PartnerRe (PRE)

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 $141 million and $600 million at September 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 given current and prospective economic conditions over the first nine months of 2007. Included in the total market value of trading securities at September 30, 2007 was $17 million related to convertible fixed income securities and $124 million related to equity securities. At September 30, 2007, the net unrealized investment gain on trading securities was approximately $5 million compared to $22 million at December 31, 2006.

As discussed above, the Company uses exchange traded treasury note futures for the purposes of managing portfolio duration. The notional value of the treasury futures was $459 million at September 30, 2007, while the fair value of the futures contracts, recorded in other invested assets, was a net unrealized gain of $1 million. In the third quarter of 2007, the Company shorted $100 million in equity futures to reduce its exposure to equity market risk due to uncertainties in the equity market. The fair value of the equity futures, recorded in other invested assets, was a net unrealized loss of $3 million at September 30, 2007.

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 of other invested assets.

Included in net payable for securities purchased at September 30, 2007 and December 31, 2006 was $39 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 $2 million for the first nine months of 2007, compared to a gain of $5 million for the same period in 2006.

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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.