(SAFR) last year, reinsurer PartnerRe Ltd. has undergone a major shift in strategy, not only in the type of business it's in, but also in where it's writing business.

That was after all a major goal of the acquisition. With SAFR, the company shifted from being totally in the catastrophe reinsurance business. About 45 percent of its net premiums came from catastrophe reinsuance in 1997, while property and construction underwriting accounted for 24 percent. Automobile accounted for 13 percent, and marine, space and aviation, credit and surety, casualty, life and other business made up the rest of the book.

And while Bermuda-based PartnerRe's overall gross premiums more than doubled with SAFR, 44 percent of that book came from Europe in 1997, compared to 17 percent in the 1996 year.

Meanwhile gross premiums written in North America declined to 37 percent from 57 percent in PartnerRe's overall book of business.

SAFR helped boost gross premiums to about $472.5 million from the $206 million written in 1996. PartnerRe wrote net premiums of about $427.8 million for the 1997 year compared to $206 million in 1996. The company had net income of $271.1 million for the financial year ended December 31, an increase of about nine percent over the 1996 results.

The reported net income figures for 1996 do not include the financial results of Paris-based SAFR, which PartnerRe bought in July 1997 for about $900 million.

PartnerRe president and chief executive officer Herbert Haag said the spread of business out of the North American market was a necessary move to protect the company's bottom line.

North America has the highest exposure to natural catastrophies, he explained, and one single event there could hurt PartnerRe. PartnerRe's strategy was to reduce the exposure to any one market by expanding the overall book through the SAFR acquisition.

With SAFR, PartnerRe's geographic expansion is comparable to the book of business written by Munich Re and Swiss Re, larger reinsurers which have the majority of their business in Europe.

In 1996, Munich Re did 69 percent of its business in Europe, 17 percent in North America, eight percent in Asia Pacific, four percent in Africa, and two percent in Latin America.

Of Swiss Re's premiums, 62 percent came from Europe, 23 percent from North America, 11 percent from Asia Pacific, two percent from Latin America, and two percent from Africa.

On a hypothetical basis, if PartnerRe's book was lumped together in 1996 with SAFR's, 60 percent of the business would have been in Europe, 22 percent in North America, 15 percent in Asia Pacific, two percent in Latin America and one percent in Africa.

Since the SAFR acquisition only occurred half way through 1997, the 1998 figures will tell how close PartnerRe is to the type of diversification it wants.

The PartnerRe group 1997 fourth quarter results indicate 61 percent of the business was in Europe compared to six percent in 1996 fourth quarter, while 23 percent was in North America, compared to 84 percent in 1996.

Mr. Haag believes PartnerRe has got a better spread than the larger competitors.

"We think our spread is superior to their spread,'' he said.

However, he also believes the group could be a bit underweight in North America.

"Our mid-term strategy is to strengthen our US multiline business,'' he said.

How PartnerRe goes about doing that in the context of a competitive market where rates are falling close to unprofitable levels is the next question the company will have to address.

Mr. Haag doesn't believe the present market will be short lived. Reinsurers have had good times and the rates reflect a vicious bid for business. Afraid to lose business, the big companies are writing at rates that are setting the market for the smaller companies. The cycle is undermining good business practice in the industry, he believes.

"We need some leadership shown in this business, which is unfortunately missing,'' he said. "The largest companies will have to determine they are no longer supporting this kind of business.'' However the industry "should not lament'' too much, he said. The situation was set up by low losses and a booming investment climate. PartnerRe will just have to maintain its underwriting discipline.

And the financial analysts have given a vote of confidence in PartnerRe's strategy.

Credit Suisse First Boston's Charles Gates has recommended a buy on the stock.

CIBC Oppenheimer's Alice Schroeder and Salomon Smith Barney's Ronald Frank have both given it an "outperform''. Morgan Stanley Dean Witter's Alan Zimmermann has given it a "strong buy''. JP Morgan Securities' James English has given the stock a "market perform''.

All the recommendations were made between February 10 to 12.

Herbert Haag