PartnerRe chief executive officer Patrick Thiele believes there should be less emphasis on returns and more on risk among financial services company in the wake of the market turbulence of the last year.

Making the keynote speech at this week's Society of Insurance Financial Management annual conference at the Fairmont Southampton hotel, Mr. Thiele said the insurance industry should be proud of the way it had come through the crisis.

He added that insurance companies' risk management had stood the test of the deepest recession in 60 years much better than banks. But he called for insurers to consider adding formalised "risk statements" to the their financial reporting, to give investors and clients a realistic assessment of how often they could lose money.

"There is too much focus on returns," Mr. Thiele told delegates on Monday. "The banks said 'you can make 18 percent return on equity (ROE)' and not to worry about what's going on behind the curtain. They never told you about the risks associated with those returns."

Risk statements should be published alongside income statements and balance sheets, Mr. Thiele argued, as this would allow comparison of corporate risk across companies.

"If you're aiming for 13 percent ROE, then you're maybe going to lose money every five or six years," Mr. Thiele said. "And if your target is 18 percent ROE, then you're going to lose money at least twice every ten years."

PartnerRe, which is the biggest writer of reinsurance in the Bermuda market, sets strict limits on how much potential loss it will take on for each type of peril and underwrites according to those limits.

"You have to set a standard against which you will not go further, if you want to be able to fight on next year," Mr. Thiele added.

PartnerRe, which was formed in 1993, has grown steadily and has produced an average ROE of 13 percent over the past five years. It has 14 offices around the world and clients in 150 countries.

In 2008, it wrote more than $4 billion in gross premiums and is currently undergoing a merger with Switzerland-based Paris Re, which will boost its shareholders' equity by $1.7 billion and make PartnerRe the fourth largest reinsurer in the world.

Speaking a year after the financial earthquake that followed the collapse of US investment bank Lehman Brothers, Mr. Thiele said there were several basic lessons to be learned from the crisis.

• Don't believe in models — they have a tendency to underestimate correlations between risks.

• You can't have too much capital.

• Don't rely on rating agencies — major problems occurred at some of the industry's most highly rated companies. Ratings are a tool but they do not absolve companies from doing their own risk analysis.

• Mark-to-market accounting is flawed. There is no reason to mark investment-grade fixed-income securities to market. PartnerRe had to mark down the value of those investments by hundreds of millions last year and has marked them up again by hundreds of millions this year. "But we did not lose any of that money last year and we didn't make any of that money this year," Mr. Thiele said.

The CEO said PartnerRe's acquisition of Paris Re put the company in the sweet spot of the reinsurance industry in terms of size, at around $6 billion of shareholders' equity.

"We're large enough to have diversification, but we're small enough to manage," he said.

"I think further consolidation is likely to happen in the smaller range of companies and there's a fair amount of discussion going on about that now.

"It's difficult to predict the future now for $500 million to $1 billion companies."