DGAP-News: Hannover Re reports sharply higher premium income and profitability
(firmenpresse) - DGAP-News: Hannover Rückversicherung AG / Key word(s): Quarter Results
Hannover Re reports sharply higher premium income and profitability
03.05.2012 / 07:30
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Hannover Re reports sharply higher premium income and profitability
- Gross premium: + 11.7%
- Net premium: + 13.1%
- Book value per share + 7.8% to EUR 44.45
- Good underwriting results from both business groups
- Net burden of major losses well below expected level: EUR 60.6 million
(EUR 572.1 million)
- Very good investment income of EUR 440.6 million (EUR 392.0 million)
- Operating profit (EBIT): EUR 393.2 million (EUR 47.4 million)
- Exceptionally good Group net income: EUR 261.3 million (EUR 52.3
million)
- Earnings per share: EUR 2.17 (EUR 0.43)
- Return on equity: + 20.2%
Hannover, 3 May 2012: Hannover Re expressed considerable satisfaction with
its results for the first quarter of 2012. 'We generated exceptionally good
Group net income of EUR 261 million in the first three months of the year
and have thus put in place a solid platform for a successful 2012 financial
year', Chief Executive Officer Ulrich Wallin commented. 'Key drivers here
were the highly satisfactory underwriting results in non-life and
life/health reinsurance as well as a very good investment income.'
Vigorous organic growth
Gross written premium for the Hannover Re Group surged by an appreciable
11.7% to EUR 3.5 billion (EUR 3.1 billion) as at 31 March 2012. At constant
exchange rates growth would have amounted to 9.5%. The level of retained
premium moved slightly higher to 91.0% (89.3%). Net premium earned
consequently rose even more strongly by 13.1% to EUR 2.8 billion (EUR 2.5
billion). Growth of 10.8% would have been recorded at constant exchange
rates.
Exceptionally good quarterly Group net income
The operating profit (EBIT) as at 31 March 2012 climbed appreciably to EUR
393.2 million on the back of a moderate major loss incidence and very good
investment income. The EBIT of EUR 47.4 million booked in the corresponding
quarter of the previous year had been impacted by heavy losses from natural
catastrophes. Group net income came in around five times higher at EUR
261.3 million (EUR 52.3 million). Earnings per share stood at EUR 2.17 (EUR
0.43).
Non-life reinsurance delivers very pleasing profit contribution
The treaty renewals in non-life reinsurance as at 1 January 2012 passed off
favourably for Hannover Re, enabling the company to make the most of
opportunities to write profitable business. As anticipated, rate increases
were especially marked for property catastrophe business owing to the heavy
losses incurred in 2011. The renewals in Germany also produced a pleasing
outcome. Developments in specialty lines were similarly satisfactory.
Gross premium in non-life reinsurance increased by a substantial 10.0%
relative to the comparable quarter to reach EUR 2.1 billion (EUR 1.9
billion). At constant exchange rates, especially against the US dollar,
growth would have come in at 8.1%. The level of retained premium rose to
91.2% (87.8%). Net premium earned climbed 13.0% to EUR 1.6 billion (EUR 1.4
billion), equivalent to growth of 11.0% after adjustment for exchange rate
effects.
In the first quarter of 2012 Hannover Re incurred only a few major losses,
leaving the net burden of major losses well below the expected level at EUR
60.6 million (EUR 572.1 million). The largest single event was the partial
sinking of the Costa Concordia cruise ship in the Mediterranean, which
resulted in a net strain of EUR 45.0 million.
In view of the favourable major loss experience, the underwriting result in
total non-life reinsurance closed at an extremely pleasing EUR 46.8 million
(-EUR 330.9 million), after the comparable quarter had been affected by an
extraordinarily large burden of major losses. The combined ratio improved
substantially to 96.8% (123.8%).
The operating result (EBIT) for non-life reinsurance improved to a very
good EUR 263.2 million (-EUR 24.5 million) as at 31 March 2012 thanks to
the positive influencing factors. Group net income soared to EUR 173.2
million (EUR 17.3 million). Earnings per share stood at EUR 1.44 (EUR
0.14).
Very good underwriting result in life and health reinsurance
Hannover Re is thoroughly satisfied with its life and health reinsurance
portfolio. 'Our risk-oriented life reinsurance business in the United
States fared especially well', Mr. Wallin emphasised. 'Building on the
platform acquired three years ago with the ING transaction, we have been
increasingly successful in writing attractive new business that assures us
a growing profit stream over the long term.'
Gross premium income for life and health reinsurance showed a very pleasing
increase of 14.3% to reach EUR 1.4 billion (EUR 1.2 billion) as at 31 March
2012. At constant exchange rates growth would amounted to 11.6%. Net
premium earned climbed 13.2% to EUR 1.3 billion (EUR 1.1 billion),
equivalent to growth of 10.5% on a currency-adjusted basis.
The increased Group net income in life and health reinsurance relative to
the previous year was crucially driven by an improved biometric risk
experience, especially in the United States and United Kingdom. As a
further factor, the narrowing in credit spreads on bond markets favourably
affected the derivative recognised for securities deposits held for the
account of Hannover Re by US cedants (ModCo). This gave rise to unrealised
gains of EUR 36.8 million.
The operating result (EBIT) increased appreciably as at 31 March 2012 to
EUR 122.2 million (EUR 58.4 million). The EBIT margin of 9.7% comfortably
surpassed the strategic target of 6%. Group net income for life and health
reinsurance as at 31 March 2012 climbed to EUR 100.1 million (EUR 41.5
million). Earnings per share amounted to EUR 0.83 (EUR 0.34).
As in previous years, Hannover Re is also reporting on the Market
Consistent Embedded Value (MCEV) in the context of its first interim
report. This consists of a valuation of the entire life and health
reinsurance portfolio. It also encompasses the discounted expected future
profits as well as the allocated capital, and hence provides a good basis
for assessing long-term profitability. The development of the MCEV was
again very pleasing in 2011. As at 31 December 2011 it stood at EUR 3.1
billion (EUR 2.6 billion). This corresponds to growth of 19.4%. The value
of new business (excluding non-controlling interests) showed another sharp
increase of 61.2% and totalled EUR 240.6 million (EUR 149.3 million).
Very pleasing investment income
Investments developed highly satisfactorily even though market conditions
were still difficult. The portfolio of investments under own management
showed further growth relative to the level as at 31 December 2011 to reach
EUR 29.0 billion (EUR 28.3 billion). Ordinary income from assets under own
management improved on the corresponding period of the previous year,
climbing by 15.9% to EUR 258.2 million (EUR 222.7 million) despite the
prevailing very low level of interest rates; the resulting annualised
return of 3.6% was on a par with the previous year. Interest on funds
withheld and contract deposits increased to EUR 83.7 million (EUR 75.9
million). The unrealised gains on assets recognised at fair value through
profit or loss totalled EUR 84.6 million (EUR 69.0 million). This figure
was influenced chiefly by the positive development of the inflation swaps
at EUR 42.6 million (EUR 60.2 million) as well as of the ModCo derivatives
at EUR 36.8 million (-EUR 1.9 million). Investment income from assets under
own management rose to EUR 356.9 million (EUR 316.1 million) as at 31 March
2012, corresponding to an annualised average return of around 5%. Including
interest on funds withheld and contract deposits, Hannover Re generated net
investment income of EUR 440.6 million (EUR 392.0 million).
Shareholders' equity reaches new record high
Hannover Re's equity base was further strengthened. Shareholders' equity
increased by EUR 390.0 million relative to the level as at 31 December 2011
to stand at EUR 5.4 billion (EUR 5.0 billion). The total policyholders'
surplus (including non-controlling interests and hybrid capital) grew by
5.0% to EUR 7.7 billion (EUR 7.3 billion). The book value per share
amounted to EUR 44.45 (EUR 41.22). The annualised return on equity reached
20.2% (4.7%).
Outlook
In light of the attractive market opportunities in non-life and life/health
reinsurance, Hannover Re anticipates a good 2012 financial year. With this
in mind, gross premium should show growth of 5% to 7%.
Market conditions in non-life reinsurance are highly advantageous. The
favourable outcome of the 1 January treaty renewals was reinforced by the 1
April renewals and in some areas even surpassed. Particularly in Japan, the
rate increases - following on from the rises in the previous year - were
again appreciable. Korea similarly saw substantial rate increases. US
catastrophe business was also notable for rate rises, which were
particularly sizeable for programmes that had been impacted by the series
of tornadoes.
Hannover Re also expects the upcoming renewal rounds within the year to
pass off favourably overall, with the resulting price increases set to hold
firm over the medium term too. For 2012 the company anticipates growth of
5% to 7% in gross premium income from total non-life reinsurance.
The prospects in life and health reinsurance are also very good. In light
of attractive business opportunities Hannover Re is looking to grow its
gross premium organically by 5% to 7% in the 2012 financial year.
A return on investment of 3.5% is targeted for the asset portfolio in 2012.
This is well below the return on investment in the first quarter in view of
the fact that the unrealised gains in subsequent quarters cannot be
expected to be as positive as in the first quarter.
Based on the good business prospects overall as well as its strategic
orientation, Hannover Re is looking forward to a good 2012 financial year.
This is conditional on the burden of major losses not significantly
exceeding the expected level of EUR 560 million for the full year and
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:
Corporate Communications:
Karl Steinle (tel. +49 511 5604-1500,
e-mail: karl.steinle(at)hannover-re.com)
Media Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: gabriele.handrick(at)hannover-re.com)
Investor Relations:
Julia Hartmann (tel. +49 511 5604-1529,
e-mail: julia.hartmann(at)hannover-re.com)
Please visit: www.hannover-re.com
Hannover Re, with a gross premium of around EUR 12 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 2,200 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 'Excellent').
Please note the disclaimer:
www.hannover-re.com/misc/disclaimer-pr-050811
Key figures of the Hannover Re Group (IFRS basis)
in EUR million Q1/ +/- previous Q1/ 2011
2012 year 2011
Hannover Re Group
Gross written premium 3,510.6 11.7% 3,143.1
Net premium earned 2,816.2 13.1% 2,490.7
Net underwriting result 0.3 (100.1%) (382.7)
Net investment income1) 440.6 12.4% 392.0
Operating profit / loss (EBIT) 393.2 47.4
Group net income (loss) 261.3 52.3
Earnings per share in EUR 2.17 0.43
Retention 91.0% 89.3%
EBIT margin2) 14.0% 1.9%
Return on equity (after tax)3) 20.2% 4.7%
in EUR million Q1/ +/- previous Q1/ 2011
2012 year 2011
Policyholders' surplus4) 7,705.3 5.0% 7,338.2
Investments (excl. funds held 28,986.7 2.3% 28,341.2
by ceding companies)
Total assets 51,120.9 2.5% 49,867.0
Book value per share in EUR 44.45 7.8% 41.22
Non-life reinsurance
in EUR million Q1/ +/- previous Q1/ 2011
2012 year 2011
Gross written premium 2,116.6 10.0% 1,924.3
Net premium earned 1,554.7 13.0% 1,376.3
Net underwriting result 46.8 (114.1%) (330.9)
Operating profit / loss (EBIT) 263.2 (24.5)
Group net income (loss) 173.2 17.3
Retention 91.2% 87.8%
Combined Ratio5) 96.8% 123.8%
EBIT margin2) 16.9% (1.8%)
Life and health reinsurance
in EUR million Q1/ +/- previous Q1/ 2011
2012 year 2011
Gross written premium 1,394.0 14.3% 1,219.4
Net premium earned 1,261.5 13.2% 1,114.5
Operating profit / loss (EBIT) 122.2 109.1% 58.4
Group net income (loss) 100.1 141.2% 41.5
Retention 90.8% 91.5%
EBIT margin2) 9.7% 5.2%
1) Including income/expense on funds withheld and contract depositsEnd of Corporate News
2) Operating profit / loss (EBIT) / net premium earned
3) Annualised
4) Equity attributable to shareholders of Hannover Re + non-controlling
interests + hybrid capital
5) Including interest income on contract deposits and funds withheld
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03.05.2012 Dissemination of a Corporate News, transmitted by DGAP - a
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Language: English
Company: Hannover Rückversicherung AG
Karl-Wiechert-Allee 50
30625 Hannover
Germany
Phone: +49-(0)511-5604-1500
Fax: +49-(0)511-5604-1648
E-mail: info(at)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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