Nov. 6 (Bloomberg) -- Hannover Re, Germany’s second-biggest reinsurer, raised its full-year profit target after returning to a bigger-than-estimated third-quarter profit as writedowns on equities weren’t repeated and no major hurricane hit the U.S.

Net income was 159 million euros ($237 million), or 1.32 euros a share, after a loss of 395 million euros, or 3.27 cents, a year earlier, the company said in an e-mailed statement today. That exceeded the median estimate of 148 million euros in a Bloomberg survey of 13 analysts.

Hannover Re Chief Executive Officer Ulrich Wallin, 54, who took the helm at the beginning of July, plans to seek more stable earnings by increasing coverage of non-catastrophe business such as motor or life and health reinsurance. The Hanover, Germany-based reinsurer raised its full-year profit forecast to at least 5.75 euros per share from an earlier forecast for at least 5 euros.

The increased 2009 profit target would translate into full- year net income of at least 690 million euros, Chief Financial Officer Roland Vogel said in a telephone interview. “That’s still a rather conservative assumption” if claims and capital markets don’t develop adversely in the fourth quarter, he said. Hannover Re, which had 578 million euros in profit for the first nine months, already said in August it expects to beat its former profit goal.

Hannover Re added 3.1 percent to 32.28 euros in Frankfurt trading, giving the company a market value of 3.9 billion euros.

Return on Equity

Hannover Re expects a 15 percent return on equity in 2010 compared with a target for more than 20 percent this year, Vogel said. This year’s earnings will include about 150 million euros in one-time gains, mainly from the January purchase of a portfolio of Scottish Re Group U.S. insurance policies that covers life business reinsured by ING Groep NV, he said.

The revised 2009 profit target would be the second-highest profit in the reinsurer’s 43-year history and would follow its first ever full-year loss in 2008 on investment writedowns and claims from hurricanes. Operating profit in the quarter was 245 million euros after a 368 million-euro year-earlier loss. Gross premiums written rose 23 percent to 2.42 billion euros.

Hannover Re also said it plans to pay a dividend of at least 2 euros for 2009. The reinsurer scrapped last year’s dividend to preserve capital and paid a dividend of 2.30 euros a share for 2007 including a bonus of 50 cents.

No Share Buyback

A share buyback as well as larger takeovers are currently “not on the agenda,” Vogel said.

Thanks to an “unremarkable hurricane season,” third- quarter catastrophe claims were below average, Hannover Re said. Hail and flood damage in Central Europe, an industrial fire claim in Russia as well as a marine loss-event cost the reinsurer about 35 million euros in the quarter.

Spending on claims and other costs at the property and casualty reinsurance unit improved to 96.3 percent of premiums collected from 114.2 percent a year earlier. A combined ratio below 100 percent means a reinsurer’s premium income exceeds claims and costs, giving it a profit from underwriting.

This year’s hurricane season has only seen one named system make landfall the U.S., Tropical Storm Claudette. In September 2008 HurricaneIke slammed into Texas, costing the industry about $20 billion, while Hurricane Gustav produced claims of about $4 billion, according to estimates by Swiss Re.

Munich Re, the world’s biggest reinsurer, yesterday reported a smaller-than-estimated third-quarter profit after it set aside money for future tax payments. Swiss Reinsurance Co., the world’s second-biggest reinsurer, earlier this week said it had an unexpected third-quarter profit of 334 million Swiss francs ($329 million), helped by investment gains and fewer catastrophe claims.

To contact the reporter on this story: Oliver Suess in Munich at osuess@bloomberg.net.

Last Updated: November 6, 2009 11:54 EST