German reinsurer Hannover Re reported that its net income for the first six months of the year totaled €218.5 million [$313 million], despite the losses that occurred in the first quarter. The decrease was substantial, compared to the €310.6 million [$444.7 million] net income in the first half of 2010, but not drastic.
The Group non-life reinsurance sector even managed to post an operating profit of €151 million [$216 million] for the first half. Nonetheless, Hannover Re said the “major loss burden” for the first six months had exceeded its expectations by €390 million [$558.5 million].
The report listed the following key figures:
Total premium growth: + 6.4 percent
Net burden of major losses: €625.2 million [$895 million] (2010-€407.6 million [$583.7 million])
Combined ratio in non-life reinsurance: 110.3 percent (2010 – 95.5 percent)
Net investment income: €672.8 million [$963.5 million] (2010 – €551.4 million [$790 million])
Operating profit (EBIT): €246.8 million [$353 million] (2010 – €490.7 million [$702.7 million])
Earnings per share: €1.81 [$2.59] (2010 – €2.58 [$3.69])
Guidance for Group net income 2011 unchanged: approximately €500 million [$716 million]
The Hannover Re expressed satisfaction with the development of its business. The reinsurer posted a “profit contribution” for the second quarter of €166.2 million [$236.5 million]. CEO Ulrich Wallin commented: “The second quarter delivered the anticipated profit contribution. Our Group net income of €218 million for the first half-year should enable us – given a normal experience in the second half of the year – to comfortably attain our targeted year-end profit of around EUR 500 million.”
The report described the results for non-life reinsurance as “satisfactory despite major losses,” and noted a gradual hardening of the markets, which seems to confirm the trend already observed in the April first renewals. Hannover Re said “treaty renewals as at 1 June and 1 July consequently produced a broadly pleasing outcome, especially in property business.”
Wallin indicated that the Group expects “this tendency will continue in the second half of 2011, and for 2012 too we are looking to further positive movement in reinsurance premiums. However, the report also pointed out that there is a “less pronounced tendency towards market hardening in areas that have been spared losses and in the casualty lines.”
Gross premium in non-life reinsurance increased by 8.3 percent in the first six months to €3.5 billion [$4.98 billion], compared to €3.3 billion [$4.69 billion] in the same period of 2010. The bulletin also explained that “at constant exchange rates, especially against the US dollar, growth would have come in at 10.3 percent.”
The level of retained premium remained virtually unchanged at 90.0 percent, compared to 90.1 percent in 1st half 2010. Net premium earned rose by 8.0 percent to €2.8 billion [$3.98 billion], compared to €2.6 billion [$3.7 billion] last year.
Hannover Re also said that the major losses it incurred in the second quarter were “comparatively moderate at €53 million [$75 million]; an amount of €22.7 million [32.3 million] was attributable to the series of tornadoes in the United States in May.
“In view of the sizeable major loss burden in the first quarter, however, the net major loss expenditure of €625.2 million [890 million] was significantly higher than in the corresponding period of the previous year (€407.6 million [580 million]). The combined ratio therefore stood at 110.3 percent (99.5 percent); considered in isolation for the second quarter, it was 97.7 percent.”
The complete report is available on the reinsurer’s web site.
Source: Hannover Re
Topics Profit Loss Reinsurance
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