DGAP-News: Hannover Re well on track to achieve full-year target
(firmenpresse) - DGAP-News: Hannover Rück SE / Key word(s): Quarter Results
Hannover Re well on track to achieve full-year target
05.11.2013 / 07:30
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Press release
Hannover Re well on track to achieve full-year target
- Return on equity: 13.9%
- Underwriting result in non-life reinsurance +43.4%: EUR 243.4 million
(EUR 169.7 million)
- Combined ratio: 95.0% (96.5%)
- Net burden of major losses: EUR 446.7 million (EUR 193.0 million)
- Gross premium: +2.3% (currency-adjusted +4.7%)
- Net investment income -12.9%: EUR 1.1 billion (EUR 1.2 billion)
- Group net income -8.6%: EUR 613.2 million (EUR 670.8 million)
Hannover, 5 November 2013: Hannover Re expressed considerable satisfaction
with the development of its business in the first nine months of the year.
'Despite challenging market conditions, and particularly in view of the low
interest rate level, we generated Group net income of EUR 613 million and
are thus well on track to achieve our full-year target in the order of EUR
800 million', Chief Executive Officer Ulrich Wallin explained. 'The
positive development in the third quarter was again driven by a very good
underwriting result in non-life reinsurance.'
Further moderate growth
Gross written premium for the Hannover Re Group increased by a modest 2.3%
to EUR 10.5 billion (EUR 10.3 billion) as at 30 September 2013. At constant
exchange rates growth would have come in at 4.7%. The level of retained
premium retreated to 88.9% (89.7%). Net premium earned climbed by 1.8% to
EUR 9.1 billion (EUR 9.0 billion); adjusted for exchange rate effects,
growth would have amounted to 4.2%.
Good Group net income
The operating profit (EBIT) as at 30 September 2013 contracted slightly by
5.4% to EUR 961.6 million (EUR 1,016.8 million). The Group net income of
EUR 613.2 million (EUR 670.8 million) was in line with the full-year
planning, despite a decline of 8.6%. This is because the result for the
previous year had been exceptionally high on account of one-off effects. As
a further factor, the burden of natural catastrophe losses in the
comparable period had been unusually low. Earnings per share amounted to
EUR 5.08 (EUR 5.56).
Significantly higher underwriting profit
In the third quarter of 2013 non-life reinsurance treaties came up for
renewal primarily in North America, Australia and New Zealand. The picture
in these markets was a mixed one, although overall the rate level was
broadly commensurate with the risks. While US catastrophe business was
impacted by rate reductions, satisfactory prices were achieved in other US
property business as well as in Australia and New Zealand. The decline in
margins in US catastrophe business is of merely limited relevance to
Hannover Re owing to the company's below-average market share here.
'Our strategy of pursuing a selective underwriting policy continues to be
of great importance in view of increasing competition and declining
investment returns. With this in mind, we are prepared to relinquish
business that we do not consider to be adequately priced - even if this
leads to a reduction of our market shares in certain areas', Mr. Wallin
emphasised.
Gross premium in non-life reinsurance increased by a modest 1.0% as at 30
September 2013 relative to the comparable period, rising to EUR 6.0 billion
(EUR 5.9 billion). At constant exchange rates growth would have come in at
2.8%. The level of retained premium decreased to 89.1% (89.9%). Net premium
earned rose by 1.5% to EUR 5.1 billion (EUR 5.0 billion); adjusted for
exchange rate effects, growth stood at 3.3%.
After the heavy major loss expenditure already incurred in the second
quarter, a number of natural disasters and other large losses were also
recorded in the third quarter. The largest single event was hailstorm
'Andreas' in Germany, with a net loss of EUR 64.0 million for Hannover Re's
account. Total major loss expenditure as at 30 September 2013 amounted to
EUR 446.7 million (EUR 193.0 million). While this is substantially higher
than the figure for the comparable period, it is still in line with the
loss expectancy for the first nine months of the current year.
The underwriting result for total non-life reinsurance surpassed the
comparable period's already pleasing performance, rising by a further 43.4
% to close at EUR 243.4 million (EUR 169.7 million). This more than offset
the expected decline in investment income. The combined ratio was very
favourable at 95.0% (96.5%).
The operating profit (EBIT) in non-life reinsurance consequently increased
by 5.0% to EUR 804.6 million (EUR 766.0 million) as at 30 September 2013.
Group net income improved by 1.8% to EUR 534.4 million (EUR 524.8 million);
earnings per share stood at EUR 4.43 (EUR 4.35).
Life and health reinsurance delivers solid growth
Although the pace of growth slowed in the third quarter, Hannover Re
nevertheless continues to see attractive growth opportunities. This is
especially true of emerging markets in Asia and South America. Substantial
profitable growth was also generated in US mortality and UK longevity
business.
Gross written premium in life and health reinsurance climbed by 4.1% as at
30 September 2013 to reach EUR 4.6 billion (EUR 4.4 billion). At constant
exchange rates growth would have come in at 7.4%. Net premium earned
increased by 2.1% to EUR 4.0 billion (EUR 3.9 billion); adjusted for
exchange rate effects, growth amounted to 5.4%.
The result in life and health reinsurance, however, fell short of
expectations: this was due to losses from the reinsurance of Australian
disability income insurance products (DII). The operating profit (EBIT) in
life and health reinsurance as at 30 September 2013 consequently contracted
sharply to EUR 143.4 million (EUR 233.3 million). The comparable figure for
the previous year had, however, been disproportionately high due to special
effects. Group net income came in at EUR 136.0 million (EUR 188.6 million);
earnings per share amounted to EUR 1.13 (EUR 1.56).
Investment income in line with expectations
Faced with what is still a challenging and volatile capital market
environment, particularly high importance attaches to preserving the value
of investments and the stability of the return. For this reason, Hannover
Re's asset portfolio is guided by the principles of a balanced risk/return
profile and broad diversification. The portfolio of assets under own
management remained stable at EUR 31.8 billion (31 December 2012: EUR 31.9
billion).
Reflecting the persistently low level of interest rates, ordinary
investment income excluding interest on funds withheld and contract
deposits came in as expected below the level of the comparable period at
EUR 781.1 million (EUR 822.0 million).
The volume of write-downs taken in the period under review was again only
very minimal. Owing to the difficult conditions on capital markets and the
elimination of positive special effects recorded in the previous year,
income from assets under own management fell short of the comparable period
at EUR 785.6 million (EUR 961.2 million). The resulting annualised average
return stood at 3.3% (4.3%). Excluding unrealised effects from the ModCo
derivatives and inflation swaps, the annualised figure was 3.4 % and thus
corresponded exactly to the target for the entire year. Net investment
income including interest on funds withheld and contract deposits was in
line with expectations at EUR 1.1 billion (EUR 1.2 billion).
Shareholders' equity slightly lower
The shareholders' equity of Hannover Re continues to be robust at EUR 5.8
billion (31 December 2012: EUR 6.0 billion). The annualised return on
equity of 13.9% is comfortably in excess of the minimum target of 750 basis
points above risk-free. The total policyholders' surplus (including
non-controlling interests and hybrid capital) amounted to EUR 8.6 billion
(31 December 2012: EUR 8.9 billion). The book value per share stood at EUR
47.73 (EUR 50.02).
Forecast 2013
With its published results as at 30 September 2013 Hannover Re is well
placed to achieve the targeted net income after tax in the order of EUR 800
million for the full 2013 financial year. This is conditional upon major
losses not significantly exceeding the expected level of EUR 625 million
and assumes that there are no unforeseen downturns on capital markets.
Based on constant exchange rates it remains the company's expectation that
gross premium will grow by around 5%.
The intensely competitive climate in non-life reinsurance is likely to be
sustained, with corresponding implications for prices and conditions.
Nevertheless, the market should be able to respond to losses with rate
increases. With this in mind, the company will continue to trust in
systematic cycle management coupled with rigorous underwriting discipline.
Yet Hannover Re also sees growth opportunities in non-life reinsurance: the
rising concentration of values in urban conurbations as well the adoption
of risk-based solvency systems in Europe and Asia hold the promise of
stable demand for reinsurance protection.
For total non-life reinsurance Hannover Re expects to generate growth of
around 3% - at constant exchange rates - in gross premium in 2013.
Hannover Re continues to see growth potential in life and health
reinsurance. Gross premium for the full year is expected to increase by 5%
to 7% after adjustment for exchange rate effects.
The return on investment targeted by Hannover Re for the full year remains
at 3.4%. With a view to stabilising the return in a stubbornly low interest
rate environment the company will maintain its holding of corporate bonds
and further slightly enlarge the real estate portfolio.
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.
Outlook 2014
At this point in time Hannover Re does not expect 2014 to bring any easing
in the competitive pressure in non-life reinsurance. It will therefore be
considerably more important to stay focused on risk-appropriate conditions
than to grow premium income. Despite this, the company expects its gross
premium to grow - based on constant exchange rates - in the low
single-digit percentage range.
Hannover Re is targeting a return on investment of 3.2%: given the low
level of interest rates for high-quality investments the company
anticipates a decrease in the return on assets under own management.
Assuming that major loss expenditure does not significantly exceed the
expected level of EUR 670 million and provided there are no unforeseen
downturns on capital markets, Hannover Re expects to post Group net income
of around EUR 850 million for the 2014 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 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 Q1-3/2013 +/- previous Q1-3/2012 20121) Including funds withheld
year
Hannover Re Group
Gross written premium 10,537.9 +2.3% 10,296.0
Net premium earned 9,117.3 +1.8% 8,959.0
Net underwriting result (48.7) (52.9)
Net investment income1) 1,053.2 (12.9%) 1208.8
Operating profit / loss (EBIT) 961.6 (5.4%) 1016.8
Group net income (loss) 613.2 (8.6%) 670.8
Earnings per share in EUR 5.08 (8.6%) 5.56
Retention 88.9% 89.7%
Tax ratio 25.1% 22.9%
EBIT margin2) 10.5% 11.3%
Return on equity (after tax)3) 13.9% 16.5%
in EUR million Q1-3/2013 +/- previous Q1-3/2012 2012
year
Policyholders' surplus4) 8,630.2 (3.5%) 8,947.2
Investments (excl. funds held 31,824.4 (0.2%) 31,874.4
by ceding companies)
Total assets 54,866.3 +0.1% 54,811.7
Book value per share in EUR 47.73 (4.6%) 50.02
Non-life reinsurance
in EUR million Q1-3/2013 +/- previous Q1-3/2012 2012
year
Gross written premium 5,956.4 +1.0% 5,897.0
Net premium earned 5,093.2 +1.5% 5,017.5
Net underwriting result 243.4 +43.4% 169.7
Operating profit / loss (EBIT) 804.6 +5.0% 766.0
Group net income (loss) 534.4 +1.8% 524.8
Retention 89.1% 89.9%
Combined Ratio1) 95.0% 96.5%
EBIT margin2) 15.8% 15.3%
Life and health reinsurance
in EUR million Q1-3/2013 +/- previous Q1-3/2012 2012
year
Gross written premium 4,581.6 +4.1% 4,399.3
Net premium earned 4,023.7 +2.1% 3,941.5
Operating profit / loss (EBIT) 143.4 (38.5%) 233.3
Group net income (loss) 136.0 (27.9%) 188.6
Retention 88.5% 89.3%
EBIT margin2) 3.6% 5.9%
2) Operating result (EBIT) / net premium earned
3) Annualised
4) Equity attributable to shareholders of Hannover Re + non-controlling
interests + hybrid capital
Key figures of the Hannover Re Group (IFRS basis)
in EUR million Q3/2013 +/- previous year Q3/20121) Including funds withheld
Hannover Re Group
Gross written premium 3,311.2 (2.8%) 3,407.5
Net premium earned 2,925.8 (6.7%) 3,134.2
Net underwriting result (43.2) (39.7)
Net investment income1) 364.2 (27.1%) 499.3
Operating profit / loss (EBIT) 291.0 (30.7%) 419.6
Group net income (loss) 205.5 (22.6%) 265.5
Earnings per share in EUR 1.70 (22.6%) 2.20
Retention 86.4% 89.4%
Tax ratio 20.1% 22.9%
EBIT margin2) 9.9% 13.4%
Return on equity (after tax)3) 14.5% 18.7%
Non-life reinsurance
in EUR million Q3/2013 +/- previous year Q3/2012
Gross written premium 1,859.4 +2.3% 1,817.3
Net premium earned 1,689.3 (1.4%)1,714.1
Net underwriting result 59.9 (15.1%) 70.5
Operating profit / loss (EBIT) 255.5 (23.9%) 335.7
Group net income (loss) 172.3 (21.5%) 219.3
Retention 86.7% 89.4%
Combined Ratio1) 96.3% 95.8%
EBIT margin2) 15.1% 19.6%
Life and health reinsurance
in EUR million Q3/2013 +/- previous year Q3/2012
Gross written premium 1,451.9 (8.7%) 1,590.5
Net premium earned 1,236.3 (12.9%) 1,420.1
Operating profit / loss (EBIT) 32.0 (58.9%) 77.8
Group net income (loss) 52.1 (13.9%) 60.5
Retention 86.1% 89.4%
EBIT margin2) 2.6% 5.5%
2) Operating profit / loss (EBIT) / net premium earned
3) Annualised
End of Corporate News
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05.11.2013 Dissemination of a Corporate News, transmitted by DGAP - a
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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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