UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM 20-F
____________________________________
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
¨

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
             
Commission file number 001-14536
___________________________________
PartnerRe Ltd.
(Exact name of registrant as specified in its charter) 
______________________________________
Bermuda
(Jurisdiction of incorporation or organization)
 
90 Pitts Bay Road, Pembroke, Bermuda
(Address of principal executive offices)
 
Mario Bonaccorso
Executive Vice President and Chief Financial Officer
90 Pitts Bay Road, Pembroke, HM 08, Bermuda Telephone: +1 441-292-0888, Email: mario.bonaccorso@partnerre.com
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
_____________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
5.875% Series F Non-Cumulative Preferred Shares, $1.00 par value
PRE-F
New York Stock Exchange
6.50% Series G Cumulative Preferred Shares, $1.00 par value
PRE-G
New York Stock Exchange
7.25% Series H Cumulative Preferred Shares, $1.00 par value
PRE-H
New York Stock Exchange
5.875% Series I Non-Cumulative Preferred Shares, $1.00 par value
PRE-I
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
_________________________________ 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 100,000,000 common shares and 281,768 Class B common shares
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  ý



If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ¨                Accelerated filer  ¨                     Non-accelerated filer  ý
Emerging growth company  ¨
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP  ý        International Financial Reporting Standards as issued by the International Accounting Standards Board ¨     Other   ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)    Yes  ¨    No  ý
 



TABLE OF CONTENTS
  
 
 
 
 
 
Page
PART I
 
 
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 4A.
Item 5.
Item 6.
Item 7.
Item 8.
Item 9.
Item 10.
Item 11.
Item 12.
 
 
PART II
 
 
 
 
Item 13.
Item 14.
Item 15.
Item 16A.
Item 16B.
Item 16C.
Item 16D.
Item 16E.
Item 16F.
Item 16G.
Item 16H.
 
 
PART III
 
 
 
 
Item 17.
Item 18.
Item 19.
 
 
 


Table of Contents

PART I

ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.

ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.

ITEM 3.
KEY INFORMATION
A. Selected Financial Data
The selected consolidated financial data of PartnerRe Ltd. and its subsidiaries (the Company or PartnerRe) below should be read in conjunction with the Consolidated Financial Statements, and the accompanying Notes to the Consolidated Financial Statements in Item 18 and with other information contained in this report, including Operating and Financial Review and Prospects in Item 5 of this report.
The selected consolidated financial data for 2019, 2018, 2017, 2016 and 2015 (in millions of United States (U.S.) dollars) is as follows:
 
 
For the years ended December 31,
Statement of Operations Data
 
2019
 
2018
 
2017
 
2016
 
2015
Net premiums earned
 
$
6,525

 
$
5,514

 
$
5,025

 
$
4,970

 
$
5,269

Net investment income
 
449

 
416

 
402

 
411

 
450

Net realized and unrealized investment gains (losses)
 
887

 
(390
)
 
232

 
26

 
(297
)
Other income
 
15

 
50

 
15

 
15

 
9

Total revenues
 
$
7,876

 
$
5,590

 
$
5,675

 
$
5,422

 
$
5,431

Net income (loss)
 
$
937

 
$
(86
)
 
$
264

 
$
447

 
$
107

Net income (loss) attributable to common shareholder
 
$
890

 
$
(132
)
 
$
218

 
$
387

 
$
47

 
 
At December 31,
Balance Sheet Data
 
2019
 
2018
 
2017
 
2016
 
2015
Total assets
 
$
25,062

 
$
22,819

 
$
22,981

 
$
21,939

 
$
21,406

Total shareholders’ equity
 
$
7,270

 
$
6,517

 
$
6,745

 
$
6,688

 
$
6,901

Common shareholder's equity (1)
 
$
6,566

 
$
5,812

 
$
6,041

 
$
5,984

 
$
6,047

 
(1) Common shareholder's equity is calculated as Total shareholders' equity less preferred shareholders' equity of $704 million, the liquidation value of preferred shares.
On March 18, 2016, the Company’s common shares were acquired by EXOR N.V. (subsequently renamed EXOR Nederland N.V.). As a result, all of the Company’s publicly traded common shares and all treasury shares were canceled and the Company's common shares were delisted. Accordingly, per share data is no longer meaningful and is no longer presented by the Company. See also Share Ownership section in Item 6.E and Notes 10 and 13 to the Consolidated Financial Statements in Item 18 of this report.
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.

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D. Risk Factors
We expose ourselves to significant risks that can impact our financial strength as measured by United States generally accepted accounting principles (U.S. GAAP) or regulatory and rating agencies' capital requirements. Risk sources for which management has established key risk limits approved by the Board of Directors (the “Board”), and the related approved limits and actual limits deployed, at December 31, 2019 and 2018 are presented in the Risk Management section below in Item 4.B.
The following risks should be read in conjunction with the Safe Harbor Statement and the Operating and Financial Review and Prospects section in Item 5, and the Notes to the Consolidated Financial Statements in Item 18 of this report. These risks may affect our financial condition and operating results and, individually or in the aggregate, could cause our actual results to differ materially from past and projected future results. Some of these risks and uncertainties could affect particular business operations or segments, while others could affect all of our businesses. Although risks are discussed separately, many are interrelated.
Except as may be required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. It is impossible to predict or identify all risk factors and, consequently, the following factors should not be construed as a complete discussion of risks and uncertainties that may affect us.
As used in these Risk Factors, the terms “the Company”, “PartnerRe”, “we”, “our” or “us” may, depending upon the context, refer solely to the Company, to one or more of the Company’s consolidated subsidiaries or to all of them taken as a whole. The terms EXOR and Exor Group relate to the Company’s ultimate parent, EXOR N.V. and its affiliated companies (see Information on the Company in Item 4 of this report).
Risks Related to Our Company
The catastrophe business that we underwrite will result in volatility of our earnings and could impair our financial condition.
Catastrophic losses result from events such as windstorms, hurricanes, typhoons, tsunamis, earthquakes, floods, hailstorms, tornadoes, severe winter weather, fires, drought, explosions, and other natural and man-made disasters, the incidence and severity of which are inherently unpredictable. We also have substantial exposure to unexpected, large losses resulting from future man-made catastrophic events, such as acts of terrorism, acts of war, nuclear accidents and political instability, or from other perils. Because catastrophe reinsurance accumulates large aggregate exposures to both man-made and natural disasters, our loss experience in this line of business could be characterized as low frequency and high severity. Although we may attempt to exclude losses from terrorism and certain other similar risks from some coverage we write, we continue to have exposure to such unforeseen or unpredictable events. Irrespective of the clarity and inclusiveness of policy language, there can be no assurance that a court or arbitration panel will not limit enforceability of policy language or otherwise issue a ruling adverse to us.
This is likely to result in substantial volatility in our financial results and potentially significant net losses from time to time, and may also result in a material decline of our book value or impairment of our financial condition that may limit our ability to make dividend, interest, or principal payments on our preferred shares and debt securities and may limit the funds available to make payments on policyholder claims.
Should we incur a very large catastrophic loss or a series of catastrophic losses, our ability to write future business may be adversely impacted if we are unable to replenish our capital.
Changing climate conditions, and the trend towards increasingly frequent and severe catastrophic events, may adversely affect our financial condition and results.
In recent years, changing weather patterns and climatic conditions, such as global warming, appear to have contributed to the unpredictability, frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures. There is a scientific consensus that global warming and other climate changes are increasing the frequency and severity of catastrophic weather events, such as hurricanes, tornadoes, windstorms, floods and other natural disasters. Such changes make it more difficult for us to predict and model catastrophic events, reducing our ability to accurately price our exposure to such events and mitigate our risks. Any increase in the frequency or severity of natural disasters may adversely affect our financial condition and results.
Epidemics and pandemics could adversely affect our business, financial condition and results of operations.
Epidemics and pandemics could adversely affect our business, financial condition and results of operations because they could exacerbate mortality and morbidity risk. The likelihood, timing, and severity of these events cannot be predicted. A pandemic or other disaster could have a major impact on the global economy or the economies of particular countries or regions, including travel, trade, tourism, the health system, food supply, consumption, overall economic output, as well as on the financial markets. In addition, a pandemic or other disaster that affected our employees or the employees of companies with which we do

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business could disrupt our business operations. These events could cause a material adverse effect on our results of operations in any period and, depending on their severity, could also materially and adversely affect our financial condition.
If actual losses exceed our estimated loss reserves, our net income and capital position will be reduced.
Our success depends upon our ability to accurately assess the risks associated with the businesses that we reinsure. We establish loss reserves to cover our estimated liability for the payment of all losses and loss expenses incurred with respect to premiums earned on the reinsurance contracts that we write. Loss reserves are estimates involving actuarial and statistical projections at a given time to reflect our expectation of the costs of the ultimate settlement and administration of claims. Although we use actuarial models as well as historical reinsurance and insurance industry loss statistics, we also rely heavily on data provided by counterparties and on management’s experience and judgment to assist in the establishment of appropriate claims and claim expense reserves. Because of the many assumptions and estimates involved in establishing reserves, the reserving process is inherently uncertain. Our estimates and judgments are based on numerous factors, and may be revised as additional experience and other data become available and are reviewed as new or improved methodologies are developed, as loss trends and claims inflation impact future payments, or as current laws or interpretations thereof change.
Estimates of losses are based on, among other things, a review of potentially exposed contracts, information reported by and discussions with counterparties and our estimate of losses related to those contracts and are subject to change as more information is reported and becomes available. Losses for casualty and liability lines often take a long time to be reported and frequently can be impacted by lengthy, unpredictable litigation and by the inflation of loss costs over time. Changes in the level of inflation also result in an increased level of uncertainty in our estimation of loss reserves, particularly for long-tail lines of business. As a consequence, actual losses and loss expenses paid may deviate substantially from the reserve estimates reflected in our financial statements.
Through various acquisitions, we assumed certain asbestos and environmental exposures. Our non-life reserves include an estimate of our ultimate liability for asbestos and environmental claims for which we cannot estimate the ultimate value using traditional reserving techniques, and for which there are significant uncertainties in estimating the amount of our potential losses. These liabilities are especially hard to estimate for many reasons, including the long delays between exposure and manifestation of any bodily injury or property damage, difficulty in identifying the source of the asbestos or environmental contamination, long reporting delays and difficulty in properly allocating liability for the asbestos or environmental damage. Certain of our subsidiaries have received and continue to receive notices of potential reinsurance claims from ceding insurance companies, which have in turn received claims asserting asbestos and environmental losses under primary insurance policies, in part reinsured by us. Such claims notices are often precautionary in nature and are generally unspecific, and the primary insurers often do not attempt to quantify the amount, timing or nature of the exposure. Given the lack of specificity in some of these notices and the legal and tort environment that affects the development of claims reserves, the uncertainties inherent in valuing asbestos and environmental claims are not likely to be resolved in the near future. As of December 31, 2019, the Company’s net non-life reserves included $45 million related to asbestos and environmental claims.
It is difficult to predict the timing of such events or estimate the amount of loss any given occurrence will generate. Under U.S. GAAP, we are not permitted to establish reserves for potential losses associated with catastrophic events until an event that may give rise to such losses occurs. If such an event were to occur, our reported income would decrease in the affected period. In particular, unforeseen large losses could reduce our profitability or impair our financial condition.
    
If ultimate losses and loss expenses exceed the reserves currently established, we will be required to increase loss reserves in the period in which we identify the deficiency to cover any such claims. As a result, even when losses are identified and reserves are established for any line of business, ultimate losses and loss expenses may deviate, perhaps substantially, from estimates reflected in loss reserves in our financial statements. Variations between our loss reserve estimates and actual emergence of losses could be material and could have a material adverse effect on our results of operations and financial condition.
See Note 7 to the Consolidated Financial Statements in Item 18 of this report for further details.
Given the inherent uncertainty of models, the usefulness of our proprietary and third-party models as a tool to evaluate risk is subject to a high degree of uncertainty that could result in actual losses that are materially different than our estimates, including probable maximum losses (PMLs), significantly impacting our financial results and condition.
We use our own proprietary catastrophe models and third-party vendor analytic and modeling capabilities to provide an objective risk assessment relating to risks in our reinsurance portfolio. We use these models to help us control risk accumulation and inform management and other stakeholders of capital requirements and to improve the risk/return profile. However, given the inherent uncertainty of modeling techniques and the application of such techniques, these models and databases may not accurately address a variety of matters that might impact certain of our coverages.

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For example, catastrophe models that simulate loss estimates based on a set of assumptions are important tools used by us to estimate our PMLs. These assumptions address a number of factors that impact loss potential including, but not limited to, the characteristics of the natural catastrophe event; demand surge resulting from an event; the types, function, location and characteristics of exposed risks; susceptibility of exposed risks to damage from an event with specific characteristics; and the financial and contractual provisions of the reinsurance contracts that cover losses arising from an event. We run many model simulations in order to understand the impact of these assumptions on its catastrophe loss potential. Furthermore, there are risks associated with catastrophic events, which are either poorly represented or not represented at all by catastrophe models. Each modeling assumption or un-modeled risk introduces uncertainty into PML estimates that management must consider. These uncertainties can include, but are not limited to, the following:
•
The models do not address all the possible hazard characteristics of a catastrophe peril (e.g., the precise path and wind speed of a hurricane);
•
The models may not accurately reflect the true frequency of events;
•
The models may not accurately reflect a risk’s vulnerability or susceptibility to damage for a given event characteristic;
•
The models may not accurately represent loss potential to reinsurance contract coverage limits, terms and conditions; and
•
The models may not accurately reflect the impact on the economy of the area affected or the financial, judicial, political, or regulatory impact on insurance claim payments during or following a catastrophe event.
Our PMLs are selected after assessment of multiple third party vendor model outputs, internally constructed independent models, including our CatFocus® suite of models, and other qualitative and quantitative assessments by management, including assessments of exposure not typically modeled in vendor or internal models. Our methodology for estimating PMLs may differ from methods used by other companies and external parties given the various assumptions and judgments required to estimate a PML.
As a result of these factors and contingencies, our reliance on assumptions and data used to evaluate our entire reinsurance portfolio, and specifically to estimate a PML, is subject to a high degree of uncertainty that could result in actual losses that are materially different from our PML estimates and, as a result, our financial results and financial condition may be significantly and adversely impacted. See further information on PMLs in the Risk Management section in Item 4.B below for further details.
Our Life products expose us to volatility in net income arising from changes in the value of the Life and health reserves liability that are directly affected by market risk and other factors and are based upon various assumptions.
The pricing and establishment of reserves for our Life and Health segment related to future policy benefits and the valuation of life insurance and annuity products are based upon various assumptions, including but not limited to market changes, mortality rates, morbidity rates and policyholder behavior. The process of establishing reserves for future policy benefits relies on our ability to accurately estimate insured events that have not yet occurred but that are expected to occur in future periods, as well as assumptions for investment returns. Significant deviations in actual experience from assumptions used for pricing and for establishing reserves for future policy benefits could have an adverse effect on the profitability of our products, our business and our financial results and condition.
Under reinsurance programs covering variable annuity guarantees we assume the risk of guaranteed minimum death benefits (GMDB). Our net income is directly impacted by changes in the reserves calculated in connection with the reinsurance of GMDB liabilities. Reported liabilities for GMDB reinsurance are determined using internal valuation models. Such valuations require considerable judgment and are subject to significant uncertainty. The valuation of these products is subject to fluctuations arising from, among other factors, changes in interest rates, changes in equity markets, changes in credit markets, changes in the allocation of the investments underlying annuitant’s account values and assumptions regarding future policyholder behavior. Adverse changes in market factors and policyholder behavior will have an impact on both life underwriting income and net income. These risks may increase as we seek to expand our Life and Health business.
The reserves described above are included in Life and health reserves on the Consolidated Balance Sheets with changes in these reserves included in Losses and loss expenses within the Consolidated Statements of Operations.
In addition, the reserves that we have established may be inadequate. If ultimate losses and loss expenses exceed the reserves currently established, we will be required to increase loss reserves in the period in which we identify the deficiency to cover any such claims. As a result, even when losses are identified and reserves are established for any line of business, ultimate losses and loss expenses may deviate, perhaps substantially, from estimates reflected in loss reserves in our financial statements. Variations between our loss reserve estimates and actual emergence of losses could be material and could have a material adverse effect on our results of operations and financial condition.

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See Liquidity and Capital Resources—Reserves in Item 5 and Notes 2(b) and 7 to the Consolidated Financial Statements in Item 18 of this report for further details.
We rely on a few reinsurance brokers for a large percentage of our business; loss of business provided by these brokers would reduce our premium volume and net income.
We produce our business both through brokers and through direct relationships with insurance company clients. For the year ended December 31, 2019, more than 70% of our gross premiums written were produced through brokers. The Company has two brokers that each individually accounted for 28% and 22% of the Company's total gross premiums written for 2019 (see Note 18 to the Consolidated Financial Statements in Item 18 of this report for further details). Because broker-produced business is concentrated with a small number of brokers, we are exposed to concentration risk. A significant reduction in the business produced by these brokers could potentially reduce our premium volume and net income.
We are exposed to credit risk relating to our reinsurance brokers and cedants.
In accordance with industry practice, we may pay amounts owed under our reinsurance policies to brokers, and they in turn pay these amounts to the ceding insurer. In some jurisdictions, if the broker fails to make such an onward payment, we might remain liable to the ceding insurer for the deficiency. Conversely the ceding insurer may pay premiums to the broker for onward payment to us in respect of reinsurance policies issued by us. In certain jurisdictions, these premiums are considered to have been paid to us at the time that payment is made to the broker, and the ceding insurer will no longer be liable to us for those amounts, whether or not we have actually received the premiums. We may not be able to collect all premiums receivable due from any particular broker at any given time. We also assume credit risk by writing business on a funds-withheld basis. At December 31, 2019, Funds held by reinsured companies recorded in the Consolidated Balance Sheet was $815 million. Under such arrangements, the cedant retains the premium they would otherwise pay to us to cover future loss payments.
If we are downgraded by rating agencies, our standing with brokers and customers could be negatively impacted and may adversely impact our results of operations.
Rating agencies assess and rate the claims-paying ability and financial strength of insurers and reinsurers, such as our principal operating subsidiaries. These ratings are based upon criteria established by the rating agencies and have become an important factor in establishing our competitive position in the market. Insureds, insurers, ceding insurers and intermediaries use these ratings as one measure by which to assess the financial strength and quality of insurers and reinsurers. However, these ratings are not an evaluation directed to investors of our preferred shares or debt securities, and are not a recommendation to buy, sell or hold our preferred shares or debt securities.
Our financial strength ratings are subject to periodic review as rating agencies evaluate us to confirm that we continue to meet their criteria for ratings assigned to us by them. Such ratings may be revised downward or revoked at the sole discretion of such ratings agencies in response to a variety of factors, including capital adequacy, management strategy, operating earnings and risk profile. In addition, from time to time, one or more rating agencies may effect changes in their capital models and rating methodologies that could have a detrimental impact on our ratings. It is also possible that rating agencies may in the future heighten the level of scrutiny they apply when analyzing companies in our industry, may increase the frequency and scope of their reviews, may request additional information from the companies that they rate, and may adjust upward the capital and other requirements employed in their models for maintenance of certain rating levels. There can be no assurance that our ratings will remain at their current levels.
If our ratings were downgraded, our competitive position in the reinsurance industry may suffer, and it could result in a reduction in demand for our products. In addition, certain business that we write contains terms that give the ceding company or derivative counterparty the right to terminate cover and/or require collateral if our ratings are downgraded.
See Liquidity and Capital Resources—Shareholders’ Equity and Capital Resources Management in Item 5 of this report for our current financial strength ratings. The status of any further changes to ratings or outlooks will depend on various factors.
The availability of retrocessional reinsurance to limit our exposure to risks may be limited and counterparty credit and other risks associated with our retrocession arrangements may result in losses which could adversely affect our financial condition and results of operations.
For the purposes of managing risk, we use retrocessional reinsurance. The availability and cost of retrocessional protection is subject to market conditions, which are beyond our control. As a result of such market conditions and other factors, we may not be able to successfully mitigate risk through retrocessional and other arrangements.
Further, we are subject to credit risk with respect to our retrocessions because the ceding of risk to retrocessionaires does not relieve us of our liability to the clients or companies we reinsure. Although we have not experienced any material credit losses to

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date, an inability of our retrocessionaires to meet their obligations to us could have a material adverse effect on our financial condition and results of operations. Our losses for a given event or occurrence may increase if our retrocessionaires dispute or fail to meet their obligations to us or the retrocessional protections purchased by us are exhausted or are otherwise unavailable for any reason. Our failure to establish adequate retrocessional arrangements or the failure of our existing retrocessional arrangements to protect us from overly concentrated risk exposure could adversely affect our financial condition and results of operations.
We may require additional capital in the future, which may not be available or may only be available on unfavorable terms.
Our future capital requirements depend on many factors, including rating agencies and regulatory requirements, our ability to write new business successfully, the frequency and severity of catastrophic events, and our ability to establish premium rates and reserves at levels sufficient to cover losses. We may need to raise additional funds through financings or curtail our growth and/or reduce our assets. Any equity or debt financing, if available at all, may be on terms that are not favorable to us. Financings could result in the issuance of securities that have rights, preferences and privileges that are senior to those of our other securities. Disruption in the increasingly volatile financial markets may limit our ability to access capital required to operate our business and we may be forced to delay raising capital or bear a higher cost of capital, which could decrease our profitability and significantly reduce our financial flexibility. The large amounts of recent industry-wide catastrophe losses have made access to capital more challenging, potentially making it more difficult and more expensive for us to raise additional financing if necessary. In addition, if we experience a credit rating downgrade, withdrawal or negative watch/outlook in the future, we could incur higher borrowing costs and may have more limited means to access capital. If we cannot obtain adequate capital on favorable terms or at all, our business, operating results and financial condition could be adversely affected. In such a severe event, we may be reliant on our parent company, EXOR Nederland N.V., to provide a further capital injection or contribution to us. However, all EXOR Group portfolio companies are managed independently and autonomously, and there can be no guarantee that EXOR Nederland N.V. would provide any additional capital.
Our investments are subject to interest rate, credit, equity and real estate related risks, which may adversely affect our net income and may adversely affect the adequacy of our capital.
We invest the net premiums we receive unless, or until such time as, we pay out losses and/or until they are made available for distribution to common and preferred shareholders, to pay interest on or redemption of debt and preferred shares, or otherwise used for general corporate purposes. Investment results comprise a substantial portion of our income. For the year ended December 31, 2019, we had net investment income of $449 million, which represented approximately 6% of total revenues. In addition, we recorded net realized and unrealized gains on investments of $887 million during 2019, which are included in the net income for the year. We are accordingly exposed to significant financial and capital market risks, including changes in interest rates, credit spreads, equity and real estate prices, foreign exchange rates, market volatility, the performance of the economy in general and other factors outside our control.
Interest rates are highly sensitive to many factors, including fiscal and monetary policies of major economies, inflation, economic and political conditions and other factors outside our control. Changes in interest rates can negatively affect net investment income in that, in a declining interest rate environment, investments in fixed maturities and short-term investments (fixed maturity portfolio) would earn interest income at lower rates. In a declining interest rate environment, the market value of our fixed income portfolio would increase; however, in a rising interest rate environment, the market value of our fixed income portfolio will decline. Depending on our liquidity needs and investment strategy, we may liquidate investments prior to maturity at a loss in order to cover liabilities as they become due or to invest in other investment opportunities that have better expected longer term profitability.
Our fixed maturity portfolio is primarily invested in high quality, investment grade securities. However, we invest a portion of the portfolio in securities that are below investment grade. We also invest a portion of our portfolio in other investments such as fixed income type funds, notes receivable, loans receivable, private placement bond investments, derivatives and other specialty asset classes. These securities generally pay a higher rate of interest or return and may have a higher degree of credit or default risk. These securities may also be less liquid in times of economic weakness or market disruptions.
We also invest a portion of our portfolio in preferred and common stocks or equity-like securities. The value of these assets fluctuates with equity markets, which are increasingly volatile. In times of economic weakness, the market value and liquidity of these assets may decline, and may impact net income and capital. We use the term equity-like investments to describe our investments that have market risk characteristics similar to equities and are not investment grade fixed maturity securities. This category includes high-yield and convertible fixed maturity investments and private placement equity investments. Fluctuations in the fair value of our equity-like investments may reduce our income in any period or year and cause a reduction in our capital. As global equity markets are at or close to historically high levels, there can be no assurance that our equity-like investments will maintain their current levels.

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In addition, we invest directly and indirectly in real estate assets, which are subject to overall market conditions. We have investments in real estate in various locations (including London, New York, France and Brazil) through investments in limited partnerships as well as through directly-owned investments in real estate and an equity method investment in a privately held real estate investment and development group, Almacantar Group S.A. (Almacantar) in London. These real estate assets are exposed to various risks, including the supply and demand of leasable commercial and residential space and fluctuations in real estate prices globally. See also Item 4.D and Note 17 to the Consolidated Financial Statements in Item 18 below in this report for further details.
Refer to Item 11 below in this report for quantitative and qualitative disclosures about market risk.
The expected replacement of LIBOR may adversely affect our net investment income.
Actions by regulators in the U.K. and elsewhere are expected to result in the replacement of the London Interbank Offered Rate (LIBOR) with alternative rates. In July 2017, the U.K. Financial Conduct Authority (the “FCA”) announced that it plans to phase out the use of LIBOR by the end of 2021, which is expected to result in these widely used reference rates no longer being available. The U.S. Federal Reserve has begun publishing a Secured Overnight Financing Rate which is intended to replace U.S. dollar LIBOR. Plans for alternative reference rates for other currencies have also been announced. Changes to LIBOR, the establishment of alternative reference rates, and related uncertainty may adversely affect us. The discontinuance of LIBOR could have an adverse impact on the market for LIBOR-based securities, the value of our investment portfolio and our net investment income. There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate, and as such, the potential effect of any such event cannot yet be determined.
Foreign currency fluctuations may reduce our net income and our capital levels.
Through our multinational reinsurance operations, we conduct business in a variety of foreign (non-U.S.) currencies, the principal exposures being the Euro, British pound, Canadian dollar, Japanese yen and Swiss Franc. Accordingly, we are subject to market risks associated with devaluations and fluctuations in currency exchange rates. Our assets and liabilities denominated in foreign currencies are therefore exposed to changes in currency exchange rates, which may be material. Our reporting currency is the U.S. dollar, and exchange rate fluctuations relative to the U.S. dollar may materially impact our financial results and condition. We employ various strategies, including the use of foreign exchange forward contracts and other derivative financial instruments, to manage our exposure to foreign currency exchange risk. To the extent that these exposures are not fully offset or hedged, or the hedges are ineffective at mitigating adverse effects, our financial results and condition may be negatively impacted by fluctuations in foreign currency exchange rates.
We may suffer losses due to defaults by various counterparties, including issuers of investment securities, reinsurance contracts and derivatives.
Issuers or borrowers whose securities we hold, reinsurers, clearing agents, clearing houses, joint venture partners, derivative instrument counterparties and other financial intermediaries may default on their obligations to us due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud or other reasons. Even if we are entitled to collateral when a counterparty defaults, such collateral may be illiquid or proceeds from such collateral when liquidated may not be sufficient to recover the full amount of the obligation. All or any of these types of default could have a material adverse effect on our results of operations, financial condition and liquidity.
Our debt, credit and International Swap Dealers Association (ISDA) agreements may limit our financial and operational flexibility, which may affect our ability to conduct our business.
We have incurred indebtedness, and may incur additional indebtedness in the future. At December 31, 2019 and 2018, our total Debt related to senior notes and capital efficient notes was approximately $1.4 billion.
Additionally, we have entered into letter of credit facilities and ISDA agreements (including but not limited to weather derivatives) with various institutions.
The agreements relating to our debt, letter of credit facilities and ISDA agreements contain various covenants that may limit our ability, among other things, to borrow money, make particular types of investments or other restricted payments, sell assets, merge or consolidate. Some of these agreements also require us to maintain specified ratings. If we fail to comply with these covenants, the lenders or counterparties under these agreements could declare a default and demand immediate repayment of all amounts owed to them. See Liquidity and Capital Resources—Shareholders’ Equity and Capital Resources Management—Credit Agreements in Item 5 of this report.
If we are in default under the terms of these agreements, we may also be restricted in our ability to declare or pay any dividends, redeem, purchase or acquire any shares or make a liquidation payment.

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If any one of the financial institutions that we use in our operations, including those that participate in our credit facilities, fails or is otherwise unable to meet their commitments, we could incur substantial losses and reduced liquidity.
We maintain cash balances significantly in excess of the U.S. Federal Deposit Insurance Corporation insurance limits at various depository institutions. We also have funding commitments from a number of banks and financial institutions that participate in our credit facilities. See Liquidity and Capital Resources—Shareholders’ Equity and Capital Resources Management—Credit Agreements in Item 5 and Note 16 to the Consolidated Financial Statements in Item 18 of this report for details. Access to funds under these existing credit facilities is dependent on the ability of the banks that are parties to the facilities to meet their funding requirements. Those banks may not be able to meet their funding requirements if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time, and we might be forced to replace credit sources in a difficult market. If we cannot obtain adequate financing or sources of credit on favorable terms, or at all, our business, operating results and financial condition could be adversely impacted.
Strategic investments and merger and acquisition (M&A) activities could disrupt our ongoing business and present risks not originally contemplated.
We have made, and in the future may make, strategic investments or acquisitions. Such endeavors involve significant risks and uncertainties, including those related to distraction of management from current operations, greater than expected liabilities and expenses, inadequate return of capital and unidentified issues not discovered in due diligence. In addition, the integration of any acquired companies may place significant demands on our management, systems, internal controls and financial and physical resources. These new ventures or M&A activities are inherently risky and may not achieve the expected benefits.
Operational risks, including human or systems failures, are inherent in our business.
Operational risks and losses can result from many sources including fraud, errors by employees, failure to document transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements or information technology failures.
Our modeling, underwriting and information technology and application systems are critical to our business and reputation. Moreover, our technology and applications are an important part of our underwriting process and our ability to compete successfully. We have also licensed certain systems and data from third parties. We cannot be certain that we will have access to these, or comparable service providers, or that our technology or applications will continue to operate as intended. In addition, we cannot be certain that we would be able to replace these service providers or consultants without slowing our underwriting response time. A major defect or failure in our internal controls or information technology and application systems could result in management distraction, harm to our reputation, a loss or delay of revenues or increased expense.
Cybersecurity events could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations.
We are dependent upon the effective functioning and availability of our information technology and application systems platforms. These platforms include, but are not limited to, our proprietary software programs such as catastrophe models as well as those licensed from third-party vendors including financial, analytic and modeling systems. We rely on the security of such platforms for the secure processing, storage and transmission of confidential information. Examples of cybersecurity incidents are unauthorized access, computer viruses, deceptive communications (phishing), data loss, malware or other malicious code or cyber-attack, destructive attack, system failures and disruptions and other events that could have security consequences. A cybersecurity incident could materially impact our ability to adequately price products and services, establish reserves, provide efficient and secure services to our clients, brokers, vendors and regulators, value our investments and timely and accurately report our financial results. Although we have implemented controls and have taken protective measures to reduce the risk of cybersecurity incidents, we cannot reasonably anticipate or prevent all cybersecurity incidents. Cybersecurity incidents could expose us to a risk of loss or misuse of our information, litigation, reputational damage, violations of applicable privacy and other laws, fines, penalties or losses that are either not insured against or not fully covered by insurance maintained. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities.
We believe there are frequent attempts to breach our cybersecurity measures. For example, in 2018 we encountered a phishing attempt where someone impersonating a senior executive sought payment; although the payment was initiated, we were able to detect the incident in time and stop the payment from being released. We cannot assure that our systems and processes will be able to identify and prevent such attempts in the future.

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The loss of key management personnel could adversely affect us.
Our success has depended, and will continue to depend, partly upon our ability to attract and retain management personnel. If any of these key management employees ceased to continue in their present role, we could be adversely affected.
Our ability to execute our business strategy is dependent on our ability to attract and retain a staff of qualified executive officers, underwriters, actuaries and other key personnel. The skills, experience and knowledge of the reinsurance industry of our management team constitute important competitive strengths. If some or all of these managers leave their positions, and even if we were able to find persons with suitable skills to replace them, our operations could be adversely affected.
We may be adversely impacted by inflation.
Deficit spending by governments in our major markets and monetary stimulus provided by central banks exposes us to a heightened risk of inflation. We monitor the risk that the principal markets in which we operate could experience increased inflationary conditions, which would, among other things, cause policyholder loss costs to increase, and negatively impact the performance of our investment portfolio. Inflation related to medical costs, construction costs and tort issues in particular impact the property and casualty industry, and broader market inflation has the potential risk of increasing overall loss costs. The impact of inflation on loss costs could be more pronounced for those lines of business that are considered to be long-tail in nature, as they require a relatively long period of time to finalize and settle claims. Changes in the level of inflation also result in an increased level of uncertainty in our estimation of loss reserves, particularly for long-tail lines of business. The onset, duration and severity of an inflationary period cannot be estimated with precision.
Risks Related to Our Industry
Our profitability is affected by the cyclical nature of the reinsurance industry.
Historically, the reinsurance industry has experienced significant fluctuations in operating results due to competition, levels of available capacity, trends in cash flows and losses, general economic conditions and other factors, particularly in the non-life lines of business. Demand for reinsurance is influenced significantly by underwriting results of primary insurers, including catastrophe losses, and prevailing general economic conditions. The supply of reinsurance is related directly to prevailing prices and levels of capacity that, in turn, may fluctuate in response to changes in rates of return on investments being realized in the reinsurance industry. In addition, the cycle of our industry may fluctuate as a result of changes in the economic, legal, political and social landscape. Since cyclicality is due in large part to the collective actions of insurers, reinsurers and general economic conditions and the occurrence of unpredictable events, we cannot predict the timing or duration of changes in the market cycle. If any of these factors were to result in a decline in the demand for reinsurance or an overall increase in reinsurance capacity, our profitability could be impacted. In the recent past, we have experienced a generally softening market cycle, with increased competition, surplus underwriting capacity, deteriorating rates and less favorable terms and conditions, all having an impact on our ability to write business.
Although we are currently experiencing improving market conditions with increased or constant pricing in most non-life classes, primarily in those markets that have been exposed to the catastrophe losses in 2019, as a result of the persisting competition and excess capacity in the industry, it is not possible to forecast if improving pricing conditions will continue.
Competition, pricing pressure and any other negative factors noted above may adversely affect our profitability and results of operations in future periods, and the impact may be material.
We operate in a highly competitive environment.
The reinsurance industry is highly competitive and we compete with a number of worldwide reinsurance companies, including, Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft (Munich Re), Swiss Re Ltd. (Swiss Re), Hannover Rück SE (Hannover Re), SCOR SE, Transatlantic Reinsurance Company Inc. (Transatlantic), General Reinsurance Corporation (GenRe), Reinsurance Group of America, Incorporated (RGA), Everest Re Group, Ltd. (Everest Re) and RenaissanceRe Holdings Ltd. (RenRe).
The lack of strong barriers to entry into the reinsurance business means that we may also compete with new companies that may be formed to enter the reinsurance market. In addition, we may experience increased competition as a result of the consolidation in the insurance and reinsurance industry. These consolidated entities may try to use their enhanced market power and relationships to negotiate price reductions for our products and services and/or obtain a larger market share through increased line sizes. Consolidated companies may also purchase less reinsurance product and services, due to increased levels of capital.
Competition in the types of reinsurance that we underwrite is based on many factors, including the perceived and relative financial strength, pricing and other terms and conditions, services provided, ratings assigned by independent rating agencies,

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speed of claims payment, geographic scope of business, client and broker relationships, reputation and experience in the lines of business to be written. If competitive pressures reduce our prices, we may expect to write less business. In addition, competition for customers would become more intense and we could incur additional expenses relating to customer acquisition and retention, further reducing our operating margins.
Further, insurance-linked securities, derivatives and other non-traditional risk transfer mechanisms and alternative vehicles are being developed and offered, which could impact the demand for traditional insurance or reinsurance. A number of new, proposed or potential industry or legislative developments could further increase competition in our industry. New competition from these developments could cause the demand for reinsurance and/or prices to fall or the costs related to client acquisition and retention to increase, either of which could have a material adverse effect on our growth and profitability.
All of the above factors may adversely affect our profitability and results of operations in future periods, the impact of which may be material, and may adversely affect our ability to successfully execute our strategy as a global diversified reinsurance company.
Legal and Regulatory Risks
Political, regulatory, governmental and industry initiatives could adversely affect our business.
Our reinsurance operations are subject to extensive laws and regulations that are administered and enforced by a number of different governmental and non-governmental self-regulatory authorities and associations in each of their respective jurisdictions and internationally. Our businesses in each jurisdiction are subject to varying degrees of regulation and supervision. The laws and regulations of the jurisdictions in which our reinsurance subsidiaries are domiciled require, among other things, maintenance of minimum levels of statutory capital, surplus, and liquidity; various solvency standards; and periodic examinations of subsidiaries’ financial condition. In some jurisdictions, laws and regulations also restrict payments of dividends and reductions of capital. Applicable statutes, regulations, and policies may also restrict the ability of these subsidiaries to write insurance and reinsurance policies, to make certain investments, and to distribute funds.
Some of these authorities regularly consider enhanced or new regulatory requirements intended to prevent future crises or otherwise assure the stability of institutions under their supervision. These authorities may also seek to exercise their supervisory authority in new and more robust ways, and new regulators could become authorized to oversee parts of our business.
It is not possible to predict all future impacts of these types of changes but they could affect the way we conduct our business and manage our capital, and may require us to satisfy increased capital requirements or to incur additional expenses, any of which, in turn, could affect our results of operations, financial condition and liquidity. Our material subsidiaries’ regulatory environments are described in detail in Business Overview—Regulation in Item 4.B of this report.

If our compliance with any particular regulatory regime is challenged, we may be subject to monetary or other penalties. In addition, in order to ensure compliance with applicable regulatory requirements or as a result of any investigation, including remediation efforts, we could be required to incur expenses and undertake additional work, which in turn may divert resources from our business. These, and other regulations relating to each of our material subsidiaries may in effect restrict each of those subsidiaries’ ability to write new business, to make certain investments and to distribute funds or assets to us. For further information see Business Overview—Regulation in Item 4.B of this report.
Recent government intervention and the possibility of future government intervention have created uncertainty in the insurance and reinsurance markets. Government regulators are generally concerned with the protection of policyholders to the exclusion of other interested parties, including shareholders and debt holders of reinsurers. We believe it is likely there will continue to be increased regulation of, and other forms of government participation in, our industry in the future, which could materially adversely affect our business by, among other things:
•
Providing reinsurance capacity in markets and to clients that we target or requiring our participation in industry pools and guaranty associations;
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Further restricting our operational or capital flexibility;
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Expanding the scope of coverage under existing policies;
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Regulating the terms of reinsurance policies;
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Adopting further or changing compliance requirements which may result in additional costs which may adversely impact our results of operation; or
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Disproportionately benefiting the companies domiciled in one country over those domiciled in another.

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Legislative and regulatory activity in healthcare may affect our profitability as a provider of accident and health reinsurance products.
We derive revenues, in part, from the provision of accident and health reinsurance in the U.S. to institutions that participate in the U.S. healthcare delivery infrastructure. The Patient Protection and Affordable Care Act of 2010 (the Healthcare Act) made significant changes to the regulation of health insurance and may negatively affect our U.S. health reinsurance business including, but not limited to, the healthcare delivery system and the healthcare cost reimbursement structure in the U.S. In addition, we may be subject to regulations, guidance or determinations emanating from the various regulatory authorities authorized under the Healthcare Act. It is difficult to predict the effect that the Healthcare Act, any regulatory pronouncement made thereunder or changes to the Healthcare Act will have on our results of operations or financial condition. In addition, it is not possible to predict whether new legislation, rules or regulatory changes (such as the proposed "Medicare for all" plans) will be adopted or enacted in the future or what impact, if any, such legislation, rules or changes could have on our business, financial condition or results of operations.
Legal and enforcement activities relating to the insurance industry could affect our business and our industry.
The insurance industry has experienced substantial volatility as a result of litigation, investigations and regulatory activity by various insurance, governmental and enforcement authorities concerning certain practices within the insurance industry.
These investigations have resulted in changes in the insurance and reinsurance markets and industry business practices. While at this time, none of these changes have caused an adverse effect on our business, we are unable to predict the potential effects, if any, that future investigations may have upon our industry. As noted above, because we frequently assume the credit risk of the counterparties with whom we do business throughout our insurance and reinsurance operations, our results of operations could be adversely affected if the credit quality of these counterparties is severely impacted by investigations in the reinsurance or insurance industry or by changes to industry practices.
Emerging claim and coverage issues could adversely affect our business.
Unanticipated developments in the law, as well as changes in social and environmental conditions could potentially result in unexpected claims for coverage under our reinsurance and other contracts. These developments and changes may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. With respect to our casualty businesses, these legal, social and environmental changes may not become apparent until sometime after their occurrence. Our exposure to these uncertainties could be exacerbated by an increase in insurance and reinsurance contract disputes, arbitration and litigation.
The full effects of these and other unforeseen emerging claim and coverage issues are extremely hard to predict. In some instances, these coverage changes may not become apparent until after we have issued reinsurance contracts that are affected by such changes. As a result, the full extent of our liability under such reinsurance contracts and, in particular, our casualty reinsurance contracts, may not be known for many years after a contract is issued.
The reinsurance industry is also affected by political, judicial and legal developments that may create new and expanded theories of liability, which may result in unexpected claim frequency and severity and delays or cancellations of products and services we provide, which could adversely affect our business.
The U.K. leaving the EU ("Brexit") could adversely affect our business.
In accordance with the withdrawal agreement implementing Brexit, the U.K. formally left the European Union (EU) on January 31, 2020. The withdrawal agreement provides for a transitional period ending on December 31, 2020, during which time the U.K. will continue to enjoy the same rights and obligations as it had as a member state, though without participating in the EU institutions. During this transitional period, the U.K. and the EU are expected to negotiate a long-term agreement covering, among other things, the terms of trade between them. However, EU officials and others have expressed skepticism that such a trade deal can be agreed in the time frame allowed. The U.K. government has stated that it will not seek to extend the transitional period. There is, therefore, a risk that at the end of 2020 no trade deal (or only a minimal trade deal) will have been completed, with the result that a “hard” Brexit occurs on December 31, 2020. Depending on the terms of the long-term trade deal with the EU and/or whether or not a “hard” Brexit occurs on December 31, 2020, the U.K. could lose access to the single EU market and to free trade deals with several countries that already have agreements with the EU.

Such uncertainty and barriers to trade could affect the attractiveness of the U.K. and impact our U.K. business. We also face risks associated with the potential uncertainty and consequences relating to Brexit, including with respect to volatility in financial markets, exchange rates and interest rates. These uncertainties could increase the volatility of, or reduce, our investment results in particular periods or over time. Brexit could adversely affect European or worldwide political, regulatory, economic or market

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conditions and could contribute to instability in global political institutions and regulatory agencies. Brexit could also lead to legal uncertainty and differing laws and regulations between the U.K. and the EU. In addition, these uncertainties relating to Brexit could affect the operations, strategic position or results of insurers or reinsurers on whom we ultimately rely to access underlying insured coverages. Any of these potential effects of Brexit, and others we cannot anticipate, could adversely affect our results of operations or financial condition.
Our business is subject to applicable laws and regulations relating to sanctions, anti-bribery and anti-money laundering, the violation of which could adversely affect our operations.
Our activities are subject to applicable economic and trade sanctions, anti-bribery and anti-money laundering laws and regulations in the jurisdictions where we operate including the U.S. and the EU, among others. Compliance with these regulations may impose significant costs, limit or restrict our ability to do business or engage in certain activities, or subject us to the possibility of civil or criminal actions or proceedings. Although we have policies and controls in place designed to comply with applicable laws and regulations, there can be no assurance that we, or an employee or agent acting on our behalf, would fully comply with applicable laws and regulations as interpreted by the relevant authorities. The divergence of regulatory requirements between the U.S. and the EU regarding business with Iran has increased these risks. Failure to accurately interpret, comply with or obtain appropriate authorizations and/or exemptions under such laws or regulations could expose us to investigations, civil penalties, criminal penalties and other sanctions, including fines, injunctions, loss of licenses or other punitive actions. In addition, such violations could damage our business and/or our reputation. Such criminal or civil sanctions, penalties, other sanctions, or damage to our business and/or reputation could have a material adverse effect on our financial condition and results of operations.
Our business is subject to applicable laws and regulations relating to data privacy and protection and cybersecurity, the changes or the violation of which could affect our operations.
Regulatory authorities around the world have implemented or are considering a number of legislative changes or regulations concerning data protection and cybersecurity which have required or may require us to incur additional expenses. We are subject to numerous U.S. federal and state laws and non-U.S. regulations governing the protection of personal and confidential information of our clients or employees, including in relation to medical records and financial information. Existing cybersecurity regulations vary by region or country in which PartnerRe operates and cover different aspects of business operations.
Our business is subject to General Data Protection Regulation (GDPR) which regulates data protection for all individuals within the EU, including foreign companies processing data of EU residents; it enhances individuals’ rights, introduces complex and far-reaching company obligations and increases penalties significantly in case of violation. The GDPR sets out a number of requirements that must be complied with when handling personal data including: the obligation to appoint data protection officers in certain circumstances and the principal of accountability and the obligation to make public notification of significant data breaches. The interpretation and application of data protection laws in the U.S., Europe and elsewhere are developing and are often uncertain and in flux. It is possible that these laws or cybersecurity regulations may be interpreted and applied in a manner that is inconsistent with our data protection or security practices. If so, in addition to the possibility of fines, this will result in an order requiring that we change our data practices, which could have an adverse effect on our business and results of operations. Complying with these various laws will cause us to incur additional costs and could require us to change our business practices.
As a group operating worldwide, we strive to comply with all applicable data protection laws and regulations. It is however possible that we fail to comply with all applicable laws and regulations. The failure or perceived failure to comply may result in inquiries and other proceedings or actions against us by government entities or others, including monetary fees, or could cause us to lose clients which could potentially have an adverse effect on our business and results of operations.
See also Business Overview—Regulation in Item 4.B for further details on cybersecurity requirements.


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Changes in current accounting practices and future pronouncements may materially impact our reported financial results.
    
Developments in accounting practices may require considerable additional time and cost to comply, particularly if we are required to prepare information relating to prior periods for comparative purposes or to apply the new requirements retroactively. The impact of changes in current accounting practices and future pronouncements may be significant. The impact may affect the results of our operations, including among other things, the calculation of net income, and may affect our financial position, including among other things, the calculation of unpaid losses and loss expenses, policy benefits for life and annuity contracts and total shareholders’ equity. The changes to accounting standards could affect the way we manage and report significant areas of our business and could impose demands on us in the areas of governance, employee training, internal controls and disclosures.

Our Consolidated Financial Statements are prepared in accordance with U.S. GAAP, and accordingly, we are required to adopt new or revised accounting standards issued by the Financial Accounting Standards Board (FASB). The FASB has issued Accounting Standards Update (ASU) 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts, which will result in changes to how we account for and report our long-duration insurance contracts. The Company is currently evaluating the impact of this guidance on its Consolidated Financial Statements and disclosures required to be adopted for the year ended December 31, 2022. 

In addition, the Company may be required to adopt new or revised accounting standards issued by other recognized authoritative bodies for purposes of reporting to our controlling shareholder or for the preparation of the Company's subsidiaries' statutory financial statements.

See Note 2(s) to the Consolidated Financial Statements in Item 18 in this report for details of recent accounting pronouncements.
Risks Related to Our Preferred Shares
PartnerRe Ltd. is a holding company, and if our subsidiaries do not pay dividends or make other distributions to us, we may not be able to pay dividends on our preferred shares or settle principal payments as they become due.
PartnerRe Ltd. is a holding company with no operations to generate income to provide liquidity other than the cash received for issuance of common shares and preferred shares. We have cash outflows in the form of other expenses and dividends to both common and preferred shareholders. We rely primarily on cash dividends and payments from our subsidiaries to meet our cash outflows. We expect future dividends and other permitted payments from our subsidiaries to be the principal source of funds to pay expenses and dividends. The ability of our subsidiaries to pay dividends or to advance or repay funds to us is subject to general economic, financial, competitive, regulatory and other factors beyond our control. In particular, the payment of dividends by our reinsurance subsidiaries is limited under Bermuda, Irish and Singapore laws and certain statutes of U.S. states in which our U.S. subsidiaries are domiciled, which statutes include minimum solvency and liquidity thresholds (see Note 11 to the Consolidated Financial Statements in Item 18 of this report for a description of various regulatory and statutory restrictions on dividend payments applicable to our reinsurance subsidiaries). Because PartnerRe Ltd. is a holding company, our right, and hence the right of our creditors and shareholders, to participate in any distribution of assets by any of our subsidiaries, upon our liquidation or reorganization or otherwise, is subject to the prior claims of policyholders and creditors of these subsidiaries.
Our controlling shareholder owns a significant majority of our common shares, and its interest may differ from the interests of our preferred shareholders.
EXOR Nederland N.V. owns approximately 99.7% of the outstanding common shares of the Company. As a result, EXOR Nederland N.V. has power to elect our directors and to determine the outcome of any action requiring shareholder approval. EXOR’s interests may differ from the interests of the holders of our preferred shares and, given EXOR Nederland N.V.’s majority controlling interest in the Company, circumstances may arise under which EXOR Nederland N.V. may exercise its control in a manner that is not favorable to the interests of the holders of the preferred shares.

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Preferred shareholders may encounter difficulties in service of process and enforcement of judgments against us in the United States.
We are a Bermuda company and some of our directors and officers are residents of various jurisdictions outside the U.S. All, or a substantial portion, of the assets of our officers and directors and of our assets are or may be located in jurisdictions outside the U.S. Although we have appointed an agent and irrevocably agreed that the agent may be served with process in New York with respect to actions against us arising out of violations of the U.S. Federal securities laws in any Federal or state court in the U.S., it could be difficult for investors to effect service of process within the U.S. on our directors and officers who reside outside the U.S. It could also be difficult for investors to enforce against us or our directors and officers judgments of a U.S. court predicated upon civil liability provisions of U.S. Federal securities laws.
There is no treaty in force between the U.S. and Bermuda providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. As a result, whether a U.S. judgment would be enforceable in Bermuda against us or our directors and officers depends on whether the U.S. court that entered the judgment is recognized by the Bermuda court as having jurisdiction over us or our directors and officers, as determined by reference to Bermuda conflict of law rules. A judgment debt from a U.S. court that is final and for a sum certain based on U.S. Federal securities laws will not be enforceable in Bermuda unless the judgment debtor had submitted to the jurisdiction of the U.S. court, and the issue of submission and jurisdiction is a matter of Bermuda law and not U.S. law.
In addition to and irrespective of jurisdictional issues, Bermuda courts will not enforce a U.S. Federal securities law that is either penal or contrary to public policy. An action brought pursuant to a public or penal law, the purpose of which is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity will not be entered by a Bermuda court. Certain remedies available under the laws of U.S. jurisdictions, including certain remedies under U.S. Federal securities laws, would not be available under Bermuda law or enforceable in Bermuda court, as they would be contrary to Bermuda public policy. Further, no claim can be brought in Bermuda against us or our directors and officers in the first instance for violation of U.S. Federal securities laws because these laws have no extra jurisdictional effect under Bermuda law and do not have force of law in Bermuda. A Bermuda court may, however, impose civil liability on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Bermuda law.
Taxation Risks
Changes in our effective income tax rate could affect our results of operations.
Our effective income tax rate could be adversely affected in the future by net income being lower than anticipated in jurisdictions where we have a relatively lower statutory tax rate and net income being higher than anticipated in jurisdictions where we have a relatively higher statutory tax rate, or by changes in corporate tax rates and tax regulations in any of the jurisdictions in which we operate. We are subject to regular audit by tax authorities in the various jurisdictions in which we operate. Any adverse outcome of such an audit could have an adverse effect on our net income, effective income tax rate and financial condition.
In addition, the determination of our provisions for income taxes requires significant judgment, and the ultimate tax determination related to some tax positions taken is uncertain. Although we believe our provisions are reasonable, the ultimate tax outcome may differ from the amounts recorded in our consolidated financial statements and may materially affect our net income and effective income tax rate in the period such determination is made.
If our non-U.S. operations become subject to U.S. income taxation, our net income will decrease.
We believe that we and our non-U.S. subsidiaries, other than certain business sourced by Partner Reinsurance Europe SE (PartnerRe Europe) and PartnerRe Ireland Insurance dac (PartnerRe Ireland) through the U.S., and a foreign reinsurance entity that has elected under I.R.C Section 953(d) to be treated as a domestic corporation (953(d) electing reinsurer), have operated, and will continue to operate, our respective businesses in a manner that will not cause us to be viewed as engaged in a trade or business in the U.S. and, on this basis, we do not expect that either we or our non-U.S. subsidiaries (other than PartnerRe Europe, PartnerRe Ireland, and the 953(d) electing reinsurer) will be required to pay U.S. corporate income taxes (other than potential withholding taxes on certain types of U.S. source passive income) or branch profits taxes. Because there is considerable uncertainty as to the activities that constitute being engaged in a trade or business within the U.S., the IRS may contend that either we or our non-U.S. subsidiaries are engaged in a trade or business in the U.S. In addition, legislation regarding the scope of non-U.S. entities and operations subject to U.S. income tax has been proposed in the past, and may be proposed again in the future. If either we or our non-U.S. subsidiaries are subject to U.S. income tax, our net income and shareholders’ equity will be reduced by the amount of such taxes, which could be material.

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The Organization for Economic Co-operation and Development’s (OECD) initiative to limit harmful tax competition may result in higher taxation and increased complexity, burden and cost of compliance.
The OECD has published reports and launched a global initiative among member and non-member countries on measures to limit harmful tax competition, known as the Base Erosion and Profit Shifting (BEPS) project. On June 21, 2016, the EU’s ministers of Finance and Economic Affairs unanimously approved the Anti-Tax Avoidance Directive to harmonize potential BEPS changes in the EU. These measures are largely directed at counteracting the effects of tax havens and preferential tax regimes in countries around the world. We expect that countries may change their tax laws in response to this project, and several countries have already changed or proposed changes to their tax laws. Changes to tax laws and additional reporting requirements could increase the complexity, burden and cost of doing business with our Bermuda companies and/or subject our Bermuda companies to increased tax and compliance burdens.
In May 2019, the OECD published a “Programme of Work,” divided into two pillars, which is designed to address the tax challenges created by an increasing digitalized economy. Pillar One addresses the broader challenge of a digitalized economy and focuses on the allocation of group profits among taxing jurisdictions based on a market-based concept rather than historical “permanent establishment” concepts. Pillar Two addresses the remaining BEPS risk of profit shifting to entities in low tax jurisdictions by introducing a global minimum tax and a proposed tax on base eroding payments, which would operate through a denial of a deduction or imposition of source-based taxation (including withholding tax) on certain payments. The OECD expects to reach agreement on key policy issues by July 2020, with a final proposal to be agreed to by the participating members by the end of 2020 and incorporated into local jurisdiction tax laws and treaties sometime shortly thereafter. To date, the proposal has been written broadly enough to potentially apply to our activities, and the impact to the Company cannot be determined at this time.
Our tax position could be adversely impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof.
We could be adversely impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by taxation authorities. Changes could have a material and adverse change in our worldwide effective tax rate and we may have to take further action to seek to mitigate the effect of such changes. Any future amendments to existing income tax treaties between the jurisdictions in which we operate, could subject us to increased taxation and/or potentially significant expense.

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ITEM 4.
INFORMATION ON THE COMPANY
A. History and Development of the Company
PartnerRe Ltd., an exempt company incorporated under the laws of Bermuda in 1993 with limited liability, is the holding company for our international reinsurance group (PartnerRe group). The principal office is located at 90 Pitts Bay Road, Pembroke, Bermuda (telephone number: +1 441-292-0888). The Company predominantly provides reinsurance on a worldwide basis through its principal wholly-owned subsidiaries, including Partner Reinsurance Company Ltd. (PartnerRe Bermuda), Partner Reinsurance Europe SE (PartnerRe Europe), Partner Reinsurance Company of the U.S. (PartnerRe U.S.) and Partner Reinsurance Asia Pte. Ltd. (PartnerRe Asia). The Company’s principal office in the U.S. is located at 200 First Stamford Place, Stamford, Connecticut (telephone number: +1 203-485-4200).
The Company maintains an internet site at www.partnerre.com that contains the Company's Annual Reports on Form 20-F filed with the U.S. Securities and Exchange Commission (SEC) and Current Reports on Form 6-K furnished with the SEC. These Reports are also available on the internet site maintained by the SEC at www.sec.gov.
The Company completed the acquisition of Societe Anonyme Francaise de Reassurances (SAFR, subsequently renamed PartnerRe SA) in 1997, the acquisition of Winterthur Re in 1998, the acquisition of PARIS RE Holdings Limited (Paris Re) in 2009, the acquisition of Presidio Reinsurance Group, Inc. (Presidio) in 2012, and the acquisition of Aurigen Capital Limited (Aurigen) in 2017. The acquisition of Aurigen, a North American life reinsurance company, was completed on April 3, 2017 by purchasing 100% of the outstanding ordinary shares for CAD 370 million (or approximately $278 million), and has enabled the Company to expand its life reinsurance footprint in Canada and the U.S. with limited overlap in market coverage.
On March 18, 2016, the Company's publicly held common shares were acquired by Exor N.V. (subsequently renamed to EXOR Nederland N.V), whose ultimate parent is EXOR N.V., one of Europe’s leading investment companies controlled by the Agnelli family, which is listed on the Milan Stock Exchange. As a result of the acquisition, PartnerRe's publicly issued common shares were cancelled and are no longer traded on the New York Stock Exchange (NYSE). The Company’s preferred shares continue to be traded on the NYSE.
At December 31, 2019 and 2018, the Company's shares owned by EXOR Nederland N.V. (Class A shares) are included in Shareholders' Equity in the Consolidated Balance Sheets. In 2018 and 2019, the Company also issued Class B shares to certain executives and directors of the Company which are included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheets (see Share Ownership section in Item 6.E and Notes 10 and 13 to the Consolidated Financial Statements in Item 18 of this report for further details).
On February 9, 2020, our ultimate parent company, EXOR N.V., announced that it had entered into exclusive discussions with Covéa Cooperations S.A. regarding a possible all-cash acquisition of PartnerRe. Should these discussions result in the execution of a binding agreement for the sale of the common shares of the Company, on the terms and subject to satisfaction of the conditions in such binding agreement, the consummation of such transaction would result in a change of control of the Company. These discussions are ongoing and there is no certainty that they will result in a transaction.
B. Business Overview
The Company provides reinsurance for its clients globally. The Company’s principal offices are located in Pembroke (Bermuda), Dublin, Stamford (Connecticut, U.S.), Toronto, Paris, Singapore and Zurich.
The Company provides reinsurance of risks to ceding companies (cedants or reinsureds). Risks reinsured include, but are not limited to, agriculture, aviation/space, casualty, catastrophe, energy, engineering, financial risks, marine, motor, multiline, U.S. health and property as well as mortality, morbidity, longevity, and accident and health and alternative risk products. The Company’s alternative risk products include weather and credit protection to financial, industrial and service companies on a worldwide basis.
Reinsurance is offered on either a proportional or non-proportional basis through treaties or facultative reinsurance:
•
In a proportional (or quota share) treaty reinsurance agreement, the reinsurer assumes a proportional share of the original premiums and losses incurred by the cedant. The reinsurer pays the ceding company a commission, which is generally based on the ceding company’s cost of acquiring the business being reinsured (including commissions, premium taxes, assessments and miscellaneous administrative expenses) and may also include a profit.
•
In a non-proportional (or excess of loss) treaty reinsurance agreement, the reinsurer indemnifies the reinsured against all or a specified portion of losses on underlying insurance policies in excess of a specified amount, which is called a retention or attachment point. Non-proportional business is written in layers and a reinsurer or group of reinsurers accepts a band of

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coverage up to a specified amount. The total coverage purchased by the cedant is referred to as a program and is typically placed with predetermined reinsurers in pre-negotiated layers. Any liability exceeding the upper limit of the program reverts to the ceding company.
•
In a facultative (proportional or non-proportional) reinsurance agreement the reinsurer assumes individual risks. The reinsurer separately rates and underwrites each risk rather than assuming all or a portion of a class of risks, as in the case of treaty reinsurance.
The majority of the Company’s gross premiums written were written on a proportional basis for each of the years ended December 31, 2019, 2018 and 2017.
The Company monitors the performance of its operations in three worldwide business units comprised of Property & Casualty (P&C), Specialty, and Life and Health, which represent its segments. The P&C segment is comprised of property and casualty business underwritten, including property catastrophe, facultative risks and U.S. health. The Specialty segment is comprised of specialty business, including treaty and facultative contracts. The combined business included in the P&C and Specialty segments is collectively referred to in this report as Non-life business. The Company’s Life and Health segment includes mortality, morbidity, and longevity business.
See Results by Segment in Item 5 of this report and Note 18 to the Consolidated Financial Statements in Item 18 of this report for further details on Segments.
Premium Distribution
The Company’s businesses are geographically diversified with premiums written on a worldwide basis. The Company’s gross premiums written by segment for the years ended December 31, 2019, 2018 and 2017 are as follows (in millions of U.S. dollars):
 
 
2019
 
2018
 
2017
 
 
$
 
%
 
$
 
%
 
$
 
%
Non-life business:
 
 
 
 
 
 
 
 
 
 
 
 
P&C segment
 
$
3,579

 
49
%
 
$
3,015

 
48
%
 
$
2,671

 
48
%
Specialty segment
 
2,213

 
31

 
2,050

 
32

 
1,934

 
34

Total Non-life business
 
$
5,792

 
80
%
 
$
5,065

 
80
%
 
$
4,605

 
82
%
Life and Health segment
 
1,493

 
20

 
1,235

 
20

 
983

 
18

 
 
$
7,285

 
100
%
 
$
6,300

 
100
%
 
$
5,588

 
100
%
See Operating Results—Results by Segment in Item 5 and Note 18 to the Consolidated Financial Statements in Item 18 of this report for results by segment.
Distribution Channels
The Company generates business through brokers and through direct relationships with insurance companies. For the years ended December 31, 2019, 2018 and 2017, the Company had two brokers that individually accounted for 10% or more of the Company’s total gross premiums written. These two brokers individually accounted for 28% and 22%, respectively, of the Company's total gross premiums written for 2019, 22% and 22%, respectively, for 2018, and 25% and 22%, respectively, for 2017 (see Note 18 to the Consolidated Financial Statements in Item 18 of this report for further details). No one cedant accounted for more than 10% of the Company's total gross premiums written for each of the years ended December 31, 2019, 2018 and 2017.
The gross premiums written in each of the Company's segments for the years ended December 31, 2019, 2018 and 2017, and the year-over-year comparisons, are described in Operating Results—Results by Segment in Item 5 of this report.
See Note 18 to the Consolidated Financial Statements in Item 18 of this report for the geographic distribution of the Company’s total gross premiums written for the years ended December 31, 2019, 2018 and 2017.
Competition
The Company competes with other reinsurers, some of which have greater financial, marketing and management resources than the Company, and also competes with new market entrants, and, specifically in the catastrophe line of business, with alternative capital sources and insurance-linked securities. Competition in the types of reinsurance that the Company underwrites is based on many factors, including the perceived and relative financial strength, pricing and other terms and conditions, services provided, ratings assigned by independent rating agencies, speed of claims payment, and reputation and experience in the lines of business to be written.

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Management believes the Company ranks among the world’s largest professional reinsurers and is well positioned in terms of client services and highly technical underwriting expertise. Management also believes that the Company’s global franchise and diversified platform allows the Company to provide broad risk solutions across many lines of business and geographies, and is increasingly attractive to cedants who are choosing to utilize fewer reinsurers by consolidating their reinsurance panels and focusing on those reinsurers who can cover more than one line of business. Furthermore, the Company’s capitalization and strong financial ratios allow the Company to demonstrate a solid balance sheet to its clients.
Management believes that the Company’s major competitors for the Company's Non-life business are the larger European, U.S. and Bermuda-based international reinsurance companies, as well as specialty reinsurers and regional companies in certain local markets. These competitors include Munich Re, Swiss Re, Hannover Re, SCOR SE, Transatlantic, GenRe, Everest Re, and RenRe.
For the Company’s Life business, the competition differs by location but generally includes multi-national reinsurers and local reinsurers or state-owned insurers in the U.K., Ireland and Continental Europe for its mortality and longevity lines of business. The competition specifically related to the Health business generally includes departments of worldwide reinsurance companies. These competitors include Munich Re, RGA, Swiss Re, Hannover Re, SCOR SE and GenRe.
Risk Management
In the reinsurance industry, the core of the business model is the assumption and management of risk. A key challenge is to create shareholder value through the efficient management of reinsurance and investment risks while limiting and mitigating those risks that can destroy the value or threaten the ability of the Company to achieve its objectives. The Company defines a capital-based risk appetite and identifies risks that meet its return targets within that framework. Management believes that this construct allows the Company to fulfill its obligation to pay policyholders’ claims, while ensuring appropriate margins to deliver an adequate risk adjusted return to shareholders.
Successful risk management is the foundation of the Company’s value proposition. The Company’s ability to succeed in risk assumption and business management is dependent on its ability to accurately identify, analyze and quantify risks as well as to understand how risks aggregate and to establish the appropriate capital requirements and limits for the risks assumed. All risks are managed by the Company within an integrated framework of policies and processes to ensure the consistent evaluation of risk holistically.
The Company’s ability to meet its risk adjusted return objectives over the long term are primarily determined by how well the Company understands, prices and manages assumed risk. Management also believes that every organization faces numerous risks that could threaten the successful achievement of its goals and objectives. These include strategic, reinsurance, financial market and credit, emerging, reputational and operational risks that are common to all industries, such as choice of strategy and markets, economic and business cycles, competition, changes in regulation, data quality and security, fraud, business disruption and management continuity. See also Risk Factors above.
The Enterprise Risk Management (ERM) Framework sets forth a cycle that fosters continuous review of the Company’s risk profile with tools and processes to effectively manage the Company’s risks. The ERM cycle consists of the following components:
Risk Governance and Risk Culture is achieved through establishing clear responsibilities of risk ownership and values for managing risks across the organization.
Risk Identification and Performance: Risk Universe is the ability to identify, assess and prioritize risks that could have a significant impact on the Company.
Risk Strategy: Risk Appetite and Risk Tolerance Framework defines an appropriate risk appetite and risk tolerance to achieve the Company’s business objectives.
Risk Reporting provides management with key risk information such as top risk exposures, changes in risk profile and sensitivities to risk exposures in order to monitor compliance with its risk appetite.
Risk Governance
The Company has a governance structure for risk management that promotes a risk culture of risk ownership throughout levels of the organization. The objective of the approach is to increase transparency over the roles and responsibilities that supports clear risk ownership.
The Company utilizes a multi-level risk management structure where the Executive Leadership Team (ELT) and Board are responsible for the establishment of the critical exposure limits, capital-at-risk and key policies through the Enterprise Risk Committee (ERC), a sub-committee of the ELT, and Underwriting Risk Committee (URC), a committee of the Board.

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The ERC is responsible for setting the Company’s risk appetite and return expectations. The ERC is comprised of ELT members such as the Chief Executive Officer, Chief Financial Officer, Chief Risk and Actuarial Officer, Chief Underwriting Officer, Chief Operations Officer, Chief Corporate and People Operations Officer, Chief Investment Officer and senior management members such as the Group Head of Capital & Risk and the Chief Legal Counsel. The Chief Audit Officer and Chief Financial and Operations Officer Life & Health attend the committee as observers. The ERC provides oversight through the quarterly monitoring of the Company’s Risk Tolerance, periodic review of internal capital modelling techniques including stress and scenario testing, capital allocation as well as internal audit plans and results.
The URC is currently comprised of all independent directors and the CEO. The role of the URC in the governance of Risk Management includes reviewing the ERM framework effectiveness and to discuss appropriate practices for the Company, including the Company's policies, guidelines and processes relating to the underwriting of reinsurance risks and assumptions of investment risks undertaken by the Company. Each of the Company’s risk policies relates to a specific risk and describes the Company’s approach to risk management, defines roles and responsibilities relating to the assumption, mitigation, and control processes for that risk, and an escalation process for exceptions. Risk management policies and processes are coordinated by the Capital & Risk department and compliance is verified by Internal Audit on a periodic basis. The audit results are monitored by the Audit Committee of the Board. Additionally, the URC also reviews the capital requirements and advises the Board on capital modelling matters.
The Business Units (BUs) and support functions are responsible for the execution of business activities and related risk mitigation strategies. These activities are represented in risk control practices embedded in the BUs which support the risk policies. Reporting on the Company’s capital and top risk exposures is integrated within the Company’s quarterly monitoring of risk tolerance limits, annual planning and risk assessment process as well as regulatory solvency assessments which are reported to the ELT and Board. The BUs are responsible for these activities and Internal Audit periodically evaluates the effectiveness of the risk control procedures.
Risk Culture
The Company’s risk culture drives the Company’s attitude toward managing risks through a set of values and behaviors. The Company’s risk culture is shaped through the risk governance structure, risk management practices and risk models. The risk oversight committees such as the ERC and URC, in addition to the dedicated local Chief Risk Officers as part of the Legal Entity Management Teams at the Tier 1 legal entities, sets the Company’s tone in terms of the importance and relevance of appropriately monitoring and managing risks. Risk Management practices such as limit frameworks and risk guidelines provide tools to ensure the Company’s risk-taking values are aligned with the Company’s risk appetite. Finally, risk models support the measurement of risks under stressed scenarios which promotes responsible behaviors and informed risk-taking.
Risk Identification and Performance: Risk Universe
The Company performs a risk identification and assessment process that is used to identify and assess the Company’s key risks. The assessment of the material risks is achieved through the performance of risk stresses and scenarios in line with the Company’s Stress Testing Framework.
The Company structures its risks within a Risk Universe which is comprised of the following risk categories: Strategic, Reinsurance, Financial Market and Credit, Operational, Emerging and Reputational.
Strategic Risk
Strategic risk is the risk of inadequate decision-making, poor execution of the Company’s strategic objectives and the risk of a misalignment between the Company’s existing strategy and the external environment that could threaten the competitive position and the ability to ensure ongoing profitability and viability.
Strategic risks are discussed and agreed to between the CEO and the Board, and managed by the CEO, and include the direction and governance of the Company, as well as its response to key external factors faced by the reinsurance industry, such as changes in cedants’ risk retention behavior, regulation, competitive structure, and macroeconomic, legal and social trends.
Reinsurance Risk
The Company’s underwriting is conducted at the BU level through specialized underwriting teams with the support of technical staff in disciplines such as actuarial, claims, legal, risk management and finance.

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The Company’s underwriters develop close working relationships with their ceding company counterparts and brokers through regular visits, gathering detailed information about the cedant’s business and local market conditions and practices. As part of the underwriting process, the underwriters also focus on the reputation and quality of the proposed cedant, the likelihood of establishing a long-term relationship with the cedant, the geographic area in which the cedant does business and the cedant’s market share, historical loss data for the cedant and, where available, historical loss data for the industry as a whole in the relevant regions, in order to compare the cedant’s historical loss experience to industry averages, and to gauge the perceived insurance and reinsurance expertise and financial strength of the cedant. The Company trains its underwriters and strives to maintain continuity of underwriters within specific geographic markets and areas of specialty.
The Company generally underwrites risks with specified limits per treaty program or facultative contract. Like other reinsurance companies, the Company is exposed to multiple insured losses arising out of a single occurrence, whether a natural event such as hurricane, windstorm, tornado, typhoon, flood or earthquake, or man-made events. Any such catastrophic event could generate insured losses in one or many of the Company’s reinsurance treaties and facultative contracts and in one or more lines of business. The Company considers such event scenarios as part of its evaluation and monitoring of its aggregate exposures to catastrophic events.
Financial Market and Credit Risk
Financial market risk is defined as the risk of a significant financial loss resulting from changes in financial markets such as changes in equity prices, interest rates, credit spreads, delinquency and default rates, foreign exchange rates or real estate prices. Financial market risk typically originates from investment activities, underwriting activities for certain product segments, and from the sensitivity of the economic value of liabilities to interest rate movements. Credit risk is defined as the risk of a significant financial loss due to default or downgrade of a counterparty. The Company is exposed to financial market and credit risk primarily through investment activities, structured transactions, business clients, retrocession as well as financial risks including GMDB, mortgage and credit and surety reinsurance lines of business.
Financial market and credit risk management follows both top-down and bottom-up approaches. The top-down approach begins with the Group Risk Tolerance Framework. The framework dictates an overarching Group Board risk limit with sub-limits for important quantifiable risk pillars including investment risks and other financial risks. Additionally, it limits downside economic risk resulting from deterministic cross-risk pillar severe stress scenarios (e.g., financial crisis or inflation spike scenarios) before being further delineated and extended to policies and guidelines, limits and investment risk standards at all levels of the Company. At the same time, guidelines and limits are constructed for each investments portfolio then for each legal entity up to the Group level in a consistent manner. These contain comprehensive specifications and limits that span credit quality, net interest rate risk, liquidity, liability coverage, capital funds quality and concentration (geographic, asset sub-class, single exposure, sector, etc.) among other considerations.
The Company utilizes external and internal tools to quantify financial market and credit risks. In addition to regularly assessing portfolio sensitivities to predetermined changes in market factors (e.g., interest rates and credit spreads), the Company has developed internally several single-year and multi-year scenarios with the goal of quantifying the impact of severe macroeconomic events (e.g., real estate crisis, financial crisis and inflation/interest rate spike) on invested assets, economically sensitive reinsurance business (e.g., mortgage, credit & surety etc.) and inflation sensitive reserves. These scenarios are then often augmented by reinsurance shocks (e.g., Natural Catastrophe event) to assess the impact on the Company’s liquidity and/or solvency at the Group and legal entity levels.
Furthermore, Risk Management employs an external real-world Economic Scenario Generator tool to regularly quantify and monitor the evolution of total return distributions by asset classes, subclass and by risk type (e.g., interest rate risk, equity risk, private equity, spread risk including default and migration risks, currency risk and real estate risk).
Net interest rate risk is monitored and managed holistically through asset liability management, asset reallocation and/or derivatives to ensure that large movements in interest rates do not result in significant loss of economic capital, in excess of Group and legal entity risk tolerances.
Counterparty credit risk is monitored and managed by major source of risk (e.g., corporate credit, derivatives, retrocession, funds withheld, etc.) and in aggregate across sources of risk. Limits are put in place at the Group level to ensure that losses due to the default of any single counterparty do not place an excessive strain on PartnerRe’s capital and/or solvency positions.
Lastly, currency risk is monitored and hedged through foreign exchange forward contracts by the Group Treasurer whenever deemed necessary and appropriate.
See Quantitative and Qualitative Disclosures about Market Risk in Item 11 of this report for further details.

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Operational Risks
Operational risks are inherent to conducting business and represent a potential for a financial loss or reputational impact as a result of operational failures caused by people, processes, systems and external events. The more significant operational risk topics, include but are not limited to, information technology (including cyber security and data integrity), business disruption, execution and process management, outsourcing, legal and regulatory compliance, fraud and human resources management. The Company seeks to minimize these risks through robust processes and controls, and monitoring throughout the organization.
Emerging Risk
Emerging risks are new risks or previously known risks that are evolving in unexpected ways with unanticipated consequences. They are monitored and managed through a cross-functional ERC which is tasked to evaluate and prioritize these risks based on the likelihood of occurrence and the potential impact on the Company.
Reputational Risk
Management considers that strong governance procedures, including a robust system of processes and internal controls, are appropriate to manage risks related to its reputation and risks related to new initiatives, including acquisitions, new products or markets. The Company seeks to preserve its reputation through high professional and ethical standards and manages the impact of identified risks through the adoption and implementation of a sound and comprehensive assumed risk framework.
Risk Strategy: Risk Appetite and Risk Tolerance Framework
Risk Appetite
Risk appetite is an integral part of an effective risk management system that defines the overall level of risk the Company is prepared to accept in pursuit of its strategic objectives, and which is managed through a robust Risk Tolerance Framework of risk limits. The ERC regularly reviews the Company’s deployment and may decide to adjust the amount of capacity deployed for each risk driver (within the established risk tolerance) based on strategic considerations and changes in market conditions.
Risk Tolerance Framework
The Company’s risk tolerance is expressed as the maximum economic loss that the Company is willing to incur based on various modeled probability return periods. To mitigate the chance of economic losses exceeding the risk tolerance, the Company relies upon diversification of risk sources and risk limits to manage exposures. Diversification enables losses from one risk source to be offset by profits from other risk sources so that the chance of overall losses exceeding the Company’s risk tolerance is reduced.
The Company’s risk tolerance is approved by the Board and is expected to remain stable. Any changes to the risk tolerance are to be approved by the Board. Definitions for the maximum economic loss and available economic capital are as follows:
Economic Loss. The Company defines an economic loss as a decrease in the Company’s economic value, which is defined as common shareholder's equity plus the “time value of money” discount of the non-life reserves that is not recognized in the consolidated financial statements in accordance with U.S. GAAP, net of tax, plus the embedded value of the life portfolio that is not recognized in the consolidated financial statements in accordance with U.S. GAAP, net of tax, less goodwill and intangible assets, net of tax.
Available Economic Capital. The Company defines economic capital as the economic value, as defined above, plus preferred shareholders’ equity and the carrying value of debt recognized in the consolidated financial statements in accordance with U.S. GAAP.
The Maximum Economic Loss. The maximum economic loss is a loss expressed as a percentage of economic capital under various modeled probability return periods.
The Company establishes key risk limits net of any reinsurance/retrocession for any risk source deemed by management to have the potential to cause economic losses greater than the Company’s risk tolerance. The Risk Tolerance Framework is approved by the Board in order to drive consistency in the application of the following Company limits: Overall Group Risk Tolerance, Reinsurance Operations, Financial Assets and Reinsurance Risk Tiers, each of which are described as follows:
Overall Group Risk Tolerance. The overall group risk tolerance limit is 35% of the loss of available economic capital based on the internal model 99% Value at Risk (VaR). Additionally, this limit is also monitored through a number of stress scenarios which impact both asset and liabilities of the balance sheet.

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Reinsurance Operations. This category includes reinsurance risks and the standard fixed income portfolio. The risk tolerance limit for Reinsurance Operations is 30% of the loss of available economic capital based on the internal model 99% VaR. Within Reinsurance Operations we have defined three risk tiers which consist of a classification of risk drivers considering the following criteria:
•
Materiality
•
Risk driver expertise, and
•
Potential for superior risk-adjusted return over the cycle.
Tier 1 Risks
Tier 1 risks consist of risk drivers that meet all three criteria of the Risk Tolerance Framework: materiality, risk driver expertise and potential for superior risk-adjusted return over the cycle. Additionally, the risk tolerance limit for this risk tier is 20% of available capital (annually defined). For the short term risks (Natural Catastrophe, Pandemic, Standard Fixed Income), the underlying metric is the 99% VaR of the one year economic impact measured either through the internal model or a corresponding scenario. For the long term risks (Mortality Trend and Casualty) the metric is the 95% VaR of the full runoff distribution. The following are Tier 1 Risks:
Natural Catastrophe Risk. The risk that the aggregate losses from natural perils materially exceed the net premiums that are received to cover such risks. The Company considers both catastrophe losses due to a single large event and catastrophe losses that would occur from multiple (but potentially smaller) events in any year.
Mortality Trend Risk. The risk that over time, mortality rates deviate from the rates estimated at pricing which affects the Long Term Mortality book (through deteriorating mortality) and the Longevity book (through improving mortality). The natural hedge between the Long Term Mortality portfolio and the Longevity portfolio depends on the differences in age groups, socio-economic classes, geographies, and lapse behavior.
Pandemic Risk. The risk of increase in mortality over an annual period associated with a rapidly spreading virus (either within a highly populated geographic area or on a global basis) with a high mortality rate.
Casualty Risk. The risk that the estimates of ultimate losses for casualty will prove to be too low, leading to the need for substantial reserve strengthening.
Standard Fixed Income Risk. The risk of a decline in the market value of the Company’s holdings of cash and publicly traded investment grade fixed income securities due to credit defaults and downgrades, credit spread and interest rate movements as well foreign exchange (FX) rate fluctuations. The risk measure also encompasses the impact of interest rate and FX movements on liabilities.
Financial Asset Risk. The risk of a decline in the market value of the Company’s holdings of public equity, private equity, real estate and alternative fixed income (private credit, loans, and Emerging Market and non-investment grade fixed income securities) assets.

The ERC monitors Tier 1 risks on a periodic basis. The approved limits and the actual limits deployed at December 31, 2019 and 2018 were as follows (in billions of U.S. dollars):
Tier 1 Risks
December 31, 2019
 
December 31, 2018
 
Approved limit (1)
 
Actual deployed (1)
 
Approved limit (1)
 
Actual deployed (1)
Natural Catastrophe Risk
$
1.7

 
$
1.1

 
$
1.7

 
$
0.8

Mortality Trend Risk (2)
$
1.7

 
$
0.8

 
$
1.7

 
$
0.8

Pandemic Risk
$
1.7

 
$
0.4

 
$
1.7

 
$
0.4

Casualty Risk (3)
$
1.7

 
$
1.1

 
$
1.7

 
$
0.7

Standard Fixed Income Risk
$
1.7

 
$
0.3

 
$
1.7

 
$
0.7

Financial Asset Risk (4)
$
1.7

 
$
1.1

 
$
1.7

 
$
0.6

 
(1)
The limits approved and the actual limits deployed in the table above are shown net of retrocession.
(2)
In 2019, the metric changed from Longevity Risk to Mortality Trend Risk. The 2018 figures are for Longevity Risk only.
(3)
In 2019, the Casualty Risk metric was based on the modeled 95% VaR, a change from 2018 scenario based metric.
(4)
Financial Asset risk is subject to the same limit of 20% of the available capital based on the internal model 99% VaR.

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Tier 2 Risks
Tier 2 risks consist of risk drivers which meet two of the three Risk Tolerance Framework criteria. Tier 2 risks are monitored by the ERC. The risk tolerance limit for Tier 2 is 10% of the available capital based on either the internal model 1-in-100 Value at Risk or a 99% scenario. The following are Tier 2 Risks:     
Mortgage Risk. The risk that losses from mortgage reinsurance materially exceed the net premiums that are received to cover such risks, which may result in operating and economic losses to the Company.
Credit and Surety Risk. The risk that aggregated trade credit losses materially exceed the net premiums that are received to cover such risks, which may result in operating and economic losses to the Company.
Tier 3 Risks
All other underwriting risks are considered as Tier 3 Risks with a risk tolerance limit of $250 million. These risks are monitored by the Chief Underwriting Officer and corresponding BU.
Risk Reporting
The Company monitors risks that could adversely impact operating and economic results. The risk reporting dashboard provides the ERC with key risk exposure analysis in order to monitor the Company’s risk tolerance limits and risk profile.
Natural Catastrophe PML
The following discussion of the Company’s natural catastrophe PML information contains forward-looking statements based upon assumptions and expectations concerning the potential effect of future events that are subject to uncertainties. See Item 3.D for a list of the Company’s risk factors. Any of these risk factors could result in actual losses that are materially different from the Company’s PML estimates below.
Natural catastrophe risk is a source of significant aggregate exposure for the Company and is managed by setting risk tolerance and limits, as discussed above. Natural catastrophe perils can impact geographic regions of varying size and can have economic repercussions beyond the geographic region directly impacted.
The Company considers a peril zone to be an area within a geographic region, continent or country in which losses from insurance exposures are likely to be highly correlated to a single catastrophic event. The Company defines peril zones to capture the vast majority of exposures likely to be incorporated by typical modeled events. There is, however, no industry standard and the Company’s definitions of peril zones may differ from those of other parties.
The Company has exposures in other peril zones that can potentially generate losses greater than the PML estimates below. The Company’s PMLs represent an estimate of loss for a single event for a given return period. The table below discloses the Company’s 1-in-250 and 1-in-500 year return period estimated loss for a single occurrence of a natural catastrophe event in a one-year period. In other words, the 1-in-250 and 1-in-500 year return period PMLs mean that there is a 0.4% and 0.2% chance, respectively, in any given year that an occurrence of a natural catastrophe in a specific peril zone will lead to losses exceeding the stated estimate.
The PML estimates below include all significant exposure from our Non-life and Life and Health business operations. This includes coverage for property, marine, energy, engineering, workers’ compensation, mortality, and exposure to catastrophe losses from insurance-linked securities. The PML estimates do not include casualty coverage that could be exposed as a result of a catastrophic event. In addition, they do not include estimates for contingent losses to insureds that are not directly impacted by the event (e.g. loss of earnings due to disruption in supply lines).

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The Company’s single occurrence estimated net PML exposures (net of retrocession and reinstatement premiums) of the top ten natural catastrophe perils as at December 31, 2019 and 2018 were as follows (in millions of U.S. dollars):
 
 
 
 
December 31, 2019
 
December 31, 2018
Zone
 
Peril
 
1-in-250
year PML
 
1-in-500
year PML
(Earthquake
perils only)
 
1-in-250
year PML
 
1-in-500
year PML
(Earthquake
perils only)
U.S. Northeast
 
Hurricane
 
$
847

 
 
 
$
630

 
 
U.S. Gulf Coast
 
Hurricane
 
802

 
 
 
586

 
 
U.S. Southeast
 
Hurricane
 
790

 
 
 
520

 
 
Caribbean
 
Hurricane
 
254

 
 
 
186

 
 
Europe
 
Windstorm
 
410

 
 
 
371

 
 
Japan
 
Typhoon
 
301

 
 
 
190

 
 
California
 
Earthquake
 
755

 
$
1,107

 
515

 
$
760

Japan
 
Earthquake
 
447

 
523

 
260

 
290

Australia
 
Earthquake
 
289

 
366

 
215

 
270

New Zealand
 
Earthquake
 
256

 
362

 
154

 
225

British Columbia
 
Earthquake
 
164

 
328

 
163

 
311

Risk Mitigation
Retrocessional Reinsurance
The Company uses retrocessional reinsurance agreements to reduce its exposure on certain reinsurance risks assumed and to mitigate the effect of any single major event or the frequency of medium-sized events. These agreements provide for the recovery of a portion of losses and loss expenses from retrocessionaires. The majority of the Company’s retrocessional reinsurance agreements cover property and specialty lines exposures, predominantly those that are catastrophe exposed. The Company also utilizes retrocessions in the Life and Health segment to manage the amount of per-event and per-life risks to which it is exposed. Retrocessionaires must be pre-approved based on their financial condition and business practices, with stability, solvency and credit ratings considered to be important criteria. Strict limits per retrocessionaire are also put into place and monitored to mitigate counterparty credit risk.
The Company remains liable to its cedants to the extent that the retrocessionaires do not meet their obligations under retrocessional agreements, and therefore retrocessions are subject to credit risk in all cases and to aggregate loss limits in certain cases. The Company holds collateral, including escrow funds, trusts, securities and letters of credit under certain retrocessional agreements. Provisions are made for amounts considered potentially uncollectible and reinsurance losses recoverable from retrocessionaires are reported after allowances for uncollectible amounts.
Regulation
The business of reinsurance is regulated in all countries in which we operate, although the degree and type of regulation varies significantly from one jurisdiction to another. The laws and regulations of the jurisdictions in which our reinsurance subsidiaries are domiciled impose complex regulatory requirements such as maintenance of minimum levels of statutory capital, surplus, and liquidity; various solvency standards; and periodic examinations of subsidiaries’ financial condition. See Risk Factors—Legal and Regulatory Risks in Item 3.D of this report.
Bermuda has been deemed Solvency II equivalent under the EU's Solvency II Directive, effective January 1, 2016. Bermuda has been granted equivalence for an unlimited period for all three relevant equivalence areas: Articles 172, 227 and 260, with the exception of rules on captives or limited purpose insurers (Class 1, Class 2, Class 3, Class A and Class B), special purpose insurers and collateralized insurers, which are subject to a different regulatory regime in Bermuda. This determination has resulted in Bermuda-based reinsurers being exempt from the requirement to post collateral in the EU and allows reinsurance contracts concluded with undertakings having their head office in Bermuda to be treated in the same manner as reinsurance contracts concluded with undertakings authorized in accordance with the Directive (Article 172); EU insurance groups can conduct their EU prudential reporting for a subsidiary in Bermuda under local rules instead of Solvency II if deduction and aggregation is allowed as the method of consolidation of group accounts (Article 227); and Bermuda insurance groups which are active in the EU are exempt

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from some aspects of group supervision in the EU as Member States will rely on the equivalent supervision exercised by the Bermuda Monetary Authority (BMA) (Article 260).
One of the key concepts of Solvency II is the principal of one “home” regulator over all the operating entities in a particular insurance or reinsurance group (referred to as Group Supervision). The Insurance Act 1978 of Bermuda and related regulations, as amended (the Insurance Act) sets out provisions regarding Group Supervision, including the power of the BMA to include or exclude specified entities from Group Supervision, the power of the BMA to withdraw as group supervisor, the functions of the BMA as Group Supervisor and the power of the BMA to make rules regarding Group Supervision for, among other things (1) assessing the financial situation and the solvency position of the insurance group and/or its members and (2) regulating intra-group transactions, risk concentration, governance procedures, risk management and regulatory reporting and disclosure. In addition to being tasked with assessing the financial condition of the Company and its subsidiaries, the BMA has the power to impose restrictions on the ability of the Company's subsidiaries to declare dividends to the Company, and the ability of the Company to pay dividends to shareholders. This Group Supervision regime is in addition to the regulation of the Company’s various operating subsidiaries in their local jurisdictions. The BMA’s Group Supervision rules set out the rules in respect of the assessment of the financial situation and solvency of an insurance group, the system of governance and risk management, and supervisory reporting and disclosures of an insurance group. The Group solvency rules set out the rules in respect of the capital and solvency return and enhanced capital requirements for an insurance group. PartnerRe Bermuda is the designated insurer for the purposes of Group Supervision, and the BMA currently acts as Group Supervisor of the Company and its subsidiaries. As Group Supervisor, the BMA will perform a number of supervisory functions including (1) coordinating the gathering and dissemination of information which is of importance for the supervisory task of other competent authorities; (2) carrying out a supervisory review and assessment of the Group; (3) carrying out an assessment of the Group’s compliance with the rules on solvency, risk concentration, intra-group transactions and good governance procedures; (4) planning and coordinating, with other competent authorities, supervisory activities in respect of the Group, both as a going concern and in emergency situations; (5) taking into account the nature, scale and complexity of the risks inherent in the business of all companies that are part of the Group; (6) coordinating any enforcement action that may need to be taken against the Group or any of its members and (7) planning and coordinating meetings of colleges of supervisors (consisting of insurance regulators) in order to facilitate the carrying out of the functions described above.
PartnerRe Ltd. is not a registered insurer; however, pursuant to its functions as Group Supervisor, the BMA includes the Company and may include any member of the group within its Group Supervision.
Significant aspects of the Bermuda insurance regulatory framework and requirements imposed on Insurance and Reinsurance Groups include the solvency assessment. The Company must annually perform an assessment of its own risk and solvency requirements, referred to as a Group’s Solvency Self Assessment (GSSA). The GSSA allows the BMA to obtain an insurance group’s view of the capital resources required to achieve its business objectives and to assess a group’s governance, risk management and controls surrounding this process. In addition, the Company must file with the BMA a Catastrophe Risk Return which assesses an insurer’s reliance on vendor models in assessing catastrophe exposure.
The BMA imposes the Enhanced Capital Requirement (ECR) on the Company pursuant to its function as the Company’s Group Supervisor. The PartnerRe Group’s ECR may be calculated by either (a) the standard model developed by the BMA known as the Bermuda Solvency Capital Requirement model (BSCR), or (b) an internal capital model which the BMA has approved for use for this purpose. The Company currently uses the BSCR model in calculating its Group ECR requirements. In addition, the Company is required to prepare and submit annual audited Group U.S. GAAP financial statements, annual Group statutory financial statements, annual Group statutory financial return, annual Group capital and solvency return and quarterly Group unaudited financial returns.
The BSCR model is a risk-based capital model which provides a method for determining an insurer’s capital requirements (statutory capital and surplus) by taking into account the risk characteristics of different aspects of the insurer’s business. The BSCR formula establishes, on a consolidated basis, capital requirements for eleven categories of risk: fixed income investment risk, equity investment risk, interest rate/liquidity risk, currency risk, concentration risk, credit risk, premium risk, reserve risk, catastrophe risk, long-term insurance risk and operational risk.
Pursuant to the Insurance (Public Disclosure) Rules 2015, the BMA requires commercial insurers and insurance groups to prepare and publish a Financial Condition Report (FCR). The FCR provides an overview of the Company’s financial condition including business performance, governance structure, risk profile, solvency valuation and capital management process. The FCR includes, among other disclosures, the respective Company’s required and available statutory capital. The FCR is required to be filed with the BMA annually and published on the PartnerRe website within 14 days of filing with the BMA. The FCR must be signed off by the CEO and any senior executive responsible for the actuarial, or risk management, or internal audit, or compliance function who will declare that to the best of their knowledge and belief the FCR fairly represents the financial condition of the Group in all material respects.

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Bermuda
All Bermuda companies must comply with the provisions of the Bermuda Companies Act 1981. In addition, the Insurance Act regulates the businesses of our Bermuda reinsurance subsidiaries. The Insurance Act does not distinguish between insurers and reinsurers: companies are registered (licensed) under the Insurance Act as “insurers”.
The continued registration of an insurer is subject to the insurer complying with the terms of its registration and such other conditions as the BMA may impose from time to time. The Insurance Act also grants to the BMA powers to supervise, investigate and intervene in the affairs of insurance companies.
The Insurance Act also regulates the business of PartnerRe Bermuda. The Insurance Act imposes solvency and liquidity standards and auditing and reporting requirements on Bermuda insurance companies.
PartnerRe Bermuda is licensed as a Class 4 and Class E insurer in Bermuda and is therefore authorized to carry on general and long-term insurance business. Significant aspects of the Bermuda insurance regulatory framework and requirements imposed on Class 4 and Class E insurers such as PartnerRe Bermuda include the following:
Minimum Solvency Margin and Enhanced Capital Requirements. The Insurance Act provides that the value of the statutory assets of an insurer must exceed the value of its statutory liabilities by an amount greater than its prescribed minimum solvency margin (MSM). The MSM that must be maintained by PartnerRe Bermuda with respect to its general business is the greater of (i) $100 million, (ii) 50% of net premiums written (with a credit for reinsurance ceded not exceeding 25% of gross premiums), (iii) 15% of net aggregate loss and loss expense provisions and other insurance reserves, or (iv) 25% of its ECR as reported at the end of the relevant year. The MSM that must be maintained by PartnerRe Bermuda with respect to its long-term business is the greater of $8 million or 2% of the first $500 million of assets plus 1.5% of assets above $500 million. Statutory assets are defined as the total assets reported on an insurer’s balance sheet in the relevant year less non-admitted assets, including goodwill and other intangible assets, not considered admissible for solvency purposes.
Minimum Capital Requirements. While not specifically referred to in the Insurance Act, the BMA has also established a Target Capital Level (TCL) equal to 120% of its ECR. While an insurer is not currently required to maintain its statutory capital and surplus at this level, the TCL serves as an early warning tool for the BMA and failure to maintain statutory capital at least equal to the TCL will likely result in increased regulatory oversight.
Any applicable insurer which at any time fails to meet the MSM requirements must, upon becoming aware of such failure, immediately notify the BMA and, within 14 days thereafter, file a written report with the BMA describing the circumstances that gave rise to the failure and setting out its plan detailing specific actions to be taken and the expected time frame in which the company intends to rectify the failure.
Any applicable insurer which at any time fails to meet the ECR applicable to it will upon becoming aware of that failure, or of having reason to believe that such a failure has occurred, immediately notify the BMA in writing and, within 14 days of such notification, file with the BMA a written report containing particulars of the circumstances leading to the failure; and a plan detailing the manner, specific actions to be taken and time within which the insurer intends to rectify the failure and within 45 days of becoming aware of that failure, or of having reason to believe that such a failure has occurred, furnish the BMA with: (1) unaudited statutory economic balance sheets and unaudited interim financial statements prepared in accordance with GAAP covering such period as the BMA may require, (2) the opinion of a loss reserve specialist, where applicable, (3) a general business solvency certificate in respect of those financial statements, where applicable, (4) a capital and solvency return reflecting an ECR prepared using post-failure data, where applicable, (5) a long-term business solvency certificate in respect of those statements, where applicable and (6) the opinion of an approved actuary, where applicable. An insurer to whom this applies shall not declare or pay any dividends until the failure is rectified.
To enable the BMA to better assess the quality of the insurer’s capital resources, applicable insurers are required to disclose the makeup of its capital in accordance with the “3-tiered capital system”. Under this system, all of the insurer’s capital instruments will be classified as either basic or ancillary capital which in turn will be classified into one of three tiers based on their “loss absorbency” characteristics. Highest quality capital will be classified as Tier 1 Capital and lesser quality capital will be classified as either Tier 2 Capital or Tier 3 Capital. Under this regime, up to certain specified percentages of Tier 1, Tier 2, and Tier 3 Capital may be used to support the insurer’s MSM and ECR.
The characteristics of the capital instruments that must be satisfied to qualify as Tier 1 Capital, Tier 2 Capital, and Tier 3 Capital are set out in the Insurance (Eligible Capital) Rules 2012, as amended. Under these rules, Tier 1 Capital, Tier 2 Capital, and Tier 3 Capital may include capital instruments that do not satisfy the requirement that the instrument be non-redeemable or settled only with the issuance of an instrument of equal or higher quality upon a breach, or if it would cause a breach, in the ECR until January 1, 2026.

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While the BMA has previously approved the use of certain instruments for capital purposes, the BMA’s consent will need to be obtained if such instruments are to remain eligible for use in satisfying the MSM and the ECR.
The BMA implemented an Economic Balance Sheet (EBS) framework which is used as the basis to determine the ECR for all commercial insurers, including PartnerRe Bermuda. The EBS framework applies prudential filters and other EBS valuation adjustments to an insurer's GAAP balance sheet to produce an economic valuation of the assets and liabilities of the insurer. The Insurance (Prudential Standards) Amendment Rules 2018 provide updates to certain aspects of the EBS framework and increase the ECR over a 3-year transition period for general business and a 10-year transition period for long-term business. The Company is currently assessing the impact on our business.
Reporting Requirements. PartnerRe Bermuda must prepare and submit, on an annual basis, both audited GAAP and statutory financial statements. The Insurance Act prescribes rules for the preparation and substance of statutory financial statements (which include, in statutory form, a balance sheet, income statement, a statement of capital and surplus, and notes thereto). The statutory financial statements include detailed information and analysis regarding premiums, claims, reinsurance and investments of the insurer.
Every insurer is also required to deliver to the BMA a declaration of compliance declaring whether or not that insurer has, with respect to the preceding financial year, (i) complied with the minimum criteria applicable to it, (ii) complied with its MSM and ECR as at its financial year-end, (iii) complied with the minimum liquidity ratio for general business as at its financial year-end, and (iv) where an insurer’s license has been issued subject to limitations, restrictions or conditions, that the insurer has observed such limitations, restrictions or conditions. The declaration of compliance must be signed by two directors and filed at the same time the insurer submits its statutory financial statements.
Code Of Conduct. Every Bermuda registered insurer must comply with the Insurance Code of Conduct (Code of Conduct) which prescribes the duties and standards that must be complied with to ensure sound corporate governance, risk management and internal controls are implemented. The BMA will assess an insurer’s compliance with the Code of Conduct in a proportionate manner relative to the nature, scale and complexity of its business. Failure to comply with the requirements of the Code of Conduct will be taken into account by the BMA in determining whether an insurer is conducting its business in a sound and prudent manner as prescribed by the Insurance Act and may result in the BMA exercising its powers of intervention and investigation.
Dividends and Distributions. As a Bermuda-domiciled holding company, the Company has limited operations of its own and its assets consist primarily of investments in its subsidiaries. Accordingly, the Company’s future cash flows largely depend on the availability of dividends or other statutorily permissible payments from subsidiaries. The ability to pay such dividends is limited by the applicable laws and regulations of the various countries and states in which these subsidiaries operate, including, among others, Bermuda, various states of the U.S., Singapore and Ireland. The Company’s ability to pay dividends and interest and to make dividends to shareholders is limited by the Bermuda Companies Act 1981.
The Insurance Act also prohibits PartnerRe Bermuda, as an insurer registered as a Class E and as a Class 4 insurer from declaring or paying any dividends during any financial year if it is in breach of its MSM or if the declaration or payment of such dividends would cause such a breach. PartnerRe Bermuda is also prohibited from declaring or paying a dividend where it has failed to comply with the ECR, until such noncompliance is rectified. Furthermore, under the Insurance Act, PartnerRe Bermuda shall not in any financial year pay dividends which would exceed 25% of its total statutory capital and surplus, as shown on its statutory balance sheet in relation to the previous financial year, unless at least 7 days before payment of those dividends it files with the BMA an affidavit signed by at least two directors, and by PartnerRe Bermuda’s principal representative in Bermuda, which states that in the opinion of those signing, declaration of those dividends has not caused the insurer to fail to meet its relevant margins.
Generally, an insurer carrying on long-term business, such as PartnerRe Bermuda, is also restricted from declaring or paying a dividend unless the value of its assets in its long-term business fund exceeds the extent of the liabilities of the insurer’s long-term business. The Insurance Act also prohibits an insurer carrying on long-term business from declaring or paying a dividend to any person other than a policyholder unless the value of the assets of such insurer, as certified by its approved actuary, exceeds its liabilities (as so certified) by the greater of its margin of solvency, or if applicable, its enhanced capital requirement and the amount of any such dividend shall not exceed that excess.
Further, under the Bermuda Companies Act 1981, as amended, the Company and PartnerRe Bermuda may only declare or pay a dividend, or make a distribution out of contributed surplus, if it has no reasonable grounds for believing that: (1) it is, or would after the payment be, unable to pay its liabilities as they become due or (2) the realizable value of its assets would be less than its liabilities.
Economic Substance Act 2018 (ESA) and Economic Substance Regulations 2018 (Substance Regulations). Under the ESA, if a Bermuda company is engaged in one or more “relevant activities” (which is defined to include insurance) it is required to maintain a substantial economic presence in Bermuda and to comply with the economic substance requirements (ES Requirements) set forth in the ESA and the Substance Regulations. A company will comply with those economic substance requirements if it: (a) is managed

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and directed in Bermuda; (b) undertakes “core income generating activities” (as may be prescribed under the ESA) in Bermuda in respect of the relevant activity; (c) maintains adequate physical presence in Bermuda; (d) has adequate full time employees in Bermuda with suitable qualifications; and (e) incurs adequate operating expenditure in Bermuda in relation to the relevant activity undertaken by it.
The economic substance guidance notes issued in December 2019 provide that a company licensed under the Insurance Act is generally considered to operate in Bermuda with adequate substance. However, such companies are still required to complete and file an economic substance declaration with the Registrar of Companies (Registrar). In assessing compliance with the ES Requirements, the Registrar will have regard to: (i) the company’s compliance with applicable corporate governance obligations under the Companies Act 1981; (ii) the company’s compliance with its obligations under the Insurance Act (including regulations, rules and code of conduct made thereunder); and (iii) the information provided in that Declaration.
In addition to the above, PartnerRe Bermuda maintains an operating branch in Canada and a representative office in Mexico. The Canada branch is subject to regulation in Canada by the Office of the Superintendent of Financial Institutions (OSFI). For a further discussion of the regulations pertaining to the Canada branch see below.
Ireland
The Central Bank of Ireland (the Central Bank) regulates insurance and reinsurance companies authorized in Ireland, including PartnerRe Europe and PartnerRe Ireland. PartnerRe Holdings Europe Limited, a holding company for PartnerRe Europe and PartnerRe Ireland, is not subject to regulation by the Central Bank. PartnerRe Europe is a reinsurance company incorporated under the laws of Ireland and is duly authorized as a reinsurance undertaking to carry on non-life and life reinsurance business in accordance with the European Union (Insurance and Reinsurance) Regulations 2015. PartnerRe Ireland is an insurance company incorporated under the laws of Ireland and is duly authorized as an insurance undertaking to carry on non-life insurance business in accordance with the European Union (Insurance and Reinsurance) Regulations 2015.
Significant aspects of the Irish re/insurance regulatory framework and requirements imposed on PartnerRe Europe and PartnerRe Ireland include the following:
Solvency Requirements. The Directive related to the solvency standards applicable to insurers and reinsurers prescribes, at the level of PartnerRe Europe and PartnerRe Ireland, the minimum amounts of financial resources that both companies are required to have in order to cover the risks to which they are exposed and the principles that should guide their overall risk management and reporting. This Directive became effective January 1, 2016. Under the Solvency II requirements, PartnerRe Europe and PartnerRe Ireland have similar governance requirements to those of PartnerRe Bermuda such as Balance Sheet, Own Risk and Solvency Assessment (ORSA), Solvency and Financial Condition Report and a Regular Supervisory Report.
Reporting Requirements. PartnerRe Europe and PartnerRe Ireland must file and submit annual audited financial statements in accordance with International Financial Reporting Standards and related reports to the Irish Companies Registration Office (CRO) together with an annual return of certain core corporate information. Changes to core corporate information during the year must also be notified to the CRO. PartnerRe Europe and PartnerRe Ireland must also file and submit annual certifications for the following:
1.    Corporate Governance Requirements for Insurance Undertakings 2015
2.    Fitness & Probity Standards (Code issued under Section 50 of the Central Bank Reform Act 2010)
3.    ORSA
4.    Quantitative Reporting Templates (QRTs)
5.    Regular Supervisory Reports
These requirements are in addition to the regulatory returns required to be filed annually with the Central Bank and additionally, in the case of PartnerRe Ireland, with the National Association of Insurance Commissioners (NAIC) in the U.S.
Dividends and Distributions. Pursuant to Irish company law, PartnerRe Europe and PartnerRe Ireland are restricted to declaring dividends only out of “profits available for distribution”. Profits available for distribution are, broadly, a company’s accumulated realized profits less its accumulated realized losses. Such profits may not include profits previously utilized.
In addition to the above, PartnerRe Europe has also established operating branches in the U.K., France, Switzerland and Hong Kong and a representative office in Brazil, which are subject to Irish reinsurance supervision regulations. In addition, the Hong Kong branch is subject to regulation by the Insurance Authority of Hong Kong, which has extended the Hong Kong’s branch authorization to a composite life and non-life license on 16 September 2019. The U.K. branch is also subject to local regulation. PartnerRe Europe closed its Dubai branch in March of 2019. PartnerRe Ireland, pursuant to the Non-admitted and Reinsurance

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Reform Act of 2010 (part of the Dodd-Frank Act), is a non-admitted alien insurer in the U.S. and is eligible to write business as an excess and surplus lines insurer in all U.S. states. PartnerRe Ireland has also established an operating branch in the U.K. which is subject to Irish insurance supervision regulations.
United States
PartnerRe U.S. Corporation is a Delaware domiciled holding company for its wholly-owned (re)insurance subsidiaries, PartnerRe U.S. and PartnerRe America Insurance Company (PRAIC) (PartnerRe U.S. and PRAIC together being the PartnerRe U.S. Insurance Companies). The PartnerRe U.S. Insurance Companies are subject to regulation under the insurance statutes and regulations of their domiciliary states (New York in the case of PartnerRe U.S. and Delaware in the case of PRAIC, and all states where they are licensed, accredited or approved to underwrite insurance and reinsurance). In 2019, PRAIC was commercially domiciled in California and may similarly be commercially domiciled in 2020. PartnerRe U.S. sold 100% of its interests in PartnerRe Insurance Company of New York to Employers Holding Group Inc. on July 31, 2019. The sale did not have a significant impact on the Company's Consolidated Financial Statements.
Currently, the PartnerRe U.S. Insurance Companies are licensed, accredited or approved reinsurers and/or insurers in all fifty states and the District of Columbia, and are subject to the requirements described below.
PartnerRe U.S. Corporation is also the owner of Presidio and its 100% owned subsidiaries Presidio Excess Insurance Services, Inc. (PXS), PartnerRe Management Ltd. (PRM) and Presidio Reinsurance Corporation (PRC). PXS is a managing general underwriter licensed in a number of states. PRM is domiciled in the U.K. and regulated by the Financial Services Authority. PRC is a Montana domiciled captive reinsurer and the Montana Department of Insurance is the domiciliary regulator of PRC. These entities are not subject to any significant regulatory requirements or restrictions that would have a material impact on the Company.
The Company also, through its 100% owned subsidiary, PartnerRe U.S. Corporation, owns 100% of PartnerRe Life Reinsurance Company of America (PRLA) a life reinsurance company which is subject to regulation under the insurance statutes and regulations of Arkansas, its state of domicile, and all states where PRLA is licensed, accredited or approved to underwrite reinsurance.
Risk-Based Capital Requirements. The Risk-Based Capital (RBC) for Insurers Model Act (the Model RBC Act) or similar legislation has been adopted by all states in the U.S. The main purpose of the Model RBC Act is to provide a tool for insurance regulators to evaluate the capital of insurers with respect to the risks assumed by them and to determine whether there is a need for possible corrective action. U.S. insurers and reinsurers are required to report the results of their RBC calculations as part of the statutory annual statements that such insurers and reinsurers file with state insurance regulatory authorities. The Model RBC Act provides for four different levels of regulatory actions, each of which may be triggered if an insurer’s Total Adjusted Capital (as defined in the Model RBC Act) is less than a corresponding level of risk-based capital. Decreases in an insurer’s Total Adjusted Capital as a percentage of its Authorized Control Level (as defined in the Model RBC Act) triggers increasing regulatory actions. Such regulatory actions include but are not limited to issuance of orders for corrective action by the insurer, rehabilitation or liquidation of the insurer. No such actions have been taken with respect to the PartnerRe U.S. Insurance Companies or PRLA.
Insurance Regulatory Information System (IRIS) Ratios. A committee of state insurance regulators developed the NAIC’s IRIS primarily to assist state insurance departments in executing their statutory mandates to oversee the financial condition of insurance or reinsurance companies operating in their respective states. IRIS identifies thirteen industry ratios for property/casualty insurers and twelve industry ratios for life insurers, and specifies usual values for each ratio. Generally, a company will become subject to regulatory scrutiny if it falls outside the usual ranges with respect to four or more of the ratios, and regulators may then act, if the company has insufficient capital, to constrain the company’s underwriting capacity. No such action has been taken with respect to the PartnerRe U.S. Insurance Companies or PRLA.
Reporting Requirements. Regulations vary from state to state, but generally require insurance holding companies and insurers and reinsurers that are subsidiaries of insurance holding companies to register and file with their state domiciliary regulatory authorities certain reports, including information concerning their capital structure, ownership, financial condition and general business operations. State regulatory authorities monitor compliance with, and periodically conduct examinations with respect to, state mandated standards of solvency, licensing requirements, investment limitations, and restrictions on the size of risks which may be reinsured, deposits of securities for the benefit of policyholders and creditors, such as reinsureds, methods of accounting for assets, reserves for unearned premiums and losses, and other purposes. In general, such regulations are for the protection of reinsureds and, ultimately, their policyholders and creditors, rather than security holders. In the U.S., the New York State Department of Financial Service (NYDFS) is the domiciliary regulator of PartnerRe U.S., the Delaware Department of Insurance is the domiciliary regulator of PRAIC and the Arkansas Insurance Department is the domiciliary regulator of PRLA.
Dividends and Distributions. Under New York law, the NYDFS must approve any dividend declared or paid by PartnerRe U.S. that, together with all dividends declared or distributed by it during the preceding twelve months, exceeds the lesser of 10% of its statutory surplus as shown on the latest statutory financial statements on file with the NYDFS, or 100% of its adjusted net

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investment income. Under Delaware law the Delaware Commissioner of Insurance must approve any dividend declared or paid by PRAIC that, together with all dividends or distributions made within the preceding 12 months exceeds the greater of (i) ten percent of PRAIC’s surplus as regards policyholders as of the preceding December 31 or (ii) the net income, not including realized capital gains, for the 12-month period ending the preceding December 31. Under Arkansas law the Arkansas Insurance Commissioner must approve any dividend declared or paid by PRLA that, together with all dividends and distributions made within the preceding 12 months exceeds the greater of (i) ten percent of PRLA's surplus as regards policyholders as of the preceding December 31 or (ii) the net gain from operations not including capital gains for the twelve-month period ending on the preceding December 31. Arkansas, Delaware and New York do not permit a dividend to be declared or distributed, except out of earned surplus.
In addition to the above, the Dodd-Frank Act currently impacts the PartnerRe U.S. Insurance Companies and PRLA. The Dodd-Frank Act represents a comprehensive overhaul of the financial services industry in the U.S. and established a Federal Insurance Office (FIO) within the U.S. Treasury Department. Although the FIO does not have general supervisory or regulatory authority over the business of insurance or reinsurance, it is charged with monitoring all aspects of the insurance industry, consulting with state insurance regulators, assisting in administration of the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIA) and other duties. Furthermore, the director of the FIO is a non-voting member of the multi-agency Financial Stability Oversight Council (FSOC), and the FSOC may, among other things, subject an insurance company or an insurance holding company to heightened prudential standards in accordance with Title I of the Dodd-Frank Act following an extended determination process (which can require that such insurance company be subject also to supervision by the Board of Governors of the Federal Reserve System). The Dodd-Frank Act also made changes to the regulation of credit for reinsurance and surplus lines insurance in the U.S.
Cybersecurity Requirements. In February 2017, the NYDFS issued final Cybersecurity Requirements for Financial Service Companies that require regulated entities, including PartnerRe U.S. Insurance Companies, to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of New York’s financial services industry. Among the requirements are the maintenance of a cybersecurity program with governance controls, risk-based minimum data security standards for technology systems, cyber breach preparedness and response requirements, including reporting obligations, vendor oversight, training, and program record keeping and certification obligations. The regulation became effective on March 1, 2017, subject to certain phase-in periods, and we will be required to incur expenses in order to meet its requirements.
Canada
Canadian branches of PartnerRe Bermuda and PartnerRe U.S. hold licenses to write reinsurance business in Canada. Each Canadian branch is authorized to insure, in Canada, risks falling within the classes of insurance and reinsurance as specified in their respective licenses and is limited to the business of reinsurance. The Canadian branch of PartnerRe Bermuda is licensed to write life and accident and sickness business in Ontario, limited to reinsurance. The Canadian branch of PartnerRe U.S. is licensed to write property and casualty and accident and sickness business in Ontario, limited to reinsurance. Each Canadian branch is subject to local regulation for its Canadian branch business, specified principally pursuant to Part XIII of the Insurance Companies Act (the Canadian Insurance Act) applicable to foreign property and casualty companies and to foreign life companies as well as relevant provincial insurance acts. OSFI supervises the application of the Canadian Insurance Act.
PartnerRe Bermuda and PartnerRe U.S. maintain sufficient assets, vested in trust at a Canadian financial institution, approved by OSFI, to allow their branches to meet minimum statutory solvency requirements as required by the Act, the regulations made under the Act and applicable guidelines issued by OSFI. Certain statutory information is filed with federal and provincial insurance regulators in respect of both property and casualty and life business written by branches. This information includes, among other things, a yearly business plan and an annual Dynamic Capital Adequacy Test report from the Appointed Actuary of the branch that tests the adequacy of the assets that are vested under various adverse scenarios or "stress tests". It is also necessary for an ORSA to be prepared each year. Each branch is required to have a Chief Agent in Canada to act as its local representative.
PartnerRe Life Reinsurance Company of Canada (PartnerRe Canada) is a Canadian incorporated life reinsurer that is a subsidiary of the Company and is domiciled in Canada. PartnerRe Canada is authorized to insure, in Canada, risks falling within the classes of Life and Accident and Sickness, limited to the business of reinsurance.
PartnerRe Canada is required to maintain capital in Canada in a custodial account to meet minimum statutory solvency requirements as required by the Canadian Insurance Act, its regulations and applicable guidelines issued by OSFI. Certain statutory information is filed with OSFI in respect of the life business written by PartnerRe Canada. This information includes, among other things, an annual business plan and Dynamic Capital Adequacy Test report from the Appointed Actuary of PartnerRe Canada that tests the adequacy of assets under various scenarios or "stress tests". It is also necessary for an ORSA to be prepared each year.

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Singapore
The Monetary Authority of Singapore (MAS) regulates insurance and reinsurance companies authorized in Singapore, including PartnerRe Asia.
PartnerRe Asia is the principal reinsurance carrier for the Company’s business underwritten in the Asia Pacific region, conducting general insurance business as a reinsurer and life insurance business as a reinsurer. PartnerRe Asia has an established operating branch in Labuan which is subject to regulation by the Labuan Financial Services Authority.
Significant aspects of the Singapore reinsurance regulatory framework and requirements include the following:
Solvency Requirements. As a licensed reinsurer, PartnerRe Asia is required to maintain minimum capital of SGD25 million. In addition, PartnerRe Asia is required to establish and maintain separate insurance funds for each class of business that it carries on for both Singapore and offshore policies. The solvency requirement in respect of each insurance fund shall at all times be not less than the total risk requirement of the fund (determined by reference to three components being insurance risks, asset portfolio risks and asset concentration risks). The MAS is entitled to require that a licensed reinsurer holds assets of a certain type and prescribed value in Singapore.
Reporting Requirements. PartnerRe Asia must file and submit annual audited financial statements in accordance with Singapore Financial Reporting Standards and related reports to the Accounting and Corporate Regulatory Authority (ACRA) together with an annual return of certain core corporate information. Changes to core corporate information during the year must also be notified to ACRA. These requirements are in addition to the quarterly and annual regulatory returns required to be filed with the MAS.
Dividends and Distribution. Dividends are generally declared from unappropriated profits. The declaration of a dividend by PartnerRe Asia may be subject to relevant conditions and requirements being met as specified under the Insurance Act (Singapore) and its associated regulations. Any proposed reduction of capital or redemption of preference shares requires the prior approval of the MAS. In addition to the above, the laws and initiatives issued by the MAS regarding Corporate Governance, Outsourcings, Cyber Security and Technology Risk Management currently impact, or may impact, Partner Re Asia in the future.
Taxation of the Company and its Subsidiaries
The following summary of the taxation of PartnerRe and its subsidiaries, PartnerRe Bermuda, PartnerRe Europe, PartnerRe Asia, and PartnerRe U.S. Corporation and its subsidiaries (collectively PartnerRe U.S. Companies) is based upon current law. Legislative, judicial or administrative changes may be forthcoming that could affect this summary.
Certain subsidiaries, branch offices and representative offices of the Company are subject to taxation related to operations in Brazil, Canada, Chile, China, France, Hong Kong, Ireland, Labuan, Mexico, Singapore, Switzerland and the U.S. The discussion below covers the significant locations for which the Company or its subsidiaries are subject to taxation.
Bermuda
PartnerRe Ltd. and PartnerRe Bermuda have each received from the Bermuda Minister of Finance an assurance under The Exempted Undertakings Tax Protection Act, 1966 of Bermuda, that in the event that any legislation is enacted in Bermuda imposing tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax shall not be applicable to PartnerRe Ltd. or PartnerRe Bermuda or to any of their operations or the shares, debentures or other obligations of PartnerRe Ltd. or PartnerRe Bermuda until March 2035. These assurances are subject to the provision that they are not construed to prevent the application of any tax or duty to such persons as are ordinarily resident in Bermuda (PartnerRe Ltd. and PartnerRe Bermuda are not currently so designated) or to prevent the application of any tax payable in accordance with the provisions of The Land Tax Act, 1967 of Bermuda or otherwise payable in relation to the property leased to PartnerRe Bermuda.
Canada
The Canadian life branch of PartnerRe Bermuda, the Canadian non-life branch of PartnerRe U.S. and PartnerRe Canada are subject to Canadian taxation on their profits. Their profits are taxed at the federal level, as well as the Ontario provincial level at a combined rate of 26.5% in 2019. See also the discussion of taxation in the United States below.
France
The French branch of PartnerRe Europe is conducting business in and is subject to taxation in France. Since January 1, 2016, the tax on corporate profits in France has been 34.43%.

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The French Bill for 2018, enacted on December 30, 2017, includes a graduated decrease of the statutory corporate income tax rate from 34.43% in 2017 to 25.83% in 2022, including all applicable surtaxes. See also the discussion of taxation in Ireland below.
Ireland
The Company’s Irish subsidiaries, PartnerRe Holdings Europe Limited, PartnerRe Europe, PartnerRe Ireland and PartnerRe Ireland Finance dac conduct business in and are subject to taxation in Ireland. Profits of an Irish trade or business are subject to Irish corporation tax at the rate of 12.5%, whereas profits arising from other than a trade or business are taxable at the rate of 25%. The Swiss, U.S. and French branches and subsidiaries of PartnerRe Europe are subject to taxation in Ireland at the Irish corporation tax rate of 12.5%. However, under Irish domestic tax law, the amount of tax paid in Switzerland, U.S. and France can be credited or deducted against the Irish corporation tax. As a result, the Company does not expect to incur significant taxation in Ireland with respect to the Swiss, U.S. and French branches.
Singapore
The Company’s Singapore subsidiary, PartnerRe Asia, is subject to corporate taxation in Singapore at the rate of 17% on profits arising from onshore business and 10% on profits arising from offshore business. However, tax exemptions may apply to qualifying profits derived from certain lines of business.
Switzerland
The Swiss branch of PartnerRe Europe is subject to Swiss taxation, mainly on profits and capital. To the extent that net profits are generated, profits are taxed at a rate of 21.15%. The tax reform that has been passed and enacted in 2019 in the canton of Zurich following the federal tax reform includes a decrease of the statutory corporate income tax rate from 21.15% to 19.7% in 2021. The branch pays capital taxes at a rate of approximately 0.17% on its imputed branch capital calculated according to a procured taxation ruling. See also the discussion of taxation in Ireland above.
United States
PartnerRe U.S. Companies transact business in and are subject to taxation in the U.S. The Canadian non-life branch of PartnerRe U.S. conducts business in Canada and is subject to taxation in Canada as discussed above. Under U.S. tax law, the amount of tax paid in Canada by the Canadian non-life branch of PartnerRe U.S. can be credited or deducted against U.S. corporation tax.
In addition, PartnerRe Europe and PartnerRe Ireland write certain U.S. and Latin American business through their U.S. reinsurance intermediaries. As a result, PartnerRe Europe and PartnerRe Ireland are deemed to be engaged in a U.S. trade or business and thus are subject to taxation in the U.S. Finally, PartnerRe Capital Investments Corp. (PCIC) and PRLA are also U.S. corporations subject to taxation in the U.S. The current statutory rate of tax on corporate profits in the U.S. is 21%. See the discussion of U.S. branch taxation below and the discussion of taxation in Ireland above.
On this basis, the Company does not expect that it and its subsidiaries, other than the PartnerRe U.S. Companies, PartnerRe Europe and PartnerRe Ireland for business conducted through their U.S. intermediaries, PCIC, PRLA, and the 953(d) electing reinsurer, will be required to pay U.S. corporate income taxes (other than withholding taxes as described below). However, because there is considerable uncertainty as to the activities that constitute a trade or business in the U.S., there can be no assurance that the IRS will not contend successfully that the Company or its non-U.S. subsidiaries (other than PartnerRe Europe, PartnerRe Ireland, and the 953(d) electing reinsurer) are engaged in a trade or business in the U.S. The maximum federal tax rate is currently 21% for a corporation’s income that is effectively connected with a trade or business in the U.S. In addition, U.S. branches of foreign corporations may be subject to the branch profits tax, which imposes a tax on U.S. branch after-tax earnings that are deemed repatriated out of the U.S., for a potential maximum effective federal tax rate of approximately 45% on the net income connected with a U.S. trade or business.
Foreign corporations not engaged in a trade or business in the U.S. are subject to U.S. income tax, effected through withholding by the payer, on certain fixed or determinable annual or periodic gains, profits and income derived from sources within the U.S. as enumerated in Section 881(a) of the Internal Revenue Code, such as dividends and interest on certain investments.
The U.S. imposes a base erosion and anti-abuse tax (BEAT) on certain payments from entities subject to U.S. tax to related foreign persons, also referred to as base erosion payments. Base erosion payments generally include any amounts that are deductible, including reinsurance premiums ceded to a related foreign person. Entities that meet certain thresholds are required to pay the minimum BEAT. The minimum BEAT is based on the excess of a percentage of the entities’ modified taxable income over its regular tax liability for the year. Modified taxable income is the taxpayer’s regular taxable income increased by any base erosion tax benefit with respect to any "base erosion payment" and an adjustment for the taxpayer’s net operating loss deduction, if any. The modified taxable income is taxed at 5% in 2018, 10% in 2019 through 2025, and 12.5% thereafter. This provision generally applies

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to entities that are subject to US net income tax with average annual gross receipts of at least $500 million and that have made foreign related-party deductible payments totaling 3% or more of the entities’ total deductions for the year.
The U.S. also imposes an excise tax on insurance and reinsurance premiums paid to foreign insurers or reinsurers with respect to risks located in the U.S. The rate of tax applicable to reinsurance premiums paid to PartnerRe Bermuda is 1% of gross premiums.
Legal Proceedings
The Company’s reinsurance subsidiaries, and the insurance and reinsurance industry in general, are subject to litigation and arbitration in the normal course of their business operations. In addition to claims litigation and disputes, the Company and its subsidiaries may be subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly relate to claims on reinsurance contracts. This category of business litigation typically involves, among other things, allegations of underwriting errors or omissions, employment claims or regulatory activity. While the outcome of business litigation cannot be predicted with certainty, the Company will dispute all allegations against the Company and/or its subsidiaries that management believes are without merit.
For information regarding legal proceedings, see Note 15(d) to the Consolidated Financial Statements in Item 18 of this report.

C. Organizational Structure
The Company's Class A common shares are owned by EXOR Nederland N.V., whose ultimate parent is EXOR N.V., an investment holding company listed on the Milan Stock Exchange. The Company has also issued Class B shares to certain executives and directors of the Company.
In addition to the Company, significant subsidiaries of EXOR N.V. include Fiat Chrysler Automobiles, CNH Industrial, Ferrari and Juventus Football Club.
The Company’s principal operating subsidiaries at December 31, 2019 are as follows:
 
  
Jurisdiction
 
Percentage Interest Held
Partner Reinsurance Company Ltd.
  
Bermuda
 
100%
Partner Reinsurance Europe SE
  
Ireland
 
100%
Partner Reinsurance Company of the U.S.
  
New York, United States
 
100%
Partner Reinsurance Asia Pacific Pte. Ltd.
 
Singapore
 
100%
See History and Development of the Company section above and also Share Ownership section in Item 6.E and Notes 1, 10 and 13 to the Consolidated Financial Statements in Item 18 of this report for further details.
See Exhibit 8.1 to this annual report on Form 20-F for a listing of the Company’s subsidiaries.

D. Property, Plants and Equipment
The Company leases office space in Pembroke (Bermuda) where its principal executive offices are located. Additionally, the Company leases office space in various other locations, principally in Dublin, Stamford, Connecticut in the U.S., Toronto, Paris, Singapore and Zurich.
In 2017, the Company purchased from a related party certain real estate investments located in London, U.K. See Note 17 to the Consolidated Financial Statements in Item 18 for further details.

ITEM 4.A
UNRESOLVED STAFF COMMENTS
None.

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ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The financial information for the years ended December 31, 2019, 2018 and 2017 presented below is based on, or has been derived from, and should be read in conjunction with, the U.S. GAAP Consolidated Financial Statements presented in Item 18 of this report. The financial results below are presented in U.S. dollars as the reporting currency.
The discussion below includes forward-looking statements, which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those expressed or implied by the forward-looking statements. See G. Safe Harbor section below and Risk Factors in Item 3 of this report for a discussion of risks and uncertainties.
Executive Overview
The Company is a leading global reinsurer, with a broadly diversified and balanced portfolio of traditional reinsurance risks and capital markets risks. The Company has three segments: P&C, Specialty, and Life and Health (see Results by Segment below).
The Company is in the business of assessing and assuming risk for an appropriate return. The Company creates value through its ability to understand, evaluate, diversify and distribute risk. The Company's strategy is founded on a capital-based risk appetite and the selected risks that management believes will allow the Company to meet its goals for appropriate profitability and risk management within that appetite. Management believes that this construct allows the Company to balance the cedant’s need for confidence of claims payment with shareholder needs for an appropriate return on capital.
The Company’s long-term objective is to provide capacity to clients and manage a portfolio of diversified risks that will create shareholder value. The Company’s profitability in any particular period can be significantly affected by large catastrophic or other large losses and the impact of changes in interest rates, credit spreads and equity markets on the fair value of investments (see Key Factors Affecting Year-over-Year Comparability below). Accordingly, the Company’s performance during any particular period is not necessarily indicative of its performance over the longer-term reinsurance cycle.
Non-life Reinsurance Operations
The Company generates its non-life reinsurance revenue from premiums. Premium rates and overall terms and conditions vary depending on market conditions. The Company writes a large majority of its non-life business on a treaty basis with a majority renewing on January 1. The remainder of this business renews at other times during the year. In addition to treaty business, the Company writes direct and facultative business which renews throughout the year.
Pricing cycles are driven by supply of capital in the industry and demand for reinsurance and insurance and other risk transfer products. The reinsurance business is also influenced by several other factors, including variations in interest rates and financial markets, changes in legal, regulatory and judicial environments, loss trends, inflation, foreign exchange rate changes and general economic conditions.
In an increasingly competitive market environment, and considering increased regulatory and rating agency expectations, the Company continues to focus on its risk management strategy, financial strength, underwriting selection process and global presence. The Company removes the volatility associated with those risks from the client and then manages those risks and the risk-related volatility. Through its broad product and geographic diversification, the Company is able to achieve portfolio diversification of risks, and its execution capabilities and global presence enable the Company to respond quickly to market needs.
A key challenge facing the Company is successfully managing risk through all phases of the reinsurance cycle. The Company believes that its long-term strategy of closely monitoring and being selective in the business that it writes, and maintaining the diversification and balance of its portfolio, will optimize returns over the reinsurance cycle. Individual businesses and markets have their own unique characteristics and are at different stages of the reinsurance pricing cycle at any given point in time. Management believes the Company has an appropriate portfolio diversification by product, geography, type of business, length of tail and distribution channel. Further, management believes that this diversification, in addition to the financial strength of the Company and its strong global franchise, will help to mitigate cyclical declines in underwriting profitability.
The non-life reinsurance market has historically been highly cyclical in nature as evidenced by hard and soft markets. For many years, with the exception of lines and markets impacted by specific catastrophic or large loss events, the Company has experienced soft market conditions with either general decreases, no changes, or marginal improvements, in pricing and profitability. Price increases were experienced in loss exposed lines of business following losses incurred in 2018 and 2019. However, the availability of capital has reduced the amplitude of cycles compared to the past.

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Life and Health Reinsurance Operations
The Company’s Life and Health segment derives revenues primarily from premiums. Within the Life and Health segment, the Company writes mortality, morbidity and longevity products. Management believes the Life and Health business provides the Company with diversification benefits and balance to its portfolio as they are generally not correlated to the Company’s Non-life business.
The profitability of the Life and Health business mainly depends on the volume and amount of death and disability claims incurred, medical claims and expenses, and the ability to adequately price the risk the Company assumes. The majority of the life premium arises from long-term in-force contracts. The life reinsurance policies are often in force for the remaining lifetime of the underlying individuals insured, with premiums earned typically over a period of 10 to 30 years. The volume of the business may be reduced each year by lapses, voluntary surrenders, death of insureds and recaptures by ceding companies. While death claims are reasonably estimated over a period of many years, claims become less predictable over shorter periods and can fluctuate significantly from period to period. Similarly, while the volume of medical claims can be predicted to a certain extent, the amount of claims and expenses depends on various factors, primarily healthcare inflation rates, driven by a shift towards the older population, reliance on expensive medical equipment and technology and changes in demand for healthcare services over time. Compared to the Non-life markets, the Life and Health reinsurance markets are more concentrated, with fewer market participants.
During 2019, the Company continued to execute its growth strategy in the Life and Health segment by continuing to increase new business volume and hiring additional employees to support further growth in this segment.
Industry Environment
The reinsurance environment has become more and more complex, as traditional forms of risk are increasingly exposed to globalization and urbanization and as new forms of risks have developed (such as cyber, geopolitical and supply chain). The need for reinsurance is further supported by factors such as primary insurers' needs to reduce volatility in earnings and a high protection gap in the non-life and life and health reinsurance and emerging markets. While the alternative capital market has experienced growth, it cannot replace traditional reinsurers whose balance sheets can absorb risks more efficiently, especially in medium and long tail lines of business.
Strategic Initiatives
The Company's strategy is to focus on reinsurance of business written by our cedants, and not compete with our clients through directly writing or assuming insurance risks. The Company is focused on striking the right balance between top down and bottom up risk selection by broadening scope and client penetration for well-understood, efficient risk classes and keeping a selective approach for less predictable risk patterns. Among the Company's strategic priorities are growing the non-life footprint with selected clients and brokers, using retrocession to enhance balance sheet strength and relevance, and growing the life and health book in targeted product segments and geographies. The Company will continue to execute its growth strategy in the Life and Health segment by continuing to increase new business volume and leveraging new talent hired to support further growth in this segment.
Reinsurance Market Outlook
The Company believes that overall, reinsurance will broadly remain a cyclical market, albeit of less amplitude, primarily as a result of excess capital, and that the cycles will become more specific and local, with less global amplitude.
The outlooks for 2020 for each of the Company's segments are summarized as follows:
2020 P&C Segment Outlook
During the January 1, 2020 renewals, the Company observed improving pricing trends in most of the North American business. Our European business continued to see flat to low single digit rate decreases in all lines except casualty where pricing increases were observed. The Company focused on portfolio optimization and improving profit margins during the January 1, 2020 renewals. As a result of the persisting competition and excess capacity in the industry, it is not possible to forecast if improving pricing conditions will continue in the future.
2020 Specialty Segment Outlook
During the January 1, 2020 renewals, the Company generally observed improved pricing in most lines of business within the Specialty segment (particularly in the engineering, aviation, energy, marine and property lines of business). The Company focused on portfolio optimization and improving profit margins during the January 1, 2020 renewals. As a result of the persisting

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competition and excess capacity in the industry, it is not possible to forecast if improving pricing conditions will continue in the future.
2020 Life and Health Outlook
The January 1, 2020 renewal for life business is not significant, as only a limited portion of the premiums written associated with the life portfolio is short-term business. Management expects moderate continued growth in the Company’s life portfolio in 2020 assuming constant foreign exchange rates, mainly due to growth in Asia, Canada, Europe and the United States. Pricing conditions are not expected to materially differ from 2019.
Investment Operations
The Company generates revenue from its investment portfolio through net investment income, including interest on fixed maturities and dividends on equity securities, interest in earnings of equity method investments, and realized and unrealized gains on investments.
For the Company’s investment risks, which include public and private markets and real estate investments, diversification of risk is critical to achieving the risk and return objectives of the Company.
From a risk management perspective, the Company allocates its invested assets into two categories: liability funds and capital funds. The Company’s investment policy distinguishes between liquid, high quality (investment grade) assets that support the Company’s liabilities, and the more diversified, higher risk asset classes that are allowed within the Company’s capital funds.
Liability funds represent invested assets supporting the net reinsurance liabilities, and are invested primarily in investment-grade fixed maturity securities and cash and cash equivalents. The preservation of liquidity and protection of capital are the primary investment objectives for these assets. The portfolio managers are required to adhere to investment guidelines as to minimum ratings and issuer and sector concentration limitations. Liability funds are invested in a way that generally matches them to the corresponding liabilities (referred to as asset-liability matching) in terms of both duration and major currency composition to provide the Company with a natural hedge against changes in interest and foreign exchange rates. In addition, the Company utilizes certain derivatives to further protect against changes in interest and foreign exchange rates. Liability funds represented approximately 53% and 54% of the total invested assets at December 31, 2019 and 2018, respectively.
Capital funds represent total capital of the Company, which includes shareholders' equity and debt liabilities, and are invested in a diversified portfolio with the objective of maximizing investment return, subject to prudent risk constraints. Capital funds contain most of the asset classes typically viewed as offering a higher risk and higher return profile, subject to risk assumption and portfolio diversification guidelines which include issuer and sector concentration limitations. Capital funds may be invested in investment grade and below investment grade fixed maturity securities, publicly listed and private equities, bond and loan investments, real estate investments, structured credit and certain other specialty asset classes. Capital funds represented approximately 47% and 46% of the total invested assets at December 31, 2019 and 2018, respectively.
While there will be periods where such investments may earn less than the risk-free rate of return, or potentially produce negative results, the Company believes the rewards for assuming these risks in a disciplined and measured way will produce a positive excess return to the Company over time. Additionally, since a portion of our investment risks are not fully correlated with the Company’s reinsurance risks, this increases the overall diversification of the Company’s total risk portfolio.
The Company employs a prudent investment philosophy. It maintains a high quality, well-balanced and liquid portfolio with total investment return achieved through a combination of optimizing current investment income and pursuing capital appreciation.
The Company’s investment strategy allows for the use of derivative instruments, subject to strict limitations. The Company may utilize various derivative instruments, such as treasury note and equity futures contracts, credit default swaps, foreign currency option contracts, equity option contracts, foreign exchange forward contracts, total return and interest rate swaps, insurance-linked securities, and to-be-announced mortgage-backed securities (TBAs) for the purpose of managing and hedging currency risk, market exposure and portfolio duration, hedging certain investments, mitigating the risk associated with underwriting operations, or enhancing investment performance that would be allowed under the Company’s investment policy if implemented in other ways. The use of financial leverage, whether achieved through derivatives or margin borrowing, requires approval from the Board. At December 31, 2019, the Company had no significant financial leverage achieved through derivatives and no margin borrowing has been approved by the Board.
The Company follows prudent investment guidelines through a strategy that seeks to maximize returns while managing investment risk in line with the Company’s overall objectives of earnings stability and long-term book value growth. A key challenge for the Company is achieving the right balance in changing market conditions. The Company regularly reviews the

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allocation of investments to asset classes within its investment portfolio and allocates investments to those asset classes the Company anticipates will outperform in the future, subject to limits and guidelines. Similarly, the Company reduces its exposure to asset classes where returns are deemed unattractive. The Company may also lengthen or shorten the duration of its fixed maturity portfolio in anticipation of changes in interest rates, or increase or decrease the amount of credit risk it assumes, depending on credit spreads and anticipated economic conditions.
In 2019, the Company's investment portfolio benefited by a change in portfolio mix resulting in higher net investment income. The portfolio also benefited from decreasing U.S. and world-wide risk-free rates, the narrowing of U.S. and European investment grade corporate spreads and improving world-wide equity markets. If the current lower yield environment should persist in 2020, we would expect that the yield on our portfolio would be adversely impacted by this low interest rate environment.
A. Operating Results
At December 31, 2019 and 2018, EXOR Nederland N.V. holds 100% of the 100 million Class A shares of $0.00000001 par value each for a total share capital of $1.00. The common shares are not listed. Accordingly, per share data is not considered meaningful to present.
Key Factors Affecting Year-over-Year Comparability
The key factors affecting the year-over-year comparability of the Company’s net income or loss for the years ended December 31, 2019, 2018 and 2017 include the following:
•
Large catastrophic and large loss events impacting Non-life segment underwriting results
•
Volatility in capital markets impacting investment results, and
•
Foreign exchange rate fluctuations.
These factors, as well as other factors described below, may continue to affect our results of operations and financial condition in the future. Each of these key factors is discussed further in the Review of Net Income or Loss section below for each of the years ended December 31, 2019, 2018 and 2017.
Review of Net Income or Loss
The components of net income or loss for the years ended December 31, 2019, 2018 and 2017 are presented in the Company’s Consolidated Statements of Operations, and in the breakdown by segment in Note 18 to the Consolidated Financial Statements, in Item 18 of this report.
Management analyzes the Company’s net income or loss in three parts: underwriting result, investment result, and corporate and other, which comprises the other components of net income or loss not allocated to the Company’s P&C, Specialty and Life and Health segments.
The net income or loss for the years ended December 31, 2019, 2018 and 2017 was comprised as follows (in millions of U.S. dollars):
 
2019
 
2018
 
2017
Underwriting result
 
 
 
 
 
P&C
$
40

 
$
(189
)
 
$
(343
)
Specialty
(60
)
 
142

 
247

Total Non-life
$
(20
)
 
$
(47
)
 
$
(96
)
Life and Health
1

 
20

 
8

 
$
(19
)
 
$
(27
)
 
$
(88
)
Investment result
1,352

 
37

 
720

Corporate and other
(396
)
 
(96
)
 
(368
)
Net income (loss)
$
937

 
$
(86
)
 
$
264

The components of net income (loss), and changes for the years presented above, are described below.


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Underwriting Result
Underwriting result consists of technical result (which is net premiums earned less losses and loss expenses and acquisition costs) and other income (loss), less other expenses that are attributable to the respective segment. Underwriting result is a primary measure of underlying profitability for the Company’s core reinsurance operations, separate from the investment results, and is used to manage and evaluate the Company's Non-life segments (P&C and Specialty). The Company believes that in order to enhance the understanding of its profitability, it is useful for our shareholders and other users of this report to evaluate the components of net income or loss separately and in the aggregate. Underwriting result should not be considered a substitute for net income or loss and does not reflect the overall profitability of the business, which is also impacted by investment results and other items included in Corporate and other above and discussed in more detail below in the Corporate and Other section.
Underwriting result, a key factor affecting net income or loss, is discussed further below in the Results by Segment section for each of the two Non-life segments (P&C and Specialty). Management measures results for the Life and Health segment on the basis of the allocated underwriting result, which includes underwriting result and net investment income allocated to Life and Health business, and is discussed further below in the Results by Segment section.
Results by Segment
The Company monitors the performance of its operations in three segments: P&C, Specialty and Life and Health. See Note 18 to the Consolidated Financial Statements included in Item 18 of this report for a description of the Company’s segments, a discussion on how the Company measures its segment results (including definitions of loss ratio, acquisition ratio, technical ratio, other expense ratio and combined ratio) and a breakdown of net income or loss, including underwriting results by segment, for each of the years ended December 31, 2019, 2018 and 2017.
Non-life Results
The Non-life underwriting results for 2019, 2018 and 2017 were largely driven by premiums earned reduced for losses and loss expenses (which included losses from large catastrophic losses and large loss events, partially offset by net favorable prior year development) and also reduced for acquisition costs, as more fully described below.
Large catastrophic and large loss events
As the Company’s reinsurance operations are exposed to low-frequency and high-severity risk events, some of which are seasonal, results for certain periods may include unusually low loss experience, while results for other periods may include modest or significant loss experience driven by catastrophic losses. The Company generally considers losses greater than $35 million, net of retrocession and reinstatement premiums, to be large catastrophic or large loss events.
The combined impact of the large catastrophic and large losses on the Company’s operating results for the years ended December 31, 2019, 2018 and 2017 was as follows (in millions of U.S. dollars, except ratios):
 
 
2019
 
2018 (1)
 
2017
 
 
P&C segment
 
Specialty segment
 
Total Non-life
 
P&C segment
 
Specialty segment
 
Total Non-life
 
P&C segment
 
Specialty segment
 
Total Non-life
Large catastrophic and large losses
 
$
258

 
$
42

 
$
300

 
$
382

 
$
4

 
$
386

 
$
508

 
$
61

 
$
569

Impact on combined ratio
 
8.4
%
 
2.1
%
 
5.9
%
 
15.1
%
 
0.2
%
 
9.0
%
 
21.8
%
 
3.5
%
 
14.1
%
 
(1) In 2018, losses related to Hurricane Florence and Typhoon Trami were individually less than $35 million each, but have been included in the large catastrophic and large losses total above as the losses combined were greater than $35 million based on best estimates as of December 31, 2018.
Large catastrophic and large losses, net of retrocession and reinstatement premiums, were comprised as follows:
•
2019: $258 million related to Typhoons Hagibis and Faxai and Hurricane Dorian and $42 million related to Ethiopian Airlines and Boeing
•
2018: $176 million related to Typhoons Jebi and Trami and Hurricanes Florence and Michael and $210 million related to California Wildfires
•
2017: $449 million related to Hurricanes Harvey, Irma and Maria (HIM) and $120 million related to California Wildfires
Losses and loss expenses for 2019, 2018 and 2017 were reduced for net favorable non-life prior year development. Non-life net favorable development was $57 million (1.1 points on the combined ratio) for 2019, $249 million (5.8 points on the combined

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ratio) for 2018 and $448 million (11.1 points on the combined ratio) for 2017. See Note 7(a) to the Consolidated Financial Statements in Item 18 of this report for a further discussion of the reserve development related to prior accident years.
See results for each of the P&C and Specialty segments below for further details of Non-life underwriting results, and the Life and Health segment results that follows, for discussions on factors impacting net income or loss as it relates to the Company's underwriting results for each of the years ended December 31, 2019, 2018 and 2017. Details of Other income and Other expenses are discussed in the Corporate and Other section below.
In addition to the information presented below, see also Note 18 to the Consolidated Financial Statements in Item 18 of this report for a breakdown of Company's net income, including the Non-life and Life and Health underwriting results, and for details of combined ratios for the Non-life segments for the years ended December 31, 2019, 2018 and 2017.
P&C Segment
The components of underwriting result, including technical result, which is calculated as net premiums earned less losses and loss expenses and acquisition costs, and the corresponding ratios (which are calculated as a percentage of net premiums earned) for the P&C segment for the years ended December 31, 2019, 2018 and 2017 were as follows (in millions of U.S. dollars, except ratios):
 
2019
 
2018
 
2017
Gross premiums written
$
3,579

 
$
3,015

 
$
2,671

Premiums ceded
(277
)
 
(293
)
 
(296
)
Net premiums written
$
3,302

 
$
2,722

 
$
2,375

Net premiums earned
$
3,071

 
$
2,535

 
$
2,330

Losses and loss expenses
(2,167
)
 
(2,073
)
 
(2,051
)
Acquisition costs
(783
)
 
(606
)
 
(534
)
Technical result
$
121

 
$
(144
)
 
$
(255
)
Other (loss) income
(1
)
 
30

 
—

Other expenses (1)
(80
)
 
(75
)
 
(88
)
Underwriting result
$
40

 
$
(189
)
 
$
(343
)
Loss ratio
70.6
%
 
81.8
%
 
88.0
%
Acquisition ratio
25.5

 
23.9

 
22.9

Technical ratio
96.1
%
 
105.7
%
 
110.9
%
Other expense ratio
2.6

 
3.0

 
3.8

Combined ratio
98.7
%
 
108.7
%
 
114.7
%
 
(1) The Company allocates certain other expenses that vary with business written by its operating segments. See Other expenses in Corporate and Other section below.

Technical and underwriting results and related ratios
The P&C underwriting and technical results for 2019, 2018 and 2017 were largely driven by premiums written and earned reduced for losses and loss expenses, and, to a lesser extent, acquisition costs.
2019 compared to 2018
The increased technical result (and the corresponding decrease in the technical ratio) in 2019 compared to 2018 was largely driven by an increase in net premiums earned and a lower loss ratio, partially offset by higher acquisition costs. The increased underwriting result (and a corresponding decrease in the combined ratio) was driven by the improvement in the technical result and ratio, and, to a lesser extent, a decrease in the other expense ratio. The underwriting result was also impacted by a reduction in Other income in 2019 compared to 2018, as the Company recognized a $29 million gain on commutation of the Paris Re Reserve Agreement in 2018 (see also Note 7(a) to the Consolidated Financial Statements in Item 18 for further details). See Corporate and Other section below for further details on Other expenses.

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2018 compared to 2017
The reduced technical loss (and the corresponding decrease in the technical ratio) in 2018 compared to 2017 was largely driven by an increase in net premiums earned and a lower loss ratio, partially offset by higher acquisition costs. The reduced underwriting result loss (and a corresponding decrease in the combined ratio) was driven by the increase in the technical result, and, to a lesser extent, a decrease in other expenses. The underwriting result was also impacted by higher Other income in 2018 compared to 2017, as the Company recognized a $29 million gain on commutation of the Paris Re Reserve Agreement in 2018 (see also Note 7(a) to the Consolidated Financial Statements in Item 18 for further details). See Corporate and Other section below for further details on Other expenses.
The changes in premiums written and earned, losses and loss expenses and acquisition costs are described further below.
Premiums
The P&C segment represented 48%, 47% and 46% of total net premiums written in 2019, 2018 and 2017, respectively. Business reported in this segment is, to a significant extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly against other currencies and this should be considered when making year-over-year comparisons. See Corporate and Other—Foreign exchange movements section below for further details of movements in foreign exchange.
2019 compared to 2018
The increase in gross and net premiums written and net premiums earned was driven primarily by new business written and renewal increases in the casualty, catastrophe and motor lines of business. Net premiums written and earned included a reduction for premiums ceded, which were lower than the prior year.
2018 compared to 2017
The increase in gross and net premiums written and net premiums earned was driven primarily by new business written, partially offset by cancellations and lower gross reinstatement premiums compared to the prior year relating to large catastrophic losses in 2017. Net premiums written and earned included a reduction for premiums ceded which were marginally lower than the prior year.
Losses and loss expenses
Losses and loss expenses include large catastrophic and large losses described above, partially offset by net favorable prior year development referred to above. See Note 7 to the Consolidated Financial Statements in Item 18 of this report for further details of losses and loss expenses and prior year development.
2019 compared to 2018
The increase in losses and loss expenses was primarily driven by growth in business. This was partially offset by a decrease in attritional losses in the current accident year, a lower level of large catastrophic and large losses, and, to a lesser extent, a higher level of favorable prior year loss development as compared to 2018. This resulted in a lower loss ratio compared to 2018.
2018 compared to 2017
The increase in losses and loss expenses was primarily driven by growth in business and a lower level of favorable prior year loss development. This was partially offset by a lower level of large catastrophic and large losses described above and a lower level of losses experienced in U.S. health business in 2018 compared to 2017 where there was an increase in frequency of large claims activity in underwriting years 2015 to 2017.
Acquisition costs
2019 compared to 2018
The increase in acquisition costs was in line with an increase in net premiums earned. The related acquisition cost ratio increased compared to 2018, driven by an increased level of experience refund accruals related to the U.S. health business.
2018 compared to 2017
The increase in acquisition costs was in line with an increase in net premiums earned. The related acquisition cost ratio increased compared to 2017, driven by a lower level of favorable loss sensitive commissions in 2018, and lower levels of reinstatement premiums in 2018, which increased net premiums earned with little to no corresponding impact to acquisition costs.

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Specialty Segment
The components of underwriting result, including technical result, which is calculated as net premiums earned less losses and loss expenses and acquisition costs, and the corresponding ratios, which are calculated as a percentage of net premiums earned, for the Specialty segment for the years ended December 31, 2019, 2018 and 2017 were as follows (in millions of U.S. dollars, except ratios):
 
2019
 
2018
 
2017
Gross premiums written
$
2,213

 
$
2,050

 
$
1,934

Premiums ceded
(76
)
 
(180
)
 
(154
)
Net premiums written
$
2,137

 
$
1,870

 
$
1,780

Net premiums earned
$
1,987

 
$
1,767

 
$
1,725

Losses and loss expenses
(1,496
)
 
(1,096
)
 
(955
)
Acquisition costs
(523
)
 
(502
)
 
(489
)
Technical result
$
(32
)
 
$
169

 
$
281

Other loss
—

 
—

 
(1
)
Other expenses (1)
(28
)
 
(27
)
 
(33
)
Underwriting result
$
(60
)
 
$
142

 
$
247

Loss ratio
75.3
%
 
62.0
%
 
55.4
%
Acquisition ratio
26.3

 
28.4

 
28.4

Technical ratio
101.6
%
 
90.4
%
 
83.8
%
Other expense ratio
1.4

 
1.5

 
1.9

Combined ratio
103.0
%
 
91.9
%
 
85.7
%
 
(1) The Company allocates certain other expenses that vary with business written by its operating segments. See Other expenses in Corporate and Other section below.
Technical and underwriting results and related ratios
The Specialty underwriting and technical results for 2019, 2018 and 2017 were largely driven by premiums written and earned reduced for losses and loss expenses, and, to a lesser extent, acquisition costs.
2019 compared to 2018
The decrease in the technical result (and the corresponding increase in the technical ratio) in 2019 compared to 2018 was largely driven by an increase in the loss ratio, partially offset by an increase in net premiums earned. The decrease in the underwriting result (and a corresponding increase in the combined ratio) was driven by the decrease in the technical result.
2018 compared to 2017
The decrease in the technical result (and the corresponding increase in the technical ratio) in 2018 compared to 2017 was largely driven by an increase in the loss ratio, partially offset by an increase in net premiums earned. The decrease in the underwriting result (and a corresponding increase in the combined ratio) was driven by the decrease in the technical result, partially offset by a decrease in other expenses. See Corporate and Other section below for further details on Other expenses.
The changes in premiums written and earned, losses and loss expenses and acquisition costs are described further below.
Premiums
The Specialty segment represented 31%, 32% and 35% of total net premiums written in 2019, 2018 and 2017, respectively. Business reported in this segment is, to a significant extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly against other currencies and this should be considered when making year-over-year comparisons. See Corporate and Other—Foreign exchange movements section below for further details of movements in foreign exchange.

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2019 compared to 2018
The increase in gross and net premiums written and earned was driven primarily by new business written and renewal increases in the financial risks, aviation and space, energy and property lines of business, partially offset by cancellations and renewal changes in other lines. Net premiums written and earned included a reduction for premiums ceded, which were lower than the prior year.
2018 compared to 2017
The increase in gross and net premiums written and earned was driven primarily by new business across all lines. These increases were partially offset by cancellations and renewal changes. Net premiums written and earned were partially offset by higher premiums ceded in 2018 under new and existing contracts.
Losses and loss expenses
2019 compared to 2018
The increase in losses and loss expenses compared to 2018 was primarily attributable to adverse prior year development in 2019, as well as growth in the business.
2018 compared to 2017
The increase in losses and loss expenses was primarily attributable to higher mid-sized losses in the current accident year and a lower level of favorable prior year loss development in 2018 compared to 2017, partially offset by a lower level of large catastrophic and large losses in 2018 than in 2017, as noted above under Non-life Results section.
See Note 7 to the Consolidated Financial Statements in Item 18 of this report for further details of losses and loss expenses and prior year development.
Acquisition costs
2019 compared to 2018
The increase in acquisition costs was in line with an increase in net premiums earned. The decrease in acquisition cost ratio during 2019 as compared to 2018 was primarily driven by a decrease in loss sensitive commissions primarily in financial risks, multiline and energy lines of business.
2018 compared to 2017
Acquisition costs and the related acquisition cost ratio remained relatively stable at approximately 28.4% for the years ended December 31, 2018 and 2017, as noted in the table above.


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Life and Health Segment
The Company provides reinsurance of life and health related risks including mortality, morbidity and longevity. Reinsurance coverage is provided to primary life insurers and pension funds to protect against individual and group mortality and disability risks. The Company also provides reinsurance coverage to employer sponsored pension schemes and primary life insurers who provide pensions or issue annuity contracts offering long-term retirement benefits to consumers, who, in turn, seek protection against outliving their financial resources.
Mortality and morbidity business is written primarily on a proportional basis through treaty agreements and is subdivided into death and disability covers (with various riders), term assurance and critical illness (TCI) and GMDB. The Company also writes certain treaties on a non-proportional basis.
Longevity business is written on a long-term, proportional basis. The Company’s longevity portfolio is subdivided into standard and non-standard annuities. The non-standard annuities are sold by insurance companies to consumers with aggravated health conditions and are usually medically underwritten on an individual basis.
The components of the allocated underwriting result for the Life and Health segment for the years ended December 31, 2019, 2018 and 2017 were as follows (in millions of U.S. dollars):
 
2019
 
2018
 
2017
Gross premiums written
$
1,493

 
$
1,235

 
$
983

Premiums ceded
(23
)
 
(24
)
 
(18
)
Net premiums written
$
1,470

 
$
1,211

 
$
965

Net premiums earned
$
1,467

 
$
1,212

 
$
970

Losses and loss expenses
(1,263
)
 
(1,025
)
 
(835
)
Acquisition costs
(149
)
 
(129
)
 
(97
)
Technical result
$
55

 
$
58

 
$
38

Other income (1)
15

 
13

 
14

Other expenses (2)
(69
)
 
(51
)
 
(44
)
Underwriting result
$
1

 
$
20

 
$
8

Net investment income
72

 
66

 
60

Allocated underwriting result
$
73

 
$
86

 
$
68

 
(1) Other income represents fee income on deposit accounted contracts and longevity swaps.
(2) The Company allocates certain other expenses that vary with business written by its operating segments. See Other expenses in Corporate and Other section below.
Allocated underwriting result
The underwriting result for Life and Health is increased by net investment income allocated to this segment to determine allocated underwriting result. See Investments Results section below for further details on net investment income. The Life and Health underwriting and allocated underwriting results for 2019, 2018 and 2017 were largely driven by premiums earned reduced for losses and loss expenses, and, to a much lesser extent, acquisition costs.
2019 compared to 2018
The decrease in allocated underwriting result was primarily driven by an increase in other expenses during 2019 as compared to 2018, driven by higher expenses to support growth in the business and a higher annual incentive bonus payment to employees. Growth in the business contributing to the allocated underwriting result was partially offset by adverse experience in the Company's short-term life business.
2018 compared to 2017
The increase in allocated underwriting result was primarily driven by increased profitability and organic growth, including the acquired Aurigen operation, partially offset by higher expenses to support the Company's plans to grow the business.
The changes in premiums written and earned, losses and loss expenses, and acquisition costs are described further below.

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Premiums
The Life and Health segment represented 21%, 21% and 19% of total net premiums written in 2019, 2018 and 2017, respectively. Business reported in this segment is, to a significant extent, originally denominated in foreign currencies and is reported in U.S. dollars. The U.S. dollar can fluctuate significantly against other currencies and this should be considered when making year-over-year comparisons. See Corporate and Other—Foreign exchange movements section below for further details of movements in foreign exchange.
2019 compared to 2018
The increases in gross and net premiums written and net premiums earned were primarily driven by growth in the longevity business.
2018 compared to 2017
The increases in gross and net premiums written and net premiums earned were primarily driven by organic growth. The increase is also partly driven by the inclusion of life premiums from the acquisition of Aurigen for a full year in 2018 compared to three quarters in 2017, following the acquisition in April 2017.
Losses and loss expenses
2019 compared to 2018
The increase in losses and loss expenses was primarily attributable to growth in the longevity business and increased losses related to the Company's short-term life business.
2018 compared to 2017
The increase in losses and loss expenses was primarily attributable to growth in the business and the inclusion of losses and loss expenses from the acquisition of Aurigen for a full year in 2018 compared to three quarters in 2017.
Acquisition costs
Acquisition costs increased each year in line with increases in net premiums earned.

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Investment Result
Investment result consists of net investment income, net realized and unrealized investment gains or losses and interest in earnings or losses of equity method investments. Net investment income primarily includes interest and amortization of premium and discount on fixed maturities, short-term investments, cash and cash equivalents and certain other invested assets (including corporate loans), dividend income and income distributions from equities and certain other invested assets, as well as investment income on funds held, offset by investment expenses and withholding taxes. Net realized and unrealized investment gains or losses primarily include amounts realized from sales and redemptions of the Company’s fixed maturities, short-term investments, equities and other invested assets; changes in net unrealized investment gains or losses on these investments; and impairment losses on real estate. Interest in earnings or losses of equity method investments represents the Company’s aggregate share of earnings or losses related to several private placement investments and limited partnership interests.
The components of the investment result for the years ended December 31, 2019, 2018 and 2017 were as follows (in millions of U.S. dollars):
 
2019
 
2018
 
2017
Net investment income (1)
$
449

 
$
416

 
$
402

Net realized and unrealized investment gains (losses)
887

 
(390
)
 
232

Interest in earnings of equity method investments
16

 
11

 
86

Total investment result
$
1,352

 
$
37

 
$
720

 
(1) Includes amounts allocated to the Life and Health segment as presented in Results by Segment above.
Net Investment Income
Net investment income is largely driven by interest and amortization on fixed maturities, short-term investments, cash and cash equivalents and privately placed corporate loans. Net investment income by asset type for the years ended December 31, 2019, 2018 and 2017 is included in Note 4(b) to the Consolidated Financial Statements in Item 18 of this report and is summarized below (in millions of U.S. dollars):
 
2019
 
2018
 
2017
Fixed maturities, short-term investments and cash and cash equivalents
$
407

 
$
392

 
$
388

Other invested assets
69

 
26

 
12

Equities, funds held and other
12

 
27

 
25

Investment expenses
(39
)
 
(29
)
 
(23
)
Net investment income
$
449

 
$
416

 
$
402

2019 compared to 2018
Net investment income increased in 2019 compared to 2018 driven by decisions to re-balance certain assets into higher yield per duration unit strategies, partially offset by higher investment expenses.
2018 compared to 2017
Net investment income increased in 2018 compared to 2017 due to higher reinvestment rates and changes in portfolio mix, partially offset by higher investment expenses.
Net Realized and Unrealized Investment Gains (Losses)
The Company’s portfolio managers have a total return investment objective, achieved through a combination of optimizing current investment income and pursuing capital appreciation. To meet this objective, it is often desirable to buy and sell securities to take advantage of changing market conditions and to reposition the investment portfolios. Accordingly, recognition of realized gains and losses is considered by the Company to be a normal consequence of its ongoing investment management activities. In addition, the Company recognizes changes in fair value for substantially all of its investments as changes in unrealized investment gains or losses in its Consolidated Statements of Operations. Realized and unrealized investment gains and losses are generally a function of multiple factors, with the most significant being prevailing interest rates, credit spreads and equity market conditions.

48
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See Note 4(a) to the Consolidated Financial Statements in Item 18 of this report for details of realized investment gains and losses and changes in unrealized investment gains and losses by investment type. Investment results for the years ended December 31, 2019, 2018 and 2017 were significantly impacted by the volatility in the capital markets with the Company reporting Net realized and unrealized investment gains or losses, included in net income or loss, as follows (in millions of U.S. dollars):
 
 
2019
 
2018
 
2017
Net realized investment gains (losses)
 
$
251

 
$
(202
)
 
$
22

Change in net unrealized investment gains (losses)
 
639

 
(182
)
 
210

Impairment loss on investments in real estate
 
(3
)
 
(6
)
 
—

Net realized and unrealized investment gains (losses)
 
$
887

 
$
(390
)
 
$
232

The net realized and unrealized investment gains of $887 million in 2019 were driven by $456 million of net realized and unrealized investment gains on equities and other invested assets, primarily due to unrealized gains in public equity funds, and $434 million of net realized and unrealized investment gains on fixed maturities and short-term investments, due to decreases in world-wide risk free rates and credit spreads. Net realized investment gains were driven by realized gains on fixed maturities and short-term investments, due to the Company's decision to rebalance certain portfolios, particularly lower rated investment grade credit, and to reallocate the proceeds to other investment classes, particularly highly rated governments and mortgage-backed securities, and to alternative credit. The $3 million impairment loss on investments in real estate was driven by a write-down in value of London-based real estate investments directly owned by the Company.
The net realized and unrealized investment losses of $390 million in 2018 were largely driven by increases in U.S. risk-free rates, widening of U.S. and European investment grade corporate spreads and net realized investment losses on fixed maturities and short-term investments due to changes in investment portfolio mix aimed at increasing yield and decreasing duration. The net realized investment losses on fixed maturities and short-term investments were partially offset by net realized gains in equities and other invested assets. The impairment loss on investments in real estate was driven by a write-down in value of London-based real estate investments referred to above.
The net realized and unrealized investment gains of $232 million in 2017 were primarily due to narrowing of corporate bond spreads and positive performance in public and private equities, partially offset by increases in U.S. risk-free interest rates. The net realized investment gains were primarily driven by gains on sales or redemptions of fixed maturities and short-term investments.
See also Notes 3 and 4(a) to the Consolidated Financial Statements in Item 18 for further details.
Interest in Earnings of Equity Method Investments
The interest in earnings of equity method investments for both 2019 and 2018 of $16 million and $11 million, respectively, reflect gains on private equities, partially offset by a decrease in value of real estate assets held by an equity method investee, Almacantar, a privately held real estate investment and development group.
The interest in earnings of equity method investments of $86 million in 2017 was primarily due to gains related to Almacantar driven by appreciation of real estate assets.

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Corporate and Other
The following are components of net income or loss (in millions of U.S. dollars), excluding amounts that the Company includes in investment results or allocates to segments, in line with the way the Company manages its business, as described above.
 
2019
 
2018
 
2017
Other expense, net of other income, not allocated to the segments (1)
$
(192
)
 
$
(146
)
 
$
(181
)
Losses and loss expenses (2)
3

 
—

 
—

Interest expense
(40
)
 
(43
)
 
(42
)
Loss on redemption of debt
(15
)
 
—

 
(2
)
Amortization of intangible assets
(12
)
 
(35
)
 
(25
)
Net foreign exchange (losses) gains
(87
)
 
119

 
(108
)
Income tax (expense) benefit
(53
)
 
9

 
(10
)
Corporate and Other
$
(396
)
 
$
(96
)
 
$
(368
)
 
(1) The Company allocates certain other expenses that vary with business written by its operating segments. Refer to Underwriting Results section above for tables that include Other expense and Other income amounts allocated to each of the three segments.
(2) Net incurred losses include favorable loss development of $3 million, $nil and $nil during the years ended December 31, 2019, 2018, and 2017, respectively. Non-life reserves allocated to Corporate and Other totaled $6 million, $9 million and $nil at December 31, 2019, 2018 and 2017, respectively.
Other Expenses
The Company's Other expenses are included in the underwriting result and in Corporate and Other, as described above. The Company’s total Other expenses in the Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 were as follows (in millions of U.S. dollars, except ratios):
 
2019
 
2018
 
2017
Other expenses
$
370

 
$
306

 
$
348

Other expenses, as a % of total net premiums earned
5.7
%
 
5.5
%
 
6.9
%
2019 compared to 2018
Other expenses of $370 million for 2019 increased by $64 million compared to 2018 primarily due to an increase in full-time equivalent employees, higher annual incentive and long term incentive payout for employees due to the strong growth in book value reported by the Company in 2019 and higher expenses in the Life and Health segment to support the organic growth of the business.
2018 compared to 2017
Other expenses of $306 million for 2018 decreased by $42 million compared to 2017 primarily due to lower recurring personnel costs driven by a decrease in full-time equivalent employees as a result of efficiency actions undertaken by the Company, in addition to lower reorganization related costs and lower consulting and facilities costs, partially offset by higher expenses primarily in the Life and Health segment to support the Company's plans to grow the business. In 2018 and 2017, the Company recorded $11 million and $29 million, respectively, of reorganization related costs. In addition, for the year ended December 31, 2017, the Company recorded $4 million of transaction costs related to the acquisition of Aurigen.
Interest Expense and Loss on Redemption of Debt
Interest expense of $40 million in 2019 decreased compared to $43 million for 2018, due to the refinancing of senior notes during 2019, whereby the Company issued $500 million 3.70% Senior Notes due 2029 and used the proceeds to early redeem the $500 million 5.50% Senior Notes due 2020. Interest expense in 2018 was comparable to $42 million for 2017.
The loss on redemption of debt of $15 million in 2019 related to the redemption of the $500 million Senior Notes due 2020, which included a make whole provision to compensate for future interest foregone as a result of the early retirement. The $2 million loss in 2017 related to debt settled by Aurigen in 2017.
See Note 9 to the Consolidated Financial Statements in Item 18 of this report for further details.

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Amortization of Intangible Assets
Amortization of intangible assets relates to intangible assets acquired upon acquisition of Paris Re in 2009, Presidio in 2012, Aurigen in 2017 and Claim Analytics Inc. in 2018. The decrease in amortization expense to $12 million in 2019 from $35 million in 2018 was primarily related to the intangible asset for guaranteed reserves which was written off in 2018, following the commutation of the Paris Re reserve agreement. The increase in amortization expense to $35 million in 2018 from $25 million in 2017 was driven by the reduction of the intangible asset related to guaranteed reserves upon the commutation in 2018 referred to above. See Note 6 to the Consolidated Financial Statements in Item 18 for further details.
Foreign Exchange Movements
The Company’s reporting currency is the U.S. dollar. The Company’s significant subsidiaries and branches have one of the following functional currencies: U.S. dollar, Euro or Canadian dollar. As a significant portion of the Company’s operations is transacted in foreign currencies, fluctuations in foreign exchange rates may affect year-over-year comparisons. To the extent that fluctuations in foreign exchange rates affect comparisons, their impact has been quantified, when possible, and discussed throughout this annual report. See Note 2(m) to the Consolidated Financial Statements in Item 18 of this report for a discussion of remeasurement and translation of foreign currencies.
Net foreign exchange losses were $87 million for 2019 compared to gains of $119 million for 2018 and losses of $108 million for 2017. The losses in 2019 were mainly driven by the weakening of the U.S. dollar against certain major currencies and foreign currency hedging costs, while gains in 2018 were driven by the strengthening of the U.S. dollar against certain major currencies and foreign currency hedge results. The losses in 2017 were driven by the weakening of the U.S. dollar against certain foreign currencies and hedging costs.
The foreign exchange fluctuations for the principal currencies in which the Company transacts business were as follows:
•
the U.S. dollar ending exchange rate weakened against most major currencies, with the exception of the Euro, at December 31, 2019 compared to December 31, 2018
•
the U.S. dollar average exchange rate for the year strengthened against most major currencies, with the exception of the Japanese yen, in 2019 compared to 2018
•
the U.S. dollar ending exchange rate strengthened against most major currencies, with the exception of the Japanese yen, at December 31, 2018 compared to December 31, 2017 and
•
the U.S. dollar average exchange rate for the year weakened against major currencies in 2018 compared to 2017.
The above fluctuations impacted individual line items of the Company’s Consolidated Statement of Operations as well as the Change in currency translation adjustment included in Accumulated other comprehensive loss in the Consolidated Balance Sheets. The Company hedges a significant portion of its currency risk exposure as discussed in Quantitative and Qualitative Disclosures about Market Risk in Item 11 of this report and in Notes 2(n) and 5 to the Consolidated Financial Statements in Item 18 of this report. See also section B. Liquidity and Capital Resources—Currency for a discussion of the impact of foreign exchange movements on the Consolidated Balance Sheets.
Income Taxes
The effective income tax rate, which the Company calculates as income tax expense or benefit divided by net income or loss before taxes, may fluctuate significantly from period to period depending on the geographic distribution of pre-tax net income or loss in any given period between different jurisdictions. The geographic distribution of pre-tax net income or loss can vary significantly between periods due to, but not limited to, the following factors: the business mix of net premiums earned, the geographic location, quantum and nature of net losses and loss expenses and life policy benefits incurred, the quantum and geographic location of other expenses, net investment income, net realized and changes in unrealized investment gains and losses and the quantum of specific adjustments to determine the income tax basis in each of the Company’s operating jurisdictions. In addition, a significant portion of the Company’s gross and net premiums are written and earned in Bermuda, a non-taxable jurisdiction, including the majority of the Company’s catastrophe business, which can result in significant volatility in the Company’s pre-tax net income or loss from period to period.

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The Company’s income tax expense (benefit) and effective income tax rate for the years ended December 31, 2019, 2018 and 2017 were as follows (in millions of U.S. dollars, except ratios):
 
2019
 
2018
 
2017
Income tax expense (benefit)
$
53

 
$
(9
)
 
$
10

Effective income tax rate
5.3
%
 
9.4
%
 
3.8
%
Income tax expense (benefit) and the effective income tax rate during 2019, 2018 and 2017 were primarily driven by the geographic distribution of the Company’s pre-tax income and losses between its various jurisdictions. In 2017, the income tax expense included a charge of $5 million related to the enactment of the Tax Cuts and Jobs Act in the U.S. See Note 12 to the Consolidated Financial Statements in Item 18 of this report for further details.
B. Liquidity and Capital Resources

The following discussion on liquidity and capital resources principally focuses on the Company’s Consolidated Balance Sheets and Consolidated Statements of Cash Flows. See Risk Factors in Item 3.D for additional information concerning risks related to our business, strategy and operations.
Capital Adequacy
A key priority for management is to hold sufficient capital to meet all of the Company’s obligations to cedants, meet regulatory and rating agency requirements of the Group and the Company's regulated subsidiaries and support its position as one of the stronger reinsurers in the industry. Management closely monitors its capital needs and capital level throughout the reinsurance cycle and, in times of volatility and turmoil in global capital markets, actively takes steps to increase or decrease the Company’s capital in order to achieve an appropriate balance of financial strength and shareholder returns. Capital management is achieved by either deploying or curtailing capital to fund business opportunities and, during times when the Company has excess capital and business opportunities are not so attractive, returning capital to its shareholders by way of dividends.
Shareholders’ Equity and Capital Resources Management
As part of its long-term strategy, the Company will seek to grow capital resources to support its operations throughout the reinsurance cycle, maintain strong ratings from the major rating agencies (see ratings summarized below) and maintain the ability to pay claims as they arise. The Company may also seek to restructure its capital through the repayment or purchase of debt obligations or preferred shares, or increase or restructure its capital through the issuance of debt or preferred shares, when opportunities arise.
The Company's total capital (defined as total of debt liabilities and preferred and common shareholders’ equity) at December 31, 2019 and 2018 was as follows (in millions of U.S. dollars, except percentages):
 
December 31, 2019
 
December 31, 2018
Senior notes
$
1,329

 
15
%
 
$
1,350

 
17
%
Capital efficient notes (1)
62

 
1

 
63

 
1

Total debt liabilities
$
1,391

 
16
%
 
$
1,413

 
18
%
Preferred shareholders’ equity, aggregate liquidation value
$
704

 
8
%
 
$
704

 
9
%
Common shareholder’s equity
6,566

 
76

 
5,812

 
73

Total shareholders' equity
$
7,270

 
84
%
 
$
6,516

 
82
%
Total capital
$
8,661

 
100
%
 
$
7,929

 
100
%
 
(1) Non-consolidated debt issued externally related to Capital efficient notes (CENts) of $62 million and $63 million as at December 31, 2019 and December 31, 2018, respectively, does not appear in the debt line of the Consolidated Balance Sheets as the finance entity that issued the debt (PartnerRe Finance II Inc.) does not meet the U.S. GAAP criteria for consolidation. The Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018 include the related intercompany notes of $70 million and $71 million, respectively, issued by PartnerRe U.S. Corporation to PartnerRe Finance II Inc. See Note 9 to the Consolidated Financial Statements included in Item 18 of this report for further information.

52

Total capital of $8.7 billion at December 31, 2019 was up 9.2% compared to December 31, 2018 as a result of an increase in common shareholder's equity, partially offset by a decrease in carrying value of senior notes, described as follows:
•
Shareholders’ equity, comprised of preferred and common shareholders’ equity in the table above, was $7.3 billion at December 31, 2019, an 11.6% increase compared to December 31, 2018. The increase was driven by comprehensive income of $999 million, offset by common and preferred dividend payments totaling $246 million in 2019.
•
The decrease in senior notes is primarily due to the foreign exchange impact of translating the Euro denominated debt into U.S. dollars, the Company's reporting currency.
See section F. Tabular Disclosures of Contractual Obligations below for further details of obligations of the Company. See Notes 9, 10 and 11 to the Consolidated Financial Statements in Item 18 of this report for a further discussion related to the Company's indebtedness and shareholders' equity, and Operating Results above for a discussion of the Company’s net income for the year ended December 31, 2019. See also Consolidated Statements of Shareholders' Equity within the Consolidated Financial Statements in Item 18 of this report.
Liquidity and Cash Flows
Liquidity is a measure of the Company’s ability to access sufficient cash flows to meet the short-term and long-term cash requirements of its business operations.
The Company aims to be a reliable and financially secure partner to its cedants. This means that the Company must maintain sufficient liquidity at all times so that it can support its cedants by settling claims quickly. The Company generates cash flows primarily from its underwriting and investment operations. Management believes that a profitable, well-run reinsurance organization will generate sufficient cash from premium receipts to pay claims, acquisition costs and other expenses in most years. To the extent that underwriting cash flows are not sufficient to cover operating cash outflows in any year, the Company may utilize cash flows generated from investments and may ultimately liquidate assets from its investment portfolio. Management ensures that its liquidity requirements are supported by maintaining a high quality, well balanced and liquid investment grade investment portfolio, and by matching within certain risk tolerance limits the duration and currency of its investments with that of its net reinsurance liabilities.
Management believes that its significant cash flows from operations and high quality liquid investment portfolio will provide sufficient liquidity for the foreseeable future to meet its present requirements. At December 31, 2019 and 2018, the Company held cash and cash equivalents of $1,484 million and $878 million, respectively.
The Company’s Consolidated Statements of Cash Flows are included in the Consolidated Financial Statements in Item 18 of this report. Explanations of the cash flows presented in the Consolidated Statements of Cash Flows are as follows:
Net cash provided by operating activities, which includes cash flows related to underwriting operations and net investment income, was $999 million in 2019 compared to $447 million in 2018 and $243 million in 2017. The increase in 2019 compared to 2018 was primarily driven by increased cash flow from underwriting operations, due to increased premium collections in line with business growth and lower loss payments related to large catastrophic and large loss events, partially offset by higher payments for attritional losses. The increase in 2018 compared to 2017 was driven by increases in cash flow from underwriting operations.
Net cash used in investing activities was $118 million in 2019 compared to net cash used in investing activities of $1,261 million in 2018 and net cash provided by investing activities of $99 million in 2017. The net cash used in investing activities in 2019 was primarily driven by purchases of other invested assets and short-term investments, offset by net sales of fixed maturities during 2019. The net cash used in investing activities in 2018 was primarily driven by purchases of fixed maturities and short-term investments and efforts made during 2018 to optimize yield on excess cash. The net cash provided by investing activities in 2017 was a result of redemptions of securities to change investment portfolio mix and to fund financing activities, partially offset by cash used to fund the Aurigen acquisition and to invest in public equity funds.
Net cash used in financing activities was $268 million in 2019 compared to $94 million in 2018 and $387 million in 2017. The net cash used in financing activities for both 2019 and 2018 was driven primarily by dividends paid to common and preferred shareholders. The net cash used in financing activities for 2017 was driven by dividends paid to common and preferred shareholders and a redemption of debt acquired in the Aurigen acquisition of $207 million.
In 2020, the Company expects to continue to generate positive operating cash flows, absent unknown events or catastrophic events or unanticipated factors that could result in negative operating cash flows in the future. Specifically, the Company expects cash flows from operating activities to continue to be sufficient to cover claims payments, absent large catastrophic or other large loss activity.

53

The Company’s ability to pay common and preferred shareholder dividends, interest payments on debt, and certain corporate expenses is dependent mainly on cash dividends from PartnerRe Bermuda, PartnerRe Europe, PartnerRe U.S. and PartnerRe Asia (collectively, the reinsurance subsidiaries), which are the Company’s most significant subsidiaries. The payment of such dividends by the reinsurance subsidiaries to the Company is limited under Bermuda, Irish and Singapore laws and certain statutes of various U.S. states in which PartnerRe U.S. is licensed to transact business. The restrictions are generally based on net income and/or certain levels of policyholders’ earned surplus as determined in accordance with the relevant statutory accounting practices.
The reinsurance subsidiaries’ dividend restrictions at December 31, 2019 are described in Note 11 to the Consolidated Financial Statements in Item 18 of this report. As a result of the acquisition of the Company by EXOR N.V. (subsequently renamed EXOR Nederland N.V.) and the preferred share exchange offer in 2016, the Company's payment of dividends on common shares declared with respect to any fiscal quarter is restricted to an amount not exceeding 67% of net income per fiscal quarter until December 31, 2020. If the Company does not make aggregate distributions of all of the distributable amounts during any fiscal quarter, such remaining amounts will carryover and are available for dividends in subsequent fiscal quarters, regardless of the Company’s Net income or loss during such subsequent fiscal quarters.
The reinsurance subsidiaries of the Company depend upon cash inflows from the collection of premiums as well as investment income and proceeds from the sales and maturities of investments to meet their obligations. Cash outflows are in the form of claims payments, purchases of investments, other expenses, income tax payments, intercompany payments as well as dividend payments to the respective parent company. See section F. Tabular Disclosures of Contractual Obligations below for further details of obligations of the Company.
Historically, the Company, through its operating subsidiaries, has generated sufficient cash flows to meet its obligations. Because of the inherent volatility of the business written by the Company, the seasonality in the timing of payments by cedants, the irregular timing of loss payments, the impact of a change in interest rates and credit spreads on the investment income as well as variability in coupon payment dates for fixed income securities, cash flows from operating activities may vary significantly between periods. In the event that paid losses accelerate beyond the ability to fund such payments from operating cash flows, the Company would use its cash and cash equivalents balances available or liquidate a portion of its high quality and liquid investment portfolio. As discussed in the Investments section below, the Company’s investments and cash and cash equivalents totaled $17.8 billion at December 31, 2019, of which $12.8 billion were cash and cash equivalents and government issued or investment grade fixed income securities.
Financial strength ratings and senior unsecured debt ratings represent the opinions of rating agencies on the Company’s capacity to meet its obligations. In the event of a significant downgrade in ratings, the Company’s ability to write business and to access the capital markets could be impacted. Some of the Company’s reinsurance treaties contain special funding and termination clauses that would be triggered in the event the Company or one of its subsidiaries is downgraded by one of the major rating agencies to levels specified in the treaties, or the Company’s capital is significantly reduced. If such an event were to occur, the Company would be required, in certain instances, to post collateral in the form of letters of credit and/or trust accounts against existing outstanding losses, if any, related to the treaty. In a limited number of instances, the subject treaties could be canceled retroactively or commuted by the cedant.
The Company’s current financial strength ratings are as follows:
 
 
Rating (1)
Standard & Poor’s
  
A+
Moody’s (2)
  
A1
A.M. Best
  
A+
 
(1) The Company's outlook from each rating agency in the table above is stable.
(2) Applies to Partner Reinsurance Company Ltd. and Partner Reinsurance Company of the U.S.

Credit Agreements
In the normal course of its operations, the Company enters into agreements with financial institutions to obtain unsecured and secured letter of credit facilities. These facilities are used for the issuance of letters of credit. Certain agreements require the letters of credit to be fully secured with cash, government bonds and/or investment grade bonds. The agreements include default covenants, which could require the Company to fully secure the outstanding letters of credit to the extent that the facility is not already fully secured and/or result in the Company not being allowed to issue any new letters of credit. See Note 16 to the Consolidated Financial Statements in Item 18 of this report for further details.

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Table of Contents

Investments
The Company’s total invested assets of $17,911 million and $16,383 million at December 31, 2019 and 2018, respectively, are comprised of total investments, cash and cash equivalents, and accrued interest. The components and carrying values of the Company’s total investments, and the percentages of total investments, at December 31, 2019 and 2018 were as follows (in millions of U.S. dollars, except percentages):
 
 
December 31, 2019
 
December 31, 2018
Fixed maturities
 
$
10,681

 
66
%
 
$
12,640

 
82
%
Short-term investments
 
1,003

 
6

 
493

 
3

Equities
 
1,295

 
8

 
694

 
5

Investments in real estate
 
72

 
—

 
73

 
—

Other invested assets
 
3,266

 
20

 
1,489

 
10

Total investments (1)
 
$
16,317

 
100
%
 
$
15,389

 
100
%
 
(1)
In addition to the total investments shown in the above table, the Company held cash and cash equivalents of $1,484 million and $878 million at December 31, 2019 and 2018, respectively, and accrued interest of $110 million and $116 million at December 31, 2019 and 2018, respectively.
The majority of the Company’s investments are carried at fair value with changes in fair value included in Net realized and unrealized investment gains or losses in the Consolidated Statements of Operations. Refer to Investment Result above in the Operating results section and Notes 3 and 4 to the Consolidated Financial Statements for further details of the composition of the investments and changes in unrealized gains or losses on investments. See also Note 17 to the Consolidated Financial Statements in Item 18 of this report for details on the composition of and changes in Investments in real estate during the year.
The cost, fair value and credit ratings of the Company’s fixed maturities and short-term investments carried at fair value at December 31, 2019 were as follows (in millions of U.S. dollars, except percentages):
 
 
 
 
 
 
Credit Rating (2)
 
 
December 31, 2019
 
Cost (1)
 
Fair
Value
 
AAA
 
AA
 
A
 
BBB
 
Below
investment
grade
 
Unrated
Fixed maturities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and sponsored enterprises
 
$
1,410

 
$
1,422

 
$
—

 
$
1,422

 
$
—

 
$
—

 
$
—

 
$
—

U.S. states, territories and municipalities
 
125

 
157

 
1

 
12

 
1

 
—

 
—

 
143

Non-U.S. sovereign government, supranational and government related
 
3,232

 
3,255

 
2,357

 
647

 
227

 
20

 
—

 
4

Corporate
 
2,583

 
2,662

 
7

 
300

 
1,305

 
909

 
129

 
12

Asset-backed securities
 
18

 
18

 
—

 
—

 
—

 
—

 
18

 
—

Residential mortgage-backed securities
 
3,100

 
3,167

 
577

 
2,590

 
—

 
—

 
—

 
—

Fixed maturities
 
$
10,468

 
$
10,681

 
$
2,942

 
$
4,971

 
$
1,533

 
$
929

 
$
147

 
$
159

Short-term investments
 
1,004

 
1,003

 
45

 
769

 
173

 
2

 
14

 
—

Total fixed maturities and short-term investments
 
$
11,472

 
$
11,684

 
$
2,987

 
$
5,740

 
$
1,706

 
$
931

 
$
161

 
$
159

% of Total fixed maturities and short-term investments
 
 
 
26
%
 
49
%
 
14
%
 
8
%
 
2
%
 
1
%
 
(1)
Cost is amortized cost for fixed maturities and short-term investments.
(2)
All references to credit rating reflect Standard & Poor’s (or estimated equivalent) ratings. Investment grade reflects a rating of BBB- or above.
At December 31, 2019, the Company held $42 million of government bonds issued by Spain and Ireland with a maturity less than five years. The Company did not have any other investments in securities issued by peripheral EU sovereign governments (Portugal, Italy, Ireland, Greece and Spain) at December 31, 2019.

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Table of Contents

At December 31, 2019, approximately 99% of the Company’s fixed maturity and short-term investments were publicly traded and approximately 97% were rated investment grade (BBB- or higher) by Standard & Poor’s (or estimated equivalent). The average credit quality, average yield to maturity and expected average duration of the Company’s fixed maturities and short-term investments at December 31, 2019 and 2018 were as follows:
 
December 31, 2019
 
December 31, 2018
Average credit quality
AA

 
 
A

 
Average yield to maturity
2.8

%
 
3.2

%
Expected average duration
2.7

years
 
3.9

years
The average credit quality of fixed maturities and short-term investments at December 31, 2019 has increased compared to December 31, 2018 due to a reallocation within the fixed maturities and short-term investment portfolios during 2019. Within these portfolios, actions were taken to reduce exposure to lower rated investment grade credit and reinvest certain proceeds in highly rated governments, supranationals and mortgage-backed securities. The total fixed maturities and short-term investments portfolio of $11,684 million at December 31, 2019 has decreased compared to December 31, 2018 of $13,133 million, primarily as a result of allocating certain funds to the corporate loan portfolio included in Other invested assets as described further below.
The average yield to maturity on fixed maturities and short-term investments decreased by 0.4% primarily due to decreases in U.S. and European risk-free interest rates.
At December 31, 2019 and 2018, the expected average duration of fixed maturities and short-term investments was 2.7 years and 3.9 years, respectively, compared to the duration of reinsurance liabilities of approximately 4.3 years and 4.8 years, respectively. The decrease in expected average duration of fixed maturities and short-term investments reflects a lower duration target on excess fixed income as yield curves continue their flattening trend.
Maturity Distribution
The distribution of fixed maturities and short-term investments at December 31, 2019 by contractual maturity date was as follows (in millions of U.S. dollars):
December 31, 2019
 
Cost
 
Fair
Value
One year or less
 
$
1,673

 
$
1,674

More than one year through five years
 
3,227

 
3,276

More than five years through ten years
 
2,878

 
2,939

More than ten years
 
576

 
610

Subtotal
 
$
8,354

 
$
8,499

Mortgage/asset-backed securities
 
3,118

 
3,185

Total
 
$
11,472

 
$
11,684

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

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Table of Contents

Corporate bonds included in Fixed maturities
Corporate bonds are comprised of obligations of U.S. and foreign corporations. The fair values of corporate bonds issued by U.S. and foreign corporations by economic sector at December 31, 2019 were as follows (in millions of U.S. dollars, except percentages):
December 31, 2019
 
U.S.
 
Foreign
 
Total Fair
Value
 
Percentage to Total Fair Value of Corporate Bonds
Sector
 
 
 
 
 
 
 
 
Financial
 
$
547

 
$
767

 
$
1,314

 
49
%
Consumer, Cyclical
 
175

 
93

 
268

 
10

Energy
 
127

 
117

 
244

 
9

Insurance
 
191

 
23

 
214

 
8

Consumer, Non-cyclical
 
119

 
47

 
166

 
6

Industrial
 
88

 
37

 
125

 
5

Utilities
 
46

 
60

 
106

 
4

Communications
 
69

 
7

 
76

 
3

Real estate and real estate investment trusts
 
41

 
28

 
69

 
3

Basic Materials
 
16

 
15

 
31

 
1

Technology
 
28

 
2

 
30

 
1

Longevity and Mortality Bonds
 
19

 
—

 
19

 
1

Total
 
$
1,466

 
$
1,196

 
$
2,662

 
100
%
% of Total
 
55
%
 
45
%
 
100
%
 
 
At December 31, 2019, other than the U.S., no country accounted for more than 15% of the Company’s corporate bonds. At December 31, 2019, the ten largest issuers accounted for 32% of the corporate bonds held by the Company (5% of total investments and cash and cash equivalents) and no single issuer accounted for more than 4% of total corporate bonds (1% of total investments and cash and cash equivalents).
Within the finance sector, 97% of corporate bonds were rated investment grade and 58% were rated A- or better at December 31, 2019.
Asset-backed and Residential Mortgage-backed Securities included in Fixed maturities
Asset-backed securities and residential mortgage-backed securities by U.S. and non-U.S. originations and the related fair value and credit ratings at December 31, 2019 were as follows (in millions of U.S. dollars, except percentages):
 
 
Credit Rating (1)
December 31, 2019
 
GNMA (2)
 
GSEs (3)
 
AAA
 
AA
 
A
 
Below
investment
grade /
Unrated
 
Fair Value
Asset-backed securities, non-U.S.
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
18

 
$
18

Residential mortgage-backed securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S.
 
$
887

 
$
1,699

 
$
539

 
$
—

 
$
—

 
$
—

 
$
3,125

Non-U.S.
 
—

 
—

 
38

 
4

 
—

 
—

 
42

Residential mortgage-backed securities
 
$
887

 
$
1,699

 
$
577

 
$
4

 
$
—

 
$
—

 
$
3,167

Total
 
$
887

 
$
1,699

 
$
577

 
$
4

 
$
—

 
$
18

 
$
3,185

% of Total
 
28
%

53
%

18
%

—
%
 
—
%
 
1
%
 
100
%
 
(1)
All references to credit rating reflect Standard & Poor’s (or estimated equivalent).
(2)
GNMA represents the Government National Mortgage Association. The GNMA, or Ginnie Mae as it is commonly known, is a wholly-owned U.S. government corporation within the Department of Housing and Urban Development which guarantees mortgage loans of qualifying first-time home buyers and low-income borrowers.
(3)
GSEs, or government sponsored enterprises, includes securities that carry the implicit backing of the U.S. government and securities issued by U.S. government agencies.

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Table of Contents

Residential mortgage-backed securities include U.S. residential mortgage-backed securities, which generally have a low risk of default. The main issuers of these securities are U.S. government agencies or GSEs, which set standards on the mortgages before accepting them into the program. Although these U.S. government backed securities do not carry a formal rating, they are generally considered to have a credit quality equivalent to or greater than AA+ corporate issues. They are considered prime mortgages and the major risk is uncertainty of the timing of prepayments.
Short-term Investments
Short-term investments include U.S. and non-U.S. government obligations and corporate bonds. Short-term investments were $1,003 million at December 31, 2019, up from $493 million at December 31, 2018, primarily due to purchases of U.S. government bonds with duration to maturity of less than one year. At December 31, 2019, 99% of short-term investments were rated BBB or higher by Standard & Poor’s (or estimated equivalent).
Equities
Investments in equities increased to $1,295 million at December 31, 2019 from $694 million at December 31, 2018. The increase in equities included $153 million of investments in several new funds and $385 million in net unrealized gains on two Exor managed public equity funds, which represented $948 million, or 73% at December 31, 2019, and $563 million, or 81% at December 31, 2018, of the Company's total Equities. See also Notes 3, 4 and 17 to the Consolidated Financial Statements in Item 18 of this report for further details for Equities.
Investments in Real Estate
Investments in real estate are valued at cost, less any write down for impairment when the changes in circumstances indicate the carrying value may not be recoverable and exceeds its estimated fair value. See also Notes 2(g) and 17 to the Consolidated Financial Statements in Item 18 of this report for further details.
Other Invested Assets
Other invested assets are comprised of investments in corporate loans, notes and loans receivable and notes securitization, private equities, and derivative instruments accounted for at fair value in addition to certain investments that are accounted for using the equity method of accounting. At December 31, 2019 and 2018, Other invested assets totaled $3,266 million and $1,489 million, respectively.
The largest single investment in Other invested assets is an investment in Almacantar of $483 million at December 31, 2019 and $498 million at December 31, 2018, accounted for under the equity method (see Note 4(f) to the Consolidated Financial Statements in Item 18 of this report for further details).
Other invested assets also includes a portfolio of third-party, individually managed privately issued corporate loans carried at fair value of $1,879 million at December 31, 2019, which increased from $402 million at December 31, 2018. These corporate loans include $1,439 million and $351 million at December 31, 2019 and 2018, respectively, of U.S. bank loans under an externally managed mandate. The mandate primarily invests in U.S. floating rate, first lien, senior secured broadly syndicated loans with a focus on facility sizes greater than $300 million. The weighted average credit rating as at December 31, 2019 was BB-/B+ with the single largest issuer being 2.1% of the Company's individually managed corporate loan portfolio. The corporate loan portfolio also included $440 million and $51 million, respectively, of other privately issued corporate loans at December 31, 2019 and 2018.
Other invested assets also includes private equities (mainly third party private equity funds) with a fair value of $534 million at December 31, 2019, which increased from $373 million at December 31, 2018.
See Notes 3, 4 and 5 to the Consolidated Financial Statements in Item 18 of this report for further details.
Funds Held by Reinsured Companies
The Company writes certain business on a funds held basis. Under funds held contractual arrangements, the cedant retains the net funds that would have otherwise been remitted to the Company and credits the net fund balance with investment income. The Company does not legally own or directly control the investments underlying its funds held assets and only has recourse to the cedant for the receivable balances and no claim to the underlying securities that support the balances. Decisions as to purchases and sales of assets underlying the funds held balances are made by the cedant; in some circumstances, investment guidelines regarding the minimum credit quality of the underlying assets may be agreed upon between the cedant and the Company as part of the reinsurance agreement, or the Company may participate in an investment oversight committee regarding the investment of the net funds, but investment decisions are not otherwise influenced by the Company.

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At December 31, 2019 and 2018, the Company recorded $815 million and $830 million, respectively, of funds held assets. The majority of the funds held assets relate to contracts that earned investment income based upon a predetermined interest rate, either fixed contractually at the inception of the contract or based upon a recognized market index (e.g., LIBOR). Under these contractual arrangements, there are no specific assets linked to the funds held assets, and the Company is only exposed to the credit risk of the cedant.
Non-life and Life and Health Reserves
See Notes 2(b) and 7 to the Consolidated Financial Statements in Item 18 of this report for details of the Company’s loss reserves, including disclosures required by the SEC Industry Guide 4: Disclosures concerning unpaid claims and claim adjustment expenses of property-casualty insurance underwriters.
Non-life Reserves
Loss reserves represent estimates of amounts an insurer or reinsurer ultimately expects to pay in the future on claims incurred at a given time, based on facts and circumstances known at the time that the loss reserves are established. It is possible that the total future payments may exceed, or be less than, such estimates. The estimates are not precise in that, among other things, they are based on predictions of future developments and estimates of future trends in claim severity, frequency and other variable factors such as inflation. During the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Despite such adjustments, the ultimate future liability may exceed or be less than the revised estimates.
As part of the reserving process, insurers and reinsurers review historical data and anticipate the impact of various factors such as legislative enactments and judicial decisions that may affect potential losses from casualty claims, changes in social and political attitudes that may increase exposure to losses, mortality and morbidity trends and trends in general economic conditions. This process assumes that past experience, adjusted for the effects of current developments, is an appropriate basis for anticipating future events.
The Company’s gross reserves by segment and the total ceded and net non-life reserves at December 31, 2019 and 2018 were as follows (in millions of U.S. dollars):
 
 
December 31, 2019
 
December 31, 2018
P&C segment and Corporate and Other (1)
 
$
7,254

 
$
7,159

Specialty segment
 
3,109

 
2,736

Gross non-life reserves
 
$
10,363

 
$
9,895

Ceded non-life reserves
 
(755
)
 
(851
)
Net non-life reserves
 
$
9,608

 
$
9,044

 
(1)
Non-life reserves allocated to Corporate and Other totaled $6 million and $9 million at December 31, 2019 and 2018, respectively.
Net non-life reserves increased from December 31, 2018 to December 31, 2019 primarily due to growth in the business and the occurrence of large catastrophic events in 2019. The changes in these reserves and the reconciliation of the gross and net total non-life reserves for the years ended December 31, 2019, 2018 and 2017 are presented and discussed further in Note 7(a) to the Consolidated Financial Statements in Item 18 of this report.
The net favorable prior year loss development on prior accident years was $57 million for the year ended December 31, 2019 primarily resulting from favorable loss emergence across most lines of business within the P&C segment, partially offset by net adverse development within the Specialty segment. See Note 7(a) to the Consolidated Financial Statements in Item 18 for further details related to the 2019 net favorable loss development compared to 2018 and 2017.
See also Note 7(c) to the Consolidated Financial Statements in Item 18 of this report for details of the net incurred and paid losses and loss expenses development by accident year, the total of incurred but not reported liabilities plus expected development on reported claims, and the net liability as at December 31, 2019 for total non-life and each of the P&C and Specialty segments.

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The gross reserves reported by cedants (case reserves), those estimated by the Company, including additional case reserves (ACRs) and amounts for losses incurred but not yet reported to the Company (IBNR), and the total gross, ceded and net loss reserves recorded for the Company’s non-life operations were as follows at December 31, 2019 (in millions of U.S. dollars):
Reserving lines
 
Case reserves
 
ACRs
 
IBNR
reserves
 
Total gross
loss reserves
recorded
 
Ceded loss
reserves
 
Net non-life reserves
recorded
P&C and Corporate and Other (1)
 
$
2,965

 
$
110

 
$
4,179

 
$
7,254

 
$
(428
)
 
$
6,826

Specialty
 
1,238

 
48

 
1,823

 
3,109

 
(327
)
 
2,782

Total Non-life reserves
 
$
4,203

 
$
158

 
$
6,002

 
$
10,363

 
$
(755
)
 
$
9,608

 
(1)
Non-life reserves allocated to Corporate and Other included $3 million, $nil and $3 million of case reserves, ACR, and IBNR reserves, respectively, at December 31, 2019.
The net non-life loss reserves represent the Company’s best estimate of future losses and loss expense amounts based on the information available at December 31, 2019. Loss reserves rely upon estimates involving actuarial and statistical projections at a given time that reflect the Company’s expectations of the costs of the ultimate settlement and administration of claims. Estimates of ultimate liabilities are contingent on many future events and the eventual outcome of these events may be different from the assumptions underlying the reserve estimates. In the event that the business environment and social trends diverge from historical trends, the Company may have to adjust its loss reserves to amounts falling significantly outside its current estimate. These estimates are regularly reviewed and the ultimate liability may be in excess of, or less than, the amounts provided, for which any adjustments will be reflected in the period in which the need for an adjustment is determined.
The Company’s best estimates are point estimates within a reasonable range of actuarial liability estimates. These ranges are developed using stochastic simulations and other techniques and provide an indication as to the degree of variability of the loss reserves. The Company interprets the ranges produced by these techniques as confidence intervals around the point estimates for each Non-life sub-segment. However, due to the inherent volatility in the business written by the Company, there can be no assurance that the final settlement of the loss reserves will fall within these ranges.
The point estimates related to net Non-life reserves recorded by the Company and the range of actuarial estimates at December 31, 2019 were as follows (in millions of U.S. dollars):
 
 
Recorded Point
Estimate
 
High
 
Low
P&C and Corporate and Other (1)
 
$
6,826

 
$
7,670

 
$
5,589

Specialty
 
$
2,782

 
$
3,063

 
$
2,409

Total net Non-life reserves
 
$
9,608

 
 
 
 
 
(1) Non-life reserves allocated to Corporate and Other totaled $6 million at December 31, 2019.
It is not appropriate to add together the ranges of each segment in an effort to determine a high and low range around the Company’s total carried loss reserves.
Of the Company’s $9,608 million of net non-life reserves at December 31, 2019, a portion of this is considered to have a long reporting tail, including the Company’s exposure to asbestos and environmental claims. See Note 7 to the Consolidated Financial Statements in Item 18 of this report for further details.
Non-life Reserving Methodology
Because a significant amount of time can elapse between the assumption of risk, occurrence of a loss event, the reporting of the event to an insurance company (the primary company or the cedant), the subsequent reporting to the reinsurance company (the reinsurer) and the ultimate payment of the claim on the loss event by the reinsurer, the Company’s non-life reserves (loss reserves) are based largely upon estimates.
The Company categorizes loss reserves into three types of reserves: reported outstanding loss reserves (case reserves), ACRs and IBNR. The Company updates its estimates for each of the aforementioned categories on a quarterly basis using information received from its cedants.
Case reserves represent unpaid losses reported by the Company’s cedants and recorded by the Company.
ACRs are established for particular circumstances where, on the basis of individual loss reports, the Company estimates that the particular loss or collection of losses covered by a treaty may be greater than those advised by the cedant.

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IBNR reserves represent a provision for claims that have been incurred but not yet reported to the Company, as well as future loss development on losses already reported, in excess of the case reserves and ACRs. Unlike case reserves and ACRs, IBNR reserves are often calculated at an aggregated level and cannot usually be directly identified as reserves for a particular loss or treaty.
The Company also estimates the future unallocated loss adjustment expenses (ULAE) associated with the loss reserves and these form part of the Company’s loss adjustment expense reserves.
The amount of time that elapses before a claim is reported to the cedant and then subsequently reported to the reinsurer is commonly referred to in the industry as the reporting tail. Lines of business for which claims are reported quickly are commonly referred to as short-tail lines and lines of business for which a longer period of time elapses before claims are reported to the reinsurer are commonly referred to as long-tail lines. In general, for reinsurance, the time lags are longer than for primary business due to the delay that occurs between the cedant becoming aware of a loss and reporting the information to its reinsurer(s). The delay varies by reinsurance market (country of cedant), type of treaty, whether losses are first paid by the cedant and the size of the loss. The delay could vary from a few weeks to a year or sometimes longer. For all lines, the Company’s objective is to estimate ultimate losses and loss expenses. Total loss reserves are then calculated by subtracting losses paid. Similarly, IBNR reserves are calculated by subtraction of case reserves and ACRs from total loss reserves.
The Company analyzes its ultimate losses and loss expenses after consideration of the loss experience of various reserving cells. The Company assigns treaties to reserving cells and allocates losses from the treaty to the reserving cell. The reserving cells are selected in order to ensure that the underlying treaties have homogeneous loss development characteristics (e.g., reporting tail) but are large enough to make estimation of trends credible. The selection of reserving cells is reviewed annually and changes over time as the business of the Company evolves. For each reserving cell, the Company tabulates losses in reserving triangles that show the total reported or paid claims at each financial year end by underwriting year cohort. An underwriting year is the year during which the reinsurance treaty was entered into as opposed to the year in which the loss occurred (accident year), or the calendar year for which financial results are reported. For each reserving cell, the Company’s estimates of loss reserves are reached after a review of the results of several commonly accepted actuarial projection methodologies. In selecting its best estimate, the Company considers the appropriateness of each methodology to the individual circumstances of the reserving cell and underwriting year for which the projection is made. The methodologies that the Company employs include, but may not be limited to, paid and reported Chain Ladder methods, Expected Loss Ratio method and paid and reported Bornhuetter-Ferguson (B-F) methods. In addition, the Company uses other methodologies to estimate liabilities for specific types of claims. For example, reserves established for the catastrophe line are primarily a function of the presence or absence of catastrophic events during the year, and the complexity and uncertainty associated with estimating unpaid losses from these large disclosed events. Internal and vendor catastrophe models are typically used in the estimation of loss and loss expenses at the early stages of catastrophe losses before loss information is reported to the reinsurer. In addition, reserves are also established in consideration of mid-sized and attritional loss events that occur during a year. In the case of asbestos and environmental claims, the Company has established reserves for future losses and allocated loss expenses based on the results of periodic actuarial studies, which consider the underlying exposures of the Company’s cedants.
The reserve methodologies employed by the Company are dependent on data that the Company collects. This data consists primarily of loss amounts and loss payments reported by the Company’s cedants, and premiums written and earned reported by cedants or estimated by the Company. The actuarial methods used by the Company to project loss reserves that it will pay in the future do not generally include methodologies that are dependent on claim counts reported, claim counts settled or claim counts open as, due to the nature of the Company’s business, this information is not routinely provided by cedants for every treaty.
For a description of the reserving methods commonly employed by the Company see Note 7 to the Consolidated Financial Statements in Item 18 of this report. Each of these methods have certain advantages and disadvantages which the Company takes into consideration when determining which methods to use and method weights.
The main strengths of the Chain Ladder (CL) Development method are that it is reactive to loss emergence (payments) and that it makes full use of historical experience on claim emergence (payments). For homogeneous low volatility lines, under stable economic conditions, the method can often produce good estimates of ultimate liabilities and reserves. However, the method has weaknesses when the underlying assumption of stable patterns is not true. This may be the consequence of changes in the mix of business, changes in claim inflation trends, changes in claim reporting practices or the presence of large claims, among other things. Furthermore, the method tends to produce volatile estimates of ultimate liabilities in situations where there is volatility in reported (paid) patterns. In particular, when the expected percentage reported (paid) is low, small deviations between actual and expected claims can lead to very volatile estimates of ultimate liabilities and reserves. Consequently, this method is often unsuitable for projections at early development stages of an underwriting year. Finally, the method fails to incorporate any information regarding market conditions, pricing, etc., which could improve the estimate of liabilities and reserves. It therefore tends not to perform very well in situations where there are rapidly changing market conditions.
The Expected Loss Ratio (ELR) method is insensitive to actual reported or paid losses therefore it is usually inappropriate at later stages of development, but can often be useful at the early stages of development when very few losses have been reported or

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paid, and the principal sources of information available to the Company consist of information obtained during pricing and qualitative information supplied by the cedant.
The Bornhuetter-Ferguson (B-F) methods (Reported or Paid) tend to provide less volatile indications at early stages of development and reflect changes in the external environment, however, this method can be slow to react to emerging loss development (payment). In particular, to the extent that the a priori loss ratios prove to be inaccurate (and are not revised), the B-F methods will produce loss estimates that take longer to converge with the final settlement value of loss liabilities.
The reserving methods used by the Company are dependent on a number of key parameter assumptions. The principal parameter assumptions underlying the methods used by the Company are:
•
the loss development factors used to form an expectation of the evolution of reported and paid claims for several years following the inception of the underwriting year. These are often derived by examining the Company’s data after due consideration of the underlying factors listed below. In some cases, where the Company lacks sufficient volume to have statistical credibility, external benchmarks are used to supplement the Company’s data;
•
the tail factors used to reflect development of paid and reported losses after several years have elapsed since the inception of the underwriting year;
•
the a priori loss ratios used as inputs in the B-F methods; and
•
the selected loss ratios used as inputs in the Expected Loss Ratio method.
As an example of the sensitivity of the Company’s reserves to reserving parameter assumptions by reserving line, the effect on the Company’s reserves of higher/lower a priori loss ratio selections, higher/lower loss development factors and higher/lower tail factors based on amounts recorded at December 31, 2019 was as follows (in millions of U.S. dollars):
 
 
P&C
 
Specialty
A Priori Loss Ratio +5%
 
363

 
189

Loss Development Factors (up to 10 years) 6 months longer
 
577

 
430

Tail Loss Development Factors higher by 5% (1)
 
336

 
129

 
 
 
 
 
A Priori Loss Ratio -5%
 
(364
)
 
(189
)
Loss Development Factors (up to 10 years) 6 months faster
 
(318
)
 
(180
)
Tail Loss Development Factors lower by 5% (1)
 
(260
)
 
(89
)
 
(1)
Tail factors are defined as aggregate development factors after 10 years from the inception of an underwriting year.
The Company believes that the illustrated sensitivities to the reserving parameter assumptions are indicative of the potential variability inherent in the estimation process of those parameters. Some reserving lines show little sensitivity to a priori loss ratio, loss development factor or tail factor as the Company may use reserving methods such as the Expected Loss Ratio method in several of its reserving cells within those lines. It is not appropriate to sum the total impact for a specific factor or the total impact for a specific reserving line as the lines of business are not perfectly correlated.
The validity of all parameter assumptions used in the reserving process is reaffirmed on a quarterly basis. Reaffirmation of the parameter assumptions means that the actuaries determine that the parameter assumptions continue to form a sound basis for projection of future liabilities. Parameter assumptions used in projecting future liabilities are themselves estimates based on historical information. As new information becomes available (e.g., additional losses reported), the Company’s actuaries determine whether a revised estimate of the parameter assumptions that reflects all available information is consistent with the previous parameter assumptions employed. In general, to the extent that the revised estimate of the parameter assumptions are within a close range of the original assumptions, the Company determines that the parameter assumptions employed continue to form an appropriate basis for projections and continue to use the original assumptions in its models. In this case, any differences could be attributed to the imprecise nature of the parameter estimation process. However, to the extent that the deviations between the two sets of estimates are not within a close range of the original assumptions, the Company reacts by adopting the revised assumptions as a basis for its reserve models. Notwithstanding the above, even where the Company has experienced no material deviations from its original assumptions during any quarter, the Company will generally review and appropriately revise the reserving parameter assumptions at least once a year to reflect all accumulated available information.
In addition to examining the data, the selection of the parameter assumptions is dependent on several underlying factors. The Company’s actuaries review these underlying factors and determine the extent to which these are likely to be stable over the time frame during which losses are projected, and the extent to which these factors are consistent with the Company’s data. If these

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factors are determined to be stable and consistent with the data, the estimation of the reserving parameter assumptions are mainly carried out using actuarial and statistical techniques applied to the Company’s data. To the extent that the actuaries determine that they cannot continue to rely on the stability of these factors, the statistical estimates of parameter assumptions are modified to reflect the direction of the change. The main underlying factors upon which the estimates of reserving parameters are predicated are:
•
the cedant’s business practices will proceed as in the past with no material changes either in submission of accounts or cash flows;
•
any internal delays in processing accounts received by the cedant are not materially different from that experienced historically, and hence the implicit reserving allowance made in loss reserves through the methods continues to be appropriate;
•
case reserve reporting practices, particularly the methodologies used to establish and report case reserves, are unchanged from historical practices;
•
the Company’s internal claim practices, particularly the level and extent of use of ACRs, are unchanged;
•
historical levels of claim inflation can be projected into the future and will have no material effect on either the acceleration or deceleration of claim reporting and payment patterns;
•
the selection of reserving cells results in homogeneous and credible future expectations for all business in the cell and any changes in underlying treaty terms are either reflected in cell selection or explicitly allowed in the selection of trends;
•
in cases where benchmarks are used, they are derived from the experience of similar business; and
•
the Company can form a credible initial expectation of the ultimate loss ratio of recent underwriting years through a review of pricing information, supplemented by qualitative information on market events.
The Company’s best estimate of total loss reserves is typically in excess of the midpoint of the actuarial ultimate liability estimate. The Company believes that there is potentially significant risk in estimating loss reserves for long-tail lines of business and for immature underwriting years that may not be adequately captured through traditional actuarial projection methodologies as these methodologies usually rely heavily on projections of prior year trends into the future. In selecting its best estimate of future liabilities, the Company considers both the results of actuarial point estimates of loss reserves as well as the potential variability of these estimates as captured by a reasonable range of actuarial liability estimates. The selected best estimates of reserves are always within the reasonable range of estimates indicated by the Company’s actuaries. In determining the appropriate best estimate, the Company reviews (i) the position of overall reserves within the actuarial reserve range, (ii) the result of bottom up analysis by underwriting year reflecting the impact of parameter uncertainty in actuarial calculations, and (iii) specific qualitative information that may have an effect on future claims but which may not have been adequately reflected in actuarial estimates, such as potential for outstanding litigation, claims practices of cedants, etc.
During 2019, 2018 and 2017, the Company reviewed its estimate for prior year losses for the P&C and Specialty segments and, in light of developing data, adjusted its ultimate loss ratios for prior accident years. The net prior year loss development for each segment for the years ended December 31, 2019, 2018 and 2017 is presented in Note 7 to the Consolidated Financial Statements in Item 18 of this report.
Actual losses paid and reported compared with the Company’s expectations, and the changes of the Company’s reserving parameter assumptions in response to the emerging development during the year ended December 31, 2019 were as follows:
•
P&C: Aggregate losses reported in 2019 for the P&C segment were better than Company's expectations as losses for most lines of business continue to emerge below expectations. This was partially offset by adverse activity primarily in U.S. casualty and U.S. multiline business.
•
Specialty: Aggregate losses reported in 2019 for the Specialty segment were worse than Company’s expectations with losses for most underwriting years worse than expected. The worse than expected loss emergence within the Specialty segment was predominantly driven by engineering, multiline and aviation but partially offset by favorable emergence primarily in agriculture and financial risks exposures. The Company reflected this experience by adjusting the selected loss ratios accordingly for these lines of business.
Life and Health Reserves
Life and health reserves relate to the Company’s Life and Health segment, which predominantly includes:
•
mortality business originating in Canada and the United States, mortality and morbidity business, covering death, critical illness and disability risks (with various riders) written in Continental Europe, the U.K., Ireland and in Asia Pacific, and GMDB business primarily written in France, and

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•
longevity business, subdivided into standard annuities written in the U.K, the U.S. and Canada and non-standard annuities written in the U.K.
The Company categorizes life reserves into three types of reserves: case reserves, IBNR and reserves for future policy benefits. Case reserves represent unpaid losses reported by the Company’s cedants and recorded by the Company. IBNR reserves represent a provision for claims that have been incurred but not yet reported to the Company, as well as future loss development on losses already reported, in excess of the case reserves. Reserves for future policy benefits relate to future events occurring on policies that are expected to be in force over an extended period of time. Reserves for future policy benefits represent an estimate of the amount which, together with estimated future premiums and investment income, will be sufficient to pay claims and future benefits, expenses and costs on in-force policies, as such claims and expenses are incurred.
Reserves for future policy benefits are calculated as the present value of future expected claims, benefits and costs to be paid, reduced by the present value of future expected premiums. Such liabilities are established based on methods and underlying assumptions in accordance with U.S. GAAP and applicable actuarial standards. Principal assumptions used in the establishment of reserves for future policy benefits have been determined based upon information reported by ceding companies, supplemented by the Company’s actuarial estimates of mortality, critical illness, persistency and future investment income, with appropriate provision to reflect uncertainty. Case reserves, IBNR reserves and reserves for future policy benefits are generally calculated at the treaty level. The Company updates its estimates for each of the aforementioned categories on a periodic basis using information received from its cedants.
The Company’s gross and net reserves for the Life and Health segment at December 31, 2019 and 2018 were as follows (in millions of U.S. dollars):
 
 
December 31, 2019
 
December 31, 2018
Case reserves
 
$
381

 
$
325

IBNR reserves
 
932

 
775

Reserves for future policy benefits
 
1,104

 
1,098

Total gross Life and health reserves
 
$
2,417

 
$
2,198

Ceded reserves
 
(16
)
 
(12
)
Net Life and health reserves
 
$
2,401

 
$
2,186

The increase in the Life and health reserves in 2019 was primarily due to growth in the business. The net incurred losses for the Company’s life reserves will generally exceed net paid losses in any one given year due to the long-term nature of the liabilities and the growth in the book of business.
Life and Health Reserving Methodology
The Company’s reserving methodologies are as follows:
•
Mortality: The reserves for the short-term mortality/morbidity business consist of case reserves calculated at the treaty level based upon cedant information. IBNR is calculated at the line of business level using the ELR method described above for non-life business.
The reserves for the traditional and limited payment long-duration contracts are established based upon accepted actuarial valuation methods which require us to make certain assumptions regarding future claims and policy benefits and includes a provision for adverse deviation. The provision for adverse deviation contemplates reasonable deviations from the best estimate assumptions for the key risk elements relevant to the product being evaluated, including mortality, disability, critical illness, expenses, and discount rates. The assumptions are locked in at contract inception and are subject to annual loss recognition testing (LRT). LRT occurs at the product group level, based on the manner of acquiring, servicing and measuring profitability of the reinsurance contracts. The LRT framework incorporates deferred acquisition cost (DAC) recoverability testing and involves determining an LRT reserve by re-measuring the policy benefit liabilities using current best estimate actuarial assumptions and current discount rates without any provisions for adverse deviation. If the aggregate LRT reserve is higher than the carrying amount of future policy benefit liabilities, net of DAC and value of life business acquired (VOBA), for a particular product grouping then a loss recognition event occurs. The DAC and VOBA asset balances for the given product grouping are first reduced, and if the balances are fully written off, the reserves will be increased, such that the current best estimate assumptions become the new locked-in basis.
The reserves for the GMDB reinsurance business are established similar to provisions for universal life contracts. Key actuarial assumptions for this business are mortality, lapses, interest rates, expected returns on cash and bonds and stock market performance. For the latter parameter, a stochastic option pricing approach is used and the benefits used in

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calculating the liabilities are based on the average benefits payable over a range of scenarios. The assumptions of investment performance and volatility are consistent with expected future experience of the respective underlying funds available for policyholder investment options. Recorded reserves for GMDB reflect management’s best estimate based upon actuarial indications.
•
Longevity: Reserves for the annuity portfolio of reinsurance contracts within the longevity book are established. Some of these contracts subject the Company to risks arising from policyholder mortality over a period that extends beyond the periods in which premiums are collected. The Reserves for future policy benefits follow the reserving methodology discussed above for long-term traditional mortality.
For standard annuities, the main risk is a higher than expected increase in future life span in the medium to long term. Non-standard annuities are annuities sold by insurance companies to people with aggravated health conditions and are usually medically underwritten on an individual basis and the main risk is the inadequate assessment of the future life span of the insured.
An example of the sensitivity of the Company’s best estimate gross reserves for Life and Health contracts to reserving assumptions by product line at December 31, 2019 was as follows (in millions of U.S. dollars, except percentages):
Reserving lines
 
Factors
 
Change
 
Increase to total
net Life and Health reserves
Longevity
 
 
 
 
 
 
 
Standard and non-standard annuities
 
Mortality improvements per annum
 
+1%
 
$
517

Mortality
 
 
 
 
 
 
 
Long-term and TCI
 
Mortality
 
+10%
 
$
632

GMDB
 
Stock market performance
 
-10%
 
$
4

The mortality sensitivities demonstrate the impact to reserves based on current mortality assumptions. Following the annual review by the Company’s actuaries, if a loss recognition event occurs, the initial assumptions would be revised and could result in an increase to the U.S. GAAP reserves.
It is not appropriate to sum the total impact for a specific reserving line or the total impact for a specific factor because the reinsurance portfolios are not perfectly correlated.
Refer to Note 7 to the Consolidated Financial Statements in Item 18 of this report for disclosures on Life and health reserves.
Reinsurance Recoverable on Paid and Unpaid Losses
The Company has exposure to credit risk related to reinsurance recoverable on paid and unpaid losses. See Note 8 to the Consolidated Financial Statements in Item 18 and Quantitative and Qualitative Disclosures about Market Risk—Counterparty Credit Risk in Item 11 of this report for a discussion of the Company’s risk related to reinsurance recoverable on paid and unpaid losses and the Company’s process to evaluate the financial condition of its reinsurers.
At December 31, 2019 and 2018, the Company recorded $889 million and $897 million, respectively, of reinsurance recoverable on paid and unpaid losses in its Consolidated Balance Sheets, of which $771 million and $863 million, respectively, represents reinsurance recoverable on unpaid losses related to the total Non-life and Life and health reserves. The decrease in the reinsurance recoverable during 2019 was primarily due to a reduction in ceded premiums written and reduced large catastrophic and large losses incurred.
At December 31, 2019, the distribution of the Company’s reinsurance recoverables on total Non-life and Life and health reserves categorized by the reinsurer’s Standard & Poor’s rating was as follows:
Rating Category
 
% of total reinsurance recoverable on unpaid losses
AA- or better
 
8
%
A- to A+
 
28
%
Less than A-
 
—
%
Unrated
 
64
%
Total
 
100
%

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At December 31, 2019, 36% of the Company’s reinsurance recoverable on total Non-life and Life and health reserves were due from reinsurers with A- or better rating from Standard & Poor’s, compared to 33% at December 31, 2018. The remaining amounts included in Unrated were all collateralized as at December 31, 2019 and 2018.
Currency
The Company’s reporting currency is the U.S. dollar. The Company has exposure to foreign currency risk due to its ownership of its Irish, French and Canadian subsidiaries and branches, whose functional currencies are the Euro and the Canadian dollar, and certain equity method investments denominated in British pounds.
At December 31, 2019, the value of the U.S. dollar weakened against most major currencies compared to December 31, 2018, with the exception of the Euro, which resulted in an increase in the U.S. dollar value of the assets and liabilities denominated in non-U.S. dollar currencies.
The currency translation adjustment account is a component of Accumulated other comprehensive income or loss in Shareholders’ equity. The reconciliation of the currency translation adjustment for the years ended December 31, 2019, 2018 and 2017 was as follows (in millions of U.S. dollars):
 
 
2019
 
2018
 
2017
Currency translation adjustment at beginning of year
 
$
(132
)
 
$
(57
)
 
$
(42
)
Change in foreign currency translation adjustment included in accumulated other comprehensive loss
 
72

 
(75
)
 
(15
)
Currency translation adjustment at end of year
 
$
(60
)
 
$
(132
)
 
$
(57
)
The currency translation adjustment account increased by $72 million during the year ended December 31, 2019 compared to a decrease of $75 million and $15 million during the years ended December 31, 2018 and 2017, respectively, due to the translation of the financial statements of the Company’s subsidiaries and branches into U.S. dollars. The increase in currency translation adjustment in 2019 was largely driven by the translation of the Company's Canadian subsidiaries and branches, as a result of the Canadian dollar strengthening as at December 31, 2019 compared to December 31, 2018.
In addition, the Company has underwriting reinsurance exposures, collecting premiums and paying claims and other expenses in currencies other than the U.S. dollar and holding certain net assets in such currencies. See Operating Results above for a discussion of the impact of foreign exchange and net foreign exchange gains and losses during the years ended December 31, 2019, 2018 and 2017.
See Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk in Item 11 for a discussion of the Company’s risk related to changes in foreign currency movements as well as details of the Company's gross and net foreign currency exposures and the associated foreign currency derivatives the Company has entered into the manage these exposures. See also Note 2(m) to the Consolidated Financial Statements in Item 18 of this report for a discussion of currencies to which the Company is exposed.
Effects of Inflation
The effects of inflation are considered implicitly in pricing and estimating non-life reserves. The actual effects of inflation on the results of operations of the Company cannot be accurately known until claims are ultimately settled.
Critical Accounting Policies and Estimates
The Company’s Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The following are the Company’s accounting estimates that management believes are the most critical to its operations and require the most difficult, subjective and complex judgment. If actual events differ significantly from the underlying assumptions and estimates used by management, there could be material adjustments to prior estimates that could potentially adversely affect the Company’s results of operations, financial condition and liquidity. These critical accounting policies and estimates should be read in conjunction with Note 2 to the Consolidated Financial Statements in Item 18 of this report.

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Non-life and Life and Health Reserves
The Company’s Non-life and Life and health reserves are significant accounting estimates. These estimates are continually reviewed with any required adjustments reflected in the periods in which they are determined, which may affect the Company’s results in future periods. See Liquidity and Capital Resources—Reserves above and Notes 2(b) and 7 to the Consolidated Financial Statements in Item 18 of this report for further details.
Premium Estimates and Recoverability of Deferred Acquisition Costs
The Company provides proportional and non-proportional reinsurance coverage to cedants (insurance companies). In most cases, cedants seek protection for business that they have not yet written at the time they enter into reinsurance agreements and thus have to estimate the volume of premiums they will cede to the Company. Reporting delays are inherent in the reinsurance industry and vary in length by reinsurance market (country of cedant) and type of treaty. As delays can vary from a few weeks to a year or sometimes longer, the Company produces accounting estimates to report premiums and acquisition costs until it receives the cedants’ actual premium reported data.
Under proportional treaties, which represented 77% of the Company’s total gross premiums written for the year ended December 31, 2019, the Company shares proportionally in both the premiums and losses of the cedant and pays the cedant a commission to cover the cedant’s acquisition costs. Under this type of treaty, the Company’s ultimate premiums written and earned and acquisition costs are not known at the inception of the treaty. As such, reported premiums written and earned and acquisition costs on proportional treaties are generally based upon reports received from cedants and brokers, supplemented by the Company’s own estimates of premiums written and acquisition costs for which ceding company reports have not been received. Premium and acquisition cost estimates are determined at the individual treaty level. The determination of premium estimates requires a review of the Company’s experience with cedants, familiarity with each market, an understanding of the characteristics of each line of business and management’s assessment of the impact of various other factors on the volume of business written and ceded to the Company. Premium and acquisition cost estimates are updated as new information is received from the cedants and differences between such estimates and actual amounts are recorded in the period in which estimates are changed or the actual amounts are determined.
Under non-proportional treaties, which represented the remaining 23% of the Company’s total gross premiums written for the year ended December 31, 2019, the Company is typically exposed to loss events in excess of a predetermined dollar amount or loss ratio and receives a fixed or minimum premium, which is subject to upward adjustment depending on the premium volume written by the cedant. In addition, many of the non-proportional treaties include reinstatement premium provisions. Reinstatement premiums are recognized as written and earned at the time a loss event occurs, where coverage limits for the remaining life of the contract are reinstated under pre-defined contract terms. The accrual of reinstatement premiums is based on management’s estimate of losses and loss expenses associated with the loss event.
The magnitude and impact of changes in premium estimates differs for proportional and non-proportional treaties. Although proportional treaties may be subject to larger changes in premium estimates compared to non-proportional treaties, as the Company generally receives cedant statements in arrears and must estimate all premiums for periods ranging from one month to more than one year (depending on the frequency of cedant statements), the impact is mitigated by changes in the cedant’s related reported acquisition costs and losses. The impact of the change in estimate on premiums earned and net income varies depending on when the change becomes known during the risk period and the underlying profitability of the treaty. Non-proportional treaties generally include a fixed minimum premium and an adjustment premium. While the fixed minimum premiums require no estimation, adjustment premiums are estimated and could be subject to changes in estimates. Changes in prior year premium estimates reported by cedants for non-life business, impacting net premiums written and earned, and the corresponding adjustments to acquisition costs and losses and loss expenses, did not have a material impact on the Company’s consolidated net income.
The recoverability of deferred acquisition costs is dependent upon the future profitability of the related business and the testing of recoverability to assess valuation is performed periodically together with a reserve adequacy test based on the latest best estimate assumptions by line of business.
See Notes 2(a), 2(c), 8(b) and 18 to the Consolidated Financial Statements in Item 18 of this report and Operating Results—Results by Segment in Item 5 of this report for accounting policies or further details regarding premiums and recoverability of deferred acquisition costs.
Recoverability of Deferred Tax Assets
Under U.S. GAAP, a deferred tax asset or liability is to be recognized for the estimated future tax effects attributable to temporary differences and carryforwards. U.S. GAAP also establishes procedures to assess whether a valuation allowance should be established for deferred tax assets. All available evidence, both positive and negative, is considered to determine whether, based on

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the weight of that evidence, a valuation allowance is needed for some portion or all of a deferred tax asset. Management must use its judgment in considering the relative impact of positive and negative evidence.
The Company has projected future taxable income in the tax jurisdictions in which the deferred tax assets arise based on management’s projections of premium and investment income, capital gains and losses, and technical and expense ratios. Based on these projections and an analysis of the ability to utilize loss and foreign tax credits carryforwards at the taxable entity level, management evaluates the need for a valuation allowance.
The Company has estimated the future tax effects attributed to temporary differences and had a deferred tax asset at December 31, 2019 of $171 million, after a valuation allowance of $187 million. The most significant component of the deferred tax asset (after valuation allowance) related to loss carryforwards.
In accordance with U.S. GAAP, the Company has assumed that the future reversal of deferred tax liabilities will result in an increase in taxes payable in future years. Underlying this assumption is an expectation that the Company will continue to be subject to taxation in the various tax jurisdictions and that the Company will continue to generate taxable revenues in excess of deductions.
See Notes 2(l) and 12 to the Consolidated Financial Statements in Item 18 of this report for further details.
Valuation of Investments Measured Using Significant Unobservable Inputs
As more fully described in Note 2(g) and 3 to the Consolidated Financial Statements in Item 18 of this report, the Company measures the fair value of its financial instruments according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that the most observable inputs be used when available. Unobservable inputs are inputs that reflect the Company’s assumptions about what market participants would use in pricing the asset or liability based on the best information available in the circumstances. Level 3 financial instruments have the least use of observable market inputs used to determine fair value. As at December 31, 2019, the Company classified $3,805 million of investments as Level 3 as a result of significant unobservable inputs used to determine fair value. See Note 3 to the Consolidated Financial Statements in Item 18 of this report for a breakdown of these investments by fair value level as well as more detail on the valuation techniques, methods and assumptions that were used by the Company to estimate the fair value of its fixed maturities, short-term investments, equities, and other invested assets (including derivatives). See Notes 2(n) and 5 to the Consolidated Financial Statements in Item 18 of this report for further details on the Company’s use of derivative financial instruments.
See also Quantitative and Qualitative disclosures About Market Risk in Item 11 of this report for further details on interest rate and credit spread risk and a sensitivity analysis of interest rate and credit spread variances on the valuation of the Company’s investments.
Valuation of Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in business combinations (PartnerRe SA, Winterthur Re, Paris Re and Presidio). The Company assesses the appropriateness of its valuation of goodwill on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. If, as a result of the assessment, the Company determines that the value of its goodwill is impaired, goodwill will be written down in the period in which the determination is made. In making an assessment of the value of its goodwill, the Company uses both market based and non-market based valuations. The fair value of the reporting units is determined based on the price-to-earnings multiples, book value multiples, and present value of estimated cash flows methods. Significant changes in the data underlying these assumptions could result in an assessment of impairment of the Company’s goodwill asset. In addition, if the current economic environment and/or the Company’s financial performance were to deteriorate significantly, this could lead to an impairment of goodwill, the write-off of which would be recorded against net income in the period such deterioration occurred.
Based upon the Company’s assessment, there was no impairment of the Company’s goodwill asset of $456 million at December 31, 2019 or 2018.
Intangible assets represent the fair value adjustments related to renewal rights, customer relationships and U.S. licenses arising from the acquisitions referred to above in addition to life VOBA and insurance licenses acquired related to the Aurigen acquisition. Definite-lived intangible assets are amortized over their useful lives while indefinite-lived intangible assets are not subject to amortization. The carrying values of intangible assets are reviewed for indicators of impairment on an annual basis, or more frequently if events or changes in circumstances indicate that impairment may exist. Impairment is recognized if the carrying values of the intangible assets are not recoverable from their undiscounted cash flows and are measured as the difference between the carrying value and the fair value. Based upon the Company’s assessment, there was no impairment of its intangible assets of $118 million at December 31, 2019 or $129 million at December 31, 2018.

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See Notes 2(j), 2(k) and 6 to the Consolidated Financial Statements in Item 18 of this report for further details.
New Accounting Pronouncements
See Note 2(s) to the Consolidated Financial Statements included in Item 18 of this report.
C. Research and Development, Patents and Licenses, etc.
Not applicable.
D. Trend Information
For a discussion of known trends, uncertainties and other events that are reasonably likely to have a material impact on the Company, see Operating Results in Item 5, Liquidity and Capital Resources in Item 5 and Tabular Disclosure of Contractual Obligations in Item 5 of this report.
E. Off-balance sheet arrangements
As more fully described in Note 9 to the Consolidated Financial Statements in Item 18 of this report, the Company has fully and unconditionally guaranteed the obligations related to debt issued to third parties by its finance subsidiaries as follows:
•
senior notes with an aggregate principal amount of €750 million issued by PartnerRe Ireland Finance DAC
•
senior notes with an aggregate principal of $500 million issued by PartnerRe Finance B LLC
•
Junior Subordinated Capital Efficient Notes (CENts) with a remaining aggregate principal amount of $62 million issued by PartnerRe Finance II Inc.

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F. Tabular Disclosure of Contractual Obligations
In the normal course of its business, the Company is a party to a variety of contractual obligations as summarized below. These contractual obligations are considered by the Company when assessing its liquidity requirements and the Company is confident in its ability to meet all of its obligations. Contractual obligations at December 31, 2019 were as follows (in millions):
 
 
Total
 
< 1 year
 
1-3 years
 
3-5 years
 
> 5 years
Contractual obligations:
 
 
 
 
 
 
 
 
 
 
Operating leases (1)
 
$
121.5

 
$
17.0

 
$
27.0

 
$
23.2

 
$
54.3

Other operating agreements
 
$
27.9

 
$
20.2

 
$
5.8

 
$
1.9

 
$
—

Other invested assets (2)
 
$
854.6

 
$
377.6

 
$
429.0

 
$
48.0

 
$
—

Non-life reserves (3)
 
$
10,363.4

 
$
3,531.8

 
$
3,105.4

 
$
1,380.0

 
$
2,346.2

Life and health reserves (4)
 
$
3,228.5

 
$
322.0

 
$
709.4

 
$
371.0

 
$
1,826.1

Deposit liabilities
 
$
5.5

 
$
0.8

 
$
1.5

 
$
1.9

 
$
1.3

Senior notes and preferred shares:
 
 
 
 
 
 
 
 
 
 
2019 senior notes—principal (5)
 
$
500.0

 
$
—

 
$
—

 
$
—

 
$
500.0

2019 senior notes—interest (5)
 
$
175.8

 
$
9.3

 
$
37.0

 
$
37.0

 
$
92.5

2016 senior notes—principal (5)
 
€
750.0

 
€
—

 
€
—

 
€
—

 
€
750.0

2016 senior notes—interest (5)
 
€
65.8

 
€
9.4

 
€
18.8

 
€
18.8

 
€
18.8

Capital efficient notes—principal (5), (6)
 
$
62.5

 
$
—

 
$
—

 
$
—

 
$
62.5

Capital efficient notes—interest (5), (6)
 
n/a

 
—(6)

 
—(6)

 
—(6)

 
—(6)

Series F non-cumulative preferred shares—principal (7)
 
$
67.0

 
$
—

 
$
—

 
$
—

 
$
67.0

Series F non-cumulative preferred shares—dividends(7)
 
n/a

 
$
3.9

 
$
7.8

 
$
7.8

 
$3.9 per annum

Series G cumulative preferred shares—principal (7)
 
$
160.4

 
$
—

 
$
—

 
$
—

 
$
160.4

Series G cumulative preferred shares—dividends (7)
 
n/a

 
$
10.4

 
$
20.8

 
$
20.8

 
$10.4 per annum

Series H cumulative preferred shares—principal (7)
 
$
293.8

 
$
—

 
$
—

 
$
—

 
$
293.8

Series H cumulative preferred shares—dividends (7)
 
n/a

 
$
21.3

 
$
42.6

 
$
42.6

 
$21.3 per annum

Series I non-cumulative preferred shares—principal (7)
 
$
183.0

 
$
—

 
$
—

 
$
—

 
$
183.0

Series I non-cumulative preferred shares—dividends (7)
 
n/a

 
$
10.8

 
$
21.6

 
$
21.6

 
$10.8 per annum

 
n/a: Not applicable
(1)
The Company has lease commitments of $25 million related to leases that will not commence until 2021, with contractual lease terms of up to 10 years. As these leases have not yet commenced, the commitments are not included in the Consolidated Balance Sheet at December 31, 2019, but are included in the table above.
(2)
The amounts above for other invested assets represent the Company’s expected timing of funding capital commitments related to its investments portfolio.
(3)
The Company’s non-life reserves represent management’s best estimate of the cost to settle the ultimate liabilities based on information available at December 31, 2019, and are not fixed amounts payable pursuant to contractual commitments. The timing and amounts of actual loss payments related to these reserves might vary significantly from the Company’s current estimate of the expected timing and amounts of loss payments based on many factors, including large individual losses as well as general market conditions.
(4)
Life and health reserves in the table above are presented on an undiscounted basis.
(5)
See Note 9 to the Consolidated Financial Statements in Item 18 of this report for further details.
(6)
The aggregate principal amount of the CENts of $62 million included above represents PartnerRe Finance II Inc.'s debt to third parties. Interest on the CENts is payable quarterly until maturity at an annual rate of 3-month LIBOR plus a margin equal to 2.325%. As a result of the variable interest rate, the table above does not show the interest payable.
(7)
See Note 10 to the Consolidated Financial Statements in Item 18 of this report for further details.
The Contractual Obligations and Commitments table above does not include an estimate of the period of cash settlement of its tax liabilities with the respective taxing authorities given the Company cannot make a reasonably reliable estimate of the timing of cash settlements.
Due to the limited nature of the information presented above, it should not be considered indicative of the Company’s liquidity or capital needs. See Liquidity section above.

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The Company has committed to a 10-year structured letter of credit facility issued by a high credit quality international bank, which has a final maturity of December 31, 2024. At December 31, 2019, the Company’s participation in the facility was $69 million. At December 31, 2019, the letter of credit facility has not been drawn down and can only be drawn down in the event of certain specific scenarios, which the Company considers remote. Unless canceled by the bank, the credit facility automatically extends for one year, each year until maturity.
G. Safe Harbor
PartnerRe Ltd. has made statements in this annual report on Form 20-F that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to various risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors described in Risk Factors in Item 3.D of this report.
Accordingly, we cannot guarantee future results, level of activity, performance or achievements. Forward-looking statements, subject to the risks, uncertainties and assumptions described above, speak only as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statements or other information contained herein, whether as a result of new information, future events or otherwise. You are cautioned not to put undue reliance on these forward-looking statements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements.
H. Non-GAAP Financial Measures
The Company has not presented or discussed any non-GAAP financial measures in this report as an addition to or substitute for measures of financial performance prepared in accordance with U.S. GAAP.

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ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following are the directors and executive officers of the Company as of March 2, 2020.
Name
 
Position with the Company
 
Date Appointed
Brian Dowd
 
Director, Chairman of Audit Committee and Chairman of the Board
 
March 18, 2016
John Elkann
 
Director
 
March 18, 2016
Mary Ann Brown
 
Director, Member of the Audit Committee
 
September 1, 2018
Jacques Bonneau
 
Director, Member of the Audit Committee
 
February 20, 2019
Emmanuel Clarke
 
Director, President and CEO, PartnerRe Ltd.
 
March 24, 2016
Mario Bonaccorso
 
Executive Vice President and CFO, PartnerRe Ltd. (1)
 
April 4, 2016
Nicolas Burnet
 
Executive Vice President and CFO, PartnerRe Ltd. (1)
 
February 7, 2020
Scott Altstadt
 
Chief Underwriting Officer
 
July 1, 2016
Marc Archambault
 
CEO Life and Health
 
April 1, 2017
Dorothée Burkel
 
Chief Corporate and People Operations Officer
 
October 2, 2017
Turab Hussain
 
Chief Risk and Actuarial Officer
 
December 2, 2017
Nikhil Srinivasan
 
Chief Investment Officer
 
September 1, 2018
Philippe Meyenhofer
 
CEO P&C EMEA
 
April 1, 2019
James Beedle
 
CEO P&C APAC
 
April 1, 2019
Greg Haft
 
CEO Specialty
 
April 1, 2019
Jonathan Colello
 
CEO P&C Americas
 
July 1, 2019
Andrew Gibbs
 
Chief Operations Officer
 
October 14, 2019
 
(1) Nicolas Burnet joined as Executive Vice President on February 7, 2020 and will assume the role of CFO effective April 1, 2020.
Biographical information
•
Brian Dowd, Director, Chairman of the Board and Audit Committee (Independent)
Brian Dowd is Chairman of PartnerRe and was formerly Vice Chairman of ACE Limited and a member of the ACE Group’s Office of the Chairman before his retirement in 2015. Mr. Dowd focused on underwriting-related matters including oversight of the Group’s product boards, the general underwriting disciplines of the company’s profit centers, outward reinsurance placements and run-off operations, as well as special strategic projects. Mr. Dowd previously held relevant positions at ACE from 1997 until his appointment as Chairman of ACE’s Insurance – North America business segment in 2006. He held the role of Vice Chairman, ACE Limited from 2009. Prior to 1997, Mr. Dowd held underwriting positions of increasing responsibility at Arkwright Mutual Insurance Company over a seven-year period. He is Chairman of the Board for ABR Reinsurance Ltd. Mr. Dowd holds a Bachelor of Science in Finance from Northern Illinois University as well as the Chartered Property Casualty Underwriter (CPCU) professional designation.
•
John Elkann, Director
John Elkann is Chairman and Chief Executive Officer of EXOR, Chairman of Fiat Chrysler Automobiles N.V. and Chairman of Ferrari N.V. Mr. Elkann obtained a scientific baccalaureate from the Lycée Victor Duruy in Paris, and graduated in Engineering from Politecnico, the Engineering University of Turin. While at university, he gained work experience in various companies of the Fiat Group in the UK and Poland (manufacturing) as well as in France (sales and marketing). He started his professional career in 2001 at General Electric as a member of the Corporate Audit Staff, with assignments in Asia, the USA and Europe. John Elkann is Chairman of Giovanni Agnelli B.V. and Vice Chairman of GEDI Gruppo Editoriale S.p.A. He is a board member of The Economist Group. Mr. Elkann is a member of MoMA as well as Chairman of the Giovanni Agnelli Foundation.

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•
Mary Ann Brown, Director, Member of the Audit Committee (Independent)
Mary Ann Brown was Chair of Pacific Life Re and has held multiple roles at Pacific Life before her retirement in 2017. As Chair of Pacific Life Re Ltd., Ms. Brown directed strategy and growth of the global reinsurance division. Prior to joining Pacific Life, Ms. Brown held multiple executive roles at MetLife, Swiss Re and New York Life. She holds a Bachelors and Masters of Arts in Education from Emory University, USA as well as a Masters of Actuarial Science from Georgia State University.
•
Jacques Bonneau, Director, Member of the Audit Committee (Independent)
Jacques Bonneau has over 41 years of professional experience in the re/insurance industry. He has held multiple executive roles, most recently at Chubb Ltd. as Group Chief Underwriting Officer from 2014 to 2017 and as CEO, Chubb Tempest Re Group from 2005 to 2014. Prior to that, he served as CEO, Chubb Tempest Re USA for six years. Mr. Bonneau is on the Board of Directors of Catalina Holdings (Bermuda) Ltd. He holds a Bachelor’s degree of Commerce from Carleton University, Ontario as well as a Masters of Business Administration from Queen’s University, Ontario.
•
Emmanuel Clarke, Director, President and CEO, PartnerRe Ltd.
Emmanuel Clarke is a member of PartnerRe’s Executive Leadership Team and is responsible for the strategic direction and management of the Company. Mr. Clarke has more than 20 years of professional experience in the reinsurance industry. Prior to becoming CEO and President of PartnerRe Ltd., Mr. Clarke held the position of CEO, PartnerRe Global from 2010, where he was responsible for the executive management of PartnerRe’s Global Non-Life operations outside North America, as well as the Company’s Life and Health operations worldwide. Mr. Clarke joined PartnerRe in 1997 with the acquisition of SAFR and was appointed Head of Credit & Surety, Global in 2001. Since that time he has served in several management and executive roles, including Head of Property & Casualty, Global and Head of Specialty Lines, Global. Mr. Clarke has a Master’s Degree in Business Administration from the University Paris, IX – Dauphine, specializing in Finance and Controlling and an MBA in International Business from Baruch College of CUNY. He currently serves on the Insurance Europe Reinsurance Advisory Board (RAB), on the Board of Directors of the Association of Bermuda Insurers and Reinsurers and is a member of the Geneva Association.
•
Mario Bonaccorso, Executive Vice President and CFO, PartnerRe Ltd.
Mario Bonaccorso is a member of PartnerRe’s Executive Leadership Team and is responsible for the Company’s Finance, Risk Management and Actuarial functions. Prior to joining PartnerRe, Mr. Bonaccorso served as Managing Director of EXOR for nine years where he was responsible for investments and the management of EXOR’s portfolio companies. Prior to joining EXOR, Mr. Bonaccorso worked as a Research and Development Telecom Engineer at Qualcomm Inc., as an engagement manager at McKinsey & Co. and as Chief Investment Officer of Jupiter Finance. Mr. Bonaccorso has a Master of Science cum laude in Telecommunications Engineering at Politecnico di Torino University and a MBA with honors from INSEAD. Mr. Bonaccorso has served on behalf of EXOR on the board of directors of Cushman & Wakefield, Banijay Holding, Banca Leonardo and EXOR SA.
•
Nicolas Burnet, Executive Vice President and CFO, PartnerRe Ltd.
Nicolas Burnet is a member of PartnerRe’s Executive Leadership Team responsible for the Company’s Finance, Risk Management and Actuarial functions. Prior to joining PartnerRe in 2020, Mr. Burnet spent nearly 16 years with Zurich Insurance Group where he was a member of the Leadership Team and held various senior leadership roles over the years, most notably: Group Head of Planning and Performance Management 2016 – 2020; General Insurance CFO 2015 – 2016, Global Life CFO 2012 – 2015, Chief Risk Officer Global Life 2011 – 2012 and Chief Operating Officer for Zurich’s Centrally Managed Businesses 2007 – 2010. Mr. Burnet joined Zurich in 2004 from Neuberger Berman and prior to that worked for JP Morgan and Price Waterhouse. Mr. Burnet holds a Bachelor's degree in Finance from Saint Joseph's University and a Master's degree in business administration from Cornell University's Johnson Graduate School of Management.
•
Scott Altstadt, Chief Underwriting Officer
Scott Altstadt is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s underwriting function. Mr. Altstadt has over 27 years of professional experience in the insurance/reinsurance industry. He joined PartnerRe in 2001, as Senior Pricing Actuary of P&C and was appointed as Chief Pricing Actuary for Specialty Lines in 2002, becoming Deputy Head of P&C in 2008. He was appointed to the position of Chief Underwriting Officer PartnerRe Global in 2013. Prior to joining PartnerRe, Mr. Altstadt worked in the U.S. and Europe with Zurich Financial Services and CNARe. Mr. Altstadt has a B.S. in Mathematics and Statistics from Purdue University.
•
Marc Archambault, CEO Life and Health
Marc Archambault is a member of PartnerRe’s Executive Leadership Team and is responsible for the Company’s worldwide Life & Health business segment. Mr. Archambault has more than 26 years of experience in life reinsurance, most recently as

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CEO of SCOR Global Life Asia-Pacific, where he led the company’s regional growth strategy in those markets, and as a member of the senior management team for Global Life. Prior to that, Mr. Archambault held a number of senior management positions at SCOR where he implemented growth strategies and product development initiatives across multiple international markets in Europe, North America, Asia and Africa. Mr. Archambault holds a Bachelor of Actuarial Science from Laval University in Quebec, Canada and is an Associate with the Canadian Institute of Actuaries.
•
Dorothée Burkel, Chief Corporate and People Operations Officer
Dorothée Burkel is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for IT, Facilities and for strategies related to attracting, developing and retaining the best talent, aligning culture and strategy, and ensuring governance and operational effectiveness. Mrs. Burkel specializes in Human Resources & Communications and has experience across a number of international companies. Prior to joining PartnerRe, Mrs. Burkel was formerly the Human Resources Director for Google Southern Europe from 2008 – 2012. In 2012, this role was extended to include the Middle East and Africa and in 2015, to the entire EMEA region where she supported Google’s Business and G&A functions. Mrs. Burkel worked for AOL France from 2001 – 2005 as the Human Resources Director and was promoted to Vice President for Human Resources and Corporate Communications for AOL France in 2005. Before leaving in 2008, she also took on the responsibility for Branding and Communications for AOL Europe. Mrs. Burkel holds a Master’s degree in French Modern Literature and graduated with honors in Political Sciences from the Institut d’Etudes Politiques in Paris.
•
Turab Hussain, Chief Risk and Actuarial Officer
Turab Hussain is a member of PartnerRe’s Executive Leadership Team and is responsible for the risk management, capital modeling and reserving functions. Mr. Hussain has more than 20 years’ experience in the insurance and reinsurance industries. Prior to joining PartnerRe, Mr. Hussain held several senior actuarial and underwriting roles with responsibility for reserving, risk assessment, capital allocation and analysis at the Hartford as well as Arch Insurance Group and American Reinsurance. Mr. Hussain is an Associate of the Casualty Actuarial Society (ACAS), a Member of the American Academy of Actuaries (MAAA) and a Chartered Enterprise Risk Analyst (CERA). He earned his bachelor’s degree in economics and statistics from Rutgers University.
•
Nikhil Srinivasan, Chief Investment Officer
Nikhil Srinivasan is a member of PartnerRe’s Executive Leadership Team and is responsible for the Company’s investments. Mr. Srinivasan served as a Director on the PartnerRe Board from August 2016 to August 2018. Prior to joining PartnerRe, Mr. Srinivasan was a partner at HPS Investment Partners, and Group Chief Investment Officer of Generali and Group Management Committee member. Prior to joining Generali, Mr. Srinivasan was at Allianz for ten years based in Singapore and Munich where he was ultimately Group Chief Investment Officer and a member of Allianz’s International Executive Committee.
•
Philippe Meyenhofer, CEO P&C EMEA
Philippe Meyenhofer is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s P&C EMEA regional business unit. Mr. Meyenhofer joined PartnerRe in 2010 as Head of Financial & Professional Lines PartnerRe Global. He was appointed to Head of Specialty Casualty PartnerRe Global in 2013, to Head of Europe P&C in 2016, and gained the additional responsibility of Deputy CEO P&C in 2018. Mr. Meyenhofer was previously with Transatlantic Re, has over 16 years of industry experience and strong, proven business leadership skills. He holds a Master of Law degree from the University of Fribourg, Switzerland, and a MBA from the University of Chicago Booth School of Business.
•
James Beedle, CEO P&C APAC
James Beedle is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s P&C Asia-Pacific regional business unit and its Global Clients and Broker Management unit. Mr. Beedle is also CEO of Partner Reinsurance Asia Pte. Ltd. Mr. Beedle has over 28 years of experience in reinsurance and reinsurance broking, strong strategic leadership capabilities and deep regional knowledge of Asia-Pacific markets. Mr. Beedle joined PartnerRe in 2017 as Head of Asia-Pacific P&C & CEO Partner Reinsurance Asia Pte. Ltd. from Willis Re, most recently as Senior Managing Director of Willis Re Asia-Pacific. His previous roles within Willis Re include COO Willis Re Australia and CEO Willis Re Japan. Mr. Beedle has a BA (Hons) in Economics from the University of York, England, is an Associate of the Chartered Insurance Institute and Executive Committee member of the Singapore Reinsurers’ Association.
•
Greg Haft, CEO Specialty
Greg Haft is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s Specialty Lines business segment. Mr. Haft has over 25 years of industry experience, combining a strong skill-set of actuarial, reinsurance business and leadership capabilities spanning property, casualty and specialty lines. Mr. Haft joined PartnerRe in 2013 as Head of Catastrophe, Bermuda. In 2016, he was appointed to Head of Global Cat and Property North

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America, and thereafter to Deputy CEO Specialty Lines and leader of Specialty Lines’ Property, Marine and Energy (PME) unit. Prior to joining PartnerRe, Mr. Haft was Managing Director, Head of U.S. Property Catastrophe Underwriting at Markel Corporation. Mr. Haft holds a B.S. Mathematics and Statistics from the University of Michigan, is a Fellow of the Casualty Actuarial Society and a Certified Cat Risk Analyst.
•
Jonathan Colello, CEO P&C Americas
Jonathan Colello is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for leading PartnerRe’s Property & Casualty business in the US, Canada and Latin America, and for the Company’s Health business in the U.S. Mr. Colello is also President of Partner Reinsurance Company of the U.S. Mr. Colello has extensive reinsurance experience and has spent the majority of his 20 year career in the industry. Most recently, he was President North America Marketing at AXIS Re in the US where he had overall responsibility for underwriting platforms in Bermuda, Canada and the United States, and served as a member of the Reinsurance Leadership Team. Prior to that, he held several leadership positions within AXIS Re since joining the company in 2004. Mr. Colello holds an MBA from New York University’s Stern School of Business and a Bachelor of Science in Business from the University of Vermont.
•
Andrew Gibbs, Chief Operations Officer
Andrew Gibbs is a member of PartnerRe’s Executive Leadership Team and has executive responsibility for the Company’s end-to-end underwriting support processes which includes: underwriting operations, reinsurance accounting, claims, payments and collections, as well as its legal, compliance and internal audit services. Mr. Gibbs has more than 30 years of professional experience in insurance, reinsurance, regulatory compliance and financial services, having held senior positions with the Bermuda Monetary Authority, Validus Holdings Ltd., ACE Group of Companies (now Chubb Group of Companies) and Ernst & Young. Prior to joining PartnerRe, Mr. Gibbs held the position of Executive Chairman at Maiden Reinsurance Ltd. Mr. Gibbs has a BA in Economics from the University of Essex in England and is a Chartered Accountant and a Chartered Insurer, a Fellow of the Institute of Chartered Accountants in England & Wales and holds an Advanced Diploma in Insurance from the Chartered Insurance Institute and a Diploma in Company Direction from the Institute of Directors.
Bilge Ogut was a Director during 2019 and resigned effective May 17, 2019. The Directors referred to above as "Independent" are considered independent in accordance with the definition of the applicable NYSE and SEC Rules.
B. Compensation
Executive Compensation
Executive compensation is comprised of salary, annual incentives, long-term incentive and other benefits. The long-term incentive (LTI) program consists of awards either in the form of deferred cash or restricted Class B common shares (Class B shares) issued to certain executives.
For the year ended December 31, 2019, the Company recorded compensation expense of $35 million paid or payable to executives as a form of cash compensation. In addition, for the year ended December 31, 2019, certain executives were granted restricted Class B shares and the Company recorded compensation expense of $10 million related to Class B shares held by certain executives.
The compensation expense for restricted Class B shares granted to executives is recognized at fair value over the restriction period of up to three years from date of grant. See Note 13 to the Consolidated Financial Statements in Item 18 of this report for further details. See also Item 6.E below for details of share ownership related to the Class B shares and Item 10.D regarding restrictions on share transfers.
Director Compensation
The Company paid approximately $1 million in cash as compensation to non-executive directors of the Company for their services as directors in 2019. For the year ended December 31, 2019, certain non-executive directors of the Company were issued Class B shares and the Company recorded compensation expense of less than $1 million related to Class B shares held by non-executive directors. Mr. Clarke did not receive any compensation for his services as a director in 2019. All directors are reimbursed for travel and other related expenses personally incurred while attending Board or committee meetings.
See Note 13 to the Consolidated Financial Statements in Item 18 of this report for further details. See also Item 6.E below for details of share ownership related to the Class B shares and Item 10.D regarding restrictions on share transfers.

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C. Board Practices
The Board currently consists of five directors (see Item 6.A above for details). The current Board have been elected to serve until the next Annual General Meeting of the Company or until their respective successors are appointed. As provided in our Bye-Laws, the number of Directors shall be such number not less than three as the Company by resolution may, from time to time, determine (see also Item 10.B for the details of the Company's Bye-laws).
There are no service contracts between the Company and any of the Company’s directors providing for benefits upon termination of their employment or service.
Audit Committee
The Board has established an Audit Committee comprised of Mr. Dowd (Chairman), Mr. Bonneau and Ms. Brown who are independent in accordance with the definition of the applicable NYSE and SEC Rules. Ms. Brown is designated as the Audit Committee financial expert as noted in Item 16A of this report.
Pursuant to its charter, the Audit Committee’s primary responsibilities are to assist Board oversight of:
•
the integrity of PartnerRe’s financial statements;
•
PartnerRe’s compliance with legal and regulatory requirements;
•
the Company's system of internal controls;
•
the qualifications and independence of the external auditors; and
•
the performance of the Company's internal and external audit functions.
The Audit Committee regularly meets with management, the Chief Audit Officer and the Company's independent registered public accounting firm to review matters relating to the quality of financial reporting and internal accounting controls, including the nature, extent and results of their audits.
Underwriting and Risk Committee
The Board, in 2019, established an Underwriting and Risk Committee comprised of Mr. Bonneau (Chairman), Mr. Dowd, Mr. Clarke and Ms. Brown.
The purpose of the Underwriting and Risk Committee, as per its charter, is to review the Company's (i) policies, guidelines and processes relating to the underwriting of reinsurance risks and assumption of investment risks and (ii) Enterprise Risk Management Framework.
The Underwriting and Risk Committee meets regularly with management.
D. Employees
The Company had 1,008 employees at December 31, 2019. The following table shows the breakdown of the number of employees by geographic location as of December 31, 2019, 2018 and 2017:
Geographic location
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Asia, Australia and New Zealand
 
62

 
50

 
46

Europe
 
551

 
541

 
537

Latin America, Caribbean and Africa
 
4

 
5

 
7

North America
 
391

 
362

 
388

Total
 
1,008

 
958

 
978

The Company employed an average of 37 temporary employees during 2019.
The increase in the number of employees in 2019 compared to 2018 was primarily driven by the growth in the life and health business. The decrease in 2018 compared to 2017 was primarily driven by the timing of natural employee turnover.

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E. Share ownership
As more fully described in section B. Compensation above, and in Note 13 to the Consolidated Financial Statements in Item 18 of this report, the Company has designated, granted and issued Class B shares to certain executives and directors of the Company.
As of March 2, 2020, 100,000,000 Class A common shares are held by EXOR Nederland N.V. and 443,298 Class B shares are held by certain executive officers and directors of the Company, either by grant of restricted or by purchase of unrestricted Class B shares.
The Class B shares issued and outstanding represent less than 0.5% of the beneficial ownership and voting rights of the Company as of March 2, 2020.
Except as otherwise required by law or the Certificate of Designation, or any sub-plan or addendum thereto, holders of Class B shares have the same voting rights as the holders of Class A common shares.

ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
As more fully described in Note 1 to the Consolidated Financial Statements in Item 18 of this report, 100% of the Company's Class A shares are owned by EXOR Nederland N.V.
On February 9, 2020, our ultimate parent company, EXOR N.V., announced that it had entered into exclusive discussions with Covéa Cooperations S.A. regarding a possible all-cash acquisition of PartnerRe. Should these discussions result in the execution of a binding agreement for the sale of the common shares of the Company, on the terms and subject to satisfaction of the conditions in such binding agreement, the consummation of such transaction would result in a change of control of the Company. These discussions are ongoing and there is no certainty that they will result in a transaction.
B. Related Party Transactions
As at December 31, 2019 and 2018 EXOR Nederland N.V. held 100% of the Class A shares and more than 99% of the total voting shares (Class A and Class B) of the Company and therefore has the power to make decisions that impact the Company.
The Company has entered into certain related party transactions as disclosed in Notes 9 and 17 to the Consolidated Financial Statements in Item 18 of this report.
C. Interests of Experts and Counsel
Not applicable.

ITEM 8.
FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See the Consolidated Financial Statements, Notes to the Consolidated Financial Statements and Financial Statements Schedules in Item 18 of this report.
B. Significant Changes
See Note 20 to the Consolidated Financial Statements in Item 18 for a disclosure of events subsequent to year end and prior to the date of filing.

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ITEM 9.
THE OFFER AND LISTING
A. Offer and Listing Details
The Company’s common shares are no longer listed as a result of the acquisition by EXOR N.V. in March 2016. The Company’s preferred shares are listed on the NYSE under the symbols PRE-F, PRE-G, PRE-H, and PRE-I. Refer to Note 10 to the Consolidated Financial Statements in Item 18 of this report for further details.
B. Plan of Distribution
Not applicable.
C. Markets
Each series of the Company’s preferred shares is listed and traded on the NYSE. The 5.875% Series F Non-Cumulative Preferred Shares began trading on February 19, 2013 and the 6.50% Series G Cumulative Preferred Shares, the 7.25% Series H Cumulative Preferred Shares and the 5.875% Series I Non-Cumulative Preferred Shares began trading on May 6, 2016.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.

ITEM 10.
ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
The Company’s Amended Memorandum of Association has been filed as exhibit 3.1 to Form F-3 (File no 333-7094) filed with the SEC on June 20, 1997, and is hereby incorporated by reference into this Annual Report.
The Company’s amended Bye-Laws were adopted on December 19, 2019, and are hereby incorporated by reference as exhibit 1.2 in this Annual Report. The changes included to (i) make them consistent with current corporate practice and administration of companies in Bermuda and (ii) grant the Majority Common Shareholder (as such term is defined in the Bye-Laws) the sole and absolute discretion to determine the remuneration of the directors of the Company.
Corporate Registration and Objectives
PartnerRe Ltd. is incorporated under the laws of Bermuda. The Company is registered at the Bermuda Registrar of Companies under registration number 18620. The objects and powers of the Company are set forth in the Memorandum of Association of the Company.
Board of Directors
The Companies Act authorizes the directors of a company, subject to its bye-laws, to exercise all powers of the company except those that are required by the Companies Act or its bye-laws to be exercised by the shareholders. The Company's Bye-Laws provide that its business is to be generally managed and conducted by the Board and that the Board shall be such number not less

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than three as the Company by resolution may, from time to time, determine. The Directors shall be elected or appointed at the Annual General Meeting, at any Special General Meeting called for that purpose or by Resolution. Directors shall hold office for such term as the Shareholders may determine or, in the absence of such determination, until the next Annual General Meeting or until their successors are elected or appointed or their office is otherwise vacated.
Under the Insurance Act, the Company must serve notice to the BMA of the fact that any person has become or ceased to be a director or officer of the Company. Such notice shall be served before the end of forty-five days beginning with the day on which the designated insurer becomes aware of the relevant facts.
Under the Company’s Bye-Laws and subject to the Companies Act, a Director is not prohibited from being a party to or otherwise have an interest in, any transaction or arrangement with the Company or in which the Company is otherwise interested. A Director who has complied with the Companies Act and with the Company’s Bye-Laws with regard to declaring the nature of his interest in a transaction or arrangement with the Company, or in which the Company is otherwise interested, may be counted in the quorum and vote at any meeting at which such transaction or arrangement is considered by the Board.
In addition to its powers granted under Bye-Law 27, the Majority Common Shareholder for and on behalf of the Company may provide benefits, whether by the payment of gratuities or pensions or otherwise, for any person including any Director or former Director who has held any executive office or employment with the Company or with any body corporate which is or has been a subsidiary or Affiliate of the Company or a predecessor in the business of the Company or of any such subsidiary or Affiliate, and to any member of his family or any person who is or was dependent on him, and may contribute to any fund and pay premiums for the purchase or provision of any such gratuity, pension or other benefit, or for the insurance of any such person.
The Company may in a Special General Meeting called for that purpose remove a Director, provided notice of any such meeting shall be served upon the Director concerned not less than fourteen (14) days before such meeting and s/he shall be entitled to be heard at such meeting. The Shareholders may authorize the Directors to fill any vacancy in their number, from time to time.
Under the Company’s Bye-Laws the quorum necessary for the transaction of the business of the Board may be fixed by the Board and, unless so fixed at any other number, shall be three (3) individuals and requires the presence of at least one Majority Shareholder Director Designee for so long as the Board consists of at least one Majority Shareholder Director Designee. Any Director who ceases to be a Director at a meeting of the Board may continue to be present and to act as a Director and be counted in the quorum until the termination of the meeting if no other Director objects and if otherwise a quorum of Directors would not be present.
A resolution in writing signed by all the Directors for the time being entitled to receive notice of a meeting of the Board shall be valid and effectual as a resolution passed at a meeting of the Board.
A meeting of the Board or a committee appointed by the Board may be held by means of such telephone, electronic or other communication facilities (including, without limiting the generality of the foregoing, by telephone or by video conferencing) as to permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously and participation in such a meeting shall constitute presence in person at such meeting. Such a meeting shall be deemed to take place where the largest group of those Directors participating in the meeting is physically assembled, or, if there is no such group, where the chairman of the meeting then is.
Among the powers of the Company which the Board may exercise, the Board is allowed to borrow money and to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company. The Board may also issue debentures and other securities (whether outright or as collateral security for any debt, liability or obligation of the Company or of any other persons).
Bermuda law provides that the Directors owe a fiduciary duty to the Company to act in good faith in their dealings with or on behalf of the Company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following essential elements:
•
a duty to act in good faith in the best interests of the Company;
•
a duty not to make a personal profit from opportunities that arise from the office of director;
•
a duty to avoid situations in which there is an actual or potential conflict between a personal interest or the duties owed to third parties and/or the Director's duty to the Company; and
•
a duty to exercise powers for the purpose for which such powers were intended.
The Companies Act imposes a duty on the Directors and Officers to:
•
act honestly and in good faith with a view to the best interests of the Company; and

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•
exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
The Companies Act also imposes various duties on the Directors and Officers with respect to certain matters of management and administration of the Company.
Under Bermuda law, the Directors and Officers generally owe fiduciary duties to the Company itself, not to the Company's individual shareholders, members, or creditors.
Shares and Share Rights
Subject to any special rights conferred on the holders of any Share or class of Shares, any Share in the Company may be issued with or have attached thereto such preferred, deferred, qualified or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise, as the Board may determine.
Subject to the general provisions of Bermuda law, the Board may, at its discretion and without the sanction of a Resolution, authorize the acquisition by the Company of its own Shares, of any class, at any price (whether at par or above or below par). Under Bermuda law, the Company must pay for such share purchases out of capital paid-up for these shares, out of funds that would otherwise be available for a dividend or distribution or out of proceeds of the issue of additional shares for the purpose of the purchase. However, to the extent that any premium over the par value is payable on the purchase, the premium must be provided out of funds that would otherwise be available for a dividend or distribution or out of the Company's share premium account.
Any Shares to be purchased may be selected in any manner whatsoever, to be either cancelled or held as Treasury Shares, upon such terms as the Board may in its discretion determine, provided always that such acquisition is effected in accordance with the provisions of the Companies Act. The whole or any part of the amount payable on any such acquisition may be paid or satisfied otherwise than in cash, to the extent permitted by the Companies Act.
As provided in our Bye-Laws and subject to the Companies Act, all or any of the special rights for the time being attached to any class of Shares for the time being issued may from time to time (whether or not the Company is being wound up) be altered or abrogated with the consent in writing of the holders of not less than seventy five percent (75%) of the issued Shares of that class or with the sanction of a resolution passed at a separate general meeting of the holders of not less than seventy five percent (75%) of the issued Shares of that class, voting in person or by proxy. To any such separate general meeting, all the provisions of these Bye-Laws as to general meetings of the Company shall mutatis mutandis apply, but so that the necessary quorum shall be two (2) or more persons holding or representing by proxy any of the Shares of the relevant class, that every holder of Shares of the relevant class shall be entitled on a poll to one vote for every such Share held by him and that any holder of Shares of the relevant class present in person or by proxy may demand a poll; provided however, that if the Company or a class of Shareholders shall have only one Shareholder, one Shareholder present in person or by proxy shall constitute the necessary quorum.
Subject to Bermuda law and except insofar as the rights attaching to, or the terms of issue of, any Share otherwise provide, the Board may from time to time declare dividends or distributions out of contributed surplus to be paid to the Shareholders according to their rights and interests, including such interim dividends as appear to the Board to be justified by the position of the Company. The Board, in its discretion, may determine that any dividend shall be paid in cash or shall be satisfied, subject to the Bye-Laws, in paying up in full Shares in the Company to be issued to the Shareholders credited as fully paid or partly paid or partly in one way and partly the other. The Board may also pay any fixed cash dividend which is payable on any Shares of the Company half yearly or on such other dates, whenever the position of the Company, in the opinion of the Board, justifies such payment.
The Board may from time to time resolve to capitalize all or any part of any amount for the time being standing to the credit of any reserve or fund which is available for distribution or to the credit of any Share premium account and accordingly that such amount be set free for distribution amongst the Shareholders or any class of Shareholders who would be entitled thereto.
If the Company shall be wound up, the liquidator may, with the sanction of a Resolution of the Company and any other sanction required by the Companies Act, divide amongst the Shareholders in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purposes set such values as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributories as the liquidator, with the like sanction, shall think fit, but so that no Shareholder shall be compelled to accept any Shares or other assets upon which there is any liability.
See Notes 10 and 13 to the Consolidated Financial Statements in Item 18 of this report for details of rights, preferences, and restrictions attached to common and preferred shares.    

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General Meetings of Shareholders and Voting Rights
If required under the Companies Act, the Board shall convene and the Company shall hold general meetings as Annual General Meetings in accordance with the requirements of the Companies Act at such times and places as the Board shall appoint or, if requested in writing signed by the Majority Common Shareholder, at such times and places as the Majority Common Shareholder shall request. The Board may, whenever it thinks fit, and shall, when required by the Companies Act or when requested by the Majority Common Shareholder, convene general meetings other than Annual General Meetings which shall be called Special General Meetings, at such time and place as the Board may appoint or, if requested in writing signed by the Majority Common Shareholder, at such time and place as the Majority Common Shareholder shall request. Except as required by the Companies Act or when requested by the Majority Common Shareholder, Special General Meetings may not be called by any person other than the Board. Save where a greater majority is required by the Companies Act or the Bye-Laws, any question proposed for consideration at any general meeting shall be decided on by a simple majority of votes cast.
Except in the case of the removal of auditors or Directors, anything which may be done by resolution of the Shareholders in general meeting or by resolution of any class of Shareholders in a separate general meeting may be done by resolution in writing. Any such Resolution shall be signed by such number of Shareholders (or the holders of such class of Shares) as would be required if the Resolution had been voted on at a meeting of Shareholders or, all the Shareholders, or such other majority of the Shareholders as may be provided by the Bye-Laws. Such resolution in writing may be signed by the Shareholder or its proxy, or in the case of a Shareholder that is a corporation (whether or not a company within the meaning of the Companies Act) by its representative on behalf of such Shareholder, in as many counterparts as may be necessary.
Under our Bye-Laws should any person (other than EXOR or any member of the Exor Group) be a Ten Percent Shareholder, notwithstanding any provision to the contrary in these Bye-Laws, the votes conferred by the Controlled Shares of such person are hereby reduced (and shall be automatically reduced in the future) by whatever amount is necessary so that after any such reduction such person shall not be a Ten Percent Shareholder. Notwithstanding the foregoing, the Board may waive the restrictions in its discretion and on a case by case basis.
Mergers and Amalgamations
Subject to the Companies Act and pursuant to our Bye-Laws, in addition to the approval of the Board, any resolution proposed for consideration at any general meeting to approve the amalgamation or merger of the Company with any other company, wherever incorporated, shall require the approval of a simple majority of votes cast at such meeting. A poll may be demanded in respect of such resolution in accordance with the Bye-Laws. Under Bermuda law, in the event of an amalgamation or a merger of a Bermuda Company with another, a shareholder of the Bermuda company who has not voted in favor of the amalgamation or merger and is not satisfied that a fair value has been offered for such shareholder’s shares, may apply to the Supreme Court of Bermuda, within one month’s notice of the special general meeting, to appraise the fair value of the shares.
Changes in Capital
Subject to the Companies Act, Bye-Laws and Amended Memorandum of Association, the Company may from time to time by Resolution authorize the reduction of its issued Share Capital or any Share premium account.
C. Material Contracts
None.
D. Exchange Controls
Securities may be offered or sold in Bermuda only in compliance with the provisions of the Bermuda Companies Act 1981, Investment Business Act 2003, and the Exchange Control Act 1972 and related regulations, each as amended, which regulate the sale of securities in Bermuda. In particular, specific permission is required from the BMA, pursuant to the provisions of the Exchange Change Control Act 1972 and related regulations (Exchange Control Act), for all issuances and transfers of securities of Bermuda companies, other than in cases where the BMA has granted a general permission. The BMA, in its policy dated June 1, 2005, provides that where any equity securities of a Bermuda company are listed on an appointed stock exchange (the NYSE is deemed to be an appointed stock exchange under Bermuda law), general permission is given for the issue and subsequent transfer of any equity securities of such company from and/or to a non-resident of Bermuda, for as long as any equity securities of the company remain so listed. Our common shares are not listed on the NYSE, and accordingly, the general permission will not apply to them.
The BMA has, however, granted us permission for the issue, sale and transfer of up to 20% of any security as defined in the Exchange Control Act including (without limitation) the grant or creation of options, warrants, coupon, rights and depository

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receipts (collectively, Securities) to and among persons who are resident of Bermuda for exchange control purposes, whether or not the Securities are listed on an appointed stock exchange.
Under the Insurance Act, where the shares of the insurer or the shares of its parent company are not traded on any stock exchange, no person shall become a 10%, 20%, 33% or 50% shareholder controller of the insurer unless (a) he has served on the BMA a notice in writing that he intends to become a controller of the insurer and (b) either the BMA has, before the end of the period of 45 days beginning with the date of service of that notice, notified him in writing that there is no objection to his becoming such a controller of the insurer or that period has elapsed without the BMA having served him with a written notice of objection to his becoming such as controller of the insurer. Likewise, no person who is a shareholder controller shall reduce or dispose of his holding in the insurer where the proportion of the voting rights held by the shareholder controller in the insurer will reach or fall below 10%, 20%, 33% or 50% as the case may be unless that shareholder controller has served on the BMA a notice in writing not later than 45 days of such disposal. As described herein, our Bye-Laws contain restrictions on the transfer of shares that generally would have the effect of prohibiting any shareholder, other than EXOR or any member of the Exor Group, from owning 10% or more of our common shares.
Any person or entity who contravenes the Bermuda Insurance Act by failing to give notice or knowingly becoming a controller of any description before the required 45 days has elapsed is guilty of an offense under Bermuda law and liable to a fine of $25,000 on summary conviction.
The BMA may file a notice of objection to any person or entity who has become a controller of any category when it appears that such person or entity is not, or is no longer, fit and proper to be a controller of the registered insurer. Before issuing a notice of objection, the BMA is required to serve upon the person or entity concerned a preliminary written notice stating the BMA’s intention to issue formal notice of objection. Upon receipt of the preliminary written notice, the person or entity served may, within 28 days, file written representations with the BMA which shall be taken into account by the BMA in making its final determination. Any person or entity who continues to be a controller of any description after having received a notice of objection is guilty of an offense and liable on summary conviction to a fine of $25,000 (and a continuing fine of $500 per day for each day that the offense is continuing) or, if convicted on indictment, to a fine of $100,000 and/or 2 years in prison.
E. Taxation
PartnerRe Ltd. and PartnerRe Bermuda are not subject to income or profits tax, withholding tax, capital gains tax or capital transfer tax in Bermuda. See Business Overview—Taxation of the Company and its Subsidiaries in Item 4.B for further details.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We maintain a website at http://www.partnerre.com. The information on our website is not incorporated by reference to this Annual Report on Form 20-F. We make available, free of charge through our website, our Annual Reports on Form 20-F as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the U.S. Securities and Exchange Commission (SEC). Filings with the SEC are also available to the public from commercial document retrieval services, and from the website maintained by the SEC at http://www.sec.gov.
I. Subsidiary Information
Not applicable.

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ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Overview
Management believes that the Company is principally exposed to six types of market related risk: interest rate risk, credit spread risk, foreign currency risk, counterparty credit risk, equity price risk and real estate price risk. How these risks relate to the Company, and the process used to manage them, is discussed below.
The Company’s investment philosophy distinguishes between assets that are generally matched against the estimated net reinsurance liabilities (liability funds) and those assets that represent shareholder capital (capital funds). Liability funds are invested in a way that generally matches them to the corresponding liabilities in both duration and currency composition to provide a natural hedge against changes in interest rates and foreign exchange rates.
The Company’s investment philosophy is to reduce foreign currency risk on capital funds by investing primarily in U.S. dollar denominated investments. In considering the market risk of capital funds, it is important to recognize the benefits of portfolio diversification. Although these asset classes in isolation may introduce more risk into the portfolio, market forces have a tendency to influence each class in different ways and at different times. Consequently, the aggregate risk introduced by a portfolio of these assets should be less than might be estimated by summing the individual risks.
Although the focus of this discussion is to identify risk exposures that impact the market value of assets alone, it is important to recognize that the risks discussed herein are significantly mitigated to the extent that the Company’s investment strategy allows market forces to influence the economic valuation of assets and liabilities in a way that is generally offsetting.
As described above in this report, the Company’s investment strategy allows the use of derivative investments, subject to strict limitations. The Company also imposes a high standard for the credit quality of counterparties in all derivative transactions and aims to diversify its counterparty credit risk exposure. See Note 5 to the Consolidated Financial Statements in Item 18 of this report for additional information related to derivatives.
The following addresses those areas where the Company believes it has exposure to material market risk in its operations.
Interest Rate Risk
The Company’s fixed income portfolio, including the fixed maturity portfolio and corporate loan portfolio, is exposed to interest rate risk. Fluctuations in interest rates have a direct impact on the market valuation of these securities. The Company manages interest rate risk on liability funds by constructing bond portfolios in which the economic impact of a general interest rate shift is comparable to the impact on the related liabilities. The Company believes that this process of matching the duration mitigates the overall interest rate risk on an economic basis. For non-life business and the mortality line of the life business, the estimated duration of the Company’s liabilities is based on projected claims payout patterns. For policy benefits related to annuity business, the Company estimates duration based on its commitment to annuitants. The Company manages the exposure to interest rate volatility on capital funds by choosing a duration profile that it believes will optimize the risk-reward relationship.
This matching of duration insulates the Company from the economic impact of interest rate changes. The Company’s liabilities are carried at their nominal value, and are not adjusted for changes in interest rates, with the exception of certain policy benefits for life and annuity contracts and deposit liabilities that are interest rate sensitive. However, substantially all of the Company’s invested assets are carried at fair value, which reflects such changes. As a result, an increase in interest rates will result in a decrease in the fair value of the Company’s investments and a corresponding decrease, net of applicable taxes, in the Company’s shareholders’ equity. A decrease in interest rates would have the opposite effect.
At December 31, 2019 and 2018, the Company held approximately $3,185 million and $2,390 million, respectively, of mortgage/asset-backed securities. These assets are exposed to prepayment risk, the adverse impact of which is more evident in a declining interest rate environment. For further details on the increase in mortgage-backed securities, refer to Liquidity and Capital Resources—Investments in Item 5.
At December 31, 2019 and 2018, the fair value of investments exposed to interest rate risk was $14,284 million and $14,131 million, respectively.

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At December 31, 2019 and 2018, the Company estimates that the hypothetical case of an immediate 100 basis points or 200 basis points parallel shift in global bond curves would result in a change in the fair value of investments exposed to interest rate risk, total invested assets and shareholders’ equity as follows (in millions of U.S. dollars, except percentages):
 
-200 Basis
Points
 
%
Change
 
-100 Basis
Points
 
%
Change
 
December 31,
2019
 
+100 Basis
Points
 
%
Change
 
+200 Basis
Points
 
%
Change
Fair value of investments exposed to interest rate risk (1)
$
15,062

 
5
%
 
$
14,684

 
3
%
 
$
14,284

 
$
13,883

 
(3
)%
 
$
13,481

 
(6
)%
Total invested assets (2)
$
18,689

 
4
%
 
$
18,311

 
2
%
 
$
17,911

 
$
17,510

 
(2
)%
 
$
17,109

 
(5
)%
Shareholders’ equity
$
8,048

 
11
%
 
$
7,670

 
6
%
 
$
7,270

 
$
6,869

 
(6
)%
 
$
6,467

 
(11
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-200 Basis
Points
 
%
Change
 
-100 Basis
Points
 
%
Change
 
December 31,
2018
 
+100 Basis
Points
 
%
Change
 
+200 Basis
Points
 
%
Change
Fair value of investments exposed to interest rate risk (1)
$
15,346

 
9
%
 
$
14,739

 
4
%
 
$
14,131

 
$
13,524

 
(4
)%
 
$
12,916

 
(9
)%
Total invested assets (2)
$
17,598

 
7
%
 
$
16,991

 
4
%
 
$
16,383

 
$
15,776

 
(4
)%
 
$
15,168

 
(7
)%
Shareholders’ equity
$
7,732

 
19
%
 
$
7,124

 
9
%
 
$
6,517

 
$
5,910

 
(9
)%
 
$
5,302

 
(19
)%
 
(1)
Includes fixed maturity securities, short-term investments, certain other invested assets, certain cash and cash equivalents and funds holding fixed income securities.
(2)
Includes total investments, cash and cash equivalents and accrued interest.
The changes do not take into account any potential mitigating impact from the equity market, taxes or the corresponding change in value of the Company’s reinsurance liabilities, which would substantially offset the economic impact on invested assets, although the offset would not be reflected in the Consolidated Balance Sheet.
The impact of an immediate change in interest rates on the fair value of investments exposed to interest rate risk, the Company’s total invested assets and shareholders’ equity, in both absolute terms and as a percentage of total invested assets and shareholders’ equity, has decreased at December 31, 2019 compared to December 31, 2018, driven by a decrease in average duration of the investment portfolio.
The Company strives to match the foreign currency exposure in its fixed income portfolio to its U.S. dollar, Euro and Canadian dollar liabilities. The Company believes that this matching process creates a diversification benefit. Consequently, the exact market value effect of a change in interest rates will depend on which countries experience interest rate changes and the foreign currency mix of the Company’s fixed maturity portfolio at the time of the interest rate changes. See Foreign Currency Risk below.
Interest rate movements also affect the economic value of the Company’s outstanding debt obligations and preferred securities in the same way that they affect the Company’s fixed maturity investments. This can result in a liability whose economic value is different from the carrying value reported in the Consolidated Balance Sheet, given the Company records the carrying value of its outstanding debt obligations at the original issued principal amount. For the Company’s preferred shares, fair value is based on quoted market prices, while carrying value is based on the aggregate liquidation value of the shares. See Notes 3(b) and 9 to the Consolidated Financial Statements in Item 18 of this report for further details regarding the fair value of debt. See also Note 10 to the Consolidated Financial Statements in Item 18 of this report for further details regarding preferred shares.
Credit Spread Risk
The Company’s fixed income portfolio, including the fixed maturity portfolio and corporate loan portfolio, is exposed to credit spread risk. Fluctuations in market credit spreads have a direct impact on the market valuation of these securities. The Company manages credit spread risk by the selection of securities within its fixed maturity portfolio. Changes in credit spreads directly affect the market value of certain fixed maturity securities, but do not necessarily result in a change in the future expected cash flows associated with holding individual securities. Other factors, including liquidity, supply and demand, and changing risk preferences of investors, may affect market credit spreads without any change in the underlying credit quality of the security.
As with interest rates, changes in credit spreads impact the shareholders’ equity of the Company as invested assets are carried at fair value, which includes changes in credit spreads. As a result, an increase in credit spreads will result in a decrease in the fair value of the Company’s investments and a corresponding decrease, net of applicable taxes, in the Company’s shareholders’ equity. A decrease in credit spreads would have the opposite effect.

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At December 31, 2019 and 2018, the fair value of investments exposed to credit spread risk was $14,284 million and $14,131 million, respectively.
At December 31, 2019 and 2018, the Company estimates that the hypothetical case of an immediate 100 basis points or 200 basis points parallel shift in global credit spreads would result in a change in the fair value of investments exposed to interest rate risk (as presented in the table above), total invested assets and shareholders’ equity as follows (in millions of U.S. dollars, except percentages):
 
-200 Basis
Points
 
%
Change
 
-100 Basis
Points
 
%
Change
 
December 31,
2019
 
+100 Basis
Points
 
%
Change
 
+200 Basis
Points
 
%
Change
Fair value of investments exposed to credit spread risk (1)
$
14,791

 
4
%
 
$
14,538

 
2
%
 
$
14,284

 
$
14,029

 
(2
)%
 
$
13,773

 
(4
)%
Total invested assets (2)
$
18,419

 
3
%
 
$
18,165

 
1
%
 
$
17,911

 
$
17,656

 
(1
)%
 
$
17,400

 
(3
)%
Shareholders’ equity
$
7,778

 
7
%
 
$
7,524

 
4
%
 
$
7,270

 
$
7,015

 
(4
)%
 
$
6,759

 
(7
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-200 Basis
Points
 
%
Change
 
-100 Basis
Points
 
%
Change
 
December 31,
2018
 
+100 Basis
Points
 
%
Change
 
+200 Basis
Points
 
%
Change
Fair value of investments exposed to credit spread risk (1)
$
14,876

 
5
%
 
$
14,504

 
3
%
 
$
14,131

 
$
13,759

 
(3
)%
 
$
13,386

 
(5
)%
Total invested assets (2)
$
17,128

 
5
%
 
$
16,756

 
2
%
 
$
16,383

 
$
16,011

 
(2
)%
 
$
15,638

 
(5
)%
Shareholders’ equity
$
7,262

 
11
%
 
$
6,890

 
6
%
 
$
6,517

 
$
6,145

 
(6
)%
 
$
5,772

 
(11
)%
 
(1)
Includes fixed maturity securities, short-term investments, certain other invested assets, certain cash and cash equivalents and funds holding fixed income securities.
(2)
Includes total investments, cash and cash equivalents and accrued interest.
The changes above also do not take into account any potential mitigating impact from the taxes, which may offset the economic impact on invested assets.
The impact of an immediate change in interest rates on the fair value of investments exposed to credit spread risk, the Company’s total invested assets and shareholders’ equity, in both absolute terms and as a percentage of total invested assets and shareholders’ equity, has decreased at December 31, 2019 compared to December 31, 2018, driven by decrease in the average credit spread duration of the fixed maturity and short-term investment portfolio.
Foreign Currency Risk
Through its multinational reinsurance operations, the Company conducts business in a variety of non-U.S. currencies, with the principal exposures being the Euro, Canadian dollar, Swiss franc, British pound and Japanese yen. As the Company’s reporting currency is the U.S. dollar, foreign exchange rate fluctuations may materially impact the Company’s Consolidated Financial Statements.
The Company is generally able to match its liability funds against its net reinsurance liabilities both by currency and duration to protect the Company against foreign exchange and interest rate risks. However, a natural offset does not exist for all currencies. For the non-U.S. dollar currencies for which the Company deems the net asset or liability exposures to be material, the Company employs a hedging strategy utilizing foreign exchange forward contracts and other derivative financial instruments, as appropriate, to reduce exposure and more appropriately match the liability funds by currency. The Company does not hedge currencies for which its asset or liability exposures are not material or where it is unable or impractical to do so. In such cases, the Company is exposed to foreign currency risk. However, the Company does not believe that the foreign currency risks corresponding to these unhedged positions are material, except for those related to the Company’s capital funds.
For the Company’s capital funds, including its net investment in foreign subsidiaries and branches and equity method securities, the Company does not typically employ hedging strategies for certain foreign currencies. From time to time, the Company enters into net investment hedges to offset foreign exchange volatility. Derivatives are included in Other invested assets in the Consolidated Balance Sheets (see Note 5 to the Consolidated Financial Statements in Item 18 of this report for further details).

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The Company’s gross and net exposures in its Consolidated Balance Sheets at December 31, 2019 and 2018 to foreign currency as well as the associated foreign currency derivatives the Company has entered into to manage these exposures, were as follows (in millions of U.S. dollars):
December 31, 2019
Euro
 
CAD
 
CHF
 
GBP
 
JPY (1)
 
Other
 
Total (2)
Total assets
$
2,244

 
$
1,552

 
$
32

 
$
1,883

 
$
329

 
$
1,325

 
$
7,365

Total liabilities
(3,744
)
 
(500
)
 
(339
)
 
(1,909
)
 
(442
)
 
(1,734
)
 
(8,668
)
Total gross foreign currency exposure
$
(1,500
)
 
$
1,052

 
$
(307
)
 
$
(26
)
 
$
(113
)
 
$
(409
)
 
$
(1,303
)
Total derivative amount
1,540

 
(1,049
)
 
—

 
75

 
(96
)
 
—

 
470

Net foreign currency exposure
$
40

 
$
3

 
$
(307
)
 
$
49

 
$
(209
)
 
$
(409
)
 
$
(833
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
Euro
 
CAD
 
CHF
 
GBP
 
JPY (1)
 
Other
 
Total (2)
Total assets
$
2,805

 
$
1,213

 
$
23

 
$
1,531

 
$
309

 
$
1,103

 
$
6,984

Total liabilities
(3,814
)
 
(396
)
 
(272
)
 
(1,648
)
 
(324
)
 
(1,521
)
 
(7,975
)
Total gross foreign currency exposure
$
(1,009
)
 
$
817

 
$
(249
)
 
$
(117
)
 
$
(15
)
 
$
(418
)
 
$
(991
)
Total derivative amount
—

 
(807
)
 
—

 
108

 
(70
)
 
—

 
(769
)
Net foreign currency exposure
$
(1,009
)
 
$
10

 
$
(249
)
 
$
(9
)
 
$
(85
)
 
$
(418
)
 
$
(1,760
)
 
(1)
The JPY exposure as at December 31, 2019 and 2018 excludes reinsurance assets of approximately $130 million and $50 million, respectively, denominated in U.S. dollars for which the underlying value is linked to JPY.
(2)
As the U.S. dollar is the Company’s reporting currency, there is no currency risk attached to the U.S. dollar and it is excluded from the above tables. The U.S. dollar accounts for the difference between the Company’s total foreign currency exposure and the total assets and total liabilities in the Consolidated Balance Sheets at December 31, 2019 and 2018.
The above numbers include the Company’s investment in certain of its subsidiaries, branches and equity method investees, whose functional currencies are the Euro, British pound, and Canadian dollar, and the foreign exchange forward contracts that the Company entered into during the year to hedge a portion of its translation exposure in light of the significant volatility in foreign exchange markets.
At December 31, 2019, the Company’s most significant net foreign currency exposure to the Swiss franc presented in the table above reflects the unhedged net foreign currency exposure to certain liability balances denominated in Swiss franc. At December 31, 2018, the Company’s most significant net foreign currency exposure to the Euro presented in the table above reflects the unhedged net investment in its European subsidiaries and branches.
At December 31, 2019, assuming all other variables remain constant and disregarding any tax effects, a change in the U.S. dollar of 10% or 20% relative to all of the other currencies held by the Company simultaneously would result in a change in shareholders’ equity of $83 million and $167 million, respectively, inclusive of the effect of foreign exchange forward contracts and other derivative financial instruments.
At December 31, 2018, assuming all other variables remain constant and disregarding any tax effects, a change in the U.S. dollar of 10% or 20% relative to all of the other currencies held by the Company simultaneously would result in a change in shareholders’ equity of $176 million and $352 million, respectively, inclusive of the effect of foreign exchange forward contracts and other derivative financial instruments.
Counterparty Credit Risk
Investments and Cash
The Company has exposure to credit risk primarily as a holder of fixed maturity securities and, to a lesser extent, through its corporate loan portfolio within Other invested assets. The Company controls this exposure by emphasizing investment grade credit quality in the fixed maturity securities it purchases. At December 31, 2019 and 2018, approximately 74% and 55%, respectively, of the Company’s fixed maturity portfolio was rated AA (or equivalent rating) or better. Refer to Liquidity and Capital Resources—Investments in Item 5 for further details of the Company's corporate loan portfolio.
At December 31, 2019 and 2018, approximately 89% and 74%, respectively, of the Company’s fixed maturity and short-term investments were rated A or better and 3% and 4%, respectively, were rated below investment grade or not rated. The Company believes this high quality concentration reduces its exposure to credit risk on fixed maturity investments to an acceptable level. At December 31, 2019 and 2018, the Company was not exposed to any significant credit concentration risk on its investments,

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excluding securities issued by the U.S. government and the World Bank which are rated AA+ and AAA, respectively. At December 31, 2019 and 2018, the Company held fixed maturity investments in the World Bank of $1,110 million and $nil, respectively. At December 31, 2019 and 2018, the single largest corporate issuer accounted for less than 4% and 4%, respectively, and the top 10 corporate issuers accounted for less than 32% and 21%, respectively, of the Company’s total corporate fixed maturity securities.
The Company holds cash and cash equivalents in several banks and ensures that there are no significant concentrations of credit risk in any one bank.
Derivatives
To a lesser extent, the Company also has credit risk exposure as a party to foreign exchange forward contracts and other derivative contracts. The Company’s investment strategy allows the use of derivative investments, subject to strict limitations. The Company imposes a high standard for the credit quality of counterparties in all derivative transactions. To mitigate credit risk, the Company monitors its exposure by counterparty, aims to diversify its counterparty credit risk and ensures that counterparties to these contracts are high credit quality international banks or counterparties. These contracts are generally of short duration (approximately 90 days) and settle on a net basis, which means that the Company is exposed to the movement of one currency against the other, as opposed to the notional amount of the contracts. At December 31, 2019 and 2018, the Company’s net notional exposure of foreign exchange forward contracts was $3,028 million and $2,458 million, respectively, while the net fair value of those contracts was a $1 million liability position and $14 million asset position at December 31, 2019 and 2018, respectively. See Note 5 to the Consolidated Financial Statements in Item 18 of this report for additional information related to derivatives.
Underwriting Operations
The Company is also exposed to credit risk in its underwriting operations, most notably in the financial risks line. Loss experience in these lines of business is cyclical and is affected by the general economic environment. The Company provides its clients in these lines of business with protection against credit deterioration, defaults or other types of financial non-performance of or by the underlying credits that are the subject of the protection provided and, accordingly, the Company is exposed to the credit risk of those clients. As with all of the Company’s business, these risks are subject to rigorous underwriting and pricing standards. In addition, the Company strives to mitigate the risks associated with these credit-sensitive lines of business through the use of risk management techniques such as risk diversification, careful monitoring of risk aggregations and accumulations and, at times, through the use of retrocessional reinsurance protection and the purchase of credit default swaps and total return and interest rate swaps.
The Company is subject to the credit risk of its cedants in the event of their insolvency or their failure to honor the value of the funds held balances due to the Company for any other reason. However, the Company’s credit risk in some jurisdictions is mitigated by a mandatory right of offset of amounts payable by the Company to a cedant against amounts due to the Company. In certain other jurisdictions the Company is able to mitigate this risk, depending on the nature of the funds held arrangements, to the extent that the Company has the contractual ability to offset any shortfall in the payment of the funds held balances with amounts owed by the Company to cedants for losses payable and other amounts contractually due. Funds held balances for which the Company receives an investment return based upon either the results of a pool of assets held by the cedant or the investment return earned by the cedant on its investment portfolio are exposed to counterparty credit risk. The Company is also exposed, to some extent, to the underlying financial market risk of the pool of assets, to the extent the underlying policies may have guaranteed minimum returns on GMDB business.
The Company has exposure to credit risk as it relates to its business written through brokers if any of the Company’s brokers are unable to fulfill their contractual obligations with respect to payments to the Company. In addition, in some jurisdictions, if the broker fails to make payments to the insured under the Company’s policy, the Company might remain liable to the insured for the deficiency. The Company’s exposure to such credit risk is somewhat mitigated in certain jurisdictions by contractual terms. See Note 18 to the Consolidated Financial Statements in Item 18 of this report of this report for information related to two brokers that accounted for 50% and 44%, respectively, of the Company’s gross premiums written for the years ended December 31, 2019 and 2018.
The Company has exposure to credit risk as it relates to its reinsurance balances receivable and reinsurance recoverable on paid and unpaid losses.
Reinsurance balances receivable from the Company’s cedants at December 31, 2019 and 2018 were $3,400 million and $2,977 million, respectively, including balances both currently due and accrued. The Company believes that credit risk related to these balances is mitigated by several factors, including but not limited to, credit checks performed as part of the underwriting process and monitoring of aged receivable balances. In addition, as the majority of its reinsurance agreements permit the Company the right to offset reinsurance balances receivable from clients against losses payable to them, the Company believes that the credit risk in this area is substantially reduced. Provisions are made for amounts considered potentially uncollectible and the allowance for uncollectible premiums receivable at December 31, 2019 and 2018 was $7 million and $5 million, respectively.

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The Company purchases retrocessional reinsurance and requires its reinsurers to have adequate financial strength. The Company evaluates the financial condition of its reinsurers and monitors its concentration of credit risk on an ongoing basis. Provisions are made for amounts considered potentially uncollectible. At December 31, 2019 and 2018, the balance of reinsurance recoverable on paid and unpaid losses was $889 million and $897 million respectively, and includes $771 million and $863 million, respectively, of reinsurance recoverable on unpaid losses related to the total Non-life and Life and health reserves. There was no provision considered necessary for uncollectible reinsurance recoverables as at December 31, 2019 and 2018. At December 31, 2019 and 2018, 36% and 33%, respectively, of the Company's reinsurance recoverable on unpaid losses were due from reinsurers with an A- or better rating from Standard & Poor’s, and the remaining 64% and 67%, respectively, was collateralized. See Liquidity and Capital Resources—Reinsurance Recoverable on Paid and Unpaid Losses in Item 5 of this report for further details of the Company’s reinsurance recoverable on unpaid losses categorized by the reinsurer’s Standard & Poor’s rating.
Other than the items discussed above, the concentrations of the Company’s counterparty credit risk exposures have not changed materially at December 31, 2019 compared to December 31, 2018.
Public Equity Price Risk
The Company invests a portion of its capital funds in public equity securities. At December 31, 2019 and 2018, the fair market value of these securities was $1,223 million and $640 million, respectively, excluding funds holding fixed income securities of $72 million and $54 million at December 31, 2019 and 2018, respectively. These equity investments are primarily mutual funds and are exposed to equity price risk, defined as the potential for loss in market value due to a decline in equity prices. The Company believes that the effects of diversification and the relatively small size of its investments in equities relative to total invested assets mitigate its exposure to equity price risk. At December 31, 2019, the Company estimates that a 10% and 20% movement in the S&P 500 Index would result in a change in the fair value of the Company’s public equity portfolio, total invested assets and shareholders’ equity by $23 million and $47 million, respectively and $30 million and $61 million, respectively at December 31, 2018. These changes do not take into account any potential mitigating impact from the fixed maturity securities or taxes.
Real Estate Price Risk
The Company invests a portion of its capital funds in real estate assets either through direct investment or through investments in variable interest entities that hold underlying real estate assets as follows:
•
Investments in real estate with a carrying value of $72 million and $73 million at December 31, 2019 and 2018, respectively, recorded in the Consolidated Balance Sheets
•
Equity method investment in Almacantar with a carrying value of $483 million and $498 million at December 31, 2019 and 2018, respectively, recorded in Other invested assets in the Consolidated Balance Sheets
•
Investments in limited partnerships with underlying real estate assets with a carrying value of $204 million and $48 million at December 31, 2019 and 2018, respectively, recorded in Other invested assets in the Consolidated Balance Sheets.
These investments are exposed to real estate market price risk, defined as the potential for loss in market value due to a decline in real estate prices. The Company believes that the effects of diversification and the relatively small size of its investments in real estate assets relative to total invested assets mitigate its exposure to real estate price risk. At December 31, 2019, the Company estimates that a 10% and 20% movement in comparable real estate prices would result in a change in the total carrying value of $759 million of the Company’s real estate asset investments referred to above, total invested assets, and shareholders’ equity by $76 million and $152 million, respectively. At December 31, 2018, the Company estimates that a 10% and 20% movement in comparable real estate prices would result in a change in the total carrying value of $618 million of the Company’s real estate asset investments referred to above, total invested assets, and shareholders’ equity by $62 million and $124 million, respectively. These changes do not take into account any potential mitigating impact from taxes.
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.

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PART II

ITEM 13.
DEFAULTS, DIVIDENDS ARREARAGES AND DELINQUENCIES
None.
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.

ITEM 15.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company carried out an evaluation, under the supervision and with the participation of management, including the CEO and CFO, as of December 31, 2019, of the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the CEO and CFO concluded that, as of December 31, 2019, the disclosure controls and procedures are effective such that information required to be disclosed by the Company in reports that it files or submits pursuant to the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is designed to provide reasonable assurance regarding the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect material misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of internal control over financial reporting as of December 31, 2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).
Based on our assessment and those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2019.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the year ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
The Company’s Board has determined that Ms. Mary Ann Brown is an independent director and audit committee financial expert in accordance with the NYSE listing rules.

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ITEM 16B.
CODE OF ETHICS
The Audit Committee of PartnerRe Ltd. has adopted the Code of Business Conduct and Ethics, which applies to all directors, officers and employees and is incorporated by reference as exhibit 11.1 to this annual report. Any specific waiver of its provisions requires the approval of the Audit Committee. Any waiver required to be publicly disclosed will be posted on our website at www.partnerre.com within four business days of such waiver being granted. During 2019, there were minor updates and revisions to the Code of Business Conduct and Ethics and no disclosable waivers. Any violation to the Code of Business Conduct and Ethics will be investigated and may result in disciplinary action, as appropriate.

ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the work of the Company’s independent registered public accounting firm. The Audit Committee also pre-approves the audit services and non-audit services to be provided, including the fees for such services, before the public accounting firm is engaged to render such services. The Audit Committee may delegate the authority to grant such approval to one or more designated members of the Audit Committee, provided that the decisions of any member to whom authority is delegated shall be presented to the full Audit Committee at its next meeting. The Audit Committee has sole authority to approve all audit fees and terms. All services of Ernst & Young Ltd. and their respective affiliates (collectively, EY) were pre-approved by the Audit Committee.
During 2019, the Audit Committee had two meetings and five informational calls to discuss the Company’s quarterly results as well as to receive updates on legal matters, matters relating to internal and external auditors, and other matters as deemed necessary. The meetings and informational calls were conducted to encourage communication among the members of the Audit Committee, management, the internal auditors and EY. The Audit Committee also discussed with EY the overall scope and plans for EY’s audits and the results of such audits. The Audit Committee met with representatives from EY, both with and without management present.
The following table presents fees for professional services rendered by the independent auditors for the years ended December 31, 2019 and 2018 (in U.S. dollars):
 
 
2019
 
2018
Audit Fees (1)
 
$
5,181,482

 
$
5,021,071

Audit-Related Fees (2)
 
117,072

 
70,995

Tax Fees (3)
 
36,247

 
—

All Other Fees
 
11,200

 
—

Total
 
$
5,346,001

 
$
5,092,066

 
(1)
For the years ended December 31, 2019 and 2018, audit fees relate to professional services rendered by EY for the audit of the Company’s annual financial statements and other audit services provided in connection with statutory and regulatory filings.
(2)
Audit-related fees are fees for services performed that are reasonably related to the performance of the audit or review of the Company’s financial statements but are not described in (1) above. Audit-related fees were for services performed by EY related to employee benefit plan audits of $67,226 and $60,995 for the years ended December 31, 2019 and 2018, respectively. Also included in audit-related fees are comfort letter procedures related to the issuance of the 2029 Senior Notes for $49,846 in 2019 and agreed upon procedures related to one of the Company's regulated branches for $10,000 in 2018.
(3)
Tax fees in 2019 relate to services performed by EY for tax compliance services and on-call advisory.

ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
None.

ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.

ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
None.

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ITEM 16G.
CORPORATE GOVERNANCE
Pursuant to exemptions available under the NYSE listing standards, as the Company is a foreign private issuer and a controlled company with no common shares listed, we are not required to comply with all of the corporate governance practices followed by U.S. domestic filer companies under the NYSE listing standards. Below is a summary of the significant differences between our corporate governance practices and the NYSE standards applicable to listed U.S. companies that are domestic filers:
•
Nominating/Corporate Governance Committee: The NYSE requires that listed companies must have a nominating/corporate governance committee composed entirely of independent directors and a committee charter detailing the committee’s purpose and responsibilities and an annual performance evaluation of the committee. Under Bermuda law and our Bye-Laws as well as the NYSE exemptions applicable to controlled companies, we are not required to have, and do not have, a separate nominating or corporate governance committee; instead, that function is filled by our full Board.
•
Compensation Committee: The NYSE requires that listed companies must have a compensation committee composed entirely of independent directors and a committee charter detailing the committee’s purpose and responsibilities, an annual performance evaluation of the committee and the rights and responsibilities of the committee with respect to retaining or obtaining advice from an independent adviser. Under Bermuda law and our Bye-Laws, as well as the NYSE exemptions applicable to controlled companies, we are not required to have, and do not have, a separate compensation committee; instead, that function is filled by our full Board, its committees, the Chairman and our CEO.

ITEM 16H.
MINE SAFETY DISCLOSURE
Not applicable.
PART III

ITEM 17.
FINANCIAL STATEMENTS
See Item 18 of this report.

ITEM 18.
FINANCIAL STATEMENTS

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PartnerRe Ltd.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars, except parenthetical share data)
 
December 31,
2019
 
December 31,
2018
Assets
 
 
 
Investments:
 
 
 
Fixed maturities, at fair value (amortized cost: 2019, $10,468,937; 2018, $12,627,921)
$
10,680,714

 
$
12,639,845

Short-term investments, at fair value (amortized cost: 2019, $1,003,508; 2018, $495,050)
1,003,421

 
493,726

Equities, at fair value (cost: 2019, $821,430; 2018, $621,312)
1,295,164

 
694,301

Investments in real estate
71,834

 
72,573

Other invested assets
3,266,009

 
1,488,995

Total investments
16,317,142

 
15,389,440

Cash and cash equivalents
1,484,463

 
877,907

Accrued investment income
109,673

 
115,735

Reinsurance balances receivable
3,400,070

 
2,976,644

Reinsurance recoverable on paid and unpaid losses
889,021

 
897,183

Prepaid reinsurance premiums
80,942

 
102,405

Funds held by reinsured companies
815,167

 
829,695

Deferred acquisition costs
874,608

 
743,046

Deposit assets
168,067

 
80,661

Net tax assets
179,813

 
157,690

Goodwill
456,380

 
456,380

Intangible assets
117,538

 
128,899

Other assets
169,521

 
63,506

Total assets
$
25,062,405

 
$
22,819,191

Liabilities
 
 

Non-life reserves
$
10,363,383

 
$
9,895,376

Life and health reserves
2,417,044

 
2,198,080

Unearned premiums
2,433,860

 
2,072,953

Other reinsurance balances payable
521,338

 
341,041

Deposit liabilities
5,507

 
7,172

Net tax liabilities
135,966

 
101,525

Accounts payable, accrued expenses and other
517,084

 
266,524

Debt related to senior notes
1,327,965

 
1,349,017

Debt related to capital efficient notes
70,089

 
70,989

Total liabilities
17,792,236

 
16,302,677

Shareholders’ Equity
 
 
 
Common shares (par value $0.00000001; issued and outstanding: 100,000,000 shares)
—

 
—

Preferred shares (par value $1.00; issued and outstanding: 28,169,062 shares; aggregate liquidation value: $704,227)
28,169

 
28,169

Additional paid-in capital
2,396,530

 
2,396,530

Accumulated other comprehensive loss
(75,925
)
 
(138,634
)
Retained earnings
4,921,395

 
4,230,449

Total shareholders’ equity
7,270,169

 
6,516,514

Total liabilities and shareholders’ equity
$
25,062,405

 
$
22,819,191

 




See accompanying Notes to Consolidated Financial Statements.

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PartnerRe Ltd.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in thousands of U.S. dollars)
 
 
For the year ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Revenues
 
 
 
 
 
 
Gross premiums written
 
$
7,285,320

 
$
6,299,929

 
$
5,587,894

Net premiums written
 
$
6,909,058

 
$
5,803,364

 
$
5,119,926

Increase in unearned premiums
 
(383,840
)
 
(289,554
)
 
(94,945
)
Net premiums earned
 
6,525,218

 
5,513,810

 
5,024,981

Net investment income
 
448,538

 
415,921

 
402,071

Net realized and unrealized investment gains (losses)
 
886,670

 
(389,632
)
 
232,491

Other income
 
15,321

 
50,127

 
15,242

Total revenues
 
7,875,747

 
5,590,226

 
5,674,785

Expenses
 
 
 
 
 
 
Losses and loss expenses
 
4,923,156

 
4,193,255

 
3,840,982

Acquisition costs
 
1,455,462

 
1,237,464

 
1,119,773

Other expenses
 
369,969

 
305,568

 
348,398

Interest expense
 
40,150

 
43,152

 
42,500

Loss on redemption of debt
 
15,175

 
—

 
1,566

Amortization of intangible assets
 
11,434

 
35,473

 
24,646

Net foreign exchange losses (gains)
 
86,760

 
(119,151
)
 
108,244

Total expenses
 
6,902,106

 
5,695,761

 
5,486,109

Income (loss) before taxes and interest in earnings of equity method investments
 
973,641

 
(105,535
)
 
188,676

Income tax expense (benefit)
 
52,536

 
(8,934
)
 
10,358

Interest in earnings of equity method investments
 
15,643

 
10,607

 
85,703

Net income (loss)
 
936,748

 
(85,994
)
 
264,021

Preferred dividends
 
46,416

 
46,416

 
46,416

Net income (loss) attributable to common shareholder
 
$
890,332

 
$
(132,410
)
 
$
217,605

Comprehensive income (loss)
 
 
 
 
 
 
Net income (loss)
 
$
936,748

 
$
(85,994
)
 
$
264,021

Change in currency translation adjustment
 
71,796

 
(74,797
)
 
(15,135
)
Change in unfunded pension obligation, net of tax
 
(6,803
)
 
24,859

 
(274
)
Change in fair value of designated cash flow hedges, net of reclassification adjustment
 
(1,877
)
 
1,877

 
—

Change in unrealized gains or losses on investments, net of tax
 
(407
)
 
(292
)
 
(303
)
Other comprehensive income (loss)
 
62,709

 
(48,353
)
 
(15,712
)
Comprehensive income (loss)
 
$
999,457

 
$
(134,347
)
 
$
248,309

 
The Company’s common shares included in shareholders' equity are owned by EXOR Nederland N.V. and are not publicly traded. As such, earnings per share data is not meaningful to present.



See accompanying Notes to Consolidated Financial Statements.

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PartnerRe Ltd.
Consolidated Statements of Shareholders’ Equity
(Expressed in thousands of U.S. dollars)
 
For the year ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Common shares
 
 
 
 
 
Balance at beginning of year
$
—

 
$
—

 
$
—

Balance at end of year
—

 
—

 
—

Preferred shares
 
 
 
 
 
Balance at beginning of year
28,169

 
28,169

 
28,169

Balance at end of year
28,169

 
28,169

 
28,169

Additional paid-in capital
 
 
 
 
 
Balance at beginning of year
2,396,530

 
2,396,530

 
2,396,530

Balance at end of year
2,396,530

 
2,396,530

 
2,396,530

Accumulated other comprehensive loss
 
 
 
 
 
Balance at beginning of year
(138,634
)
 
(90,281
)
 
(74,569
)
Currency translation adjustment
 
 
 
 
 
Balance at beginning of year
(131,700
)
 
(56,903
)
 
(41,768
)
Change in foreign currency translation adjustment
71,796

 
(74,797
)
 
(15,135
)
Balance at end of year
(59,904
)
 
(131,700
)
 
(56,903
)
Unfunded pension obligation
 
 
 
 
 
Balance at beginning of year
(9,185
)
 
(34,044
)
 
(33,770
)
Change in unfunded pension obligation, net of tax
(6,803
)
 
24,859

 
(274
)
Balance at end of year (net of tax: 2019, $4,379; 2018, $2,479; 2017, $9,744)
(15,988
)
 
(9,185
)
 
(34,044
)
Unrealized gain on investments
 
 
 
 
 
Balance at beginning of year
2,251

 
666

 
969

Change in fair value of designated cash flow hedges, net of reclassification adjustment
(1,877
)
 
1,877

 
—

Change in unrealized gains or losses on investments, net of tax
(407
)
 
(292
)
 
(303
)
Balance at end of year (net of tax: 2019, 2018 and 2017: $nil)
(33
)
 
2,251

 
666

Balance at end of year
(75,925
)
 
(138,634
)
 
(90,281
)
Retained earnings
 
 
 
 
 
Balance at beginning of year
4,230,449

 
4,410,694

 
4,337,782

Net income (loss)
936,748

 
(85,994
)
 
264,021

Dividends on common shares
(199,386
)
 
(47,835
)
 
(144,693
)
Dividends on preferred shares
(46,416
)
 
(46,416
)
 
(46,416
)
Balance at end of year
4,921,395

 
4,230,449

 
4,410,694

Total shareholders’ equity
$
7,270,169

 
$
6,516,514

 
$
6,745,112


See accompanying Notes to Consolidated Financial Statements.


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PartnerRe Ltd.
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
 
For the year ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Cash flows from operating activities
 
 
 
 
 
Net income (loss)
$
936,748

 
$
(85,994
)
 
$
264,021

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
Amortization of net premium on investments
14,478

 
52,495

 
69,080

Amortization of intangible assets
11,434

 
35,473

 
24,646

Net realized and unrealized investment (gains) losses
(886,670
)
 
389,632

 
(232,491
)
Loss on redemption of debt
15,175

 
—

 
1,566

Changes in:
 
 
 
 
 
Reinsurance balances, net
(397,563
)
 
(427,220
)
 
(84,767
)
Reinsurance recoverable on paid and unpaid losses, net of ceded premiums payable
112,223

 
(98,086
)
 
(481,173
)
Funds held by reinsured companies and funds held–directly managed
56,890

 
(23,483
)
 
47,383

Deferred acquisition costs
(128,426
)
 
(98,475
)
 
(34,822
)
Net tax assets and liabilities
17,118

 
(82,247
)
 
42,337

Non-life and life and health reserves
713,281

 
637,652

 
571,907

Unearned premiums, net of prepaid reinsurance premiums
383,841

 
289,554

 
94,945

Other net changes in operating assets and liabilities
150,340

 
(141,808
)
 
(39,756
)
Net cash provided by operating activities
998,869

 
447,493

 
242,876

Cash flows from investing activities
 
 
 
 
 
Sales of fixed maturities
16,502,655

 
14,665,938

 
12,524,296

Redemptions of fixed maturities
738,478

 
494,148

 
572,638

Purchases of fixed maturities
(14,918,698
)
 
(15,638,777
)
 
(12,465,127
)
Sales of short-term investments
1,914,640

 
224,411

 
119,504

Redemptions of short-term investments
724,033

 
23,432

 
50,051

Purchases of short-term investments
(3,142,818
)
 
(733,431
)
 
(143,859
)
Sales of equities
133,891

 
89,349

 
16,232

Purchases of equities
(296,687
)
 
(218,751
)
 
(275,928
)
Sales and redemptions of other invested assets
330,227

 
328,924

 
245,093

Purchases of other invested assets
(2,009,452
)
 
(490,797
)
 
(239,335
)
Consideration paid to acquire Aurigen, net of cash acquired
—

 
—

 
(233,233
)
Other, net
(94,263
)
 
(5,357
)
 
(71,511
)
Net cash (used in) provided by investing activities
(117,994
)
 
(1,260,911
)
 
98,821

Cash flows from financing activities
 
 
 
 
 
Dividends paid to common and preferred shareholders
(245,802
)
 
(94,251
)
 
(191,109
)
Issuance of unrestricted Class B common shares (1)
1,159

 
—

 
11,000

Redemption of unrestricted Class B common shares (1)
(6,540
)
 
—

 
—

Issuance of senior notes
496,012

 
—

 
—

Redemption of debt
(512,697
)
 
—

 
(207,130
)
Net cash used in financing activities
(267,868
)
 
(94,251
)
 
(387,239
)
Effect of foreign exchange rate changes on cash
(6,451
)
 
13,564

 
44,226

Increase (decrease) in cash and cash equivalents
606,556

 
(894,105
)
 
(1,316
)
Cash and cash equivalents—beginning of year
877,907

 
1,772,012

 
1,773,328

Cash and cash equivalents—end of year
$
1,484,463

 
$
877,907

 
$
1,772,012

Supplemental cash flow information:
 
 
 
 
 
Taxes paid
$
85,047

 
$
139,543

 
$
66,228

Interest paid
$
38,650

 
$
41,551

 
$
40,989

 
(1) Class B shares are recorded as a liability on the Company's Consolidated Balance Sheet. See Note 13 for further details.

See accompanying Notes to Consolidated Financial Statements.

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PartnerRe Ltd.
Notes to Consolidated Financial Statements

1. Organization
PartnerRe Ltd. provides reinsurance on a worldwide basis through its principal wholly-owned subsidiaries, including Partner Reinsurance Company Ltd. (PartnerRe Bermuda), Partner Reinsurance Europe SE (PartnerRe Europe), Partner Reinsurance Company of the U.S. (PartnerRe U.S.) and Partner Reinsurance Asia Pte. Ltd. (PartnerRe Asia). Non-life risks reinsured include agriculture, aviation/space, casualty, catastrophe, energy, engineering, financial risks, marine, motor, multiline, property and U.S. health. Life and health risks include mortality, morbidity and longevity. Reinsurance of alternative risk products include weather and credit protection to financial, industrial and service companies on a worldwide basis.
PartnerRe Ltd. and it subsidiaries are collectively referred to hereinafter as PartnerRe or the Company.
The Company was incorporated in August 1993 under the laws of Bermuda. The Company commenced operations in November 1993 upon completion of the sale of common shares and warrants pursuant to subscription agreements and an initial public offering.
The Company completed the acquisition of Societe Anonyme Francaise de Reassurances (SAFR, subsequently renamed PartnerRe SA and reinsurance business transferred into PartnerRe Europe) in 1997, the acquisition of Winterthur Re in 1998, the acquisition of PARIS RE Holdings Limited (Paris Re) in 2009, the acquisition of Presidio Reinsurance Group, Inc. (Presidio) in 2012 and the acquisition of Aurigen Capital Limited (Aurigen) in April 2017.
On March 18, 2016, the Company's publicly held common shares were acquired by Exor N.V. (subsequently renamed to EXOR Nederland N.V), whose ultimate parent is EXOR N.V. (Exor), one of Europe’s leading investment companies controlled by the Agnelli family, which is listed on the Milan Stock Exchange. As a result of the acquisition, PartnerRe's publicly issued common shares were cancelled and are no longer publicly traded. The Company’s preferred shares continue to be traded on the New York Stock Exchange (NYSE).
At December 31, 2019 and 2018, the Company's 100 million common shares (Class A shares) issued to EXOR Nederland N.V. are included in Shareholders' Equity in the Consolidated Balance Sheets (see Note 10). At December 31, 2019 and 2018, the Company also had 281,768 and 345,644, respectively, of Class B common shares (Class B shares) issued to certain executives and directors of the Company which are recognized in Accounts payable, accrued expenses and other in the Consolidated Balance Sheets (see Note 13). The percentage of total common shares owned by EXOR Nederland N.V. at December 31, 2019 and 2018 was approximately 99.7%.
2. Significant Accounting Policies
The Company’s Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions have been eliminated. Certain reclassifications have been made to prior period amounts to conform to the current year presentation.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While management believes that the amounts included in the Consolidated Financial Statements reflect its best estimates and assumptions, actual results could differ from those estimates. The Company’s principal estimates include:

•
Non-life reserves;
•
Life and health reserves;
•
Reinsurance recoverable for unpaid losses;
•
Gross and net premiums written and net premiums earned;
•
Recoverability of deferred acquisition costs;
•
Recoverability of deferred tax assets;
•
Valuation of certain investments that are measured using significant unobservable inputs; and
•
Valuation of goodwill and intangible assets.

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The following are the Company’s significant accounting policies:
(a) Premiums
Gross premiums written and earned are based upon reports received from ceding companies, supplemented by the Company’s own estimates of premiums written and earned for which ceding company reports have not been received. The determination of premium estimates requires a review of the Company’s experience with cedants, familiarity with each market, an understanding of the characteristics of each line of business and management’s assessment of the impact of various other factors on the volume of business written and ceded to the Company. Premium estimates are updated as new information is received from cedants and differences between such estimates and actual amounts are recorded in the period in which the estimates are changed or the actual amounts are determined. Net premiums written and earned are presented net of ceded premiums.
Premiums related to non-life business are earned on a basis that is consistent with the risks covered under the terms of the reinsurance contracts, which is generally one to two years. Reinstatement premiums are recognized as written and earned at the time a loss event occurs, where coverage limits for the remaining life of the contract are reinstated under pre-defined contract terms. The accrual of reinstatement premiums is based on management’s estimate of losses and loss expenses associated with the loss event. Unearned premiums represent the portion of premiums written which is applicable to the unexpired risks under contracts in force.
Premiums related to life and annuity business are recorded over the premium-paying period on the underlying policies. Premiums on contracts for which there is no significant mortality or critical illness risk are accounted for in a manner consistent with accounting for interest-bearing financial instruments and are not reported as revenues, but rather as direct deposits to the contract. Amounts assessed against annuity and universal life policyholders are recognized as revenue in the period assessed.
(b) Losses and Loss Expenses
The reserves for non-life business include amounts determined from loss reports on individual treaties (case reserves), additional case reserves when the Company’s loss estimate is higher than reported by the cedants (ACRs) and amounts for losses incurred but not yet reported to the Company (IBNR). Such reserves are estimated by management based upon reports received from ceding companies, supplemented by the Company’s own actuarial estimates of reserves for which ceding company reports have not been received, and based on the Company’s own historical experience. To the extent that the Company’s own historical experience is inadequate for estimating reserves, such estimates may be determined based upon industry experience and management’s judgment. The estimates are regularly reviewed and the ultimate liability may be materially in excess of, or less than, the amounts provided. Any adjustments are reflected in the periods in which they are determined, which may affect the Company’s operating results in future periods. See Note 7(a) for further details.
The life and health reserves have been established based upon information reported by ceding companies, supplemented by the Company’s actuarial estimates, which for life include mortality, morbidity, critical illness, persistency and future investment income, with appropriate provision to reflect uncertainty. For traditional and limited payment long-duration contracts, the assumptions are locked in at contract inception and are subject to annual loss recognition testing. Future policy benefit reserves for annuity and universal life contracts are carried at their accumulated values. Reserves for policy claims and benefits include both mortality, morbidity and critical illness claims in the process of settlement, and claims that have been incurred but not yet reported. See Note 7(b) for further details.
(c) Deferred Acquisition Costs
Acquisition costs, comprising primarily incremental brokerage fees, commissions and excise taxes, which vary directly with, and are related to, the acquisition of reinsurance contracts, are capitalized and charged to expense as the related premium is earned. All other acquisition related costs, including indirect costs, are expensed as incurred. Acquisition costs are shown net of commissions earned on ceded reinsurance. 
Acquisition costs related to individual life and annuity contracts are deferred and amortized over the premium-paying periods in proportion to anticipated premium income, allowing for lapses, terminations and anticipated investment income. Acquisition costs related to universal life and single premium annuity contracts for which there is no significant mortality or critical illness risk are deferred and amortized over the lives of the contracts as a percentage of the estimated gross profits expected to be realized on the contracts.
The Company establishes a premium deficiency reserve to the extent the deferred acquisition costs are insufficient to cover the excess of expected losses and loss expenses, settlement costs and deferred acquisition costs over the related unearned premiums. Actual and anticipated losses and loss expenses, other costs, and investment income related to underlying premiums are considered in determining the recoverability of deferred acquisition costs for the Company’s short-duration contracts. Actual and anticipated loss experience, together with the present value of future gross premiums, the present value of future benefits, and settlement and

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maintenance costs are considered in determining the recoverability of deferred acquisition costs related to the Company’s life and annuity business.
(d) Reinsurance
The Company purchases retrocessional contracts to reduce its exposure to risk of losses on reinsurance assumed. Ceded premiums, which represent the cost of retrocessional protection purchased by the Company, are expensed over the coverage period. Prepaid reinsurance premiums represent the portion of premiums ceded applicable to the unexpired term of policies in force.
Reinsurance recoverable on paid and unpaid losses involves actuarial estimates consistent with those used to establish the associated liabilities for non-life and life and health reserves and are recorded net of a valuation allowance for estimated uncollectible recoveries.
Retroactive reinsurance reimburses a ceding company for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance. Premiums payable for retroactive reinsurance coverage meeting the conditions of reinsurance accounting are reported as reinsurance recoverables to the extent that those amounts do not exceed recorded liabilities relating to underlying reinsurance contracts. To the extent that recorded liabilities on an underlying reinsurance contract exceed premiums payable for retroactive coverage, a deferred gain is recognized in the Company's Consolidated Balance Sheets.
(e) Funds Held by Reinsured Companies
The Company writes certain business on a funds held basis. Under such contractual arrangements, the cedant retains the premiums that would have otherwise been paid to the Company and the Company is credited with investment income on these funds. The Company generally earns investment income on the funds held balances based upon a predetermined interest rate, either fixed contractually at the inception of the contract or based upon a recognized index (e.g. LIBOR). However, in certain circumstances, the Company may receive an investment return based upon either the result of a pool of assets held by the cedant, generally used to collateralize the funds held balance, or the investment return earned by the cedant on its entire investment portfolio. In these arrangements, gross investment returns are typically reflected in net investment income in the Company’s Consolidated Statements of Operations. In these arrangements, the Company is exposed, to a limited extent, to the underlying credit risk of the pool of assets inasmuch as the underlying policies may have guaranteed minimum returns. In such cases, an embedded derivative exists and its fair value is recorded by the Company as an increase or decrease to the funds held balance.
(f) Deposit Assets and Liabilities
In the normal course of its operations, the Company writes certain contracts that do not meet the risk transfer provisions of U.S. GAAP. While these contracts do not meet risk transfer provisions for accounting purposes, there is a remote possibility that the Company will suffer a loss. The Company accounts for these contracts using the deposit accounting method originally recording deposit assets or liabilities for an amount equivalent to the consideration paid or received, respectively. The difference between the consideration received and the estimated liability for unpaid losses is determined upon entering into the contract and, if a loss, recognized into income immediately, and if a gain, the gain is deferred and earned over the expected settlement period of the contract, with the unearned portion recorded as a component of deposit liabilities. Actuarial studies are used to estimate the liabilities under these contracts and the appropriate accretion rates to increase or decrease the liabilities over the term of the contracts. The change in the estimated liability for the period is recorded in Other income or loss in the Consolidated Statements of Operations. Under some of these contracts, cedants retain the assets on a funds-held basis. In those cases, the Company records those assets as deposit assets and records the related income in Net investment income in the Consolidated Statements of Operations. Also included in Deposit assets are receivables included as an element of certain life reinsurance agreements that do not meet risk transfer.
(g) Investments
The Company elects the fair value option for Fixed maturities and Equities with changes in fair value recorded in Net realized and unrealized investment gains or losses in the Consolidated Statements of Operations.
Short-term investments, which comprise securities with a maturity greater than three months but less than one year from the date of purchase, are recorded at fair value by electing either the fair value option with changes in fair value recorded in Net realized and unrealized gains or losses included in the Consolidated Statements of Operations, or by designating as available-for-sale with changes in fair value recorded in Other comprehensive income or loss.
Investments in real estate are recorded at cost less any write down for impairment, where applicable. Real estate assets held for investment are reviewed for impairment at least annually, or more frequently when events or changes in circumstances indicate the carrying value may not be recoverable and exceeds its estimated fair value.

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The Company recognizes Other invested assets at fair value, except for those that are accounted for using the equity method of accounting. Other invested assets consist of equity investments in non-publicly traded companies; privately placed corporate loans, notes and loans receivable and notes securitization; and derivative financial instruments. Non-publicly traded entities in which the Company has significant influence, including an ownership of more than 20% and less than 50% of the voting rights, and limited partnerships in which the Company has more than a minor interest (typically more than 3 to 5%), are accounted for using either the equity method or the fair value option. Where the equity method is used, the Company's share of profits or losses of the investee are recorded in Interest in earnings or losses of equity method investees in the Consolidated Statements of Operations. Where the fair value option is elected, the investment is recognized in the Consolidated Balance Sheets at fair value with changes in fair value recorded in Net realized and unrealized investment gains or losses in the Consolidated Statements of Operations. See Note 2(n) below for significant accounting policy for derivatives.
Net investment income includes interest and dividend income, amortization of premiums and discounts on fixed maturities and short-term investments, and is net of investment expenses and withholding taxes. Investment income is recognized when earned and accrued to the balance sheet date. Realized gains or losses on the disposal of investments are determined on a first-in, first-out basis. Investment purchases and sales are recorded on a trade-date basis.
The Company defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company measures the fair value of financial instruments according to a fair value hierarchy that prioritizes the information used to measure fair value into three broad levels. The Company’s policy is to recognize transfers between the hierarchy levels at the beginning of the period. Refer to Note 3 for the valuation techniques used by the Company
(h) Cash and Cash Equivalents
Cash equivalents are carried at fair value and include fixed income securities that, from the date of purchase, have a maturity of three months or less.
(i) Business Combinations
The Company accounts for transactions in which it obtains control over one or more businesses using the acquisition method. The purchase price is allocated to identifiable assets and liabilities, including any intangible assets, based on their estimated fair value at the acquisition date. The estimates of fair values for assets and liabilities acquired are determined based on various market and income analyses and appraisals. Any excess of the purchase price over the fair value of net assets acquired is recorded as goodwill in the Company’s Consolidated Balance Sheets, while any excess of the fair value of net assets acquired over the purchase price is recorded as a gain in the Consolidated Statements of Operations. All costs associated with an acquisition are expensed as incurred.
(j) Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. The Company assesses the appropriateness of its valuation of goodwill on an annual basis (as of December 31) or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. If, as a result of the assessment, the Company determines that the value of its goodwill is impaired, goodwill will be written down in the period in which the determination is made.
(k) Intangible Assets
Intangible assets represent the fair value adjustments related to renewal rights, and customer relationships; value of life business acquired; and U.S. licenses arising from acquisitions. Definite-lived intangible assets are amortized over their useful lives and the amortization expense is recorded in the Consolidated Statement of Operations. Indefinite-lived intangible assets are not subject to amortization. The carrying values of indefinite-lived intangible assets are reviewed for indicators of impairment on an annual basis (as of December 31) or more frequently if events or changes in circumstances indicate that impairment may exist. Impairment is recognized if the carrying values of the intangible assets are not recoverable from their undiscounted cash flows and is measured as the difference between the carrying value and the fair value.
(l) Income Taxes
Certain subsidiaries and branches of the Company operate in jurisdictions where they are subject to taxation. Current and deferred income taxes are charged or credited to Net income or loss or, in certain cases, to Accumulated other comprehensive income or loss, based upon enacted tax laws and rates applicable in the relevant jurisdiction in the period in which the tax becomes accruable or realizable. Deferred income taxes are provided for all temporary differences between the bases of assets and liabilities

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used in the Consolidated Balance Sheets and those used in the various jurisdictional tax returns. When management’s assessment indicates that it is more likely than not that deferred tax assets will not be realized, a valuation allowance is recorded against the deferred tax assets. Where appropriate, the valuation allowance assessment considers tax planning strategies.
The Company recognizes a tax benefit relating to uncertain tax positions only where the position is more likely than not to be sustained assuming examination by tax authorities. A liability is recognized for any tax benefit (along with any interest and penalty, if applicable) claimed in a tax return in excess of the amount recognized in the financial statements under U.S. GAAP. Any changes in amounts recognized are recorded in the period in which they are determined.
(m) Foreign Exchange
In recording foreign currency transactions, revenue and expense items in a currency other than the functional currency are converted into the functional currency at the average rates of exchange for the period. Monetary assets and liabilities originating in currencies other than the functional currency are remeasured into the functional currency at the rates of exchange in effect at the balance sheet dates. The resulting foreign exchange transaction gains or losses are included in Net foreign exchange gains or losses in the Consolidated Statements of Operations.
The reporting currency of the Company is the U.S. dollar. The national currencies of the Company’s subsidiaries and branches are generally their functional currencies, except for the Company’s Bermuda subsidiaries, its Swiss branch and its Singapore subsidiary and branches, whose functional currency is the U.S. dollar. In translating the financial statements of those subsidiaries or branches whose functional currency is other than the U.S. dollar, assets and liabilities are converted into U.S. dollars using the rates of exchange in effect at the balance sheet dates, and revenues and expenses are converted using the average foreign exchange rates for the period. The effect of translation adjustments are reported in the Consolidated Balance Sheets as Currency translation adjustment, a separate component of Accumulated other comprehensive income or loss. The change in currency translation adjustment is reflected in Other comprehensive income or loss.
(n) Derivatives
The Company’s investment strategy allows for the use of derivative instruments, subject to strict limitations. The Company may use derivative financial instruments such as foreign exchange forward contracts, foreign currency option contracts, futures contracts, to-be-announced mortgage-backed securities (TBAs), total return swaps, interest rate swaps, insurance-linked securities, and credit default swaps for the purpose of managing overall currency risk, market exposures and portfolio duration, for hedging certain investments, or for enhancing investment performance that would be allowed under the Company’s investment policy if implemented in other ways.
On the date the Company enters into a derivative contract, management determines whether or not the derivative is to be used and designated as a hedge of an identified underlying risk exposure (a designated hedge). The Company’s derivative instruments are recorded in Other invested assets in the Consolidated Balance Sheets at fair value, with gains and losses associated with changes in fair value recognized in either Net realized and unrealized investment gains or losses or Net foreign exchange gains or losses in the Consolidated Statements of Operations, or in Other comprehensive income, depending on the nature and designation of the derivative instrument (see also Note 5).
The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. In this documentation, the Company specifically identifies the asset or liability that has been designated as a hedged item and states how the hedging instrument is expected to hedge the risks related to the hedged item. The Company formally measures effectiveness of its designated hedging relationships both at the hedge inception and on an ongoing basis. For its derivatives designated as hedges at December 31, 2018, the Company's method for assessing the effectiveness of the designated hedge was a qualitative assessment, as the Company determined that the hedging instrument (the designated foreign currency forward contracts) and the hedged assets (the available-for-sale foreign currency denominated short-term investments) were perfectly aligned as they related to the hedged risk, the foreign currency exchange rate risk exposure. These hedges were settled during 2019, and there were no derivatives designated as hedges at December 31, 2019.
The Company will discontinue hedge accounting prospectively if it is determined that the derivative is no longer effective in hedging the exposure to variability in expected future cash flows that is attributable to the risk it was meant to hedge; if the derivative instrument expires, is sold, or is otherwise terminated; or if the Company removes the designation of the hedge. To the extent that the Company discontinues hedge accounting because, based on management’s assessment, the derivative no longer qualifies as an effective hedge, or the Company otherwise de-designates the hedge, the derivative will continue to be carried in the Consolidated Balance Sheet at its fair value, with changes in its fair value recognized in in the Consolidated Statements of Operations, or in Other comprehensive income, depending on the type of derivative held.

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(o) Pensions
The Company recognizes an asset or a liability in the Consolidated Balance Sheets for the funded status of its defined benefit plans that are overfunded or underfunded, respectively, measured as the difference between the fair value of plan assets and the pension obligation and recognizes changes in the funded status of defined benefit plans in the year in which the changes occur as a component of Accumulated other comprehensive income or loss, net of tax.
(p) Variable Interest Entities
The Company is involved in the normal course of business with variable interest entities (VIEs). An assessment is performed as of the date the Company becomes initially involved in the VIE followed by a reassessment upon certain events related to its involvement in the VIE. The Company consolidates a VIE when it is the primary beneficiary having a controlling financial interest as a result of having the power to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or right to receive benefits, that could potentially be significant to the VIE.
(q) Segment Reporting
The Company monitors the performance of its operations in three segments: Property & Casualty (P&C), Specialty and Life and Health. Segments represent markets that are reasonably homogeneous in terms of client types, buying patterns, underlying risk patterns or approach to risk management.
Since the Company does not manage its assets by segment, neither assets nor net investment income are allocated to the P&C and Specialty segments. However, because of the interest-sensitive nature of some of the Company’s life products, allocated net investment income is considered in management’s assessment of the profitability of the Life and Health segment. The following items are not considered in evaluating the results of the P&C, Specialty and Life and Health segments: Net realized and unrealized investment gains or losses, Interest expense, Loss on redemption of debt, Amortization of intangible assets, Net foreign exchange gains or losses, Income tax expense or benefit and Interest in earnings and losses of equity method investments. These items are included in the Corporate and Other component, which is comprised of the Company’s investment and corporate activities, including other expenses.
(r) Share-Based Incentives
The Company is authorized to issue restricted Class B shares to certain executives and directors. The compensation cost for restricted shares is measured at fair value and expensed over the period for which the employee is required to provide services in exchange for the award, up to three years from the date of grant. The Company has elected to recognize forfeitures as they occur. Unrestricted Class B shares can be sold back to the Company at the option of the shareholder. Class B shares are accounted for as liabilities, included in Accounts payable, accrued expenses and other on the Consolidated Balance Sheets.
(s) Recent Accounting Pronouncements
Adopted during 2019
In February 2016, the Financial Accounting Standards Board (FASB) issued updated guidance on the accounting for leases. The guidance requires, among other items, lessees to recognize right-of-use assets and lease liabilities on the balance sheet, and expands required disclosures. The guidance does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows for operating leases. The guidance was effective for the year ended December 31, 2019. The Company adopted the guidance using the modified retrospective transition method, and as a result, the Company’s reporting for comparative periods including related disclosures prior to adoption continue to be presented in the Consolidated Financial Statements in accordance with the previous lease accounting guidance. The Company elected the "package of practical expedients" permitted under the guidance and also elected the hindsight practical expedient in determining the lease term for the Company's existing leases at transition. The adoption of this standard resulted in the recognition of operating lease right-of-use assets of $76 million included in Other assets and lease liabilities of $86 million included in Accounts payable, accrued expenses and other on the Consolidated Balance Sheet as of December 31, 2019. The reduction of the right-of-use asset relates primarily to deferred rent that was recorded under the previous guidance. The Company determined it was not required to record a cumulative effect adjustment to opening retained earnings as of January 1, 2019. See Note 15(b) for further details.

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Not yet adopted
In January and April 2017, the FASB issued updated guidance on the accounting for goodwill impairment. This update removes the second step of the goodwill impairment test and requires entities to apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance is effective for annual impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The Company does not expect the adoption of this guidance to have a significant impact on its Consolidated Financial Statements and disclosures.
In June 2016, the FASB issued updated guidance on the recognition of credit losses by replacing the incurred loss impairment methodology with new accounting models related to how credit losses on financial instruments are determined. The new guidance is applicable to financial assets measured at amortized cost such as loans, reinsurance receivables, trade receivables, debt securities, off-balance sheet credit exposures, and other financial assets that have a contractual right to receive cash. The Company's investments, except for certain Other invested assets that are accounted for using the equity method of accounting and Investments in real estate, are measured at fair value through net income, and therefore those investments would not be impacted by the adoption of this guidance. The guidance is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of this guidance and does not expect the adoption to have a material impact on its Consolidated Financial Statements and disclosures required to be adopted for the year ended December 31, 2020.
In August 2018, the FASB issued updated guidance to the disclosure requirements for fair value measurement as part of the disclosure framework project. The updated guidance allows for the removal and modification of certain disclosures to improve the effectiveness of disclosures in the notes to financial statements. This guidance is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of this guidance on its Consolidated Financial Statements and disclosures required to be adopted for the year ended December 31, 2020.
In August 2018, the FASB issued updated guidance to improve financial reporting for insurance companies that issue long-duration contracts such as life insurance and annuities. The objective of the new guidance is to improve, simplify, and enhance the financial reporting of long-duration contracts by providing financial statement users with useful information in a timely and transparent manner. This guidance is effective for annual periods beginning after December 15, 2021. The Company is currently evaluating the impact of this guidance on its Consolidated Financial Statements and disclosures required to be adopted for the year ended December 31, 2022. This guidance could have a material impact on the measurement recognition of long duration contracts and will result in additional disclosures once adopted.
In August 2018, the FASB issued updated guidance to the disclosure requirements for defined benefit plans as part of the disclosure framework project. The updated guidance allows for the removal and modification of certain disclosures to improve the effectiveness of disclosures in the notes to financial statements. This guidance is effective for fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of this guidance on its disclosures required to be adopted for the year ended December 31, 2021.

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3. Fair Value
(a) Fair Value of Financial Instrument Assets
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement.
The Company determines the appropriate level in the hierarchy for each financial instrument that it measures at fair value. In determining fair value, the Company uses various valuation approaches, including market, income and cost approaches. The hierarchy is broken down into three levels based on the observability of inputs as follows:
 
•
Level 1 inputs—Unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
The Company’s financial instruments that it measures at fair value using Level 1 inputs generally include equities listed on a major exchange.
•
Level 2 inputs—Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets and significant directly or indirectly observable inputs, other than quoted prices, used in industry accepted models.
The Company’s financial instruments that it measures at fair value using Level 2 inputs generally include: U.S. government issued bonds; U.S. government sponsored enterprises bonds; certain U.S. state, territory and municipal entities bonds; non-U.S. sovereign government, supranational and government related bonds; investment grade and high yield corporate bonds; asset-backed securities; mortgage-backed securities; short-term investments; certain common and preferred equities; foreign exchange forward contracts; foreign currency option contracts; and interest rate swaps..
•
Level 3 inputs—Unobservable inputs.
The Company’s financial instruments that it measures at fair value using Level 3 inputs generally include: inactively traded fixed maturities including U.S. state, territory and municipal bonds; special purpose financing asset-backed bonds; unlisted or private equities; certain other mutual fund equities; privately placed corporate loans, notes and loans receivable and notes securitizations included in Other invested assets; and certain other derivatives, including weather derivatives, longevity insurance-linked securities and total return swaps included in Other invested assets.

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At December 31, 2019 and 2018, the Company’s financial instruments measured at fair value were classified between Levels 1, 2 and 3 as follows (in thousands of U.S. dollars):
December 31, 2019
 
Quoted prices in
active markets for
identical assets
(Level 1)
 
Significant
other observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Total
Fixed maturities
 
 
 
 
 
 
 
 
U.S. government and government sponsored enterprises
 
$
—

 
$
1,421,716

 
$
—

 
$
1,421,716

U.S. states, territories and municipalities
 
—

 
13,807

 
143,427

 
157,234

Non-U.S. sovereign government, supranational and government related
 
—

 
3,255,154

 
—

 
3,255,154

Corporate bonds
 
—

 
2,643,402

 
18,687

 
2,662,089

Asset-backed securities
 
—

 
—

 
18,228

 
18,228

Residential mortgage-backed securities
 
—

 
3,166,290

 
—

 
3,166,290

Other mortgage-backed securities
 
—

 
3

 
—

 
3

Fixed maturities
 
$
—

 
$
10,500,372

 
$
180,342

 
$
10,680,714

Short-term investments
 
$
—

 
$
1,003,421

 
$
—

 
$
1,003,421

Equities
 
 
 
 
 
 
 
 
Finance
 
$
31,315

 
$
2

 
$
126

 
$
31,443

Consumer cyclical
 
20,117

 
—

 
—

 
20,117

Insurance
 
5,284

 
273

 
9,403

 
14,960

Consumer noncyclical
 
13,126

 
—

 
—

 
13,126

Basic materials
 
5,295

 
—

 
—

 
5,295

Industrials
 
4,042

 
—

 
—

 
4,042

Technology
 
3,027

 
—

 
—

 
3,027

Real estate
 
—

 
—

 
2,385

 
2,385

Communications
 
922

 
—

 
—

 
922

Mutual funds
 
—

 
—

 
1,199,847

 
1,199,847

Equities
 
$
83,128

 
$
275

 
$
1,211,761

 
$
1,295,164

Other invested assets
 
 
 
 
 
 
 
 
Derivative assets
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
$
—

 
$
4,363

 
$
—

 
$
4,363

Total return swaps
 
—

 
—

 
1,448

 
1,448

Insurance-linked securities
 
—

 
—

 
2,728

 
2,728

Foreign currency option contracts
 
—

 
266

 
—

 
266

Other
 
 
 
 
 
 
 
 
Corporate loans (1)
 
—

 
—

 
1,879,105

 
1,879,105

Notes and loans receivable and notes securitization
 
—

 
—

 
3,085

 
3,085

Private equities
 
—

 
—

 
533,744

 
533,744

Derivative liabilities
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
—

 
(5,643
)
 
—

 
(5,643
)
Total return swaps
 
—

 
—

 
(2,962
)
 
(2,962
)
Interest rate swaps
 
—

 
(12,378
)
 
—

 
(12,378
)
Insurance-linked securities
 
—

 
—

 
(3,871
)
 
(3,871
)
Other invested assets
 
$
—

 
$
(13,392
)
 
$
2,413,277

 
$
2,399,885

Total
 
$
83,128

 
$
11,490,676

 
$
3,805,380

 
$
15,379,184

 
(1)
Corporate loans includes a portfolio of third-party, individually managed privately issued corporate loans that are managed under an externally managed mandate with a fair value of $1.4 billion and $0.4 billion at December 31, 2019 and 2018, respectively. The mandate primarily invests in U.S. floating rate, first lien, senior secured broadly syndicated loans with a focus on facility sizes greater than $300 million. Corporate loans also includes $0.5 billion of other privately issued corporate loans at December 31, 2019.

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December 31, 2018
 
Quoted prices in
active markets for
identical assets
(Level 1)
 
Significant
other observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Total
Fixed maturities
 
 
 
 
 
 
 
 
U.S. government and government sponsored enterprises
 
$
—

 
$
2,345,008

 
$
—

 
$
2,345,008

U.S. states, territories and municipalities
 
—

 
13,695

 
120,898

 
134,593

Non-U.S. sovereign government, supranational and government related
 
—

 
2,158,642

 
—

 
2,158,642

Corporate bonds
 
—

 
5,590,208

 
21,470

 
5,611,678

Asset-backed securities
 
—

 
41,087

 
17,596

 
58,683

Residential mortgage-backed securities
 
—

 
2,331,230

 
—

 
2,331,230

Other mortgage-backed securities
 
—

 
11

 
—

 
11

Fixed maturities
 
$
—

 
$
12,479,881

 
$
159,964

 
$
12,639,845

Short-term investments (1)
 
$
—

 
$
493,726

 
$
—

 
$
493,726

Equities
 
 
 
 
 
 
 
 
Finance
 
$
11,307

 
$
1

 
$
13,710

 
$
25,018

Technology
 
5,492

 
—

 
12,256

 
17,748

Consumer noncyclical
 
13,334

 
—

 
—

 
13,334

Consumer cyclical
 
6,435

 
—

 
—

 
6,435

Industrials
 
4,797

 
—

 
—

 
4,797

Insurance
 
1,771

 
1,189

 
—

 
2,960

Communications
 
1,451

 
—

 
—

 
1,451

Other
 
799

 
—

 
—

 
799

Mutual funds
 
—

 
—

 
621,759

 
621,759

Equities
 
$
45,386

 
$
1,190

 
$
647,725

 
$
694,301

Other invested assets
 
 
 
 
 
 
 
 
Derivative assets
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
$
—

 
$
17,820

 
$
—

 
$
17,820

Insurance-linked securities
 
—

 
—

 
2,824

 
2,824

Total return swaps
 
—

 
—

 
1,697

 
1,697

Interest rate swaps
 
—

 
10

 
—

 
10

Other
 
 
 
 
 
 
 
 
Corporate loans
 
—

 
—

 
401,702

 
401,702

Notes and loans receivable and notes securitization
 
—

 
—

 
6,507

 
6,507

Private equities
 
—

 
—

 
372,710

 
372,710

Derivative liabilities
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
—

 
(3,673
)
 
—

 
(3,673
)
Total return swaps
 
—

 
—

 
(3,232
)
 
(3,232
)
Interest rate swaps
 
—

 
(9,194
)
 
—

 
(9,194
)
Insurance-linked securities
 
—

 
—

 
(2,568
)
 
(2,568
)
Other invested assets
 
$
—

 
$
4,963

 
$
779,640

 
$
784,603

Total
 
$
45,386

 
$
12,979,760

 
$
1,587,329

 
$
14,612,475

 
(1)
Short-term investments includes $229 million of available-for-sale securities with readily determinable fair values. These securities were purchased in 2018 and are recorded at fair value, which approximated amortized cost given the short term to maturity of approximately three to four months, and matured during 2019.
At December 31, 2019 and 2018, the aggregate carrying amounts of items included in Other invested assets that the Company did not measure at fair value were $866 million and $704 million, respectively, which related to the Company’s investments that are accounted for using the equity method of accounting. Refer to Note 4(f) for further information on the Company's equity method investment in Almacantar Group S.A. (Almacantar).
At December 31, 2019 and 2018, the carrying value of accrued investment income approximated fair value due to its short-term nature.

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During the year ended December 31, 2019, an equity security issued by a financial services company valued at $14 million was transferred from Level 3 to Level 1 due to the availability of quoted prices in active markets. During the year ended December 31, 2018, a corporate longevity bond valued at $25 million was transferred from Level 2 to Level 3 due to the lack of multiple independent pricing services. Transfers into Level 3 during 2018 also included four private equity securities valued at $31 million that were previously held at cost and were measured to fair value upon adoption of new accounting guidance. During the years ended December 31, 2019 and 2018, there were no transfers between Level 1 and Level 2.
Disclosures about the fair value of financial instruments that the Company does not measure at fair value exclude insurance contracts and certain other financial instruments. At December 31, 2019 and 2018, the fair values of financial instrument assets recorded in the Consolidated Balance Sheets not described above approximate their carrying values.
The reconciliations of the beginning and ending balances for financial instruments measured at fair value using Level 3 inputs for the years ended December 31, 2019 and 2018, were as follows (in thousands of U.S. dollars):
For the year ended December 31, 2019
 
Balance at
beginning
of year
 
Realized and
unrealized
investment
gains (losses)
included in
net income
 
Purchases
 
Settlements
and
sales (1)
 
Net
transfers
(out of) into
Level 3
 
Balance
at end of
year
 
Change in
unrealized
investment gains (losses)
relating to
assets held at
end of year
Fixed maturities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. states, territories and municipalities
 
$
120,898

 
$
12,959

 
$
10,455

 
$
(885
)
 
$
—

 
$
143,427

 
$
12,951

Asset-backed securities
 
17,596

 
1,274

 
—

 
(642
)
 
—

 
18,228

 
1,274

Corporate
 
21,470

 
157

 
—

 
(2,940
)
 
—

 
18,687

 
157

Fixed maturities
 
$
159,964

 
$
14,390

 
$
10,455

 
$
(4,467
)
 
$
—

 
$
180,342

 
$
14,382

Equities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finance
 
$
13,710

 
$
100

 
$
—

 
$
—

 
$
(13,684
)
 
$
126

 
$
(3
)
Technology
 
12,256

 
(1,538
)
 
—

 
(10,718
)
 
—

 
—

 
—

Mutual funds
 
621,759

 
388,024

 
206,685

 
(16,621
)
 
—

 
1,199,847

 
385,317

Insurance
 
—

 
7,514

 
1,889

 
—

 
—

 
9,403

 
7,514

Real estate
 
—

 
—

 
2,385

 
—

 
—

 
2,385

 
—

Equities
 
$
647,725

 
$
394,100

 
$
210,959

 
$
(27,339
)
 
$
(13,684
)
 
$
1,211,761

 
$
392,828

Other invested assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives, net
 
$
(1,279
)
 
$
115

 
$
(2,000
)
 
$
507

 
$
—

 
$
(2,657
)
 
$
(111
)
Corporate loans
 
401,702

 
9,237

 
1,828,802

 
(360,636
)
 
—

 
1,879,105

 
9,940

Notes and loan receivables and notes securitization
 
6,507

 
(717
)
 
—

 
(2,705
)
 
—

 
3,085

 
139

Private equities
 
372,710

 
49,759

 
132,256

 
(20,981
)
 
—

 
533,744

 
37,159

Other invested assets
 
$
779,640

 
$
58,394

 
$
1,959,058

 
$
(383,815
)
 
$
—

 
$
2,413,277

 
$
47,127

Total
 
$
1,587,329

 
$
466,884

 
$
2,180,472

 
$
(415,621
)
 
$
(13,684
)
 
$
3,805,380

 
$
454,337

 
(1)
Settlements and sales of Equities and Other invested assets included sales of $27 million and $289 million, respectively. Sales of Other invested assets of $289 million included sales of corporate loans of $270 million, notes and loan receivables and notes securitization of $2 million, and private equities of $17 million.

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For the year ended December 31, 2018
 
Balance at
beginning
of year
 
Realized and
unrealized
investment
(losses) gains
included in
net income
 
Purchases
 
Settlements
and
sales (1)
 
Net
transfers
into (out of)
Level 3
 
Balance
at end of
year
 
Change in
unrealized
investment (losses) gains
relating to
assets held at
end of year
Fixed maturities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. states, territories and municipalities
 
$
128,806

 
$
(4,417
)
 
$
—

 
$
(3,491
)
 
$
—

 
$
120,898

 
$
(4,320
)
Asset-backed securities
 
20,738

 
(2,552
)
 
—

 
(590
)
 
—

 
17,596

 
(2,552
)
Corporate
 
—

 
(139
)
 
—

 
(3,745
)
 
25,354

 
21,470

 
(139
)
Fixed maturities
 
$
149,544

 
$
(7,108
)
 
$
—

 
$
(7,826
)
 
$
25,354

 
$
159,964

 
$
(7,011
)
Equities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finance
 
$
21,926

 
$
5,065

 
$
—

 
$
(13,281
)
 
$
—

 
$
13,710

 
$
(3,544
)
Technology
 
10,961

 
1,295

 
—

 
—

 
—

 
12,256

 
1,295

Mutual funds
 
558,736

 
10,996

 
55,027

 
(3,000
)
 
—

 
621,759

 
10,996

Equities
 
$
591,623

 
$
17,356

 
$
55,027

 
$
(16,281
)
 
$
—

 
$
647,725

 
$
8,747

Other invested assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives, net
 
$
11,221

 
$
5,038

 
$
(1,623
)
 
$
(15,915
)
 
$
—

 
$
(1,279
)
 
$
372

Corporate loans
 
205,331

 
(21,522
)
 
367,975

 
(150,082
)
 
—

 
401,702

 
(20,823
)
Notes and loan receivables and notes securitization
 
108,563

 
(4,054
)
 
—

 
(98,002
)
 
—

 
6,507

 
(3,884
)
Private equities
 
331,932

 
(12,422
)
 
55,114

 
(32,994
)
 
31,080

 
372,710

 
(15,048
)
Other invested assets
 
$
657,047

 
$
(32,960
)
 
$
421,466

 
$
(296,993
)
 
$
31,080

 
$
779,640

 
$
(39,383
)
Funds held–directly managed
 
$
2,067

 
$
238

 
$
268

 
$
(2,573
)
 
$
—

 
$
—

 
$
—

Total
 
$
1,400,281

 
$
(22,474
)
 
$
476,761

 
$
(323,673
)
 
$
56,434

 
$
1,587,329

 
$
(37,647
)
 
(1)
Settlements and sales of Equities, Other invested assets, and Funds held–directly managed included sales of $16 million, $248 million and $3 million, respectively. Sales of Other invested assets of $248 million included sales of derivatives of $16 million, corporate loans of $107 million, notes and loan receivables and notes securitization of $96 million, and private equities of $29 million.




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The significant unobservable inputs used in the valuation of financial instruments measured at fair value using Level 3 inputs at December 31, 2019 and 2018 were as follows (fair value in thousands of U.S. dollars):
December 31, 2019
 
Fair value
 
Valuation techniques
 
Unobservable inputs
 
Range
(Weighted average)
Fixed maturities
 
 
 
 
 
 
 
 
U.S. states, territories and municipalities
 
$
143,427

 
Discounted cash flow
 
Credit spreads
 
-0.1% – 9.6% (3.5%)
Asset backed securities
 
18,228

 
Discounted cash flow
 
Credit spreads
 
4.7% (4.7%)
Equities
 
 
 
 
 
 
 
 
Insurance
 
9,403

 
Weighted market comparables
 
Revenue multiple
 
 2.6x (2.6x)
 
 
 
 
 
Adjusted earnings multiple
 
 7.7x (7.7x)
 
 
 
 
 
Liquidity discount
 
30.0% (30.0%)
Other invested assets
 
 
 
 
 
 
 
 
Total return swaps, net
 
(1,514
)
 
Discounted cash flow
 
Credit spreads
 
2.3% – 24.0% (16.9%)
Insurance-linked securities – longevity swaps
 
2,728

 
Discounted cash flow
 
Credit spreads
 
1.9% (1.9%)
Insurance-linked securities – pandemic swaps
 
(1,871
)
 
Discounted cash flow
 
Credit spreads
 
56.2% (56.2%)
Notes and loans receivables
 
2,153

 
Discounted cash flow
 
Credit spreads
 
17.5% (17.5%)
 
 
 
 
 
 
Gross revenue/fair value ratios
 
1.1 (1.1)
Note securitization
 
932

 
Discounted cash flow
 
Credit spreads
 
1.2% (1.2%)
Private equity – other
 
15,800

 
Discounted cash flow
 
Effective yield
 
3.0% (3.0%)
Private equity – funds
 
167,804

 
Lag reported market value
 
Net asset value, as reported
 
100.0% (100.0%)
 
 
 
 
 
Market adjustments
 
1.9% – 15.0% (9.7%)


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December 31, 2018
 
Fair value
 
Valuation techniques
 
Unobservable inputs
 
Range
(Weighted average)
Fixed maturities
 
 
 
 
 
 
 
 
U.S. states, territories and municipalities
 
$
120,898

 
Discounted cash flow
 
Credit spreads
 
0.2% – 10.2% (4.3%)
Asset backed securities
 
17,596

 
Discounted cash flow
 
Credit spreads
 
6.7% (6.7%)
Equities
 
 
 
 
 
 
 
 
Finance(1)
 
13,710

 
Lag reported market value
 
Transaction price
 
12.0 (12.0)
Technology
 
12,256

 
Reported market value
 
Tangible book value multiple
 
1.0 (1.0)
Other invested assets
 

 
 
 
 
 
 
Total return swaps, net
 
(1,535
)
 
Discounted cash flow
 
Credit spreads
 
2.5% – 23.0% (16.0%)
Insurance-linked securities – longevity swaps
 
2,824

 
Discounted cash flow
 
Credit spreads
 
2.6% (2.6%)
Insurance-linked securities – pandemic swaps
 
(1,301
)
 
Discounted cash flow
 
Credit spreads
 
27.3% (27.3%)
Insurance-linked securities – weather index swap
 
(1,267
)
 
Proprietary option model
 
Index value (temperature)
 
80.7 – 3,293.8 (175.3)
Notes and loans receivable
 
2,660

 
Discounted cash flow
 
Credit spreads
 
41.5% – 41.9% (41.5%)
Notes and loans receivable
 
2,688

 
Discounted cash flow
 
Credit spreads
 
17.5% (17.5%)
 
 
 
 
Gross revenue/fair value ratios
 
1.1 (1.1)
Note securitization
 
1,159

 
Discounted cash flow
 
Credit spreads
 
0.8% (0.8%)
Private equity – direct
 
1,889

 
 Weighted market comparables
 
Revenue multiple
 
1.1 (1.1)
 
 

 
 
Adjusted earnings multiple
 
9.8 (9.8)
 
 
 
 
 
Liquidity discount
 
30% (30%)
Private equity – funds
 
14,438

 
Reported market value
 
Net asset value, as reported
 
100.0% (100.0%)
 
 
 
 
 
Market adjustments
 
-6.5% (-6.5%)
Private equity – other
 
19,997

 
Discounted cash flow
 
Effective yield
 
4.1% (4.1%)
 
(1) During 2018, the Company sold a portion of its investment and used the arm's length transaction price as an estimate of the fair value of the remaining holdings.
The tables above do not include financial instruments that are measured using unobservable inputs (Level 3) where the unobservable inputs were obtained from external sources and used without adjustment. These financial instruments include corporate bonds (included within Fixed maturities), certain common stock equities and mutual fund investments (included within Equities), certain private equity funds (private equities included within Other invested assets), privately placed corporate loans (included within Other invested assets) and certain derivatives (included within Other invested assets).
The Company has established a Valuation Committee which is responsible for determining the Company’s invested asset valuation procedures, reviewing significant changes in the fair value measurements of securities classified as Level 3 and ensuring that there is appropriate oversight, on at least an annual basis, of the fair value measurements of significant securities that are classified as Level 3. The Valuation Committee is comprised of members of the Company’s senior management team.

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Changes in the fair value of the Company’s financial instruments subject to the fair value option during the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands of U.S. dollars):
 
2019
 
2018
 
2017
Fixed maturities and short-term investments
$
190,343

 
$
(150,926
)
 
$
124,033

Equities
403,011

 
2,791

 
60,460

Other invested assets
50,857

 
(12,987
)
 
28,144

Funds held–directly managed (1)
—

 
(6,484
)
 
(5,612
)
Total
$
644,211

 
$
(167,606
)
 
$
207,025

 
(1) The funds held–directly managed account was settled in 2018 upon commutation of the related Paris Re Reserve Agreement. See Note 7(a).
Substantially all of the above changes in fair value are included in Net realized and unrealized investment gains (losses) in the Consolidated Statements of Operations. The change in the fair value of Other invested assets subject to the fair value option does not include certain derivatives.
The following methods and assumptions were used by the Company in estimating the fair value of each class of financial instrument recorded in the Consolidated Balance Sheets. There have been no material changes in the Company’s valuation techniques during the periods presented.
Fixed maturities 
•
U.S. government and government sponsored enterprises—consists primarily of bonds issued by the U.S. Treasury and corporate debt securities issued by government sponsored enterprises and federally owned or established corporations. These securities are generally priced by independent pricing services. The independent pricing services may use actual transaction prices for securities that have been actively traded. For securities that have not been actively traded, each pricing source has its own proprietary method to determine the fair value, which may incorporate option adjusted spreads (OAS), interest rate data and market news. The Company generally classifies these securities in Level 2.
•
U.S. states, territories and municipalities—consists primarily of bonds issued by U.S. states, territories and municipalities and the Federal Home Loan Mortgage Corporation. Certain of the bonds that are issued by municipal housing authorities and the Federal Home Loan Mortgage Corporation are not actively traded and are priced based on internal models using unobservable inputs (credit spreads). Accordingly, the Company classifies these securities in Level 3. A significant increase (decrease) in credit spreads in isolation could result in a significantly lower (higher) fair value measurement. The remaining securities are generally priced by independent pricing services using the techniques described for U.S. government and government sponsored enterprises above. The Company generally classifies these securities in Level 2.
•
Non-U.S. sovereign government, supranational and government related—consists primarily of bonds issued by non-U.S. national governments and their agencies, non-U.S. regional governments and supranational organizations. These securities are generally priced by independent pricing services using the techniques described for U.S. government and government sponsored enterprises above. The Company generally classifies these securities in Level 2.
•
Corporate—consists primarily of bonds issued by U.S. and foreign corporations covering a variety of industries and issuing countries. Corporate securities also include real estate investment trusts, catastrophe bonds, longevity and mortality bonds and government guaranteed corporate debt. These securities are generally priced by independent pricing services and brokers. The pricing provider incorporates information including credit spreads, interest rate data and market news into the valuation of each security. The Company generally classifies these securities in Level 2. When a corporate security is inactively traded or the valuation model uses unobservable inputs, the Company classifies the security in Level 3.
•
Asset-backed securities—primarily consists of bonds issued by U.S. and foreign corporations that are predominantly backed by student loans, automobile loans, credit card receivables, equipment leases, and special purpose financing. With the exception of special purpose financing securities, these asset-backed securities are generally priced by independent pricing services and brokers. The pricing provider applies dealer quotes and other available trade information, prepayment speeds, yield curves and credit spreads to the valuation. The Company generally classifies these securities in Level 2. Special purpose financing securities are generally inactively traded and are priced based on valuation models using unobservable inputs (credit spreads). The Company generally classifies these securities in Level 3. A significant increase (decrease) in credit spreads in isolation could result in a significantly lower (higher) fair value measurement.

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•
Residential mortgage-backed securities—primarily consists of bonds issued by the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, as well as private, non-agency issuers. These residential mortgage-backed securities are generally priced by independent pricing services and brokers. When current market trades are not available, the pricing provider or the Company will employ proprietary models with observable inputs including other trade information, prepayment speeds, yield curves and credit spreads. The Company generally classifies these securities in Level 2.
•
Other mortgage-backed securities—primarily consists of commercial mortgage-backed securities. These securities are generally priced by independent pricing services and brokers. The pricing provider applies dealer quotes and other available trade information, prepayment speeds, yield curves and credit spreads to the valuation. The Company generally classifies these securities in Level 2.
In general, the methods employed by the independent pricing services to determine the fair value of the securities that have not been actively traded primarily involve the use of “matrix pricing” in which the independent pricing source applies the credit spread for a comparable security that has traded recently to the current yield curve to determine a reasonable fair value. The Company generally uses one pricing source per security and uses a pricing service ranking to consistently select the most appropriate pricing service in instances where it receives multiple quotes on the same security. When fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Most of the Company’s fixed maturities are priced from the pricing services or dealer quotes. The Company will typically not make adjustments to prices received from pricing services or dealer quotes; however, in instances where the quoted external price for a security uses significant unobservable inputs, the Company will classify that security as Level 3. The methods used to develop and substantiate the unobservable inputs used are based on the Company’s valuation policy and are dependent upon the facts and circumstances surrounding the individual investments which are generally transaction specific. The Company’s inactively traded fixed maturities are classified as Level 3. For all fixed maturity investments, the bid price is used for estimating fair value.
To validate prices, the Company compares the fair value estimates to its knowledge of the current market and will investigate prices that it considers not to be representative of fair value. The Company also reviews an internally generated fixed maturity price validation report which converts prices received for fixed maturity investments from the independent pricing sources and from broker-dealers quotes and plots OAS and duration on a sector and rating basis. The OAS is calculated using established algorithms developed by an independent risk analytics platform vendor. The OAS on the fixed maturity price validation report are compared for securities in a similar sector and having a similar rating, and outliers are identified and investigated for price reasonableness. In addition, the Company completes quantitative analyses to compare the performance of each fixed maturity investment portfolio to the performance of an appropriate benchmark, with significant differences identified and investigated.
Short-term investments
Short-term investments are valued in a manner similar to the Company’s fixed maturity investments and are generally classified in Level 2. At December 31, 2018, short-term investments included investments in foreign currency denominated bonds issued by a foreign government with durations to maturity of three to four months, as discussed in footnote (1) to the fair value table above, which matured during 2019. See also Notes 2(g) and 2(n) for further details.
Equities
Equity securities include U.S. and foreign common and preferred stocks, real estate investment trusts and mutual funds. Publicly traded equities are generally classified in Level 1 as the Company uses prices received from independent pricing sources based on quoted prices in active markets. Equities classified as Level 2 are generally mutual funds invested in fixed income securities, where the net asset value of the fund is provided on a daily basis, and certain common and preferred equities. Equities classified as Level 3 are generally mutual funds invested in securities other than the common stock of publicly traded companies, where the net asset value is not provided on a daily basis, and inactively traded common stocks. The significant unobservable inputs used in the fair value measurement of inactively traded common stocks classified as Level 3 include market return information, weighted using management’s judgment, from comparable selected publicly traded companies in the same industry, in a similar region and of a similar size, including transactional prices, tangible book value multiples, revenue multiples and adjusted earnings multiples. Significant increases (decreases) in any of these inputs could result in a significantly higher (lower) fair value measurement. Significant unobservable inputs used in measuring the fair value measurement of inactively traded common stocks also include a liquidity discount. A significant increase (decrease) in the liquidity discount could result in a significantly lower (higher) fair value measurement.
To validate prices, the Company completes quantitative analyses to compare the performance of each equity investment portfolio to the performance of an appropriate benchmark, with significant differences identified and investigated.

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Other invested assets
The Company’s foreign exchange forward contracts, foreign currency option contracts, interest rate swaps and TBAs are generally classified as Level 2 within the fair value hierarchy and are priced by independent pricing services.
Included in the Company’s Level 3 classification, in general, are certain derivatives, including weather derivative insurance-linked securities and total return swaps; privately placed corporate loans; notes and loans receivable and notes securitizations; and private equities. For Level 3 instruments, the Company will generally (i) receive a price based on a manager’s or trustee’s valuation for the asset; (ii) develop an internal discounted cash flow model to measure fair value; or (iii) use market return information, adjusted if necessary and weighted using management’s judgment, from comparable selected publicly traded equity funds in a similar region and of a similar size. Where the Company receives prices from the manager or trustee, these prices are based on the manager’s or trustee’s estimate of fair value for the assets and are generally audited on an annual basis. Where the Company develops its own discounted cash flow models, the inputs will be specific to the asset in question, based on appropriate historical information, adjusted as necessary, and using appropriate discount rates. The significant unobservable inputs used in the fair value measurement of Other invested assets classified as Level 3 include variation in regional temperatures, credit spreads, gross revenue to fair value ratios and other valuation ratios. Significant increases (decreases) in any of these inputs in isolation could result in a significantly lower (higher) fair value measurement. Significant unobservable inputs used in the fair value measurement of Other invested assets classified as Level 3 also include market return information, weighted using management’s judgment, from comparable selected publicly traded companies in the same industry, in a similar region and of a similar size, net income multiples and effective yields. Significant increases (decreases) in these inputs in isolation could result in a significantly higher (lower) fair value measurement. As part of the Company’s modeling to determine the fair value of an investment, the Company considers counterparty credit risk as an input to the model, however, the majority of the Company’s counterparties are investment grade rated institutions and the failure of any one counterparty would not have a significant impact on the Company’s consolidated financial statements.
To validate prices, the Company will compare them to benchmarks, where appropriate, or to the business results generally within that asset class and specifically to those particular assets.
(b) Fair Value of Financial Instrument Liabilities
At December 31, 2019 and 2018, the carrying values of financial instrument liabilities recorded in the Consolidated Balance Sheets approximate their fair values, with the exception of the long-term debt related to senior notes and capital efficient notes (CENts). The fair value of the debt related to senior notes as of December 31, 2019 and 2018 was calculated based on discounted cash flow models using observable market yields and contractual cash flows based on the aggregate principal amount outstanding. The fair value of the debt related to CENts as of December 31, 2019 and 2018 was calculated based on market data valuation models using observable inputs based on the aggregate principal amount outstanding of the intercompany debt.
See Note 9 for further details related to the Company's debt, including the carrying values and fair values.
At December 31, 2019 and 2018, the Company’s debt related to the senior notes and CENts was classified as Level 2 in the fair value hierarchy.
Disclosures about the fair value of financial instrument liabilities exclude insurance contracts.

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4. Investments
(a) Net Realized and Unrealized Investment Gains (Losses)
The components of the net realized and unrealized investment gains (losses) for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands of U.S. dollars): 
 
 
2019
 
2018
 
2017
Net realized investment gains (losses) on fixed maturities and short-term investments
 
$
243,508

 
$
(224,887
)
 
$
28,632

Net realized investment gains (losses) on equities
 
6,545

 
14,601

 
(4,052
)
Net realized investment gains (losses) on other invested assets
 
830

 
7,136

 
(3,217
)
Net realized investment gains on funds held–directly managed (1)
 
—

 
1,200

 
508

Net realized investment gains (losses)
 
$
250,883

 
$
(201,950
)
 
$
21,871

Change in net unrealized investment gains (losses) on fixed maturities and short-term investments
 
$
190,343

 
$
(150,926
)
 
$
124,033

Change in net unrealized investment gains on equities
 
403,011

 
2,791

 
60,460

Change in net unrealized investment gains (losses) on other invested assets
 
44,441

 
(25,607
)
 
32,790

Change in net unrealized investment losses on funds held–directly managed (1)
 
—

 
(6,484
)
 
(5,567
)
Net other realized and unrealized investment gains (losses)
 
969

 
(1,334
)
 
(1,096
)
Change in net unrealized investment gains (losses)
 
$
638,764

 
$
(181,560
)
 
$
210,620

Impairment loss on investments in real estate
 
$
(2,977
)
 
$
(6,122
)
 
$
—

Net realized and unrealized investment gains (losses)
 
$
886,670

 
$
(389,632
)
 
$
232,491

 
(1) The funds held–directly managed account was settled in 2018 upon commutation of the related Paris Re Reserve Agreement. See also Note 7(a) for further details.
(b) Net Investment Income
The components of net investment income for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands of U.S. dollars): 
 
 
2019
 
2018
 
2017
Fixed maturities
 
$
379,939

 
$
378,726

 
$
382,676

Short-term investments and cash and cash equivalents
 
26,981

 
13,279

 
5,363

Other invested assets
 
68,879

 
26,234

 
11,800

Equities, funds held and other (1)
 
12,221

 
21,964

 
17,256

Funds held–directly managed (2)
 
—

 
4,674

 
7,742

Investment expenses
 
(39,482
)
 
(28,956
)
 
(22,766
)
Net investment income
 
$
448,538

 
$
415,921

 
$
402,071

 
(1) The Company generally earns investment income on funds held by reinsured companies based upon a predetermined interest rate, either fixed contractually at the inception of the contract or based upon a recognized index (e.g. LIBOR). Interest rates ranged from 0.1% to 5.1%, 0.1% to 7.4% and 0.1% to 7.0% for the years ended December 31, 2019, 2018 and 2017, respectively.
(2) The funds held–directly managed account was settled in 2018 upon commutation of the related Paris Re Reserve Agreement. See also Note 7(a) for further details.
(c) Pledged and Restricted Assets
At December 31, 2019 and 2018, approximately $294 million and $152 million, respectively, of cash and cash equivalents and approximately $4,025 million and $3,849 million, respectively, of securities were deposited, pledged or held in escrow accounts in favor of ceding companies and other counterparties or government authorities to comply with reinsurance contract provisions and insurance laws.

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(d) Receivable for Securities Sold and Payable for Securities Purchased
At December 31, 2019 and 2018, receivables for securities sold of $31 million and $19 million, respectively, were recorded within Other assets. At December 31, 2019 and 2018, payables for securities purchased of $169 million and $80 million, respectively, were recorded within Accounts payable, accrued expenses, and other in the Consolidated Balance Sheets.
(e) Variable Interest Entities
The Company holds variable interests in VIEs including certain limited liability companies or partnerships, trusts, fixed maturity investments and asset-backed securities. The holdings in these VIEs are reported within Fixed maturities and Other invested assets in the Company’s Consolidated Balance Sheets. The Company’s involvement in these entities is, for the most part, passive in nature. The Company’s maximum exposure to loss with respect to these investments is limited to the amounts invested in and advanced to the VIEs, and any unfunded commitments (see Note 15(c)).
(f) Summarized Financial Information of an Equity Method Investee
At December 31, 2019 and 2018, the Company held a 36% shareholding in the privately held United Kingdom real estate investment and development group, Almacantar. At December 31, 2019 and 2018, the total carrying value of this investment, accounted for under the equity method, was $483 million and $498 million, respectively, included within Other invested assets in the Consolidated Balance Sheets. This equity method investment was considered significant as the interest in earnings of this investee exceeded 10% of the consolidated net income before income tax expense of the Company for the year ended December 31, 2017. As at December 31, 2019 and 2018, the investment in Almacantar was no longer considered significant. The summarized balance sheet and income statement of Almacantar is as follows (in thousands of U.S. dollars):
 
 
December 31, 2019
 
December 31, 2018
Current assets
 
$
963,812

 
$
1,007,293

Noncurrent assets
 
$
1,431,384

 
$
1,341,825

Current liabilities
 
$
159,205

 
$
577,660

Noncurrent liabilities
 
$
862,943

 
$
357,625

 
 
 
 
 
 
 
For the year ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Revenues
 
$
47,551

 
$
42,671

 
$
20,508

Operating (loss) profit (1)
 
$
(63,653
)
 
$
(14,562
)
 
$
190,613

Net (loss) income
 
$
(56,648
)
 
$
(21,038
)
 
$
213,241

 
(1) Operating (loss) profit referred to in the table above includes revenues, cost of sales, and unrealized gains (losses) on properties.
5. Derivatives
The Company’s objectives for holding or issuing derivatives are as follows:
Foreign Exchange Forward Contracts—The Company utilizes foreign exchange forward contracts as part of its overall currency risk management and investment strategies. At December 31, 2018, the Company specifically designated certain foreign exchange forward contracts as a highly effective hedge of certain foreign currency denominated short-term investments, which were settled during 2019.
Futures Contracts and Foreign Currency Option Contracts —The Company uses exchange traded treasury note futures contracts to manage portfolio duration and equity futures to hedge certain investments. The Company utilizes foreign currency option contracts to mitigate foreign currency risk. 
Insurance-linked Securities—The Company enters into various derivatives for which the underlying risks reference parametric weather risks and pandemic outbreaks, in addition to longevity total return swaps for which the underlying risks reference longevity risks.

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Total Return and Interest Rate Swaps—The Company enters into total return swaps referencing certain investments in Other invested assets. The Company enters into interest rate swaps to mitigate the interest rate risk on certain of the total return swaps and certain fixed maturity investments.
TBAs—The Company utilizes TBAs as part of its overall investment strategy and to enhance investment performance.
The net fair values of derivatives included in Other invested assets within the Company’s Consolidated Balance Sheets and the related net notional exposures at December 31, 2019 and 2018 were as follows (in thousands of U.S. dollars):
 
 
Asset
derivatives
at fair value
 
Liability
derivatives
at fair value
 
Net derivatives
December 31, 2019
 
Fair value
 
Net notional
exposure
Derivatives not designated as hedges
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
$
4,363

 
$
(5,643
)
 
$
(1,280
)
 
$
3,028,063

Foreign currency option contracts
 
266

 
—

 
266

 
—

Insurance-linked securities (1)
 
2,728

 
(3,871
)
 
(1,143
)
 
46,250

Total return swaps
 
1,448

 
(2,962
)
 
(1,514
)
 
31,641

Interest rate swaps (2)
 
—

 
(12,378
)
 
(12,378
)
 
—

Total derivatives not designated as hedges
 
$
8,805

 
$
(24,854
)
 
$
(16,049
)
 
 
 
 
 
Asset
derivatives
at fair value
 
Liability
derivatives
at fair value
 
Net derivatives
December 31, 2018
 
Fair value
 
Net notional
exposure
Derivatives designated as hedges
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
$
—

 
$
(2,464
)
 
$
(2,464
)
 
$
226,019

Total derivatives designated as hedges
 
$
—

 
$
(2,464
)
 
$
(2,464
)
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as hedges
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
$
17,820

 
$
(1,209
)
 
$
16,611

 
$
2,231,871

Insurance-linked securities (1)
 
2,824

 
(2,568
)
 
256

 
59,257

Total return swaps
 
1,697

 
(3,232
)
 
(1,535
)
 
41,980

Interest rate swaps (2)
 
10

 
(9,194
)
 
(9,184
)
 
1,840

Total derivatives not designated as hedges
 
$
22,351

 
$
(16,203
)
 
$
6,148

 
 
Total derivatives
 
$
22,351

 
$
(18,667
)
 
$
3,684

 
 
 
(1)
Insurance-linked securities include longevity swaps for which the notional amounts are not reflective of the overall potential exposure of the swaps. The net notional exposure above included the Company's best estimate of the present value of future expected claims.
(2)
The Company enters into interest rate swaps to mitigate notional exposures on certain total return swaps and certain fixed maturities. The net notional exposure for interest rate swaps above relates to fixed maturities.
The fair value of derivatives is recorded in Other invested assets in the Company’s Consolidated Balance Sheets. At December 31, 2018, the Company held foreign exchange forward contracts which were designated as highly effective hedges of the Japanese Yen foreign exchange rate risk exposure against the U.S. dollar related to specific Japanese government issued bonds recorded in Short-term investments. At December 31, 2018, there was less than $2 million of gains related to foreign exchange forward contracts designated as cash flow hedges recognized in Accumulated other comprehensive loss. These gains were reclassified to income upon settlement of the hedges and maturity of the bonds during 2019 and, as a result, there are no hedge related balances recorded in Accumulated other comprehensive loss at December 31, 2019. There were no derivatives designated as hedges at December 31, 2019.

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The gains and losses in the Consolidated Statements of Operations for derivatives not designated as hedges for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands of U.S. dollars):
 
2019
 
2018
 
2017
Foreign exchange forward contracts
$
(41,171
)
 
$
45,143

 
$
(41,776
)
Total included in Net foreign exchange (losses) gains
$
(41,171
)
 
$
45,143

 
$
(41,776
)
Futures contracts
$
(9,952
)
 
$
11,043

 
$
(11,683
)
Insurance-linked securities
(4,381
)
 
6,134

 
(563
)
Total return swaps
—

 
—

 
464

Interest rate swaps
(5,230
)
 
2,332

 
1,105

TBAs
—

 
(13,614
)
 
4,742

Other
463

 
—

 
—

Total included in Net realized and unrealized investment gains (losses)
$
(19,100
)
 
$
5,895

 
$
(5,935
)
Total derivatives not designated as hedges
$
(60,271
)
 
$
51,038

 
$
(47,711
)
Offsetting of Derivatives
The gross and net fair values of derivatives that are subject to offsetting in the Consolidated Balance Sheets at December 31, 2019 and 2018 were as follows (in thousands of U.S. dollars):
 
 
 
 
Gross
amounts
offset in the
balance sheet
 
Net amounts of
assets/liabilities
presented in the
balance sheet
 
Gross amounts not offset
in the balance sheet
 
 
December 31, 2019
 
Gross
amounts
recognized (1)
 
Financial
instruments
 
Cash collateral
received/pledged
 
Net amount
Total derivative assets
 
$
8,805

 
$
—

 
$
8,805

 
$
—

 
$
(19,537
)
 
$
(10,732
)
Total derivative liabilities
 
$
(24,854
)
 
$
—

 
$
(24,854
)
 
$
—

 
$
2,977

 
$
(21,877
)
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Total derivative assets
 
$
22,351

 
$
—

 
$
22,351

 
$
(544
)
 
$
(24,704
)
 
$
(2,897
)
Total derivative liabilities
 
$
(18,667
)
 
$
—

 
$
(18,667
)
 
$
544

 
$
5,221

 
$
(12,902
)
 
(1)
Amounts include all derivative instruments, irrespective of whether there is a legally enforceable master netting arrangement in place.

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6. Goodwill and Intangible Assets
The Company’s goodwill related to the acquisitions of PartnerRe SA, Winterthur Re, Paris Re and Presidio and intangible assets related to the acquisitions of Paris Re, Presidio, Aurigen and Claims Analytics at December 31, 2019, 2018 and 2017 were as follows (in thousands of U.S. dollars): 
 
 
Goodwill
 
Definite-
lived intangible
assets
 
Indefinite-
lived intangible
assets
 
Total
intangible assets
Balance at December 31, 2016
 
$
456,380

 
$
99,742

 
$
7,350

 
$
107,092

Acquired during the year(1)
 
—

 
75,583

 
2,205

 
77,788

Intangible assets amortization
 
n/a

 
(24,646
)
 
n/a

 
(24,646
)
Balance at December 31, 2017
 
$
456,380

 
$
150,679

 
$
9,555

 
$
160,234

Acquired during the year(2)
 
—

 
4,138

 
—

 
4,138

Intangible assets amortization
 
n/a

 
(35,473
)
 
n/a

 
(35,473
)
Balance at December 31, 2018
 
$
456,380

 
$
119,344

 
$
9,555

 
$
128,899

Foreign currency translation
 
—

 
73

 
—

 
73

Intangible assets amortization
 
n/a

 
(11,434
)
 
n/a

 
(11,434
)
Balance at December 31, 2019
 
$
456,380

 
$
107,983

 
$
9,555

 
$
117,538

 
n/a: Not applicable
(1) In April 2017, the Company completed the acquisition of Aurigen. The Company recorded intangible assets related to the life value of business acquired (life VOBA) of $76 million and insurance licenses of $2 million. A bargain purchase gain of less than $1 million was included in Other income in the Consolidated Statement of Operations for the year ended December 31, 2017 representing the excess of fair value of the net assets acquired over the purchase price.
(2) In June 2018, the Company completed the acquisition for 100% of the assets in Claim Analytics Inc., a Canadian based provider of predictive analytics solutions for the insurance industry. In relation to this acquisition, the Company recorded intangible assets related to customer relationships of $4 million.
The gross carrying value and accumulated amortization of intangible assets included in the Consolidated Balance Sheets at December 31, 2019 and 2018 were as follows (in thousands of U.S. dollars):
 
 
December 31, 2019
 
December 31, 2018
 
 
Gross  carrying
value
 
Accumulated
amortization
 
Net carrying value
 
Gross  carrying
value
 
Accumulated
amortization
 
Net carrying value
Definite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Renewal rights
 
$
48,163

 
$
(35,238
)
 
$
12,925

 
$
48,163

 
$
(31,828
)
 
$
16,335

Customer relationships
 
67,619

 
(42,419
)
 
25,200

 
67,546

 
(36,188
)
 
31,358

Life VOBA
 
75,583

 
(5,725
)
 
69,858

 
75,583

 
(3,932
)
 
71,651

Total definite-lived intangible assets
 
$
191,365

 
$
(83,382
)
 
$
107,983

 
$
191,292

 
$
(71,948
)
 
$
119,344

Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance licenses
 
9,555

 
n/a

 
9,555

 
9,555

 
n/a

 
9,555

Total intangible assets
 
$
200,920

 
$
(83,382
)
 
$
117,538

 
$
200,847

 
$
(71,948
)
 
$
128,899

 
n/a: Not applicable
Definite-lived intangible assets are amortized over a period of 10-13 years for renewal rights and customer relationships, and 100 years for life VOBA.

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The allocation of the goodwill to the Company’s segments at December 31, 2019 and 2018 was as follows (in thousands of U.S. dollars): 
 
2019
 
2018
P&C segment
$
242,376

 
$
242,376

Specialty segment
196,047

 
196,047

Life and Health segment
17,957

 
17,957

Total
$
456,380

 
$
456,380

The estimated future amortization expense related to the Company’s definite-lived intangible assets is as follows (in thousands of U.S. dollars): 
Year
 
VOBA
 
Other definite-
lived intangible
assets
 
Total definite-
lived intangible
assets
2020
 
$
1,573

 
$
8,422

 
$
9,995

2021
 
1,486

 
7,349

 
8,835

2022
 
2,478

 
6,423

 
8,901

2023
 
2,272

 
5,641

 
7,913

2024
 
2,296

 
4,960

 
7,256

Thereafter
 
59,753

 
5,330

 
65,083

Total
 
$
69,858

 
$
38,125

 
$
107,983

7. Non-life and Life and Health Reserves
(a) Non-life reserves
Non-life reserves are categorized into three types of reserves: case reserves, ACRs and IBNR reserves. Case reserves represent unpaid losses reported by the Company’s cedants and recorded by the Company. ACRs are established for particular circumstances where, on the basis of individual loss reports, the Company estimates that the particular loss or collection of losses covered by a treaty may be greater than those advised by the cedant. IBNR reserves represent a provision for claims that have been incurred but not yet reported to the Company, as well as future loss development on losses already reported, in excess of the case reserves and ACRs. See also note 2(b).
The Company’s gross liability for non-life reserves reported by cedants (case reserves) and those estimated by the Company (ACRs and IBNR reserves) at December 31, 2019 and 2018 was as follows (in thousands of U.S. dollars):
 
 
December 31, 2019
 
December 31, 2018
Case reserves
 
$
4,203,052

 
$
4,217,068

ACRs
 
158,220

 
174,713

IBNR reserves
 
6,002,111

 
5,503,595

Non-life reserves
 
$
10,363,383

 
$
9,895,376


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The reconciliation of the beginning and ending gross and net liability for non-life reserves for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands of U.S. dollars): 
 
 
2019
 
2018
 
2017
Gross liability at beginning of year
 
$
9,895,376

 
$
10,102,172

 
$
9,247,200

Reinsurance recoverable at beginning of year
 
850,946

 
719,998

 
295,388

Net liability at beginning of year
 
9,044,430

 
9,382,174

 
8,951,812

Net incurred losses related to: (1)
 
 
 
 
 
 
Current year
 
3,716,988

 
3,417,366

 
3,453,725

Prior years
 
(56,848
)
 
(248,719
)
 
(448,158
)
 
 
3,660,140

 
3,168,647

 
3,005,567

Net paid losses related to:
 
 
 
 
 
 
Current year
 
(439,285
)
 
(336,584
)
 
(472,291
)
Prior years
 
(2,651,385
)
 
(2,585,403
)
 
(2,506,760
)
 
 
(3,090,670
)
 
(2,921,987
)
 
(2,979,051
)
Retroactive reinsurance recoverable (2)
 
(81,013
)
 
—

 
—

Change in Paris Re reserve agreement (3)
 
—

 
(397,493
)
 
(3,481
)
Effects of foreign exchange rate changes
 
75,701

 
(186,911
)
 
407,327

Net liability at end of year
 
$
9,608,588

 
$
9,044,430

 
$
9,382,174

Reinsurance recoverable at end of year
 
754,795

 
850,946

 
719,998

Gross liability at end of year
 
$
10,363,383

 
$
9,895,376

 
$
10,102,172

 
(1) Net incurred losses include favorable loss development of $3 million during the year ended December 31, 2019, which are allocated to Corporate and Other as disclosed in Note 18. Non-life reserves allocated to Corporate and Other totaled $6 million, $9 million and $nil at December 31, 2019, 2018 and 2017, respectively.    
(2) In the fourth quarter of 2019, the Company entered into a loss portfolio transfer agreement transferring 100% of liabilities, including profit commissions, related to its wholesale managing general agent portfolio. As a result of the transaction, the Company recorded a deferred gain of $14 million, which is included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheet.
(3) The change in reserve agreement includes adverse development on Paris Re’s reserves which were guaranteed by Axa under the reserve agreement. In 2018, this balance also includes the reduction of the guaranteed reserves following the commutation of the agreement in the fourth quarter of 2018.
For the year ended December 31, 2019, the Company reported net favorable loss development for prior accident years resulting from favorable loss emergence in the P&C segment, which was partially offset by adverse loss emergence for the Specialty segment. The favorable loss emergence within the P&C segment was primarily from accident years 2014 and prior, mainly driven by the European casualty and motor business, which was partially offset by adverse loss emergence in the U.S. casualty business. The adverse loss emergence within the Specialty segment was across multiple accident years, predominantly from the engineering, aviation and multiline business.
For the year ended December 31, 2018, the Company reported net favorable loss development for prior accident years resulting from favorable loss emergence in both Non-life segments. The favorable loss emergence within the P&C segment was across multiple accident years, mainly driven by the European casualty business. The favorable loss emergence within the Specialty segment was across multiple accident years, predominantly from the financial risks and property marine energy business.
For the year ended December 31, 2017, the Company reported net favorable loss development for prior accident years resulting from favorable loss emergence in both Non-life segments. The favorable loss emergence within the P&C segment was across multiple accident years, mainly driven by the casualty business. The favorable loss emergence within the Specialty segment was predominantly from the previous two accident years, mainly driven by the energy and agriculture business.

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Paris Re Reserve Agreement
Following Paris Re’s acquisition of substantially all of the reinsurance operations of Colisée Re in 2006, Paris Re’s French operating subsidiary (Paris Re France) entered into a reserve agreement (Reserve Agreement) whereby AXA and Colisée Re guaranteed reserves in respect of Paris Re France and subsidiaries acquired in the acquisition. The Reserve Agreement related to losses incurred prior to December 31, 2005. The reserve guarantee was conditioned upon, among other things, the guaranteed business, including related ceded reinsurance, being managed by AXA Liabilities Managers, an affiliate of Colisée Re. At December 31, 2017, the Company’s gross liability for non-life reserves included $426 million of guaranteed reserves, which were settled prior to December 31, 2018 as a result of the commutation of the remaining reserves under the Reserve Agreement. As a result of this commutation, a gain of $29 million was recorded in Other income within the Consolidated Statement of Operations during the year ended December 31, 2018. As of December 31, 2019 no balances related to the Paris Re agreement remain.
Asbestos and Environmental Claims
The Company’s net non-life reserves at December 31, 2019 and 2018 included $45 million and $47 million, respectively, related to asbestos and environmental claims. The gross liability for such claims at December 31, 2019 and 2018 was $51 million and $54 million, respectively.
Ultimate loss estimates for such claims cannot be estimated using traditional reserving techniques and there are significant uncertainties in estimating the Company’s potential losses for these claims. In view of the legal and tort environment that affect the development of such claims, the uncertainties inherent in estimating asbestos and environmental claims are not likely to be resolved in the near future. There can be no assurance that the reserves established by the Company will not be adversely affected by development of other latent exposures, and further, there can be no assurance that the reserves established by the Company will be adequate. The Company does, however, actively evaluate potential exposure to asbestos and environmental claims and establishes additional reserves as appropriate. The Company believes that it has made a reasonable provision for these exposures and is unaware of any specific issues that would materially affect its unpaid losses and loss expense reserves related to this exposure.
Non-life reserving methods
The reserving methods commonly employed by the Company are summarized as follows:
Chain Ladder (CL) Development Methods (Reported or Paid)
These methods use the underlying assumption that losses reported (paid) for each underwriting year at a particular development stage follow a stable pattern. The CL development method assumes that on average, every underwriting year will display the same percentage of ultimate liabilities reported by the Company’s cedants at 24 months after the inception of the underwriting year. The percentages reported (paid) are established for each development stage after examining historical averages from the loss development data. These are sometimes supplemented by external benchmark information. Ultimate liabilities are estimated by multiplying the actual reported (paid) losses by the reciprocal of the assumed reported (paid) percentage. Reserves are then calculated by subtracting paid claims from the estimated ultimate liabilities.
Expected Loss Ratio (ELR) Method
This method estimates ultimate losses for an underwriting year by applying an estimated loss ratio to the earned premium for that underwriting year. Although the method is insensitive to actual reported or paid losses, it can often be useful at the early stages of development when very few losses have been reported or paid, and the principal sources of information available to the Company consist of information obtained during pricing and qualitative information supplied by the cedant. However, the lack of sensitivity to reported or paid losses means that the method is usually inappropriate at later stages of development.
Bornhuetter-Ferguson (B-F) Methods (Reported or Paid)
These methods aim to address the variability at early stages of development and incorporates external information such as pricing. The B-F methods are more sensitive to reported and paid losses than the ELR method, and can be seen as a blend of the ELR and CL development methods. Unreported (unpaid) claims are calculated using an expected reporting (payment) pattern and an externally determined estimate of ultimate liabilities (usually determined by multiplying an a priori loss ratio with estimates of premium volume). The accuracy of the a priori loss ratio is a critical assumption in this method. Usually a priori loss ratios are initially determined on the basis of pricing information, but may also be adjusted to reflect other information that subsequently emerges about underlying loss experience.

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Loss Event Specific Method
The ultimate losses estimated under this method are derived from estimates of specific events based on reported claims, client and broker discussions, review of potential exposures, market loss estimates, modeled analysis and other event specific criteria.
Method Weights
In determining the loss reserves, the Company often relies on a blend of the results from two or more methods (e.g., weighted averages). The judgment as to which of the above method(s) is most appropriate for a particular underwriting year and reserving cell could change over time as new information emerges regarding underlying loss activity and other data issues. Furthermore, as each line is typically composed of several reserving cells, it is likely that the reserves for the line will be dependent on several reserving methods. This is because reserves for a line are the result of aggregating the reserves for each constituent reserving cell and that a different method could be selected for each reserving cell.
The principal reserving methods used for each of the Specialty segment and P&C segment were ELR, Reported/Paid B-F, and Reported/Paid CL, with the exception of catastrophe risks within the P&C segment where the principal reserving methods used were ELR based on exposure analysis and loss event specific methods.
(b) Life and Health Reserves
The reconciliation of the beginning and ending gross and net liability for life and health reserves for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands of U.S. dollars):
 
 
2019
 
2018
 
2017
Gross liability at beginning of period
 
$
2,198,080

 
$
2,098,759

 
$
1,722,330

Reinsurance recoverable at beginning of period
 
11,829

 
9,287

 
2,726

Net liability at beginning of period
 
$
2,186,251

 
$
2,089,472

 
$
1,719,604

Liability acquired related to the acquisition of Aurigen
 
—

 
—

 
67,916

Net incurred losses
 
1,263,016

 
1,024,608

 
835,415

Net losses paid
 
(1,071,487
)
 
(818,916
)
 
(714,151
)
Effects of foreign exchange rate changes
 
23,081

 
(108,913
)
 
180,688

Net liability at end of period
 
$
2,400,861

 
$
2,186,251

 
$
2,089,472

Reinsurance recoverable at end of period
 
16,183

 
11,829

 
9,287

Gross liability at end of period
 
$
2,417,044

 
$
2,198,080

 
$
2,098,759

The increase in net losses incurred and paid in 2019 compared to 2018 was primarily due to growth in the longevity line of business.
The increase in net losses incurred and paid in 2018 compared to 2017 was primarily due to growth in the business and the inclusion of losses and loss expenses from the acquisition of Aurigen for a full year in 2018 compared to three quarters in 2017.
The Company used interest rate assumptions to estimate its liabilities for policy benefits for life and annuity contracts which ranged from 0% to 7% at December 31, 2019, 2018 and 2017, respectively.
Life and health reserving methods
The reserving methods commonly employed by the Company are summarized as follows:
Mortality
The reserves for the short-term mortality/morbidity business consist of case reserves calculated at the treaty level based upon cedant information. IBNR is calculated at the segment level using the ELR method described above for Non-life business.
The reserves for the traditional and limited payment long-duration contracts are established based upon accepted actuarial valuation methods which require us to make certain assumptions regarding future claims and policy benefits and includes a provision for adverse deviation. The provision for adverse deviation contemplates reasonable deviations from the best estimate assumptions for the key risk elements relevant to the product being evaluated, including mortality, disability, critical illness,

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expenses, and discount rates. The assumptions are locked in at contract inception and are subject to annual loss recognition testing (LRT). LRT occurs at the product group level, based on the manner of acquiring, servicing and measuring profitability of the reinsurance contracts. The LRT framework incorporates deferred acquisition cost (DAC) recoverability testing and involves determining an LRT reserve by re-measuring the policy benefit liabilities using current best estimate actuarial assumptions and current discount rates without any provisions for adverse deviation. If the aggregate LRT reserve is higher than the carrying amount of future policy benefit liabilities, net of DAC and VOBA, for a particular product grouping then a loss recognition event occurs. The DAC and VOBA asset balances for the given product grouping are first reduced, and if the balances are fully written off, the reserves will be increased, such that the current best estimate assumptions become the new locked-in basis.
The reserves for the guaranteed minimum death benefit (GMDB) reinsurance business are established similar to provisions for universal life contracts. Key actuarial assumptions for this business are mortality, lapses, interest rates, expected returns on cash and bonds and stock market performance. For the latter parameter, a stochastic option pricing approach is used and the benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. The assumptions of investment performance and volatility are consistent with expected future experience of the respective underlying funds available for policyholder investment options. Recorded reserves for GMDB reflect management’s best estimate based upon actuarial indications.
Longevity
Reserves for the annuity portfolio of reinsurance contracts within the longevity book are established using the reserving methodology discussed above for long-term traditional mortality.
(c) Losses and Loss Expenses
Losses and loss expenses in the Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 were comprised as follows (in thousands of U.S. dollars): 
 
 
2019
 
2018
 
2017
Non-life (1)
 
$
3,660,140

 
$
3,168,647

 
$
3,005,567

Life and Health
 
1,263,016

 
1,024,608

 
835,415

Losses and loss expenses
 
$
4,923,156

 
$
4,193,255

 
$
3,840,982

 
(1) Net incurred losses include favorable loss development of $3 million during the year ended December 31, 2019, which are allocated to Corporate and Other as disclosed in Note 18.    
Non-life net incurred and paid losses and loss expense development
The net incurred and paid losses and loss expenses development by accident year for each of the years ended December 31, 2012 through 2019, and the total of IBNR plus expected development on reported claims included within the net incurred claims amounts, as at each of the years ended December 31, 2012 through 2019, are presented in the tables below (in thousands of U.S. dollars).
The information presented below for incurred and paid claims development for each of the years ended December 31, 2012 through 2018 and the average annual percentage payout of incurred claims by age, net of reinsurance, is presented as supplementary information and is unaudited. The tables below reflect losses incurred and paid losses translated to U.S. dollars at the exchange rate as of the balance sheet date whereas the losses and loss expenses in the Consolidated Statement of Operations reflect losses incurred at the average exchange rate for the period.

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NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - NON-LIFE
 
 
For the year ended December 31,
 
December 31, 2019
Accident year
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
Total of IBNR plus expected development on reported claims
2012
 
$
2,647,806

 
$
2,459,009

 
$
2,303,222

 
$
2,196,596

 
$
2,164,135

 
$
2,195,163

 
$
2,172,148

 
$
2,139,972

 
$
79,953

2013
 
 
 
2,880,337

 
2,706,850

 
2,528,689

 
2,475,252

 
2,441,912

 
2,414,380

 
2,411,641

 
124,904

2014
 
 
 
 
 
2,839,909

 
2,623,230

 
2,511,859

 
2,479,721

 
2,492,027

 
2,484,866

 
172,037

2015
 
 
 
 
 
 
 
2,894,162

 
2,603,297

 
2,497,256

 
2,512,588

 
2,514,275

 
245,645

2016
 
 
 
 
 
 
 
 
 
2,920,285

 
2,687,055

 
2,627,830

 
2,642,625

 
305,985

2017
 
 
 
 
 
 
 
 
 
 
 
2,979,457

 
2,944,385

 
2,900,190

 
519,547

2018
 
 
 
 
 
 
 
 
 
 
 
 
 
3,032,976

 
3,157,151

 
1,111,071

2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,380,372

 
2,599,954

Total
 
 
 
 
 
 
 
 
 
 
 


 


 
$
21,631,092

 
$
5,159,096

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - NON-LIFE
 
 
For the year ended December 31,
 
 
Accident year
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
 
2012
 
$
284,166

 
$
1,056,888

 
$
1,442,587

 
$
1,610,064

 
$
1,713,934

 
$
1,805,174

 
$
1,854,934

 
$
1,910,828

 
 
2013
 
 
 
243,466

 
1,296,424

 
1,648,668

 
1,849,929

 
1,980,425

 
2,073,929

 
2,139,380

 
 
2014
 
 
 
 
 
305,500

 
1,316,469

 
1,621,164

 
1,830,516

 
1,972,511

 
2,079,766

 
 
2015
 
 
 
 
 
 
 
303,258

 
1,220,915

 
1,620,950

 
1,842,331

 
2,009,107

 
 
2016
 
 
 
 
 
 
 
 
 
325,991

 
1,371,581

 
1,729,815

 
1,999,489

 
 
2017
 
 
 
 
 
 
 
 
 
 
 
386,724

 
1,505,014

 
1,947,279

 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
258,686

 
1,402,377

 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
373,408

 
 
Total
 
 
 
 
 
 
 
 
 
 
 


 


 
$
13,861,634

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net reserves for Accident Years and exposures included in the triangles
 


 


 
$
7,769,458

 
 
All outstanding liabilities before Accident Year 2012, net of reinsurance
 
 
 
 
 
1,390,371

 
 
Total outstanding liabilities for unpaid claims
 
 
 


 


 
$
9,159,829

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - NON-LIFE
 
 
Years
 
1
 
2
 
3
 
4
 
5
 
6
 
7
 
8
 
 
Non-life
 
11%
 
39%
 
15%
 
9%
 
6%
 
4%
 
3%
 
3%
 
 


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NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - PROPERTY
 
 
For the year ended December 31,
 
December 31, 2019
Accident year
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
Total of IBNR plus expected development on reported claims
2012
 
$
662,441

 
$
661,245

 
$
583,098

 
$
566,540

 
$
551,100

 
$
550,829

 
$
538,974

 
$
528,350

 
$
1,763

2013
 
 
 
680,224

 
577,101

 
544,546

 
529,252

 
524,956

 
514,569

 
512,280

 
637

2014
 
 
 
 
 
516,850

 
472,237

 
450,682

 
448,212

 
444,769

 
443,084

 
1,273

2015
 
 
 
 
 
 
 
590,183

 
547,728

 
522,565

 
515,050

 
509,581

 
4,681

2016
 
 
 
 
 
 
 
 
 
725,033

 
682,433

 
635,793

 
615,922

 
689

2017
 
 
 
 
 
 
 
 
 
 
 
1,028,702

 
1,066,528

 
982,534

 
9,914

2018
 
 
 
 
 
 
 
 
 
 
 
 
 
853,796

 
895,740

 
143,479

2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
769,345

 
508,751

Total
 
 
 
 
 
 
 
 
 
 
 


 


 
$
5,256,836

 
$
671,187

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - PROPERTY
 
 
For the year ended December 31,
 
 
Accident year
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
 
2012
 
$
100,087

 
$
357,186

 
$
450,730

 
$
484,755

 
$
496,024

 
$
505,112

 
$
508,155

 
$
515,287

 
 
2013
 
 
 
88,592

 
337,128

 
437,950

 
472,219

 
490,491

 
493,544

 
497,536

 
 
2014
 
 
 
 
 
93,141

 
324,074

 
388,404

 
414,611

 
424,255

 
429,061

 
 
2015
 
 
 
 
 
 
 
95,097

 
354,291

 
442,619

 
471,072

 
481,885

 
 
2016
 
 
 
 
 
 
 
 
 
135,797

 
458,282

 
540,023

 
577,319

 
 
2017
 
 
 
 
 
 
 
 
 
 
 
223,070

 
729,584

 
838,023

 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
76,543

 
552,879

 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
69,397

 
 
Total
 
 
 
 
 
 
 
 
 
 
 

 

 
$
3,961,387

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net reserves for Accident Years and exposures included in the triangles
 

 

 
$
1,295,449

 
 
All outstanding liabilities before Accident Year 2012, net of reinsurance
 
 
 
 
 
98,817

 
 
Total outstanding liabilities for unpaid claims
 
 
 


 


 
$
1,394,266

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - PROPERTY
 
 
Years
 
1
 
2
 
3
 
4
 
5
 
6
 
7
 
8
 
 
Property
 
17%
 
51%
 
15%
 
6%
 
3%
 
1%
 
1%
 
1%
 
 





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NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - CASUALTY
 
 
For the year ended December 31,
 
December 31, 2019
Accident year
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
Total of IBNR plus expected development on reported claims
2012
 
$
691,612

 
$
677,836

 
$
650,181

 
$
609,784

 
$
592,346

 
$
600,562

 
$
596,124

 
$
581,746

 
$
57,791

2013
 
 
 
802,811

 
799,292

 
750,054

 
732,098

 
727,631

 
724,046

 
721,739

 
103,987

2014
 
 
 
 
 
904,048

 
879,775

 
859,778

 
865,219

 
881,493

 
874,893

 
143,527

2015
 
 
 
 
 
 
 
901,313

 
842,230

 
818,099

 
860,334

 
863,757

 
198,744

2016
 
 
 
 
 
 
 
 
 
850,575

 
802,362

 
823,050

 
851,402

 
243,580

2017
 
 
 
 
 
 
 
 
 
 
 
761,332

 
730,116

 
758,644

 
310,148

2018
 
 
 
 
 
 
 
 
 
 
 
 
 
942,480

 
958,819

 
556,588

2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,206,641

 
1,034,865

Total
 
 
 
 
 
 
 
 
 
 
 


 


 
$
6,817,641

 
$
2,649,230

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - CASUALTY
 
 
For the year ended December 31,
 
 
Accident year
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
 
2012
 
$
51,617

 
$
135,521

 
$
205,350

 
$
278,348

 
$
334,492

 
$
392,972

 
$
424,029

 
$
451,205

 
 
2013
 
 
 
50,730

 
159,533

 
267,552

 
349,230

 
419,638

 
481,271

 
521,963

 
 
2014
 
 
 
 
 
72,033

 
210,083

 
314,019

 
414,479

 
502,072

 
573,236

 
 
2015
 
 
 
 
 
 
 
67,148

 
187,592

 
300,608

 
398,833

 
501,185

 
 
2016
 
 
 
 
 
 
 
 
 
36,648

 
166,265

 
266,382

 
382,219

 
 
2017
 
 
 
 
 
 
 
 
 
 
 
61,252

 
179,150

 
290,131

 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
62,265

 
235,579

 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
88,066

 
 
Total
 
 
 
 
 
 
 
 
 
 
 

 

 
$
3,043,584

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net reserves for Accident Years and exposures included in the triangles
 

 

 
$
3,774,057

 
 
All outstanding liabilities before Accident Year 2012, net of reinsurance
 
 
 
 
 
1,235,855

 
 
Total outstanding liabilities for unpaid claims
 
 
 


 


 
$
5,009,912

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - CASUALTY
 
 
Years
 
1
 
2
 
3
 
4
 
5
 
6
 
7
 
8
 
 
Casualty
 
7%
 
16%
 
13%
 
12%
 
10%
 
9%
 
6%
 
5%
 
 


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NET INCURRED LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - SPECIALTY
 
 
For the year ended December 31,
 
December 31, 2019
Accident year
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
Total of IBNR plus expected development on reported claims
2012
 
$
1,293,753

 
$
1,119,928

 
$
1,069,943

 
$
1,020,272

 
$
1,020,689

 
$
1,043,772

 
$
1,037,050

 
$
1,029,876

 
$
20,399

2013
 
 
 
1,397,302

 
1,330,457

 
1,234,089

 
1,213,902

 
1,189,325

 
1,175,765

 
1,177,622

 
20,280

2014
 
 
 
 
 
1,419,011

 
1,271,218

 
1,201,399

 
1,166,290

 
1,165,765

 
1,166,889

 
27,237

2015
 
 
 
 
 
 
 
1,402,666

 
1,213,339

 
1,156,592

 
1,137,204

 
1,140,937

 
42,220

2016
 
 
 
 
 
 
 
 
 
1,344,677

 
1,202,260

 
1,168,987

 
1,175,301

 
61,716

2017
 
 
 
 
 
 
 
 
 
 
 
1,189,423

 
1,147,741

 
1,159,012

 
199,485

2018
 
 
 
 
 
 
 
 
 
 
 
 
 
1,236,700

 
1,302,592

 
411,004

2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,404,386

 
1,056,338

Total
 
 
 
 
 
 
 
 
 
 
 


 


 
$
9,556,615

 
$
1,838,679

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET PAID LOSSES AND LOSS EXPENSES DEVELOPMENT TABLE - SPECIALTY
 
 
For the year ended December 31,
 
 
Accident year
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018
 
2019
 
 
2012
 
$
132,462

 
$
564,181

 
$
786,507

 
$
846,961

 
$
883,418

 
$
907,090

 
$
922,750

 
$
944,336

 
 
2013
 
 
 
104,144

 
799,763

 
943,166

 
1,028,480

 
1,070,296

 
1,099,114

 
1,119,881

 
 
2014
 
 
 
 
 
140,326

 
782,312

 
918,741

 
1,001,426

 
1,046,184

 
1,077,469

 
 
2015
 
 
 
 
 
 
 
141,013

 
679,032

 
877,723

 
972,426

 
1,026,037

 
 
2016
 
 
 
 
 
 
 
 
 
153,546

 
747,034

 
923,410

 
1,039,951

 
 
2017
 
 
 
 
 
 
 
 
 
 
 
102,402

 
596,280

 
819,125

 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
119,878

 
613,919

 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
215,945

 
 
Total
 
 
 
 
 
 
 
 
 
 
 

 

 
$
6,856,663

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net reserves for Accident Years and exposures included in the triangles
 


 


 
$
2,699,952

 
 
All outstanding liabilities before Accident Year 2012, net of reinsurance
 
 
 
 
 
55,699

 
 
Total outstanding liabilities for unpaid claims
 
 
 


 


 
$
2,755,651

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVERAGE ANNUAL PERCENTAGE PAYOUT OF INCURRED CLAIMS BY AGE, NET OF REINSURANCE - SPECIALTY
 
 
Years
 
1
 
2
 
3
 
4
 
5
 
6
 
7
 
8
 
 
Specialty
 
12%
 
48%
 
16%
 
8%
 
4%
 
2%
 
2%
 
2%
 
 
The Company is predominantly a reinsurer of primary insurers and does not have access to claim frequency information held by our cedants due to the majority of the Company’s business being written on a proportional basis. As such, the Company considers it impracticable to disclose information on the frequency of claims.
As disclosed in the notes to the consolidated financial statements for the year ended December 31, 2016, the Company concluded that it was impracticable to provide net incurred and paid losses and loss expenses development data for 10 years. As a result, the Company provided 5 years of data in 2016 and includes an additional year of data for each subsequent year such that by 2021 a full 10 years of data will be disclosed.

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The reconciliation of the net incurred and paid claims development information above to the Non-life reserves in the Consolidated Balance Sheet at December 31, 2019 was as follows (in thousands of U.S. dollars):
 
 
December 31, 2019
Total outstanding liability for unpaid claims
 
 
Property
 
$
1,394,266

Casualty
 
5,009,912

Specialty
 
2,755,651

Total outstanding liabilities for unpaid claims
 
$
9,159,829

Unallocated loss expenses
 
$
164,021

U.S. health net reserves (1)
 
281,022

Other
 
3,716

Total other liabilities
 
$
448,759

Net liability at end of year
 
$
9,608,588

 
 
 
Reinsurance recoverable on paid and unpaid claims
 
 
Property
 
$
340,926

Casualty
 
86,940

Specialty
 
326,929

Reinsurance recoverable at end of year
 
$
754,795

Gross liability at end of year
 
$
10,363,383

 
(1) U.S. health business is not meaningful to include in the development tables as the estimated average duration of the health reserves is less than one year and substantially all claims are expected to be paid within two years, based on historical payout patterns.
8. Reinsurance
(a) Reinsurance Recoverable on Paid and Unpaid Losses
The Company uses retrocessional agreements to reduce its exposure to risk of loss on reinsurance assumed. These agreements provide for recovery from retrocessionaires of a portion of losses and loss expenses. The Company remains liable to its cedants to the extent that the retrocessionaires do not meet their obligations under these agreements, and therefore the Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk on an ongoing basis. The Company actively manages its reinsurance exposures by generally selecting retrocessionaires having a credit rating of A- or higher. In certain cases where an otherwise suitable retrocessionaire has a credit rating lower than A-, the Company generally requires the posting of collateral, including escrow funds and letters of credit, as a condition to its entering into a retrocession agreement. The Company regularly reviews its reinsurance recoverable balances to estimate an allowance for uncollectible amounts based on quantitative and qualitative factors. There was no allowance for uncollectible reinsurance recoverable at December 31, 2019 and 2018 deemed necessary based on the quantitative and qualitative analysis as collectability was determined to be reasonably assured and given that any recoverables related to reinsurers with ratings below A- or unrated are collateralized.

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(b) Ceded Reinsurance
Net premiums written, net premiums earned and losses and loss expenses are reported net of reinsurance in the Company’s Consolidated Statements of Operations. Assumed, ceded and net amounts for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands of U.S. dollars): 
 
 
Premiums
Written
 
Premiums
Earned
 
Losses and Loss
Expenses
2019
 
 
 
Non-life (1)
 
$
5,792,542

 
$
5,433,357

 
$
3,879,242

Life and Health
 
1,492,778

 
1,489,721

 
1,277,684

Assumed
 
$
7,285,320

 
$
6,923,078

 
$
5,156,926

 
 
 
 
 
 
 
Non-life (1)
 
$
353,735

 
$
375,301

 
$
219,102

Life and Health
 
22,527

 
22,559

 
14,668

Ceded
 
$
376,262

 
$
397,860

 
$
233,770

 
 
 
 
 
 
 
Non-life (1)
 
$
5,438,807

 
$
5,058,056

 
$
3,660,140

Life and Health
 
1,470,251

 
1,467,162

 
1,263,016

Net
 
$
6,909,058

 
$
6,525,218

 
$
4,923,156

 
 
Premiums
Written
 
Premiums
Earned
 
Losses and Loss
Expenses
2018
 
 
 
Non-life
 
$
5,064,780

 
$
4,751,958

 
$
3,566,201

Life and Health
 
1,235,149

 
1,235,973

 
1,035,363

Assumed
 
$
6,299,929

 
$
5,987,931

 
$
4,601,564

 
 
 
 
 
 
 
Non-life
 
$
472,498

 
$
450,096

 
$
397,554

Life and Health
 
24,067

 
24,025

 
10,755

Ceded
 
$
496,565

 
$
474,121

 
$
408,309

 
 
 
 
 
 
 
Non-life
 
$
4,592,282

 
$
4,301,862

 
$
3,168,647

Life and Health
 
1,211,082

 
1,211,948

 
1,024,608

Net
 
$
5,803,364

 
$
5,513,810

 
$
4,193,255

 
 
Premiums
Written
 
Premiums
Earned
 
Losses and Loss
Expenses
2017
 
 
 
Non-life
 
$
4,604,938

 
$
4,483,662

 
$
3,644,844

Life and Health
 
982,956

 
987,884

 
813,446

Assumed
 
$
5,587,894

 
$
5,471,546

 
$
4,458,290

 
 
 
 
 
 
 
Non-life
 
$
450,129

 
$
428,471

 
$
639,277

Life and Health
 
17,839

 
18,094

 
(21,969
)
Ceded
 
$
467,968

 
$
446,565

 
$
617,308

 
 
 
 
 
 
 
Non-life
 
$
4,154,809

 
$
4,055,191

 
$
3,005,567

Life and Health
 
965,117

 
969,790

 
835,415

Net
 
$
5,119,926

 
$
5,024,981

 
$
3,840,982

 
(1)
Non-life Losses and loss expenses include amounts allocated to Corporate and Other as disclosed in Note 18.


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9. Debt
The debt outstanding related to senior notes and capital efficient notes (CENts) and the carrying value recorded in the Consolidated Balance Sheets at December 31, 2019 and 2018 was comprised as follows (in thousands):
 
 
 
 
 
 
December 31, 2019
 
December 31, 2018
Issuer
 
Related Maturity Date
 
Commitment
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Debt related to senior notes
 
 
 
 
 
 
 
 
 
 
 
 
PartnerRe Finance B LLC
 
Due 2020
 
$
—

 
$
—

 
$
—

 
$
500,000

 
$
515,518

PartnerRe Finance B LLC
 
Due 2029
 
$
500,000

 
495,614

 
535,309

 
—

 
—

PartnerRe Ireland Finance DAC
 
Due 2026
 
€
750,000

 
832,351

 
871,088

 
849,017

 
825,546

Total Debt related to senior notes
 
 
 
 
 
$
1,327,965

 
$
1,406,397

 
$
1,349,017

 
$
1,341,064

Debt related to CENts
 
 
 
 
 
 
 
 
 
 
 
 
PartnerRe Finance II Inc.
 
Due 2066
 
$
62,484

 
$
70,089

 
$
55,866

 
$
70,989

 
$
59,299

PartnerRe Finance B LLC and PartnerRe Finance II Inc. (collectively, U.S. finance entities) were utilized to issue U.S. dollar denominated debt while PartnerRe Ireland Finance DAC (Irish finance entity) was formed in order to issue Euro denominated senior notes.
The U.S. finance entities are wholly-owned by PartnerRe U.S. Corporation, a holding company indirectly 100% owned by the Company. The proceeds received by the U.S. finance entities upon issuance of debt were provided to PartnerRe U.S. Corporation in exchange for notes receivable for the same principal and interest terms as the related debt issued externally. The Company determined that the U.S. entities were VIEs; however, the Company was not the primary beneficiary and, as a result, did not consolidate the U.S. finance entities. The intercompany notes payable by PartnerRe U.S. Corporation to the U.S. finance entities are recorded within Debt related to senior notes and Debt related to CENts in the Consolidated Balance Sheets and the related interest as interest expense in the Consolidated Statements of Operations.
The Irish finance entity is wholly-owned by PartnerRe Holdings Europe Limited, a wholly owned subsidiary of the Company. The proceeds received by the Irish finance entity upon issuance of debt were provided to the Company in exchange for notes receivable, which are eliminated on consolidation, together with the related interest. The Company determined that PartnerRe Ireland Finance DAC is a VIE and the Company is the primary beneficiary. As a result, the debt issued externally has been reflected as Debt related to senior notes in the Consolidated Balance Sheets and the related interest as interest expense in the Consolidated Statements of Operations.
Debt related to senior notes
In March 2010, PartnerRe Finance B LLC issued $500 million aggregate principal amount of 5.500% senior notes due June 1, 2020 with the option to redeem, in whole or in part, at any time. PartnerRe U.S. Corporation agreed to pay the related 5.500% note payable on the same terms to PartnerRe Finance B LLC. On July 19, 2019, the Company early redeemed these senior notes and settled the related intercompany note, with an aggregate principle of $500 million for a make-whole redemption price. As a result, the Company recorded a loss on redemption of debt of $15 million in the Consolidated Statement of Operations during 2019.
In June 2019, PartnerRe Finance B LLC issued $500 million aggregate principal amount of 3.700% senior notes at a price of 99.783% of the principal amount. The net proceeds of the issuance, after consideration of the offering discount and underwriting expenses and commissions, totaled $496 million. These senior notes may be redeemed at the option of the issuer, in whole or in part, at any time, with early redemption requiring the payment of a make-whole premium. Early redemption prior to June 19, 2022 is subject to the Bermuda Monetary Authority's approval. Commencing on January 2, 2020, interest on these notes is payable semi-annually at an annual fixed rate of 3.700%. Unless previously redeemed, the notes mature on July 2, 2029. PartnerRe U.S. Corporation has agreed to pay a related 3.700% note payable to PartnerRe Finance B LLC for any unpaid principal amount on July 2, 2029. These senior notes are ranked as senior unsecured obligations of PartnerRe Finance B LLC and the Company has fully and unconditionally guaranteed all obligations of PartnerRe Finance B LLC related to these senior notes. The Company’s obligations under this guarantee are senior and unsecured and rank equally with all other senior unsecured indebtedness. The proceeds from this issuance were used to fully redeem the senior notes due 2020 on July 19, 2019.
In September 2016, PartnerRe Ireland Finance DAC issued €750 million aggregate principal amount of 1.250% senior notes at a price of 99.144% of the principal amount, which are listed in the main securities market of the Irish Stock Exchange. Interest is payable annually commencing on September 15, 2017. These senior notes may be redeemed at the option of the issuer, in whole or in part, at any time. Early redemption prior to September 15, 2021 is subject to the Bermuda Monetary Authority's approval. Unless

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previously redeemed, the notes mature on September 15, 2026. These senior notes are ranked as senior unsecured obligations of PartnerRe Ireland Finance DAC. The Company has fully and unconditionally guaranteed all obligations of PartnerRe Ireland Finance DAC under these senior notes. The Company’s obligations under this guarantee are senior and unsecured and rank equally with all other senior unsecured indebtedness.
Debt related to CENts
In November 2006, PartnerRe Finance II Inc. issued Fixed-to-Floating Rate Junior Subordinated CENts with a principal amount of $250 million and on March 13, 2009, purchased and retired $187 million of this principal amount. On June 5, 2019, an additional $1 million of the principal amount was purchased and retired. As a result, the remaining aggregate principal amount of the CENts as at December 31, 2019 was $62 million. In November 2006, PartnerRe U.S. Corporation issued a Fixed-to-Floating Rate promissory note, with a principal amount of $258 million to PartnerRe Finance II Inc. due December 1, 2066. In March 2009, $187 million of the principal amount was extinguished, with an additional $1 million of the principal amount extinguished in June 2019. As a result, the remaining principal amount of the intercompany promissory note as at December 31, 2019, which is included as Debt related to CENts in the Consolidated Balance Sheet, was $70 million.
The CENts have been redeemable at the option of the issuer, in whole or in part, since December 1, 2016 and are ranked as junior subordinated unsecured obligations of PartnerRe Finance II Inc. The Company has fully and unconditionally guaranteed on a subordinated basis all obligations of PartnerRe Finance II Inc. under the CENts. The Company’s obligations under this guarantee are unsecured and rank junior in priority of payments to the Company’s senior notes.
Interest on both the CENts and the promissory note was payable semi-annually through to December 1, 2016 at an annual fixed rate of 6.440% and payable quarterly thereafter until maturity at an annual rate of 3-month LIBOR plus a margin equal to 2.325%, reset quarterly. Since December 1, 2016, PartnerRe Finance II Inc. has the right to defer one or more interest payments for up to ten years to December 1, 2026.
10. Shareholders’ Equity
Authorized Shares
At December 31, 2019 and 2018, the total authorized share capital (common and preferred) of the Company was $200 million.
Common Shares
At December 31, 2019 and 2018, 100 million authorized and issued Class A common shares of $0.00000001 par value each were owned by EXOR Nederland N.V.
Redeemable Preferred Shares
At December 31, 2019 and 2018, the Company's issued and outstanding redeemable preferred shares, each with a par value of $1.00 per share, were as follows (in millions of U.S. dollars, except number of shares and percentage amounts):
 
Series F
 
Series G
 
Series H
 
Series I
 
Total
Date of issuance
 February 2013

 
May 2016

 
May 2016

 
May 2016

 
 
Number of preferred shares outstanding
2,679,426

 
6,415,264

 
11,753,798

 
7,320,574

 
28,169,062

Annual dividend rate
5.875
%
 
6.5
%
 
7.25
%
 
5.875
%
 
 
Underwriting discounts and commissions (1)
$
2.3

 
$
5.4

 
$
9.5

 
$
6.4

 
$
23.6

Aggregate liquidation value, at $25 per share
$
67.0

 
$
160.4

 
$
293.8

 
$
183.0

 
$
704.2

 
(1)
Underwriting discounts and commissions represent the original amounts paid to issue Series D, E and F shares. These amounts were reallocated on a pro-rata basis between the previously issued and the newly issued shares as a result of the share exchange in May 2016 for $nil consideration described below.
Following the acquisition by EXOR N.V. (subsequently renamed EXOR Nederland N.V.) in 2016, the Company launched an exchange offer whereby participating preferred shareholders could exchange any or all existing preferred shares for newly issued preferred shares reflecting, subject to certain exceptions, an extended call date of the fifth anniversary from the date of issuance, and a restriction on payment of dividends on common shares declared with respect to any fiscal quarter to an amount not exceeding 67% of net income during such fiscal quarter until December 31, 2020. If the Company does not make aggregate distributions of all of the distributable amounts during any fiscal quarter, such remaining amounts will carryover and are available

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for dividends in subsequent fiscal quarters, regardless of the Company’s Net income or loss during such subsequent fiscal quarters. As a result of the exchange offer, the Company cancelled the Series D, E and F preferred shares tendered in the exchange offer. Non-tendered preferred shares not exchanged and the new Series G, H and I preferred shares remained outstanding and continued to be listed on the NYSE. The terms of the newly issued preferred shares would otherwise remain identical in all material respects to the Company’s existing preferred shares, which are described below.
The redemption price of all preferred shares is $25 per share plus accrued and unpaid dividends. In the event of liquidation of the Company, the preferred shares rank on parity with each other, but rank senior to the common shares, and the holders of the preferred shares would receive a distribution of $25 per share. In addition, upon liquidation, non-cumulative Series F and I preferred shares would receive any declared but unpaid dividends while the cumulative Series G and H preferred shares would receive any accrued but unpaid dividends.
The Company may redeem the Series F preferred shares at any time at whole or in part from time to time since March 1, 2018.
The Company may redeem each of the Series G, H and I preferred shares on or after May 1, 2021.
Dividends on the Series F and I preferred shares are non-cumulative and are payable quarterly. Dividends on the Series G and H preferred shares are cumulative from the date of issuance and are payable quarterly in arrears.
11. Dividend Restrictions and Statutory Requirements
The Company’s ability to pay common and preferred shareholders’ dividends and its corporate expenses is dependent mainly on cash dividends from PartnerRe Bermuda, PartnerRe Europe, PartnerRe U.S. and PartnerRe Asia (collectively, the reinsurance subsidiaries), which are the Company’s most significant subsidiaries. The payment of such dividends by the reinsurance subsidiaries to the Company is limited under Bermuda, Irish and Singapore laws and certain statutes of various U.S. states in which PartnerRe U.S. is domiciled. The restrictions are generally based on net income and/or certain levels of policyholders’ earned surplus as determined in accordance with the relevant statutory accounting practices. In addition, in accordance with the terms of the merger agreement between the Company and EXOR N.V., subsequent to preferred share exchange (see Note 10), the Company's payment of dividends on common shares declared with respect to any fiscal quarter is restricted to an amount not exceeding 67% of net income per fiscal quarter until December 31, 2020. If the Company does not make aggregate distributions of all of the distributable amounts during any fiscal quarter, such remaining amounts will carryover and are available for dividends in subsequent fiscal quarters, regardless of the Company’s Net income or loss during such subsequent fiscal quarters. At December 31, 2019, given the Company complied with its Bermuda solvency requirements, there were no other restrictions on the Company’s ability to pay common and preferred shareholders’ dividends from its retained earnings, except for the reinsurance subsidiaries’ dividend restrictions described below.
The reinsurance subsidiaries are required to file annual statements with insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis), maintain minimum levels of solvency and liquidity and comply with risk-based capital requirements and licensing rules. At December 31, 2019, the reinsurance subsidiaries’ solvency, liquidity and risk-based capital amounts were in excess of the minimum levels required. The typical adjustments to insurance statutory basis amounts to convert to U.S. GAAP include the elimination of certain statutory reserves, deferral of certain acquisition costs, recognition of goodwill, intangible assets and deferred income taxes that are limited on a statutory basis, valuation of bonds at fair value and presentation of ceded reinsurance balances gross of assumed balances.
PartnerRe Bermuda may declare dividends subject to it continuing to meet its minimum solvency and capital requirements, which are to hold statutory capital and surplus equal to or exceeding the Target Capital Level, which is equivalent to 120% of the Enhanced Capital Requirement (ECR). The ECR is calculated with reference to the Bermuda Solvency Capital Requirement model, which is a risk-based capital model. At December 31, 2019, the maximum dividend that PartnerRe Bermuda could pay without prior regulatory approval was approximately $1,058 million.
PartnerRe Europe is subject to the Solvency II European Directive (Solvency II Regulations). The Solvency II Regulations relate to the solvency standards applicable to insurers and reinsurers and lays down, at the level of PartnerRe Europe, the minimum amounts of financial resources required in order to cover the risks to which it is exposed and the principles that should guide its overall risk management and reporting. PartnerRe Europe may declare dividends subject to it continuing to meet its Solvency II requirements, which are to hold available capital, calculated on a Solvency II balance sheet basis, in excess of the solvency capital requirement (SCR). The maximum dividend is limited to “profits available for distribution”, which consist of accumulated realized profits less accumulated realized losses. The reporting deadline for the annual Solvency II submission is April 7, 2020.

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PartnerRe U.S. may declare dividends subject to it continuing to meet its minimum solvency and capital requirements and is generally limited to paying dividends from earned surplus. The maximum dividend that can be declared and paid without prior approval is limited, to the lesser of adjusted net investment income or 10% of its total statutory capital and surplus as of the most recently filed annual statement.
PartnerRe Asia may declare dividends from unappropriated profits subject to meeting the capital requirements, as laid out by the Monetary Authority of Singapore. As a licensed reinsurer, PartnerRe Asia is required to maintain minimum capital of SGD25 million. In addition, PartnerRe Asia is required to establish and maintain separate insurance funds for each class of business that it writes, for both Singapore and offshore policies. The solvency requirement in respect of each insurance fund shall at all times be not less than the total risk requirement of the fund (determined by reference to three components being insurance risks, asset portfolio risks and asset concentration risks) and above 120% of the total risk requirement on a Company basis. The declaration of a dividend by PartnerRe Asia is subject to conditions and requirements being met as specified under the Companies Act and the Insurance Act and its associated regulations. The filing date for the annual submission is March 31, 2020.
The statutory financial statements and returns of the Company’s reinsurance subsidiaries as at, and for the year ended, December 31, 2019 are due to be submitted to the relevant regulatory authorities later in 2020, with different filing dates in each jurisdiction. In certain jurisdictions, the statutory financial statements and returns are subject to the review and final approval of the relevant regulatory authorities. As a result, the comparative figures in the tables below reflect final figures submitted to regulatory authorities for 2018 and 2017.
The statutory net income (loss) of PartnerRe Bermuda, PartnerRe Europe, PartnerRe U.S. and PartnerRe Asia for the years ended December 31, 2019, 2018 and 2017 was as follows (in millions of U.S. dollars):
 
 
2019
 
2018
 
2017
PartnerRe Bermuda
 
$
863

 
$
138

 
$
(69
)
PartnerRe Europe
 
$
188

 
$
1

 
$
153

PartnerRe U.S.
 
$
(106
)
 
$
(197
)
 
$
24

PartnerRe Asia
 
$
8

 
$
(40
)
 
$
18

The required and actual statutory capital and surplus of PartnerRe Bermuda, PartnerRe Europe, PartnerRe U.S. and PartnerRe Asia at December 31, 2019 and 2018 was as follows (in millions of U.S. dollars):
 
 
PartnerRe Bermuda
 
PartnerRe Europe
 
PartnerRe U.S.
 
PartnerRe Asia
 
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Required statutory capital and surplus
 
$
2,441

 
$
2,145

 
$
1,532

 
$
1,511

 
$
911

 
$
732

 
$
64

 
$
56

Actual statutory capital and surplus
 
$
4,858

 
$
4,233

 
$
2,219

 
$
2,169

 
$
1,080

 
$
1,094

 
$
208

 
$
208

In addition to the required statutory capital and surplus requirements for the reinsurance subsidiaries in the table above, the Company is required to assess its solvency capital needs both at a Group and subsidiary level. The Company’s capital requirements determine the amount of capital available to be declared as dividends to its shareholders. As Group Supervisor, the Bermuda Monetary Authority is tasked with assessing the financial condition of the Group and coordinates the dissemination of information to other relevant competent authorities for the purpose of assisting in their regulatory functions and the enforcement of regulatory action against the Company or any of its subsidiaries, including the power to impose restrictions on the ability of the relevant subsidiaries to declare dividends to the Company, and the ability of the Company to pay dividends to shareholders. In addition, the Company is required to maintain the Group ECR imposed by the BMA under Bermuda law.
12. Taxation
The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income or capital gains tax under current Bermuda law. In the event that there is a change in current law such that taxes on income or capital gains are imposed, the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 2035 pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966.
The Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The significant jurisdictions in which the Company’s subsidiaries and branches are subject to tax are Canada, France, Ireland, Singapore, Switzerland and the U.S.

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Income tax returns are open for examination for the tax years 2014-2019 in Hong Kong, 2015-2019 in Canada, Ireland, and the U.S., 2016-2019 in Singapore and Switzerland, and 2018-2019 in France. As a global organization, the Company may be subject to a variety of transfer pricing or permanent establishment challenges by taxing authorities in various jurisdictions. While management believes that adequate provision has been made in the Consolidated Financial Statements for any potential assessments that may result from tax examinations for all open tax years, the completion of tax examinations for open years may result in changes to the amounts recognized in the Consolidated Financial Statements.
Income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands of U.S. dollars): 
 
 
2019
 
2018
 
2017
Current income tax expense (benefit)
 
 
 
 
 
 
U.S.
 
$
12,899

 
$
(6,872
)
 
$
(10,031
)
Non U.S.
 
64,069

 
33,887

 
76,425

Total current income tax expense
 
$
76,968

 
$
27,015

 
$
66,394

Deferred income tax (benefit) expense
 
 
 
 
 
 
U.S.
 
$
(25,850
)
 
$
(40,318
)
 
$
5,538

Non U.S.
 
4,268

 
3,256

 
(58,702
)
Total deferred income tax (benefit)
 
$
(21,582
)
 
$
(37,062
)
 
$
(53,164
)
Unrecognized tax (benefit) expense
 
 
 
 
 
 
U.S.
 
$
—

 
$
—

 
$
—

Non U.S.
 
(2,850
)
 
1,113

 
(2,872
)
Total unrecognized tax (benefit) expense
 
$
(2,850
)
 
$
1,113

 
$
(2,872
)
Total income tax (benefit) expense
 
 
 
 
 
 
U.S.
 
$
(12,951
)
 
$
(47,190
)
 
$
(4,493
)
Non U.S.
 
65,487

 
38,256

 
14,851

Total income tax expense (benefit)
 
$
52,536

 
$
(8,934
)
 
$
10,358

Income (loss) before taxes attributable to the Company’s domestic and foreign operations and a reconciliation of the actual income tax rate to the amount computed by applying the effective tax rate of 0% under Bermuda (the Company’s domicile) law to income (loss) before taxes was as follows for the years ended December 31, 2019, 2018 and 2017 (in thousands of U.S. dollars):
 
 
2019
 
2018
 
2017
Domestic (Bermuda)
 
$
715,912

 
$
33,759

 
$
82,219

Foreign
 
273,372

 
(128,687
)
 
192,160

Income (loss) before taxes
 
$
989,284

 
$
(94,928
)
 
$
274,379

Reconciliation of effective tax rate (% of income (loss) before taxes)
 
 
 
 
 
 
Expected tax rate
 
0.0
 %
 
0.0
 %
 
0.0
 %
Foreign taxes at local expected tax rates
 
6.5

 
14.3

 
11.4

Impact of foreign exchange gains or losses
 
(0.5
)
 
(4.2
)
 
(3.2
)
Unrecognized tax benefit
 
0.2

 
(1.2
)
 
(1.0
)
Tax-exempt income and expenses not deductible
 
(0.6
)
 
7.3

 
(5.2
)
Foreign branch tax
 
(1.2
)
 
(4.1
)
 
(24.6
)
Valuation allowance
 
0.7

 
(12.3
)
 
24.8

Outside basis difference in subsidiary
 
—

 
6.7

 
—

Other
 
0.2

 
2.9

 
1.6

Actual tax rate
 
5.3
 %
 
9.4
 %
 
3.8
 %

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On September 1, 2019, the Canton of Zurich, Switzerland enacted legislation to reduce the current corporate tax rate income tax rate from 21.15% to 19.7% in 2021. As a result, deferred tax assets and liabilities in Switzerland were revalued at December 31, 2019, resulting in an income tax benefit of $6 million for the year ended December 31, 2019. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act ("TCJA") to reduce the corporate income tax rate from 35% to 21% effective for taxable years beginning after December 31, 2017, and on December 30, 2017, France enacted legislation to progressively reduce the current corporate income tax rate of 34.43% to specific scheduled effective rates, including the applicable surtax, for each subsequent year end which includes 28.92% on the first €500,000 taxable income and 34.43% on the remainder for 2019 decreasing to 25.83% for 2022. As a result, deferred tax assets and liabilities in the United States and France were revalued at December 31, 2017, resulting in an income tax expense of $5 million for the year ended December 31, 2017.
During the year ended December 31, 2018, the Company completed its review of income tax enactment-date effects, including the revaluation of December 31, 2017 deferred tax assets and liabilities in the United States and France, and determined no significant measurement period adjustments were required.
The components of net tax assets and liabilities at December 31, 2019 and 2018 were as follows (in thousands of U.S. dollars):
 
 
December 31, 2019
 
December 31, 2018
Net tax assets
 
$
179,813

 
$
157,690

Net tax liabilities
 
(135,966
)
 
(101,525
)
Net tax assets
 
$
43,847

 
$
56,165

 
 
 
December 31, 2019
 
December 31, 2018
Net current tax assets
 
$
65,000

 
$
102,091

Net deferred tax liabilities
 
(15,464
)
 
(37,183
)
Net unrecognized tax benefit
 
(5,689
)
 
(8,743
)
Net tax assets
 
$
43,847

 
$
56,165

Deferred tax assets and liabilities reflect the tax impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Significant components of the net deferred tax assets and liabilities at December 31, 2019 and 2018 were as follows (in thousands of U.S. dollars):
 
 
December 31, 2019
 
December 31, 2018
Deferred tax assets
 
 
 
 
Discounting of loss reserves and adjustment to life policy reserves
 
$
15,924

 
$
27,103

Foreign tax credit carryforwards
 
173,936

 
161,177

Tax loss carryforwards
 
80,523

 
49,721

Unearned premiums
 
37,226

 
26,071

Other deferred tax assets
 
50,738

 
47,877

 
 
$
358,347

 
$
311,949

Valuation allowance
 
(186,907
)
 
(189,090
)
Deferred tax assets
 
$
171,440

 
$
122,859

Deferred tax liabilities
 
 
 
 
Deferred acquisition costs
 
$
64,140

 
$
45,558

Goodwill and other intangibles
 
61,773

 
65,114

Equalization reserves
 
6,416

 
16,606

Unrealized appreciation and timing differences on investments
 
26,752

 
5,012

Unrealized appreciation and timing differences on foreign exchange revaluations
 
18,830

 
21,117

Other deferred tax liabilities
 
8,993

 
6,635

Deferred tax liabilities
 
$
186,904

 
$
160,042

Net deferred tax liabilities
 
$
(15,464
)
 
$
(37,183
)
Realization of the deferred tax assets is dependent on generating sufficient taxable income in future periods. Although realization is not assured, management believes that it is more likely than not that the deferred tax assets will be realized. The valuation allowance recorded at December 31, 2019 relates to a foreign tax credit carryforward of $174 million in Ireland, and net deferred tax assets of $5 million in Canada and $8 million in the United States. The valuation allowance recorded at December 31, 2018 related to a foreign tax credit carryforward of $161 million in Ireland, other deferred foreign tax of $7 million in Ireland, net deferred tax assets of $13 million in Canada and $8 million in the United States.

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At December 31, 2019, the deferred tax assets (after valuation allowance) included tax loss carryforwards of $18 million in Singapore and $2 million in Hong Kong that can be carried forward for an unlimited period of time, and $52 million in the United States that predominantly relates to non-life insurance company taxable losses and can be carried forward for 19-20 years . At December 31, 2018, the deferred tax assets (after valuation allowance) included tax loss carryforwards of $17 million in Singapore and $1 million in Hong Kong that can be carried forward for an unlimited period of time, and $21 million in the United States that predominantly relates to non-life insurance company taxable losses and can be carried forward for 20 years .
The total amount of unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands of U.S. dollars): 
 
 
January 1,
2019
 
Changes in tax
positions taken
during a prior
year
 
Tax positions
taken
during the
current year
 
Change as a
result of a lapse
of the statute
of limitations
 
Impact of the
change in
foreign currency
exchange rates
 
December 31,
2019
Unrecognized tax benefits that, if recognized, would impact the effective tax rate
 
$
6,639

 
$
(3,560
)
 
$
1,258

 
$
—

 
$
(152
)
 
$
4,185

Interest and penalties recognized on the above
 
2,104

 
(669
)
 
121

 
—

 
(52
)
 
1,504

Total unrecognized tax benefits, including interest and penalties
 
$
8,743

 
$
(4,229
)
 
$
1,379

 
$
—

 
$
(204
)
 
$
5,689

 
 
 
January 1,
2018
 
Changes in tax
positions taken
during a prior
year
 
Tax positions
taken
during the
current year
 
Change as a
result of a lapse
of the statute
of limitations
 
Impact of the
change in
foreign currency
exchange rates
 
December 31,
2018
Unrecognized tax benefits that, if recognized, would impact the effective tax rate
 
$
6,460

 
$
73

 
$
346

 
$
—

 
$
(240
)
 
$
6,639

Interest and penalties recognized on the above
 
1,481

 
691

 
—

 
—

 
(68
)
 
2,104

Total unrecognized tax benefits, including interest and penalties
 
$
7,941

 
$
764

 
$
346

 
$
—

 
$
(308
)
 
$
8,743

 
 
 
January 1,
2017
 
Changes in tax
positions taken
during a prior
year
 
Tax positions
taken
during the
current year
 
Change as a
result of a lapse
of the statute
of limitations
 
Impact of the
change in
foreign currency
exchange rates
 
December 31,
2017
Unrecognized tax benefits that, if recognized, would impact the effective tax rate
 
$
8,722

 
$
281

 
$
589

 
$
(4,115
)
 
$
983

 
$
6,460

Interest and penalties recognized on the above
 
968

 
900

 
6

 
(534
)
 
141

 
1,481

Total unrecognized tax benefits, including interest and penalties
 
$
9,690

 
$
1,181

 
$
595

 
$
(4,649
)
 
$
1,124

 
$
7,941

For the years ended December 31, 2019, 2018 and 2017, there were no unrecognized tax benefits that, if recognized, would create a temporary difference between the reported amount of an item in the Company’s Consolidated Balance Sheets and its tax basis. The Company recognizes interest and penalties as Income tax expense (benefit) in the Consolidated Statements of Operations.
At December 31, 2019, an unrecognized tax benefit of $2 million is reasonably expected to reverse within twelve months.
13. Share-Based Incentives
During 2017, the Company designated a new class of voting Class B shares. Class B shares can either be purchased by or granted to certain executives or non-executive directors of the Company at the discretion of the Company in line with the provisions set out in the Certificate of Designation, or any sub-plan or addendum thereto.

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Grants can be made by the Company twice per year as of March 1 or September 1. The number of shares granted is determined based on a long-term incentive (LTI) award amount divided by the latest U.S. GAAP book value (or common shareholder's equity) per share published as of either December 31 or June 30 (the valuation dates). As a result, Class B shares with a grant date of March 1 are based on the U.S. GAAP book value as of the December 31 valuation date, while Class B shares with a grant date of September 1 are based on the U.S. GAAP book value as of the June 30 valuation date. The granted shares may be issued net of share equivalent to settle related withholding taxes, where applicable.
Restricted Class B shares are granted at $nil consideration and are restricted from sale for a period of up to three years from the date of grant. An acceleration of the restriction period may occur under certain circumstances, including death, permanent disability, or retirement of the shareholder. Notwithstanding these provisions, the Company's Board of Directors has authority to accelerate the restriction period at its own discretion. Restricted Class B shares granted are recognized at fair value over the restriction period.
Unrestricted Class B shares can be purchased twice per year at a price based on the latest U.S. GAAP book value as of the most recent valuation date of either June 30 or December 31. Such subscriptions may only be permitted within 30 days following public release of the U.S. GAAP book value of the Company as of the applicable valuation date.
Unrestricted Class B shares can be transferred or sold back to the Company, subject to any applicable restrictions as per the Certificate of Designation, at the option of the shareholder. The notices of grant require that, once the restriction period has expired, the employee can only sell or transfer the Class B shares back to the Company provided the employee continues to hold shares in the amount of a minimum of four times their gross annual long-term incentive target value, unless otherwise agreed in writing.
The Class B shares are accounted for as liabilities, with 13 million and $16 million included in Accounts payable, accrued expense and other in the Consolidated Balance Sheets at December 31, 2019 and 2018, respectively. The compensation expense related to Class B awards for the years ended December 31, 2019, 2018 and 2017 was approximately $10 million, $4 million, and $2 million, respectively, included in Other expenses in the Company's Consolidated Statement of Operations.
During 2019, there were repurchases by the Company of approximately $13 million, which included $6 million restricted Class B shares and $7 million unrestricted Class B shares.
The following table provides an activity summary of the Company's restricted and unrestricted Class B shares outstanding:
 
 
Restricted Class B shares
 
Unrestricted Class B shares
 
Total Class B shares
Outstanding December 31, 2017
 
71,658

 
183,834

 
255,492

Granted
 
90,152

 
—

 
90,152

Outstanding December 31, 2018
 
161,810

 
183,834

 
345,644

Granted
 
117,929

 
—

 
117,929

Purchased
 
—

 
18,875

 
18,875

Repurchased
 
(100,407
)
 
(100,273
)
 
(200,680
)
Outstanding December 31, 2019
 
179,332

 
102,436

 
281,768

14. Retirement Benefit Arrangements
For employee retirement benefits, the Company maintains certain defined contributions plans and other active and frozen defined benefit plans. The majority of the defined benefit obligation at December 31, 2019 relates to a hybrid plan accounted for as a defined benefit plan under U.S. GAAP for the Company’s Zurich office employees (the Zurich Plan).
Defined Contribution Plans
Contributions are made by the Company, and in some locations, these contributions are supplemented by the local plan participants. Contributions are based on a percentage of the participant’s base salary depending upon competitive local market practice and vesting provisions meeting legal compliance standards and market trends. The accumulated benefits for the majority of these plans vest immediately or over a four-year period. As required by law, certain retirement plans also provide for death and disability benefits and lump sum indemnities to employees upon retirement.
The Company incurred expenses for these defined contribution arrangements of $13 million, $13 million and $11 million for the years ended December 31, 2019, 2018 and 2017, respectively, included within Other expenses in the Company's Consolidated Statements of Operations.

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Active Defined Benefit Plan
The Company maintains the Zurich Plan, which is classified as a hybrid plan and accounted for as a defined benefit plan under U.S. GAAP. At December 31, 2019 and 2018, the funded status of the Zurich Plan was as follows (in thousands of U.S. dollars):
 
 
2019
 
2018
Underfunded pension obligation at beginning of year
 
$
37,105

 
$
64,342

Change in pension obligation
 
 
 
 
Service cost
 
$
8,619

 
$
7,203

Interest cost
 
1,584

 
1,366

Plan participants’ contributions
 
3,604

 
2,938

Actuarial loss (gain)
 
18,286

 
(9,439
)
Plan amendments
 
3,551

 
(19,945
)
Benefits paid
 
(2,352
)
 
(4,901
)
Foreign currency adjustments
 
2,828

 
(584
)
Change in pension obligation
 
$
36,120

 
$
(23,362
)
Change in fair value of plan assets
 
 
 
 
Actual return on plan assets
 
18,140

 
958

Employer contributions
 
7,193

 
5,245

Plan participants’ contributions
 
3,604

 
2,938

Benefits paid
 
(2,352
)
 
(4,901
)
Foreign currency adjustments
 
2,198

 
(365
)
Change in fair value of plan assets
 
$
28,783

 
$
3,875

Underfunded pension obligation at end of year
 
$
44,442

 
$
37,105

Additional information:
 
 
 
 
Projected benefit obligation at end of year(1)
 
$
197,912

 
$
161,792

Fair value of plan assets at end of year
 
$
153,470

 
$
124,687

Underfunded pension obligation at end of year
 
$
44,442

 
$
37,105

Accumulated pension obligation at end of year(2)
 
$
189,089

 
$
152,681

 
(1) Represents the actuarial present value of all benefits attributed to employee service rendered to December 31, measured using assumptions as to future compensation levels
(2) Represents the actuarial present value of benefits (whether vested or non-vested) attributed to employee service rendered and compensation to December 31, with no assumption about future compensation levels
At December 31, 2019 and 2018, the underfunded pension obligation of $44 million and $37 million, respectively, was included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheets. The amounts included in Accumulated other comprehensive loss at December 31, 2019 and 2018 were cumulative losses of $16 million (net of $4 million of taxes) and $9 million (net of $2 million of taxes), respectively.
The net periodic benefit cost reported in Other expenses in the Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 was $5 million, $10 million and $11 million, respectively.
The investment strategy of the Zurich Plan’s Pension Committee is to achieve a consistent long-term return, which will provide sufficient funding for future pension obligations while limiting risk. The expected long-term rate of return on plan assets is based on the expected asset allocation and assumptions concerning long-term interest rates, inflation rates and risk premiums for equities above the risk-free rates of return. These assumptions take into consideration historical long-term rates of return for the relevant asset categories. The investment strategy is reviewed regularly.
In September 2018, the Company approved an amendment to the Zurich Plan related to employer contributions, employee contribution choices, and spousal benefits, which resulted in a reduction of $20 million in the unfunded pension obligation recorded within Accumulated other comprehensive loss in the Consolidated Balance Sheet as of December 31, 2018.
On January 1, 2019, the pension scheme moved from a fully insured scheme with a guaranteed level of return to a partially insured scheme, both under the same pension provider (AXA Winterthur), participating in a single investment pool. On the set-up of the new partially insured plan, a coverage ratio of approximately 111%% was applied to the assets to reflect the change from the fully insured to the partially insured scheme. As at December 31, 2019 the coverage ratio was 115%% based on the performance of

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the assets. The actual return on plan assets for the year ended December 31, 2019 was $18 million, which included $5 million recognized in net income, and a $13 million reduction of the unfunded pension obligation recorded within Accumulated other comprehensive loss in the Consolidated Balance Sheet primarily related to the one-time impact of transitioning to the new scheme.
The fair value of the Zurich Plan’s assets at December 31, 2019 and 2018 were an investment pool of funds, including cash, of $153 million and $125 million, respectively. The partially insured funds comprise the accumulated pension plan contributions and investment returns thereon. These funds meet the definition of Level 2 inputs of the fair value hierarchy as defined in Note 3(a).
A transition group of pensioners elected to remain under the previous pension arrangement. This resulted in a plan amendment of $4 million which increased the unfunded pension obligation recorded within Accumulated other comprehensive loss in the Consolidated Balance Sheet as at December 31, 2019. This amount will be amortized into net income over the remaining years of service of active participants starting in 2020.
The assumptions used to determine the Zurich Plan’s pension obligation and net periodic benefit cost for the years ended December 31, 2019, 2018 and 2017 were as follows:
 
 
2019
 
2018
 
2017
 
 
Pension
obligation
 
Net periodic
benefit cost
 
Pension
obligation
 
Net periodic
benefit cost
 
Pension
obligation
 
Net periodic
benefit cost
Discount rate
 
0.25
%
 
1.00
%
 
1.00
%
 
0.75
%
 
0.75
%
 
0.75
%
Expected long-term return on plan assets
 
—

 
3.50
%
 
—

 
0.75
%
 
—

 
0.75
%
Rate of compensation increase
 
2.00
%
 
2.00
%
 
2.25
%
 
2.25
%
 
2.25
%
 
2.00
%
At December 31, 2019, estimated employer contributions to be paid in 2020 related to the Zurich Plan were $7 million and future benefit payments were estimated to be paid as follows (in thousands of U.S. dollars):
Year
 
Amount
2020
 
$
5,175

2021
 
$
6,841

2022
 
$
6,547

2023
 
$
7,073

2024
 
$
7,631

2025 to 2029
 
$
45,389

The Company does not believe that any of the Zurich Plan’s assets will be returned to the Company during 2020.
15. Commitments and Contingencies
(a) Concentration of Credit Risk
Fixed maturities
The Company’s investment portfolio is managed following prudent standards of diversification and a prudent investment philosophy. The Company is not exposed to any significant credit concentration risk on its investments, except for debt securities issued by the U.S. government and government sponsored enterprises, and other highly rated non-U.S. sovereign governments’ and supranational organizations' securities. At December 31, 2019, other than the U.S. government and government sponsored enterprises and the World Bank, the Company’s fixed maturity investment portfolio did not contain exposure to any non-U.S. sovereign government or any other issuer that accounted for more than 10% of the Company’s shareholders’ equity. The investment in World Bank at December 31, 2019 totaled $1,110 million and is included in the Non-U.S. sovereign government, supranational and government related within Fixed maturities on the Consolidated Balance Sheets. At December 31, 2018, other than the U.S. government and government sponsored enterprises, the Company’s fixed maturity investment portfolio did not contain exposure to any non-U.S. sovereign government or any other issuer that accounted for more than 10% of the Company’s shareholders’ equity. The Company keeps cash and cash equivalents in several banks and ensures that there are no significant concentrations of credit risk in any one bank.

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Derivatives
The Company’s investment strategy allows for the use of derivative instruments, subject to strict limitations. Derivative instruments may be used to replicate investment positions and for the purpose of managing overall currency risk, market exposures and portfolio duration, for hedging certain investments, or for enhancing investment performance that would be allowed under the Company’s investment policy if implemented in other ways. The Company is exposed to credit risk in the event of non-performance by the counterparties to the Company’s derivative contracts. However, the Company diversifies the counterparties to its derivative contracts to reduce credit risk, and because the counterparties to these contracts are high credit quality international banks, the Company does not anticipate non-performance. These contracts are generally of short duration and settle on a net basis. The difference between the contract amounts and the related market value represents the Company’s maximum credit exposure.
Underwriting operations
The Company is also exposed to credit risk in its underwriting operations, most notably in the credit/surety line. Loss experience in these lines of business is cyclical and is affected by the state of the general economic environment. The Company provides its clients in these lines of business with reinsurance protection against credit deterioration, defaults or other types of financial non-performance of or by the underlying credits that are the subject of the reinsurance provided and, accordingly, the Company is exposed to the credit risk of those credits. The Company mitigates the risks associated with these credit-sensitive lines of business through the use of risk management techniques such as risk diversification, careful monitoring of risk aggregations and accumulations and, at times, through the use of retrocessional reinsurance protection and the purchase of credit default, total return and interest rate swaps.
The Company has exposure to credit risk as it relates to its business written through brokers, if any of the Company’s brokers is unable to fulfill their contractual obligations with respect to payments to the Company. In addition, in some jurisdictions, if the broker fails to make payments to the insured under the Company’s policy, the Company might remain liable to the insured for the deficiency. The Company’s exposure to such credit risk is somewhat mitigated in certain jurisdictions by contractual terms.
The Company has exposure to credit risk related to reinsurance balances receivable and reinsurance recoverable on paid and unpaid losses. The credit risk exposure related to these balances is mitigated by several factors, including but not limited to, credit checks performed as part of the underwriting process, monitoring of aged receivable balances and the contractual right to offset premiums receivable or funds held balances against non-life reserves. The Company regularly reviews its reinsurance recoverable balances to estimate an allowance for uncollectible amounts based on quantitative and qualitative factors. At December 31, 2019 and 2018, the Company recorded a provision for uncollectible premiums receivable of $7 million and $5 million, respectively. See also Note 8 for discussion of credit risk related to reinsurance recoverable on paid and unpaid losses.
The Company is also subject to the credit risk of its cedants in the event of insolvency or the cedant’s failure to honor the value of funds held balances for any other reason. However, the Company’s credit risk in some jurisdictions is mitigated by a mandatory right of offset of amounts payable by the Company to a cedant against amounts due to the Company. In certain other jurisdictions the Company is able to mitigate this risk, depending on the nature of the funds held arrangements, to the extent that the Company has the contractual ability to offset any shortfall in the payment of the funds held balances with amounts owed by the Company to cedants for losses payable and other amounts contractually due.
(b) Lease Arrangements
The Company adopted a new lease accounting standard on January 1, 2019 (see Note 2(s)). The Company leases office space under operating leases expiring in various years through 2038. At the lease commencement, the Company determines the classification of each lease as either a finance lease or an operating lease. The Company currently only has leases classified as operating and the lease expense is recognized on a straight-line basis over the lease term. Operating lease right-of-use assets and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Variable lease payments are excluded from these lease payments to the extent they are not based on consumer price index or a market index and are recognized in the period in which the obligation for those payments is incurred.
Many of the Company's lease terms include options to extend or terminate the lease at the discretion of the Company, and are reflected in the lease measurement only if the Company is reasonably certain of exercising those options. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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The Company has lease agreements with lease and non-lease components, such as common-area maintenance costs. The Company has elected the practical expedient to account for lease components together with non-lease components as a single lease component for all real estate leases.
As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.
The following table summarizes the balances related to the Company's total lease expense and provides supplemental other information related to operating leases for the year ended December 31, 2019 (in thousands of U.S. dollars):
 
 
2019
 
Operating lease costs
 
$
15,893

 
Variable lease costs
 
2,598

 
Sublease income
 
(1,515
)
 
Total lease costs
 
$
16,976

 
 
 
 
 
Other information:
 
 
 
Operating lease right-of-use assets (1)
 
$
75,774

 
Operating lease liabilities (2)
 
$
85,777

 
Operating lease right-of-use assets obtained in exchange for lease obligations, non-cash (3)
 
$
86,157

 
Operating cash outflows from operating leases
 
$
11,305

 
Weighted-average remaining lease term on operating leases (4)
 
9.2

Yrs
Weighted-average discount rate on operating leases (5)
 
2.6
%
 
 
(1) Included in Other assets in the Consolidated Balance Sheet
(2) Included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheet
(3) Includes transition amounts related to the adoption of the new lease guidance in 2019
(4) Weighted-average remaining lease term is calculated on the basis of the remaining lease term and the lease liability balance for each lease as of the reporting date
(5) Weighted-average discount rate is calculated on the basis of the discount rate for the lease that was used to calculate the lease liability balance for each lease as of the reporting date and the remaining balance of the lease payments for each lease as of the reporting date
The following table shows the contractual maturities of the Company's operating lease liabilities at December 31, 2019 (in thousands of U.S. dollars):
Year
 
Expected cash flows
2020
 
$
17,010

2021
 
12,295

2022
 
10,376

2023
 
9,647

2024
 
8,568

2025-2038
 
38,902

Discount
 
(11,021
)
Total discounted operating lease liabilities
 
$
85,777

The Company has additional lease commitments of $25 million related to leases that will not commence until 2021, with contractual lease terms of up to 10 years. As these leases have not yet commenced, the commitments are not included in the maturity table above or in the Consolidated Balance Sheets at December 31, 2019.

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(c) Other Agreements
The Company has entered into service agreements that provide for business and information technology support and computer equipment. Future payments under these contracts amount to $28 million, with $20 million and $4 million to be paid during 2020 and 2021, respectively, and the remainder to be paid through 2024.
The Company has entered into certain investments, including investments in VIEs (see Note 4(e)), with unfunded capital commitments. As of December 31, 2019, the Company expects to fund capital commitments totaling $855 million with $378 million, $307 million, $122 million, and $48 million to be paid during 2020, 2021, 2022, and 2023, respectively.
The Company has committed to a 10-year structured letter of credit facility issued by a high credit quality international bank which has a final maturity of December 31, 2024. At December 31, 2019 and 2018, the Company’s participation in the facility was $69 million and $67 million, respectively. At December 31, 2019, the letter of credit facility has not been drawn down and can only be drawn down in the event of certain specific scenarios, which the Company considers remote. Unless canceled by the bank, the credit facility automatically extends for one year, each year until maturity.
(d) Legal Proceedings
Litigation
The Company’s reinsurance subsidiaries, and the insurance and reinsurance industry in general, are subject to litigation and arbitration in the normal course of their business operations. In addition to claims litigation and disputes, the Company and its subsidiaries may be subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly relate to claims on reinsurance contracts. This category of business litigation typically involves, among other things, allegations of underwriting errors or omissions, employment claims or regulatory activity. While the outcome of business litigation cannot be predicted with certainty, the Company will dispute all allegations against the Company and/or its subsidiaries that management believes are without merit.
At December 31, 2019, the Company was not a party to any litigation or arbitration that it believes could have a material effect on the financial condition, results of operations or liquidity of the Company.
In March 2019, a cedant (“the Cedant”) brought a motion for a declaratory judgment against the Company in the Québec Superior Court seeking a declaration that the Cedant had properly exercised its right, pursuant to an agreement between the parties, to recapture certain portfolios of life reinsurance contracts that the Cedant had retroceded to the Company. The Cedant alleges that such recapture entitles it to a payment from the Company of approximately CAD $144.7 million (approximately U.S. $110 million). The Company believes it has strong defenses to the Cedant’s claim, including that the Cedant failed to unconditionally exercise its alleged recapture right within the specified contractual parameters, and that even if the Cedant had done so, the recapture payment requested is significantly overstated. If the Cedant's claim prevails in its entirety, the Company could incur a loss, calculated as the value of the recapture payment reduced by the net reserves recorded by the Company related to the in-force business subject to recapture. However, the Company cannot reasonably predict the result of this matter. As the Company believes that it is not probable that a loss has been or is expected to be incurred for this litigation, no accrual for a contingent liability has been made as at December 31, 2019.
16. Credit Agreements
In the normal course of its operations, the Company enters into agreements with financial institutions to obtain unsecured and secured letter of credit facilities. At December 31, 2019, the total amount of such credit facilities available to the Company was approximately $602 million, with the significant facilities as follows:
•
$400 million combined credit facility, with the first $100 million being unsecured and any further utilization secured. This credit facility matures each year on November 14, and automatically extends for a further year, unless canceled by either counterparty
•
$150 million secured credit facility, that matures on December 31, 2021, and automatically extends for a further year unless canceled by either counterparty
•
$50 million secured credit facility, that matures on December 21, 2021, and automatically extends for a further year unless canceled by either counterparty.
Under the terms of certain reinsurance agreements, irrevocable letters of credit were issued for a total of $102 million on an unsecured basis and $338 million on a secured basis at December 31, 2019 in respect of losses and unearned premium reserves. The

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committed secured credit facilities maintained by the Company are used for the issuance of letters of credit which must be fully secured with either cash, government bonds and/or investment grade bonds.
The agreements include default covenants, which could require the Company to fully secure the outstanding letters of credit to the extent that the facility is not already fully secured and/or result in the Company not being allowed to issue any new letters of credit.
At December 31, 2019, no conditions of default existed under these facilities.
17. Related Party Transactions
During 2019 and 2018, the Company declared and paid to EXOR Nederland N.V. common share dividends totaling $199 million and $48 million, respectively.
In the normal course of its underwriting activities, the Company has entered into reinsurance agreements with companies affiliated with the Company.
In the normal course of its investment operations, the Company bought or held securities of companies affiliated with the Company, including the following:
•
In 2018, the Company entered into an agreement with Exor to invest in a newly formed limited partnership, Exor Seeds L.P. At December 31, 2019 and 2018, the carrying value of the Company's investment in the limited partnership was $32 million and $11 million, respectively, with the increase from 2018 driven primarily by additional capital contributions. This investment is accounted for using the equity method and is included within Other invested assets in the Consolidated Balance Sheets.
•
In 2017, the Company invested $500 million in two Exor managed public equity funds. At December 31, 2019 and 2018, the carrying value of these investments totaled $948 million and $563 million, respectively. These investments are recorded at fair value and are included within Equities in the Consolidated Balance Sheets. Net realized and unrealized investment gains related to these funds of $385 million, $12 million, and $51 million were recorded in the Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017, respectively.
•
In 2017, the Company purchased certain real estate investments from Almacantar, an equity method investee, for total cash consideration of £55 million ($83 million). At December 31, 2019 and 2018, the carrying value of real estate was $72 million and $73 million, respectively, with the changes in carrying value from original cost related to impairment losses and the foreign currency impact of translating the GBP denominated balance to U.S. dollars. The years ended December 31, 2019 and 2018 included impairment losses of $3 million and $6 million, respectively, related to these real estate investments. These investments are classified as Investments in real estate in the Consolidated Balance Sheets. Refer also to Note 4(f) for a discussion of the Company's interest in Almacantar.
During the years ended December 31, 2019, 2018 and 2017, the Company entered into various agreements with Exor whereby Exor provides services in exchange for fees as follows:
•
advisory services related to certain real estate investments where the Company paid approximately $221 thousand, $45 thousand, and $45 thousand for services rendered in 2019, 2018 and 2017, respectively
•
services commencing in September 2018 for investment advisory and use of certain office space, where the Company paid $254 thousand and $273 thousand related to services provided in 2019 and 2018, respectively
•
certain advisory services for a fixed annual fee of $500 thousand in 2019 and 2018. Fees paid in 2017 were less than $500 thousand, as the fixed annual fee was increased from €300 thousand to $500 thousand effective April 1, 2017.
The transactions between related parties discussed above were entered into at arm's-length.
18. Segment Information
The Company monitors the performance of its operations in three segments: Property and Casualty (P&C), Specialty and Life and Health. The business in the P&C and Specialty segments is collectively referred to as Non-life business. P&C, Specialty and Life and Health each separately represent markets that are reasonably homogeneous in terms of client types, buying patterns, underlying risk patterns and approach to risk management.
The P&C segment is comprised of property and casualty business underwritten, including property catastrophe, facultative and U.S. health risks. The Specialty segment is comprised of specialty business underwritten, including treaty and facultative contracts. The Life and Health segment is comprised of mortality, morbidity and longevity business.

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Management measures results for the P&C and Specialty segments on the basis of the loss ratio, acquisition ratio, technical ratio, other expense ratio and combined ratio (all defined below). Management measures results for the Life and Health segment on the basis of the allocated underwriting result, which includes underwriting result and net investment income allocated to life business.
The segment results for the years ended December 31, 2019, 2018 and 2017 are presented below (in millions of U.S. dollars, except ratios).
Segment Information
For the year ended December 31, 2019
 
 
P&C
segment
 
Specialty
segment
 
Total
Non-life
 
Life
and Health
segment
 
Corporate
and Other
 
Total
Gross premiums written
 
$
3,579

 
$
2,213

 
$
5,792

 
$
1,493

 
$
—

 
$
7,285

Net premiums written
 
$
3,302

 
$
2,137

 
$
5,439

 
$
1,470

 
$
—

 
$
6,909

Increase in unearned premiums
 
(231
)
 
(150
)
 
(381
)
 
(3
)
 
—

 
(384
)
Net premiums earned
 
$
3,071

 
$
1,987

 
$
5,058

 
$
1,467

 
$
—

 
$
6,525

Losses and loss expenses
 
(2,167
)
 
(1,496
)
 
(3,663
)
 
(1,263
)
 
3

 
(4,923
)
Acquisition costs
 
(783
)
 
(523
)
 
(1,306
)
 
(149
)
 
—

 
(1,455
)
Technical result
 
$
121

 
$
(32
)
 
$
89

 
$
55

 
$
3

 
$
147

Other (loss) income
 
(1
)
 
—

 
(1
)
 
15

 
1

 
15

Other expenses
 
(80
)
 
(28
)
 
(108
)
 
(69
)
 
(193
)
 
(370
)
Underwriting result
 
$
40

 
$
(60
)
 
$
(20
)
 
$
1

 
n/a

 
$
(208
)
Net investment income
 
 
 
 
 
 
 
72

 
377

 
449

Allocated underwriting result
 
 
 
 
 
 
 
$
73

 
n/a

 
n/a

Net realized and unrealized investment gains
 
 
 
 
 
 
 
 
 
887

 
887

Interest expense
 
 
 
 
 
 
 
 
 
(40
)
 
(40
)
Loss on redemption of debt
 
 
 
 
 
 
 
 
 
(15
)
 
(15
)
Amortization of intangible assets
 
 
 
 
 
 
 
 
 
(12
)
 
(12
)
Net foreign exchange losses
 
 
 
 
 
 
 
 
 
(87
)
 
(87
)
Income tax expense
 
 
 
 
 
 
 
 
 
(53
)
 
(53
)
Interest in earnings of equity method investments
 
 
 
 
 
 
 
 
 
16

 
16

Net income
 
 
 
 
 
 
 
 
 
n/a

 
$
937

Loss ratio (1)
 
70.6
%
 
75.3
%
 
72.4
%
 
 
 
 
 
 
Acquisition ratio (2)
 
25.5

 
26.3

 
25.8

 
 
 
 
 
 
Technical ratio (3)
 
96.1
%
 
101.6
%
 
98.2
%
 
 
 
 
 
 
Other expense ratio (4)
 
2.6

 
1.4

 
2.1

 
 
 
 
 
 
Combined ratio (5)
 
98.7
%
 
103.0
%
 
100.3
%
 
 
 
 
 
 
 
(1) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned.
(2) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned.
(3) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio.
(4) Other expense ratio is obtained by dividing other expenses by net premiums earned.
(5) Combined ratio is defined as the sum of the technical ratio and the other expense ratio.


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Segment Information
For the year ended December 31, 2018
 
 
P&C
segment
 
Specialty
segment
 
Total
Non-life
 
Life
and Health
segment
 
Corporate
and Other
 
Total
Gross premiums written
 
$
3,015

 
$
2,050

 
$
5,065

 
$
1,235

 
$
—

 
$
6,300

Net premiums written
 
$
2,722

 
$
1,870

 
$
4,592

 
$
1,211

 
$
—

 
$
5,803

(Increase) decrease in unearned premiums
 
(187
)
 
(103
)
 
(290
)
 
1

 
—

 
(289
)
Net premiums earned
 
$
2,535

 
$
1,767

 
$
4,302

 
$
1,212

 
$
—

 
$
5,514

Losses and loss expenses
 
(2,073
)
 
(1,096
)
 
(3,169
)
 
(1,025
)
 
—

 
(4,194
)
Acquisition costs
 
(606
)
 
(502
)
 
(1,108
)
 
(129
)
 
—

 
(1,237
)
Technical result
 
$
(144
)
 
$
169

 
$
25

 
$
58

 
$
—

 
$
83

Other income
 
30

 
—

 
30

 
13

 
7

 
50

Other expenses
 
(75
)
 
(27
)
 
(102
)
 
(51
)
 
(153
)
 
(306
)
Underwriting result
 
$
(189
)
 
$
142

 
$
(47
)
 
$
20

 
n/a

 
$
(173
)
Net investment income
 
 
 
 
 
 
 
66

 
350

 
416

Allocated underwriting result
 
 
 
 
 
 
 
$
86

 
n/a

 
n/a

Net realized and unrealized investment losses
 
 
 
 
 
 
 
 
 
(390
)
 
(390
)
Interest expense
 
 
 
 
 
 
 
 
 
(43
)
 
(43
)
Amortization of intangible assets
 
 
 
 
 
 
 
 
 
(35
)
 
(35
)
Net foreign exchange gains
 
 
 
 
 
 
 
 
 
119

 
119

Income tax benefit
 
 
 
 
 
 
 
 
 
9

 
9

Interest in earnings of equity method investments
 
 
 
 
 
 
 
 
 
11

 
11

Net loss
 
 
 
 
 
 
 
 
 
n/a

 
$
(86
)
Loss ratio
 
81.8
%
 
62.0
%
 
73.7
%
 
 
 
 
 
 
Acquisition ratio
 
23.9

 
28.4

 
25.8

 
 
 
 
 
 
Technical ratio
 
105.7
%
 
90.4
%
 
99.5
%
 
 
 
 
 
 
Other expense ratio
 
3.0

 
1.5

 
2.4

 
 
 
 
 
 
Combined ratio
 
108.7
%
 
91.9
%
 
101.9
%
 
 
 
 
 
 




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Segment Information
For the year ended December 31, 2017
 
 
P&C
segment
 
Specialty
segment
 
Total
Non-life
 
Life
and Health
segment
 
Corporate
and Other
 
Total
Gross premiums written
 
$
2,671

 
$
1,934

 
$
4,605

 
$
983

 
$
—

 
$
5,588

Net premiums written
 
$
2,375

 
$
1,780

 
$
4,155

 
$
965

 
$
—

 
$
5,120

(Increase) decrease in unearned premiums
 
(45
)
 
(55
)
 
(100
)
 
5

 
—

 
(95
)
Net premiums earned
 
$
2,330

 
$
1,725

 
$
4,055

 
$
970

 
$
—

 
$
5,025

Losses and loss expenses
 
(2,051
)
 
(955
)
 
(3,006
)
 
(835
)
 
—

 
(3,841
)
Acquisition costs
 
(534
)
 
(489
)
 
(1,023
)
 
(97
)
 
—

 
(1,120
)
Technical result
 
$
(255
)
 
$
281

 
$
26

 
$
38

 
$
—

 
$
64

Other (loss) income
 
—

 
(1
)
 
(1
)
 
14

 
2

 
15

Other expenses
 
(88
)
 
(33
)
 
(121
)
 
(44
)
 
(183
)
 
(348
)
Underwriting result
 
$
(343
)
 
$
247

 
$
(96
)
 
$
8

 
n/a

 
$
(269
)
Net investment income
 
 
 
 
 
 
 
60

 
342

 
402

Allocated underwriting result
 
 
 
 
 
 
 
$
68

 
n/a

 
n/a

Net realized and unrealized investment gains
 
 
 
 
 
 
 
 
 
232

 
232

Interest expense
 
 
 
 
 
 
 
 
 
(42
)
 
(42
)
Loss on redemption of debt
 
 
 
 
 
 
 
 
 
(2
)
 
(2
)
Amortization of intangible assets
 
 
 
 
 
 
 
 
 
(25
)
 
(25
)
Net foreign exchange losses
 
 
 
 
 
 
 
 
 
(108
)
 
(108
)
Income tax expense
 
 
 
 
 
 
 
 
 
(10
)
 
(10
)
Interest in earnings of equity method investments
 
 
 
 
 
 
 
 
 
86

 
86

Net income
 
 
 
 
 
 
 
 
 
n/a

 
$
264

Loss ratio
 
88.0
%
 
55.4
%
 
74.1
%
 
 
 
 
 
 
Acquisition ratio
 
22.9

 
28.4

 
25.2

 
 
 
 
 
 
Technical ratio
 
110.9
%
 
83.8
%
 
99.3
%
 
 
 
 
 
 
Other expense ratio
 
3.8

 
1.9

 
3.0

 
 
 
 
 
 
Combined ratio
 
114.7
%
 
85.7
%
 
102.3
%
 
 
 
 
 
 

 The following table provides the geographic distribution of gross premiums written based on the location of the underlying risk for the years ended December 31, 2019, 2018 and 2017 (in millions of U.S. dollars, except percentages):
 
 
2019
 
2018
 
2017
North America
 
$
3,752

 
51
%
 
$
2,929

 
47
%
 
$
2,620

 
47
%
Europe
 
2,155

 
30

 
2,152

 
34

 
1,866

 
33

Asia, Australia and New Zealand
 
835

 
11

 
699

 
11

 
565

 
10

Latin America and the Caribbean
 
264

 
4

 
260

 
4

 
267

 
5

Middle East, Africa, Russia and the Commonwealth of Independent States (CIS)
 
279

 
4

 
260

 
4

 
270

 
5

Total
 
$
7,285

 
100
%
 
$
6,300

 
100
%
 
$
5,588

 
100
%

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The following table provides the gross premiums written by segment and line of business for the years ended December 31, 2019, 2018 and 2017 (in millions of U.S. dollars, except percentages):
 
 
2019
 
2018
 
2017
P&C
 
 
 
 
 
 
Casualty
 
$
1,394

 
$
1,052

 
$
804

Property
 
644

 
615

 
547

Catastrophe
 
537

 
478

 
481

Motor
 
400

 
308

 
262

U.S. health
 
391

 
405

 
416

Multiline and other
 
213

 
157

 
161

Total P&C
 
$
3,579

 
$
3,015

 
$
2,671

Specialty
 
 
 
 
 
 
Financial risks
 
$
587

 
$
549

 
$
490

Agriculture
 
483

 
506

 
557

Aviation and space
 
286

 
228

 
219

Multiline and other
 
276

 
307

 
199

Energy
 
183

 
79

 
63

Property
 
151

 
112

 
90

Marine
 
132

 
103

 
154

Engineering
 
102

 
124

 
117

Casualty
 
13

 
42

 
45

Total Specialty
 
$
2,213

 
$
2,050

 
$
1,934

Life and Health
 
$
1,493

 
$
1,235

 
$
983

Total
 
$
7,285

 
$
6,300

 
$
5,588

The Company produces its business both through brokers and through direct relationships with insurance company clients. None of the Company’s cedants individually accounted for more than 4% of total gross premiums written during each of the years ended December 31, 2019, 2018 and 2017.
The Company has two brokers that individually accounted for 10% or more of its gross premiums written during the years ended December 31, 2019, 2018 and 2017, as follows:
 
 
2019
 
2018
 
2017
Marsh (including Guy Carpenter)
 
28
%
 
22
%
 
25
%
Aon Group (including the Benfield Group)
 
22
%
 
22
%
 
22
%
The following table summarizes the percentage of gross premiums written through these two brokers by segment for the years ended December 31, 2019, 2018 and 2017: 
 
 
2019
 
2018
 
2017
P&C
 
60
%
 
53
%
 
53
%
Specialty
 
62
%
 
52
%
 
56
%
Life and Health
 
8
%
 
11
%
 
12
%
19. Other Expenses
For the years ended December 31, 2019, 2018 and 2017, the Company recorded $13 million, $11 million and $29 million, respectively, of reorganization related costs. In addition, for the year ended December 31, 2017, the Company recorded $4 million of transaction costs related to the acquisition of Aurigen.

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20. Subsequent Events
On February 9, 2020, our ultimate parent company, EXOR N.V., announced that it had entered into exclusive discussions with Covéa Cooperations S.A. regarding a possible all-cash acquisition of PartnerRe. Should these discussions result in the execution of a binding agreement for the sale of the common shares of the Company, on the terms and subject to satisfaction of the conditions in such binding agreement, the consummation of such transaction would result in a change of control of the Company. These discussions are ongoing and there is no certainty that they will result in a transaction.


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of PartnerRe Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of PartnerRe Ltd. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 
/S/ Ernst & Young Ltd.
Ernst & Young Ltd.
We have served as the Company‘s auditor since 2016.
Hamilton, Bermuda
March 2, 2020

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of PartnerRe Ltd.
We have audited the consolidated financial statements of PartnerRe Ltd. and subsidiaries (the Company) as of December 31, 2019 and 2018, and for each of the three years in the period ended December 31, 2019, and have issued our report thereon dated March 2, 2020 (included elsewhere in this Annual Report on Form 20-F). Our audits of the consolidated financial statements included the financial statement schedules listed in Item 18 of this Form 20-F (the “schedules”). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s schedules, based on our audits.
In our opinion, the schedules present fairly, in all material respects, the information set forth therein when considered in conjunction with the consolidated financial statements.

 
/S/ Ernst & Young Ltd.
Ernst & Young Ltd.
 
Hamilton, Bermuda
March 2, 2020


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SCHEDULE I
PartnerRe Ltd.
Consolidated Summary of Investments
Other Than Investments in Related Parties
at December 31, 2019
(Expressed in thousands of U.S. dollars)
 
Type of investment
 
Cost (1)
 
Fair Value
 
Amount at which shown in
the balance sheet
Fixed maturities
 
 
 
 
 
 
U.S. government and government sponsored enterprises
 
$
1,409,996

 
$
1,421,716

 
$
1,421,716

U.S. states, territories and municipalities
 
124,602

 
157,234

 
157,234

Non-U.S. sovereign government, supranational and government related
 
3,232,352

 
3,255,154

 
3,255,154

Corporate bonds
 
2,583,276

 
2,662,089

 
2,662,089

Asset-backed securities
 
18,238

 
18,228

 
18,228

Residential mortgage-backed securities
 
3,100,387

 
3,166,290

 
3,166,290

Other mortgage-backed securities
 
86

 
3

 
3

Fixed maturities
 
$
10,468,937

 
$
10,680,714

 
$
10,680,714

Equities
 
 
 
 
 
 
Banks, trust and insurance companies
 
$
26,234

 
$
46,404

 
$
46,404

Industrial, miscellaneous and all other
 
795,196

 
1,248,760

 
1,248,760

Equities 
 
$
821,430

 
$
1,295,164

 
$
1,295,164

Short-term investments
 
$
1,003,508

 
$
1,003,421

 
$
1,003,421

Other invested assets (2)
 
 
 
$
2,399,885

 
$
3,266,009

Investments in real estate (3)
 
 
 
$
—

 
$
71,834

Total
 
 
 
$
15,379,184

 
$
16,317,142

 
(1)
Original cost of fixed maturities reduced by repayments and adjusted for amortization of premiums or accrual of discounts. Original cost of equity securities.
(2)
Other invested assets shown in the Consolidated Balance Sheets in Item 18 also includes the Company’s investments accounted for using the equity method of accounting of $866 million.
(3)
Investments in real estate are carried at original cost less any impairments.



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SCHEDULE II
PartnerRe Ltd.
Condensed Balance Sheets—Parent Company Only
(Expressed in thousands of U.S. dollars, except parenthetical share and per share data)
 
 
 
December 31, 2019
 
December 31, 2018
Assets
 
 
 
 
Fixed maturities, at fair value (amortized cost: 2019, $56,096; 2018, $109,824)
 
$
58,161

 
$
109,951

Short-term investments, at fair value (amortized cost: 2019, $3,993; 2018, $nil)
 
3,993

 
—

Cash and cash equivalents
 
4,512

 
1,081

Investments in subsidiaries
 
8,896,352

 
8,831,161

Intercompany loans and balances receivable
 
219,815

 
657,156

Other
 
4,422

 
4,588

Total assets
 
$
9,187,255

 
$
9,603,937

 
 
 
 
 
Liabilities
 
 
 
 
Intercompany loans and balances payable (1)
 
$
1,884,499

 
$
3,061,210

Accounts payable, accrued expenses and other
 
32,587

 
26,213

Total liabilities
 
1,917,086

 
3,087,423

 
 
 
 
 
Shareholders’ Equity
 
 
 
 
Common shares (par value $0.00000001; issued and outstanding: 100,000,000 shares)
 
—

 
—

Preferred shares (par value $1.00; issued and outstanding: 28,169,062 shares; aggregate liquidation value: $704,227)
 
28,169

 
28,169

Additional paid-in capital
 
2,396,530

 
2,396,530

Accumulated other comprehensive loss
 
(75,925
)
 
(138,634
)
Retained earnings
 
4,921,395

 
4,230,449

Total shareholders’ equity
 
7,270,169

 
6,516,514

Total liabilities and shareholders’ equity
 
$
9,187,255

 
$
9,603,937

 
(1)
The parent has fully and unconditionally guaranteed on a subordinated basis all obligations of PartnerRe Finance II Inc., an indirect 100% owned finance subsidiary of the parent, related to the remaining $62 million aggregate principal amount of 6.440% Fixed-to-Floating Rate Junior Subordinated CENts. The parent’s obligations under this guarantee are unsecured and rank junior in priority of payments to the parent’s senior notes.
The parent has fully and unconditionally guaranteed all obligations of PartnerRe Finance B, indirect 100% owned finance subsidiary of the parent, and PartnerRe Finance Ireland DAC, direct 100% owned subsidiary of the parent, related to the issuance of the 3.700% senior notes and 1.250% senior notes, respectively. The parent’s obligations under these guarantees are senior and unsecured and rank equally with all other senior unsecured indebtedness of the parent.


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SCHEDULE II
PartnerRe Ltd.
Condensed Statements of Operations and Comprehensive Income (Loss) —Parent Company Only
(Expressed in thousands of U.S. dollars)
 
 
 
For the year ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Revenues
 
 
 
 
 
 
Net investment income
 
$
1,620

 
$
1,844

 
$
1,890

Interest income on intercompany loans
 
12,215

 
13,015

 
12,201

Net realized and unrealized investment gains (losses)
 
2,594

 
(1,632
)
 
91

Other income (loss)
 
112

 
(6,778
)
 
8,418

Total revenues
 
16,541

 
6,449

 
22,600

Expenses
 
 
 
 
 
 
Other expenses
 
51,115

 
25,792

 
40,131

Interest expense on intercompany loans
 
14,757

 
15,041

 
12,085

Net foreign exchange (gains) losses
 
(26,885
)
 
(50,276
)
 
35,753

Total expenses
 
38,987

 
(9,443
)
 
87,969

(Loss) income before equity in net income (loss) of subsidiaries
 
(22,446
)
 
15,892

 
(65,369
)
Equity in net income (loss) of subsidiaries
 
959,194

 
(101,886
)
 
329,390

Net income (loss)
 
936,748

 
(85,994
)
 
264,021

Preferred dividends
 
46,416

 
46,416

 
46,416

Net income (loss) attributable to common shareholder
 
$
890,332

 
$
(132,410
)
 
$
217,605

Comprehensive income (loss)
 
 
 
 
 
 
Net income (loss)
 
$
936,748

 
$
(85,994
)
 
$
264,021

Other comprehensive income (loss)
 
62,709

 
(48,353
)
 
(15,712
)
Comprehensive income (loss)
 
$
999,457

 
$
(134,347
)
 
$
248,309



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SCHEDULE II
PartnerRe Ltd.
Condensed Statements of Cash Flows—Parent Company Only
(Expressed in thousands of U.S. dollars)
 
 
 
For the year ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Cash flows from operating activities
 
 
 
 
 
 
Net income (loss)
 
$
936,748

 
$
(85,994
)
 
$
264,021

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
 
 
 
Equity in net (income) loss of subsidiaries
 
(959,194
)
 
101,886

 
(329,390
)
Other, net
 
(17,167
)
 
(29,283
)
 
25,239

Net cash used in operating activities
 
(39,613
)
 
(13,391
)
 
(40,130
)
Cash flows from investing activities
 
 
 
 
 
 
Advances to/from subsidiaries, net
 
(282,233
)
 
(261,666
)
 
11,138

Net issue of intercompany loans receivable and payable (1)
 
276,332

 
299,279

 
—

Sales and redemptions of fixed maturities
 
72,724

 
65,025

 
40,379

Sales and redemptions of short-term investments
 
2,189

 
—

 
—

Purchases of fixed maturities
 
(18,621
)
 
(124,932
)
 
(16,414
)
Purchases of short-term investments
 
(6,173
)
 
—

 
—

Other, net
 
(29
)
 
(680
)
 
414

Net cash provided by (used in) investing activities
 
44,189

 
(22,974
)
 
35,517

Net cash used in financing activities (2)
 
—

 
—

 
—

Effect of foreign exchange rate changes on cash
 
(1,145
)
 
10,765

 
8,144

Increase (decrease) in cash and cash equivalents
 
3,431

 
(25,600
)
 
3,531

Cash and cash equivalents—beginning of year
 
1,081

 
26,681

 
23,150

Cash and cash equivalents—end of year
 
$
4,512

 
$
1,081

 
$
26,681

 
(1)
During the year ended December 31, 2019, the Company recorded non-cash dividends received from subsidiaries and non-cash capital contributions to subsidiaries of $979 million and $22 million, respectively, with corresponding changes to the intercompany loan balances. These non-cash transactions have therefore been excluded from the Condensed Statements of Cash Flows—Parent Company Only.
(2)
During the years ended December 31, 2019, 2018 and 2017, dividends paid to common and preferred shareholders of $246 million, $94 million and $191 million, respectively, were paid by a Bermuda subsidiary on behalf of the parent and have therefore been excluded from the Condensed Statements of Cash Flows—Parent Company Only.

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SCHEDULE III
PartnerRe Ltd.
Supplementary Insurance Information
For the years ended December 31, 2019, 2018 and 2017
(Expressed in thousands of U.S. dollars)
 
 
 
Deferred Policy Acquisition Costs
 
Gross Reserves
 
Unearned Premiums
 
Other Benefits Payable
 
Premium Revenue
 
Net Investment Income (1)
 
Losses Incurred
 
Acquisition Costs
 
Other Expenses (2)
 
Net Premiums Written
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-life
 
$
640,442

 
$
10,357,981

 
$
2,420,009

 
$
—

 
$
5,058,056

 
$ N/A
 
$
3,662,891

 
$
1,306,388

 
$
107,414

 
$
5,438,807

Life and Health
 
234,166

 
—

 
13,851

 
2,417,044

 
1,467,162

 
71,756

 
1,263,016

 
149,074

 
69,191

 
1,470,251

Corporate and Other
 
—

 
5,402

 
—

 
—

 
—

 
376,782

 
(2,751
)
 
—

 
193,364

 
—

Total
 
$
874,608

 
$
10,363,383

 
$
2,433,860

 
$
2,417,044

 
$
6,525,218

 
$
448,538

 
$
4,923,156

 
$
1,455,462

 
$
369,969

 
$
6,909,058

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-life
 
$
553,535

 
$
9,885,913

 
$
2,062,736

 
$
—

 
$
4,301,862

 
$ N/A
 
$
3,168,647

 
$
1,107,760

 
$
102,397

 
$
4,592,282

Life and Health
 
189,511

 
—

 
10,217

 
2,198,080

 
1,211,948

 
65,567

 
1,024,608

 
129,704

 
51,055

 
1,211,082

Corporate and Other
 
—

 
9,463

 
—

 
—

 
—

 
350,354

 
—

 
—

 
152,116

 
—

Total
 
$
743,046

 
$
9,895,376

 
$
2,072,953

 
$
2,198,080

 
$
5,513,810

 
$
415,921

 
$
4,193,255

 
$
1,237,464

 
$
305,568

 
$
5,803,364

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-life
 
$
493,196

 
$
10,102,172

 
$
1,807,013

 
$
—

 
$
4,055,191

 
$ N/A
 
$
3,005,567

 
$
1,023,065

 
$
121,134

 
$
4,154,809

Life and Health
 
179,111

 
—

 
11,986

 
2,098,759

 
969,790

 
59,895

 
835,415

 
96,708

 
44,346

 
965,117

Corporate and Other
 
—

 
—

 
—

 
—

 
—

 
342,176

 
—

 
—

 
182,918

 
—

Total
 
$
672,307

 
$
10,102,172

 
$
1,818,999

 
$
2,098,759

 
$
5,024,981

 
$
402,071

 
$
3,840,982

 
$
1,119,773

 
$
348,398

 
$
5,119,926

 
 
(1)
Because the Company does not manage its assets by segment, net investment income is not allocated to the Non-life business of the reinsurance operations. However, because of the interest-sensitive nature of some of the Company’s Life products, net investment income is considered in management’s assessment of the profitability of the Life and Health segment.
(2)
Other expenses are a component of underwriting result for the Non-life business and Life and Health segment as the Company allocates certain other expenses to its operating segments that vary with business written.


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SCHEDULE IV
PartnerRe Ltd.
Reinsurance
For the years ended December 31, 2019, 2018 and 2017
(Expressed in thousands of U.S. dollars)
 
 
 
Gross amount
 
Ceded to other companies
 
Assumed from other companies
 
Net amount
 
Percentage of amount assumed to net
2019
 
 
 
 
 
 
 
 
 
 
Life reinsurance in force(1)
 
$
—

 
$
17,632,050

 
$
359,376,352

 
$
341,744,302

 
105
%
Premiums earned
 
 
 
 
 
 
 
 
 
 
Life
 
$
—

 
$
22,559

 
$
1,427,723

 
$
1,405,164

 
102
%
Accident and health
 
—

 
—

 
61,998

 
61,998

 
100
%
P&C(2)
 
275,923

 
375,301

 
5,157,434

 
5,058,056

 
102
%
Total premiums
 
$
275,923

 
$
397,860

 
$
6,647,155

 
$
6,525,218

 
102
%
 
 
 
 
 
 
 
 
 
 
 
2018
 
 
 
 
 
 
 
 
 
 
Life reinsurance in force(1)
 
$
—

 
$
16,349,433

 
$
349,064,323

 
$
332,714,890

 
105
%
Premiums earned
 
 
 
 
 
 
 
 
 
 
Life
 
$
—

 
$
24,025

 
$
1,184,604

 
$
1,160,579

 
102
%
Accident and health
 
—

 
—

 
51,369

 
51,369

 
100
%
P&C(2)
 
248,501

 
450,096

 
4,503,457

 
4,301,862

 
105
%
Total premiums
 
$
248,501

 
$
474,121

 
$
5,739,430

 
$
5,513,810

 
104
%
 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
Life reinsurance in force(1)
 
$
—

 
$
15,136,473

 
$
295,171,940

 
$
280,035,467

 
105
%
Premiums earned
 
 
 
 
 
 
 
 
 
 
Life
 
$
—

 
$
18,094

 
$
944,752

 
$
926,658

 
102
%
Accident and health
 
—

 
—

 
43,132

 
43,132

 
100
%
P&C(2)
 
261,760

 
428,471

 
4,221,902

 
4,055,191

 
104
%
Total premiums
 
$
261,760

 
$
446,565

 
$
5,209,786

 
$
5,024,981

 
104
%
 
(1) Life reinsurance in force excludes products that do not pass risk transfer,
(2) P&C includes Specialty and U.S. health premiums.


155
Table of Contents

SCHEDULE VI
PartnerRe Ltd.
Supplemental Information
Concerning Property-Casualty Insurance Operations (1) 
For the years ended December 31, 2019, 2018 and 2017
(Expressed in thousands of U.S. dollars)
 
 
 
 
 
 
 
 
 
 
 
Losses and Loss Expenses Incurred Related to (2)
 
 
 
 
 
 
Affiliation with Registrant
 
Deferred Policy Acquisition Costs
 
Liability for Unpaid Losses and Loss Expenses
 
Unearned Premiums
 
Premiums Earned
 
Current year
 
Prior year
 
Acquisition Costs
 
Paid Losses and Loss Expenses
 
Premiums Written
Consolidated subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
$
640,442

 
$
10,363,383

 
$
2,420,009

 
$
5,058,056

 
$
3,716,988

 
$
(56,848
)
 
$
1,306,388

 
$
3,090,670

 
$
5,438,807

2018
 
$
553,535

 
$
9,895,376

 
$
2,062,736

 
$
4,301,862

 
$
3,417,366

 
$
(248,719
)
 
$
1,107,760

 
$
2,921,987

 
$
4,592,282

2017
 
$
493,196

 
$
10,102,172

 
$
1,807,013

 
$
4,055,191

 
$
3,453,725

 
$
(448,158
)
 
$
1,023,065

 
$
2,979,051

 
$
4,154,809

 
(1) Includes the Company's P&C and Specialty segments.
(2) Net incurred losses include favorable loss development of $3 million during the year ended December 31, 2019, which are allocated to Corporate and Other.

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ITEM 19.
EXHIBITS

EXHIBIT INDEX
 
 
 
  
 
Incorporated by Reference
 
 
Exhibit
Number
 
Exhibit Description
 
Form
 
Original
Number
 
Date Filed
 
SEC File
Reference
Number
 
Filed
Herewith
1.1
 
Amended Memorandum of Association
 
F-3
 
3.1
 
June 20, 1997
 
333-7094
 
 
1.2
 
 
 
 
 
 
 
 
 
 
X
2.1
 
 
8-K
 
4.1
 
February 14, 2013
 
001-14536
 
 
2.1.1
 
 
8-K
 
3.1
 
February 14, 2013
 
001-14536
 
 
2.2
 
 
8-K
 
4.1
 
May 3, 2016
 
001-14536
 
 
2.3
 
 
8-K
 
4.2
 
May 3, 2016
 
001-14536
 
 
2.4
 
 
8-K
 
4.3
 
May 3, 2016
 
001-14536
 
 
2.5
 
 
20-F
 
2.8
 
March 14, 2018
 
001-14536
 
 
2.6.1
 
 
8-K
 
4.1
 
November 7, 2006
 
001-14536
 
 
2.6.2
 
 
8-K
 
4.2
 
November 7, 2006
 
001-14536
61194484
 
 
2.7.1
 
 
8-K
 
4.3
 
November 7, 2006
 
001-14536
 
 
2.7.2
 
 
8-K
 
4.4
 
November 7, 2006
 
001-14536
 
 
2.8.1
 
 
8-K
 
4.1
 
March 15, 2010
 
001-14536
 
 
2.8.2
 
 
6-K
 
4.1
 
June 19, 2019
 
001-14536
 
 
2.9.1
 
 
8-K
 
4.3
 
March 15, 2010
 
001-14536
 
 
2.9.2
 
 
6-K
 
4.2
 
June 19, 2019
 
001-14536
 
 
2.10.1
 
 
 
 
 
 
 
 
 
 
X
2.10.2
 
 
 
 
 
 
 
 
 
 
X

157
Table of Contents

 
 
  
 
Incorporated by Reference
 
 
Exhibit
Number
 
Exhibit Description
 
Form
 
Original
Number
 
Date Filed
 
SEC File
Reference
Number
 
Filed
Herewith
2.10.3
 
 
 
 
 
 
 
 
 
 
X
2.11
 
 
 
 
 
 
 
 
 
 
X
4.1
 
 
8-K
 
2.1
 
 August 3, 2015
 
001-14536
 
 
4.2
 
 
10-Q
 
10.16
 
November 4, 2009
 
001-14536
 
 
4.3
 
 
10-K
 
10.38
 
February 25, 2016
 
001-14536
 
 
8.1
 
 
 
 
 
 
 
 
 
 
X
11.1
 
 
 
 
 
 
 
 
 
 
X
12.1
 
 
 
 
 
 
 
 
 
 
X
12.2
 
 
 
 
 
 
 
 
 
 
X
13.1
 
 
 
 
 
 
 
 
 
 
X
101.1
 
The following financial information from PartnerRe Ltd.’s Annual Report on Form 20–F for the year ended December 31, 2019 formatted in XBRL: (i) Consolidated Balance Sheets at December 31, 2019 and 2018; (ii) Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2019, 2018 and 2017; (iii) Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017; (v) Notes to Consolidated Financial Statements and (vi) Financial Statements Schedules.
 
 
 
 
 
 
 
 
 
X




158
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SIGNATURE


The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

 
 
 
 
PARTNERRE LTD.
 
 
By:
 
/S/    MARIO BONACCORSO        
Name:
 
Mario Bonaccorso
Title:
 
Executive Vice President and Chief Financial Officer


 


159


B Y E - L A W S
of
PartnerRe Ltd.
INTERPRETATION
1.    Interpretation
1.1
In these Bye-Laws, unless the context otherwise requires:
“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person. The term
“Affiliated” shall have the correlative meaning.
“Alternate Director” means an Alternate Director appointed to the Board in accordance with Bye-Law 26;
“Bermuda” means the Islands of Bermuda;
“Board” means the Board of Directors of the Company appointed pursuant to these Bye Laws and acting by resolution as provided for in the Companies Acts and in these Bye Laws or the Directors present at a meeting of Directors at which there is a quorum;
“Code” means the United States Internal Revenue Code of 1986, as amended;
“Common Shares” means the common shares of the Company, par value $1.00 per share;
“Company” means the company incorporated in Bermuda having the name of PartnerRe Ltd.;
“Companies Acts” means every Bermuda statute from time to time in force concerning companies insofar as the same applies to the Company;
“Confidential Information” shall have the meaning given such term in Bye- Law 6.9;
“Controlled Shares” of a person means Shares that would be treated as owned by such person under the rules set forth in section 958 of the Code;
“Covered Manager Person” shall have the meaning given such term in Bye- Law 29.1;
“Director” means such person or persons as shall be appointed to the Board from time to time pursuant to these Bye-Laws and includes an Alternate Director;
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;
“EXOR Group” means EXOR Nederland N.V. (“EXOR”), a naamloze vennotschap organized under the laws of Kingdom of the Netherlands, and each of its Affiliates or subsidiaries that becomes a Shareholder and each of their respective successors;
“EXOR Group Member” means any member of the EXOR Group;
“Indemnified Person” means any Director, Officer, Resident Representative, member of a committee duly constituted under these Bye-Laws and any liquidator or manager for the time being acting in relation to the affairs of the Company, and his heirs, executors and administrators;
“Indemnified Person-Related Entities” means any corporation, limited liability company, partnership, joint venture, trust, or other legal entity (other than the Company, any other person controlled by the Company or the insurer under and pursuant to an insurance policy of the Company or any such controlled person) from whom an Indemnified Person may be entitled to indemnification or advancement of expenses with respect to which, in whole or in part, the Company or any other person controlled by the Company may also have an indemnification or advancement obligation;
“Majority Common Shareholder” means EXOR (or its designee) or any other EXOR Group Member individually or collectively holding a majority of the total combined voting power of the Common Shares;
“Majority Shareholder Director Designee” means a Director that also serves as a director or officer of the Majority Common Shareholder or any of its Affiliates;
“Manager” shall have the meaning given such term in Bye-Law 29.1;
“Meeting Date” shall have the meaning given such term in Bye-Law 40.2;
“Officer” means a person appointed by the Board pursuant to these Bye-Laws and shall not include an auditor of the Company;
“Own or Control” means, with respect to the Company’s Shares, own under the rules set forth in section 958 of the Code;
“Paid-Up” means paid-up or credited as paid-up;
“Record Date Holder” shall have the meaning given such term in Bye-Law 37.2.1;
“Register” means the Register of Shareholders of the Company maintained by the Company in Bermuda and, except in Bye-Law 11, includes any branch register;
“Registered Office” means the registered office of the Company which shall be at such place in Bermuda as the Board shall from time to time determine;
“Relevant Shares” shall have the meaning given such term in Bye-Law 40.2.2;
“Resident Representative” means (if any) the individual (or, if permitted in accordance with the Companies Acts, the company) appointed to perform the duties of resident representative set out in the Companies Acts and includes any assistant or deputy Resident Representative appointed by the Board to perform any of the duties of the Resident Representative;
“Resolution” means a resolution of the Shareholders passed in general meeting or, where required, of a separate class or separate classes of Shareholders passed in a separate general meeting or in either case adopted by resolution in writing, in accordance with the provisions of these Bye-Laws;
“Seal” means the common seal of the Company and includes any authorised duplicate thereof;
“Secretary” means the individual or the company appointed by the Board to perform any of the duties of the Secretary and includes a temporary or assistant or deputy Secretary;
“Service” shall have the meaning given such term in Bye-Law 6.9;
“Share” means share in the capital of the Company and includes a fraction of a share;
“Shareholder” means a shareholder of the Company;
“Specified Place” means the place, if any, specified in the notice of any meeting of the Shareholders, or adjourned meeting of the Shareholders, at which the chairman of the meeting shall preside;
“Ten Percent Shareholder” means a person who Owns or Controls more than 9.9% of the total combined voting power of all classes of Shares entitled to vote at a general meeting of the Company’s Shareholders or in any other circumstance in which the Company’s Shareholders are entitled to vote;
“Treasury Share” means a Share that was or is treated as having been acquired and held by the Company and has been held continuously by the Company since it was so acquired and has not been cancelled; and
“these Bye-Laws” means these Bye-Laws, as amended from time to time.
1.2
Words importing only the singular number include the plural number and vice versa.
1.3
Words importing only the masculine gender include the feminine and neuter genders respectively.
1.4
Words importing persons include companies or associations or bodies of persons, whether corporate or not.
1.5
A reference to writing shall include typewriting, printing, lithography, photography, facsimile and electronic record.
1.6
Any words or expressions defined in the Companies Acts in force at the date when these Bye-Laws or any part thereof are adopted shall bear the same meaning in these Bye-Laws or such part (as the case may be).
REGISTERED OFFICE
2.    Registered Office
The Registered Office shall be at such place in Bermuda as the Board shall from time to time appoint.
SHARES AND SHARE RIGHTS
3.    Share Rights
3.1
Subject to any special rights conferred on the holders of any Share or class of Shares, any Share in the Company may be issued with or have attached thereto such preferred, deferred, qualified or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise, as the Board may determine.
3.2
Subject to the Companies Acts, any preference Shares may, with the approval of the Board, be issued on terms:
3.2.1
that they are to be redeemed on the happening of a specified event or on a given date; and or,
3.2.2
that they are liable to be redeemed at the option of the Company; and/or,
3.2.3
if authorised by the memorandum of association of the Company, that they are liable to be redeemed at the option of the holder. The terms and manner of redemption shall be provided for in such form as the Board may determine and shall be attached to but shall not form part of these Bye-Laws.
3.3
The Board may, at its discretion and without the sanction of a Resolution, authorise the acquisition by the Company of its own Shares, of any class, at any price (whether at par or above or below par), and any Shares to be so purchased may be selected in any manner whatsoever, to be held as Treasury Shares or otherwise, upon such terms as the Board may in its discretion determine, PROVIDED ALWAYS that such acquisition is effected in accordance with the provisions of the Companies Acts. The whole or any part of the amount payable on any such acquisition may be paid or satisfied otherwise than in cash, to the extent permitted by the Companies Acts.
3.4
All the rights attaching to a Treasury Share shall be suspended and shall not be exercised by the Company in respect of any such Treasury Share and, except where required in accordance with the Companies Act, all Treasury Shares shall be excluded from the calculation of any percentage or fraction of the Company’s share capital, or shares of the Company.
4.    Modification of Rights
4.1
Notwithstanding Bye-Law 18.2 and subject to the Companies Acts, all or any of the special rights for the time being attached to any class of Shares for the time being issued may from time to time (whether or not the Company is being wound up) be altered or abrogated with the consent in writing of the holders of not less than seventy five percent (75%) of the issued Shares of that class or with the sanction of a resolution passed at a separate general meeting of the holders of not less than seventy five percent (75%) of the issued Shares of that class, voting in person or by proxy. To any such separate general meeting, all the provisions of these Bye-Laws as to general meetings of the Company shall mutatis mutandis apply, but so that the necessary quorum shall be two (2) or more persons holding or representing by proxy any of the Shares of the relevant class, that every holder of Shares of the relevant class shall be entitled on a poll to one vote for every such Share held by him and that any holder of Shares of the relevant class present in person or by proxy may demand a poll; PROVIDED HOWEVER, that if the Company or a class of Shareholders shall have only one Shareholder, one Shareholder present in person or by proxy shall constitute the necessary quorum.
4.2
For the purposes of this Bye-Law 4, unless otherwise expressly provided by the rights attached to any Shares or class of Shares, those rights attaching to any class of Shares for the time being shall not be deemed to be altered by:
4.2.1
the creation or issue of further Shares ranking pari passu with them;
4.2.2
the creation or issue of further Shares ranking as regards participation in the profits or assets of the Company or otherwise in priority to them; or
4.2.3
the purchase, acquisition or redemption by the Company of any of its own Shares.
5.     Shares
5.1
Subject to the provisions of these Bye-Laws, the unissued Shares (whether forming part of the original capital or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration and upon such terms and conditions as the Board may determine.
5.2
Subject to the provisions of these Bye-Laws, any Shares of the Company held by the Company as Treasury Shares shall be at the disposal of the Board, which may hold all or any of the Shares, dispose of or transfer all or any of the Shares for cash or other consideration, or cancel all or any of the Shares.
5.3
The Board may in connection with the issue of any Shares exercise all powers of
paying commission and brokerage conferred or permitted by law. Subject to the provisions of the Companies Acts, any such commission or brokerage may be satisfied by the payment of cash or by the allotment of fully or partly paid Shares or partly in one way and partly in the other.
5.4
Shares may be issued in fractional denominations and in such event the Company shall deal with such fractions to the same extent as its whole Shares, so that a Share in a fractional denomination shall have, in proportion to the fraction of a whole Share that it represents, all the rights of a whole Share, including (but without limiting the generality of the foregoing) the right to vote, to receive dividends and distributions and to participate in a winding-up.
5.5
Except as ordered by a court of competent jurisdiction or as required by law, no person shall be recognised by the Company as holding any Share upon trust and the Company shall not be bound by or required in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any Share or in any fractional part of a Share or (except only as otherwise provided in these Bye-Laws or by law) any other right in respect of any Share except an absolute right to the entirety thereof in the registered holder.
6.    Certain Limitations on Ownership and Voting of Shares
6.1
Notwithstanding any provision to the contrary in these Bye-Laws but subject to the provisions of this Bye-Law 6.1, no person (other than any EXOR Group Member) shall be permitted to (i) Own or Control Shares in excess of 9.9% of the outstanding Shares (determined by value) or (ii) be a Ten Percent Shareholder (determined without regard to Bye-Laws 6.3, 6.4 and 6.5). Accordingly, no person (other than any EXOR Group Member) shall be registered as the holder of Shares, no Shares may be issued, purchased or transferred (including by reason of the death of a Shareholder), and no alteration of capital may occur if as a result of such registration, issuance, purchase, transfer or alteration, as applicable, a person would (i) Own or Control Shares in excess of 9.9% of the outstanding Shares (determined by value) or (ii) be a Ten Percent Shareholder (determined without regard to Bye-Laws 6.3, 6.4 and 6.5). Notwithstanding the foregoing, the Board may waive the restrictions set forth in this Bye-Law, in its discretion and on a case by case basis.
6.2
Notwithstanding any provision to the contrary in these Bye-Laws, if the Board reasonably determines that ownership by any Shareholder (other than any EXOR Group Member) of the Company’s Shares may result in (i) a person being a Ten Percent Shareholder (determined without regard to Bye-Laws 6.3, 6.4 and 6.5) or (ii) any non-de minimis adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company, or any Shareholder or Affiliate of a Shareholder, the Company will have the option but not the obligation to purchase the minimum number of Shares held by such Shareholder that is necessary so that after such purchase such person is not a Ten Percent Shareholder (determined without regard to Bye-Laws 6.3, 6.4 and 6.5), or is necessary to eliminate such non-de minimis adverse tax, legal or regulatory consequences, in each case, at a price determined in the reasonable discretion of the Board to represent such Shares’ fair market value; provided that if the Shares are traded on a securities exchange in or outside the United States, the fair market value per Share shall be determined by the Board based on the last sales price per Share on such exchange or, if there is none, the average of the bid and asked price per Share on such exchange, in each case for the ten business days prior to the purchase date. The Board will use reasonable efforts to ensure equal treatment to similarly situated Shareholders to the extent possible under the circumstances in connection with the application of this Bye-Law 6.2.
6.3
If, but for the application of this Bye-Law 6.3, any person (other than any EXOR Group Member) would be a Ten Percent Shareholder, notwithstanding any provision to the contrary in these Bye-Laws, the votes conferred by the Controlled Shares of such person are hereby reduced (and shall be automatically reduced in the future) by whatever amount is necessary so that after any such reduction such person shall not be a Ten Percent Shareholder. Notwithstanding the foregoing, the Board may waive the restrictions set forth in this Bye-Law, in its discretion and on a case by case basis.
6.4
In determining the reduction in votes conferred by Controlled Shares pursuant to Bye-Law 6.3, the reduction in the vote conferred by the Controlled Shares of any person shall be effected proportionately among all the Controlled Shares of such person; PROVIDED, HOWEVER, that if a Shareholder owns, or is treated as owning by the application of section 958 of the Code, interests in another Shareholder, any reduction in votes conferred by Controlled Shares of such Shareholder (determined solely on the basis of Shares held directly by such Shareholder and Shares attributed from such other Shareholder) shall first be effected by reducing the votes conferred on the Shares held directly by the Shareholder that owns directly or through another entity an interest in such other Shareholder.
6.5
Notwithstanding any provision to the contrary in these Bye-Laws, in addition to any other provision of Bye-Law 6.3, Shares shall not carry rights to vote, or shall have reduced voting rights, to the extent that the Board reasonably determines that it is necessary that such Shares should not carry the right to vote or should have reduced voting rights in order to avoid non-de minimis adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company or any Shareholder or Affiliate of a Shareholder; PROVIDED, that the Board will use reasonable efforts to exercise such discretion equally among similarly situated Shareholders (to the extent possible under the circumstances).
6.6
The votes that are reduced pursuant to Bye-Laws 6.3, 6.4 or 6.5 shall be conferred proportionately among the Shares held by the other Shareholders; PROVIDED, however, that no Shares shall be conferred votes to the extent that so doing would cause any person (other than any EXOR Group Member) to be a Ten Percent Shareholder (without regard to any other adjustments to voting power pursuant to this Bye-Law 6).
6.7
Prior to any vote being cast on a resolution proposed at a meeting, the Board shall make a determination regarding any adjustments to be made pursuant to this Bye-Law 6, and shall notify the Shareholders of the voting power conferred by their Shares at such meeting.
6.8
Notwithstanding any provision to the contrary in these Bye-Laws, the Company shall have the authority to request from any Shareholder, and such Shareholder shall provide to the Company, such information as the Company may reasonably request for the purpose of implementing this Bye-Law 6. If a Shareholder fails to timely respond to a request for information from the Company pursuant to this Bye-Law, or submits incomplete or inaccurate information in response to such a request, the Board may in its reasonable discretion determine that such Shareholder’s Shares shall carry no or reduced, as the case may be, voting rights until otherwise determined by the Board in its reasonable discretion.
6.9
Any information provided by a Shareholder to the Company pursuant to Bye- Law 6.8 shall be deemed “confidential information” (the “Confidential Information”) and shall be used by the Company solely for the purposes contemplated by this Bye-Law 6 (except as may be required otherwise by applicable law or regulation). The Company shall hold such Confidential Information in strict confidence and shall not disclose any Confidential Information that it receives, except (i) to the Internal Revenue Service (the “Service”) if and to the extent the Confidential Information is required by the Service, (ii) to any outside legal counsel or accounting firm engaged by the Company to make determinations pursuant to this Bye-Law 6 (iii) to officers and employees of the Company or (iv) as otherwise required by law or regulation.
6.10
The Company shall take all measures practicable to ensure the continued confidentiality of the Confidential Information and shall grant the persons referred to in Bye-Law 6.9(ii) and (iii) above access to the Confidential Information only to the extent necessary to allow them to assist the Company in implementing this Bye-Law 6. Prior to granting access to the Confidential Information to such persons, the Company shall inform them of its confidential nature and of the provisions of this Bye-Law and shall require them to abide by all the provisions hereof. For the avoidance of doubt, the Company shall be permitted to disclose to the Shareholders and others the relative voting percentages of the Shareholders after application of this Bye-Law 6. At the written request of a Shareholder, the Confidential Information of such Shareholder shall be destroyed or returned to such Shareholder (in the Company’s sole discretion) after the later to occur of (i) such Shareholder no longer being a Shareholder or (ii) the expiration of the applicable statute of limitations with respect to any consideration to which such Confidential Information is relevant under this Bye-Law 6.
6.11
The Company shall (i) promptly notify a Shareholder (to the extent legally permissible) of any request made to the Company to disclose any Confidential Information provided by or with respect to such Shareholder and, prior to such disclosure, shall (to the extent legally permissible) permit such Shareholder a reasonable period of time to seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Bye-Law 6, and (ii) if, in the absence of a protective order, such disclosure is required in the opinion of counsel to the Company, the Company shall make such disclosure without liability hereunder, PROVIDED that the Company shall furnish only that portion of the Confidential Information which is legally required and, upon the request of such Shareholder and at its expense, shall use commercially reasonable efforts to ensure that confidential treatment will be accorded to all such disclosed information.
6.12
Without limiting any protection otherwise provided in these Bye-Laws, neither the Company nor the Board will be liable to the Company, its Shareholders or any other person whatsoever with respect to any determinations made by it in implementing this Bye-Law 6 so long as it has acted in good faith.
7.    Certificates / Uncertificated Shares
7.1
The Shares of the Company shall be represented by certificates, PROVIDED that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its Shares shall be uncertificated Shares. Any such resolution shall not apply to Shares represented by a certificate until such certificate is surrendered to the Company. Except as otherwise provided by the law, the rights and obligations of the holders of uncertificated Shares and the rights and obligations of the holders of Shares represented by certificates of the same class and series shall be identical. In the case of a Share held jointly by several persons, delivery of a certificate to one of several joint holders shall be sufficient delivery to all.
7.2
If a Share certificate is defaced, lost or destroyed, it may be replaced without fee but only on such terms (if any) as to evidence and indemnity and to payment of the costs and out of pocket expenses of the Company in investigating such evidence and preparing such indemnity as the Board may think fit and, in case of defacement, on delivery of the old certificate to the Company.
7.3
All certificates for Share or loan capital or other securities of the Company (other than letters of allotment, scrip certificates and other like documents) shall, except to the extent that the terms and conditions relating thereto otherwise provide, be in such form as the Board may determine and issued under the Seal or signed by a Director, the Secretary or any person authorised by the Board for that purpose. The Board may determine, either generally or in any particular case, that any signatures on any such certificates need not be autographic but may be affixed to such certificates by some mechanical means or may be printed thereon or that such certificates need not be signed by any persons, or may determine that a representation of the Seal may be printed on any such certificates. If any person holding an office in the Company who has signed, or whose facsimile signature has been used on any certificate, ceases for any reason to hold his office, such certificate may nevertheless be issued as though that person had not ceased to hold such office.
7.4
Nothing in these Bye-Laws shall prevent title to any securities of the Company from being evidenced and/or transferred without a written instrument in accordance with regulations made from time to time in this regard under the Companies Acts, and (i) the Board shall have power to implement any arrangements which it may think fit for such evidencing and/or transfer which accord with those regulations and (ii) any such transfer shall be subject to the applicable provisions of Bye-Laws 6 and 13.
8.    Lien
8.1
The Company shall have a first and paramount lien on every Share (other than a fully Paid-Up Share) for all monies (whether presently payable or not, called or payable, at a date fixed by or in accordance with the terms of issue of such Share in respect of such Share) and the Company shall also have a first and paramount lien on every Share (other than a fully Paid-Up Share) standing registered in the name of a Shareholder, whether singly or jointly with any other person, for all the debts and liabilities of such Shareholder or his estate to the Company, whether the same shall have been incurred before or after notice to the Company of any interest of any person other than such Shareholder, and whether the time for the payment or discharge of the same shall have actually arrived or not, and notwithstanding that the same are joint debts or liabilities of such Shareholder or his estate and any other person, whether a Shareholder or not. The Company’s lien on a Share shall extend to all dividends payable thereon. The Board may at any time, either generally or in any particular case, waive any lien that has arisen or declare any Share to be wholly or in part exempt from the provisions of this Bye-Law 8.
8.2
The Company may sell, in such manner as the Board may think fit, any Share on which the Company has a lien but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of fourteen (14) days after a notice in writing, stating and demanding payment of the sum presently payable and giving notice of the intention to sell in default of such payment, has been served on the holder of the Share.
8.3
The net proceeds of any sale by the Company of any Shares on which it has a lien shall be applied in or towards payment or discharge of the debt or liability in respect of which the lien exists so far as the same is presently payable, and any residue shall (subject to a like lien for debts or liabilities not presently payable as existed upon the Share prior to the sale) be paid to the person who was the holder of the Share immediately before such sale. For giving effect to any such sale, the Board may authorise a person to transfer the Share sold to the purchaser thereof. The purchaser shall be registered as the holder of the Share and shall not be bound to see to the application of the purchase money, nor shall such purchaser’s title to the Share be affected by any irregularity or invalidity in the proceedings relating to the sale.
8.4
Whenever any law for the time being of any country, state or place imposes or purports to impose any immediate or future or possible liability upon the Company to make any payment or empowers any government or taxing authority or government official to require the Company to make any payment in respect of any Shares registered in any of the Company’s registers as held either jointly or solely by any Shareholder or in respect of any dividends, bonuses or other monies due or payable or accruing due or which may become due or payable to such Shareholder by the Company on or in respect of any Shares registered as aforesaid or for or on account or in respect of any Shareholder and whether in consequence of:
8.4.1
the death of such Shareholder;
8.4.2
the non-payment of any income tax or other tax by such Shareholder;
8.4.3
the non-payment of any estate, probate, succession, death, stamp, or other duty by the executor or administrator of such Shareholder or by or out of his estate; or
8.4.4
any other act or thing; in every such case (except to the extent that the rights conferred upon holders of any class of Shares render the Company liable to make additional payments in respect of sums withheld on account of the foregoing):
8.4.4.1
the Company shall be fully indemnified by such Shareholder or his executor or administrator from all liability;
8.4.4.2
the Company shall have a lien upon all dividends and other monies payable in respect of the Shares registered in any of the Company’s registers as held either jointly or solely by such Shareholder for all monies paid or payable by the Company in respect of such Shares or in respect of any dividends or other monies as aforesaid thereon or for or on account or in respect of such Shareholder under or in consequence of any such law together with interest thereon (at a rate not exceeding that permissible under the Interest and Credit Charges (Regulation) Act 1975 of Bermuda) from the date of payment to the date of repayment and may deduct or set off against such dividends or other monies payable as aforesaid any monies paid or payable by the Company as aforesaid together with interest as aforesaid;
8.4.4.3
the Company may recover as a debt due from such Shareholder or his executor or administrator wherever constituted any monies paid by the Company under or in consequence of any such law and interest thereon at the rate and for the period aforesaid in excess of any dividends or other monies as aforesaid then due or payable by the Company; and
8.4.4.4
the Company may, if any such money is paid or payable by it under any such law as aforesaid, refuse to register a transfer of any Shares by any such Shareholder or his executor or administrator until such money and interest as aforesaid is set off or deducted as aforesaid, or in case the same exceeds the amount of any such dividends or other monies as aforesaid then due or payable by the Company, until such excess is paid to the Company.
8.5
Subject to the rights conferred upon the holders of any class of Shares, nothing herein contained shall prejudice or affect any right or remedy which any law may confer or purport to confer on the Company and as between the Company and every such Shareholder as aforesaid, his estate representative, executor, administrator and estate wheresoever constituted or situate, any right or remedy which such law shall confer or purport to confer on the Company shall be enforceable by the Company.
9.    Calls on Shares
9.1
The Board may from time to time make calls upon the Shareholders (for the avoidance of doubt excluding the Company in respect of any nil or partly paid Shares held by the Company as Treasury Shares) in respect of any monies unpaid on their Shares (whether on account of the par value of the Shares or by way of premium) and not by the terms of issue thereof made payable at a date fixed by or in accordance with such terms of issue, and each Shareholder shall (subject to the Company serving upon him at least fourteen (14) days’ notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his Shares. A call may be revoked or postponed as the Board may determine.
9.2
A call may be made payable by instalments and shall be deemed to have been made at the time when the resolution of the Board authorising the call was passed.
9.3
The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof.
9.4
If a sum called in respect of the Share shall not be paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for the payment thereof to the time of actual payment at such rate as the Board may determine, but the Board shall be at liberty to waive payment of such interest wholly or in part.
9.5
Any sum which, by the terms of issue of a Share, becomes payable on allotment or at any date fixed by or in accordance with such terms of issue, whether on account of the nominal amount of the Share or by way of premium, shall for all the purposes of these Bye-Laws be deemed to be a call duly made, notified and payable on the date on which, by the terms of issue, the same becomes payable and, in case of non-payment, all the relevant provisions of these Bye-Laws as to payment of interest, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.
9.6
The Board may on the issue of Shares differentiate between the allottees or holders as to the amount of calls to be paid and the times of payment.
10.    Forfeiture of Shares
10.1
If a Shareholder fails to pay any call or instalment of a call on the day appointed for payment thereof, the Board may at any time thereafter during such time as any part of such call or instalment remains unpaid serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued.
10.2
The notice shall name a further day (not being less than fourteen (14) days from the date of the notice) on or before which, and the place where, the payment required by the notice is to be made and shall state that, in the event of nonpayment on or before the day and at the place appointed, the Shares in respect of which such call is made or instalment is payable will be liable to be forfeited. The Board may accept the surrender of any Share liable to be forfeited hereunder and, in such case, references in these Bye-Laws to forfeiture shall include surrender.
10.3
If the requirements of any such notice as aforesaid are not complied with, any Share in respect of which such notice has been given may at any time thereafter, before payment of all calls or instalments and interest due in respect thereof has been made, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited Shares and not actually paid before the forfeiture.
10.4
When any Share has been forfeited, notice of the forfeiture shall be served upon the person who was before forfeiture the holder of the Share but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice as aforesaid.
10.5
A forfeited Share shall be deemed to be the property of the Company and may be sold, re-offered or otherwise disposed of either to the person who was, before forfeiture, the holder thereof or entitled thereto or to any other person upon such terms and in such manner as the Board shall think fit, and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Board shall think fit.
10.6
A person whose Shares have been forfeited shall thereupon cease to be a Shareholder in respect of the forfeited Shares but shall, notwithstanding the forfeiture, remain liable to pay to the Company all monies which at the date of forfeiture were presently payable by him to the Company in respect of the Shares with interest thereon at such rate as the Board may determine from the date of forfeiture until payment, and the Company may enforce payment without being under any obligation to make any allowance for the value of the Shares forfeited.
10.7
An affidavit in writing that the deponent is a Director or the Secretary and that a Share has been duly forfeited on the date stated in the affidavit shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the Share. The Company may receive the consideration (if any) given for the Share on the sale, re-allotment or disposition thereof and the Board may authorise a person to transfer the Share to the person to whom the same is sold, re-allotted or disposed of, and he shall thereupon be registered as the holder of the Share and shall not be bound to see to the application of the purchase money (if any) nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, sale, re-allotment or disposal of the Share.
REGISTER OF SHAREHOLDERS
11.    Register of Shareholders
The Register shall be kept at the Registered Office or at such other place in Bermuda as the Board may from time to time direct, in the manner prescribed by the Companies Acts. Subject to the provisions of the Companies Acts, the Company may keep one or more branch registers in any place, and the Board may make, amend and revoke any resolutions as it may think fit respecting the keeping of such registers. The Register or any branch register may be closed at such times and for such period as the Board may from time to time decide, subject to the Companies Acts. Except during such time as it is closed, the Register and each branch register shall be open to inspection in the manner prescribed by the Companies Acts between 10:00 a.m. and 12:00 noon on every working day. Unless the Board otherwise determines, no Shareholder or intending Shareholder shall be entitled to have entered in the Register any indication of any trust or any equitable, contingent, future or partial interest in any Share or any fractional part of a Share and if any such entry exists or is permitted by the Board it shall not be deemed to abrogate any of the provisions of Bye-Law 5.5.
REGISTER OF DIRECTORS AND OFFICERS
12.    Register of Directors and Officers
The Secretary shall establish and maintain a register of the Directors and Officers of the Company as required by the Companies Acts. The register of Directors and Officers shall be open to inspection in the manner prescribed by the Companies Acts between 10:00 a.m. and 12:00 noon on every working day.
TRANSFER OF SHARES
13.    Transfer of Shares
13.1
Subject to the Companies Acts, to Bye-Law 6, and to such other restrictions contained in these Bye-Laws, as may be applicable, any Shareholder may transfer all or any of his Shares by an instrument of transfer in the usual common form or in any other form which the Board may approve in accordance with Bye- Law 7.4.
No such instrument shall be required on the redemption of a Share or on the purchase by the Company of a Share.
13.2
The instrument of transfer (if any) of a Share shall be signed by or on behalf of the transferor and where any Share is not fully-paid, the transferee. The transferor shall be deemed to remain the holder of the Share until the name of the transferee is entered in the Register in respect thereof. Any instrument of transfer when registered may be retained by the Company. The Board may, in its absolute discretion and without assigning any reason therefor, decline to register any transfer of any Share which is not a fully-paid Share. The Board may also decline to register any transfer unless:
13.2.1
the instrument of transfer (if any) is duly stamped (if required by law) and lodged with the Company, accompanied by the certificate for the Shares to which it relates, and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer,
13.2.2
the instrument of transfer (if any) is in favour of less than five (5) persons jointly; and
13.2.3
it is satisfied that all applicable consents, authorisations, permissions or approvals of any governmental body or agency in Bermuda or any other applicable jurisdiction required to be obtained under relevant law prior to such transfer have been obtained.
13.3
Subject to any directions of the Board from time to time in force, the Secretary may exercise the powers and discretions of the Board under this Bye-Law 13.
13.4
If the Board declines to register a transfer it shall, within three (3) months after the date on which the instrument of transfer (if any) was lodged, send to the transferee notice of such refusal.
13.5
A fee to be determined by the Board shall be charged by the Company for registering any transfer, probate, letters of administration, certificate of death or marriage, power of attorney, stop notice, order of court or other instrument relating to or affecting the title to any Share, or otherwise making an entry in the Register relating to any Share (the Company may also require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed on it in connection with such transfer or entry).
TRANSMISSION OF SHARES
14.    Transmission of Shares
14.1
In the case of the death of a Shareholder, the survivor or survivors, where the deceased was holding the Shares as “joint holders”, and the estate representative, where he was sole holder, shall be the only person recognised by the Company as having any title to his Shares; but nothing herein contained shall release the estate of a deceased holder (whether the sole or joint) from any liability in respect of any Share held by him solely or jointly with other persons. For the purpose of this Bye-Law 14, estate representative means the person to whom probate or letters of administration has or have been granted in Bermuda or, failing any such person, such other person as the Board may in its absolute discretion determine to be the person recognised by the Company for the purpose of this Bye-Law 14. For greater certainty, where two (2) or more persons are registered as joint holders of a Share or Shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to the said Share or Shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.
14.2
Subject to Bye-Law 6, any person becoming entitled to a Share in consequence of the death of a Shareholder or otherwise by operation of applicable law may, subject as hereafter provided and upon such evidence being produced as may from time to time be required by the Board as to his entitlement, either be registered himself as the holder of the Share or elect to have some person nominated by him registered as the transferee thereof. If the person so becoming entitled elects to be registered himself, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects. If he shall elect to have his nominee registered, he shall signify his election by signing an instrument of transfer of such Share in favour of his nominee. All the limitations, restrictions and provisions of these Bye-Laws relating to the right to transfer and the registration of transfer of Shares shall be applicable to any such notice or instrument of transfer (if any) as aforesaid as if the death of the Shareholder or other event giving rise to the transmission had not occurred and the notice or instrument of transfer was an instrument of transfer signed by such Shareholder.
14.3
A person becoming entitled to a Share in consequence of the death of a Shareholder or otherwise by operation of applicable law shall (upon such evidence being produced as may from time to time be required by the Board as to his entitlement) be entitled to receive and may give a discharge for any dividends or other monies payable in respect of the Share, but he shall not be entitled in respect of the Share to receive notices of or to attend or vote at general meetings of the Company or, save as aforesaid, to exercise in respect of the Share any of the rights or privileges of a Shareholder until he shall have become registered as the holder thereof. The Board may at any time give notice requiring such person to elect either to be registered himself or to transfer the Share and, if the notice is not complied with within sixty (60) days, the Board may thereafter withhold payment of all dividends and other monies payable in respect of the Shares until the requirements of the notice have been complied with.
14.4
Subject to any directions of the Board from time to time in force, the Secretary may exercise the powers and discretions of the Board under this Bye-Law 14.
SHARE CAPITAL
15.    Increase of Capital
15.1
The Company may from time to time increase its capital by such sum to be divided into Shares of such par value as the Company by Resolution shall prescribe.
15.2
The Company may, by the Resolution increasing the capital, direct that the new Shares or any of them shall be offered in the first instance either at par or at a premium or (subject to the provisions of the Companies Acts) at a discount to all the holders for the time being of Shares of any class or classes in proportion to the number of such Shares held by them respectively or make any other provision as to the issue of the new Shares.
15.3
The new Shares shall be subject to all the provisions of these Bye-Laws with reference to lien, the payment of calls, forfeiture, transfer, transmission and otherwise.
16.    Alteration of Capital
16.1
Subject to Bye-Law 6 and the approval of the Board, the Company may from time to time by Resolution:
16.1.1
divide its Shares into several classes and attach thereto respectively any preferential, deferred, qualified or special rights, privileges or conditions;
16.1.2
consolidate and divide all or any of its Share capital into Shares of larger par value than its existing Shares;
16.1.3
sub-divide its Shares or any of them into Shares of smaller par value than is fixed by its memorandum, so that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same as it was in the case of the Share from which the reduced Share is derived;
16.1.4
make provision for the issue and allotment of Shares which do not carry any voting rights;
16.1.5
cancel Shares which, at the date of the passing of the relevant Resolution, have not been taken or agreed to be taken by any person, and diminish the amount of its Share capital by the amount of the Shares so cancelled;
16.1.6
change the currency denomination of its Share capital.
16.2
Where any difficulty arises in regard to any division, consolidation, or subdivision under this Bye-Law 16, the Board may settle the same as it thinks expedient and, in particular, may arrange for the sale of the Shares representing fractions and the distribution of the net proceeds of sale in due proportion amongst the Shareholders who would have been entitled to the fractions, and for this purpose the Board may authorise a person to transfer the Shares representing fractions to the purchaser thereof, who shall not be bound to see to the application of the purchase money nor shall his title to the Shares be affected by any irregularity or invalidity in the proceedings relating to the sale.
16.3
Subject to the Companies Acts and to any confirmation or consent required by law or these Bye-Laws, the Company may by Resolution from time to time convert any preference Shares into redeemable preference Shares.
17.    Reduction of Capital
17.1
Subject to Bye-Law 6, the Companies Acts, its memorandum and any confirmation or consent required by law, these Bye-Laws or otherwise, the Company may from time to time by Resolution authorise the reduction of its issued Share capital or any Share premium account in any manner.
17.2
In relation to any such reduction, the Company may by Resolution determine the terms upon which such reduction is to be effected including, in the case of a reduction of part only of a class of Shares, those Shares to be affected.
GENERAL MEETINGS AND RESOLUTIONS IN WRITING
18.    General Meetings and Resolutions in Writing
18.1
If required under the Companies Act, the Board shall convene and the Company shall hold general meetings as Annual General Meetings in accordance with the requirements of the Companies Acts at such times and places as the Board shall appoint or, if requested in writing signed by the Majority Common Shareholder, at such times and places as the Majority Common Shareholder shall request. The Board may, whenever it thinks fit, and shall, when required by the Companies Acts or when requested by the Majority Common Shareholder, convene general meetings other than Annual General Meetings which shall be called Special General Meetings, at such time and place as the Board may appoint or, if requested in writing signed by the Majority Common Shareholder, at such time and place as the Majority Common Shareholder shall request. Except as required by the Companies Acts or when requested by the Majority Common Shareholder, Special General Meetings may not be called by any person other than the Board.
18.2
Except in the case of the removal of auditors or Directors, anything which may be done by resolution of the Shareholders in general meeting or by resolution of any class of Shareholders in a separate general meeting may be done by resolution in writing. Any such Resolution shall be signed by such number of Shareholders (or the holders of such class of Shares) as provided in the Companies Acts. Such resolution in writing may be signed by the Shareholder or its proxy, or in the case of a Shareholder that is a corporation (whether or not a company within the meaning of the Companies Acts) by its representative on behalf of such Shareholder, in as many counterparts as may be necessary.
18.3
Notice of any resolution in writing to be made under this Bye-Law shall be given to all the Shareholders who would be entitled to attend a meeting and vote on the resolution. The requirement to give notice of any resolution in writing to be made under this Bye-Law to such Shareholders shall be satisfied by giving to those Shareholders a copy of that resolution in writing in the same manner as that required for a notice of a general meeting of the Company at which the resolution could have been considered, except that the length of the period of notice shall not apply. The date of the notice shall be set out in the copy of the resolution in writing.
18.4
The accidental omission to give notice, in accordance with this Bye-Law, of a resolution in writing to, or the non-receipt of such notice by, any person entitled to receive such notice shall not invalidate the passing of the resolution in writing.
18.5
For the purposes of this Bye-Law, the date of the resolution in writing is the date when the resolution in writing is signed by, or on behalf of, the Shareholder who establishes the relevant number of votes required for the passing of the resolution in writing and any reference in any enactment to the date of passing of a resolution is, in relation to a resolution in writing made in accordance with this Bye-Law, a reference to such date.
19.    Notice of General Meetings
19.1
An Annual General Meeting shall be called by not less than thirty (30) days’ notice in writing and a Special General Meeting shall be called by not less than seven (7) days, and, in either case, not more than ninety (90) days, notice in writing. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and shall specify the place, day and time of the meeting, and the nature of the business to be considered. Notice of every general meeting shall be given in any manner permitted by these Bye- Laws to all Shareholders other than such as, under the provisions of these Bye- Laws or the terms of issue of the Shares they hold, are not entitled to receive such notice from the Company, and to every Director, and to any Resident Representative who or which has delivered a written notice upon the Registered Office requiring that such notice be sent to him or it.
19.2
A Shareholder present, either in person or by proxy, at any meeting of the Company or of the holders of any class of Shares present in person or by proxy shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called.
19.3
The accidental omission to give notice of a meeting or (in cases where instruments of proxy are sent out with the notice) the accidental omission to send such instrument of proxy to, or the non-receipt of notice of a meeting or such instrument of proxy by, any person entitled to receive such notice shall not invalidate the proceedings at that meeting.
19.4
The Board may cancel or postpone a meeting of the Shareholders after it has been convened and notice of such cancellation or postponement shall be served in accordance with these Bye-Laws upon all Shareholders entitled to notice of the meeting so cancelled or postponed setting out, where the meeting is postponed to a specific date, notice of the new meeting in accordance with this Bye-Law 19.
20.    Notice of Nominations and Shareholder Business
20.1
Nominations of persons for election to the Board or the proposal of other business to be transacted by the Shareholders may be made at an Annual General Meeting only (i) pursuant to the Company’s notice of meeting, (ii) by or at the direction of the Board or (iii) by any Shareholder who is a Shareholder of record at the time of giving of notice provided for in Bye-Laws 20.1 – 20.3, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in Bye-Laws 20.1 – 20.3.
20.2
For nominations or other business to be properly brought before an Annual General Meeting or by a Shareholder pursuant to clause (iii) of Bye-Law 20.1, the Shareholder must have given timely notice thereof in writing to the Secretary and any such proposed business (other than the nominations of persons for election to the Board) must constitute a proper matter for Shareholder action. To be timely, a Shareholder’s notice shall be delivered to, or mailed and received by, the Secretary at the Registered Office (or at such other place or places as the Board may otherwise specify for this purpose) not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year’s Annual General Meeting of Shareholders; PROVIDED HOWEVER, that in the event that the date of the Annual General Meeting is advanced more than thirty (30) days prior to such anniversary date or delayed more than seventy (70) days after such anniversary date then to be timely such notice must be received by the Company no earlier than ninety (90) days prior to such Annual General Meeting and no later than the later of sixty (60) days prior to such Annual General Meeting or the tenth (10th) day following the day on which public announcement of the date of the meeting was first made by the Company. In no event shall the public announcement of an adjournment or postponement of an Annual General Meeting commence a new time period (or extend any time period) for the giving of a Shareholder’s notice as described above.
20.3
A Shareholder’s notice to the Secretary shall set forth (a) as to each person whom the Shareholder proposes to nominate for election or re-election as a Director all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected), (b) as to any other business that the Shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these Bye-Laws, the text of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such Shareholder and the beneficial owner, if any, on whose behalf the proposal is made and (c) as to the Shareholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made:
20.3.1
the name and address, as they appear on the Register, of such Shareholder and any such beneficial owner;
20.3.2
the class or series and number of Shares which are held of record or are beneficially owned by such Shareholder and by any such beneficial owner;
20.3.3
a description of any agreement, arrangement or understanding between or among such Shareholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business;
20.3.4
a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned Shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to mitigate loss to, manage risk or benefit of Share price changes for, or increase or decrease the voting power of, such Shareholder or any such beneficial owner, or any such nominee, with respect to the Company’s securities;
20.3.5
a representation that the Shareholder is a holder of record of Shares entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to bring such nomination or other business before the meeting; and
20.3.6
a representation as to whether such Shareholder or any such beneficial owner intends or is part of a group that intends to (i) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding Shares required to approve or adopt the proposal or to elect each such nominee and/or (ii) otherwise to solicit proxies from Shareholders in support of such proposal or nomination.
20.4
Only such business shall be conducted at an Annual General Meeting or a Special General Meeting as shall have been brought before the meeting pursuant to the Company’s notice of meeting pursuant to Bye-Law 19, or otherwise in accordance with the Companies Acts. Nominations of persons for election to the Board of the Company at a Special General Meeting may be made by Shareholders only (i) in accordance with Bye-Law 18.1 or (ii) if the election of directors is included as business to be brought before a Special General Meeting in the Company’s notice of meeting, then only by any Shareholder of the Company who is a Shareholder of record at the time of giving of notice provided for in this Bye-Law 20, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Bye-Law 20. The proposal by Shareholders of other business to be conducted at a Special General Meeting may be made only in accordance with Bye-Law 18.1. For nominations to be properly brought by a Shareholder before a Special General Meeting pursuant to this Bye-Law 20, the Shareholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a Shareholder’s notice shall be delivered to or mailed and received at the Registered Office (or at such other place or places as the Board may otherwise specify for this purpose) (A) not earlier than ninety (90) days prior to the date of the Special General Meeting nor (B) later than the later of sixty (60) days prior to the date of the Special General Meeting or the tenth (10th) day following the day on which public announcement of the date of the Special General Meeting was first made. A Shareholder’s notice to the Secretary shall comply with the notice requirements of Bye-Law 20.3.
20.5
At the request of the Board, any person nominated by the Board for election as a Director shall furnish to the Secretary the information that is required to be set forth in a Shareholder’s notice of nomination that pertains to the nominee. No person shall be eligible to be nominated by a Shareholder to serve as a Director unless nominated in accordance with the procedures set forth in this Bye-Law 20. No business shall be conducted at a general meeting except in accordance with the procedures set forth or referenced in Bye-Law 18.1 and this Bye-Law 20. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these Bye-Laws or that business was not properly brought before the meeting, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded or such business shall not be transacted, as the case may be. Notwithstanding the foregoing provisions of this Bye-Law 20, unless otherwise required by law, if the Shareholder (or a qualified representative of the Shareholder) does not appear at the annual or special meeting of Shareholders of the Company to present a nomination or other proposed business, such nomination shall be disregarded or such proposed business shall not be transacted, as the case may be, notwithstanding that proxies in respect of such vote may have been received by the Company.
20.6
Without limiting the foregoing provisions of this Bye-Law 20, a Shareholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this Bye-Law 20; PROVIDED, HOWEVER, that any references in these Bye-Laws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Bye-Law 20, and compliance with this Bye-Law 20 shall be the exclusive means for a Shareholder (other than the Majority Common Shareholder) to make nominations or submit other business (other than as provided in the last sentence of this Bye-Law 20.6). Notwithstanding anything to the contrary, the notice requirements set forth herein with respect to the proposal of any business pursuant to this Bye-Law 20 other than a nomination shall be deemed satisfied by a Shareholder if such Shareholder has submitted a proposal to the Company in compliance with Rule 14a-8 promulgated under the Exchange Act and such Shareholder’s proposal is required to be included in a proxy statement that has been prepared by the Company to solicit proxies for the meeting of Shareholders.
20.7
Notwithstanding anything to the contrary contained in these Bye-Laws, the provisions of Bye-Law 20 (or any part thereof) shall not apply to any nomination, notice, appointment or election of a Director or to any other business to be transacted at any Annual General Meeting, Special General Meeting, general meeting convened in accordance with the requirements of the Companies Acts or pursuant to any resolution in writing pursuant to Bye-Law 18.2, which, in any such case, is proposed by a Majority Common Shareholder.
21.    Proceedings at General Meetings
21.1
In accordance with the Companies Acts, a general meeting may be held with only one (1) individual present provided that the requirement for a quorum is satisfied. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment, choice or election of a chairman, which shall not be treated as part of the business of the meeting. Save as otherwise provided by these Bye-Laws, Shareholders entitled to vote at any general meeting and present in person or by proxy representing not less than 25% of the Shares, shall be a quorum for all purposes.
21.2
If within five (5) minutes (or such longer time as the chairman of the meeting may determine to wait) after the time appointed for the meeting, a quorum is not present, the meeting, if convened on the requisition of Shareholders, shall be dissolved. In any other case, it shall stand adjourned to such other day and such other time and place as the chairman of the meeting may determine and at such adjourned meeting one (1) Shareholder present in person or by proxy and entitled to vote shall be a quorum. The Company shall give not less than seven (7) days’ notice of any meeting adjourned through want of a quorum and such notice shall state that the one (1) Shareholder present in person or by proxy (whatever the number of Shares held by them) and entitled to vote shall be a quorum.
21.3
A meeting of the Shareholders or any class thereof may be held by means of such telephone, electronic or other communication facilities (including, without limiting the generality of the foregoing, by telephone, video conference and webcast) as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting. If it appears to the chairman of a general meeting that the Specified Place is inadequate to accommodate all persons entitled and wishing to attend, the meeting is duly constituted and its proceedings are valid if the chairman is satisfied that adequate facilities are available, whether at the Specified Place or elsewhere, to ensure that each such person who is unable to be accommodated at the Specified Place is able to communicate simultaneously and instantaneously with the persons present at the Specified Place, whether by the use of microphones, loud-speakers, audio-visual or other communications equipment or facilities.
21.4
Each Director, and upon giving the notice referred to in Bye-Law 19.1 above, the Resident Representative, if any, shall be entitled to attend and speak at any general meeting of the Company.
21.5
The Board may choose one of their number to preside as chairman at every general meeting. If there is no such chairman, or if at any meeting the chairman is not present within five (5) minutes after the time appointed for holding the meeting, or is not willing to act as chairman, the Directors present shall choose one of their number to act or if only one Director is present he shall preside as chairman if willing to act. If no Director is present, or if each of the Directors present declines to take the chair, the persons present and entitled to vote on a poll shall elect one of their number to be chairman.
21.6
The chairman of the meeting may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. When a meeting is adjourned for three (3) months or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as expressly provided by these Bye-Laws, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
22.    Voting
22.1
Save where a greater majority is required by the Companies Acts or these Bye- Laws and subject to Bye-Law 6, any question proposed for consideration at any general meeting shall be decided on by a simple majority of votes cast.
22.2
Subject to any rights or restrictions for the time being lawfully attached to any class of Shares and subject to the provisions of these Bye-Laws including any adjustments made to the voting power of the Shares of any Shareholder pursuant to Bye-Law 6, at any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands or by a count of votes received in the form of electronic records, unless (before or on the declaration of the result of the show of hands or count of votes received as electronic records or on the withdrawal of any other demand for a poll) a poll is demanded by:
22.2.1
the chairman of the meeting; or
22.2.2
at least three (3) Shareholders present in person or represented by proxy; or
22.2.3
any Shareholder or Shareholders present in person or represented by proxy and holding between them not less than one tenth (1/10) of the total voting rights of all the Shareholders having the right to vote at such meeting; or
22.2.4
a Shareholder or Shareholders present in person or represented by proxy holding Shares conferring the right to vote at such meeting, being Shares on which an aggregate sum has been Paid-Up equal to not less than one tenth (1/10) of the total sum Paid-Up on all such Shares conferring such right. The demand for a poll may be withdrawn by the person or any of the persons making it at any time prior to the declaration but only with the consent of the chairman and a demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand for a poll was made. Unless a poll is so demanded and the demand is not withdrawn, a declaration by the chairman that a resolution has, on a show of hands or count of votes received as electronic records, been carried or carried unanimously or by a particular majority or not carried by a particular majority or lost shall be final and conclusive, and an entry to that effect in the minute book of the Company shall be conclusive evidence of the fact without proof of the number or proportion of votes recorded for or against such resolution.
22.3
If a poll is duly demanded, the result of the poll shall be deemed to be the resolution of the meeting at which the poll is demanded.
22.4
A poll demanded on the election of a chairman, or on a question of adjournment, shall be taken forthwith. A poll demanded on any other question shall be taken in such manner and either forthwith or at such time (being not later than three (3) months after the date of the demand) and place as the chairman shall direct and he may appoint scrutineers (who need not be Shareholders) and fix a time and place for declaring the result of the poll. It shall not be necessary (unless the chairman otherwise directs) for notice to be given of a poll.
22.5
The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll has been demanded and it may be withdrawn at any time before the close of the meeting or the taking of the poll, whichever is the earlier.
22.6
On a poll, votes may be cast either personally or by proxy.
22.7
A person entitled to more than one vote on a poll need not use all his votes or cast all the votes he uses in the same way.
22.8
In the case of an equality of votes at a general meeting, whether on a show of hands or count of votes received as electronic records or on a poll, the chairman of such meeting shall not be entitled to a second or casting vote and the resolution shall fail.
22.9
In the case of joint holders of a Share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the joint holding.
22.10
A Shareholder who is a patient for any purpose of any statute or applicable law relating to mental health or in respect of whom an order has been made by any Court having jurisdiction for the protection or management of the affairs of persons incapable of managing their own affairs may vote, whether on a show of hands or on a poll, by his receiver, committee, curator bonis or other person in the nature of a receiver, committee or curator bonis appointed by such Court and such receiver, committee, curator bonis or other person may vote on a poll by proxy, and may otherwise act and be treated as such Shareholder for the purpose of general meetings.
22.11
No Shareholder shall, unless the Board otherwise determines, be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of Shares in the Company have been paid.
22.12
If:
22.12.1
any objection shall be raised to the qualification of any voter; or,
22.12.2
any votes have been counted which ought not to have been counted or which might have been rejected; or,
22.12.3
any votes are not counted which ought to have been counted,
the objection or error shall not vitiate the decision of the meeting or adjourned meeting on any resolution unless the same is raised or pointed out at the meeting or, as the case may be, the adjourned meeting at which the vote objected to is given or tendered or at which the error occurs. Any objection or error shall be referred to the chairman of the meeting and shall only vitiate the decision of the meeting on any resolution if the chairman decides that the same may have affected the decision of the meeting. The decision of the chairman on such matters shall be final and conclusive.
23.    Proxies and Corporate Representatives
23.1
A Shareholder may appoint one or more persons as his proxy, with or without the power of substitution, to represent him and vote on his behalf in respect of all or some of his Shares at any general meeting (including an adjourned meeting). A proxy need not be a Shareholder. 23.2 The instrument appointing a proxy or corporate representative shall be in writing executed by the appointor or his attorney authorised by him in writing or, if the appointor is a corporation, either under its seal or executed by an officer, attorney or other person authorised to sign the same.
23.3
Any Shareholder may appoint a proxy or (if a corporation) representative (or representatives) for a specific general meeting, and adjournments thereof, or may appoint a standing proxy or (if a corporation) representative, by serving on the Company at the Registered Office, or at such place or places as the Board may otherwise specify for the purpose, a proxy or (if a corporation) an authorisation. Any standing proxy or authorisation shall be valid for all general meetings and adjournments thereof or resolutions in writing, as the case may be, until notice of evocation is received at the Registered Office or at such place or places as the Board may otherwise specify for the purpose. Where a standing proxy or authorisation exists, its operation shall be deemed to have been suspended at any general meeting or adjournment thereof at which the Shareholder is present or in respect to which the Shareholder has specially appointed a proxy or representative. The Board may from time to time require such evidence as it shall deem necessary as to the due execution and continuing validity of any standing proxy or authorisation and the operation of any such standing proxy or authorisation shall be deemed to be suspended until such time as the Board determines that it has received the requested evidence or other evidence satisfactory to it.
23.4
Any Shareholder may irrevocably appoint a proxy and in such case: (i) such proxy shall be irrevocable in accordance with the terms of the instrument of appointment; (ii) the holder of such proxy shall be the only person entitled to vote the relevant Shares at any meeting at which such holder is present; and (iii) the Company shall be obliged to recognise the holder of such proxy until such time as such holder shall notify the Company in writing that such proxy is no longer in force.
23.5
Subject to Bye-Law 23.3, the instrument appointing a proxy or corporate representative together with such other evidence as to its due execution as the Board may from time to time require, shall be delivered at the Registered Office (or at such place as may be specified in the notice convening the meeting or in any notice of any adjournment or, in either case or the case of a resolution in writing, in any document sent therewith) prior to the holding of the relevant meeting or adjourned meeting at which the person named in the instrument proposes to vote or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, before the time appointed for the taking of the poll, or, in the case of a resolution in writing, prior to the effective date of the resolution in writing and in default the instrument of proxy or authorisation shall not be treated as valid.
23.6
Instruments of proxy or authorisation shall be in any common form or in such other form as the Board may approve and the Board may, if it thinks fit, send out with the notice of any meeting or any resolution in writing forms of instruments of proxy or authorisation for use at that meeting or in connection with that resolution in writing. The instrument of proxy shall be deemed to confer authority to demand or join in demanding a poll, to speak at the meeting and to vote on any amendment of a resolution in writing or amendment of a resolution put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy or authorisation shall, unless the contrary is stated therein, be valid as well for any adjournment of the meeting as for the meeting to which it relates. If the terms of the appointment of a proxy include a power of substitution, any proxy appointed by substitution under such power shall be deemed to be the proxy of the Shareholder who conferred such power. All the provisions of these Bye- Laws relating to the execution and delivery of an instrument or other form of communication appointing or evidencing the appointment of a proxy shall apply, mutatis mutandis, to the instrument or other form of communication effecting or evidencing such an appointment by substitution.
23.7
A vote given in accordance with the terms of an instrument of proxy or authorisation shall be valid notwithstanding the previous death or unsoundness of mind of the principal, or revocation of the instrument of proxy or of the corporate authority, provided that no intimation in writing of such death, unsoundness of mind or revocation shall have been received by the Company at the Registered Office (or such other place as may be specified for the delivery of instruments of proxy or authorisation in the notice convening the meeting or other documents sent therewith) at least one hour before the commencement of the meeting or adjourned meeting, or the taking of the poll, or the day before the effective date of any resolution in writing at which the instrument of proxy or authorisation is used.
23.8
Subject to the Companies Acts, the Board may at its discretion waive any of the provisions of these Bye-Laws related to proxies or authorisations and, in particular, may accept such verbal or other assurances as it thinks fit as to the right of any person to attend, speak and vote on behalf of any Shareholder at general meetings or to sign resolutions in writing.
BOARD OF DIRECTORS
24.    Appointment and Removal of Directors
24.1
The number of Directors of the Board shall be such number not less than three (3) as the Company by Resolution may, from time to time, determine. No share qualification shall be required of any Director.
24.2
The Directors shall be elected or appointed at the Annual General Meeting, at any Special General Meeting called for that purpose or by Resolution. The Shareholders may authorise the Directors to fill any vacancy in their number, from time to time.
24.3
Directors shall hold office for such term as the Shareholders may determine or, in the absence of such determination, until the next Annual General Meeting or until their successors are elected or appointed or their office is otherwise vacated.
24.4
The Company may in a Special General Meeting called for that purpose remove a Director, PROVIDED notice of any such meeting shall be served upon the Director concerned not less than fourteen (14) days before such meeting and s/he shall be entitled to be heard at such meeting.
25.    Resignation and Disqualification of Directors
25.1
The office of a Director shall be vacated upon the happening of any of the following events:
25.1.1
if he resigns his office by notice in writing delivered to the Registered Office or tendered at a meeting of the Board;
25.1.2
if he becomes of unsound mind or a patient for any purpose of any statute or applicable law relating to mental health and the Board resolves that his office is vacated;
25.1.3
if he becomes bankrupt under the laws of any country or compounds with his creditors;
25.1.4
if he is prohibited by law from being a Director; or
25.1.5
if he ceases to be a Director by virtue of the Companies Acts or these Bye-Laws or is removed from office pursuant to Bye-Law 24.4.
25.2
The provisions of section 93 of the Companies Act 1981 of Bermuda shall not apply to the Company.
26.    Alternate Directors
26.1
A Director may appoint another Director as his Alternate Director and may remove such Alternate Director. Any appointment or removal of an Alternate Director by a Director shall be effected by delivery of a written notice of appointment or removal to the Secretary at the Registered Office, signed by such Director, and such notice shall be effective immediately upon receipt or on any later date specified in that notice. Any Alternate Director may be removed by the Board. An Alternate Director may also be a Director in his own right and may act as alternate to more than one Director.
26.2
An Alternate Director shall cease to be an Alternate Director:
26.2.1
if his appointor ceases to be a Director;
26.2.2
on the happening of any event which, if he were a Director, would cause him to vacate his office as Director;
26.2.3
if he is removed from office pursuant to Bye-Law 26.1; or
26.2.4
if he resigns his office by notice to the Secretary at the Registered Office.
26.3
An Alternate Director shall be entitled to receive notices of all meetings of Directors, to attend, be counted in the quorum and vote at any such meeting at which any Director to whom he is alternate is not personally present, and generally to perform all the functions of any Director to whom he is alternate in his absence.
26.4
Every person acting as an Alternate Director shall (except as regards powers to appoint an alternate and remuneration) be subject in all respects to the provisions of these Bye-Laws relating to Directors and shall alone be responsible to the Company for his acts and defaults and shall not be deemed to be the agent of or for any Director for whom he is alternate. An Alternate Director may be paid expenses and shall be entitled to be indemnified by the Company to the same extent mutatis mutandis as if he were a Director. Every person acting as an Alternate Director shall have one vote for each Director for whom he acts as alternate (in addition to his own vote if he is also a Director). The signature of an Alternate Director to any resolution in writing of the Board or a committee of the Board shall, unless the terms of his appointment provides to the contrary, be as effective as the signature of the Director or Directors to whom he is alternate.
27.    Directors’ Fees and Additional Remuneration and Expenses
27.1
The amount, if any, of Directors' fees and any additional remuneration shall from time to time be determined by the Majority Common Shareholder. Unless otherwise determined to the contrary, such fees shall be deemed to accrue from day-to-day. Each Director may be paid his reasonable travel, hotel and incidental expenses in attending and returning from meetings of the Board or committees constituted pursuant to these Bye-Laws or general meetings and shall be paid all expenses properly and reasonably incurred by him in the conduct of the Company’s business or in the discharge of his duties as a Director. Any Director who, by request, goes or resides abroad for any purposes of the Company or who performs services which in the opinion of the Board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine, and such extra remuneration shall be in addition to any remuneration provided for by or pursuant to any other Bye-Law.
27.2
No Director or former Director shall be accountable to the Company or the Shareholders for any benefit provided pursuant to this Bye-Law 27 and the receipt of any such benefit shall not disqualify any person from being or becoming a Director.
28.    Directors’ Interests
28.1
A Director may hold any other office or place of profit with the Company (except that of auditor) in conjunction with his office of Director for such period and upon such terms as the Board may determine, and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine, and such extra remuneration shall be in addition to any remuneration provided for by or pursuant to any other Bye-Law.
28.2
A Director may act by himself or his firm in a professional capacity for the Company (otherwise than as auditor) and he or his firm shall be entitled to remuneration for professional services as if he were not a Director.
28.3
Subject to the provisions of the Companies Acts, a Director may notwithstanding his office be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested; and be a director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by the Company or in which the Company is interested. The Board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.
28.4
So long as, where it is necessary, he declares the nature of his interest at the first opportunity at a meeting of the Board or by writing to the Directors as required by the Companies Acts, a Director shall not by reason of his office be accountable to the Company for any benefit which he derives from any office or employment to which these Bye-Laws allow him to be appointed or from any transaction or arrangement in which these Bye-Laws allow him to be interested, and no such transaction or arrangement shall be liable to be avoided on the ground of any interest or benefit.
28.5
A Director who has disclosed his interest in a transaction or arrangement with the Company, or in which the Company is otherwise interested, may be counted in the quorum and vote at any meeting at which such transaction or arrangement is considered by the Board.
28.6
Subject to the Companies Acts and any further disclosure required thereby, a general notice to the Directors by a Director or Officer declaring that he is interested (directly or indirectly) in any transaction or arrangement proposed to be entered into by the Company shall be a sufficient declaration of interest in relation to such transaction or arrangement.
29.    Corporate Opportunities
29.1
Subject to any express agreement that may from time to time be in effect, each of (x) any Director or Officer who is also a director, officer, employee, managing director or Affiliate of an EXOR Group Member (collectively, the “Managers”) and (y) their respective Affiliates, may, and shall have no duty not to, in each case on behalf of the Managers or their Affiliates (the persons and entities in clauses (x) and (y), each a “Covered Manager Person”), to the fullest extent permitted by applicable law, (i) carry on and conduct, whether directly or indirectly, including (without limitation) as a partner in any partnership, as a joint venturer in any joint venture, or a director, officer, employee or shareholder of any Company, or as a participant in any syndicate, pool, trust or association, any business of any kind, nature or description, whether or not such business is competitive with or in the same or similar lines of business as the Company, (ii) do business with any client, customer, vendor or other person that has a commercial relationship with the Company or any of its Affiliates, and (iii) make investments in any kind of property in which the Company may make investments. To the fullest extent permitted by law, the Company hereby renounces any interest or expectancy of the Company to participate in any business of the Managers or their Affiliates, and waives any claim against a Covered Manager Person and shall indemnify a Covered Manager Person against any claim that such Covered Manager Person is liable to the Company or its shareholders for breach of any fiduciary duty solely by reason of such person’s or entity’s participation in any such business.
29.2
If a Covered Manager Person acquires knowledge of a potential transaction or matter which may constitute a corporate opportunity for both (x) the Covered Manager Person, in his or her EXOR Group Member-related capacity, or an EXOR Group Member (other than the Company) and (y) the Company, the Covered Manager Person shall not, to the fullest extent permitted by applicable law, have any duty to offer or communicate information regarding such corporate opportunity to the Company. To the fullest extent permitted by law, the Company hereby renounces any interest or expectancy of the Company in such corporate opportunity and waives any claim against each Covered Manager Person and shall indemnify a Covered Manager Person against any claim that such Covered Manager Person is liable to the Company or its shareholders for breach of any fiduciary duty solely by reason of the fact that such Covered Manager Person (i) pursues or acquires any corporate opportunity for the account of an EXOR Group Member, (ii) directs, recommends, sells, assigns, or otherwise transfers such corporate opportunity to another person or (iii) does not communicate information regarding such corporate opportunity to the Company, PROVIDED, HOWEVER, in each case, that any corporate opportunity which is expressly offered to a Covered Manager Person in writing solely in his or her capacity as a Director or Officer shall belong to the Company.
29.3
Any person or entity purchasing or otherwise acquiring any interest in any Shares of the Company shall be deemed to have notice of and to have consented to the provisions of this Bye-Law 29.
POWERS AND DUTIES OF THE BOARD
30.    Powers and Duties of the Board
30.1
Subject to the provisions of the Companies Acts and these Bye-Laws, the Board shall manage the business of the Company and may pay all expenses incurred in promoting and incorporating the Company and may exercise all the powers of the Company. No alteration of these Bye-Laws shall invalidate any prior act of the Board which would have been valid if that alteration had not been made. The powers given by this Bye-Law 30 shall not be limited by any special power given to the Board by these Bye-Laws and a meeting of the Board at which a quorum is present shall be competent to exercise all the powers, authorities and discretions for the time being vested in or exercisable by the Board.
30.2
The Board may exercise all the powers of the Company except those powers that are required by the Companies Acts or these Bye-Laws to be exercised by the Shareholders.
30.3
All cheques, promissory notes, drafts, bills of exchange and other instruments, whether negotiable or transferable or not, and all receipts for money paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the Board shall from time to time determine.
30.4
In addition to its powers under Bye-Law 27, the Board on behalf of the Company may provide benefits, whether by the payment of gratuities or pensions or otherwise, for any person including any Director or former Director who has held any executive office or employment with the Company or with any body corporate which is or has been a subsidiary or Affiliate of the Company or a predecessor in the business of the Company or of any such subsidiary or Affiliate, and to any member of his family or any person who is or was dependent on him, and may contribute to any fund and pay premiums for the purchase or provision of any such gratuity, pension or other benefit, or for the insurance of any such person.
30.5
The Board may from time to time appoint one or more of its body to hold any other employment or executive office with the Company for such period and upon such terms as the Board may determine and may revoke or terminate any such appointments. Any such revocation or termination as aforesaid shall be without prejudice to any claim for damages that such Director may have against the Company or the Company may have against such Director for any breach of any contract of service between him and the Company which may be involved in such revocation or termination. Any person so appointed shall receive such remuneration (if any) (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine, and either in addition to or in lieu of his remuneration as a Director.
31.    Delegation of the Board’s Powers
31.1
The Board may by power of attorney appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Board, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these Bye-Laws) and for such period and subject to such conditions as it may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney and of such attorney as the Board may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him. Such attorney may, if so authorised by the power of attorney, execute any deed, instrument or other document on behalf of the Company.
31.2
The Board may entrust to and confer upon any Director, Officer or, without prejudice to the provisions of Bye-Law 31.3, other person any of the powers, authorities and discretions exercisable by it upon such terms and conditions with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, authorities and discretions, and may from time to time revoke or vary all or any of such powers, authorities and discretions, but no person dealing in good faith and without notice of such revocation or variation shall be affected thereby.
31.3
The Board may delegate any of its powers, authorities and discretions to committees, consisting of one (1) or more persons, as it thinks fit. Any committee so formed shall, in the exercise of the powers authorities and discretions so delegated, conform to any directions which may be imposed upon it by the Board. The meetings and proceedings of any such committee shall be governed by the provisions of these Bye-Laws regulating the meetings and proceedings of the Board, so far as the same are applicable and are not superseded by directions imposed by the Board.
32.    Proceedings of the Board
32.1
The Board may meet for the despatch of business, adjourn and otherwise regulate its meetings as it thinks fit. Questions arising at any meeting shall be determined by a majority of votes cast at a meeting at which a quorum is present. In the case of an equality of votes, the motion shall be deemed to have been lost. A Director may, and the Secretary on the requisition of a Director shall, at any time summon a meeting of the Board.
32.2
Notice of a meeting of the Board may be given to a Director by word of mouth or in any manner permitted by these Bye-Laws. A Director may retrospectively waive the requirement for notice of any meeting by consenting in writing to the business conducted at the meeting.
32.3
The quorum necessary for the transaction of the business of the Board may be fixed by the Board and, unless so fixed at any other number, shall be three (3) individuals and requires the presence of at least one Majority Shareholder Director Designee for so long as the Board consists of at least one Majority Shareholder Director Designee. Any Director who ceases to be a Director at a meeting of the Board may continue to be present and to act as a Director and be counted in the quorum until the termination of the meeting if no other Director objects and if otherwise a quorum of Directors would not be present.
32.4
A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or proposed contract, transaction or arrangement with the Company and has complied with the provisions of the Companies Acts and these Bye-Laws with regard to disclosure of his interest shall be entitled to vote in respect of any contract, transaction or arrangement in which he is so interested and if he shall do so his vote shall be counted, and he shall be taken into account in ascertaining whether a quorum is present.
32.5
The Resident Representative shall, upon delivering written notice of an address for the purposes of receipt of notice to the Registered Office, be entitled to receive notice of, attend and be heard at, and to receive minutes of all meetings of the Board.
32.6
So long as a quorum of Directors remains in office, the continuing Directors may act notwithstanding any vacancy in the Board but, if no such quorum remains, the continuing Directors or a sole continuing Director may act only for the purpose of (i) calling a general meeting or (ii) preserving the assets of the Company.
32.7
The Board may choose one of their number to preside as chairman at every meeting of the Board. If there is no such chairman, or if at any meeting the chairman is not present within five (5) minutes after the time appointed for holding the meeting, or is not willing to act as chairman, the Directors present may choose one of their number to be chairman of the meeting.
32.8
The meetings and proceedings of any committee consisting of one (1) or more members shall be governed by the provisions contained in these Bye-Laws for regulating the meetings and proceedings of the Board so far as the same are applicable and are not superseded by any regulations imposed by the Board.
32.9
A resolution in writing signed by all the Directors for the time being entitled to receive notice of a meeting of the Board (or by an Alternate Director, as provided for in these Bye-Laws) or by all the members of a committee for the time being shall be as valid and effectual as a resolution passed at a meeting of the Board or, as the case may be, of such committee duly called and constituted. Such resolution may be contained in one document or in several documents in the like form each signed by one or more of the Directors or members of the committee concerned.
32.10
A meeting of the Board or a committee appointed by the Board may be held by means of such telephone, electronic or other communication facilities (including, without limiting the generality of the foregoing, by telephone or by video conferencing) as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously and participation in such a meeting shall constitute presence in person at such meeting. Such a meeting shall be deemed to take place where the largest group of those Directors participating in the meeting is physically assembled, or, if there is no such group, where the chairman of the meeting then is.
32.11
All acts done by the Board or by any committee or by any person acting as a Director or member of a committee or any person duly authorised by the Board or any committee shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any member of the Board or such committee or person acting as aforesaid or that they or any of them were disqualified or had vacated their office, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director, member of such committee or person so authorised.
OFFICERS
33.    Officers
33.1
The Officers of the Company, who may or may not be Directors, may be appointed by the Board at any time. Any person appointed pursuant to this Bye- Law 33 shall hold office for such period and upon such terms as the Board may determine and the Board may revoke or terminate any such appointment. Any such revocation or termination shall be without prejudice to any claim for damages that such Officer may have against the Company or the Company may have against such Officer for any breach of any contract of service between him and the Company which may be involved in such revocation or termination. Save as provided in the Companies Acts or these Bye-Laws, the powers and duties of the Officers of the Company shall be such (if any) as are determined from time to time by the Board.
MINUTES
34.    Minutes
34.1
The Board shall cause minutes to be made and books kept for the purpose of recording:
34.1.1
all appointments of Officers made by the Board;
34.1.2
the names of the Directors and other persons (if any) present at each meeting of the Board and of any committee; and
34.1.3
all proceedings at meetings of the Company, of the holders of any class of Shares in the Company, of the Board and of committees appointed by the Board.
34.2
Shareholders shall only be entitled to see the Register of Directors and Officers, the Register, the financial information provided for in Bye-Law 41.3 and the minutes of meetings of the Shareholders of the Company.
SECRETARY AND RESIDENT REPRESENTATIVE
35.    Secretary and Resident Representative
35.1
The Secretary (including one or more deputy or assistant secretaries) and, if required, the Resident Representative, shall be appointed by the Board at such remuneration (if any) and upon such terms as it may think fit and any Secretary and Resident Representative so appointed may be removed by the Board. The duties of the Secretary and the duties of the Resident Representative shall be those prescribed by the Companies Acts together with such other duties as shall from time to time be prescribed by the Board.
35.2
A provision of the Companies Acts or these Bye-Laws requiring or authorising a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same person acting both as Director and as, or in the place of, the Secretary.
THE SEAL
36.    The Seal
36.1
The Board may authorise the production of a common seal of the Company and one or more duplicate common seals of the Company, which shall consist of a circular device with the name of the Company around the outer margin thereof and the country and year of registration in Bermuda across the centre thereof.
36.2
Any document required to be under seal or executed as a deed on behalf of the Company may be:
36.2.1
executed under the Seal in accordance with these Bye-Laws; or
36.2.2
signed or executed by any person authorised by the Board for that purpose, without the use of the Seal.
36.3
The Board shall provide for the custody of every Seal. A Seal shall only be used by authority of the Board or of a committee constituted by the Board. Subject to these Bye-Laws, any instrument to which a Seal is affixed shall be attested by the signature of:
36.3.1
a Director; or
36.3.2
the Secretary; or
36.3.3
any one person authorised by the Board for that purpose.
DIVIDENDS AND OTHER PAYMENTS
37.    Dividends and Other Payments
37.1
Except insofar as the rights attaching to, or the terms of issue of, any Share otherwise provide, the Board may from time to time declare dividends or distributions out of contributed surplus to be paid to the Shareholders according to their rights and interests, including such interim dividends as appear to the Board to be justified by the position of the Company. The Board, in its discretion, may determine that any dividend shall be paid in cash or shall be satisfied, subject to Bye-Law 38, in paying up in full Shares in the Company to be issued to the Shareholders credited as fully paid or partly paid or partly in one way and partly the other. The Board may also pay any fixed cash dividend which is payable on any Shares of the Company half yearly or on such other dates, whenever the position of the Company, in the opinion of the Board, justifies such payment.
37.2
Except insofar as the rights attaching to, or the terms of issue of, any Share otherwise provide:
37.2.1
all dividends or distributions out of contributed surplus may be declared and paid according to the amounts Paid-Up on the Shares in respect of which the dividend or distribution is paid, and an amount Paid-Up on a Share in advance of calls may be treated for the purpose of this Bye-Law 37 as Paid-Up on the Share;
37.2.2
dividends or distributions out of contributed surplus may be apportioned and paid pro rata according to the amounts Paid-Up on the Shares during any portion or portions of the period in respect of which the dividend or distribution is paid.
37.3
The Board may deduct from any dividend, distribution or other monies payable to a Shareholder by the Company on or in respect of any Shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise in respect of Shares of the Company.
37.4
No dividend, distribution or other monies payable by the Company on or in respect of any Share shall bear interest against the Company.
37.5
Any dividend, distribution or interest, or part thereof payable in cash, or any other sum payable in cash to the holder of Shares may be paid by cheque or warrant sent through the post or by courier addressed to the holder at his address in the Register or, in the case of joint holders, addressed to the holder whose name stands first in the Register in respect of the Shares at his registered address as appearing in the Register or addressed to such person at such address as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first in the Register in respect of such Shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company. Any one of two (2) or more joint holders may give effectual receipts for any dividends, distributions or other monies payable or property distributable in respect of the Shares held by such joint holders.
37.6
Any dividend or distribution out of contributed surplus unclaimed for a period of six (6) years from the date of declaration of such dividend or distribution shall be forfeited and shall revert to the Company and the payment by the Board of any unclaimed dividend, distribution, interest or other sum payable on or in respect of the Share into a separate account shall not constitute the Company a trustee in respect thereof.
37.7
The Board may also, in addition to its other powers, direct payment or satisfaction of any dividend or distribution out of contributed surplus wholly or in part by the distribution of specific assets, and in particular of paid-up Shares or debentures of any other company, and where any difficulty arises in regard to such distribution or dividend, the Board may settle it as it thinks expedient, and in particular, may authorise any person to sell and transfer any fractions or may ignore fractions altogether, and may fix the value for distribution or dividend purposes of any such specific assets and may determine that cash payments shall be made to any Shareholders upon the footing of the values so fixed in order to secure equality of distribution and may vest any such specific assets in trustees as may seem expedient to the Board, PROVIDED that such dividend or distribution may not be satisfied by the distribution of any partly paid Shares or debentures of any company without the sanction of a Resolution.
38.    Reserves
The Board may, before declaring any dividend or distribution out of contributed surplus, set aside such sums as it thinks proper as reserves which shall, at the discretion of the Board, be applicable for any purpose of the Company and pending such application may, also at such discretion, either be employed in the business of the Company or be invested in such investments as the Board may from time to time think fit. The Board may also without placing the same to reserve carry forward any sums which it may think it prudent not to distribute.
CAPITALISATION OF PROFITS
39.    Capitalisation of Profits
39.1
The Board may from time to time resolve to capitalise all or any part of any amount for the time being standing to the credit of any reserve or fund which is available for distribution or to the credit of any Share premium account and accordingly that such amount be set free for distribution amongst the Shareholders or any class of Shareholders who would be entitled thereto if distributed by way of dividend and in the same proportions, on the footing that the same be not paid in cash but be applied either in or towards paying up amounts for the time being unpaid on any Shares in the Company held by such Shareholders respectively or in payment up in full of unissued Shares, debentures or other obligations of the Company, to be allotted and distributed credited as fully paid amongst such Shareholders, or partly in one way and partly in the other, PROVIDED that for the purpose of this Bye-Law 39, a Share premium account may be applied only in paying up of unissued Shares to be issued to such Shareholders credited as fully paid.
39.2
Where any difficulty arises in regard to any distribution under this Bye-Law 39, the Board may settle the same as it thinks expedient and, in particular, may authorise any person to sell and transfer any fractions or may resolve that the distribution should be as nearly as may be practicable in the correct proportion but not exactly so or may ignore fractions altogether, and may determine that cash payments should be made to any Shareholders in order to adjust the rights of all parties, as may seem expedient to the Board. The Board may appoint any person to sign on behalf of the persons entitled to participate in the distribution any contract necessary or desirable for giving effect thereto and such appointment shall be effective and binding upon the Shareholders.
RECORD DATES
40.    Record Dates
40.1
Notwithstanding any other provisions of these Bye-Laws, the Board may fix any date as the record date for any dividend, distribution, allotment or issue and as more particularly set out in Bye-Law 40.2 for the purpose of identifying the persons entitled to receive notices of any general meeting and to vote at any general meeting. Any such record date may be on or at any time before or after any date on which such dividend, distribution, allotment or issue is declared, paid or made or such notice is despatched.
40.2
In relation to any general meeting of the Company or of any class of Shareholder or to any adjourned meeting or any poll taken at a meeting or adjourned meeting of which notice is given, the Board may specify in the notice of meeting or adjourned meeting or in any document sent to Shareholders by or on behalf of the Board in relation to the meeting, a time and date (a “Record Date”) prior to the date fixed for the meeting (the “Meeting Date”) and, notwithstanding any provision in these Bye-Laws to the contrary, in such case:
40.2.1
each person entered in the Register at the Record Date as a Shareholder, or a Shareholder of the relevant class (a “Record Date Holder”) shall be entitled to attend and to vote at the relevant meeting and to exercise all of the rights or privileges of a Shareholder, or a Shareholder of the relevant class, in relation to that meeting in respect of the Shares, or the Shares of the relevant class, registered in his name at the Record Date;
40.2.2
as regards any Shares, or Shares of the relevant class, which are registered in the name of a Record Date Holder at the Record Date but are not so registered at the Meeting Date (“Relevant Shares”), each holder of any Relevant Shares at the Meeting Date shall be deemed to have irrevocably appointed that Record Date Holder as his proxy for the purpose of attending and voting in respect of those Relevant Shares at the relevant meeting (with power to appoint, or to authorise the appointment of, some other person as proxy), in such manner as the Record Date Holder in his absolute discretion may determine; and
40.2.3
accordingly, except through his proxy pursuant to Bye-Law 40.2.2, a holder of Relevant Shares at the Meeting Date shall not be entitled to attend or to vote at the relevant meeting, or to exercise any of the rights or privileges of a Shareholder, or a Shareholder of the relevant class, in respect of the Relevant Shares at that meeting.
40.3
The entry of the name of a person in the Register as a Record Date Holder shall be sufficient evidence of his appointment as proxy in respect of any Relevant Shares for the purposes of this paragraph, but all the provisions of these Bye-Laws relating to the execution and deposit of an instrument appointing a proxy or any ancillary matter (including the Board’s powers and discretions relevant to such matter) shall apply to any instrument appointing any person other than the Record Date Holder as proxy in respect of any Relevant Shares.
ACCOUNTING RECORDS
41.    Accounting Records
41.1
The Board shall cause to be kept accounting records sufficient to give a true and fair view of the state of the Company’s affairs and to show and explain its transactions, in accordance with the Companies Acts.
41.2
The records of account shall be kept at the Registered Office or at such other place or places as the Board thinks fit, and shall at all times be open to inspection by the Directors, PROVIDED that if the records of account are kept at some place outside Bermuda, there shall be kept at an office of the Company in Bermuda such records as will enable the Directors to ascertain with reasonable accuracy the financial position of the Company at the end of each three (3) month period. No Shareholder (other than an Officer of the Company) shall have any right to inspect any accounting record or book or document of the Company except as conferred by law or authorised by the Board.
41.3
A copy of every balance sheet and statement of income and expenditure, including every document required by law to be annexed thereto, which is to be laid before the Company in general meeting, together with a copy of the auditors’ report, shall be sent to each person entitled thereto in accordance with the requirements of the Companies Acts.
AUDIT
42.    Audit
Save and to the extent that an audit is waived in the manner permitted by the Companies Acts, auditors shall be appointed and their duties regulated in accordance with the Companies Acts, any other applicable law and such requirements not inconsistent with the Companies Acts as the Board may from time to time determine.
SERVICE OF NOTICES AND OTHER DOCUMENTS
43.    Service of Notices and Other Documents
43.1
Any notice or other document (including but not limited to a Share certificate, any notice of a general meeting of the Company, any instrument of proxy and any document to be sent in accordance with Bye Law 41) may be sent to, served on or delivered to any Shareholder by the Company
43.1.1
personally;
43.1.2
by sending it through the post (by airmail where applicable) in a prepaid letter addressed to such Shareholder at his address as appearing in the Register;
43.1.3
by sending it by courier to or leaving it at the Shareholder’s address appearing in the Register;
43.1.4
by, where applicable, sending it by email or facsimile or other mode of representing or reproducing words in a legible and non-transitory form or by sending an electronic record of it by electronic means, in each case to an address or number supplied by such Shareholder for the purposes of communication in such manner; or
43.1.5
by publication of an electronic record of it on a website and notification of such publication (which shall include the address of the website, the place on the website where the document may be found, and how the document may be accessed on the website) by any of the methods set out in paragraphs 43.1.1, 43.1.2, 43.1.3 or 43.1.4 of this Bye-Law 43, in accordance with the Companies Acts.
In the case of joint holders of a Share, service or delivery of any notice or other document on or to one of the joint holders shall for all purposes be deemed as sufficient service on or delivery to all the joint holders.
43.2
Any notice or other document shall be deemed to have been served on or delivered to any Shareholder by the Company
43.2.1
if sent by personal delivery, at the time of delivery;
43.2.2
if sent by post, forty-eight (48) hours after it was put in the post;
43.2.3
if sent by courier or facsimile, twenty-four (24) hours after sending;
43.2.4
if sent by email or other mode of representing or reproducing words in a legible and non-transitory form or as an electronic record by electronic means, twelve (12) hours after sending; or
43.2.5
if published as an electronic record on a website, at the time that the notification of such publication shall be deemed to have been delivered to such Shareholder,
and in proving such service or delivery, it shall be sufficient to prove that the notice or document was properly addressed and stamped and put in the post, published on a website in accordance with the Companies Acts and the provisions of these Bye-Laws, or sent by courier, facsimile, email or as an electronic record by electronic means, as the case may be, in accordance with these Bye-Laws.
Each Shareholder and each person becoming a Shareholder subsequent to the adoption of these Bye-Laws, by virtue of its holding or its acquisition and continued holding of a Share, as applicable, shall be deemed to have acknowledged and agreed that any notice or other document (excluding a Share certificate) may be provided by the Company by way of accessing them on a website instead of being provided by other means.
43.3
Any notice or other document delivered, sent or given to a Shareholder in any manner permitted by these Bye-Laws shall, notwithstanding that such Shareholder is then dead or bankrupt or that any other event has occurred, and whether or not the Company has notice of the death or bankruptcy or other event, be deemed to have been duly served or delivered in respect of any Share registered in the name of such Shareholder as sole or joint holder unless his name shall, at the time of the service or delivery of the notice or document, have been removed from the Register as the holder of the Share, and such service or delivery shall for all purposes be deemed as sufficient service or delivery of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the Share.
43.4
Save as otherwise provided, the provisions of these Bye-Laws as to service of notices and other documents on Shareholders shall mutatis mutandis apply to service or delivery of notices and other documents to the Company or any Director, Alternate Director or Resident Representative pursuant to these Bye-Laws.
WINDING UP
44.    Winding Up
If the Company shall be wound up, the liquidator may, with the sanction of a Resolution of the Company and any other sanction required by the Companies Acts, divide amongst the Shareholders in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purposes set such values as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributories as the liquidator, with the like sanction, shall think fit, but so that no Shareholder shall be compelled to accept any Shares or other assets upon which there is any liability.
INDEMNITY
45.    Indemnity
45.1
Subject to the proviso below, every Indemnified Person shall be fully indemnified and held harmless out of the assets of the Company against all liabilities, losses, damages or expenses (including but not limited to liabilities under contract, tort and statute or any applicable law or regulation and all reasonable legal and other costs and expenses properly payable) incurred or suffered by him by or by reason of any act done, conceived in or omitted in the conduct of the Company’s business or in the discharge of his duties and the indemnity contained in this Bye-Law 45 shall extend to any Indemnified Person acting in any office or trust in the reasonable belief that he has been appointed or elected to such office or trust notwithstanding any defect in such appointment or election PROVIDED ALWAYS that the indemnity contained in this Bye-Law 45 shall not extend to any matter which would render it void pursuant to the Companies Acts. The right to indemnification conferred in this Bye-Law 45 shall be a contract right.
45.2
No Indemnified Person shall be liable to the Company for the acts, defaults or omissions of any other Indemnified Person.
45.3
Every Indemnified Person shall be indemnified out of the assets of the Company against all liabilities incurred by him by or by reason of any act done, conceived in or omitted in the conduct of the Company’s business or in the discharge of his duties in defending any proceedings, whether civil or criminal, in which judgement is given in his favour, in which he is acquitted, which is settled compromised or abandoned, or in connection with any application under the Companies Acts in which relief from liability is granted to him by the court.
45.4
To the extent that any Indemnified Person is entitled to claim an indemnity pursuant to these Bye-Laws in respect of amounts paid or discharged by him, the relevant indemnity shall take effect as an obligation of the Company to immediately reimburse the person making such payment or effecting such discharge.
45.5
Each Shareholder and the Company agree to waive any claim or right of action he or it may at any time have, whether individually or by or in the right of the Company, against any Indemnified Person on account of any action taken by such Indemnified Person or the failure of such Indemnified Person to take any action in the performance of his duties with or for the Company PROVIDED HOWEVER that such waiver shall not apply to any claims or rights of action arising out of the fraud or dishonesty of such Indemnified Person or to recover any gain, personal profit or advantage to which such Indemnified Person is not legally entitled.
45.6
Expenses incurred in defending any civil or criminal action or proceeding for which indemnification is required pursuant to these Bye-Laws shall be paid by the Company in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the Indemnified Person to repay such amount if any allegation of fraud or dishonesty is proved (after the exhaustion of all rights of appeal) against the Indemnified Person.
45.7
Each Shareholder, by virtue of, and as a condition precedent to, its acquisition and continued holding of a Share shall be deemed to have acknowledged and agreed that the advances of funds may be made by the Company as aforesaid, and when made by the Company under this Bye-Law 45 are made to meet expenditures incurred for the purpose of enabling such Indemnified Person to properly perform his or her duties to the Company.
45.8
The Company hereby acknowledges that each Indemnified Person may have certain rights to indemnification, advancement of expenses and/or insurance provided by the Indemnified Person-Related Entities. The Company hereby agrees (i) that the Company is the indemnitor of first resort (i.e., its obligations to each Indemnified Person are primary and any obligation of the Indemnified Person-Related Entities to advance expenses or to provide indemnification for the same expenses or liabilities incurred by any Indemnified Person are secondary), (ii) that the Company shall be required to advance the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of these Bye-Laws, without regard to any rights any such Indemnified Person may have against the Indemnified Person-Related Entities and (iii) that the Company irrevocably waives, relinquishes and releases the Indemnified Person-Related Entities from any and all claims against the Indemnified Person-Related Entities for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Indemnified Person-Related Entities on behalf of any Indemnified Person with respect to any claim for which any such Indemnified Person has sought or may seek indemnification from the Company shall affect the foregoing and the Indemnified Person-Related Entities shall have the right of contributions and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of any such Indemnified Person against the Company.
45.9
The purpose of Bye-Laws 45.1 – 45.8 as a whole is to provide the broadest indemnity allowable at law, and to the extent any indemnification hereunder is prohibited, unenforceable or not authorized under applicable law, it is the intent of these Bye-Laws that such indemnification be interpreted as broadly as possible without invalidating the remaining provisions hereof. Specifically, to the extent prohibited by Bermuda law, these Bye-Laws shall not be applied or construed so as to result in the indemnification of any person, including an Indemnified Person, to the extent he is proven (after the exhaustion of all rights of appeal) to have engaged in fraud or dishonesty.
45.10
To the extent permitted by Bermuda law, any repeal, alteration or amendment of Bye-Laws 45.1 – 45.8, or adoption of any provision inconsistent therewith or any modification shall not adversely affect any rights to indemnification or to the advancement of expenses thereunder existing at the time of such repeal, alteration, amendment, adoption or modification with respect to any events, acts or omissions occurring immediately prior to such repeal, alteration, amendment, adoption or modification (regardless of when any proceeding, or part thereof, relating to such event, act or omission arises or is first threatened, commenced or completed).
AMALGAMATION AND MERGER
46.    Amalgamation and Merger
In addition to the approval of the Board, any resolution proposed for consideration at any general meeting to approve the amalgamation or merger of the Company with any other company, wherever incorporated, shall require the approval of a simple majority of votes cast at such meeting and the quorum for such meeting shall be that required in Bye-Law 21.1 and a poll may be demanded in respect of such resolution in accordance with the provisions of Bye-Law 22.2.
ALTERATION OF BYE-LAWS
47.    Alteration of Bye-Laws
These Bye-Laws may only be revoked or amended by the Board, but no such revocation or amendment shall be operative unless and until it is subsequently approved by Resolution.




DEED OF COVENANT

THIS DEED OF COVENANT is made on 15 September 2016 by PartnerRe Ireland Finance DAC (the Issuer) in favour of the account holders or participants specified below of Clearstream Banking S.A. (Clearstream, Luxembourg) and/or Euroclear Bank S.A./N.V. (Euroclear) (each a Clearing System).

WHEREAS:

(A)
The Issuer has entered into an Agency Agreement (the Agency Agreement, which expression includes the same as it may be amended, supplemented, novated or restated from time to time) dated 15 September 2016 between the Issuer, PartnerRe Ltd. as guarantor (the Guarantor), BNP Paribas Securities Services, Luxembourg Branch as fiscal agent (the Fiscal Agent) and the other agents named therein in relation to the issue of €750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026 (the Notes). The terms and conditions of the Notes (the Conditions) are set out in Schedule 2 to the Agency Agreement.

(B)
Payments of principal and interest in respect of the Notes are unconditionally and irrevocably guaranteed by the Guarantor as provided in a guarantee (the Guarantee) dated 15 September 2016 entered into by the Guarantor.

(C)
The Notes will be issued in bearer form and will initially be represented by, and comprised in, Global Notes (as defined in the Agency Agreement), in each case representing a certain number of underlying Notes (the Underlying Notes).

(D)
Each Global Note may, after issue, be deposited with a depositary for one or more Clearing Systems (each a Relevant Clearing System and together, the Relevant Clearing System). Upon any deposit of a Global Note the Underlying Notes represented by the Global Note will be credited to a securities account or securities accounts with the Relevant Clearing System. Any account holder with the Relevant Clearing System which has Underlying Notes credited to its securities account from time to time (other than any Relevant Clearing System which is an account holder of any other Relevant Clearing System) (each an Accountholder) will, subject to and in accordance with the terms and conditions and operating procedures or management regulations of the Relevant Clearing System, be entitled to transfer the Underlying Notes and (subject to and upon payment being made by the Issuer to the bearer in accordance with the terms of the Global Note) will be entitled to receive payments from the Relevant Clearing System calculated by reference to the Underlying Notes credited to its securities account.

(E)
In certain circumstances specified in each Global Note, the bearer of the Global Note will have no further rights under the Global Note (but without prejudice to the rights which any person may have pursuant to this Deed of Covenant). The time at which this occurs is referred to as the Relevant Time. In those circumstances, each Accountholder will, subject to and in accordance with the terms of this Deed and the Guarantee, acquire against the Issuer and the Guarantor all those rights which the Accountholder would have had if, prior to the Relevant Time, duly executed and authenticated definitive Notes had been issued in respect of its Underlying Notes and the definitive Notes were held and beneficially owned by the Accountholder.

NOW THIS DEED WITNESSES AS FOLLOWS:

1.
If at any time the bearer of the Global Note ceases to have rights under it in accordance with its terms, the Issuer covenants with each Accountholder that each Accountholder shall automatically acquire at the Relevant Time, without the need for any further action on behalf of any person, against the Issuer all those rights which the Accountholder would have had if at the Relevant Time it held and beneficially owned executed and authenticated definitive Notes in respect of each Underlying




Note represented by the Global Note which the Accountholder has credited to its securities account with the Relevant Clearing System at the Relevant Time.

The Issuer's obligation under this clause shall be a separate and independent obligation by reference to each Underlying Note which a Accountholder has credited to its securities account with the Relevant Clearing System and the Issuer agrees that a Accountholder may assign its rights under this Deed in whole or in part.

2.
The records of the Relevant Clearing System shall be conclusive evidence of the identity of the Accountholders and the number of Underlying Notes credited to the securities account of each Accountholder. For these purposes a statement issued by the Relevant Clearing System stating:

(a)
the name of the Accountholder to which the statement is issued; and

(b)
the aggregate principal amount of Underlying Notes credited to the securities account of the Accountholder as at the opening of business on the first day following the Relevant Time on which the Relevant Clearing System is open for business,

shall, in the absence of manifest error, be conclusive evidence of the records of the Relevant Clearing System at the Relevant Time.

3.
In the event of a dispute, the determination of the Relevant Time by the Relevant Clearing System shall (in the absence of manifest error) be final and conclusive for all purposes in connection with the Accountholders with securities accounts with the Relevant Clearing System.

4.
The Issuer undertakes in favour of each Accountholder that, in relation to any payment to be made by it under this Deed, it will comply with the provisions of Condition 7 (Taxation) of the Notes to the extent that they apply to any payments in respect of Underlying Notes as if those provisions had been set out in full in this Deed.

5.
The Issuer will pay any stamp and other similar duties or taxes, including interest and penalties, payable (i) under the laws of the Republic of Ireland or Bermuda in connection with the execution of this Deed and (ii) on any action taken reasonably and in good faith by any Accountholder to enforce the provisions of this Deed.

6.
The Issuer represents, warrants and undertakes to and with each Accountholder that it has all corporate power, and has taken all necessary corporate or other steps, to enable it to execute, deliver and perform this Deed, and that this Deed constitutes legal, valid and binding obligations of the Issuer enforceable in accordance with its terms subject to the laws of bankruptcy, insolvency, examinership and other laws affecting the rights of creditors generally, and general equitable principles (whether court-base or otherwise).

7.
This Deed shall take effect as a deed poll for the benefit of the Accountholders from time to time. This Deed shall be deposited with and held by the Common Safekeeper for Euroclear and Clearstream, Luxembourg until all the obligations of the Issuer under this Deed have been discharged in full.

8.
The Issuer acknowledges the right of every Accountholder to the production of, and the right of every Accountholder to obtain (upon payment of a reasonable charge) a copy of, this Deed, and further acknowledges and covenants that the obligations binding upon it contained in this Deed are owed to, and shall be for the account of, each and every Accountholder, and that each Accountholder shall be entitled severally to enforce those obligations against the Issuer.

9.
If any provision in or obligation under this Deed is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair (i) the validity, legality or enforceability under the law of that jurisdiction of any other provision in or obligation




under this Deed, or (ii) the validity, legality or enforceability under the law of any other jurisdiction of that or any other provision in or obligation under this Deed.

10.    
(a)
This Deed and any non-contractual obligations arising out of or in connection with it are governed by, and construed in accordance with, English law.

(b)
Subject to clause 10(d) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed, including any dispute as to its existence, validity, interpretation, performance, breach or termination or the consequences of its nullity and any dispute relating to any non-contractual obligations arising out of or in connection with it (a Dispute) and each of the Issuer and any Accountholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts.

(c)
For the purposes of this clause 10, the Issuer waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.

(d)
To the extent allowed by law, each Accountholder may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions.

(e)
The Issuer irrevocably appoints Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent under this Deed for service of process in any proceedings before the English courts in relation to any Dispute and agrees that, in the event of Law Debenture Corporate Services Limited being unable or unwilling for any reason so to act, it will immediately appoint another person as its agent for service of process in England in respect of any Dispute. The Issuer agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this clause shall affect the right to serve process in any other manner permitted by law.

(f)
WITHOUT PREJUDICE TO CLAUSES 10(b), 10(c) AND 10(d), THE ISSUER WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH THIS DEED. THIS DEED MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.
IN WITNESS whereof this Deed has been executed and delivered as a deed poll by the Issuer on the date which appears first on page 1.





GUARANTEE

Guarantee of PartnerRe Ltd.
THIS GUARANTEE is given on 15 September 2016 by PartnerRe Ltd. (the Guarantor). WHEREAS:
(A)
The Guarantor has agreed to guarantee the obligations of PartnerRe Ireland Finance DAC (the Issuer) under (i) the €750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026 (the Notes) to be issued by the Issuer pursuant to an Agency Agreement (the Agency Agreement) dated
15 September 2016 between the Issuer, the Guarantor, BNP Paribas Securities Services, Luxembourg Branch as Fiscal Agent (the Fiscal Agent) and the other agents named therein and (ii) the Deed of Covenant executed by the Issuer on 15 September 2016 in respect of the Notes (the Deed of Covenant).

(B)
Terms defined in the Conditions of the Notes (the Conditions), the Agency Agreement and the Deed of Covenant and not otherwise defined in this Guarantee shall have the same meaning when used in this Guarantee.

NOW THIS DEED WITNESSES AS FOLLOWS:

1.
The Guarantor as primary obligor unconditionally and irrevocably:

(a)
guarantees to (i) the holder from time to time of each Note or Coupon and (ii) each Accountholder, by way of continuing guarantee the due and punctual payment of all amounts payable by the Issuer on or in respect of the Note or Coupon (including any additional amounts which may become payable under Condition 7 (Taxation) and the Deed of Covenant) as and when the same shall become due according to the Conditions and the Deed of Covenant; and

(b)
agrees that, if and each time that the Issuer fails to make any payments as and when the same become due, the Guarantor will on demand (without requiring the relevant Noteholder or Couponholder or Accountholder first to take steps against the Issuer or any other person) pay to the relevant Noteholder or Couponholder, or as the case may be, the Accountholder the amounts (as to which the certificate of the relevant Noteholder or Couponholder, or as the case may be, the Accountholder shall in the absence of manifest error be conclusive) in the currency in which the amounts are payable by the Issuer under the Notes or the Deed of Covenant.

2.
If any sum which, although expressed to be payable by the Issuer under the Notes, Coupons or the Deed of Covenant is for any reason (whether or not now existing and whether or not now known or becoming known to the Issuer, the Guarantor or any relevant Noteholder, Couponholder and/or Accountholder) not recoverable from the Guarantor on the basis of a guarantee then (a) it will nevertheless be recoverable from it as if it were the sole principal debtors and will be paid by it to the relevant Noteholder, Couponholder and/or Accountholder on demand, and (b) as a separate and additional liability under this Guarantee the Guarantor agrees, as a primary obligation, to indemnify each relevant Noteholder, Couponholder and each Accountholder in respect of such sum by way of a full indemnity in the manner and currency as is provided for in the Notes and the Deed of Covenant, and to indemnify each relevant Noteholder, Couponholder and each Accountholder against all losses, claims, costs, charges and expenses to which it may be subject or which it may incur in recovering such sum.
3.
If any payment received by any relevant Noteholder, Couponholder or Accountholder pursuant to the provisions of the Notes, Coupons or the Deed of Covenant shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer or, without limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or diminishing the liability of the Guarantor and this Guarantee shall continue to apply as if such payment had at all times remained owing by the Issuer and the Guarantor shall indemnify the relevant Noteholders, Couponholders and/or Accountholders (as the case may be) in respect thereof provided that the obligations of the Issuer and/or the




Guarantor under this clause Error! Reference source not found. shall, as regards each payment made to any relevant Noteholder, Couponholder or Accountholder which is avoided or set aside, be contingent upon such payment being reimbursed to the Issuer or other persons entitled through the Issuer.

4.
All payments by the Guarantor under this Guarantee shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) imposed or levied by or on behalf of any authority having the power to tax, unless the withholding or deduction of the Taxes is required by law. In the event that the Guarantor is so required to withhold or deduct any Taxes imposed or levied by or on behalf of a Relevant Jurisdiction from a payment under this Guarantee, the Guarantor will pay such additional amounts as shall be necessary in order that the net amounts received by the Noteholders, Couponholders and Accountholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Notes or, as the case may be, the Coupons, or the Deed of Covenant in the absence of the withholding or deduction; except that no additional amounts shall be payable with respect to any payment in respect of any Note or Coupon or the Deed of Covenant:

(a)
for Taxes in respect of such Note or Coupon or the Deed of Covenant by reason of such Noteholder, Couponholder or Accountholder (or any beneficial owner of any interest in, or rights in respect of, such Note or Coupon) having a present or former connection with the Relevant Jurisdiction other than a mere holding of the Note or Coupon or the receipt of payments in respect thereof; or

(b)
presented for payment in the Republic of Ireland or Bermuda;

(c)
presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by satisfying any statutory requirement or by making a declaration or any other statement, including but not limited to a declaration of residence or non- residence or other similar claim for exemption;

(d)
presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note and/or Coupon to another Paying Agent;

(e)
presented for payment more than 30 days after the Relevant Date except to the extent that the holder thereof would have been entitled to an additional amount on presenting the same for payment on such thirtieth day assuming that day to have been a Presentation Date;

(f)
where such withholding or deduction is required pursuant to Section 1471(b) of the US Internal Revenue Code of 1986, as amended (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any amended or successor version), any current or future regulations or agreements (including any intergovernmental agreements) thereunder, official interpretations thereof or any law, regulation or official interpretation implementing any of the foregoing; or
(g)
any combination of the above.
5.
The obligations of the Guarantor under this Guarantee shall not be affected by any matter or thing which but for this provision might operate to affect the obligations including, without limitation:

(a)
any time or indulgence granted to or composition with the Issuer or any other person;

(b)
the taking, variation, renewal or release of remedies or securities against the Issuer or any other person; or

(c)
any unenforceability, invalidity or irregularity.

6.
Where any discharge (whether in respect of the obligations of the Issuer or any security for the obligations of the Issuer or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be repaid on bankruptcy, liquidation or otherwise




without limitation, the liability of the Guarantor under this Guarantee shall continue as if there had been no discharge or arrangement. The holder of any Note or Coupon or an Accountholder, acting in good faith, shall be entitled to concede or compromise any claim that any payment, security or other disposition is liable to avoidance or repayment.

7.
The Guarantor represents and warrants that:

(a)
the obligations of the Guarantor under this Guarantee constitute the direct, unconditional and (subject to the provisions of clause 6) unsecured obligations of the Guarantor and (subject as provided above) rank and will rank pari passu with all other outstanding unsecured and unsubordinated obligations of the Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors' rights; and

(b)
all necessary governmental consents and authorisations for the giving and implementation of this Guarantee have been obtained.

8.
The Guarantor shall be subrogated to all rights of the Noteholders, the Couponholders and the Accountholders, as the case may be, in respect of any amounts paid by the Guarantor pursuant to this Guarantee, provided however that, until all amounts which may be or become payable under the Notes, the Coupons and the Deed of Covenant have been irrevocably paid in full, the Guarantor shall not by virtue of this Guarantee be subrogated to any rights of any holder of any Note or Coupon or any Accountholder or claim in competition with such holders against the Issuer.

9.
This Guarantee shall enure for the benefit of the Noteholders, the Couponholders and the Accountholders and shall be deposited with and held by the Fiscal Agent.

10.
If any provision in or obligation under this Guarantee is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair (i) the validity, legality or enforceability under the law of that jurisdiction of any other provision in or obligation under this Guarantee, or (ii) the validity, legality or enforceability under the law of any other jurisdiction of that or any other provision in or obligation under this Guarantee.

11.
This Guarantee and any non-contractual obligations arising out of or in connection with it are governed by, and construed in accordance with, English law.

Subject to subparagraph (c) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with this Guarantee, including any dispute as to its existence, validity, interpretation, performance, breach or termination or the consequences of its nullity and any dispute relating to any non-contractual obligations arising out of or in connection with it (a Dispute) and each of the Guarantor and any
Noteholders, Couponholders or Accountholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts.

(a)
For the purposes of subparagraphs 0 and (c), the Guarantor waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.

(b)
To the extent allowed by law, the Noteholders, the Couponholders and the Accountholders may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction and (ii) concurrent proceedings in any number of jurisdictions.

(c)
The Guarantor irrevocably appoints Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent under this Guarantee for service of process in any proceedings before the English courts in relation to any Dispute and agrees that in the event of Law Debenture Corporate Services Limited being unable or unwilling for any reason so to act, it will




immediately appoint another person as its agent for service of process in England in respect of any Dispute. The Guarantor agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this sub-paragraph shall affect the right to serve process in any other manner permitted by law.

(d)
WITHOUT PREJUDICE TO SUBPARAGRAPHS (A) TO (C), THE GUARANTOR WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH THIS GUARANTEE. THIS GUARANTEE MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.

IN WITNESS whereof this Guarantee has been executed as a deed poll by the Guarantor.





AGENCY AGREEMENT
DATED 15 SEPTEMBER 2016
PARTNERRE IRELAND FINANCE DAC
€750,000,000
1.25 per cent. Guaranteed Notes due 15 September 2026 unconditionally and irrevocably guaranteed by PARTNERRE LTD.

THIS AGREEMENT is made on 15 September 2016

BETWEEN:

(1)
PARTNERRE IRELAND FINANCE DAC, a designated activity company limited by shares incorporated under the laws of the Republic of Ireland with company number 586239 with offices at Fifth Floor, Block One, The Oval, 160 Shelbourne Road, Dublin 4, Ireland (the Issuer);

(2)
PARTNERRE LTD., an exempted company incorporated with limited liability under the laws of Bermuda with registered number 18620 with offices at 90 Pitts Bay Road, Pembroke, HM08,
Bermuda (the Guarantor); and

(3)
BNP PARIBAS SECURITIES SERVICES, a société en commandite par actions (S.C.A.) incorporated under the laws of France, registered with the Registre du Commerce et des Sociétés of Paris under number 552 108 011, whose registered office is at 3, Rue d’Antin - 75002 Paris, France and acting through its Luxembourg Branch whose offices are at 60, avenue J.F. Kennedy, L-1855 Luxembourg, having as postal address L-2085 Luxembourg and registered with the Luxembourg trade and companies register under number B. 86 862 in its capacity as fiscal and principal paying agent (in such capacity the Fiscal Agent, which expression shall include any successor fiscal agent appointed under clause 20) and in its capacity as paying agent (together with the Fiscal Agent and any further or other paying agents appointed from time to time in respect of the Notes, the Paying Agents).

WHEREAS:

(A)
The Issuer has agreed to issue €750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026 (the Notes which expression shall include, unless the context otherwise requires, any further Notes issued pursuant to Condition 14 (Further Issues) and forming a single series with the Notes).

(B)
The Notes will be issued in bearer form in the denominations of €100,000 and integral multiples of
€1,000 in excess thereof up to and including €199,000 each with interest coupons (Coupons) attached. The Notes are intended to be held in a manner which would allow Eurosystem eligibility.

(C)
The Notes will initially be represented by a temporary Global Note (the Temporary Global Note) in or substantially in the form set out in Part 1 of Schedule 1 which will be exchanged in accordance with its terms for a permanent Global Note (the Permanent Global Note and, together with the Temporary Global Note, the Global Notes) in or substantially in the form set out in Part 2 of Schedule 1.

(D)
The definitive Notes and Coupons will be in or substantially in the respective forms set out in Part 1 of Schedule 2. The Conditions of the Notes (the Conditions) will be in or substantially in the form set out in Part 2 of Schedule 2.

(E)
The Notes will be issued with the benefit of a deed of covenant dated 15 September 2016 (as amended or supplemented from time to time) (the Deed of Covenant) entered into by the Issuer substantially in




the form set out in Schedule 3.

(F)
Payments in respect of the Notes will be unconditionally and irrevocably guaranteed by the Guarantor as provided in a guarantee (the Guarantee) entered into by the Guarantor substantially in the form set out in Schedule 4.

IT IS AGREED as follows:

1.
DEFINITIONS AND INTERPRETATION

1.1
As used in this Agreement:

Basic Terms Modification means any proposal:

(a)
to change the date, or the method of determining the date, for payment of principal, interest or any other amount in respect of the Notes, to reduce or cancel the amount of principal, interest or any other amount payable on any date in respect of the Notes or to change the method of calculating the amount of principal, interest or any other amount payable in respect of the Notes on any date;

(b)
modifying any provision of the Guarantee;

(c)
to change the currency in which any amount due in respect of the Notes is payable;

(d)
to change the quorum required at any meeting of Noteholders or the majority required to pass an Extraordinary Resolution or any other resolution of Noteholders or the number or percentage of votes required to be cast, or the number or percentage of Notes required to be held, in connection with the taking of any decision or action by or on behalf of the Noteholders or any of them;

(e)
to change this definition, the definition of "Extraordinary Resolution", the definition of "outstanding" or the definition of "Written Resolution" in the Conditions or in this Agreement;

(f)
to approve any exchange or substitution of the Notes for, or the conversion of the Notes into, any other obligations or securities of the Issuer or any other person; or

(g)
in connection with any proposed exchange, substitution or conversion of the type referred to in subparagraph (f) to amend any of the provisions of the Notes describing circumstances in which Notes may be redeemed or declared due and payable prior to their scheduled maturity date;

Clearstream, Luxembourg means Clearstream Banking S.A.;

Euroclear means Euroclear Bank S.A./N.V.;

outstanding means in relation to the Notes all the Notes issued other than:

(a)
those Notes which have been redeemed pursuant to Condition 6 (Redemption and Purchase);

(b)
those Notes in respect of which the date for redemption in accordance with the Conditions has occurred and the redemption moneys (including all interest payable thereon) have been duly paid to the Fiscal Agent in the manner provided in clause 4 (and, where appropriate, notice to that effect has been given to the Noteholders under Condition 11 (Notices)) and remain available for payment of the relevant Notes and/or Coupons;





(c)
those Notes which have been purchased and cancelled pursuant to Condition 6 (Redemption and Purchase);
(d)
those Notes in respect of which claims have become prescribed under Condition 8 (Prescription);

(e)
those mutilated or defaced Notes which have been surrendered and cancelled and in respect of which replacements have been issued pursuant to Condition 10 (Replacement of Notes and Coupons);

(f)
(for the purpose only of ascertaining the principal amount of the Notes outstanding and without prejudice to the status for any other purpose of the relevant Notes) those Notes which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 10 (Replacement of Notes and Coupons); and

(g)
the Temporary Global Note to the extent that it has been duly exchanged for the Permanent Global Note and the Permanent Global Note to the extent that it has been exchanged for the relative Notes in definitive form in each case pursuant to their respective provisions,

provided that for each of the following purposes, namely:

(i)
the right to attend and vote at any meeting of the Noteholders or the right to sign or authorise the signature of any Written Resolution or passing any Extraordinary Resolution by way of electronic consents given through the relevant clearing systems; and

(ii)
Condition 12 (Meetings of Noteholders and Modification) and paragraphs 4, 7 and 9 of Schedule 5,

those Notes (if any) which are for the time being held by any person (including but not limited to, the Issuer, the Guarantor or any of its other Subsidiaries) for the benefit of the Issuer, the Guarantor or any of its other Subsidiaries shall (unless and until ceasing to be so held) be deemed not to remain outstanding; and

specified office of any Agent means the office specified in clause 22 or any other specified offices as may from time to time be duly notified pursuant to clause 22.

1.2
(a)    In this Agreement, unless the contrary intention appears, a reference to:

(i)
an amendment includes a supplement, restatement or novation and amended is to be construed accordingly;

(ii)
a person includes (i) any individual, company, unincorporated association, government, state agency, international organisation or other entity and (ii) its successors and assigns;

(iii)
the records of Euroclear and Clearstream, Luxembourg shall be the records that each of Euroclear and Clearstream, Luxembourg holds for its customers which reflect the amount of such customer's interest in the Notes;

(iv)
a provision of a law is a reference to that provision as extended, amended or re- enacted;

(v)
a clause or schedule is a reference to a clause of, or a schedule to, this Agreement;

(vi)
a document or any provision of a document is a reference to that document or provision




as amended from time to time; and
(vii)
a time of day is a reference to London time.

(b)
In this Agreement:

(i)
words denoting the singular shall include the plural and vice versa;

(ii)
words denoting one gender only shall include the other gender; and

(iii)
words denoting persons only shall include firms and corporations and vice versa.

(c)
Words and expressions defined in the Conditions and not otherwise defined in this Agreement shall have the same meanings when used in this Agreement.

The headings in this Agreement do not affect its interpretation.

All references in this Agreement to costs or charges or expenses shall include any value added tax or similar tax charged or chargeable in respect thereof.

(d)
References in this Agreement to principal and/or interest shall include any additional amounts payable pursuant to Condition 7 (Taxation).

(e)
As used herein, in relation to any Notes which are to have a "listing" or be "listed" (i) on the Irish Stock Exchange plc (the Irish Stock Exchange), listing and listed shall be construed to mean that such Notes have been admitted to the Official List of the Irish Stock Exchange and admitted to trading on the Irish Stock Exchange's regulated market and (ii) on any other Stock Exchange in a jurisdiction within the European Economic Area, listing and listed shall be construed to mean that the Notes have been admitted to trading on a market within that jurisdiction which is a regulated market for the purposes of the Markets in Financial Instruments Directive (Directive 2004/39/EC).

(f)
All references in this Agreement to Euroclear and/or Clearstream, Luxembourg shall, wherever the context so admits, be deemed to include references to any additional or alternative clearing system in which the relevant Notes are from time to time accepted for clearance.

2.
APPOINTMENT OF PAYING AGENTS

2.1
The Issuer and the Guarantor hereby appoint, on the terms and subject to the conditions of this Agreement, BNP Paribas Securities Services, Luxembourg Branch, acting at its specified office, as fiscal and principal paying agent and as paying agent.

2.2
Each Paying Agent accepts its appointment, and agrees to act, as agent of the Issuer and the Guarantor in relation to the Notes and agrees to comply with the terms of this Agreement. Each Paying Agent further agrees to perform the duties specified for it in the Conditions. The obligations of the Paying Agents are several and not joint.

2.3
The Fiscal Agent undertakes to the Issuer that it will, in connection with the issue of the Notes, perform the duties which are stated to be performed by it in Schedule 6. Each of the Paying Agents (other than the Fiscal Agent) agrees that if any information that is required by the Fiscal Agent to perform the duties set out in Schedule 6 becomes known to it, it will promptly provide such information to the Fiscal Agent.

2.4
The Issuer hereby authorises and instructs the Fiscal Agent to elect Euroclear as common safekeeper. The Issuer acknowledges that any such election is subject to the right of Euroclear and Clearstream,
Luxembourg to jointly determine that the other shall act as common safekeeper and agrees that no




liability shall attach to the Fiscal Agent in respect of any such election made by it.

2.5
Notwithstanding anything to the contrary herein or in any other agreement, if in the Fiscal Agent’s opinion, acting reasonably, it deems it appropriate to delegate any of its roles, duties or obligations created hereunder or under any other agreement (or any part thereof) to a third party, the Issuer and the Guarantors hereby acknowledge the potential for, and acquiesce to, such delegation.

3.
AUTHENTICATION, EFFECTUATION AND DELIVERY OF NOTES

3.1
The Issuer authorises and instructs the Fiscal Agent to (i) authenticate the Global Notes and any definitive Notes delivered pursuant to subclause 3.4, (ii) transmit such Global Notes electronically to the common safekeeper and to give effectuation instructions in respect of the Global Notes following its authentication thereof and (iii) instruct Euroclear and Clearstream, Luxembourg to make the appropriate entries in their records to reflect the initial outstanding aggregate principal amount of the Notes. The Issuer further authorises and instructs the Fiscal Agent to destroy each Global Note retained by it following its receipt of confirmation from the common safekeeper that the relevant Global Note has been effectuated.

3.2
The Issuer authorises and instructs the Fiscal Agent to (i) cause interests in the Temporary Global Note to be exchanged for interests in the Permanent Global Note and interests in a Global Note to be exchanged for definitive Notes in accordance with their respective terms and (ii) instruct Euroclear and Clearstream, Luxembourg to make appropriate entries in their records to reflect such exchanges. Following the exchange of the last interest in a Global Note, the Fiscal Agent shall cause the Global Note to be cancelled and delivered to the Issuer or as it may direct.

3.3
The Issuer undertakes that the Permanent Global Note (duly executed on behalf of the Issuer) will be available to be exchanged for interests in the Temporary Global Note in accordance with the terms of the Temporary Global Note.

3.4
If a Global Note is to be exchanged in accordance with its terms for definitive Notes, the Issuer undertakes that it will deliver to, or to the order of, the Fiscal Agent, as soon as reasonably practicable and in any event not later than 15 days before the relevant exchange is due to take place, sufficient numbers of executed definitive Notes (with Coupons attached) to enable the Fiscal Agent to comply with its obligations under this Agreement. Each definitive Note and Coupon so delivered shall be duly executed on behalf of the Issuer.

3.5
The Fiscal Agent shall cause all Notes delivered to and held by it under this Agreement to be maintained in safe custody and shall ensure that interests in the Temporary Global Note are only exchanged for interests in the Permanent Global Note in accordance with the terms of the Temporary Global Note and this Agreement and that the definitive Notes are issued only in accordance with the terms of a Global Note and this Agreement.

3.6
So long as any of the Notes is outstanding the Fiscal Agent shall, within seven days of any request by the Issuer, certify to the Issuer the number of definitive Notes held by it under this Agreement.

3.7
In the event that Definitive Notes are issued and the Fiscal Agent informs the Issuer that it is unable to perform its obligations under this Agreement, the Issuer shall forthwith appoint a new agent in accordance with Clause 20 which is able to perform such obligations.

4.
PAYMENT TO THE FISCAL AGENT

4.1
The Issuer or, failing the Issuer, the Guarantor shall, by no later than 10.00 a.m. (Luxembourg time) on the day on which any payment of principal and/or interest in respect of any of the Notes becomes
due under the Conditions, transfer to an account specified by the Fiscal Agent, which in all cases shall




be an account maintained outside of the United States, such amount of euro as shall be sufficient for the purposes of such payment of principal and/or interest in immediately available funds.

4.2
The Issuer or, as the case may be, the Guarantor shall ensure that, before 10.00 a.m. (Luxembourg time) on the second Business Day immediately prior to each day on which any payment is to be made to the Fiscal Agent under subclause 4.1, the Fiscal Agent shall receive a copy of an irrevocable payment instruction to the bank through which the payment is to be made. For the purposes of this subclause 4.2, Business Day means a day on which commercial banks and foreign exchange markets settle payments and are open for general business in the Republic of Ireland, Bermuda and Luxembourg.

4.3
Subject to the Fiscal Agent being satisfied in its sole discretion that payment will be duly made as provided in clause 4.1, the Fiscal Agent or the relevant Paying Agent shall pay or cause to be paid all amounts due in respect of the Notes on behalf of the Issuer in the manner provided in the Conditions. If any payment provided for in clause 4.1 is made late but otherwise in accordance with the provisions of this Agreement, the Fiscal Agent and each Paying Agent shall nevertheless make payments in respect of the Notes as aforesaid following receipt by it of such payment.

4.4
If for any reason the Fiscal Agent considers in its sole discretion that the amounts to be received by the Fiscal Agent pursuant to clause 4.1 will be, or the amounts actually received by it pursuant thereto are, insufficient to satisfy all claims in respect of all payments then falling due in respect of the Notes, the Fiscal Agent shall then forthwith notify the Issuer and the Guarantor of such insufficiency and, until such time as the Fiscal Agent has received the full amount of all such payments, neither the Fiscal Agent nor any Paying Agent shall be obliged to pay any such claims.

4.5
For the avoidance of doubt, the Paying Agents shall not have any obligation to make any payment of principal or interest in respect of the Notes to the Noteholders until the Fiscal Agent has been put in funds by the Issuer.

4.6
Should the Issuer pay amounts in EUR to the Fiscal Agent prior to the date the amounts are due, the Fiscal Agent may request from the relevant Issuer or the Guarantor payment of interest rates on such amounts, from the date on which they are paid to the date on which they are due, at a percentage rate equal to the cost to the Fiscal Agent of funding the amounts received in accordance with the applicable standard market interest rate.

5.
NOTIFICATION OF NON RECEIPT OF PAYMENT

The Fiscal Agent shall notify each of the other Paying Agents and the Issuer and the Guarantor forthwith:

(a)
if it has not by the relevant date specified in subclause 4.1 received unconditionally the full amount in euro required for the payment; and

(b)
if it receives unconditionally the full amount of any sum payable in respect of the Notes or Coupons after such date.

The Fiscal Agent shall, at the request and expense of the Issuer or the Guarantor, forthwith upon receipt of any amount as described in subparagraph (b), cause notice of that receipt to be published under Condition 11 (Notices).

6.
DUTIES OF THE PAYING AGENTS

6.1
Subject to the payments to the Fiscal Agent provided for by clause 4 being duly made, the Paying Agents shall act as paying agents of the Issuer and the Guarantor in respect of the Notes and pay or cause to be paid on behalf of the Issuer and/or the Guarantor in the manner provided in the Conditions, on and after each date on which any payment becomes due and payable, any principal and/or interest then payable




under the Conditions and this Agreement.

6.2
If default is made by the Issuer and the Guarantor in respect of any payment, then unless and until the full amount of the relevant payment has been made in accordance with the provisions of this Agreement (except as to the time of making the same) or other arrangements satisfactory to the Fiscal Agent have been made, neither the Fiscal Agent nor any of the other Paying Agents shall be bound to act as paying agents.

6.3
Without prejudice to subclauses 6.1 and 6.2, if the Fiscal Agent pays any amounts to the holders of Notes or Coupons or to any other Paying Agent at a time when it has not received payment in full in respect of the Notes in accordance with subclause 4.1 (the excess of the amounts so paid over the amounts so received being the Shortfall), the Issuer (failing which the Guarantor) will, in addition to paying amounts due under subclause 4.1, pay to the Fiscal Agent on demand interest (at a rate which represents the Fiscal Agent's cost of funding the Shortfall) on the Shortfall (or the unreimbursed portion thereof) until the receipt in full by the Fiscal Agent of the Shortfall.

6.4
Whilst any Notes are represented by a Global Note, all payments due in respect of the Notes shall be made to, or to the order of, the holder of the Global Note, subject to and in accordance with the provisions of the Global Note. On the occasion of each payment, the Fiscal Agent shall instruct Euroclear and Clearstream, Luxembourg to make the appropriate entries in their records to reflect such payment.

6.5
If on presentation of a Note or Coupon the amount payable in respect of the Note or Coupon is not paid in full (otherwise than as a result of withholding or deduction for or on account of any Taxes as permitted by the Conditions) the Fiscal Agent shall instruct Euroclear and Clearstream, Luxembourg to make the appropriate entries in their records to reflect such shortfall in payment.

6.6
The Fiscal Agent shall ensure that, if certification of non-U.S. beneficial ownership is required under U.S. Treasury regulations, payments of both principal, premium (if any) and/or interest in respect of a Temporary Global Note will only be made if such certification of non-U.S. beneficial ownership (in the form set out in Schedule 8) has been received from Euroclear and/or Clearstream, Luxembourg in accordance with the terms of the Temporary Global Note.

7.
REIMBURSEMENT OF THE PAYING AGENTS

7.1
If a Paying Agent other than the Fiscal Agent makes any payment in accordance with this Agreement:

(a)
it shall notify the Fiscal Agent of the amount so paid by it and the serial number and outstanding amount of each Note in relation to which such payment was made; and

(b)
the Fiscal Agent shall pay to such Paying Agent out of the funds received by it under clause 4 by wire transfer in euro and in same day, freely transferable, cleared funds to such account with such bank as such Paying Agent has by notice to the Fiscal Agent specified for the purpose (which shall be an account maintained outside the United States in all cases), an amount equal to the amount so paid by such Paying Agent.
7.2
If the Fiscal Agent makes any payment in accordance with this Agreement, it shall be entitled to appropriate for its own account out of the funds received by it under clause 4 an amount equal to the amount so paid by it.

8.
NOTICE OF ANY WITHHOLDING OR DEDUCTION

If the Issuer or the Guarantor is, in respect of any payment in respect of the Notes, compelled to withhold or deduct any amount for or on account of any Taxes as contemplated by Condition 7 (Taxation), the Issuer or, as the case may be, the Guarantor shall give notice to the Fiscal Agent as soon as it becomes aware of the requirement to make such withholding or deduction and shall give to the Fiscal Agent such




information as the Fiscal Agent shall reasonably require to enable it to comply with the requirement.

9.
DUTIES OF THE FISCAL AGENT IN CONNECTION WITH OPTIONAL REDEMPTION AND REDEMPTION FOR TAXATION REASONS

9.1
If the Issuer decides to redeem all of the Notes for the time being outstanding under Condition 6 (Redemption and Purchase), it shall give notice of the decision and of the principal amount of Notes which it has decided to redeem to the Fiscal Agent at least 45 days before the relevant redemption date.

9.2
The Fiscal Agent shall instruct Euroclear and Clearstream, Luxembourg to make appropriate entries in their records in respect of all Notes redeemed by the Issuer to reflect such redemptions.

10.
PUBLICATION AND RECEIPT OF NOTICES

10.1
On behalf of and at the written request and expense of the Issuer (failing which the Guarantor), the Fiscal Agent shall cause to be published all notices required to be given by the Issuer and/or the Guarantor under the Conditions.

10.2
Each Agent, on receipt of a notice or other communication received on behalf of the Issuer or the Guarantor, shall as soon as reasonably practicable forward a copy to the Issuer and the Guarantor.

11.
CANCELLATION OF NOTES AND COUPONS

11.1
All Notes which are redeemed, all definitive Notes which are surrendered in connection with redemption (together with all unmatured Coupons attached to or delivered with Notes), all Coupons which are paid and all Global Notes which are exchanged in full (in accordance with the provisions of clause 3.2) will be cancelled by the Paying Agent by or to which they are redeemed, surrendered, paid or exchanged. Each of the Paying Agents shall give to the Fiscal Agent details of all payments made by it and shall deliver all cancelled Notes and Coupons to the Fiscal Agent (or as the Fiscal Agent may specify). Where Notes are purchased by or on behalf of the Issuer, the Guarantor or any of its Subsidiaries, the Issuer or, as the case may be, the Guarantor, will immediately notify the Fiscal Agent in writing of all Notes which have been purchased and will procure that the Notes (together with all unmatured Coupons appertaining to the Notes) are promptly cancelled and delivered to the Fiscal Agent or its authorised agent.

11.2
The Fiscal Agent or its authorised agent shall (unless otherwise instructed by the Issuer in writing and save as provided in subclause 13.1) destroy upon disposal authorisation of the Clearing Systems all cancelled Notes and Coupons and, upon written request, shall furnish the Issuer and the Guarantor with a certificate of destruction containing written particulars of the serial numbers of the Notes and the number by maturity date of Coupons so destroyed.

11.3
The Fiscal Agent shall instruct Euroclear and Clearstream, Luxembourg to make appropriate entries in their records in respect of all Notes which are cancelled.

12.
ISSUE OF REPLACEMENT NOTES AND COUPONS

12.1
The Issuer shall cause a sufficient quantity of additional forms of Notes and Coupons to be available, upon request, to the Fiscal Agent at its specified office for the purpose of issuing replacement Notes or Coupons as provided below.

12.2
The Fiscal Agent shall, subject to and in accordance with Condition 10 (Replacement of Notes and Coupons) and the following provisions of this clause, cause to be delivered any replacement Notes or Coupons which the Issuer may determine to issue in place of Notes or Coupons which have been lost, stolen, mutilated, defaced or destroyed.





12.3
In the case of a mutilated or defaced Note, the Fiscal Agent shall ensure that (unless otherwise covered by such indemnity as the Issuer may require) any replacement Note only has attached to it Coupons corresponding to those attached to the mutilated or defaced Note which is presented for replacement.

12.4
The Fiscal Agent shall obtain verification, in the case of an allegedly lost, stolen or destroyed Note or Coupon in respect of which the serial number is known, that the Note or Coupon has not previously been redeemed or paid. The Fiscal Agent shall not issue a replacement Note or Coupon unless and until the applicant has:

(a)
paid such expenses and costs as may be incurred in connection with the replacement;

(b)
furnished it with such evidence and indemnity as the Issuer may reasonably require; and

(c)
in the case of a mutilated or defaced Note or Coupon, surrendered it to the Fiscal Agent.

12.5
The Fiscal Agent shall cancel mutilated or defaced Notes or Coupons in respect of which replacement Notes or Coupons have been issued pursuant to this clause. The Fiscal Agent shall, unless otherwise requested by the Issuer or the Guarantor, destroy all those Notes and Coupons and shall furnish the Issuer and the Guarantor with a destruction certificate containing the information specified in subclause 11.2.

12.6
The Fiscal Agent shall, on issuing any replacement Note or Coupon, forthwith inform the Issuer and the other Paying Agents of the serial number of the replacement Note or Coupon issued and (if known) of the serial number of the Note or Coupon in place of which the replacement Note or Coupon has been issued. Whenever replacement Coupons are issued under this clause, the Fiscal Agent shall also notify the other Paying Agents of the maturity dates of the lost, stolen, mutilated, defaced or destroyed Coupons and of the replacement Coupons issued.

12.7
Whenever a Note or Coupon for which a replacement Note or Coupon has been issued and the serial number of which is known is presented to a Paying Agent for payment, the relevant Paying Agent shall immediately send notice to the Issuer and (if it is not itself the Fiscal Agent) the other Paying Agents and shall not be obliged to make any payment in respect of such Note or Coupon.

13.
RECORDS AND CERTIFICATES

13.1
The Fiscal Agent shall in respect of the Coupons of each maturity, retain until the expiry of ten years from the Relevant Date (as defined in the Conditions) in respect of the Coupons either (i) all paid Coupons of that maturity or (ii) a list of the serial numbers of Coupons of that maturity still remaining unpaid.

13.2
The Fiscal Agent shall (i) keep full and complete records of (such records to be made available to the Issuer and the Guarantor at all reasonable times), and (ii) upon written request give to the Issuer and the Guarantor, as soon as possible and in any event within four months after the date of redemption, purchase, payment or replacement of a Note or Coupon (as the case may be), a certificate stating (as applicable):

(a)
the aggregate principal amount of Notes which have been redeemed and the aggregate amount in respect of Coupons which have been paid;

(b)
the serial numbers of those Notes in definitive form (other than serial numbers of Coupons);

(c)
the total number of each denomination by maturity date of those Coupons;





(d)
the aggregate principal amounts of Notes and the aggregate amounts in respect of Coupons which have been surrendered or exchanged and replaced and the serial numbers of those Notes in definitive form and the total number by maturity date of the Coupons surrendered therewith; and

(e)
the total number by maturity date of unmatured Coupons missing from Notes which have been redeemed or surrendered and replaced and the serial numbers of the Notes in definitive form to which the missing unmatured Coupons appertained.

14.
COPIES OF DOCUMENTS AVAILABLE FOR INSPECTION

14.1
The Guarantee shall be deposited with the Fiscal Agent and shall be held in safe custody by the Fiscal Agent on behalf of the Noteholders and Couponholders.

14.2
The Paying Agents shall hold copies of all documents required to be so available by the Conditions or the rules of any relevant stock exchange (or any other relevant authority) and shall make such copies available for physical inspection by Noteholders at its specified office during normal business hours. For this purpose, the Issuer and/or the Guarantor shall furnish each Paying Agent with sufficient copies of each of the relevant documents.

15.
COMMISSIONS AND EXPENSES

15.1
The Issuer or, failing the Issuer, the Guarantor shall pay to the Fiscal Agent such fees and commissions in respect of the services of the Paying Agents under this Agreement as shall be separately agreed between the Issuer, the Guarantor and the Fiscal Agent. The Issuer and the Guarantor shall not be concerned with the apportionment of such fees and commissions among the Paying Agents.

15.2
The Issuer (and failing the Issuer, the Guarantor) shall pay to the Fiscal Agent an amount equal to any value added tax which may be payable in respect of the fees and commissions payable to, together with all reasonable expenses incurred by, the Paying Agents in connection with their services under this Agreement.

15.3
The Fiscal Agent shall arrange for the payment of the fees and commissions due to the other Agents and arrange for the reimbursement of their expenses promptly after the receipt of the relevant moneys from the Issuer or the Guarantor (as the case may be). Neither the Issuer nor the Guarantor shall be responsible for any payment or reimbursement by the Fiscal Agent to the other Paying Agents.
16.
INDEMNITY

16.1
The Issuer shall indemnify (and failing the Issuer so indemnifying, the Guarantor agrees to indemnify) each of the Paying Agents against any losses, liabilities, costs, claims, actions, demands or expenses (together, Losses) (including, but not limited to, all reasonable costs, legal fees, charges and expenses (together, Expenses) paid or incurred in defending or disputing any Losses) which it may incur or which may be made against it as a result of or in connection with its appointment or the exercise of its powers and duties under this Agreement except for any Losses or Expenses resulting from its own gross negligence, default or bad faith or that of its directors, officers or employees.

16.2
Each of the Paying Agents severally undertakes to indemnify the Issuer and the Guarantor against all Losses and Expenses which either of them may incur or which may be made against any of them as a result of its own gross negligence, default or bad faith or that of its directors, officers or employees.

16.3
The indemnities set out in this clause 16 shall survive any termination or expiry of this Agreement.

16.4
Notwithstanding any other provision of this Agreement, under no circumstances will the Paying Agents be liable to the Issuer and the Guarantor or any other person for any incidental, consequential, indirect,




special or exemplary damages of any kind or nature whatsoever or for any loss of revenues, loss of profits, loss of business, loss of opportunity or loss of goodwill (collectively Additional Damages) arising from any representation, any breach of implied term or any duty at common law or under any statute or express term of this Agreement, and whether such liability is asserted on the basis of contract, tort or otherwise, whether or not foreseeable, even if the Paying Agents have been advised or was aware of the possibility of such Additional Damages.

16.5
None of the Paying Agents shall be liable for any loss caused by events beyond their reasonable control including any malfunction, interruption or error in the transmission of information caused by any machine or systems or interception of communication facilities, abnormal operating conditions or acts of God.

17.
REPAYMENT BY FISCAL AGENT

Sums paid by or by arrangement with the Issuer or the Guarantor to the Fiscal Agent pursuant to the terms of this Agreement shall not be required to be repaid to the Issuer or as the case may be, the Guarantor unless and until any Note or Coupon becomes void under the provisions of Condition 8 (Prescription) but in that event the Fiscal Agent shall forthwith repay to the Issuer or, as the case may be, the Guarantor sums equivalent to the amounts paid by the Issuer or, as the case may be, the Guarantor to the Fiscal Agent and not disbursed by virtue of the Notes becoming void.

18.
CONDITIONS OF APPOINTMENT

18.1
Save as provided in subclause 18.3, the Fiscal Agent shall be entitled to deal with money paid to it by the Issuer or the Guarantor for the purposes of this Agreement in the same manner as other money paid to a bank by its customers and shall not be liable to account to the Issuer or the Guarantor for any interest or other amounts in respect of such money. No money held by any Paying Agent need be segregated except as required by law.

18.2
In acting under this Agreement and in connection with the Notes and the Coupons the Paying Agents shall act solely as agents of the Issuer and the Guarantor and will not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or the Couponholders.

18.3
No Paying Agent shall exercise any right of set-off or lien against the Issuer, the Guarantor or any holders of Notes or Coupons in respect of any moneys payable to or by it under the terms of this Agreement.

18.4
Except as otherwise required by law, each of the Paying Agents shall be entitled to treat the holder of any Note or Coupon as the absolute owner for all purposes (whether or not any payment in respect of the relevant Note or Coupon shall be overdue and notwithstanding any notice of ownership or writing on the Note or Coupon or any notice of previous loss or theft of the Note or Coupon) and shall not be required to obtain any proof thereof as to the identity of such bearer.

18.5
The Paying Agents shall be obliged to perform such duties and only such duties as are set out in this Agreement and the Notes and no implied duties or obligations shall be read into this Agreement or the Notes against the Paying Agents other than the duty to act honestly and in good faith and to exercise the diligence of a reasonably prudent agent in comparable circumstances.

18.6
Each of the Paying Agents may consult with any expert or legal, financial and other professional advisers and the opinion of such advisers shall be full and complete protection in respect of any action taken, omitted or suffered under this Agreement in good faith and in accordance with the opinion of such advisers. Failure to consult such advisers on any matter shall not be construed as evidence of the Fiscal Agent not acting in good faith.

18.7
Each of the Paying Agents shall be protected and shall incur no liability for or in respect of any action




taken, omitted or suffered in reliance upon any instruction, request or order from the Issuer or the Guarantor or any document which it reasonably believes to be genuine and to have been delivered, signed or sent by the proper party or parties or upon written instructions from the Issuer or the Guarantor.

18.8
Any of the Paying Agents, their officers, directors or employees may become the owner of, or acquire any interest in, Notes or Coupons with the same rights that it or he would have if the Paying Agent concerned were not appointed under this Agreement, and may engage or be interested in any financial or other transaction with the Issuer or the Guarantor, and may act on, or as depositary, trustee or agent for, any committee or body of holders of the Notes or Coupons or other obligations of the Issuer or the Guarantor, as freely as if such Paying Agent were not appointed under this Agreement.

18.9
None of the Paying Agents shall be under any obligation to take any action under this Agreement (i) which may be illegal or contrary to applicable law or regulation or (ii) which it expects will result in any expense, loss, charge or liability accruing to it, the payment of which or adequate indemnity against which within a reasonable time is not, in its opinion, assured to it.

18.10
None of the Agents shall have any obligation or duty (i) to monitor or inquire as to the performance of the Issuer of its obligations under the Notes, this Agreement or any other relevant documents or (ii) to determine or take any steps to ascertain whether any relevant event under the Notes has occurred.

18.11
The Fiscal Agent will not be responsible for any failure to perform any of its obligations if such performance is prevented, hindered or delayed by a Force Majeure Event, in such case its obligations will be suspended for so long as the Force Majeure Event continues. “Force Majeure Event” means any event due to any cause beyond the reasonable control of the Agent, such as restrictions on the convertibility or transferability of currencies, requisitions, unavailability of communications systems, sabotage, fire, flood, explosion, acts of God, civil commotion, strikes or industrial action of any kind (other than any such actions or strikes undertaken by the Fiscal Agent itself or its employees), riots, insurrection, war or acts of government.

18.12
Each Agent undertakes to inform the Issuer promptly if it is not exempt from withholding under FATCA or anticipates becoming not exempt from withholding under FATCA.

19.
COMMUNICATION WITH PAYING AGENTS

A copy of all communications relating to the subject matter of this Agreement between the Issuer or the Guarantor and any of the Paying Agents other than the Fiscal Agent shall be sent to the Fiscal Agent.

20.
TERMINATION OF APPOINTMENT

20.1
The Issuer and the Guarantor may terminate, without cause, the appointment of any Paying Agent at any time and/or appoint additional or other Paying Agents by giving to the Paying Agent whose appointment is concerned and, where appropriate, the Fiscal Agent at least 45 days' prior written notice to that effect, provided that, so long as any of the Notes is outstanding:

(a)
in the case of a Paying Agent, the notice shall not expire less than 45 days before any due date for the payment of interest; and

(b)
notice shall be given under Condition 11 (Notices) at least 30 days before the removal or appointment of a Paying Agent.

20.2
Notwithstanding the provisions of subclause 20.1, if at any time a Paying Agent (i) becomes incapable of acting, or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of an administrator, liquidator or administrative or other receiver of all or any substantial part of its property, or if an administrator,




liquidator or administrative or other receiver of it or of all or a substantial part of its property is appointed, or it admits in writing its inability to pay or meet its debts as they may mature or suspends payment of its debts, or if an order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law or if a public officer takes charge or control of the Paying Agent or of its property or affairs for the purpose of rehabilitation, administration or liquidation, or (ii) is not, or ceases to be, exempt from withholding under FATCA, the Issuer and the Guarantor may forthwith without notice terminate the appointment of the Paying Agent, in which event notice shall be given to the Noteholders under Condition 11 (Notices) as soon as is practicable.

20.3
The termination of the appointment of a Paying Agent under this Agreement shall not entitle the Paying Agent to any amount by way of compensation but shall be without prejudice to any amount then accrued due.

20.4
All or any of the Paying Agents may resign their respective appointments under this Agreement at any time by giving to the Issuer, the Guarantor and, where appropriate, the Fiscal Agent at least 90 days' prior written notice to that effect provided that, in the case of a Paying Agent, so long as any of the Notes is outstanding and in definitive form, the notice shall not expire less than 45 days before any Interest Payment Date. Following receipt of a notice of resignation from a Paying Agent, the Issuer shall promptly, and in any event not less than 30 days before the resignation takes effect, give notice of such resignation to the Noteholders under Condition 11 (Notices). If the Fiscal Agent resigns or is removed pursuant to subclauses 20.1 or 20.2 above or in accordance with this subclause 20.4, the Issuer and the Guarantor shall promptly and in any event within 30 days appoint a successor (being a leading bank). If the Issuer and the Guarantor fail to appoint a successor within such period, the Fiscal Agent shall be entitled, on behalf of the Issuer and the Guarantor, to appoint in its place as a successor Fiscal Agent a reputable financial institution of good standing which the Issuer and the Guarantor shall approve and such approval not to be unreasonably withheld or delayed.

20.5
Notwithstanding the provisions of subclauses 20.1, 20.2 and 20.4, so long as any of the Notes are outstanding, the termination of the appointment of a Paying Agent (whether by the Issuer and the
Guarantor or by the resignation of the Paying Agent) shall not be effective unless upon the expiry of the relevant notice there is:

(a)
a Fiscal Agent;

(b)
a Paying Agent (which may be the Fiscal Agent) having its specified office in the place required by the rules and regulations of the relevant stock exchange or any other relevant authority; and

(c)
a Paying Agent in a jurisdiction within Europe, other than the jurisdiction in which the Issuer is incorporated.

20.6
Any successor Paying Agent shall execute and deliver to its predecessor, the Issuer, the Guarantor and, where appropriate, the Fiscal Agent an instrument accepting its appointment under this Agreement, and the successor Paying Agent, without any further act, deed or conveyance, shall become vested with all the authority, rights, powers, trusts, immunities, duties and obligations of the predecessor with like effect as if originally named as a Paying Agent.

20.7
If the appointment of a Paying Agent under this Agreement is terminated (whether by the Issuer and the Guarantor or by the resignation of the relevant Paying Agent), the Paying Agent shall on the date on which the termination takes effect deliver to its successor Paying Agent (or, if none, the Fiscal Agent) all Notes and Coupons surrendered to it but not yet destroyed and all records concerning the Notes and Coupons maintained by it (except such documents and records as it is obliged by law or regulation to retain or not to release) and pay to its successor Paying Agent (or, if none, to the Fiscal Agent) the amounts (if any) held by it in respect of Notes or Coupons which have become due and payable but which have not been presented for payment, but shall have no other duties or responsibilities under this




Agreement.

20.8
If the Fiscal Agent or any of the other Paying Agents shall change its specified office, it shall give to the Issuer, the Guarantor and, where appropriate, the Fiscal Agent not less than 45 days' prior written notice to that effect giving the address of the new specified office. As soon as practicable thereafter and in any event at least 30 days before the change, the Fiscal Agent shall give to the Noteholders on behalf of and at the expense of the Issuer (failing which, the Guarantor) notice of the change and the address of the new specified office under Condition 11 (Notices).

20.9
Any legal entity into which any Paying Agent is merged or converted or any legal entity which such Agent may be consolidated, (i) to which the business of such Agent is transferred, (ii) with which the Agent agrees to transfer its respective rights and obligations hereunder or (iii) which results from any merger, conversion, consolidation or transfer to which such Agent shall be a party shall resulting from any merger or conversion to which such Paying Agent is a party shall, to the extent permitted by applicable law, be the successor to such Paying Agent without any further formality, whereupon the relevant Issuer, the Guarantor, the Paying Agents, and such successor shall acquire and become subject to the same rights and obligations between themselves as if they had entered into an agreement in the form mutatis mutandis of this Agreement. Notice of any such merger, conversion, consolidation or transfer of activity shall forthwith be given by such successor to the relevant Issuer, the Guarantor and where appropriate, the Fiscal Agent.

21.
MEETINGS OF NOTEHOLDERS

21.1
The provisions of Schedule 5 shall apply to meetings of the Noteholders and shall have effect in the same manner as if set out in this Agreement provided that, so long as any of the Notes are represented by a Global Note, the expression Noteholders shall include the persons for the time being shown in the records of Euroclear and/or Clearstream, Luxembourg (other than Clearstream, Luxembourg, if Clearstream, Luxembourg shall be an accountholder of Euroclear, and Euroclear, if
Euroclear shall be an accountholder of Clearstream, Luxembourg), as the holders of a particular principal amount of such Notes (each an Accountholder) (in which regard a certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding save in the case of manifest error) for all purposes other than with respect to the payment of principal and interest on such Notes, the right to which shall be vested as against the Issuer or the Guarantor solely in the bearer of the relevant Global Note in accordance with and subject to its terms, and the expressions holder and holders shall be construed accordingly and the expression Notes shall mean units of €1,000 principal amount of Notes.

22.
NOTICES

22.1
All notices or other communications under or in connection with this Agreement shall be in English and shall be delivered in person or by facsimile in accordance with the address and facsimile details below.

22.2
Any notice shall take effect, in the case of a letter, at the time of delivery, and, in the case of a facsimile, at the time of dispatch; provided, however, that any such communication which is received after 4.00 p.m. (in the city of the addressee) on any particular day or on a day on which commercial banks and foreign exchange markets do not settle payments in the city of the addressee shall be deemed to have been received and shall take effect from 10.00 a.m. on the next following day on which commercial banks and foreign exchange markets settle payments in the city of the addressee or on the next Business Day.

22.3
The address and facsimile number of each party for all notices under or in connection with this Agreement are:






(a)
in the case of the Issuer:
PartnerReIreland Finance DAC
 
 
Fifth Floor, Block One TheOval160 Shelbourne Road
Dublin 4, Ireland
Fifth Floor, Block One TheOval160 Shelbourne Road
Dublin 4, Ireland
 
 
 
Facsimile No:
+353 1637 9660
 
 
Attention:
Niamh Freeman
(b)
in the case of the Guarantor:
PartnerRe Ltd.
 
 
 
90 Pitts Bay Road Pembroke, HM08 Bermuda
 
 
 
Facsimile No:
+1 441 292 6080
 
 
Attention:
Chief Legal Counsel
(c)
in the case of the Fiscal Agent:
BNP Paribas Securities Services, Luxembourg
Branch
 
 
 
60, Avenue J.F. Kennedy L-1855 Luxembourg Luxembourg
 
 
 
Facsimile No:
+352 2696 9757
 
Attention:
Attention:
CorporateTrust
Services

23.
AMENDMENTS

The Fiscal Agent, the Issuer and the Guarantor may agree, without the consent of any Noteholder, to:

(a)
any modification of the Notes, the Coupons or of this Agreement which is of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory provisions of the law; or

(b)
any modification (except a Basic Terms Modification) of the Notes, the Coupons or this Agreement which is not prejudicial to the interests of the Noteholders.

Any such modification shall be binding on the Noteholders and, unless the Fiscal Agent agrees otherwise, any modification shall be notified by the Issuer to the Noteholders as soon as practicable thereafter in accordance with Condition 11 (Notices).

24.
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

25.
TAXES AND STAMP DUTIES

The Issuer or, failing the Issuer, the Guarantor agrees to pay any and all stamp and other similar taxes or duties which may be payable under the laws of the Republic of Ireland or Bermuda in connection with the execution, delivery, performance and enforcement of this Agreement by the Paying Agent.

26.
GENERAL

26.1
This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.





26.2
If any provision in or obligation under this Agreement is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair (i) the validity, legality or enforceability under the law of that jurisdiction of any other provision in or obligation, under this Agreement, and (ii) the validity, legality or enforceability under the law of any other jurisdiction of that or any other provision in or obligation under this Agreement.

26.3
No failure or delay of the Issuer, the Guarantor, the Fiscal Agent in exercising any right or remedy under this Agreement shall constitute a waiver of that right. Any waiver of any right will be limited to the specific instance. The exclusion or omission of any provision or term from this Agreement shall not be deemed to be a waiver of any right or remedy the Issuer, the Fiscal Agent may have under applicable law.

26.4
This Agreement constitutes the complete and exclusive written agreement of the parties. It supersedes and terminates as of the date of its execution all prior oral or written agreements, arrangements or understandings between the parties in relation to the services to be provided hereunder.

27.
GOVERNING LAW AND SUBMISSION TO JURISDICTION

27.1
This Agreement and any non-contractual obligations arising out of or in connection with this Agreement are governed by, and construed in accordance with, English law.

27.2
Subject to subclause 27.4 below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement, including any dispute as to its existence, validity, interpretation, performance, breach or termination or the consequences of its nullity and any dispute relating to any non-contractual obligations arising out of or in connection with it (a Dispute) and each party submits to the exclusive jurisdiction of the English courts.

27.3
For the purposes of clauses 27.2 and 27.4, the Issuer and the Guarantor each waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.

27.4
To the extent allowed by law, the Agents may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions.

27.5
Each of the Issuer and the Guarantor irrevocably appoints Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent under this Agreement for service of process in any proceedings before the English courts in relation to any Dispute and agrees that, in the event of Law Debenture Corporate Services Limited being unable or unwilling for any reason so to act, it will immediately appoint another person as its agent for service of process in England in respect of any Dispute on terms acceptable to the Agents, failing which the Agents may appoint another process agent for this purpose. The Issuer and the Guarantor each agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this clause shall affect the right to serve process in any other manner permitted by law.

27.6
WITHOUT PREJUDICE TO CLAUSE 27.2, 27.3 AND 27.4 THE ISSUER AND THE GUARANTOR EACH WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH THIS AGREEMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.

28.
CONFIDENTIALITY

28.1
The Fiscal Agent and the Issuer undertake to respect and protect the confidentiality of all information acquired as a result of or pursuant to this Agreement and will not, without the other Party's prior written




consent, disclose any such information to a third party, unless it is required to do so by any applicable law or regulation or is specifically authorised to do so hereunder or by any separate agreement, especially where the provision of such information is the object or part of the service to be provided by the Fiscal Agent.

28.2
In order to provide its services to the Issuer and to satisfy legal obligations it is subject to, the Fiscal Agent will process (in particular, without being limited to, by collecting, recording, organizing, storing, adapting or altering, retrieving, consulting, using, disclosing by transmission, disseminating or otherwise making available to third parties) data relating to the Issuer (including, without being limited to the Issuer's name, address, occupation, nationality, corporate form, etc.).

The Issuer may freely refuse to provide the Fiscal Agent with the information requested by the Fiscal Agent. However, such a refusal will be an obstacle preventing the start or continuation of business relations between the Issuer and the Fiscal Agent. The Fiscal Agent will only ask for the information needed to fulfill its obligations and provide the Issuer with its services and may communicate such

data to processors (in the conditions detailed in Clause 28.3) and local authorities as necessary for the latter or the Fiscal Agent to achieve the above-mentioned purposes.

The Issuer may, at its request, access to the data relating to it and will be entitled to have them rectified. The Issuer undertakes to communicate the information included in this Clause 28.2 to the concerned persons acting with respect to this Agreement.

28.3
Whilst performing this Agreement and providing its services, the Fiscal Agent may process personal data relating to third parties (e.g. the Noteholders, hereafter the Data) on behalf of the Issuer. With respect to these acts of processing, the Fiscal Agent will act as a processor to the Issuer and undertakes, under its responsibility, to:

a)
process the Data exclusively as necessary to perform the Agreement and provide the services requested by the Issuer or otherwise in accordance with instructions received from the Issuer from time to time; and

b)
implement all appropriate technical and organizational measures so as to ensure the protection of the Data against accidental or unlawful destruction or accidental loss, falsification, unauthorized dissemination or access and against all other unlawful forms of processing.

28.4
The Issuer expressly authorizes:

a)
the Fiscal Agent to subcontract, under its responsibility and in compliance with applicable laws and regulations, the provision of the services (in whole or in part) and the related processing of Data to Fiscal Agent 's group entities or third parties (hereafter, the Processors); and

b)
the transfer of Data, under the Fiscal Agent’s responsibility, to the Fiscal Agent's group entities or third parties (such as to a correspondent, a processor or any other person providing services to the Fiscal Agent) if such transmission is required to allow the Fiscal Agent to provide its services to the Issuer or to satisfy legal obligations it or the recipient of the Data is subject to. The Issuer expressly authorizes such transfer, including, to the extent relevant, any transfer outside the European Union. The Fiscal Agent assumes the responsibility that these third parties treat these Data as confidential.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.








SCHEDULE 1
FORMS OF GLOBAL NOTES
PART 1

FORM OF THE TEMPORARY GLOBAL NOTE

PartnerRe Ireland Finance DAC
(a designated activity company limited by shares incorporated under the laws of the Republic of Ireland)

TEMPORARY GLOBAL NOTE

€750,000,000
1.25 per cent. Guaranteed Notes due 15 September 2026 unconditionally and irrevocably guaranteed by
PartnerRe Ltd.

This temporary Global Note is issued in respect of the €750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026 (the Notes) of PartnerRe Ireland Finance DAC (the Issuer). The Notes are issued subject to and with the benefit of an Agency Agreement (the Agency Agreement) dated 15 September 2016, between, among others, the Issuer, PartnerRe Ltd. (the Guarantor) and BNP Paribas Securities Services, Luxembourg Branch as Fiscal Agent (the Fiscal Agent) and the Conditions of the Notes (the Conditions) set out in Part 2 of Schedule 2 to the Agency Agreement. Payments in respect of the Notes are unconditionally and irrevocably guaranteed by the Guarantor/as provided in a Guarantee dated 15 September 2016 entered into by the Guarantor.

1.
PROMISE TO PAY

Subject as provided in this temporary Global Note, the Issuer, for value received, promises to pay the bearer of this temporary Global Note the sum of €750,000,000 (seven hundred and fifty million euro) or such lesser sum as is equal to the principal amount of the Notes represented by this temporary Global Note on 15 September 2026 or on such earlier date as the principal or other amounts in respect of this temporary Global Note may become due under the Conditions and to pay interest on (and which is calculated by reference to) the principal sum for the time being outstanding of this temporary Global Note at the rate of 1.25 per cent. per annum from 15 September 2016 payable annually in arrear on 15 September in each year until payment of the principal sum has been made or duly provided for in full together with any other amounts as may be payable, all subject to and under the Conditions.

The principal amount of Notes represented by this temporary Global Note shall be the aggregate amount from time to time entered in the records of both Euroclear Bank S.A./N.V. and Clearstream Banking S.A. (each a relevant Clearing System and together the relevant Clearing Systems). The records of the relevant Clearing Systems (which expression in this temporary Global Note means the records that each relevant Clearing System holds for its customers which reflect the amount of such customer's interest in the Notes) shall be conclusive evidence of the principal amount of Notes represented by this temporary Global Note and, for these purposes, a statement issued by a relevant Clearing System (which statement shall be made available to the bearer upon request) stating the nominal amount of Notes represented by this temporary Global Note at any time shall, save in the
case of manifest error, be conclusive evidence of the records of the relevant Clearing System at that time.

2.
EXCHANGE FOR PERMANENT GLOBAL NOTE AND PURCHASES

The permanent Global Note to be issued on exchange for interests in this temporary Global Note will




be substantially in the form set out in Part 2 of Schedule 1 to the Agency Agreement.

Subject as provided below, the permanent Global Note will only have an entry made to represent definitive Notes after the date which is 40 days after the closing date for the Notes (the Exchange Date).

Interests in this temporary Global Note may be exchanged for interests recorded in the records of the relevant Clearing Systems in a duly executed and authenticated permanent Global Note without charge, in full or partial exchange for this temporary Global Note, in order that the permanent Global Note represents an aggregate principal amount of Notes equal to the principal amount of this temporary Global Note submitted for exchange. Notwithstanding the foregoing, no such exchange shall be made except to the extent there shall have been presented to the Fiscal Agent or such other person as the Fiscal Agent may direct (the Exchange Agent) by a relevant Clearing System a certificate in the form set out in Schedule 8 of the Agency Agreement to the effect that the relevant Clearing System has received from or in respect of a person entitled to a beneficial interest in a particular principal amount of the Notes (as shown by its records) a certificate of non-US beneficial ownership from such person in the form required by it.

Notwithstanding the foregoing, where this temporary Global Note has been exchanged in part for the permanent Global Note pursuant to the foregoing and definitive Notes have been issued in exchange for the total amount of Notes represented by the permanent Global Note pursuant to its terms, then interests in this temporary Global Note will no longer be exchangeable for interests in the permanent Global Note but will be exchangeable, in full or partial exchange, for duly executed and authenticated definitive Notes, without charge, in the denominations of €100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000 each with interest coupons attached, such definitive Notes to be substantially in the form set out in Part 1 of Schedule 2 to the Agency Agreement. Notwithstanding the foregoing, definitive Notes shall not be so issued and delivered unless there shall have been presented to the Exchange Agent by a relevant Clearing System a certificate in the form set out in Schedule 8 of the Agency Agreement to the effect that the relevant Clearing System has received from or in respect of a person entitled to a beneficial interest in a particular principal amount of Notes (as shown by its records) a certificate of non-US beneficial ownership from such person in the form required by it.

Any person who would, but for the provisions of this temporary Global Note and of the Agency Agreement, otherwise be entitled to receive either (a) an interest in the permanent Global Note or (b) definitive Notes shall not be entitled to require the exchange of an appropriate part of this temporary Global Note for an interest in the permanent Global Note or definitive Notes unless and until he shall have delivered or caused to be delivered to a relevant Clearing System a certificate of non-US beneficial ownership in the form required by the relevant Clearing System.

This temporary Global Note may be exchanged by the bearer hereof on any day (other than a Saturday or Sunday) on which banks are open for general business in Luxembourg. The aggregate principal amount of interests in the permanent Global Note recorded in the records of the relevant Clearing Systems or, as the case may be, definitive Notes issued upon an exchange of this temporary Global Note will, subject to the terms hereof, be equal to the aggregate principal amount of this temporary Global Note submitted by the bearer for exchange (to the extent that such principal amount does not exceed the aggregate principal amount of this temporary Global Note).
Upon (a) any exchange of a part of this temporary Global Note for an interest in the permanent Global Note or for a definitive Note, (b) receipt of instructions from a relevant Clearing System that, following the purchase by or on behalf of the Issuer, the Guarantor or any of its subsidiaries of a part of this temporary Global Note, part is to be cancelled or (c) any redemption of a part of this temporary Global Note, the Issuer shall procure that the portion of the principal amount of this temporary Global Note so exchanged, cancelled or redeemed shall be entered pro rata in the records of the relevant Clearing Systems. On an exchange in whole of this temporary Global Note, this temporary Global Note shall be surrendered to or to the order of the Fiscal Agent.





3.
BENEFITS

Until the entire principal amount of this temporary Global Note has been extinguished in exchange for the permanent Global Note and/or definitive Notes, the bearer of this temporary Global Note shall (subject as provided below) in all respects be entitled to the same benefits as if he were the bearer of the definitive Notes referred to above, except that the bearer of this temporary Global Note shall only be entitled to receive any payment on this temporary Global Note on presentation of certificates as provided below. Accordingly, except as ordered by a court of competent jurisdiction or as required by law or applicable regulation, the Issuer and any Paying Agent may (subject as provided below) deem and treat the holder of this temporary Global Note as the absolute owner of this temporary Global Note for all purposes. All payments of any amounts payable and paid to such holder shall, to the extent of the sums so paid, discharge the liability for the moneys payable on this temporary Global Note and on the relevant definitive Notes and/or Coupons.

4.
PAYMENTS

Payments due in respect of Notes for the time being represented by this temporary Global Note shall be made to the bearer of this temporary Global Note only upon presentation by a relevant Clearing System to the Fiscal Agent at its specified office of a certificate in the form set out in Schedule 8 of the Agency Agreement to the effect that it has received from or in respect of a person entitled to a beneficial interest in a particular principal amount of the Notes (as shown on its records) a certificate of non-US beneficial ownership in the form required by the Clearing System. Each payment so made will discharge the Issuer's obligations in respect thereof.

The bearer of this temporary Global Note will not be entitled to receive any payment of interest due on or after the Exchange Date unless, upon due certification, exchange of this temporary Global Note is improperly withheld or refused.

Upon any payment in respect of the Notes represented by this temporary Global Note, the Issuer shall procure that the amount so paid shall be entered pro rata in the records of the relevant Clearing Systems. In the case of any payment of principal the principal amount of this temporary Global Note shall be reduced for all purposes the Issuer shall procure that the amount so paid shall be entered pro rata in the records of the relevant Clearing Systems and, upon such entry being made, the principal amount of the Notes recorded in the records of the relevant Clearing Systems and represented by this temporary Global Note shall be reduced by the amount so paid. Any failure to make such entries shall not affect the discharge referred to in the first paragraph above.





5.
ACCOUNTHOLDERS

For so long as any of the Notes is represented by this temporary Global Note or by this temporary Global Note and the permanent Global Note and such Global Note(s) is/are held on behalf of the relevant Clearing Systems, each person (other than a relevant Clearing System which is an account holder of any other relevant Clearing System) who is for the time being shown in the records of a relevant Clearing System as the holder of a particular principal amount of Notes (each an Accountholder) (in which regard any certificate or other document issued by a relevant Clearing
System as to the principal amount of such Notes standing to the account of any person shall, save in the case of manifest error, be conclusive and binding for all purposes) shall be treated as the holder of that principal amount for all purposes (including but not limited to for the purposes of any quorum requirements of, or the right to demand a poll or, meetings of the Noteholders and giving notice to the Issuer pursuant to Condition 9 (Events of Default) other than with respect to the payment of principal and interest on the Notes, the right to which shall be vested, as against the Issuer, solely in the bearer of this temporary Global Note in accordance with and subject to its terms. Each Accountholder must look solely to the relevant Clearing Systems for its share of each payment made to the bearer of this temporary Global Note.

In the event that this Global Note (or any part of it) has become due and repayable in accordance with the Conditions or that the maturity date of the Notes has occurred and, in either case, payment in full of the amount due has not been made to the bearer in accordance with the provisions set out above, then from 8.00 p.m. (London time) on such day each Accountholder will become entitled to proceed directly against the Issuer on, and subject to, the terms of the Deed of Covenant executed by the Issuer on 15 September 2016 in respect of the Notes and the bearer will have no further rights under this Global Note (but without prejudice to the rights which any person may have under the Deed of Covenant).

6.
NOTICES

For so long as all of the Notes are represented by this temporary Global Note or by this temporary Global Note and the permanent Global Note and such Global Note(s) is/are held on behalf of a relevant Clearing System, notices to Noteholders may be given by delivery of the relevant notice to the relevant Clearing Systems for communication to the relevant Accountholders rather than by publication as required by Condition 11 (Notices); provided that, so long as the Notes are listed on any stock exchange, notices shall also be published in accordance with the rules of such exchange. Any such notice shall be deemed to have been given to the Noteholders on the second day after the day on which such notice is delivered to the relevant Clearing Systems as aforesaid.

Whilst any of the Notes held by a Noteholder are represented by a Global Note, notices to be given by such Noteholder may be given by such Noteholder (where applicable) through the applicable clearing system's operational procedures approved for this purpose and otherwise in such manner as the Fiscal Agent and the applicable clearing system approve for this purpose.

7.
PRESCRIPTION

Claims against the Issuer and the Guarantor in respect of principal and interest on the Notes represented by this temporary Global Note will be prescribed after 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date (as defined in Condition 7 (Taxation)).

8.
THE RELEVANT CLEARING SYSTEMS

Notes represented by this temporary Global Note are transferable in accordance with the rules and procedures of the relevant Clearing Systems.

9.
AUTHENTICATION AND EFFECTUATION





This temporary Global Note shall not become valid or enforceable for any purpose unless and until it has been authenticated by or on behalf of the Fiscal Agent and effectuated by the entity appointed as common safe-keeper by the relevant Clearing Systems.

The Notes are intended to be held in a manner which would allow eurosystem eligibility and as such this Global Note is intended upon issue to be deposited with one of Euroclear or Clearstream,
Luxembourg as common safekeeper. This does not necessarily mean that the Notes represented by the Global Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem either upon issue or at any or all times during their life, such recognition depending upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met).

10.
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this temporary Global Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

11.
SEVERABILITY

If any provision in or obligation under this temporary Global Note is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair (i) the validity, legality or enforceability under the law of that jurisdiction of any other provision in or obligation under this temporary Global Note, or (ii) the validity, legality or enforceability under the law of any other jurisdiction of that or any other provision in or obligation under this temporary Global Note.

12.
GOVERNING LAW

This temporary Global Note and any non-contractual obligations arising out of or in connection with it are governed by, and construed in accordance with, English law.

IN WITNESS whereof the Issuer has caused this temporary Global Note to be signed by a person duly authorised on its behalf.

PartnerRe Ireland Finance DAC

By: ............................................
(Duly authorised) Issued on 15 September 2016.

CERTIFICATE OF AUTHENTICATION

This is the temporary Global Note described in the Agency Agreement By or on behalf of
BNP Paribas Securities Services, Luxembourg Branch as Fiscal Agent (without recourse, warranty or liability)

...................................................






CERTIFICATE OF EFFECTUATION

Effectuated without recourse, warranty or liability by
as common safe-keeper
Euroclear Bank S.A./N.V.
By: ............................................


Note: An investment in the Notes does not have the status of a bank deposit in Ireland and is not within the scope of the deposit protection scheme operated by the Central Bank of Ireland. The Issuer is not regulated or authorised by the Central Bank of Ireland by virtue of issuing the Notes.





PART 2

FORM OF THE PERMANENT GLOBAL NOTE

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

PartnerRe Ireland Finance DAC
(a designated activity company limited by shares incorporated under the laws of the Republic of Ireland)

PERMANENT GLOBAL NOTE

€750,000,000
1.25 per cent. Guaranteed Notes due 15 September 2026 unconditionally and irrevocably guaranteed by
PartnerRe Ltd.

This permanent Global Note is issued in respect of the €750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026 (the Notes) of PartnerRe Ireland Finance DAC (the Issuer). The Notes are initially represented by a temporary Global Note interests in which will be exchanged in accordance with the terms of the temporary Global Note for interests in this permanent Global Note and, if applicable, definitive Notes. The Notes are issued subject to and with the benefit of an Agency Agreement (the Agency Agreement) dated 15 September 2016, between, among others, the Issuer, PartnerRe Ltd. (the Guarantor) and BNP Paribas Securities Services, Luxembourg Branch as Fiscal Agent (the Fiscal Agent) and the Conditions of the Notes (the Conditions) set out in Part 2 of Schedule 2 to the Agency Agreement. Payments in respect of the Notes are unconditionally and irrevocably guaranteed by the Guarantor as provided in a Guarantee dated 15 September 2016 entered into by the Guarantor.

1.
PROMISE TO PAY

Subject as provided in this permanent Global Note, the Issuer, for value received, promises to pay the bearer of this permanent Global Note the sum of €750,000,000 (seven hundred and fifty million euro) or such lesser sum as is equal to the principal amount of the Notes represented by this permanent Global




Note on 15 September 2026 or on such earlier date as the principal or other amounts in respect of this permanent Global Note may become due under the Conditions and to pay interest on (and which is calculated by reference to) the principal sum for the time being outstanding of this permanent Global Note at the rate of 1.25 per cent. per annum from 15 September 2016, payable annually in arrear on 15 September in each year until payment of the principal sum has been made or duly provided for in full together with any other amounts as may be payable, all subject to and under the Conditions.

The principal amount of Notes represented by this permanent Global Note shall be the aggregate amount from time to time entered in the records of both Euroclear Bank S.A./N.V. and Clearstream Banking S.A. (each a relevant Clearing System and together the relevant Clearing Systems). The records of the relevant Clearing Systems (which expression in this permanent Global Note means the records that each relevant Clearing System holds for its customers which reflect the amount of such customer's interest in the Notes) shall be conclusive evidence of the principal amount of Notes represented by this permanent Global Note and, for these purposes, a statement issued by a relevant
Clearing System (which statement shall be made available to the bearer upon request) stating the nominal amount of Notes represented by this permanent Global Note at any time shall, save in the case of manifest error, be conclusive evidence of the records of the relevant Clearing System at that time.

2.
EXCHANGE OF INTERESTS IN THE TEMPORARY GLOBAL NOTE FOR INTERESTS IN THIS PERMANENT GLOBAL NOTE

Upon any exchange of an interest recorded in the records of the relevant Clearing Systems in the temporary Global Note representing the Notes for an interest recorded in the records of the relevant Clearing Systems in this permanent Global Note, the Issuer shall procure that details of such exchange shall be entered pro rata in the records of the relevant Clearing Systems.

3.
EXCHANGE FOR DEFINITIVE NOTES AND PURCHASES

Upon the occurrence of an Exchange Event (as further described below), this permanent Global Note may be exchanged for duly executed and authenticated definitive Notes without charge and the Fiscal Agent or such other person as the Fiscal Agent may direct (the Exchange Agent) shall deliver, in full (but not in partial) exchange for this permanent Global Note, an aggregate principal amount of duly executed and authenticated definitive Notes with Coupons attached equal to the total principal amount of this permanent Global Note.

An Exchange Event will occur if:

(a)
an event of default (as set out in Condition 9 (Events of Default)) has occurred and is continuing; or

(b)
the Issuer has been notified that both the relevant Clearing Systems have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no successor clearing system is available; or

(c)
the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes in definitive form.

The Issuer will promptly give notice to Noteholders if an Exchange Event occurs. In the case of
(a) or (b) above, the bearer of this permanent Global Note, acting on the instructions of one or more of the Accountholders (as defined below), may give notice to the Issuer and the Fiscal Agent requesting exchange and, in the case of (c) above, the Issuer may also give notice to the Fiscal Agent of its intention to exchange this permanent Global Note for definitive Notes. Any exchange shall occur no later than 45 days after the date of receipt of the first relevant notice by the Fiscal Agent.





Exchanges will be made upon presentation of this permanent Global Note at the office of the Fiscal Agent on any day on which banks are open for general business in Luxembourg. In exchange for this permanent Global Note the Issuer will deliver, or procure the delivery of, an equal aggregate principal amount of definitive Notes (having attached to them all Coupons in respect of interest which has not already been paid on this permanent Global Note), security printed in accordance with any applicable legal and stock exchange requirements and in or substantially in the form set out in the Agency Agreement. On exchange of this permanent Global Note, the Issuer will procure that it is cancelled and, if the holder so requests, returned to the holder together with any relevant definitive Notes.

The definitive Notes to be issued on exchange will be in bearer form in the denominations of
€100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000 each with
interest coupons (Coupons) attached and will be substantially in the form set out in Part 1 of Schedule 2 to the Agency Agreement.

Upon (a) receipt of instructions from the relevant Clearing Systems that, following the purchase by or on behalf of the Issuer, the Guarantor or any of its subsidiaries of a part of this permanent Global Note, part is to be cancelled or (b) any redemption of a part of this permanent Global Note, the Issuer shall procure that the portion of the principal amount of this permanent Global Note so cancelled or redeemed shall be entered pro rata in the records of the relevant Clearing Systems. On an exchange in whole of this permanent Global Note, this permanent Global Note shall be surrendered to or to the order of the Fiscal Agent.

4.
BENEFITS

Until the entire principal amount of this permanent Global Note has been extinguished in exchange for definitive Notes or in any other manner envisaged by the Conditions, the bearer of this permanent Global Note shall (subject as provided below) in all respects be entitled to the same benefits as if he were the bearer of the definitive Notes referred to above. Accordingly, except as ordered by a court of competent jurisdiction or as required by law or applicable regulation, the Issuer and any Paying Agent may (subject as provided below) deem and treat the holder of this permanent Global Note as the absolute owner of this permanent Global Note for all purposes. All payments of any amounts payable and paid to such holder shall, to the extent of the sums so paid, discharge the liability for the moneys payable on this permanent Global Note and on the relevant definitive Notes and/or Coupons.

5.
PAYMENTS

Payments due in respect of Notes for the time being represented by this permanent Global Note shall be made to the bearer of this permanent Global Note and each payment so made will discharge the Issuer's obligations in respect thereof.

Upon any payment in respect of the Notes represented by this permanent Global Note, the Issuer shall procure that the amount so paid shall be entered pro rata in the records of the relevant Clearing Systems. In the case of any payment of principal the Issuer shall procure that the amount so paid shall be entered pro rata in the records of the relevant Clearing Systems and, upon any such entry being made, the principal amount of the Notes recorded in the records of the relevant Clearing Systems and represented by this permanent Global Note shall be reduced by the amount so paid. Any failure to make such entries shall not affect the discharge referred to in the previous paragraph.

6.
ACCOUNTHOLDERS

For so long as any of the Notes is represented by this permanent Global Note or by this permanent Global Note and the temporary Global Note and such Global Note(s) is/are held on behalf of the relevant Clearing Systems, each person (other than a relevant Clearing System which is an account holder of




any other relevant Clearing System) who is for the time being shown in the records of a relevant Clearing System as the holder of a particular principal amount of Notes (each an Accountholder) (in which regard any certificate or other document issued by a relevant Clearing System as to the principal amount of such Notes standing to the account of any person shall, save in the case of manifest error, be conclusive and binding for all purposes) shall be treated as the holder of that principal amount for all purposes (including but not limited to for the purposes of any quorum requirements of, or the right to demand a poll or, meetings of the Noteholders and giving notice to the Issuer pursuant to Condition 9 (Events of Default) other than with respect to the payment of principal and interest on the Notes, the right to which shall be vested, as against the Issuer, solely in the bearer of this permanent Global Note in accordance with and subject to its terms. Each Accountholder must look solely to the relevant Clearing Systems for its share of each payment made to the bearer of this permanent Global Note.
In the event that (a) this Global Note (or any part of it) has become due and repayable in accordance with the Conditions or that the maturity date of the Notes has occurred and, in either case, payment in full of the amount due has not been made to the bearer in accordance with the provisions set out above, or (b) following an Exchange Event, this Global Note is not duly exchanged for definitive Notes by the day provided above, then from 8.00 p.m. (London time) on such day each Accountholder will become entitled to proceed directly against the Issuer on, and subject to, the terms of the Deed of Covenant executed by the Issuer on 15 September 2016 in respect of the Notes and the bearer will have no further rights under this Global Note (but without prejudice to the rights which any person may have under the Deed of Covenant).

7.
NOTICES

For so long as all of the Notes are represented by this permanent Global Note or by this permanent Global Note and the temporary Global Note and such Global Note(s) is/are held on behalf of a relevant Clearing System, notices to Noteholders may be given by delivery of the relevant notice to the relevant Clearing Systems for communication to the relevant Accountholders rather than by publication as required by Condition 11 (Notices), provided that, so long as the Notes are listed on any stock exchange, notices shall also be published in accordance with the rules of such exchange. Any such notice shall be deemed to have been given to the Noteholders on the second day after the day on which such notice is delivered to the relevant Clearing Systems as aforesaid.

Whilst any of the Notes held by a Noteholder are represented by a Global Note, notices to be given by such Noteholder may be given by such Noteholder (where applicable) through the applicable clearing system's operational procedures approved for this purpose and otherwise in such manner as the Fiscal Agent and the applicable clearing system approve for this purpose.

8.
PRESCRIPTION

Claims against the Issuer and the Guarantor in respect of principal and interest on the Notes represented by this permanent Global Note will be prescribed after 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date (as defined in Condition 7 (Taxation)).

9.
THE RELEVANT CLEARING SYSTEMS

Notes represented by this permanent Global Note are transferable in accordance with the rules and procedures of the relevant Clearing Systems.

10.
AUTHENTICATION AND EFFECTUATION

This permanent Global Note shall not become valid or enforceable for any purpose unless and until it has been authenticated by or on behalf of the Fiscal Agent and effectuated by the entity appointed as common safe-keeper by the relevant Clearing Systems.





The Notes are intended to be held in a manner which would allow eurosystem eligibility and as such this Global Note is intended upon issue to be deposited with one of Euroclear or Clearstream, Luxembourg as common safekeeper. This does not necessarily mean that the Notes represented by the Global Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem either upon issue or at any or all times during their life, such recognition depending upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met).
11.
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this permanent Global Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

12.
SEVERABILITY

If any provision in or obligation under this permanent Global Note is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair (i) the validity, legality or enforceability under the law of that jurisdiction of any other provision in or obligation under this permanent Global Note, or (ii) the validity, legality or enforceability under the law of any other jurisdiction of that or any other provision in or obligation under this permanent Global Note.

13.
GOVERNING LAW

This permanent Global Note and any non-contractual obligations arising out of or in connection with it are governed by, and construed in accordance with, English law.

IN WITNESS whereof the Issuer has caused this permanent Global Note to be signed by a person duly authorised on its behalf.

PartnerRe Ireland Finance DAC

By: ............................................
(Duly authorised) Issued on 15 September 2016.

CERTIFICATE OF AUTHENTICATION

This is the permanent Global Note described in the Agency Agreement By or on behalf of
BNP Paribas Securities Services, Luxembourg Branch as Fiscal Agent (without recourse, warranty or liability)

...................................................


CERTIFICATE OF EFFECTUATION

Effectuated without recourse, warranty or liability by Euroclear Bank S.A./N.V.




as common safe-keeper


By: ............................................
Note: An investment in the Notes does not have the status of a bank deposit in Ireland and is not within the scope of the deposit protection scheme operated by the Central Bank of Ireland. The Issuer is not regulated or authorised by the Central Bank of Ireland by virtue of issuing the Notes.







SCHEDULE 2

FORM OF DEFINITIVE NOTE
PART 1
FORM OF DEFINITIVE NOTE AND COUPON

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

(Face of Note)

000000
XS1489391109
00 00000

PartnerRe Ireland Finance DAC
(a designated activity company limited by shares incorporated with limited liability under the laws of the Republic of Ireland)

€750,000,000
1.25 per cent. Guaranteed Notes due 15 September 2026 unconditionally and irrevocably guaranteed
as to payment of principal and interest by

PartnerRe Ltd.
(incorporated with limited liability under the laws of Bermuda)

The issue of the Notes was authorised by a resolution of the Board of Directors of PartnerRe Ireland Finance DAC (the Issuer) passed on 9 September 2016 and the giving of the guarantee in respect of the Notes was authorised by a resolution of the Board of Directors of PartnerRe Ltd. (the Guarantor) passed on 22 August 2016.

This Note forms one of a series of Notes issued as bearer Notes in the denominations of €100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000 in an aggregate principal amount of €750,000,000.

The Issuer for value received and subject to and in accordance with the Conditions endorsed hereon hereby




promises to pay to the bearer on 15 September 2026 (or on such earlier date as the principal sum (as determined under the Conditions) may become repayable under the said Conditions) the principal sum of:

€[relevant denomination] (l euro)

together with interest on the principal amount of €[relevant denomination] at the rate of 1.25 per cent. per annum payable annually in arrear on 15 September and together with such other amounts as may be payable, all subject to and under the Conditions.

The Notes are issued pursuant to an Agency Agreement (the Agency Agreement) dated 15 September 2016 between, among others, the Issuer, the Guarantor and BNP Paribas Securities Services, Luxembourg Branch as Fiscal Agent. Payments of principal and interest in respect of the Notes are unconditionally and
irrevocably guaranteed by the Guarantor as provided in a guarantee (the Guarantee) dated 15 September 2016 entered into by the Guarantor. The Notes have the benefit of, and are subject to, the provisions contained in the Agency Agreement, the Guarantee and the Conditions.

If any provision in or obligation under this Note is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair (i) the validity, legality or enforceability under the law of that jurisdiction of any other provision in or obligation under this Note, or (ii) the validity, legality or enforceability under the law of any other jurisdiction of that or any other provision in or obligation under this Note.

Neither this Note nor any of the Coupons relating to this Note shall become valid or enforceable for any purpose unless and until this Note has been authenticated by or on behalf of the Fiscal Agent.

IN WITNESS WHEREOF this Note [and the Coupons relating to this Note] [has] [have] been executed on behalf of the Issuer.

Dated as of [l]

Issued in [London, England].

PartnerRe Ireland Finance DAC

By:


Note: An investment in the Notes does not have the status of a bank deposit in Ireland and is not within the scope of the deposit protection scheme operated by the Central Bank of Ireland. The Issuer is not regulated or authorised by the Central Bank of Ireland by virtue of issuing the Notes.




































(Reverse of Note)

CONDITIONS OF THE NOTES

(as set out in Part 2 of this Schedule 2)

FISCAL AND PRINCIPAL PAYING AGENT

BNP Paribas Securities Services, Luxembourg Branch 60, avenue J.F. Kennedy, L-1855
Luxembourg

and/or such other or further Fiscal Agent or Paying Agents and/or specified offices as may from time to time be appointed by the Issuer and notice of which has been given to the Noteholders.

FORM OF COUPON

(Face of Coupon)

PartnerRe Ireland Finance DAC
€750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026
unconditionally and irrevocably guaranteed by
PartnerRe Ltd.


This Coupon relating to a Note payable in the denomination of €[relevant denomination] is payable to bearer, separately negotiable and subject to the
Conditions of the Notes
Coupon for
€[] per €1,000 due on
[], []

[[PartnerRe Ireland Finance DAC] By:    ]





ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.

00 000000
XS1489391109
000000

(Reverse of Coupon)

FISCAL AND PRINCIPAL PAYING AGENT:
BNP Paribas Securities Services, Luxembourg Branch.

PART 2
CONDITIONS OF THE NOTES

The €750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026 (the Notes) of PartnerRe Ireland Finance DAC (the Issuer) are issued subject to and with the benefit of an Agency Agreement dated 15 September 2016 (such agreement as amended and/or supplemented and/or restated from time to time, the Agency Agreement) made between the Issuer, PartnerRe Ltd. (the Guarantor) as guarantor, BNP Paribas Securities Services, Luxembourg Branch as fiscal agent and principal paying agent (the Fiscal Agent) and the other initial paying agents named in the Agency Agreement (together with the Fiscal Agent, the Paying Agents). The holders of the Notes (the Noteholders) and the holders of the interest coupons appertaining to the Notes (the Couponholders and the Coupons respectively) are entitled to the benefit of a Deed of Covenant (the Deed of Covenant) dated 15 September 2016 and made by the Issuer. The original of the Deed of Covenant is held by the Common Safekeeper (as defined below) for Euroclear and Clearstream, Luxembourg (each as defined below).

The statements in these Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Agency Agreement. Copies of the Agency Agreement and the Deed of Covenant are available for inspection during normal business hours by the Noteholders and Couponholders at the specified office of each of the Paying Agents. The Noteholders and the Couponholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement and the Deed of Covenant applicable to them. References in these Conditions to the Fiscal Agent and the Paying Agents shall include any successor appointed under the Agency Agreement.

1.
FORM, DENOMINATION AND TITLE

1.1
Form and Denomination

The Notes are in bearer form, serially numbered, in the denominations of €100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000 each with Coupons attached on issue.

1.2
Title

(a)
Title to the Notes and to the Coupons will pass by delivery.

(b)
Notes shall not be physically delivered in Belgium except to a clearing system, a depositary or other institution for the purpose of their immobilisation in accordance with article 4 of the Belgian Law of 14 December 2005.

1.3
Holder Absolute Owner





The Issuer, the Guarantor and any Paying Agent will (except as otherwise required by law) deem and treat the bearer of any Note or Coupon as the absolute owner for all purposes (whether or not the Note or Coupon shall be overdue and notwithstanding any notice of ownership or writing on the Note or Coupon or any notice of previous loss or theft of the Note or Coupon) and shall not be required to obtain any proof thereof or as to the identity of such bearer.

2.
STATUS OF THE NOTES

The Notes and the Coupons are direct, unconditional unsecured obligations of the Issuer and rank and will rank pari passu, without any preference among themselves, with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, but, in the event of
insolvency, only to the extent permitted by applicable laws relating to creditors' rights. The Notes will be effectively subordinated to all existing and future obligations (including to policyholders, trade creditors, debt holders and taxing authorities) of any subsidiaries of the Issuer.

3.
GUARANTEE

3.1
Guarantee

The payment of the principal and interest in respect of the Notes has been unconditionally and irrevocably guaranteed by the Guarantor under a guarantee (the Guarantee) dated 15 September 2016 and executed by the Guarantor.

3.2
Status of the Guarantee

The obligations of the Guarantor under the Guarantee constitute direct, unconditional and unsecured obligations of the Guarantor and rank and will rank pari passu with all other outstanding unsecured and unsubordinated obligations of the Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors' rights. The Guarantor’s obligations under the Guarantee will be effectively subordinated to all existing and future obligations (including to policyholders, trade creditors, debt holders and taxing authorities) of the Guarantor’s subsidiaries, other than the Issuer.

The original of the Guarantee is held by the Fiscal Agent on behalf of, and copies are available during normal business hours for inspection by, the Noteholders and Couponholders at its specified office.

On an unconsolidated basis, the Guarantor’s indebtedness as of 30 June 2016 was approximately
$2,215 million, with such obligations ranking equal to the Guarantee. As of 30 June 2016, the Guarantor’s subsidiaries had $14,548 million of outstanding liabilities (including policyholder liabilities on a consolidated basis) that rank senior to the Guarantee.

4.
INTEREST

4.1
Interest Rate and Interest Payment Dates

The Notes bear interest on their outstanding principal amount from and including 15 September 2016 at the rate of 1.25 per cent. per annum, payable annually in arrear on 15 September in each year (each an Interest Payment Date). The first payment (representing a full year's interest) shall be made on 15 September 2017.

4.2
Interest Accrual

Each Note will cease to bear interest from and including its due date for redemption unless, upon due presentation, payment of the principal in respect of the Note is improperly withheld or refused or unless




default is otherwise made in respect of payment. In such event, interest will continue to accrue until whichever is the earlier of:

(a)
the date on which all amounts due in respect of such Note have been paid; and

(b)
five days after the date on which the full amount of the moneys payable in respect of such Notes has been received by the Fiscal Agent and notice to that effect has been given to the Noteholders in accordance with Condition 11 (Notices).
4.3
Calculation of Broken Interest

When interest is required to be calculated in respect of a period of less than a full year, it shall be calculated by applying the rate of 1.25 per cent. per annum to each €1,000 principal amount of Notes (the Calculation Amount) and on the basis of (a) the actual number of days in the period from and including the date from which interest begins to accrue (the Accrual Date) to but excluding the date on which it falls due divided by (b) the actual number of days from and including the Accrual Date to but excluding the next following Interest Payment Date. The resultant figure shall be rounded to the nearest cent, half a cent being rounded upwards. The interest payable in respect of a Note shall be the product of such rounded figure and the amount by which the Calculation Amount is multiplied to reach the denomination of the relevant Note, without any further rounding.

5.
PAYMENTS

5.1
Payments in respect of Notes

Payments of principal and interest in respect of each Note will be made against presentation and surrender (or, in the case of part payment only, endorsement) of the Note, except that payments of interest due on an Interest Payment Date will be made against presentation and surrender (or, in the case of part payment only, endorsement) of the relevant Coupon, in each case at the specified office outside the United States and its possessions of any of the Paying Agents.

5.2
Method of Payment

Payments will be made (i) by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee and maintained outside the United States and its possessions or (ii) at the option of the payee, by euro cheque (which in no event shall be mailed to an address in the United States or its possessions).

5.3
Missing Unmatured Coupons

Each Note should be presented for payment together with all relative unmatured Coupons, failing which the full amount of any relative missing unmatured Coupon (or, in the case of payment not being made in full, that proportion of the full amount of the missing unmatured Coupon which the amount so paid bears to the total amount due) will be deducted from the amount due for payment. Each amount so deducted will be paid in the manner mentioned above against presentation and surrender (or, in the case of part payment only, endorsement) of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 7 (Taxation)) in respect of the relevant Note (whether or not the Coupon would otherwise have become void pursuant to Condition 8 (Prescription)) or, if later, five years after the date on which the Coupon would have become due, but not thereafter.

5.4
Payments subject to applicable laws

Payments in respect of the Notes are subject in all cases to any fiscal or other laws and regulations, and any other directives, agreements and administrative practices and procedures of fiscal and other authorities in relation to tax, anti-money laundering and other requirements which may apply to the




payment of amounts due in respect of the Notes (including, without limitation, any withholding or deduction arising under or in connection with FATCA), but without prejudice to the provisions of Condition 7 (Taxation).

5.5
Payment only on a Presentation Date

(a)
A holder shall be entitled to present a Note or Coupon for payment only on a Presentation Date and shall not, except as provided in Condition 4 (Interest), be entitled to any further interest or other payment if a Presentation Date is after the due date.

Presentation Date means a day which (subject to Condition 8 (Prescription)):

(i)
is or falls after the relevant due date;

(ii)
is a Business Day (as defined below) in the place of the specified office of the Paying Agent at which the Note or Coupon is presented for payment; and

(iii)
in the case of payment by credit or transfer to a euro account as referred to above, is a TARGET2 Settlement Day (as defined below).

(b)
In this Condition, Business Day means, in relation to any place, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in that place and TARGET2 Settlement Day means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System is open.

5.6
Initial Paying Agents

(a)
The names of the initial Paying Agents and their initial specified offices are set out at the end of these Conditions. The Issuer and the Guarantor reserve the right at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents provided that:

(i)
there will at all times be a Fiscal Agent;

(ii)
so long as the Notes are listed on any stock exchange or admitted to listing by any other relevant authority, there will at all times be at least one Paying Agent (which may be the Fiscal Agent) having a specified office in the place required by the rules and regulations of the relevant Stock Exchange or any other relevant authority; and

(iii)
there will at all times be a Paying Agent in a jurisdiction within Europe, other than the jurisdiction in which the Issuer is incorporated.

(b)
Notice of any variation, termination, appointment and/or of any changes in specified offices will be given to the Noteholders promptly by the Issuer in accordance with Condition 11 (Notices).

6.
REDEMPTION AND PURCHASE

6.1
Redemption at Maturity

Unless previously redeemed or purchased and cancelled as provided below, the Issuer will redeem the Notes at their principal amount on 15 September 2026 (the Maturity Date).

6.2
Redemption for Taxation Reasons





Subject to Condition 6.7 (Conditions to Redemption or Repurchase),

(a)
as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction (as defined in Condition 7 (Taxation)), or any change in or amendment to the application or official interpretation of such laws or regulations of a Relevant Jurisdiction,
which change or amendment is announced, enacted or becomes effective on or after 13 September 2016, on the next Interest Payment Date either (i) the Issuer or the Guarantor has become obligated or would be required to pay additional amounts as provided or referred to in Condition 7 (Taxation) or (ii) the Guarantor would be unable for reasons outside its control to procure payment by the Issuer and in making payment itself would be required to pay such additional amounts; and

(b)
the requirement cannot be avoided by the Issuer or, as the case may be, the Guarantor taking reasonable measures available to it,

the Issuer may at its option, having given not less than 30 nor more than 60 days' notice to the Noteholders in accordance with Condition 11 (Notices) (which notice shall be irrevocable), redeem all the Notes, but not some only, at any time at their principal amount together with interest accrued to but excluding the date of redemption, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor would be obliged to pay such additional amounts, were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Fiscal Agent to make available at its specified offices to the Noteholders (i) a certificate signed by two directors of the Issuer or, as the case may be, two directors of the Guarantor stating the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and (ii) an opinion of independent legal advisers of recognised standing to the effect that the Issuer or, as the case may be, the Guarantor has or will become obliged to pay such additional amounts as a result of the change or amendment.

6.3
Redemption at the Option of the Issuer

Subject to Condition 6.7 (Conditions to Redemption or Repurchase), 85 per cent. or more in aggregate principal amount of the Notes have been redeemed or repurchased and cancelled in accordance with these Conditions, the Issuer may, having given:

(a)
    not less than 15 nor more than 30 days’ notice to the Noteholders in accordance with Condition 11 (Notices); and

(b)
notice to the Fiscal Agent not less than 15 days before the giving of the notice referred to in
i.
above,

(which notices shall be irrevocable and shall specify the date fixed for redemption), redeem all (but not some only) of the remaining Notes on the following Interest Payment Date at their principal amount.

6.4
Purchases

Subject to Condition 6.7 (Conditions to Redemption or Repurchase), the Issuer, the Guarantor or any of the Guarantor’s subsidiaries may at any time purchase Notes (provided that all unmatured Coupons appertaining to the Notes are purchased with the Notes) in any manner and at any price. Such Notes may be held, reissued, resold or, at the option of the purchaser, surrendered to any Paying Agent for cancellation.

6.5
Cancellations





All Notes which are redeemed by or on behalf of the Issuer or the Guarantor or any of the Guarantor’s subsidiaries may, at the option of the Issuer or Guarantor, forthwith be cancelled, together with all relative unmatured Coupons attached to the Notes or surrendered with the Notes.
All Notes so redeemed and cancelled pursuant to this Condition, and any Notes purchased and surrendered for cancellation pursuant to Condition 6.4 (Purchases) shall be forwarded to the Fiscal Agent and may not be reissued or resold.

6.6
Notices Final

Upon the expiry of any notice as is referred to in Condition 6.2 (Redemption for Taxation Reasons), the Issuer shall be bound to redeem the Notes to which the notice refers in accordance with the terms of such Condition.

6.7
Conditions to Redemption or Repurchase

Any redemption or purchase of the Notes that is within five years of the Issue Date is subject to the Issuer having obtained the consent or non-objection of the Relevant Regulator (if then required by the Relevant Rules). A certificate signed by two Directors of the Guarantor confirming such compliance delivered to the Fiscal Agent shall be conclusive and sufficient evidence thereof and shall be binding on the Noteholders.

For purposes of these Conditions:

(a)
Relevant Regulator means the Bermuda Monetary Authority (or any successor which carries on the role of regulator of financial services companies generally in Bermuda);

(b)
Relevant Rules means the Bermuda Insurance Act and any other legislation, rules or regulations of Bermuda or of the Bermuda Monetary Authority from time to time (including, but not limited to, the Bermuda Insurance (Eligible Capital) Rules 2012, as amended) relating to the characteristics, features or criteria of own funds or capital resources and which are, at such time, applicable to the Guarantor.

7.
TAXATION

7.1
Payment without Withholding

All payments in respect of the Notes by or on behalf of the Issuer or the Guarantor (each, a “Payor”) shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) imposed or levied by or on behalf of any authority having the power to tax, unless the withholding or deduction of the Taxes is required by law. In the event that a Payor is so required to withhold or deduct any Taxes imposed or levied by or on behalf of a Relevant Jurisdiction from a payment in respect of the Notes, the Issuer or, as the case may be, the Guarantor will pay such additional amounts as shall be necessary in order that the net amounts received by the Noteholders and Couponholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Notes or, as the case may be, Coupons in the absence of the withholding or deduction; except that no additional amounts shall be payable in relation to any payment in respect of any Note or Coupon:

(a)
for Taxes in respect of such Note or Coupon by reason of such Noteholder or Couponholder (or any beneficial owner of any interest in, or rights in respect of, such Note or Coupon) having a present or former connection with the Relevant Jurisdiction other than a mere holding of the Note or Coupon or the receipt of payments in respect thereof;






(b)
presented for payment in the Republic of Ireland or Bermuda;
(c)
presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by satisfying any statutory requirement or by making a declaration or any other statement, including but not limited to a declaration of residence or non- residence or other similar claim for exemption;


(d)
presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note and/or Coupon to another Paying Agent;


(e)
presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that the holder thereof would have been entitled to an additional amount on presenting the same for payment on such thirtieth day assuming that day to have been a Presentation Date (as defined in Condition 5.5 (Payment only on a Presentation Date));

(f)
where such withholding or deduction is required pursuant to Section 1471(b) of the US Internal Revenue Code of 1986, as amended (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any amended or successor version), any current or future regulations or agreements (including any intergovernmental agreements) thereunder, official interpretations thereof or any law, regulation or official interpretation implementing any of the foregoing; or

(g)
any combination of the above.

7.2
Interpretation

In these Conditions:

(a)
Relevant Date means the date on which the payment first becomes due but, if the full amount of the money payable has not been received by the Fiscal Agent on or before the due date, it means the date on which, the full amount of the money having been so received, notice to that effect has been duly given to the Noteholders by the Issuer in accordance with Condition 11 (Notices); and

(b)
Relevant Jurisdiction means the Republic of Ireland or any political subdivision or any authority thereof or therein having power to tax (in the case of payments by the Issuer) or Bermuda or any political subdivision or any authority thereof or therein having power to tax (in the case of payments by the Guarantor).

7.3
Additional Amounts

Any reference in these Conditions to any amounts in respect of the Notes shall be deemed also to refer to any additional amounts which may be payable under this Condition.

8.
PRESCRIPTION

Notes and Coupons will become void unless presented for payment within periods of 10 years (in the case of principal) and 5 years (in the case of interest) from the Relevant Date in respect of the Notes or, as the case may be, the Coupons, subject to the provisions of Condition 5 (Payments).

9.
EVENTS OF DEFAULT





9.1
Events of Default

The holder of any Note may give notice to the Issuer that the Note is, and it shall accordingly forthwith become, immediately due and repayable at its principal amount, together with interest accrued to the date of repayment, if any of the following events (Events of Default) shall have occurred and be continuing:

(a)
if default is made in the payment of any principal or interest due in respect of the Notes or any of them and, in the case of interest, the default continues for a period of 10 days; or

(b)
if the Issuer or the Guarantor fails to perform or observe any of its other obligations under these Conditions or the Guarantee and (except in any case where the failure is incapable of remedy, when no continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 days following the service by any Noteholder on the Issuer or the Guarantor (as the case may be) of written notice requiring the same to be remedied; or

(c)
if (i) any Indebtedness for Borrowed Money (as defined below) of the Issuer or the Guarantor becomes due and repayable prematurely by reason of an event of default (however described); (ii) the Issuer or the Guarantor fails to make any payment in respect of any Indebtedness for Borrowed Money on the due date for payment (as extended by any applicable grace and/or remedy period); (iii) any security given by the Issuer or the Guarantor for any Indebtedness for Borrowed Money becomes enforceable; or (iv) default is made by the Issuer or the Guarantor in making any payment due under any guarantee and/or indemnity given by it in relation to any Indebtedness for Borrowed Money of any other person (as extended by any applicable grace and/or remedy period); provided however, that no such event described in sub-clauses (i) - (iv) above shall constitute an Event of Default where the Issuer or the Guarantor is contesting in good faith by, in the reasonable opinion of the Issuer or the Guarantor, as the case may be, appropriate means its liability to make payment thereunder or unless the aggregate Indebtedness for Borrowed Money relating to all such events which shall have occurred and be continuing shall amount to at least
€100,000,000 (or its equivalent in any other currency); or

(d)
if any order is made by any competent court or resolution is passed for the winding up or dissolution of the Issuer or the Guarantor save for the purposes of reorganisation on terms previously approved by an Extraordinary Resolution of the Noteholders; or

(e)
if the Issuer or the Guarantor ceases or threatens to cease to carry on the whole or a substantial part of its business, save for the purposes of reorganisation on terms previously approved by an Extraordinary Resolution of the Noteholders, or the Issuer or the Guarantor stops or threatens to stop payment of, or is unable to, or admits inability to, pay its debts (or any class of its debts) as they fall due or is deemed unable to pay its debts pursuant to or for the purposes of any applicable law, or is adjusted or found bankrupt or insolvent; or

(f)
if (i) proceedings are initiated against the Issuer or the Guarantor under any applicable liquidation, insolvency, composition, reorganisation or other similar laws or an application is made (or documents filed with a court) for the appointment of an administrative or other receiver, manager, administrator, liquidator or other similar official, or an administrative or other receiver, manager, administrator, liquidator or other similar official is appointed, in relation to the Issuer or the Guarantor or, as the case may be, in relation to the whole or a substantial part of the undertaking or assets of any of them or an encumbrancer takes possession of the whole or a substantial part of the undertaking or assets of any of them, or a
distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out or put in force against the whole or a substantial part of the undertaking or assets of any of




them, and (ii) in any such case (other than the appointment of an administrator) is not discharged, stayed or otherwise removed within 60 days; or

(g)
if the Issuer or the Guarantor initiates or consents to judicial proceedings relating to itself under any applicable liquidation, insolvency, composition, reorganisation or other similar laws or makes a conveyance or assignment for the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors) or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors); or

(h)
if the Guarantee ceases to be, or is claimed by the Issuer or the Guarantor not to be, in full force and effect; or

(i)
if the Issuer ceases to be a subsidiary wholly-owned and controlled, directly or indirectly, by the Guarantor; or

(j)
if one or more final judgment(s) or court order(s) for the payment of any amount in excess of
€100,000,000 (or its equivalent in any other currency or currencies) is rendered against the Issuer or the Guarantor and continue(s) unsatisfied and unstayed for a period of 60 days after the date(s) thereof or, if later, the date therein specified for payment or is not otherwise being appropriately contested in good faith; or

(k)
if it is or will become unlawful for the Issuer or the Guarantor to perform or comply with any of their respective obligations under or in respect of the Notes or the Agency Agreement or any such obligations cease or will cease to be legal, valid, binding and enforceable.

9.2
Interpretation

For the purposes of this Condition, Indebtedness for Borrowed Money means any indebtedness (whether being principal, premium, interest or other amounts), other than indebtedness which is non- recourse to the Issuer or the Guarantor, as the case may be, for or in respect of any borrowed money or any liability under or in respect of any acceptance or acceptance credit or any notes, bonds, debentures, debenture stock, loan stock or other securities.

10.
REPLACEMENT OF NOTES AND COUPONS

Should any Note or Coupon be lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Fiscal Agent upon payment by the claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

11.
NOTICES

11.1
Notices to the Noteholders

All notices to the Noteholders will be valid if published in a leading English language daily newspaper published in London and, so long as the Notes are admitted to trading on, and listed on the Official List of, the Irish Stock Exchange and the rules and regulations of such exchange so require, if an announcement is released by the Issuer through the company's announcement office of the Irish Stock Exchange. It is expected that publication in a newspaper will normally be made in the Financial Times. The Issuer shall also ensure that notices are duly published in a manner which
complies with the rules and regulations of any stock exchange or other relevant authority on which the Notes are for the time being listed. Any such notice will be deemed to have been given (i) if published in a leading English language daily newspaper published in London, on the date of the first publication




or, where required to be published in more than one newspaper, on the date of the first publication in all required newspapers and (ii) if released by the Issuer through the company's announcement office of the Irish Stock Exchange, on the date of release by the Irish Stock Exchange. Couponholders will be deemed for all purposes to have notice of the contents of any notice given to the Noteholders in accordance with this paragraph.

11.2
Notices from the Noteholders

Notices to be given by any Noteholder shall be in writing and given by lodging the same, together with the relative Note or Notes, with the Fiscal Agent or, if the Notes are held in a clearing system, may be given through the clearing system in accordance with its standard rules and procedures.

12.
MEETINGS OF NOTEHOLDERS AND MODIFICATION

12.1
Meetings of Noteholders

The Agency Agreement contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the modification by Extraordinary Resolution of any of these Conditions or the Guarantee or any of the provisions of the Agency Agreement. The quorum at any meeting for passing an Extraordinary Resolution will be one or more persons present holding or representing more than 50 per cent. in principal amount of the Notes for the time being outstanding, or at any adjourned such meeting one or more persons present whatever the principal amount of the Notes held or represented by him or them, except that at any meeting the business of which includes any matter defined in the Agency Agreement as a Basic Terms Modification, including the modification of the Guarantee or certain of these Conditions (including the date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes), the necessary quorum for passing an Extraordinary Resolution will be one or more persons present holding or representing not less than two-thirds, or at any adjourned meeting not less than one-third, of the principal amount of the Notes for the time being outstanding. The Agency Agreement provides that (i) a resolution passed at a meeting duly convened and held in accordance with the Agency Agreement by a majority consisting of not less than three-fourths of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of the holders of not less than three-fourths in principal amount of the Notes for the time being outstanding or (iii) consent given by way of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Fiscal Agent) by or on behalf of the holders of not less than three-fourths in principal amount of the Notes for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolution of the Noteholders. An Extraordinary Resolution passed by the Noteholders will be binding on all Noteholders, whether or not they are present at any meeting and whether or not they voted on the resolution, and on all Couponholders.

12.2
Modification

(a)
The Fiscal Agent, and, the Issuer and the Guarantor may agree, without the consent of the Noteholders or Couponholders, to:

(i)
any modification of, the Notes, the Coupons or any of the provisions of the Agency Agreement which is of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory provisions of the law; or
(ii)
any modification (except a Basic Terms Modification (being a matter in respect of which an increased quorum is required as mentioned above)) of the Notes, the Coupons or the Agency Agreement which is not prejudicial to the interests of the Noteholders.

(b)
Any modification shall be binding on the Noteholders and the Couponholders and, unless the Fiscal Agent agrees otherwise, any modification shall be notified by the Issuer to the Noteholders as soon as




practicable thereafter in accordance with Condition 11 (Notices).

13.
SUBSTITUTION

13.1
Conditions Precedent to Substitution

The Issuer may, without the consent of the Noteholders, be replaced and substituted by the Guarantor as principal debtor (the Substituted Debtor) in respect of the Notes provided that:

(a)
a deed poll in or substantially in the form scheduled to the Agency Agreement and such other documents (if any) shall be executed by the Substituted Debtor as may be necessary to give full effect to the substitution (together, the Documents) and (without limiting the generality of the foregoing) pursuant to which the Substituted Debtor shall undertake in favour of each Noteholder to be bound by the Conditions of the Notes and the provisions of the Agency Agreement and the Deed of Covenant as fully as if the Substituted Debtor had been named in the Notes and the Agency Agreement and the Deed of Covenant as the principal debtor in respect of the Notes in place of the Issuer (or any previous substitute);

(b)
without prejudice to the generality of Condition 13.1(a) above, where the Substituted Debtor is incorporated, domiciled or resident for taxation purposes in a territory other than the Republic of Ireland, the Documents shall contain a covenant by the Substituted Debtor and/or such other provisions as may be necessary to ensure that each Noteholder has the benefit of a covenant in terms corresponding to the provisions of Condition 7 (Taxation) with the substitution for the references to the Republic of Ireland references to the territory or territories in which the Substituted Debtor is incorporated, domiciled and/or resident for taxation purposes;

(c)
the Documents shall contain a warranty and representation by the Substituted Debtor (i) that the Substituted Debtor and the Issuer has obtained all necessary governmental and regulatory approvals and consents for such substitution and for the performance by the Substituted Debtor of its obligations under the Documents and that all such approvals and consents are in full force and effect, and (ii) that the obligations assumed by the Substituted Debtor under the Documents are all legal, valid and binding in accordance with their respective terms;

(d)
each stock exchange on which the Notes are listed shall have confirmed that following the proposed substitution of the Substituted Debtor the Notes will continue to be listed on such stock exchange;

(e)
the Substituted Debtor shall have delivered to the Fiscal Agent or procured the delivery to the Fiscal Agent of a legal opinion from a leading firm of Bermuda lawyers to the effect that the Documents constitute legal, valid and binding obligations of the Substituted Debtor, such opinion to be dated not more than seven days prior to the date of the substitution of the Substituted Debtor for the Issuer and to be available for inspection during normal business hours by Noteholders at the specified office of the Fiscal Agent;

(f)
the Issuer shall have delivered to the Fiscal Agent or procured the delivery to the Fiscal Agent of a legal opinion from a leading firm of the Republic of Ireland lawyers to the effect that the Documents constitute legal, valid and binding obligations of the Issuer, such opinion
to be dated not more than seven days prior to the date of substitution of the Substituted Debtor for the Issuer and to be available for inspection during normal business hours by Noteholders at the specified office of the Fiscal Agent;

(g)
the Issuer shall have delivered to the Fiscal Agent or procured the delivery to the Fiscal Agent of a legal opinion from a leading firm of English lawyers to the effect that the Documents constitute legal, valid and binding obligations of the parties thereto under English law, such




opinion to be dated not more than seven days prior to the date of substitution of the Substituted Debtor for the Issuer and to be available for inspection during normal business hours by Noteholders at the specified office of the Fiscal Agent; and

(h)
the Substituted Debtor shall have appointed the process agent appointed by the Issuer in Condition 15 (Governing Law and Submission to Jurisdiction) or another person with an office in England as its agent in England to receive service of process on its behalf in relation to any legal action or proceedings arising out of or in connection with the Notes.

13.2
Assumption by Substitute Debtor

Upon execution of the Documents as referred to in Condition 13.1 (Conditions Precedent to Substitution) above, the Substituted Debtor shall be deemed to be named in the Notes as the principal debtor in place of the Issuer (or of any previous substitute under these provisions) and the Notes shall thereupon be deemed to be amended to give effect to the substitution. The execution of the Documents shall operate to release the Issuer as issuer (or such previous substitute as aforesaid) from all of its obligations as principal debtor in respect of the Notes.

13.3
Deposit of Documents

The Documents shall be deposited with and held by the Fiscal Agent for so long as any Note remains outstanding and for so long as any claim made against the Substituted Debtor by any Noteholder in relation to the Notes or the Documents shall not have been finally adjudicated, settled or discharged. The Substituted Debtor shall acknowledge in the Documents the right of every Noteholder to production of the Documents for the enforcement of any of the Notes or the Documents.

13.4
Notice of Substitution

Not less than 15 days after execution of the Documents, the Substituted Debtor shall give notice thereof to the Noteholders in accordance with Condition 11 (Notices).

14
FURTHER ISSUES

The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further notes (Further Notes), having terms and conditions the same as those of the Notes, or the same except for the amount and date of the first payment of interest, which may be consolidated and form a single series with the outstanding Notes. If any such Further Notes are issued pursuant to this Condition 14, references in the Conditions to the “Notes” shall include any such Further Notes.

15
GOVERNING LAW AND SUBMISSION TO JURISDICTION

15.1
Governing Law

The Agency Agreement, the Guarantee, the Deed of Covenant, the Notes, the Coupons and any non- contractual obligations arising out of or in connection with the Agency Agreement, the Guarantee,
the Deed of Covenant, the Notes and the Coupons are governed by and construed in accordance with English law.

15.2
Submission to Jurisdiction

(a)
Subject to Condition 15.2(c) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with the Notes or the Coupons, including any dispute as to their existence, validity, interpretation, performance, breach or termination or the consequences of their nullity and any dispute relating to any non-contractual obligations arising out of or in connection with the Notes and/




or the Coupons (a Dispute) and each of the Issuer, the Guarantor and any Noteholders and Couponholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts.

(b)
For the purposes of this Condition, the Issuer waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.

(c)
To the extent allowed by law, the Noteholders and the Couponholders may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions.

15.3
Appointment of Process Agent

The Issuer and the Guarantor each irrevocably appoint Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent for service of process in any proceedings before the English courts in relation to any Dispute and agree that, in the event of Law Debenture Corporate Services Limited being unable or unwilling for any reason so to act, they will each immediately appoint another person as its agent for service of process in England in respect of any Dispute. The Issuer and Guarantor each agree that failure by a process agent to notify it of any process will not invalidate service. Nothing in this Condition shall affect the right to serve process in any other manner permitted by law.

15.4
Other Documents and the Guarantor

Each of the Issuer and, where applicable, the Guarantor have in the Agency Agreement, the Deed of Covenant and the Guarantee submitted to the jurisdiction of the English courts and appointed an agent in England for service of process, in terms substantially similar to those set out above.

15.5
Waiver of Trial by Jury

WITHOUT PREJUDICE TO CONDITION 15.2 THE ISSUER WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH THE NOTES AND THE COUPONS. THESE CONDITIONS MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.

16
RIGHTS OF THIRD PARTIES

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

SCHEDULE 3

FORM OF DEED OF COVENANT

THIS DEED OF COVENANT is made on 15 September 2016 by PartnerRe Ireland Finance DAC (the Issuer) in favour of the account holders or participants specified below of Clearstream Banking S.A. (Clearstream, Luxembourg) and/or Euroclear Bank S.A./N.V. (Euroclear) (each a Clearing System).

WHEREAS:

(A)
The Issuer has entered into an Agency Agreement (the Agency Agreement, which expression includes the same as it may be amended, supplemented, novated or restated from time to time) dated 15 September 2016 between the Issuer, PartnerRe Ltd. as guarantor (the Guarantor), BNP Paribas Securities Services, Luxembourg Branch as fiscal agent (the Fiscal Agent) and the other agents named therein in relation




to the issue of €750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026 (the Notes). The terms and conditions of the Notes (the Conditions) are set out in Schedule 2 to the Agency Agreement.

(B)
Payments of principal and interest in respect of the Notes are unconditionally and irrevocably guaranteed by the Guarantor as provided in a guarantee (the Guarantee) dated 15 September 2016 entered into by the Guarantor.

(C)
The Notes will be issued in bearer form and will initially be represented by, and comprised in, Global Notes (as defined in the Agency Agreement), in each case representing a certain number of underlying Notes (the Underlying Notes).

(D)
Each Global Note may, after issue, be deposited with a depositary for one or more Clearing Systems (each a Relevant Clearing System and together, the Relevant Clearing System). Upon any deposit of a Global Note the Underlying Notes represented by the Global Note will be credited to a securities account or securities accounts with the Relevant Clearing System. Any account holder with the Relevant Clearing System which has Underlying Notes credited to its securities account from time to time (other than any Relevant Clearing System which is an account holder of any other Relevant Clearing System) (each an Accountholder) will, subject to and in accordance with the terms and conditions and operating procedures or management regulations of the Relevant Clearing System, be entitled to transfer the Underlying Notes and (subject to and upon payment being made by the Issuer to the bearer in accordance with the terms of the Global Note) will be entitled to receive payments from the Relevant Clearing System calculated by reference to the Underlying Notes credited to its securities account.

(E)
In certain circumstances specified in each Global Note, the bearer of the Global Note will have no further rights under the Global Note (but without prejudice to the rights which any person may have pursuant to this Deed of Covenant). The time at which this occurs is referred to as the Relevant Time. In those circumstances, each Accountholder will, subject to and in accordance with the terms of this Deed and the Guarantee, acquire against the Issuer and the Guarantor all those rights which the Accountholder would have had if, prior to the Relevant Time, duly executed and authenticated definitive Notes had been issued in respect of its Underlying Notes and the definitive Notes were held and beneficially owned by the Accountholder.

NOW THIS DEED WITNESSES AS FOLLOWS:

1.
If at any time the bearer of the Global Note ceases to have rights under it in accordance with its terms, the Issuer covenants with each Accountholder that each Accountholder shall automatically acquire at the Relevant Time, without the need for any further action on behalf of any person, against
the Issuer all those rights which the Accountholder would have had if at the Relevant Time it held and beneficially owned executed and authenticated definitive Notes in respect of each Underlying Note represented by the Global Note which the Accountholder has credited to its securities account with the Relevant Clearing System at the Relevant Time.

The Issuer's obligation under this clause shall be a separate and independent obligation by reference to each Underlying Note which a Accountholder has credited to its securities account with the Relevant Clearing System and the Issuer agrees that a Accountholder may assign its rights under this Deed in whole or in part.

2.
The records of the Relevant Clearing System shall be conclusive evidence of the identity of the Accountholders and the number of Underlying Notes credited to the securities account of each Accountholder. For these purposes a statement issued by the Relevant Clearing System stating:

(a)
the name of the Accountholder to which the statement is issued; and

(b)
the aggregate principal amount of Underlying Notes credited to the securities account of the




Accountholder as at the opening of business on the first day following the Relevant Time on which the Relevant Clearing System is open for business,

shall, in the absence of manifest error, be conclusive evidence of the records of the Relevant Clearing System at the Relevant Time.

3.
In the event of a dispute, the determination of the Relevant Time by the Relevant Clearing System shall (in the absence of manifest error) be final and conclusive for all purposes in connection with the Accountholders with securities accounts with the Relevant Clearing System.

4.
The Issuer undertakes in favour of each Accountholder that, in relation to any payment to be made by it under this Deed, it will comply with the provisions of Condition 7 (Taxation) of the Notes to the extent that they apply to any payments in respect of Underlying Notes as if those provisions had been set out in full in this Deed.

5.
The Issuer will pay any stamp and other similar duties or taxes, including interest and penalties, payable (i) under the laws of the Republic of Ireland or Bermuda in connection with the execution of this Deed and (ii) on any action taken reasonably and in good faith by any Accountholder to enforce the provisions of this Deed.

6.
The Issuer represents, warrants and undertakes to and with each Accountholder that it has all corporate power, and has taken all necessary corporate or other steps, to enable it to execute, deliver and perform this Deed, and that this Deed constitutes legal, valid and binding obligations of the Issuer enforceable in accordance with its terms subject to the laws of bankruptcy, insolvency, examinership and other laws affecting the rights of creditors generally, and general equitable principles (whether court-base or otherwise).

7.
This Deed shall take effect as a deed poll for the benefit of the Accountholders from time to time. This Deed shall be deposited with and held by the Common Safekeeper for Euroclear and Clearstream, Luxembourg until all the obligations of the Issuer under this Deed have been discharged in full.

8.
The Issuer acknowledges the right of every Accountholder to the production of, and the right of every Accountholder to obtain (upon payment of a reasonable charge) a copy of, this Deed, and further acknowledges and covenants that the obligations binding upon it contained in this Deed are owed to, and shall be for the account of, each and every Accountholder, and that each Accountholder shall be entitled severally to enforce those obligations against the Issuer.
9.
If any provision in or obligation under this Deed is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair (i) the validity, legality or enforceability under the law of that jurisdiction of any other provision in or obligation under this Deed, or (ii) the validity, legality or enforceability under the law of any other jurisdiction of that or any other provision in or obligation under this Deed.

10.
(a)    This Deed and any non-contractual obligations arising out of or in connection with it are governed by, and construed in accordance with, English law.

(b)
Subject to clause 10(d) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed, including any dispute as to its existence, validity, interpretation, performance, breach or termination or the consequences of its nullity and any dispute relating to any non-contractual obligations arising out of or in connection with it (a Dispute) and each of the Issuer and any Accountholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts.

(c)
For the purposes of this clause 10, the Issuer waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.





(d)
To the extent allowed by law, each Accountholder may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions.

(e)
The Issuer irrevocably appoints Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent under this Deed for service of process in any proceedings before the English courts in relation to any Dispute and agrees that, in the event of Law Debenture Corporate Services Limited being unable or unwilling for any reason so to act, it will immediately appoint another person as its agent for service of process in England in respect of any Dispute. The Issuer agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this clause shall affect the right to serve process in any other manner permitted by law.

(f)
WITHOUT PREJUDICE TO CLAUSES 10(b), 10(c) AND 10(d), THE ISSUER WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH THIS DEED. THIS DEED MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.

IN WITNESS whereof this Deed has been executed and delivered as a deed poll by the Issuer on the date which appears first on page 1.

SCHEDULE 4 FORM OF GUARANTEE
Guarantee of PartnerRe Ltd.

THIS GUARANTEE is given on 15 September 2016 by PartnerRe Ltd. (the Guarantor). WHEREAS:
(A)
The Guarantor has agreed to guarantee the obligations of PartnerRe Ireland Finance DAC (the Issuer) under (i) the €750,000,000 1.25 per cent. Guaranteed Notes due 15 September 2026 (the Notes) to be issued by the Issuer pursuant to an Agency Agreement (the Agency Agreement) dated
15 September 2016 between the Issuer, the Guarantor, BNP Paribas Securities Services, Luxembourg Branch as Fiscal Agent (the Fiscal Agent) and the other agents named therein and (ii) the Deed of Covenant executed by the Issuer on 15 September 2016 in respect of the Notes (the Deed of Covenant).

(B)
Terms defined in the Conditions of the Notes (the Conditions), the Agency Agreement and the Deed of Covenant and not otherwise defined in this Guarantee shall have the same meaning when used in this Guarantee.

NOW THIS DEED WITNESSES AS FOLLOWS:

1.
The Guarantor as primary obligor unconditionally and irrevocably:

(a)
guarantees to (i) the holder from time to time of each Note or Coupon and (ii) each Accountholder, by way of continuing guarantee the due and punctual payment of all amounts payable by the Issuer on or in respect of the Note or Coupon (including any additional amounts which may become payable under Condition 7 (Taxation) and the Deed of Covenant) as and when the same shall become due according to the Conditions and the Deed of Covenant; and

(b)
agrees that, if and each time that the Issuer fails to make any payments as and when the same become due, the Guarantor will on demand (without requiring the relevant Noteholder or Couponholder or Accountholder first to take steps against the Issuer or any other person) pay




to the relevant Noteholder or Couponholder, or as the case may be, the Accountholder the amounts (as to which the certificate of the relevant Noteholder or Couponholder, or as the case may be, the Accountholder shall in the absence of manifest error be conclusive) in the currency in which the amounts are payable by the Issuer under the Notes or the Deed of Covenant.

2.
If any sum which, although expressed to be payable by the Issuer under the Notes, Coupons or the Deed of Covenant is for any reason (whether or not now existing and whether or not now known or becoming known to the Issuer, the Guarantor or any relevant Noteholder, Couponholder and/or Accountholder) not recoverable from the Guarantor on the basis of a guarantee then (a) it will nevertheless be recoverable from it as if it were the sole principal debtors and will be paid by it to the relevant Noteholder, Couponholder and/or Accountholder on demand, and (b) as a separate and additional liability under this Guarantee the Guarantor agrees, as a primary obligation, to indemnify each relevant Noteholder, Couponholder and each Accountholder in respect of such sum by way of a full indemnity in the manner and currency as is provided for in the Notes and the Deed of Covenant, and to indemnify each relevant Noteholder, Couponholder and each Accountholder against all
losses, claims, costs, charges and expenses to which it may be subject or which it may incur in recovering such sum.

3.
If any payment received by any relevant Noteholder, Couponholder or Accountholder pursuant to the provisions of the Notes, Coupons or the Deed of Covenant shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer or, without limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or diminishing the liability of the Guarantor and this Guarantee shall continue to apply as if such payment had at all times remained owing by the Issuer and the Guarantor shall indemnify the relevant Noteholders, Couponholders and/or Accountholders (as the case may be) in respect thereof provided that the obligations of the Issuer and/or the Guarantor under this clause 3 shall, as regards each payment made to any relevant Noteholder, Couponholder or Accountholder which is avoided or set aside, be contingent upon such payment being reimbursed to the Issuer or other persons entitled through the Issuer.

4.
All payments by the Guarantor under this Guarantee shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) imposed or levied by or on behalf of any authority having the power to tax, unless the withholding or deduction of the Taxes is required by law. In the event that the Guarantor is so required to withhold or deduct any Taxes imposed or levied by or on behalf of a Relevant Jurisdiction from a payment under this Guarantee, the Guarantor will pay such additional amounts as shall be necessary in order that the net amounts received by the Noteholders, Couponholders and Accountholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Notes or, as the case may be, the Coupons, or the Deed of Covenant in the absence of the withholding or deduction; except that no additional amounts shall be payable with respect to any payment in respect of any Note or Coupon or the Deed of Covenant:

(a)
for Taxes in respect of such Note or Coupon or the Deed of Covenant by reason of such Noteholder, Couponholder or Accountholder (or any beneficial owner of any interest in, or rights in respect of, such Note or Coupon) having a present or former connection with the Relevant Jurisdiction other than a mere holding of the Note or Coupon or the receipt of payments in respect thereof; or

(b)
presented for payment in the Republic of Ireland or Bermuda;

(c)
presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by satisfying any statutory requirement or by making a declaration or any other statement, including but not limited to a declaration of residence or non- residence or other similar claim for exemption;





(d)
presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note and/or Coupon to another Paying Agent;

(e)
presented for payment more than 30 days after the Relevant Date except to the extent that the holder thereof would have been entitled to an additional amount on presenting the same for payment on such thirtieth day assuming that day to have been a Presentation Date;

(f)
where such withholding or deduction is required pursuant to Section 1471(b) of the US Internal Revenue Code of 1986, as amended (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any amended or successor version), any current or future regulations or agreements (including any intergovernmental agreements) thereunder, official interpretations thereof or any law, regulation or official interpretation implementing any of the foregoing; or
(g)
any combination of the above.

5.
The obligations of the Guarantor under this Guarantee shall not be affected by any matter or thing which but for this provision might operate to affect the obligations including, without limitation:

(a)
any time or indulgence granted to or composition with the Issuer or any other person;

(b)
the taking, variation, renewal or release of remedies or securities against the Issuer or any other person; or

(c)
any unenforceability, invalidity or irregularity.

6.
Where any discharge (whether in respect of the obligations of the Issuer or any security for the obligations of the Issuer or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be repaid on bankruptcy, liquidation or otherwise without limitation, the liability of the Guarantor under this Guarantee shall continue as if there had been no discharge or arrangement. The holder of any Note or Coupon or an Accountholder, acting in good faith, shall be entitled to concede or compromise any claim that any payment, security or other disposition is liable to avoidance or repayment.

7.
The Guarantor represents and warrants that:

(a)
the obligations of the Guarantor under this Guarantee constitute the direct, unconditional and (subject to the provisions of clause 6) unsecured obligations of the Guarantor and (subject as provided above) rank and will rank pari passu with all other outstanding unsecured and unsubordinated obligations of the Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors' rights; and

(b)
all necessary governmental consents and authorisations for the giving and implementation of this Guarantee have been obtained.

8.
The Guarantor shall be subrogated to all rights of the Noteholders, the Couponholders and the Accountholders, as the case may be, in respect of any amounts paid by the Guarantor pursuant to this Guarantee, provided however that, until all amounts which may be or become payable under the Notes, the Coupons and the Deed of Covenant have been irrevocably paid in full, the Guarantor shall not by virtue of this Guarantee be subrogated to any rights of any holder of any Note or Coupon or any Accountholder or claim in competition with such holders against the Issuer.

9.
This Guarantee shall enure for the benefit of the Noteholders, the Couponholders and the Accountholders




and shall be deposited with and held by the Fiscal Agent.

10.
If any provision in or obligation under this Guarantee is or becomes invalid, illegal or unenforceable in any respect under the law of any jurisdiction, that will not affect or impair (i) the validity, legality or enforceability under the law of that jurisdiction of any other provision in or obligation under this Guarantee, or (ii) the validity, legality or enforceability under the law of any other jurisdiction of that or any other provision in or obligation under this Guarantee.

11.
This Guarantee and any non-contractual obligations arising out of or in connection with it are governed by, and construed in accordance with, English law.

(a)
Subject to subparagraph (c) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with this Guarantee, including any dispute as to its existence, validity, interpretation, performance, breach or termination or the consequences of its nullity and any dispute relating to any non-contractual obligations
arising out of or in connection with it (a Dispute) and each of the Guarantor and any Noteholders, Couponholders or Accountholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts.

(b)
For the purposes of subparagraphs (a) and (c), the Guarantor waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.

(c)
To the extent allowed by law, the Noteholders, the Couponholders and the Accountholders may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction and (ii) concurrent proceedings in any number of jurisdictions.

(d)
The Guarantor irrevocably appoints Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent under this Guarantee for service of process in any proceedings before the English courts in relation to any Dispute and agrees that in the event of Law Debenture Corporate Services Limited being unable or unwilling for any reason so to act, it will immediately appoint another person as its agent for service of process in England in respect of any Dispute. The Guarantor agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this sub-paragraph shall affect the right to serve process in any other manner permitted by law.

(e)
WITHOUT PREJUDICE TO SUBPARAGRAPHS (A) TO (C), THE GUARANTOR WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN CONNECTION WITH THIS GUARANTEE. THIS GUARANTEE MAY BE FILED AS A WRITTEN CONSENT TO A BENCH TRIAL.

IN WITNESS whereof this Guarantee has been executed as a deed poll by the Guarantor.



SCHEDULE 5

PROVISIONS FOR MEETINGS OF NOTEHOLDERS

DEFINITIONS

1.
As used in this Schedule, the following expressions have the following meanings unless the context otherwise requires:





Block Voting Instruction means an English language document issued by a Paying Agent in which:

(a)
it is certified that on the date thereof Notes (whether in definitive form or represented by a Global Note) (not being Notes in respect of which a Voting Certificate has been issued and is outstanding in respect of the meeting specified in such Block Voting Instruction) have been deposited with such Paying Agent or (to the satisfaction of such Paying Agent) are held to its order or under its control or are blocked in an account with a Clearing System and that no such Notes will cease to be so deposited or held or blocked until the first to occur of:

(i)
the conclusion of the meeting specified in such Block Voting Instruction; and

(ii)
the surrender to the Paying Agent, not less than 48 Hours before the time for which such meeting is convened, of the receipt issued by such Paying Agent in respect of each such deposited Note which is to be released or (as the case may require) the Notes ceasing with the agreement of the Paying Agent to be held to its order or under its control or so blocked and the giving of notice by the Paying Agent to the Issuer in accordance with paragraph 3(e) of the necessary amendment to the Block Voting Instruction;

(b)
it is certified that each holder of such Notes has instructed such Paying Agent that the vote(s) attributable to the Notes so deposited or held or blocked should be cast in a particular way in relation to the resolution(s) to be put to such meeting and that all such instructions are, during the period commencing 48 Hours prior to the time for which such meeting is convened and ending at the conclusion or adjournment thereof, neither revocable nor capable of amendment;

(c)
the aggregate principal amount of the Notes so deposited or held or blocked is listed distinguishing with regard to each such resolution between those in respect of which instructions have been given that the votes attributable thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto should be cast against the resolution; and

(d)
one or more persons named in such Block Voting Instruction (each hereinafter called a proxy) is or are authorised and instructed by such Paying Agent to cast the votes attributable to the Notes so listed in accordance with the instructions referred to in (c) above as set out in such Block Voting Instruction;

Clearing System means Euroclear and/or Clearstream, Luxembourg and includes, in respect of any Note, any clearing system on behalf of which such Note is held or which is the bearer or holder of a Note, in either case whether alone or jointly with any other Clearing System(s). For the avoidance of doubt, the provisions of clause 1.2(h) shall apply to this definition;
Eligible Person means any one of the following persons who shall be entitled to attend and vote at a meeting:

(a)
a holder of a Note in definitive form;

(b)
a bearer of any Voting Certificate;

(c)
a proxy specified in any Block Voting Instruction;

Extraordinary Resolution means:

(a)
a resolution passed at a meeting duly convened and held in accordance with the provisions of this Schedule by a majority consisting of not less than three-fourths of the Eligible Persons voting thereon upon a show of hands or, if a poll is duly demanded, by a majority consisting




of not less than three-fourths of the votes cast on such poll;

(b)
a resolution in writing signed by or on behalf of the holders of not less than three-fourths in principal amount of the Notes for the time being outstanding (a Written Resolution) which resolution may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the holders; or

(c)
consent given by way of electronic consents through the relevant Clearing System(s) (in a form satisfactory to the Fiscal Agent) by or on behalf of the holders of not less than three- fourths in principal amount of the Notes for the time being outstanding;

Voting Certificate means an English language certificate issued by a Paying Agent in which it is stated:

(a)
that on the date thereof Notes (whether in definitive form or represented by a Global Note) (not being Notes in respect of which a Block Voting Instruction has been issued and is outstanding in respect of the meeting specified in such Voting Certificate) were deposited with such Paying Agent or (to the satisfaction of such Paying Agent) are held to its order or under its control or are blocked in an account with a Clearing System and that no such Notes will cease to be so deposited or held or blocked until the first to occur of:

(i)
the conclusion of the meeting specified in such Voting Certificate; and

(ii)
the surrender of the Voting Certificate to the Paying Agent who issued the same; and

(b)
that the bearer thereof is entitled to attend and vote at such meeting in respect of the Notes represented by such Voting Certificate;

24 Hours means a period of 24 hours including all or part of a day on which banks are open for business both in the place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose the day on which the meeting is to be held) and that period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included all or part of a day on which banks are open for business in all of the places where the Paying Agents have their specified offices; and

48 Hours means a period of 48 hours including all or part of two days on which banks are open for business both in the place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose the day on which the meeting is to be held) and that period shall be extended by one period or, to the extent necessary,
more periods of 24 hours until there is included all or part of two days on which banks are open for business in all of the places where the Paying Agents have their specified offices.

For the purposes of calculating a period of Clear Days in relation to a meeting, no account shall be taken of the day on which the notice of such meeting is given (or in the case of an adjourned meeting, the day on which the meeting to be adjourned is held) or the day on which such meeting is held.

All references in this Schedule to a "meeting" shall, where the context so permits, include any relevant adjourned meeting.

EVIDENCE OF ENTITLEMENT TO ATTEND AND VOTE

2.
A holder of a Note (whether in definitive form or represented by a Global Note) may require the issue by any Paying Agent of Voting Certificates and Block Voting Instructions in accordance with the terms of paragraph 3.





For the purposes of paragraph 3 below the Fiscal Agent and each Paying Agent shall be entitled to rely, without further enquiry, on any information or instructions received from a Clearing System and shall have no liability to any Noteholder or other person for any loss, damage, cost, claim or other liability occasioned by its acting in reliance thereon, nor for any failure by a Clearing System to deliver information or instructions to the Fiscal Agent or any Paying Agent.

The holder of any Voting Certificate or the proxies named in any Block Voting Instruction shall for all purposes in connection with the relevant meeting be deemed to be the holder of the Notes to which such Voting Certificate or Block Voting Instruction relates and the Paying Agent with which such Notes have been deposited or the person holding Notes to the order or under the control of such Paying Agent or the Clearing System in which such Notes have been blocked shall be deemed for such purposes not to be the holder of those Notes.

PROCEDURE FOR ISSUE OF VOTING CERTIFICATES, BLOCK VOTING INSTRUCTIONS AND PROXIES

3.
(a)    Definitive Notes - not held in a Clearing System

If Notes have been issued in definitive form and are not held in an account with any Clearing System, the Fiscal Agent may from time to time prescribe further regulations (in accordance with paragraph 23) to enable the holders of such Notes to attend and/or vote at a meeting in respect of such Notes.

(b)
Global Notes and definitive Notes held in a Clearing System - Voting Certificate

A holder of a Note (not being a Note in respect of which instructions have been given to the Fiscal Agent in accordance with paragraph 3(c)) represented by a Global Note or which is in definitive form and is held in an account with any Clearing System may procure the delivery of a Voting Certificate in respect of such Note by giving notice to the Clearing System through which such Noteholder's interest in the Note is held specifying by name a person (an Identified Person) (which need not be the Noteholder himself) to collect the Voting Certificate and attend and vote at the meeting. The relevant Voting Certificate will be made available at or shortly prior to the commencement of the meeting by the Fiscal Agent against presentation by such Identified Person of the form of identification previously notified by such holder to the Clearing System. The Clearing System may prescribe forms of identification (including, without limitation, a passport or driving licence) which it considers appropriate for these purposes. Subject to receipt by the Fiscal Agent from the Clearing
System, no later than 24 Hours before the time for which such meeting is convened, of notification of the principal amount of the Notes to be represented by any such Voting Certificate and the form of identification against presentation of which such Voting Certificate should be released, the Fiscal Agent shall, without any obligation to make further enquiry, make available Voting Certificates against presentation of the form of identification corresponding to that notified.

(c)
Global Notes and definitive Notes held in a Clearing System - Block Voting Instruction

A holder of a Note (not being a Note in respect of which a Voting Certificate has been issued) represented by a Global Note or which is in definitive form and is held in an account with any Clearing System may require the Fiscal Agent to issue a Block Voting Instruction in respect of such Note by first instructing the Clearing System through which such Noteholder's interest in the Note is held to procure that the votes attributable to such Note should be cast at the meeting in a particular way in relation to the resolution or resolutions to be put to the meeting. Any such instruction shall be given in accordance with the rules of the Clearing System then in effect. Subject to receipt by the Fiscal Agent, no later than 24 Hours prior to the time for which such




meeting is convened, of notification of the principal amount of the Notes in respect of which instructions have been given and the manner in which the votes attributable to such Notes should be cast, the Fiscal Agent shall, without any obligation to make further enquiry, appoint a proxy to attend the meeting and cast votes in accordance with those instructions.

(d)
Each Block Voting Instruction shall be deposited by the relevant Paying Agent at the place specified by the Fiscal Agent for the purpose not less than 24 Hours before the time appointed for holding the meeting at which the proxy or proxies named in the Block Voting Instruction proposes to vote, and in default the Block Voting Instruction shall not be treated as valid unless the Chairman of the meeting decides otherwise before such meeting proceeds to business. A copy of each Block Voting Instruction shall (if so requested by the Issuer) be deposited with the Issuer before the commencement of the meeting but the Issuer shall not as a result be obliged to investigate or be concerned with the validity of or the authority of the proxy or proxies named in such Block Voting Instruction.

(e)
Any vote given in accordance with the terms of a Block Voting Instruction shall be valid notwithstanding the previous revocation or amendment of the Block Voting Instruction or of any of the instructions of the relevant Noteholder or the relevant Clearing System (as the case may be) pursuant to which it was executed provided that no intimation in writing of such revocation or amendment has been received from the relevant Paying Agent by the Issuer at its registered office by the time being 24 Hours before the time appointed for holding the meeting at which the Block Voting Instruction is to be used.

CONVENING OF MEETINGS, QUORUM AND ADJOURNED MEETINGS

4.
The Issuer or the Guarantor may at any time, and the Issuer shall upon a requisition in writing in the English language signed by the Noteholders of not less than 10 per cent. in principal amount of the Notes for the time being outstanding, convene a meeting and if the Issuer makes default for a period of seven days in convening such a meeting the same may be convened by the relevant Noteholders. Whenever the Issuer or the Guarantor is about to convene any such meeting the Issuer or the Guarantor, as the case may be, shall forthwith give notice in writing to the Fiscal Agent of the day, time and place of the meeting and of the nature of the business to be transacted at the meeting. Every such meeting shall be held at such time and place approved by the Fiscal Agent.

5.
At least 21 Clear Days' notice specifying the place, day and hour of the meeting shall be given to the Noteholders prior to any meeting in the manner provided by Condition 11 (Notices). Such notice,
which shall be in the English language, shall state generally the nature of the business to be transacted at the meeting thereby convened and, where an Extraordinary Resolution will be proposed at the meeting, shall either specify in such notice the terms of such resolution or state fully the effect on the Noteholders of such resolution, if passed. Such notice shall include statements as to the manner in which Noteholders may arrange for Voting Certificates or Block Voting Instructions to be issued. A copy of the notice shall be sent by post to the Issuer (unless the meeting is convened by the Issuer) and to the Guarantor (unless the meeting is convened by the Guarantor).

6.
The person (who may but need not be a Noteholder) nominated in writing by the Issuer shall be entitled to take the chair at the relevant meeting but if no such nomination is made or if at any meeting the person nominated shall not be present within 15 minutes after the time appointed for holding the meeting the Noteholders present shall choose one of their number to be Chairman failing which the Issuer may appoint a Chairman. The Chairman of an adjourned meeting need not be the same person as was Chairman of the meeting from which the adjournment took place.

7.
At any such meeting one or more Eligible Persons present and holding or representing in the aggregate more than 50 per cent. in principal amount of the Notes for the time being outstanding shall (subject




as provided below) form a quorum for the transaction of business (including the passing of an Extraordinary Resolution) PROVIDED THAT at any meeting the business of which includes any Basic Terms Modification (which shall only be capable of being effected after having been approved by Extraordinary Resolution) the quorum shall be one or more Eligible Persons present and holding or representing in the aggregate not less than two-thirds of the principal amount of the Notes for the time being outstanding. No business (other than the choosing of a Chairman) shall be transacted at any meeting unless the requisite quorum be present at the commencement of the relevant business.

8.
If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairman may decide) after the time appointed for such meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting shall if convened upon the requisition of Noteholders be dissolved. In any other case it shall stand adjourned for such period being not less than 13 Clear Days nor more than 42 Clear Days and to such place as may be appointed by the Chairman either at or subsequent to such meeting and approved by the Fiscal Agent. If within 15 minutes (or a longer period not exceeding 30 minutes as the Chairman may decide) after the time appointed for any adjourned meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the Chairman may either dissolve such meeting or adjourn the same for such period, being not less than 13 Clear Days (but without any maximum number of Clear Days) and to such place as may be appointed by the Chairman either at or subsequent to such adjourned meeting and approved by the Fiscal Agent, and the provisions of this sentence shall apply to all further adjourned such meetings.

9.
At any adjourned meeting one or more Eligible Persons present (whatever the principal amount of the Notes so held or represented by them) shall (subject as provided below) form a quorum and shall have power to pass any resolution and to decide upon all matters which could properly have been dealt with at the meeting from which the adjournment took place had the requisite quorum been present PROVIDED THAT at any adjourned meeting the quorum for the transaction of business comprising any Basic Terms Modification shall be one or more Eligible Persons present and holding or representing in the aggregate not less than one-third of the principal amount of the Notes for the time being outstanding.

10.
Notice of any adjourned meeting shall be given in the same manner as notice of an original meeting but as if 10 were substituted for 21 in paragraph 5 and such notice shall state the required quorum.

CONDUCT OF BUSINESS AT MEETINGS

11.
Every question submitted to a meeting shall be decided in the first instance by a show of hands. A poll may be demanded (before or on the declaration of the result of the show of hands) by the Chairman, the Issuer, the Guarantor or any Eligible Person (whatever the amount of the Notes so held or represented by him).

12.
At any meeting, unless a poll is duly demanded, a declaration by the Chairman that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

13.
Subject to paragraph 15, if at any such meeting a poll is so demanded it shall be taken in such manner and, subject as provided below, either at once or after an adjournment as the Chairman directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the motion on which the poll has been demanded.





14.
The Chairman may, with the consent of (and shall if directed by) any such meeting, adjourn the same from time to time and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place.

15.
Any poll demanded at any such meeting on the election of a Chairman or on any question of adjournment shall be taken at the meeting without adjournment.

16.
Any director or officer of the Issuer or, as the case may be, the Guarantor, their lawyers and financial advisers and any director or officer of any of the Paying Agents may attend and speak at any meeting. Save as aforesaid, no person shall be entitled to attend and speak nor shall any person be entitled to vote at any meeting unless he is an Eligible Person. No person shall be entitled to vote at any meeting in respect of Notes which are deemed to be not outstanding by virtue of the proviso to the definition of "outstanding" in clause 1.

17.
At any meeting:

(a)
on a show of hands every Eligible Person present shall have one vote; and

(b)
on a poll every Eligible Person present shall have one vote in respect of each €1,000, in principal amount of the Notes held or represented by such Eligible Person.

18.
Without prejudice to the obligations of the proxies named in any Block Voting Instruction, any Eligible Person entitled to more than one vote need not use all his votes or cast all the votes to which he is entitled in the same way.

19.
The proxies named in any Block Voting Instruction need not be holders. Nothing herein shall prevent any of the proxies named in any Block Voting Instruction from being a director, officer or representative of or otherwise connected with the Issuer or the Guarantor.

20.
The Noteholders shall in addition to the powers set out above have the following powers exercisable only by Extraordinary Resolution (subject, in the case of an Extraordinary Resolution to be proposed at a meeting, to the provisions relating to quorum contained in paragraphs 7 and 9) namely:
(a)
power to sanction any compromise or arrangement proposed to be made between the Issuer the Guarantor and the Noteholders and Couponholders or any of them;

(b)
power to approve any abrogation, modification, compromise or arrangement in respect of the rights of the Noteholders and Couponholders against the Issuer or the Guarantor against any other or others of them or against any of their property whether such rights arise under this Agreement, the Notes or the Coupons or otherwise;

(c)
power to agree to any modification of the provisions contained in this Agreement or the Conditions, the Notes, the Guarantee or the Deed of Covenant which is proposed by the Issuer or the Guarantor;

(d)
power to give any authority or sanction which under the provisions of this Schedule or the Notes is required to be given by Extraordinary Resolution;

(e)
power to appoint any persons (whether Noteholders or not) as a committee or committees to represent the interests of the Noteholders and to confer upon such committee or committees any powers or discretions which the Noteholders could themselves exercise by Extraordinary Resolution;

(f)
power to approve any scheme or proposal for the exchange or sale of the Notes for, or the




conversion of the Notes into, or the cancellation of the Notes in consideration of, shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities of the Issuer or the Guarantor or any other company formed or to be formed, or for or into or in consideration of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities as stated above and partly for or into or in consideration of cash; and

(g)
power to approve the substitution of any entity for the Issuer and/or the Guarantor (or any previous substitute) as principal debtor and/or guarantor, as the case may be.

21.
Any Extraordinary Resolution (i) passed at a meeting of the Noteholders duly convened and held (ii) passed as an Extraordinary Resolution in writing or (iii) passed by way of electronic consents given by holders through the relevant Clearing System(s), in accordance with the provisions of this Schedule shall be binding upon all the Noteholders whether present or not or whether or not represented at any meeting and whether or not voting on such Extraordinary Resolution and upon all Couponholders and each of them shall be bound to give effect to the resolution accordingly and the passing of any such Extraordinary Resolution shall be conclusive evidence that the circumstances justify its passing. Notice of the result of voting on any Extraordinary Resolution duly considered by the Noteholders shall be published in accordance with Condition 11 (Notices) by the Issuer within 14 days of the result being known PROVIDED THAT non-publication of such notice shall not invalidate such result.

22.
Minutes of all resolutions and proceedings at every meeting shall be made and entered in books to be from time to time provided for that purpose by the Issuer and any such minutes, if purporting to be signed by the Chairman of the meeting at which such resolutions were passed or proceedings transacted shall be conclusive evidence of the matters contained in them and, until the contrary is proved, every such meeting in respect of the proceedings of which minutes have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted at the meeting to have been duly passed or transacted.

23.
Subject to all other provisions contained in this Schedule, the Fiscal Agent may without the consent of the Issuer, the Guarantor, the Noteholders or the Couponholders prescribe any other regulations regarding the calling and/or the holding of meetings of Noteholders and attendance and voting at
them as the Fiscal Agent may in its sole discretion think fit (including, without limitation, the substitution for periods of 24 hours and 48 hours referred to in this Schedule of shorter periods). Any regulations prescribed by the Fiscal Agent may but need not reflect the practices and facilities of any relevant clearing system. Notice of any other regulations may be given to Noteholders in accordance with Condition 11 (Notices) and/or at the time of service of any notice convening a meeting.

SCHEDULE 6

ADDITIONAL DUTIES OF THE FISCAL AGENT

The Fiscal Agent and the Issuer will comply with the following provisions:

1.
The Fiscal Agent will inform each of Euroclear and Clearstream, Luxembourg (the ICSDs), through the common service provider appointed by the ICSDs to service the Notes (the CSP), of the initial issue outstanding amount (IOA) for the Notes on or prior to the issue date of the Notes.

2.
If any event occurs that requires a mark up or mark down of the records which an ICSD holds for its customers to reflect such customers' interest in the Notes, the Fiscal Agent will (to the extent known to it) promptly provide details of the amount of such mark up or mark down, together with a description of the event that requires it, to the ICSDs (through the CSP) to ensure that the IOA of the Notes remains at all times accurate.





3.
The Fiscal Agent will at least once every month reconcile its record of the IOA of the Notes with information received from the ICSDs (through the CSP) with respect to the IOA maintained by the ICSDs for the Notes and will promptly inform the ICSDs (through the CSP) of any discrepancies.

4.
The Fiscal Agent will promptly assist the ICSDs (through the CSP) in resolving any discrepancy identified in the IOA of the Notes.

5.
The Fiscal Agent will promptly provide to the ICSDs (through the CSP) details of all amounts paid by it under the Notes (or, where the Notes provide for delivery of assets other than cash, of the assets so delivered).

6.
The Fiscal Agent will (to the extent known to it) promptly provide to the ICSDs (through the CSP) notice of any changes to the Notes that will affect the amount of, or date for, any payment due under the Notes.

7.
The Fiscal Agent will (to the extent known to it) promptly provide to the ICSDs (through the CSP) copies of all information that is given to the holders of the Notes.

8.
The Fiscal Agent will promptly pass on to the Issuer all communications it receives from the ICSDs directly or through the CSP relating to the Notes.

9.
The Fiscal Agent will (to the extent known to it) promptly notify the ICSDs (through the CSP) of any failure by the Issuer to make any payment or delivery due under the Notes when due.

SCHEDULE 7

FORM OF SUBSTITUTION DEED POLL

This Deed Poll is made on [ ] by (i) PartnerRe Ireland Finance DAC as existing issuer (in its capacity as existing issuer of the Notes (as defined below), the Existing Issuer), a designated activity company limited by shares incorporated under the laws of the Republic of Ireland, (ii) PartnerRe Ltd. as the substitute of the Existing Issuer and as the guarantor (in its capacity as the substitute, the Substitute, and in its capacity as the guarantor, the Guarantor), a company incorporated with limited liability under the laws of Bermuda, and
(i)BNP Paribas Securities Services, a société en commandite par actions (S.C.A.) incorporated under the laws of France, registered with the Registre du Commerce et des Sociétés of Paris under number 552 108 011, whose registered office is at 3, Rue d’Antin - 75002 Paris, France and acting through its Luxembourg Branch whose offices are at 60, avenue J.F. Kennedy, L-1855 Luxembourg, having as postal address L-2085 Luxembourg and registered with the Luxembourg trade and companies register under number B. 86 862 in its capacity as fiscal and principal paying agent (the Fiscal Agent).

WHEREAS:

(A)
The Notes have been issued subject to and with the benefit of an Agency Agreement dated 15 September 2016 (the Agency Agreement, which expression includes the same as it may be amended, supplemented or restated from time to time) between the Existing Issuer, the Guarantor, the Fiscal Agent and the other agents named therein.

(B)
The Notes have been issued with the benefit of a deed of covenant dated 15 September 2016 (the Deed of Covenant, which expression includes the same as it may be amended, supplemented or restated from time to time), executed by the Existing Issuer, and a guarantee dated 15 September 2016 (the Guarantee) executed by the Guarantor relating to the Notes.

(C)
It has been proposed that in respect of the Notes there will be a substitution of the Substitute for the




Existing Issuer as the issuer of the Notes (the Substitution). Expressions defined in the Notes and the Agency Agreement have the same meaning in this Deed unless the context requires otherwise.

(D)
On or about the date hereof, the Substitute will execute a Deed of Covenant (the New Deed of Covenant) in favour of the Accountholders (as defined therein) in order to make arrangements for the protection of the interests of Accountholders in the event that the Global Note becomes void in accordance with its terms. For the avoidance of doubt, the Substitute hereby confirms that, with effect on and from the Effective Date, the provisions of the New Deed of Covenant shall apply in respect of the Notes as if the Substitute had been the Existing Issuer mentioned therein and, accordingly, all references in the New Deed of Covenant to “Notes”, “Global Notes” and “Definitive Notes” (and related expressions) shall be deemed to include the Notes.

(E)
Following the Substitution, it is intended that the Notes will cease to benefit from the terms of the Guarantee from and including the Effective Date (as defined below).

(F)
The Notes are listed on the Official List of the Irish Stock Exchange and are admitted to trading on the regulated market of the Irish Stock Exchange.

(G)
References herein to Notes include, where the context so permits the [temporary/permanent] Global Note (the Global Note), [for which interests in the temporary Global Note were exchanged in accordance with the terms of the temporary global Note,] and definitive Notes (if any) issued in exchange for the Global Note in accordance with the terms of the Global Note. References herein to Coupons are to the Coupons relating to the Notes. References herein to Noteholder means any holder of a Note and Couponholder means any holder of a Coupon. Capitalised terms used but not
defined herein shall have the meaning ascribed to them in the Conditions of the Notes, contained in the Prospectus dated 13 September 2016 and the Agency Agreement unless the context requires.

THIS DEED WITNESSES as follows:

1.
The Substitute agrees that, with effect from and including the first date on which notice has been given by the Existing Issuer pursuant to Condition 11 (Notices) and all the other requirements of such Condition have been met (the effective date), it shall be deemed to be the "Issuer" for all purposes in respect of the Agency Agreement, the Notes and any Coupons, and accordingly it shall be entitled to all the rights, and subject to all the liabilities, on the part of the Existing Issuer contained in them.

2.
With effect from and including the Effective Date:

(a)
the Existing Issuer is released from all its covenants, conditions and liabilities held in its capacity as issuer of the Notes, contained in the Notes and any Coupons and the Deed of Covenant insofar as they relate to the Notes and the Agency Agreement;

(b)
the Guarantor is released from all its liabilities, in its capacity as guarantor, contained in the Notes and any Coupons and the Guarantee insofar as they relate to the guarantee; and

(c)
the Substitute shall be bound by the Conditions of the Notes and the provisions of the Agency Agreement as fully as if the Substitute had been named in the Notes, the Coupons and the Agency Agreement as the principal debtor in respect of the Notes and Coupons in place of the Existing Issuer. The Agency Agreement shall be read and construed in conjunction with this Deed as if all references therein to the Existing Issuer were references to the Substitute.

3.
For the purposes of Condition 13.1 (Conditions Precedent to Substitution) of the Conditions of the Notes, Condition 7 (Taxation) of the Conditions of the Notes shall be construed as if the Substitute is the Issuer of the Notes and Bermuda is the applicable jurisdiction instead of the Republic of Ireland and Bermuda.





4.
The Substitute agrees that the benefit of the undertakings and the covenants binding upon them contained in this Deed shall be for the benefit of each and every Noteholder and Couponholder and each Noteholder and Couponholder shall be entitled severally to enforce such obligations against the Substitute.

5.
The Substitute hereby agrees that, with effect from the Effective Date, it will duly observe and perform and be bound by all such of the terms and provisions contained in the Agency Agreement as are expressed to be binding on or as apply to the Existing Issuer in respect of the Notes and the Coupons.

6.
The Fiscal Agent hereby agrees and confirms that, with effect on and from the Effective Date, it will act as fiscal agent and paying agent of the Substitute in relation to the Notes and the Coupons and that it will continue to hold all moneys in respect of the Notes paid to it by the Existing Issuer prior to the Effective Date as agent for the Substitute on and subject to the terms, provisions and conditions of the Agency Agreement.

7.
The Existing Issuer represents, warrants and agrees that:

(a)
at the date hereof it is not in default in respect of any amount payable under the Notes; and
(b)
it has obtained all necessary governmental and regulatory approvals and consents for the Substitution and that all such approvals and consents are in full force and effect.

8.
The Substitute agrees that, on or about the date hereof and in any case before the Effective Date, it will execute the New Deed of Covenant (substantially in the form of the Deed of Covenant) in favour of the Accountholders (as defined therein) in order to make arrangements for the protection of the interests of Accountholders in the event that the Global Note becomes void in accordance with its terms.

9.
The Substitute represents, warrants and agrees that (i) it has obtained all necessary governmental and regulatory or other approvals and consents for the Substitution, and has obtained all necessary governmental and regulatory or other approvals and consents for the performance by it of its obligations under this Deed and any other documents to be executed by the Substitute as may be necessary to give full effect to the Substitution (such other documents, together with this Deed and the New Deed of Covenant, the Documents) and that all such approvals and consents are in full force and effect and (ii) that the execution and delivery of the Documents have been duly authorised by it and that the obligations assumed by the Substitute under the Documents are all legal, valid and binding in accordance with their respective terms and enforceable by each Noteholder.

10.
The Existing Issuer and the Substitute each agree that it will use its best endeavours promptly to obtain confirmation from the Irish Stock Exchange that, following the Substitution, the Notes will continue to be listed and admitted to trading on such stock exchange.

11.
The Existing Issuer, the Substitute and the Fiscal Agent agree that legal opinions dated the date hereof as to matters of law relating to (i) the fulfilment of the requirements of Condition 13.1 (Conditions Precedent to Substitution) of the Conditions of the Notes, and (ii) that the Notes and any Coupons are legal, valid and binding obligations of the Substitute, shall be delivered to the Fiscal Agent from [l], legal advisors to the Substitute as to Bermuda law and from [l], legal advisors to the Existing Issuer as to Irish law.

12.
This Deed and the New Deed of Covenant shall be deposited with and held to the exclusion of the Substitute by the Fiscal Agent at its specified office for the time being under the Conditions until complete performance of the obligations contained in the Notes occurs and the Substitute hereby acknowledge the right of every Noteholder to production of this Deed and the New Deed of Covenant and, upon request and payment of the expenses incurred in connection therewith, to the production of a copy hereof certified by the Fiscal Agent to be a true and complete copy.





13.
This Deed may only be amended in the same way as the other Conditions are capable of amendment under Schedule 5 of the Agency Agreement and any such amendment of this Deed will constitute one of the proposals specified in Condition 12 (Meetings of Noteholders and Modification) to which special quorum provisions apply.

14.
This Deed and any non-contractual obligations arising out of or in connection with it are governed by and shall be construed in accordance with English law.

(a)
Subject to paragraph (c) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed, including any dispute as to its existence, validity, interpretation, performance, breach or termination or the consequences of its nullity and any dispute relating to any non-contractual obligations arising out of or in connection with it (a Dispute) and each of the Existing Issuer and the Substitute in relation to any Dispute submits to the exclusive jurisdiction of the English courts.
(b)
For the purposes of this paragraph (b), the Existing Issuer, the Substitute and the Fiscal Agent waive any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.

(c)
To the extent allowed by law, the Fiscal Agent and each Holder may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions.

(d)
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Deed, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

(e)
The Existing Issuer and the Substitute each irrevocably appoints Law Debenture Corporate Services Limited at Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent under this Deed for service of process in any proceedings before the English courts in relation to any Dispute and agrees that in the event of Law Debenture Corporate Services Limited being unable or unwilling for any reason so to act, it will immediately appoint another person as its agent for service of process in England in respect of any Dispute. The Existing Issuer and the Substitute each agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing in this sub-paragraph shall affect the right to serve process in any other manner permitted by law.

IN WITNESS whereof this Deed has been executed by and on behalf of the parties hereto as a Deed Poll as of the day and year first above written.


SCHEDULE 8

CLEARING SYSTEM CERTIFICATE OF NON-U.S. CITIZENSHIP AND RESIDENCE

PartnerRe Ireland Finance DAC

€750,000,000
1.25 per cent. Guaranteed Notes due 15 September 2026 unconditionally and irrevocably guaranteed by
PartnerRe Ltd.

This is to certify that, based solely on certifications we have received in writing, by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the nominal amount set forth below (our Member Organisations) substantially to the effect set forth in the Agency Agreement, as of the date hereof, [l] nominal amount of the above-captioned Notes:





(i)is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source (United States persons),

(ii)is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) (financial institutions)) purchasing for their own account or for resale, or (b) acquired the Notes through foreign branches of United States financial institutions and who hold the Notes through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or

(iii)is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (iii) above (whether or not also described in clause (i) or (ii)) have certified that they have not acquired the Notes for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

As used herein, United States means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction; and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest in respect of) the Temporary Global Note excepted in such certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as at the date hereof.

We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.





DESCRIPTION OF REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE
SECURITIES EXCHANGE ACT OF 1934
As of March 2, 2020, PartnerRe Ltd. (the “Company” or “we”) had four classes of securities registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (1) our 5.875% Series F Non-Cumulative Preferred Shares, par value $1.00 per share (“Series F Preferred Shares”); (2) our 6.50% Series G Cumulative Preferred Shares, par value $1.00 per share (the “Series G Preferred Shares”); (3) our 7.25% Series H Cumulative Preferred, par value $1.00 per share (the “Series H Preferred Shares”); and (4) our 5.875% Series I Non-Cumulative Preferred Shares, par value $1.00 per share (the “Series I Preferred Shares” and, collectively with the Series F Preferred Shares, Series G Preferred Shares and Series H Preferred Shares, the “Preferred Shares”).
Description of the Preferred Shares
The following description of our Preferred Shares is a summary and does not purport to be complete. Except as described below, the terms of each series of Preferred Shares are the same.
The description of our Series F Preferred Shares is qualified in its entirety by reference to the Certificate of Designation, Preferences and Rights of 5.875% Series F Non-Cumulative Redeemable Preferred Shares, dated February 14, 2013.
The description of our Series G Preferred Shares is qualified in its entirety by reference to the Certificate of Designation of 6.50% Series G Cumulative Redeemable Preferred Shares, dated May 1, 2016.
The description of our Series H Preferred Shares is qualified in its entirety by reference to the Certificate of Designation of 7.25% Series H Cumulative Redeemable Preferred Shares, dated May 1, 2016.
The description of our Series I Preferred Shares is qualified in its entirety by reference to the Certificate of Designation of 5.875% Series I Non-Cumulative Redeemable Preferred Shares, dated May 1, 2016.
Each series of the Preferred Shares is listed and traded on the New York Stock Exchange (“NYSE”).
General
The holders of each series of the Preferred Shares have no preemptive rights with respect to any of our common shares (as defined below) or any of our other securities convertible into or carrying rights or options to purchase any such shares. The Preferred Shares are not subject to any sinking fund or other obligation on our part to redeem or retire the Preferred Shares. Unless we redeem them, the Preferred Shares have a perpetual term with no maturity.
Our board of directors may, from time to time, create and issue additional preferred shares without the approval of our shareholders and fix their relative rights, preferences and limitations. The alteration of the special rights attached to each series of the Preferred Shares requires the approval of their holders. See “Voting Rights” below. We have not issued shares that would be senior to any series of the Preferred Shares with respect to payment of dividends and distribution of assets in liquidation.
As of March 2, 2020, there were (i) 2,679,426 Series F Preferred Shares outstanding; (ii) 6,415,264 Series G Preferred Shares outstanding; (iii) 11,753,798 Series H Preferred Shares outstanding; and (iv) 7,320,574 Series I Preferred Shares outstanding.
Dividends; Ranking
Holders of the Preferred Shares are entitled to receive, when declared by our board of directors out of funds legally available for the payment of dividends, an amount equal to such holders’ applicable percentage of their liquidation preference, as further described below. Holders of the Series F and Series I Preferred Shares are entitled to receive cash dividends in an amount per share equal to 5.875% of the liquidation preference per annum (equivalent to $1.46875 per share). Holders of the Series G and Series H Preferred Shares are entitled to receive, cumulative preferential cash dividends in an amount per share equal to 6.50% and 7.25% of the liquidation preference per annum, respectively (equivalent to $1.625 and $1.8125 per share, respectively).
Holders of our Series F and Series I Preferred Shares are not entitled to any dividends in excess of dividends actually declared by our board. No interest, or sum of money in lieu of interest, will be payable in respect of any undeclared or declared but unpaid dividends on our Series F or Series I Preferred Shares.




Dividends on the Series G and Series H Preferred Shares accrue and are cumulative, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Holders of our Series G and H Preferred Shares are not be entitled to any dividends in excess of full cumulative dividends. No interest, or sum of money in lieu of interest, will be payable in respect of any dividend payment or payments on our Series G or H Preferred Shares which may be in arrears.
If there is any change in the law, regulation or official directive (whether or not having the force of law) or in the interpretation by any Bermuda governmental authority or court of competent jurisdiction which imposes on us any condition with respect to our Series G Preferred Shares as a result of which any dividend payment is reduced, we will give notice to the holders of our Series G Preferred Shares of such event and all reductions will be borne in full by the holders of our Series G Preferred Shares (but only to the extent permitted by law).
Dividends on the Preferred Shares are payable quarterly, when, as and if declared by our board of directors, on the first day of March, June, September and December of each year (each, a “Dividend Payment Date”); provided, however, that if any Dividend Payment Date falls on any day other than a business day (defined as any day other than a Saturday, Sunday or a day on which banking institutions in Hamilton, Bermuda, or New York, New York are not required to be open), the dividend payment due on such Dividend Payment Date will be paid on the business day immediately after such Dividend Payment Date. The dividend for such dividend period and any other dividend payable on the Preferred Shares for any partial dividend period is computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends are payable to holders of record as they appear in our register of members at the close of business on the tenth calendar day immediately preceding such Dividend Payment Date, whether or not a business day (each, a “Dividend Record Date”).
So long as any Preferred Shares are outstanding, (i) no dividends or other distributions (other than dividends or distributions paid solely in shares of, or options, warrants or rights to subscribe for or purchase shares of, fully junior shares (as defined below)) will be declared or paid or set apart for payment and no other distribution will be declared or paid or set apart for payment upon junior shares (as defined below), and (ii) no junior shares will be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of common shares made for purposes of an employee incentive or benefit plan of the Company or any subsidiary of the Company) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any junior shares) by the Company, directly or indirectly (except by conversion into or exchange for fully junior shares) ((i) and (ii) collectively, “Distributions”), unless in each case (1) the dividends on all outstanding the Preferred Shares and any parity shares (as defined below) have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for the latest completed dividend period, and, in the case of the cumulative shares, for all past dividend periods; and (2) sufficient funds have been or contemporaneously are set apart for the payment of the dividends for the current dividend period with respect to the Preferred Shares and the current dividend period with respect to such parity shares.
Our board of directors will not declare any dividends on the Preferred Shares nor will we pay or set apart for payment any dividends at such time as the terms and provisions of any of our agreements, including any agreement relating to our indebtedness, prohibit such declaration, payment or setting apart for payment or provide that such action would constitute a breach of or default under such agreement, or if such action is restricted or prohibited by law.
In respect of the Series G Preferred Shares, the Series H Preferred Shares and the Series I Preferred Shares, until December 31, 2020, Distributions declared or paid with respect to any fiscal quarter must be less than, in the aggregate, 67% of the Company’s net income (“Net Income”), as determined in accordance with United States generally accepted accounting principles, during such fiscal quarter (such amount, the “Distributable Amount”), provided, that if the Company does not make aggregate Distributions of all of the Distributable Amount during any fiscal quarter, such remaining amount will carryover and be available for Distributions in subsequent fiscal quarters, regardless of the Company’s Net Income during such subsequent fiscal quarters.
“common shares” means the common shares of the Company, par value $1.00 per share.
“fully junior shares” means the common shares and any other class or series of shares of the Company now or hereafter issued and outstanding over which the Preferred Shares have preference or priority in both (i) the payment of dividends and (ii) the distribution of assets on any liquidation, dissolution or winding up of the Company.
“junior shares” means the common shares and any other class or series of shares of the Company now or hereafter issued and outstanding over which the Preferred Shares have preference or priority in either (i) the payment of dividends or (ii) the distribution of assets on any liquidation, dissolution or winding up of the Company.




“parity shares” means the shares on a parity with the Preferred Shares, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up of the Company, whether cumulative or non-cumulative, and whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof shall be different from those of the Preferred Shares, if the holders of such class or series and the Preferred Shares shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of declared but unpaid or accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other.
Certain Bermuda Law Restrictions on Payment of Dividends and Redemption of Shares
Under Bermuda law, we may not lawfully declare or pay a dividend unless there are reasonable grounds for believing that we are, or will after payment of the dividend be, able to pay our liabilities as they become due, and that the realizable value of our assets will, after payment of the dividend, be greater than our liabilities.
In addition, under Bermuda law, no redemption of the Preferred Shares may be effected if, on the date that the redemption is to be effected, we have reasonable grounds for believing that we are, or after the redemption would be, unable to pay our liabilities as they become due. In addition, if the redemption price is to be paid out of funds otherwise available for dividends or distributions, no redemption may be made if the realizable value of our assets would thereby be less than our liabilities.
Further, as the Bermuda Monetary Authority (“BMA”) is our group supervisor for insurance group solvency and reporting requirements, we may not be able to declare or pay a dividend on the Preferred Shares or effect any redemption of Preferred Shares if we are or, after giving effect to such payment, would be in breach of the Insurance Act 1978 of Bermuda, as amended, and related rules and regulations thereunder (the “Insurance Act”), the Insurance (Eligible Capital) Rules 2012, the Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Rules 2011, including the enhanced capital requirements or the group enhanced capital requirements contained within such rules or under such other applicable rules and regulations as may from time to time be issued by the BMA (or any successor agency or then-applicable regulatory authority) pursuant to the terms of the Insurance Act, or any successor legislation.
Payment of Additional Amounts
We will make all payments on the Series F, H and I Preferred Shares free and clear of and without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Bermuda or any other jurisdiction in which the Company is organized or any political subdivision or taxing authority thereof or therein (a “Taxing Jurisdiction”), unless such taxes, fees, duties, assessments or governmental charges are required to be withheld or deducted by (x) the laws (or any regulations or rulings promulgated thereunder) of a Taxing Jurisdiction or (y) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a Taxing Jurisdiction). If a withholding or deduction at source is required by either (x) or (y), we will, subject to certain limitations and exceptions described below, pay to the holders of the Series F, H and I Preferred Shares such additional amounts as dividends as may be necessary so that the net amounts paid will be equal to the amounts we would otherwise have been required to pay had no such withholding or deduction been required.
We will not be required to pay any additional amounts to the holders of the Series F, H or I Preferred Shares for or on account of:
(1)
any tax, fee, duty, assessment or governmental charge of whatever nature that would not have been imposed but for the fact that such holder was a resident, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the relevant taxing jurisdiction or any political subdivision thereof or otherwise had some connection with the relevant taxing jurisdiction other than by reason of the mere ownership of, or receipt of payment under, such Series F, H or I Preferred Shares;
(2)
any Series F, H or I Preferred Shares presented for payment more than 30 days after the Relevant Date. The “Relevant Date” means, in respect of any payment, the date on which such payment first becomes due and payable, but if the full amount of the moneys payable has not been received by the dividend disbursing agent on or prior to such due date, it means the first date on which, the full amount of such moneys having been so received and being available for payment to holders, notice to that effect will have been duly given to the holders of the Series F, H or I Preferred Shares;
(3)
any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge or any tax, assessment or other governmental charge that is payable otherwise than by withholding or deduction from payment of the liquidation preference;




(4)
any tax, fee, duty, assessment or other governmental charge that is imposed or withheld by reason of the failure by the holder of such Series F, H or I Preferred Shares to comply with any reasonable request by us addressed to the holder within 90 days of such request (a) to provide information concerning the nationality, residence or identity of the holder or (b) to make any declaration or other similar claim or satisfy any information or reporting requirement, which is required or imposed by statute, treaty, regulation or administrative practice of the relevant taxing jurisdiction or any political subdivision thereof as a precondition to exemption from all or part of such tax, fee, duty, assessment or other governmental charge;
(5)
any withholding or deduction required to be made pursuant to any European Union (“EU”) directive on the taxation of savings implementing the conclusions of The Economic and Financial Affairs Council meetings of 26-27 November 2000, 3 June 2003 or any law implementing or complying with, or introduced in order to conform to, such EU directive; or
(6)
any combination of items (1), (2), (3), (4) and (5).
In addition, we will not pay additional amounts with respect to any payment on any such Series F, H or I Preferred Shares to any holder who is a fiduciary, partnership, limited liability company or other pass-through entity other than the sole beneficial owner of such Series F, H or I Preferred Shares if such payment would be required by the laws of the relevant taxing jurisdiction (or any political subdivision or relevant taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or partner or settlor with respect to such fiduciary or a member of such partnership, limited liability company or other pass-through entity or a beneficial owner to the extent such beneficiary, partner or settlor would not have been entitled to such additional amounts had it been the holder of the Series F, H or I Preferred Shares.
If there is a substantial probability that we or any successor corporation would become obligated to pay any additional amounts as a result of a change in tax law, we will also have the option to redeem the Series F, H or I Preferred Shares as described in the “Tax Redemption” section below.
Liquidation Preference
In the event of liquidation of the Company, each series of the Preferred Shares rank on parity with each other but rank senior to the common shares. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of the Preferred Shares will be entitled to receive from our assets legally available for distribution to shareholders, $25.00 per share. In addition, upon liquidation, holders of the Series F Preferred Shares and the Series I Preferred Shares would receive any declared but unpaid dividends, if any, to the date of final distribution to such holders while the Series G Preferred Shares and the Series H Preferred Shares would receive any accrued but unpaid dividends, if any, to the date fixed for distribution, in each case, before any distribution is made to holders of our common shares and any other class or series of junior shares.
After payment of the full amount of the liquidating distributions to which they are entitled, the holders of our Preferred Shares will have no right or claim to any of our remaining assets. In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, our available assets are insufficient to pay the amount of the liquidating distributions on all outstanding Preferred Shares and the corresponding amounts payable on all classes or series of parity shares, then the holders of the Preferred Shares and all such classes or series of parity shares will share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.
If liquidating distributions will have been made in full to all holders of the Preferred Shares and all classes or series of parity shares, our remaining assets will be distributed among the holders of our common shares or any other classes or series of our junior shares, according to their respective rights and preferences and in each case according to their respective number of shares. For such purposes, our consolidation, amalgamation or merger with or into any other entity, the sale, lease or conveyance of all or substantially all of our shares or property or business or a statutory share exchange will not be deemed to constitute a liquidation, dissolution or winding up of the Company.
Redemption
The Series F Preferred Shares are redeemable at our option after March 1, 2018 and the Series G, H and I Preferred Shares are redeemable at our option on or after May 1, 2021, in each case, upon not less than 30 nor more than 90 days written notice, for cash at a redemption price of $25.00 per share.
In addition to the redemption price, the Series F Preferred Shares and Series I Preferred Shares would receive an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period to, but excluding, the redemption




date and any declared but unpaid dividends payable to the redemption date, while the Series G Preferred Shares and the Series H Preferred Shares would receive all accrued and unpaid dividends, if any, to the date fixed for redemption, without interest.
The Preferred Shares are not be subject to any sinking fund or other obligation on our part to redeem or retire the Preferred Shares. Holders of shares to be redeemed will surrender certificates for such shares at the place designated in such notice.
If fewer than all of the outstanding Preferred Shares of any series are to be redeemed, we will determine the number of shares to be redeemed and such shares may be redeemed pro rata from the holders of record of such shares in proportion to the number of such shares held by such holders (with adjustments to avoid redemption of fractional shares), by lot or by any other method that we may deem equitable in our sole discretion.
Unless dividends on all the Preferred Shares and all parity shares will have been declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for the latest completed dividend period, and, in the case of the cumulative shares, for all past dividend periods, we may not redeem, purchase, or acquire any Preferred Shares or any parity shares, otherwise than pursuant to a purchase or exchange offers made on the same terms (other than in respect of arrearages on the cumulative shares) to all holders of such Preferred Shares and parity shares.
Notice of any redemption will be mailed at least 30 days but not more than 90 days before the redemption date to each holder of record of the Preferred Shares to be redeemed at the address shown in our register of members. Each notice will state, as appropriate: (i) the redemption date; (ii) the number of Preferred Shares to be redeemed; (iii) the redemption price (including any accrued or declared but unpaid dividends, as applicable); and (iv) the place or places where certificates for the Preferred Shares are to be surrendered for payment of the redemption price; and (v) that dividends on the Series G Preferred Shares and the Series H Preferred Shares to be redeemed will cease to accrue on such redemption date. If fewer than all of the Preferred Shares are to be redeemed, the notice mailed to each such holder thereof will also specify the number of the Preferred Shares to be redeemed from such holder. If we have given notice of redemption of any of the Preferred Shares and set apart the funds necessary for such redemption in trust for the benefit of the holders of the Preferred Shares so called for redemption, then from and after the redemption date, dividends will cease to accrue on any Series G Preferred Shares or Series H Preferred Shares being redeemed and all such Preferred Shares will no longer be deemed to be outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price plus all accrued and unpaid or declared but unpaid dividends, as applicable, if any.
The holders of the Preferred Shares at the close of business on a Dividend Record Date will be entitled to receive the dividend payable with respect to such Preferred Shares on the corresponding Dividend Payment Date notwithstanding the redemption thereof between such Dividend Record Date and the corresponding Dividend Payment Date or our default in the payment of the dividend due. Except as provided above, we will make no payment or allowance for (i) unpaid dividends with respect to the Series G Preferred Shares and the Series H Preferred Shares or (ii) declared but unpaid dividends with respect to the Series F Preferred Shares and Series I Preferred Shares, in each case, whether or not in arrears, on the Preferred Shares which have been called for redemption.
Capital Disqualification Redemption - Series F and Series I Preferred Shares
We have the option to redeem for cash the Series F Preferred Shares and/or the Series I Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days nor more than 60 days prior written notice in accordance with the procedures described under “Redemption” above, at a redemption price of $25.00 per share, plus an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period to, but excluding, the redemption date, within 90 days after we have reasonably determined that, as a result of (i) any amendment to, or change in, the laws or regulations of Bermuda that is enacted or becomes effective after the initial issuance of the Series F Preferred Shares or the Series I Preferred Shares, as applicable; (ii) any proposed amendment to, or change in, those laws or regulations that is announced or becomes effective after the initial issuance of the Series F Preferred Shares or the Series I Preferred Shares, as applicable; or (iii) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of the Series F Preferred Shares or the Series I Preferred Shares, as applicable, a “capital disqualification event” (as defined below) has occurred; provided that any such redemption in part may only be made if (x) we have reasonably determined that the portion of the Series F Preferred Shares or the Series I Preferred Shares, as applicable, to be redeemed are the subject of the capital disqualification event and (y) after giving effect to such redemption, we have reasonably determined that a capital disqualification event will not exist with respect to the then-outstanding Series F Preferred Shares or the Series I Preferred Shares, as applicable, and such redemption will not result in the suspension or removal of the Series F Preferred Shares or the Series I Preferred Shares, as applicable, from NYSE listing.




A “capital disqualification event” has occurred if the Series F Preferred Shares or the Series I Preferred Shares, as applicable, cease to qualify, in whole or in part (including as a result of any transitional or grandfathering provisions), for purposes of determining our minimum solvency margin, capital adequacy ratios or any other comparable ratios, regulatory capital resource or level of the Company or any member thereof, where subdivided into tiers, as Tier 2 Capital securities under then-applicable capital adequacy rules and regulations imposed upon us by the BMA (or any successor agency or then-applicable regulatory authority), which, includes our “Enhanced Capital Requirements” (as defined in the relevant Bermuda capital regulations) then applicable to the Company and/or its group, except as a result of any applicable limitation on the amount of such capital.
Tax Redemption - Series F, Series H and Series I Preferred Shares
We have the option to redeem for cash the Series F, I or H Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days nor more than 60 days prior written notice in accordance with the procedures described under “Redemption” above, at a redemption price of $25.00 per share, plus (i) accrued and unpaid dividends, if any, to the date of redemption, without interest on such accrued and unpaid dividends with respect to the Series H Preferred Shares or (ii) an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period to, but excluding, the redemption date with respect to the Series F or Series I Preferred Shares, in each case, if as a result of a “change in tax law” there is a substantial probability that the Company or any successor would be required to pay any additional amounts with respect to the Series F, H or I Preferred Shares, as applicable, and the payment of those additional amounts cannot be avoided by the use of any reasonable measures available to us or any successor corporation.
A “change in tax law” that would trigger the provisions of the preceding paragraph would be (a) a change in or amendment to laws, regulations or rulings of any jurisdiction, political subdivision or taxing authority described in the next sentence, (b) a change in the official application or interpretation of those laws, regulations or rulings, (c) any execution of or amendment to any treaty affecting taxation to which any jurisdiction, political subdivision or taxing authority described in the next sentence is party or (d) a decision rendered by a court of competent jurisdiction in Bermuda or any taxing jurisdiction or any political subdivision described in the next sentence, whether or not such decision was rendered with respect to us, in each case described in (a)-(d) above occurring after February 11, 2013, in the case of the Series F Preferred Shares, and April 1, 2016, in the case of the Series I and H Preferred Shares. The jurisdictions, political subdivisions and taxing authorities referred to in the previous sentence are (a) Bermuda or any political subdivision or governmental authority of or in Bermuda with the power to tax, (b) any jurisdiction from or through which we or our dividend disbursing agent are making payments on the Series F, I or H Preferred Shares, as applicable, or any political subdivision or governmental authority of or in that jurisdiction with the power to tax or (c) any other jurisdiction in which the Company or a successor is organized or generally subject to taxation or any political subdivision or governmental authority of or in that jurisdiction with the power to tax.
In addition, we will have the option to redeem for cash any or all the Series F, I or H Preferred Shares at any time in whole or from time to time in part, upon not less than 30 days nor more than 60 days prior written notice in accordance with the procedures set forth under “Redemption” above, at a redemption price of $25.00 per share, plus (i) accrued and unpaid dividends, if any, to the date of redemption, without interest on such accrued and unpaid dividends with respect to the Series H Preferred Shares or (ii) an amount equal to the portion of the quarterly dividend attributable to the then-current dividend period to, but excluding, the redemption date with respect to the Series F or Series I Preferred Shares, in each case, if there is a substantial probability that the entity formed by a consolidation, merger or amalgamation involving us or the entity to which we convey, transfer or lease substantially all our properties and assets will be required to pay additional amounts in respect of any tax, assessment or governmental charge imposed on any holder of Series F, I or H Preferred Shares, as applicable, as a result of a change in tax law that occurred after the date of the consolidation, merger, amalgamation, conveyance, transfer or lease and the payment of those additional amounts cannot be avoided by the use of any reasonable measures available to the Company or any successor corporation.
Substitution or Variation
In lieu of a redemption upon a capital disqualification event as described under “Capital Disqualification Event” or a redemption upon a tax event as described under “Tax Redemption” above, upon or following such capital disqualification event or tax event, we may, without the consent of any holders of the Series F Preferred Shares or the Series I Preferred Shares, vary the terms of the Series F Preferred Shares or the Series I Preferred Shares, or exchange them for new securities, that (1) in the case of a capital disqualification event, for purposes of determining the solvency margin, capital adequacy ratios or any other comparable ratios, regulatory capital resource or level of the Company or any member thereof, where subdivided into tiers, would cause the Series F Preferred Shares or the Series I Preferred Shares to become securities that qualify as Tier 2 Capital securities under then-applicable capital adequacy regulations imposed upon us by the BMA (or any successor agency or then-applicable regulatory authority), which includes our Enhanced Capital Requirements (as defined in the Bermuda capital regulations) or (2) in the case of a tax event, would eliminate the substantial probability that we or any successor corporation




would be required to pay any additional amounts with respect to the Series F Preferred Shares or the Series I Preferred Shares as a result of a change in tax law. In either case, the terms of the varied securities or new securities considered in the aggregate cannot be less favorable to holders than the terms of the Series F Preferred Shares or the Series I Preferred Shares prior to being varied or exchanged; provided that no such variation of terms or securities received in exchange will change the specified denominations, or the amount of dividends payable on, the redemption dates (other than any extension of the period during which an optional redemption may not be exercised by the Company) or currency of, the Series F Preferred Shares or the Series I Preferred Shares, reduce the liquidation preference thereof, lower the ranking of the securities, reduce the voting threshold for the issuance of senior shares or change the foregoing list of items that may not be so amended as part of such variation or exchange. Further, no such variation of terms or securities received in exchange will impair the right of a holder of the securities to institute suit for the payment of any amounts due (as provided under each Certificate of Designation), but unpaid with respect to such holder’s securities.
Prior to any variation or exchange, we will be required to (1) receive an opinion of independent legal advisers of recognized standing to the effect that holders and beneficial owners of the Series F Preferred Shares or the Series I Preferred Shares (including as holders and beneficial owners of the varied or exchanged securities) will not recognize income, gain or loss for United States federal income tax purposes as a result of such variation or exchange and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case had such variation or exchange not occurred and (2) deliver a certificate signed by two executive officers of the Company to the transfer agent for the Series F Preferred Shares or the Series I Preferred Shares confirming that (a) a capital disqualification event or a tax event has occurred and is continuing (as reasonably determined by the Company) and (b) that the terms of the varied or new securities, considered in the aggregate, are not less favorable to holders than the terms of the Series F Preferred Shares or the Series I Preferred Shares prior to being varied or exchanged (as reasonably determined by the Company).
Any variation or exchange of the Series F Preferred Shares or the Series I Preferred Shares described above will be made after notice is given to the holders of the Series F Preferred Shares or the Series I Preferred Shares not less than 30 nor more than 60 days prior to the date fixed for variation or exchange, as applicable.
“capital adequacy regulations” means the solvency margin, capital adequacy regulations or any other regulatory capital rules applicable to us from time to time on an individual or group basis pursuant to Bermuda law and/or the laws of any other relevant jurisdiction and which set out the requirements to be satisfied by financial instruments to qualify as solvency margin or additional solvency margin or regulatory capital (or any equivalent terminology employed by the then applicable capital adequacy regulations).
Voting Rights
I.
Series F and Series I Preferred Shares
Except as described below, the Series F Preferred Shares and the Series I Preferred Shares have no voting rights. Whenever dividends have not been declared and paid on the Series F Preferred Shares, the Series I Preferred Shares or any class or series of non-cumulative parity shares in an amount equivalent to dividends for six full dividend periods (whether or not consecutive), then, immediately upon the happening of such event, the holders of the Series F Preferred Shares and the Series I Preferred Shares, together with the holders of shares of every class or series of non-cumulative parity shares, voting as a single class regardless of class or series, will have the right to elect two directors to our board of directors. Whenever dividends on the Series F Preferred Shares, the Series I Preferred Shares and the non-cumulative parity shares then outstanding have been paid in full, or declared and sufficient funds have been set apart for payment, for at least four consecutive dividend periods, then the right of holders of the Series F Preferred Shares, the Series I Preferred Shares and the non-cumulative parity shares to be represented by directors will cease (but subject always to the same provision for the vesting of such rights in the case of any future non-payments in an amount equivalent to dividends for six full dividend periods), and the terms of office of the additional directors elected to our board will immediately terminate.




Holders of cumulative shares are entitled to two separate additional directors whenever dividends have not been declared and paid on such cumulative parity shares in an amount equivalent to dividends for six full dividend periods (whether or not consecutive) in accordance with the terms of the respective Certificates of Designation for such cumulative shares. Unlike the additional directors for the non-cumulative shares, the terms of office of the additional directors elected by holders of cumulative shares will cease whenever all arrearages in dividends on such cumulative shares then outstanding will have been paid and dividends thereon for then-current quarterly dividend period will have been declared and paid or declared and set apart for payment. Although the Series F Preferred Shares and the Series I Preferred Shares are parity shares with respect to the cumulative shares, and notwithstanding any provision of the Certificate of Designation of any series of cumulative shares, holders of the Series F Preferred Shares and the Series I Preferred Shares will not be entitled to vote with the holders of the cumulative shares for the election of additional directors in circumstances where the holders of cumulative shares are entitled to do so.
In the event we were to merge or amalgamate with another company, the holders the Series F Preferred Shares and the Series I Preferred Shares are entitled to vote on such merger or amalgamation together with all other holders of our share capital pursuant to the Companies Act 1981 of Bermuda, as amended, provided that the holders of the Series F Preferred Shares and the Series I Preferred Shares would be entitled to vote as a separate class, if the merger or amalgamation agreement contains a provision that would constitute a variation of the rights of such Series F Preferred Shares and the Series I Preferred Shares.
In addition, except as set forth above under “Substitution or Variation,” without the written consent, or the sanction of a resolution passed at a separate meeting, of the holders of at least 75% of each of the Series F Preferred Shares and the Series I Preferred Shares at the time outstanding, we may not (i) make any amendment or alteration to, or repeal, any of the provisions of our Memorandum of Association, bye-laws or the Certificate of Designation that would vary the rights, preferences or voting powers of the holders of the Series F Preferred Shares or the Series I Preferred Shares; (ii) authorize any amalgamation, consolidation, merger or statutory share exchange that affects the Series F Preferred Shares and the Series I Preferred Shares, unless in each such case each Series F and Series I Preferred Share will remain outstanding with no variation in its rights, preferences or voting powers or will be converted into or exchanged for preferred shares of the surviving entity having rights, preferences and voting powers identical to that of a Series F and I Preferred Share; or (iii) authorize any creation or increase in the authorized amount of, any shares of any class or series or any security convertible into shares of any class or series ranking prior to the Series F Preferred Shares and the Series I Preferred Shares in payment of dividends or the distribution of assets on any liquidation, dissolution or winding up of the Company. However, no such vote of the holders of the Series F Preferred Shares and the Series I Preferred Shares will be required if, prior to the time any vote is to be taken, all the outstanding Series F Preferred Shares and the Series I Preferred Shares will have been redeemed. We may create and issue additional classes or series of parity shares and fully junior shares without the consent of any holder of the Series F Preferred Shares and the Series I Preferred Shares. The holders of the Series F Preferred Shares and the Series I Preferred Shares are not entitled to vote on any sale of all or substantially all of our assets.
II.
Series G and Series H Preferred Shares
Generally, the Series G and Series H Preferred Shares have no voting rights. Whenever dividends payable on the Series G or the Series H Preferred Shares or any class or series of cumulative parity shares will be in arrears (whether or not such dividends have been earned or declared) in an amount equivalent to dividends for six full dividend periods (whether or not consecutive), then, immediately upon the happening of such event, the holders of the Series G and the Series H Preferred Shares, together with the holders of shares of every class or series of cumulative parity shares, voting as a single class regardless of class or series, will have the right to elect two directors to our board of directors. Whenever all arrearages in dividends on the Series G and the Series H Preferred Shares and the cumulative parity shares then outstanding will have been paid and dividends thereon for the current quarterly dividend period will have been paid or declared and set apart for payment, then the right of holders of the Series G and Series H Preferred Shares and the cumulative parity shares to be represented by directors will cease (but subject always to the same provision for the vesting of such rights in the case of any future arrearages in an amount equivalent to dividends for six full dividend periods), and the terms of office of the additional directors elected to our board will forthwith terminate.
Without the written consent, or the sanction of a resolution passed at a separate meeting, of the holders of at least 75% of the Series G and the Series H Preferred Shares at the time outstanding, we may not (i) make any amendment or alteration to, or repeal, any of the provisions of our Memorandum of Association, bye-laws or the Certificate of Designation that would vary the rights, preferences or voting powers of the holders of the Series G and the Series H Preferred Shares; (ii) authorize any amalgamation, consolidation, merger or statutory share exchange that affects the Series G and the Series H Preferred Shares, unless in each such case each Series G and the Series H Preferred Share will remain outstanding with no variation in its rights, preferences or voting powers or will be converted into or exchanged for preferred shares of the surviving entity having rights, preferences and voting powers identical to that of a Series G and the Series H Preferred Share; or (iii) authorize any creation or




increase in the authorized amount of, any shares of any class or series or any security convertible into shares of any class or series ranking prior to the Series G and the Series H Preferred Shares in payment of dividends or the distribution of assets on any liquidation, dissolution or winding up of the Company. However, no such vote of the holders of the Series G and the Series H Preferred Shares will be required if, prior to the time when any of the foregoing actions is to take effect, all the outstanding Series G and Series H Preferred Shares will have been redeemed. We may create and issue additional classes or series of parity shares and fully junior shares without the consent of any holder of the Series G and the Series H Preferred Shares. The holders of the Series G and the Series H Preferred Shares are not entitled to vote on any sale of all or substantially all of our assets.
Conversion
Our Preferred Shares are not convertible or exchangeable for any of our other securities.
Limitations on Transfer and Ownership
Our bye-laws provide that, subject to waiver by our board of directors, no person (other than any other than any member of EXOR N.V., a naamloze vennotschap organized under the laws of Kingdom of the Netherlands, and each of its affiliates that becomes a shareholder of the Company and each of their respective successors) may acquire ownership of our shares if such purchase would result in (1) such person owning or controlling more than 9.9% of our outstanding shares (as determined by value) or (2) such person becoming a holder of more than 9.9% of the total combined voting power of all classes of our shares entitled to vote at a general meeting of our shareholders or in any other circumstance in which our shareholders are entitled to vote (a “Ten Percent Shareholder”). A transferee will be permitted to dispose of any shares purchased which violate the restriction and as to the transfer of which registration is refused. In addition, in the event we become aware of such ownership, we may reduce the voting rights with respect to any of our shares owned or controlled by such person to the extent necessary to limit the voting power held by such person to 9.9% in the aggregate. The voting rights with respect to all shares held by such person in excess of the 9.9% limitation will be allocated to the other holders of shares, pro rata based on the number of shares held by all such other holders of shares, subject only to the further limitation that no shareholder allocated such voting rights may exceed the 9.9% limitation as a result of such allocation. For these purposes, references to ownership or control of our shares mean ownership within the meaning of Section 958 of the Internal Revenue Code and Section 13(d)(3) of the Exchange Act. Our bye-laws provide for additional limitations on transfer and ownership of our share capital.
Jurisdiction and Governing Law
We have agreed to submit ourselves to the non-exclusive jurisdiction of any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York, over any suit, action or proceeding arising out of or relating to the Preferred Shares. Bermuda substantive law will be applied in any such proceeding.




Exhibit 8.1
PartnerRe Ltd.
Subsidiaries of the Company
 
  
Jurisdiction
 
Percentage Interest Held
PartnerRe Ltd.
  
Bermuda
 
 
PartnerRe Services Ltd.
  
Bermuda
 
100%
Partner Reinsurance Company Ltd.
  
Bermuda
 
100%
PartnerRe Americas Services Company, S.A. de C.V.
 
Mexico
 
100%
PPF Holdings I Ltd.
  
Bermuda
 
100%
PPF Holdings II Ltd.
  
Bermuda
 
100%
PPF Holdings III Ltd.
  
Bermuda
 
100%
PartnerRe Capital Investments Corp.
  
Delaware, United States
 
100%
LFR Collections LLC
  
Delaware, United States
 
100%
Almandine I LLC
  
Delaware, United States
 
95%
PartnerRe Investment Holding Company Ltd.
  
Bermuda
 
100%
PartnerRe ILS Fund Ltd.
  
Bermuda
 
100%
Raccoon River Re Ltd
 
Bermuda
 
100%
Partner Reinsurance Life Company of Bermuda Ltd.
 
Bermuda
 
100%
PartnerRe Corporate Member Limited
 
United Kingdom
 
100%
PartnerRe Corporate Member 2 Limited
 
United Kingdom
 
100%
Almacantar Group S.A.
 
Luxembourg
 
36%
Partner Reinsurance Asia Pte. Ltd.
 
Singapore
 
100%
PartnerRe Holdings Europe Limited
 
Ireland
 
100%
     PartnerRe Life Reinsurance Company of Canada
 
Canada
 
100%
PartnerRe Connecticut Inc.
  
Connecticut, United States
 
100%
PartnerRe Ireland Insurance dac
  
Ireland
 
100%
PartnerRe Ireland Finance DAC
  
Ireland
 
100%
PartnerRe Holdings SA
  
France
 
100%
Partner Reinsurance Europe SE
  
Ireland
 
100%
PartnerRe Escritório de Representação no Brasil Ltda.
  
Brazil
 
100%
PartnerRe Miami Inc.
  
Florida, United States
 
100%
PartnerRe U.S. Corporation
  
Delaware, United States
 
100%
PRE Life Bermuda Re Ltd.
 
Bermuda
 
100%
PartnerRe Life Reinsurance Company of America
 
Arkansas, United States
 
100%
PartnerRe America Insurance Company
  
Delaware, United States
 
100%
PPF Finance LLC
  
Delaware, United States
 
100%
PartnerRe Finance A LLC
  
Delaware, United States
 
100%
PartnerRe Finance B LLC
  
Delaware, United States
 
100%
PartnerRe Finance C LLC
  
Delaware, United States
 
100%
PartnerRe Asset Management Corporation
  
Delaware, United States
 
100%
Pitts Bay Investment Management Inc.
  
Delaware, United States
 
100%
Partner Reinsurance Company of the U.S.
  
New York, United States
 
100%
PartnerRe Finance I Inc.
  
Delaware, United States
 
100%
PartnerRe Finance II Inc.
  
Delaware, United States
 
100%
PartnerRe Capital Trust II
  
Delaware, United States
 
100%
PartnerRe Capital Trust III
  
Delaware, United States
 
100%
Presidio Reinsurance Group, Inc.
  
Delaware, United States
 
100%
Presidio Excess Insurance Services Inc.
  
California, United States
 
100%
PartnerRe Management Limited
  
United Kingdom
 
100%
Presidio Reinsurance Corporation
  
Montana, United States
 
100%


Code of Business
Conduct and Ethics

To All PartnerRe Employees:
Dear Colleagues,
As we continue to make great progress towards our 2020 vision, it is good to remind ourselves of some of the fundamentals of our success, and in particular, of our values of trust, responsibility, openness and initiative. These values set the foundation for PartnerRe as an organization that is committed to integrity and openness; one that continues to build on its strengths and where employees feel pride and ambition in their work.
It is up to each one of us to live these values by transforming them from just words into meaningful actions that shape our culture and our reputation, and the way in which our clients, brokers, future employees and our own communities perceive us. I therefore invite you to take the time to read the Code of Conduct, to think about what our values mean to you and how you can apply them in your everyday work.
I also expect you to have the courage to speak up if you witness any infringements of the Code of Conduct. You can find out how to identify and report a violation by reading PartnerRe’s Whistleblowing Procedure, which can be found together with the Reporting Hotline and the Code of Conduct, on the home page of Relink. 
If you have any questions or concerns relating to ethics at PartnerRe or how to report a violation, please contact a member of the Legal team.
Thank you for your support,
Emmanuel Clarke
CEO and President 
PartnerRe Ltd.






Code of Business Conduct and Ethics
Governance
Work Environment 
Reporting Violations
Conflicts of Interest
Legal and Regulatory Integrity 
Financial and Non-Financial Integrity
Insider Trading
Sanctions and Anti-Money Laundering
Anti-Trust and Fair Dealing
Bribery and Corruption
Fraud
Protection and Proper Use of PartnerRe Resources
Corporate Opportunities and Resources
Electronic Communications
Confidentiality 



Our vision
Our vision is to be the best reinsurance partner to our clients and brokers.

Our Core Purpose
We help insurance companies succeed by making risk manageable for our clients. We combine technical expertise and strong relationships to help fuel their success and their peace of mind.

Our Strategy
We complement our technical capabilities with a client focused approach, to develop successful partnerships with our clients.

We create value through:
▪
Sourcing diversified and profitable risks by being the go-to reinsurer for our clients
▪
and brokers
▪
Executing intelligent and responsible underwriting
▪
Managing risk and capital for strength and flexibility
▪
Maintaining an efficient, effective platform
▪
Attracting, retaining and developing talent

Our Values
Trust
▪
Ethics first, every time
▪
Partnership in words and actions
▪
Committed to earning client trust every day
Responsibilities
▪
Passionate about results for our business and clients
▪
Acting like owners - always accountable for our actions
▪
Mindful, multicultural citizens of the world
Openness
▪
Transparency in the face of complexity
▪
Collaboration over competition
▪
Speaking up and standing out
Initiative
▪
Proactive solutions, not reactive repairs
▪
Empowering people to seize opportunities every day
▪
Extraordinary acts, both big and small






Code of Business
Conduct and Ethics
This Code of Business Conduct and Ethics (the “Code”) applies to all PartnerRe Group1 directors and employees (referred to herein as “Employee(s)”). References to “Employee(s)” also include any third party connected to PartnerRe who is notified that the Code applies to them.
PartnerRe’s reputation is critical to the success of its business and organization and comes from the everyday actions of Employees when dealing with clients, suppliers, regulators, competitors and fellow Employees. Consistent and sound business practices contribute to building a reputation that creates value and a sustainable competitive advantage.
We are committed to a culture of trust and responsibility; therefore, the highest level of ethical conduct should be reflected in all of our business activities.
At PartnerRe we have common values that apply to the entire organization and that underpin our business activities and behavior.
This Code is designed to provide a high-level overview of these core values in practice. It is supplemented by additional policies and guidelines that fully explain the application of these values. Employees are required to read, understand, accept and apply the values contained in the Code and in all other policies and guidelines applicable to them, in their everyday work and behavior.
It is not possible for the Code to cover every possible situation that may arise; therefore, in the case of doubt, there is one simple question to ask: “If the act or omission were made public, would PartnerRe’s reputation be questioned or damaged?”
If a situation seems questionable with respect to the application of the principles outlined in this Code, Employees are encouraged to seek guidance from their manager, the Human Resources Department, the Corporate Audit Department, the Legal and Compliance Department or the Executive Leadership Team.

1 PartnerRe Group includes PartnerRe Ltd. and all direct and indirect subsidiaries and branches thereof (“PartnerRe” or the “Company”)


Governance
The Code is approved by the Audit Committee of PartnerRe Ltd. which is made up entirely of independent directors.
Any specific waiver of the provisions of this Code or material amendment requires the approval of the Audit Committee.
Any violation of the Code will result in appropriate disciplinary measures, up to and including dismissal. Criminal misconduct may be referred to the appropriate legal authorities.
If a principle in this Code infringes the law, the law shall prevail. If a local custom or policy conflicts with this Code, the Code shall prevail. Any questions in connection with conflicts should be addressed to the Legal and Compliance Department.
Q
If I comply with local laws and regulations, will this ensure my compliance with the Code?
A
Not necessarily. Our Code may impose standards that are more rigorous than those imposed by local laws and regulations. In these situations, and provided that the Code does not conflict with laws and regulations, you should make sure that you comply with the Code


Work Environment
We expect our work environment to be free from all forms of discrimination, harassment or intimidation and will therefore not tolerate any prejudice, whether based on race, color, age, religion, gender, sexual orientation, national origin or otherwise.
All Employees are expected to perform their duties in a safe manner, free from the influence of alcohol, illegal drugs or other controlled substances (except for prescription medication for medical treatment). The use of illegal drugs in the workplace will not be tolerated.
Although alcohol may be consumed at work-related events when the local custom and occasion make it appropriate to do so, it is the responsibility of each Employee to consume no more than moderate amounts and to ensure that his/her performance, judgment and behavior are unimpaired.
PartnerRe strives to provide each Employee with a healthy and safe work environment. It is the responsibility of each Employee to maintain this healthy and safe workplace by following environmental, health and safety rules and practices and by reporting accidents, injuries and unsafe equipment, practices or conditions.
PartnerRe encourages direct and open communication among and between Employees and management. Employees are free to discuss issues with their managers without fear of reprisal or the need for third-party representation. Any form of retaliation will result in appropriate disciplinary measures.


Reporting Violations
Whistleblowing Procedure
An Employee who becomes aware of any activity that appears to violate any applicable state, federal, local or national laws, rules, regulations applicable to PartnerRe (the “Regulations”) or provisions of this Code or any other PartnerRe policy and guidelines, is expected to promptly report the possible violation. PartnerRe has a process that governs how Employees may openly, confidentially or anonymously report an actual or potential violation without fear of retaliation. This process is described in the Whistleblowing Procedure2 which can be accessed via the homepage of Relink.
Employees are encouraged to report an actual or potential violation firstly through the normal business channels i.e. (i) to their direct manager or, if the employees do not feel that this is appropriate, (ii) to the Human Resources Department, the Corporate Audit Department, the Legal and Compliance Department, or to any member of the Executive Leadership Team.
If an Employee, for any reason, is uncomfortable with making a report through the above channels or if the responses that he/she has received are not satisfactory, the Employee may report the Violation anonymously by using the “Reporting Hotline” button located on the home page of Relink (the “Hotline”). All reports made through the Hotline are sent directly to the Chairman of the Audit Committee of PartnerRe Ltd.
Q
I am concerned that someone may have breached the Regulations or the Code, but I am not really sure. What should I do?
A
Even in circumstances where you are unsure but have questions or concerns, we encourage you to report the perceived breach of the Regulations or the Code. In order to facilitate the reporting of employee concerns, we have established a Whistleblowing Procedure, which provides certain mechanisms for Employees to submit concerns in good faith. There are no repercussions for any Employee with respect to good faith reporting of complaints or questions. Retaliation of any type against an Employee who reports a violation or potential violation in good faith will not be tolerated and is prohibited by principles outlined in the Code. Anyone who attempts to retaliate against an Employee for reporting a Violation or potential violation will face discipline, which may include termination.
2The reporting process may differ subject to Employee location


Conflicts of Interest
Policy Statement on Conflicts of Interest
PartnerRe is committed to an environment free from conflicts of interest. A conflict of interest occurs when the private interests of an Employee or the private interests of his/her Immediate Family Member3 interfere, or appear to interfere, with the interests of PartnerRe.
Employees should discuss any circumstance that creates a real or potential conflict of interest with their manager and, where applicable report it to the Legal and Compliance Department. For Employees, all decisions regarding the Company’s interests must be based solely on what is best for the Company and must not be improperly influenced by personal interests. Employees shall not divulge or personally benefit from any information about the Company or its clients that is not available to the public.
Employees shall not accept commissions, gifts, gratuities, credit, loans or favors of any kind (“Special Treatment”) from any person, firm or corporation doing business or seeking to do business with the Company under circumstances from which it could be reasonably inferred that the Special Treatment could interfere or appear to interfere with the interests of the Company.
Employees must avoid all other employment and activities which involve obligations which may conflict with the interests of the Company
Q
Every year one of our suppliers sends me a couple of bottles of wine in the festive season - can I accept them?
A
You have to decide if the gift is reasonable and appropriate in the circumstances. Gifts of a nominal value are acceptable, but you must be sure that such a gift will in no way influence your business judgment or could be perceived as favoring the giver. If you are unsure how to respond to a receipt of a gift, contact the Legal and Compliance Department.
Some examples of prohibited behavior that are considered to be or could be perceived as being a conflict of interest are listed below. Employees may not:
•
Accept any personal benefit (such as fees, commissions) from a person or business involved in any transaction with PartnerRe.
•
Accept gifts, discounts, services, transportation or any other form of services or goods or favors of value from contractors, vendors, brokers, agents, client companies or persons providing services/ materials to PartnerRe other than of nominal value.
•
Offer favors, gifts or services other than those that are reasonable and appropriate for the individuals involved and supported by appropriate documentation and approvals.


•
Offer or accept cash (or cash equivalent), loans or guarantees (other than in an approved corporate capacity) in any amount to/from a supplier, client, potential supplier or potential client.
•
Arrange or facilitate certain business transactions between their Immediate Family Member and any client or supplier.
•
Have a financial interest in clients, suppliers, competitors or any enterprise that is known to have a business relationship with PartnerRe, except where the financial interest is less than 1% of a publicly traded company.
•
Borrow from or lend to clients, suppliers or fellow Employees except for normal banking transactions with financial institutions conducted on a commercial basis.
Any activity that an Employee is aware of that has similar characteristics to the above, or could be perceived to have similar characteristics, and any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest, requires disclosure to the Legal and Compliance Department.
Entertainment
Accepting normal business entertainment, at which the giver is present, such as lunch, dinner, theater, a sporting event or other customary business entertainment, is appropriate if it is not frequent and is of a reasonable nature, in the course of a meeting or to foster better business relations. Sound judgment must always be used when deciding whether to attend any event, keeping in mind how your attendance may be viewed by others within and outside the organization.
Q
One of my clients has invited me to stay at his holiday home whenever I want - is this permitted under the Code?
A
No. You may not accept any “favors of value” from a supplier, client, potential supplier, client or competitor, other than of nominal value.
3 For the purposes of this Code, Immediate Family Member includes an Employee’s relatives or partner sharing their household



Legal and Regulatory Integrity
PartnerRe operates in multiple jurisdictions around the world. PartnerRe and all of its Employees must comply fully with the Regulations of the cities, states and countries in which we operate. Although Employees are not expected to know the details of each of these Regulations, it is important to know enough to determine when to seek advice from the Legal and Compliance Department or other appropriate persons.
Employees may under no circumstance knowingly mislead or misrepresent any PartnerRe information specifically but without limitation to auditors, regulators or any other official bodies.


Financial and Non-Financial Integrity
All financial transactions must be accurately and fairly recorded in a timely manner in accordance with applicable accounting standards and the policies and guidelines of PartnerRe. All periodic reports that PartnerRe is required to prepare and PartnerRe’s other public communications shall contain full, fair, accurate, timely and understandable disclosure.


Insider Trading
Guidelines: Trading
All Employees must comply with all applicable securities laws on the sale and purchase of any PartnerRe preference shares. All Employees are strictly prohibited from trading any securities, not just PartnerRe preference shares, while in possession of Material Non-Public Information (as defined in the Trading Guidelines), including shares in EXOR N.V.


Sanctions and Anti-Money Laundering
Guidelines: Sanctions and Anti-Money Laundering
Jurisdictions in which PartnerRe operates often impose legal restrictions against doing business with certain designated countries, people and organizations (the “Applicable Sanctions”).
It is generally PROHIBITED to directly or indirectly engage in trade, financial or commercial transactions and other dealings (“Transaction(s)”):
•
in a country subject to total embargo in accordance with Applicable Sanctions;
•
with or that would benefit individuals, entities and vessels that are the subject of Applicable Sanctions or that are owned or controlled by individuals and/or entities that are the subject of Applicable Sanctions; or
•
for activities prohibited by the Applicable Sanctions.
PartnerRe undertakes to take reasonable measures to detect and prevent money laundering4 and related activities. PartnerRe and its Employees are prohibited from knowingly laundering money and shall be vigilant before engaging in a Transaction with a counterparty.
Employees are required to familiarize themselves and to comply with the instructions set forth in PartnerRe’s Sanctions and Anti-Money Laundering Guidelines and other supporting documents in order to detect and prevent money laundering, terrorism financing or transactions with prohibited countries, people and organizations.
Q
Where can I find a list of the designated countries that have restrictions in place that may prevent PartnerRe from doing business there?
A
A list of the designated countries can be found on Relink.
4 Practice of disguising the origins of illegally-obtained money in order to create the impression that the funds were derived from a legitimate source. Money laundering occurs in connection with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism


Anti-Trust and Fair Dealing
Guidelines: Anti-Trust 
PartnerRe is committed to preserving free competition according to all anti-trust and competition laws and Regulations applicable to the jurisdictions in which we conduct business.
Employees are required to compete independently, in an ethical manner and must endeavor to deal fairly with PartnerRe’s clients, suppliers, service providers, competitors and other Employees. No Employee should take unlawful advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.
Q
Am I permitted to talk to our competitors about pricing trends as long as I don’t talk specifically about PartnerRe pricing or our competitors’ products?
A
General discussions on publicly known industry trends industry trends may be permitted. You must however be mindful of how these discussions may be perceived and how this information may be used by others. As a rule, you should always decline to discuss specific pricing and terms with competitors.


Bribery and Corruption
Guidelines: Anti-Bribery
PartnerRe is committed to fighting corruption, in compliance with applicable Regulations. Employees must not accept or offer, directly or indirectly, during the course of their duties, any benefit (including money, gifts or services) from or to public officials, politicians, political parties, or any other person or organization with a view to inducing them to do or not do something within the scope of, or facilitated by, their job or position.
Employees should also at all times be mindful of cultural and geographic differences in the different countries we operate in and disregard any local practice, rule or custom unless in line with the standards set forth in the Code or required by local law. Any such situation should be referred to the Legal and Compliance Department.


Fraud
Guidelines: Anti-Fraud
There is no tolerance of fraud involving any Employees or third party with a business association with PartnerRe. Many of the actions that are prohibited under this Code may constitute fraudulent activity, including, but not limited to:
•
Intentional misstatement of the Company’s financial statements;
•
Intentional misstatement of the Company’s management information;
•
Misappropriation of funds, securities, supplies, or other Company assets for personal gain;
•
Willful corporate tax evasion or facilitating any structure for the purpose of tax evasion, by omission of income, unlawful deductions, intercompany agreements, inappropriate structures or transfer pricing schemes;
•
Entering into a reinsurance contract or investment transaction which has the intent of providing an accounting benefit or capital benefit to the counterparty which is inconsistent with the underlying economics of the transaction;
•
Revenue and/or assets obtained by Fraud or in an illegal manner, including money laundering, facilitation payments to foreign or domestic governments, kickback schemes or payoffs occurring during procurement and/or bidding process during major acquisitions and projects;
•
Any dishonest or intentionally misleading act;
•
Impropriety in the handling or reporting of money or financial transactions and statements;
•
Profiteering as a result of insider knowledge of Company activities;
•
Disclosing confidential and proprietary information to outside parties;
•
Disclosing securities activities or acquisitions engaged in or contemplated by the Company;
•
Accepting or seeking anything of material value from contractors, vendors, brokers, client companies, MGAs/TPAs or persons providing services/materials to the Company;
•
Destruction, removal, or inappropriate use of records and intellectual property (electronic or physical), furniture, fixtures, or equipment;
•
Recording of fictitious journal entries or similar adjustments;
•
Intentionally biasing assumptions and judgments used to estimate certain account balances such as loss reserves;


•
Entering into transactions that are outside PartnerRe’s normal or approved course of business and lacking in economic substance;
•
Any similar or related irregularity.
Q
Should I report a suspicion of fraud even if I don’t have any proof?
A
Yes, if you report a breach of the Regulations or the Code, you should be as specific as possible about the possible violation you have witnessed and provide as much detailed information as you can to help facilitate an investigation. Even if you don’t have evidence, you should still report suspected fraudulent behavior.



Protection and Proper Use of PartnerRe Resources
Guidelines: Information Technology,  Anti-Bribery
Employees have a responsibility to safeguard and make proper and efficient use of PartnerRe’s assets (both tangible and intangible) and systems (“PartnerRe Resources”).
Each Employee has an obligation to prevent PartnerRe Resources from being lost, damaged, misused, stolen, embezzled or destroyed.
PartnerRe Resources are intended to be used for legitimate business purposes. Limited personal use of PartnerRe Resources is permissible when such use does not lead to inappropriate expense, interfere with business operations or violate the Regulations, the Code or any other PartnerRe policies or guidelines.


Corporate Opportunities
Employees have a duty to promote PartnerRe’s legitimate interests when the opportunity to do so arises and to use PartnerRe Resources exclusively for that purpose. Corporate opportunities must not be taken or used for personal gain.
Employees shall not take personal advantage of PartnerRe’s property, information or their position and shall not compete directly or indirectly with PartnerRe.
Q
One of my relatives is looking for a new insurer and has asked me to set up a meeting with one of our cedants. Is this acceptable under the Code?
A
No. You may not arrange or facilitate any business transaction between any Immediate Family Members and any client or supplier.
In certain circumstances, it is acceptable to make recommendations to third parties in a personal capacity, provided that you are not involved in arranging or facilitating any meeting and you have no involvement with any relationship that may ensue.


Electronic Communications
Guidelines: Electronic Communications
PartnerRe provides information systems and computer networks to Employees. All information conveyed by any type of Electronic Communications (as defined in the Electronic Communications Guidelines) must be conducted lawfully, in an appropriate manner and, consequently, must be clear, concise and unambiguous and at all times respectful of other individuals.



Confidentiality
Guidelines: Data Privacy, Information Security, External Communications, Information Technology
Employees must maintain the confidentiality of all information entrusted to them and shall not use confidential information unless in possession of express and explicit authorization. With respect to personal data, information must always be held in strict compliance with the applicable Regulations concerning the protection of personal data.
Any disclosure of confidential information must be either authorized internally or required by applicable Regulations or legal process.
Confidential information includes any type of non-public business or personal information with respect to PartnerRe, its Employees, clients, prospective clients, suppliers, shareholders and any other persons or entities with whom PartnerRe has a relationship and that have an expectation of confidentiality.
The obligation to preserve confidential information continues even after Employees leave PartnerRe.
Q
I meet after work with a number of friends who work for competitor organizations. How do I decide what is and isn’t confidential information?
A
You must use your own judgment, but be aware that confidential information is any non-public information. If in doubt, be cautious, and don’t discuss specific business issues.

This Code is supplemented by various documents, which are referenced herein. Employees are required to read, understand, accept and apply the principles contained in the Code and in all other documents applicable to them in their everyday work and behavior.
www.partnerre.com


CERTIFICATION
I, Emmanuel Clarke, certify that:
1.
I have reviewed this annual report on Form 20-F of PartnerRe Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: March 2, 2020
By:
 
/S/    EMMANUEL CLARKE        
Name:
 
Emmanuel Clarke
Title:
 
President & Chief Executive Officer


CERTIFICATION
I, Mario Bonaccorso, certify that:
1.
I have reviewed this annual report on Form 20-F of PartnerRe Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: March 2, 2020
By:
 
/S/    MARIO BONACCORSO        
Name:
 
Mario Bonaccorso
Title:
 
Executive Vice President & Chief Financial Officer
                 
 



SECTION 906 CERTIFICATIONS
The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2019 (the “Report”) of PartnerRe Ltd. (the “Company”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Emmanuel Clarke, the Chief Executive Officer, and Mario Bonaccorso, the Chief Financial Officer, each certifies that, to the best of his knowledge:
1.
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 2, 2020
 

By:
 
/S/    EMMANUEL CLARKE        
Name:
 
Emmanuel Clarke
Title:
 
President & Chief Executive Officer
By:
 
/S/    MARIO BONACCORSO        
Name:
 
Mario Bonaccorso
Title:
 
Executive Vice President & Chief Financial Officer