Hannover Re Drops Most Since March as First-Quarter Profit FallsCarolyn Bandel and Annette Weisbach
Hannover Re, the world’s fourth-biggest reinsurer, slid the most in almost two months in Frankfurt trading after first-quarter profit fell 15 percent.
The stock decreased as much as 3.6 percent, the steepest decline since March 15, and was down 1.9 percent at 63.25 euros as of 9:46 a.m. local time. Hannover Re advanced 7.3 percent this year, lagging behind the 13 percent gain for the 28-company Bloomberg Europe 500 Insurance Index.
Net income fell to 221.4 million euros ($289.6 million) in the three months to March from 261.3 million euros a year earlier, it said in an e-mailed statement today. The company was expected to earn 211.3 million euros, according to the average estimate of six analysts surveyed by Bloomberg.
Hannover Re, based in the city of Hanover, expects profit to decline to 800 million euros this year from a record 858 million euros in 2012 and says a fall in interest rates means a 3.4 percent return on investments is “ambitious”. It posted an annualized return of 3.2 percent for the quarter as investment income slid 20 percent.
“These results are no game-changer,” said Daniel Bischof, an analyst with Zurich-based financial services firm Helvea, who recommends investors reduce their exposure to the share. “The renewal volumes are positive, and the very low natural catastrophe activity” enabled Hannover Re to build up a buffer for the next nine months, he said.
Claims from major losses such as natural disasters fell to 13 million euros in the quarter from 60.6 million euros in the same period of 2012. That helped underwriting profit in non-life more than double to 98.1 million euros in the period.
Hannover Re said volumes increased 11 percent during April contract renewals, which mainly focused on business in Asia.
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 first-quarter earnings were “a first successful step toward accomplishing our full-year goal,” Chief Executive Officer Ulrich Wallin said. “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.”
German insurer Talanx AG owns 50.2 percent of Hannover Re.