Bermuda reinsurer PartnerRe yesterday announced net income of nearly $80 million in a first quarter that produced more than $330 million in catastrophe losses.

February's earthquake in Chile and European windstorm Xynthia were the two most expensive events of an unusually costly first three months of the year for global reinsurers.

The huge catastrophe claims drove PartnerRe to an operating loss, but investment gains allowed the company to make a net profit.

Net income for the first quarter was $79.7 million, or 85 cents per diluted share, representing a fall of more than 43 percent from last year's earnings of $141.5 million, or $2.32 per share.

Net income includes net after-tax realised and unrealised gains on investments of $110.6 million, or $1.33 per share.

The company recorded an operating loss of $41.8 million, or 50 cents per share, for the first quarter, compared to operating earnings of $155.7 million, or $2.72 per share in the same period in 2009.

Chief executive officer Patrick Thiele said: "As a global, diversified reinsurer, we assume volatility that our insurance company clients don't want and, consequently, we expect to occasionally show that volatility in our own quarterly financial results.

"This quarter was an example of that with approximately $334 million in catastrophes causing a small operating loss. Nevertheless, we reported positive net income, as our capital markets risks more than offset those losses, and GAAP book value per share was essentially flat with year-end 2009."

Shareholders' equity fell to $7.4 billion at March 31 from $7.6 billion at the end of 2009.

During the first quarter the company purchased just over three million shares for a total cost of around $231 million.

Commenting on the outlook for the market, Mr. Thiele said: "The current reinsurance market remains stable, and looking forward we see no significant changes in either pricing or loss trends in most of our markets with the exception of South American earthquake exposures, where pricing is responding to the losses.

"In this environment, we will continue to optimise our larger, more diversified book of business, with the combined book priced at a low double digit return on deployed underwriting capital."

Last year, PartnerRe acquired Switzerland-based reinsurer Paris Re in a deal worth around $2 billion. Paris Re's contribution had a positive impact on reinsurance sales, as gross premiums written rose to $1.91 billion in the first three months of this year from $. 134 billion in the first quarter of 2009.

"We are progressing well with the integration of Paris Re into PartnerRe and expect to meet our goal of operating as one entity at the July 1, 2010 renewals," Mr. Thiele said. "There have been no surprises in the business or the balance sheet we purchased and we remain pleased with this acquisition and the business and talent it has added to PartnerRe."