Hannover Re Second-Quarter Profit Rises 10% on Life Reinsurance

August 6, 2014

Hannover Re, the world’s third- biggest reinsurer, said second-quarter profit rose 10 percent, helped by a lower level of large claims and higher life reinsurance earnings.

Net income climbed to €211.5 million ($282.7 million) from €192.3 million [$257.1 million] a year ago, the reinsurer said in a statement today. Profit compared with the € 223.8 million [$299 million] average estimate of 11 analysts surveyed by Bloomberg.

Reinsurers are facing pressure on their earnings as reinsurance rates decline amid lower-than-average disaster claims and record capital available for their coverage. Funds available in the reinsurance market grew to a record $555 billion by the end the first quarter, according to reinsurance broker Aon Benfield.

The Hanover, Germany-based reinsurer, led by Chief Executive Officer Ulrich Wallin, confirmed its full-year profit target of about €850 million [$1.136 billion] for this year. That compares with €895.5 million [$1.197 billion] reported for 2013.

Earnings at the life reinsurance unit more than doubled to €72 million [$96.25 million], while the non-life unit reported a decline of 20 percent to €150 million [$200 million]. The quarter’s major losses were “again slight,” lowering costs for major claims this year to €104.7 million [$140 million] from €259.5 million [$347 million] a year ago, Hannover Re said.

While the first-half’s lower-than-average catastrophe claims help reduce claims costs, they also limit pricing power for the industry. Reinsurance rates declined in the main renewals of annual treaties in January, April and July. They fell in seven of the last 10 years, according to the Guy Carpenter World Property Catastrophe Rate on Line Index.

Hannover Re shares rose 1.4 percent this year, valuing the company at €7.6 billion [$10.16 billion]. The Bloomberg Europe 500 Insurance Index fell 0.3 percent.

Germany’s third-biggest insurer, Talanx AG, owns 50.2 percent of Hannover Re.

 

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