Hannover Re, the world’s third- biggest reinsurer, confirmed its profit target for this year even as the prices it charges customers for coverage fell.
“Although the rate level in non-life reinsurance was broadly lower than in the previous year, we achieved adequate margins” following negotiations with clients, Chief Executive Officer Ulrich Wallin said in a statement today. “Profitability is likely to remain largely stable relative to 2013.”
Hannover Re, which renegotiated about two thirds of its property-casualty reinsurance business, said the volume to be renewed declined by 2 percent. It confirmed a profit target of €850 million ($1.153 billion) for this year, which includes a budget of €670 million [$909 million] for major losses, from €625 million [$848 million] set aside last year. The company, which plans to report 2013 earnings on March 11, didn’t comment on its profit goal of about €800 million [$1.085 billion] for 2013.
The reinsurer, based in Hanover, Germany, said in September it expects prices to be little changed in January. Reinsurers, which help primary insurers shoulder risks, are under pressure to maintain price levels because of an abundant supply of capital boosted by money from pension funds and lower-than- average disaster losses.
The reinsurance industry had about $322 billion in capital at the end of 2013, almost a record, according to Guy Carpenter, the reinsurance broker of Marsh & McLennan Cos. Because of the ample supply, prices for property-catastrophe policies declined 11 percent in January and also fell for most other types of coverage, according to the broker.
Last year, insurers’ and reinsurers’ claims from natural catastrophes dropped 52 percent to about $31 billion amid a quieter hurricane season, according to Munich Re, the world’s biggest reinsurer.
Munich Re said earlier this week that it plans to boost its dividend after fourth-quarter profit beat estimates. The Munich- based reinsurer reported a 1.5 percent price decline for January, when it renewed about half of its non-life reinsurance contracts.
–Editors: Jon Menon, Mark Bentley