Hannover Re Reports $203.4 Q1 Net Income, Despite ‘Major Losses’

Hannover Re’s first quarter report noted that, although it had been hit with some “major losses,” the reinsurer was nonetheless satisfied “with its start to the new financial year.”

CEO Ulrich Wallin commented: “Although the burden of major losses in this quarter was higher than our expected level, the achieved result puts in place a good platform for attaining our 2010 profit target – namely a return on equity of at least 15 percent after tax.”

Financial highlights for the period were listed as follows:
— Net premium rises by + 9.5 percent
— Burden of major losses higher than expected level
— Combined ratio in non-life reinsurance: 99.3 percent
— Premium volume and profitability in life and health reinsurance show appreciable growth
— Good investment income: + 41.0 percent
— Satisfactory Group net income: €157.2 million [$203.4 million]
— Shareholders’ equity: + 10.0 percent
— Forecast for the full financial year reaffirmed: return on equity of at least 15 percent.

Hannover Re’s bulletin noted that the “appreciable growth recorded in the corresponding quarter of the previous year, the gross written premium booked by the Hannover Re Group increased by a further 7.1 percent to €2.9 billion [$3.75 billion] (€2.7 billion [$3.5 billion] in Q1, 2009) as of 31 March 2010.”

Wallin added: “With our Group net income of €157.2 million we are right on track to achieve our targeted total result.” The bulletin explained that the “previous year’s figure of €228.6 million [$296 million] included a special effect of €86.4 million [$111.87 million].” Earnings per share came in at €1.30 [$1.682], compared to €1.90 [$2.46] in Q1 2009.

Hannover Re also said its treaty renewals at the beginning of the year passed off in line with its expectations. “Overall, the rate level was still commensurate with the risks. Based on its very good ratings the company was able to further cement its market position.

“Gross premium in non-life reinsurance increased by 4.0 percent as at 31 March 2010 relative to the corresponding period of the previous year to stand at €1.7 billion [$2.2 billion],” the same as last year.” The level of retained premium retreated slightly to 90.1 percent (92.4 percent). Net premium earned climbed 6.5 percent to €1.3 billion [$1.68 billion].”

However, the Company also indicated that the “incidence of major losses in the first quarter was considerably higher than in the comparable quarter of the previous year. The largest single loss for Hannover Re was the severe earthquake in Chile with a net strain of €185.1 million [$240 million]. The devastating earthquake in Haiti produced loss expenditure in the order of €25.5 million [$33 million], owing to lower insured values. Reserves of around €40 million [$51.8 million] have been constituted for European winter storm ‘Xynthia’.” Altogether, the net burden of major losses for the first quarter totaled €264.4 million [$342.4 million], compared to €98.8 million [$128 million], a figure which the bulletin described as “well in excess of the expected level.”

Source: Hannover Re