Hannover Re reports very pleasing result for the first half of 2009
(Thomson Reuters ONE) - Corporate news announcement processed and transmitted by Hugin AS.The issuer is solely responsible for the content of this announcement. ------------------------------------------------------------------------------------ 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 reachHannover, 6 August 2009: In its interim report published todayHannover Re expressed considerable satisfaction with the developmentof its business. "We achieved gratifying results in both ourunderwriting business and on the investments side, and we aretherefore well on track to generate the forecast return on equity ofat least 18% for the full 2009 financial year", Chief ExecutiveOfficer Ulrich Wallin explained.The operating profit (EBIT) as at 30 June 2009 grew by a substantial49.9% year-on-year to reach EUR 600.1 million (EUR 400.2 million).Group net income increased by a similarly gratifying 66.1% - interalia due to the good overall development of business as well aspositive special effects in life and health reinsurance - to EUR419.0 million (EUR 252.2 million). This was equivalent to earnings ofEUR 3.47 (EUR 2.09) a share; the annualised return on equity stood at27.9% (16.4%).Gross written premium climbed 26.7% as at 30 June 2009 to EUR5.3 billion (EUR 4.1 billion). "This significant increase derived inlarge measure from organic growth, although the acquisition of theING life reinsurance portfolio was also a factor here", Mr. Wallinnoted. 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 highlysatisfactory for Hannover Re. The capital squeeze felt by primaryinsurers in the wake of the financial market crisis has led tostronger demand for reinsurance protection. "The treaty renewals on 1June 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 allsegments", Mr. Wallin explained. "In view of our profit-orientedunderwriting policy, we therefore reduced our exposures - especiallyin property catastrophe business in the United States and Japan, butalso in some casualty segments."Stronger demand for reinsurance protection was also observed inworldwide credit and surety insurance. In the area of structuredcovers, too, the reverberations of the financial market crisisinjected significant growth impetus as anticipated. All in all, theprospects for worldwide non-life reinsurance are very promising.Gross premium in non-life reinsurance as at 30 June 2009 improved onthe comparable period of the previous year by 16.0% to reach EUR3.1 billion (EUR 2.7 billion). At constant exchange rates, especiallyagainst the US dollar, the increase would have been 12.0%. The levelof retained premium climbed to 94.1% (89.4%) due to sharply lowerretrocessions. Net premium earned consequently rose by 19.2% to EUR2.5 billion (EUR 2.1 billion).In the second quarter Hannover Re incurred only a modest number ofmajor losses. The largest single loss event was the crash of an AirFrance passenger jet with a strain of some EUR 30 million for netaccount. The total net burden of major losses amounted to EUR163.3 million (EUR 130.0 million). This was equivalent to 6.6% of netpremium in non-life reinsurance, a figure below the expected level of10%. The combined ratio stood at 97.1% (98.4%).Net underwriting income in non-life reinsurance improved from EUR23.6 million in the corresponding period of the previous year to EUR57.3 million. The operating profit (EBIT) in this business groupincreased by 10% to EUR 317.1 million (EUR 288.2 million). Group netincome grew by 14.1% to EUR 223.2 million (EUR 195.7 million).Developments in life and health reinsurance were exceptionallypleasing. Owing to a visible weakening in the solvency position oflife insurers, demand for reinsurance solutions continued to rise -leading to an increased clamour for risk- and financially orientedproducts. This state of affairs was especially evident in the UnitedStates, where the insurance industry had suffered considerableerosion of its capital base.Hannover Re's worldwide life and health reinsurance business enjoyedfurther profitable growth following the acquisition of the INGportfolio in January 2009. "With this transaction we were able tofurther 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 theseniors' health market and the financial solutions sector in the US.Not only that, the new markets segment - in which Hannover Re writesenhanced annuities and ranks among the market's leading reinsurers inthe United Kingdom - also offers considerable potential. Here, as isalso the case with the reinsurance of existing pension funds, theopportunities 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 lifereinsurance market in Asia - also offers good growth prospects. Themain drivers of business nevertheless continue to be the developedinsurance markets of the United Kingdom, United States, Germany andAustralia.Spurred on by the acquisition of the ING life reinsurance portfolioand brisk organic growth, gross written premium as at 30 June 2009surged by 45.6% to EUR 2.2 billion (EUR 1.5 billion). At constantexchange rates growth would have been as high as 49.6%. The level ofretained premium rose from 89.6% to 91.6%, while net premium earnedincreased by 48.9% to EUR 2.0 billion (EUR 1.3 billion).The investment income generated in life and health reinsurancedoubled from EUR 154.8 million to EUR 314.0 million. Positive specialeffects were a factor here. They derived from the reversal ofunrealised losses on deposits with US cedants (B36 derivatives) andfrom improvements in the value of deposits assumed by Hannover Re inthe context of the ING transaction. The result was adversely impactedby opposing effects in UK annuity business. On balance, the operatingresult (EBIT) in life and health reinsurance profited fromnon-recurring effects of around EUR 150 million in the firsthalf-year.The operating profit (EBIT) as at 30 June 2009 consequently increasedsharply to EUR 266.1 million (EUR 87.2 million). The EBIT margin of13.4% thus comfortably surpassed the target corridor of 6.5% to 7.5%.Group net income rose appreciably to EUR 212.5 million (EUR65.0 million).Although conditions on the financial markets are still challenging,Hannover Re expressed satisfaction with the development of itsinvestments. Thanks to a positive cash flow, the assets under ownmanagement grew to EUR 21.0 billion, thereby improving on the volumeas at 31 December 2008 (EUR 20.1 billion). Ordinary income excludinginterest on deposits fell just slightly short of the level in thecorresponding period of the previous year at EUR 398.8 million (EUR407.9 million), a testament to the fact that the company is correctin pursuing an investment policy geared to generating stable ordinaryincome. The balance of realised gains and losses totalled EUR 55.5million for the first half-year, as against EUR 102.3 million in thecomparable period of the previous year; this had been influenced byhigh realisations owing to the tactical shortening of durations inthe USD portfolio. Along with impairments taken on structuredproducts in the amount of EUR 26.2 million, the volume of write-downstotalling altogether EUR 93.4 million (EUR 130.6 million) was due inlarge measure in the amount of EUR 64.1 million to alternativeinvestments; of this amount, EUR 41.9 million was attributable toprivate equity. Unrealised gains on asset holdings measured at fairvalue through profit or loss amounted to EUR 87.2 million; thiscontrasted with unrealised losses of EUR 15.1 million in thecorresponding period of the previous year. This gratifyingdevelopment was due chiefly to the doubling of investment income inlife and health reinsurance.Net investment income increased by 27.9% to EUR 569.2 million (EUR445.1 million), assisted first and foremost by the improvement inunrealised gains and the reduced volume of write-downs. This figureincludes income from interest on funds withheld, which at EUR 144.9million was substantially higher than in the comparable period of theprevious year (EUR 102.3 million).OutlookBased on its strategic orientation and the available marketopportunities, Hannover Re anticipates a good result for 2009 in bothnon-life and life/health reinsurance. At constant exchange rates thenet 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. Thetreaty renewals as at 1 July 2009 in the United States, when aroundone-third of the portfolio is renegotiated, reinforced the trend ofprior renewal phases. Yet prices did not rise in all areas to theextent needed. Particularly in the case of property catastrophecovers, efforts to secure the required price increases were onlypartially successful. Sufficient capacity was for the most partavailable here. While the rate level in standard casualty businessremained stable, price rises were obtained in the workerscompensation segment. Rates in the professional indemnity lines werebroadly unchanged, although conditions improved under treaties thathad suffered losses. Hannover Re was satisfied overall with thetreaty 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 withinthe anticipated bounds of roughly 10% of net premium, a very healthyprofit contribution is to be expected.The fundamental business climate in life and health reinsurance isalso positive. Here, too, the financial and economic crisis hasprompted stronger demand for reinsurance and hence provided growthstimuli. Hannover Re will continue to expand its involvement in thefield of enhanced annuities and intends to extend its activities tothe North American market during the current financial year.Owing to the acquisition of the ING life reinsurance portfolioeffective 1 January 2009, net premium for the current year in lifeand health reinsurance is likely to grow by more than 35% and theprofit 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 theasset holdings. In the area of fixed-income securities the companycontinues to stress the high quality and diversification of itsportfolio. Following Hannover Re's move to reduce its exposure tolisted equities to virtually zero, further volatility on stockmarkets can of course have only a limited effect on the investmentincome. "Our goal is to protect our portfolio even better againstinterest rate fluctuations and other market risks. Although we havemade plans to resume our investments in equities in the future, sucha step will only be contemplated once the market climate is morestable", Mr. Wallin emphasised.In light of its strategic orientation and the available marketopportunities in non-life and life/health reinsurance, Hannover Recontinues to anticipate a good result for the full 2009 financialyear. Assuming that the burden of major losses does not significantlyexceed the expected level of 10% of net premium in non-lifereinsurance, and as long as there are no further adverse movements oncapital markets, Hannover Re expects - allowing for the non-recurringeffect from the acquisition of the ING life reinsurance portfolio - aminimum return on equity of 18% and earnings per share of at leastEUR 5 for the 2009 financial year. It remains the company's goal topay 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(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.comHannover Re, with a gross premium of around 9 billion euro, is one ofthe leading reinsurance groups in the world. It transacts all linesof non-life and life and health reinsurance. It maintains businessrelations with more than 5,000 insurance companies in about 150countries. Its worldwide network consists of more than 100subsidiaries, branch and representative offices on all fivecontinents with a total staff of roughly 2,000. The rating agenciesmost relevant to the insurance industry have awarded Hannover Re verystrong 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 beforward-looking statements or statements of future expectations basedon currently available information. Such statements are naturallysubject to risks and uncertainties. Factors such as the developmentof general economic conditions, future market conditions, unusualcatastrophic loss events, changes in the capital markets and othercircumstances may cause the actual events or results to be materiallydifferent from those anticipated by such statements. Hannover Re doesnot make any representation or warranty, express or implied, as tothe accuracy, completeness or updated status of such statements.Therefore, in no case whatsoever will Hannover Re and its affiliatecompanies be liable to anyone for any decision made or action takenin conjunction with the information and/or statements in this pressrelease or for any related damages.http://hugin.info/130686/R/1332760/315704.pdf --- End of Message ---Hannover RückKarl-Wiechert-Allee 50 Hannover GermanyWKN: 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;
Datum: 06.08.2009 - 07:30 Uhr
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