Hannover Re, the world’s third-biggest reinsurer, said second-quarter profit climbed 4.1 percent after a gain in investment income.
Net income rose to 166.2 million euros ($238 million) from 159.6 million euros a year earlier, the Hanover, Germany-based company said in a statement today. That beat the 151 million-euro average estimate of eight analysts surveyed by Bloomberg. Investment income increased 3.3 percent to 281 million euros.
Hannover Re, led by Chief Executive Officer Ulrich Wallin, reduced its full-year profit target by 23 percent to 500 million euros in May following claims from the earthquake and tsunami in Japan. The reinsurer reiterated that forecast today, adding that it expects full-year earnings to benefit from a tax gain of about 124 million euros.
“Our group net income of 218 million euros for the first half year should enable us, given a normal experience in the second half of the year, to comfortably attain our targeted year-end profit,” Wallin said in the statement.
Hannover Re shares fell 1.5 percent to 31.79 euros at 9:34 a.m. in Frankfurt trading. The stock is down 21 percent this year compared with an 11 percent decline in the 28-company Bloomberg Europe 500 Insurance Index.
Natural disasters cost insurers and reinsurers about $70 billion in the first six months of this year, according to estimates by Guy Carpenter & Co., the reinsurance brokerage of Marsh & McLennan Cos. Hannover Re had major losses of 53 million euros in the second quarter, bringing the first-half total to 625 million euros.
The reinsurer’s full-year profit target depends on second-half catastrophe losses not significantly exceeding the forecast 295 million euros and “also assumes that there are no drastic downturns on capital markets,” Hannover Re said.
Hannover Re’s debt holdings of Portugal, Ireland, Italy and Spain were 254 million euros at the end of the quarter, or about 1 percent of total investments. The company doesn’t own any Greek government bonds.
Swiss Re Ltd. and Munich Re, the world’s biggest reinsurers, last week said they expect rates to rise after posting second-quarter earnings that exceeded analyst estimates. Zurich-based Swiss Re reported an 18 percent increase in net income to $960 million, while larger rival Munich Re posted a 3.8 percent rise in profit to 736 million euros.
Reinsurers sell coverage to primary insurers such as Allianz SE and Axa SA to help guard them against the cost of major claims. Hannover Re is 50.2 percent owned by German insurer Talanx AG.
Hannover Re said in a separate statement today that Claude Chevre will join its management board by Feb. 1, 2012, at the latest. Chevre, 44, will succeed Wolf Becke, who retires on Jan. 1, and will assume responsibility for the life and health reinsurance business together with board member Klaus Miller. Chevre was previously head of life for Asian markets, Spain, Portugal and Latin America at PartnerRe Ltd., Hannover Re said.