Corporate | 7 May 2013 07:01
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Hannover Rück SE / Key word(s): Quarter Results
Hannover Re makes a good start to the 2013 financial year – Gross premium: + 7.0% – Net premium earned: + 9.4% – Book value per share increased to EUR 52.18 (31 December 2012: EUR 50.02) – Operating profit (EBIT): EUR 352.5 million (EUR 393.2 million) – Group net income: EUR 221.4 million (EUR 261.3 million) – Satisfactory investment income: EUR 354.7 million (EUR 440.6 million) – Net major loss expenditure very low at EUR 13.4 million (EUR 60.6 million) – Underwriting result in non-life reinsurance doubled: EUR 98.1 million (EUR 46.8 million) – Return on equity: 14.4% Hannover, 7 May 2013: Hannover Re posted Group net income of EUR 221.4 million for the first quarter of 2013. ‘This result is a first successful step towards accomplishment of our full-year goal, namely Group net income after tax in the order of EUR 800 million’, Chief Executive Officer Ulrich Wallin stated. ‘The key factors here are a very good underwriting profit in non-life reinsurance and a satisfactory result in our life and health reinsurance business.’
Continued organic growth
Good quarterly Group net income
Gross premium in non-life reinsurance increased by 3.8% relative to the comparable quarter to reach EUR 2.2 billion (EUR 2.1 billion). At constant exchange rates, especially against the US dollar, growth would have been 4.0%. The level of retained premium decreased slightly to 89.8% (91.2%). Net premium earned climbed 8.8% to EUR 1.7 billion (EUR 1.6 billion), equivalent to growth of 8.9% after adjustment for exchange rate effects. Assisted by an exceptionally untroubled major loss experience in the first quarter of 2013, the underwriting profit in total non-life reinsurance more than doubled to EUR 98.1 million (EUR 46.8 million). Hannover Re incurred a net loss of merely EUR 13.4 million (EUR 60.6 million) from a satellite failure, a figure well below the expected level. ‘Despite this, we constituted IBNR reserves broadly in line with the loss expectancy for the first quarter in those segments with major loss exposure’, Mr. Wallin noted. The combined ratio improved to a very good 94.0% (96.8 %). The operating profit (EBIT) for non-life reinsurance as at 31 March 2013 remained virtually on a par with the previous year’s level at EUR 258.7 (EUR 263.0 million), despite a sharp decline of around EUR 44 million in investment income connected with unrealised gains from the inflation swaps. Group net income nudged slightly higher to EUR 174.9 million (EUR 173.2 million). Earnings per share amounted to EUR 1.45 (EUR 1.44).
Life and health reinsurance enjoys vigorous growth
Gross premium income for life and health reinsurance as at 31 March 2013 increased more strongly than anticipated by 11.9% to EUR 1.6 billion (EUR 1.4 billion). At constant exchange rates growth would have come in at 12.6%. Net premium earned rose by 10.1% to EUR 1.4 billion (EUR 1.3 billion), equivalent to growth of 10.8% on a currency-adjusted basis. The operating profit (EBIT) as at 31 March 2013 amounted to EUR 88.3 million (EUR 122.3 million). The EBIT margin reached 4.8% in the areas of Longevity and Financial Solutions and 7.6% in Mortality and Morbidity business, thereby beating the strategic targets of 2% and 6% respectively. Group net income for life and health reinsurance totalled EUR 65.3 million (EUR 100.2 million). Earnings per share stood at EUR 0.54 (EUR 0.83). In accordance with its usual practice Hannover Re is also reporting on the Market Consistent Embedded Value (MCEV) in the context of its interim report on the first quarter. The MCEV captures the entire life and health reinsurance portfolio, since it recognises the corresponding cost of capital in addition to the expected future profits. The MCEV therefore serves as a very good means of assessing the profitability of long-duration life and health reinsurance business. Bearing in mind the protracted strain on capital markets, the MCEV developed favourably as at 31 December 2012 and stood at EUR 3,133.9 million (EUR 3,065.8 million). This corresponds to growth of 2.2%. The company recorded a sizeable increase of 30.3% in the value of new business (excluding non-controlling interests); amounting to EUR 313.6 million (EUR 240.6 million), this was the highest value of new business achieved to date.
Solid investment income
Investment income from assets under own management totalled EUR 260.9 million (EUR 356.9 million) in the reporting period, producing an annualised average return of 3.2 %. Unlike in the previous year, investment income was not influenced by appreciable special effects connected with changes in the fair values of the inflation swaps taken out by the company and of the ModCo derivatives. Unrealised gains consequently declined from EUR 84.6 million to EUR 3.3 million. Net investment income including interest on funds withheld and contract deposits closed satisfactorily at EUR 354.7 million (EUR 440.6 million). With write-downs of just EUR 3.2 million (EUR 7.2 million) having to be taken, this is seen as affirmation of the company’s conservative safety-first investment strategy.
Shareholders’ equity further strengthened
Outlook
The business environment in non-life reinsurance is more competitive than it was in the previous year. ‘Despite this, we have largely been able to preserve the rate level of the previous year – on a risk-adjusted basis – in the treaty renewals to date’, Mr. Wallin emphasised. The company sees attractive growth opportunities in a number of areas, including for example emerging markets. Hannover Re is also satisfied with the outcome of the treaty renewals as at 1 April. Against a backdrop of stable prices growth of around 11% was achieved in the portfolio that came up for renewal. Movements in prices and conditions were very pleasing in Japan after the significant rate increases of the past two years. This level was for the most part maintained. The company therefore enlarged its shares under existing treaties and booked premium gains of around 6% in the original currency. Faced with more challenging market conditions in Korea, the exposure to proportional business was scaled back while higher-margin non-proportional acceptances were expanded. In US property catastrophe business only a small number of treaties are renewed on 1 April. Additional capacities from the non-traditional market meant that the further price increases which had been anticipated on the back of losses from Hurricane Sandy failed to materialise. In the area of agricultural risks Hannover Re made the most of the attractive rate level to substantially enlarge its portfolio. For 2013 the company is looking to generate growth in its non-life reinsurance business group in the range of 3% to 5% at constant exchange rates.
The prospects for
life and health reinsurance
are similarly bright. Adjusted for exchange rate effects, Hannover Re is looking to grow its gross premium organically by 5% to 7% in the 2013 financial year.
Based on the good start to the current financial year and the prevailing market climate, Hannover Re is looking to a successful 2013 financial year . The company anticipates Group net income for the full year in the order of EUR 800 million. This is conditional upon major losses not significantly exceeding the expected level of EUR 625 million for the full year and also assumes that there are no drastic downturns on capital markets. As for the dividend , Hannover Re continues to aim for a payout ratio in the range of 35% to 40% of its IFRS Group net income after tax. For further information please contact:
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Please visit: www.hannover-re.com Hannover Re , with a gross premium of EUR 13.8 billion, is the third-largest reinsurer in the world. It transacts all lines of non-life and life and health reinsurance and is present on all continents with around 2,300 staff. 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+ ‘Superior’).
Please note the disclaimer:
1) Including funds withheld 2) Operating result (EBIT) / net premium earned 3) Annualised 4) Equity attributable to shareholders of Hannover Re + non-controlling interests + hybrid capital End of Corporate News 07.05.2013 Dissemination of a Corporate News, transmitted by DGAP – a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. DGAP’s Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de |
| Language: | English | |
| Company: | Hannover Rück SE | |
| Karl-Wiechert-Allee 50 | ||
| 30625 Hannover | ||
| Germany | ||
| Phone: | +49-(0)511-5604-1500 | |
| Fax: | +49-(0)511-5604-1648 | |
| E-mail: | info@hannover-re.com | |
| Internet: | www.hannover-re.com | |
| ISIN: | DE0008402215 | |
| WKN: | 840 221 | |
| Indices: | MDAX | |
| Listed: | Regulierter Markt in Frankfurt (Prime Standard), Hannover; Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart; Terminbörse EUREX | |
| End of News | DGAP News-Service |
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| 209795 07.05.2013 |