Corporate | 2 February 2017 07:30
Hannover Re: Hannover Re raises guidance for 2017 following treaty renewals
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DGAP-News: Hannover Rück SE / Key word(s): Contract/Change in Forecast
Press Release Hannover Re raises guidance for 2017 following treaty renewals
Hannover, 2 February 2017: Hannover Re is satisfied overall with the outcome of the treaty renewals as at 1 January 2017. Markets continue to see significant competition, however, as a result of which the anticipated stabilisation in rates has not as yet set in across the board. Although the treaty renewals were challenging, the company benefited from its customer intimacy and its ability to offer reinsurance solutions tailored to clients’ requirements. “Thanks to gross premium that came in above expectations, we were able to raise our premium target for 2017 and now expect an increase in the low single-digit percentage range. Furthermore, bearing in mind the successful closing of several financial solutions contracts in life and health reinsurance as well, we are raising our guidance for Group net income in 2017 from more than EUR 950 million to more than EUR 1 billion”, Ulrich Wallin, Chief Executive Officer of Hannover Re, explained. All in all, the situation on the worldwide property and casualty reinsurance market shows little change and remains challenging. The broadly good financial results still being reported by many companies combined with the excess supply of capacity were not conducive to a fundamental trend reversal on the rates side. The increased claims expenditure in 2016 had favourable effects on prices only on a local level. Sharply high demand was observed among customers in relation to reinsurance solutions offering solvency relief. Attractive opportunities to grow the portfolio also opened up in North America, above all in Canada, as well as in credit and surety business and in the area of cyber covers. With an eye to its own profitability requirements, however, the company again did not renew all treaties in this round of renewals. Of the total premium volume booked in the previous year in traditional property and casualty reinsurance (excluding facultative business and structured reinsurance) amounting to EUR 7,326 million, roughly two-thirds of the treaties with a volume of altogether EUR 4,685 million were up for renewal as at 1 January 2017. Of this, a premium volume of EUR 4,006 million was renewed, while treaties worth EUR 679 million were either cancelled or renewed in modified form. Including increases of EUR 459 million from new treaties and – to a more limited extent – from changes in prices and treaty shares, the total renewed premium volume came in at EUR 4,621 million; at constant exchange rates this is equivalent to a decrease of 1.4% in traditional reinsurance. Making allowance for structured reinsurance business, however, growth of around 7% was booked as at 1 January 2017.
Target markets
In Germany, the largest single market within the segment of Continental Europe , Hannover Re maintained its leading position through its subsidiary E+S Rück. The rate trend in motor business was especially pleasing: significant improvements in the original market led to additional premium income. The increased prevalence of regional loss events in the previous year prompted stronger demand for natural hazards covers. The premium volume for the total portfolio in the German market remained essentially stable. The treaty renewals in the Netherlands and Northern European markets , where the company enlarged its portfolio, passed off thoroughly successfully. In France, too, Hannover Re was able to successfully expand its existing customer relationships. Business in Central and Eastern Europe was intensely competitive, with rates coming under sustained pressure. Yet the company also noted rising prices in some cases, for example in Poland. The premium volume for the Continental Europe segment contracted by 1.2%.
Specialty lines
The
aviation line
was once again extremely competitive
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Given the unchanged abundant supply of insurance capacity, rates in the market fell by up to 10%. While Hannover Re reduced its involvement particularly on the proportional side, non-proportional business – which witnessed more moderate price erosion – remained stable. The premium volume retreated by a substantial 15.8%.
Hannover Re is satisfied with the renewal of its business written in the United Kingdom and in the London Market . Premiums in non-proportional motor insurance were maintained on a stable level. The company benefited in this connection from its long-standing customer relationships. Increasing demand for cyber covers opened up new business opportunities. Hannover Re generated premium growth of altogether 7.9% for this market.
Global reinsurance
Natural catastrophe business saw further rate decreases in some areas owing to the absence of market-changing large losses. Hurricane Matthew provided necessary price impetus on a localised basis. In the United States price reductions were offset by increased shares in profitable programmes. The pressure on prices in Latin America prompted the company to scale back its involvement. In Europe modest rate increases were booked in some countries. Overall, Hannover Re boosted its premium volume in total natural catastrophe business by 2.9% while maintaining prices on a stable level. In structured reinsurance business the company enjoyed very pleasing demand for reinsurance solutions offering solvency relief. Hannover Re booked strong premium growth here from Europe and North and Latin America.
Guidance raised for 2017
Hannover Re, with gross premium of around EUR 17 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 2,500 staff. Established in 1966, the Hannover Re Group today has a network of more than 100 subsidiaries, branches and representative offices worldwide. The Group’s German business is written by the subsidiary E+S Rück. The rating agencies most relevant to the insurance industry have awarded both Hannover Re and E+S Rück very strong insurer financial strength ratings: Standard & Poor’s AA- “Very Strong” and A.M. Best A+ “Superior”.
Please note the disclaimer:
02.02.2017 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.
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| 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: | Regulated Market in Frankfurt (Prime Standard), Hanover; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange; Luxemburg |
| End of News | DGAP News Service |