PartnerRe last night reported a 24 percent drop in first-quarter income compared to 2007.

The Bermuda reinsurer posted a net income of $129 million, or $2.16 per share, for the first three months of the year, down $40 million compared to the same period in 2007 when its profits totalled $169.3 million, or $2.76 per share.

The company's first-quarter results did not meet predictions of analysts, who expected net income of $2.30 a share.

President and CEO Patrick Thiele said: "PartnerRe continues to post solid results despite an increasingly competitive non-life reinsurance market. We were able to achieve net written premium growth of approximately 11 percent in a softening market because of the continuing weakness of the US dollar, our acquisition last year of the renewal rights to the international reinsurance operations of the French Monceau Group, as well as significant growth in our agricultural book in the US. This new business helps to maintain the superior level of diversification we have built over the last cycle.

"Our solid underwriting performance, combined with good results from our investment operations, allowed us to grow GAAP book value per share by $2.97 in the quarter, which represents a four-percent increase in the quarter and 21-percent increase year over year."

During the first quarter of 2008, the company adopted FAS 159 (a fair value accounting standard) and reclassified "available for sale securities" as "trading securities", which has the effect of recording market value movements of the company's investment portfolio through the net realised gains and losses line on the income statement. PartnerRe also announced it had repurchased 188,660 common shares, worth $15 million, during the period. There are approximately 4.3 million common shares remaining under the current repurchase authorization of November 2007.

The company's total revenue rose during the period to $1.1 billion compared to $962 million for first quarter of 2007. Total revenues include $909.8 million of net premiums earned, net investment income of $137.0 million, and net realised investment gains of $25.1 million.

Operating earnings for the first quarter of 2008 were $110.2 million or $1.98 per share. This compares to operating earnings of $154.9 million, or $2.66 per share, for the first quarter of 2007. Mr. Thiele predicted the company's underwriting profitability will decrease during the rest of the year but remains optimistic.

"We are experiencing a softening market in most of our lines of business as clients cut back on the size of their programmes, competition increases, and prices decline," he said. "Inevitably, our underwriting profitability will decrease as these trends continue."

However, Mr. Thiele said the company was beginning to see opportunities in the capital markets.

He said: "Despite these cross-currents, we believe that PartnerRe is well-positioned strategically and financially to continue to achieve our long-term targets for operating return on equity of 13 percent over the cycle, and average annual book value per share growth in excess of 10 percent."

The company also announced that its board declared a regular quarterly dividend of $0.46 per common share. The dividend will be payable on June 2, 2008, to common shareholders of record on May 23, 2008, with the stock trading ex-dividend commencing May 21, 2008.