Hannover Re increases Group net income by around 20 percent

18 August 2015 —
The first half of 2015 closed on a very pleasing note for Hannover Re. The company had generated significantly more than half of its full-year profit target after the first six months. In view of this performance, the expectation for the full 2015 financial year has been raised from the original level of EUR 875 million to a figure in the order of EUR 950 million. "Both business groups - namely Property & Casualty and Life & Health reinsurance - and also the investment portfolio played a successful part in this positive result", Chief Executive Officer Ulrich Wallin stated. "The sustained strong profitability of property and casualty reinsurance shows that with our systematically pursued policy of selective underwriting we are well placed to tackle the conditions associated with challenging market phases."

Gross premium sharply higher
Gross written premium for the Hannover Re Group increased by a substantial 21.5% as at 30 June 2015 to EUR 8.6 billion (EUR 7.1 billion). This can be attributed in part to the strength of the US dollar. At constant exchange rates growth would still have come in at a pleasing 9.5%. This figure was better than expected. Key contributory factors here were sizeable individual transactions in various regions and lines including Asia, North America, agricultural risks and in the specialty field of Insurance-Linked Securities. The level of retained premium rose to 88.3% (87.7%). Net premium earned climbed 20.2% to EUR 7.0 billion (EUR 5.8 billion); at constant exchange rates growth would have amounted to 8.3%.

Half-year result substantially higher

The operating profit (EBIT) as at 30 June 2015 came in comfortably above the level of the previous year's period at EUR 789.4 million (EUR 683.7 million), driven by good business results and considerably higher ordinary investment income. Group net income for the first half-year increased by 19.7% to EUR 531.9 million (EUR 444.4 million). Earnings per share amounted to EUR 4.41 (EUR 3.69).

Property and casualty reinsurance posts very good result

While supply still outstripped demand in worldwide property and casualty reinsurance, the first signs of bottoming out began to emerge here on the rates side. This was also true to some extent of the treaty renewals as at 1 April 2015, which from an overall perspective passed off satisfactorily for Hannover Re.

Gross premium for property and casualty reinsurance increased by 21.9% as at 30 June 2015 relative to the previous year's period to reach EUR 5.0 billion (EUR 4.1 billion). This was due in part to the strong US dollar. At constant exchange rates growth of 10.0% would have been booked. The level of retained premium edged lower to 89.6% (91.1%). Net premium earned climbed by 15.5% to EUR 3.9 billion (EUR 3.4 billion); adjusted for exchange rate effects, a gain of 4.4% would have been recorded.

Major loss expenditure in the first half of 2015 stayed below the budgeted level of EUR 294 million for the period at EUR 197.4 million (EUR 104.7 million). The largest individual losses for Hannover Re were the storm "Niklas" at EUR 35.4 million and an explosion on an oil platform in the Gulf of Mexico, which cost the company EUR 32.9 million. In keeping with past practice, the unused portion of the budget was allocated to the IBNR reserves, thereby building an additional cushion for any large losses that may occur in the second half of 2015. The already very good underwriting result of the comparable period was boosted by a further 7.9% to EUR 170.9 million (EUR 158.3 million). The combined ratio was positive at 95.4% (95.0%). Against this backdrop, the operating profit (EBIT) for property and casualty reinsurance reached a very pleasing EUR 583.7 million (EUR 521.0 million) as at 30 June 2015. Group net income surged 20.3% to EUR 418.4 million (EUR 347.9 million). Earnings per share stood at EUR 3.47 (EUR 2.89).

Life and health reinsurance generates premium growth
Hannover Re achieved the targeted improvement in profitability for life and health reinsurance relative to the previous year's period, although the result in the second quarter of 2015 fell short of expectations owing to higher mortality and lapse rates in part of the US mortality portfolio.

Gross premium in life and health reinsurance increased by a substantial 21.0% as at 30 June 2015 to EUR 3.6 billion (EUR 3.0 billion); adjusted for exchange rate effects, growth would have come in at 8.9%. Here, too, the strength of the US dollar and pound sterling made itself felt. Hannover Re booked particularly strong growth in its longevity portfolio and was also able to act on opportunities in South America, Australia and Asia. Net premium earned rose by 26.6% to EUR 3.1 billion (EUR 2.5 billion); this is equivalent to a gain of 13.8% at constant exchange rates. The retention increased to 86.5% (83.1%).

The operating profit (EBIT) in life and health reinsurance grew by a pleasing 29.2% as at 30 June 2015 to EUR 200.0 million (EUR 154.8 million); this included a special effect from the first quarter in an amount of around EUR 40 million. Group net income improved appreciably by 26.2% to EUR 145.6 million (EUR 115.4 million). Earnings per share reached EUR 1.21 (EUR 0.96).

Read the full story Hannover Re increases Group net income by around 20 percent
Share |