The company incurred USD 18 million of pre-tax losses from event cancellation claims associated with COVID-19 in the first quarter of 2020. PartnerRe is exposed to COVID-19 related claims across its Non-life and Life & Health segments, and the COVID-19 related losses recorded during the first quarter reflect estimates on claims incurred as of March 31, 2020. The COVID-19 crisis and its potential recessionary impacts is an ongoing event, and it is too early to quantify the full extent of its impact.
The company is also exposed to investment risk and the first quarter results reflect USD 610 million of unrealized investment losses driven by the economic impacts of widening credit spreads and declines in equity markets.
The company's solvency and liquidity remained strong at the end of the first quarter of 2020, with a solvency ratio estimated in excess of 250% and cash and cash equivalents of USD 1.9 billion.
- Gross written premiums: USD 2,041 million (-3.6%), of which:
- GWP P&C: USD 1,137 million (-9.0%)
- GWP Specialty: USD 523 million (+3.0%)
- GWP L&H: USD 381 million (+6.1%)
- Net premiums earned: USD 1,566 million (+13.0%)
- Total revenues: USD 1,072 million (-45.5%)
- Total expenses: USD 1,534 million (+6.8%)
- Net (loss) income: USD (433) million (-187.1%)
Non-life net premiums written for the first quarter of 2020 decreased 6% compared to the first quarter of 2019, driven by a 7% decrease in the P&C segment, offset by a 1% increase in the Specialty segment, reflecting the company's focus on portfolio optimization during the January 1, 2020 renewals. Non-life net premiums earned for the first quarter of 2020 increased by 14% compared to the first quarter of 2019, driven by premiums earned on prior underwriting years.
The Non-life underwriting loss was USD 46 million (combined ratio of 103.8%) for the first quarter of 2020 compared to a profit of USD 24 million (combined ratio of 97.7%) for the first quarter of 2019.
The P&C segment reported a combined ratio of 94.3% for the first quarter of 2020 compared to 87.7% for the first quarter of 2019. The P&C combined ratio for the first quarter of 2020 included USD 26 million (3.4 points) of favorable prior year reserve development, compared to USD 49 million (7.3 points) for the first quarter of 2019.
The Specialty segment reported a combined ratio of 121.1% for the first quarter of 2020 compared to 116.0% for the first quarter of 2019, with both periods adversely impacted by prior year reserve development of USD 95 million (22.4 points) and USD 38 million (10.4 points), respectively. Prior year reserve development for the first quarter of 2020 was largely exposure driven by premium increases, as well as experience driven by a mid-sized loss from a 2019 event in the property line of business. The impact of higher adverse prior year development was partially offset by an improvement in the current accident year loss ratio compared to the same period of 2019. The first quarter of 2020 included a loss of USD 18 million (4.2 points) on two event cancellations related to COVID-19, compared to the first quarter of 2019 which included a loss of USD 27 million (7.3 points) in the aviation line of business.
Net premiums written were up 7% and net premiums earned were up 10% for the first quarter 2020, compared to the first quarter of 2019.
Allocated underwriting result was a profit of USD 18 million in the first quarter of 2020, compared to a profit of USD 30 million in the first quarter 2019. The decrease was primarily driven by a USD 23 million adverse impact in the guaranteed minimum death benefits (GMDB) line of business following declines in equity markets during the first quarter of 2020, partially offset by the favorable impact of certain portfolio recaptures.
Net investment return in the first quarter of 2020 was a loss of USD 503 million, or (2.9)%, and included net realized and unrealized investment losses of USD 602 million and losses from equity method investments of USD 4 million, which were partially offset by net investment income of USD 103 million. This compares to a net investment return of USD 600 million, or 3.6%, for the first quarter of 2019, which included net investment income of USD 110 million, net realized and unrealized investment gains of USD 469 million and interest in earnings of equity method investments of USD 21 million.
Net investment income was down USD 7 million, or 6%, for the first quarter of 2020, compared to the same period of 2019, driven by higher investment expenses, partially offset by higher gross investment income from decisions in 2019 to re-balance certain assets into higher yield per duration unit strategies.
Net realized and unrealized investment losses of USD 602 million for the first quarter of 2020 included net realized and unrealized investment losses of USD 27 million on fixed maturities and short-term investments, net realized and unrealized investment losses of USD 362 million on equities, and net realized and unrealized investment losses of USD 213 million on other invested assets.
"The COVID-19 pandemic is a test for our industry and a reminder of the potential severity of systemic events, and the value of strong reinsurance partnerships. (...)
In our first quarter, we delivered positive underwriting results in our P&C and Life & Health segments, which was offset by loss activity in our Specialty segment. I am confident that the actions we have taken throughout last year to improve our portfolio performance, combined with strong underlying rate increases in the loss affected classes, will start to show a positive impact. We continue to execute on our growth strategy for Life & Health to maintain a well-diversified and profitable book of business. (...)
With the strength of our balance sheet and our high quality investment portfolio, we have the resilience to weather this pandemic and changed economic cycle, and we are well-positioned for the hardening of reinsurance pricing."