PartnerRe last night reported a net loss of $103.1 million as a fall in the value of its investments took its toll.

The Bermuda reinsurer said operating earnings were $112.5 million, or $2.35 per share, but these were offset by realised and unrealised investment losses of $217.2 million, or $4.55 per share.

The company’s shareholders are preparing to vote on August 7 on a proposal to merge with fellow Bermuda reinsurer Axis Capital, as rival bidder Exor waits in the wings.

PartnerRe interim chief executive officer David Zwiener said: “We continued to see challenging market conditions during the second quarter, both in terms of persistent competitive reinsurance pressures and difficult financial markets.

“Nevertheless, we posted strong technical results in the quarter, which when combined with our first quarter performance, resulted in an operating ROE of 8.5 per cent.”

Mr Zwiener added PartnerRe’s book value had risen 1 per cent during the year to date, though it had been negatively impacted by “increases in longer term risk-free rates both in the US and Europe, resulting in a significant mark-to-market loss on our investment portfolio”.

As bond yields rise, bond prices fall, forcing bondholders to report unrealised investment losses, something that is likely to feature in the earnings reports of many other Bermuda insurers in the coming days.

Mr Zwiener said he saw positive signs in the challenging reinsurance market.

“Despite continued competitive pressures, we saw some initial signs that markets are beginning to stabilise, and we wrote a number of profitable new treaties. This speaks to our strong market presence, the quality of our client relationships, and underscores the strength of the PartnerRe franchise.”

Second-quarter combined ratio — reflecting the proportion of premium dollars paid out in claims and expenses — was 90.3 per cent, which benefited from reserve releases of $173 million, or 17.1 points.

Gross premiums written were down slightly for the quarter, to $1.43 billion, compared to $1.46 billion in the same period of last year.