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DGAP-News: Hannover Re posts good half-yearly result



DGAP-News: Hannover Re posts good half-yearly result

DGAP-News: Hannover Rück SE / Key word(s): Half Year Results
Hannover Re posts good half-yearly result

07.08.2013 / 07:30

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Hannover Re posts good half-yearly result 

  - Net premium earned: + 6.3% (currency-adjusted + 7.7%)

  - Net burden of major losses: EUR 259.5 million (EUR 132.4 million)

  - Underwriting result in non-life reinsurance + 85.0%: EUR 183.6 million
    (EUR 99.2 million)

  - Combined ratio: 94.4% (96.8%)

  - Investment income - 2.9%: EUR 689.0 million (EUR 709.5 million)

  - Operating profit (EBIT) + 12.3%: EUR 670.7 million (EUR 597.2 million)

  - Group net income + 0.6%: EUR 407.7 million (EUR 405.3 million)

  - Return on equity: 14.0%

Hannover, 7 August 2013: With its result for the first half-year Hannover
Re has put in place a good basis for achieving its full-year targets. 'The
modest rise in Group net income to EUR 408 million was driven mainly by an
85% increase in the underwriting profit for non-life reinsurance', Chief
Executive Officer Ulrich Wallin explained. 'This more than made up for the
reduced profitability in life and health reinsurance and somewhat lower
investment income.'

Continued organic growth
Gross written premium for the Hannover Re Group increased by 4.9% to reach
EUR 7.2 billion (EUR 6.9 billion) as at 30 June 2013. At constant exchange
rates growth would have amounted to 6.2%. The level of retained premium
remained virtually unchanged at 90.0% (89.8%). Net premium earned climbed  
6.3% to EUR 6.2 billion (EUR 5.8 billion), equivalent to growth of 7.7%
adjusted for exchange rate effects.

Good Group net income 
The operating profit (EBIT) for the first six months of 2013 was thoroughly
pleasing, rising 12.3% to EUR 670.7 million (EUR 597.2 million). Owing to a
higher tax ratio Group net income increased less strongly relative to the
comparable period, coming in at EUR 407.7 million (EUR 405.3 million).
Earnings per share amounted to EUR 3.38 (EUR 3.36).

Pleasing result in non-life reinsurance 
The pace of growth in gross and net premium has slowed in non-life
reinsurance. This is due in part to increased competition, but also to the
disciplined underwriting policy practised by Hannover Re. 'For reasons of
profitability we concentrate our acceptances exclusively on business that
meets our margin requirements. We are even prepared to accept a contraction
in premium income', Mr. Wallin emphasised.

Gross premium in non-life reinsurance increased only slightly relative to
the comparable period, rising 0.4% to EUR 4.1 billion (EUR 4.1 billion). At
constant exchange rates growth would have come in at 1.3%. The level of
retained premium was unchanged at 90.2% (90.2%). Net premium earned climbed
3.0% to EUR 3.4 billion (EUR 3.3 billion); growth of 4.0% would have been
recorded after adjustment for exchange rate effects.

Following a very calm major loss situation in the first quarter, a number
of large losses were recorded in the second quarter. The largest single
event was the severe flooding in Germany and other European countries. The
resulting net strain for Hannover Re amounts to EUR 136.9 million. Further
sizeable losses occurred shortly before the end of the quarter, including
for example hail damage in Germany and a flood event in Canada. Total major
loss expenditure for Hannover Re as at 30 June 2013 amounted to EUR 259.5
million (EUR 132.4 million). It was only slightly higher than the loss
expectancy and hence the major loss budget for the first half-year. The
underwriting result for total non-life reinsurance surged by a pleasing
85.0% to EUR 183.6 million (EUR 99.2 million) and thus more than offset the
reduced investment income for the business group - a decrease which had
been anticipated in view of the low level of interest rates. The combined
ratio for the first half-year was positive at 94.4% (96.8%).

The operating profit (EBIT) in non-life reinsurance consequently improved
by a thoroughly gratifying 27.6% to EUR 549.1 million (EUR 430.3 million)
as at 30 June 2013. Group net income increased by 18.6% to EUR 362.1
million (EUR 305.4 million); earnings per share stood at EUR 3.00 (EUR
2.53).

Life and health reinsurance offers attractive growth opportunities 
As anticipated, good business opportunities presented themselves in life
and health reinsurance during the first half of the year. The dominant
topics here continue to be protection for a progressively ageing population
in industrialised nations as well as financially oriented reinsurance
solutions designed to optimise a client's capital structure. 'We also
booked particularly healthy growth in promising future markets such as
Latin America, Eastern Europe and Asia, where demand for our life
reinsurance products is especially strong', Mr. Wallin noted.

Gross written premium in life and health reinsurance climbed 11.4% to EUR
3.1 billion (EUR 2.8 billion) as at 30 June 2013. New transactions written
for the assumption of UK pension business as well as substantial growth in
emerging markets were the key factors here. At constant exchange rates
growth would have been as high as 13.4%. Net premium earned increased by
10.5% to EUR 2.8 billion (EUR 2.5 billion), equivalent to growth of 12.6%
after adjustment for exchange rate effects.

Profitability fell short of expectations in the reporting period just
ended. This can be attributed principally to losses incurred in part of the
book of US mortality business. The operating profit (EBIT) in life and
health reinsurance as at 30 June 2013 consequently retreated to EUR 111.4
million (EUR 155.4 million). Group net income closed at EUR 83.8 million
(EUR 128.0 million); earnings per share totalled EUR 0.70 (EUR 1.06).

Satisfactory investment income 
Bearing in mind the continued challenging and volatile capital market
environment, investments developed in line with expectations. Despite the
sustained positive cash flow, the portfolio of investments under own
management contracted slightly to EUR 31.6 billion (31 December 2012: EUR
31.9 billion). This was driven by reduced fair values in the portfolio of
fixed-income securities due to interest rate increases shortly before the
end of the second quarter. Exchange rate effects were an additional factor
here. Owing to the protracted low level of interest rates, the ordinary
investment income of EUR 503.6 million came in below the comparable period
(EUR 532.0 million) as had been expected. Net income from investments under
own management contracted in the period under review from EUR 553.2 million
to EUR 501.4 million. This was due largely to the balance of unrealised
gains and losses: the inflation swaps taken out to hedge part of the
inflation risks associated with technical reserves produced an unrealised
loss of EUR 39.7 million (EUR -9.9 million) as at 30 June 2013. Altogether,
unrealised losses of EUR 37.5 million (EUR +2.9 million) were recognised.

The annualised average return on the portfolio of assets under own
management amounted to 3.2%. Excluding the aforementioned unrealised
effects, the figure was 3.4% and hence within the range of our expectations
for the full year. In view of the decline in ordinary and unrealised income
in what remained a challenging capital market environment, investment
income including interest on funds withheld and contract deposits was still
gratifying at EUR 689.0 million (EUR 709.5 million).

Shareholders' equity remains robust
Hannover Re's equity base remained strong in the first half-year at EUR 5.6
billion (31 December 2012: EUR 6.0 billion). The expected reduction was due
to dividend payments as well as interest rate rises on the US side, which
led to a decrease in the fair values of investments in this area. The
annualised return on equity of 14.0% was comfortably above our minimum
target of 750 basis points above risk-free. The total policyholders'
surplus (including non-controlling interests and hybrid capital) amounted
to EUR 8.5 billion (31 December 2012: EUR 8.9 billion). The book value per
share stood at EUR 46.40 (EUR 50.02).

Outlook
In view of its strong positioning and the development of business to date,
Hannover Re expects to post a result in the region of the declared year-end
targets in both non-life and life/health reinsurance for the full 2013
financial year. Based on constant exchange rates the company continues to
anticipate growth of around 5% in gross premium.

In some areas of non-life reinsurance the competitive pressure has
continued to intensify relative to the previous year. 'The importance of
our strategy of systematic cycle management combined with rigorous
underwriting discipline remains undiminished. Going forward, then, we shall
continue to write only business that meets our margin requirements', Mr.
Wallin emphasised.

Despite a more intensely competitive environment, Hannover Re is broadly
satisfied with the treaty renewals in non-life reinsurance as at 1 July
2013. Treaties for North American business as well as in the Australian and
New Zealand markets traditionally come up for renewal at this time of year.
Even though appreciable competitive pressure could be felt in US
catastrophe business due to additional capacities from the catastrophe bond
market, margins here are for the most part still adequate. However, given
that Hannover Re has scaled back the proportion of US property catastrophe
business in its non-life reinsurance portfolio to 8%, the implications of
this softening market trend for the company are limited. Rate hikes in
retail property business, on the other hand, were sustained; in commercial
property business, too, Hannover Re booked moderate price increases.

For 2013 Hannover Re is looking to grow its gross premium income from total
non-life reinsurance by 3% to 5% after adjustment for exchange rate
effects.

In life and health reinsurance Hannover Re sees good prospects for further
profitable growth. Particularly notable growth impetus is anticipated from
Asia, India and Eastern Europe, where awareness of the need for individual
provision is on the rise. Yet mature markets such as the United States,
United Kingdom, Germany and France will also continue to play a pivotal
role for Hannover Re. Gross premium is expected to increase by 5% to 7% for
the full year after adjustment for exchange rate effects. Growth here could
also come in somewhat higher on the basis of the half-year figures.

Hannover Re's targeted return on investment for the full year remains
unchanged at 3.4%.

The results for the first six months constitute a good platform for a
continued successful 2013 financial year as well as for attainment of the
company's guidance, namely post-tax Group net income in the order of EUR
800 million. This is conditional on the burden of major losses not
significantly exceeding the expected level of EUR 625 million for the full
year and assumes that there are no unforeseen 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@hannover-re.com) 

Media Relations: 
Gabriele Handrick (tel. +49 511 5604-1502, 
e-mail: gabriele.handrick@hannover-re.com)

Investor Relations: 
Julia Hartmann (tel. +49 511 5604-1529, 
e-mail: julia.hartmann@hannover-re.com) 

Please visit: www.hannover-re.com

Hannover Re, with a gross premium of EUR 13.8 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 2,300
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').

Please note the disclaimer:
www.hannover-re.com/misc/disclaimer-pr-050811


Key figures of the Hannover Re Group (IFRS basis)


in EUR million                   H1/2013   +/- previous  H1/2012   2012
                                           year
Hannover Re Group
Gross written premium             7,226.7         +4.9%   6,888.4
Net premium earned                6,191.5         +6.3%   5,824.8
Net underwriting result             (5.5)                  (13.2)
Net investment income1)             689.0        (2.9%)     709.5
Operating profit / loss (EBIT)      670.7        +12.3%     597.2
Group net income (loss)             407.7         +0.6%     405.3
Earnings per share in EUR            3.38         +0.6%      3.36
Retention                           90.0%                   89.8%
Tax ratio                           27.2%                   22.9%
EBIT margin2)                       10.8%                   10.3%
Return on equity (after tax)3)      14.0%                   15.5%

in EUR million                   H1/2013   +/- previous  H1/2012   2012
                                           year
Policyholders' surplus4)          8,467.5        (5.4%)             8,947.2
Investments (excl. funds held
by ceding companies)             31,609.8        (0.8%)            31,874.4
Total assets                     55,157.1         +0.6%            54,811.7
Book value per share in EUR         46.40        (7.2%)               50.02

Non-life reinsurance
in EUR million                   H1/2013   +/- previous  H1/2012   2012
                                           year
Gross written premium             4,097.1         +0.4%   4,079.7
Net premium earned                3,403.9         +3.0%   3,303.4
Net underwriting result             183.6        +85.0%      99.2
Operating profit / loss (EBIT)      549.1        +27.6%     430.3
Group net income (loss)             362.1        +18.6%     305.4
Retention                           90.2%                   90.2%
Combined Ratio1)                    94.4%                   96.8%
EBIT margin2)                       16.1%                   13.0%

Life and health reinsurance
in Mio. EUR                      H1/2013   +/- previous  H1/2012   2012
                                           year
Gross written premium             3,129.7        +11.4%   2,808.8
Net premium earned                2,787.3        +10.5%   2,521.4
Operating profit / loss (EBIT)      111.4       (28.3%)     155.4
Group net income (loss)              83.8       (34.5%)     128.0
Retention                           89.6%                   89.2%
EBIT margin2)                        4.0%                    6.2%

1) Including funds withheld
2) Operating result (EBIT) / net premium earned
3) Annualised
4) Equity attributable to shareholders of Hannover Re + non-
controlling interests + hybrid capital





Key figures of the Hannover Re Group (IFRS basis)



in EUR million                          Q2/2013   +/- previous     Q2/2012
                                                  year
Hannover Re Group
Gross written premium                    3,468.8            +2.7%   3,377.9
Net premium earned                       3,110.7            +3.4%   3,008.6
Net underwriting result                   (22.9)           +68.8%    (13.6)
Net investment income1)                    334.3           +24.3%     268.8
Operating profit / loss (EBIT)             318.1           +55.9%     204.0
Group net income (loss)                    186.3           +29.4%     144.0
Earnings per share in EUR                   1.54           +29.4%      1.19
Retention                                  90.1%                      88.5%
Tax ratio                                  29.0%                      18.1%
EBIT margin2)                              10.2%                       6.8%
Return on equity (after tax)3)             12.5%                      10.7%

Non-life reinsurance
in EUR million                          Q2/2013   +/- previous     Q2/2012
                                                  year
Gross written premium                    1,899.5           (3.2%)   1,963.1
Net premium earned                       1,712.0           (2.1%)   1,748.7
Net underwriting result                     85.5           +62.9%      52.5
Operating profit / loss (EBIT)             290.4           +73.6%     167.3
Group net income                           187.2           +41.6%     132.3
Retention                                  90.8%                      89.1%
Combined Ratio1)                           94.8%                      96.8%
EBIT margin2)                              17.0%                       9.6%

Life and health reinsurance
in Mio. EUR                             Q2/2013   +/- previous     Q2/2012
                                                  year
Gross written premium                    1,569.4           +10.9%   1,414.8
Net premium earned                       1,398.5           +11.0%   1,259.9
Operating profit / loss (EBIT)              23.1          (30.4%)      33.1
Group net income (loss)                     18.6          (33.3%)      27.9
Retention                                  89.3%                      87.6%
EBIT margin2)                               1.6%                       2.6%

1) Including funds withheld
2) Operating result (EBIT) / net premium earned
3) Annualised




End of Corporate News

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07.08.2013 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

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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:      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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224473 07.08.2013                                                      
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