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Hannover Re presents very pleasing interim result
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| Copyright: | Unknown | | Source: | Market Wire | | Wordcount: | |
HANNOVER, GERMANY -- (MARKET WIRE) -- 11/06/09 --
Hannover Re presents very pleasing interim result
* Gross premium + 25.6% on the back of stronger demand and ING acquisition
* Net premium + 30.3% due to increased retention
* Net investment income + 129.6%
* Group net income EUR 578.4 million
* Moderate burden of catastrophe losses
* Combined ratio 96.8%
* EBIT margin comfortably beats target
* Profit target for 2009 raised to at least EUR 5.75 per share
* Dividend of at least EUR 2 envisaged for 2009
Hannover, 6 November 2009: In its interim report presented today
Hannover Re expressed considerable satisfaction with the development
of its business. "With our result for the third quarter we have
secured a very good foundation and are in a position to raise our
profit target for the full financial year. We now anticipate earnings
of at least EUR 5.75 a share and are looking to pay a dividend of at
least EUR 2 per share", Chief Executive Officer Ulrich Wallin
explained.
The operating profit (EBIT) as at 30 September 2009 improved
substantially year-on-year to reach EUR 844.8 million. Group net
income surged - in part due to various special effects in life and
health reinsurance - by EUR 721.2 million to EUR 578.4 million. The
result for the corresponding period of the previous year had been
negative (-EUR 142.8 million) owing to heavy write-downs taken on
equities because of the turmoil prevailing on capital markets at the
time. Earnings of EUR 4.80 (-EUR 1.18) a share were generated; the
annualised return on equity stood at 24.2% (-6.4%).
Gross written premium in total business rose by 25.6% to EUR
7.7 billion (EUR 6.1 billion) as at 30 September 2009. This includes
EUR 606.4 million from the acquisition of the ING life reinsurance
portfolio. Exchange-rate effects did not play a significant role.
With the level of retained premium increasing to 92.3% (88.8%), net
premium earned climbed by an even stronger 30.3% to EUR 6.7 billion
(EUR 5.2 billion).
The development of shareholders' equity, which improved by 24.9% on
the level as at 31 December 2008 to EUR 3.5 billion (EUR
2.8 billion), was especially gratifying. The policyholders' surplus,
comprised of shareholders' equity, minority interests and hybrid
capital, increased from EUR 4.7 billion to EUR 5.4 billion.
Hannover Re was highly satisfied with the development of its non-life
reinsurance. The situation on the international reinsurance markets
remains positive. The effects of the financial market crisis have
highlighted particularly forcefully the attraction of reinsurance as
a capital management tool, especially in cash-intensive segments.
Demand for reinsurance protection has consequently risen in numerous
segments. The industry summits in Monte Carlo, Baden-Baden and the
United States underscored this trend.
Capacities contracted sharply in credit and surety insurance in
response to higher loss ratios triggered by the financial market
crisis. Hannover Re made the most of the associated significant price
rises and selectively enlarged its portfolio. Even though the result
only reached break-even as at 30 September 2009 owing to increased
default rates and prudent reserving, the company sees the improving
loss ratios as confirmation of its strategy and expects the written
credit and surety business to return to profitability in 2010.
Business in Central and Eastern Europe, where the company enlarged
its portfolio, is faring well. Stronger demand in the area of
structured covers continues to open up highly attractive
opportunities.
Gross premium in non-life reinsurance as at 30 September 2009
improved on the comparable period of the previous year by 16.2% to
EUR 4.4 billion (EUR 3.8 billion). At constant exchange rates,
especially against the US dollar, the increase would have been 13.0%.
The retention climbed to 93.4% (88.4%) due to substantially reduced
retrocessions. Net premium earned consequently rose by an impressive
21.3% to EUR 3.8 billion (EUR 3.1 billion).
In light of an unremarkable hurricane season the burden of
catastrophe losses in the third quarter was below average. Hail and
flood damage in Central Europe, an industrial fire claim in Russia as
well as a loss event in marine business led to expenditure in the
order of EUR 35 million. All in all, the total net burden of
catastrophe losses and major claims in the period until 30 September
2009 stood at EUR 198.2 million (EUR 444.9 million). This is
equivalent to 5.3% of net premium in non-life reinsurance and hence
comfortably below the expected level. The combined ratio amounted to
96.8% (103.6%).
The net underwriting result in non-life reinsurance improved from
-EUR 131.2 million in the comparable period of the previous year to
EUR 98.1 million. The operating profit (EBIT) increased to EUR
477.0 million (-EUR 86.0 million). Group net income climbed to a very
good EUR 331.3 million (-EUR 178.0 million), producing earnings of
EUR 2.75 (-EUR 1.48) a share.
Hannover Re is very pleased with the development of its life and
health reinsurance business. Owing to a visibly weaker solvency
position insurers are adopting a considerably more cautious risk
strategy and financial policy, hence leading to an increased clamour
for both risk- and financially oriented products. This state of
affairs was particularly evident in the United States, where the
insurance industry suffered marked erosion of its capital base.
"Block assumption transactions, i.e. the assumption of defined
in-force portfolios, also currently offer favourable opportunities
which we again used in the third quarter to expand our business", Mr.
Wallin explained.
Driven by the acquisition of the ING life reinsurance portfolio and
vigorous organic growth, gross written premium as at
30 September 2009 surged by a substantial 41.1% to EUR 3.3 billion
(EUR 2.3 billion). At constant exchange rates the increase would have
been 43.2%. The retention climbed from 89.3% to 90.8%. Net premium
earned rose by 43.8% to EUR 3.0 billion (EUR 2.1 billion).
Net investment income in life and health reinsurance was doubled from
EUR 206.3 million to EUR 433.5 million. Positive special effects
resulting from the reversal of unrealised losses on deposits with US
clients were again a factor here in the third quarter. The operating
profit (EBIT) therefore improved considerably to EUR 331.4 million
(EUR 93.2 million). The EBIT margin of 11.2% consequently surpassed
the target corridor of 6.5% to 7.5%. Group net income climbed to EUR
261.7 million (EUR 61.4 million), producing earnings of EUR 2.17 (EUR
0.51) a share.
Investments developed satisfactorily for the Group as a whole in the
first nine months. The portfolio of assets under own management
improved on the volume as at 31 December 2008, growing to EUR
21.7 billion (EUR 20.1 billion) thanks largely to a positive
operating cash flow. Despite significantly lower interest rates,
ordinary income excluding interest on deposits fell just slightly
short of the value in the corresponding period of the previous year
at EUR 603.8 million (EUR 627.5 million) - a testament to the fact
that Hannover Re is correct in pursuing an investment policy geared
to generating stable ordinary income.
The balance of realised gains and losses totalled EUR 67.9 million as
at 30 September 2009, as against EUR 77.0 million in the comparable
period of the previous year. Along with impairments taken on
fixed-income securities of EUR 35.2 million, the volume of
write-downs totalling altogether EUR 110.3 million (EUR
433.0 million) was due in large measure (EUR 70.8 million) to
alternative investments; of this amount, EUR 47.5 million was
attributable to private equity. Unrealised gains on asset holdings
measured at fair value through profit or loss amounted to EUR
135.4 million. This contrasted with unrealised losses of EUR
33.4 million in the corresponding period of the previous year. This
positive development resulted chiefly from the reversal of unrealised
losses on securities deposits held for the account of Hannover Re by
US clients.
Assisted first and foremost by the improvement in unrealised gains
and a significantly reduced volume of write-downs, the net investment
income climbed very strongly to EUR 850.5 million (EUR 370.4
million).
Outlook
Hannover Re anticipates a pleasing result for 2009 in both non-life
and life/health reinsurance. At constant exchange rates the company
expects the net premium volume to grow by around 30%.
In non-life reinsurance the markets present a very satisfactory
picture overall. The price level is broadly commensurate with the
risks, although in some segments - for example US casualty business -
further rate increases are needed. Owing to an above-average claims
development in the aviation segment in the year under review, higher
prices can be obtained for both loss-affected and loss-free
programmes in the currently ongoing round of treaty renewals. The
company sees attractive business opportunities in the area of
structured covers, especially with an eye to the likely implications
of Solvency II.
Net premium in non-life reinsurance should show growth of around 20%
by year-end. Provided the burden of catastrophe losses and major
claims continues to remain within the anticipated bounds, a very
healthy profit contribution can be expected.
The fundamental business climate in life and health reinsurance is
also positive. Here, too, the financial and economic crisis has
prompted stronger demand for reinsurance and hence provided growth
stimuli.
Owing to the acquisition of the ING life reinsurance portfolio
effective 1 January 2009, Hannover Re expects the net premium volume
to rise by around 40%. All in all, the life and health reinsurance
business group should also deliver a very good profit contribution to
total business.
On the investments side the anticipated positive cash flow should -
subject to stable exchange rates - result in further growth in the
asset holdings. In the area of fixed-income securities the company
continues to stress the high quality and diversification of its
portfolio. "We shall only consider investing in equities again in a
more stable market climate", Mr. Wallin emphasised.
In light of its strategic orientation and the available market
opportunities in non-life and life/health reinsurance, Hannover Re
expects to post a very good result for the 2009 financial year.
Assuming that the burden of catastrophe losses and major claims does
not significantly exceed the expected level in
non-life reinsurance, and as long as there are no adverse movements
on capital markets, Hannover Re expects - allowing for the
non-recurring effect from the acquisition of the ING life reinsurance
portfolio - a return on equity in excess of 20% and earnings per
share of at least EUR 5.75 for the 2009 financial year. The company's
goal is to pay a dividend in the order of at least EUR 2.
For further information please contact:
Press and Public Relations / Investor Relations:
Stefan Schulz (tel. +49 511 5604-1500,
e-mail: stefan.schulz@hannover-re.com)
Press and Public Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: gabriele.handrick@hannover-re.com)
Investor Relations:
Klaus Paesler (tel. +49 511 5604-1736,
e-mail: klaus.paesler@hannover-re.com)
Please visit: www.hannover-re.com
Hannover Re, with a gross premium of around EUR 9 billion, is one of
the leading reinsurance groups 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 2,000. 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.
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
Key Figures: http://hugin.info/130686/R/1352967/327596.pdf
Copyright © Hugin AS 2009. All rights reserved.
This is a news service of Thomson Business Intelligence Service ©2006. This content is for your personal use only, subject to Terms and Conditions. No redistribution allowed.
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