Bermuda-based reinsurer Partner Re yesterday posted lower year on year net income with the profit recorded during the second quarter being down at $119.8 million from $121.9 million a year ago.

But the slightly lower profit level was not enough to knock the optimism out of Partner Re's CEO Patrick Thiele.

Mr. Thiele said in an earnings statement that the industry was seeing prices falling off in some lines but that Partner Re's focus on certain lines made it a company "uniquely positioned for continued success".

Indeed, looking at results for the first six months of the year the company posted record results in net income, net premiums written and operating income (see report card).

Mr. Thiele said: "We continued to achieve excellent results during the second quarter and first half of 2004, with an annualised operating return on equity of 18 percent and 19 percent respectively. "Book value has grown 5 percent on a year-to-date basis, despite the significant rise in interest rates during the second quarter. Our results underscore the strength of PartnerRe's financial position and technical capabilities, and reflect the real economic value that we are generating for our shareholders."

Mr. Thiele continued: "We are very pleased with the performance of all our operations this quarter, highlighted by a non-life combined ratio of 92.2 percent.

"Our excellent results for the quarter and the half year reflect our disciplined technical skills, as well as the strong pricing enjoyed over the last couple of years and the continued modest level of large losses.

Mr. Thiele recognised that there was increasing competition for insurers and reinsurers now but said the company expected business it wrote to continue to turn a profit. "These market conditions have led to high levels of industry profitability, which in turn have resulted in increasing competition, and prices declining in some lines, including property, catastrophe and aviation.

"Hence, our growth rate in written premiums has slowed considerably from the extremely strong growth enjoyed in 2002 and 2003.

Nevertheless, expected profitability on currently written business remains quite good."

Partner Re reported that along non-life lines, there was during the quarter $735 million in net premiums written, down 5 percent as compared to last year. US property and casualty business, which represented approximately 24 percent of total net premiums written for the quarter, accounted for net premiums written of $201 million, down nine percent over the prior year's second quarter. But net premiums earned increased nine percent during the quarter when compared to the same period in 2003. Non-US property and casualty business accounted for another 24 percent of total net premiums written, and reported net premiums written of $197 million for the second quarter of 2004, compared to $186 million for the same period in 2003. Net premiums earned during the quarter were $230 million, up seven percent from $215 million in last year's second quarter. Partner Re's specialty business, which represented approximately 40 percent of total net premiums written for the quarter, resulted in net premiums written of $337 million for the second quarter, down eight percent over the prior year period. Net premiums earned increased 4 percent during the quarter.

The group's life segment, with business written primarily in Europe, Canada and Latin America, represented approximately 12 percent of total net premiums written in the quarter, and led to net premiums written of $104 million for the quarter, reflecting 57 percent growth over the second quarter of 2003.

And Partner Re's ART (Alternative Risk Transfer) segment comprised finite reinsurance, structured finance, weather related products, and for the first time, the results of the company's recent investment in a new Bermuda-based joint venture, Channel Re.

Premiums are not a representative measure of activity in ART, as reinsurance accounting does not apply for much of the business in this segment.

The ART segment generally recognises gross margins, net spreads, or changes in the value of derivative instruments on its various transactions either on the "premium written", "premium earned", "investment income", or "other income" line of the income statement, according to applicable accounting guidance.

The technical result for this segment was $1 million for the second quarter of 2004, as compared to nil in the second quarter of 2003.