., PartnerRe Bermuda and PRISBe are not subject to income or profits tax, withholding tax, capital gains tax or
capital transfer tax in Bermuda, under current Bermuda law. However, on December 27, 2023, the Government of Bermuda enacted
the CIT Act, which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal years beginning on or after
January 1, 2025. See Business Overview—Taxation of the Company and its Subsidiaries in Item 4.B for further details.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We maintain a website at http://www.partnerre.com. The information on our website is not incorporated by reference to this
Annual Report on Form 20-F. We make available, free of charge through our website, our Annual Reports on Form 20-F as soon as
reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. Filings with the SEC are
also available to the public from commercial document retrieval services, and from the website maintained by the SEC at http://
www.sec.gov.
I. Subsidiary Information
Not applicable.
J. Annual Report to Security Holders
Not applicable.
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Overview
Management believes that the Company is principally exposed to six types of market related risks: interest rate risk, credit
spread risk, foreign currency risk, counterparty credit risk, equity price risk and real estate price risk. How these risks relate to the
Company, and the process used to manage them, is discussed below.
The Company’s investment philosophy distinguishes between assets that are generally matched against the estimated net
reinsurance liabilities (liability funds) and those assets that represent shareholder capital (capital funds). The Company manages the
duration and currency composition of its assets to mitigate the impact of changes in interest rates and foreign exchange rates.
The Company's capital funds are invested primarily in U.S. dollar denominated investments, reducing foreign currency risk. In
considering the market risk of capital funds, it is important to recognize the benefits of portfolio diversification. Although these
asset classes in isolation may introduce more risk into the portfolio, market forces have a tendency to influence each class in
different ways and at different times. Consequently, the aggregate risk introduced by a portfolio of these assets should be less than
might be estimated by summing the individual risks.
Although the focus of this discussion is to identify risk exposures that impact the market value of assets alone, it is important
to recognize that the risks discussed herein are significantly mitigated to the extent that the Company’s investment strategy allows
market factors to influence the economic valuation of assets and liabilities in a way that is generally offsetting.
As described above in this report, the Company’s investment strategy allows the use of certain derivative investments, subject
to limitations. The Company also imposes a high standard for the credit quality of counterparties in all derivative transactions and
aims to diversify its counterparty credit risk exposure. See Note 6 to the Consolidated Financial Statements in Item 18 of this report
for additional information related to derivatives.
The following addresses those areas where the Company believes it has exposure to related market risks.
Interest Rate Risk
Investments
The Company’s fixed income portfolio, including the fixed maturity portfolio and corporate loan portfolio, is exposed to
interest rate risk. Fluctuations in interest rates have a direct impact on the market valuation of these securities. The Company
manages interest rate risk by constructing fixed maturity and corporate loan portfolios in which the economic impact of a general
interest rate shift on invested assets is comparable to the offsetting impact on the liabilities. This process mitigates the overall net
interest rate risk on an economic basis.
Most of the Company’s invested assets are carried at fair value and are interest rate sensitive. As a result, an increase in
interest rates will result in a decrease in the fair value of the Company’s investments and a corresponding decrease, net of applicable
taxes, in the Company’s shareholders’ equity. A decrease in interest rates would have the opposite effect.
At December 31, 2023 and 2022, the Company held approximately $4,743 million and $3,751 million, respectively, of
mortgage/asset-backed securities. These assets are exposed to prepayment risk, the adverse impact of which is more evident in a
declining interest rate environment. For further details on the increase in mortgage-backed securities, refer to Liquidity and Capital
Resources—Investments in Item 5.
At December 31, 2023 and 2022, the fair value of investments exposed to interest rate risk was $18,882 million and $16,331
million, respectively.
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At December 31, 2023 and 2022, the Company estimates that the hypothetical case of an immediate 100 basis points or 200
basis points parallel shift in global bond curves would result in a change in the fair value of investments exposed to interest rate risk,
total invested assets and shareholders’ equity, before taxes, as follows (in millions of U.S. dollars, except percentages):
-200 Basis
Points
%
Change
-100 Basis
Points
%
Change
December 31,
2023
+100 Basis
Points
%
Change
+200 Basis
Points
%
Change
Fair value of investments exposed
to interest rate risk (1)
Total invested assets (2)
Shareholders’ equity
$ 20,060
$ 22,946
6 % $ 19,478
3 % $
18,882 $ 18,271
(3) % $ 17,644
5 % $ 22,364
3 % $
21,768 $ 21,157
(3) % $ 20,531
(7) %
(6) %
$ 9,602
14 % $ 9,021
7 % $
8,424 $ 7,813
(7) % $ 7,187
(15) %
-200 Basis
Points
%
Change
-100 Basis
Points
%
Change
December 31,
2022
+100 Basis
Points
%
Change
+200 Basis
Points
%
Change
Fair value of investments exposed
to interest rate risk (1)
Total invested assets (2)
Shareholders’ equity
$ 17,483
$ 20,396
7 % $ 16,901
3 % $
16,331 $ 15,771
(3) % $ 15,224
6 % $ 19,814
3 % $
19,244 $ 18,685
(3) % $ 18,137
(7) %
(6) %
$ 7,550
18 % $ 6,968
9 % $
6,397 $ 5,838
(9) % $ 5,290
(17) %
(1) Includes fixed maturity securities, short-term investments, certain other invested assets, certain cash and cash equivalents and
funds holding fixed income securities.
(2) Includes total investments, cash and cash equivalents and accrued interest.
The changes do not take into account any potential mitigating impact from the equity market, taxes or the corresponding
change in value of the Company’s reinsurance liabilities, which would substantially offset the economic impact on invested assets,
although the offset would not be entirely reflected in the Consolidated Balance Sheet.
The impacts of an immediate change in interest rates on the fair value of investments exposed to interest rate risk, the
Company’s total invested assets and shareholders’ equity, as a percentage of total invested assets and shareholders’ equity, at
December 31, 2023 is relatively lower than the impacts at December 31, 2022 mainly because of the shortening of total fixed
income asset duration. The shortening of total fixed income asset duration is mostly driven by asset allocation towards short-dated
investments where the yield curve offers an attractive opportunity to reduce interest rate exposure on surplus.
The Company manages its net foreign currency exposures to major currencies. The exact market value effect of a change in
interest rates will depend on which countries experience interest rate changes and the foreign currency mix of the Company’s fixed
maturity portfolio at the time of the interest rate changes. See Foreign Currency Risk below.
Market risk benefits
The Company's net MRB assets related to its GMDB products are also carried at fair value and are interest rate sensitive. An
increase in interest rates will generally result in an increase in fair value of the net MRB asset as projected returns increase and a
corresponding increase, net of applicable taxes, in the Company’s shareholders’ equity. A decrease in interest rates would have the
opposite effect.
At December 31, 2023 and 2022, the Company estimates that the hypothetical case of an immediate 100 basis points or 200
basis points parallel shift in global bond curves would result in a change in the fair value of net MRB assets and shareholders’
equity, before taxes, as follows (in millions of U.S. dollars, except percentages):
-200 Basis
Points
%
Change
-100 Basis
Points
%
Change
December 31,
2023
+100 Basis
Points
%
Change
+200 Basis
Points
%
Change
Net MRB assets
Shareholders’ equity
$
37
(74) % $
97
(31) % $
140 $
165
18 % $
173
$ 8,322
(1) % $ 8,382
— % $
8,424 $ 8,450
— % $ 8,458
24 %
— %
-200 Basis
Points
%
Change
-100 Basis
Points
%
Change
December 31,
2022
+100 Basis
Points
%
Change
+200 Basis
Points
%
Change
Net MRB assets
Shareholders’ equity
$
46
(62) % $
90
(26) % $
122 $
144
18 % $
154
$ 6,322
(1) % $ 6,365
(1) % $
6,397 $ 6,419
— % $ 6,430
26 %
1 %
The impacts of an immediate increase in interest rates on the fair value of MRBs and shareholders’ equity, as a percentage of
MRBs and shareholders’ equity, at December 31, 2023 is relatively lower than the impacts at December 31, 2022 mainly as a result
of the MRB fair value already benefiting from higher interest rates in 2023 compared to 2022, which reduces the benefit of further
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interest rate increases as there is already a lower chance of GMDB being at risk, while the opposite is true for an immediate decrease
in interest rates.
The Company uses many inputs into the fair value calculation of MRBs, and the sensitivities above do not reflect movements
in other market data which would reasonably be expected to change with changes in interest rates. The changes reflected above also
do not take into account any potential offsetting impact from taxes or changes in value of the Company’s invested assets.
Reinsurance liabilities
Most of the Company’s reserves are carried at their nominal value, and are not adjusted for changes in interest rates, with the
exception of its traditional and limited payment long-duration contracts within Life and health reserves, which are updated to reflect
current discount rate assumptions. The changes in discount rate assumptions are recognized within Other comprehensive income or
loss. An increase in interest rates will typically result in a decrease in the long-duration reserves as the present value of expected net
premiums and the present value of expected future policy benefits are discounted at a higher rate. A decrease in interest rates would
have the opposite effect. For the Company's reserves that are carried at their nominal value, the economic value may be different
from the carrying value reported in the Consolidated Balance Sheet, as they are not adjusted for changes in interest rates.
At December 31, 2023 and 2022, the Company estimates that the hypothetical case of an immediate 100 basis points or 200
basis points parallel shift in global bond curves would result in a change in the Company's traditional and limited payment long-
duration reserves, net of reinsurance, and shareholders’ equity, before taxes, as follows (in millions of U.S. dollars, except
percentages):
-200 Basis
Points
%
Change
-100 Basis
Points
%
Change
December 31,
2023
+100 Basis
Points
%
Change
+200 Basis
Points
%
Change
Traditional and limited payment
long-duration reserves, net
Shareholders’ equity
$ 2,056
$ 8,583
8 % $ 1,963
2 % $ 8,490
3 % $
1 % $
1,898 $ 1,847
(3) % $ 1,802
8,424 $ 8,373
(1) % $ 8,329
(5) %
(1) %
-200 Basis
Points
%
Change
-100 Basis
Points
%
Change
December 31,
2022
+100 Basis
Points
%
Change
+200 Basis
Points
%
Change
Traditional and limited payment
long-duration reserves, net
Shareholders’ equity
$ 1,693
$ 6,537
9 % $ 1,615
2 % $ 6,459
4 % $
1 % $
1,554 $ 1,503
(3) % $ 1,461
6,397 $ 6,347
(1) % $ 6,305
(6) %
(1) %
The impacts of an immediate increase or decrease in interest rates on the net traditional and limited payment long-duration
reserves and shareholders' equity, as a percentage of the net traditional and limited payment long-duration reserves and shareholders'
equity, at December 31, 2023 is relatively comparable to the impacts at December 31, 2022.
The interest rate sensitivities demonstrate the potential impact to the Company's traditional and limited payment reserves, net
of retrocession, from changes in current interest rate assumptions. The carrying value of the traditional and limited payment
reserves, net of retrocession, was used for these sensitivities. See Note 2(b) to the Consolidated Financial Statements in Item 18 of
this report and Liquidity and Capital Resources—Reserves in Item 5 above for further details on traditional and limited payment
contracts. The changes reflected above also do not take into account any potential offsetting impact from taxes or changes in value
of the Company’s invested assets.
Other
Interest rate movements also affect the economic value of the Company’s outstanding debt obligations and preferred securities
in the same way that they affect the Company’s fixed maturity investments. This can result in a liability whose economic value is
different from the carrying value reported in the Consolidated Balance Sheet, given the Company records the carrying value of its
outstanding debt obligations at the original issued principal amount. For the Company’s preferred shares, fair value is based on
quoted market prices, while carrying value is based on the aggregate liquidation value of the shares. See Notes 4(b) and 13 to the
Consolidated Financial Statements in Item 18 of this report for further details regarding the fair value of debt. See also Note 14 to
the Consolidated Financial Statements in Item 18 of this report for further details regarding preferred shares.
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Credit Spread Risk
Investments
The Company’s fixed income portfolio, including the fixed maturity portfolio and corporate loan portfolio, is exposed to credit
spread risk. Fluctuations in market credit spreads have a direct impact on the market valuation of these securities. The Company
manages credit spread risk by the selection of securities within its fixed maturity and corporate loan portfolios. Changes in credit
spreads directly affect the market value of certain fixed maturity securities, but do not necessarily result in a change in the future
expected cash flows associated with holding individual securities. Other factors, including liquidity, supply and demand, and
changing risk preferences of investors, may affect market credit spreads without any change in the underlying credit quality of the
security.
As with interest rates, changes in credit spreads impact the shareholders’ equity of the Company as invested assets are carried
at fair value, which includes changes in credit spreads. As a result, an increase in credit spreads will result in a decrease in the fair
value of the Company’s investments and a corresponding decrease, net of applicable taxes, in the Company’s shareholders’ equity.
A decrease in credit spreads would have the opposite effect.
At December 31, 2023 and 2022, the fair value of investments exposed to credit spread risk was $14,158 million and $12,010
million, respectively. This represents a portion of investments exposed to interest rate risk as discussed above as it excludes certain
government securities that are not considered to be sensitive to credit spread risk.
At December 31, 2023 and 2022, the Company estimates that the hypothetical case of an immediate 100 basis points or 200
basis points parallel shift in global credit spreads would result in a change in the fair value of investments exposed to credit spread
risk, total invested assets and shareholders’ equity, before taxes, as follows (in millions of U.S. dollars, except percentages):
-200 Basis
Points
%
Change
-100 Basis
Points
%
Change
December 31,
2023
+100 Basis
Points
%
Change
+200 Basis
Points
%
Change
Fair value of investments exposed
to credit spread risk (1)
Total invested assets (2)
Shareholders’ equity
$ 15,189
$ 22,799
7 % $ 14,666
4 % $
14,158 $ 13,663
(3) % $ 13,182
5 % $ 22,277
2 % $
21,768 $ 21,273
(2) % $ 20,792
(7) %
(4) %
$ 9,456
12 % $ 8,933
6 % $
8,424 $ 7,930
(6) % $ 7,449
(12) %
-200 Basis
Points
%
Change
-100 Basis
Points
%
Change
December 31,
2022
+100 Basis
Points
%
Change
+200 Basis
Points
%
Change
Fair value of investments exposed
to credit spread risk (1)
Total invested assets (2)
Shareholders’ equity
$ 12,994
$ 20,228
8 % $ 12,495
4 % $
12,010 $ 11,538
(4) % $ 11,079
5 % $ 19,729
3 % $
19,244 $ 18,772
(2) % $ 18,313
(8) %
(5) %
$ 7,382
15 % $ 6,883
8 % $
6,397 $ 5,925
(7) % $ 5,467
(15) %
(1) Includes certain fixed maturity securities, certain short-term investments, certain other invested assets, certain cash and cash
equivalents and funds holding fixed income securities.
(2) Includes total investments, cash and cash equivalents and accrued interest.
The changes do not take into account any potential mitigating impact from the equity market, taxes or the corresponding
change in value of the Company’s reinsurance liabilities, which would substantially offset the economic impact on invested assets,
although the offset would not be entirely reflected in the Consolidated Balance Sheet.
The impacts of an immediate change in credit spreads on the fair value of investments exposed to credit spread risk, the
Company’s total invested assets and shareholders’ equity, in absolute terms and as a percentage of each respective balance at
December 31, 2023 is relatively lower than the impacts at December 31, 2022 because of the shortened spread duration of total
spread sensitive fixed income assets.
Market risk benefits
The measurement of MRBs at fair value considers the non-performance risk which is based on the Company’s own credit
spread risk. Refer to Note 10 to the Consolidated Financial Statements in Item 18 of this report for disclosures related to MRBs.
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Table of Contents
Reinsurance liabilities
As discussed above, most of the Company’s reserves are carried at their nominal value, and are not adjusted for changes in
interest rates, with the exception of its traditional and limited payment long-duration contracts within Life and health reserves,
which are updated to reflect current discount rate assumptions. The discount rate assumption for the traditional and limited payment
long-duration contracts includes an assumption for credit spreads. As a result, the sensitivities to credit spreads are the same as those
shown above for interest rate sensitivities for traditional and limited payment long-duration contracts.
Foreign Currency Risk
Through its multinational reinsurance operations, the Company conducts business in a variety of non-U.S. currencies, with the
principal exposures being the Euro, Canadian dollar, Swiss franc, British pound and Japanese yen. As the Company’s reporting
currency is the U.S. dollar, foreign exchange rate fluctuations that are not hedged may materially impact the Company’s
Consolidated Financial Statements. For the non-U.S. dollar currencies for which the Company deems the net asset or liability
exposures to be material, the Company employs a hedging strategy utilizing foreign exchange forward contracts and other derivative
financial instruments, as appropriate, to reduce exposure by currency. The Company does not hedge currencies for which its asset or
liability exposures are not material or where it is unable or impractical to do so. In such cases, the Company is exposed to foreign
currency risk. However, the Company does not believe that the foreign currency risks corresponding to these unhedged positions are
material. Derivatives are included in Other invested assets in the Consolidated Balance Sheets (see Note 6 to the Consolidated
Financial Statements in Item 18 of this report for further details).
The Company’s gross and net exposures in its Consolidated Balance Sheets at December 31, 2023 and 2022 to foreign
currency as well as the associated foreign currency derivatives the Company has entered into to manage these exposures, were as
follows (in millions of U.S. dollars):
December 31, 2023
Total assets
Total liabilities
Total gross foreign currency exposure
Total derivative amount
Net foreign currency exposure
December 31, 2022
Total assets
Total liabilities
Total gross foreign currency exposure
Total derivative amount
Net foreign currency exposure
JPY
GBP
CHF
Euro
CAD
$ 1,815 $
(557)
Total (1)
28 $ 2,523 $ 1,192 $ 166 $ 411 $ 601 $ 6,736
(504) (1,140) (7,907)
(183)
(93) $ (539) $ (1,171)
(17) $
82
278
25
(11) $ (514) $ (893)
(193) (3,993) (1,337)
$ 1,258 $ (165) $ (1,470) $ (145) $
(1,252) —
$
—
(47) $ (145) $
6 $ (165) $
—
1,423
(17) $
Other
AUD
GBP
CHF
Euro
CAD
JPY (2)
$ 1,640 $
(483)
Total (1)
25 $ 2,202 $ 1,135 $ 133 $ 395 $ 569 $ 6,099
(478) (1,040) (7,286)
(241)
(127) (3,682) (1,235)
(83) $ (471) $ (1,187)
$ 1,157 $ (102) $ (1,480) $ (100) $ (108) $
73
(1,183) —
574
62
(10) $ (409) $ (613)
$
87
—
(13) $ (108) $
(26) $ (102) $
1,535
55 $
Other
AUD
(1) As the U.S. dollar is the Company’s reporting currency, there is no currency risk attached to the U.S. dollar and it is excluded
from the above tables. The U.S. dollar accounts for the difference between the Company’s total foreign currency exposure and
the total assets and total liabilities in the Consolidated Balance Sheets at December 31, 2023 and 2022.
(2) The JPY exposure as at December 31, 2022 excludes reinsurance assets of approximately $11 million, denominated in U.S.
dollars for which the underlying value is linked to JPY.
The above numbers include the Company’s investment in certain of its subsidiaries and branches, whose functional currencies
are the Euro and Canadian dollar, and the foreign exchange forward contracts that the Company entered into during the year to
hedge a portion of its translation exposure in light of the significant volatility in foreign exchange markets.
At December 31, 2023, the Company’s most significant net foreign currency exposure was to the Swiss franc and at
December 31, 2022 the Company’s most significant net foreign currency exposure was to the Japanese yen. These net exposures
reflect the unhedged net foreign currency exposure to certain liability balances denominated in Swiss franc and Japanese yen,
respectively.
At December 31, 2023, assuming all other variables remain constant and disregarding any tax effects, a change in the U.S.
dollar of 10% or 20% relative to all of the other currencies held by the Company simultaneously would result in a change in
shareholders’ equity of $89 million and $179 million, respectively, inclusive of the effect of foreign exchange forward contracts and
other derivative financial instruments.
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At December 31, 2022, assuming all other variables remain constant and disregarding any tax effects, a change in the U.S.
dollar of 10% or 20% relative to all of the other currencies held by the Company simultaneously would result in a change in
shareholders’ equity of $61 million and $123 million, respectively, inclusive of the effect of foreign exchange forward contracts and
other derivative financial instruments.
Counterparty Credit Risk
Investments and Cash
The Company has exposure to credit risk primarily as a holder of fixed maturity securities and, to a lesser extent, through its
corporate loan portfolio within Other invested assets. The Company controls this exposure by emphasizing investment grade credit
quality in the fixed maturity securities it purchases. At December 31, 2023 and 2022, approximately 55% of the Company’s fixed
maturity portfolio was rated AA (or equivalent rating) or better. At December 31, 2023 and 2022, approximately 72% and 71%,
respectively, of the Company’s fixed maturity and short-term investments were rated A or better and 2% were rated below
investment grade or not rated.
The Company believes this high quality concentration reduces its exposure to credit risk on fixed maturity investments to an
acceptable level. At December 31, 2023 and 2022, other than the U.S. government and U.S. government sponsored enterprises, the
Company’s fixed maturity investment portfolio was not exposed to any significant credit concentration risk on its investments. At
December 31, 2023 and 2022, the single largest corporate issuer accounted for less than 2%, and the top 10 corporate issuers
accounted for less than 14% and 12%, respectively, of the Company’s total corporate fixed maturity securities. Refer to Liquidity
and Capital Resources—Investments in Item 5 for further details of the Company's corporate loan portfolio.
The Company holds cash and cash equivalents in several banks and ensures that there are no significant concentrations of
credit risk in any one bank.
Derivatives
The Company also has credit risk exposure as a party to foreign exchange forward contracts and other derivative contracts.
The Company’s investment strategy allows the use of derivative investments, subject to limitations. The Company imposes a high
standard for the credit quality of counterparties in all derivative transactions. To mitigate credit risk, the Company monitors its
exposure by counterparty, aims to diversify its counterparty credit risk and ensures that counterparties to these contracts are high
credit quality international banks or institutions. These contracts are generally of short-duration (approximately 90 days) and settle
on a net basis, which means that the Company is exposed to the movement of one currency against the other, as opposed to the
notional amount of the contracts. At December 31, 2023 and 2022, the Company’s net notional exposure of foreign exchange
forward contracts was $4,205 million and $4,278 million, respectively, while the net fair value of those contracts was a $4 million
asset position at December 31, 2023 and a $4 million liability position at December 31, 2022. See Note 6 to the Consolidated
Financial Statements in Item 18 of this report for additional information related to derivatives.
Underwriting Operations
The Company is also exposed to credit risk in its underwriting operations, most notably in the financial risks line. Loss
experience in these lines of business is cyclical and is affected by the general economic environment. The Company provides its
clients in these lines of business with protection against credit deterioration, defaults or other types of financial non-performance of
or by the underlying credits that are the subject of the protection provided and, accordingly, the Company is exposed to the credit
risk of those clients. As with all of the Company’s business, these risks are subject to rigorous underwriting and pricing standards.
In addition, the Company strives to mitigate the risks associated with these credit-sensitive lines of business through the use of risk
management techniques such as risk diversification, careful monitoring of risk aggregations and accumulations and, at times,
through the use of retrocessional reinsurance protection and the purchase of total return and interest rate swaps.
The Company is subject to the credit risk of its cedants in the event of their insolvency or their failure to honor the value of the
funds held balances due to the Company for any other reason. However, the Company’s credit risk in some jurisdictions is mitigated
by a mandatory right of offset of amounts payable by the Company to a cedant against amounts due to the Company. In certain
other jurisdictions the Company is able to mitigate this risk, depending on the nature of the funds held arrangements, to the extent
that the Company has the contractual ability to offset any shortfall in the payment of the funds held balances with amounts owed by
the Company to cedants for losses payable and other amounts contractually due. Funds held balances for which the Company
receives an investment return based upon either the results of a pool of assets held by the cedant or the investment return earned by
the cedant on its investment portfolio are exposed to counterparty credit risk. The Company is also exposed, to some extent, to the
underlying financial market risk of the pool of assets, to the extent the underlying policies may have guaranteed minimum returns on
GMDB business.
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The Company has exposure to credit risk as it relates to its business written through brokers if any of the Company’s brokers
are unable to fulfill their contractual obligations with respect to payments to the Company. In addition, in some jurisdictions, if the
broker fails to make payments to the insured under the Company’s policy, the Company might remain liable to the insured for the
deficiency. The Company’s exposure to such credit risk is somewhat mitigated in certain jurisdictions by contractual terms. See
Note 22 to the Consolidated Financial Statements in Item 18 of this report of this report for information related to two brokers that
accounted for 51% and 56%, respectively, of the Company’s gross premiums written for the years ended December 31, 2023 and
2022.
The Company has exposure to credit risk as it relates to its reinsurance balances receivable and reinsurance recoverable on
paid and unpaid losses.
Reinsurance balances receivable from the Company’s cedants at December 31, 2023 and 2022 were $3,377 million and $3,343
million, respectively, including balances both currently due and accrued. The Company believes that credit risk related to these
balances is mitigated by several factors, including but not limited to, credit checks performed as part of the underwriting process and
monitoring of aged receivable balances. In addition, as the majority of its reinsurance agreements permit the Company the right to
offset reinsurance balances receivable from clients against losses payable to them, the Company believes that the credit risk in this
area is substantially reduced. Provisions are made for amounts considered potentially uncollectible and the allowance for
uncollectible premiums receivable at December 31, 2023 and 2022 was $11 million and $12 million, respectively.
The Company purchases retrocessional reinsurance and requires its reinsurers to have adequate financial strength. The
Company evaluates the financial condition of its reinsurers and monitors its concentration of credit risk on an ongoing basis.
Provisions are made for amounts considered potentially uncollectible. At December 31, 2023 and 2022, the balance of reinsurance
recoverable on paid and unpaid losses was $1,921 million and $1,948 million, respectively, and includes $1,793 million and $1,872
million, respectively, of reinsurance recoverable on unpaid losses related to the total Non-life and Life and health reserves. At
December 31, 2023 and 2022, the Company's allowance for credit losses on its reinsurance recoverable balance was $3 million. At
December 31, 2023 and 2022, 18% and 19%, respectively, of the Company's reinsurance recoverable on unpaid losses were due
from reinsurers with an A- or better rating from Standard & Poor’s, and the remaining 82% and 81%, respectively, was
collateralized. See Liquidity and Capital Resources—Reinsurance Recoverable on Paid and Unpaid Losses in Item 5 and Note 12 to
the Consolidated Financial Statements in Item 18 of this report for further details of the Company’s reinsurance recoverable on
unpaid losses.
Other than the items discussed above, the concentrations of the Company’s counterparty credit risk exposures have not
changed materially at December 31, 2023 compared to December 31, 2022.
Public Equity Price Risk
Investments
The Company invests a portion of its capital funds in public equity securities and funds. At December 31, 2023 and 2022, the
fair market value of these securities was $720 million and $719 million, respectively, excluding funds holding fixed income
securities of $197 million and $211 million at December 31, 2023 and 2022, respectively. These equity investments are primarily
open-ended investment funds and are exposed to equity price risk, defined as the potential for loss in market value due to a decline
in equity prices. The Company believes that the effects of diversification and the relatively small size of its investments in equities
relative to total invested assets mitigate its exposure to equity price risk. At December 31, 2023, the Company estimates that a 10%
and 20% movement in the relevant index would result in a change in the fair value of the Company’s public equity portfolio, total
invested assets and shareholders’ equity by $78 million and $156 million, respectively and $61 million and $121 million,
respectively at December 31, 2022. These changes do not take into account any potential mitigating impact from fixed maturity
securities or taxes.
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Market risk benefits
The Company's net MRB assets related to its GMDB products are also sensitive to equity markets. An increase in the relevant
equity index will generally reduce the chance of GMDB being at risk and increase the fair value of the net MRB asset, with a
corresponding increase, net of applicable taxes, in the Company’s shareholders’ equity. A decrease in the relevant equity index
would have the opposite effect.
At December 31, 2023 and 2022, the Company estimates that the hypothetical case of an immediate 10% movement in equity
market returns would result in a change in the fair value of net MRB assets and shareholders’ equity, before taxes, as follows (in
millions of U.S. dollars, except percentages):
Net MRB assets
Shareholders’ equity
Net MRB assets
Shareholders’ equity
-10 Percentage
Points
%
Change
December 31,
2023
+10 Percentage
Points
%
Change
$
$
111
8,396
(21) % $
140 $
— % $
8,424 $
156
8,440
11 %
— %
-10 Percentage
Points
%
Change
December 31,
2022
+10 Percentage
Points
%
Change
$
$
99
6,374
(19) % $
122 $
— % $
6,397 $
136
6,412
11 %
— %
The impacts of an immediate increase or decrease in equity market returns on the fair value of MRBs and shareholders’ equity,
as a percentage of MRBs and shareholders’ equity, at December 31, 2023 is relatively comparable to the impacts at December 31,
2022.
The Company uses many inputs into the fair value calculation of MRBs and the sensitivities above do not reflect movements
in other market data which would reasonably be expected to change with changes in equity markets. The changes reflected above
also do not take into account any potential offsetting impact from taxes.
Real Estate Price Risk
The Company invests a portion of its capital funds in real estate assets either through direct investment or through investments
in entities that hold underlying real estate assets as follows:
•
•
•
•
Investments in real estate with a carrying value of $56 million and $58 million at December 31, 2023 and 2022,
respectively, recorded in the Consolidated Balance Sheets.
Investment in Almacantar with a carrying value of $471 million and $492 million at December 31, 2023 and 2022,
respectively, recorded in Other invested assets in the Consolidated Balance Sheets.
Investments in limited partnerships with underlying real estate assets with a carrying value of $161 million and $167
million at December 31, 2023 and 2022, respectively, recorded in Other invested assets in the Consolidated Balance
Sheets.
Investments in publicly traded REITs with a carrying value of $39 million and $62 million at December 31, 2023 and
2022, respectively, which are recorded in Equities in the Consolidated Balance Sheets.
These investments are exposed to real estate market price risk, defined as the potential for loss in market value due to a decline
in real estate prices. The Company believes that the effects of diversification and the relatively small size of its investments in real
estate assets relative to total invested assets mitigate its exposure to real estate price risk. At December 31, 2023, the Company
estimates that a 10% and 20% movement in comparable real estate prices would result in a change in the total carrying value of
$727 million of the Company’s real estate asset investments referred to above, total invested assets, and shareholders’ equity by $73
million and $145 million, respectively. At December 31, 2022, the Company estimates that a 10% and 20% movement in
comparable real estate prices would result in a change in the total carrying value of $779 million of the Company’s real estate asset
investments referred to above, total invested assets, and shareholders’ equity by $78 million and $156 million, respectively. These
changes do not take into account any potential mitigating impact from taxes.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company carried out an evaluation, under the supervision and with the participation of management, including the CEO
and CFO, as of December 31, 2023, of the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the CEO and CFO
concluded that, as of December 31, 2023, the disclosure controls and procedures are effective such that information required to be
disclosed by the Company in reports that it files or submits pursuant to the Securities Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated
to management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding
required disclosures.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control
over financial reporting is designed to provide reasonable assurance regarding the preparation of financial statements for external
purposes in accordance with U.S. GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect material misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of internal control over financial reporting as of December 31, 2023. In making
this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control-Integrated Framework (2013).
Based on our assessment and those criteria, management believes that the Company maintained effective internal control over
financial reporting as of December 31, 2023.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the year ended
December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over
financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
The Company’s Board has determined that Ms. Mary Ann Brown is an independent director and audit committee financial
expert in accordance with the NYSE listing rules.
ITEM 16B. CODE OF ETHICS
The Audit Committee of PartnerRe Ltd. has adopted the Code of Business Conduct and Ethics, which applies to all directors,
officers and employees and is incorporated by reference as Exhibit 11.1 to this annual report. Any specific waiver of its provisions
requires the approval of the Audit Committee. Any waiver required to be publicly disclosed will be posted on our website at
www.partnerre.com within four business days of such waiver being granted. During 2023, there were minor updates and revisions to
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the Code of Business Conduct and Ethics and no disclosable waivers for 2023 or 2022. Any violation to the Code of Business
Conduct and Ethics will be investigated and may result in disciplinary action, as appropriate.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the work of the
Company’s independent registered public accounting firm. The Audit Committee also pre-approves the audit services and non-audit
services to be provided, including the fees for such services, before the public accounting firm is engaged to render such services.
The Audit Committee may delegate the authority to grant such approval to one or more designated members of the Audit
Committee, provided that the decisions of any member to whom authority is delegated shall be presented to the full Audit
Committee at its next meeting. The Audit Committee has sole authority to approve all audit fees and terms.
The Company's principal accountant for 2021 was Ernst and Young, Ltd. (EY). Upon acquisition of the Company by Covéa
Coopérations on July 12, 2022, PartnerRe appointed PricewaterhouseCoopers Ltd (Bermuda) (“PwC Bermuda”) as PartnerRe Ltd.’s
independent registered public accounting firm for the fiscal year ending December 31, 2022. Refer to Change in Registrant's
Certifying Accountant in Item 16F of this report. All services of PricewaterhouseCoopers Ltd. and their respective affiliates
(collectively, PwC) were pre-approved by the Audit Committee.
During 2023, the Audit Committee had four meetings to discuss the Company’s quarterly results as well as to receive updates
on legal matters, matters relating to internal and external auditors, and other matters as deemed necessary. The meetings were
conducted to encourage communication among the members of the Audit Committee, management and the internal auditors. The
Audit Committee also discussed with PwC the overall scope and plans for PwC’s audits and the results of such audits. The Audit
Committee met with representatives from PwC, both with and without management present.
The following table presents fees for professional services rendered by independent auditors for the years ended December 31,
2023 and 2022 (in U.S. dollars).
Audit Fees (1)
Audit-Related Fees (2)
Tax Fees (3)
All Other Fees (4)
Total
2023
7,227,540 $
134,663
398,093
123,289
7,883,585 $
2022
7,453,750
185,000
305,530
125,147
8,069,427
$
$
(1) For the years ended December 31, 2023 and 2022, audit fees relate to professional services rendered by PwC for the audit of
the Company’s annual financial statements and other audit services provided in connection with statutory and regulatory
filings.
(2) Audit-related fees are fees for services performed that are reasonably related to the performance of the audit or review of the
Company’s financial statements but are not described in (1) above. Audit-related fees in 2023 were primarily related to audit of
an employee benefits plan in the US and statutory audits of non-consolidated third party capital vehicles. Audit-related fees in
2022 were for services performed by PwC related to future international accounting standard changes.
(3) Tax fees in 2023 and 2022 relate to services performed by PwC for tax compliance services and on-call advisory.
(4) All other fees for the years ended December 31, 2023 and 2022 were driven by permitted loss reserve specialist services in
relation to statutory audits in the US, as well as fees for accounting software subscriptions.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
None.
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ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
On May 3, 2021 (the Redemption Date), PartnerRe Ltd. filed a Form 25 Notification of Removal From Listing And/Or
Registration Under Section 12(b) of the Securities Exchange Act of 1934 to redeem all of its outstanding 6.50% Series G
Cumulative Redeemable Preferred Shares (Series G Preferred Shares), 7.25% Series H Cumulative Redeemable Preferred Shares
(Series H Preferred Shares) and 5.875% Series I Cumulative Redeemable Preferred Shares (Series I Preferred Shares). The Series G
Preferred Shares and Series H Preferred Shares were redeemed at a redemption price of $25.00 per share, plus accrued and unpaid
dividends thereon. The Series I Preferred Shares were redeemed at a redemption price of $25.00 per share, plus an amount equal to
the portion of the quarterly dividend attributable to the current dividend period to, but excluding the Redemption Date.
For further details related to these redemptions, refer to Note 14 to the Consolidated Financial Statements in Item 18 of this
report.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Upon closing of Covéa Coopérations' acquisition of the Company on July 12, 2022, PartnerRe appointed
PricewaterhouseCoopers Ltd (Bermuda) (“PwC Bermuda”) as the Company’s independent registered public accounting firm for the
fiscal year ended December 31, 2022.
As described in Note 2 of the Company’s Consolidated Financial Statements, Accounting Standard Update 2018-12 Topic
944: Targeted Improvements to the Accounting for Long-Duration Contracts (“LDTI”) revised key elements of the measurement
models and disclosure requirements for long-duration insurance contracts. LDTI, which was effective commencing with fiscal years
beginning after December 15, 2022, required retrospective adjustments to the Consolidated Financial Statements for the years ended
December 31, 2022 and 2021. This resulted in modifications to the Company’s previously issued financial statements for the year
ended December 31, 2021, including to the opening balance as of January 1, 2021 (the “Modifications”), which were required to be
audited. PartnerRe’s Consolidated Financial Statements for the years ended December 31, 2022 and 2023, which also reflect the
adoption of LDTI, were also required to be audited.
The Company’s Audit Committee concluded that Ernst & Young Ltd. (“EY”), PartnerRe’s previous auditor, could not serve as
the auditor for the Modifications to the previously issued financial statements as of and for the year ended December 31, 2021, as
EY was no longer independent of PartnerRe, and identified other firms it believed were qualified to audit the Modifications. In each
case, PartnerRe identified issues that might impact the independence of such other qualified firms. The Audit Committee considered
these issues in choosing an auditor for the Modifications and determined that the Company engage PwC Bermuda.
As part of the engagement acceptance process for the Modifications, PwC Bermuda informed the Company’s Audit
Committee that two of its member firms within PricewaterhouseCoopers International Limited (“PwC”), each member firm of
which is a separate legal entity, provided non-audit services during the audit period to four subsidiaries of the Company. The
services, which are inconsistent with the SEC and PCAOB independence rules, included assisting the Company’s appointed actuary,
seconding staff and acting as an appointed actuary. For each of the services identified, PwC Bermuda provided an overview of the
facts, including the nature of the services, the period over which the services were performed, the respective fees, the impact, if any,
on the Modifications, and the factors considered by PwC Bermuda in assessing the impact the services have on PwC’s objectivity
and impartiality. PwC Bermuda also noted that none of the non-audit services would be subject to PwC Bermuda’s audit of the
Modifications, the fees earned by PwC for the services (approximately $570,000 in the aggregate) were insignificant and immaterial
to PwC, PwC Bermuda and the Company and none of the non-audit services were performed by individuals who would be part of
the PwC Bermuda audit engagement team for the audit of the Modifications.
After considering the facts and circumstances, the Audit Committee and PwC Bermuda each assessed the services identified,
both individually and in the aggregate, and determined that, given the limited nature and immateriality of the services, PwC
Bermuda could be objective and impartial, and that a reasonable investor with knowledge of all relevant facts and circumstances of
the services, would conclude that PwC Bermuda is capable of exercising objective and impartial judgment on all issues
encompassed within PwC Bermuda’s audit of the Modifications to the previously issued financial statements as of and for the year
ended December 31, 2021.
The report of EY on PartnerRe Ltd.’s consolidated financial statements, before the effects of the adjustments to retrospectively
apply the change in accounting principle described in Note 3, for the year ended December 31, 2021 did not contain any adverse
opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with the audit of PartnerRe’s consolidated financial statements for the fiscal year ended December 31, 2021 and
for the period up to July 12, 2022, (1) there were no disagreements (as defined in paragraph (a)(1)(iv) of Item 16F of Form 20-F and
related instructions) with EY on any matters of accounting principles or practices, financial statement disclosure, or auditing scope
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or procedures, which, if not resolved to the satisfaction of EY, would have caused EY to make reference to the matter in their report;
and (2) there were no “reportable events” (as defined in paragraphs (a)(1)(v)(A) through (D) of Item 16F of Form 20-F).
The Company has requested EY to furnish it a letter addressed to the SEC stating whether it agreed with the above statements
in relation to the resignation of independent registered public accounting firm and paragraphs 6 and 7 above. A copy of this letter is
filed as Exhibit 15.1 to this Form 20-F.
ITEM 16G. CORPORATE GOVERNANCE
Pursuant to exemptions available under the NYSE listing standards, as the Company is a foreign private issuer and a controlled
company with no common shares listed, we are not required to comply with all of the corporate governance practices followed by
U.S. domestic filer companies under the NYSE listing standards. Below is a summary of the significant differences between our
corporate governance practices and the NYSE standards applicable to listed U.S. companies that are domestic filers:
• Nominating/Corporate Governance Committee: The NYSE requires that listed companies must have a nominating/
corporate governance committee composed entirely of independent directors and a committee charter detailing the
committee’s purpose and responsibilities and an annual performance evaluation of the committee. Under Bermuda law and
our Bye-Laws as well as the NYSE exemptions applicable to controlled companies, we are not required to have, and do not
have, a separate nominating or corporate governance committee; instead, that function is filled by our full Board.
• Compensation Committee: The NYSE requires that listed companies must have a compensation committee composed
entirely of independent directors and a committee charter detailing the committee’s purpose and responsibilities, an annual
performance evaluation of the committee and the rights and responsibilities of the committee with respect to retaining or
obtaining advice from an independent adviser. Under Bermuda law and our Bye-Laws, as well as the NYSE exemptions
applicable to controlled companies, we are not required to have, and do not have, a separate compensation committee;
instead, that function is filled by our full Board, its committees, the Chairman, the Lead Independent Director and our
CEO.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I.
DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J.
INSIDER TRADING POLICIES
Not applicable.
ITEM 16k. CYBERSECURITY
Information technology is a critical component of our business. PartnerRe has in place a comprehensive security platform
using a combination of people, processes and technical solutions to protect the PartnerRe Group from cybersecurity threats.
PartnerRe’s Group ERM Framework identifies and seeks to mitigate risks of the PartnerRe Group. Information technology
(IT) risk (including cyber risks) falls under the PartnerRe Group ERM Operational Risk Policy. The PartnerRe Group ERM
Operational Risk Policy is reviewed and approved by the PartnerRe Group Boards and the Boards of the operating reinsurance
companies annually, and information technology risks (including cyber risks) and risk mitigation are reviewed annually with IT.
PartnerRe's Information Technology Guidelines and Information Security Guidelines support the objectives of the PartnerRe Group
ERM Operational Risk Policy. Cyber risks are analyzed as part of the regular PartnerRe Group wide risk review process. Respective
risk mitigation is based on and embedded in the PartnerRe’s Group ERM Framework and also considered in PartnerRe’s Cyber
Security Strategy and Risk Management Framework.
PartnerRe’s Cyber Security Risk Framework is based on ISO 27001 and the NIST (National Institute of Standards and
Technology) Cyber Security Framework and sets out a comprehensive security platform consisting of people, processes and
technical solutions.
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Our cybersecurity risk management framework includes (1) data classification guidelines and applicable safeguards, (2)
identification and assessment of the main cybersecurity risk by the ERM function on a regular basis, in collaboration with the Group
IT Department, (3) risk assessment and IT security health checks performed by the Group IT Department, (4) vendor management
program to govern the outsourcing process and to manage and mitigate the potential risks associated with outsourcing, (5)
maintenance of an inventory of applications and computer systems and includes an business impact analysis carried out yearly to
identify critical business processes and applications, (6) monitoring threat intelligence sources including cyber security reports,
vendor security bulletins etc., (7) disaster recovery data centers, (8) formalized access management processes and related access
control policies, (9) software development lifecycle and change management processes to ensure that all changes are recorded,
assessed, tested and approved in a consistent manner, (10) security measures in order to protect internal network, data and mail
systems and legacy systems, (11) guidelines around storing personal sensitive data, (12) security awareness training, (13) security
monitoring platform and detection rules and procedures, (14) incident management process and crisis management plan, (15)
polices that define the frequency of data backups and backup’s retention periods, and (16) PartnerRe Group business continuity and
disaster recovery plans.
The PartnerRe Group Board has oversight responsibility for the PartnerRe Group, and the Board of Directors of each of the
operating reinsurance subsidiaries has responsibility for the oversight of cyber risk of the respective company, subject to the overall
policy established by the PartnerRe Group Board. Cyber risk is considered as part of the PartnerRe Group ERM Operational Risk
Policy. Pursuant to that policy, each of the Boards of the operating reinsurance companies – directly or through their respective Risk
Committees – receive a quarterly update on security incidents and other cyber risk issues through Operational Risk Reporting from
the Chief Risk Officer of that operating reinsurance subsidiary. In addition, a quarterly update on cybersecurity is presented by the
Chief Information Officer (CIO) to the Enterprise Risk Committee of PartnerRe Ltd. Additionally, the PartnerRe Group Cyber
Security Strategy and Risk Management Framework are annually reviewed and approved by the PartnerRe Group Board, the senior
management team and the Board of each of the operating reinsurance subsidiaries.
PartnerRe’s Corporate Audit Group performs IT and IT security related internal audits, using specialized resources in addition
to undertaking an annual cyber-security audit, the observations and recommendations from these internal audits are addressed with a
high priority by the PartnerRe Group IT Department.
Overall responsibility for the implementation and management of PartnerRe’s IT systems and security rests with the CIO who
reports to the Chief Executive Officer. The CIO’s duties include: (1) identifying the resources necessary to maintain and protect the
IT systems and data and managing these resources effectively, (2) ensuring that IT related policies are regularly reviewed, updated
and implemented, and (3) leading IT recovery in the event of a cyber-attack.
In addition, a Chief Information Security Officer (CISO) is tasked with overseeing implementation and execution of
PartnerRe’s Cyber Security program. On an annual basis, the CISO reports to the PartnerRe Group Board on the overall
effectiveness of the cybersecurity program.
Our CIO has more than 25 years' industry experience and currently has executive responsibility for PartnerRe Group's IT and
facilities management function. He holds a Master's degree in Mathematical Economics and a PhD in Applied Mathematics. Our
CISO has more than 25 years' experience in the field of IT, IT engineering, IT compliance, risk and cybersecurity. He has completed
professional certifications including certified information security manager (Feb 2015 - Dec 2023) from ISACA (Information
Systems Audit and Control Association) and holds a Master's degree in Business and Information Management.
PartnerRe’s IT Risk, Security and Compliance Department reports to the CIO. Its duties include: (1) identifying the main
cyber threats for PartnerRe, (2) selecting and implementing efficient mitigation solutions, (3) establishing the security monitoring
function and management of security events, (4) reporting on significant cyber incidents, (5) building, continuously improving and
adapting PartnerRe’s cyber security program, consistent with the policy established by the PartnerRe Group Board, to protect
business information and systems and meet regulatory requirements.
In 2023, we did not identify any cybersecurity threats or incidents that have materially affected or are reasonably likely to
materially affect the Company, including with respect to our business strategy, results of operations, or financial condition.
However, despite our efforts, we cannot eliminate all risks from cybersecurity threat or incident. For more information about these
risks, please see Risk Factors – Risks Related to Our Company in Item 3.D of this report.
ITEM 17.
FINANCIAL STATEMENTS
See Item 18 of this report.
PART III
100
Table of Contents
ITEM 18.
FINANCIAL STATEMENTS
PARTNERRE LTD.
TABLE OF CONTENTS
Financial Statements
Consolidated Balance Sheets at December 31, 2023 and 2022
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022
and 2021
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Note 1. Organization
Note 2. Significant Accounting Policies
Note 3. Adoption of Accounting Pronouncement
Note 4. Fair Value
Note 5. Investments
Note 6. Derivatives
Note 7. Goodwill and Intangible Assets
Note 8. Deferred Acquisition Costs
Note 9. Non-Life Reserves
Note 10. Life and Health Reserves
Note 11. Market Risk Benefits
Note 12. Reinsurance
Note 13. Debt
Note 14. Shareholders' Equity
Note 15. Dividend Restrictions and Statutory Requirements
Note 16. Taxation
Note 17. Share-Based Incentives
Note 18. Retirement Benefit Arrangements
Note 19. Commitments and Contingencies
Note 20. Credit Agreements
Note 21. Related Party Transactions
Note 22. Segment Information
Note 23. Subsequent Events
Audit Opinions
Reports of Independent Registered Public Accounting Firms (PCAOB ID: 1403, 1277)
Schedules
Schedule I - Consolidated Summary of Investments Other than Investments in Related Parties at December 31, 2023
Schedule II - Condensed Financial Information of Registrant at December 31, 2023 and 2022 and for the Years Ended
December 31, 2023, 2022 and 2021
Schedule III - Supplementary Insurance Information As of and for the Years Ended December 31, 2023, 2022 and 2021
Schedule IV - Reinsurance for the Years Ended December 31, 2023, 2022 and 2021
Schedule VI - Supplemental Information Concerning Property-Casualty Insurance Operations for the Years Ended
December 31, 2023, 2022 and 2021
101
Page
102
103
104
105
106
106
113
117
128
129
131
132
132
140
143
144
146
147
148
149
152
154
156
159
159
161
165
166
171
172
175
176
177
Table of Contents
Assets
Investments:
PartnerRe Ltd.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars, except parenthetical share data)
December 31,
2023
December 31,
2022
Fixed maturities, at fair value (amortized cost: 2023, $16,604,693; 2022 $14,925,319)
$ 15,090,056 $ 13,021,914
Short-term investments, at fair value (amortized cost: 2023, $1,032,895; 2022, $536,139)
Equities, at fair value (cost: 2023, $532,484; 2022, $586,107)
Investments in real estate
Other invested assets
Total investments
Cash and cash equivalents (restricted: 2023, $97,620; 2022: $137,782)
Accrued investment income
Reinsurance balances receivable (1)
Reinsurance recoverable on paid and unpaid losses
Prepaid reinsurance premiums
Funds held by reinsured companies
Deferred acquisition costs
Market risk benefit assets, at fair value
Deposit assets
Net tax assets
Goodwill
Intangible assets
Other assets
Total assets
Liabilities
Non-life reserves (1)
Life and health reserves (1)
Market risk benefit liabilities, at fair value
Unearned premiums (1)
Other reinsurance balances payable (1)
Debt
Deposit liabilities
Net tax liabilities
Accounts payable, accrued expenses and other
Total liabilities
Shareholders’ Equity
Common shares (par value $0.00000001; issued and outstanding: 100,000,000 shares)
Preferred shares (par value $1.00; issued and outstanding: 8,000,000 shares; aggregate liquidation
value: $200,000)
Additional paid-in capital
Accumulated other comprehensive income
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
(1) See Note 21 for additional information regarding related party transactions.
See accompanying Notes to Consolidated Financial Statements.
102
1,020,257
917,170
56,188
523,510
929,886
57,984
3,464,839
3,355,106
20,548,510
17,888,400
1,097,423
1,251,596
122,107
3,377,324
1,921,231
215,611
450,454
103,752
3,342,612
1,947,786
247,276
471,570
1,020,704
1,012,067
144,636
164,189
563,368
456,380
81,913
324,639
131,186
81,053
160,634
456,380
89,769
203,119
$ 30,488,489 $ 27,387,200
$ 13,151,309 $ 12,725,631
2,859,257
2,497,519
5,062
2,741,755
655,240
1,883,585
6,009
57,584
704,267
9,170
2,745,371
632,336
1,848,003
4,681
38,576
488,594
22,064,068
20,989,881
—
—
8,000
8,000
1,929,934
1,929,934
7,527
6,478,960
8,424,421
70,879
4,388,506
6,397,319
$ 30,488,489 $ 27,387,200
Table of Contents
PartnerRe Ltd.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in thousands of U.S. dollars)
Revenues
Gross premiums written (1)
Net premiums written (1)
Increase in unearned premiums (1)
Net premiums earned (1)
Net investment income
Net realized and unrealized investment gains (losses)
Other income
Total revenues
Expenses
Losses and loss expenses (liability remeasurement loss (gain): 2023, $7,102; 2022,
$(1,267); 2021, $98,937) (1)
Market risk benefit gains
Acquisition costs (1)
Other expenses
Interest expense
Amortization of intangible assets
Net foreign exchange losses
Total expenses
Income (loss) before taxes and interest in (losses) earnings of equity method
investments
Income tax benefit (expense)
Interest in (losses) earnings of equity method investments
Net income (loss)
Preferred dividends
Loss on redemption of preferred shares
For the year ended
December 31,
2023
December 31,
2022
December 31,
2021
$ 9,102,358 $ 8,689,279 $ 8,203,925
$ 7,928,912 $ 7,544,195 $ 7,134,018
(10,152)
(287,078)
(177,496)
7,918,760
7,257,117
6,956,522
645,685
517,426
40,965
398,348
376,469
(1,969,014)
40,492
37,797
28,748
9,122,836
5,726,943
7,399,536
4,990,208
4,725,872
4,851,040
(7,079)
(121,211)
(19,873)
1,563,107
1,537,213
1,391,502
463,385
414,876
398,542
57,532
7,906
42,542
55,185
8,912
14,774
55,606
8,861
36,498
7,117,601
6,635,621
6,722,176
2,005,235
(908,678)
677,360
327,924
(41,895)
(39,967)
(15,040)
10,821
2,318,119
(939,752)
9,750
—
9,750
—
126,795
764,188
22,693
21,234
Net income (loss) attributable to common shareholder
$ 2,308,369 $
(949,502) $
720,261
Comprehensive income (loss)
Net income (loss)
Change in currency translation adjustment
Change in net unrealized gains or losses on investments, net of tax
Change in unfunded pension obligation, net of tax
Change in discount rate for liability for future policy benefits, net of tax
Change in instrument-specific credit risk for market risk benefits, net of tax
Other comprehensive (loss) income
Comprehensive income (loss)
(1) See Note 21 for additional information regarding related party transactions.
$ 2,318,119 $
(3,180)
(939,752) $
5,670
764,188
44,160
(26)
(15,005)
(49,984)
4,843
—
12,573
99,250
49,794
(128)
23,307
53,053
3,825
(63,352)
167,287
124,217
$ 2,254,767 $
(772,465) $
888,405
See accompanying Notes to Consolidated Financial Statements.
103
Table of Contents
PartnerRe Ltd.
Consolidated Statements of Shareholders’ Equity
(Expressed in thousands of U.S. dollars)
Common shares
Balance at beginning of year
Balance at end of year
Preferred shares
Balance at beginning of year
Issuance of preferred shares
Redemption of preferred shares
Balance at end of year
Additional paid-in capital
Balance at beginning of year
Issuance of preferred shares
Redemption of preferred shares
Balance at end of year
Accumulated other comprehensive income (loss)
Balance at beginning of year
Currency translation adjustment
Balance at beginning of year
Cumulative effect of adoption of accounting guidance (Note 3)
Change in currency translation adjustment
Balance at end of year
Unfunded pension obligation
Balance at beginning of year
Change in unfunded pension obligation, net of tax
Balance at end of year (net of tax: 2023, $(2,375); 2022, $1,230; 2021, $1,840)
Unrealized gain on investments
Balance at beginning of year
Change in net unrealized gains or losses on investments, net of tax
Balance at end of year (net of tax: 2023, 2022 and 2021: $nil)
Discount rate for liability for future policy benefits
Balance at beginning of year
Cumulative effect of adoption of accounting guidance (Note 3)
Change in discount rate for liability for future policy benefits, net of tax
Balance at end of year (net of tax: 2023, $(5,998); 2022, $(4,040); 2021, $8,999)
Instrument-specific credit risk for market risk benefits
Balance at beginning of year
Cumulative effect of adoption of accounting guidance (Note 3)
Change in instrument-specific credit risk for market risk benefits, net of tax
Balance at end of year (net of tax: 2023, $245; 2022, $380; 2021, $6,117)
Balance at end of year
Retained earnings
Balance at beginning of year
Cumulative effect of adoption of accounting guidance (Note 3)
Net income (loss)
Dividends on common shares
Dividends on preferred shares
Loss on redemption of preferred shares
Balance at end of year
Total shareholders’ equity
For the year ended
December 31,
2023
December 31,
2022
December 31,
2021
$
$
$
$
— $
— $
8,000 $
—
—
8,000 $
— $
— $
—
—
8,000 $
—
—
8,000 $
25,490
8,000
(25,490)
8,000
$
1,929,934 $
1,929,934 $
—
—
—
—
$
1,929,934 $
1,929,934 $
2,334,564
185,887
(590,517)
1,929,934
$
$
$
$
$
$
$
$
$
$
$
$
70,879 $
(96,408) $
(96,005)
(16,697) $
—
(3,180)
(19,877) $
5,509 $
(15,005)
(9,496) $
26 $
(26)
— $
85,337 $
—
(49,984)
35,353 $
(3,296) $
—
4,843
1,547 $
7,527 $
(22,367) $
—
5,670
(16,697) $
(7,064) $
12,573
5,509 $
26 $
—
26 $
(13,913) $
—
99,250
85,337 $
(53,090) $
—
49,794
(3,296) $
70,879 $
(65,788)
(739)
44,160
(22,367)
(30,371)
23,307
(7,064)
154
(128)
26
—
(66,966)
53,053
(13,913)
—
(56,915)
3,825
(53,090)
(96,408)
$
4,388,506 $
5,515,902 $
—
2,318,119
(217,915)
(9,750)
—
—
(939,752)
(177,894)
(9,750)
—
$
$
6,478,960 $
8,424,421 $
4,388,506 $
6,397,319 $
5,062,948
(160,640)
764,188
(106,667)
(22,693)
(21,234)
5,515,902
7,357,428
See accompanying Notes to Consolidated Financial Statements.
104
Table of Contents
PartnerRe Ltd.
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of net premium on investments
Amortization of intangible assets
Market risk benefit gains
Net realized and unrealized investment (gains) losses
Changes in:
Reinsurance balances, net
Reinsurance recoverable on paid and unpaid losses, net of ceded premiums payable
Funds held by reinsured companies
Deferred acquisition costs
Net tax assets and liabilities
Non-life and life and health reserves
Unearned premiums, net of prepaid reinsurance premiums
Other net changes in operating assets and liabilities
Net cash provided by operating activities
Cash flows from investing activities
Sales of fixed maturities
Redemptions of fixed maturities
Purchases of fixed maturities
Sales of short-term investments
Redemptions of short-term investments
Purchases of short-term investments
Sales of equities
Purchases of equities
Sales and redemptions of other invested assets
Purchases of other invested assets
Other, net
Net cash used in investing activities
Cash flows from financing activities
Dividends paid to common and preferred shareholders
Redemption of unrestricted Class B common shares (1)
Issuance of preferred shares
Redemption of preferred shares
Redemption of debt
Net cash used in financing activities
Effect of foreign exchange rate changes on cash
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents—beginning of year
Cash and cash equivalents—end of year
Supplemental cash flow information:
Taxes paid
Interest paid
For the year ended
December 31,
2023
December 31,
2022
December 31,
2021
$ 2,318,119 $
(939,752) $
764,188
2,878
7,906
(7,079)
78,162
8,912
(121,211)
(517,426) 1,969,014
57,900
8,861
(19,873)
(37,797)
(8,986)
39,753
(69,753)
568
(381,549)
658,698
10,152
182,400
2,235,681
(381,838)
(297,170)
53,335
(134,704)
(61,891)
959,669
287,078
48,805
1,468,409
19,366
(640,614)
113,626
(118,069)
5,004
873,085
177,496
29,417
1,232,590
3,693,365
623,929
723,372
1,662,939
2,381,821
1,216,920
(4,038,399) (2,940,597) (8,141,246)
252,527
308,622
321,609
227,118
(372,901)
(867,605)
161,501
915,583
(144,537)
(78,425)
545,411
1,106,211
(627,460) (1,555,569)
(31,903)
(664,825) (2,329,122)
219,073
845,215
(1,513,449)
236,303
(54,507)
728,857
(902,693)
(79,717)
(2,173,006)
11,679
(227,665)
—
—
—
—
(227,665)
10,817
(154,173)
(187,644)
(6,346)
—
—
(560)
(194,550)
(18,335)
590,699
660,897
(129,360)
(581)
193,887
(637,241)
—
(573,295)
(20,109)
(1,689,936)
2,350,833
660,897
1,251,596
$ 1,097,423 $ 1,251,596 $
$
$
221,368 $
57,227 $
216,467 $
54,867 $
100,222
56,177
(1) Class B shares are liability-accounted on the Company's Consolidated Balance Sheet. See Note 17 for further details.
See accompanying Notes to Consolidated Financial Statements.
105
Table of Contents
1. Organization
PartnerRe Ltd.
Notes to Consolidated Financial Statements
PartnerRe Ltd. primarily provides reinsurance on a worldwide basis through its principal wholly-owned subsidiaries, including
Partner Reinsurance Company Ltd. (PartnerRe Bermuda), Partner Reinsurance Europe SE (PartnerRe Europe), Partner Reinsurance
Company of the U.S. (PartnerRe U.S.), Partner Reinsurance Asia Pte. Ltd. (PartnerRe Asia) and PartnerRe Life Reinsurance
Company of Canada (PartnerRe Canada). Non-life risks reinsured include agriculture, aviation/space, casualty, catastrophe, energy,
engineering, financial risks, marine, motor, multiline, property and U.S. health. Life and health risks include mortality, morbidity,
longevity and financial reinsurance solutions. PartnerRe Ltd. and its subsidiaries are collectively referred to hereinafter as
PartnerRe, the Company or the PartnerRe Group.
The Company was incorporated in August 1993 under the laws of Bermuda. The Company commenced operations in
November 1993 upon completion of the sale of common shares and warrants pursuant to subscription agreements and an initial
public offering.
The Company completed the acquisition of Societe Anonyme Francaise de Reassurances (SAFR) in 1997, the acquisition of
Winterthur Re in 1998, the acquisition of PARIS RE Holdings Limited (Paris Re) in 2009, the acquisition of Presidio Reinsurance
Group, Inc. (Presidio) in 2012 and the acquisition of Aurigen Capital Limited (Aurigen) in 2017.
On March 18, 2016, the Company's publicly held common shares were acquired by Exor N.V. (subsequently renamed to
EXOR Nederland N.V), whose ultimate parent is EXOR N.V. (Exor), which is listed on the Milan Stock Exchange. As a result of
the acquisition, PartnerRe's publicly issued common shares were cancelled and are no longer publicly traded.
On December 16, 2021, Exor announced that it had signed a definitive agreement with Covéa Coopérations S.A. (Covéa
Coopérations), under which Covéa Coopérations would acquire PartnerRe's common shares. Preferred shares issued by PartnerRe
were not included in the transaction. Consummation of this transaction occurred on July 12, 2022. The Company’s preferred shares
continue to be traded on the New York Stock Exchange (NYSE).
At December 31, 2023 and 2022, the Company's 100 million common shares (Class A shares) issued to Covéa Coopérations
were included in Shareholders' Equity in the Consolidated Balance Sheets (see Note 14). The Company also has Class C common
shares (Class C shares) and restricted share units outstanding, all of which are issued to certain executives and directors of the
Company, and are recognized in Accounts payable, accrued expenses and other in the Consolidated Balance Sheets (see Note 17).
2. Significant Accounting Policies
The Company’s Consolidated Financial Statements have been prepared in accordance with accounting principles generally
accepted in the United States (U.S. GAAP). The Consolidated Financial Statements include the accounts of the Company and its
subsidiaries. Intercompany accounts and transactions have been eliminated. Certain reclassifications have been made to prior period
amounts to conform to the current year presentation.
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 Consolidated
Financial Statements reflect its best estimates and assumptions, actual results could differ from those estimates. The Company’s
principal estimates include:
• Non-life reserves;
• Life and health reserves;
• Reinsurance recoverable for unpaid losses;
• Gross and net premiums written and net premiums earned;
• Valuation and recoverability of deferred tax assets;
• Fair value measurements of certain financial instrument assets; and
• Valuation of goodwill
The following are the Company’s significant accounting policies:
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(a) Premiums
Gross premiums written and earned are based upon reports received from ceding companies, supplemented by the Company’s
own estimates of premiums written and earned for which ceding company reports have not been received. The determination of
premium estimates requires a review of the Company’s experience with cedants, familiarity with each market, an understanding of
the characteristics of each line of business and management’s assessment of the impact of various other factors on the volume of
business written and ceded to the Company. Premium estimates are updated as new information is received from cedants and
differences between such estimates and actual amounts are recorded in the period in which the estimates are changed or the actual
amounts are determined. Net premiums written and earned are presented net of ceded premiums.
Premiums related to non-life business are earned on a basis that is consistent with the risks covered under the terms of the
reinsurance contracts, which is generally one to two years. Reinstatement premiums are recognized as written and earned at the time
a loss event occurs, where coverage limits for the remaining life of the contract are reinstated under pre-defined contract terms. The
accrual of reinstatement premiums is based on management’s estimate of losses and loss expenses associated with the loss event.
Unearned premiums represent the portion of premiums written which is applicable to the unexpired risks under contracts in force.
Premiums related to traditional and limited payment long-duration contracts are recorded over the premium-paying period on
the underlying policies. Premiums on contracts for which there is no significant mortality or critical illness risk are accounted for in
a manner consistent with accounting for interest-bearing financial instruments and are not reported as revenues, but rather as direct
deposits to the contract. Amounts assessed against annuity and universal life policyholders are recognized as revenue in the period
assessed. Premiums related to life and health short-duration business are earned on a basis that is consistent with the risks covered
under the terms of the reinsurance contracts, which is generally one to two years.
(b) Losses and Loss Expenses
Non-life reserves
Reserves for non-life business include amounts determined from loss reports on individual treaties (case reserves), additional
case reserves when the Company’s loss estimate is higher than reported by the cedants (ACRs) and amounts for losses incurred but
not yet reported to the Company (IBNR). Such reserves are estimated by management based upon reports received from ceding
companies, supplemented by the Company’s own actuarial estimates of reserves for which ceding company reports have not been
received, and based on the Company’s own historical experience. To the extent that the Company’s own historical experience is
inadequate for estimating reserves, such estimates may be determined based upon industry experience and management’s judgment.
The estimates are regularly reviewed and the ultimate liability may be materially in excess of, or less than, the amounts provided.
Any adjustments are reflected in the periods in which they are determined, which may affect the Company’s operating results in
future periods. See Note 9 for further details.
Life and Health Reserves
Traditional and limited payment long-duration contracts
For traditional and limited payment long-duration contracts, which includes long-term protection and longevity business, the
Company accrues a liability for future policy benefits (LFPB) over time as revenue is recognized based on a net premium ratio. The
net premium ratio is the proportion of present value of gross premiums required to provide for all benefits and certain expenses. The
LFPB uses the Company's current best estimate assumption of future cash flows discounted at a rate that approximates a single A
rated corporate bond yield. Contracts are generally grouped into cohorts by product type, issue year, geographical region, currency,
and other factors.
Each quarter, the Company reviews its estimate of cash flows expected over the entire life of a group of contracts using actual
historical experience and current future best estimate assumptions, and if the cash flows change, the LFPB is updated using a net
premium ratio. The revised net premium ratio is calculated as of contract inception. This revised net premium ratio will derive a
remeasurement gain or loss that is presented as a component of Losses and loss expenses within the Consolidated Statements of
Operations. If the net premium ratio exceeds 100% for a given cohort, a corresponding adjustment is recognized immediately in net
income. The calculated LFPB cannot be less than zero for a given cohort.
The net premium ratio is not updated for changes in discount rate assumptions, as the impact of changes in quarterly discount
rates are recorded in Comprehensive income or loss. The current discount rate assumption for all contracts is derived from a yield
curve based on upper-medium grade fixed income securities (single A rated credit). For unobservable discount rates, the Company
uses estimates consistent with fair value guidance, maximizing the use of relevant, observable market prices and minimizing the use
of unobservable inputs. The locked-in discount rate assumption is utilized for purposes of interest accretion recognized in Losses
and loss expenses within the Consolidated Statements of Operations and for updating the net premium ratio. The locked-in discount
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rate assumption is based on the weighted average upper-medium grade fixed income yields during the first calendar year of the
contract.
The most significant cash flow assumptions used are mortality, morbidity and persistency. The Company has elected to lock-in
claims expense assumptions at contract inception and those assumptions are not subsequently reviewed or updated. See Note 10 for
further information of the effects of changes in assumptions on the remeasurement of the LFPB.
Other long-duration contracts
Reserves for other long-duration contracts primarily include interest-sensitive life and investment-type contract liabilities,
which are carried at the accumulated contract holder values.
Life and health short-duration contracts
Reserves for life and health short-duration contracts have been established based upon information reported by ceding
companies, supplemented by the Company’s actuarial estimates, which include mortality, morbidity, critical illness, and persistency
with appropriate provision to reflect uncertainty.
See Note 10 for further details.
(c) Market Risk Benefits
Market risk benefits (MRBs) are contracts or contract features that both provide protection to the contract holder from other-
than-nominal capital market risk and expose the Company to other-than-nominal capital market risk. MRBs include certain contract
features that provide minimum guarantees to policyholders, such as guaranteed minimum death benefits (GMDB). MRBs can be in
either an asset or a liability position, and are presented separately on the Consolidated Balance Sheets as the criteria for right of
offset is not met. MRBs are measured at fair value using an option-based valuation model based on current net amounts at risk,
market data, Company experience, and other factors. Consistent with a fair value income approach, all contractual cash flows
specified within the GMDB treaties and expense cash flows that are consistent with the expected expense levels, are projected on a
prospective basis. Risk neutral scenarios are used to project and discount cash flows. Changes in fair value related to MRBs are
recognized as Market risk benefit gains (losses) except for the portion of the change in fair value due to a change in the instrument-
specific credit risk, which is recognized in Other comprehensive income or loss, both within the Consolidated Statements of
Operations and Comprehensive Income (Loss). MRBs are derecognized in the financial statements upon contract termination. At
that point, the Company records any amounts (i.e. instrument-specific credit risk changes in MRBs) previously recorded in OCI into
net income. See Note 11 for further details.
(d) Deferred Acquisition Costs
Deferred acquisition costs are comprised of primarily incremental brokerage fees, commissions and excise taxes, which vary
directly with, and are related to, the successful acquisition of reinsurance contracts. All other acquisition related costs, including
indirect costs, are expensed as incurred. Acquisition costs are shown net of commissions earned on ceded reinsurance.
Deferred acquisitions costs related to non-life contracts are amortized as the related premium is earned. The Company
establishes a premium deficiency reserve to the extent the deferred acquisition costs are insufficient to cover the excess of expected
losses and loss expenses, settlement costs and deferred acquisition costs over the related unearned premiums. Actual and anticipated
losses and loss expenses, other costs, and investment income related to underlying premiums are considered in determining the
recoverability of these deferred acquisition costs.
Deferred acquisition costs related to traditional and limited payment long-duration contracts are amortized over the expected
term of the underlying contracts, on a constant level basis, at the cohort level. Acquisition costs related to unexpected contract
terminations are written off. Assumptions used to amortize these acquisition costs are consistent with the related liability for future
policy benefits. These acquisition costs are not evaluated for recoverability and are not subject to impairment testing.
Amortization of deferred acquisition costs is included in Acquisition costs within the Consolidated Statements of Operations.
(e) Reinsurance
The Company purchases retrocessional contracts to reduce its exposure to risk of losses on reinsurance assumed. Ceded
premiums, which represent the cost of retrocessional protection purchased by the Company, are expensed over the coverage period.
Prepaid reinsurance premiums represent the portion of premiums ceded applicable to the unexpired term of policies in force.
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Reinsurance recoverable on paid and unpaid losses involves actuarial estimates consistent with those used to establish the
associated liabilities for non-life and life and health reserves and are recorded net of a valuation allowance for estimated
uncollectible recoveries.
Retroactive reinsurance reimburses a ceding company for liabilities incurred as a result of past insurable events covered under
contracts subject to the reinsurance. Premiums payable for retroactive reinsurance coverage meeting the conditions of reinsurance
accounting are reported as reinsurance recoverables. To the extent that recorded liabilities on an underlying reinsurance contract
exceed premiums payable for retroactive coverage, a deferred gain is recognized in Accounts payable, accrued expenses and other
on the Company's Consolidated Balance Sheets and amortized over estimated remaining settlement period of the underlying
contract. Any such amortization is included in Losses and loss expenses in the Consolidated Statements of Operations.
(f) Funds Held by Reinsured Companies
The Company writes certain business on a funds held basis. Under such contractual arrangements, the cedant retains the
premiums that would have otherwise been paid to the Company and the Company is credited with investment income on these
funds. The Company generally earns investment income on the funds held balances based upon a predetermined interest rate, either
fixed contractually at the inception of the contract or based upon a recognized index (e.g. SOFR). However, in certain
circumstances, the Company may receive an investment return based upon either the result of a pool of assets held by the cedant,
generally used to collateralize the funds held balance, or the investment return earned by the cedant on its entire investment
portfolio. In these arrangements, investment returns are typically reflected in Net investment income in the Company’s Consolidated
Statements of Operations. In these arrangements, the Company is exposed, to a limited extent, to the underlying credit risk of the
pool of assets inasmuch as the underlying policies may have guaranteed minimum returns. In such cases, an embedded derivative
exists and its fair value is recorded by the Company as an increase or decrease to the funds held balance.
(g) Deposit Assets and Liabilities
In the normal course of its operations, the Company writes certain contracts that do not meet the risk transfer provisions of
U.S. GAAP. While these contracts do not meet risk transfer provisions for accounting purposes, there is a remote possibility that the
Company will suffer a loss. The Company accounts for these contracts using the deposit accounting method originally recording
deposit assets or liabilities for an amount equivalent to the consideration paid or received, respectively. The difference between the
consideration received and the estimated liability for unpaid losses is determined upon entering into the contract and, if a loss,
recognized into income immediately, and if a gain, the gain is deferred and earned over the expected settlement period of the
contract, with the unearned portion recorded as a component of deposit liabilities. Actuarial studies are used to estimate the
liabilities under these contracts and the appropriate accretion rates to increase or decrease the liabilities over the term of the
contracts. The change in the estimated liability for the period is recorded in Other income or loss in the Consolidated Statements of
Operations. Under some of these contracts, cedants retain the assets on a funds-held basis. In those cases, the Company records
those assets as deposit assets and records the related income in Net investment income in the Consolidated Statements of
Operations. Also included in Deposit assets are receivables included as an element of certain life reinsurance agreements that do not
meet risk transfer.
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(h) Investments
The Company elects the fair value option for Fixed maturities, Short-term investments and Equities with changes in fair value
recorded in Net realized and unrealized investment gains or losses in the Consolidated Statements of Operations. Short-term
investments comprise securities with a maturity greater than three months but less than one year from the date of purchase.
Investments in real estate includes real estate that is directly held by the Company, which is recorded at cost less any write
down for impairment, where applicable. Real estate assets held for investment are reviewed for impairment at least annually, or
more frequently when events or changes in circumstances indicate the carrying value may not be recoverable and exceeds its
estimated fair value.
The Company recognizes Other invested assets at fair value, except for those that are accounted for using the equity method of
accounting. Other invested assets consist of equity investments in non-publicly traded companies such as limited liability companies
and limited partnerships (or similar structures); privately placed corporate loans, notes and loans receivable and notes securitization;
and derivative financial instruments. Non-publicly traded entities in which the Company has significant influence, including an
ownership of more than 20% and less than 50% of the voting rights, and limited partnerships (or similar structures) in which the
Company has more than a minor interest (typically more than 3% to 5%), are accounted for using either the equity method or the
fair value option. Where the equity method is used, the Company's share of profits or losses of the investee are recorded in Interest
in earnings or losses of equity method investees in the Consolidated Statements of Operations. The Company has not elected the fair
value option for these equity method investees as the carrying values already approximate fair value. Where the fair value option is
elected, the investment is recognized in the Consolidated Balance Sheets at fair value with changes in fair value recorded in Net
realized and unrealized investment gains or losses in the Consolidated Statements of Operations. See Note 2(o) below for significant
accounting policy for derivatives.
The Company defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The Company measures the fair value of financial instruments according to a
fair value hierarchy that prioritizes the information used to measure fair value into three broad levels. The Company’s policy is to
recognize transfers between the hierarchy levels at the beginning of the period. Refer to Note 4 for the valuation techniques used by
the Company.
The Company invests in various funds where the net asset value (NAV) is used as a basis for determining fair value. The
Company applies the practical expedient relating to investments in certain entities that calculate NAV per share (or its equivalent)
and therefore measure the fair value of these fund investments based on that NAV per share, or its equivalent. Refer to Note 4 for
the valuation methods and assumptions used by the Company.
Net investment income includes interest and dividend income, amortization of premiums and discounts on fixed maturities and
short-term investments, and is net of investment expenses and withholding taxes. Investment income is recognized when earned and
accrued to the balance sheet date. Realized gains or losses on the disposal of investments are determined on a first-in, first-out basis.
Investment purchases and sales are recorded on a trade-date basis.
(i) Cash and Cash Equivalents
Cash equivalents are carried at fair value and include fixed income securities that, from the date of purchase, have a maturity
of three months or less.
(j) Business Combinations
The Company accounts for transactions in which it obtains control over one or more businesses using the acquisition method.
The purchase price is allocated to identifiable assets and liabilities, including any intangible assets, based on their estimated fair
value at the acquisition date. The estimates of fair values for assets and liabilities acquired are determined based on various market
and income analyses and appraisals. Any excess of the purchase price over the fair value of net assets acquired is recorded as
Goodwill in the Company’s Consolidated Balance Sheets, while any excess of the fair value of net assets acquired over the purchase
price is recorded as a gain in the Consolidated Statements of Operations. All costs associated with an acquisition are expensed as
incurred.
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(k) Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination.
The Company assesses the appropriateness of its valuation of goodwill on an annual basis (as of December 31) or more frequently if
events or changes in circumstances indicate that the carrying amount may not be recoverable. If, as a result of the assessment, the
Company determines that the value of its goodwill is impaired, goodwill will be written down in the period in which the
determination is made.
(l) Intangible Assets
Intangible assets represent the fair value adjustments related to renewal rights, and customer relationships; value of life
business acquired; and U.S. licenses arising from acquisitions. Definite-lived intangible assets are amortized over their useful lives
and the Amortization of intangible assets is recorded in the Consolidated Statement of Operations. Indefinite-lived intangible assets
are not subject to amortization. The carrying values of indefinite-lived intangible assets are reviewed for indicators of impairment on
an annual basis (as of December 31) or more frequently if events or changes in circumstances indicate that impairment may exist.
Impairment is recognized if the carrying values of the intangible assets are not recoverable from their undiscounted cash flows and
is measured as the difference between the carrying value and the fair value.
(m) Income Taxes
Certain subsidiaries and branches of the Company operate in jurisdictions where they are subject to taxation. Current and
deferred income taxes are charged or credited to Net income or loss or, in certain cases, to Accumulated other comprehensive
income or loss, based upon enacted tax laws and rates applicable in the relevant jurisdiction in the period in which the tax becomes
accruable or realizable. Deferred income taxes are provided for all temporary differences between the bases of assets and liabilities
used in the Consolidated Balance Sheets and those used in the various jurisdictional tax returns. When management’s assessment
indicates that it is more likely than not that deferred tax assets will not be realized, a valuation allowance is recorded against the
deferred tax assets. Where appropriate, the valuation allowance assessment considers tax planning strategies.
The Company recognizes a tax benefit relating to uncertain tax positions only where the position is more likely than not to be
sustained assuming examination by tax authorities. A liability is recognized for any tax benefit (along with any interest and penalty,
if applicable) claimed in a tax return in excess of the amount recognized in the financial statements under U.S. GAAP. Any changes
in amounts recognized are recorded in the period in which they are determined.
In the event that there is a change in current tax law, the impact of such change is recorded in Income tax expense or benefit
within the Consolidated Statements of Operations in the period of enactment.
(n) Foreign Exchange
In recording foreign currency transactions, revenue and expense items in a currency other than the functional currency are
converted into the functional currency at the average rates of exchange for the period. Monetary assets and liabilities originating in
currencies other than the functional currency are remeasured into the functional currency at the rates of exchange in effect at the
balance sheet dates. The resulting foreign exchange transaction gains or losses are included in Net foreign exchange gains or losses
in the Consolidated Statements of Operations. Non-monetary assets and liabilities denominated in foreign currency are not
subsequently remeasured.
The reporting currency of the Company is the U.S. dollar. The national currencies of the Company’s subsidiaries and branches
are generally their functional currencies, except for the Company’s Bermuda subsidiaries, its branches in Switzerland and the United
Kingdom and its Singapore subsidiary and branches, whose functional currency is the U.S. dollar. In translating the financial
statements of those subsidiaries or branches whose functional currency is other than the U.S. dollar, assets and liabilities are
converted into U.S. dollars using the rates of exchange in effect at the balance sheet dates, and revenues and expenses are converted
using the average foreign exchange rates for the period. The effect of translation adjustments are reported in the Consolidated
Balance Sheets as Currency translation adjustment, a separate component of Accumulated other comprehensive income or loss. The
change in currency translation adjustment is reflected in Other comprehensive income or loss.
(o) Derivatives
The Company’s investment strategy allows for the use of certain derivative instruments, subject to strict limitations. The
Company may use derivative financial instruments such as foreign exchange forward contracts, foreign currency option contracts,
futures contracts, to-be-announced mortgage-backed securities (TBAs), total return swaps, interest rate swaps, insurance-linked
securities, and credit default swaps for the purpose of managing overall currency risk, market exposures and portfolio duration, for
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hedging certain investments, or for enhancing investment performance that would be allowed under the Company’s investment
policy if implemented in other ways.
On the date the Company enters into a derivative contract, management determines whether or not the derivative is to be used
and designated as a hedge of an identified underlying risk exposure (a designated hedge). The Company’s derivative instruments are
recorded in Other invested assets in the Consolidated Balance Sheets at fair value, with gains and losses associated with changes in
fair value recognized in either Net realized and unrealized investment gains or losses or Net foreign exchange gains or losses in the
Consolidated Statements of Operations, or in Other comprehensive income or loss, depending on the nature and designation of the
derivative instrument (see also Note 6).
The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its
risk management objectives and strategy for undertaking various hedge transactions. In this documentation, the Company
specifically identifies the asset or liability that has been designated as a hedged item and states how the hedging instrument is
expected to hedge the risks related to the hedged item. The Company formally measures effectiveness of its designated hedging
relationships both at the hedge inception and on an ongoing basis.
The Company will discontinue hedge accounting prospectively if it is determined that the derivative is no longer effective in
hedging the exposure to variability in expected future cash flows that is attributable to the risk it was meant to hedge; if the
derivative instrument expires, is sold, or is otherwise terminated; or if the Company removes the designation of the hedge. To the
extent that the Company discontinues hedge accounting because, based on management’s assessment, the derivative no longer
qualifies as an effective hedge, or the Company otherwise de-designates the hedge, the derivative will continue to be carried in the
Consolidated Balance Sheet at its fair value, with changes in its fair value recognized in in the Consolidated Statements of
Operations, or in Other comprehensive income or loss, depending on the type of derivative held.
(p) Pensions
The Company recognizes an asset or a liability in the Consolidated Balance Sheets for the funded status of its defined benefit
plans that are overfunded or underfunded, respectively, measured as the difference between the fair value of plan assets and the
pension obligation and recognizes changes in the funded status of defined benefit plans in the year in which the changes occur as a
component of Accumulated other comprehensive income or loss, net of tax.
(q) Variable Interest Entities
The Company is involved in the normal course of business with variable interest entities (VIEs). An assessment is performed
as of the date the Company becomes initially involved in the VIE followed by a reassessment upon certain events related to its
involvement in the VIE. The Company consolidates a VIE when it is the primary beneficiary having a controlling financial interest
as a result of having the power to direct the activities that most significantly impact the economic performance of the VIE and the
obligation to absorb losses, or right to receive benefits, that could potentially be significant to the VIE.
(r) Segment Reporting
The Company monitors the performance of its operations in three segments: Property & Casualty (P&C), Specialty and Life
and Health. Segments represent markets that are reasonably homogeneous in terms of client types, buying patterns, underlying risk
patterns or approach to risk management.
Since the Company does not manage its assets by segment, neither assets nor net investment income are allocated to the P&C
and Specialty segments. However, because of the long-duration profile of some of the Company’s life products, allocated net
investment income is considered in management’s assessment of the profitability of the Life and Health segment. The following
items are not considered in evaluating the results of the P&C, Specialty and Life and Health segments: Net realized and unrealized
investment gains or losses, MRB gains or losses, Interest expense, Loss on redemption of debt, Amortization of intangible assets,
Net foreign exchange gains or losses, Income tax expense or benefit and Interest in earnings and losses of equity method
investments. These items are included in the Corporate and Other component, which is comprised of the Company’s investment and
corporate activities, including other expenses.
(s) Share-Based Incentives
The Company is authorized to issue Class C common shares and restricted share units to certain executives and directors. Prior
to the adoption of the Class C common shares and related restricted share unit plan in 2021, the Company was authorized to issue
restricted Class B common shares. The compensation cost for grants of Class B and C common shares and restricted share units is
measured at fair value and expensed over the period for which the employee is required to provide services in exchange for the
award, up to three years from the date of grant. The Company has elected to recognize forfeitures as they occur. Class B and C
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common shares and restricted share units are accounted for as liabilities and included in Accounts payable, accrued expenses and
other on the Consolidated Balance Sheets. See Note 17 for further details.
(t) Recent Accounting Pronouncements
Recently adopted
In August 2018, the Financial Accounting Standards Board’s (the “FASB”) issued an accounting standard update with the
objective of making targeted improvements to the existing recognition, measurement, presentation and disclosure requirements for
long-duration contracts issued by an insurance entity. The Company adopted FASB targeted improvements to the accounting for
long-duration contracts (LDTI) on January 1, 2023. The updated guidance has changed how the Company accounts for its long-
duration insurance contracts. Refer to Note 3 for the impact of adoption. In accordance with the transition guidance, prior period
consolidated financial statements and disclosures presented herein have been adjusted to reflect LDTI.
Not yet adopted
Reference Rate Reform
In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying U.S. GAAP to
modification of contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (LIBOR)
or another reference rate expected to be discontinued because of reference rate reform. Along with the optional expedients, the
amendments include a general principle that permits an entity to consider contract modifications due to reference reform to be an
event that does not require contract re-measurement at the modification date or reassessment of a previous accounting
determination. In 2022, the sunset date of this guidance was deferred to December 31, 2024, and the guidance may be elected over
time as reference rate reform activities occur. The Company is currently evaluating the impact of adopting this guidance on its
Consolidated Financial Statements and disclosures.
Fair Value Measurement
In June 2022, the FASB issued updated guidance to address diversity in practice by clarifying that a contractual sale restriction
should not be considered in the measurement of the fair value of an equity security. It also requires entities with investments in
equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such
securities. The guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The update
applies prospectively, with any adjustments resulting from adoption recognized in earnings on the date of adoption. The Company is
currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements and disclosures.
Segment Disclosures
In November 2023, the FASB issued an accounting standard update to address improvements to reportable segment
disclosures. Improvements primarily include the following annual disclosures: i) significant segment expenses that are regularly
provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, and
ii) other segment items and description of its composition. The guidance is effective for fiscal years beginning after December 15,
2023 and applies retrospectively unless impracticable, with early adoption permitted. The Company is currently evaluating the
impact of adopting this guidance on its Consolidated Financial Statement disclosures.
Income Tax Disclosures
In December 2023, the FASB issued guidance to improve income tax disclosures. The standard requires disaggregated
information about a company’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is
effective for fiscal years beginning after December 15, 2024 with the option to apply the standard retrospectively, and early
adoption permitted. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial
Statement disclosures.
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3. Adoption of Accounting Pronouncement
The Company adopted the LDTI guidance on January 1, 2023 for its long-duration contracts, using the modified retrospective
method for all topics except for market risk benefits, which was adopted using the full retrospective method, with a transition date of
January 1, 2021 (Transition Date). The guidance changes how insurers account for long-duration contracts, including recognition,
measurement, presentation and disclosure requirements.
The impact of adoption on the Transition Date was a decrease to Accumulated other comprehensive income (AOCI) of $125
million, net of tax, due to the update in the discount rate used to measure the liability for future policy benefits and changes in fair
value of the Company's market risk benefits related to GMDB products attributable to changes in the instrument-specific credit risk.
Retained earnings decreased by $161 million, net of tax, as of the Transition Date, resulting from valuation impacts to the liability
for future policy benefits related to cohorts with a net premium ratio greater than 100% at the Transition Date, partially offset by a
favorable movement from the fair value accounting for GMDB products.
Before the adoption of the LDTI guidance, VOBA was amortized consistent with DAC. At transition, the Company has
retained its legacy amortization method for VOBA which is based on projected premiums and not adopt a method that amortizes
VOBA on a constant level basis that approximates straight-line amortization, as allowed under the guidance. The Company
continues to assess VOBA for annual impairment. Refer to Note 2(l) for additional information on intangible assets.
Impact of Adoption
The table below presents the effect of transition adjustments on shareholders’ equity as of January 1, 2021 due to adoption of
the LDTI guidance (in thousands of U.S. dollars):
Life and health reserves (1)
Market risk benefits (1)
Tax impact of related LDTI adjustments
Total decrease to shareholders' equity
January 1, 2021
Accumulated other
comprehensive loss
Retained earnings
$
(171,047) $
8,095
2,312
(160,640) $
(84,001) $
(63,474)
22,855
(124,620) $
$
Total
(255,048)
(55,379)
25,167
(285,260)
(1) GMDB reserves of $22 million were included within Life and health reserves on the Consolidated Balance Sheets prior to
adoption of LDTI, and were subsequently reclassified to Market risk benefit assets and liabilities upon adoption of the new
guidance.
The table below summarizes the balance of and changes in the traditional and limited payment long-duration life and health
reserves on January 1, 2021 due to adoption of the LDTI guidance (in thousands of U.S. dollars):
Balance, beginning of year, January 1, 2021 pre-adoption
Change in discount rate assumptions
Change in cash flow assumptions and effect of net premiums exceeding gross premiums
Adjusted balance, beginning of year, January 1, 2021
Less: Reinsurance recoverable
Adjusted balance, beginning of year January 1, 2021, net of reinsurance
Long-term
Protection
Longevity
$
$
$
1,243,251 $
53,027
178,110
1,474,388 $
(28,190)
1,446,198 $
345,306
30,300
(5,631)
369,975
(6,222)
363,753
The table below summarizes the balance of and changes in the net liability position of market risk benefits on January 1, 2021
due to adoption of the LDTI guidance (in thousands of U.S. dollars):
Balance, beginning of year January 1, 2021 pre-adoption (1)
Adjustment for the difference between carrying amount and fair value, except for the difference due to instrument-specific
credit risk
Adjustment for the cumulative effect of changes in the instrument-specific credit risk since issuance
Balance, beginning of year January 1, 2021
MRB, net liability
position
$
$
(22,211)
8,095
(63,474)
(77,590)
(1) GMDB reserves were included within Life and health reserves on the Consolidated Balance Sheets prior to adoption of LDTI,
and were subsequently reclassified to Market risk benefit assets and liabilities upon adoption of the new guidance.
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The following is a reconciliation of market risk benefit assets (liabilities) to the Consolidated Balance Sheet at January 1, 2021
(in thousands of US dollars):
Market risk benefit assets at fair value
Market risk benefit liabilities, at fair value
Market risk benefits, net, January 1, 2021
GMDB
153,070
(230,660)
(77,590)
$
$
The impact of LDTI adoption on the applicable financial statement lines of the Company's Consolidated Balance Sheet
effective as of January 1, 2021 was as follows (in thousands of U.S. dollars):
Reinsurance recoverable on paid and unpaid losses
Market risk benefit assets, at fair value
Net tax assets
Total assets
Life and health reserves
Market risk benefit liabilities, at fair value
Net tax liabilities
Total liabilities
Accumulated other comprehensive loss
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
Impact to Previously Reported Amounts
Pre-adoption,
January 1, 2021
LDTI Impact
Post-adoption,
January 1, 2021
$
$
$
$
901,063 $
—
182,077
26,898,575 $
2,704,229 $
—
131,621
19,571,578
(96,005)
5,062,948
7,326,997
26,898,575 $
757 $
153,070
492
154,319 $
233,594 $
230,660
(24,675)
439,579
(124,620)
(160,640)
(285,260)
154,319 $
901,820
153,070
182,569
27,052,894
2,937,823
230,660
106,946
20,011,157
(220,625)
4,902,308
7,041,737
27,052,894
The following represents the effects of LDTI adoption on the applicable financial statement lines of the Company's
Consolidated Balance Sheet as of December 31, 2022 (in thousands of U.S. dollars):
Reinsurance recoverable on paid and unpaid losses
Deferred acquisition costs
Market risk benefit assets
Net tax assets
Total assets
Life and health reserves
Market risk benefit liabilities
Net tax liabilities
Total liabilities
Accumulated other comprehensive income (loss)
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
As of December 31, 2022
As Previously
Reported
LDTI Impact
As Adjusted for
LDTI
$
$
$
$
1,959,652 $
1,012,850
—
164,384
27,272,413 $
2,510,293 $
—
29,154
20,984,063
(7,669)
4,358,085
6,288,350
27,272,413 $
(11,866) $
(783)
131,186
(3,750)
114,787 $
(12,774) $
9,170
9,422
5,818
78,548
30,421
108,969
114,787 $
1,947,786
1,012,067
131,186
160,634
27,387,200
2,497,519
9,170
38,576
20,989,881
70,879
4,388,506
6,397,319
27,387,200
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The following represents the effects of LDTI adoption on the applicable financial statement lines of the Company's
Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2022 and 2021 (in
thousands of U.S. dollars):
For the Year Ended December 31, 2022
As Previously
Reported
LDTI Impact
As Adjusted for
LDTI
Expenses
Losses and loss expenses
Market risk benefit gains
Acquisition costs
Net foreign exchange losses
Total expenses
(Loss) income before taxes and interest in earnings of equity method
investments
Income tax expense
Net (loss) income
Net (loss) income attributable to common shareholder
Comprehensive (loss) income
Net (loss) income
Change in currency translation adjustment
Changes in discount rate for liability for future policy benefits, net of tax
$
$
Changes in instrument-specific credit risk for market risk benefits, net of tax
—
Comprehensive (loss) income
$
(1,067,992) $
$
4,747,403 $
—
1,540,681
29,402
6,796,459
(1,069,516)
(31,334)
(1,090,029)
(1,099,779) $
(1,090,029) $
9,464
—
(21,531) $
(121,211)
(3,468)
(14,628)
(160,838)
160,838
(10,561)
150,277
150,277 $
150,277 $
(3,794)
99,250
49,794
295,527 $
4,725,872
(121,211)
1,537,213
14,774
6,635,621
(908,678)
(41,895)
(939,752)
(949,502)
(939,752)
5,670
99,250
49,794
(772,465)
Expenses
Losses and loss expenses
Market risk benefit gains
Acquisition costs
Net foreign exchange losses
Total expenses
Income before taxes and interest in earnings of equity method investments
Income tax expense
Net income
Net income attributable to common shareholder
Comprehensive income
Net income
Change in currency translation adjustment
Changes in discount rate for liability for future policy benefits, net of tax
Changes in instrument-specific credit risk for market risk benefits, net of tax
Comprehensive income
For the Year Ended December 31, 2021
As Previously
Reported
LDTI Impact
As Adjusted for
LDTI
$
$
$
$
4,883,984 $
—
1,386,832
30,883
6,764,708
634,828
(38,219)
723,404
679,477 $
723,404 $
43,120
—
—
789,703 $
(32,944) $
(19,873)
4,670
5,615
(42,532)
42,532
(1,748)
40,784
40,784 $
40,784 $
1,040
53,053
3,825
98,702 $
4,851,040
(19,873)
1,391,502
36,498
6,722,176
677,360
(39,967)
764,188
720,261
764,188
44,160
53,053
3,825
888,405
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The following represents the effects of LDTI adoption on the applicable financial statement lines of the Company's
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 (in thousands of U.S. dollars):
Cash flows from operating activities:
Net loss
Adjustments to reconcile net income to net cash provided by operating activities:
Market risk benefit gains
Changes in:
Reinsurance recoverable on paid and unpaid losses, net of ceded premiums payable
Deferred acquisition costs
Net tax assets and liabilities
Non-life and life and health reserves
Other net changes in operating assets and liabilities
Net cash provided by operating activities
$
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Market risk benefit gains
Changes in:
Reinsurance recoverable on paid and unpaid losses, net of ceded premiums payable
Deferred acquisition costs
Net tax assets and liabilities
Non-life and life and health reserves
Other net changes in operating assets and liabilities
Net cash provided by operating activities
$
For the Year Ended December 31, 2022
As Previously
Reported
LDTI Impact
As Adjusted for
LDTI
(1,090,029) $
150,277 $
(939,752)
—
(121,211)
(121,211)
(325,409)
(131,236)
(72,452)
1,009,439
63,433
1,468,409 $
28,239
(3,468)
10,561
(49,770)
(14,628)
— $
(297,170)
(134,704)
(61,891)
959,669
48,805
1,468,409
For the Year Ended December 31, 2021
As Previously
Reported
LDTI Impact
As Adjusted for
LDTI
723,404 $
40,784 $
764,188
—
(19,873)
(19,873)
(637,908)
(122,739)
3,256
903,324
23,801
1,232,590 $
(2,706)
4,670
1,748
(30,239)
5,616
— $
(640,614)
(118,069)
5,004
873,085
29,417
1,232,590
$
$
117
Table of Contents
4. Fair Value
(a) Assets and Liabilities Measured at Fair Value
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value by maximizing the use of
observable inputs and minimizing the use of unobservable inputs by requiring that the most observable inputs be used when
available. Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data
obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about
what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The
level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is
significant to the measurement.
The Company determines the appropriate level in the hierarchy for each asset and liability that it measures at fair value. In
determining fair value, the Company uses various valuation approaches, including market, income and cost approaches. The
hierarchy is broken down into three levels based on the observability of inputs as follows:
• Level 1 inputs—Unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the
ability to access.
The Company’s assets and liabilities that it measures at fair value using Level 1 inputs generally include equities listed on a
major exchange.
• Level 2 inputs—Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets
or liabilities in inactive markets and significant directly or indirectly observable inputs, other than quoted prices, used in
industry accepted models.
The Company’s assets and liabilities that it measures at fair value using Level 2 inputs generally include: U.S. government
issued bonds; U.S. government sponsored enterprises bonds; certain U.S. state, territory and municipal entities bonds; non-
U.S. sovereign government, supranational and government related bonds; investment grade and high yield corporate bonds;
mortgage-backed and certain asset-backed securities; short-term investments; certain preferred equities; certain privately
placed corporate loans; and certain derivative assets and liabilities.
• Level 3 inputs—Unobservable inputs.
The Company’s assets and liabilities that it measures at fair value using Level 3 inputs generally include: inactively traded
fixed maturities including U.S. state, territory and municipal bonds; special purpose financing asset-backed bonds; certain
short-term investments; unlisted equity securities; certain privately placed corporate loans, notes and loans receivable and
notes securitizations; certain real estate company investments; certain fund investments included in Other invested assets;
certain other derivatives, including weather derivatives, longevity insurance-linked securities, options and warrants, and
total return swaps included in Other invested assets; and market risk benefit assets and liabilities.
118
Table of Contents
At December 31, 2023 and 2022, the Company’s assets and liabilities measured at fair value were classified between Levels 1,
2 and 3 as follows (in thousands of U.S. dollars):
December 31, 2023
Assets (liabilities)
Fixed maturities
U.S. government and government
sponsored enterprises
U.S. states, territories and municipalities
Non-U.S. sovereign government,
supranational and government related
Corporate bonds
Asset-backed securities
Residential mortgage-backed securities
Fixed maturities
Short-term investments
Equities
Real estate
Diversified
Consumer non-cyclical
Consumer cyclical
Energy
Insurance
Finance
Industrials
Fund investments
Equities
Other invested assets
Derivative assets
Quoted prices in
active markets for
identical assets
(Level 1)
Significant
other observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) (2)
Fair value
based on NAV
as practical
expedient
Total
$
$
$
$
$
— $
—
1,736,952 $
8,850
— $
42,792
— $ 1,736,952
51,642
—
—
—
—
—
1,780,318
6,777,767
—
4,728,355
—
—
15,022
—
—
—
—
—
1,780,318
6,777,767
15,022
4,728,355
— $ 15,032,242 $
57,814 $
— $ 15,090,056
— $
1,020,257 $
— $
— $ 1,020,257
39,015 $
—
653
3,095
2
—
—
4
—
42,769 $
— $
—
—
—
—
140
—
—
—
140 $
2,844 $
15,823
8,574
28
1,698
—
125
6
—
— $
—
—
—
—
—
—
—
845,163
41,859
15,823
9,227
3,123
1,700
140
125
10
845,163
29,098 $
845,163 $
917,170
Foreign exchange forward contracts
Insurance-linked securities
Options and warrants
Other
Corporate loans (1)
Notes and loans receivable and notes
securitization
Real estate company investment
Fund investments
Derivative liabilities
Foreign exchange forward contracts
Interest rate swaps
—
—
—
—
—
—
—
—
—
31,565
—
—
—
7,235
4,390
1,141,657
231,189
—
—
—
—
—
—
—
1,664
471,156
43,198
—
—
1,347,876
31,565
7,235
4,390
1,372,846
1,664
471,156
1,391,074
(27,669)
(849)
—
—
—
—
(27,669)
(849)
Other invested assets
Total investments measured at fair value
Market risk benefits, net (3)
Net assets measured at fair value
$
$
$
$
— $
1,144,704 $
758,832 $ 1,347,876 $ 3,251,412
42,769 $ 17,197,343 $
— $
42,769 $ 17,197,343 $
— $
845,744 $ 2,193,039 $ 20,278,895
139,574 $
139,574
985,318 $ 2,193,039 $ 20,418,469
— $
(1) Corporate loans includes a portfolio of third-party, individually managed privately issued corporate loans that are managed
under externally managed mandates with a fair value of $1.1 billion and $1.0 billion at December 31, 2023 and 2022,
respectively. The mandates primarily invest in U.S. floating rate, first lien, senior secured broadly syndicated loans with a focus
on facility sizes greater than $300 million. Corporate loans also includes $0.3 billion and $0.3 billion of other privately issued
corporate loans at December 31, 2023 and 2022, respectively.
(2) The reconciliations of the beginning and ending balances for investments measured at fair value using Level 3 inputs are
presented in the succeeding tables.
(3) Refer to Note 11 for details on the changes in the MRBs measured at fair value for the years ended December 31, 2023 and
2022.
119
Table of Contents
December 31, 2022
Assets (liabilities)
Fixed maturities
U.S. government and government
sponsored enterprises
U.S. states, territories and municipalities
Non-U.S. sovereign government,
supranational and government related
Corporate bonds
Asset-backed securities
Residential mortgage-backed securities
Fixed maturities
Short-term investments
Equities
Real estate
Consumer non-cyclical
Diversified
Consumer cyclical
Energy
Finance
Industrials
Insurance
Fund investments
Equities
Other invested assets
Derivative assets
Foreign exchange forward contracts
Interest rate swaps
Insurance-linked securities
Options and warrants
TBAs
Other
Corporate loans
Notes and loans receivable and notes
securitization
Real estate company investment
Fund investments
Derivative liabilities
Foreign exchange forward contracts
Interest rate swaps
Other invested assets
Total investments measured at fair value
Market risk benefits, net
Net assets measured at fair value
Quoted prices in
active markets for
identical assets
(Level 1)
Significant
other observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Fair value
based on NAV
as practical
expedient
Total
$
$
$
$
$
$
$
$
$
$
— $ 1,797,934 $
—
10,126
— $
48,747
— $ 1,797,934
58,873
—
—
—
—
—
1,654,532
5,759,149
12,434
3,723,062
—
—
15,930
—
—
—
—
—
1,654,532
5,759,149
28,364
3,723,062
— $ 12,957,237 $
64,677 $
— $ 13,021,914
— $
516,603 $
6,907 $
— $
523,510
61,754 $
—
—
4,449
3
—
20
—
—
66,226 $
— $
—
—
—
—
—
—
42
—
42 $
1,814 $
10,081
9,667
28
1,514
120
76
—
—
— $
—
—
—
—
—
—
—
840,318
63,568
10,081
9,667
4,477
1,517
120
96
42
840,318
23,300 $
840,318 $
929,886
— $
—
—
—
—
13,705 $
258
—
—
578
— $
—
6,657
8,691
—
— $
—
—
—
—
13,705
258
6,657
8,691
578
—
—
—
—
—
—
1,015,529
287,278
—
1,302,807
—
—
—
3,166
491,602
36,274
—
—
1,271,612
3,166
491,602
1,307,886
(17,336)
(153)
—
—
—
—
(17,336)
(153)
— $ 1,012,581 $
833,668 $ 1,271,612 $ 3,117,861
66,226 $ 14,486,463 $
— $
— $
928,552 $ 2,111,930 $ 17,593,171
122,016
122,016 $
— $
66,226 $ 14,486,463 $ 1,050,568 $ 2,111,930 $ 17,715,187
Other invested assets included in the fair value tables above at December 31, 2023 and 2022, exclude investments that are
accounted for using the equity method of accounting of $213 million and $237 million, respectively (see Note 5(f) for further
details).
At December 31, 2023 and 2022, the carrying value of accrued investment income approximated fair value due to its short-
term nature.
At December 31, 2023 and 2022, the fair values of financial instrument assets recorded in the Consolidated Balance Sheets not
described above approximate their carrying values.
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Table of Contents
The reconciliations of the beginning and ending balances for investments measured at fair value using Level 3 inputs for the
years ended December 31, 2023 and 2022, were as follows (in thousands of U.S. dollars):
For the year ended December 31, 2023
Fixed maturities
U.S. states, territories and
municipalities
Asset-backed securities
Fixed maturities
Short-term investments
Equities
Energy
Consumer non-cyclical
Real estate
Consumer cyclical
Finance
Industrials
Diversified
Equities
Other invested assets
Derivatives, net
Corporate loans
Balance at
beginning
of year
(Losses)
gains
included in
net income
Settlements
and
sales (1)
Net
transfers
out of
Level 3
Balance
at end of
year
Purchases
Change in
unrealized
(losses) gains
relating to
assets held at
end of year
$
48,747 $
(340) $
— $
(5,615) $
— $
42,792 $
(1,730)
15,930
—
—
(908)
—
15,022
—
64,677 $
(340) $
— $
(6,523) $
— $
57,814 $
(1,730)
6,907 $
— $
— $
(6,907) $
— $
— $
—
1,514 $
184 $
— $
— $
— $
1,698 $
184
$
$
$
10,081
1,814
28
120
76
9,667
(1,507)
1,030
—
5
(41)
323
—
—
—
—
—
5,835
—
—
—
—
(29)
(2)
—
—
—
—
—
—
8,574
2,844
28
125
6
15,823
$
23,300 $
(6) $
5,835 $
(31) $
— $
29,098 $
$
15,348 $
577 $
— $
(4,300) $
— $
11,625 $
287,278
9,546
2,630
(24,843) (43,422)
231,189
(1,507)
1,030
—
5
(41)
321
(8)
—
7,792
49
8,257
Notes and loans receivable and notes
securitization
Fund investments
3,166
36,274
90
8,257
Real estate company investment
491,602
(20,446)
—
—
—
(1,592)
(1,333)
—
—
—
—
1,664
43,198
471,156
(20,446)
Other invested assets
$ 833,668 $
(1,976) $
2,630 $
(32,068) $ (43,422) $ 758,832 $
(4,348)
Total
$ 928,552 $
(2,322) $
8,465 $
(45,529) $ (43,422) $ 845,744 $
(6,086)
(1) Included sales of Fixed maturities and Other invested assets of $6 million and $30 million, respectively. Sales of Fixed
maturities were comprised of U.S. states, territories and municipalities. Sales of Other invested assets included sales of
corporate loans of $25 million, sales of derivatives of $4 million, and sales of notes and loans receivable and notes
securitization of $1 million.
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For the year ended December 31, 2022
Fixed maturities
U.S. states, territories and
municipalities
Asset-backed securities
Fixed maturities
Short-term investments
Equities
Energy
Consumer non-cyclical
Real estate
Consumer cyclical
Finance
Industrials
Diversified
Equities
Other invested assets
Derivatives, net
Corporate loans
Balance at
beginning
of year
(Losses)
gains
included in
net income
Purchases
Settlements
and
sales (1)
Net
transfers
into Level 3
Balance
at end of
year
Change in
unrealized
(losses) gains
relating to
assets held at
end of year
$
95,181 $
(13,862) $
— $
(32,572) $
— $ 48,747 $
(14,108)
16,764
—
—
(834)
—
15,930
—
$ 111,945 $
(13,862) $
— $
(33,406) $
— $ 64,677 $
(14,108)
$
$
— $
— $
6,907 $
— $
— $
6,907 $
—
2,368 $
(854) $
— $
— $
— $
1,514 $
(854)
10,081
2,097
1,394
128
220
7,468
—
(283)
(1,366)
(8)
13
—
—
—
—
—
(223)
2,759
—
—
—
—
(157)
(337)
—
—
—
—
—
—
10,081
1,814
28
120
76
9,667
—
(283)
(1,366)
(8)
(53)
(344)
$
23,756 $
(2,721) $
2,759 $
(494) $
— $ 23,300 $
(2,908)
996
2,166
2,301
322
$
7,796 $
1,929 $
5,631 $
(8) $
— $ 15,348 $
287,527
1,443
34,543
(42,589)
6,354
287,278
Notes and loans receivable and notes
securitization
Fund investments
6,575
11,739
(594)
—
92
30,286
(2,815)
(5,843)
—
—
3,166
36,274
Real estate company investment
560,687
(69,085)
—
—
—
491,602
(69,085)
Other invested assets
$ 874,324 $
(66,215) $
70,460 $
(51,255) $
6,354 $ 833,668 $
(63,300)
Total
$ 1,010,025 $
(82,798) $
80,126 $
(85,155) $
6,354 $ 928,552 $
(80,316)
(1) Included sales of Fixed maturities and Other invested assets of $32 million and $36 million, respectively. Sales of Fixed
maturities were comprised of U.S. states, territories and municipalities. Sales of Other invested assets included sales of
corporate loans of $33 million and sales of notes and loans receivable and notes securitization of $3 million.
During the year ended December 31, 2023, fifteen corporate loans valued at $43 million were transferred from Level 3 to
Level 2 due to the availability of quoted prices for similar securities in active markets.
During the year ended December 31, 2022, five corporate loans valued at $15 million were transferred from Level 2 to Level 3
due to the unavailability of quoted prices for similar securities in active markets, and five corporate loans valued at $9 million were
transferred from Level 3 to Level 2 due to the availability of quoted prices for similar securities in active markets.
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Table of Contents
The significant unobservable inputs used in the valuation of assets and liabilities measured at fair value using Level 3 inputs at
December 31, 2023 and 2022 were as follows (fair value in thousands of U.S. dollars):
December 31, 2023
Fixed maturities
U.S. states, territories and
municipalities
Other invested assets
Insurance-linked securities
– longevity swaps
Fund investments
Real estate company
investment
Fair value Valuation techniques
Unobservable inputs
Range
(Weighted average (1))
$ 42,792 Discounted cash flow Credit spreads
2.5% – 2.7% (2.6%)
7,235 Discounted cash flow Credit spreads
4,529 Discounted cash flow Effective yield
6.0% (6.0%)
0.7% (0.7%)
471,156
Income capitalization
Estimated rental value (per sq ft)
$96 – $102 ($100)
Net initial yield
Reversionary yield
3.6% – 5.4% (4.8%)
5.0% – 6.4% (5.7%)
Comparable method
Sale value (per sq ft)
$3,072 – $5,848 ($5,171)
Market risk benefits, net
139,574 Option pricing
Mortality rates
techniques
Lapse rates
Equity implied long-term
volatility
Swaption implied long-term
volatility
0.02% – 100.0% (0.5%)
3.1% – 25.0% (5.0%)
18.9% - 28.7% (22.5%)
54.6% - 77.7% (76.5%)
December 31, 2022
Fixed maturities
U.S. states, territories and
municipalities
Short-term investments
Other invested assets
Insurance-linked securities -
longevity swaps
Fund investments
Note securitization
Real estate company
investment
Fair value Valuation techniques
Unobservable inputs
Range
(Weighted average (1))
$ 48,747 Discounted cash flow Credit spreads
2.7% – 3.6% (3.4%)
6,907 Discounted cash flow Credit spreads
6,657 Discounted cash flow Credit spreads
6,008 Discounted cash flow Effective yield
188 Discounted cash flow Credit spreads
2.5% (2.5%)
5.7% (5.7%)
0.6% (0.6%)
2.5% (2.5%)
491,602
Income capitalization Estimated rental value (per sq ft)
$84 – $90 ($87)
Net initial yield
Reversionary yield
2.2% – 4.6% (3.9%)
4.6% – 5.3% (4.9%)
Comparable method
Sale value (per sq ft)
$1,617 – $5,459 ($4,836)
Market risk benefits, net
122,016 Option pricing
Mortality rates
techniques
Lapse rates
Equity implied long-term
volatility
Swaption implied long-term
volatility
0.02% – 100.0% (0.5%)
3.2% – 25.7% (8.5%)
21.6% - 29.7% (24.6%)
60.0% - 85.5% (82.8%)
(1) Unobservable inputs were weighted by the relative fair value.
The tables above do not include assets and liabilities that are measured using unobservable inputs (Level 3) where the
unobservable inputs were obtained from external sources and used without adjustment. These include asset-backed securities
(included in Fixed maturities); equities (included within Equities), certain notes and loans receivables and certain fund investments
(included within Other invested assets), certain privately placed corporate loans (included within Other invested assets) and certain
derivatives.
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Changes in the fair value of the Company’s assets and liabilities subject to the fair value option during the years ended
December 31, 2023, 2022 and 2021 were as follows (in thousands of U.S. dollars):
Fixed maturities and short-term investments
Equities
Other invested assets
2023
2022
2021
$
390,712 $ (1,807,048) $
(558,466)
43,420
(505,072)
(29,064)
(136,580)
198,780
184,209
Total included in net realized and unrealized investment gains (losses)
$
405,068 $ (2,448,700) $
(175,477)
The change in the fair value of Other invested assets subject to the fair value option does not include certain derivatives.
The following methods and assumptions were used by the Company in estimating the fair value of each class of assets and
liabilities recorded in the Consolidated Balance Sheets. There have been no material changes in the Company’s valuation techniques
during the periods presented.
Fixed maturities
• U.S. government and government sponsored enterprises—consists primarily of bonds issued by the U.S. Treasury and debt
securities issued by government sponsored enterprises and federally owned or established corporations. These securities are
generally priced by independent pricing services. The independent pricing services may use actual transaction prices for
securities that have been actively traded. For securities that have not been actively traded, each pricing source has its own
proprietary method to determine the fair value, which may incorporate option adjusted spreads (OAS), interest rate data
and market news. The Company generally classifies these securities in Level 2.
• U.S. states, territories and municipalities—consists primarily of bonds issued by U.S. states, territories and municipalities
and the Federal Home Loan Mortgage Corporation. Certain of the bonds that are issued by municipal housing authorities
and the Federal Home Loan Mortgage Corporation are not actively traded and are priced based on internal models using
unobservable inputs (credit spreads). Accordingly, the Company classifies these securities in Level 3. A significant
increase (decrease) in credit spreads in isolation could result in a significantly lower (higher) fair value measurement. The
remaining securities are generally priced by independent pricing services using the techniques described for U.S.
government and government sponsored enterprises above. The Company generally classifies these securities in Level 2.
• Non-U.S. sovereign government, supranational and government related—consists primarily of bonds issued by non-U.S.
national governments and their agencies, non-U.S. regional governments and supranational organizations. These securities
are generally priced by independent pricing services using the techniques described for U.S. government and government
sponsored enterprises above. The Company generally classifies these securities in Level 2.
• Corporate—consists primarily of bonds issued by U.S. and foreign corporations covering a variety of industries and
issuing countries. Corporate securities also include real estate investment trusts, catastrophe bonds, longevity and mortality
bonds and government guaranteed corporate debt. These securities are generally priced by independent pricing services and
brokers. The pricing provider incorporates information including credit spreads, interest rate data and market news into the
valuation of each security. The Company generally classifies these securities in Level 2. When a corporate security is
inactively traded or the valuation model uses unobservable inputs, the Company classifies the security in Level 3.
• Asset-backed securities—consists of special purpose financing securities. With the exception of special purpose financing,
these asset-backed securities are generally priced by independent pricing services and brokers. The pricing provider applies
dealer quotes and other available trade information, prepayment speeds, yield curves and credit spreads to the valuation.
The Company generally classifies these securities in Level 2. Special purpose financing securities are generally inactively
traded and are priced based on valuation models using unobservable inputs (credit spreads). The Company generally
classifies these securities in Level 3. A significant increase (decrease) in credit spreads in isolation could result in a
significantly lower (higher) fair value measurement.
• Residential mortgage-backed securities—primarily consists of bonds issued by the Government National Mortgage
Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, as well as private,
non-agency issuers. These residential mortgage-backed securities are generally priced by independent pricing services and
brokers. When current market trades are not available, the pricing provider or the Company will employ proprietary models
with observable inputs including other trade information, prepayment speeds, yield curves and credit spreads. The
Company generally classifies these securities in Level 2.
In general, the methods employed by the independent pricing services to determine the fair value of the securities that have not
been actively traded primarily involve the use of “matrix pricing” in which the independent pricing source applies the credit spread
for a comparable security that has traded recently to the current yield curve to determine a reasonable fair value. The Company
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Table of Contents
generally uses one pricing source per security and uses a pricing service ranking to consistently select the most appropriate pricing
service in instances where it receives multiple quotes on the same security. When fair values are unavailable from these independent
pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Most of the
Company’s fixed maturities are priced from the pricing services or dealer quotes. The Company will typically not make adjustments
to prices received from pricing services or dealer quotes; however, in instances where the quoted external price for a security uses
significant unobservable inputs, the Company will classify that security as Level 3. The methods used to develop and substantiate
the unobservable inputs used are based on the Company’s valuation policy and are dependent upon the facts and circumstances
surrounding the individual investments which are generally transaction specific. The Company’s inactively traded fixed maturities
are classified as Level 3. For all fixed maturity investments, the bid price is used for estimating fair value.
Short-term investments
Short-term investments are valued in a manner similar to the Company’s fixed maturity investments and are generally
classified in Level 2 or 3 depending on the inputs used in the valuation of the asset.
Equities
Equity securities include U.S. and foreign common and preferred stocks, real estate investment trusts and certain fund
investments. Publicly traded equities are generally classified in Level 1 as the Company uses prices received from independent
pricing sources based on quoted prices in active markets. Equities classified as Level 2 are preferred equities. Equities classified as
Level 3 are generally inactively traded common stocks. For these investments, the Company utilizes prices from third-party sources
without adjustment. Fund investments are valued using net asset valuations as a practical expedient as discussed in further detail
below.
Other invested assets
The Company’s foreign exchange forward contracts, interest rate swaps, TBAs and certain privately placed corporate loans are
generally classified as Level 2 within the fair value hierarchy and are priced by independent pricing services.
Included in the Company’s Level 3 classification, in general, are certain derivatives, such as weather derivative insurance-
linked securities; certain privately placed corporate loans; notes and loans receivable and note securitizations; certain fund
investments; and a real estate company investment. For Level 3 instruments, the Company will generally (i) receive a price based on
a manager’s or trustee’s valuation for the asset; (ii) develop an internal discounted cash flow model to measure fair value; (iii) use
market return information, adjusted if necessary and weighted using management’s judgment, from comparable selected publicly
traded equity funds in a similar region and of a similar size, or (iv) receive the valuation information and techniques used by real
estate company investments. Where the Company receives prices from the manager or trustee, these prices are based on the
manager’s or trustee’s estimate of fair value for the assets and are generally audited on an annual basis. Where the Company
develops its own discounted cash flow models, the inputs will be specific to the asset in question, based on appropriate historical
information, adjusted as necessary, and using appropriate discount rates. When the Company utilizes significant unobservable inputs
including market return information, information is weighted using managements' judgement, obtained from comparable selected
publicly traded companies in the same industry, in a similar region and of similar size and effective yields. Significant increases
(decreases) in these inputs in isolation could result in a significantly higher (lower) fair value measurement for an asset. When the
Company uses the valuation information and techniques used by real estate company investments, it independently evaluates the
valuation techniques being utilized by the entity to ensure techniques are consistent with U.S. GAAP. Valuation techniques include
the income capitalization technique or the comparable method and are based on the properties' highest and best use, with typical
market based assumptions, such as estimated rental values, net initial yield, reversionary yield and sales values. A significant
increase (decrease) in estimated rental values, reversionary yield and/or sales values could result in a significantly higher (lower)
fair value measurement for an asset, while a significant increase (decrease) in net initial yield could result in a significantly lower
(higher) fair value measurement for an asset.
Significant unobservable inputs used in the fair value measurement of Other invested assets classified as Level 3 also include
credit spreads. Significant increases (decreases) in this input in isolation could result in a significantly lower (higher) fair value
measurement.
Fund investments included in Other invested assets are generally valued using net asset valuations as a practical expedient as
discussed in further detail below.
As part of the Company’s modeling to determine the fair value of an investment, other than for those measured using net asset
valuations as a practical expedient, the Company also uses credit risk as an input to models, however, the majority of the
Company’s counterparties are investment grade rated institutions and the failure of any one counterparty would not have a
significant impact on the Company’s Consolidated Financial Statements.
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Market risk benefit assets and liabilities
MRBs are classified as Level 3 fair value measurements as the fair value is measured using an option-based valuation model
based on certain unobservable inputs. The most significant unobservable inputs underlying the valuation of MRBs includes long-
term implied volatility, mortality rates and lapse rates.
Unobservable inputs for mortality rates are base mortality and mortality improvements assumptions. Base mortality
assumptions differ by treaty and are derived from experience. Improvement mortality assumptions are based on the CMI Mortality
Projections Model which is a publicly available tool from the UK Institute and Faculty of Actuaries. The net MRB asset increases as
base mortality decreases and improvement mortality increases.
Unobservable inputs for lapse rates refer to the assumptions reflecting the ability of the policyholders to actively manage their
savings by withdrawing deposits on an in-force contract, either fully or partially. These assumptions are defined at treaty, age and
policy duration level. These rates are derived from treaty experience of the policyholders' behaviors and updated on an annual basis.
Increases in lapse rates will have a volume effect on the net MRB reserve, generally reducing the net asset (increasing the net
liability).
Unobservable inputs for equity long-term implied volatilities refer to the value towards which the equity implied volatilities
converge beyond the last liquid point. An increase in long-term equity implied volatility means higher long-term projected equity
risk and a higher probability of triggering the guaranteed minimum death benefit. This will generally lead to a decrease of the net
MRB asset.
Unobservable inputs for swaption long-term implied volatilities refer to the value towards which the swaption implied
volatilities converge beyond the last liquid point. An increase in long-term swaption implied volatility means higher long-term
projected interest rates risk and a higher probability of triggering the guaranteed minimum death benefit. This will generally lead to
a decrease of the net MRB asset.
Measuring the Fair Value of Investments Using Net Asset Valuations as the Practical Expedient
The table below reflects the Company's portfolio of investments measured using net asset valuations as the practical expedient
at December 31, 2023 and 2022 (in thousands of US dollars):
Public equity funds
Private equity funds
Private credit funds
Multi-strategy funds
December 31, 2023
December 31, 2022
Carrying
Value (1)
Remaining
Unfunded
Commitment
Carrying
Value (1)
Remaining
Unfunded
Commitment
Redemption
Frequency
Redemption
Notice Period
$
648,080 $
— $
629,125 $
—
See below
See below
452,387
430,788
661,784
106,060
228,451
110,396
389,736
404,065
689,004
150,458
See below
See below
67,815
See below
See below
147,409
See below
See below
Total fund investments
$ 2,193,039 $
444,907 $ 2,111,930 $
365,682
(1) The table above only reflects the Company's investments valued at fair value based on the NAV practical expedient, which
includes fund investments of $845 million included in Equities and $1,348 million included in Other invested assets at
December 31, 2023 and fund investments of $840 million included in Equities and $1,272 million included in Other invested
assets at December 31, 2022.
Investment Strategies and redemption terms and conditions of the various funds included in the above table are as follows:
Public Equity Funds— The Company's investments in public equity funds include long/short funds and also funds invested in
geographically diverse regions such as Asia, seeking higher risk-adjusted returns, that primarily invest in public equities. The
Company generally has the right to redeem these funds during a quarterly redemption period with 30 - 60 days' prior notice, some of
which are subject to redemption thresholds and redemption fees. During 2022, the Company agreed it would not sell certain
investments for a three year period. The carrying value of these investments amount to $575 million and $422 million at December
31, 2023 and December 31, 2022, respectively.
Private Equity Funds— The Company's investments in private equity funds include limited partnerships or similar interests
that invest in private equity assets. The Company generally has no right to redeem its interest in any of these private equity funds in
advance of dissolution of the applicable limited partnerships. Instead, distributions are received by the Company in connection with
the exit from the underlying private equity investments of the fund. It is estimated that the majority of the underlying assets of the
limited partnerships would liquidate over 5 to 10 years from inception of the limited partnership.
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Private Credit Funds— The Company's investments in private credit funds include funds and limited partnerships or similar
interests that invest in private credit instruments, including senior secured bank loan funds, secondaries, and mezzanine investments.
The Company generally has no right to redeem its interest in any of these private credit funds in advance of dissolution of the
applicable limited partnerships. Instead, distributions are received by the Company in connection with the liquidation or maturity of
the underlying private credit assets of the fund. It is estimated that the majority of the underlying assets of the limited partnerships
would liquidate over 5 to 10 years from inception of the limited partnership.
Multi-Strategy Funds— The Company's investments in multi-strategy funds include limited partnerships or similar interests
that invest across diverse asset classes, including equities, bonds, credit markets, and real estate. For one multi-strategy fund with a
carrying value of $235 million and $314 million at December 31, 2023 and 2022, respectively, the Company does have quarterly
redemption rights subject to a 60 day notice period, gate policy and 36 month lock-up period which ends in 2024. The Company
generally has no right to redeem its interest in any of the remaining multi-strategy limited partnership funds in advance of
dissolution. Instead, distributions are received by the Company in connection with the liquidation or maturity of the underlying
assets of the fund. It is estimated the majority of the underlying assets of the limited partnerships would liquidate over 5 to 10 years
from inception of the limited partnership.
The fair values of these public equity, private equity, private credit and multi-strategy funds are estimated using net asset
valuations as advised by external fund managers or third party administrators. NAVs are based on the manager's or administrator's
valuation of the underlying assets of the fund in accordance with the fund's governing documents and in accordance with U.S.
GAAP. For NAV fund valuations, valuation statements are typically released on a reporting lag and accordingly, the Company
estimates the value of these funds using the most recent fund valuations as adjusted for capital calls, redemptions, drawdowns and
distributions. NAV estimates may not be available from all fund managers, therefore the Company typically has a reporting lag in
its fair value measurements of these funds.
The fair values of these funds are measured using the NAV practical expedient, therefore the fair values of these funds have
not been categorized within the fair value hierarchy.
(b) Fair Value of Financial Instrument Liabilities
At December 31, 2023 and 2022, the carrying values of financial instrument liabilities recorded in the Consolidated Balance
Sheets approximate their fair values, with the exception of the Company's senior notes and junior subordinated notes. The fair value
of the senior notes as of December 31, 2023 and 2022 was calculated based on discounted cash flow models using observable
market yields and contractual cash flows based on the aggregate principal amount outstanding. The fair value of the junior
subordinated notes as of December 31, 2023 and 2022 was calculated based on market data valuation models using observable
inputs based on the aggregate principal amount outstanding of the debt.
See Note 13 for further details related to the Company's debt, including the carrying values and fair values.
At December 31, 2023 and 2022, the Company’s senior notes and junior subordinated notes were classified as Level 2 in the
fair value hierarchy.
Disclosures about the fair value of financial instrument liabilities exclude insurance contracts. GMDB liabilities classified as
MRBs have been described above under Market risk benefit assets and liabilities.
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5. Investments
(a) Net Realized and Unrealized Investment Gains (Losses)
The components of the net realized and unrealized investment gains (losses) for the years ended December 31, 2023, 2022 and
2021 were as follows (in thousands of U.S. dollars):
Net realized investment (losses) gains on fixed maturities and short-term investments
Net realized investment gains on equities
Net realized investment (losses) gains on other invested assets
Net realized investment gains
Change in net unrealized investment gains (losses) on fixed maturities and short-term
investments
Change in net unrealized investment gains (losses) on equities
Change in net unrealized investment (losses) gains on other invested assets
Net other realized and unrealized investment losses
Change in net unrealized investment gains (losses)
Impairment loss on investments in real estate
Net realized and unrealized investment gains (losses)
(b) Net Investment Income
$
2022
2023
(4,041) $
2021
19,893
78,501
103,011
$ 111,149 $ 471,681 $ 201,405
461,041
9,781
(6,188)
121,378
859 $
43,420
(20,975)
(1,761)
(505,072)
(123,694)
(2,672)
$ 390,712 $ (1,807,048) $ (558,466)
198,780
196,926
(848)
$ 411,396 $ (2,438,486) $ (163,608)
$
—
(2,209) $
37,797
$ 517,426 $ (1,969,014) $
(5,119) $
The components of net investment income for the years ended December 31, 2023, 2022 and 2021 were as follows (in
thousands of U.S. dollars):
Fixed maturities
Short-term investments and cash and cash equivalents
Other invested assets
Equities
Funds held and other (1)
Investment expenses
Net investment income
2021
2023
2022
$ 424,205 $ 310,152 $ 301,391
4,860
90,442
12,686
75,467
176,065
19,693
17,477
99,375
11,118
6,950
10,801
17,871
(56,695)
(50,781)
$ 645,685 $ 398,348 $ 376,469
(50,575)
(1) The Company generally earns investment income on funds held by reinsured companies based upon a predetermined interest
rate, either fixed contractually at the inception of the contract or based upon a recognized index. Interest rates ranged from
0.2% to 10.5%, 0.1% to 10.9% and 0.1% to 7.3% for the years ended December 31, 2023, 2022 and 2021, respectively.
(c) Pledged and Restricted Assets
At December 31, 2023 and 2022, approximately $98 million and $138 million, respectively, of cash and cash equivalents and
approximately $6,341 million and $5,258 million, respectively, of securities were deposited, pledged or held in escrow accounts in
favor of ceding companies, intercompany agreements, and other counterparties or government authorities to comply with
reinsurance contract provisions and insurance laws.
(d) Receivables for Securities Sold and Payables for Securities Purchased
At December 31, 2023 and 2022, receivables for securities sold of $187 million and $52 million, respectively, were recorded
within Other assets. At December 31, 2023 and 2022, payables for securities purchased of $221 million and $149 million,
respectively, were recorded within Accounts payable, accrued expenses and other in the Consolidated Balance Sheets.
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(e) Variable Interest Entities
The Company holds variable interests in VIEs including certain limited liability companies or partnerships, trusts, fixed
maturity investments and asset-backed securities. The holdings in these VIEs are reported within Fixed maturities and Other
invested assets in the Company’s Consolidated Balance Sheets. The Company’s involvement in these entities is, for the most part,
passive in nature. The Company’s maximum exposure to loss with respect to these investments is limited to the amounts invested in
and advanced to the VIEs and any unfunded commitments (see Note 19(c)). As at December 31, 2023 and 2022, the Company did
not have material consolidated VIEs.
(f) Other Invested Assets
At December 31, 2023 and 2022, the Company had carrying values of $1,883 million and $1,856 million respectively, of
investments that were either accounted for under the equity method of accounting or would have been accounted for under the
equity method if the Company had not chosen to apply the fair value option.
At December 31, 2023 and 2022, the Company held a 36% shareholding in the privately held United Kingdom real estate
investment and development group, Almacantar Group Limited (Almacantar). The total carrying value of this investment
was $471 million and $492 million, at December 31, 2023 and 2022, respectively. This investment is accounted for under the fair
value option and included within Other invested assets in the Consolidated Balance Sheets.
The Company's equity method investments are comprised primarily of passive investment interests focusing in the real estate
sector. The Company had equity method investments of $213 million and $237 million at December 31, 2023 and 2022,
respectively, included within Other invested assets in the Consolidated Balance Sheets. Dividends on equity method investments for
2023 and 2022 were $3 million and $2 million, respectively.
6. Derivatives
The Company’s objectives for holding or issuing derivatives are as follows:
Foreign Exchange Forward Contracts—The Company utilizes foreign exchange forward contracts as part of its overall
currency risk management and investment strategies.
Insurance-linked Securities—The Company enters into various derivatives for which the underlying risks reference parametric
weather risks, pandemic outbreaks and mortality, in addition to longevity total return swaps for which the underlying risks reference
longevity risks.
Total Return and Interest Rate Swaps—The Company enters into total return swaps referencing certain investments in Other
invested assets. The Company enters into interest rate swaps to mitigate the interest rate risk on certain of the total return swaps and
certain fixed maturity investments.
To-Be-Announced Mortgage-Backed Securities (TBAs), Options and Warrants—The Company utilizes TBAs, options and
warrants as part of its overall investment strategy and to enhance investment performance.
There were no derivatives designated as hedges for the years ended December 31, 2023 and 2022. The net fair values of
derivatives included in Other invested assets within the Company’s Consolidated Balance Sheets and the related net notional
exposures at December 31, 2023 and 2022 were as follows (in thousands of U.S. dollars):
December 31, 2023
Derivatives not designated as hedges
Foreign exchange forward contracts
Insurance-linked securities (1)
Interest rate swaps (2)
Options and warrants
Total derivatives not designated as hedges
Asset
derivatives
at fair value
Liability
derivatives
at fair value
Net derivatives
Fair value
Net notional
exposure
$
31,565 $
(27,669) $
3,896 $ 4,205,417
7,235
—
—
7,235
(849)
(849)
4,390
43,190 $
—
(28,518) $
4,390
14,672
$
9,700
—
8,898
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December 31, 2022
Derivatives not designated as hedges
Foreign exchange forward contracts
Insurance-linked securities (1)
Interest rate swaps (2)
TBAs
Options and warrants
Asset
derivatives
at fair value
Liability
derivatives
at fair value
Net derivatives
Fair value
Net notional
exposure
$
13,705 $
(17,336) $
(3,631) $ 4,277,894
6,657
258
578
8,691
29,889 $
—
(153)
—
—
(17,489) $
6,657
105
578
8,691
12,400
16,937
—
—
8,815
Total derivatives not designated as hedges
$
(1) Insurance-linked securities include longevity swaps for which the notional amounts are not reflective of the overall potential
exposure of the swaps. The net notional exposure above includes the Company's best estimate of the present value of future
expected claims.
(2) The Company enters into interest rate swaps to mitigate notional exposures on certain total return swaps and certain fixed
maturities. The net notional exposure for interest rate swaps above relates to fixed maturities.
The gains and losses in the Consolidated Statements of Operations for derivatives not designated as hedges for the years ended
December 31, 2023, 2022 and 2021 were as follows (in thousands of U.S. dollars):
Foreign exchange forward contracts
Total included in Net foreign exchange losses
Insurance-linked securities
Total return swaps
Interest rate swaps
TBAs
Other
Total included in Net realized and unrealized investment (losses) gains
Total derivatives not designated as hedges
Offsetting of Derivatives
2023
2022
2021
(38,858) $
(34,902) $
(16,788)
(38,858) $
(34,902) $
(16,788)
(1,754) $
2,049 $
(5)
934
(951)
10,594
448
—
(23)
—
4,807
1,430
7,020
(56)
(298)
(2,262) $
13,554 $
12,903
(41,120) $
(21,348) $
(3,885)
$
$
$
$
$
The gross and net fair values of derivatives that are subject to offsetting in the Consolidated Balance Sheets at December 31,
2023 and 2022 were as follows (in thousands of U.S. dollars):
December 31, 2023
Total derivative assets
Total derivative liabilities
December 31, 2022
Total derivative assets
Total derivative liabilities
Gross
amounts
recognized (1)
Gross
amounts
offset in the
balance sheet
Net amounts of
assets/liabilities
presented in the
balance sheet
Gross amounts not offset
in the balance sheet
Financial
instruments
Cash collateral
received/
pledged
Net amount
$
$
$
$
43,190 $
(28,518) $
— $
— $
43,190 $
— $
(41,747) $
1,443
(28,518) $
— $
16,220 $ (12,298)
29,889 $
(17,489) $
— $
— $
29,889 $
(258) $
(37,262) $
(7,631)
(17,489) $
258 $
15,978 $
(1,253)
(1) Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in
place.
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7. Goodwill and Intangible Assets
The Company’s goodwill related to the acquisitions of PartnerRe SA, Winterthur Re, Paris Re and Presidio and intangible
assets related to the acquisitions of Paris Re, Presidio, Aurigen and Claims Analytics at December 31, 2023, 2022 and 2021 were as
follows (in thousands of U.S. dollars):
Balance at December 31, 2020
Foreign currency translation
Intangible assets amortization
Balance at December 31, 2021
Foreign currency translation
Intangible assets amortization
Balance at December 31, 2022
Foreign currency translation
Intangible assets amortization
Balance at December 31, 2023
n/a: Not applicable
Goodwill
Definite-
lived intangible
assets
Indefinite-
lived intangible
assets
Total
intangible assets
$
456,380 $
98,114 $
9,555 $
107,669
—
n/a
10
(8,861)
—
n/a
$
456,380 $
89,263 $
9,555 $
—
n/a
(137)
(8,912)
—
n/a
$
456,380 $
80,214 $
9,555 $
—
n/a
50
(7,906)
—
n/a
$
456,380 $
72,358 $
9,555 $
10
(8,861)
98,818
(137)
(8,912)
89,769
50
(7,906)
81,913
The gross carrying value and accumulated amortization of intangible assets included in the Consolidated Balance Sheets at
December 31, 2023 and 2022 were as follows (in thousands of U.S. dollars):
December 31, 2023
December 31, 2022
Gross
carrying
value
Accumulated
amortization
Net carrying
value
Gross
carrying
value
Accumulated
amortization
Net carrying
value
Definite-lived intangible assets:
Renewal rights
Customer relationships
Life VOBA
Total definite-lived intangible assets
Indefinite-lived intangible assets:
Insurance licenses
Total intangible assets
n/a: Not applicable
$
48,163 $
67,661
75,583
(44,985) $
(60,532)
(13,532)
$ 191,407 $ (119,049) $
(43,032) $
3,178 $
(56,850)
7,129
(11,261)
62,051
72,358 $ 191,357 $ (111,143) $
48,163 $
67,611
75,583
5,131
10,761
64,322
80,214
9,555
n/a
$ 200,962 $ (119,049) $
n/a
9,555
81,913 $ 200,912 $ (111,143) $
9,555
9,555
89,769
Definite-lived intangible assets are amortized over a period of 10-13 years for renewal rights and customer relationships, and
100 years for life VOBA.
The allocation of goodwill to the Company’s segments at December 31, 2023 and 2022 was as follows (in thousands of U.S.
dollars):
P&C segment
Specialty segment
Life and Health segment
Total
2023
2022
242,376 $
196,047
17,957
456,380 $
242,376
196,047
17,957
456,380
$
$
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The estimated future amortization expense related to the Company’s definite-lived intangible assets is as follows (in thousands
of U.S. dollars):
Year
2024
2025
2026
2027
2028
Thereafter
Total
VOBA
Other definite-
lived intangible
assets
Total definite-
lived intangible
assets
$
$
2,296 $
2,070
1,892
2,238
2,247
51,308
62,051 $
4,960 $
4,367
402
402
176
—
10,307 $
7,256
6,437
2,294
2,640
2,423
51,308
72,358
8. Deferred Acquisition Costs
Deferred acquisition costs comprises capitalized costs of $700 million and $701 million related to Non-life business and $321
million and $311 million related to Life and health business at December 31, 2023 and 2022, respectively.
The reconciliation of beginning and ending balances of deferred acquisition costs for the Company's traditional and limited
payment long-duration contracts within the Life and health business for the years ended December 31, 2023, 2022 and 2021 was as
follows (in thousands of U.S. dollars):
Long-term protection
Balance at beginning of year
Capitalizations
Amortization expense
Foreign exchange effect
Balance at end of year
9. Non-life Reserves
2023
2022
2021
$
$
311,362 $
38,056
(32,012)
3,200
320,606 $
298,783 $
67,432
(31,467)
(23,386)
311,362 $
270,170
69,548
(29,696)
(11,239)
298,783
Non-life reserves are categorized into three types of reserves: case reserves, ACRs and IBNR reserves. Case reserves represent
unpaid losses reported by the Company’s cedants and recorded by the Company. ACRs are established for particular circumstances
where, on the basis of individual loss reports, the Company estimates that the particular loss or collection of losses covered by a
treaty may be greater than those advised by the cedant. IBNR reserves represent a provision for claims that have been incurred but
not yet reported to the Company, as well as future loss development on losses already reported, in excess of the case reserves and
ACRs. See also Note 2(b). The Company’s gross liability for non-life reserves at December 31, 2023 and 2022 was as follows (in
thousands of U.S. dollars):
Case reserves
ACRs
IBNR reserves
Non-life reserves
December 31, 2023
December 31, 2022
$
$
5,148,325 $
190,071
7,812,913
13,151,309 $
5,110,575
159,821
7,455,235
12,725,631
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The reconciliation of the beginning and ending gross and net liability for non-life reserves for the years ended December 31,
2023, 2022 and 2021 was as follows (in thousands of U.S. dollars):
Gross liability at beginning of year
Reinsurance recoverable at beginning of year
Net liability at beginning of year
Net incurred losses related to:
Current year
Prior years
Net paid losses related to:
Current year
Prior years
Retroactive reinsurance recoverable adjustment
Effects of foreign exchange rate changes and other
Net liability at end of year
Reinsurance recoverable at end of year
Gross liability at end of year
Prior Years' Reserve Development
$
2023
12,725,631 $
1,851,811
10,873,820
2022
12,047,792 $
1,532,666
10,515,126
2021
11,395,321
782,330
10,612,991
3,229,633
(47,293)
3,182,340
3,533,087
(219,853)
3,313,234
(416,151)
(2,316,451)
(2,732,602)
(93,378)
155,882
11,386,062
1,765,247
13,151,309 $
(419,633)
(2,238,503)
(2,658,136)
(35,695)
(260,709)
10,873,820
1,851,811
12,725,631 $
3,637,671
(194,426)
3,443,245
(437,938)
(2,535,057)
(2,972,995)
(357,864)
(210,251)
10,515,126
1,532,666
12,047,792
$
For the year ended December 31, 2023, the Company reported net favorable loss development for prior accident years
resulting from favorable loss emergence in both the P&C and Specialty segments. The favorable loss emergence within the P&C
segment was across multiple accident years, mainly driven by the catastrophe and U.S. health business, partially offset by adverse
loss emergence in the casualty business. The favorable loss emergence within the Specialty segment was across multiple accident
years, predominantly from the financial risks, agriculture, and multiline business, which was partially offset by adverse loss
emergence in the aviation and marine business.
For the year ended December 31, 2022, the Company reported net favorable loss development for prior accident years
resulting from favorable loss emergence in both the P&C and Specialty segments and a reduction in unallocated loss adjustment
expenses. The favorable loss emergence within the P&C segment was across multiple accident years, mainly driven by the motor,
catastrophe, and casualty business. The favorable loss emergence within the Specialty segment was across multiple accident years,
predominantly from the financial risks, engineering, marine, and property business, which was partially offset by adverse loss
emergence in the aviation business.
For the year ended December 31, 2021, the Company reported net favorable loss development for prior accident years
resulting from favorable loss emergence in both the P&C and Specialty segments. The favorable loss emergence within the
Specialty segment was across multiple accident years, predominantly from financial risks lines. The favorable loss emergence
within the P&C segment was primarily from a refinement of loss estimates for certain large catastrophic events from accident years
2017 - 2019.
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Retroactive Reinsurance Recoverable
During the second quarter of 2021, the Company entered into a loss portfolio transfer and adverse development cover
agreement related to prior underwriting years on the Company's U.S. casualty and auto business within the P&C segment. Premium
paid for the loss portfolio transfer and adverse development cover agreement resulted in a cash transfer for the premium at inception
of the agreement, and a reinsurance recoverable of $485 million at December 31, 2023 and $394 million at December 31, 2022. At
December 31, 2023 and 2022, as a result of adverse prior years reserve development ceded under this agreement, a deferred gain of
$99 million and $47 million, respectively, was recorded in Accounts payable, accrued expense and other in the Consolidated
Balance Sheets. This transaction is presented retrospectively in the net loss and loss expenses incurred development table for the
casualty business below. Reinsurance recoveries under this transaction are attributed to calendar year and accident year based on the
underlying distribution of losses subject to the agreement.
Asbestos and Environmental Claims
The Company’s net non-life reserves at December 31, 2023 and 2022 included $40 million and $42 million, respectively,
related to asbestos and environmental claims. The gross liability for such claims at December 31, 2023 and 2022 was $47 million
and $49 million, respectively.
Ultimate loss estimates for such claims cannot be estimated using traditional reserving techniques and there are significant
uncertainties in estimating the Company’s potential losses for these claims. In view of the legal and tort environment that affect the
development of such claims, the uncertainties inherent in estimating asbestos and environmental claims are not likely to be resolved
in the near future. There can be no assurance that the reserves established by the Company will not be adversely affected by
development of other latent exposures, and further, there can be no assurance that the reserves established by the Company will be
adequate. The Company does, however, actively evaluate potential exposure to asbestos and environmental claims and establishes
additional reserves as appropriate. The Company believes that it has made a reasonable provision for these exposures and is
unaware of any specific issues that would materially affect its unpaid losses and loss expense reserves related to this exposure.
Non-life reserving methods
The reserving methods commonly employed by the Company are summarized as follows:
Chain Ladder (CL) Development Methods (Reported or Paid)
These methods use the underlying assumption that losses reported (paid) for each underwriting year at a particular
development stage follow a stable pattern. The CL development method assumes that on average, every underwriting year will
display the same percentage of ultimate liabilities reported by the Company’s cedants at 24 months after the inception of the
underwriting year. The percentages reported (paid) are established for each development stage after examining historical averages
from the loss development data. These are sometimes supplemented by external benchmark information. Ultimate liabilities are
estimated by multiplying the actual reported (paid) losses by the reciprocal of the assumed reported (paid) percentage. Reserves are
then calculated by subtracting paid claims from the estimated ultimate liabilities.
Expected Loss Ratio (ELR) Method
This method estimates ultimate losses for an underwriting year by applying an estimated loss ratio to the earned premium for
that underwriting year. Although the method is insensitive to actual reported or paid losses, it can often be useful at the early stages
of development when very few losses have been reported or paid, and the principal sources of information available to the Company
consist of information obtained during pricing and qualitative information supplied by the cedant. However, the lack of sensitivity to
reported or paid losses means that the method is usually inappropriate at later stages of development.
Bornhuetter-Ferguson (B-F) Methods (Reported or Paid)
These methods aim to address the variability at early stages of development and incorporates external information such as
pricing. The B-F methods are more sensitive to reported and paid losses than the ELR method, and can be seen as a blend of the
ELR and CL development methods. Unreported (unpaid) claims are calculated using an expected reporting (payment) pattern and an
externally determined estimate of ultimate liabilities (usually determined by multiplying an a priori loss ratio with estimates of
premium volume). The accuracy of the a priori loss ratio is a critical assumption in this method. Usually a priori loss ratios are
initially determined on the basis of pricing information, but may also be adjusted to reflect other information that subsequently
emerges about underlying loss experience.
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Loss Event Specific Method
The ultimate losses estimated under this method are derived from estimates of specific events based on reported claims, client
and broker discussions, review of potential exposures, market loss estimates, modeled analysis and other event specific criteria.
Method Weights
In determining the loss reserves, the Company often relies on a blend of the results from two or more methods (e.g., weighted
averages). The judgment as to which of the above method(s) is most appropriate for a particular underwriting year and reserving cell
could change over time as new information emerges regarding underlying loss activity and other data issues. Furthermore, as each
line is typically composed of several reserving cells, it is likely that the reserves for the line will be dependent on several reserving
methods. This is because reserves for a line are the result of aggregating the reserves for each constituent reserving cell and that a
different method could be selected for each reserving cell.
The principal reserving methods used for each of the Specialty segment and P&C segment were ELR, Reported/Paid B-F, and
Reported/Paid CL, with the exception of catastrophe risks within the P&C segment where the principal reserving methods used were
ELR based on exposure analysis and loss event specific methods.
Non-life net incurred and paid losses and loss expense development
The net incurred and paid losses and loss expenses development by accident year for each of the years ended December 31,
2014 through 2023, and the total of IBNR plus expected development on reported claims included within the net incurred claims
amounts, as at each of the years ended December 31, 2014 through 2023, are presented in the tables below (in thousands of U.S.
dollars). The tables below reflect losses incurred and paid losses translated to U.S. dollars at the exchange rate as of the balance
sheet date whereas the Losses and loss expenses in the Consolidated Statements of Operations reflect losses incurred at the average
exchange rate for the period.
The reconciliation of the net incurred and paid claims development information below to the Non-life reserves in the
Consolidated Balance Sheet at December 31, 2023 was as follows (in thousands of U.S. dollars):
Total outstanding liability for unpaid claims
Property
Casualty
Specialty
Total outstanding liabilities for unpaid claims
Unallocated loss expenses
U.S. health net reserves (1)
Other
Total other liabilities
Net liability at end of year
Reinsurance recoverable on unpaid claims
Property
Casualty
Specialty
Reinsurance recoverable at end of year
Gross liability at end of year
December 31, 2023
$
$
$
$
$
$
$
1,908,065
6,176,122
3,011,789
11,095,976
130,717
156,570
2,799
290,086
11,386,062
763,028
698,223
303,996
1,765,247
13,151,309
(1) U.S. health business is not meaningful to include in the development tables as the estimated average duration of the health
reserves is less than one year and substantially all claims are expected to be paid within two years, based on historical payout
patterns.
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NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - NON-LIFE
For the year ended December 31,
December
31, 2023
Total of
IBNR plus
expected
development
on reported
claims
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$ 2,481,720 $ 2,514,200 $ 2,368,967 $ 2,349,869 $ 2,353,759 $ 2,315,021 $ 2,277,135 $ 2,262,546 $ 2,232,454 $ 2,233,339 $
50,959
2,502,854
2,611,184
2,527,784
2,550,830
2,520,182
2,475,960
2,451,141
2,432,324
2,435,356
2,451,204
2,559,851
2,516,126
2,486,199
2,467,920
2,484,069
2,476,383
2,472,778
2,549,737
2,801,179
2,698,916
2,651,730
2,663,904
2,658,571
2,660,319
2,596,552
2,974,243
2,969,810
2,972,766
3,009,359
3,015,217
2,931,280
3,519,556
3,510,991
3,523,443
3,531,407
4,186,395
3,586,462
3,499,097
3,480,994
87,537
95,112
159,021
334,532
637,205
859,604
2,880,141
2,829,876
2,836,450
1,435,501
3,410,844
3,374,321
1,723,904
3,115,830
967,607
$ 29,156,011 $ 6,350,982
NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - NON-LIFE
For the year ended December 31,
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$ 336,270 $ 1,291,273 $ 1,594,146 $ 1,810,171 $ 1,946,054 $ 2,044,804 $ 2,118,939 $ 2,164,676 $ 2,196,720 $ 2,243,258
306,562
1,159,655
1,564,173
1,798,537
1,959,722
2,067,935
2,142,234
2,198,481
2,240,255
321,351
1,272,443
1,627,697
1,893,694
2,030,728
2,123,169
2,211,977
2,302,984
394,394
1,421,140
1,804,959
2,072,838
2,195,236
2,314,529
2,436,391
271,827
1,276,542
1,811,055
2,093,543
2,283,931
2,490,887
462,939
1,438,793
1,961,928
2,341,116
2,640,483
480,122
1,277,034
1,805,063
2,106,017
373,191
1,088,143
1,531,660
394,598
914,038
Accident
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Accident
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
397,510
$ 19,303,483
$ 9,852,528
1,243,448
$ 11,095,976
Net reserves for accident years and exposures included in the triangles
All outstanding liabilities before accident year 2014, net of reinsurance
Total outstanding liabilities for unpaid claims
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - NON-LIFE
(unaudited)
Years
Non-life
1
13%
2
29%
3
15%
4
10%
5
6%
6
5%
7
4%
8
3%
9
2%
10
2%
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NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - PROPERTY
For the year ended December 31,
December 31,
2023
Total of IBNR
plus expected
development
on reported
claims
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$ 469,568 $ 488,446 $ 463,409 $ 458,609 $ 452,907 $ 450,487 $ 447,816 $ 447,894 $ 444,808 $ 445,152 $
537,193
565,816
537,792
528,106
524,147
519,568
525,203
523,475
663,490
681,050
644,349
625,873
622,562
624,375
623,593
971,607
1,022,186
952,613
923,025
915,166
910,105
805,960
820,675
799,735
778,867
766,591
703,097
782,453
720,079
711,928
524,453
620,491
909,849
766,684
714,189
1,252,575
1,070,935
1,061,772
1,056,274
919,517
918,629
944,920
914,749
859,807
415,801
298
3,605
8,045
12,314
16,456
32,277
132,920
253,718
457,178
334,152
$ 7,227,449 $
1,250,963
NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - PROPERTY
For the year ended December 31,
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$ 95,013 $ 323,309 $ 395,102 $ 423,339 $ 432,567 $ 438,152 $ 442,581 $ 444,798 $ 445,375 $ 448,276
85,015
330,876
435,539
469,036
481,879
489,195
498,557
501,524
132,914
446,804
538,988
579,381
595,159
604,980
609,257
214,026
694,240
805,627
853,945
862,942
870,638
81,830
494,608
628,458
666,919
687,439
78,527
426,566
545,163
586,587
115,165
515,030
681,851
121,453
491,546
103,876
Accident
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Accident
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
503,399
613,854
882,726
709,211
627,924
772,952
639,577
279,970
91,499
$ 5,569,388
$ 1,658,061
250,004
$ 1,908,065
Net reserves for accident years and exposures included in the triangles
All outstanding liabilities before accident year 2014, net of reinsurance
Total outstanding liabilities for unpaid claims
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - PROPERTY
(unaudited)
Years
Property
1
15%
2
41%
3
16%
4
6%
5
3%
6
2%
7
1%
8
1%
9
—%
10
1%
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NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - CASUALTY
For the year ended December 31,
December 31,
2023
Total of IBNR
plus expected
development
on reported
claims
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$ 804,571 $ 848,698 $ 814,622 $ 810,349 $ 826,000 $ 791,768 $ 766,415 $ 753,383 $ 739,605 $ 740,555 $
699,327
783,275
761,091
803,497
770,242
751,652
726,451
714,608
670,767
756,954
767,366
747,814
740,047
750,268
747,402
621,095
743,114
720,966
709,881
716,862
720,732
767,559
905,491
895,978
903,353
920,169
717,382
747,434
724,138
927,658
999,955
1,226,210
1,272,980
1,273,687
1,282,398
1,344,430
1,115,751
1,094,890
1,086,082
1,013,896
967,726
987,435
1,495,131
1,561,575
1,698,981
34,090
57,407
61,476
94,614
236,104
494,696
601,415
886,905
888,080
326,606
$ 10,473,638 $
3,681,393
NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - CASUALTY
For the year ended December 31,
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$ 69,119 $ 189,458 $ 292,152 $ 387,182 $ 470,964 $ 536,883 $ 594,035 $ 631,367 $ 654,893 $ 692,148
73,252
184,520
303,213
398,790
505,067
577,907
627,964
667,748
28,304
140,081
244,560
369,651
455,982
520,069
586,050
55,617
157,792
246,615
334,296
411,806
488,164
59,105
201,190
323,510
425,887
532,717
100,639
274,821
430,192
580,304
112,281
176,740
304,592
80,434
225,846
120,660
Accident
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Accident
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
702,472
667,058
596,996
699,190
731,677
410,337
329,578
173,769
171,996
$ 5,175,221
$ 5,298,417
877,705
$ 6,176,122
Net reserves for accident years and exposures included in the triangles
All outstanding liabilities before accident year 2014, net of reinsurance
Total outstanding liabilities for unpaid claims
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - CASUALTY
(unaudited)
Years
Casualty
1
9%
2
12%
3
13%
4
12%
5
12%
6
11%
7
10%
8
7%
9
4%
10
5%
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NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - SPECIALTY
For the year ended December 31,
December
31, 2023
Total of
IBNR plus
expected
development
on reported
claims
Accident
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Accident
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$ 1,207,581 $ 1,177,056 $ 1,090,936 $ 1,080,911 $ 1,074,852 $ 1,072,766 $ 1,062,904 $ 1,061,269 $ 1,048,041 $ 1,047,632 $
16,571
1,266,334
1,262,093
1,228,901
1,219,227
1,225,793
1,204,740
1,199,487
1,194,241
1,193,521
1,116,947
1,121,847
1,104,411
1,112,512
1,105,311
1,109,426
1,105,388
1,104,853
957,035
1,035,879
1,025,337
1,018,824
1,031,876
1,027,734
1,026,332
1,023,033
1,248,077
1,274,097
1,290,546
1,322,599
1,320,875
1,228,228
1,510,893
1,517,932
1,537,828
1,534,820
1,589,390
1,399,776
1,342,435
1,338,638
946,728
943,521
970,793
934,266
952,939
1,001,048
26,525
25,591
52,093
81,972
110,232
125,269
294,878
378,646
306,849
$ 11,454,924 $ 1,418,626
NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - SPECIALTY
For the year ended December 31,
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$ 172,138 $ 778,506 $ 906,892 $ 999,650 $ 1,042,523 $ 1,069,769 $ 1,082,323 $ 1,088,511 $ 1,096,452 $ 1,102,834
148,295
644,259
825,421
930,711
972,776
1,000,833
1,015,713
1,029,209
1,034,384
160,133
685,558
844,149
944,662
979,587
998,120
1,016,670
1,022,072
124,751
569,108
752,717
884,597
920,488
955,727
956,669
130,892
580,744
859,087
1,000,737
1,063,775
1,082,486
283,773
737,406
986,573
1,174,225
1,280,882
252,676
585,264
818,620
171,304
370,751
170,062
922,728
562,505
460,299
134,015
$ 8,558,874
$ 2,896,050
115,739
$ 3,011,789
Net reserves for accident years and exposures included in the triangles
All outstanding liabilities before accident year 2014, net of reinsurance
Total outstanding liabilities for unpaid claims
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - SPECIALTY
(unaudited)
Years
Specialty
1
15%
2
36%
3
17%
4
10%
5
4%
6
2%
7
1%
8
1%
9
1%
10
1%
The Company is predominantly a reinsurer of primary insurers and does not have access to claim frequency information held
by its cedants due to the majority of the Company’s business being written on a proportional basis. As such, the Company considers
it impracticable to disclose information on the frequency of claims.
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Table of Contents
10. Life and Health Reserves
The Company's gross and net liability for life and health reserves at December 31, 2023, 2022 and 2021 was as follows (in
thousands of U.S. dollars):
Long-term protection
Longevity
Total traditional and limited payment long-duration life and health reserves
Other long-duration life and health reserves
Short-term life and health reserves
Total life and health reserves, net
Reinsurance recoverable
Life and health reserves, gross
Traditional and limited payment long-duration contracts
466,037
304,318
December 31,
2023
December 31,
2021
December 31,
2022
$ 1,432,088 $ 1,249,661 $ 1,454,838
323,489
$ 1,898,125 $ 1,553,979 $ 1,778,327
122,532
860,997
$ 2,831,669 $ 2,477,709 $ 2,761,856
23,526
$ 2,859,257 $ 2,497,519 $ 2,785,382
116,918
816,626
127,752
795,978
19,810
27,588
The reconciliation of the beginning and ending net liability for the Company's life and health reserves for traditional and
limited payment long-duration contracts for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands of
U.S. dollars):
2023
2022
2021
Long-term
Protection
Longevity
Long-term
Protection
Longevity
Long-term
Protection
Longevity
Present Value of Expected Net Premiums
Balance, beginning of year
Beginning balance at original discount rate
Effect of changes in cash flow assumptions
Effect of actual variances from expected experience
Foreign exchange and other
Adjusted beginning of year balance
Issuances
Interest accrual
Net premiums collected
Foreign exchange and other
Ending balance at original discount rate
Effect of changes in discount rate assumptions
Balance, end of year
Present Value of Expected Future Policy Benefits
Balance, beginning of year
Beginning balance at original discount rate
Effect of changes in cash flow assumptions
$ 7,181,905 $ 6,859,347 $ 8,265,658 $ 9,450,775 $ 7,722,807 $ 8,710,380
8,417,277
9,912,178
(12,857)
10,101,622
—
8,929,616
124,380
7,832,595
132,056
9,468,464
1,341
(46,073)
49,882
(1,485)
(100,539)
(77,951)
9,291,315
3,106,448
303,087
495,356
61,698
10,150,019
9,611,050
813,865
1,100,371
189,144
215,148
(668,228)
(519,987)
(494,404) (1,016,336)
(46,910)
129,081
702
7,693
8,358,212
10,002,879
2,249,974
907,176
152,388
249,381
(601,195)
(564,741) (1,012,723)
(57,757)
157,390
10,101,622
10,752,085
(2,238,887) (1,914,504) (2,730,273) (2,609,117)
(650,847)
$ 8,513,198 $ 10,405,665 $ 7,181,905 $ 6,859,347 $ 8,265,658 $ 9,450,775
138,504
12,107
8,115,262
1,271,419
183,835
(497,615)
(143,285)
632,042
12,320,169
9,468,464
9,912,178
8,929,616
(663,958)
$ 8,444,212 $ 7,167,340 $ 9,735,516 $ 9,778,306 $ 9,197,194 $ 9,080,355
8,758,460
11,279,091
(17,855)
10,400,475
—
10,405,240
100,464
9,735,709
1,671
9,253,956
175,808
(29,989)
Effect of actual variances from expected experience
124,864
(113,205)
520,942
47,215
198,217
(46,809)
Foreign exchange and other
Adjusted beginning of year balance
Issuances
Interest accrual
Benefit payments
Foreign exchange and other
Ending balance at original discount rate
Effect of changes in discount rate assumptions
Balance, end of year
24,331
11,398,297
910,154
269,802
(521,918)
(89,722)
9,534,453
3,111,518
308,484
(885,792)
67,193
11,093,839
1,095,566
235,775
(542,353)
(2,935)
10,444,755
814,178
194,485
(666,887)
11,525
9,639,506
1,250,111
207,736
(503,727)
770
8,694,566
2,249,787
160,408
(643,565)
656,619
12,725,282
(60,721)
201,607
10,400,475
12,257,942
(2,309,437) (1,851,883) (2,834,879) (2,568,369)
(622,169)
$ 9,948,505 $ 10,873,399 $ 8,444,212 $ 7,167,340 $ 9,735,516 $ 9,778,306
(603,736) (1,050,822)
11,279,091
10,405,240
9,735,709
(669,724)
(188,386)
Cumulative impact of flooring
$
4,037 $
1,828 $
2,367 $
— $
194 $
819
Liability for future policy benefits, after flooring
adjustment
Less: reinsurance recoverable
Net liability for future policy benefits, after reinsurance
recoverable
$ 1,439,344 $ 469,562 $ 1,264,674 $ 307,993 $ 1,470,052 $ 328,350
4,861
15,214
15,013
7,256
3,675
3,525
$ 1,432,088 $ 466,037 $ 1,249,661 $ 304,318 $ 1,454,838 $ 323,489
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The amount of undiscounted and discounted expected future gross premiums and expected future benefit payments for
traditional and limited payment long-duration contracts for the years ended December 31, 2023, 2022 and 2021 was as follows (in
thousands of U.S. dollars):
Long-term Protection
Undiscounted expected future gross premiums
Undiscounted expected future benefit payments
Discounted expected future gross premiums
Discounted expected future benefit payments
Longevity
Undiscounted expected future gross premiums
Undiscounted expected future benefit payments
Discounted expected future gross premiums
Discounted expected future benefit payments
December 31,
2023
December 31,
2022
December 31,
2021
$ 22,577,821 $ 19,982,118 $ 17,229,187
$ 19,981,172 $ 17,642,176 $ 15,441,167
$ 10,835,854 $
9,162,867 $ 10,592,914
9,948,505 $
$
9,735,516
8,444,212 $
December 31,
December 31,
2021
2023
December 31,
2022
$ 17,998,514 $ 13,032,711 $ 13,647,768
$ 16,929,038 $ 12,199,575 $ 12,752,333
$ 11,284,884 $
7,485,087 $ 10,331,411
$ 10,873,399 $
9,778,306
7,167,340 $
The total gross premiums and interest expense recognized in the Consolidated Statements of Operations for traditional and
limited payment long-duration contracts for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands of
U.S. dollars):
Long-term protection
Longevity
Total
Gross Premiums
Interest Expense
2023
2022
2021
2023
2022
2021
$
$
744,428 $
1,094,934
1,839,362 $
684,990 $
742,542
1,427,532 $
662,496 $
692,000
1,354,496 $
20,421 $
5,397
25,818 $
20,627 $
5,341
25,968 $
23,901
8,020
31,921
The weighted-average interest rates for traditional and limited payment long-duration contracts for the years ended December
31, 2023, 2022 and 2021 were as follows:
Long-term Protection:
Interest accretion rate
Current discount rate
Longevity:
Interest accretion rate
Current discount rate
2023
2022
2021
2.63 %
4.48 %
2.43 %
4.93 %
2.28 %
2.87 %
2023
2022
2021
2.95 %
4.83 %
2.06 %
5.48 %
1.94 %
2.48 %
The weighted-average duration of reserves for long-term protection was 4.2 years, 4.4 years and 5.3 years for the years ended
December 31, 2023, 2022 and 2021, respectively. The weighted average duration of reserves for Longevity has been split into the
fixed premium leg and the floating claims leg, with the fixed premium leg having a duration of 7.6 years, 7.8 years and 9.8 years
and the floating claims leg having a duration of 7.5 years, 7.7 years and 9.5 years, for the years ended December 31, 2023, 2022 and
2021, respectively.
Long-term protection
Significant assumptions used to calculate the LFPB for long-term protection include mortality, morbidity, and persistency, and
both locked-in and current discount rates.
In 2023, the Company undertook a review of significant assumptions and primarily made changes to mortality and morbidity.
Mortality assumption updates primarily reflected mixed future mortality improvements and claims experience on certain treaties that
largely offset. Morbidity assumption updates primarily reflected adverse claims experience on a specific treaty. Current discount
rates were updated from 2022 resulting in a slight increase to the LFPB.
In 2022, the Company undertook a review of significant assumptions and primarily made changes to mortality and morbidity.
Mortality assumption updates largely reflected unfavorable claims experience on certain treaties. Morbidity assumption updates
largely reflected adverse claims experience on a specific treaty. Current discount rates were updated from 2021 resulting in a
significant decrease to the LFPB.
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In 2021, the Company undertook a review of significant assumptions and primarily made changes to mortality and morbidity.
Mortality assumption updates primarily reflected unfavorable claims experience on certain treaties. Morbidity assumption updates
primarily reflected adverse claims experience on specific treaties. Current discount rates were updated from 2020 resulting in a
significant decrease to the LFPB.
Impacts to expected net premiums and expected future policy benefits due to assumption changes in 2023, 2022 and 2021 can
be observed in the LFPB rollforward tables at December 31, 2023, 2022 and 2021.
Longevity
Significant assumptions used to calculate the LFPB for Longevity include mortality, and both locked-in and current discount
rates.
In 2023, the Company undertook a review of significant assumptions and updated mortality improvement assumptions to
reflect favorable developments prior to COVID-19. Current discount rates were updated from 2022, resulting in a slight decrease to
the LFPB.
In 2022, the Company reviewed actual experience but did not make any assumption updates. Current discount rates were
updated from 2021, resulting in a slight increase to the LFPB.
In 2021, the Company undertook a review of significant assumptions and made revisions to mortality improvement
assumption model parameters to reflect industry trends. Current discount rates were updated from 2020, resulting in a slight
decrease to the LFPB.
Impacts to expected net premiums and expected future policy benefits due to assumption changes in 2023, 2022 and 2021 can
be observed in the LFPB rollforward tables at December 31, 2023, 2022 and 2021.
Life and health short-duration reserves
The reconciliation of the beginning and ending gross and net liability of the life and health reserves for short-duration
contracts for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands of U.S. dollars):
Gross liability at beginning of year
Reinsurance recoverable at beginning of year
Net liability at beginning of year
Net incurred losses
Net losses paid
Effects of foreign exchange rate changes and other
Net liability at end of year
Reinsurance recoverable at end of year
Gross liability at end of year
2023
2022
2021
$
$
797,100 $
1,122
795,978
187,078
(190,082)
23,652
816,626
16,807
833,433 $
864,448 $
3,451
860,997
157,572
(172,043)
(50,548)
795,978
1,122
797,100 $
960,198
6,397
953,801
184,872
(234,501)
(43,175)
860,997
3,451
864,448
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11. Market Risk Benefits
MRBs, which relate to our GMDB business, are measured at fair value using an option-based valuation model based on
current net amounts at risk, market data, Company experience and other factors. Declines in the equity markets, increased volatility,
and a low interest rate environment increase the Company's exposure to liabilities under the guaranteed features. The net amount at
risk for GMDB is defined as the current guaranteed benefit amount in excess of the current contract value.
The reconciliation of beginning and ending balances of market risk benefits for the years ended December 31, 2023, 2022
and 2021 was as follows (in thousands of U.S. dollars):
Balance, beginning of year
Effect of changes in the instrument-specific credit risk
Balance, beginning of year, before effect of changes in the instrument-specific credit
risk
Issuances
Interest accrual
Attributed fees collected
Benefit payments
Actual policyholder behavior different from expected behaviors
Effect of changes in future expected policyholder behavior
Effect of changes in other future assumptions
Effect of changes in interest rates
Effect of changes in equity index volatility
Effect of changes in equity markets
Foreign exchange impact
Other
Balance, end of year, before effect of changes in the instrument-specific credit risk
Effect of changes in the instrument-specific credit risk
Balance, end of year
Net amount at risk
Weighted-average attained age of contract holders
2023
2022
2021
$ 122,016 $
3,676
GMDB
(53,011) $
59,207
125,692
5,625
6,081
(29,273)
3,799
(8,415)
(12,111)
5,844
(12,722)
11,716
14,550
5,501
21,985
6,196
1,312
(1,819)
(29,417)
(897)
5,126
(3,819)
4,318
197,277
(24,728)
(58,497)
(1,715)
32,355
$ 138,272 $ 125,692 $
(3,676)
$ 139,574 $ 122,016 $
1,302
(77,590)
63,474
(14,116)
(14,931)
(2,623)
(34,371)
1,597
(14,565)
10,776
(51,743)
82,422
(4,634)
31,222
439
16,723
6,196
(59,207)
(53,011)
$ 251,293 $ 603,656 $
61 years
61 years
52,320
61 years
The reconciliation of market risk benefit asset (liability) to the Company's Consolidated Balance Sheets at December 31, 2023
and 2022 was as follows (in thousands of U.S. dollars):
Market risk benefits
Asset
144,636 $
$
Liability
5,062 $
Net
139,574 $
Asset
131,186 $
Liability
9,170 $
Net
122,016
December 31, 2023
December 31, 2022
In 2023, the Company recognized market risk benefit gains primarily due to an increase in equity markets and a decrease in
equity index volatility, both of which reduce the chance of GMDB being at risk and increases the net MRB asset. The Company also
recognized the impacts of new business and actual and future expected policyholder activity.
For 2022, the Company recognized market risk benefit gains primarily due to a steep increase in interest rates in the year
which reduces the chance of GMDB being at risk and increases the net MRB asset, partially offset by a decrease in equity markets
and an increase in equity index volatility which decreased the MRB net asset.
For 2021, the Company recognized market risk benefit gains due to increases in interest rates and improvements in equity
markets which reduced the chance of the GMDB being at risk and increased the net MRB asset, partially offset by the impact of
changes in other future assumptions.
See Note 4 for additional information related to the fair value measurement of MRBs.
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12. Reinsurance
(a) Reinsurance Recoverable on Paid and Unpaid Losses
The Company uses retrocessional agreements to reduce its exposure to risk of loss on reinsurance assumed. These agreements
provide for recovery from retrocessionaires of a portion of losses and loss expenses. The Company remains liable to its cedants to
the extent that the retrocessionaires do not meet their obligations under these agreements, and therefore the Company evaluates the
financial condition of its reinsurers and monitors concentration of credit risk on an ongoing basis. The Company actively manages
its reinsurance exposures by generally selecting either collateralized retrocessionaires or counterparties that have a credit rating of
A- or higher.
The Company established Lorenz Re Ltd. (“Lorenz Re”), a special purpose insurer registered as a segregated accounts
company in Bermuda, as part of its third party capital platform to provide third party investors with access to portfolios of risk in the
global reinsurance markets. Lorenz Re operates by providing fully collateralized reinsurance capacity to certain of the Company's
operating subsidiaries in respect of multiple lines of business. Lorenz Re raises capital primarily from third party investors seeking
exposure to the global reinsurance markets by issuing non-voting redeemable preferred shares in its individual segregated accounts.
The proceeds from issuance of these preferred shares are deposited into trust accounts collateralizing varying portfolios of potential
reinsurance recoverables, which have established investment guidelines that generally require assets to be held as either cash and
cash equivalents or in U.S. government issued securities of high credit quality. For the years ended December 31, 2023, 2022 and
2021, the Company ceded premium written to Lorenz Re’s segregated cells of $529 million, $664 million and $634 million,
respectively, and recorded a Reinsurance recoverable on paid and unpaid losses from the segregated cells of $767 million and
$921 million as at December 31, 2023 and 2022, respectively.
In assessing an allowance for reinsurance recoverable balances, the Company considers historical information, financial
strength and credit ratings of reinsurers, collateralization amounts and the remaining expected life of reinsurance recoverable
balances to determine the appropriateness of the allowance. Historically, the Company has not experienced material credit losses
from retrocessional agreements. In assessing future default for reinsurance recoverable balances, the Company evaluates the
valuation allowance under the probability of default and loss given default method and utilizes counterparty credit ratings from
major rating agencies, as well as assesses the current market conditions and reasonable and supportable forecasts for the likelihood
of default. At December 31, 2023 and 2022, the Company's allowance for credit losses on its reinsurance recoverable balance was
$3 million.
(b) Ceded Reinsurance
Net premiums written, net premiums earned and losses and loss expenses are reported net of reinsurance in the Company’s
Consolidated Statements of Operations. Direct, assumed, ceded and net amounts for the years ended December 31, 2023, 2022 and
2021 were as follows (in thousands of U.S. dollars):
Non-life
Life and Health
Direct
Non-life
Life and Health
Assumed
Non-life
Life and Health
Ceded
Non-life
Life and Health
Net
Premiums
Written
2023
Premiums
Earned
Losses and Loss
Expenses
347,351 $
—
347,351 $
372,230 $
—
372,230 $
188,912
—
188,912
6,646,273 $
2,108,734
8,755,007 $
6,643,101 $
2,108,711
8,751,812 $
3,346,078
1,838,714
5,184,792
1,145,301 $
28,145
1,173,446 $
1,176,865 $
28,417
1,205,282 $
352,650
30,846
383,496
5,848,323 $
2,080,589
7,928,912 $
5,838,466 $
2,080,294
7,918,760 $
3,182,340
1,807,868
4,990,208
$
$
$
$
$
$
$
$
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Non-life
Life and Health
Direct
Non-life
Life and Health
Assumed
Non-life
Life and Health
Ceded
Non-life
Life and Health
Net
Non-life
Life and Health
Direct
Non-life
Life and Health
Assumed
Non-life
Life and Health
Ceded
Non-life
Life and Health
Net
Premiums
Written
2022
Premiums
Earned
Losses and Loss
Expenses
393,186 $
—
393,186 $
377,380 $
—
377,380 $
207,301
—
207,301
6,622,236 $
1,673,857
8,296,093 $
6,319,389 $
1,674,091
7,993,480 $
3,817,630
1,426,584
5,244,214
1,116,672 $
28,412
1,145,084 $
1,085,317 $
28,426
1,113,743 $
711,697
13,946
725,643
5,898,750 $
1,645,445
7,544,195 $
5,611,452 $
1,645,665
7,257,117 $
3,313,234
1,412,638
4,725,872
Premiums
Written
2021
Premiums
Earned
Losses and Loss
Expenses
421,756 $
—
421,756 $
318,058 $
—
318,058 $
221,173
—
221,173
6,135,299 $
1,646,870
7,782,169 $
5,956,360 $
1,651,485
7,607,845 $
3,991,292
1,423,826
5,415,118
1,046,227 $
23,680
1,069,907 $
944,862 $
24,519
969,381 $
769,220
16,031
785,251
5,510,828 $
1,623,190
7,134,018 $
5,329,556 $
1,626,966
6,956,522 $
3,443,245
1,407,795
4,851,040
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
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13. Debt
The debt outstanding and the carrying value recorded in the Consolidated Balance Sheets at December 31, 2023 and 2022 was
comprised as follows (in thousands):
Senior notes due 2029
Senior notes due 2026
Junior subordinated notes due 2050
Capital efficient notes due 2066
Debt
Senior notes due 2029
Commitment
Carrying Value
Fair Value
Carrying Value
Fair Value
December 31, 2023
December 31, 2022
500,000 $
750,000
497,525 $
829,304
484,790 $
790,081
497,073 $
794,368
494,832
432,685
494,638
462,521
721,807
428,250
$
€
$
$
500,000
61,924
61,924
54,247
$ 1,883,585 $ 1,762,793 $ 1,848,003 $ 1,666,825
61,924
55,237
In June 2019, PartnerRe Finance B LLC, an indirect wholly-owned financing subsidiary of the Company, issued $500 million
aggregate principal amount of 3.700% senior notes at a price of 99.783% of the principal amount. The net proceeds of the issuance,
after consideration of the offering discount and underwriting expenses and commissions, totaled $496 million. These senior notes
may be redeemed at the option of the issuer, in whole or in part, at any time, with early redemption requiring the payment of a
make-whole premium. Commencing on January 2, 2020, interest on these notes is payable semi-annually at an annual fixed rate of
3.700%. Unless previously redeemed, the notes mature on July 2, 2029. These senior notes are ranked as senior unsecured
obligations of PartnerRe Finance B LLC and PartnerRe Ltd. has fully and unconditionally guaranteed all obligations of PartnerRe
Finance B LLC related to these senior notes. PartnerRe Ltd.’s obligations under this guarantee are senior and unsecured and rank
equally with all other senior unsecured indebtedness.
Senior notes due 2026
In September 2016, PartnerRe Ireland Finance DAC, an indirect wholly-owned financing subsidiary of the Company,
issued €750 million aggregate principal amount of 1.250% senior notes at a price of 99.144% of the principal amount, which are
listed in the main securities market of the Irish Stock Exchange. Interest is payable annually commencing on September 15, 2017.
These senior notes may be redeemed at the option of the issuer, in whole or in part, at any time. Unless previously redeemed, the
notes mature on September 15, 2026. These senior notes are ranked as senior unsecured obligations of PartnerRe Ireland Finance
DAC. PartnerRe Ltd. has fully and unconditionally guaranteed all obligations of PartnerRe Ireland Finance DAC under these senior
notes. PartnerRe Ltd.’s obligations under this guarantee are senior and unsecured and rank equally with all other senior unsecured
indebtedness.
Junior subordinated notes due 2050
In September 2020, PartnerRe Finance B LLC issued $500 million aggregate principal amount of 4.500% fixed-rate reset
junior subordinated notes at par. The net proceeds of the issuance, after consideration of the underwriting expenses, commissions
and other expenses, totaled $494 million. Commencing on April 1, 2021, interest on these notes is payable semi-annually at an
annual fixed rate of 4.500% until the first reset date on October 1, 2030. From the first reset date, and resetting every five years
thereafter, the notes will bear interest at an annual rate equal to the five-year treasury rate plus 3.815%. These junior subordinated
notes may be redeemed at the option of the issuer, in whole or in part, at any time, with early redemption outside of a par call period
requiring the payment of a make-whole premium. Par call periods occur between April 1 and October 1 in each year in which the
interest rate resets. Early redemption prior to October 1, 2025 is subject to the Bermuda Monetary Authority's approval. Unless
previously redeemed, the notes mature on October 1, 2050. These notes are ranked as unsecured junior subordinated obligations,
and will rank junior in right of payment to all outstanding and future senior indebtedness of PartnerRe Finance B LLC. PartnerRe
Ltd. has fully and unconditionally guaranteed all obligations of PartnerRe Finance B LLC related to these junior subordinated notes.
PartnerRe Ltd.’s obligations under this guarantee are unsecured junior subordinated obligations and rank junior in right of payment
to all its outstanding and future senior indebtedness, and equally in right of payment with all outstanding and future unsecured
indebtedness that is by its terms equal in right of payment to the junior subordinated notes.
Capital efficient notes due 2066
In November 2006, PartnerRe Finance II Inc., an indirect wholly-owned financing subsidiary of the Company, issued Fixed-
to-Floating Rate Junior Subordinated Capital Efficient Notes (CENts) with a principal amount of $250 million. In March 2009, $187
million of the principal amount was extinguished, with an additional $900 thousand of the principal amount extinguished in June
2019 and $560 thousand in December 2022. As a result, the remaining aggregate principal amount of the CENts as at December 31,
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2023 and 2022 was $62 million. Interest on the CENts is payable quarterly at an annual rate of 3-month SOFR plus a margin equal
to 2.325%, and an additional spread adjustment of 0.26161% (due to the transition of the benchmark from LIBOR), reset quarterly.
Since December 1, 2016, PartnerRe Finance II Inc. has had the right to defer one or more interest payments for up to ten years to
December 1, 2026. The CENts are currently redeemable at the option of the issuer, in whole or in part, and are ranked as junior
subordinated unsecured obligations of PartnerRe Finance II Inc. PartnerRe Ltd. has fully and unconditionally guaranteed all
obligations of PartnerRe Finance II Inc. related to these junior subordinated notes. PartnerRe Ltd.’s obligations under this guarantee
are unsecured junior subordinated obligations and rank junior in right of payment to all its outstanding and future senior
indebtedness, and equally in right of payment with all outstanding and future unsecured indebtedness that is by its terms equal in
right of payment to the junior subordinated notes.
Debt repurchases
We or our affiliates may, at any time and from time to time, seek to retire or purchase our outstanding debt, in open-market
purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we
may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other
factors.
14. Shareholders’ Equity
Authorized Shares
At December 31, 2023 and 2022, the total authorized share capital (common and preferred) of the Company was $200 million.
Common Shares
At December 31, 2022 and 2023, 100 million authorized and issued Class A common shares of $0.00000001 par value each
were owned by Covéa Coopérations.
See Note 17 for discussion of Class C common shares.
Redeemable Preferred Shares
On March 15, 2021, the Company issued 8,000,000 4.875% Series J fixed rate non-cumulative redeemable preferred shares at
a par value of $1.00 per share and a redemption price of $200 million. The Company incurred issuance costs directly attributable to
the new preferred shares of $6 million. The Series J preferred shares will remain outstanding into perpetuity, unless and until the
Company decides to redeem them. The shares are not callable by the Company until March 15, 2026. On and after March 15, 2026,
the Series J Preferred Shares will be redeemable at the Company’s option, in whole or from time to time in part, at a redemption
price equal to $25 per Series J Preferred Share, plus declared and unpaid dividends. Dividends on the Series J preferred shares are
non-cumulative and are payable quarterly in arrears. In the event of liquidation of the Company, the Series J preferred shares rank
senior to the common shares, and the holders of the preferred shares would receive a distribution of $25 per share plus any declared
but unpaid dividends. The Series J preferred shares were the only preferred shares issued and outstanding at December 31, 2023 and
2022.
On May 3, 2021, the Company redeemed all outstanding Series G, Series H and Series I preferred shares at $25 per share for
an aggregate liquidation value of $637 million. In addition, unpaid preferred dividends accrued to the redemption date totaling
$7 million were paid. In connection with the redemption, the Company recognized a loss of $21 million related to the deferred
issuance costs paid upon issuance which were included in Additional paid-in capital related to the Series G, H and I preferred
shares. There was no additional gain or loss on redemption to recognize as the redemption price and the initial consideration
received on the issue of preferred shares were both $25 per share. The loss of $21 million was recognized as a deemed preferred
dividend in retained earnings and in determining the Net income available to common shareholder.
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15. Dividend Restrictions and Statutory Requirements
The Company’s ability to pay common and preferred shareholders’ dividends and its corporate expenses is dependent mainly
on cash dividends from PartnerRe Bermuda, PartnerRe Europe, PartnerRe U.S., PartnerRe Asia and PartnerRe Canada (collectively,
the reinsurance subsidiaries), which are the Company’s most significant subsidiaries. The payment of such dividends by the
reinsurance subsidiaries to the Company is limited under Bermuda, Irish, Canadian and Singapore laws and certain statutes of
various U.S. states in which PartnerRe U.S. is domiciled. The restrictions are generally based on net income and/or certain levels of
surplus as determined in accordance with the relevant statutory accounting practices. The Company’s dividend policy is to declare
and pay a dividend on its common shares at consistent levels each quarter. On December 16, 2021, Exor signed a definitive
agreement with Covéa Coopérations, under which Covéa Coopérations agreed to purchase all of the common shares of PartnerRe
Ltd. from Exor. Consummation of this transaction occurred on July 12, 2022. During 2023, the Company declared and paid
common share dividends totaling $200 million. In addition, a deemed dividend of $18 million was paid to Covéa Coopérations
during 2023. At December 31, 2023, given the Company complied with its Bermuda solvency requirements, there were no other
restrictions on the Company’s ability to pay common and preferred shareholders’ dividends from its retained earnings, except for
the reinsurance subsidiaries’ dividend restrictions described below.
The reinsurance subsidiaries are required to file annual statements with insurance regulatory authorities prepared on an
accounting basis prescribed or permitted by such authorities (statutory basis), maintain minimum levels of solvency and liquidity
and comply with risk-based capital requirements and licensing rules. At December 31, 2023, the reinsurance subsidiaries’ solvency,
liquidity and risk-based capital amounts were in excess of the minimum levels required. The typical adjustments to insurance
statutory basis amounts to convert to U.S. GAAP include the elimination of certain statutory reserves, deferral of certain acquisition
costs, recognition of goodwill, intangible assets and deferred income taxes that are limited on a statutory basis, valuation of bonds at
fair value, the deferral of gains on retroactive reinsurance on non-life business and presentation of ceded reinsurance balances gross
of assumed balances.
PartnerRe Bermuda may declare dividends subject to it continuing to meet its minimum solvency and minimum liquidity
ratios, which are to hold statutory capital and surplus equal to or exceeding the Target Capital Level, which is equivalent to 120% of
the Enhanced Capital Requirement (ECR) and to maintain a minimum general business liquidity ratio equal to the value of its
relevant assets at not less than 75% of the amount of its relevant liabilities. The ECR is calculated with reference to the Bermuda
Solvency Capital Requirement model, which is a risk-based capital model. During 2023, the maximum dividend that PartnerRe
Bermuda can pay without prior regulatory approval is approximately $1,120 million. The reporting deadline for the annual
submission is April 30, 2024.
PartnerRe Europe is subject to the Solvency II European Directive (Solvency II Regulations). The Solvency II Regulations
relate to the solvency standards applicable to insurers and reinsurers and lay down, at the level of PartnerRe Europe, the minimum
amounts of financial resources required in order to cover the risks to which it is exposed and the principles that should guide its
overall risk management and reporting. PartnerRe Europe may declare dividends subject to it continuing to meet its Solvency II
requirements, which are to hold available capital, calculated on a Solvency II balance sheet basis, in excess of the solvency capital
requirement (SCR). The maximum dividend is limited to “profits available for distribution”, which consist of accumulated realized
profits less accumulated realized losses. The reporting deadline for the annual Solvency II submission is April 7, 2024.
PartnerRe U.S. may declare dividends subject to it continuing to meet its minimum solvency and capital requirements and is
generally limited to paying dividends from earned surplus. In connection with the acquisition by Covéa Coopérations, it was agreed
that PartnerRe US would not take action to declare or distribute any dividend for the two year period from July 12, 2022 to July 12,
2024 without the prior approval of the New York State Department of Financial Services. The maximum dividend that can be
declared and paid without prior approval is limited, to the lesser of adjusted net investment income or 10% of its total statutory
capital and surplus as of the most recently filed annual statement. The reporting deadline for the annual filing is March 1, 2024.
PartnerRe Asia may declare dividends from unappropriated profits subject to meeting the capital requirements, as laid out by
the Monetary Authority of Singapore. As a licensed reinsurer, PartnerRe Asia is required to maintain minimum capital of SGD25
million. In addition, PartnerRe Asia is required to establish and maintain separate insurance funds for each class of business that it
writes, for both Singapore and offshore policies. The solvency requirement in respect of each insurance fund shall at all times be not
less than the total risk requirement of the fund (determined by reference to three components being insurance risks, asset portfolio
risks and asset concentration risks) and above 120% of the total risk requirement on a Company basis. The declaration of a dividend
by PartnerRe Asia is subject to conditions and requirements being met as specified under the Companies Act and the Insurance Act
and its associated regulations. The filing date for the annual submission is March 31, 2024.
PartnerRe Canada may declare dividends subject to it continuing to meet its capital requirements and maintaining adequate
and appropriate forms of liquidity in addition to complying with related regulations. Dividends and capital distributions are subject
to regulations under the Insurance Companies Act (Canada) and the requirements of the Office of the Superintendent of Financial
Institutions (OSFI). The reporting deadline for the annual filing is February 29, 2024.
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The statutory financial statements and returns of the Company’s reinsurance subsidiaries as at, and for the year ended,
December 31, 2023 are due to be submitted to the relevant regulatory authorities later in 2023, with different filing dates in each
jurisdiction. In certain jurisdictions, the statutory financial statements and returns are subject to the review and final approval of the
relevant regulatory authorities. As a result, the comparative figures in the tables below reflect final figures submitted to regulatory
authorities for 2022 and 2021.
The statutory net income (loss) of PartnerRe Bermuda, PartnerRe Europe, PartnerRe U.S., PartnerRe Asia and PartnerRe
Canada for the years ended December 31, 2023, 2022 and 2021 was as follows (in millions of U.S. dollars):
PartnerRe Bermuda
PartnerRe Europe
PartnerRe U.S.
PartnerRe Asia
PartnerRe Canada
2023
2022
2021
$ 1,138 $
(139) $
900
$
$
$
$
383 $
(329) $
220 $
242 $
48 $
13 $
(35) $
(14) $
28
68
(6)
(12)
The required and actual statutory capital and surplus of PartnerRe Bermuda, PartnerRe Europe, PartnerRe U.S., PartnerRe
Asia and PartnerRe Canada at December 31, 2023 and 2022 was as follows (in millions of U.S. dollars):
PartnerRe Bermuda (1)
PartnerRe Europe
PartnerRe U.S.
PartnerRe Asia
PartnerRe Canada
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
$ 2,824 $ 2,727 $ 1,564 $ 1,537 $ 1,472 $ 1,356 $
56 $
47 $ 1,221 $ 1,144
$ 7,108 $ 5,816 $ 2,971 $ 2,672 $ 2,182 $ 1,928 $
265 $
212 $ 1,606 $ 1,392
Required statutory
capital and surplus
Actual statutory
capital and surplus
(1) Required statutory capital and surplus is calculated at the Target Capital Level
In addition to the required statutory capital and surplus requirements for the reinsurance subsidiaries in the table above, the
Company is required to assess its solvency capital needs both at a PartnerRe Group and subsidiary level. The Company’s capital
requirements determine the amount of capital available to be declared as dividends to its shareholders. As Group Supervisor of the
Company, the Bermuda Monetary Authority is tasked with assessing the financial condition of the PartnerRe Group and coordinates
the dissemination of information to other relevant authorities for the purpose of assisting in their regulatory functions and the
enforcement of regulatory action against the Company or any of its subsidiaries, including the power to impose restrictions on the
ability of the relevant subsidiaries to declare dividends to the Company, and the ability of the Company to pay dividends to
shareholders. In addition, the Company is required to maintain the Group ECR imposed by the BMA under Bermuda law. The
Company is currently completing the 2023 PartnerRe Group BSCR, which must be filed with the BMA on or before May 31, 2024,
and at this time, we expect we will exceed the ECR.
16. Taxation
The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income or profit tax, withholding tax,
capital gains tax or capital transfer tax in Bermuda, under current Bermuda law. However, on December 27, 2023, Bermuda enacted
the Corporate Income Tax Act 2023 (the “CIT Act”). Entities subject to tax under the CIT Act are the Bermuda constituent entities
of multi-national groups. A multi-national group is defined under the CIT Act as a group with entities in more than one jurisdiction
with consolidated revenues of at least €750 million for two of the four previous fiscal years. If Bermuda constituent entities of a
multi-national group are subject to tax under the CIT Act, such tax is charged at a rate of 15 percent of the net income of such
constituent entities (as determined in accordance with the CIT Act, including after adjusting for any relevant foreign tax credits
applicable to the Bermuda constituent entities). No tax is chargeable under the CIT Act until tax years starting on or after January 1,
2025. The CIT Act also includes a provision referred to as the economic transition adjustment, which is intended to provide a fair
and equitable transition into the tax regime, and results in a deferred tax benefit for the Company. Pursuant to this legislation, the
Company has estimated as of December 31, 2023, a $487 million deferred tax asset in relation to the economic transition adjustment
and a $55 million deferred tax liability in relation to the future tax impact of temporary differences between book and tax value.
Most of the net $432 million deferred tax asset is expected to be utilized predominantly over a 10-year period.
The Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax
in the jurisdictions in which they operate. The significant jurisdictions in which the Company’s subsidiaries and branches are subject
to tax are Canada, France, Hong Kong, Ireland, Singapore, Switzerland, United Kingdom and the U.S.
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Income tax returns are open for examination for the tax years 2018-2023 in the U.S. and Hong Kong; 2019-2023 in Canada,
Ireland, United Kingdom and Singapore; 2021-2023 in France and Switzerland. As a global organization, the Company may be
subject to a variety of transfer pricing or permanent establishment challenges by taxing authorities in various jurisdictions. While
management believes that adequate provision has been made in the Consolidated Financial Statements for any potential assessments
that may result from tax examinations for all open tax years, the completion of tax examinations for open years may result in
changes to the amounts recognized in the Consolidated Financial Statements.
Income tax expense (benefit) for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands of U.S.
dollars):
Current income tax expense
U.S.
Non U.S.
Total current income tax expense
Deferred income tax (benefit) expense
U.S.
Non U.S.
Total deferred income tax (benefit) expense
Unrecognized tax expense (benefit)
U.S.
Non U.S.
Total unrecognized tax expense (benefit)
Total income tax (benefit) expense
U.S.
Non U.S.
Total income tax (benefit) expense
2023
2022
2021
$
$
40,840 $
11,621
52,461 $ 114,528 $
93,906 $
20,622
31,216
18,293
49,509
$
8,048 $
(390,065)
$ (382,017) $
(14,428) $
(60,138)
(74,566) $
(9,404)
61
(9,343)
$
$
— $
1,632
1,632 $
— $
1,933
1,933 $
—
(199)
(199)
$
48,888 $
(376,812)
$ (327,924) $
79,478 $
(37,583)
41,895 $
21,812
18,155
39,967
Income (loss) before taxes attributable to the Company’s domestic and foreign operations and a reconciliation of the actual
income tax rate to the amount computed by applying the effective tax rate of 0% under Bermuda (the Company’s domicile) law to
income (loss) before taxes was as follows for the years ended December 31, 2023, 2022 and 2021 (in thousands of U.S. dollars):
Domestic (Bermuda)
Foreign
Income (loss) before taxes
Reconciliation of effective tax rate (% of income (loss) before taxes)
Expected tax rate
Foreign taxes at local expected tax rates
Impact of foreign exchange gains or losses
Unrecognized tax expense (benefit)
Tax-exempt income and expenses not deductible
Foreign branch tax
Valuation allowance
Tax legislation change
Other
Actual tax rate
2023
2022
(95,063) $ 631,852
$ 772,926 $
172,303
(802,794)
1,217,269
$ 1,990,195 $ (897,857) $ 804,155
2021
0.0 %
12.4
0.0 %
15.3
(1.1)
0.1
(3.8)
2.0
(4.3)
(21.9)
0.1
(16.5) %
(0.3)
(0.2)
0.2
4.1
(20.8)
—
(3.0)
(4.7) %
0.0 %
6.7
(0.1)
—
(0.3)
0.1
0.6
(0.3)
(1.7)
5.0 %
Following the enactment in 2023 of the CIT Act, a net $432 million deferred tax asset was recorded as described in further
detail above. This had a 21.9 point reduction on the effective tax rate in 2023 and is included within the Tax legislation change line
in the table above.
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The components of net tax assets and liabilities at December 31, 2023 and 2022 were as follows (in thousands of U.S. dollars):
Net tax assets
Net tax liabilities
Net tax assets
Net current tax assets
Net deferred tax assets (liabilities)
Net unrecognized tax benefit
Net tax assets
December 31, 2023
December 31, 2022
$
$
563,368 $
(57,584)
505,784 $
160,634
(38,576)
122,058
December 31, 2023
December 31, 2022
$
$
109,538 $
408,884
(12,638)
505,784 $
108,836
23,931
(10,709)
122,058
Deferred tax assets and liabilities reflect the tax impact of temporary differences between the carrying amounts of assets and
liabilities for financial reporting and income tax purposes. Significant components of the net deferred tax assets and liabilities at
December 31, 2023 and 2022 were as follows (in thousands of U.S. dollars):
Deferred tax assets
Foreign tax credit carryforwards
Tax loss carryforwards
Unearned premiums
Coinsurance funds held
Unrealized depreciation and timing differences on investments
Bermuda economic transition adjustment
Other deferred tax assets
Valuation allowance
Deferred tax assets
Deferred tax liabilities
Deferred acquisition costs
Goodwill and other intangibles
Coinsurance reserves
Discounting of loss reserves and adjustment to life policy reserves
Equalization reserves
Other deferred tax liabilities
Deferred tax liabilities
Net deferred tax assets
December 31, 2023
December 31, 2022
$
$
$
$
$
$
176,904 $
104,546
44,878
6,237
96,108
487,265
45,019
960,957 $
(325,150)
635,807 $
94,144 $
55,067
16,065
44,406
13,732
3,509
226,923 $
408,884 $
211,023
123,597
46,029
—
170,720
—
37,424
588,793
(386,525)
202,268
92,459
55,882
—
7,928
8,235
13,833
178,337
23,931
Realization of deferred tax assets is dependent on generating sufficient taxable income in future periods. Although realization
is not assured, management believes that it is more likely than not that the deferred tax assets will be realized. The valuation
allowance recorded at December 31, 2023 relates to a foreign tax credit carryforward of $177 million in Ireland, a net unrealized
investment loss position in the United States generating a deferred tax asset of $114 million, and net deferred tax assets of
$32 million in the United States. The valuation allowance recorded at December 31, 2022 relates to a foreign tax credit carryforward
of $211 million in Ireland, a net unrealized investment loss position in the United States generating a deferred tax asset of
$148 million, and net deferred tax assets of $12 million in the United States, $11 million in the United Kingdom and $5 million in
Canada.
At December 31, 2023, the deferred tax assets included $27 million in aggregate tax loss carryforwards (after valuation
allowance) including: $15 million in Singapore, $6 million in the United Kingdom, $3 million in Switzerland and $3 million in the
United States. At December 31, 2022, the deferred tax assets included $76 million in aggregate tax loss carryforwards (after
valuation allowance) including: $26 million in Switzerland, $20 million in Singapore, $10 million in the United States, $2 million in
Hong Kong, $2 million in United Kingdom and $1 million in Canada. The loss carryforwards at both December 31, 2023 and
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December 31, 2022 can be carried forward for an unlimited period of time except Canada which is limited to twenty years and
Switzerland which is limited to seven years.
The total amount of unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 was as follows (in
thousands of U.S. dollars):
Balance at January 1
Changes in tax positions taken during a prior year
Settlements
Impact of the change in foreign currency exchange rates
Balance at December 31
2023
10,709 $
4,773
(2,547)
(297)
12,638 $
2022
9,276 $
1,933
—
(500)
10,709 $
2021
10,272
(200)
—
(796)
9,276
$
$
For the years ended December 31, 2023, 2022 and 2021, there were no new uncertain tax positions taken. For the years ended
December 31, 2023, 2022 and 2021, there were no unrecognized tax benefits that, if recognized, would create a temporary
difference between the reported amount of an item in the Company’s Consolidated Balance Sheets and its tax basis. The Company
recognizes interest and penalties as Income tax expense (benefit) in the Consolidated Statements of Operations.
At December 31, 2023, $5 million of unrecognized tax benefits are expected to reverse within twelve months.
17. Share-Based Incentives
The Company is authorized to issue Class C common shares (Class C shares) and restricted share units to certain executives
and directors of the Company. Prior to the adoption of the Class C shares and related restricted share unit plan in 2021, the
Company was authorized to issue restricted Class B common shares (Class B shares) which ranked pari passu with Class C shares in
all respects.
Class C Shares and Restricted Share Unit Plan
During 2021, the Company designated a new class of voting Class C shares and also adopted a related restricted share unit
plan and French sub-plan (collectively the “RSU Plan”). The RSU Plan provides for the award of restricted share units to certain
executives of the Company (each a “Participant”). Effective January 1, 2024, the Company's Board of Directors approved the
Second Amended and Restated 2021 Restricted Share Unit Plan.
Grants under the RSU Plan are split evenly between restricted share units and performance share units (collectively referred to
as RSUs) which are adjusted for personal performance (range of 75% to 125% of target) and Company performance (range of 50%
to 150% of target), respectively, after one year following the date of grant. RSUs are generally granted on March 1 of a given year,
and the target number of RSUs initially granted is determined based on a long-term incentive (“LTI”) target award amount divided
by the latest U.S. GAAP book value (or common shareholder’s equity) per share published as of December 31.
The RSUs are granted at $nil consideration and cliff vest after a three year vesting period from the date of grant, in accordance
with the terms set out in the RSU Agreement and the RSU Plan provided to the Participant. An acceleration of the vesting period
will occur under certain circumstances, including death or permanent disability of the Participant or change of control for the
Company. Notwithstanding these provisions, the Company's Board of Directors has authority to accelerate the vesting period at its
own discretion. The RSUs are eligible for imputed dividends which are subject to the same forfeiture provisions as the related
RSUs. RSUs do not entitle the holder to any voting rights for the Company. RSUs are settled in unrestricted Class C shares
following the vesting date.
Class C shares can also be purchased by or granted to certain executives or non-executive directors of the Company, provided
requisite approvals have been granted, at the discretion of the Company's Board of Directors. Purchases of Class C shares are based
on the latest U.S. GAAP book value as of the applicable valuation date.
Unrestricted Class C shares can be sold back to the Company at a redemption price based on the Company’s U.S. GAAP book
value per share as of the applicable valuation date, at the discretion of the Company as further defined in the RSU Agreement and
RSU Plan. The RSU Plan requires that the Participant can only sell Class C shares back to the Company provided that the
Participant at a minimum holds cumulative Class C shares and RSUs in the lesser amount of (i) two times their gross annual LTI
target value or (ii) $1,000,000, unless otherwise agreed (the “Minimum Holding Requirement”).
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Class B Shares
During 2017, the Company designated a class of voting Class B shares. Prior to the approval of the Class C shares and related
RSU Plan in 2021, Class B shares could either be purchased by or granted to certain executives or non-executive directors of the
Company at the discretion of the Company in line with the provisions set out in the Class B Certificate of Designation, or any sub-
plan or addendum thereto. Effective 2021, the Company no longer grants Class B shares or authorizes new purchases of Class B
shares.
All Class B shares were extinguished in 2022 and there were no longer any Class B shares issued or outstanding for the years
ended December 31, 2023 and 2022, respectively.
Summary of Activity
Restricted Class B shares, Class C shares and RSUs granted are recognized at fair value over the requisite service period. The
Company has elected to recognize forfeitures as they occur rather than estimating service-based forfeitures over the requisite service
period.
In July 2022, Covéa Coopérations completed the acquisition of PartnerRe Ltd. from Exor. Upon the change of control, all
Class B shares, Class C shares and RSUs vested and were repurchased by the Company, with the exception of Class C shares and
RSUs issued in 2022. The repurchase price for all Class B shares, Class C shares and RSUs was based on a valuation utilizing the
Covéa Coopérations acquisition purchase price per share of the Company. The Company's total settlement amount paid upon change
of control was $43 million, net of $3 million of tax withholding, which included $40 million paid for granted shares and RSUs and
$3 million for certain shares that were previously purchased by executives and directors of the Company.
Included in Accounts payable, accrued expense and other in the Consolidated Balance Sheets was a liability of $27 million for
Class C Shares and RSUs at December 31, 2023, and a liability of $7 million for Class C shares and RSUs at December 31, 2022.
The compensation expense related to Class B shares, Class C shares and RSUs for the years ended December 31, 2023, 2022, and
2021 was $21 million, $29 million and $13 million, respectively, included in Other expenses in the Company's Consolidated
Statements of Operations. The 2022 expense included the impact of accelerated vesting of Class B shares, Class C shares and RSUs
due to the change of control.
As of December 31, 2023, there was $16 million of total unrecognized compensation cost related to RSUs, which will be
recognized on a weighted average basis during the next 1.5 years.
The following tables provide activity summaries of the Company's Class B shares, Class C shares, and RSUs outstanding:
Outstanding December 31, 2020
Granted
Outstanding December 31, 2021
Forfeitures
Accelerated vesting and repurchase upon change of control
Granted
Outstanding December 31, 2022
Forfeitures
Vested
Granted
Outstanding December 31, 2023
RSUs (1)
—
263,214
263,214
(2,964)
(260,250)
265,805
265,805
(29,044)
(42,838)
222,093
416,016
(1) For RSUs, the number of grants in the table are shown at the maximum number that can be attained if the performance
conditions are fully met for personal and Company performance. Forfeitures represent adjustments to grants falling below the
maximum attainable as a result of not fully meeting the performance conditions.
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Outstanding December 31, 2020
Granted
Purchased
Outstanding December 31, 2021
Accelerated vesting and repurchase upon change of control
Granted
Outstanding December 31, 2022
Granted
RSUs and imputed dividends settled in Class C shares
Outstanding December 31, 2023
Outstanding December 31, 2020
Repurchased
Expiration of restricted period
Outstanding December 31, 2021
Expiration of restricted period
Accelerated vesting and repurchase upon change of control
Outstanding December 31, 2022
Outstanding December 31, 2023
18. Retirement Benefit Arrangements
Restricted Class C
shares
Unrestricted Class C
shares
Total Class C shares
—
7,373
—
7,373
(7,373)
7,666
7,666
7,722
—
15,388
—
—
2,072
2,072
(5,819)
3,747
—
—
44,459
44,459
—
7,373
2,072
9,445
(13,192)
11,413
7,666
7,722
44,459
59,847
Restricted Class B
shares
Unrestricted Class B
shares
Total Class B shares
189,166
(29,048)
(20,298)
139,820
(32,168)
(107,652)
—
—
85,498
(22,957)
20,298
82,839
32,168
(115,007)
—
—
274,664
(52,005)
—
222,659
—
(222,659)
—
—
For employee retirement benefits, the Company maintains certain defined contribution plans and other active and frozen
defined benefit plans.
Defined Contribution Plans
Contributions are made by the Company, and in some locations, these contributions are supplemented by the local plan
participants. Contributions are based on a percentage of the participant’s base salary depending upon competitive local market
practice and vesting provisions meeting legal compliance standards and market trends. The accumulated benefits for the majority of
these plans vest immediately or over a period of up to four years. As required by law, certain retirement plans also provide for death
and disability benefits and lump sum indemnities to employees upon retirement.
The Company incurred expenses for these defined contribution arrangements of $14 million, $13 million, and $13 million for
the years ended December 31, 2023, 2022 and 2021, respectively, included within Other expenses in the Company's Consolidated
Statements of Operations.
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Active Defined Benefit Plan
The majority of the defined benefit obligation at December 31, 2023 relates to a hybrid plan accounted for as a defined benefit
plan under U.S. GAAP for the Company’s Zurich office employees (the Zurich Plan).
At December 31, 2023 and 2022, the funded status of the Zurich Plan was as follows (in thousands of U.S. dollars):
Underfunded pension obligation at beginning of year
Change in pension obligation
Service cost
Interest cost
Plan participants’ contributions
Actuarial losses (gains)
Plan amendments
Benefits paid
Foreign currency adjustments
Settlements
Change in pension obligation
Change in fair value of plan assets
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Benefits paid
Foreign currency adjustments
Settlements
Change in fair value of plan assets
Underfunded pension obligation at end of year
Additional information:
Projected benefit obligation at end of year (1)
Fair value of plan assets at end of year
Underfunded pension obligation at end of year
Accumulated pension obligation at end of year (2)
$
$
2023
2022
9,538 $
32,636
7,300 $
8,746
3,707
4,194
373
3,792
18,002
(37,992)
(2,606)
1,775
18,500
(13,064)
—
(4,576)
(3,736)
—
$
37,808 $
(33,393)
$
5,590 $
(14,936)
8,396
4,194
1,775
16,658
(13,064)
7,658
3,792
(4,576)
(2,233)
—
$
$
23,549 $
(10,295)
23,797 $
9,538
$ 207,336 $ 169,527
$ 183,539 $ 159,989
$
23,797 $
9,538
$ 200,462 $ 167,560
(1) Represents the actuarial present value of all benefits attributed to employee service rendered to December 31, measured using
assumptions as to future compensation levels
(2) Represents the actuarial present value of benefits (whether vested or non-vested) attributed to employee service rendered and
compensation to December 31, with no assumption about future compensation levels
At December 31, 2023 and 2022, the underfunded pension obligation of $24 million and $10 million, respectively, was
included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheets. The amounts included in
Accumulated other comprehensive income (loss) at December 31, 2023 and 2022 were cumulative losses of $8 million (net of $2
million of taxes) and cumulative gains of $6 million (net of $1 million of taxes), respectively.
The net periodic benefit cost reported in Other expenses in the Consolidated Statements of Operations for the years ended
December 31, 2023, 2022 and 2021 was $3 million, $1 million and $8 million, respectively.
The projected benefit obligation increased by $38 million during 2023, due primarily to an update of actuarial assumptions of
$18 million to reflect a decline in discount rates, and foreign currency adjustments of $19 million due to the strengthening in the
value of the Swiss Franc versus the U.S. dollar during the year, partially offset by $13 million of settlements. This was offset by
increases of the fair value of plan assets of $24 million, driven by $17 million in foreign currency adjustments and $8 million in
employer contributions, partially offset by $13 million of settlements. In 2022, the decrease in the projected benefit obligation was
driven by an update of actuarial assumptions primarily to reflect an increase in discount rates during the year. This was offset by
decreases to the fair value of plan assets of $10 million, due primarily to the actual return on plan assets during the year, partially
offset by $8 million in employer contributions.
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The investment strategy for the plan is to achieve a consistent long-term return, which will provide sufficient funding for
future pension obligations while limiting risk. The expected long-term rate of return on plan assets is based on the expected asset
allocation and assumptions concerning long-term interest rates, inflation rates and risk premiums for equities above the risk-free
rates of return. These assumptions take into consideration historical long-term rates of return for the relevant asset categories. The
investment strategy is reviewed regularly.
The Zurich Plan is a partially insured scheme participating in a single investment pool under the pension provider. As at
December 31, 2023 and 2022, the coverage ratio was 103% and 101%, respectively, based on the performance of the assets. The fair
value of the Zurich Plan’s assets, comprised of an investment pool of funds and including cash, at December 31, 2023 and 2022 was
$184 million and $160 million, respectively. The partially insured funds comprise the accumulated pension plan contributions and
investment returns thereon. These funds meet the definition of Level 2 inputs of the fair value hierarchy as defined in Note 4(a). The
actual return on plan assets for the years ended December 31, 2023, 2022, and 2021 was a gain of $6 million, loss of $15 million,
and gain of $7 million, respectively.
The assumptions used to determine the Zurich Plan’s pension obligation and net periodic benefit cost for the years ended
December 31, 2023, 2022 and 2021 were as follows:
Discount rate
Interest crediting rate
Expected long-term return on plan assets
Rate of compensation increase
2023
2022
2021
Pension
obligation
Net periodic
benefit cost
Pension
obligation
Net periodic
benefit cost
Pension
obligation
Net periodic
benefit cost
1.30 %
1.30 %
—
2.25 %
2.20 %
2.20 %
5.00 %
2.25 %
2.20 %
2.20 %
—
2.25 %
0.20 %
1.00 %
4.25 %
2.00 %
0.20 %
1.00 %
—
2.00 %
0.10 %
1.00 %
3.50 %
2.00 %
At December 31, 2023, estimated employer contributions to be paid in 2024 related to the Zurich Plan were $8 million and
future benefit payments were estimated to be paid as follows (in thousands of U.S. dollars):
Year
2024
2025
2026
2027
2028
2029 to 2033
19. Commitments and Contingencies
(a) Concentration of Credit Risk
Fixed maturities
Amount
13,455
11,660
12,846
11,225
10,689
57,052
$
$
$
$
$
$
The Company’s investment portfolio is managed following prudent standards of diversification and a prudent investment
philosophy. The Company is not exposed to any significant credit concentration risk on its investments, except for debt securities
issued by the U.S. government and government sponsored enterprises and other highly rated non-U.S. sovereign governments’
securities. At December 31, 2023 and 2022, other than the U.S. government and U.S. government sponsored enterprises, the
Company’s fixed maturity investment portfolio did not contain exposure to any non-U.S. sovereign government or any other issuer
that accounted for more than 10% of the Company’s shareholders’ equity. The Company keeps cash and cash equivalents in several
banks and ensures that there are no significant concentrations of credit risk in any one bank.
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Derivatives
The Company’s investment strategy allows for the use of derivative instruments, subject to strict limitations. Derivative
instruments may be used to replicate investment positions and for the purpose of managing overall currency risk, market exposures
and portfolio duration, for hedging certain investments, or for enhancing investment performance that would be allowed under the
Company’s investment policy if implemented in other ways. The Company is exposed to credit risk in the event of non-performance
by the counterparties to the Company’s derivative contracts. However, the Company diversifies the counterparties to its derivative
contracts to reduce credit risk, and because the counterparties to these contracts are high credit quality international banks, the
Company does not anticipate non-performance. These contracts are generally of short duration and settle on a net basis. The
difference between the contract amounts and the related market value represents the Company’s maximum credit exposure.
Underwriting operations
The Company is also exposed to credit risk in its underwriting operations, most notably in the credit/surety line. Loss
experience in these lines of business is cyclical and is affected by the state of the general economic environment. The Company
provides its clients in these lines of business with reinsurance protection against credit deterioration, defaults or other types of
financial non-performance of or by the underlying credits that are the subject of the reinsurance provided and, accordingly, the
Company is exposed to the credit risk of those credits. The Company mitigates the risks associated with these credit-sensitive lines
of business through the use of risk management techniques such as risk diversification, careful monitoring of risk aggregations and
accumulations and, at times, through the use of retrocessional reinsurance protection and the purchase of credit default, total return
and interest rate swaps.
The Company has exposure to credit risk as it relates to its business written through brokers, if any of the Company’s brokers
is unable to fulfill their contractual obligations with respect to payments to the Company. In addition, in some jurisdictions, if the
broker fails to make payments to the insured under the Company’s policy, the Company might remain liable to the insured for the
deficiency. The Company’s exposure to such credit risk is somewhat mitigated in certain jurisdictions by contractual terms.
The Company has exposure to credit risk related to reinsurance balances receivable, reinsurance recoverable on paid and
unpaid losses, funds held by reinsured companies and deposit assets. The credit risk exposure related to these balances is mitigated
by several factors, including but not limited to, credit checks performed as part of the underwriting process, monitoring of aged
receivable balances and, in certain cases, the contractual right to offset amounts payable by the Company to the counterparty against
amounts due to the Company from the counterparty.
In assessing future default for reinsurance balances receivable, the Company evaluates the valuation allowance under the loss
rate method and utilizes historic loss activity, adjusted for its assessment of current market conditions and reasonable and
supportable forecasts on loss rates. At December 31, 2023 and 2022, the Company's allowance for credit losses for its reinsurance
balances receivable was $11 million and $12 million, respectively. In assessing an allowance for funds held by reinsured companies
and deposit assets, the Company considers historical information and the financial strength and credit ratings of counterparties to
determine the appropriateness of the allowance. In assessing future default for these balances, the Company evaluates the valuation
allowance under the probability of default and loss given default method and utilizes counterparty credit ratings from major rating
agencies, as well as assessing the current market conditions and reasonable and supportable forecasts for the likelihood of default.
At December 31, 2023 and 2022, the Company's allowance for credit losses was $4 million for funds held by reinsured companies
and $1 million for deposit assets, respectively. See Note 12 for discussion of credit risk related to reinsurance recoverable on paid
and unpaid losses.
(b) Lease Arrangements
The Company leases office space under operating leases expiring in various years through 2038. At the lease commencement,
the Company determines the classification of each lease as either a finance lease or an operating lease. The Company currently only
has leases classified as operating and the lease expense is recognized on a straight-line basis over the lease term. Operating lease
right-of-use assets and operating lease liabilities are recognized at the commencement date of the lease based on the present value of
lease payments over the lease term. Variable lease payments are excluded from these lease payments to the extent they are not based
on consumer price index or a market index and are recognized in the period in which the obligation for those payments is incurred.
Many of the Company's lease terms include options to extend or terminate the lease at the discretion of the Company, and are
reflected in the lease measurement only if the Company is reasonably certain of exercising those options. The Company's lease
agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company has lease agreements with lease and non-lease components, such as common-area maintenance costs. The
Company has elected the practical expedient to account for lease components together with non-lease components as a single lease
component for all real estate leases.
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As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information
available at the lease commencement date in determining the present value of lease payments.
The following table summarizes the balances related to the Company's total lease expense and provides supplemental other
information related to operating leases for the year ended December 31, 2023 and 2022 (in thousands of U.S. dollars):
Operating lease costs
Variable lease costs
Sublease income
Total lease costs
Other information:
Operating lease right-of-use assets (1)
Operating lease liabilities (2)
Operating lease right-of-use assets obtained in exchange for lease obligations, non-cash
Operating cash outflows from operating leases
Weighted-average remaining lease term on operating leases (3)
Weighted-average discount rate on operating leases (4)
2023
13,478
1,660
(140)
14,998
68,400
78,881
6,517
13,834
$
$
$
$
$
$
2022
12,437
1,292
—
13,729
71,174
79,925
4,016
13,545
$
$
$
$
$
$
7.4 Yrs
2.5 %
7.8 Yrs
2.3 %
(1) Included in Other assets in the Consolidated Balance Sheets
(2) Included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheets
(3) Weighted-average remaining lease term is calculated on the basis of the remaining lease term and the lease liability balance
for each lease as of the reporting date
(4) Weighted-average discount rate is calculated on the basis of the discount rate for the lease that was used to calculate the lease
liability balance for each lease as of the reporting date and the remaining balance of the lease payments for each lease as of
the reporting date
The following table shows the contractual maturities of the Company's operating lease liabilities at December 31, 2023 (in
thousands of U.S. dollars):
Year
2024
2025
2026
2027
2028
2029 to 2038
Discount
Total discounted operating lease liabilities
(c) Other Agreements
Expected cash flows
$
14,806
14,364
14,203
13,025
8,796
20,499
(6,812)
78,881
$
The Company has entered into maintenance agreements and service agreements that provide for business and information
technology support and computer equipment. Future payments under these contracts amount to $34 million, with $23 million and $5
million to be paid during 2024 and 2025, respectively, and the remainder to be paid through to 2029.
The Company has entered into certain investments, including investments in VIEs (see Note 5(e)), with unfunded capital
commitments. As of December 31, 2023, the Company expects to fund capital commitments totaling $522 million with $230
million, $105 million, $66 million, $43 million, and $39 million expected to be paid during 2024, 2025, 2026, 2027 and 2028,
respectively.
In exchange for a fee, the Company has committed to provide statutory reserve support to a third party by funding loans if
certain events occur. At December 31, 2023, the Company does not believe that it will be required to provide any funding under this
commitment, as the occurrence of the defined events is considered remote.
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(d) Legal Proceedings
Litigation
The Company’s reinsurance subsidiaries, and the insurance and reinsurance industry in general, are subject to litigation and
arbitration in the normal course of their business operations. In addition to claims litigation and disputes, the Company and its
subsidiaries may be subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly
relate to claims on reinsurance contracts. While the outcome of any such litigation cannot be predicted with certainty, the Company
will dispute all allegations against the Company and/or its subsidiaries that management believes are without merit.
In March 2019, a cedant (“the Cedant”) brought a motion for a declaratory judgment against the Company seeking a
declaration that the Cedant had properly exercised its right, pursuant to an agreement between the parties, to recapture certain
portfolios of life reinsurance contracts that the Cedant had retroceded to the Company. In February 2021, the Company reached a
settlement with the Cedant.
At December 31, 2023, the Company was not a party to any litigation or arbitration that it believes could have a material
adverse effect on the financial condition, results of operations or liquidity of the Company.
20. Credit Agreements
In the normal course of its operations, the Company enters into agreements with financial institutions to obtain unsecured and
secured letter of credit facilities. At December 31, 2023, the total amount of such credit facilities available to the Company was
approximately $1,027 million, with the significant facilities as follows:
•
•
•
•
$400 million combined credit facility, with the first $100 million being unsecured and any further utilization secured. This
credit facility matures each year on October 23, and automatically extends for a further year, unless canceled by either
counterparty.
$250 million secured credit facility, that reduces to $150 million on and after March 31, 2024 and matures on December
31, 2024.
$200 million secured credit facility, that matures each year on December 21, and automatically extends for a further year
unless canceled by either counterparty.
$175 million unsecured credit facility (of which $50 million is committed and $125 million is uncommitted), that matures
on December 19, 2026.
Under the terms of certain reinsurance agreements, irrevocable letters of credit were issued for a total of $130 million on an
unsecured basis and $480 million on a secured basis at December 31, 2023 in respect of losses and unearned premium reserves. The
committed secured credit facilities maintained by the Company are used for the issuance of letters of credit which must be fully
secured with either cash, government bonds and/or investment grade bonds.
The agreements include default covenants, which could require the Company to fully secure the outstanding letters of credit to
the extent that the facility is not already fully secured and/or result in the Company not being allowed to issue any new letters of
credit.
At December 31, 2023, no conditions of default existed under these facilities.
21. Related Party Transactions
The transactions between related parties discussed below were entered into at arm's-length.
(a) Transactions with Covéa Group
Covéa Coopérations is part of the Covéa Group, which meets the definition of a related party. In this context, the Covéa Group
covers Covéa (the parent company of the Covéa Group, whose legal form is "SGAM" i.e. a mutual insurance group company), its
affiliated mutual companies, Covéa Coopérations, and their subsidiaries and affiliates included in their consolidated financial
statements.
During 2023, the Company declared and paid to the Covéa Coopérations common share dividends totaling $200 million.
During 2022, no common share dividends were declared and paid to Covéa Coopérations. In addition to the common share
dividends, a deemed dividend was paid to Covéa Coopérations during 2023 of $18 million related to the Company acquiring
renewal rights associated with an identified set of reinsurance treaties written by Covéa Coopérations. The Company is providing
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Table of Contents
run-off services to Covéa Coopérations for the related in-force business until the natural expiry of those policies. For the year ended
December 31, 2023, the Company earned $3 million related to services provided which was recognized as a receivable at the year
end.
In the normal course of its underwriting activities, the Company entered into assumed reinsurance agreements with certain
affiliates of the Covéa Group.
Included in the Consolidated Statements of Operations for the year ended December 31, 2023 were the following transactions
related to the Covéa Group (in thousands of U.S. dollars):
Gross premiums written
Net premiums written
Decrease in unearned premiums
Net premiums earned
Losses and loss expenses
Acquisition costs
2023
10,759
10,759
305
11,064
21,697
33
$
$
$
$
$
$
Included in the Consolidated Balance Sheets at December 31, 2023 and 2022 were the following balances related to the Covéa
Group (in thousands of U.S. dollars):
Reinsurance balances receivable
Non-life reserves
Life and health reserves
Unearned premiums
Other reinsurance balances payable
2023
2022
$
$
$
$
$
3,781 $
107,736 $
5,798 $
335 $
206 $
3,169
95,013
1,175
571
106
Upon close of the acquisition of the Company's common shares by Covéa Coopérations in 2022, the Covéa Group sold its
interest in the Company's third-party capital vehicles.
(b) Transactions with EXOR
Prior to the acquisition of the Company's common shares by Covéa Coopérations in 2022, EXOR was a related party to
PartnerRe. The following transactions occurred during EXOR's ownership of the Company.
During 2022 and 2021, the Company declared and paid to EXOR Nederland N.V. common share dividends totaling
$178 million and $107 million, respectively.
In the normal course of its investment operations, the Company bought or held securities of companies affiliated with the
Company, including the following:
•
•
•
In 2021, the Company invested in two Exor managed funds. Net unrealized losses related to these funds of $72 million
were recorded in the Consolidated Statements of Operations for the year ended December 31, 2022 (including $34 million
pre-acquisition), compared to net unrealized gains of $115 million for the year ended December 31, 2021.
In 2018, the Company entered into an agreement with Exor to invest in a newly formed limited partnership, Exor Seeds
L.P. During 2021, the Company sold its interest in Exor Seeds L.P. to Exor S.A. at a transaction price of $51 million.
In 2017, the Company invested $500 million in two Exor managed public equity funds. In conjunction with the acquisition
of the Company by Covéa Coopérations in 2022, the Company sold a portion of these funds to EXOR for total
consideration of $772 million, resulting in a realized gain of $450 million, the majority of which was included in unrealized
gains in prior periods. Net realized and unrealized investment gains related to these funds of $40 million (including
$24 million of losses pre-acquisition) and $115 million were recorded in the Consolidated Statements of Operations for the
years ended December 31, 2022 and 2021, respectively.
During the years ended December 31, 2022 and 2021, the Company was a party to various agreements with Exor whereby
Exor provided services in exchange for fees as follows:
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Table of Contents
•
•
•
•
advisory services related to certain real estate investments where the Company paid approximately $265 thousand and $433
thousand for services rendered in 2022 and 2021, respectively. This agreement is terminated effective June 30, 2024.
investment advisory services and use of certain office space, where the Company paid $175 thousand related to services
provided in 2021. This agreement was terminated in 2021.
certain advisory services for a fee of $184 thousand for 2022 and $350 thousand for 2021. This agreement terminated in
2022 in conjunction with the acquisition of the Company by Covéa Coopérations.
consulting services related to certain investments such as alternative fixed income, real estate, public equity and private
equity funds as well as co-invest opportunities. The related consulting service agreement was effective April 1, 2021 and
the Company paid $3.9 million and $2.6 million related to services provided in 2022 and 2021, respectively. This
agreement was terminated effective March 31, 2023.
Following the acquisition of the Company's common shares by Covéa Coopérations in 2022, EXOR is no longer a related
party to PartnerRe.
(c) Other
In the normal course of its underwriting activities, the Company has entered into reinsurance agreements with companies
affiliated with the Company. Refer to Note 12 for further details.
22. Segment Information
The Company monitors the performance of its operations in three segments: Property and Casualty (P&C), Specialty and Life
and Health. The business in the P&C and Specialty segments is collectively referred to as Non-life business. P&C, Specialty and
Life and Health each separately represent markets that are reasonably homogeneous in terms of client types, buying patterns,
underlying risk patterns and approach to risk management.
The P&C segment is comprised of property and casualty business underwritten, including property catastrophe, facultative and
U.S. health risks. The Specialty segment is comprised of specialty business underwritten, including treaty and facultative contracts.
The Life and Health segment is comprised of mortality, morbidity, longevity and financial reinsurance solutions businesses.
Management measures results for the P&C and Specialty segments on the basis of the loss ratio, acquisition ratio, technical
ratio, other expense ratio and combined ratio (all defined below). Management measures results for the Life and Health segment on
the basis of the allocated underwriting result, which includes underwriting result and net investment income allocated to life
business.
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The segment results for the years ended December 31, 2023, 2022 and 2021 are presented below (in millions of U.S. dollars,
except ratios).
Segment Information
For the year ended December 31, 2023
Gross premiums written
Net premiums written
P&C
segment
Specialty
segment
Total
Non-life
Life
and Health
segment
Corporate
and Other
Total
$ 4,771
$ 2,223
$ 6,994
$ 3,909
$ 1,939
$ 5,848
$
$
2,108 $
2,081 $
— $
9,102
— $
7,929
Decrease (increase) in unearned premiums
37
(47)
(10)
—
—
(10)
$ 3,946
$ 1,892
$ 5,838
$
2,081 $
— $
7,919
(986)
(3,182)
(1,808)
Net premiums earned
Losses and loss expenses
Acquisition costs
Technical result
Other income
Other expenses
Underwriting result
Net investment income
Allocated underwriting result
Market risk benefit gains
Net realized and unrealized investment gains
Interest expense
Amortization of intangible assets
Net foreign exchange losses
Income tax benefit
Interest in losses of equity method investments
Net income
Loss ratio (1)
Acquisition ratio (2)
Technical ratio (3)
Other expense ratio (4)
Combined ratio (5)
(109)
164 $
40
(118)
86
73
159
$
$
$
—
—
— $
(4,990)
(1,563)
1,366
1
(214)
n/a $
573
n/a
7
517
(58)
(8)
(43)
328
41
(463)
944
646
n/a
7
517
(58)
(8)
(43)
328
(15)
n/a $
(15)
2,318
(2,196)
(960)
$ 790
(494)
$ 412
(1,454)
$ 1,202
—
—
—
(92)
$ 698
(39)
$ 373
(131)
$ 1,071
55.7 %
52.1 %
54.5 %
24.3
26.1
24.9
80.0 %
78.2 %
79.4 %
2.3
2.1
2.2
82.3 %
80.3 %
81.6 %
(1) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned.
(2) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned.
(3) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio.
(4) Other expense ratio is obtained by dividing other expenses by net premiums earned.
(5) Combined ratio is defined as the sum of the technical ratio and the other expense ratio.
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Table of Contents
Gross premiums written
Net premiums written
Segment Information
For the year ended December 31, 2022
P&C
segment
Specialty
segment
Total
Non-life
Life
and Health
segment
Corporate
and Other
Total
$ 5,025
$ 1,990
$ 7,015
$ 4,234
$ 1,665
$ 5,899
$
$
1,674 $
1,645 $
— $
8,689
— $
7,544
(Increase) decrease in unearned premiums
(293)
5
(288)
1
—
(287)
Net premiums earned
Losses and loss expenses
Acquisition costs
Technical result
Other income
Other expenses
Underwriting result
Net investment income
Allocated underwriting result
Market risk benefit gains
Net realized and unrealized investment losses
Interest expense
Amortization of intangible assets
Net foreign exchange losses
Income tax expense
Interest in earnings of equity method investments
Net loss
Loss ratio
Acquisition ratio
Technical ratio
Other expense ratio
Combined ratio
$ 3,941
$ 1,670
$ 5,611
$
1,646 $
— $
7,257
(2,410)
(995)
(903)
(435)
(3,313)
(1,430)
(1,413)
(107)
—
—
$ 536
$ 332
$ 868
$
126 $
— $
—
—
—
39
1
(4,726)
(1,537)
994
40
(84)
(35)
(119)
(93)
(203)
(415)
$ 452
$ 297
$ 749
$
$
72
74
146
n/a $
324
n/a
121
619
398
n/a
121
(1,969)
(1,969)
(55)
(9)
(14)
(42)
11
(55)
(9)
(14)
(42)
11
n/a $
(940)
61.2 %
54.1 %
59.0 %
25.2
26.0
25.5
86.4 %
80.1 %
84.5 %
2.1
2.1
2.1
88.5 %
82.2 %
86.6 %
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Table of Contents
Gross premiums written
Net premiums written
Segment Information
For the year ended December 31, 2021
P&C
segment
Specialty
segment
Total
Non-life
Life
and Health
segment
Corporate
and Other
Total
$ 4,541
$ 2,016
$ 6,557
$
1,647 $
— $
8,204
(Increase) decrease in unearned premiums
(194)
13
(181)
3,722
1,789
5,511
1,623
4
—
—
7,134
(177)
Net premiums earned
Losses and loss expenses
Acquisition costs
Technical result
Other income
Other expenses
Underwriting result
Net investment income
Allocated underwriting result
Market risk benefit gains
Net realized and unrealized investment gains
Interest expense
Amortization of intangible assets
Net foreign exchange losses
Income tax expense
Interest in earnings of equity method investments
Net income
Loss ratio
Acquisition ratio
Technical ratio
Other expense ratio
Combined ratio
$ 3,528
$ 1,802
$ 5,330
$
1,627 $
— $
6,957
(2,391)
(1,052)
(3,443)
(864)
(415)
(1,279)
(1,408)
(113)
—
—
$ 273
$ 335
$ 608
$
106 $
— $
—
—
—
26
3
(4,851)
(1,392)
714
29
(71)
(30)
(101)
(88)
(210)
(399)
$ 202
$ 305
$ 507
$
$
44
81
125
67.8 %
58.4 %
64.6 %
24.5
23.0
24.0
92.3 %
81.4 %
88.6 %
2.0
1.7
1.9
94.3 %
83.1 %
90.5 %
n/a $
295
n/a
20
38
(56)
(9)
(36)
(40)
127
n/a $
344
376
n/a
20
38
(56)
(9)
(36)
(40)
127
764
The following table provides the geographic distribution of gross premiums written by region for the years ended
December 31, 2023, 2022 and 2021 (in millions of U.S. dollars, except percentages):
North America
Europe
Asia, Australia and New Zealand
Latin America and the Caribbean
Middle East, Africa, Russia and the Commonwealth of Independent
States (CIS)
Total
2023
2022
2021
$ 5,089
2,916
744
249
104
56 % $ 5,040
58 % $ 4,649
57 %
32
2,592
30
2,410
8
3
1
720
223
114
8
3
1
814
189
142
29
10
2
2
$ 9,102
100 % $ 8,689
100 % $ 8,204
100 %
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The following table provides the gross premiums written by segment and line of business for the years ended December 31,
2023, 2022 and 2021 (in millions of U.S. dollars, except percentages):
P&C
Casualty
Catastrophe
Property
U.S. health
Multiline and other
Motor
Total P&C
Specialty
Financial risks
Property
Energy
Aviation and space
Marine
Agriculture
Engineering
Multiline and other
Total Specialty
Life and Health
Total
2023
2022
2021
$
2,391 $
2,777 $
2,145
1,077
783
355
105
60
933
764
355
119
77
924
809
351
183
129
4,771 $
5,025 $
4,541
693 $
634 $
449
406
360
203
47
34
31
240
346
362
223
101
39
45
2,223 $
2,108 $
9,102 $
1,990 $
1,674 $
8,689 $
510
277
314
416
174
205
100
20
2,016
1,647
8,204
$
$
$
$
$
The Company produces its business both through brokers and through direct relationships with insurance company clients.
None of the Company’s cedants individually accounted for more than 10% of total gross premiums written during each of the years
ended December 31, 2023, 2022 and 2021.
The Company has two brokers that individually accounted for 10% or more of its gross premiums written during the years
ended December 31, 2023, 2022 and 2021, as follows:
Aon PLC
Marsh & McLennan Companies, Inc
2023
2022
2021
26 %
25 %
26 %
30 %
24 %
28 %
The following table summarizes the percentage of gross premiums written through these two brokers by segment for the years
ended December 31, 2023, 2022 and 2021:
P&C
Specialty
Life and Health
23. Subsequent Events
2023
2022
2021
65 %
65 %
5 %
67 %
70 %
6 %
63 %
66 %
6 %
On February 15, 2024, the Company's Board of Directors declared a dividend for the period December 15, 2023 – March 14,
2024 of $0.3046875 per share on the Company’s 4.875% Fixed Rate Non-Cumulative Redeemable Preferred Shares, Series J. The
dividend was payable on March 15, 2024 to shareholders of record on February 29, 2024.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of PartnerRe Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of PartnerRe Ltd. and its subsidiaries (the “Company”) as of
December 31, 2023 and 2022 and the related consolidated statements of operations and comprehensive income (loss), shareholders’
equity, and cash flows for each of the two years in the period ended December 31, 2023, including the related notes and financial
statement schedules as of December 31, 2023 and 2022 and for each of the two years in the period ended December 31, 2023, listed
in the index appearing under Item 18 (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023
in conformity with accounting principles generally accepted in the United States of America.
We also have audited the adjustments to retrospectively apply the change in accounting for long-duration insurance contracts as
described in Note 3. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to
audit, review, or apply any procedures to the 2021 consolidated financial statements of the Company other than with respect to the
adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2021 consolidated financial
statements taken as a whole.
Change in Accounting Principle
As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for long-
duration insurance contracts in 2023.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Adoption of the New Accounting Standard for Long-Duration Contracts
As described above and in Notes 2, 3, 10 and 11 to the consolidated financial statements, the Company has adopted the new
accounting standard relating to targeted improvements to existing recognition, measurement, presentation and disclosure
requirements for long-duration insurance contracts (the “LDTI standard”). The Company adopted the LDTI standard on January 1,
2023 with retroactive cumulative effect to January 1, 2021 for its traditional and limited payment long-duration contracts, on a
modified retrospective basis, except for market risk benefits which used a full retrospective basis. As a result of the adoption, the
consolidated financial statements as of and for the years ended December 31, 2022 and 2021 have been adjusted to reflect the
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effects of applying the LDTI standard. The impact of adopting the LDTI standard resulted in transition date adjustments to retained
earnings and accumulated other comprehensive loss of $161 million and $125 million, respectively, as of January 1, 2021, and
adjustments to retained earnings and accumulated other comprehensive income of $30 million and $79 million, respectively, as of
December 31, 2022, and to net income of $150 million and $41 million for the years ended December 31, 2022 and 2021,
respectively. The transition date and transition period adjustments are principally related to the changes in discount rate for the
liability for future policy benefits and changes in instrument-specific credit risk for market risk benefits as it pertains to accumulated
other comprehensive income/loss. Retained earnings was adjusted by the impact to future policy benefits related to cohorts with a
net premium ratio greater than 100% at the transition date, partially offset by favorable movement from the fair value accounting for
GMDB products. For traditional and limited payment long-duration contracts, the Company accrues a liability for future policy
benefits (LFPB), based on a net premium ratio. The net premium ratio is the proportion of present value of gross premiums required
to provide for all benefits and certain expenses. Management developed a discount rate methodology used to estimate the liability
for future policy benefits for the Company’s traditional reinsurance liabilities and constructed discount rate curves that reference
upper-medium grade fixed-income instrument yields (single A rated credit). The methodology uses observable market data, where
available, and uses various estimation techniques. Discount rates are updated quarterly. Market risk benefits include certain contract
features that provide minimum guarantees to policyholders, such as Guaranteed Minimum Death Benefit (GMDB) and are presented
separately on the balance sheet either in an asset or liability position. Market risk benefits are measured at fair value using an option-
based valuation model based on current net amounts at risk, market data, Company experience and other factors.
The principal considerations for our determination that performing procedures relating to the adoption of the LDTI standard is a
critical audit matter are (i) the significant judgment by management when adopting the LDTI standard and determining the transition
date and transition period adjustments, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and
evaluating audit evidence related to management’s discount rate methodology and development of the yield curve and
management’s significant market risk benefit assumptions used in determining the fair value of market risk benefits with specific
reference to interest rates and volatility, and (iii) the audit effort involved the use of professionals with specialized skills and
knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included, among others, (i) evaluating management’s process for
adopting the LDTI standard and for determining the transition date and transition period adjustments, (ii) testing the relevance and
reliability of the external data used by management to develop the discount rate curve, (iii) evaluating whether the valuation
technique accurately reflects the discount rate curve, (iv) testing the completeness and accuracy of the data used by management to
develop and update the significant market risk benefit assumptions, (v) evaluating whether significant market risk benefit
assumptions are accurately reflected in the applicable valuation technique, and (vi) the use of professionals with specialized skills
and knowledge to assist in (a) evaluating the appropriateness of the discount rate methodology and the reasonableness of the
discount rate curve based on the consideration of the Company’s experience, industry trends, and market conditions, as applicable,
(b) evaluating the appropriateness of the applicable valuation techniques and the reasonableness of the significant market risk
benefit assumptions used in determining the fair value of market risk benefits based on the consideration of the Company’s
historical and actual experience, industry trends, and market conditions, as applicable.
Valuation of certain Life and Health Reserves
As described in Notes 2 and 10 to the consolidated financial statements, life and health reserves consist of traditional and limited
payment duration contracts, other long-duration contracts, and life and health short-duration contracts. As at December 31, 2023, the
Company’s life and health reserves were $2.9 billion. As disclosed in Note 2, for traditional and limited payment long-duration
contracts, the Company accrues a liability for future policy benefits (LFPB) over time as revenue is recognized based on a net
premium ratio. The net premium ratio is the amount of gross premiums required to provide for all benefits and certain expenses. The
LFPB uses the Company's current assumption of future cash flows discounted at a rate that approximates a single A rated corporate
bond yield. Contracts are generally grouped into cohorts by product type, issue year, geographical region, currency, and other
factors. The most significant cash flow assumptions used are mortality, morbidity and persistency. The Company has elected to
lock-in claims expense assumptions at contract inception and those assumptions are not subsequently reviewed or updated.
The principal considerations for our determination that performing procedures relating to the valuation of life and health reserves is
a critical audit matter are (i) the significant judgment by management when selecting the actuarial method and developing their
estimate, which in turn led to a high degree of auditor subjectivity and judgment in performing the audit procedures related to the
estimate with a focus on traditional and limited payment long-duration contracts, (ii) the significant audit effort and judgment in
evaluating the audit evidence related to the actuarial methods and the related assumptions, specifically discount rates and (iii) the
audit effort involved the use of professionals with specialized skills and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to (a)
model change controls and (b) completeness of the underlying data inputs used in the valuation methods; including select policy
data attributes. These procedures also included, among others, (i) the involvement of professionals with specialized skills and
knowledge to assist in testing management’s process for determining the valuation of life and health reserves, which included (a)
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evaluating the appropriateness of the methods used, and (b) evaluating the reasonableness of management’s significant assumptions
related to policyholder behavior and the discount rate (ii) testing the completeness and accuracy of data provided by management on
a sample basis and (iii) testing the relevance and reliability of management data used in the Company’s reserving.
Valuation of certain Non-life Reserves
As described in Notes 2 and 9 to the consolidated financial statements, the reserves for non-life business include amounts
determined from loss reports on individual treaties (case reserves), additional case reserves when the Company’s loss estimate is
higher than reported by the cedants (ACRs) and amounts for losses incurred but not yet reported to the Company (IBNR). As at
December 31, 2023, the Company’s non-life reserves were $13.2 billion. As disclosed by management, ACRs are established for
particular circumstances where, on the basis of individual loss reports, management estimates that the particular loss or collection of
losses covered by a treaty may be greater than those advised by the cedant. IBNR reserves represent a provision for claims that have
been incurred but not yet reported to the Company, as well as future loss development on losses already reported, in excess of the
case reserves and ACRs. Management develops the estimated reserves through the use of a variety of statistical and actuarial
techniques, which monitor reserve adequacy over time, evaluate new information as it becomes known and adjust reserves as
deemed necessary. The Company often relies on a blend of the results from two or more methods (e.g., weighted averages). The
judgment as to which of the reserving method(s) is most appropriate for a particular underwriting year and reserving cell could
change over time as new information emerges regarding underlying loss activity and other data.
The principal considerations for our determination that performing procedures relating to the valuation of certain non-life reserves is
a critical audit matter are (i) the significant judgment by management when selecting actuarial methods and developing their
estimate; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s
significant assumptions related to a) the expected loss ratios, loss development factors, ultimate loss ratios and the selection of
significant actuarial methods in relation to certain reserving segments and b) potential exposures, market loss estimates, modeled
analysis and future loss development on losses already reported in relation to certain major events; and (iii) the audit effort involved
the use of professionals with specialized skills and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
underlying data inputs used in the valuation method; including premiums, case reserves and losses paid. These procedures also
included, among others, (i) the involvement of professionals with specialized skills and knowledge to assist in (a) developing an
independent estimate for certain reserve segments of the non-life reserve, and comparing this independent estimate to management’s
determined reserve; and (b) for certain reserve segments and major events, testing management’s process for estimating the reserve
for claims and claim expenses by evaluating the appropriateness of management’s aforementioned significant actuarial methods and
assumptions and the consistency of management’s approach period-over period, (ii) testing the completeness and accuracy of data
provided by management on a sample basis and (iii) testing the relevance and reliability of management data used in the Company’s
reserving.
/s/ PricewaterhouseCoopers Ltd.
Hamilton, Bermuda
March 25, 2024
We have served as the Company’s auditor since 2022.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and the Board of Directors
PartnerRe Ltd.
Opinion on the Financial Statements
We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 3, the
accompanying consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of PartnerRe
Ltd. (the Company) for the year ended December 31, 2021 (the 2021 consolidated financial statements before the effects of the
adjustments discussed in Note 3 are not presented herein), and the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements, before the effects of the adjustments to retrospectively
apply the change in accounting described in Note 3, present fairly, in all material respects, the results of operations and cash flows
of the Company for the year ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We were
not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting described
in Note 3 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are
appropriate and have been properly applied. Those adjustments were audited by PricewaterhouseCoopers Ltd.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we
express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audit provides a reasonable basis for our opinion.
We served as the Company’s auditor from 2016 to 2022.
/S/ Ernst & Young Ltd.
Ernst & Young Ltd.
Hamilton, Bermuda
March 2, 2022
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Directors
PartnerRe Ltd.
We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 3, the
consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of PartnerRe Ltd. (the
Company) for the year ended December 31, 2021 (the 2021 consolidated financial statements before the effects of the adjustments
discussed in Note 3 are not presented herein), and have issued our report thereon dated March 2, 2022, included elsewhere in this
Annual Report on Form 20-F. Our audit of the consolidated statements of operations and comprehensive income, shareholders’
equity and cash flows included the financial statement schedules listed in Item 18 of this Form 20-F (the “schedules”). These
schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
schedules, based on our audit.
In our opinion, the schedules present fairly, in all material respects, the information set forth therein when considered in conjunction
with the consolidated financial statements.
/S/ Ernst & Young Ltd.
Ernst & Young Ltd.
Hamilton, Bermuda
March 2, 2022
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Type of investment
Fixed maturities
PartnerRe Ltd.
Consolidated Summary of Investments
Other Than Investments in Related Parties
at December 31, 2023
(Expressed in thousands of U.S. dollars)
SCHEDULE I
(1)
Cost
Fair Value
Amount at which
shown in
the balance sheet
U.S. government and government sponsored enterprises
$
1,972,264 $
1,736,952 $
1,736,952
U.S. states, territories and municipalities
Non-U.S. sovereign government, supranational and government related
Corporate bonds
Asset-backed securities
Residential mortgage-backed securities
Fixed maturities
Equities
Common stocks
Banks, trust and insurance companies
Industrial, miscellaneous and all other
Nonredeemable preferred stocks
Equities
Short-term investments
Other invested assets (2)
Investments in real estate (3)
Total
51,350
1,909,275
7,309,854
15,022
51,642
1,780,318
6,777,767
15,022
5,346,928
4,728,355
$ 16,604,693 $ 15,090,056 $
51,642
1,780,318
6,777,767
15,022
4,728,355
15,090,056
$
$
$
93,942 $
39,141 $
423,149
15,393
860,189
17,840
532,484 $
917,170 $
39,141
860,189
17,840
917,170
1,032,895 $
1,020,257 $
1,020,257
$
$
3,251,412 $
3,464,839
— $
56,188
$ 20,278,895 $
20,548,510
(1) Original cost of fixed maturities reduced by repayments and adjusted for amortization of premiums or accrual of discounts.
Original cost of equity securities.
(2) Other invested assets shown in the Consolidated Balance Sheets in Item 18 also includes the Company’s investments accounted
for using the equity method of accounting of $213 million.
(3) Investments in real estate are carried at original cost less any impairments.
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Table of Contents
PartnerRe Ltd.
Condensed Financial Information of Registrant
Condensed Balance Sheets—Parent Company Only
(Expressed in thousands of U.S. dollars, except parenthetical share and per share data)
SCHEDULE II
Assets
Fixed maturities, at fair value (amortized cost: 2023, $95,252; 2022, $90,171)
$
80,936 $
73,642
December 31,
2023
December 31,
2022
Short-term investments, at fair value (amortized cost: 2023, $2,487; 2022, $nil)
Cash and cash equivalents
Investments in subsidiaries
Intercompany loans and balances receivable
Other
Total assets
Liabilities
Intercompany loans and balances payable (1)
Accounts payable, accrued expenses and other
Total liabilities
Shareholders’ Equity
Common shares (par value $0.00000001; issued and outstanding: 100,000,000 shares)
Preferred shares (par value $1.00; issued and outstanding: 8,000,000 shares; aggregate liquidation
value: $200,000)
Additional paid-in capital
Accumulated other comprehensive income
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
2,487
3,052
—
3,814
10,388,510
8,749,966
22,504
18,873
18,546
21,042
$ 10,516,362 $ 8,867,010
$ 2,034,176 $ 2,423,951
57,765
45,740
2,091,941
2,469,691
—
—
8,000
8,000
1,929,934
1,929,934
7,527
70,879
6,478,960
4,388,506
8,424,421
6,397,319
$ 10,516,362 $ 8,867,010
(1) The parent has fully and unconditionally guaranteed all obligations of PartnerRe Finance B LLC and PartnerRe Finance
Ireland DAC, a direct 100% owned subsidiary of the parent, related to the issuance of the 3.700% senior notes and 1.250%
senior notes, respectively. The parent’s obligations under these guarantees are senior and unsecured and rank equally with all
other senior unsecured indebtedness of the parent.
The parent has also fully and unconditionally guaranteed all obligations of PartnerRe Finance II Inc. and PartnerRe Finance B
LLC, both indirect 100% owned finance subsidiaries of the parent, related to the remaining $62 million aggregate principal
amount of Fixed-to-Floating Rate junior subordinated CENts, with an annual rate of 3-month SOFR plus a margin equal to
2.325% and an additional spread adjustment of 0.26161% (due to the transition of the benchmark from LIBOR), and
$500 million aggregate principal amount of 4.500% Fixed-Rate Reset junior subordinated notes, respectively. The parent’s
obligations under these guarantees are unsecured junior subordinated obligations and rank junior in right of payment to all of
the parent's outstanding and future senior indebtedness, and equally in right of payment with all outstanding and future
unsecured indebtedness that is by its terms equal in right of payment to the junior subordinated notes.
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PartnerRe Ltd.
SCHEDULE II
Condensed Financial Information of Registrant - Continued
Condensed Statements of Operations and Comprehensive Income (Loss) —Parent Company Only
(Expressed in thousands of U.S. dollars)
December 31, 2023
December 31, 2022
December 31, 2021
For the year ended
Revenues
Net investment income
Net realized and unrealized investment gains (losses)
Other income
Total revenues
Expenses
Other expenses
Interest expense on intercompany loans
Net foreign exchange losses (gains)
Total expenses
Loss before equity in net income (loss) of subsidiaries
Equity in net income (loss) of subsidiaries
Net income (loss)
Preferred dividends
Loss on redemption of preferred shares
Net income (loss) attributable to common shareholder
Comprehensive income (loss)
Net income (loss)
Other comprehensive (loss) income
Comprehensive income (loss)
$
2,612 $
1,851 $
1,713
108
4,433
51,302
46,993
53,800
152,095
(147,662)
2,465,781
2,318,119
9,750
—
(15,406)
106
2,496
(16,730)
148
(13,449)
(14,086)
73,046
33,408
(65,165)
41,289
(54,738)
(885,014)
(939,752)
9,750
—
55,996
35,204
(79,696)
11,504
(25,590)
789,778
764,188
22,693
21,234
$
$
$
2,308,369 $
(949,502) $
720,261
2,318,119 $
(939,752) $
(63,352)
167,287
2,254,767 $
(772,465) $
764,188
124,217
888,405
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PartnerRe Ltd.
Condensed Financial Information of Registrant - Continued
Condensed Statements of Cash Flows—Parent Company Only
(Expressed in thousands of U.S. dollars)
SCHEDULE II
Cash flows from operating activities
Net income (loss)
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in net (income) loss of subsidiaries
Other, net
Net cash used in operating activities
Cash flows from investing activities
Advances to/from subsidiaries, net (1)
Sales and redemptions of fixed maturities
Sales and redemptions of short-term investments
Purchases of fixed maturities
Purchases of short-term investments
Other, net
Net cash provided by investing activities
Cash flows from financing activities (1)
Issuance of preferred shares (2)
Redemption of preferred shares (2)
Net cash used in financing activities
Effect of foreign exchange rate changes on cash
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents—beginning of year
Cash and cash equivalents—end of year
$
December 31, 2023
December 31, 2022
December 31, 2021
For the year ended
$
2,318,119 $
(939,752) $
764,188
(2,465,781)
101,969
(45,693)
52,631
6,483
940
(11,613)
(3,868)
(2,078)
42,495
—
—
—
2,436
(762)
3,814
3,052 $
885,014
41,810
(12,928)
22,213
11,290
5,173
(15,984)
(5,173)
(3,341)
14,178
—
—
—
576
1,826
1,988
3,814 $
(789,778)
(51,783)
(77,373)
100,426
481,015
—
(62,239)
—
(8,465)
510,737
193,887
(637,241)
(443,354)
1,958
(8,032)
10,020
1,988
(1) The following non-cash transactions were excluded from the Condensed Statement of Cash Flows - Parent Company Only:
a. During 2023, 2022 and 2021, dividends paid to common and preferred shareholders of $228 million, $188 million and $129 million,
respectively, were paid by a Bermuda subsidiary on behalf of the parent, with a corresponding increase to intercompany balances
payable.
b. During 2023, the parent recorded non-cash dividends received from subsidiaries of $850 million, non-cash capital contributions to
subsidiaries of $103 million, and a corresponding decrease in intercompany loan payable of $747 million.
c. During 2022, the parent recorded a non-cash exchange of certain intercompany balances payable for an intercompany loan payable of
$744 million.
d. During 2022, the parent recorded non-cash dividends received from subsidiaries of $630 million, non-cash capital contributions to
subsidiaries of $527 million and a corresponding decrease in intercompany balances payable of $103 million.
e. During 2021, the parent recorded a non-cash dividend received from a subsidiary of $350 million, with a corresponding change to
intercompany balances payable.
(2) During 2021, the parent issued 8 million 4.875% Series J fixed rate non-cumulative redeemable preferred shares at a par value of $1.00 per
share and a redemption price of $200 million, and incurred preferred share issuance costs of $6 million. The parent also redeemed all
outstanding Series G, H and I preferred shares at $25 per share for an aggregate liquidation value of $637 million during 2021.
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2023
Non-life
Life and Health
Corporate and Other
Total
2022
Non-life
PartnerRe Ltd.
Supplementary Insurance Information
As of and for the years ended December 31, 2023, 2022 and 2021
(Expressed in thousands of U.S. dollars)
SCHEDULE III
Deferred
Policy
Acquisition
Costs
Non-life
Reserves
Unearned
Premiums
Life and
Health
Reserves
Premium
Revenue
Net
Investment
Income (1)
Losses
Incurred
Acquisition
Costs
Other
Expenses (2)
Net
Premiums
Written
$
700,090 $ 13,151,309 $ 2,739,585 $
— $ 5,838,466 $ N/A
$ 3,182,340 $ 1,454,373 $
130,733 $ 5,848,323
320,614
—
—
—
2,170
2,859,257
2,080,294
73,091
1,807,868
108,734
118,404
2,080,589
—
—
—
572,594
—
—
214,248
—
$ 1,020,704 $ 13,151,309 $ 2,741,755 $ 2,859,257 $ 7,918,760 $
645,685 $ 4,990,208 $ 1,563,107 $
463,385 $ 7,928,912
$
700,694 $ 12,725,631 $ 2,743,406 $
— $ 5,611,452 $ N/A
$ 3,313,234 $ 1,430,121 $
119,274 $ 5,898,750
Life and Health
Corporate and Other
311,373
—
—
—
1,965
2,497,519
1,645,665
73,656
1,412,638
107,092
92,919
1,645,445
—
—
—
324,692
—
—
202,683
—
Total
2021
Non-life
Life and Health
Corporate and Other
Total
$ 1,012,067 $ 12,725,631 $ 2,745,371 $ 2,497,519 $ 7,257,117 $
398,348 $ 4,725,872 $ 1,537,213 $
414,876 $ 7,544,195
$
617,537 $ 12,047,792 $ 2,498,426 $
— $ 5,329,556 $ N/A
$ 3,443,245 $ 1,279,039 $
100,635 $ 5,510,828
298,787
—
—
—
2,735
2,785,382
1,626,966
81,226
1,407,795
112,463
88,069
1,623,190
—
—
—
295,243
—
—
209,838
—
$
916,324 $ 12,047,792 $ 2,501,161 $ 2,785,382 $ 6,956,522 $
376,469 $ 4,851,040 $ 1,391,502 $
398,542 $ 7,134,018
(1) Because the Company does not manage its assets by segment, net investment income is not allocated to the Non-life business of the reinsurance operations. However,
because of the interest-sensitive nature of some of the Company’s Life products, net investment income is considered in management’s assessment of the profitability of the
Life and Health segment.
(2) Other expenses are a component of underwriting result for the Non-life business and Life and Health segment as the Company allocates certain other expenses to its
operating segments that vary with business written.
175
Table of Contents
2023
Life reinsurance in force (1)
Premiums earned
Life
Accident and health
P&C (2)
Total premiums
2022
Life reinsurance in force (1)
Premiums earned
Life
Accident and health
P&C (2)
Total premiums
2021
Life reinsurance in force (1)
Premiums earned
Life
Accident and health
P&C (2)
Total premiums
PartnerRe Ltd.
Reinsurance
For the years ended December 31, 2023, 2022 and 2021
(Expressed in thousands of U.S. dollars)
SCHEDULE IV
Gross amount
Ceded to other
companies
Assumed from
other companies
Net amount
Percentage of
amount assumed
to net
$
$
$
$
$
$
$
$
$
— $ 26,041,527 $ 648,495,550 $ 622,454,023
104 %
— $
—
372,230
372,230 $
28,417 $
—
1,176,865
1,205,282 $
2,075,330 $
33,381
6,643,101
8,751,812 $
2,046,913
33,381
5,838,466
7,918,760
101 %
100 %
114 %
111 %
— $ 20,301,849 $ 529,438,861 $ 509,137,012
104 %
— $
—
377,380
377,380 $
28,426 $
—
1,085,317
1,113,743 $
1,648,455 $
25,636
6,319,389
7,993,480 $
1,620,029
25,636
5,611,452
7,257,117
102 %
100 %
113 %
110 %
— $ 19,383,794 $ 453,373,378 $ 433,989,584
104 %
— $
—
318,058
318,058 $
24,519 $
—
944,862
969,381 $
1,620,130 $
31,355
5,956,360
7,607,845 $
1,595,611
31,355
5,329,556
6,956,522
102 %
100 %
112 %
109 %
(1) Life reinsurance in force excludes products that do not pass risk transfer.
(2) P&C includes Specialty and U.S. health premiums.
176
Table of Contents
SCHEDULE VI
PartnerRe Ltd.
Supplemental Information
Concerning Property-Casualty Insurance Operations (1)
For the years ended December 31, 2023, 2022 and 2021
(Expressed in thousands of U.S. dollars)
Losses and Loss Expenses
Incurred Related to
Affiliation with Registrant
Consolidated subsidiaries
2023
2022
2021
Deferred Policy
Acquisition
Costs
Liability for
Unpaid Losses
and Loss
Expenses
Unearned
Premiums
Premiums
Earned
Current year
Prior year
Acquisition
Costs
Paid Losses and
Loss Expenses
Premiums
Written
$
$
$
700,090 $ 13,151,309 $ 2,739,585 $ 5,838,466 $ 3,229,633 $
(47,293) $ 1,454,373 $ 2,732,602 $ 5,848,323
700,694 $ 12,725,631 $ 2,743,406 $ 5,611,452 $ 3,533,087 $ (219,853) $ 1,430,121 $ 2,658,136 $ 5,898,750
617,537 $ 12,047,792 $ 2,498,426 $ 5,329,556 $ 3,637,671 $ (194,426) $ 1,279,039 $ 2,972,995 $ 5,510,828
(1) Includes the Company's P&C and Specialty segments.
177
Table of Contents
ITEM 19.
EXHIBITS
EXHIBIT INDEX
Exhibit
Number
1.1
1.2
Exhibit Description
Amended Memorandum of Association
Bye-laws of PartnerRe Ltd.
2.1
2.2
2.3
2.4.1
2.4.2
2.5.1
2.5.2
2.6.1
2.6.2
2.7.1
2.7.2
2.8.1
2.8.2
2.8.3
2.9.1
2.9.2
Certificate of Designation of 4.875% Series J Fixed
Rate Non-Cumulative Redeemable Preferred Shares
Certificate of Designation of Class B Common
Shares
PartnerRe Ltd. 2021 Restricted Share Unit Plan
Junior Subordinated Indenture dated November 7,
2006 among PartnerRe Finance II Inc., PartnerRe
Ltd. and The Bank of New York.
First Supplemental Junior Subordinated Indenture
(including the form of the CENts) among PartnerRe
Finance II Inc., PartnerRe Ltd. and The Bank of
New York
Junior Subordinated Debt Securities Guarantee
Agreement dated November 7, 2006 between
PartnerRe Ltd. and The Bank of New York
First Supplemental Junior Subordinated Debt
Securities Guarantee Agreement dated November 7,
2006 between PartnerRe Ltd. and The Bank of New
York
Indenture dated March 15, 2010 among PartnerRe
Finance B LLC, PartnerRe Ltd. and The Bank of
New York Mellon
Second Supplemental Indenture, dated as of June
19, 2019, among PartnerRe Finance B LLC,
PartnerRe Ltd. and The Bank of New York Mellon
Senior Debt Securities Guarantee Agreement dated
March 15, 2010 between PartnerRe Ltd. and The
Bank of New York Mellon
Second Supplemental Senior Debt Securities
Guarantee Agreement, dated as of June 19, 2019,
between PartnerRe Ltd. and The Bank of New York
Mellon
Deed of covenant made on 15 September 2016 by
PartnerRe Ireland Finance DAC in favour of the
account holders or participants of Clearstream
Banking S.A. and/or Euroclear Bank S.A./N.V.
Guarantee agreement by PartnerRe Ltd. of the
obligations of PartnerRe Ireland Finance DAC
under (i) the €750,000,000 1.25 per cent.
Guaranteed Notes due 15 September 2026
Agency agreement dated 15 September 2016
between PartnerRe Ltd., PartnerRe Ireland Finance
DAC and BNP Paribas Securities Services
Subordinated Debt Securities Indenture, dated as of
September 22, 2020 among PartnerRe Finance B
LLC, PartnerRe Ltd. and The Bank of New York
Mellon
First Supplemental Subordinated Debt Securities
Indenture, dated as of September 22, 2020, among
PartnerRe Finance B LLC, PartnerRe Ltd. and The
Bank of New York Mellon
Incorporated by Reference
Form
F-3
20-F
6-K
20-F
20-F
8-K
Original
Number
3.1
1.2
3.1
2.8
2.6
4.1
Date Filed
June 20, 1997
March 21, 2023
March 15, 2021
Filed
Herewith
SEC File
Reference
Number
333-7094
001-14536
001-14536
March 14, 2018
001-14536
March 2, 2022
001-14536
November 7, 2006
001-14536
8-K
4.2
November 7, 2006
001-14536
61194484
8-K
4.3
November 7, 2006
001-14536
8-K
4.4
November 7, 2006
001-14536
8-K
4.1
March 15, 2010
001-14536
6-K
4.1
June 19, 2019
001-14536
8-K
4.3
March 15, 2010
001-14536
6-K
4.2
June 19, 2019
001-14536
20-F
2.10.1 March 2, 2020
001-14536
20-F
2.10.2 March 2, 2020
001-14536
20-F
2.10.3 March 2, 2020
001-14536
6-K
4.1
September 22, 2020 001-14536
6-K
4.2
September 22, 2020 001-14536
178
Table of Contents
Exhibit
Number
2.10.1
2.10.2
2.11
4.1
8.1
11.1
12.1
12.2
13.1
15.1
17.1
97.1
101.1
Exhibit Description
Subordinated Debt Securities Guarantee Agreement,
dated as of September 22, 2020, between PartnerRe
Ltd. and The Bank of New York
First Supplemental Subordinated Debt Securities
Guarantee Agreement, dated as of September 22,
2020, between PartnerRe Ltd. and The Bank of New
York
Description of Securities
Form of Indemnification Agreement between
PartnerRe Ltd. and its directors
Subsidiaries of the Company
Code of Business Conduct and Ethics
Certification of Jacques Bonneau, Chief Executive
Officer, as required by Rule 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934
Certification of Abina Kealy, Chief Financial
Officer, as required by Rule 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934
Certifications of Jacques Bonneau, Chief Executive
Officer, and Abina Kealy, Chief Financial Officer,
as required by Rule 13a-14(b) or 15d-14(b) of the
Securities Exchange Act of 1934
Letter Regarding Change in Registrant's Certifying
Accountant
Guarantors and Issuers of Guaranteed Securities
Recovery of Erroneously Awarded Compensation
Policy
The following financial information from PartnerRe
Ltd.’s Annual Report on Form 20–F for the year
ended December 31, 2023 formatted in Inline
XBRL: (i) Consolidated Balance Sheets at
December 31, 2023 and 2022; (ii) Consolidated
Statements of Operations and Comprehensive
Income for the years ended December 31, 2023,
2022 and 2021; (iii) Consolidated Statements of
Shareholders’ Equity for the years ended December
31, 2023, 2022 and 2021; (iv) Consolidated
Statements of Cash Flows for the years ended
December 31, 2023, 2022 and 2021; (v) Notes to
Consolidated Financial Statements and (vi)
Financial Statements Schedules.
104.1
Cover Page Interactive Data File (formatted as
Inline XBRL and contained in Exhibit 101)
Incorporated by Reference
Form
6-K
Original
Number
4.3
Date Filed
SEC File
Reference
Number
Filed
Herewith
September 22, 2020 001-14536
6-K
4.4
September 22, 2020 001-14536
10-Q
10.16
November 4, 2009
001-14536
X
X
X
X
X
X
X
X
X
X
X
179
Table of Contents
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
PARTNERRE LTD.
By:
Name:
Title:
/S/ ABINA KEALY
Abina Kealy
Executive Vice President and Chief Financial Officer
Date:
March 25, 2024
180