02.02.2017
Hannover Rück SE DE0008402215
DGAP-News: Hannover Re: Hannover Re raises guidance for 2017 following treaty renewals
DGAP-News: Hannover Rück SE / Key word(s): Contract/Change in Forecast
Hannover Re: Hannover Re raises guidance for 2017 following treaty renewals
02.02.2017 / 07:30
The issuer is solely responsible for the content of this announcement.
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Press Release
Hannover Re raises guidance for 2017 following treaty renewals
- Continuing competition in property and casualty reinsurance
- Rate decline in non-proportional business less marked than in the past
three 1/1 treaty renewals
- Pleasing outcome of renewals in North America
- Guidance for Group net income 2017 raised to more
than EUR 1 billion
Hannover, 2 February 2017: Hannover Re is satisfied overall with the
outcome of the treaty renewals as at 1 January 2017. Markets continue to
see significant competition, however, as a result of which the anticipated
stabilisation in rates has not as yet set in across the board. Although the
treaty renewals were challenging, the company benefited from its customer
intimacy and its ability to offer reinsurance solutions tailored to
clients' requirements. "Thanks to gross premium that came in above
expectations, we were able to raise our premium target for 2017 and now
expect an increase in the low single-digit percentage range. Furthermore,
bearing in mind the successful closing of several financial solutions
contracts in life and health reinsurance as well, we are raising our
guidance for Group net income in 2017 from more than EUR 950 million to
more than
EUR 1 billion", Ulrich Wallin, Chief Executive Officer of Hannover Re,
explained.
All in all, the situation on the worldwide property and casualty
reinsurance market shows little change and remains challenging. The broadly
good financial results still being reported by many companies combined with
the excess supply of capacity were not conducive to a fundamental trend
reversal on the rates side. The increased claims expenditure in 2016 had
favourable effects on prices only on a local level.
Sharply high demand was observed among customers in relation to reinsurance
solutions offering solvency relief. Attractive opportunities to grow the
portfolio also opened up in North America, above all in Canada, as well as
in credit and surety business and in the area of cyber covers. With an eye
to its own profitability requirements, however, the company again did not
renew all treaties in this round of renewals.
Of the total premium volume booked in the previous year in traditional
property and casualty reinsurance (excluding facultative business and
structured reinsurance) amounting to EUR 7,326 million, roughly two-thirds
of the treaties with a volume of altogether EUR 4,685 million were up for
renewal as at 1 January 2017. Of this, a premium volume of EUR 4,006
million was renewed, while treaties worth EUR 679 million were either
cancelled or renewed in modified form. Including increases of EUR 459
million from new treaties and - to a more limited extent - from changes in
prices and treaty shares, the total renewed premium volume came in at EUR
4,621 million; at constant exchange rates this is equivalent to a decrease
of 1.4% in traditional reinsurance. Making allowance for structured
reinsurance business, however, growth of around 7% was booked as at 1
January 2017.
Target markets
Hannover Re is highly satisfied with the treaty renewals for North American
business. The economic recovery in the United States led to an increase in
insurance premiums and hence to solid demand for reinsurance protection.
The pressure on rates has eased appreciably; signs that they have bottomed
out can now be seen across the various lines of business. On the property
side the company was able to renew its treaties at largely stable rates and
conditions thanks to its long-standing customer relationships - in the case
of smaller and mid-sized accounts it was even possible to obtain modest
rate increases. In casualty business, too, prices remained largely stable;
the company was able to slightly increase its premium volume here through
new business. The treaty renewals in Canada passed off very favourably:
significant rate increases were secured under virtually all programmes in
property business, driven crucially by the heavy losses caused by
devastating wildfires in the province of Alberta. The total premium volume
for North America rose by a substantial 6.5%.
In Germany, the largest single market within the segment of Continental
Europe, Hannover Re maintained its leading position through its subsidiary
E+S Rück. The rate trend in motor business was especially pleasing:
significant improvements in the original market led to additional premium
income. The increased prevalence of regional loss events in the previous
year prompted stronger demand for natural hazards covers. The premium
volume for the total portfolio in the German market remained essentially
stable. The treaty renewals in the Netherlands and Northern European
markets, where the company enlarged its portfolio, passed off thoroughly
successfully. In France, too, Hannover Re was able to successfully expand
its existing customer relationships. Business in Central and Eastern Europe
was intensely competitive, with rates coming under sustained pressure. Yet
the company also noted rising prices in some cases, for example in Poland.
The premium volume for the Continental Europe segment contracted by 1.2%.
Specialty lines
Rates in marine reinsurance continued to deteriorate, albeit at a slower
pace. Part of the business in this segment was relinquished on grounds of
inadequate pricing. In the important London Market further rate reductions
were recorded for marine and energy covers. Rate increases, on the other
hand, were obtained under loss-impacted treaties. Hannover Re scaled back
its premium volume in marine business by 3.2%.
The aviation line was once again extremely competitive. Given the unchanged
abundant supply of insurance capacity, rates in the market fell by up to
10%. While Hannover Re reduced its involvement particularly on the
proportional side, non-proportional business - which witnessed more
moderate price erosion - remained stable. The premium volume retreated by a
substantial 15.8%.
The outcome of the treaty renewals in credit and surety reinsurance was
pleasing. Especially in credit reinsurance, it proved possible to enlarge
sizeable existing accounts and build new customer relationships, thereby
boosting the premium volume in this line. On the surety side the premium
volume contracted slightly. In the area of political risks Hannover Re was
restrained in its acceptances and maintained a stable portfolio in view of
the prevailing very intense competition. The premium income for the
portfolio that was up for renegotiation in these three specialty lines
increased by 7.7%.
Hannover Re is satisfied with the renewal of its business written in the
United Kingdom and in the London Market. Premiums in non-proportional motor
insurance were maintained on a stable level. The company benefited in this
connection from its long-standing customer relationships. Increasing demand
for cyber covers opened up new business opportunities. Hannover Re
generated premium growth of altogether 7.9% for this market.
Global reinsurance
Competition varied in intensity across the markets of the Asia-Pacific
region. It proved impossible to avoid making share reductions in
unprofitable business - above all in China -, which consequently led to
lower premium income in this market. The picture in the rest of Asia was a
mixed one, with modest premium declines for the company throughout the
region.
Natural catastrophe business saw further rate decreases in some areas owing
to the absence of market-changing large losses. Hurricane Matthew provided
necessary price impetus on a localised basis. In the United States price
reductions were offset by increased shares in profitable programmes. The
pressure on prices in Latin America prompted the company to scale back its
involvement. In Europe modest rate increases were booked in some countries.
Overall, Hannover Re boosted its premium volume in total natural
catastrophe business by 2.9% while maintaining prices on a stable level.
In structured reinsurance business the company enjoyed very pleasing demand
for reinsurance solutions offering solvency relief. Hannover Re booked
strong premium growth here from Europe and North and Latin America.
Guidance raised for 2017
Despite challenging treaty renewals in property and casualty reinsurance,
Hannover Re has raised its profit targets for the current financial year:
adjusted for exchange rate effects, the company now anticipates a low
single-digit percentage increase in gross premium for property & casualty
and life & health reinsurance. The expected return on investment continues
to be 2.7%. The guidance for Group net income in 2017 is raised from more
than
EUR 950 million to more than EUR 1 billion. All statements remain subject
to the proviso that large loss expenditure does not exceed the budgeted
level of EUR 825 million and that there are no unforeseen distortions on
capital markets. Hannover Re continues to target a combined ratio of less
than 96%.
Hannover Re, with gross premium of around EUR 17 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 2,500 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
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02.02.2017 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.
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Financial/Corporate News and Press Releases.
Archive at www.dgap.de
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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: 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
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540867 02.02.2017
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