Hannover Re First-Quarter Profit Declined 15% on Investments

Hannover Re (HNR1), the world’s fourth- biggest reinsurer, said first-quarter profit dropped 15 percent as lower interest rates and tougher competition weighed on margins and the group did not repeat earlier unrealized gains.

Net income declined to 221.4 million euros ($289.6 million) from 261.3 million euros a year ago, the Hanover, Germany-based reinsurer said in a statement today. That beat the 211.3 million-euro average estimate of six analysts surveyed by Bloomberg.

Hannover Re expects profit to decline to 800 million euros from a record 858 million euros last year, it said in March. After a drop in interest rates in 2012, Hannover Re said a goal of a 3.4 percent return on investments this year was “ambitious” and posted an annualized return of 3.2 percent for the quarter as investment income dropped 20 percent.

“This results is a first successful step toward accomplishing our full-year goal,” Chief Executive Officer Ulrich Wallin said in an e-mailed statement today. “For the current financial year, Hannover Re believes that both non-life and life and health reinsurance offer sufficient growth potential for the company to be able to achieve its goals.”

Underwriting profit in non-life more than doubled to 98.1 million euros after an “exceptionally untroubled major-loss experience in the first quarter,” the group said.

Hannover Re’s shareholders meet for an annual general meeting in Hanover today, when they will consider a dividend payment for last year. In March, the company set the dividend for 2012 at a record 2.60 euros a share plus a bonus of 0.40 euros, compared with 2.10 euros a share in 2011.

The shares have advanced 9.3 percent this year, lagging behind a gain of 12 percent for the 28-company Bloomberg Europe 500 Insurance Index and valuing the firm at 7.77 billion euros.

German insurer Talanx AG (TLX) owns 50.2 percent of the firm.

To contact the reporters on this story: Annette Weisbach in Frankfurt at aweisbach1@bloomberg.net; Carolyn Bandel in Zurich at cbandel@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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