Corporate | 4 February 2015 07:30
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Hannover Rück SE / Key word(s): Contract
Press release Hannover Re broadly satisfied with outcome of 1 January treaty renewals – Stable portfolio in property and casualty reinsurance thanks to strong market positioning and good rating – Rate quality supports our profit targets despite price erosion – Price increases in loss-impacted programmes smaller than expected – Prospects for 2015 in property and casualty reinsurance in the range of expectations Hannover, 4 February 2015: Hannover Re is largely satisfied with the outcome of the treaty renewals as at 1 January 2015 in light of the challenging business environment, even though the rate quality of the renewed portfolio fell short of the previous year. “The price decline in many markets was significant compared to the previous year. Thanks to our good rating and long-standing customer relationships we nevertheless achieved a rather pleasing outcome. Despite our systematic selective underwriting policy we were able to keep our portfolio stable”, Ulrich Wallin, Chief Executive Officer of Hannover Re, explained. German and US business held up especially well in this renewal season. The treaty renewals were particularly notable for a clear trend towards increased retentions carried by ceding companies. This was due to the fact that market-changing major losses were again absent in 2014 and hence the capital resources of primary insurers improved still further. The inflow of capital from alternative markets (ILS) continued to put prices under additional pressure, above all in natural catastrophe business. This led to rate reductions in many areas and in some cases deteriorations in conditions. It was, however, possible to push through rate increases under programmes that had suffered losses in 2014. This was especially true of Germany. The significant losses incurred in the aviation line, on the other hand, did little to boost prices. Of the total premium volume booked in the previous year in property and casualty reinsurance (excluding facultative business and structured reinsurance) amounting to EUR 6,179 million, roughly two-thirds of the treaties with a volume of altogether EUR 3,988 million were up for renewal as at 1 January 2015. Of this, a premium volume of EUR 3,617 million was renewed, while treaties worth EUR 371 million were either cancelled or renewed in modified form. Including increases of EUR 350 million from new treaties and – to a more limited extent – from changes in prices and treaty shares, the total renewed premium volume thus came in at EUR 4,023 million; this is equivalent to an increase of 1% at unchanged exchange rates.
Target markets
In Germany, the largest single market within the segment of Continental Europe, Hannover Re was again able to expand its already excellent position through its subsidiary E+S Rück. Further price increases were obtained for non-proportional motor own damage covers on account of losses from windstorm and hail events of the previous years. Both here and in homeowners’ comprehensive insurance the rate quality has improved. There is still ground to make up in non-proportional motor liability business, while the situation in industrial fire insurance also remains strained – prompting the company to write such risks highly selectively. The total portfolio in the domestic German market closed with a modest premium gain due to new customer relationships. In France Hannover Re was able to position itself well as the purchasers of reinsurance protection applied more rigorous selection criteria. The markets of Eastern Europe are intensely competitive in view of their growth potential, as a consequence of which rates came under appreciable pressure in some countries.
Specialty lines
The significant major losses incurred in the
aviation line
in 2014 had only a qualified positive effect on the rate trend. Rate increases remained limited owing to the continued plentiful availability of insurance capacities. Nor did any appreciable hardening take hold in the market for war covers. The premium volume booked for the entire aviation line contracted by 8%.
Global reinsurance
The growth potential for agricultural covers remains considerable, above all in emerging markets. Both here and in the United States the company was able to enlarge this portfolio thanks to its intimate market knowledge. In natural catastrophe business developments varied: while US property catastrophe business saw declining rates, as anticipated, owing to the absence of market-changing major losses, price increases were achieved in other regions. Most notably, improvements of 5% to 10% were attainable in Germany under loss-impacted programmes. The premium volume booked by the company increased by altogether 8%.
Outlook for 2015
Hannover Re expects to generate a stable or slightly higher gross premium volume in the 2015 financial year based on constant exchange rates. The return on investment is expected to come in around 3.0%, with Group net income anticipated in the order of EUR 875 million. As usual, all statements are subject to the proviso that major loss expenditure does not exceed the anticipated level of EUR 690 million and that there are no unforeseen adverse movements on capital markets. For further information please contact:
Corporate Communications:
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Hannover Re , with gross premium of EUR 14.0 billion, is the third-largest reinsurer in the world. It transacts all lines of property & casualty and life & 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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2015-02-04 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP 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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| 318677 2015-02-04 |