Corporate | 11 March 2014 07:45
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Hannover Rück SE / Key word(s): Final Results
Hannover Re achieves new record result – Group net income up 5.4% to EUR 895.5 million (EUR 849.6 million) – Dividend proposal for 2013: EUR 3.00 per share – Return on equity: 15.0% (15.4%) – Non-life reinsurance delivers excellent profit contribution – Combined ratio: 94.9% (95.8%) – Currency-adjusted growth in gross premium: + 4.2% – Major loss expenditure of EUR 577.6 million below the major loss budget Hannover, 11 March 2014: Hannover Re comfortably surpassed its year-end profit target for 2013 and posted a new record result of EUR 895.5 million. “This performance was driven by a very good underwriting result in non-life reinsurance, which improved again on the previous year by EUR 63 million. Group net income additionally benefited from a positive tax effect”, Chief Executive Officer Ulrich Wallin explained. It is envisaged that Hannover Re’s shareholders will also share in this success. The Executive Board and Supervisory Board will therefore propose to the Annual General Meeting that a dividend of EUR 3.00 per share should be paid; this is equivalent to a payout ratio of 40% relative to IFRS Group net income.
2013 financial year
The operating profit (EBIT) of the Hannover Re Group decreased to EUR 1,229.1 million (EUR 1,393.9 million). Despite the very good result achieved in non-life reinsurance, the elimination of positive special effects recorded in the previous year from movements in the fair values of so-called ModCo derivatives as well as other negative impacts relating to the inflation swaps made themselves felt here in an amount of altogether EUR 113.4 million. Life and health reinsurance fell short of expectations in the year under review. Group net income nevertheless increased by a pleasing 5.4% to EUR 895.5 million (EUR 849.6 million). The very good performance was assisted by a tax effect of around EUR 90 million resulting from the release of provisions for deferred taxes. Earnings per share rose to EUR 7.43 (EUR 7.04).
Non-life reinsurance delivers best ever result
While the major loss expenditure incurred by Hannover Re in the year under review was lower than anticipated, especially Germany and Canada were impacted disproportionately heavily by losses from natural catastrophes. Hailstorm Andreas was the most expensive event for the insurance industry worldwide and also for Hannover Re, with a net cost of EUR 99.3 million. The floods in Germany and other European countries left their mark to the tune of EUR 92.5 million. These and other major losses resulted in total net expenditure for Hannover Re of EUR 577.6 million (EUR 477.8 million). At 94.9% (95.8%), the combined ratio improved again on the previous year. This pleasing trend was further supported by the merely partial utilisation of the major loss budget totalling EUR 625 million. Given that the underwriting result recorded another significant increase to EUR 335.5 million (EUR 272.2 million), the operating profit (EBIT) of EUR 1,061.0 million (EUR 1,091.4 million) came in on a par with the previous year despite the decline in investment income. Aside from lower ordinary income, the fall in investment income can be attributed to reduced gains on disposals and a loss on the inflation swaps. This contrasted, however, with an inflation-driven decrease in loss expenditure. Group net income surged by an appreciable 17.8% to EUR 807.7 million (EUR 685.6 million), thereby also reaching an all-time high. Earnings per share stood at EUR 6.70 (EUR 5.68).
Moderate development in life and health reinsurance
In terms of results, however, life and health reinsurance did not live up to expectations. This was chiefly a reflection of substantial strengthening of the reserves for Australian disability business. The business in question involves individual disability covers in respect of which the risk experience has deteriorated considerably industry-wide. The total strain on the operating result (EBIT) was in the order of EUR 100 million. A further factor was the absence of positive profit effects from the ModCo derivatives, which in the previous year had amounted to more than EUR 40 million. Against this backdrop the operating result (EBIT) in life and health reinsurance contracted sharply by 46.1% to EUR 150.5 million (EUR 279.0 million). Due to tax income associated with losses in the aforementioned Australian business, Group net income declined by a less appreciable 26.2% to EUR 164.2 million (EUR 222.5 million). Earnings per share amounted to EUR 1.36 (EUR 1.84).
Good investment income
Ordinary investment income excluding income from funds withheld showed a pleasing development despite the persistently low level of interest rates; amounting to EUR 1,041.3 million (EUR 1,088.4 million), it decreased only marginally. Realised gains contracted to EUR 144.2 million (EUR 227.5 million), a reflection of the fact that in the comparable period Hannover Re had acted on opportunities in the real estate sector. Investment income was also adversely affected by the performance of the ModCo derivatives and the inflation swaps. Write-downs of just EUR 19.4 million (EUR 21.7 million) had to be taken. Income from assets under own management contracted to EUR 1,054.5 million (EUR 1,300.2 million) as at 31 December 2013. Income from funds withheld was stable at EUR 357.3 million (EUR 355.5 million). Including income from funds withheld, net investment income closed at EUR 1,411.8 million, as against EUR 1,655.7 million in the previous year.
Robust shareholders’ equity
Outlook for 2014
For the 2014 financial year Hannover Re anticipates – based on constant exchange rates – stable to slightly higher gross premium income. In non-life reinsurance the company is looking to book a broadly stable volume in view of its selective, profit-oriented underwriting policy; in life and health reinsurance an increase in the low to mid-single digit percentage range is expected. The company is aiming for a return on investment of 3.2%. Assuming that major loss expenditure does not significantly exceed the anticipated level of EUR 670 million and provided there are no unexpectedly adverse movements on capital markets, it remains Hannover Re’s assumption that Group net income for the 2014 financial year will be in the order of EUR 850 million. For the current financial year Hannover Re is targeting a dividend payout ratio in the range of 35% to 40% of its post-tax IFRS Group net income. For further information please contact:
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Please visit: www.hannover-re.com Hannover Re , with a gross premium of EUR 14.0 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 2,400 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”).
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End of Corporate News 11.03.2014 Dissemination of a Corporate News, transmitted by DGAP – a company of EQS Group 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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