EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

We are a leading global reinsurer, providing multi-line reinsurance to insurance companies. We are an economic entity that exists to take risk and earn an adequate return on the capital that shareholders provide. Three principles drive our behavior. First, we sell a product of value to selected insurance and capital markets clients backed by our financial ability to meet our commitments. Second, we deliver an adequate return on the shareholders’ capital to compensate them for the risk that we assume on their behalf. Third, we aspire to be a well-managed company through our sound governance practices and processes and our commitment to provide a challenging work environment where employees can both develop their careers and be appropriately rewarded for their performance.

Executives and employees with the skills to assess, value and manage risk are critical to the creation of shareholder value. We seek to establish compensation policies which both further the rights of the shareholders to receive an adequate risk adjusted return and the expectation of employees to be adequately compensated for their ability to create value.

Compensation Committee

The Board is responsible for managing strategic decisions throughout the organization. To best manage this responsibility, the Board has established five standing committees: the Audit Committee, the Compensation Committee, the Finance and Risk Management Committee, the Human Resources Committee and the Nominating and Governance Committee. Each committee is detailed under the heading “Committees of the Board of Directors” on pages 18-21. Membership of each committee, including the Compensation Committee, has been determined to maximize the requisite abilities and professional experience of each of the respective directors. The assignment of directors to specific committees and the designation of committee chairs is the responsibility of the Nominating and Governance Committee. The Nominating and Governance Committee organizes and approves the rotation of committee membership and committee chairs on a regular basis.

The primary responsibilities of the Compensation Committee are to set our compensation philosophy, to review and approve recommendations from the Human Resources Committee and to make recommendations to the Board, as necessary, with respect to the compensation and benefits of executive management. In addition, they manage any plan that provides equity-based awards. The Compensation Committee also oversees the application of the compensation philosophy to the compensation and benefits policies for the named executive officers and any other officers subject to Section 16 of the Securities Exchange Act, whom we refer to as the Section 16 officers. These compensation and benefit policies govern cash and equity compensation, perquisites, retirement, severance and change in control benefits.

The Compensation Committee is comprised of four directors, namely, Mr. Jean-Paul L. Montupet (Chairman), Mr. Vito H. Baumgartner (Vice-Chairman), Mr. Kevin M. Twomey and Dr. Jürgen Zech. Further information relating to the experience and background of each member of the Compensation Committee, including the Chairman and Vice-Chairman, can be found under the heading “Executive Officer and Director Biographies” on pages 5-10.

Each member of the Compensation Committee is an independent director as defined under the New York Stock Exchange rules and as determined by the Board on an annual basis. The roles and responsibilities of the Compensation Committee are outlined in the PartnerRe Ltd. Compensation Committee Charter which is available on our website at www.partnerre.com.

Roles and Responsibilities of the Members of the Compensation Committee

Chairman

The responsibilities of the Chairman of the Compensation Committee include:

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Vice-Chairman

The responsibilities of the Vice-Chairman of the Compensation Committee include:

Committee Membership

Each member of the Compensation Committee is required to prepare for each meeting, consider the materials provided and discuss any issues raised. Members are also required to provide input and support to the Chairman of the Compensation Committee on decisions and recommendations.

The Compensation Committee meets a minimum of four times per year. The meeting dates correspond with the regularly scheduled Board meetings, as set by the Chairman of the Board. The Chairman of the Compensation Committee may call additional meetings as required.

Compensation Committee Consulting Services

The Compensation Committee Charter permits the Chairman of the Compensation Committee to engage outside consulting services. In August 2005, Mr. Montupet engaged PricewaterhouseCoopers for their expertise in the strategic design, and governance controls of executive, director and corporate compensation and benefit programs.

Mr. Montupet has direct access to PricewaterhouseCoopers and he requests information, analysis and proposals from them on a regular basis. Mr. Montupet and the other committee members receive full copies of all final work products generated by PricewaterhouseCoopers for the Compensation Committee. Mr. Montupet may also request that PricewaterhouseCoopers attend any meeting of the Compensation Committee as appropriate. PricewaterhouseCoopers invoices us for their services with a copy sent to Mr. Montupet. Fees for these services are agreed on a project-by-project basis. No annual retainer fees are paid to PricewaterhouseCoopers.

Management uses the services of another team within the PricewaterhouseCoopers organization to provide technical expertise on the compliance of broad-based global employee equity programs and new U.S. accounting and tax regulations. Management also obtains consulting services from other independent compensation consultants on an ad hoc basis throughout the year. Typical projects include market pay studies, industry benchmarking and input on current trends and developments in executive compensation.

Management Role in Compensation Committee Activities

The Chief Executive Officer is not a member of the Compensation Committee and does not attend any Compensation Committee meetings unless specifically requested to do so by the Chairman of the Compensation Committee . The Chief Executive Officer may act as a key discussion partner with Compensation Committee members to provide information regarding business context, the market environment and our strategic direction. The Chief Executive Officer also provides recommendations to the Compensation Committee on individual performance evaluations and compensation for the named executive officers, other than himself. The Chief Executive Officer is a member of the Human Resources Committee together with the members of the Compensation Committee.

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The Chief Human Resources Officer is not a member of the Compensation Committee, but does attend Compensation Committee meetings. The Chief Human Resources Officer supports the Compensation Committee by presenting information and proposals to the Compensation Committee as outlined in the meeting agendas. The Chief Human Resources Officer also ensures technical and administrative support for the Compensation Committee as required.

The Director of Group Compensation and Benefits is not a member of the Compensation Committee, but does attend Compensation Committee meetings. The Director of Group Compensation and Benefits acts as staff to the Compensation Committee, as a resource on technical issues, as well as committee secretary.

PartnerRe Executive Total Compensation Program

The Compensation Committee has developed and approved the Executive Total Compensation Program, which is designed to fairly reward executives for above average performance. The Compensation Committee has determined the following guidelines:

Additional design elements within the Compensation Committee guidelines include:

The intent of the Compensation Committee is to establish compensation and benefit programs for our Chief Executive Officer, Mr. Patrick A. Thiele, and certain executive officers that will incent and reward the contributions, results and behaviors that will most effectively produce optimal financial results while ensuring the continued stability and long-term success of our company for our shareholders.

To proactively manage the strategic and operational risks, the Compensation Committee developed an Executive Total Compensation Program which was implemented in 2004. Individuals who are eligible to participate in the Executive Total Compensation Program are the Chief Executive Officer, and Messrs. Benchimol, Meyenhofer and Moore (together, the “Program Participants”). The Executive Total Compensation Program was designed to meet the following strategic objectives, set by the Board:

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Full details on each compensation and benefit component contained in the policy appear in subsequent sections of this document.

Compensation of Program Participants: Roles and Responsibilities

Board of Directors

The Board is responsible for the final approval of all compensation elements for each Program Participant, including the Chief Executive Officer.

Compensation Committee

The Compensation Committee reviews the analysis from the Chief Human Resources Officer, the compensation consultant and the Chief Executive Officer (with respect to the other Program Participants) in determining the final compensation recommendations to the Board for the Program Participants.

Chief Executive Officer

The Chief Executive Officer provides information and recommendations to the Compensation Committee related to the compensation of the Program Participants other than himself. Annually the Chief Executive Officer proposes financial performance metrics, weights and scales and organizational performance objectives for each Program Participant for the subsequent performance period. Following the performance period, the Chief Executive Officer makes compensation recommendations based on both the financial performance results and the Chief Executive Officer’s qualitative assessment of each Program Participant’s performance in achieving the organizational objectives and contribution to the organization. Compensation recommendations for the Program Participants are aligned with our compensation philosophy, annual incentive guidelines, equity grant methodology and the Executive Total Compensation Program.

Human Resources Committee

The Human Resources Committee (as described in further detail under “Human Resources Committee” on page 19) is comprised of the members of the Compensation Committee together with the Chief Executive Officer and is staffed by the Chief Human Resources Officer and other members of the Group Human Resources department.

The Human Resources Committee charter requires the Human Resources Committee to oversee human resources philosophy, strategy, policy and administration applicable to all employees within the PartnerRe group.

Human Resources Management

The Chief Human Resources Officer provides information and analysis on executive compensation and equity programs for the Compensation Committee, as requested.

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On an annual basis, Human Resources management provides analysis on internal pay equity, tally sheets, compensation mix, executive stock ownership and competitive market comparisons.

The Chief Human Resources Officer and PricewaterhouseCoopers present the Compensation Committee with alternatives in the compensation of our Chief Executive Officer to consider, based on benchmarking data and our executive compensation programs.

Recommendations for the Chief Executive Officer and Program Participants are then presented to the full Compensation Committee by the Chief Human Resources Officer. Base salary recommendations are analyzed for market competitiveness. Annual incentives are calculated based on our financial performance results (organizational performance ratings may only be determined by the Compensation Committee). Equity award recommendations are based on equity grant methodologies and adjusted as appropriate for individual performance.

The Compensation Committee recommends the Program Participants’ total compensation to the Board for their ratification and approval.

Once approved, the Chief Human Resources Officer is responsible for implementing the base salary adjustments, the annual incentive payment and the equity award grant.

Compensation Consultant

PricewaterhouseCoopers is responsible for providing information and guidance to the Compensation Committee as requested. Annually at the November meeting of the Compensation Committee, PricewaterhouseCoopers presents a competitive peer group analysis for review and approval. Based on the approved peer group, PricewaterhouseCoopers prepares a competitive compensation analysis on executive compensation which is presented to the Compensation Committee at the following February meeting for ratification and approval. Each element of total compensation for the Program Participants is compared to respective counterparts for each company within the competitive peer group.

Named Executive Officers in the Proxy

Within the PartnerRe group, the principal decision-maker is the group Chief Executive Officer, Patrick A. Thiele. In reaching a determination on principal decisions, the Chief Executive Officer relies heavily on the Chief Financial Officer, the Chief Executive Officers of the major business units and the Chief Actuary. This group constitutes the named executive officers.

Mr. Costas Miranthis, the Chief Actuary, was designated as a named executive officer and a Section 16 officer on April 5, 2006. Mr. Miranthis’s remuneration is the same as offered to all other management level employees, who are not included in the Executive Total Compensation Program. Mr. Miranthis is eligible to receive an annual incentive with a target payout of 80 percent of salary. In February 2007, Mr. Miranthis was awarded an annual incentive payment of $620,686, based on company results and the performance of the actuarial function in 2006. Mr. Miranthis’ annual incentive payment is indexed to the pound sterling and is based on the average rate for the prior year (i.e., 2006 for 2007 payment) against a base period defined as the 12 month average at the time his employment commenced. Mr. Miranthis is eligible for annual grants under our long term incentive plan but is not included in the Executive Total Compensation Program.

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Further details about the Program Participants are included below:

Summary of Elements of Compensation

Base Salary

Base salary is set at market competitive levels using disclosed peer company comparisons. This is a fixed expense that does not vary with performance. It is intended to remunerate executives for their extensive years of experience and industry specific expertise that does not vary with performance. Our peer group is discussed below under the heading “External Pay Equity—Competitive Peer Group”. At the Chief Executive Officer’s request, and as agreed by the Compensation Committee, Mr. Thiele’s salary will be capped at $1 million per year from 2007 until retirement.

Annual Incentive

Each named executive officer has a bonus target that is set as a percentage of salary with the Chief Executive Officer’s bonus target set at 125 percent and the other Program Participant percent’s bonus target set at 100 percent. As applies to all employees the named executive officers can earn between 0-200 percent of their individual target bonus based on performance.

For the Program Participants, a variable amount is paid based on pre-determined, quantitative measures intended to incent and reward performance. In our case, the primary measure of performance for our executives is group annual operating return on equity. The Compensation Committee approves the performance goals including the weights and measures for each named executive officer prior to or at the beginning of each performance period. For more detailed information, please see the “Annual Incentive Guidelines” and “Performance Weightings, Metrics and Scales” sections below.

Equity Grants

Equity grants are made in accordance with the Executive Total Compensation Program with the amounts granted by the Compensation Committee using operating return on equity as the measure of performance. We set ownership targets for each of our Program Participants and have designed a structured award program that allows each Program Participant to reach the targets within a reasonable period of time. Once the Program Participants reach these targets, we allow them to customize the form of the grant.

For more detailed information, see the “Annual Equity Grant Methodology” and “Executive Stock Ownership” sections below.

Mix of Compensation

We analyze and review the mix of compensation for the Program Participants on an annual basis. The intent of the Compensation Committee is to ensure that the balance between fixed and variable compensation supports a pay for performance approach and that the equity component is sufficient to align the executives’ interests with those of shareholders, focused on the long-term success of the organization.

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The following table illustrates the breakdown of compensation of target compensation for the Program Participants for 2006. The numbers shown are percentages of total annual compensation which is the aggregate value of salary, annual target bonus and target equity awards:

As detailed above, Mr. Miranthis is not a Program Participant. The following table illustrates the breakdown of compensation of target compensation for Mr. Miranthis:

The Compensation Committee has concluded that our target incentives and equity methodologies provide the appropriate mix of total compensation in support of our compensation philosophy.

Internal Pay Equity

The Compensation Committee analyzes and reviews the appropriate level of compensation for the Program Participants on an annual basis. In addition, the Compensation Committee analyzes and reviews the compensation of our section 16 officers, including Mr. Miranthis and the group Chief Accounting Officer, Laurie Desmet, on an annual basis. The Compensation Committee reviews compensation information based on both internal pay equity analysis and the external competitive market where we compete for talent.

Each year, the Compensation Committee recommends the Chief Executive Officer’s total compensation package and any revisions to the package are approved by the Chairman of the Board. Management prepares an internal equity pay analysis annually comparing the compensation levels of each element of basic compensation as well as total compensation consisting of base salary, annual incentive and equity awards.

The analysis presented for review by the Compensation Committee in 2006 compared average compensation levels from 2001 to 2006 for the Chief Executive Officer and other Program Participants and section 16 filers.

The Compensation Committee believes that the Chief Executive Officer’s compensation levels, compared to the other Program Participants, are appropriate and reflect the scope and responsibilities of the Chief Executive Officer relative to other Program Participants. The Compensation Committee has also determined that the other Program Participants are appropriately positioned between the Chief Executive Officer and the next level of management.

Based on the aggregate of the salary, annual incentive and equity value averaged over the last three years, the Chief Executive Officer’s annual compensation was 29 times the average annual compensation paid to our employees.

External Pay Equity—Competitive Peer Group

To aid retention and recruitment of potential executive officers, the Compensation Committee analyses and reviews the compensation data of a selected market peer group. We define our competitive peer group as those organisations with whom we compete for executive talent. The Compensation Committee has established an annual peer group review process in which companies included in the existing peer group are reviewed for their

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continued relevance and other companies are considered for inclusion to the group. Criteria used for analysis and consideration include size (revenues and market capitalization), corporate strategy, business mix, location and the availability of compensation data. All companies included in the peer group are in the insurance or reinsurance industry.

The 2006 market peer group was chosen by the Compensation Committee based on recommendations from PricewaterhouseCoopers, the retained compensation consultants to the Compensation Committee. In November 2006, the Compensation Committee approved the following companies for our peer group analysis: ACE Ltd., XL Capital Ltd., W.R. Berkley Corporation, Reinsurance Group America Inc., Everest Re Group Ltd., Transatlantic Holdings Inc., Arch Capital Group Ltd., Scor SA, Axis Capital Holdings Limited, Endurance Specialty Holdings Ltd., and RenaissanceRe Holdings.

In January 2007, PricewaterhouseCoopers provided a compensation analysis for the Program Participants relative to their counterparts within the competitive peer group. Their report, including all supporting documentation, was provided to the Compensation Committee. The key findings of the analysis demonstrated to the Compensation Committee that the Program Participants are being fairly compensated relative to their peers.

Linkage of Compensation to Business Strategy

Annual Incentive

Annual Incentive Guidelines

All employees of the PartnerRe group are eligible for a cash annual incentive based on the achievement of pre-determined performance goals. The Compensation Committee approved the PartnerRe Group Annual Incentive Guidelines. These guidelines provide a framework for the structure and payout of annual incentives in the organization, including guidance on performance metrics and weights as well as process and governance. The components are:

The target annual incentives and 2006 payout ranges for the named executive officers are as follows:

Performance Weightings, Metrics and Scales

The annual incentive performance weightings, metrics and scales for the Program Participants are approved by the Compensation Committee at the November meeting of the Compensation Committee that precedes the performance period commencing in January. Metrics measure both financial and non-financial (organizational) performance against pre-determined objectives. Weights are applied to each metric based upon the importance to our strategy, the current business environment and the behaviors of each executive that the Compensation Committee wants to incent and reward.

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Each of the Program Participant’s annual incentive is heavily weighted (70-80 percent) toward our financial performance in terms of profitability and growth. In the last three years, operating return on equity has been the principal financial measure. The scale has not changed in five years and is as follows:

The above scale is calibrated to reflect the degree of difficulty associated with achieving the return on equity targets shown. The annual incentive target (i.e., payout at 100 percent) reflects 13 percent return on equity performance, which is our long-term target. The scale starts at 8 percent because we believe that at or below this level, shareholders are not being adequately compensated for the risk associated with their investment in us. The annual incentive payout is capped at 18 percent because we believe that an uncapped payout could result in behavior that is not in our best interests in the long-term or that of our shareholders.

In addition to the return on equity goal, there are other predetermined quantitative and qualitative goals. These quantitative goals are either growth of business or return on profitability. The qualitative goals relate to specific projects and actions which are determined by the Board as being part of our overall success.

2006 Annual Incentive Weightings for the named executive officers

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Annual Equity Grant Methodology

The Compensation Committee and management view equity awards as a grant of ownership in PartnerRe Ltd. and therefore the amount of equity available for allocation to employees each year is based on the shareholder value created in the performance period.

Our measure of value creation for the annual equity grant is operating return on equity. The amount of equity available for allocation to employees depends on the year’s return on equity performance results and is expressed as a percentage of our common shares outstanding. This measure has been used since 2001.

One of the stated strategic objectives of the Compensation Committee is to align the long-term interests of employees and shareholders by encouraging ownership of our common shares. In the event that the return on equity falls below 10 percent, the amount of equity available for allocation to employees will be 0.8 percent of our common shares outstanding. In the event that return on equity is greater than 15 percent, the amount of equity available for allocation to employees will be capped at 2.7 percent of our common shares outstanding.

The form of annual equity awards has shifted in recent years from the exclusive use of stock options to also using restricted stock units as part of our equity award program. To calculate total equity pool grants, we convert stock-settled share appreciation rights to restricted stock units based on a Black-Scholes derived conversion rate of four stock-settled share appreciation rights equal to one restricted stock unit valued at the time of grant.

For the 2007 performance year, we will change the measure of value creation from return on equity to economic value per share. As our industry is cyclical, economic value per share is better determined by utilizing a four-year performance period as opposed to an annual performance period. Switching to measuring growth by economic value per share, which incorporates a longer-term view, is better aligned with the objectives of a long-term incentive as it captures other important aspects of value creation within a reinsurance company.

Equity Pool Allocation

Using the 2006 equity grant methodology, the Compensation Committee, taking into consideration peer group analysis, provides recommendations for the allocation of equity to the Chief Executive Officer, named executive officers and other employees. These recommendations are based upon a mathematical formula approved by the Compensation Committee and are derived from analysis of the Compensation Committee approved peer group.

The Compensation Committee approved the equity awards for the Program Participants resulting from the application of the 2006 equity grant methodology. In addition, the Compensation Committee approved the award for Mr. Miranthis, as recommended by the Chief Executive Officer, based on the same allocation methodology.

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Form of Equity

The Executive Total Compensation Program outlines the form of equity to be used for the Program Participants. The equity award delivered to the Program Participants consists of 50% of the value in stock-settled share appreciation rights and 50% in restricted stock units. The Compensation Committee’s intention is to encourage executive retention by issuing the three-year cliff-vesting restricted stock units and to incent continued growth in value and share price by issuing stock-settled-share appreciation rights with a three-year ratable vesting schedule. We believe that the three-year vesting schedule is consistent with market practice.

Equity Grant Dates

Following the release of the year-end financial results, the Compensation Committee reviews, adjusts and recommends approval of the final total equity pool and the annual equity awards for the individual Program Participants to the Board. The grant date of the annual equity awards for the Program Participants is the date such award is approved by the Board in February of each year. The dates for the Board and Compensation Committee meetings are set a year in advance. The table below illustrates the grant dates over the past five years:

Stock-settled share appreciation rights for eligible employees are granted with an exercise price at the fair market value of the common shares of PartnerRe Ltd. The plan rules define the fair market value as the average of the high and low trading prices of common shares of PartnerRe Ltd. on the trading date immediately preceding the grant date.

Executive Stock Ownership and Retention

The Compensation Committee believes that the most effective way to align the interests of executives and shareholders is to make executives meaningful shareholders themselves. Within the Executive Total Compensation Program, the Compensation Committee has established stock ownership guidelines along with holding restrictions and incentives to further encourage Program Participants to hold a stake in the future value of the organization.

Stock Ownership Guidelines

The Program Participants are required to meet and maintain two stock ownership targets. The targets are referred to as total shares/equivalents (shares owned, restricted stock, restricted or deferred stock units and shares held in qualified plans) and total stockholdings (total shares/equivalents plus all exercisable and un-exercisable options and stock-settled share appreciation rights).

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The targets are expressed as a percentage of shares outstanding. These percentages were derived from an analysis of the executive share ownership of our competitive peer group.

Net Share Retention Guidelines

The Compensation Committee manages executive stock ownership through net shareholding requirements as outlined in the Executive Total Compensation Program. Net shares are defined as the shares remaining from a transaction (exercise or vesting) after enough shares are sold to pay the applicable option exercise price and any tax or social security liabilities on the transaction.

If the Program Participant has not met the total shares ownership target, the Program Participant is required to retain 100 percent of the net shares until the target is met. If the Program Participant has met the total shares ownership target, the Program Participant is required to retain 50 percent of the net shares for a period of three years.

Elective Company Match

The Compensation Committee further encourages executive stock ownership through company matches on elective deferrals of cash annual incentives as outlined in the Executive Total Compensation Program. Eligible Program Participants may elect to defer a portion or all of their cash annual incentive into immediately vested deferred stock units. The award of deferred stock units has a minimum delivery date restriction of five years from the date of grant. We will then provide an additional restricted stock unit award equal to 25 percent of the deferred cash incentive value. These awards of restricted stock units are subject to a three-year cliff-vest and also have a minimum delivery date restriction of five years from the date of grant.

Compensation Customization

One of the key responsibilities of the Compensation Committee is to provide compensation programs that optimally incent, reward and retain the key executives of the organization. The Compensation Committee recognizes that in terms of compensation, executives are motivated by both the level and form of compensation. Each individual executive has preferences for different forms of compensation based upon their personal financial portfolio, risk appetite and retirement goals and timeline.

The Compensation Committee provides flexibility to executives in electing the form of delivery of the value of their annual equity awards within the Compensation Customization Guidelines of the Executive Total Compensation Program. To ensure continued alignment of the executives’ interests with shareholders, only Program Participants who have met the two stock ownership targets are eligible for compensation customization. The standard form of annual equity awards is 50 percent in stock-settled share appreciation rights and 50 percent in restricted stock units. Eligible executives may elect to change the standard form of annual equity awards by selecting from a pre-defined menu of alternatives including 100 percent delivery in stock options or stock-settled share appreciation rights, 100 percent delivery in restricted stock units or 50 percent restricted stock units and 50 percent deferred cash.

Pursuant to the Executive Total Compensation Program, Messrs. Thiele and Moore are currently eligible to customize the form of delivery of the value of their annual equity awards. Mr. Moore met both stock ownership

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targets in 2004 and he has elected to receive the value of his equity awards granted in 2005, 2006 and 2007 to be paid 50 percent in restricted stock units and 50 percent in deferred cash. Mr. Thiele met both stock ownership targets in 2005 and he has elected to receive the value of his equity awards granted in 2006 and 2007 to be paid 50 percent in restricted stock units and 50 percent in deferred cash.

The amount of the deferred cash awards is equal to the dollar value of the stock option equivalents award on the date of grant. The equity allocation for each executive is divided in two, representing the standard award breakdown of a 50 percent grant in restricted stock units and a 50 percent grant in stock-settled share appreciation rights. The number of restricted stock units to be granted is multiplied by the fair market value of common shares of PartnerRe Ltd. on the date of grant. Instead of granting stock-settled share appreciation rights, this dollar amount is granted in a deferred cash award which vests ratably over three years. Upon vesting, the executive receives the vested portion of the award in cash with interest equal to the three-month Treasury Bill rate.

The form and delivery of the 2006 annual equity award values for the named executive officers is shown in the following table:

Retirement Benefits and Conditions

We maintain active defined-contribution plans and frozen, fully-funded non-contributory defined benefit plans, which were closed to new members in June 1999. Contributions are made by us and in some locations are supplemented by the local plan participants. Contributions are based on a percentage of the participant’s base salary which depends on competitive local market practice. Vesting provisions meet local legal requirements and market trends; the accumulated benefits for the majority of these plans vest immediately or over a two year period. As required by law, certain retirement plans also provide for death and disability benefits and lump sum indemnities to employees on retirement.

The Compensation Committee believes that executives who have dedicated themselves to the organization for significant periods and who have participated at the highest level of management in shaping and guiding our future long-term value should share in the rewards of their contributions. Therefore, the Compensation Committee has established the definition of retirement for the Program Participants. The Executive Total Compensation Program outlines special treatment of equity compensation, contingent upon compliance with post-retirement conditions. In all other respects, the retirement benefits in place for executives are the same as offered to all other employees. There are no supplemental employer contributions or enhanced features in the Program Participants’ retirement plans.

Executive Retirement Definition and Status

Program Participants are eligible for executive retirement benefits and conditions once they meet the criteria for the definition of executive retirement:

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Special Treatment of Equity Compensation

The Compensation Committee wants Program Participants to continue to focus on the long-term value of the organization through to their retirement dates by allowing them to realize the full value of their long-term incentive awards. Under the Executive Total Compensation Program, any unvested awards as of the date of retirement will continue to vest under the original vesting provisions for an additional 36 months. Additionally, any vested options or stock-settled share appreciation rights (including those that vest post-retirement) will remain exercisable for the remainder of the original term of the grant.

Post-retirement Conditions

In return for providing the beneficial treatment of long-term equity compensation awards, the Compensation Committee requires executives to comply with the following limitations on business activity for 36 months following retirement:

Chief Executive Officer Retention

The Board has full confidence in the expertise, integrity and leadership of Mr. Patrick A. Thiele as our Chief Executive Officer. The Compensation Committee want to ensure that we are providing every incentive and motivation to Mr. Thiele to continue in the chief executive position through the most critical stages of the current reinsurance business cycle as fewer profitable opportunities require much greater skill and management oversight.

In November 2004, we entered into retention award arrangements with Mr. Thiele, based on a design recommendation from PricewaterhouseCoopers. The arrangements are structured as a restricted share unit award and a separate deferred cash award. The restricted share unit award amount is for 42,582 restricted share units, each of which represents the right to future delivery of one common share. The deferred cash award entitles Mr. Thiele to an amount of $2,500,000. The restricted share unit award and the deferred cash award are subject to the same retention and threshold performance conditions. To fulfill the conditions, Mr. Thiele must remain our employee until December 31, 2009, and our book value per share must equal or exceed $65.00 per diluted share, as presented in our 2009 audited financial statements (the “performance condition”).

Mr. Thiele will receive a pro rata portion of the retention awards if his services are terminated by us without cause or by Mr. Thiele with good reason prior to December 31, 2009, provided that the performance condition is met on a pro rata basis. Pro rata values for the performance condition for each quarterly financial reporting period until December 31, 2009 are set forth in the award agreements.

The awards are forfeited if Mr. Thiele’s service is terminated by us for cause or by Mr. Thiele without good reason before December 31, 2009. In the event of a change in control, the awards are no longer subject to the performance condition, but will remain subject to the provision requiring Mr. Thiele to remain employed by us until December 31, 2009.

Other Compensation & Benefits

Other compensation and benefits are awarded to the named executive officers based upon competitive market standards, both at the executive level and within the local market environments.

Within the PartnerRe group, members of senior management over 45 are eligible for our executive health benefit. The Compensation Committee recognizes that our human resources are the most valuable asset of the organization. The executive health benefit policy approved by the Compensation Committee funds the expense of comprehensive medical reviews on a bi-annual basis, including travel and accommodation as necessary, for designated employees.

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Messrs. Thiele, Benchimol and Miranthis are based at the corporate headquarters in Bermuda. There is competition for talent among the international companies in Bermuda and the cost of living is significant. In keeping with our compensation philosophy, policies at the corporate headquarters reflect local market practices including housing allowances and Bermudian payroll tax reimbursements for employees at all levels. The competitive practice for expatriate executives in Bermuda also includes reimbursement of car expenses, club fees and tax filing assistance.

Other items included in “other compensation” reflect each executive’s participation in broad-based plan philosophies that are the same for all employees such as competitive employer contributions to defined-contribution retirement plans, company-paid life insurance premiums and cash dividend equivalent payments on unvested, undelivered restricted stock units.

Severance

To assist in recruiting our executive officers and to ensure that we are competitive with the market we provide for severance of our Program Participants. Severance will be paid upon the termination of employment under several different scenarios, including a change in control. Severance triggers, restrictive conditions and compensation are governed by executive employment agreements, the Executive Total Compensation Program, change in control agreements, and our equity plans for employees.

Executive Employment Agreements

Messrs. Thiele, Benchimol and Moore have executive employment agreements that outline termination definitions and compensation. Termination definitions include death, disability, termination by us for cause, and by the employee for good reason. Compensation upon termination is defined for each of the termination definitions as well as for any reason other than the specific termination definitions. The termination compensation was compared to competitive benchmarks and recommended by PricewaterhouseCoopers.

The executive employment agreements contain provisions regarding post-termination restrictions. Mr. Thiele and Mr. Benchimol’s executive employment agreements state that in the case of termination by us for or without cause or by the employee without good reason, for the period starting six months prior to termination and ending six months post-termination, the employee agrees not to solicit or accept business from our clients or to solicit any employee to terminate. Mr. Moore’s agreement states that in the case of termination by us for cause or by the employee without good reason, for the period starting six months prior to termination and ending six months post-termination, the employee agrees not to solicit or accept business from our clients, not to solicit any employee to terminate and not to engage in any business of the type performed by us.

Mr. Moore’s executive agreement entitles him to post-retirement benefits consisting of continued hospital and medical coverage. There are no contractual agreements for post-retirement benefits for any of the other Program Participants.

Messrs. Meyenhofer and Miranthis do not have executive employment agreements with us and therefore do not have specific severance provisions contracted with us except as explained under “Change in Control Policy” below.

Change in Control Policy

The Compensation Committee approved the PartnerRe Ltd. Change in Control Policy effective November 2004. Each of the Program Participants has a separate change in control agreement governed by the change in control policy. The objectives of this policy are to provide incentives to ensure that management cooperates in the best interests of shareholders and to protect compensation and benefits in order to retain key executives during a change in control transaction.

The definition of a change in control under the change in control policy is consistent with the definition of the 2005 Employee Equity Plan, as approved by shareholders in 2005. Upon a change in control, all equity granted under the plan will fully vest and all restrictions will be lifted.

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The change in control policy defines the triggers and conditions for certain senior employees to be eligible for severance in the form of cash compensation and benefits. Two conditions must be met for eligibility:

Termination by cause will result in the event of an employee engaging in gross negligence or willful misconduct or the employee’s conviction of a criminal offense.

Termination by the employee with good reason is defined as the assignment to the employee by us of duties inconsistent with his/her position, authority, duties, responsibilities or status with us, a reduction in compensation and benefits without the employee’s consent or any other material change in the conditions of employment.

The Compensation Committee recognizes that while key executives may not be terminated as a result of a change in control event, they may want to leave the new organization for other reasons. The loss of key employees during the initial integration phase in a change in control event may potentially have an impact on the ultimate success of the new organization. The acquiring company is also likely to pay more if they are confident they have our management assistance during transition. Therefore, the change in control policy also provides an incentive to key executives to remain with the organization during the first 12 months following a change in control. Subsequently, during a 30-day period following the first anniversary of a change in control, the change in control policy allows the executive to voluntarily terminate his/her employment (a modified trigger) and still be entitled to his/her severance cash compensation and benefits. The executive is therefore incented to remain with us during the most critical stages of a change in control event to provide management leadership with a smooth transition.

Under the change in control policy, the Program Participants all have a 30-day modified-trigger clause (as detailed above) in their change in control agreements.

Impact of Regulatory and Accounting Requirements

In making executive compensation decisions, the Compensation Committee is mindful of the impact of regulatory requirements on those decisions. In particular, regulatory requirements affect the Compensation Committee’s decisions in the following ways:

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Annual Incentive

The Compensation Committee approved a performance rating for each of the Program Participants from 0 percent to 200 percent. The performance rating reflects each Program Participant’s achievement of organizational objectives. The performance rating was included in the annual incentive calculations along with the financial performance results. The Board approved the following annual incentive payouts:

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Equity Awards

The Compensation Committee reviewed the award recommendations for the Program Participants which were presented in accordance with the equity grant methodology and the Executive Total Compensation Program. A diagram which illustrates the allocation of the total equity pool for 2006, is shown below:

The Board approved the following individual equity and cash awards:

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Summary Compensation Table

The table below summarizes the total compensation paid or earned by each of the named executive officers for the fiscal year ended December 31, 2006. The named executive officers were not entitled to receive payments which would be characterized as “Bonus” payments in column (d) below for the fiscal year ended December 31, 2006. The amounts disclosed in column (e) and (f) reflect the dollar amount expensed for financial statement reporting purposes for the fiscal year ended December 31, 2006, in accordance with FAS 123R. All assumptions used in calculating FAS 123R values with respect to the stock and option awards are located in note 10 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006. The amounts disclosed in column (e) reflect all restricted share unit awards. The amounts disclosed in column (f) reflect all options, cash settled share appreciation rights and share settled share appreciation rights. The amounts disclosed in (g) were determined by the Compensation Committee at its February 22, 2007 meeting and, to the extent not deferred by the executive, were paid out shortly thereafter. The amounts disclosed in column (i) are further detailed on the following table “All Other Compensation”.

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