Hannover Re 3rd Quarter Profit Rises 21% on Benign Hurricane Season

By | November 5, 2014

Hannover Re, the world’s third- biggest reinsurer, said third-quarter profit rose 21 percent, helped by a benign U.S. hurricane season and higher income from investments.

Net income rose to 251 million euros ($315 million) from 207 million euros a year ago, the reinsurer said in a statement. Profit beat the 209 million-euro average estimate of nine analysts surveyed by Bloomberg. The company confirmed its full- year profit target of about 850 million euros and said it aims for 875 million euros next year.

The Hanover, Germany-based reinsurer, led by Chief Executive Officer Ulrich Wallin, said last month it expects more “heavy losses” from two storms to sustain prices for coverage in Germany.

“Both business groups and the investment income fully lived up to our expectations,” Wallin said in the statement. “We are well placed to navigate the challenging market environment and are confident of achieving our full-year profit target.”

Investment income rose 14 percent to 414 million euros in the quarter helped by the sale of securities.

Wallin told investors on Oct. 23 that Hannover Re would increase payouts via special dividends or share buybacks if it decides to return capital. He said in an interview in April that Hannover Re’s major shareholder Talanx AG would prefer dividends to share buybacks.

Hannover Re paid a dividend of 3 euros a share for 2013, same as for 2012. It is expected to maintain that payment for the current year, according to a Bloomberg Dividend Forecast.

Reinsurers help primary insurers like Allianz SE and Axa SA shoulder risks. They are facing pressure on their earnings as reinsurance rates decline amid lower-than-average disaster claims and record capital available for their coverage. Rates fell in the main renewals of annual treaties in January, April and July this year. They dropped in seven of the last 10 years.

The Atlantic hurricane season, which runs from June through November and can result in the industry’s biggest losses, typically sees the most activity from mid-August to mid-October. Hurricane Sandy, which tore through the northeastern U.S. in October 2012, was the last major hurricane claim.

Hannover Re shares advanced 6.6 percent this year, valuing the company at 8 billion euros. The Bloomberg Europe 500 Insurance Index gained 3.2 percent over the same period. Germany’s third-biggest insurer, Talanx, owns 50.2 percent of Hannover Re.

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