Hannover Re Considers Higher Payout Ratio After Record Profit

Hannover Re, the world’s fourth-largest reinsurer, may increase the proportion of profit distributed to shareholders after full-year earnings increased by 17 percent.

The company may raise the payout from the current 35 percent to 40 percent of net income “if the present comfortable level of capitalization remains unchanged,” Hannover Re said in a statement on Thursday.

Reinsurers help primary insurers shoulder risks for events such as natural disasters. While they have seen earnings squeezed by record low interest rates, below-average losses from natural disasters have helped bolster earnings. 

Hanover Re, led by Ulrich Wallin, 61, proposed a dividend of 3.25 euros ($3.57) a share plus a special dividend of 1.50 euros for 2015, according to the statement. That’s the second extra payout in a row. Full-year net income rose 17 percent to a record 1.15 billion euros last year, beating the company’s target of about 950 million euros. For this year, profit is expected to reach at least 950 million euros.

Hannover Re has lost about 11 percent in Frankfurt trading this year, giving the company a market value of more than 11 billion euros.

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