04.02.2015
Hannover Rück SE DE0008402215
DGAP-News: Hannover Re broadly satisfied with outcome of 1 January treaty renewals
DGAP-News: Hannover Rück SE / Key word(s): Contract
Hannover Re broadly satisfied with outcome of 1 January treaty
renewals
04.02.2015 / 07:30
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Press release
Hannover Re broadly satisfied with outcome of 1 January treaty renewals
- Stable portfolio in property and casualty reinsurance thanks to strong
market positioning and good rating
- Rate quality supports our profit targets despite price erosion
- Price increases in loss-impacted programmes smaller than expected
- Prospects for 2015 in property and casualty reinsurance in the range of
expectations
Hannover, 4 February 2015: Hannover Re is largely satisfied with the
outcome of the treaty renewals as at 1 January 2015 in light of the
challenging business environment, even though the rate quality of the
renewed portfolio fell short of the previous year. "The price decline in
many markets was significant compared to the previous year. Thanks to our
good rating and long-standing customer relationships we nevertheless
achieved a rather pleasing outcome. Despite our systematic selective
underwriting policy we were able to keep our portfolio stable", Ulrich
Wallin, Chief Executive Officer of Hannover Re, explained. German and US
business held up especially well in this renewal season.
The treaty renewals were particularly notable for a clear trend towards
increased retentions carried by ceding companies. This was due to the fact
that market-changing major losses were again absent in 2014 and hence the
capital resources of primary insurers improved still further. The inflow of
capital from alternative markets (ILS) continued to put prices under
additional pressure, above all in natural catastrophe business. This led to
rate reductions in many areas and in some cases deteriorations in
conditions. It was, however, possible to push through rate increases under
programmes that had suffered losses in 2014. This was especially true of
Germany. The significant losses incurred in the aviation line, on the other
hand, did little to boost prices.
Of the total premium volume booked in the previous year in property and
casualty reinsurance (excluding facultative business and structured
reinsurance) amounting to EUR 6,179 million, roughly two-thirds of the
treaties with a volume of altogether EUR 3,988 million were up for renewal
as at 1 January 2015. Of this, a premium volume of EUR 3,617 million was
renewed, while treaties worth EUR 371 million were either cancelled or
renewed in modified form. Including increases of EUR 350 million from new
treaties and - to a more limited extent - from changes in prices and treaty
shares, the total renewed premium volume thus came in at EUR 4,023 million;
this is equivalent to an increase of 1% at unchanged exchange rates.
Target markets
The treaty renewals in North American business passed off satisfactorily:
property business presented a broadly stable picture, albeit with poorer
commissions in some instances. Whereas heavier pressure on rates could be
felt in general liability, the professional indemnity lines proved more
robust. Slight rate increases were recorded in Canada owing to the losses
incurred in 2013 and 2014. All in all, the rate level in the United States
continued to be commensurate with the risks, thereby enabling us - in part
also through targeted new business acquisition - to grow the premium volume
in North America by altogether 5%.
In Germany, the largest single market within the segment of Continental
Europe, Hannover Re was again able to expand its already excellent position
through its subsidiary E+S Rück. Further price increases were obtained for
non-proportional motor own damage covers on account of losses from
windstorm and hail events of the previous years. Both here and in
homeowners' comprehensive insurance the rate quality has improved. There is
still ground to make up in non-proportional motor liability business, while
the situation in industrial fire insurance also remains strained -
prompting the company to write such risks highly selectively. The total
portfolio in the domestic German market closed with a modest premium gain
due to new customer relationships.
In France Hannover Re was able to position itself well as the purchasers of
reinsurance protection applied more rigorous selection criteria. The
markets of Eastern Europe are intensely competitive in view of their growth
potential, as a consequence of which rates came under appreciable pressure
in some countries.
Specialty lines
In marine reinsurance a worsening in the loss experience from the wrecks of
the "Costa Concordia" and "Rena" prevented a more substantial drop in
prices. Rates for the reinsurance of offshore risks declined as
anticipated. All in all, the renewed premium volume contracted marginally.
The significant major losses incurred in the aviation line in 2014 had only
a qualified positive effect on the rate trend. Rate increases remained
limited owing to the continued plentiful availability of insurance
capacities. Nor did any appreciable hardening take hold in the market for
war covers. The premium volume booked for the entire aviation line
contracted by 8%.
Hannover Re is satisfied with the outcome of the renewals in credit and
surety reinsurance, where around three-quarter of the portfolio was up for
renegotiation. Hannover Re was able to maintain its market share. The
premium volume retreated, however, as a reflection of the higher retentions
carried by ceding companies.
Global reinsurance
The picture in Hannover Re's global reinsurance segment was a mixed one:
the company is satisfied with its treaty renewals in Latin America,
although the main round of renewals will not take place until 1 July 2015.
Despite soft market conditions overall and fiercely competitive placements,
the company maintained its market position in the region and achieved
prices that were commensurate with the risks. Most notably, existing
customer relationships and the premium volume were expanded in Brazil,
thereby offsetting slight declines in premium from other countries.
The growth potential for agricultural covers remains considerable, above
all in emerging markets. Both here and in the United States the company was
able to enlarge this portfolio thanks to its intimate market knowledge.
In natural catastrophe business developments varied: while US property
catastrophe business saw declining rates, as anticipated, owing to the
absence of market-changing major losses, price increases were achieved in
other regions. Most notably, improvements of 5% to 10% were attainable in
Germany under loss-impacted programmes. The premium volume booked by the
company increased by altogether 8%.
Outlook for 2015
Despite softer market conditions overall in property and casualty
reinsurance, it is Hannover Re's assumption that the underwriting result
should again be in the region of the 2014 figure provided major losses
remain within the expected range. In view of its very good positioning in
the reinsurance market and the high quality of its loss reserves, the
company should - depending on the burden of major losses in property and
casualty reinsurance - be able to generate good underwriting results again
in 2015, even though the rate quality in the reinsurance market has
deteriorated appreciably. Based on anticipated stronger profitability in
life and health reinsurance as well as stable income - in absolute terms -
expected from investments under own management, Hannover Re is confident of
achieving its declared profit targets.
Hannover Re expects to generate a stable or slightly higher gross premium
volume in the 2015 financial year based on constant exchange rates. The
return on investment is expected to come in around 3.0%, with Group net
income anticipated in the order of EUR 875 million. As usual, all
statements are subject to the proviso that major loss expenditure does not
exceed the anticipated level of EUR 690 million and that there are no
unforeseen adverse movements on capital markets.
For further information please contact:
Corporate Communications:
Karl Steinle (tel. +49 511 5604-1500,
e-mail: [email protected])
Media Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: [email protected])
Investor Relations:
Julia Hartmann (tel. +49 511 5604-1529,
e-mail: [email protected])
Please visit: www.hannover-re.com
Hannover Re, with gross premium of EUR 14.0 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
2,400 staff. The rating agencies most relevant to the insurance industry
have awarded Hannover Re very strong insurer financial strength ratings
(Standard & Poor's AA- "Very Strong" and A.M. Best A+ "Superior").
Please note the disclaimer:
www.hannover-re.com/misc/disclaimer-pr-050811
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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: Regulierter Markt in Frankfurt (Prime Standard), Hannover;
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart; Terminbörse EUREX
End of News DGAP News-Service
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