09.03.2017
Hannover Rück SE DE0008402215
DGAP-News: Hannover Rück SE: Hannover Re reports fifth consecutive record result
DGAP-News: Hannover Rück SE / Key word(s): Final Results
Hannover Rück SE: Hannover Re reports fifth consecutive record result
09.03.2017 / 07:45
The issuer is solely responsible for the content of this announcement.
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Press Release
Hannover Re reports fifth consecutive record result
- Group net income climbs by 1.8% to EUR 1.17 billion (EUR 1.15 billion)
- Increased dividend proposal for 2016: EUR 5.00 per share (EUR 4.75 per
share)
- Book value per share reaches new record high: EUR 74.61 (EUR 66.90)
- Return on equity: 13.7% (14.7%)
- Gross premium contracts by 4.2% to EUR 16.4 billion; adjusted for
exchange rate effects: -2.1%
- Combined ratio: 93.7% (94.4%)
- For 2017 group net income of more than EUR 1 billion expected
Hannover, 9 March 2017: With Group net income of EUR 1.17 billion Hannover
Re has comfortably surpassed its target for the 2016 financial year.
"Another strong underwriting result in property and casualty reinsurance
combined with pleasing investment income laid the foundation", Chief
Executive Officer Ulrich Wallin noted. In addition, the tax rate for 2016
decreased to a normalised level.
In view of the good business development, the Executive Board and
Supervisory Board will propose to the Annual General Meeting that an
increased dividend of altogether EUR 5.00 per share (EUR 4.75 per share)
should be paid for 2016: the distribution will take the form of a regular
dividend of EUR 3.50 per share - an increase of EUR 0.25 compared to the
previous year - plus a special dividend of EUR 1.50 per share. The payout
ratio for 2016 will then amount to more than 50% of IFRS Group net income.
New record year in 2016
In the currently challenging market environment, Hannover Re's overriding
priority continues to be generating profits rather than growing premium
income. With this in mind, the gross premium volume contracted by 4.2% to
EUR 16.4 billion (EUR 17.1 billion); adjusted for exchange rate effects, it
would have decreased by just 2.1%. The level of retained premium climbed to
89.3% (87.0%). Net premium earned consequently fell by only a modest 1.2%
to EUR 14.4 billion (EUR 14.6 billion). At unchanged exchange rates growth
of 1.0% would have been booked.
Despite the non-recurrence of a positive one-off effect of EUR 39 million
in the comparable period, Hannover Re generated a highly satisfactory
operating profit (EBIT) of EUR 1,689.3 million (EUR 1,755.2 million). Once
again, this was assisted by large loss expenditure that came in below
budget as well as reduced frequency losses and by a slightly better-than-
expected return on investment. Group net income improved on the previous
year by 1.8% to reach a new record high of EUR 1,171.2 million (EUR 1,150.7
million). Earnings per share amounted to EUR 9.71 (EUR 9.54).
Property and casualty reinsurance delivers strong result
Despite the intensely competitive state of the market, Hannover Re is
thoroughly satisfied with the performance of its property and casualty
reinsurance portfolio - even though developments varied widely in the
individual lines and geographical regions. The North American market was
stable overall; a growing demand here was for cyber covers. Most notably,
however, it was the rise in demand for reinsurance solutions offering
solvency relief - both in Europe and in Asia - that had favourable
implications for Hannover Re. Yet these trends did not entirely suffice to
offset the premium declines in other areas, with the result that the gross
premium volume in property and casualty reinsurance fell slightly by 1.4%
to EUR 9.2 billion (EUR 9.3 billion). Premium income would have remained
stable at unchanged exchange rates. The level of retained premium moved
marginally lower to 88.5% (89.3%). Net premium earned contracted by 1.4% to
EUR 8.0 billion (EUR 8.1 billion); at constant exchange rates it would have
been unchanged.
As in the previous years, expenditures from large losses were again
moderate, although they were higher in 2016 than in the comparable period.
The largest single loss for Hannover Re was the wildfires in the Canadian
province of Alberta, with a net strain of EUR 127.9 million. Hurricane
Matthew caused a net loss of EUR 70.3 million. In addition, a number of
severe earthquakes and other natural catastrophe events as well as man-made
losses were recorded. The total net loss expenditure for the company
amounted to EUR 626.6 million (EUR 572.9 million). The burden of large
losses thus remained below the budgeted level for 2016 of EUR 825 million.
A very good combined ratio of 93.7% (94.4%) was achieved. Along with the
pleasing development on the underwriting side, this can also be attributed
to the positive run-off of reserves from prior years that were no longer
required. The operating profit (EBIT) came in at EUR 1,340.3 million (EUR
1,341.3 million). Group net income climbed by 3.8% to reach a new all-time
best of EUR 949.9 million (EUR 914.7 million). Earnings per share stood at
EUR 7.88 (EUR 7.58).
Life and health reinsurance generates solid profit contribution
Following the vigorous growth recorded in life and health reinsurance in
the comparable period, the gross premium volume for 2016 contracted
slightly to EUR 7.1 billion (EUR 7.7 billion). This was due to the
discontinuation of a number of large treaties. Adjusted for exchange rate
effects, the decrease would have been 4.3%. Net premium earned came in 0.9%
lower than in the previous year at EUR 6.4 billion (EUR 6.5 billion);
growth would have been 2.2% at constant exchange rates owing to a higher
retention.
The development of the profit contributions in life and health reinsurance
was satisfactory. The operating result (EBIT) totalled EUR 343.3 million
(EUR 405.1 million), with the decrease driven principally by the
elimination of a positive one-off effect of EUR 39 million booked in the
previous year. The result was also impacted by adverse effects in US
mortality business; for the most part, however, the portfolio showed
improved profitability. Financial solutions business once again posted a
very positive performance. Group net income in life and health reinsurance
closed lower at EUR 252.9 million (EUR 289.6 million). Earnings per share
stood at EUR 2.10 (EUR 2.40).
Very pleasing investment income
Against a backdrop of continued low interest rates, Hannover Re is very
satisfied with the development of its investments: the portfolio of assets
under own management increased - boosted above all by a sustained positive
operating cash flow - by EUR 2.5 billion to EUR 41.8 billion (EUR 39.3
billion).
In view of the non-recurrence of the positive one-off effect in life and
health reinsurance and despite the low interest rate environment, ordinary
investment income came in at a pleasing EUR 1,162.0 million (EUR 1,253.4
million). The diminished potential returns were to some extent offset by
higher income from dividends.
Net realised gains and losses totalled EUR 206.3 million (EUR 135.8
million) as at 31 December 2016. Write-downs of EUR 76.3 million (EUR 38.7
million) were taken, including scheduled depreciation on directly held real
estate as well as write-downs on equities due to lower prices following the
UK Brexit decision. The bulk of these impairments have since been offset by
reversals. Income from investments under own management amounted to a good
EUR 1,218.3 million (EUR 1,270.1 million) as at 31 December 2016. The
resulting return on investment of 3.0% was slightly higher than the 2.9 %
target. Investment income including income from funds withheld and contract
deposits came in at EUR 1,550.4 million (EUR 1,665.1 million).
Shareholders' equity further strengthened
The shareholders' equity of Hannover Rück SE showed further gratifying
growth, climbing to EUR 9.0 billion (EUR 8.1 billion) as at 31 December
2016. The book value per share consequently also increased; it reached a
new all-time high of EUR 74.61 (EUR 66.90). Despite the increased
shareholders' equity, the return on equity was very favourable at 13.7%
(14.7%) and again comfortably surpassed the target. The total
policyholders' surplus (including non-controlling interests and hybrid
capital) grew to EUR 11.2 billion (EUR 10.3 billion).
Outlook for 2017
Hannover Re raised its targets for Group net income and gross premium in
February: adjusted for exchange rate effects, gross premium for total
business is now expected to grow by a low single-digit percentage in 2017.
The company anticipates Group net income of more than EUR 1 billion. This
is based on the premise that major loss expenditure does not significantly
exceed the budgeted level of EUR 825 million and that there are no
exceptional distortions on capital markets.
The asset portfolios should continue to grow - at constant exchange rates -
in view of the anticipated positive cash flow. The company is keeping its
targeted return on investment unchanged at 2.7%.
In terms of the dividend for the current financial year, Hannover Re still
envisages a payout ratio in the range of 35% to 40% of its IFRS Group net
income. This ratio may increase in light of capital management
considerations if the present comfortable level of capitalisation remains
unchanged.
Hannover Re, with gross premium of EUR 16.4 billion, is the third-largest
reinsurer in the world. It transacts all lines of property & casualty and
life & health reinsurance and is present on all continents with around
2,900 staff. Established in 1966, the Hannover Re Group today has a network
of more than 100 subsidiaries, branches and representative offices
worldwide. The Group's German business is written by the subsidiary E+S
Rück. The rating agencies most relevant to the insurance industry have
awarded both Hannover Re and E+S Rück very strong insurer financial
strength ratings: Standard & Poor's AA- "Very Strong" and A.M. Best A+
"Superior".
Please note the disclaimer: https://www.hannover-re.com/535917
Contact
Corporate Communications:
Karl Steinle
tel. +49 511 5604-1500
[email protected]
Media Relations:
Gabriele Handrick
tel. +49 511 5604-1502
[email protected]
Investor Relations:
Julia Hartmann
tel. +49 511 5604-1529
[email protected]
www.hannover-re.com
Key figures of the Hannover Re Group (IFRS basis)
in EUR million 2016 +/- previous year 2015 Hannover Re Group Gross written premium 16,353.6 -4.2% 17,068.7 Net premium earned 14,417.6 -1.2% 14,593.0 Net underwriting result 115.9 +23.6% 93.8 Net investment income 1,550.4 -6.9% 1,665.1 Operating profit (EBIT) 1,689.3 -3.8% 1,755.2 Group net income 1,171.2 +1.8% 1,150.7 Earnings per share in EUR 9.71 +1.8% 9.54 Retention 89.3% 87.0% Tax ratio 24.2% 27.3% EBIT margin1) 11.7% 12.0% Return on equity 13.7% 14.7% in EUR million 2016 +/- previous year 2015 Policyholders' surplus 11,231.4 +9.4% 10,267.3 Investments (excl. funds 41,793.5 +6.2% 39,346.9 Total assets 63,528.6 +0.5% 63,214.9 Book value per share in EUR 74.61 +11.5% 66.90 Dividend2) 603,0 +5.3% 572,8 Dividend per share in EUR2) 5,00 +5.3% 4.75 Property & Casualty reinsurance in EUR million 2016 +/- previous year 2015 Gross written premium 9,204.6 -1.4% 9,338.0 Net premium earned 7,985.0 -1.4% 8,099.7 Net underwriting result 479.1 +10.8% 432.2 Operating profit (EBIT) 1,340.3 -0.1% 1,341.3 Group net income 949.9 +3.8 914.7 Retention 88.5% 89.3% Combined Ratio3) 93.7% 94.4% EBIT margin1) 16.8% 16.6% Life & Health reinsurance in EUR million 2016 +/- previous year 2015 Gross written premium 7,149.0 -7.5% 7,730.9 Net premium earned 6,432.4 -0.9% 6,492.4 Operating profit (EBIT) 343.3 -15.3% 405.1 Group net income 252.9 -12.7% 289.6 Retention 90.4% 84.2% EBIT margin1) 5.3% 6.2% 1) Operating result (EBIT)/net premium earned 2) Dividend proposal for 2016 3) Including funds withheld Key figures of the Hannover Re Group (IFRS basis) in EUR million Q4/2016 +/- previous year Q4/2015 Hannover Re Group Gross written 3,899.6 -5.4% 4,122.8 premium Net premium 3,651.1 -3.0% 3,762.9 earned Net underwriting 71.5 -57.1% 166.6 result Net investment 404.0 -8.3% 440.4 income Operating profit 500.2 -11.5% 565.0 (EBIT) Group net income 381.3 +4.5% 364.7 Earnings per 3.16 +4.5% 3.02 share in EUR Retention 88.2% 84.0% Tax ratio 17.5% 29.0% EBIT margin1) 13.7% 15.0% Return on equity 17.2% 18.5% Property & Casualty reinsurance in EUR million Q4/2016 +/- previous year Q4/2015 Gross written 2,084.0 +3.2% 2,018.6 premium Net premium 2,059.8 -3.5% 2,134.4 earned Net underwriting 203.6 +12.5% 180.9 result Operating profit 447.3 +10.5% 405.0 (EBIT) Group net income 336.4 +27.6% 263.7 Retention 89.1% 91.1% Combined Ratio2) 89.9% 91.3% EBIT margin1) 21.7% 19.0% Life & Health reinsurance in EUR million Q4/2016 +/- previous year Q4/2015 Gross written 1,815.6 -13.7% 2,104.3 premium Net premium 1,591.3 -2.3% 1,628.3 earned Operating profit 52.9 158.8 (EBIT) Group net income 44.0 111.8 Retention 87.2% 77.2% EBIT margin1) 3.3% 9.8% 1) Operating result (EBIT)/net premium earned 2) Including funds withheld--------------------------------------------------------------------------- 09.03.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: Hannover Rück SE Karl-Wiechert-Allee 50 30625 Hannover Germany Phone: +49-(0)511-5604-1500 Fax: +49-(0)511-5604-1648 E-mail: [email protected] Internet: www.hannover-re.com ISIN: DE0008402215 WKN: 840 221 Indices: MDAX Listed: Regulated Market in Frankfurt (Prime Standard), Hanover; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange; Luxemburg End of News DGAP News Service --------------------------------------------------------------------------- 551981 09.03.2017
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