DGAP-News: Hannover Re enjoys solid treaty renewals in competitive environment
(firmenpresse) - DGAP-News: Hannover Rückversicherung AG / Key word(s): Miscellaneous
Hannover Re enjoys solid treaty renewals in competitive environment
04.02.2013 / 07:30
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Hannover Re enjoys solid treaty renewals in competitive environment
- Hannover Re maintains good rate quality in treaty renewals as at 1
January 2013
- Prices slightly improved due to rate increases in loss-impacted areas
- Appreciable rate increases in marine business following losses in 2012
- Pleasing renewals in North America
- Premium volume in non-proportional business selectively expanded
- Good result expected for 2013
Hannover, 4 February 2013: Hannover Re expressed satisfaction with the
prices obtained in the treaty renewals as at 1 January 2013. 'Although the
environment is considerably more competitive than in the previous year, our
selective underwriting approach enabled us to achieve a price level at
least on a par with the quality of the good 2012 financial year', Chief
Executive Officer Ulrich Wallin stated.
Hurricane Sandy, which caused significant strains for the (re)insurance
industry in 2012, had a stabilising effect on prices. Rate increases were
recorded in loss-impacted programmes; these were especially pronounced in
marine business. In UK motor business, too, prices for non-proportional
reinsurance covers climbed sharply, prompting Hannover Re to further extend
its involvement here. 'The development of our business in North America was
also very pleasing. We grew by 14% here', Mr. Wallin emphasised.
Of the total premium volume booked in the previous year in non-life
reinsurance (excluding facultative business and structured reinsurance)
amounting to EUR 5,826 million, roughly two-thirds of the treaties with a
volume of altogether EUR 3,785 million were up for renewal on 1 January
2013. Of this, a premium volume of EUR 3,476 million was renewed, while
treaties worth EUR 308 million were either cancelled or renewed in modified
form. Including increases of EUR 348 million from new or modified treaties
and thanks to improved prices, the total renewed premium volume came in at
EUR 3,824 million - equivalent to growth of 1%. The fact that the increase
is on the moderate side overall can be attributed in particular to
significantly more intense competition, which at least in some lines and
regions served to curtail rate movements. It was also noticeable that large
primary insurance groups carried more risks in their retentions. Against
this backdrop Hannover Re was again able to generate gratifying growth of
6% in the higher-margin non-proportional sector. Proportional business, on
the other hand, contracted slightly.
The treaty renewals again demonstrated the considerable importance that
clients continue to attach to financial strength in the reinsurance
industry. Hannover Re is superbly positioned with its excellent ratings
('AA-', 'Very Strong' from Standard&Poor's and 'A+', 'Superior' from A.M.
Best) and as a financially robust reinsurer it is offered and awarded the
entire spectrum of business. Most notably, the upgrading of our A.M. Best
rating in September 2012 was a positive factor in the treaty renewals in
the United States.
The treaty renewals in North America passed off favourably. Demand for
high-quality reinsurance protection continued to rise, even though certain
clients raised their retentions appreciably. It was therefore possible to
further expand the portfolio of US property business. Loss-impacted
programmes, above all those affected by Hurricane Sandy, achieved price
increases ranging between 10% and 30%. Premiums in US casualty business are
trending higher. All in all, North American business grew by 14%.
The renewal phase in Germany was similarly notable for brisk competition,
not least because large primary insurance groups ceded less business to
reinsurers. The situation in motor insurance, first and foremost on the
liability side, showed further improvement. The total premium volume for
German business contracted slightly.
In view of the record major loss expenditure incurred in marine business as
a consequence of the 'Costa Concordia' cruise ship incident and Hurricane
Sandy, rates surged sharply higher. Under loss-impacted programmes the
increases ranged from 25% to 40%. Even under treaties that had been spared
major losses Hannover Re was able to achieve premium increases averaging
10%. The premium volume for marine business was enlarged.
On the back of the good underwriting results posted in aviation reinsurance
in recent years further rate erosion was observed on both the primary and
the reinsurance side. The business nevertheless remains profitable;
Hannover Re further expanded its portfolio here by entering into strategic
partnerships.
Hannover Re is satisfied with the outcome of its treaty renewals in credit
and surety reinsurance, where more than two-thirds of the portfolio was
renewed. Loss ratios rose slightly on account of the troubled general
economic trend. Rates and conditions held largely stable despite the
availability of considerable capacity in the market. Hannover Re maintained
its premium volume roughly unchanged.
In property catastrophe business the strains resulting from Hurricane Sandy
served to substantially alleviate the pressure on prices. Loss-impacted
programmes and those faring poorly as a consequence of earlier losses saw
rate increases of 15%. Further positive effects should be possible in the
rounds of renewals during the year. Our premium volume from worldwide
catastrophe business grew by 11%. In this context it should be noted that a
mere 40% of Hannover Re's portfolio was up for renewal on 1 January 2013.
Outlook for 2013
In view of the satisfactory outcome of the treaty renewals as at 1 January
2013 Hannover Re anticipates a good financial year in non-life reinsurance.
All in all, the prospects on the underwriting side should be roughly
comparable with those of 2012. 'With an eye to increasingly competitive
conditions in non-life reinsurance, we consider ourselves well positioned
thanks to our low expense ratio', Mr. Wallin noted. Hannover Re sees
further growth potential in business with agricultural risks, in Latin
America and in the markets of Central and Eastern Europe.
As already announced, Hannover Re expects to be able to raise its total
gross premium volume for the 2013 financial year by around 5% based on
constant exchange rates. Premium growth is forecast to be in the range of
3% to 5% in non-life reinsurance and 5% to 7% in life/health reinsurance.
'As far as non-life reinsurance is concerned, however, it is even more the
case in the current market situation that the quality of the business
counts for more than the volume - even if this means that we do not achieve
our targeted premium growth', Mr. Wallin stressed.
The company is aiming for a return on investment of 3.4%.
Hannover Re has budgeted an amount of EUR 625 million for major losses
incurred in the current financial year; last year's figure was EUR 560
million. The increase reflects, among other things, the enlarged premium
volume in non-life reinsurance, and also allows for adjustments to risk
models for certain countries.
Assuming that the burden of major losses does not significantly exceed this
expected level and barring any unforeseen downturns on capital markets,
Hannover Re anticipates Group net income in the order of EUR 800 million
for the 2013 financial year.
For further information please contact:
Corporate Communications:
Karl Steinle (tel. +49 511 5604-1500,
e-mail: karl.steinle(at)hannover-re.com)
Media Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: gabriele.handrick(at)hannover-re.com)
Investor Relations:
Julia Hartmann (tel. +49 511 5604-1529,
e-mail: julia.hartmann(at)hannover-re.com)
Please visit: www.hannover-re.com
Hannover Re, with a gross premium of around EUR 12 billion, is the
third-largest reinsurer in the world. It transacts all lines of non-life
and life and health reinsurance and is present on all continents with
around 2,200 staff. 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+ 'Superior').
Please note the disclaimer:
www.hannover-re.com/misc/disclaimer-pr-050811
End of Corporate News
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Language: English
Company: Hannover Rückversicherung AG
Karl-Wiechert-Allee 50
30625 Hannover
Germany
Phone: +49-(0)511-5604-1500
Fax: +49-(0)511-5604-1648
E-mail: info(at)hannover-re.com
Internet: www.hannover-re.com
ISIN: DE0008402215
WKN: 840 221
Indices: MDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard), Hannover;
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart; Terminbörse EUREX
End of News DGAP News-Service
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200401 04.02.2013
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