10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission file number 1-14536

PartnerRe Ltd.

(Exact name of Registrant as specified in its charter)

Bermuda	Not Applicable
(State of incorporation)	(I.R.S. Employer Identification No.)

90 Pitts Bay Road, Pembroke, HM08, Bermuda

(Address of principal executive offices) (Zip Code)

(441) 292-0888

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 the filing requirements for at least the past 90 days.

Yes  x        No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x                    Accelerated filer  ¨                    Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨        No  x

The number of the Registrant’s common shares (par value $1.00 per share) outstanding as of August 1, 2007 was 56,358,683.

1

PartnerRe Ltd.

INDEX TO FORM 10-Q

		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Report of Independent Registered Public Accounting Firm	3
	Unaudited Condensed Consolidated Balance Sheets—June 30, 2007 and December 31, 2006	4
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income—Three Months and Six Months Ended June 30, 2007 and 2006	5
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity—Six Months Ended June 30, 2007 and 2006	6
	Unaudited Condensed Consolidated Statements of Cash Flows—Six Months Ended June 30, 2007 and 2006	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	45
ITEM 4.	Controls and Procedures	46
PART II—OTHER INFORMATION
ITEM 1.	Legal Proceedings	47
ITEM 1A.	Risk Factors	47
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
ITEM 3.	Defaults upon Senior Securities	48
ITEM 4.	Submission of Matters to a Vote of Security Holders	48
ITEM 5.	Other Information	48
ITEM 6.	Exhibits	49
	Signatures	50
	Exhibit Index	51

2

PART I—FINANCIAL INFORMATION

Item 1.         Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of PartnerRe Ltd.

We have reviewed the accompanying condensed consolidated balance sheet of PartnerRe Ltd. and subsidiaries as of June 30, 2007, and the related condensed consolidated statements of operations and comprehensive income for the three-month and six-month periods ended June 30, 2007 and 2006, and of shareholders’ equity and of cash flows for the six-month periods ended June 30, 2007 and 2006. These interim condensed consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of PartnerRe Ltd. and subsidiaries as of December 31, 2006 and the related consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated March 1, 2007, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2006 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche        

Deloitte & Touche

Hamilton, Bermuda

August 9, 2007

3

PartnerRe Ltd.

Unaudited Condensed Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars, except parenthetical share data and per share data)

	June 30, 2007			December 31, 2006
Assets
Investments:
Fixed maturities, available for sale, at fair value (amortized cost: 2007, $8,264,873; 2006, $7,852,798)	$	8,172,868		$	7,835,680
Short-term investments, available for sale, at fair value (amortized cost: 2007, $86,701; 2006, $133,872)		86,604			133,751
Equities, available for sale, at fair value (cost: 2007, $1,309,364; 2006, $920,913)		1,417,013			1,015,144
Trading securities, at fair value (cost: 2007, $69,934; 2006, $578,445)		72,525			599,972
Other invested assets		141,097			105,390
Total investments		9,890,107			9,689,937
Cash and cash equivalents, at fair value, which approximates amortized cost		1,052,192			988,788
Accrued investment income		170,541			157,923
Reinsurance balances receivable		1,899,596			1,573,566
Reinsurance recoverable on paid and unpaid losses		167,037			168,840
Funds held by reinsured companies		989,702			1,002,402
Deferred acquisition costs		644,653			542,698
Deposit assets		338,482			306,212
Net tax assets		11,099			17,826
Goodwill		429,519			429,519
Other assets		72,610			70,514
Total assets	$	15,665,538		$	14,948,225
Liabilities
Unpaid losses and loss expenses	$	6,944,959		$	6,870,785
Policy benefits for life and annuity contracts		1,494,205			1,430,691
Unearned premiums		1,694,517			1,215,624
Reinsurance balances payable		122,275			115,897
Ceded premiums payable		17,811			17,213
Funds held under reinsurance treaties		22,933			21,257
Deposit liabilities		375,751			350,763
Net payable for securities purchased		35,916			90,331
Accounts payable, accrued expenses and other		142,324			172,212
Long-term debt		620,000			620,000
Debt related to capital efficient notes		257,605			257,605
Total liabilities		11,728,296			11,162,378
Shareholders’ Equity
Common shares (par value $1.00, issued: 2007, 57,079,534; 2006, 57,076,312)		57,080			57,076
Series C cumulative preferred shares (par value $1.00, issued and outstanding: 2007 and 2006, 11,600,000; aggregate liquidation preference: 2007 and 2006, $290,000,000)		11,600			11,600
Series D cumulative preferred shares (par value $1.00, issued and outstanding: 2007 and 2006, 9,200,000; aggregate liquidation preference: 2007 and 2006, $230,000,000)		9,200			9,200
Additional paid-in capital		1,417,009			1,413,977
Accumulated other comprehensive income:
Net unrealized gains on investments (net of tax of: 2007, $2,066; 2006, $15,429)		9,507			56,913
Currency translation adjustment		109,331			68,734
Unfunded pension obligation (net of tax of: 2007, $2,110; 2006, $2,122)		(7,232	)		(7,277	)
Retained earnings		2,374,902			2,175,624
Common shares held in treasury, at cost (2007, 585,800 shares; 2006, nil)		(44,155	)		—
Total shareholders’ equity		3,937,242			3,785,847
Total liabilities and shareholders’ equity	$	15,665,538		$	14,948,225

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

4

PartnerRe Ltd.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income

(Expressed in thousands of U.S. dollars, except share and per share data)

	For the three months ended June 30, 2007			For the three months ended June 30, 2006			For the six months ended June 30, 2007			For the six months ended June 30, 2006
Revenues
Gross premiums written	$	907,758		$	817,610		$	2,209,521		$	2,190,456
Net premiums written	$	898,686		$	815,893		$	2,169,258		$	2,160,497
(Increase) decrease in unearned premiums		(9,409	)		43,070			(437,940	)		(468,713	)
Net premiums earned		889,277			858,963			1,731,318			1,691,784
Net investment income		130,894			108,320			249,911			208,272
Net realized investment losses		(53,647	)		(58,928	)		(52,879	)		(3,830	)
Other (loss) income		(8,911	)		12,704			(8,393	)		20,460
Total revenues		957,613			921,059			1,919,957			1,916,686
Expenses
Losses and loss expenses and life policy benefits		524,038			541,377			1,002,772			1,040,195
Acquisition costs		206,313			199,425			407,037			398,682
Other operating expenses		79,947			76,482			158,931			150,912
Interest expense		13,484			13,200			26,994			25,921
Net foreign exchange losses		9,308			4,116			13,554			7,462
Total expenses		833,090			834,600			1,609,288			1,623,172
Income before taxes and interest in earnings of equity investments		124,523			86,459			310,669			293,514
Income tax expense		22,716			11,845			42,620			27,976
Interest in earnings of equity investments		3,214			2,917			6,239			5,236
Net income	$	105,021		$	77,531		$	274,288		$	270,774
Preferred dividends		8,631			8,631			17,263			17,263
Net income available to common shareholders	$	96,390		$	68,900		$	257,025		$	253,511
Comprehensive income, net of tax
Net income	$	105,021		$	77,531		$	274,288		$	270,774
Change in net unrealized gains or losses on investments, net of tax		(54,167	)		(56,710	)		(47,406	)		(148,760	)
Change in currency translation adjustment		31,695			29,870			40,597			39,595
Change in unfunded pension obligation, net of tax		64			—			45			—
Comprehensive income	$	82,613		$	50,691		$	267,524		$	161,609
Per share data
Net income per common share:
Basic net income	$	1.70		$	1.21		$	4.52		$	4.47
Diluted net income	$	1.66		$	1.20		$	4.42		$	4.40
Weighted average number of common shares outstanding		56,682,753			56,763,548			56,820,780			56,748,621
Weighted average number of common and common share equivalents outstanding		58,148,651			57,655,961			58,173,663			57,628,557
Dividends declared per common share	$	0.43		$	0.40		$	0.86		$	0.80

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

5

PartnerRe Ltd.

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

(Expressed in thousands of U.S. dollars)

	For the six months ended June 30, 2007			For the six months ended June 30, 2006
Common shares
Balance at beginning of period	$	57,076		$	56,730
Issue of common shares		491			70
Repurchase of common shares		(487	)		—
Balance at end of period		57,080			56,800
Preferred shares
Balance at beginning of period		20,800			20,800
Issue of preferred shares		—			—
Balance at end of period		20,800			20,800
Additional paid-in capital
Balance at beginning of period		1,413,977			1,373,992
Issue of common shares		36,329			17,824
Repurchase of common shares		(33,297	)		—
Balance at end of period		1,417,009			1,391,816
Deferred compensation
Balance at beginning of period		—			(107	)
Impact of adopting SFAS 123(R)		—			107
Balance at end of period		—			—
Accumulated other comprehensive income
Balance at beginning of period		118,370			89,663
Change in net unrealized gains or losses on investments, net of tax		(47,406	)		(148,760	)
Change in currency translation adjustment		40,597			39,595
Change in unfunded pension obligation, net of tax		45			—
Balance at end of period		111,606			(19,502	)
Retained earnings
Balance at beginning of period		2,175,624			1,551,709
Net income		274,288			270,774
Impact of adopting FIN 48		(8,721	)		—
Dividends on common shares		(49,026	)		(45,362	)
Dividends on preferred shares		(17,263	)		(17,263	)
Balance at end of period		2,374,902			1,759,858
Common shares held in treasury
Balance at beginning of period		—			—
Repurchase of common shares		(44,155	)		—
Balance at end of period		(44,155	)		—
Total shareholders’ equity	$	3,937,242		$	3,209,772

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

6

PartnerRe Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)

	For the six months ended June 30, 2007			For the six months ended June 30, 2006
Cash Flows from Operating Activities
Net income	$	274,288		$	270,774
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of net premium on investments		1,825			15,941
Net realized investment losses		52,879			3,830
Changes in:
Net sales (purchases) of trading securities		514,379			(69,281	)
Reinsurance balances, net		(291,801	)		(327,949	)
Deferred acquisition costs		(89,553	)		(97,628	)
Net tax assets		9,157			21,752
Unpaid losses and loss expenses including life policy benefits		15,749			(88,598	)
Unearned premiums, net		437,940			468,713
Other changes in operating assets and liabilities		38,026			106,649
Other, net		13,554			7,600
Net cash provided by operating activities		976,443			311,803
Cash Flows from Investing Activities
Sales of fixed maturities		2,174,374			1,418,577
Redemptions of fixed maturities		420,970			339,677
Purchases of fixed maturities		(3,006,139	)		(1,897,256	)
Sales of short-term investments		7,383			20,007
Redemptions of short-term investments		82,751			79,491
Purchases of short-term investments		(39,250	)		(128,523	)
Sales of equities		679,277			8,385,666
Purchases of equities		(1,061,028	)		(8,073,219	)
Other, net		(49,598	)		9,812
Net cash (used in) provided by investing activities		(791,260	)		154,232
Cash Flows from Financing Activities
Cash dividends paid to shareholders		(66,289	)		(62,625	)
Net (repurchase) issue of common shares and treasury shares		(54,457	)		3,361
Contract fees on forward sale agreement		(5,124	)		(4,756	)
Net cash used in financing activities		(125,870	)		(64,020	)
Effect of foreign exchange rate changes on cash		4,091			4,586
Increase in cash and cash equivalents		63,404			406,601
Cash and cash equivalents—beginning of period		988,788			1,001,378
Cash and cash equivalents—end of period	$	1,052,192		$	1,407,979
Supplemental cash flow information:
Taxes paid	$	(33,409	)	$	(8,928	)
Interest paid	$	(28,160	)	$	(25,263	)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

7

PartnerRe Ltd.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization

PartnerRe Ltd. (the Company or PartnerRe) provides reinsurance on a worldwide basis through its principal wholly owned subsidiaries, Partner Reinsurance Company Ltd. (Partner Reinsurance), PartnerRe SA and Partner Reinsurance Company of the U.S. (PartnerRe U.S.). Risks reinsured include, but are not limited to property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, other lines, life/annuity 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.

2. Significant Accounting Policies

The Company’s Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. The Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries, including those that meet the consolidation requirements of variable interest entities (VIEs). Entities in which the Company has an ownership of more than 20% and less than 50% of the voting shares are accounted for using the equity method. Intercompany accounts and transactions have been eliminated. To facilitate comparison of information across periods, certain reclassifications have been made to prior year amounts to conform to the current year’s 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 Condensed Consolidated Financial Statements reflect its best estimates and assumptions, actual results could differ from those estimates. The Company’s principal estimates include:

• Unpaid losses and loss expenses;

• Policy benefits for life and annuity contracts;

• Gross and net premiums written and net premiums earned;

• Recoverability of deferred acquisition costs;

• Determination of other-than-temporary impairments of investments;

• Recoverability of tax loss carry-forwards;

• Valuation of goodwill; and

• Valuation of other invested assets, including certain derivative financial instruments.

In the opinion of Management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of results for the interim periods have been made. As the Company’s reinsurance operations are exposed to low-frequency high-severity risk events, some of which are seasonal, results for certain interim periods may include unusually low loss experience while results for other interim periods may include significant catastrophic losses. Consequently, the Company’s results for interim periods are not necessarily indicative of results for the full year. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2006.

The following significant accounting policy was adopted by the Company during the six months ended June 30, 2007.

(a) Treasury shares

Common shares repurchased by the Company and not cancelled are recorded, as treasury shares, at cost and result in a reduction of shareholders’ equity in the Condensed Consolidated Balance Sheets. From time to time, the Company may reissue treasury shares.

3. Recent Accounting Pronouncements

SFAS 155

In February 2006, the FASB issued Statement No. 155 “Accounting for Certain Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140” (SFAS 155). This Statement amends SFAS No. 133 “Accounting for

8

Derivative Instruments and Hedging Activities” (SFAS 133) and SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (SFAS 140). This Statement resolves issues addressed in SFAS 133 DIG Issue No. D1 “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets”. It permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133; establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and amends SFAS 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

In January 2007, the FASB finalized SFAS 133 DIG Issue No. B40 “Embedded Derivatives: Application of Paragraph 13(b) to Securitized Interests in Prepayable Financial Assets” (Issue B40). Issue B40 determined criteria to evaluate whether a securitized interest in prepayable financial assets would not be subject to the bifurcation conditions in paragraph 13(b) of SFAS 133, thereby modifying the way beneficial interests in securitized financial assets are evaluated under SFAS 155.

The Company adopted SFAS 155 as of January 1, 2007 and applied Issue B40 for all securitized interests in prepayable financial assets acquired by the Company after the adoption of SFAS 155. The adoption of SFAS 155 and Issue B40 did not have a significant impact on the consolidated shareholders’ equity or net income of the Company.

SFAS 157

In September 2006, the FASB issued Statement No. 157, “Fair Value Measurements” (SFAS 157). This statement defines fair value, establishes a framework for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 provides guidance on how to measure fair value when required under existing accounting standards. The statement requires disclosure of 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. Quantitative and qualitative disclosures will focus on the inputs used to measure fair value for both recurring and non-recurring fair value measurements and the effects of the measurements on the financial statements.

SFAS 157 will be effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of the adoption of SFAS 157 on its consolidated shareholders’ equity or net income.

SFAS 159

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115” (SFAS 159). SFAS 159 allows entities to choose, at specified election dates, to measure eligible financial assets and financial liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item’s fair value in subsequent reporting periods must be recognized in current earnings. SFAS 159 also establishes presentation and disclosure requirements designed to draw comparisons between entities that elect different measurement attributes for similar assets and liabilities.

SFAS 159 will be effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of the adoption of SFAS 159 on its consolidated shareholders’ equity or net income.

4. Taxation

Effective January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (FIN 48). FIN 48 requires companies to recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. A liability must be recognized for any tax benefit (along with any interest and penalty, if applicable) claimed in a tax return in excess of the amount allowed under FIN 48.

The effect of the adoption of FIN 48 on the Company’s Condensed Consolidated Statement of Shareholders’ Equity was a reduction in opening retained earnings of $8.7 million, with no impact on the Company’s net income.

9

The total amount of unrecognized tax benefits at January 1, 2007 (date of adoption) and June 30, 2007, is as follows (in thousands of U.S. dollars):

	June 30, 2007		January 1, 2007 (date of adoption)
Unrecognized tax benefits that, if recognized, would affect the effective tax rate	$	31,306	$	28,915
Interest and penalties recognized on the above		696		387
Total	$	32,002	$	29,302
Unrecognized tax benefits that, if recognized, would create a temporary difference between the reported amount of an item in the Company’s Condensed Consolidated Balance Sheet and its tax basis	$	2,128	$	2,221
Interest and penalties recognized on the above		—		—
Total	$	2,128	$	2,221
Total unrecognized tax benefits, including interest and penalties	$	34,130	$	31,523

The Company recognizes interest and penalties as income tax expense in its Condensed Consolidated Statements of Operations.

Management does not expect that the total amount of unrecognized tax benefits will change significantly in 2007. Income tax returns are open for examination for the tax years 2003-2006 in France, Switzerland and the United States.

5. Computation of Net Income per Common and Common Share Equivalents

The reconciliation of basic and diluted net income per share is as follows (in thousands of U.S. dollars or shares, except per share amounts):

	For the three months ended June 30, 2007		For the three months ended June 30, 2006		For the six months ended June 30, 2007		For the six months ended June 30, 2006
Numerator:
Net income	$	105,021	$	77,531	$	274,288	$	270,774
Less: preferred dividends		8,631		8,631		17,263		17,263
Net income available to common shareholders	$	96,390	$	68,900	$	257,025	$	253,511
Denominator:
Weighted average number of common shares outstanding—basic		56,682.8		56,763.5		56,820.8		56,748.6
Stock options and other		1,465.9		892.5		1,352.9		880.0
Weighted average number of common and common share equivalents outstanding—diluted		58,148.7		57,656.0		58,173.7		57,628.6
Basic net income per share	$	1.70	$	1.21	$	4.52	$	4.47
Diluted net income per share	$	1.66	$	1.20	$	4.42	$	4.40

6. Legal Proceedings

Legal proceedings at June 30, 2007 have not changed significantly since December 31, 2006. See Note 15(g) to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2006.

7. Segment Information

The Company monitors the performance of its underwriting operations in three segments, Non-life, ART and Life. The Non-life segment is further divided into three sub-segments, U.S. Property and Casualty (U.S. P&C), Global (Non-U.S.) Property and Casualty (Global (Non-U.S.) P&C) and Worldwide Specialty. Segments and sub-segments represent markets that are reasonably homogeneous in terms of geography, client types, buying patterns, underlying risk patterns and approach to risk management. See Note 19 to the Consolidated Financial Statements in the Company’s 2006 Annual Report on Form 10-K/A for additional information concerning the Company’s segments and sub-segments.

10

The following tables provide a summary of the segment revenues and results for the three months and six months ended June 30, 2007 and 2006 (in millions of U.S. dollars, except ratios):

Segment Information

For the three months ended June 30, 2007

	U.S. P&C			Global (Non-U.S.) P&C			Worldwide Specialty			Total Non-Life Segment			ART Segment(A)			Life Segment			Corporate			Total
Gross premiums written	$	170		$	129		$	457		$	756		$	8		$	144		$	—		$	908
Net premiums written	$	170		$	127		$	458		$	755		$	8		$	136		$	—		$	899
Decrease (increase) in unearned premiums		17			46			(78	)		(15	)		(2	)		7			—			(10	)
Net premiums earned	$	187		$	173		$	380		$	740		$	6		$	143		$	—		$	889
Losses and loss expenses and life policy benefits		(120	)		(131	)		(156	)		(407	)		—			(117	)		—			(524	)
Acquisition costs		(47	)		(44	)		(85	)		(176	)		(1	)		(29	)		—			(206	)
Technical result	$	20		$	(2	)	$	139		$	157		$	5		$	(3	)	$	—		$	159
Other loss		n/a			n/a			n/a			—			(9	)		—			—			(9	)
Other operating expenses		n/a			n/a			n/a			(51	)		(2	)		(8	)		(19	)		(80	)
Underwriting result		n/a			n/a			n/a		$	106		$	(6	)	$	(11	)		n/a		$	70
Net investment income		n/a			n/a			n/a			—			1			15			115			131
Allocated underwriting result(1)		n/a			n/a			n/a			n/a		$	(5	)	$	4			n/a			n/a
Net realized investment losses		n/a			n/a			n/a			n/a			n/a			n/a			(54	)		(54	)
Interest expense		n/a			n/a			n/a			n/a			n/a			n/a			(13	)		(13	)
Net foreign exchange losses		n/a			n/a			n/a			n/a			n/a			n/a			(9	)		(9	)
Income tax expense		n/a			n/a			n/a			n/a			n/a			n/a			(23	)		(23	)
Interest in earnings of equity investments		n/a			n/a			n/a			n/a			3			n/a			n/a			3
Net income		n/a			n/a			n/a			n/a			n/a			n/a			n/a		$	105
Loss ratio(2)		64.2	%		75.6	%		40.9	%		54.9	%
Acquisition ratio(3)		24.9			25.6			22.4			23.8
Technical ratio(4)		89.1	%		101.2	%		63.3	%		78.7	%
Other operating expense ratio(5)											7.0
Combined ratio(6)											85.7	%

(A) This segment includes the Company’s share of ChannelRe Holdings’ net income in the amount of $3.2 million for the period from January 1, 2007 to March 31, 2007 as the Company reports the results of ChannelRe Holdings on a one-quarter lag.

(1) Allocated underwriting result is defined as net premiums earned, other income or loss and allocated net investment income less losses and loss expenses and life policy benefits, acquisition costs and other operating expenses.

(2) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned.

(3) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned.

(4) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio.

(5) Other operating expense ratio is obtained by dividing other operating expenses by net premiums earned.

(6) Combined ratio is defined as the sum of the technical ratio and the other operating expense ratio.

11

Segment Information

For the three months ended June 30, 2006

	U.S. P&C			Global (Non-U.S.) P&C			Worldwide Specialty			Total Non-Life Segment			ART Segment(B)			Life Segment			Corporate			Total
Gross premiums written	$	170		$	128		$	408		$	706		$	7		$	105		$	—		$	818
Net premiums written	$	170		$	127		$	409		$	706		$	7		$	103		$	—		$	816
Decrease (increase) in unearned premiums		35			54			(51	)		38			1			4			—			43
Net premiums earned	$	205		$	181		$	358		$	744		$	8		$	107		$	—		$	859
Losses and loss expenses and life policy benefits		(170	)		(95	)		(192	)		(457	)		(3	)		(82	)		—			(542	)
Acquisition costs		(48	)		(48	)		(70	)		(166	)		(1	)		(32	)		—			(199	)
Technical result	$	(13	)	$	38		$	96		$	121		$	4		$	(7	)	$	—		$	118
Other income		n/a			n/a			n/a			—			13			—			—			13
Other operating expenses		n/a			n/a			n/a			(48	)		(5	)		(7	)		(16	)		(76	)
Underwriting result		n/a			n/a			n/a		$	73		$	12		$	(14	)		n/a		$	55
Net investment income		n/a			n/a			n/a			—			—			13			95			108
Allocated underwriting result(1)		n/a			n/a			n/a			n/a		$	12		$	(1	)		n/a			n/a
Net realized investment losses		n/a			n/a			n/a			n/a			n/a			n/a			(59	)		(59	)
Interest expense		n/a			n/a			n/a			n/a			n/a			n/a			(13	)		(13	)
Net foreign exchange losses		n/a			n/a			n/a			n/a			n/a			n/a			(4	)		(4	)
Income tax expense		n/a			n/a			n/a			n/a			n/a			n/a			(12	)		(12	)
Interest in earnings of equity investments		n/a			n/a			n/a			n/a			3			n/a			n/a			3
Net income		n/a			n/a			n/a			n/a			n/a			n/a			n/a		$	78
Loss ratio(2)		83.0	%		52.3	%		53.7	%		61.4	%
Acquisition ratio(3)		23.3			26.9			19.5			22.4
Technical ratio(4)		106.3	%		79.2	%		73.2	%		83.8	%
Other operating expense ratio(5)											6.5
Combined ratio(6)											90.3	%

(B) This segment includes the Company’s share of ChannelRe Holdings’ net income in the amount of $2.8 million for the period from January 1, 2006 to March 31, 2006 as the Company reports the results of ChannelRe Holdings on a one-quarter lag.

12

Segment Information

For the six months ended June 30, 2007

	U.S. P&C			Global (Non-U.S.) P&C			Worldwide Specialty			Total Non-Life Segment			ART Segment(C)			Life Segment			Corporate			Total
Gross premiums written	$	429		$	462		$	999		$	1,890		$	20		$	300		$	—		$	2,210
Net premiums written	$	429		$	459		$	978		$	1,866		$	20		$	283		$	—		$	2,169
Increase in unearned premiums		(46	)		(110	)		(264	)		(420	)		(8	)		(10	)		—			(438	)
Net premiums earned	$	383		$	349		$	714		$	1,446		$	12		$	273		$	—		$	1,731
Losses and loss expenses and life policy benefits		(252	)		(248	)		(290	)		(790	)		—			(213	)		—			(1,003	)
Acquisition costs		(97	)		(90	)		(158	)		(345	)		(2	)		(60	)		—			(407	)
Technical result	$	34		$	11		$	266		$	311		$	10		$	—		$	—		$	321
Other loss		n/a			n/a			n/a			—			(8	)		—			—			(8	)
Other operating expenses		n/a			n/a			n/a			(102	)		(5	)		(15	)		(37	)		(159	)
Underwriting result		n/a			n/a			n/a		$	209		$	(3	)	$	(15	)		n/a		$	154
Net investment income		n/a			n/a			n/a			—			1			26			223			250
Allocated underwriting result(1)		n/a			n/a			n/a			n/a		$	(2	)	$	11			n/a			n/a
Net realized investment losses		n/a			n/a			n/a			n/a			n/a			n/a			(53	)		(53	)
Interest expense		n/a			n/a			n/a			n/a			n/a			n/a			(27	)		(27	)
Net foreign exchange losses		n/a			n/a			n/a			n/a			n/a			n/a			(13	)		(13	)
Income tax expense		n/a			n/a			n/a			n/a			n/a			n/a			(43	)		(43	)
Interest in earnings of equity investments		n/a			n/a			n/a			n/a			6			n/a			n/a			6
Net income		n/a			n/a			n/a			n/a			n/a			n/a			n/a		$	274
Loss ratio(2)		65.7	%		71.2	%		40.6	%		54.7	%
Acquisition ratio(3)		25.4			25.7			22.1			23.8
Technical ratio(4)		91.1	%		96.9	%		62.7	%		78.5	%
Other operating expense ratio(5)											7.1
Combined ratio(6)											85.6	%

(C) This segment includes the Company’s share of ChannelRe Holdings’ net income in the amount of $6.1 million for the period from October 1, 2006 to March 31, 2007 as the Company reports the results of ChannelRe Holdings on a one-quarter lag.

13

Segment Information

For the six months ended June 30, 2006

	U.S. P&C			Global (Non-U.S.) P&C			Worldwide Specialty			Total Non-Life Segment			ART Segment(D)			Life Segment			Corporate			Total
Gross premiums written	$	466		$	493		$	956		$	1,915		$	26		$	249		$	—		$	2,190
Net premiums written	$	466		$	491		$	936		$	1,893		$	25		$	242		$	—		$	2,160
Increase in unearned premiums		(62	)		(126	)		(255	)		(443	)		(10	)		(15	)		—			(468	)
Net premiums earned	$	404		$	365		$	681		$	1,450		$	15		$	227		$	—		$	1,692
Losses and loss expenses and life policy benefits		(313	)		(232	)		(319	)		(864	)		(7	)		(169	)		—			(1,040	)
Acquisition costs		(99	)		(99	)		(133	)		(331	)		(2	)		(66	)		—			(399	)
Technical result	$	(8	)	$	34		$	229		$	255		$	6		$	(8	)	$	—		$	253
Other income		n/a			n/a			n/a			—			20			—			—			20
Other operating expenses		n/a			n/a			n/a			(96	)		(9	)		(14	)		(32	)		(151	)
Underwriting result		n/a			n/a			n/a		$	159		$	17		$	(22	)		n/a		$	122
Net investment income		n/a			n/a			n/a			—			—			24			184			208
Allocated underwriting result(1)		n/a			n/a			n/a			n/a		$	17		$	2			n/a			n/a
Net realized investment losses		n/a			n/a			n/a			n/a			n/a			n/a			(3	)		(3	)
Interest expense		n/a			n/a			n/a			n/a			n/a			n/a			(26	)		(26	)
Net foreign exchange losses		n/a			n/a			n/a			n/a			n/a			n/a			(7	)		(7	)
Income tax expense		n/a			n/a			n/a			n/a			n/a			n/a			(28	)		(28	)
Interest in earnings of equity investments		n/a			n/a			n/a			n/a			5			n/a			n/a			5
Net income		n/a			n/a			n/a			n/a			n/a			n/a			n/a		$	271
Loss ratio(2)		77.5	%		63.7	%		46.8	%		59.6	%
Acquisition ratio(3)		24.5			27.0			19.6			22.9
Technical ratio(4)		102.0	%		90.7	%		66.4	%		82.5	%
Other operating expense ratio(5)											6.6
Combined ratio(6)											89.1	%

(D) This segment includes the Company’s share of ChannelRe Holdings’ net income in the amount of $5.1 million for the period from October 1, 2005 to March 31, 2006 as the Company reports the results of ChannelRe Holdings on a one-quarter lag.

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8. Summarized Financial Information of ChannelRe Holdings

The following tables provide summarized financial information of ChannelRe Holdings, which is accounted for using the equity method. As the Company calculates its share of ChannelRe Holdings’ results on a one-quarter lag, the results presented below included summarized financial information as follows:

• The three-month periods include results from January 1 to March 31.

• The six-month periods include results from October 1 to March 31.

As ChannelRe Holdings has a financial year-end of December 31, this quarterly data is not presented in the annual financial statements of ChannelRe Holdings.

Balance Sheet Data (in millions of U.S. dollars):

	March 31, 2007		September 30, 2006
Total investments available for sale	$	657	$	624
Cash and cash equivalents		6		10
Deferred acquisition costs		40		43
Other assets		10		9
Total assets	$	713	$	686
Deferred premium revenue	$	157	$	167
Loss and loss adjustment expense reserves		22		19
Other liabilities		9		8
Total liabilities		188		194
Minority interest		146		137
Shareholders’ equity		379		355
Total liabilities, minority interest and shareholders’ equity	$	713	$	686

In May, 2007, ChannelRe Holdings distributed a dividend of $37.5 million to its shareholders. The Company’s share, $7.5 million, reduced the carrying value of its investment in ChannelRe Holdings.

Income Statement Data (in millions of U.S. dollars):

	For the three months ended March 31, 2007			For the three months ended March 31, 2006			For the six months from October 1, 2006 to March 31, 2007			For the six months from October 1, 2005 to March 31, 2006
Premiums earned	$	17		$	16		$	31		$	32
Net investment income		7			6			14			11
Net realized investment gains (losses)		—			—			1			(2	)
Total revenues		24			22			46			41
Losses incurred		2			2			3			4
Amortization of deferred acquisition costs		4			4			8			8
Other expenses		2			2			4			4
Total expenses		8			8			15			16
Minority interest		(4	)		(4	)		(9	)		(7	)
Net income	$	12		$	10		$	22		$	18

There is diversity in practice among financial guarantee insurers and reinsurers with respect to their accounting policies for loss reserves. In April 2007, the FASB issued an Exposure Draft to improve the accounting for financial guarantee insurance contracts. The Exposure Draft, “Accounting For Financial Guarantee Insurance Contracts-an Interpretation of FASB Statement No. 60”, would require the recognition of premium revenue when insured contractual payments are made by the issuer of the insured financial obligation. The Exposure Draft would also require recognition of a claim liability prior to a default (insured event) under certain criteria and a more consistent claim liability measurement based on the present value of expected cash flows. The Exposure Draft would be effective for financial statements issued for fiscal years beginning after December 15, 2007. The Company cannot currently assess how the Exposure Draft will impact the Company’s investment in ChannelRe Holdings.

15

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

The Company is a leading global reinsurer with a broadly diversified portfolio of risks. The Company writes all lines of business in virtually all markets worldwide, and differentiates itself through its approach to risk, its strategy to manage risk, and its financial strength. Through its broad product and geographic diversification, its strong execution capabilities, and its local presence in most major markets, the Company is able to respond quickly to market needs, and capitalize on business opportunities virtually anywhere in the world.

The Company’s philosophy is to assume its clients’ risks, thereby removing the volatility associated with these risks, and then to manage those risks and the risk-related volatility. The Company’s ability to succeed in the risk assumption business is dependent on its ability to accurately analyze and quantify risk, to understand volatility and how risks aggregate or correlate, and to establish the appropriate capital requirements and absolute limits for the risks assumed.

See the Executive Overview, Key Financial Measures and Other Key Issues of Management in Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates at June 30, 2007 have not changed materially compared to December 31, 2006. See Critical Accounting Policies and Estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A. The following discussion updates specific information related to the Company’s estimates for losses and loss expenses and life policy benefits and income taxes and focuses only on material changes from December 31, 2006.

Losses and Loss Expenses and Life Policy Benefits

Losses and Loss Expenses

Because a significant amount of time can lapse 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 liability for unpaid losses and loss expenses (loss reserves) is based largely upon estimates. The Company categorizes loss reserves into three types of reserves: reported outstanding loss reserves (case reserves), additional case reserves (ACRs) and incurred but not reported (IBNR) reserves. The Company updates its estimates for each of the aforementioned categories on a quarterly basis using information received from cedants. 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 Company’s Non-life loss reserves for each category and sub-segment are reported in the table included later in this section.

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. For both short and long-tail 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’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 cell and underwriting year for which the projection is made.

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.

See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits in Item 7 of Part II in the Company’s 2006 Annual Report on Form 10-K/A for additional information on the reserving methodologies employed by the Company, the principal reserving methods used for the reserving lines, the principal parameter assumptions underlying the methods and the main underlying factors upon which the estimates of reserving parameters are predicated.

16

The Company’s best estimate of total loss reserves is typically in excess of the midpoint of the actuarial reserve estimates. 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. 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 reserve estimates. Selected reserves are always within the indicated reasonable range of estimates indicated by the Company’s actuaries.

During the three months ended June 30, 2007 and 2006, the Company reviewed its estimate for prior year losses for each sub-segment of the Non-life segment and, in light of developing data, determined to adjust its ultimate loss ratios for prior accident years. The following table summarizes the net favorable (adverse) reserve development for the Company’s Non-life segment for the three months and six months ended June 30, 2007 and 2006 (in millions of U.S. dollars):

	For the three months ended June 30, 2007		For the three months ended June 30, 2006			For the six months ended June 30, 2007		For the six months ended June 30, 2006
Prior year favorable (adverse) loss development:
Non-life segment
U.S. P&C	$	12	$	(18	)	$	16	$	(19	)
Global (Non-U.S) P&C		20		47			60		47
Worldwide Specialty		75		33			153		102
Total prior year loss development	$	107	$	62		$	229	$	130

The net favorable loss development on prior accident years of $107 million and $229 million recorded in the three months and six months ended June 30, 2007, respectively, resulted from a reassessment of approximately $119 million and $219 million, respectively, of loss development assumptions used by the Company to estimate future liabilities due to favorable loss emergence, as losses reported by cedants, including treaties where the risk period expired, were lower than expected. The impact of the reassessment of loss development assumptions was partially offset by approximately $12 million related to a change in exposure due to positive premium adjustments during the three months ended June 30, 2007 and was supplemented by approximately $10 million related to a change in exposure due to negative premium adjustments during the six months ended June 30, 2007.

For a discussion of prior year reserve development by Non-life sub-segment, see Review of Net Income—Results by Segment below. See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits in Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A for additional information by reserving lines.

Case reserves are reported to the Company by its cedants, while ACRs and IBNR are estimated by the Company. The following table shows the gross reserves reported by cedants (case reserves), those estimated by the Company (ACRs and IBNR) and the total net loss reserves recorded at June 30, 2007 for each Non-life sub-segment (in millions of U.S. dollars):

	Case reserves		ACRs		IBNR reserves		Total gross loss reserves recorded		Retroceded loss reserves			Total net loss reserves recorded
U.S. P&C	$	636	$	115	$	1,529	$	2,280	$	(31	)	$	2,249
Global (Non-U.S.) P&C		1,250		12		1,116		2,378		(44	)		2,334
Worldwide Specialty		1,093		159		1,030		2,282		(54	)		2,228
Total Non-life	$	2,979	$	286	$	3,675	$	6,940	$	(129	)	$	6,811

The recorded loss reserves represent Management’s best estimate of future liabilities based on information available as of June 30, 2007. Loss reserves are estimates involving actuarial and statistical projections at a given time to reflect the Company’s expectations of the costs of the ultimate settlement and administration of claims. The estimates are continually 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 estimates its net loss reserves using single actuarial point estimates. Ranges around these actuarial point estimates are developed using stochastic simulations and 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 Company’s best 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.

17

The actuarial point estimates recorded by the Company and the range of estimates around these point estimates at June 30, 2007, were as follows for each Non-life sub-segment (in millions of U.S. dollars):

	Recorded Point Estimate		High		Low
Net Non-life segment loss reserves:
U.S. P&C	$	2,249	$	2,479	$	1,720
Global (Non-U.S.) P&C		2,334		2,467		2,000
Worldwide Specialty		2,228		2,282		1,969

It is not appropriate to add together the ranges of each sub-segment in an effort to determine a high and low range around the Company’s total Non-life carried loss reserves.

Included in the business that is considered to have a long reporting tail is the Company’s exposure to asbestos and environmental claims. The Company’s net reserve for unpaid losses and loss expenses for asbestos and environmental exposures has not changed significantly since December 31, 2006. See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits in Item 7 of Part II and Note 4 to Consolidated Financial Statements in the Company’s 2006 Annual Report on Form 10-K/A.

Life Policy Benefits

Liabilities for policy benefits for ordinary life and accident and health policies have been established based upon information reported by cedants supplemented by the Company’s actuarial estimates of mortality, critical illness, persistency and future investment income, with appropriate provision to reflect uncertainty. Future policy benefit reserves for annuity and universal life products are carried at their accumulated values. Reserves for policy claims and benefits include both mortality and critical illness claims in the process of settlement and claims that are assumed to have been incurred but not yet reported. Interest rate assumptions used to estimate liabilities for policy benefits for life and annuity contracts ranged from 1.0% to 4.9% at June 30, 2007. Actual experience in a particular period may vary from expected experience and, consequently, may affect the Company’s results in future periods.

The Life segment reported net adverse development on prior accident years of $2 million for the three months ended June 30, 2007 and net favorable development on prior accident years of $5 million for the six months ended June 30, 2007. The net prior year developments were primarily related to the receipt of additional reported loss information from cedants. The Life segment reported net adverse development on prior accident years of $5 million for the three months and six months of 2006.

Income Taxes

Effective January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109”. See Note 4 to Unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I above for a discussion on the impact of the adoption of this Interpretation.

Results of Operations—for the Three Months and Six Months Ended June 30, 2007 and 2006

The following discussion on Results of Operations contains forward-looking statements based upon assumptions and expectations concerning the potential effect of future events that are subject to uncertainties. See Item 1A of Part I of the Company’s 2006 Annual Report on Form 10-K/A and Item 1A of Part II below for the Company’s most recently published risk factors. Any of these risk factors could cause actual results to differ materially from those reflected in such forward-looking statements.

The Company’s reporting currency is the U.S. dollar. The Company’s 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 period-to-period comparisons. To the extent that fluctuations in foreign exchange rates affect comparisons, their impact has been quantified, when possible, and discussed in each of the relevant sections. See Note 2(j) to Consolidated Financial Statements in the Company’s 2006 Annual Report on Form 10-K/A for a discussion on translation of foreign currencies.

18

The foreign exchange fluctuations for the principal currencies in which the Company transacts business, were as follows:

• the U.S. dollar weakened, on average, against the euro and other currencies, except for the Japanese yen, in the three months ended June 30, 2007 compared to the same period in 2006;

• the U.S. dollar weakened, on average, against the euro and other currencies, except for the Canadian dollar and Japanese yen, in the six months ended June 30, 2007 compared to the same period in 2006; and

• the U.S. dollar weakened against most currencies, except for the Japanese yen, at June 30, 2007 compared to December 31, 2006.

Overview

The Company measures its performance in several ways. Among the performance measures accepted under U.S. GAAP is diluted net income per share, a measure that focuses on the return provided to the Company’s common shareholders. Diluted net income per share is obtained by dividing net income available to common shareholders by the weighted average number of common and common share equivalents outstanding. Net income available to common shareholders is defined as net income less preferred dividends.

As the Company’s reinsurance operations are exposed to low-frequency high-severity risk events, some of which are seasonal, results for certain interim periods may include unusually low loss experience, while results for other interim periods may include significant catastrophic losses. Consequently, the Company’s results for interim periods are not necessarily indicative of results for the full year.

Net income, preferred dividends, net income available to common shareholders and diluted net income per share for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars, except per share data):

	For the three months ended June 30, 2007		% Change 2007 over 2006		For the three months ended June 30, 2006		For the six months ended June 30, 2007		% Change 2007 over 2006		For the six months ended June 30, 2006
Net income	$	105	35	%	$	78	$	274	1	%	$	271
Less: preferred dividends		9	—			9		17	—			17
Net income available to common shareholders	$	96	40		$	69	$	257	1		$	254
Diluted net income per share	$	1.66	38		$	1.20	$	4.42	—		$	4.40

Three-month result

Net income, net income available to common shareholders and diluted net income per share for the three months ended June 30, 2007 increased compared to the same period of 2006, principally due to an increase in the Non-life underwriting result and an increase in net investment income during the 2007 period. These increases were partially offset by a lower ART underwriting result and a higher income tax expense compared to the three months ended June 30, 2006.

Six-month result

Net income, net income available to common shareholders and diluted net income per share for the six months ended June 30, 2007 were essentially flat compared to the same period of 2006. However, a higher Non-life underwriting result and higher net investment income during the six months ended June 30, 2007 were offset by higher net realized investment losses, a lower ART underwriting result and a higher income tax expense compared to the six months ended June 30, 2006.

These items are discussed in the following section Review of Net Income.

Review of Net Income

Management analyzes the Company’s net income in three parts: underwriting result, net investment income and other components of net income. Underwriting result consists of net premiums earned and other income or loss less losses and loss expenses and life policy benefits, acquisition costs and other operating expenses. Investment income includes interest and dividends, net of investment expenses, generated by the Company’s investment portfolio, as well as interest income generated on funds held and certain ART transactions. Other components of net income include net realized investment gains and losses, interest expense, net foreign exchange gains and losses, income tax expense or benefit and interest in earnings of equity investments.

19

The components of net income for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007			% Change 2007 over 2006		For the three months ended June 30, 2006			For the six months ended June 30, 2007			% Change 2007 over 2006		For the six months ended June 30, 2006
Underwriting result:
Non-life	$	106		46	%	$	73		$	209		32	%	$	159
ART		(6	)	NM			12			(3	)	NM			17
Life		(11	)	(17	)		(14	)		(15	)	(27	)		(22	)
Corporate expenses		(19	)	15			(16	)		(37	)	14			(32	)
Net investment income		131		21			108			250		20			208
Net realized investment losses		(54	)	(9	)		(59	)		(53	)	>1000			(3	)
Interest expense		(13	)	2			(13	)		(27	)	4			(26	)
Net foreign exchange losses		(9	)	126			(4	)		(13	)	82			(7	)
Income tax expense		(23	)	92			(12	)		(43	)	52			(28	)
Interest in earnings of equity investments		3		10			3			6		19			5
Net income	$	105		35		$	78		$	274		1		$	271

NM: not meaningful

Underwriting result is a key measurement that the Company uses to manage and evaluate its segments and sub-segments, as it is a primary measure of underlying profitability for the Company’s core reinsurance operations, separate from the investment results. The Company believes that in order to enhance the understanding of its profitability, it is useful for investors to evaluate the components of income separately and in the aggregate. Underwriting result should not be considered a substitute for net income and does not reflect the overall profitability of the business, which is also impacted by investment results and other items.

Three-month result

The underwriting result for the Non-life segment increased by $33 million, from $73 million in the three months ended June 30, 2006 to $106 million in 2007. The increase was principally attributable to:

• an increase of $45 million in net favorable development on prior accident year losses, from $62 million in the three months ended June 30, 2006 to $107 million in 2007. The components of the net favorable loss development on prior accident year losses are described in more detail in the discussion of individual sub-segments in the next section; and partially offset by

• a decrease of $9 million resulting from a higher than usual level of mid-sized losses, including Cyclone Gonu and the floods in the United Kingdom, incurred in the Company’s Global (Non-U.S.) P&C sub-segment during the three months ended June 30, 2007 and normal fluctuations in profitability between periods, partially offset by greater upward prior period premiums adjustments reported by cedants; and

• an increase in other operating expenses of $3 million.

Underwriting result for the ART segment declined by $18 million, from a profit of $12 million in the three months ended June 30, 2006 to a loss of $6 million in the corresponding period of 2007. The decline resulted primarily from the principal finance line, which suffered a net underwriting loss of $12 million in the three months ended June 30, 2007 compared to net underwriting income of $2 million in the same period of 2006 due to write-downs on four separate and unrelated transactions. To a lesser extent, the decline was also attributable to the weather line which reported a negligible net underwriting income for the three months ended June 30, 2007 compared to net underwriting income of $5 million in the same period of 2006 due to favorable weather conditions in Japan, as well as the benefit from early termination of a number of longer term contracts, which led to accelerated profit recognition for the terminated contacts in the 2006 period.

Underwriting result for the Life segment improved from a loss of $14 million in the three months ended June 30, 2006 to a loss of $11 million in the corresponding period of 2007 due to an increase in profitability for the mortality line and the improvement of $3 million in net adverse prior year development, partially offset by a profit commission adjustment reported by a cedant.

20

Corporate expenses increased by $3 million, from $16 million during the three months ended June 30, 2006 to $19 million in the corresponding period of 2007. The increase was primarily due to higher personnel costs and consulting and professional fees.

The Company reported net investment income of $131 million in the three months ended June 30, 2007 compared to $108 million in the prior year period. The 21% increase in net investment income was primarily attributable to the increase in the asset base resulting from the investment of the Company’s significant cash flows from operations, which totaled $963 million excluding the net sale of $193 million of trading securities since June 30, 2006. The higher interest rates prevailing during the three months ended June 30, 2007 compared to same period in 2006 also contributed to the increase in net investment income. Changes in average foreign exchange rates also contributed 2% to the increase as a result of the weakening of the U.S. dollar, on average, in the three months ended June 30, 2007 compared to the same period in 2006.

Net realized investment losses decreased by $5 million, from a loss of $59 million in the three months ended June 30, 2006 to $54 million for the same period in 2007. Realized investment gains and losses are generally a function of multiple factors, with the most significant being the prevailing interest rates, equity market conditions, the timing of disposition of fixed maturities and equity securities, and charges for the recognition of other-than-temporary impairments in the Company’s investment portfolio. Although net realized investment gains on the sale of equity securities were $57 million higher in the three months ended June 30, 2007 compared to the same period of 2006, net realized investment losses on the sale of fixed maturity securities were $8 million higher than 2006 and charges for other-than-temporary impairments were $44 million higher than 2006, primarily due to the increase in interest rates.

The foreign exchange loss increased by $5 million, from a loss of $4 million in the three months ended June 30, 2006 to a loss of $9 million in the same period in 2007. The Company hedges a significant portion of its currency risk exposure as discussed in the Quantitative and Qualitative Disclosures about Market Risk in Item 3 of Part I of this report. The increase in the foreign exchange loss during the three months ended June 30, 2007 compared to the same period in 2006 is largely a function of (1) the comparative interest rate differential between the functional currency of the reporting unit and the currency being hedged, which increased the cost of hedging instruments used by the Company; (2) currency movements against the Company’s functional currencies for unhedged positions; and (3) the difference between the period-end foreign exchange rates which are used to revalue the balance sheet and the average foreign exchange rates which are used to revalue the income statement.

The total tax expense was $23 million in the three months ended June 30, 2007 compared to $12 million in the prior year period. The increase in income tax expense was primarily a result of the strengthening of the Canadian dollar against the Euro which caused PartnerRe SA to incur a $7 million tax expense due to the increased carrying value of its Canadian branch. The increase was also due to the geography (or tax jurisdiction) distribution of pre-tax income, with some of the Company’s taxable entities generating higher pre-tax income and tax expense in the three months ended June 30, 2007 compared to the same period in 2006.

Six-month result

The underwriting result for the Non-life segment increased by $50 million, from $159 million in the six months ended June 30, 2006 to $209 million in the same period of 2007. The increase was principally attributable to:

• an increase of $99 million in net favorable development on prior accident year losses, from $130 million in the six months ended June 30, 2006 to $229 million in the corresponding period of 2007. The components of the net favorable loss development on prior accident year losses are described in more detail in the discussion of individual sub-segments in the next section; and

• an increase resulting from normal fluctuations in profitability between periods partially offset by a higher than usual level of mid-sized losses incurred as described in the three-month result totaling approximately $6 million; partially offset by

• an increase in the level of large catastrophic losses of $49 million, net of reinstatement premiums, relating to European Windstorm Kyrill; and

• an increase in other operating expenses of $6 million.

Underwriting result for the ART segment declined by $20 million, from a profit of $17 million in the six months ended June 30, 2006 to a loss of $3 million in the same period of 2007. The decline resulted primarily from lower underwriting results from the principal finance line ($13 million) and the weather line ($15 million) during the six months ended June 30, 2007 compared to the same period of 2006 for the reasons explained in the three-month result, as well as accelerated profit

21

recognition on the early termination of a number of longer term contracts in the 2006 period, partially offset by improved underwriting results from the structured risk transfer line ($7 million) due to a lower level of losses in 2007.

Underwriting result for the Life segment improved from a loss of $22 million in the six months ended June 30, 2006 to a loss of $15 million in 2007 due to an increase in profitability of the mortality line and to the improvement of $10 million in net prior year development, partially offset by profit commission adjustments reported by cedants.

Corporate expenses increased by $5 million, from $32 million during the six months ended June 30, 2006 to $37 million in 2007. The increase was primarily due to higher personnel costs and consulting and professional fees.

The Company reported net investment income of $250 million in the six months ended June 30, 2007 compared to $208 million in the prior year period. The 20% increase in net investment income was primarily attributable to the increase in the asset base resulting from the investment of the Company’s significant cash flows from operations. The higher interest rates prevailing during the first six months of 2007 compared to the same period in 2006 also contributed to the increase in net investment income. Changes in average foreign exchange rates also contributed 2% to the increase as a result of the weakening of the U.S. dollar, on average, in the six months ended June 30, 2007 compared to the same period in 2006.

Net realized investment losses increased by $50 million, from $3 million in the six months ended June 30, 2006 to $53 million in the same period of 2007. Although net realized investment gains on the sale of equity securities were $16 million higher in the six months ended June 30, 2007 compared to the same period of 2006, net realized investment losses on the sale of fixed maturity securities were $5 million higher than 2006 and charges for other-than-temporary impairments were $53 million higher than 2006, primarily due to the increase in interest rates.

Interest expense increased by $1 million in the six months ended June 30, 2007 compared to the same period in 2006 due to the interest rate of 6.44% incurred on the Company’s $257.6 million debt related to capital efficient notes in 2007 compared to the interest rate of 7.90% on the Company’s $206.2 million debt related to trust preferred securities in 2006.

The foreign exchange loss increased by $6 million, from a loss of $7 million in the six months ended June 30, 2006 to a loss of $13 million in the same period of 2007 due to the factors described in the three-month result above.

The total tax expense was $43 million in the six months ended June 30, 2007 compared to $28 million in the prior year period. The increase in income tax expense was primarily due to the factors described in the three-month result above.

Results by Segment

The Company monitors the performance of its underwriting operations in three segments, Non-life, ART and Life. The Non-life segment is further divided into three sub-segments, U.S. P&C, Global (Non-U.S.) P&C and Worldwide Specialty. Segments and sub-segments represent markets that are reasonably homogeneous in terms of geography, client types, buying patterns, underlying risk patterns and approach to risk management. See the description of the Company’s segments and sub-segments and the discussion of how the Company measures its segment results in Note 7 to Unaudited Condensed Consolidated Financial Statements (included in Item 1 of Part I above) and in Note 19 to the Consolidated Financial Statements in the Company’s 2006 Annual Report on Form 10-K/A.

Segment results are shown net of intercompany transactions. Business reported in the Global (Non-U.S.) P&C and Worldwide Specialty sub-segments and the Life segment is, to a significant extent, denominated in foreign currencies and is reported in U.S. dollars at the average foreign exchange rates for each period. The U.S. dollar has fluctuated against the euro and other currencies in the three months and six months ended June 30, 2007 compared to the same periods in 2006 and this should be considered when making period-to-period comparisons.

Non-life Segment

U.S. P&C

The U.S. P&C sub-segment includes the U.S. casualty line, which represented approximately 64% and 65% of net premiums written in this sub-segment in the second quarter and first six months of 2007, respectively. This line typically tends to have a higher loss ratio and lower technical result due to the long-tail nature of the risks involved. Casualty treaties typically provide for investment income on premiums invested over a longer period as losses are typically paid later than for other lines. Investment income, however, is not considered in the calculation of technical result.

22

The components of the technical result and the corresponding ratios for this sub-segment for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007			% Change 2007 over 2006		For the three months ended June 30, 2006			For the six months ended June 30, 2007			% Change 2007 over 2006		For the six months ended June 30, 2006
Gross premiums written	$	170		—	%	$	170		$	429		(8	)%	$	466
Net premiums written		170		—			170			429		(8	)		466
Net premiums earned	$	187		(8	)	$	205		$	383		(5	)	$	404
Losses and loss expenses		(120	)	(29	)		(170	)		(252	)	(20	)		(313	)
Acquisition costs		(47	)	(2	)		(48	)		(97	)	(2	)		(99	)
Technical result(1)	$	20		NM		$	(13	)	$	34		NM		$	(8	)
Loss ratio(2)		64.2	%				83.0	%		65.7	%				77.5	%
Acquisition ratio(3)		24.9					23.3			25.4					24.5
Technical ratio(4)		89.1	%				106.3	%		91.1	%				102.0	%

NM: not meaningful

(1) Technical result is defined as net premiums earned less losses and loss expenses and acquisition costs.

(2) Loss ratio is obtained by dividing losses and loss expenses by net premiums earned.

(3) Acquisition ratio is obtained by dividing acquisition costs by net premiums earned.

(4) Technical ratio is defined as the sum of the loss ratio and the acquisition ratio.

Premiums

The U.S. P&C sub-segment represented 19% and 20% of total net premiums written in the three months and six months ended June 30, 2007, respectively.

Three-month result

The gross and net premiums written in the three months ended June 30, 2007 were essentially flat compared to the same period in 2006. This resulted from a decrease in the casualty line, partially offset by an increase in the property and motor lines. Net premiums written were also impacted by lower negative premium adjustments received from cedants in 2007. The 8% decline in net premiums earned in the three months ended June 30, 2007 compared to the same period in 2006 is primarily due to a shift in the mix of business from loss occurring to risk attaching business, which earns premiums at a slower pace.

Six-month result

The decline in gross and net premiums written and net premiums earned in the six months ended June 30, 2007 resulted principally from timing differences in the recognition of premiums due to a modest shift from non-proportional to proportional business and increased risk retention by cedants, partially offset by lower downward premium adjustments reported by cedants in 2007 compared to the same period in 2006. Minimum and deposit premiums are recognized at the inception of the treaty while premiums under proportional treaties are recognized over the risk period of the reinsurance contract. The majority of the decline in premiums resulted from a decrease of $34 million of minimum and deposit premiums written by the Company in the six months ended June 30, 2007 compared to the same period of 2006. The Company continued to observe diverse market conditions. Pricing improved for catastrophe-exposed business compared to 2006, while terms and conditions weakened and pricing declined for all other lines as a result of the competitive market conditions and increased risk retention by cedants. Despite the sustained competition prevailing in this sub-segment and the higher risk retention by cedants, the Company was able to pursue business that met its profitability objectives.

Losses and loss expenses and loss ratio

Three-month result

The losses and loss expenses and loss ratio reported in the three months ended June 30, 2007 and 2006 reflected no significant catastrophic or individually significant loss for either period. The 2007 losses and loss expenses and loss ratio reflect a) a net favorable loss development on prior accident years in the amount of $12 million, or 6.4 points on the loss ratio of this sub-segment; and b) a decrease in the book of business and exposure for this sub-segment as evidenced by the

23

decrease in net premiums earned. The net favorable loss development of $12 million was attributable to net favorable loss development for prior accident years in the casualty and motor lines. Loss information provided by cedants in the three months ended June 30, 2007 for prior accident years for this sub-segment included no individually significant losses or reductions of losses but a series of attritional losses or reductions. Based on the Company’s assessment of this loss information, the Company has decreased its expected ultimate loss ratios for the casualty and motor lines, which had the net effect of decreasing prior year loss estimates.

The 2006 losses and loss expenses and loss ratio reflected a net adverse loss development on prior accident years in the amount of $18 million, or 8.7 points on the loss ratio. The net adverse loss development of $18 million included net adverse loss development for prior accident years in all lines and included $10 million in the property line related to the 2005 hurricanes Katrina, Rita and Wilma.

The decrease of $50 million in losses and loss expenses from the three months ended June 30, 2006 compared to the same period of 2007 included:

• an improvement of $30 million in net prior year development; and

• a decrease in losses and loss expenses of approximately $20 million resulting from a combination of the decrease in the book of business and exposure, and normal fluctuations in profitability between periods.

Six-month result

The losses and loss expenses and loss ratio reported in the six months ended June 30, 2007 and 2006 reflected no significant catastrophic or individually significant loss for either period. The 2007 losses and loss expenses and loss ratio reflect a) a net favorable loss development on prior accident years in the amount of $16 million, or 4.3 points on the loss ratio of this sub-segment; and b) a decrease in the book of business and exposure for this sub-segment as evidenced by the decrease in net premiums earned. The net favorable loss development of $16 million included net favorable loss development for prior accident years in the casualty and motor lines of $19 million, partially offset by net adverse loss development in the property line of $3 million. Loss information provided by cedants in the six months ended June 30, 2007 for prior accident years for this sub-segment included no individually significant losses or reductions of losses but a series of attritional losses or reductions. Based on the Company’s assessment of this loss information, the Company has decreased its expected ultimate loss ratios for the casualty and motor lines (increased for the property line), which had the net effect of decreasing (increasing for the property line) prior year loss estimates.

The 2006 losses and loss expenses and loss ratio reflected a net adverse loss development on prior accident years in the amount of $19 million, or 4.6 points on the loss ratio. The net adverse loss development of $19 million included net adverse loss development for prior accident years in all lines of business and included $21 million related to the 2005 hurricanes Katrina, Rita and Wilma.

The decrease of $61 million in losses and loss expenses from the six months ended June 30, 2006 compared to the same period of 2007 included:

• an improvement of $35 million in net prior year development; and

• a decrease in losses and loss expenses of approximately $26 million resulting from a combination of the decrease in the book of business and exposure, and normal fluctuations in profitability between periods.

Acquisition costs and acquisition ratio

Three-month result and six-month result

While the Company’s book of business and exposure declined in the three months and six months ended June 30, 2007 compared to the same periods of 2006, the acquisition costs and acquisition ratio did not change significantly as a result of a modest shift from non-proportional to proportional business, which generally carries a higher acquisition ratio.

Technical result and technical ratio

Three-month result

The increase of $33 million in the technical result and corresponding decrease in the technical ratio in the three months ended June 30, 2007 compared to the same period in 2006 was primarily attributable to an improvement in net prior year development of $30 million and an increase of $3 million resulting from normal fluctuations in profitability between periods, including the impact of premium adjustments.

24

Six-month result

The increase of $42 million in the technical result and corresponding decrease in the technical ratio in the six months ended June 30, 2007 compared to 2006 was primarily attributable to an improvement in net prior year development of $35 million and an increase of $7 million resulting from normal fluctuations in profitability between periods, including the impact of premium adjustments and considering timing differences in the recognition of premiums.

Global (Non-U.S.) P&C

The Global (Non-U.S.) P&C sub-segment is composed of short-tail business, in the form of property and proportional motor business, that represented 74% and 73% of net premiums written for this sub-segment in the three months and six months ended June 30, 2007, respectively, and long-tail business, in the form of casualty and non-proportional motor business, that represented the balance of this sub-segment.

The components of the technical result and the corresponding ratios for this sub-segment for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007			% Change 2007 over 2006		For the three months ended June 30, 2006			For the six months ended June 30, 2007			% Change 2007 over 2006		For the six months ended June 30, 2006
Gross premiums written	$	129		2	%	$	128		$	462		(6	)%	$	493
Net premiums written		127		—			127			459		(6	)		491
Net premiums earned	$	173		(5	)	$	181		$	349		(4	)	$	365
Losses and loss expenses		(131	)	38			(95	)		(248	)	7			(232	)
Acquisition costs		(44	)	(9	)		(48	)		(90	)	(9	)		(99	)
Technical result	$	(2	)	NM		$	38		$	11		(68	)	$	34
Loss ratio		75.6	%				52.3	%		71.2	%				63.7	%
Acquisition ratio		25.6					26.9			25.7					27.0
Technical ratio		101.2	%				79.2	%		96.9	%				90.7	%

NM: not meaningful

Premiums

The Global (Non-U.S.) P&C sub-segment represented 14% and 21% of total net premiums written for the three months and six months ended June 30, 2007, respectively.

Three-month result

The slight increase in gross premiums written in the three months ended June 30, 2007 resulted from the casualty and motor lines of business, and was partially offset by a decrease in the property line. The decline in net premiums earned resulted from all lines of business, with the largest decrease coming from the motor line, reflecting the steady decline in premiums written over recent periods. The weakening of the U.S. dollar, on average, during the three months ended June 30, 2007 compared to the same period in 2006 partially offset the decrease in net premiums written in this sub-segment, as premiums denominated in currencies that have appreciated against the U.S. dollar were converted into U.S. dollars at higher average exchange rates. Without the positive contribution of foreign exchange, gross and net premiums written would have declined by 4% and 5%, respectively, and net premiums earned would have declined by 11%.

Six-month result

The decline in gross and net premiums written in the six months ended June 30, 2007 resulted from all lines in this sub-segment, with the largest decrease coming from the motor line. The decline in net premiums earned occurred in the property and motor lines. Increased competition and increased risk retention by cedants are the principal reasons for the decrease in premium volume and exposure in this sub-segment. In addition to the continued increases in risk retention by cedants, the reduction in the motor line resulted from the Company’s decision not to renew treaties that did not meet the Company’s profitability objectives. Net premiums written were also impacted by lower negative premium adjustments received from cedants in 2007. The weakening of the U.S. dollar, on average, during the six months ended June 30, 2007 compared to the same period in 2006 partially offset the decrease in net premiums written in this sub-segment, as premiums denominated in

25

currencies that have appreciated against the U.S. dollar were converted into U.S. dollars at higher average exchange rates. Without the positive contribution of foreign exchange, gross and net premiums written would have declined by 13% and net premiums earned would have declined by 10%. The Company has remained selective in an increasingly competitive environment and has chosen to retain business that met its profitability objectives instead of focusing on premium volume.

Losses and loss expenses and loss ratio

Three-month result

The losses and loss expenses and loss ratio reported in the three months ended June 30, 2007 reflected a) no large catastrophic losses; b) a higher than usual level of mid-sized losses, including Cyclone Gonu and the floods in the United Kingdom; c) a net favorable loss development on prior accident years of $20 million, or 11.3 points on the loss ratio; and d) a decrease in the book of business and exposure as evidenced by the decrease in net premiums earned. The net favorable loss development of $20 million included net favorable development in the property and motor lines and resulted from a reassessment of the loss development assumptions used by the Company to estimate future liabilities due to what it believed were favorable experience trends in these lines of business, as losses reported by cedants during the three months ended June 30, 2007 for prior accident years, and for treaties where the risk period expired, were lower than the Company expected. Loss information provided by cedants in the three months ended June 30, 2007 for prior accident years for this sub-segment included no individually significant losses or reductions of losses but a series of attritional losses or reductions. Based on the Company’s assessment of this loss information, the Company has decreased its expected ultimate loss ratios for the property and motor lines, which had the net effect of decreasing prior year loss estimates.

The losses and loss expenses and loss ratio reported in the three months ended June 30, 2006 reflected a) no large catastrophic losses; b) a net favorable loss development on prior accident years of $47 million, or 25.4 points on the loss ratio; and c) a decrease in the book of business and exposure for this sub-segment, as evidenced by the decrease in net premiums earned. The net favorable loss development of $47 million included net favorable development in all lines of business.

The increase of $36 million in losses and loss expenses from the three months ended June 30, 2006 compared to the same period of 2007 included:

• a decrease of $27 million in net favorable prior year development; and

• an increase in losses and loss expenses resulting from the higher than usual level of mid-sized losses, partially offset by the decrease in the book of business and exposure, and normal fluctuations in profitability between periods totaling approximately $9 million.

Six-month result

The losses and loss expenses and loss ratio reported in the six months ended June 30, 2007 reflected a) losses related to European Winterstorm Kyrill of $13 million, or 3.6 points on the loss ratio of this sub-segment; b) a higher than usual level of mid-sized losses during the three months ended June 30, 2007; c) a net favorable loss development on prior accident years of $60 million, or 17.0 points on the loss ratio; and d) a decrease in the book of business and exposure as evidenced by the decrease in net premiums earned. The net favorable loss development of $60 million included net favorable development in all lines of business and resulted from a reassessment of the loss development assumptions used by the Company to estimate future liabilities due to what it believed were favorable experience trends in these lines of business, as losses reported by cedants during the six months ended June 30, 2007 for prior accident years, and for treaties where the risk period expired, were lower than the Company expected. Loss information provided by cedants in the six months ended June 30, 2007 for prior accident years for this sub-segment included no individually significant losses or reductions of losses but a series of attritional losses or reductions. Based on the Company’s assessment of this loss information, the Company has decreased its expected ultimate loss ratios for all lines of business, which had the net effect of decreasing prior year loss estimates.

The losses and loss expenses and loss ratio reported in the six months ended June 30, 2006 reflected a) no large catastrophic losses; b) a net favorable loss development on prior accident years of $47 million, or 12.7 points on the loss ratio; and c) a decrease in the book of business and exposure for this sub-segment as evidenced by the decrease in net premiums earned. The net favorable loss development of $47 million included net favorable development of $48 million in the property and casualty lines, partially offset by net adverse development of $1 million in the motor line.

The increase of $16 million in losses and loss expenses from the six months ended June 30, 2006 compared to the same period of 2007 included:

• an increase in losses and loss expenses resulting from the higher than usual level of mid-sized losses, partially offset by the decrease in the book of business and exposure, and normal fluctuations in profitability between periods totaling approximately $16 million; and

26

• an increase in large catastrophic losses of $13 million; and was partially offset by

• an increase of $13 million in net favorable prior year development

Acquisition costs and acquisition ratio

Three-month and six-month result

The decrease in acquisition costs in the three months and six months ended June 30, 2007 compared to the same periods in 2006 was primarily due to the reduction in the Company’s book of business and exposure, as evidenced by the decrease in net premiums earned and higher acquisition costs in the 2006 periods from sliding scale and profit commission experience adjustments.

Technical result and technical ratio

Three-month result

The decrease of $40 million in technical result and corresponding increase in technical ratio from the three months ended June 30, 2006 to the same period of 2007 was primarily explained by a decrease of $27 million in net favorable prior year development and a decrease of approximately $13 million resulting from a higher than usual level of mid-sized losses and normal fluctuations in profitability between periods.

Six-month result

The decrease of $23 million in technical result and corresponding increase in technical ratio from the six months ended June 30, 2006 to the same period of 2007 was primarily explained by higher catastrophe losses of $13 million and a decrease of approximately $23 million resulting from a higher than usual level of mid-sized losses and normal fluctuations in profitability between periods, partially offset by an increase of $13 million in net favorable prior year development.

Worldwide Specialty

The Worldwide Specialty sub-segment is usually the most profitable sub-segment within the Company; however, it is important to note that this sub-segment is exposed to volatility resulting from significant catastrophe and other large losses, and thus, profitability in any one period is not necessarily predictive of future profitability.

The components of the technical result and the corresponding ratios for this sub-segment for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007			% Change 2007 over 2006		For the three months ended June 30, 2006			For the six months ended June 30, 2007			% Change 2007 over 2006		For the six months ended June 30, 2006
Gross premiums written	$	457		12	%	$	408		$	999		4	%	$	956
Net premiums written		458		12			409			978		4			936
Net premiums earned	$	380		6		$	358		$	714		5		$	681
Losses and loss expenses		(156	)	(19	)		(192	)		(290	)	(9	)		(319	)
Acquisition costs		(85	)	22			(70	)		(158	)	18			(133	)
Technical result	$	139		45		$	96		$	266		16		$	229
Loss ratio		40.9	%				53.7	%		40.6	%				46.8	%
Acquisition ratio		22.4					19.5			22.1					19.6
Technical ratio		63.3	%				73.2	%		62.7	%				66.4	%

Premiums

The Worldwide Specialty sub-segment represented 51% and 45% of total net premiums written in the three months and six months ended June 30, 2007, respectively.

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Three-month result

Gross and net premiums written increased by 12% in the three months ended June 30, 2007 compared to the same period in 2006. With the exception of the catastrophe line, which was relatively flat, net premium written increased in all lines of business compared to 2006, with the largest increases in premiums written generated by the specialty casualty, engineering, credit/surety and marine lines. Net premiums written were also impacted by greater positive premium adjustments received from cedants in 2007. The weakening of the U.S. dollar, on average, in the three months ended June 30, 2007 compared to the same period in 2006 contributed to the increase in net premiums written in this sub-segment, as premiums denominated in currencies that have appreciated against the U.S. dollar were converted into U.S. dollars at higher average exchange rates. Without the positive contribution of foreign exchange, gross and net premiums written would have increased by 9% and net premiums earned would have increased by 2%.

Six-month result

Gross and net premiums written increased by 4% in the first six months of 2007 compared to the same period in 2006. The increase resulted from most lines of business, with the exception of the aviation, agriculture, catastrophe and energy lines which decreased, compared to the same period in 2006. Net premiums written were also impacted by lower positive premium adjustments received from cedants in 2007. The weakening of the U.S. dollar, on average, in the six months ended June 30, 2007 compared to the same period in 2006 contributed significantly to the increase in net premiums written in this sub-segment, as premiums denominated in currencies that have appreciated against the U.S. dollar were converted into U.S. dollars at higher average exchange rates. Without the positive contribution of foreign exchange, gross and net premiums written and net premiums earned would have increased by 1%. Notwithstanding the increased competition prevailing in certain lines and markets of this sub-segment and the increased risk retention by cedants, the Company was able to pursue business that met its profitability objectives.

Losses and loss expenses and loss ratio

Three-month result

The losses and loss expenses and loss ratio reported in the three months ended June 30, 2007 for this sub-segment reflected a) no large catastrophic losses; and b) a net favorable loss development on prior accident years in the amount of $75 million, or 19.8 points on the loss ratio. The net favorable loss development of $75 million reported in the three months ended June 30, 2007 included net favorable loss development for prior accident years in all lines of business, except for the energy line, and was primarily due to favorable loss emergence, as losses reported by cedants for prior accident years, including treaties where the risk period expired, were lower than the Company expected. Loss information provided by cedants for prior accident years for all lines of business in this sub-segment included no individually significant losses or reductions but a series of attritional losses or reductions for both years. Based on the Company’s assessment of this loss information, the Company has decreased its expected ultimate loss ratios for all lines of business (increased for the energy line), which had the net effect of decreasing (increasing for the energy line) the level of prior year loss estimates for this sub-segment.

The losses and loss expenses and loss ratio reported in the three months ended June 30, 2006 for this sub-segment reflected a) no catastrophic losses; and b) a net favorable loss development on prior accident years in the amount of $33 million, or 9.2 points on the loss ratio. The net favorable loss development of $33 million included net favorable loss development for prior accident years in all lines of business, except for the catastrophe line, which included net adverse development of $8 million relating to the 2005 hurricanes Katrina, Rita and Wilma.

The decrease of $36 million in losses and loss expenses from the three months ended June 30, 2006 compared to the same period of 2007 included:

• an increase of $42 million in net favorable prior year development; and was partially offset by

• an increase in losses and loss expenses of approximately $6 million resulting from normal fluctuations in profitability between periods.

Six-month result

The losses and loss expenses and loss ratio reported in the six months ended June 30, 2007 for this sub-segment reflected a) losses related to European Winterstorm Kyrill of $39 million, or 5.2 points on the loss ratio of this sub-segment; and b) net favorable loss development on prior accident years in the amount of $153 million, or 21.5 points on the loss ratio. The net favorable loss development of $153 million reported in the six months ended June 30, 2007 included net favorable loss development for prior accident years in all lines of business and was primarily due to favorable loss emergence, as losses reported by cedants for prior accident years, including treaties where the risk period expired, were lower than the Company

28

expected. Loss information provided by cedants for prior accident years for all lines of business in this sub-segment included no individually significant losses or reductions but a series of attritional losses or reductions for both years. Based on the Company’s assessment of this loss information, the Company has decreased its expected ultimate loss ratios for all lines of business, which had the net effect of decreasing the level of prior year loss estimates for this sub-segment.

The losses and loss expenses and loss ratio reported in the six months ended June 30, 2006 for this sub-segment reflected a) no catastrophic losses; and b) a net favorable loss development on prior accident years in the amount of $102 million, or 15.0 points on the loss ratio. The net favorable loss development of $102 million included net favorable loss development for prior accident years in all lines, except for the catastrophe line, which included net adverse development of $9 million relating to the 2005 hurricanes Katrina, Rita and Wilma.

The decrease of $29 million in losses and loss expenses from the six months ended June 30, 2006 compared to the same period of 2007 included:

• an increase of $51 million in net favorable prior year development; and

• a decrease in losses and loss expenses of approximately $17 million resulting from normal fluctuations in profitability between periods; and was partially offset by

• an increase in large catastrophic losses of $39 million.

Acquisition costs and acquisition ratio

Three-month result and six-month result

The increase in acquisition costs and acquisition ratio in the three months and six months ended June 30, 2007 compared to 2006 is primarily due to a modest shift from non-proportional to proportional business, which generally carries higher acquisition costs, the increase in net premiums earned and the effect of increased competition in this sub-segment.

Technical result and technical ratio

Three-month result

The increase of $43 million in the technical result and corresponding decrease in the technical ratio from the three months ended June 30, 2006 compared to 2007 was due to the increase of $42 million in net favorable prior year development and a modest increase of approximately $1 million resulting from normal fluctuations in profitability between periods.

Six-month result

The increase of $37 million in the technical result and corresponding decrease in the technical ratio from the six months ended June 30, 2006 compared to 2007 was due to the increase of $51 million in net favorable prior year development and an increase of approximately $22 million resulting from normal fluctuations in profitability between periods, partially offset by an increase of $36 million, net of $3 million in reinstatement premiums, in the level of large catastrophic losses.

ART Segment

The ART segment is comprised of structured risk transfer reinsurance, principal finance, weather-related products and strategic investments, including the interest in earnings of the Company’s equity investment in ChannelRe Holdings.

As revenues in this segment are recorded either as premiums or other income (in the case of derivative contracts and contracts that do not qualify for reinsurance accounting), premiums alone are not a representative measure of activity in ART. This segment is very transaction driven, and revenues and profit trends will be uneven, especially given the relatively small size of this segment. Accordingly, profitability or growth in any year is not necessarily predictive of future profitability or growth.

The Company’s share of the results of ChannelRe Holdings amounted to $3 million for the three months ended June 30, 2007 and 2006 and $6 million and $5 million for six months ended June 30, 2007 and 2006, respectively. The Company records income on its investment in ChannelRe Holdings on a one-quarter lag.

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The components of the underwriting result, allocated underwriting result and the interest in earnings of equity investments for this segment for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007			For the three months ended June 30, 2006			For the six months ended June 30, 2007			For the six months ended June 30, 2006
Gross premiums written	$	8		$	7		$	20		$	26
Net premiums written		8			7			20			25
Net premiums earned	$	6		$	8		$	12		$	15
Losses and loss expenses		—			(3	)		—			(7	)
Acquisition costs		(1	)		(1	)		(2	)		(2	)
Technical result	$	5		$	4		$	10		$	6
Other (loss) income		(9	)		13			(8	)		20
Other operating expenses		(2	)		(5	)		(5	)		(9	)
Underwriting result	$	(6	)	$	12		$	(3	)	$	17
Net investment income		1			—			1			—
Allocated underwriting result(1)	$	(5	)	$	12		$	(2	)	$	17
Interest in earnings of equity investments	$	3		$	3		$	6		$	5

(1) Allocated underwriting result is defined as net premiums earned, other income or loss and allocated net investment income less losses and loss expenses, acquisition costs and other operating expenses.

Three-month result

Allocated underwriting result for the ART segment declined by $17 million, from a profit of $12 million in the three months ended June 30, 2006 to a loss of $5 million in the corresponding period of 2007. The decline resulted primarily from the principal finance line, which suffered a net underwriting loss of $12 million in the three months ended June 30, 2007 compared to net underwriting income of $2 million in the same period of 2006 due to write-downs on four separate and unrelated transactions. To a lesser extent, the decline was also attributable to the weather line which reported a negligible net underwriting income for the three months ended June 30, 2007 compared to net underwriting income of $5 million in the same period of 2006 due to favorable weather conditions in Japan, as well as the benefit from early termination of a number of longer term contracts, which led to accelerated profit recognition for the terminated contacts in the 2006 period. Other operating expenses declined by $3 million due to lower bonus accruals in 2007, as a result of the lower underwriting result.

Six-month result

Allocated underwriting result for the ART segment declined by $19 million, from a profit of $17 million in the six months ended June 30, 2006 to a loss of $2 million in the same period of 2007. The decline resulted primarily from lower underwriting results from the principal finance line ($12 million) and the weather line ($15 million) during the six months ended June 30, 2007 compared to the same period of 2006 for the reasons explained in the three-month result, as well as accelerated profit recognition on the early termination of a number of longer term contracts in the 2006 period, partially offset by improved underwriting results from the structured risk transfer line ($7 million) due to a lower level of losses in 2007 and lower other operating expenses.

Asset and capital market risks

In addition to structured risk transfer transactions, the Company’s ART operations assume asset and capital markets risks, including investments in non-publicly traded companies, private placement equity investments and derivative financial instruments. These transactions are either accounted for as reinsurance or derivative transactions, while others are reported as other invested assets on the Company’s Consolidated Balance Sheets. The following is a discussion of asset and capital markets risks assumed by the Company’s ART operations.

For the principal finance line, the Company has entered into total return and interest rate swaps, as well as cash investments and reinsurance contracts. The underlying risks of the transactions are primarily structured asset-backed securities. At June 30, 2007, the notional value of the Company’s principal finance portfolio was $333 million. At June 30, 2007, approximately 44% of the portfolio related to apparel and retail future flow or intellectual property backed transactions, with the rest distributed over a number of generally unrelated risks. At June 30, 2007, approximately 51% of the underlying investments were rated investment-grade or higher. The Company uses internal valuation models to estimate the fair value of these swaps and develops assumptions that require significant judgment, such as the timing of future cash flows, credit spreads and general levels of interest rates.

30

As part of the weather-related products line, in addition to transactions structured as insurance or reinsurance, the Company has entered into derivative financial instruments. The Company uses internal valuation models to estimate the fair value of these derivatives and develops assumptions that require significant judgment, such as the timing of future cash flows, credit spreads and general levels of interest rates. The underlying risks of these derivatives are parametric weather risks (temperature and precipitation) as well as promotional risks. At June 30, 2007, the total notional amount of this exposure was $33 million.

As part of the strategic investments line, the Company purchased a 20% ownership in ChannelRe Holdings, a non-publicly traded financial guaranty reinsurer, which assumed a portfolio of in-force business from MBIA and provides reinsurance services exclusively to MBIA. The underlying risks of this investment are municipal, non-U.S. infrastructure, structured finance transactions and CDOs. ChannelRe Holdings has modest direct exposure to seasoned sub-prime mortgages in its reinsurance portfolio, and no exposure to sub-prime mortgages issued after 2004. ChannelRe Holdings has also guaranteed certain CDOs that include sub-prime mortgage collateral. These have high attachment points (in excess of the rating agency determined AAA levels), and are considered to be well structured. ChannelRe Holdings’ management has informed the Company that it has reviewed its exposure to sub-prime mortgage issues in light of recent developments and rating agency actions and that it does not expect these developments to cause any material increase in losses on its modest direct sub-prime mortgage and high quality CDO exposure. At June 30, 2007, the value of the Company’s investment in ChannelRe Holdings was $97 million. In addition to its investment in ChannelRe Holdings, the Company has also invested $12 million in other private placement equity transactions.

Life Segment

The following table provides the components of the allocated underwriting result for this segment for the three months and six months ended June 30, 2007 and 2006 (in millions of U.S. dollars):

	For the three months ended June 30, 2007			% Change 2007 over 2006		For the three months ended June 30, 2006			For the six months ended June 30, 2007			% Change 2007 over 2006		For the six months ended June 30, 2006
Gross premiums written	$	144		36	%	$	105		$	300		21	%	$	249
Net premiums written		136		32			103			283		17			242
Net premiums earned	$	143		34		$	107		$	273		20		$	227
Life policy benefits		(117	)	44			(82	)		(213	)	26			(169	)
Acquisition costs		(29	)	(8	)		(32	)		(60	)	(8	)		(66	)
Technical result	$	(3	)	(50	)	$	(7	)	$	—		(96	)	$	(8	)
Other operating expenses		(8	)	14			(7	)		(15	)	10			(14	)
Net investment income		15		19			13			26		13			24
Allocated underwriting result(1)	$	4		NM		$	(1	)	$	11		364		$	2

NM: not meaningful

(1) Allocated underwriting result is defined as net premiums earned and allocated net investment income less life policy benefits, acquisition costs and other operating expenses.

Premiums

The Life segment represented 15% and 13% of total net premiums written in the three months and six months ended June 30, 2007, respectively.

Three-month result

The increases in gross and net premiums written and net premiums earned during the three months ended June 30, 2007 compared to the same period in 2006 resulted from an increase in all lines, but was more evident in the mortality line. Growth in the mortality line resulted from intrinsic growth in the business written by the Company’s cedants, which resulted in more volume ceded to the Company on existing treaties, and new business generated by the Company. Net premiums written were also impacted by a positive premium adjustment of $6 million received from a cedant for a longevity treaty in 2007. In addition, the U.S. dollar weakened, on average, in the three months ended June 30, 2007 and premiums denominated in currencies that have appreciated against the U.S. dollar were converted into U.S. dollars at higher average exchange rates. Without the positive contribution of foreign exchange, gross and net premiums written and net premiums earned would have increased by 28%, 24% and 26%, respectively.

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Six-month result

The increases in gross and net premiums written and net premiums earned during the six months ended June 30, 2007 compared to the same period in 2006 resulted from an increase in all lines, but was more evident in the mortality line as described above. In addition, the U.S. dollar weakened, on average, in the six months ended June 30, 2007 and premiums denominated in currencies that have appreciated against the U.S. dollar were converted into U.S. dollars at higher average exchange rates. Without the positive contribution of foreign exchange, gross and net premiums written and net premiums earned would have increased by 12%, 9% and 12% respectively.

Life policy benefits

Three-month result

Life policy benefits increased by $35 million, or 44%, in the three months ended June 30, 2007 compared to the same period in 2006. This was primarily attributable to the growth in the Company’s book of business and exposure, as evidenced by the 34% increase in net premiums earned for this segment. Life policy benefits for the three months ended June 30, 2007 included net adverse prior year development of $2 million compared to net adverse prior year development of $5 million in 2006. The net adverse development of $2 million reported in the three months ended June 30, 2007 included net adverse loss development in the longevity line of $8 million partially offset by net favorable loss development in the mortality and health lines of $6 million. The net prior year development was primarily due to the receipt of additional reported loss information from cedants. In addition, the Company recorded incurred losses of $9 million and $1 million in the three months ended June 30, 2007 and 2006, respectively, reported by a cedant for a longevity treaty in run-off. The 2006 period also included a reduction in incurred losses of $3 million reported by a cedant for a health treaty.

Six-month result

Life policy benefits increased by $44 million, or 26%, in the six months ended June 30, 2007 compared to the same period in 2006. This was primarily attributable to the growth in the Company’s book of business and exposure, as evidenced by the 20% increase in net premiums earned for this segment. Life policy benefits for the six months ended June 30, 2007 included net favorable prior year development of $5 million compared to net adverse prior year development of $5 million in 2006. The net favorable development of $5 million reported in the six months ended June 30, 2007 included net favorable loss development in the mortality line of $16 million partially offset by net adverse loss development in the longevity line of $11 million. The net prior year development was primarily due to the receipt of additional reported loss information from cedants. In addition, the Company recorded a loss reduction of $2 million in the six months ended June 30, 2007 and incurred losses of $2 million in the six months ended June 30, 2006 reported by a cedant for a longevity treaty in run-off. The 2006 period also included a reduction in incurred losses of $3 million reported by a cedant for a health treaty.

Acquisition costs

Three-month result

The decrease of $3 million in acquisition costs in the three months ended June 30, 2007 compared to the same period of 2006 was primarily attributable to a change in reporting by a cedant to reduce acquisition costs on a mortality treaty compared to the same period of 2006. The 2007 period included a profit commission of $3 million reported by a cedant for a longevity treaty, while the 2006 period included higher acquisition costs for the health line resulting from sliding scale and profit commission experience adjustments and an additional $4 million reported by a cedant for a longevity treaty.

Six-month result

The decrease of $6 million in acquisition costs in the six months ended June 30, 2007 compared to the same period of 2006 was primarily attributable to a change in reporting by a cedant to reduce acquisition costs on a mortality treaty compared to the same period of 2006. The 2007 period included profit commissions and adjustments totaling $9 million reported by cedants for longevity treaties while the 2006 period included higher acquisition costs for the health line resulting from sliding scale and profit commission experience adjustments and an additional $7 million reported by a cedant for a longevity treaty.

Net investment income

Three-month result and six-month result

Net investment income increased by $2 million for the three months and six months ended June 30, 2007 compared to the same periods of 2006 as a result of higher invested assets from the growth in the book of business. The comparison for the six month periods was also affected by $3 million lower net investment income reported by a cedant for a longevity treaty in the six months of 2007 compared to 2006.

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Allocated underwriting result

Three-month result

The increase of $5 million in allocated underwriting result in the three months ended June 30, 2007 compared to the same period in 2006 is primarily attributable to an increase in profitability of the mortality line and by the improvement of $3 million in net adverse prior year development, partially offset by a profit commission adjustment reported by a cedant.

Six-month result

The increase of $9 million in allocated underwriting result in the six months ended June 30, 2007 compared to the same period in 2006 is primarily attributable to an increase in profitability of the mortality line and to the improvement of $10 million in net prior year development, partially offset by profit commission adjustments reported by cedants.

Premium Distribution by Line of Business

The distribution of net premiums written by line of business for the three months and six months ended June 30, 2007 and 2006 was as follows:

	For the three months ended June 30, 2007		For the three months ended June 30, 2006		For the six months ended June 30, 2007		For the six months ended June 30, 2006
Non-life
Property and Casualty
Property	15	%	15	%	19	%	19	%
Casualty	14		18		16		19
Motor	4		3		6		6
Worldwide Specialty
Agriculture	6		6		3		4
Aviation/Space	6		6		4		4
Catastrophe	15		16		16		16
Credit/Surety	7		7		6		5
Engineering	6		5		4		4
Energy	2		3		2		2
Marine	3		3		3		3
Specialty property	2		2		3		3
Specialty casualty	4		2		4		3
ART	1		1		1		1
Life	15		13		13		11
Total	100	%	100	%	100	%	100	%

There were modest shifts in the distribution of net premiums written by line and segment between the 2007 and 2006 periods, which reflected the Company’s response to existing market conditions. Additionally, the distribution of net premiums written may also be affected by the shift in treaty structure from a proportional to non-proportional basis. Foreign exchange fluctuations affected the comparison for all lines.

• Casualty: the decrease in premiums resulted principally from timing differences in the recognition of premiums and greater downward premium adjustments reported by cedants in 2007 compared to 2006.

• Life: as part of its diversification strategy, the Company continues to steadily increase the proportion of its life business.

Premium Distribution by Treaty Type

The Company typically writes business on either a proportional or non-proportional basis. On proportional business, the Company shares proportionally in both the premiums and losses of the cedant. On non-proportional business, the Company is typically exposed to loss events in excess of a predetermined dollar amount or loss ratio. In both proportional and non-proportional business, the Company typically reinsures a large group of primary insurance contracts written by the ceding company. In addition, the Company writes a small percentage of its business on a facultative basis. Facultative arrangements are generally specific to an individual risk and can be written on either a proportional or non-proportional basis. Generally,

33

the Company has more influence over pricing, as well as terms and conditions, in non-proportional and facultative arrangements.

The distribution of gross premiums written by type of treaty for the three months and six months ended June 30, 2007 and 2006 was as follows:

	For the three months ended June 30, 2007		For the three months ended June 30, 2006		For the six months ended June 30, 2007		For the six months ended June 30, 2006
Non-life Segment
Proportional	53	%	54	%	45	%	44	%
Non-proportional	25		27		36		39
Facultative	5		5		4		5
Life Segment
Proportional	16		13		12		10
Non-proportional	—		—		2		1
ART Segment
Non-proportional	1		1		1		1
Total	100	%	100	%	100	%	100	%

The distribution of gross premiums written by treaty type is affected by changes in the allocation of capacity among lines of business and by the timing of receipt by the Company of certain accounts and premium adjustments by cedants in the Non-life and Life segments.

The decrease in the percentage of non-proportional gross premiums written for the Non-life segment resulted primarily from timing differences in the recognition of premiums in the U.S. sub-segment due to a modest shift from minimum and deposit premiums, which are recognized at the inception of the treaty, to premiums under proportional treaties, which are recognized over the risk period.

The increase in the percentage of proportional gross premiums written for the Life segment resulted from the increase in the Company’s mortality business. In addition, changes in average foreign exchange rates affect the period-to-period comparisons for all treaty types.

Premium Distribution by Geographic Region

The geographic distribution of gross premiums written for the three months and six months ended June 30, 2007 and 2006 was as follows:

	For the three months ended June 30, 2007		For the three months ended June 30, 2006		For the six months ended June 30, 2007		For the six months ended June 30, 2006
North America	47	%	50	%	42	%	43	%
Europe	40		36		46		44
Asia, Australia and New Zealand	8		9		7		8
Latin America, Caribbean and Africa	5		5		5		5
Total	100	%	100	%	100	%	100	%

The distribution of gross premiums written was comparable between both periods. In addition, the distribution of gross premiums for all non-U.S. regions was affected by foreign exchange fluctuations which increased the non-U.S. premiums as premiums denominated in currencies that have appreciated against the U.S. dollar were converted into U.S. dollars at higher average exchange rates.

34

Premium Distribution by Production Source

The Company generates its business, or gross premiums written, both through brokers and through direct relationships with cedants. The percentage of gross premiums written by source for the three months and six months ended June 30, 2007 and 2006 was as follows:

	For the three months ended June 30, 2007		For the three months ended June 30, 2006		For the six months ended June 30, 2007		For the six months ended June 30, 2006
Broker	72	%	71	%	70	%	69	%
Direct	28		29		30		31

The distribution of gross premiums written was comparable between both periods.

Net Investment Income

Net investment income by asset source for the three months and six months ended June 30, 2007 and 2006 was as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007			% Change 2007 over 2006		For the three months ended June 30, 2006			For the six months ended June 30, 2007			% Change 2007 over 2006		For the six months ended June 30, 2006
Fixed maturities	$	100		29	%	$	77		$	194		26	%	$	154
Short-term investments, trading securities, cash and cash equivalents		14		(9	)		16			29		7			27
Equities		10		5			9			20		9			18
Funds held and other		12		14			10			18		(3	)		18
Investment expenses		(5	)	12			(4	)		(11	)	11			(9	)
Net investment income	$	131		21		$	108		$	250		20		$	208

Three-month result

Net investment income increased in the three months ended June 30, 2007 compared to the same period of 2006 due to:

• an increase in net investment income from fixed maturities, equities and funds held in the three months ended June 30, 2007 compared to the same period in 2006, primarily due to an increase in the asset base resulting from the reinvestment of cash flows from operations of $963 million excluding the net sale of $193 million of trading securities since June 30, 2006 and to higher interest rates prevailing during the three months of 2007 compared to the same period of 2006;

• the weakening of the U.S. dollar, on average, in the three months ended June 30, 2007 compared to the same period in 2006 contributed 2% of the increase in net investment income; partially offset by

• a decrease in net investment income from short-term investments, trading securities, and cash and cash equivalents in the three months ended June 30, 2007 compared to the same period in 2006, primarily due to the increased asset allocation during the 2006 period to cash and cash equivalents, trading securities and U.S. government securities from equity securities to keep the portfolio duration shorter than its neutral duration; and

• an increase in investment expenses resulting from the increase in the asset base.

Six-month result

Net investment income increased in the six months ended June 30, 2007 compared to the same period of 2006 due to:

• an increase in net investment income from fixed maturities, equities, short-term investments, trading securities, and cash and cash equivalents in the first six months of 2007 compared to the same period in 2006, primarily due to an increase in the asset base since June 30, 2006 as noted above and to higher interest rates prevailing during the first six months of 2007 compared to the same period of 2006;

• the weakening of the U.S. dollar, on average, in the first six months of 2007 compared to the same period in 2006 contributed 2% of the increase in net investment income; partially offset by

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• an increase in investment expenses resulting from the increase in the asset base.

Net Realized Investment Losses

The Company’s portfolio managers have dual investment objectives of optimizing current investment income and achieving capital appreciation. To meet these objectives, 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.

Proceeds from the sale of investments classified as available for sale for the three months and six months ended June 30, 2007 were $1,490 million and $2,892 million, respectively. Realized investment gains and losses on securities classified as available for sale for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007			For the three months ended June 30, 2006			For the six months ended June 30, 2007			For the six months ended June 30, 2006
Gross realized gains	$	55		$	62		$	84		$	171
Gross realized losses excluding other-than-temporary impairments		(28	)		(84	)		(47	)		(145	)
Other-than-temporary impairments		(64	)		(20	)		(74	)		(21	)
Total net realized investment (losses) gains on available for sale securities	$	(37	)	$	(42	)	$	(37	)	$	5

The components of net realized investment gains or losses for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007			For the three months ended June 30, 2006			For the six months ended June 30, 2007			For the six months ended June 30, 2006
Net realized investment losses on available for sale fixed maturities and short-term investments, excluding other-than-temporary impairments	$	(20	)	$	(12	)	$	(25	)	$	(20	)
Net realized investment gains (losses) on available for sale equities, excluding other-than-temporary impairments		47			(10	)		62			46
Other-than-temporary impairments		(64	)		(20	)		(74	)		(21	)
Net realized investment gains on trading securities		11			—			25			11
Change in net unrealized investment gains or losses on trading securities		(4	)		(19	)		(20	)		(8	)
Net realized and unrealized investment (losses) gains on equity securities sold but not yet purchased		(5	)		8			(8	)		(3	)
Net realized and unrealized investment gains on designated hedging activities		3			3			5			5
Net realized and unrealized losses on other invested assets		(18	)		—			(17	)		—
Other realized and unrealized investment losses		(4	)		(9	)		(1	)		(13	)
Total net realized investment (losses) gains	$	(54	)	$	(59	)	$	(53	)	$	(3	)

Realized investment gains and losses are generally a function of multiple factors, with the most significant being the prevailing interest rates, equity market conditions, the timing of disposition of fixed maturities and equity securities, and charges for the recognition of other-than-temporary impairments in the Company’s investment portfolio.

Other-than-temporary impairments are recorded as realized investment losses in the Consolidated Statements of Operations, which reduces net income and net income per share. Temporary losses are recorded as unrealized investment losses, which do not impact net income and net income per share, but reduce accumulated other comprehensive income in the Consolidated Balance Sheet, except for those related to trading securities, which are recorded immediately as realized investment losses. See Critical Accounting Policies and Estimates—Other-than-Temporary Impairment of Investments in Item 7 of Part II and Note 2(f) to Consolidated Financial Statements of the Company’s 2006 Annual Report on Form 10-K/A.

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Three-month result

Net realized investment gains on the sale of equity securities were $57 million higher in the three months ended June 30, 2007 compared to the same period of 2006, while net realized investment losses on the sale of fixed maturity securities were $8 million higher than 2006. In addition, the Company recorded charges for other-than-temporary impairments relating to its investment portfolio of $64 million (of which $41 million related to fixed maturity securities and $23 million related to equity securities) and $20 million for the three months ended June 30, 2007 and 2006, respectively. The other-than-temporary impairment charges and the losses on fixed maturity securities were mainly the result of rising interest rates, which reduced the fair value of the fixed income portfolio. The Company also recorded other-than-temporary impairment charges on a handful of equity securities with large unrealized loss positions. Typically, the Company considers impairment to have occurred when events have occurred that are likely to prevent the Company from recovering its investment in the security prior to a decision to dispose of the security.

Net realized investment gain on trading securities, change in net unrealized investment gains or losses on trading securities and net realized and unrealized investment (losses) gains on equity securities sold but not yet purchased result from the timing of disposition and the change in market value of the trading securities.

The increase in net realized and unrealized losses on other invested assets for the three months ended June 30, 2007 compared to the same period in 2006 resulted primarily from the increase of $14 million in losses related to treasury futures used by the Company to manage the investment portfolio duration.

Six-month result

Net realized investment gains on the sale of equity securities were $16 million higher in the six months ended June 30, 2007 compared to the same period of 2006, while net realized investment losses on the sale of fixed maturity securities were $5 million higher than 2006. In addition, the Company recorded charges for other-than-temporary impairments relating to its investment portfolio of $74 million (of which $44 million related to fixed maturity securities and $30 million to equity securities) and $21 million for the six months ended June 30, 2007 and 2006, respectively, mainly as a result of rising interest rates, which reduced the fair value of the fixed income portfolio. The Company also recorded other-than-temporary impairment charges on a handful of equity securities with large unrealized loss positions.

The increase in net realized and unrealized losses on other invested assets for the six months ended June 30, 2007 compared to the same period in 2006 resulted primarily from the increase of $18 million in losses related to treasury futures used by the Company to manage the investment portfolio duration.

Other Income (Loss)

Other loss for the three months and six months ended June 30, 2007 was $9 million and $8 million, respectively, compared to other income for the three months and six months ended June 30, 2006 of $13 million and $20 million, respectively. The other income (loss) primarily reflected income or losses on the Company’s ART contracts that were accounted for using the deposit accounting method or were considered to be derivatives. See the discussion of the ART segment included in the section Review of Net Income—Results by Segment above.

Other Operating Expenses

Other operating expenses for the three months and six months ended June 30, 2007 and 2006 were as follows (in millions of U.S. dollars):

	For the three months ended June 30, 2007		% Change 2007 over 2006		For the three months ended June 30, 2006		For the six months ended June 30, 2007		% Change 2007 over 2006		For the six months ended June 30, 2006
Other operating expenses	$	80	5	%	$	76	$	159	5	%	$	151

Three-month result

Other operating expenses are comprised primarily of personnel and infrastructure costs and represented 9% of total net premiums earned (both life and non-life) in the three months ended June 30, 2007 and 2006. The increase in operating expenses of 5% in the three months ended June 30, 2007 compared to the same period of 2006 consisted primarily of increases in personnel costs of $3 million and consulting and professional fees of $1 million. Without the contribution of foreign exchange, other operating expenses would have increased by 2% in the three months ended June 30, 2007 compared to the same period in 2006.

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Six-month result

Other operating expenses represented 9% of total net premiums earned in the six months ended June 30, 2007 and 2006. The increase in operating expenses of 5% in the six months ended June 30, 2007 compared to the same period of 2006 consisted primarily of increases in personnel costs of $8 million and consulting and professional fees of $3 million, partially offset by decreases of $3 million in depreciation and other costs. Without the contribution of foreign exchange, other operating expenses would have increased by 2% in the six months ended June 30, 2007 compared to the same period in 2006.

Financial Condition, Liquidity and Capital Resources

See the Financial Condition, Liquidity and Capital Resources discussion in Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A. The following discussion of Financial Condition, Liquidity and Capital Resources at June 30, 2007 focuses only on material changes from December 31, 2006.

Investments

Total investments and cash were $10.9 billion at June 30, 2007, compared to $10.7 billion at December 31, 2006. The major factors influencing the increase in the six-month period ended June 30, 2007 were:

• net cash provided by operating activities of $462 million, after excluding $514 million net sales of trading securities; and

• other factors, the primary one being the net positive influence of the effect of a weaker U.S. dollar relative to the euro and other currencies as it relates to the conversion of invested assets and cash balances into U.S. dollars, amounting to approximately $101 million; offset by

• net payment for the Company’s common shares of $54 million resulting from the repurchase of common shares of $78 million under the Company’s share repurchase program, partially offset by $24 million related to the issuance of common shares under the Company’s equity plans;

• decrease in net payable for securities purchased, including equity securities sold but not yet repurchased, of $64 million;

• dividend payments on common and preferred shares totaling $66 million; and

• decrease in the market value (realized and unrealized) of the investment portfolio of $116 million resulting from the decrease in market value of fixed income portfolio of $158 million, offset by the increase in market value of the equity portfolio of $42 million.

The Company employs a prudent investment philosophy. It maintains a high-quality, well-balanced and liquid portfolio having the dual objectives of optimizing current investment income and achieving capital appreciation. The Company’s invested assets are comprised of total investments, cash and cash equivalents and accrued investment income. From a risk management perspective, the Company allocates its invested assets into two categories: liability funds and capital funds. At June 30, 2007, the liability funds totaled $6.7 billion and were comprised of cash and cash equivalents and high quality fixed income securities. The capital funds, which totaled $4.4 billion, were comprised of cash and cash equivalents, investment-grade and below investment-grade fixed income securities, preferred and common stock, private equity investments, and convertible fixed income securities. For additional information on liability funds, capital funds and the use of derivative financial instruments in the Company’s investment strategy, see Financial Condition, Liquidity and Capital Resources in Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A.

Available for Sale Investments

At June 30, 2007, investments classified as available for sale comprised approximately 99% of the Company’s total investments (excluding other invested assets), with 1% being classified as trading securities. At June 30, 2007, approximately 97% of the Company’s fixed income securities were rated investment-grade (BBB- or higher) by Standard & Poor’s (or estimated equivalent) and 95% of the invested assets currently held by the Company are publicly traded. The average duration of the Company’s investment portfolio was 3.9 years at June 30, 2007 and 4.1 years at December 31, 2006, which closely matches the duration of the Company’s liabilities. Fixed maturities, short-term investments and cash and cash equivalents had an average yield to maturity at market of 5.2% at June 30, 2007 compared to 4.9% at December 31, 2006, reflecting higher interest rates. The Company’s investment portfolio generated a total return of 2.3% for the six-month period ended June 30, 2007 compared to 2.0% for the same period in 2006.

During the past few years, as credit spreads have narrowed, the Company has found fewer opportunities to invest prudently in credit risk. Therefore, the Company decreased its proportional exposure to credit risks while increasing its allocation to

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government securities and cash equivalents. At June 30, 2007, the percentage allocation to cash equivalents and government securities reached the highest level in the last five years.

The cost, gross unrealized gains, gross unrealized losses and fair value of investments classified as available for sale at June 30, 2007 were as follows (in millions of U.S. dollars):

June 30, 2007	Cost(1)		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturities
—U.S. government	$	1,491	$	4	$	(20	)	$	1,475
—other foreign governments		2,326		13		(30	)		2,309
—corporate		2,572		16		(38	)		2,550
—mortgage/asset-backed securities		1,876		1		(38	)		1,839
Total fixed maturities		8,265		34		(126	)		8,173
Short-term investments		87		—		—			87
Equities		1,309		130		(22	)		1,417
Total	$	9,661	$	164	$	(148	)	$	9,677

(1) Cost is amortized cost for fixed maturities and short-term investments and original cost for equity securities, net of other-than-temporary impairments.

U.S. governments included both U.S. treasuries and agencies of the U.S. government. At June 30, 2007, U.S. treasuries accounted for 71% of this category. While U.S. treasuries and U.S. agencies are not rated, they are generally considered to have credit quality equivalent to or greater than AAA corporate issues.

Included in other foreign governments are obligations of non-U.S. governments and their agencies. At June 30, 2007, 95% of this category was rated AAA, while investment grade government and agency obligations of the Organization for Economic Cooperation and Development countries accounted for the remaining 5% of this category. The largest three foreign government issuers (Germany, Canada, and the United Kingdom) accounted for 88% of this category at June 30, 2007.

Corporate bonds are comprised of obligations of U.S. and foreign corporations. At June 30, 2007, 95% of these investments were rated investment grade (BBB- or higher) by Standard & Poor’s (or estimated equivalent), while 63% were rated A or better. While the ten largest issuers accounted for less than 19% of the corporate bonds, no single issuer accounted for more than 4% of the total at June 30, 2007. At June 30, 2007, 83% of this category was comprised of U.S. bonds, and 46% were bonds within the financial sector.

In the mortgage/asset-backed securities category, 87% of the investments were U.S. mortgage-backed securities at June 30, 2007. These securities have generally a low risk of default as they are backed by an agency of the U.S. government, which enforces standards on the mortgages before accepting them into the program. They are considered prime mortgages and the major risk is uncertainty of the timing of pre-payments. While these securities do not carry a formal rating, they are generally considered to have a credit quality equivalent to or greater than AAA. While there have been recent market concerns regarding sub-prime mortgages, asset-backed home equity loans, commercial mortgages, and adjustable rate mortgages, the Company did not have exposure to these types of securities in its own portfolio at June 30, 2007. The remaining 13% of this category was comprised of non-U.S. mortgage-backed securities and asset-backed securities, all of which were rated investment grade (BBB- or higher) by Standard & Poor’s (or estimated equivalent). Within that 13% were Dutch and Danish mortgage-backed and asset-backed securities, which accounted for 8% of this category and were rated AAA. Asset-backed securities accounted for the remaining 5% of this category.

Short-term securities classified as available for sale were primarily obligations of the German and Canadian governments with maturities of less than six months.

Publicly traded common stocks comprised 79% of equities at June 30, 2007. The majority of the remaining balance was comprised of a $232 million bank loan portfolio, which accounted for 16% of the equities, with the balance in high yield, convertibles and alternative investments. Of the publicly traded common stocks, U.S. issuers represented 93% of the total equities at June 30, 2007. While the ten largest common stocks accounted for less than 22% of the equities held by the Company at June 30, 2007, no single common stock issuer accounted for more than 4%. At June 30, 2007, the largest publicly traded common stock

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exposure of the ten major economic sectors was 23% in consumer non-cyclicals while other sectors over 10% included communications at 21%, financials at 17% and technology at 11%.

For the six months ended June 30, 2007, the Company recorded charges for other-than-temporary impairments relating to its investment portfolio of $74 million ($44 million related to fixed maturity securities and $30 million related to equity securities). See Note 2(f) to Consolidated Financial Statements in the Company’s 2006 Annual Report on Form 10-K/A for a discussion of the Company’s accounting policies for investments and other-than-temporary impairments.

At June 30, 2007, the Company had more than 700 securities with gross unrealized losses. Of the gross unrealized losses of $148 million at June 30, 2007 on investments classified as available for sale, 68% related to investment positions that were carried at an unrealized loss for less than 12 months compared to 42% at December 31, 2006. Total gross unrealized losses on fixed maturities were $126 million at June 30, 2007, of which $122 million were attributable to investment-grade securities and $4 million attributable to securities rated below investment-grade. The Company’s investment security with the largest unrealized loss position at June 30, 2007, for which an other-than-temporary impairment charge has not been taken, had a gross unrealized loss of $6 million, representing 2% of the amortized cost of the security, which is rated AAA. The unrealized loss, and the majority of the unrealized losses on fixed maturity securities classified as available for sale for which an other-than-temporary impairment charge has not been taken, are due to changes in interest rates.

At June 30, 2007, the unrealized losses on the Company’s U.S. and foreign government securities resulted from interest rate increases. The majority of the government securities are rated AAA, and the contractual terms of those investments do not permit the issuer to settle the securities at a price less than the par value of the investment. The Company’s unrealized losses on investments in corporate bonds were also primarily due to interest rate increases, largely related to investment-grade securities. The unrealized losses on these high quality corporate bonds were distributed across many industries, with the financial and industrial sectors contributing the largest portion of unrealized losses. The unrealized losses on the Company’s investments in mortgage and asset-backed securities were also due to interest rate increases. Almost all the mortgage and asset-backed securities were issued by agencies of the U.S. government, and therefore it is expected that the securities would not be settled at a price less than the par value of the securities.

The Company’s investments in equity securities consist primarily of investments in common stock of companies in various industries and investments in private equity funds. The Company evaluated the equity issuers in relation to the severity and duration of the impairment. The largest equity unrealized loss at June 30, 2007, for which an other-than-temporary impairment charge has not been taken, was an unrealized loss of $3 million, representing 8% of the cost of the security.

The Company believes that these decreases in value are temporary under current accounting guidance, and additional analysis of individual securities for potential other-than-temporary impairments was carried out by the Company to validate its belief. The Company has the intent and ability to retain such investments for a period of time sufficient to allow for any recovery in fair value, and after considering the other-than-temporary impairment charges already taken, does not consider those investments to be other-than-temporarily impaired at June 30, 2007. At June 30, 2007, Management believed that the Company had no significant unrealized losses caused by other factors and circumstances, including an issuer’s specific corporate risk or due to industry or geographic risk, for which an other-than-temporary impairment charge has not been taken. The Company currently does not have any exposure to the sub-prime mortgage sector in its investment portfolio, and consequently, the Company’s other-than temporary impairment charge for the three and six months ended June 30, 2007 did not include any write-downs related to sub-prime mortgage issues.

Maturity Distribution

The distribution of available for sale fixed maturities and short-term investments at June 30, 2007, by contractual maturity date, is shown below (in millions of U.S. dollars). 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.

	Amortized Cost		Fair Value
One year or less	$	869	$	867
More than one year through five years		2,964		2,942
More than five years through ten years		2,282		2,240
More than ten years		361		372
Subtotal		6,476		6,421
Mortgage/asset-backed securities		1,876		1,839
Total	$	8,352	$	8,260

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The maturity distribution for those available for sale fixed maturities and short-term investments that were in an unrealized loss position at June 30, 2007 was as follows (in millions of U.S. dollars):

	Amortized Cost		Fair Value		Gross Unrealized Losses
One year or less	$	793	$	791	$	(2	)
More than one year through five years		2,353		2,319		(34	)
More than five years through ten years		1,603		1,558		(45	)
More than ten years		189		182		(7	)
Subtotal		4,938		4,850		(88	)
Mortgage/asset-backed securities		1,539		1,501		(38	)
Total	$	6,477	$	6,351	$	(126	)

Rating Distribution

The following table provides a breakdown of the credit quality of the Company’s fixed income securities at June 30, 2007:

	% of total fixed income securities
Rating Category
AAA	70	%
AA	5
A	12
BBB	10
Below investment-grade/unrated	3
	100	%

Other Investments

Fixed maturities, short-term and equity investments that are bought and held principally for the purpose of selling in the near term are classified as trading securities. The market value of investments classified as trading securities was $73 million and $600 million at June 30, 2007 and December 31, 2006, respectively. The decrease in trading securities is mainly due to a change in asset allocation from the equity trading portfolio to the available for sale equity and fixed maturity portfolios due to increased uncertainty as to future values of equity securities given current and prospective economic conditions. Included in the total market value of trading securities at June 30, 2007 was $21 million related to convertible fixed income securities and $52 million related to equity securities. At June 30, 2007, the net unrealized investment gain on trading securities was approximately $3 million.

The Company also owns other invested assets, consisting primarily of investments in non-publicly traded companies, private placement equity investments, private placement bond investments, derivative financial instruments and other specialty asset classes. See the ART segment included in the section Review of Net Income—Results by Segment above for a discussion on other invested assets.

Included in net payable for securities purchased at June 30, 2007 and December 31, 2006 was $50 million and $70 million, respectively, of equity securities sold but not yet purchased, which represent sales of securities not owned at the time of the sale. The change in net unrealized investment gains or losses on equity securities sold but not yet purchased was a loss of $3 million for the first six months of 2007, compared to a gain of $2 million for the same period in 2006.

Funds Held by Reinsured Companies (Cedants)

Funds held by reinsured companies at June 30, 2007 have not changed significantly since December 31, 2006. See Funds Held by Reinsured Companies (Cedants) in Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A.

Unpaid Losses and Loss Expenses

The Company establishes loss reserves to cover the estimated liability for the payment of all losses and loss expenses incurred with respect to premiums earned on the contracts that the Company writes. Loss reserves do not represent an exact calculation of the liability. Estimates of ultimate liabilities are contingent on many future events and the eventual outcome of

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these events may be different from the assumptions underlying the reserve estimates. The Company believes that the recorded unpaid losses and loss expenses represent Management’s best estimate of the cost to settle the ultimate liabilities based on information available at June 30, 2007. See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits above and Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A for additional information concerning losses and loss expenses.

The Company’s unpaid losses and loss expenses for its non-life operations are composed of the reserves for its Non-life and ART segments. At June 30, 2007 and December 31, 2006, the Company recorded gross non-life reserves for unpaid losses and loss expenses of $6,945 million and $6,871 million, respectively. The following table provides a reconciliation of the net non-life reserves for unpaid losses and loss expenses for the first six months of 2007 (in millions of U.S. dollars):

	For the six months ended June 30, 2007
Net liability at December 31, 2006	$	6,732
Net incurred losses related to:
Current year		1,019
Prior years		(229	)
		790
Net paid losses		(797	)
Effects of foreign exchange rate changes		91
Net liability at June 30, 2007	$	6,816

See Critical Accounting Policies and Estimates—Losses and Loss Expenses and Life Policy Benefits and Review of Net Income—Results by Segment above for a discussion of losses and loss expenses and prior years’ reserve developments.

Net incurred losses for the six months ended June 30, 2007 included $51 million for European Windstorm Kyrill. The non-life ratio of paid losses to net premiums earned was 55%, while the non-life ratio of paid losses to incurred losses was 101% for the six months ended June 30, 2007, compared to 64% and 107%, respectively for the same period in 2006. The high non-life ratio of paid losses to incurred losses in the six month periods reflected payments on the large 2005 and 2004 catastrophic loss events. As of June 30, 2007, approximately 90% and 80% of the Company’s ultimate loss estimates related to the 2004 Atlantic hurricanes and the large 2005 catastrophic losses, respectively, were paid.

Policy Benefits for Life and Annuity Contracts

At June 30, 2007 and December 31, 2006, the Company recorded gross policy benefits for life and annuity contracts of $1,494 million and $1,431 million, respectively. The following table provides a reconciliation of the net policy benefits for life and annuity contracts for the first six months of 2007 (in millions of U.S. dollars):

	For the six months ended June 30, 2007
Net liability at December 31, 2006	$	1,388
Net incurred losses		213
Net paid losses		(176	)
Effects of foreign exchange rate changes		30
Net liability at June 30, 2007	$	1,455

See Review of Net Income—Results by Segment above for a discussion of life policy benefits and prior years’ reserve developments.

Contractual Obligations and Commitments

In the normal course of its business, the Company is a party to a variety of contractual obligations as summarized in the Company’s 2006 Annual Report on Form 10-K/A. 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 June 30, 2007 have not changed materially compared to December 31, 2006.

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Shareholders’ Equity and Capital Resources Management

Shareholders’ equity at June 30, 2007 was $3.9 billion, a 4% increase compared to $3.8 billion at December 31, 2006. The major factors contributing to the increase in shareholders’ equity in the six-month period ended June 30, 2007 were:

• net income of $274 million; and

• a $41 million positive effect of the currency translation adjustment resulting primarily from the translation of PartnerRe Holdings Europe Limited (formerly PartnerRe Holdings Ireland Limited) and its subsidiaries and PartnerRe SA’s financial statements into the U.S. dollar; offset by

• a $9 million decrease in opening retained earnings due to the adoption of FIN 48;

• a net decrease of $41 million, due to the repurchase of common shares of $78 million under the Company’s share repurchase program, offset by the issuance of common shares under the Company’s equity plans and compensation expense related to the Company’s employee equity plans of $37 million;

• a $47 million decrease in net unrealized gains and losses on investments, net of deferred taxes, recorded in shareholders’ equity resulting from changes in the fair value of investments, realization of net gains and losses on sales of securities and other-than-temporary impairments; and

• dividends declared on both the Company’s common and preferred shares of $66 million.

As part of its long-term strategy, the Company will continue to actively manage capital resources to support its operations throughout the reinsurance cycle and for the benefit of its shareholders, subject to the ability to maintain strong ratings from the major rating agencies and the unquestioned ability to pay claims as they arise. Generally, the Company seeks to increase its capital when its current capital position is not sufficient to support the volume of attractive business opportunities available. Conversely, the Company will seek to reduce its capital, through dividends or stock repurchases, when available business opportunities are insufficient to fully utilize the Company’s capital at adequate returns.

During the first six months of 2007, the Company repurchased in the open market under its authorized share repurchase program, 1,073,100 of its common shares at a total cost of approximately $78 million, of which 585,800 common shares, or approximately $44 million, are currently held in treasury and are available for reissuance. In May 2007, the Company’s Board of Directors increased the shares authorized for repurchase by the Company to 5 million shares. At June 30, 2007, the Company had 4.4 million common shares remaining under its current share repurchase authorization.

Management uses growth in diluted book value per share as a prime measure of the value the Company is generating for its common shareholders, as Management believes that over time, growth in the Company’s diluted book value per share should translate into growth in the Company’s stock price. Diluted book value per share is calculated using common shareholders’ equity (shareholders’ equity less the liquidation value of preferred shares) divided by the number of fully diluted common shares outstanding. During the first six months of 2007, diluted book value per share increased by 5.2% to $58.96 at June 30, 2007, compared to the December 31, 2006 diluted book value per share of $56.07.

The table below sets forth the capital structure of the Company at June 30, 2007 and December 31, 2006 (in millions of U.S. dollars):

	June 30, 2007				December 31, 2006
Capital Structure:
Long-term debt	$	620	13	%	$	620	13	%
Capital efficient notes(1)		250	5			250	6
6.75% Series C cumulative preferred shares, aggregate liquidation		290	6			290	6
6.5% Series D cumulative preferred shares, aggregate liquidation		230	5			230	5
Common shareholders’ equity		3,417	71			3,266	70
Total Capital	$	4,807	100	%	$	4,656	100	%

(1) PartnerRe Finance II, the issuer of the capital efficient notes, does not meet the consolidation requirements of FIN 46(R). Accordingly, the Company shows the related intercompany debt of $257.6 million on its Consolidated Balance Sheets.

43

Liquidity

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. Management believes that its significant cash flows and high quality liquid investment portfolio will provide sufficient liquidity for the foreseeable future. Cash and cash equivalents were $1,052 million at June 30, 2007, compared to $989 million at December 31, 2006. Cash flows from operations for the six months ended June 30, 2007 increased to $976 million from $312 million in the same period in 2006. This increase in cash flows from operations was mainly due to a change in asset allocation to sell approximately $514 million of trading securities, which are classified as operating cash flows under U.S. GAAP, and higher underwriting cash inflows due to lower paid losses in the six months of 2007 compared to the same period in 2006. Without the impact of trading securities, net cash provided by operating activities would have been $462 million and $381 million for the six months ended June 30, 2007 and 2006, respectively.

The decrease in paid losses in the first six months of 2007 reflects lower payments on the 2004 and 2005 catastrophes compared to the same period in 2006. Paid losses for the six months ended June 30, 2007 and June 30, 2006 included approximately $151 million and $286 million, respectively, related to the large 2005 and 2004 catastrophic loss events. The increase in cash flows from operations is also related to an increase in cash receipts related to the 20% increase in net investment income in the first six months of 2007, compared to the same period in 2006. The growth in net investment income is a result of cumulative cash flows added to the portfolio, as well as the contribution of rising interest rates.

The Company is a holding company with no operations or significant assets other than the capital stock of the Company’s subsidiaries and other intercompany balances. The Company relies primarily on cash dividends and payments from Partner Reinsurance, PartnerRe SA and PartnerRe U.S. to pay the operating expenses, interest expense, shareholder dividends and other obligations of the holding company that may arise from time to time. The Company expects future dividends and other permitted payments from its subsidiaries to be the principal source of its funds to pay expenses and dividends.

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. See Liquidity and Credit Facilities in Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A for a detailed discussion of the impact of a significant downgrade in ratings.

Our current financial strength ratings are:

Standard & Poor’s	AA-/stable
Moody’s	Aa3/stable
A.M. Best	A+/stable
Fitch	AA/stable

Credit Facilities and Off-Balance Sheet Arrangements

Credit facilities and off-balance sheet arrangements at June 30, 2007 have not changed significantly since December 31, 2006. See Credit Facilities and Off-Balance Sheet Arrangements in Item 7 of Part II of the Company’s 2006 Annual Report on Form 10-K/A.

Currency

See Results of Operations and Review of Net Income above for a discussion on net foreign exchange losses for the three months and six months ended June 30, 2007 and 2006.

Effects of Inflation

The effects of inflation are considered implicitly in pricing and estimating reserves for unpaid losses and loss expenses. The actual effects of inflation on the results of operations of the Company cannot be accurately known until claims are ultimately settled.

Recent Accounting Pronouncements

See Note 3 to the Unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q.

44

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Overview

Management believes that the Company is principally exposed to four types of market related risk: interest rate risk, foreign currency risk, credit risk and equity price risk. How these risks relate to the Company, and the process used to manage them, is discussed in Item 7A of Part II of the Company’s 2006 Annual Report on Form 10-K/A. The following discussion of market risks at June 30, 2007 focuses only on material changes from December 31, 2006 in the Company’s market risk exposures, or how those exposures are managed.

Interest Rate Risk

The Company’s fixed income portfolio is exposed to interest rate risk. Fluctuations in interest rates have a direct impact on the market valuation of these securities. The Company’s investment philosophy distinguishes between assets that are generally matched against the estimated net reinsurance assets and liabilities (liability funds) and those assets that represent shareholder capital (capital funds). 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 reinsurance liabilities. 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.

At June 30, 2007, the Company estimates that the hypothetical case of an immediate 100 basis point adverse parallel shift in global bond curves would result in an approximately 3.9% (or approximately $367 million) decrease in fair value of investments exposed to interest rates, or approximately 3.3% and 9.3% decrease of the total invested assets and shareholders’ equity of the Company, respectively. This change does not take into account taxes or the corresponding change in the economic value of its reinsurance liabilities, which, as noted above, would substantially offset the economic impact on invested assets, although the offset would not be reflected in the Company’s Consolidated Balance Sheets.

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, the British pound, the Canadian dollar, the Swiss franc and the 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 table below summarizes the Company’s gross and net exposure on its June 30, 2007 Consolidated Balance Sheet to foreign currency, as well as the associated foreign currency derivatives the Company has put in place to manage this exposure (in millions of U.S. dollars):

	Euro			GBP			CAD			CHF			JPY			Other			Total(1)
Invested assets	$	2,200		$	474		$	532		$	—		$	—		$	184		$	3,390
Other net liabilities		(1,945	)		(298	)		(440	)		(145	)		(32	)		(449	)		(3,309	)
Total foreign currency risk		255			176			92			(145	)		(32	)		(265	)		81
Total derivative amount		270			(115	)		55			168			39			248			665
Net foreign currency exposure	$	525		$	61		$	147		$	23		$	7		$	(17	)	$	746

(1) 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 this table. The U.S. dollar accounted for the difference between the Company’s total foreign currency risk in this table and the invested assets and other net liabilities on the Company’s Consolidated Balance Sheet.

The above numbers include the Company’s investments in PartnerRe SA, whose functional currency is the euro and its Canadian branch, whose functional currency is the Canadian dollar, and PartnerRe Holdings Europe Limited (formerly PartnerRe Holdings Ireland Limited) and its subsidiaries, whose functional currencies are the euro, which the Company does not hedge, partially offset by net short or long exposures in certain currencies.

Assuming all other variables are held constant and disregarding any tax effects, a 10% change in the U.S. dollar relative to the other currencies held by the Company would result in a $75 million change in the net assets held by the Company, inclusive of the effect of the derivative hedges.

45

Credit Risk

The Company has exposure to credit risk primarily as a holder of fixed income securities. The Company manages this exposure by emphasizing investment-grade credit quality in the fixed income securities it purchases. At June 30, 2007, approximately 70% of the Company’s fixed income portfolio was rated AAA (or equivalent rating), 87% was rated A- or better and 3% of the Company’s fixed income portfolio was rated below investment-grade. The Company believes this high-quality concentration reduces its exposure to credit risk on fixed income investments to an acceptable level.

To a lesser extent, the Company is also exposed to the following credit risks:

• in its underwriting operations, most notably in the credit/surety line and in the business written by the Company’s ART segment;

• as a party to foreign currency forward contracts and other derivative contracts;

• credit risk of its cedants in the event of their insolvency or failure to honor the value of the funds held balances due to the Company;

• as it relates to its business written through brokers if any of the Company’s brokers is unable to fulfill their contractual obligations;

• as it relates to its reinsurance balances receivable and reinsurance recoverable on paid and unpaid losses; and

• under its retrocessional reinsurance contracts.

The credit risks that the Company is exposed to have not changed materially since December 31, 2006. See Credit Risk in Item 7A of Part II of the Company’s 2006 Annual Report on Form 10-K/A for a discussion of the credit risks identified above.

Equity Price Risk

The Company invests a portion of its capital funds in marketable equity securities classified as available for sale (fair market value of $1,417 million at June 30, 2007). The Company also holds marketable equity securities classified as trading securities (fair market value of $52 million at June 30, 2007). These equity investments are exposed to equity price risk, defined as the potential for loss in market value due to a decline in equity prices. Net payable for securities purchased includes equity securities sold but not yet purchased in the amount of $50 million at June 30, 2007, which represent sales of securities not owned at the time of sale. The Company estimates that its equity investment portfolio has a beta versus the S&P 500 Index of approximately 0.91. Given the estimated beta for the Company’s equity portfolio, a 10% movement in the S&P 500 Index would result in an approximately 9.1% (or approximately $132 million without taking into account taxes) increase or decrease in the market value of the Company’s equity portfolio, or approximately 1.2% and 3.4% increase or decrease of the total invested assets and shareholders’ equity of the Company, respectively.

ITEM 4.        CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of the Company’s Management, including the Company’s Chief Executive Officer and Chief Financial Officer, as of June 30, 2007, of the effectiveness of the design and operation 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 Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2007, the Company’s disclosure controls and procedures are effective such that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and is accumulated and communicated to Management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting identified in connection with such evaluation that occurred during the three months ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

46

PART II—OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

See Legal Proceedings in Item 3 of Part I of the Company’s 2006 Annual Report on Form 10-K/A.

ITEM 1A.     RISK FACTORS

Cautionary Note Concerning Forward-Looking Statements

Certain statements contained in this document, including Management’s Discussion and Analysis, may be considered forward-looking statements as defined in section 27A of the United States Securities Act of 1933 and section 21E of the United States Securities Exchange Act of 1934. Forward-looking statements are made based upon Management’s assumptions and expectations concerning the potential effect of future events on the Company’s financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. PartnerRe’s forward-looking statements could be affected by numerous foreseeable and unforeseeable events and developments that may affect the Company directly, or indirectly through our industry. As used in these Risk Factors, the terms “we”, “our” or “us” may, depending upon the context, refer to the Company, to one or more of the Company’s consolidated subsidiaries or to all of them taken as a whole.

The words believe, anticipate, estimate, project, plan, expect, intend, hope, forecast, evaluate, will likely result or will continue or words of similar impact generally involve forward-looking statements. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

See Risk Factors in Item 1A of Part I of the Company’s 2006 Annual Report on Form 10-K/A for a complete review of important risk factors. The following discussion supplements the operating risk factors that could have a material impact on the Company results of operations or financial condition.

Changes in legislation may materially impact advantageous capital gains rates on our dividends

Under current law, our U.S. shareholders are taxed on dividends at advantageous capital gains rates rather than ordinary income tax rates. Currently, there is proposed legislation before both Houses of Congress that would exclude shareholders of foreign companies from this advantageous capital gains rate treatment unless either (i) the company is organized or created in a country that has entered into a “comprehensive income tax treaty” with the U.S. or (ii) the shares of such company are readily tradable on an established securities market in the U.S. and the company is organized or created in a country that has a comprehensive income tax system that the U.S. Secretary of the Treasury determines is satisfactory for this purpose. We would not satisfy either of these tests and, accordingly, if this legislation became law, individual U.S. shareholders would no longer qualify for the advantageous capital gains rates on our dividends.

47

ITEM 2.        UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) The following table provides information about purchases by the Company during the quarter ended June 30, 2007, of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act.

Issuer Purchases of Equity Securities

Period	(a) Total number of shares purchased(1)	(b) Average price paid per share	(c) Total number of shares purchased as part of publicly announced program(1)(2)	(d) Maximum number of shares that may yet be purchased under the program(2)
04/01/2007-04/30/2007	—	—	—	3,806,351
05/01/2007-05/31/2007	376,800	75.46	376,800	4,623,200
06/01/2007-06/30/2007	209,000	75.22	209,000	4,414,200
Total	585,800	75.38	585,800

(1) The Company repurchased an aggregate of 585,800 of its common shares in the open market during the three months ended June 30, 2007 pursuant to its repurchase program.

(2) In May 2007, the Company’s Board of Directors approved an increase in the Company’s stock repurchase authorization up to a maximum of 5 million common shares. Of this authorization, 4,414,200 common shares remain eligible for repurchase. Unless terminated earlier by resolution of the Company’s Board of Directors, the program will expire when the Company has repurchased all shares authorized for repurchase thereunder.

ITEM 3.        DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual General Meeting of shareholders of the Company was held on May 10, 2007. The shareholders elected the Class II Directors, Mr. Rollwagen, Mr. Baumgartner, Mr. Montupet and Mr. Stanca to hold office until the Annual General Meeting of shareholders in the year 2010 or until their successors are elected or appointed.

The number of votes cast For and Withheld for each of the above is set forth below:

	For	Withheld
John Rollwagen	47,888,594	75,443
Vito H. Baumgartner	47,851,962	112,075
Jean-Paul Montupet	47,911,538	52,499
Lucio Stanca	47,851,683	112,354

The term of office of the Company’s Class III Directors (Judith Hanratty, Rémy Sautter, Patrick A. Thiele and Jürgen Zech) and its Class I Directors (Robert M. Baylis, Jan H. Hoelsboer and Kevin M. Twomey), continue until the Company’s 2008 and 2009 Annual General Meetings, respectively.

The shareholders also re-appointed Deloitte & Touche to serve as the Company’s independent registered public accounting firm until the 2008 Annual General Meeting of shareholders by a vote of 47,943,082 For, 10,373 Against and 10,582 Abstaining.

The shareholders resolved to change the Bye-Laws to authorize the Company to acquire and hold shares as “Treasury Shares”, by a vote of 47,877,343 For, 67,210 Against and 19,484 Abstaining.

ITEM 5.        OTHER INFORMATION

None.

48

ITEM 6.        EXHIBITS

(a) Exhibits—The following exhibits are filed as part of this report on Form 10-Q:

3.2	Amended and Restated Bye-laws
10.1	Letter Agreement between the Company and Patrick Thiele dated May 15, 2007
11.1	Statements Regarding Computation of Net Income Per Common and Common Share Equivalents
15	Letter Regarding Unaudited Interim Financial Information
31.1	Section 302 Certification of Patrick A. Thiele
31.2	Section 302 Certification of Albert A. Benchimol
32	Section 906 Certifications

49

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PartnerRe Ltd. (Registrant)
	By:	/s/ PATRICK A. THIELE
	Name:	Patrick A. Thiele
	Title:	President & Chief Executive Officer
Date: August 9, 2007
	By:	/s/ ALBERT A. BENCHIMOL
	Name:	Albert A. Benchimol
	Title:	Executive Vice President & Chief Financial Officer
Date: August 9, 2007

50

EXHIBIT INDEX

Exhibit Number	Exhibit
3.2	Amended and Restated Bye-laws
10.1	Letter Agreement between the Company and Patrick Thiele dated May 15, 2007
11.1	Statements Regarding Computation of Net Income per Common and Common Share Equivalents
15	Letter Regarding Unaudited Interim Financial Information
31.1	Section 302 Certification of Patrick A. Thiele
31.2	Section 302 Certification of Albert A. Benchimol
32	Section 906 Certifications

51

EX-3.2

Exhibit 3.2

BYE-LAWS

Of

PartnerRe Ltd.

INDEX

Bye-Law	Subject	Page
1	Interpretation	1-3
2	Registered Office	3
3,4	Share Rights	3,4
5,6	Modification of Rights	4,5
7-10	Shares	5-7
11-13	Certificates	7
14-16	Lien	8,9
17-22	Calls of Shares	9,10
23-29	Forfeiture of Shares	10-12
30	Register of Shareholders	12
31	Register of Directors and Officers	12
32-37	Transfer of Shares	13,14
38-41	Transmission of Shares	14-16
42-44	Increase of Capital	16
45,46	Alteration of Capital	16-18
47,48	Reduction of Capital	18
49	General Meetings	18
50,51	Notice of General Meetings	18,19
52-58	Proceedings at General Meetings	19-21
59-70	Voting	21-24

Bye-Law	Subject	Page
71-76	Proxies and Corporate Representatives	24-26
77-80	Appointments and Removal of Directors	26,27
81	Resignation and Disqualification of Directors	27,28
82-84	Alternate Directors	28,29
85	Directors’ Fees and Additional Remuneration and Expenses	29
86	Directors’ Interests	29-31
87-91	Powers and Duties of the Board	31,32
92-94	Delegation of the Board’s Powers	32,33
95-103	Proceedings of the Board	33-36
104	Officers	36
105	Minutes	36,37
106,107	Secretary	37
108	The Seal	37,38
109-114	Dividends and other Payments	38,39
115	Reserves	39,40
116,117	Capitalization of Profits	40,41
118	Record Dates	41
119-122	Accounting Records	41-44
123	Audit	44
124-126	Service of Notices and Other Documents	44,45

Bye-Law	Subject	Page
127	Winding Up	45,46
128-130	Indemnity	46,47
131	Alteration of Bye-Laws	47

BYE-LAWS

of

PartnerRe Holdings Ltd.

INTERPRETATION

1. In these Bye-Laws unless the context otherwise requires:-

“Bermuda” means the Islands of Bermuda;

“Board” means the Board of Directors of the Company or the Directors present at a meeting of Directors at which there is a quorum;

“Company” means the company incorporated in Bermuda under the name of PartnerRe Holdings Ltd. On the 24^th day of August 1993;

“the Companies Acts” means every Bermuda statute from the time to time in force concerning companies insofar as the same applies to the Company;

“Controlled Shares” means shares of the Company (i) that would be deemed owned by a Shareholder under the rules set forth in section 958 of the U.S. Internal Revenue Code of 1986 (which includes shares directly owned, indirectly owned through the ownership of another entity and constructively owned because of certain relationships (such as family relationship or ownership relationships) and (ii) beneficially owned directly or as a result of the possession of sole or shared voting power within the meaning of section 13 (d)(3) of the U.S. Securities Exchange Act of 1934.

“Own or Control” means, with respect to the Company’s shares, (i) own under the rules set forth in section 958 of the U.S. Internal Revenue Code of 1986 (which includes shares directly owned, indirectly owned through the ownership of another entity and constructively owned because of certain relationships (such as family relationships or

1

ownership relationships) and (ii) beneficially owned directly or indirectly as a result of the possession of sole or shared voting power within the meaning of section 13 (d)(3) of the U.S. Securities Exchange Act of 1934.

“paid up” means paid up or credited as paid up;

“Register” means the Register of Shareholders of the Company;

“Registered Office” means the registered office for the time being of the Company;

“Seal” means the common seal of the Company and includes any duplicate thereof;

“Secretary” includes a temporary or assistant Secretary and any person appointed by the Board to perform any of the duties of the Secretary;

“Shareholder” means a shareholder or member of the Company;

“these Bye-Laws” means these Bye-Laws in their present form or as from time to time amended;

“Ten Percent Shareholder” means a person who the Board determines 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.

“9.9% limitation” means the requirement and restriction that no person shall be permitted to Own or Control 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, except as provided for herein or as permitted by the Board.

for the purposes of these Bye-Laws a corporation shall be deemed to be present in person if its representative duly authorised pursuant to the Companies Act is present;

words importing the singular number only include the plural number and vice versa;

2

words importing the masculine gender only include the feminine and neuter genders respectively;

words importing persons include companies or associations or bodies of persons, whether corporate or un-incorporate;

reference to writing shall include typewriting, printing, lithography, photography and other modes of representing or reproducing words in a legible and non-transitory form;

any words or expressions defined in the Companies Act in force at the date when theses 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. The Registered Office shall be at such place in Bermuda as the Board shall from time to time appoint.

SHARE RIGHTS

3. 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 restriction, whether in regard to dividend, voting, return of capital or otherwise, as the Board may determine.

4. (a) The Board is expressly authorized at any time, and from time to time, without any vote or action by the Shareholder, to issue preference shares, including, without limitation, redeemable preference shares, in one or more classes or series and to determine the rights, designations, powers, preferences and relative, participating optional or other special rights, and such qualification, limitation or restrictions thereof, including without limitations, consideration, dividends rights, conversion rights, voting powers (full or limited,

3

or no voting powers), terms and manner of redemption (including without limitation sinking fund provisions), redemption dates, redemption prices, liquidations preferences, conditions and the number of shares constituting and the designation of any class or series of such preference shares. Any such determination shall be made by resolution adopted by the Board. The designation and issue by the Board of any class or series of preference shares and the establishment of the rights and preferences thereof shall not be deemed to constitute an alteration or abrogation of the special rights attached to any class of shares for the purpose of Bye-Law 5 except as may be explicitly provided in the terms of issue of any shares for time being issued.

(b) The Company may issue preference shares which are to be redeemed, or are to be liable to be redeemed, at the option of the Company, at the option of the holder or at the option of both the Company and the holder. The redemption of any such preference shares shall be effected on such terms and in such manner as the Board shall determine pursuant to the authority conferred on it by Bye-Law 4(a).

(c) The Board may, at its discretion and without the sanction of a Resolution, authorise the acquisition by the Company of its own shares, to be 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.

MODIFICATION OF RIGHTS

5. 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 of the issued shares of that class or with the

4

sanction of a resolution passed by the holders of not less than seventy five percent of the issued shares of that class at a separate general meeting of the holders of such shares 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 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.

6. The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be altered by the creation or issue of further shares ranking pari passu therewith.

SHARES

7. Subject to the provisions of these Bye-Laws, the unissued shares of the Company (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. Similarly, subject to the provisions of these Bye-Laws, any shares of the Company held 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.

8. Subject to Bye-Law 32, no person shall be permitted to Own or Control shares in the Company to the extent that such holder or any person will be considered to Own or Control

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Controlled Shares, as the Board may determine in excess of 9.9% of the outstanding shares of the Company, nor shall any person be permitted to Own or Control Controlled Shares in the Company if the result thereof would be to render such a person or any other person a Ten Percent Shareholder. Nor may any shares be issued or any transfer of shares be made if the effect of such issuance or transfer would be to cause a violation of the prohibition of this paragraph. To the extent that, for any reason whatsoever and by any method howsoever, a person, whether an existing Member or not of the Company, shall Own or Control Controlled Shares in the Company in excess of the 9.9% limitation, then all shares which such person may Own or Control in excess of the 9.9% limitation shall carry no voting rights whatsoever, and shall be discounted in respect of such Member for the purpose of the calculation of any majority requirements which may or which is required to be taken at any general meeting of the Company for any purpose SAVE THAT the Controlled Shares of such Member in excess of the 9.9% limitation shall be allocated for voting purposes to all other Members of the Company pro rata to the common shareholdings of such other Members PROVIDED ALWAYS that no other Member shall be allocated voting rights pursuant to this saving if to do so would render such other Member a Ten Percent Shareholder. In the event that a reallocation of voting rights pursuant to this Bye-Law would result in the creation of additional Ten Percent Shareholders, the reallocation to be made shall only be made to such Members who, after the reallocation, would not be Ten Percent Shareholders.

9. The Board may in connection with the issue of any shares exercise all powers of paying commission and brokerage conferred or permitted by law.

10. Except as ordered by the 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

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shall not be bound by or required in any way to recognise (even when having noticed thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as 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.

CERTIFICATES

11. The preparation, issue and delivery of certificates shall be governed by the Companies Act. 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.

12. If a share certificate is defaced, lost or destroyed it may be replaced without fee but 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.

13. All certificates for share or loan capital or other securities of the Company (other than letters for allotment, scrip certificates and other like documents) shall, except to the extent that the terms and conditions for the time being relating thereto otherwise provided, be issued under the Seal. The Board may by resolution 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.

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LIEN

14. The Company shall have a first and paramount lien on every share (not being a fully paid share) for all moneys, 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 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 not withstanding 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 provision of this Bye-Law.

15. 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 days after a notice in writing, stating and demanding payment of the sum presently payable and giving notice of their intention to sell in default of such payment, has been served on the holder for the time being of the share.

16. The net proceeds of the 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

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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 holder of the share immediately before such sale. For giving effect to any such sale the Board may authorise some person to transfer the share sold to the purchaser thereof. The purchaser shall be registered as the holder of the share and he shall not be bound to see the application of the purchase money, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the sale.

CALLS ON SHARES

17. The Board may from time to time make calls upon the Shareholders in respect of any moneys 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 the 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 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.

18. A call may be made payable by installments and shall be deemed to have been made at the time when the resolution of the Board authorizing the call was passed.

19. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.

20. 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.

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21. Any sum which, by the terms of the 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 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.

22. 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.

FORFEITURE OF SHARES

23. If a shareholder fails to pay any call or installment 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 installment remains unpaid serve a notice on him requiring payment of so much of the call or installment as is unpaid, together with any interest which may have accrued.

24. The notice shall name a further day (not being less than fourteen 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 non-payment on or before the day and at the place appointed, the shares in respect of which such call is made or installment 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.

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25. 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 installments 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.

26. 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.

27. A forfeited share shall be deemed the property of the Company and may be sold, reoffered or otherwise disposed of either to the person who was, before forfeiture, the holder thereof or entitled thereto or to any person upon such terms and in such manner as the Board shall think fit, and at any time before sale, reallotment or disposition the forfeiture may be cancelled on such terms as the Board may think fit.

28. 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 moneys 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.

29. 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

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may receive the consideration (if any) given for the share on the sale, reallotment or disposition thereof and the Board may authorise some person to transfer the share to the person to whom the same is sold, realloted or disposed of, and he shall thereupon be registered as the holder of the share and shall not be bound to see 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, reallotment or disposal of the share.

REGISTER OF SHAREHOLDERS

30. The Secretary shall establish and maintain the Register of Shareholders at the Registered Office in the manner prescribed by the Companies Act. Unless the Board otherwise determines, the Register of Shareholders shall be open to inspection in the manner prescribed by the Companies Act between 10:00 a.m. and 12:00 noon on every working day. Unless the Board so 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 interest in 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 the Bye-Law 9.

REGISTER OF DIRECTORS AND OFFICERS

31. The Secretary shall establish and maintain a register of the Directors and Officers of the Company as required by the Companies Act. The register of Directors and Officers shall be open to inspection in the manner prescribed by the Companies Act between 10:00 a.m. and 12:00 noon on every working day.

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TRANSFER OF SHARES

32. No transfer (including a repurchase by the Company) may be made if the effect of such transfer would result in the transferee or any other Shareholder of the Company controlling in excess of nine and nine tenths per cent (9.9 percent) of all of the issued and outstanding shares of the Company. 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. One of the purposes of the 9.9% limitation is to prevent the Company from being characterized as a foreign personal holding company within the meaning of the Internal Revenue Code of 1986 of the United States, as amended. Nevertheless, the Board will not be liable to the Company, its Shareholders or any person whatsoever for any errors in judgment made by it in granting any waiver or waivers to the foregoing restrictions in any case so long as it has acted in good faith.

33. Subject to the Companies Acts and to such of the 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. No such instrument shall be required on the redemption of a share or on the purchase or acquisition by the Company of a share.

34. The instrument of transfer of a share shall be signed by or on behalf of the transferor and where any share is not fully-paid the transferee, and 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. All instruments of transfer when registered may be retained by the Company. The Board may, in its absolute discretion and without assigning any reason therefore, decline to register any transfer of any share which is not a fully-paid share.

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35. The Board may also decline to register any transfer unless:-

(a) the instrument of transfer is duly stamped and lodged with the Company, or any transfer agent appointed by 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,

(b) the instrument of transfer is in respect of only one class of share,

(c) where applicable, the permission of the Bermuda Monetary Authority with respect thereto has been obtained.

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 and Bye-Laws 31 and 33.

36. If the Board declines to register a transfer it shall, within three months after the date on which the instrument of transfer was lodged, send to the transferee notice of such refusal.

37. No fee shall be charged by the Company for registering any transfer, probate, letters of administration, certificate of death or marriage, power of attorney, distringas or stop notice, order of court or other instruments relating to or affecting the title to any share, or otherwise making an entry in the Register relating to any share.

TRANSMISSION OF SHARES

38. In the case of the death of a Shareholder, the survivor or survivors, where the deceased was a joint holder, and the estate representative, where he was a 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 shares held by him solely or jointly with other persons. For the purpose of this Bye-Law, estate representative means the person to whom probate or letters

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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 recognized by the Company for the purpose of this Bye-Law.

39. 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 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. Accordingly, no person shall be registered as the holder of a share if the result would be that such person would Own or Control shares in excess of the 9.9% limitation.

40. 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 moneys 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

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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 days the Board may thereafter withhold payment of all dividends and other moneys payable in respect of the shares until the requirements of the notice have been complied with.

41. Subject to any direction of the Board from time to time in force, the Secretary may exercise the powers and discretions of the Board under Bye-Laws 35, 36 and 37.

INCREASE OF CAPITAL

42. 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 in general meeting shall prescribe.

43. 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 Act) at a discount to all 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 provisions as to the issue of the new shares.

44. 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.

ALTERATION OF CAPITAL

45. Without prejudice to the powers of the Board pursuant to Bye-Law 3, and in contemplation of the provisions of Section 45 of the Companies Act, the Company from time to time in general meeting:-

(a) divide its shares into several classes and attach thereto respectively any preferential, deferred, qualified or special rights, privileges or conditions;

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(b) consolidate and divide all or any of its share capital into shares of larger par value than its existing shares;

(c) sub-divide its shares or any of them into shares of smaller par value than is fixed by its memorandum, so, however, 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;

(d) make provisions for the issue and allotment of shares which do not carry any voting rights;

(e) cancel shares which, at the date of the passing of the resolution in that behalf, 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; and

(f) change the currency denomination of its share capital. PROVIDED THAT, no such action shall be taken except as authorized by a vote of a majority of the members, and, provided further, that no such action shall be taken if it were to result in any Shareholder violating the 9.9% limitation unless all of the Shareholders of the Company unanimously consent.

Where any difficulty arises in regard to any division, consolidation, or sub-division under this Bye-Law, 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 some person to transfer the shares

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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.

46. Subject to the Companies Act and to any confirmation or consent required by law or these Bye-Laws, the Company may by resolution in general meeting from time to time convert any preference shares into redeemable preference shares.

REDUCTION OF CAPITAL

47. Subject to the Companies Act, its memorandum and any confirmation or consent required by law or these Bye-Laws, the Company may from time to time in general meeting authorise the reduction of its issued share capital or any capital redemption reserve fund or any share premium or contributed surplus account in any manner.

48. In relation to any such reduction, the Company may in general meeting 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

49. 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. The Board may, whenever it thinks fit, and shall, when required by the Companies Act, convene general meetings other than Annual General Meetings which shall be called Special General Meetings.

NOTICE OF GENERAL MEETINGS

50. 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 notice

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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, in the case of a Special General Meeting, the general nature of the business to be considered. Notice of every general meeting shall be given in any manner permitted by Bye-Laws 124, 125 and 126 to all Shareholders other than such as, under the provisions of these Bye-Laws or of the terms of issue of the shares they hold, are not entitled to receive such notice from the Company. Notwithstanding that a meeting of the Company is called by shorter notice than that specified in this Bye-Law, it shall be deemed to have been duly called if it is so agreed:-

(a) in the case of a meeting called as an Annual General Meeting, by all the Shareholders entitled to attend and vote thereat;

(b) in the case of any other meeting, by a majority in number of the Shareholders having the right to attend and vote at the meeting, being a majority together holding not less than 95 percent in nominal value of the shares giving that right.

51. 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 instruments 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.

PROCEEDINGS AT GENERAL MEETINGS

52. 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

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Owning and Controlling not less than 25% of the shares of the Company entitled to vote at any general meeting and present in person or by proxy, shall be a quorum for all purposes.

53. If within five minutes (or such 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 cases, 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 two Shareholders present in person (whatever the number of shares held by them) shall be a quorum. The Company shall not give less than seven (7) days notice of any meeting adjourned through want of a quorum and such notice shall state that two Shareholders present in person (whatever the number of shares held by them) shall be a quorum.

54. A meeting of the Shareholders or any class thereof may be held by means of such telephone, electronic or other communication facilities 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.

55. Each Director shall be entitled to attend and speak at any general meeting of the Company.

56. The Chairman (if any) of the Board or, in his absence, the President shall preside as chairman at every general meeting. If there is no such Chairman or President, or if at any meeting neither of the Chairman nor the President is present within five minutes after the time appointed for holding the meeting, or if neither of them is willing to act as chairman, the Directors present shall choose one of their number to act or if one Director only 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.

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57. 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 months or more, notice of the adjourned meeting shall be given as in case of an original meeting.

58. 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.

VOTING

59. Save where a greater majority is required by the Companies Act or these Bye-Laws, any question proposed for consideration at any general meeting shall be decided on by a simple majority of votes cast. However, no Shareholder shall, unless the Board otherwise determines, be entitled to vote at any general meeting in respect of any shares which such Shareholder shall hold in excess of the 9.9% limitation for whatever reason.

60. At any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by:-

(a) the chairman of the meeting; or

(b) at least three Shareholders present in person or represented by proxy; or

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(c) any Shareholder or Shareholders present in person or represented by proxy and holding between them not less than one tenth of the total voting rights of all the Shareholders having the right to vote at such meeting; or

(d) 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 of the total sum paid up on all such shares conferring such right.

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, 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 of votes recorded for or against such resolution.

61. If a poll is duly demanded, the result of the poll shall be deemed to be the resolution of the meeting at which the polled is demanded.

62. 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 months after the date of the demand) and place as the chairman shall direct. It shall not be necessary (unless the chairman otherwise directs) for notice to be given of a poll.

63. The demand for a poll shall not prevent the continuance of a meeting for the transaction for 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.

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64. On a poll, votes may be cast either personally or by proxy.

65. 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.

66. In the case of an equality of votes at a general meeting, whether on a show of hands or on a poll, the chairman of such meeting shall not be entitled to a second or casting vote.

67. In the case of joint holders of a share, the vote of the senior who tenders the vote, whether in person or by proxy, shall be excepted 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.

68. 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 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.

69. Unless the Board otherwise determines, every Shareholder shall be entitled to vote at any general meeting notwithstanding that certain calls or other sum presently payable by him in respect of shares in the Company have not yet been paid.

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70. If (i) any objection shall be raised to the qualification of any voter or (ii) any votes have been counted which ought not to have been counted or which might have been rejected or (iii) 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.

PROXIES AND CORPORATE REPRESENTATIVES

71. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney authorised by him in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.

72. Any Shareholder may appoint a standing proxy or (if a corporation) representative by depositing at the Registered Office a proxy or (if a corporation) an authorisation and such proxy or authorisation shall be valid for all general meetings and adjournments thereof until notice of revocation is received at the Registered Office. 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 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

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validity of any such 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.

73. Subject to Bye-Law 69, the instrument appointing a proxy 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, in any document sent therewith) prior to the holding of the 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 and in default the instrument of proxy shall not be treated as valid.

74. Instruments of proxy 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 forms of instruments of proxy for use at that meeting. The instruments of proxy shall be deemed to confer authority to demand or join in demanding a poll and to vote on any amendment of a resolution put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy 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.

75. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the instrument of proxy or of the authority under which it was executed, provided that no intimation in writing of such death, insanity 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

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instruments of proxy in the notice convening the meeting or other documents sent therewith) one hour at least before the commencement of the meeting or adjourned meeting, or the taking of the poll, at which the instrument of proxy is used.

76. Subject to the Companies Act, 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 and vote on behalf of any Shareholder at general meetings.

APPOINTMENT AND REMOVAL OF DIRECTORS

77. There shall be three classes of directors, with various terms of office, with the result that there shall be a rotating board. The classes of directors shall be known as Class 1, Class 2 and Class 3. Each class shall have a minimum of one director and a maximum of four directors. The directors elected during the first year of existence of the Company shall serve in office as follows. Class 1 shall retire at the Second Annual General Meeting (the Statutory Meeting being deemed to be also the First Annual General Meeting). Class 2 shall retire at the Third Annual General Meeting, and Class 3 shall retire at the Fourth Annual General Meeting. Each class of director shall be eligible for re-election at the Annual General Meeting of the Company at which such Class shall retire, to hold office for three years or until its successors are elected or appointed.

78. The number of Directors shall be such number not less than three as the Company in general meeting may from time to time determine and, subject to the Companies Act and these Bye-Laws, shall serve until re-elected or their successors are appointed at the next Annual General Meeting.

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79. The Company shall at the Annual General Meeting and may in general meeting determine the minimum and the maximum number of Directors and may in general meeting determine that one or more vacancies in the Board shall be deemed casual vacancies for the purposes of these Bye-Laws. Without prejudice to the power of the Company in general meeting in pursuance of any of the provisions of these Bye-Laws to appoint any person to be a Director, the Board, so long as a quorum of Directors remains in office, shall have power at any time and from time to time to appoint any individual to be a Director so as to fill a casual vacancy.

80. 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 the meeting and he shall be entitled to be heard at that meeting. Any vacancy created by the removal of a Director at a Special General Meeting may be filled at the Meeting by the election of another Director in his place or, in the absence of any such election, by the Board.

RESIGNATION AND DISQUALIFICATION OF DIRECTORS

81. The office of a Director shall be vacated upon the happening of any of the following events:-

(a) if he resigns his office by notice in writing delivered to the Registered Office or tendered at a meeting of the Board;

(b) 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;

(c) if he becomes bankrupt or compounds with his creditors;

(d) if he is prohibited by law from being a Director;

(e) if he ceases to be a Director by virtue of the Companies Act or is removed from office pursuant to these Bye-Laws.

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ALTERNATE DIRECTORS

82. The Company may in general meeting elect any person or persons to act as Directors in the alternative to any of the Directors or may authorise the Board to appoint such Alternate Directors. Any Alternate Director may be removed by the Company in general meeting and, if appointed by the Board, may be removed by the Board and, subject thereto, the office of Alternate Director shall continue until the next annual election of Directors or, if earlier, the date on which the relevant Director ceases to be a Director. An Alternate Director may also be a Director in his own right and may act as alternate to more than one Director.

83. An Alternate Director shall be entitled to receive notices of all meetings of Directors, to attend, to be counted in the quorum and vote at any such meetings 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.

84. Every person acting as 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.

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DIRECTORS’ FEES AND ADDITIONAL REMUNERATION AND EXPENSES

85. The amount, if any, of Directors’ fees shall from time to time be determined by the Board (subject always to disclosure to the Auditors) and in the absence of a determination to the contrary in general meeting, such fees shall be deemed to accrue from day to day. Each Director may be paid his reasonable traveling, 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.

DIRECTORS’ INTERESTS

86. (a) 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 therefore (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.

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(b) 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.

(c) Subject to the provisions of the Companies Act, 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 of officers of such other company.

(d) 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 Act, 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.

(e) Subject to the Companies Act and any further disclosure required thereby, a general notice to the Directors by a Director or officer declaring that he is a director or

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officer or has an interest in a person and is to be regarded as interested in any transaction or arrangement made with that person, shall be a sufficient declaration of interest in relation to any transaction or arrangement so made.

POWERS AND DUTIES OF THE BOARD

87. Subject to the provisions of the Companies Act and these Bye-Laws and to any directions given by the Company in general meeting, 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 and no such direction shall invalidate any prior act of the Board which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this Bye-Law 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.

88. The Board may exercise all the powers of the Company 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 and to 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.

89. 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 by resolution determine.

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90. 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 dependant 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.

91. The Board may from time to time appoint one or more of its body to be a managing director, joint managing director or an assistant managing director or 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.

DELEGATION OF THE BOARD’S POWERS

92. 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

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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.

93. The Board may entrust to and confer upon any Director or officer any of the powers 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, and may from time to time revoke or vary all or any of such powers but no person dealing in good faith and without notice of such revocation or variation shall be affected thereby.

94. The Board may delegate any of its powers, authorities and discretions to committees, consisting of such person or persons (whether a member or members of its body or not) as it thinks fit. Any committee so formed shall, in the exercise of the powers, authorities and discretion so delegated, conform to any regulations which may be imposed upon it by the Board.

PROCEEDINGS OF THE BOARD

95. The Board may meet for the dispatch 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. 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 board meeting.

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96. Notice of a board meeting shall be deemed to be duly given to a Director if it is given to him personally or by word of mouth or sent to him by post, cable, telex, telecopier or other mode or representing or reproducing words in a legible and non-transitory form at his last known address or any other address given by him to the Company for this purpose. A Director may waive notice of any meeting either prospectively or retrospectively.

97. (a) 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 two individuals. Any Director who ceases to be a Director at a board meeting may continue to be present and to act as a Director and be counted in the quorum until the termination of the board meeting if no other Director objects and if otherwise a quorum of Directors would not be present.

(b) 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 Act 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 also 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.

98. 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 calling a general meeting.

99. The Chairman (if any) of the Board or, in his absence, the President shall preside as chairman at every meeting of the Board. If there is no such Chairman or President, or if at any meeting neither the Chairman nor the President is present within five minutes after the time appointed for holding the meeting, or if neither of them is willing to act as chairman, the Directors present may chose one of their number to be chairman of the meeting.

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100. The meetings and proceedings of any committee consisting of two 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.

101. 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 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.

102. 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 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.

103. 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.

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OFFICERS

104. The officers of the Company shall include a President and a Vice-President who shall be Directors and shall be elected by the Board as soon as possible after the statutory meeting and each annual general meeting. In addition, the Board may appoint one of the Directors to be Chairman of the Board and any person whether or not he is a Director to hold such other office (including any additional Vice-Presidencies) as the Board may from time to time determine. Any person elected or appointed pursuant to this Bye-Law shall hold office for such period and upon such terms as the Board may determine and the Board may revoke or terminate any such election or 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 Act 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

105. The Directors shall cause minutes to be made and books kept for the purpose of recording:-

(a) all appointments of officers made by the Directors;

(b) the names of the Directors and other persons (if any) present at each meeting of Directors and of any committees;

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(c) of all proceedings at meetings of the Company, of the holders of any class of shares in the Company, and of committees;

(d) of all proceedings of managers (if any).

SECRETARY

106. The Secretary shall be appointed by the Board at such remuneration (if any) and upon such terms as it may think fit and any Secretary so appointed may be removed by the Board. The duties of the Secretary shall be those prescribed by the Companies Act together with such other duties as shall from time to time be prescribed by the Board.

107. A provision of the Companies Act 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

108. (a) The Seal shall consist of a circular metal device with the name of the Company around the outer margin thereof and the country and year of incorporation across the center thereof. Should the seal not have been received at the Registered Office in such form at the date of adoption of this Bye-Law then, pending such receipt, any document requiring to be sealed with the Seal shall be sealed by affixing a red wafer seal to the document with the name of the Company, and the country and year of incorporation type written across the center thereof.

(b) 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 of the Board authorised by the Board in that behalf. Subject to these Bye-Laws, any instrument to which a Seal is affixed shall be signed by a Director and by the Secretary or by a second Director; provided that the Secretary or a Director may affix a Seal over his signature only to authenticate copies of these Bye-Laws, the minutes of any meeting or any other documents requiring authentication.

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DIVIDENDS AND OTHER PAYMENTS

109. The Board may from time to time declare cash 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 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.

110. The Board may deduct from any dividend, distribution or other moneys 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.

111. No dividend, distribution or other moneys payable by the Company on or in respect of any share shall bear interest against the Company.

112. Any dividend, distribution, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his address in the Register or, in the case of joint holders, addressed to the holder whose names stands first in the Register in respect of the shares at his registered address 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

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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 or more joint holders may give effectual receipts for any dividends, distributions or other moneys payable or property distributable in respect of the shares held by such joint holders.

113. Any dividend or distribution out of contributed surplus unclaimed for a period of six 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.

114. The Board may 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 distributions 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.

RESERVES

115. The Board may, before recommending or 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

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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.

CAPITALIZATION OF PROFITS

116. The Board may at any time and from time to time resolve to the effect that it is desirable 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 or any capital redemption reserve fund 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, and the Board shall give effect to such resolution, provided that for the purpose of this Bye-Law, a share premium account and a capital redemption reserve fund may be applied only in paying up of unissued shares to be issued to such Shareholders credited as fully paid and provided further that any sum standing to the credit of a share premium account may only be applied in crediting as fully paid shares of the same class as that from which the relevant share premium was derived.

117. Where any difficulty arises in regard to any distribution under the last preceding Bye-Law, 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

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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

118. Notwithstanding any other provisions of these Bye-Laws, the Company in general meeting or the Board may fix any date as the record date for any dividend, distribution, allotment or issue and for the purpose of identifying the persons entitled to receive notices of general meetings. Any such record date must be on or at any time before the date on which any such dividend, distribution, allotment or issue is paid or made or such notice is dispatched.

ACCOUNTING RECORDS

119. 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 Act.

120. 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 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 or the Company in general meeting.

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121. 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 auditor’s report, shall be sent to each person entitled thereto in accordance with the requirements of the Companies Act.

122. So long as the Company is required to maintain the registration if its Common Shares under section 12 of the United States Securities Exchange Act of 1934 but continues to be exempt (by virtue of its qualification as a “foreign private issuer”, as defined in rule 3b-4 under the Exchange Act, or for any other reason):-

(i) from the periodic filing and reporting requirements under Regulation 13A under the Exchange Act that are applicable to a private issuer of equity securities registered under the Exchange Act that is not a foreign private issuer (a “U.S. private issuer”), then the Company shall nevertheless comply with the periodic reporting provisions and related disclosure requirements, including filing requirements with the U.S. Securities and Exchange Commission (the “SEC”), that are applicable to a U.S. private issuer whose equity securities are registered under Section 12 of the Exchange Act; or

(ii) from the requirements imposed upon U.S. private issuers pursuant to sections 14(a), (b) and (c) of the Exchange Act with regard to the preparation and dissemination of proxy and information statements, then the Company shall nevertheless be required to comply, and all record or beneficial owners of Common Shares shall be required to comply, in connection with any dissemination of information or solicitation of proxies relating to

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action at a meeting of Shareholders or a solicitation of consents for Shareholder action, with all provisions of Regulations 14A and 14C under the Exchange Act other than those that relate to (a) filing requirements with the U.S. SEC, (b) requirements to include Shareholder proposals in proxy materials pursuant to rule 14a-8, and (c) requirements with respect to the approval of certain transactions pursuant to item 14 of the Schedule 14A, PROVIDED THAT, in lieu of the application of the provisions of rule 14a-9 and 14c-6, the following provision shall apply, interpreted under Bermuda law:

(1) No dissemination of information or solicitation of proxies shall be made by the Company or any record or beneficial owner of Common Shares containing any statement that, at the time and under the circumstances under which it is made, is false or misleading with respect to any material fact or that omits to state any material fact necessary in order to make the statements therein not misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or with respect to the same matter that has become false or misleading.

(2) The following rules and items under the Exchange Act shall be applicable to the Company and its record and beneficial Shareholders in compliance with the foregoing principles:

Rules: 14a-1, 14a-2, 14a-3(a) (but, with regard to specific matters, only to the extent specified below with respect to specific disclosures required by Schedule 14A), (b), (d), (e), and (f) (1), 14a-4, 14a-5, 14a-7, 14a-10, 14a-11(a), (b) and (f), 14a-12a, 14a-13, 14a-14, 14c-1, 14c-2(a) (but, with regard to specific matters, only to the extent specified below with respect to specific

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disclosures required by Schedule 14C) and (b), 14c-3(a), 14c-4 and 14c-7. Schedule 14A: Items 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20 (but not with respect to matters analogous to those governed by items 14) and 21. Schedule 14C: Items 1 (to the extent required by the items specified with respect to Schedule 14A above), 2, 3, 4 and 7.

(3) All reference to U.S. laws, regulations, rules and schedules in this Bye-Law are to such provisions as in effect on 26^th August 1993 and to any successor provisions thereto.

(4) No amendment to this Bye-Law 122 shall be effective without the approval of 66 2/3% of the Common Shares outstanding from time to time.

AUDIT

123. Save and to the extent that an audit is waived in the manner permitted by the Companies Act, auditors shall be appointed and their duties regulated in accordance with the Companies Act, any other applicable law and such requirements not inconsistent with the Companies Act as the Board may from time to time determine.

SERVICE OF NOTICES AND OTHER DOCUMENTS

124. Any notice or other document (including a share certificate) may be served on or delivered to any Shareholder by the Company either personally or by sending it through the post (by airmail where applicable) in a pre-paid letter addressed to such Shareholder at his address as appearing in the Register or by delivering it to or leaving it at such registered address. 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. Any notice or other document if sent by post

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shall be deemed to have been served or delivered seven days after it was put in the post, and in proving such service or delivery, it shall be sufficient to prove that the notice or document was properly addressed, stamped and put in the post.

125. Any notice of a general meeting of the Company shall be deemed to be duly given to a Shareholder if it is sent to him by cable, telex, telecopier or other mode of representing or reproducing words in legible and non-transitory form at his address as appearing in the Register or any other address given by him to the Company for this purpose. Any such notice shall be deemed to have been served twenty-four hours after its dispatch.

126. 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.

WINDING UP

127. 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

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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

128. Subject to the proviso below, every Director, officer of the Company and a member of a committee constituted under Bye-Law 94 shall be indemnified out of the funds of the Company against all civil liabilities loss damage or expense (including but not limited to liabilities under contract, tort and statute or any applicable foreign law or regulation and all reasonable legal and other costs and expenses properly payable) incurred or suffered by him as such Director, officer or committee member and the indemnity contained in this Bye-Law shall extend to any person acting as a Director, officer or committee member in the reasonable belief that he has been so appointed or elected notwithstanding any defect in such appointment or election PROVIDED ALWAYS that the indemnity contained in this Bye-Law shall not extend to any matter which would render it void pursuant to the Companies Act.

129. Every Director, officer and member of a committee duly constituted under Bye-Law 94 of the Company shall be indemnified out of the funds of the Company against all liabilities incurred by him as such Director, officer or committee member in defending any proceedings, whether civil or criminal, in which judgment is given in his favour, or in which he is aquitted, or in connection with any application under the Companies Act in which relief from liability is granted to him by the court.

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130. To the extent that any Director, officer or member of a committee duly constituted under Bye-Law 94 is entitled to claim an indemnity pursuant to these Bye-Laws in respect of amounts paid or discharged by him, the relative indemnity shall take effect as an obligation of the Company to reimburse the person making such payment or effecting such discharge.

ALTERATION OF BYE-LAWS

131. These Bye-Laws may be amended from time to time in the manner provided for in the Companies Act.

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EX-10.1

Exhibit 10.1

BY HAND
Mr. Patrick Thiele Chief Executive Officer PartnerRe Ltd. Wellesley House South 90 Pitts Bay Road Pembroke HM08, Bermuda	May 15, 2007

Dear Mr. Thiele,

Housing Benefit to CEO Patrick Thiele

On May 10^th 2007, the Compensation Committee of PartnerRe Ltd. (“the Company”) resolved and approved that Paragraph 3, Schedule 1 of the employment agreement between you and the Company dated September 29^th 2000 (the “Existing Agreement”) would be amended effective for the May rental period to provide that the amount of your monthly Bermuda housing benefit is equal to 100% of actual rent you incur rather than $16,000.

Please confirm your acceptance of the above by signing below and returning this Letter Agreement to the undersigned

For further questions, please contact me at +441-294-5404.

Sincerely,

Abigail Clifford

Chief Human Resource Officer

By signing this Letter Agreement I hereby acknowledge and accept the above.

BY:

Name:

PartnerRe Ltd. Fifth Floor, Wellesley House South 90 Pitts Bay Road, Pembroke, HM 08, Bermuda Tel: +1 441 292 0888 Fax: +1 441 292 7010 www.partnerre.com The thinking insurer’s reinsurer.

EX-11.1

Exhibit 11.1

PartnerRe Ltd.

Computation of Net Income per Common and Common Share Equivalents

For the Six Months and Three Months Ended June 30, 2007 and 2006

(in thousands of U.S. dollars or shares, except per share amounts)

	For the Six Months Ended June 30, 2007					For the Six Months Ended June 31, 2006
	Income (Numerator)		Shares (Denominator)	Per Share Amount		Income (Numerator)		Shares (Denominator)	Per Share Amount
Net income	$	274,288				$	270,774
Less: preferred dividends		17,263					17,263
Net income available to common shareholders/Weighted average number of common shares outstanding/Basic net income per share	$	257,025	56,820.8	$	4.52	$	253,511	56,748.6	$	4.47
Effect of dilutive securities:
Stock options and other			1,352.9					880.0
Net income available to common shareholders/Weighted average number of common and common share equivalents outstanding/Diluted net income per share	$	257,025	58,173.7	$	4.42	$	253,511	57,628.6	$	4.40

	For the Three Months Ended June 30, 2007					For the Three Months Ended June 30, 2006
	Income (Numerator)		Shares (Denominator)	Per Share Amount		Income (Numerator)		Shares (Denominator)	Per Share Amount
Net income	$	105,021				$	77,531
Less: preferred dividends		8,631					8,631
Net income available to common shareholders/Weighted average number of common shares outstanding/Basic net income per share	$	96,390	56,682.8	$	1.70	$	68,900	56,763.5	$	1.21
Effect of dilutive securities:
Stock options and other			1,465.9					892.5
Net income available to common shareholders/Weighted average number of common and common share equivalents outstanding/Diluted net income per share	$	96,390	58,148.7	$	1.66	$	68,900	57,656.0	$	1.20

EX-15

Exhibit 15

August 9, 2007

PartnerRe Ltd.

Wellesley House

90 Pitts Bay Road

Pembroke HM 08

Bermuda

We have made a review, in accordance with the standards of the Public Company Accounting Oversight Board (United States), of the unaudited condensed consolidated interim financial information of PartnerRe Ltd. and subsidiaries for the periods ended June 30, 2007 and 2006, as indicated in our report dated August 9, 2007; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, is incorporated by reference in Registration Statements Nos. 333-11998, 333-107242 and 333-129762 on Form S-8, and in Registration Statements Nos. 333-124713 and 333-133573 on Form S-3.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ Deloitte & Touche        

Deloitte & Touche

Hamilton, Bermuda

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Patrick A. Thiele, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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(s) 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 company’s most recent fiscal quarter 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(s) 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 registrant’s internal control over financial reporting.

Date: August 9, 2007

	/s/ Patrick A. Thiele
Name: Title:	Patrick A. Thiele President & Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Albert A. Benchimol, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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(s) 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 company’s most recent fiscal quarter 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(s) 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 registrant’s internal control over financial reporting.

Date: August 9, 2007

	/s/ Albert A. Benchimol
Name: Title:	Albert A. Benchimol Executive Vice President & Chief Financial Officer

EX-32

EXHIBIT 32

SECTION 906 CERTIFICATIONS

The certification set forth below is being submitted in connection with the Quarterly Report on Form 10-Q of PartnerRe Ltd. (the “Report”) 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.

Patrick A. Thiele, the Chief Executive Officer, and Albert A. Benchimol, 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 PartnerRe Ltd.

Date: August 9, 2007

/S/ PATRICK A. THIELE

Patrick A. Thiele

President & Chief Executive Officer

/S/ ALBERT A. BENCHIMOL

Albert A. Benchimol

Executive Vice President & Chief Financial Officer