Hannover Re Profit Rises 29 Percent, Beating Estimates

Hannover Re (HNR1), the world’s fourth-biggest reinsurer, said second-quarter profit rose 29 percent, beating analysts’ estimates, helped by higher investment income.

Net income advanced to 186.3 million euros ($247.9 million) from 144 million euros a year ago, the Hanover, Germany-based company said in a statement today. That compared with a 173.4 million-euro average estimate of nine analysts surveyed by Bloomberg.

Hannover Re, led by Chief Executive Officer Ulrich Wallin, confirmed its full-year profit forecast of about 800 million euros after floods in Germany, Austria and the Czech Republic resulted in net claims of 136.9 million euros. The reinsurer said in June that its costs for the floods probably won’t exceed its budget for major disaster claims.

Net investment income rose 24 percent to 334.3 million euros in the quarter from a year earlier, Hannover Re said.

Munich Re, the world’s biggest reinsurer, yesterday missed analyst estimates with a 35 percent decline in second-quarter profit, as claims from natural disasters rose. The Munich-based company said it expects costs of about 230 million euros from the June floods in central Europe. It kept its full-year earnings target of “close to” 3 billion euros.

Reinsurers, which help primary insurers such as Allianz SE (ALV) and Axa SA (CS) shoulder risks in return for a share of premiums, face challenges from low interest rates and an abundant supply of capital. Even with the recent European flooding, catastrophe claims remain below average, weighing on demand for reinsurance coverage.

While flooding in May and June was “by far” the most expensive natural catastrophe in the first half, resulting in insured losses of more than 3 billion euros, the industry’s total insured losses in the period of about $13 billion remained below the 10-year average of $22 billion, according to estimates by Munich Re published last month.

Hannover Re shares decreased 4.1 percent this year, lagging behind the 17 percent gain for the Bloomberg Europe 500 Insurance Index. German insurer Talanx AG (TLX), which sold shares in an initial public offering last year, owns 50.2 percent of Hannover Re.

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

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

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