Bermuda reinsurer PartnerRe last night reported a $95.3 million profit for the fourth quarter and achieved investment gains despite an horrendous three-month period on the global financial markets.

The fourth-quarter performance allowed the company to record a full-year net income of $46.6 million for 2008, despite net losses in the second and third quarters on catastrophe losses and investment impairments.

Fourth-quarter profit broke down to $1.53 per share. In the equivalent period in 2007, PartnerRe made net income of $180.6 million, or $3.04 per share. This year, however, the company is including realised and unrealised changes in the market value of investments, after the adoption of accounting standard FAS 159.

The adoption of the optional accounting standard meant that annual net income, which broke down to 22 cents per share, included net after-tax realised and unrealised losses on investments of $453.6 million — or $8.15 per share.

For the fourth quarter, realised and unrealised investment gains were $37.6 million.

The company's earnings were hit by a $114 million increase in its estimate of claims relating to Hurricane Ike during the fourth quarter.

PartnerRe's president and chief executive officer Patrick Thiele said 2008 had been an extraordinary year on two fronts.

"The year was highlighted by the worst global financial crisis we have experienced in recent history and it was the third worst year in recorded history for natural catastrophes," Mr. Thiele said in PartnerRe's earnings release last night.

"Despite this, we delivered a 12 percent operating return on beginning equity for the year, maintained a strong balance sheet, and achieved a positive total return on our investment portfolio.

"More importantly, over a longer period, which we believe is a better measure of a company's success, we exceeded our long term targets, with a 15 percent average operating return on beginning equity and 11 percent compounded GAAP book value per share growth over the last six years."

Gross premiums written in the fourth quarter totalled $752.17 million, up almost $30 million compared to the same period in 2007.

Combined ratio — the percentage of premium dollars spent on claims and expenses — was 94.1 percent, of which Hurricane Ike accounted for nine points. This compared to 80.4 percent during the same period in 2007.

The company's book value at December 31, 2008, was $63.95 per share, down six percent year on year. PartnerRe's shares rose 21 cents to $65.74 in New York trading yesterday before the company announced its results.

Mr. Thiele was bullish about the company's prospects for this year. "Our performance at the January 1, 2009 renewals confirmed an environment of increasing demand for reinsurance and adequate pricing, and we expect the environment to show gradual improvement through the remainder of the year," he said.

"The reinsurance industry is meeting its responsibility to be a consistent and secure source of capital to its clients. Within this environment, PartnerRe is in a position of strength, and the PartnerRe franchise, characterised by stability, consistency, transparency and balance, is even more evident today."