Hannover Re Confirms Profit Target as Renewals Beat Expectations
Hannover Re, the world’s third- biggest reinsurer, confirmed its profit forecast for this year after negotiating better-than-expected rates with clients in the January round of renewals.
“For 2011 we see sufficient opportunities for selective profitable growth,” Ulrich Wallin, chief executive officer of the Hanover, Germany-based reinsurer, told reporters during a briefing at the company’s headquarters. “We shall concentrate on segments where prices are rising or where they adequately reflect the risks.”
Reinsurers, which help primary carriers such as Allianz SE and Axa SA shoulder risks for clients, have to cope with rising costs for natural disasters, reduced income from investments due to low interest rates and falling reinsurance prices. Hannover Re said it was able to renew contracts this year at “broadly stable rates and conditions” amid an average drop across the industry of 5 percent to 10 percent.
Hannover Re, which is 50.2 percent owned by German insurer Talanx AG, confirmed a net income target of about 650 million euros ($895 million) this year. Wallin, 56, also said he sees no reason to change the 2010 goal of more than 700 million euros, helped by a 100 million-euro tax gain. He declined to be more specific, referring to the planned publication of full-year and fourth-quarter results on March 9.
Earthquakes in Haiti and Chile as well as winter storms in Europe led to an increase in insured losses from natural disasters of more than two-thirds to $37 billion last year, Munich Re said on Jan. 3. That exceeded the annual average of $35 billion over the preceding 10 years even as the 2010 U.S. hurricane season didn’t result in major claims.
Hannover Re will provide claims estimates for the floods in Australia in the coming weeks, management board member Juergen Graeber said, adding that they won’t have an impact on the firm’s earnings forecasts. Almost two months of torrential rains led to a flood disaster in the northeastern state of Queensland that killed several people, affected 30,000 homes, shut mines and wiped out crops.
To contact the reporter on this story: Oliver Suess in Munich at firstname.lastname@example.org