PartnerRe Ltd profits fell by more than a third in the second quarter, as rising interest rates reduced the value of some of the Bermudian reinsurer’s fixed-income investments.

The company said net income for the April through June quarter totalled $125 million, a figure that included the impact of $79 million of unrealised losses on fixed-income investments.

This compared to a net income of $191 million for the corresponding period of 2017, which included net unrealised investment gains on fixed-income securities of $95 million.

PartnerRe said the majority of its investments are accounted for at fair value, with changes in the fair value included in the net income figure.

Emmanuel Clarke, PartnerRe’s president and chief executive officer, said: “We delivered an annualised net income return on equity of 8.4 per cent in this quarter, driven by solid underwriting profits in both our non-life and life and health segments and a 20 per cent increase in net premium written compared to last year’s second quarter.

“I am pleased to see our results reflect the efforts we have made, over the past two years, to gain relevance with our key clients and brokers, and to find new attractive business opportunities.

“Notwithstanding a competitive reinsurance market, we achieved a positive July 1 renewal where we continued to see increases in business margins.

“These results, in conjunction with continued improved efficiency in operating expenses, and the impact of higher reinvestment yields on our investment portfolio, position our company well to deliver improved underwriting and financial results during the remainder of 2018.”

PartnerRe is a wholly owned subsidiary of Italian-based Exor, the investment vehicle of the Agnelli family.

Underwriting profits, including both non-life and life and health operations and corporate expenses, were $36 million for the second quarter of 2018 compared to $37 million for the same period of 2017.

Non-life net premiums written were up 21 per cent for the second quarter of 2018 and 17 per cent for the half year 2018 compared to the same periods of 2017.

These increases were primarily due to new business written in both the P & C and specialty segments. The non-life underwriting profit was $65 million, with a combined ratio of 93.8 per cent, for the second quarter of 2018 compared to $108 million and a combined ratio of 87.7 per cent, for the same period of 2017.

In the life and health business, net premiums written were up 19 per cent in the second quarter of 2018 and 24 per cent for the half year 2018 compared to the same periods of 2017, driven primarily by organic growth in the life business, a favourable foreign exchange impact and higher rates in the Health business.

The increase for the half year also reflects the inclusion of the Aurigen life premiums for two quarters in 2018 compared to only one quarter in 2017, following the acquisition of Aurigen on April 2, 2017.