PartnerRe Ltd. experienced a net loss of $26 million for the second quarter of 2008 after switching over to a new accounting method.

The global reinsurer's net loss was equivalent to 64 cents per share and compared to $105 million, or $1.66 per share, for the same period in 2007, prior to changing to the FAS 159 system.

The new system means that the company presents its realised and unrealised changes in the market values of investments on its income statement, leading to increased volatility in earnings.

"Fair value" accounting rules require companies to put a current market value on its assets, as opposed to how most financial reporting had been done previously based on historical cost - the original price paid for an asset. But US accounting rule makers have come to view fair value, or the price the asset could fetch in the current market, as more transparent.

The net loss included net after-tax realised and unrealised losses on investments of $219.1 million or $4.04 per share, while it also realised $7.8 million in pre-tax losses on sales of securities during the second quarter last year. Separately, the value of the company's $12 billion investment portfolio declined by $288.5 million on pre-tax unrealised losses, mainly due to an increase in interest rates during the quarter.

Operating earnings for the second quarter 2008 were $183.8 million or $3.39 per share, compared to $136 million or $2.34 per share for the same period last year.

PartnerRe's president and CEO, Patrick Thiele, said: "Despite a softening reinsurance market and turmoil in the capital markets, PartnerRe had a strong second quarter and first half of 2008.

"Adoption of FAS 159 for all of our investment portfolio means that we will have considerable volatility in our quarterly reported net income. However, on the measures that clearly define fundamental performance - operating return on equity and growth in book value per share - we continue to perform well.

"During the first half of 2008, we had six-percent growth in operating earnings per share, annualised operating ROE of 15.5 percent, as well as growth in fully diluted book value per share of three percent. Over the last 12 months, our book value per share grew by 19 percent. On both measures, we continue to exceed our long-term targets of 10-percent growth in book value and per share, and 13-percent operating ROE over the cycle."

Report Card

Net income: -$26 million compared to $105 million in 2007

Combined ratio: 85.9 percent compared to 85.3 percent in 2007

Gross premiums written: $968.2 million compared to $907.8 million in 2007