DGAP-News: Hannover Re makes a good start to the 2013 financial year
(firmenpresse) - DGAP-News: Hannover Rück SE / Key word(s): Quarter Results
Hannover Re makes a good start to the 2013 financial year
07.05.2013 / 07:01
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Hannover Re makes a good start to the 2013 financial year
- Gross premium: + 7.0%
- Net premium earned: + 9.4%
- Book value per share increased to EUR 52.18 (31 December 2012: EUR
50.02)
- Operating profit (EBIT): EUR 352.5 million (EUR 393.2 million)
- Group net income: EUR 221.4 million (EUR 261.3 million)
- Satisfactory investment income: EUR 354.7 million (EUR 440.6 million)
- Net major loss expenditure very low at EUR 13.4 million (EUR 60.6
million)
- Underwriting result in non-life reinsurance doubled: EUR 98.1 million
(EUR 46.8 million)
- Return on equity: 14.4%
Hannover, 7 May 2013: Hannover Re posted Group net income of EUR 221.4
million for the first quarter of 2013. 'This result is a first successful
step towards accomplishment of our full-year goal, namely Group net income
after tax in the order of EUR 800 million', Chief Executive Officer Ulrich
Wallin stated. 'The key factors here are a very good underwriting profit in
non-life reinsurance and a satisfactory result in our life and health
reinsurance business.'
Continued organic growth
Gross written premium for the Hannover Re Group grew more strongly than
forecast by 7.0% to reach EUR 3.8 billion (EUR 3.5 billion) as at 31 March
2013. At constant exchange rates growth would have come in at 7.4%. The
level of retained premium was slightly lower than in the corresponding
period of the previous year at 89.9% (91.0%). Net premium earned rose by
9.4% to EUR 3.1 billion (EUR 2.8 billion). Growth of 9.8% would have been
booked at constant exchange rates.
Good quarterly Group net income
In the absence of the positive special effects recorded in the unrealised
gains of the comparable quarter, the operating profit (EBIT) declined as
anticipated to EUR 352.5 million (EUR 393.2 million) as at 31 March 2013.
Group net income totalled EUR 221.4 million (EUR 261.3 million), putting in
place a good platform for achieving the full-year target. Earnings per
share amounted to EUR 1.84 (EUR 2.17).
Non-life reinsurance delivers pleasing profit contribution
In non-life reinsurance the generally good results posted by reinsurers in
2012 led to a more competitive market environment. The supply of
reinsurance protection exceeded demand in many areas. The non-life treaty
renewals as at 1 January nevertheless passed off satisfactorily for
Hannover Re. Rate increases were obtained under programmes that had
suffered losses. They were particularly marked in marine business on
account of the historically high major loss expenditure caused by the wreck
of the 'Costa Concordia' cruise ship and Hurricane Sandy in 2012.
Gross premium in non-life reinsurance increased by 3.8% relative to the
comparable quarter to reach EUR 2.2 billion (EUR 2.1 billion). At constant
exchange rates, especially against the US dollar, growth would have been
4.0%. The level of retained premium decreased slightly to 89.8% (91.2%).
Net premium earned climbed 8.8% to EUR 1.7 billion (EUR 1.6 billion),
equivalent to growth of 8.9% after adjustment for exchange rate effects.
Assisted by an exceptionally untroubled major loss experience in the first
quarter of 2013, the underwriting profit in total non-life reinsurance more
than doubled to EUR 98.1 million (EUR 46.8 million). Hannover Re incurred a
net loss of merely EUR 13.4 million (EUR 60.6 million) from a satellite
failure, a figure well below the expected level. 'Despite this, we
constituted IBNR reserves broadly in line with the loss expectancy for the
first quarter in those segments with major loss exposure', Mr. Wallin
noted. The combined ratio improved to a very good 94.0% (96.8 %).
The operating profit (EBIT) for non-life reinsurance as at 31 March 2013
remained virtually on a par with the previous year's level at EUR 258.7
(EUR 263.0 million), despite a sharp decline of around EUR 44 million in
investment income connected with unrealised gains from the inflation swaps.
Group net income nudged slightly higher to EUR 174.9 million (EUR 173.2
million). Earnings per share amounted to EUR 1.45 (EUR 1.44).
Life and health reinsurance enjoys vigorous growth
Hannover Re is thoroughly satisfied with its life and health reinsurance
business. The company continues to see good growth prospects in the United
States, Australia and parts of Europe. What is more, growing demand for
reinsurance solutions can be observed in Asia and South America. 'We got
off to a particularly successful start this year in UK longevity business',
Mr. Wallin noted. 'We were able to assume pension commitments of altogether
GBP 3 billion at attractive conditions and expect this business alone to
generate additional gross premium income of around GBP 150 million for the
current financial year.'
Gross premium income for life and health reinsurance as at 31 March 2013
increased more strongly than anticipated by 11.9% to EUR 1.6 billion (EUR
1.4 billion). At constant exchange rates growth would have come in at
12.6%. Net premium earned rose by 10.1% to EUR 1.4 billion (EUR 1.3
billion), equivalent to growth of 10.8% on a currency-adjusted basis.
The operating profit (EBIT) as at 31 March 2013 amounted to EUR 88.3
million (EUR 122.3 million). The EBIT margin reached 4.8% in the areas of
Longevity and Financial Solutions and 7.6% in Mortality and Morbidity
business, thereby beating the strategic targets of 2% and 6% respectively.
Group net income for life and health reinsurance totalled EUR 65.3 million
(EUR 100.2 million). Earnings per share stood at EUR 0.54 (EUR 0.83).
In accordance with its usual practice Hannover Re is also reporting on the
Market Consistent Embedded Value (MCEV) in the context of its interim
report on the first quarter. The MCEV captures the entire life and health
reinsurance portfolio, since it recognises the corresponding cost of
capital in addition to the expected future profits. The MCEV therefore
serves as a very good means of assessing the profitability of long-duration
life and health reinsurance business. Bearing in mind the protracted strain
on capital markets, the MCEV developed favourably as at 31 December 2012
and stood at EUR 3,133.9 million (EUR 3,065.8 million). This corresponds to
growth of 2.2%. The company recorded a sizeable increase of 30.3% in the
value of new business (excluding non-controlling interests); amounting to
EUR 313.6 million (EUR 240.6 million), this was the highest value of new
business achieved to date.
Solid investment income
Investments developed satisfactorily despite the protracted period of low
interest rates. The portfolio of investments under own management showed
further growth to reach EUR 32.5 billion (EUR 31.9 billion). Ordinary
investment income fell only slightly short of the corresponding period of
the previous year at EUR 246.1 million (EUR 258.2 million). Interest on
funds withheld and contract deposits increased from EUR 83.7 million to EUR
93.8 million.
Investment income from assets under own management totalled EUR 260.9
million (EUR 356.9 million) in the reporting period, producing an
annualised average return of 3.2 %. Unlike in the previous year, investment
income was not influenced by appreciable special effects connected with
changes in the fair values of the inflation swaps taken out by the company
and of the ModCo derivatives. Unrealised gains consequently declined from
EUR 84.6 million to EUR 3.3 million. Net investment income including
interest on funds withheld and contract deposits closed satisfactorily at
EUR 354.7 million (EUR 440.6 million).
With write-downs of just EUR 3.2 million (EUR 7.2 million) having to be
taken, this is seen as affirmation of the company's conservative
safety-first investment strategy.
Shareholders' equity further strengthened
Shareholders' equity increased by 4.3% in the first quarter of 2013 to EUR
6.3 billion (31 December 2012: EUR 6.0 billion). The total policyholders'
surplus (including non-controlling interests and hybrid capital) grew to
EUR 9.2 billion, as against EUR 8.9 billion at the end of the previous
year. The book value per share amounted to EUR 52.18 (EUR 50.02). The
annualised return on equity reached 14.4% (20.3%).
Outlook
For the current financial year Hannover Re believes that both non-life and
life/health reinsurance offer sufficient growth potential for the company
to be able to achieve its goals. Adjusted for exchange rate effects, gross
premium for the Hannover Re Group is expected to increase by around 5%.
The business environment in non-life reinsurance is more competitive than
it was in the previous year. 'Despite this, we have largely been able to
preserve the rate level of the previous year - on a risk-adjusted basis -
in the treaty renewals to date', Mr. Wallin emphasised. The company sees
attractive growth opportunities in a number of areas, including for example
emerging markets.
Hannover Re is also satisfied with the outcome of the treaty renewals as at
1 April. Against a backdrop of stable prices growth of around 11% was
achieved in the portfolio that came up for renewal. Movements in prices and
conditions were very pleasing in Japan after the significant rate increases
of the past two years. This level was for the most part maintained. The
company therefore enlarged its shares under existing treaties and booked
premium gains of around 6% in the original currency. Faced with more
challenging market conditions in Korea, the exposure to proportional
business was scaled back while higher-margin non-proportional acceptances
were expanded. In US property catastrophe business only a small number of
treaties are renewed on 1 April. Additional capacities from the
non-traditional market meant that the further price increases which had
been anticipated on the back of losses from Hurricane Sandy failed to
materialise. In the area of agricultural risks Hannover Re made the most of
the attractive rate level to substantially enlarge its portfolio. For 2013
the company is looking to generate growth in its non-life reinsurance
business group in the range of 3% to 5% at constant exchange rates.
The prospects for life and health reinsurance are similarly bright.
Adjusted for exchange rate effects, Hannover Re is looking to grow its
gross premium organically by 5% to 7% in the 2013 financial year.
The expected positive cash flow should - subject to stable exchange rates -
lead to further growth in the asset portfolio. Hannover Re is targeting a
return on investment of 3.4% for the full year.
Based on the good start to the current financial year and the prevailing
market climate, Hannover Re is looking to a successful 2013 financial year.
The company anticipates Group net income for the full year in the order of
EUR 800 million. This is conditional upon major losses not significantly
exceeding the expected level of EUR 625 million for the full year and also
assumes that there are no drastic downturns on capital markets.
As for the dividend, Hannover Re continues to aim for a payout ratio in the
range of 35% to 40% of its IFRS Group net income after tax.
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 EUR 13.8 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 2,300
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
Key figures of the Hannover Re Group (IFRS basis)
in EUR million Q1/2013 +/- Q1/2012 20121) Including funds withheld
previous
year
Hannover Re Group
Gross written premium 3,757.9 +7.0% 3,510.6
Net premium earned 3,080.9 +9.4% 2,816.2
Net underwriting result 17. Apr 0.3
Net investment income1) 354.7 (19.5%) 440.6
Operating result (EBIT) 352.5 (10.3%) 393.2
Group net income 221.4 (15.3%) 261.3
Earnings per share in EUR 306.82 (15.3%) 427.67
Retention 89.9% 91.0%
Tax ratio 25.6% 25.2%
EBIT margin2) 11.4% 14.0%
Return on equity (after
tax)3) 14.4% 20.3%
in EUR million Q1/2013 +/- Q1/2012 2012
previous
year
Policyholders' surplus4) 9,165.1 +2.4% 8,947.2
Investments (excl. funds
held by ceding companies) 32,531.7 +2.1% 31,874.4
Total assets 56,381.0 +2.9% 54,811.7
Book value per share in EUR 52.18 +4.3% 50.02
Non-life reinsurance
in EUR million Q1/2013 +/- Q1/2012 2012
previous
year
Gross written premium 2,197.6 +3.8% 2,116.6
Net premium earned 1,691.9 +8.8% 1,554.7
Net underwriting result 98.1 +109.8% 46.8
Operating result (EBIT) 258.7 (1.7%) 263.0
Group net income 174.9 +1.0% 173.2
Retention 89.8% 91.2%
Combined Ratio1) 94.0% 96.8%
EBIT margin2) 15.3% 16.9%
Life and health reinsurance
in EUR million Q1/2013 +/- Q1/2012 2012
previous
year
Gross written premium 1,560.3 +11.9% 1,394.0
Net premium earned 1,388.9 +10.1% 1,261.5
Operating result (EBIT) 88.3 (27.8%) 122.3
Group net income 65.3 (34.9%) 100.2
Retention 90.0% 90.8%
EBIT margin2) 6.4% 9.7%
2) Operating result (EBIT) / net premium earned
3) Annualised
4) Equity attributable to shareholders of Hannover Re + non-controlling
interests + hybrid capital
End of Corporate News
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Language: English
Company: Hannover Rück SE
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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209795 07.05.2013
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