HANNOVER Re's expectations for 2016's income after taxes close to EUR 1 billion

12 May 2016 — Daniela GHETU
HANNOVER Re anticipates stable or slightly lower gross premium as well as net income after tax of at least EUR 950 million for the full 2016 financial year. This is conditional on major loss expenditure not significantly exceeding the budgeted level of EUR 825 million and assumes that there are no unforeseen distortions on capital markets.

In P&C reinsurance HANNOVER Re expects to post a good underwriting result for 2016 that should be roughly on the level of 2015. The company is aiming for a combined ratio of less than 96%. The EBIT margin for property and casualty reinsurance should be at least 10%.

The competitive market conditions that still prevail in P&C reinsurance were further underlined by the treaty renewals as at 1 April, the traditional date on which business in Japan and - albeit on a smaller scale - treaties in the markets of Australia, New Zealand, Korea and North America are renewed. In view of its selective underwriting policy and the company's concentration on existing business, HANNOVER Re was able to preserve the good quality of its property and casualty reinsurance portfolio. The premium volume booked from this round of treaty renewals increased by 9.1% due to profitable business opportunities.

The company expects to see further improvement in the development of its life and health reinsurance business. This should be especially evident in emerging markets and - following the implementation of Solvency II - in Europe as well as in the area of longevity risks. While it is Hannover Re's expectation that some large-volume treaties will be discontinued, the gross premium volume will likely remain broadly stable on the back of new business production. The value of new business should be in excess of EUR 220 million. The targeted EBIT margins remain unchanged at 2% for financial solutions and longevity business and 6% for mortality and morbidity business.

The expected positive cash flow that Hannover Re generates from the technical account and its investments should - subject to stable exchange rates and yield levels - should lead to further growth in the asset portfolios. The company is targeting a return on investment of 2.9% for 2016.

HANNOVER Re's 2016 assessment is based, among others, on the positive outcome of the 1st quarter of 2016."Factoring out a positive special effect recorded in the comparable quarter of 2015, we achieved a pleasing increase in our Group net income as at 31 March 2016. This was driven by a strong underwriting profit in property and casualty reinsurance as well as good results in life and health reinsurance and on the investment side", Chief Executive Officer Ulrich WALLIN stated. The gratifying quarterly result is a good first step towards achieving the full-year profit target of at least EUR 950 million.

1Q2016 key financial results of the group:
  • Group net income rises by 12.7% to EUR 271.2 million (EUR 240.7 million) after elimination of a positive special effect from the previous year
  • Gross premium in line with expectations, -2.1% adjusted for exchange rate effects
  • Sharply improved underwriting result in property and casualty reinsurance
  • Combined ratio: 94.7% (95.7%)
  • Good business development in life and health reinsurance
  • Return on investment: 2.9%
  • Return on equity: 13.2%
  • Group net income guidance for the 2016 financial year confirmed

Share |