96 Pitts Bay Road
Pembroke HM 08, Bermuda
Mr. Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
Dear Mr. Katz:
PartnerRe Ltd. appreciates the opportunity to comment on Release No. 33-8145 - Conditions for Use of Non-GAAP Financial Measures.
PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. In 2001 total revenues were $1.9 billion. As of September 30, 2002, total assets were $8.2 billion, total capitalization was $2.5 billion and total shareholders' equity was $1.9 billion.
We support the SEC's efforts to improve the transparency of financial information included in publicly filed documents. In addition we support the Commission's efforts to enhance presentation and disclosure around non-GAAP financial information. We do have concerns about specific components of the rules as described below.
Proposed Regulation G
We support the basic proposal in Regulation G and believe that a reconciliation between non-GAAP financial measures and the most comparable GAAP financial measure will provide meaningful information to the users of such information. Such information can easily be presented in a tabular format within the text of a document or as an exhibit to a document.
These efforts should not, however, over look the fact that non-GAAP financial measures can be meaningful to investors. Within the insurance and reinsurance industry "operating earnings" (net income adjusted for net, after-tax, realized investment gains and losses) is a commonly used measure as it reflects the underlying fundamental performance of companies within our industry. Operating earnings can be easily reconciled to net income to insure that the user of this financial information has a clear understanding of how this non-GAAP financial metric is derived.
Proposed Amendments to Item 10 of Regulation S-K, Item 10 of Regulation S-B and Form 20-F
We support these amendments and believe that a quantitative reconciliation between non-GAAP and GAAP financial measures will provide meaningful information to the users of financial statements. We also believe that enhanced disclosure as to why management uses non-GAAP financial measures will benefit users of this information.
We believe the Commission should reconsider the prohibition on non-GAAP per share measurements. As stated previously non-GAAP financial measures can add value to the users of such information and this includes certain non-GAAP per share measurements. As long as non-GAAP financial information and non-GAAP per share measurements are comparable across an industry (i.e., the industry has accepted these measurements as a primary measurement for the industry) the provision of such information can add significant value to the users of this information. In the case of non-GAAP per share measurements this can add to the comparability of companies across a given industry. A provision requiring the reconciliation of non-GAAP per share measurements with a comparable GAAP measurement would provide a much more meaningful solution.
Furthermore, non-GAAP financial information and non-GAAP per-share measures are often used by Company management to measure Company performance (e.g., the calculation of return-on-equity is often calculated using operating earnings). Other relevant measures often used by management include operating earnings per share and book value per share. If such measurements are useful to management in running their business one can make the assumption that this information would also be useful to the readers of the Company's financial information.
Proposed New Item 1.04 of Form 8-K
We believe the current requirements of Regulation FD are sufficient.
Once again we appreciate the opportunity to comment on this proposed rule and we hope the Commission will give these comments serious consideration.
Edward L. Rand, Jr.