Hannover Re posts vigorous growth and raises profit target
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Hannover Rück /
Hannover Re posts vigorous growth and raises profit target
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· Gross premium surges by 11.5%
· Major loss burden still higher than the expected
level
· Combined ratio in non-life reinsurance: 99.0%
· Life and health reinsurance grows by 14.2% and EBIT
margin within the target corridor
· Good investment income: EUR 872.2 million
· Pleasing Group net income: EUR 582.0 million
· Book value per share rises by 20.0% to EUR 36.96
· Return on equity: 19.0%
· Profit target for 2010 raised to more than EUR 700
million
Hannover, 10 November 2010: Hannover Re reported robust premium
growth and better-than-expected Group net income as at 30 September 2010. This
was driven by strong demand in non-life and life/health reinsurance, healthy
investment income and a positive tax effect. "In view of the highly gratifying
development of business in the third quarter and the additional income deriving
from the tax effect on which we reported in our ad hoc announcement dated 20
October 2010, we are raising our profit forecast for the full financial year
from around EUR 600 million to more than EUR 700 million", Chief Executive
Officer Ulrich Wallin confirmed.
Further premium growth
Gross written premium in total business surged by an appreciable
11.5% as at 30 September 2010 to reach EUR 8.6 billion. At constant exchange
rates, especially against the US dollar, growth would have come in at 7.7%. The
retention decreased to 91.0% (92.3%). Net premium earned climbed by 11.1% to EUR
7.5 billion (EUR 6.7 billion).
Exceptionally pleasing result
The operating profit (EBIT) again slightly exceeded the previous
year's outstanding level. It stood at EUR 862.0 million (EUR 851.7 million).
Group net income as at 30 September 2010 closed at EUR 582.0 million (EUR
596.6 million). This includes the aforementioned positive effect from a tax
decision handed down by the Federal Fiscal Court, which made it possible to
release provisions that had been set aside on a precautionary basis. The
resulting profit contribution totals EUR 98.0 million. The comparable period of
the previous year had, however, also been shaped by positive non-recurring
effects totalling EUR 169 million. Earnings per share amounted to EUR 4.83 (EUR
4.95).
Pleasing performance of non-life reinsurance despite continued
above-average burden of major losses
Hannover Re is very largely satisfied with the state of
international reinsurance markets, despite a discernible trend towards gradual
market softening. Prices and conditions are nevertheless broadly commensurate
with the risks. "In order to remain successful going forward, it is important
for us to maintain our selective underwriting policy based on detailed risk
analyses", Mr. Wallin emphasised.
Gross premium in non-life reinsurance increased by 9.5% as at 30
September 2010 relative to the comparable period of the previous year to reach
EUR 4.8 billion (EUR 4.4 billion). At constant exchange rates, especially
against the US dollar, the increase would have been 6.5%. The retention dropped
to 90.5% (93.4%). Net premium earned climbed by 8.0% to EUR 4.1 billion (EUR
3.8 billion).
The burden of major losses incurred by Hannover Re continued to
exceed expectations after nine months. "Although this year's hurricane season in
North and Central America was thoroughly unremarkable, we again recorded
appreciable strains from natural catastrophe losses in the third quarter. The
largest single loss event for us was the earthquake in New Zealand, which cost
us almost EUR 90 million", Mr. Wallin noted. The net burden of major losses as
at 30 September 2010 totalled EUR 554.1 million, after just EUR 198.2 million in
the comparable period. The combined ratio consequently rose to 99.0% (96.8%).
Against this backdrop the net underwriting result decreased from EUR
98.1 million to EUR 32.4 million.
The operating profit (EBIT) soared by an appreciable 32.8% to EUR
633.4 million (EUR 477.0 million). Group net income increased by 32.1% to EUR
437.7 million (EUR 331.3 million); this includes the positive effect from the
release of provisions set aside on a precautionary basis, which is reflected
only in non-life reinsurance. Earnings per share stood at EUR 3.63 (EUR 2.75).
Significant double-digit organic growth in life and health
reinsurance
Hannover Re is very satisfied with the development of its life
and health reinsurance business, which once again showed double-digit premium
growth. "We generated the strongest percentage gain in China, where we are also
represented by a branch office. The still rather low insurance density in this
country contrasts with a rapidly expanding middle class. For 2010 we therefore
expect our business in this market to grow by more than 50%", Mr. Wallin
explained.
Driven by the vigorous organic growth, gross written premium
climbed sharply by 14.2% to EUR 3.7 billion (EUR 3.3 billion) as at
30 September 2010. At constant exchange rates growth would have reached 9.3%.
The retention nudged higher from 90.8% to 91.5%. Net premium earned grew by
15.0% to EUR 3.4 billion (EUR 3.0 billion).
Profitability as at 30 September 2010 was also gratifying: while
the operating profit (EBIT) of EUR 213.6 million fell short of the result for
the comparable period (EUR 338.3 million), this can be attributed to the fact
that the latter was influenced by positive special effects of around EUR 187
million. Had it not been for these effects EBIT would have risen by 41%. The
EBIT margin of 6.3% is comfortably within the target corridor of 6% to 7%. Group
net income totalled EUR 170.2 million (EUR 279.9 million). Earnings per share
amounted to EUR 1.41 (EUR 2.32).
Investment income highly satisfactory despite low interest rates
In view of its risk-averse investment strategy and the prevailing
low level of interest rates, Hannover Re expressed considerable satisfaction
with the development of its asset holdings. Driven by a positive operating cash
flow and favourable movements in fair values, the portfolio of assets under own
management grew to EUR 25.5 billion (EUR 22.5 billion). Thanks to the further
rise in ordinary income and sharply lower write-downs, and despite increased
unrealised losses, net investment income came in slightly higher than the level
of the previous year. Totalling EUR 872.2 million (EUR 850.5 million), it thus
showed an average return of 3.6%.
Further pleasing growth in shareholders' equity
Shareholders' equity excluding minority interests improved on the
level of 31 December 2009 by EUR 742.3 million to reach EUR 4.5 billion (EUR
3.7 billion). The book value per share consequently rose by 20.0% to EUR
36.96 (EUR 30.80). The policyholders' surplus, consisting of shareholders'
equity, minority interests and hybrid capital, stood at EUR 6.9 billion (EUR
5.6 billion).
Outlook
In light of developments to date on the international
reinsurance markets, Hannover Re expects the net premium for the current
financial year to grow by around 8% at constant exchange rates.
By and large, markets in non-life reinsurance are still offering
risk-adequate prices. There is, however, no mistaking the fact that the
substantial capacity made available by reinsurers relative to the demand for
their products is leading to more intense competitive pressure. Consequently,
rate increases can now only be obtained under loss-impacted programmes. The oil
platform disaster in the Gulf of Mexico should prompt market hardening and
substantial price increases in the offshore sector. Given the large number of
severe natural disasters in the current financial year price increases are also
expected in catastrophe-exposed business. Hannover Re is looking to further
premium growth in the area of agricultural risks as well as in emerging markets.
In non-life reinsurance Hannover Re anticipates net premium
growth of around 6% and a very healthy profit contribution. This is dependent
upon the burden of major losses in the fourth quarter remaining within the
bounds of expectations.
The general climate in life and health reinsurance continues to
be very positive. A particularly significant factor here is the demographic
trend in established insurance markets such as the United States, Japan, United
Kingdom and Germany. Financially oriented reinsurance solutions, i.e. models
designed to strengthen the solvency base of primary insurers, are enjoying
sustained demand.
Hannover Re now expects to grow net premium in life and health
reinsurance by roughly 12% in the current year. The EBIT margin should come in
within the target range of 6% to 7%.
On the investments side the anticipated positive cash flow should
- subject to stable exchange rates - lead to further growth in the asset
portfolio. In the area of fixed-income securities the focus remains on the high
quality and diversification of the portfolio. "In the third quarter we began to
invest in listed equities again. On grounds of prudence, though, we only
envisage an equity allocation of at most 2.8% by year-end", Mr. Wallin
emphasised. The return on investment in the 2010 financial year should be in the
region of 3.5%.
Based on the favourable development of its business and the
positive tax effect, Hannover Re is raising its profit expectation for the
2010 financial year from around EUR 600 million to more than EUR 700 million.
This is subject to the premise that the burden of major losses in the fourth
quarter does not exceed the expected level and also assumes that there are no
adverse movements on capital markets. 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:
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:
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
the third-largest reinsurer 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 2,100. 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#1460546]
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Hannover Rück
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Unternehmensinformation / Kurzprofil:
Datum: 10.11.2010 - 07:30 Uhr
Sprache: Deutsch
News-ID 48598
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Town:
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