Hannover Re starts the new financial year on a positive note
(Thomson Reuters ONE) -
Hannover Rück / Hannover Re starts the new financial year on a positive note processed and transmitted by Hugin AS. The issuer is solely responsible for the content of this announcement.
· Net premium rises by + 9.5%
· Burden of major losses higher than expected level
· Combined ratio in non-life reinsurance: 99.3%
· Premium volume and profitability in life and health reinsurance show
appreciable growth
· Good investment income: + 41.0%
· Satisfactory Group net income: EUR 157.2 million
· Shareholders' equity: + 10.0%
· Forecast for the full financial year reaffirmed: return on equity of at
least 15%
Hannover, 4 May 2010: Hannover Re expressed considerable satisfaction with its
start to the new financial year. "Although the burden of major losses in this
quarter was higher than our expected level, the achieved result puts in place a
good platform for attaining our 2010 profit target - namely a return on equity
of at least 15 percent after tax", Chief Executive Officer Ulrich Wallin
affirmed.
Vigorous premium growth in the first quarter of 2010
Following the appreciable growth recorded in the corresponding quarter of the
previous year, the gross written premium booked by the Hannover Re Group
increased by a further 7.1% to EUR 2.9 billion (EUR 2.7 billion) as at 31 March
2010. The level of retained premium decreased to 90.8% (91.7%). Net premium
earned climbed by 9.5% to EUR 2.3 billion (EUR 2.1 billion).
The operating profit (EBIT) as at 31 March 2010 stood at EUR 245.0 million,
after EUR 307.0 million in the corresponding quarter of the previous year.
Adjusted for the positive non-recurring effect of EUR 86.4 million recognised in
the first quarter of the previous year in connection with the acquisition of the
ING life reinsurance portfolio, EBIT would have grown by 11.1%. "With our Group
net income of EUR 157.2 million we are right on track to achieve our targeted
total result", Mr. Wallin emphasised. The previous year's figure of
EUR 228.6 million included a special effect of EUR 86.4 million. Earnings per
share came in at EUR 1.30 (EUR 1.90).
Non-life reinsurance within expectations despite exceptional burden of major
losses
The treaty renewals at the beginning of the year passed off in line with
Hannover Re's expectations. Overall, the rate level was still commensurate with
the risks. Based on its very good ratings the company was able to further cement
its market position.
Gross premium in non-life reinsurance increased by 4.0% as at 31 March 2010
relative to the corresponding period of the previous year to stand at
EUR 1.7 billion (EUR 1.7 billion). The level of retained premium retreated
slightly to 90.1% (92.4%). Net premium earned climbed 6.5% to EUR 1.3 billion
(EUR 1.2 billion).
The incidence of major losses in the first quarter was considerably higher than
in the comparable quarter of the previous year. The largest single loss for
Hannover Re was the severe earthquake in Chile with a net strain of EUR 185.1
million. The devastating earthquake in Haiti produced loss expenditure in the
order of EUR 25.5 million owing to lower insured values. Reserves of around
EUR 40 million have been constituted for European winter storm "Xynthia".
Altogether, the net burden of major losses for the first quarter totalled
EUR 264.4 million (EUR 98.8 million) - a figure well in excess of the expected
level. The combined ratio of 99.3% (95.0%) was assisted by run-off profits from
reserves constituted for prior years with respect to major losses and in German
business.
Against this backdrop the net underwriting result declined markedly from
EUR 53.6 million in the corresponding quarter of the previous year to
EUR 5.5 million. The operating profit (EBIT) in non-life reinsurance fell by
11.7% to EUR 165.6 million (EUR 187.6 million). Group net income contracted by
13.2% to EUR 109.4 million (EUR 126.1 million), producing earnings per share of
EUR 0.91 (EUR 1.05).
Very good performance in life and health reinsurance
The life and health reinsurance business group developed very favourably, both
in terms of premium volume and results. Further dynamic growth was driven by the
acquisition of the ING life reinsurance portfolio, expansion in the area of
block assumption transactions and steady demand for UK enhanced annuities.
Gross written premium climbed 12.2% to EUR 1.1 billion (EUR 1.0 billion) as at
31 March 2010. The level of retained premium nudged slightly higher to 91.8%
(90.6%). Net premium earned increased by 13.3% to EUR 1.0 billion
(EUR 910.4 million), thereby surpassing the growth target of 10%.
The operating profit (EBIT) of EUR 68.8 million was very good. The figure of
EUR 118.6 million recorded in the corresponding quarter of the previous year had
been influenced by a positive special effect of EUR 86.4 million associated with
the acquisition of the ING life reinsurance portfolio. The operating profit
(EBIT) would have risen by 113.6% if this effect were eliminated. The EBIT
margin of 6.7% is well within the target corridor of 6% to 7%. Group net income
reached EUR 52.0 million (EUR 110.5 million). Earnings per share amounted to EUR
0.43 (EUR 0.92).
As in previous years, Hannover Re is also reporting on the Market Consistent
Embedded Value (MCEV) in the context of its first interim report. This comprises
a valuation of the life and health reinsurance portfolio as well as of the
allocated capital and hence provides a good basis for assessing long-term
profitability. Bearing in mind the present state of capital markets, the MCEV
developed very well as at 31 December 2009. It amounted to EUR 2.2 billion (EUR
1.7 billion), equivalent to an increase of 33.8%.
Sharply improved investment income
Net investment income was boosted by 41.0% to EUR 279.5 million (EUR 198.2
million). The return on investment came in at 3.6% and was thus slightly higher
than the expected level. Key factors here were the growth in the volume of
assets under own management to EUR 23.7 billion (31 December 2010: EUR
22.5 billion), lower write-downs and a further reduction of credit spreads for
corporate bonds on the back of more stable markets.
Very pleasing growth in shareholders' equity
Driven by a very pleasing profit trend and increased unrealised gains, the
shareholders' equity of the Hannover Re Group improved on the level of 31
December 2009 (EUR 3.7 billion) by an appreciable 10.0% to reach EUR 4.1
billion. The book value per share amounted to EUR 33.87 (EUR 30.78).
Outlook
In view of its very healthy market position and the favourable conditions
prevailing in non-life reinsurance - and especially in life and health
reinsurance - Hannover Re anticipates a good result for 2010. At constant
exchange rates the net premium volume is expected to grow by around 5%.
Hannover Re is largely satisfied with the treaty renewals in non-life
reinsurance as at 1 April; the prices obtained were commensurate with the risks.
In Japan rates softened slightly in the property lines, but for the most part
they held stable in casualty business. Overall, Hannover Re maintained its
premium volume in the Japanese market unchanged. Further rate increases were
pushed through in worldwide aviation reinsurance, while in marine business
prices retreated.
For 2010 the company expects net premium in total non-life reinsurance to grow
by around 4%. Provided the burden of major losses remains within the expected
bounds and as long as the disproportionately heavy expenditure incurred in the
first quarter is not sustained, the profit target is not at risk.
In life and health reinsurance Hannover Re anticipates growth of roughly 10% in
net premium in 2010. The EBIT margin is expected to come in within the target
range of 6% of 7%.
The company is aiming for a return on investment of 3.5% on its asset portfolio
in 2010.
In view of its strategic orientation and the available market opportunities,
Hannover Re sees a realistic opportunity to build on the good result of 2009 -
adjusted for non-recurring effects. Subject to the premise that the overshoot of
the major loss expectancy does not continue to grow in the course of the year
and assuming that there are no drastically adverse movements on capital markets,
Hannover Re anticipates a return on equity of at least 15% for the 2010
financial year. As for the dividend, the company continues to aim for a payout
ratio in the range of 35% to 40% of its IFRS Group net income.
For further information please contact:
Press and Public Relations / Investor Relations:
Karl Steinle (tel. +49 511 5604-1500,
e-mail: karl.steinle(at)hannover-re.com)
Press and Public Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: gabriele.handrick(at)hannover-re.com)
Investor Relations:
Klaus Paesler (tel. +49 511 5604-1736,
e-mail: klaus.paesler(at)hannover-re.com)
Please visit: www.hannover-re.com
Hannover Re, with a gross premium of around EUR 10 billion, 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.
[HUG#1411091]
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Hannover Rück
Karl-Wiechert-Allee 50 Hannover Germany
Key Figures: http://hugin.info/130686/R/1411091/363377.pdf
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Datum: 04.05.2010 - 07:30 Uhr
Sprache: Deutsch
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