firmenpresse print | Hannover Re reports very pleasing result for the first half of 2009
06.08.2009
Hannover Re reports very pleasing result for the first half of 2009
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Hannover Re reports very pleasing result for the first half of 2009
* Gross premium + 26.7%
* Net premium + 30.8% due to stronger demand, ING acquisition
and increased retention
* Net investment income +27.9%
* Operating profit (EBIT) +49.9%
* Group net income +66.1%
* Burden of catastrophe losses within the expected bounds
* Combined ratio 97.1%
* EBIT margin in non-life and life/health reinsurance clearly
better than target range
* Annual targets within reach
Hannover, 6 August 2009: In its interim report published today
Hannover Re expressed considerable satisfaction with the development
of its business. "We achieved gratifying results in both our
underwriting business and on the investments side, and we are
therefore well on track to generate the forecast return on equity of
at least 18% for the full 2009 financial year", Chief Executive
Officer Ulrich Wallin explained.
The operating profit (EBIT) as at 30 June 2009 grew by a substantial
49.9% year-on-year to reach EUR 600.1 million (EUR 400.2 million).
Group net income increased by a similarly gratifying 66.1% - inter
alia due to the good overall development of business as well as
positive special effects in life and health reinsurance - to EUR
419.0 million (EUR 252.2 million). This was equivalent to earnings of
EUR 3.47 (EUR 2.09) a share; the annualised return on equity stood at
27.9% (16.4%).
Gross written premium climbed 26.7% as at 30 June 2009 to EUR
5.3 billion (EUR 4.1 billion). "This significant increase derived in
large measure from organic growth, although the acquisition of the
ING life reinsurance portfolio was also a factor here", Mr. Wallin
noted. Given the higher level of retained premium at 93.0% (89.5%),
net premium earned grew to EUR 4.5 billion (EUR 3.4 billion).
The development of non-life reinsurance continued to be highly
satisfactory for Hannover Re. The capital squeeze felt by primary
insurers in the wake of the financial market crisis has led to
stronger demand for reinsurance protection. "The treaty renewals on 1
June and 1 July also passed off very well for our company overall.
Yet we were not satisfied with the movements in the rate level in all
segments", Mr. Wallin explained. "In view of our profit-oriented
underwriting policy, we therefore reduced our exposures - especially
in property catastrophe business in the United States and Japan, but
also in some casualty segments."
Stronger demand for reinsurance protection was also observed in
worldwide credit and surety insurance. In the area of structured
covers, too, the reverberations of the financial market crisis
injected significant growth impetus as anticipated. All in all, the
prospects for worldwide non-life reinsurance are very promising.
Gross premium in non-life reinsurance as at 30 June 2009 improved on
the comparable period of the previous year by 16.0% to reach EUR
3.1 billion (EUR 2.7 billion). At constant exchange rates, especially
against the US dollar, the increase would have been 12.0%. The level
of retained premium climbed to 94.1% (89.4%) due to sharply lower
retrocessions. Net premium earned consequently rose by 19.2% to EUR
2.5 billion (EUR 2.1 billion).
In the second quarter Hannover Re incurred only a modest number of
major losses. The largest single loss event was the crash of an Air
France passenger jet with a strain of some EUR 30 million for net
account. The total net burden of major losses amounted to EUR
163.3 million (EUR 130.0 million). This was equivalent to 6.6% of net
premium in non-life reinsurance, a figure below the expected level of
10%. The combined ratio stood at 97.1% (98.4%).
Net underwriting income in non-life reinsurance improved from EUR
23.6 million in the corresponding period of the previous year to EUR
57.3 million. The operating profit (EBIT) in this business group
increased by 10% to EUR 317.1 million (EUR 288.2 million). Group net
income grew by 14.1% to EUR 223.2 million (EUR 195.7 million).
Developments in life and health reinsurance were exceptionally
pleasing. Owing to a visible weakening in the solvency position of
life insurers, demand for reinsurance solutions continued to rise -
leading to an increased clamour for risk- and financially oriented
products. This state of affairs was especially evident in the United
States, where the insurance industry had suffered considerable
erosion of its capital base.
Hannover Re's worldwide life and health reinsurance business enjoyed
further profitable growth following the acquisition of the ING
portfolio in January 2009. "With this transaction we were able to
further strengthen the segment of risk-oriented life reinsurance,
which had hitherto been underrepresented in the United States", Mr.
Wallin explained. Hannover Re remains keenly interested in the
seniors' health market and the financial solutions sector in the US.
Not only that, the new markets segment - in which Hannover Re writes
enhanced annuities and ranks among the market's leading reinsurers in
the United Kingdom - also offers considerable potential. Here, as is
also the case with the reinsurance of existing pension funds, the
opportunities for further profitable expansion are very good.
Hannover Re maintains a regional focus on the so-called BRIC markets
(Brazil, Russia, India and China), although Korea - the largest life
reinsurance market in Asia - also offers good growth prospects. The
main drivers of business nevertheless continue to be the developed
insurance markets of the United Kingdom, United States, Germany and
Australia.
Spurred on by the acquisition of the ING life reinsurance portfolio
and brisk organic growth, gross written premium as at 30 June 2009
surged by 45.6% to EUR 2.2 billion (EUR 1.5 billion). At constant
exchange rates growth would have been as high as 49.6%. The level of
retained premium rose from 89.6% to 91.6%, while net premium earned
increased by 48.9% to EUR 2.0 billion (EUR 1.3 billion).
The investment income generated in life and health reinsurance
doubled from EUR 154.8 million to EUR 314.0 million. Positive special
effects were a factor here. They derived from the reversal of
unrealised losses on deposits with US cedants (B36 derivatives) and
from improvements in the value of deposits assumed by Hannover Re in
the context of the ING transaction. The result was adversely impacted
by opposing effects in UK annuity business. On balance, the operating
result (EBIT) in life and health reinsurance profited from
non-recurring effects of around EUR 150 million in the first
half-year.
The operating profit (EBIT) as at 30 June 2009 consequently increased
sharply to EUR 266.1 million (EUR 87.2 million). The EBIT margin of
13.4% thus comfortably surpassed the target corridor of 6.5% to 7.5%.
Group net income rose appreciably to EUR 212.5 million (EUR
65.0 million).
Although conditions on the financial markets are still challenging,
Hannover Re expressed satisfaction with the development of its
investments. Thanks to a positive cash flow, the assets under own
management grew to EUR 21.0 billion, thereby improving on the volume
as at 31 December 2008 (EUR 20.1 billion). Ordinary income excluding
interest on deposits fell just slightly short of the level in the
corresponding period of the previous year at EUR 398.8 million (EUR
407.9 million), a testament to the fact that the company is correct
in pursuing an investment policy geared to generating stable ordinary
income. The balance of realised gains and losses totalled EUR 55.5
million for the first half-year, as against EUR 102.3 million in the
comparable period of the previous year; this had been influenced by
high realisations owing to the tactical shortening of durations in
the USD portfolio. Along with impairments taken on structured
products in the amount of EUR 26.2 million, the volume of write-downs
totalling altogether EUR 93.4 million (EUR 130.6 million) was due in
large measure in the amount of EUR 64.1 million to alternative
investments; of this amount, EUR 41.9 million was attributable to
private equity. Unrealised gains on asset holdings measured at fair
value through profit or loss amounted to EUR 87.2 million; this
contrasted with unrealised losses of EUR 15.1 million in the
corresponding period of the previous year. This gratifying
development was due chiefly to the doubling of investment income in
life and health reinsurance.
Net investment income increased by 27.9% to EUR 569.2 million (EUR
445.1 million), assisted first and foremost by the improvement in
unrealised gains and the reduced volume of write-downs. This figure
includes income from interest on funds withheld, which at EUR 144.9
million was substantially higher than in the comparable period of the
previous year (EUR 102.3 million).
Outlook
Based on its strategic orientation and the available market
opportunities, Hannover Re anticipates a good result for 2009 in both
non-life and life/health reinsurance. At constant exchange rates the
net premium volume is expected to grow by approximately 25%.
In non-life reinsurance the markets offer a good price level overall,
although further rate increases are needed in certain segments. The
treaty renewals as at 1 July 2009 in the United States, when around
one-third of the portfolio is renegotiated, reinforced the trend of
prior renewal phases. Yet prices did not rise in all areas to the
extent needed. Particularly in the case of property catastrophe
covers, efforts to secure the required price increases were only
partially successful. Sufficient capacity was for the most part
available here. While the rate level in standard casualty business
remained stable, price rises were obtained in the workers
compensation segment. Rates in the professional indemnity lines were
broadly unchanged, although conditions improved under treaties that
had suffered losses. Hannover Re was satisfied overall with the
treaty renewals in Australia and New Zealand.
Net premium in non-life reinsurance should show growth of around 20%
by year-end 2009. Provided the burden of major losses remains within
the anticipated bounds of roughly 10% of net premium, a very healthy
profit contribution is to be expected.
The fundamental business climate in life and health reinsurance is
also positive. Here, too, the financial and economic crisis has
prompted stronger demand for reinsurance and hence provided growth
stimuli. Hannover Re will continue to expand its involvement in the
field of enhanced annuities and intends to extend its activities to
the North American market during the current financial year.
Owing to the acquisition of the ING life reinsurance portfolio
effective 1 January 2009, net premium for the current year in life
and health reinsurance is likely to grow by more than 35% and the
profit contribution to total business should be very good.
On the investments side the anticipated positive cash flow should -
subject to stable exchange rates - result in further growth in the
asset holdings. In the area of fixed-income securities the company
continues to stress the high quality and diversification of its
portfolio. Following Hannover Re's move to reduce its exposure to
listed equities to virtually zero, further volatility on stock
markets can of course have only a limited effect on the investment
income. "Our goal is to protect our portfolio even better against
interest rate fluctuations and other market risks. Although we have
made plans to resume our investments in equities in the future, such
a step will only be contemplated once the market climate is more
stable", Mr. Wallin emphasised.
In light of its strategic orientation and the available market
opportunities in non-life and life/health reinsurance, Hannover Re
continues to anticipate a good result for the full 2009 financial
year. Assuming that the burden of major losses does not significantly
exceed the expected level of 10% of net premium in non-life
reinsurance, and as long as there are no further adverse movements on
capital markets, Hannover Re expects - allowing for the non-recurring
effect from the acquisition of the ING life reinsurance portfolio - a
minimum return on equity of 18% and earnings per share of at least
EUR 5 for the 2009 financial year. It remains the company's goal to
pay a dividend in the range of 35% to 40%.
For further information please contact:
Press and Public Relations / Investor Relations:
Stefan Schulz (tel. +49 511 5604-1500,
e-mail: stefan.schulz@hannover-re.com)
Press and Public Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: gabriele.handrick@hannover-re.com)
Investor Relations:
Klaus Paesler (tel. +49 511 5604-1736,
e-mail: klaus.paesler@hannover-re.com)
Please visit: www.hannover-re.com
Hannover Re, with a gross premium of around 9 billion euro, is one of
the leading reinsurance groups in the world. It transacts all lines
of non-life and life and health reinsurance. It maintains business
relations with more than 5,000 insurance companies in about 150
countries. Its worldwide network consists of more than 100
subsidiaries, branch and representative offices on all five
continents with a total staff of roughly 2,000. The rating agencies
most relevant to the insurance industry have awarded Hannover Re very
strong insurer financial strength ratings (Standard & Poor's AA-
"Very Strong" and A.M. Best A "Excellent").
Disclaimer: Some of the statements in this press release may be
forward-looking statements or statements of future expectations based
on currently available information. Such statements are naturally
subject to risks and uncertainties. Factors such as the development
of general economic conditions, future market conditions, unusual
catastrophic loss events, changes in the capital markets and other
circumstances may cause the actual events or results to be materially
different from those anticipated by such statements. Hannover Re does
not make any representation or warranty, express or implied, as to
the accuracy, completeness or updated status of such statements.
Therefore, in no case whatsoever will Hannover Re and its affiliate
companies be liable to anyone for any decision made or action taken
in conjunction with the information and/or statements in this press
release or for any related damages.
http://hugin.info/130686/R/1332760/315704.pdf
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Hannover Rück
Karl-Wiechert-Allee 50 Hannover Germany
WKN: 840221;
ISIN: DE0008402215; Index: CDAX, CLASSIC All Share, HDAX, MDAX,
MIDCAP, Prime All Share;
Listed: Prime Standard in Frankfurter Wertpapierbörse, Freiverkehr in
Börse Berlin,
Freiverkehr in Börse Düsseldorf, Freiverkehr in Hanseatische
Wertpapierbörse zu Hamburg,
Freiverkehr in Bayerische Börse München, Freiverkehr in Börse
Stuttgart,
Regulierter Markt in Niedersächsische Börse zu Hannover, Regulierter
Markt in Frankfurter Wertpapierbörse;
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