05.11.2014
Hannover Rück SE DE0008402215
DGAP-News: Hannover Re substantially increases Group net income
DGAP-News: Hannover Rück SE / Key word(s): 9-month figures
Hannover Re substantially increases Group net income
05.11.2014 / 07:30
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Press release
Hannover Re substantially increases Group net income
- Group net income +10.3%: EUR 695.4 million (EUR 630.2 million)
- Net major losses of EUR 242.2 million well below the expected level
- Combined ratio in property and casualty reinsurance: 95.3%
- Gross premium growth (currency-adjusted): +2.9%
- Income from assets under own management +6.4%: EUR 836.0 million (EUR
785.6 million)
- Return on investment: 3.3%
- Book value per share: EUR 58.01
- Return on equity: 14.4%
Hannover, 5 November 2014: Hannover Re is very satisfied with the
development of its business as at 30 September 2014. Despite difficult
general conditions, Group net income was boosted by 10.3% relative to the
previous year's period to EUR 695.4 million. "Both business groups and the
investment income fully lived up to our expectations", Chief Executive
Officer Ulrich Wallin affirmed. "We are well placed to navigate the
challenging market environment and are confident of achieving our full-year
profit target in the order of EUR 850 million."
Currency-adjusted gross premium slightly higher
The gross written premium booked by the Hannover Re Group for the first
nine months increased by 1.6% to EUR 10.7 billion (EUR 10.5 billion). At
constant exchange rates growth would have come in at 2.9%. The company is
thus within its target corridor of generating stable to slightly higher
gross premium for the full financial year. The retention retreated to 87.0%
(88.9%). Net premium earned consequently fell by a modest 1.7% to EUR 9.0
billion (EUR 9.1 billion); adjusted for exchange rate effects, the decrease
would have been 0.5%.
Good Group net income for the first nine months
The operating profit (EBIT) as at 30 September 2014 rose by a pleasing
10.7% to EUR 1,090.8 million (EUR 985.8 million). Group net income also
improved on the comparable period's already good figure by a further 10.3%
to reach EUR 695.4 million (EUR 630.2 million). Earnings per share amounted
to EUR 5.77 (EUR 5.23).
Property and casualty reinsurance delivers another good result
Property and casualty reinsurance continues to be intensely competitive.
This was also evident in the treaty negotiations as at 1 July 2014, when
parts of the North American portfolio, most agricultural risks and business
from Latin America came up for renewal.
Total gross premium for property and casualty reinsurance increased by 1.7%
as at 30 September 2014 to EUR 6.1 billion (EUR 6.0 billion). At constant
exchange rates a gain of 3.2% would have been booked. The growth generated
by Hannover Re in spite of its disciplined underwriting policy can be
attributed largely to attractive opportunities in emerging markets. The
company's retention rose slightly to 89.6% (89.1%). Net premium earned was
on the level of the previous year at EUR 5.1 billion (EUR 5.1 billion);
adjusted for exchange rate effects, an increase of 1.5% would have been
recorded.
Following a low burden of major losses in the first half of 2014, major
loss expenditure climbed slightly in the third quarter. The aviation line
was particularly hit, with the largest single loss resulting from armed
conflicts in Libya which left Tripoli airport heavily damaged. Hannover Re
anticipates a net strain of EUR 50.0 million in this regard. The crash of
the Malaysia Airlines plane over Ukraine caused a loss of EUR 32.2 million
for net account. Total net expenditure on major loss events as at 30
September 2014 came to EUR 242.2 million (EUR 446.7 million); it was thus
well below the company's expected level of EUR 491 million for the period.
The underwriting result was again pleasing at EUR 225.3 million (EUR 243.4
million). The combined ratio of 95.3 % (95.0 %) came in better than the
company's set target.
The operating profit (EBIT) for property and casualty reinsurance as at 30
September 2014 closed at a very favourable EUR 846.8 million (EUR 804.6
million). Group net income climbed 5.0% to EUR 560.8 million (EUR 534.4
million). Earnings per share totalled EUR 4.65 (EUR 4.43).
Life and health reinsurance shows stronger result
Gross premium in life and health reinsurance increased by a modest 1.4% to
EUR 4.6 billion (EUR 4.6 billion). This is equivalent to an increase of
2.6% after adjustment for exchange rate effects. The third quarter passed
off particularly favourably. Hannover Re continues to see growth potential
driven by rising prosperity, especially in emerging economies, and also
worldwide on account of increasingly exacting regulatory requirements. In
view of a reduced retention of 83.7% (88.5%), net premium earned retreated
more sharply by 4.0% to EUR 3.9 billion (EUR 4.0 billion); adjusted for
exchange rate effects, this corresponds to a reduction of 2.9%.
The operating profit (EBIT) in life and health reinsurance rose by a
substantial 39.6% as at 30 September 2014 to EUR 233.9 million (EUR 167.6
million). Losses such as those incurred in the previous year in the
Australian disability portfolio and to some extent also in US mortality
business played virtually no further role in the current reporting period.
Group net income improved by 8.6% to EUR 166.2 million (EUR 153.0 million).
The fact that the increase was not more marked can be attributed to
exceptionally low tax expenditure in the previous year's comparable period.
Earnings per share reached EUR 1.38 (EUR 1.27).
Very positive investment income
The portfolio of assets under own management grew by EUR 3.2 billion as at
30 September 2014 to EUR 35.0 billion. The increase was supported in
particular by currency translation effects associated with the USD and GBP
holdings and by the cash flow from the technical account. Growth was also
assisted by the placement of a further subordinated bond with a volume of
EUR 500 million.
Despite the low interest rate environment, ordinary investment income
excluding interest on funds withheld and contract deposits came in modestly
higher than the level of the comparable period at EUR 791.8 million (EUR
781.1 million). A positive factor here was stronger income from private
equity and real estate investments, which more than offset the diminished
returns from fixed-income instruments. Interest on funds withheld and
contract deposits amounted to EUR 285.3 million (EUR 267.6 million).
Net realised gains increased to EUR 137.4 million (EUR 97.4 million) as at
30 September 2014. Changes in the fair values of financial assets measured
at fair value through profit or loss - the so-called ModCo derivatives and
the inflation swaps are included here - amounted to EUR -8.8 million (EUR
-18.8 million).
Investment income from assets under own management climbed by a very
pleasing 6.4% as at 30 September 2014 to EUR 836.0 million (EUR 785.6
million). The resulting annualised return on investment amounted to 3.3%.
Net investment income including interest on funds withheld and contract
deposits improved by 6.5% to EUR 1,121.3 million (EUR 1,053.2 million).
Further growth in shareholders' equity
Hannover Re's shareholders' equity climbed to a new record high of EUR 7.0
billion as at 30 September 2014 (31 December 2013: EUR 5.9 billion).
Despite this increase the annualised return on equity stood at a pleasing
14.4% (31 December 2013: 15.0%). The book value per share reached EUR 58.01
(31 December 2013: EUR 48.83).
Outlook 2014
In view of its results for the first nine months, Hannover Re is confident
of achieving its full-year targets for 2014. Based on constant exchange
rates, the company continues to expect stable to slightly higher gross
premium and Group net income after tax in the order of EUR 850 million for
the full 2014 financial year. This is conditional on major loss expenditure
not significantly exceeding the anticipated level of EUR 670 million and
assumes that there are no unforeseen adverse developments on capital
markets.
In property and casualty reinsurance there are no indications as yet of a
change in the market. Nevertheless, reinsurance rates should - aside from
certain exceptions - stabilise as at 1 January 2015, since the scope for
further reductions is limited in light of the return on equity targets that
reinsurers need to meet. Faced with the prevailing soft market, Hannover Re
remains committed solely to preserving the profitability and quality of its
portfolio in property and casualty reinsurance.
The improved performance in life and health reinsurance should be
sustained. The full 2014 financial year is therefore expected to close with
a significantly stronger result than the previous year.
Hannover Re's targeted full-year return on investment is 3.2%. The company
is not currently planning to make any significant adjustments to the
allocation of its investments to individual asset classes. The focus is
primarily on stability while maintaining an adequate risk/return profile.
As for the dividend, the company envisages a payout ratio in the range of
35% to 40% of its IFRS Group net income after tax.
Outlook 2015
For the 2015 financial year Hannover Re anticipates - adjusted for currency
translation effects - stable or slightly higher gross premium. The return
on investment will likely be around 3.0%, while Group net income after tax
should be in the order of EUR 875 million. As usual, all statements are
subject to the proviso that major losses remain within the expected bounds
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
Key figures of the Hannover Re Group (IFRS basis) +/- previous Q1-3/ in EUR million Q1-3/2014 year 2013(1) 2013 Hannover Re Group Gross written premium 10,704.5 +1.6% 10,537.9 Net premium earned 8,966.1 (1.7%) 9,117.3 Net underwriting result (11.8) (51.8%) (24.6) Net investment income 1,121.3 +6.5% 1,053.2 Operating profit (EBIT) 1,090.8 +10.7% 985.8 Group net income 695.4 +10.3% 630.2 Earnings per share in EUR 5.77 +10.3% 5.23 Retention 87.0% 88.9% Tax ratio 25.5% 25.2% EBIT margin(2) 12.2% 10.8% Return on equity 14.4% 14.3% +/- previous in EUR million Q1-3/2014 year Q1-3/2013 2013 Policyholders' surplus 9,635.0 +9.9% 8,767.9 Investments (excl. funds held by ceding companies) 35,033.0 +9.9% 31,875.2 Total assets 59,107.6 +9.6% 53,915.5 Book value per share in EUR 58.01 +18.8% 48.83 Property & Casualty reinsurance in EUR million Q1-3/2014 +/- previous year Q1-3/2013 2013 Gross written premium 6,060.0 +1.7% 5,956.4 Net premium earned 5,104.5 +0.2% 5,093.2 Net underwriting result 225.3 (7.5%) 243.4 Operating profit (EBIT) 846.8 +5.2% 804.6 Group net income 560.8 +5.0% 534.4 Retention 89.6% 89.1% Combined Ratio(3) 95.3% 95.0% EBIT margin(2) 16.6% 15.8% Life & Health reinsurance in EUR million Q1-3/2014 +/- previous year Q1-3/2013(1) 2013 Gross written premium 4,644.6 +1.4% 4,581.6 Net premium earned 3,861.4 (4.0%) 4,023.7 Operating profit (EBIT) 233.9 +39.6% 167.6 Group net income 166.2 +8.6% 153.0 Retention 83.7% 88.5% EBIT margin(2) 6.1% 4.2%(1) Adjusted on the basis of IAS 8 (2) Operating result (EBIT)/net premium earned (3) Including funds withheld Key figures of the Hannover Re Group (IFRS basis) in EUR million Q3/2014 +/- previous year Q3/2013(1) Hannover Re Group Gross written premium 3,639.6 +9.9% 3,311.2 Net premium earned 3,126.8 +6.9% 2,925.8 Net underwriting result (26.3) (36.4%) (41.4) Net investment income 413.8 +13.6% 364.2 Operating profit (EBIT) 407.1 +39.1% 292.7 Group net income 251.0 +21.4% 206.7 Earnings per share in EUR 2.08 +21.4% 1.71 Retention 85.7% 86.4% Tax ratio 27.1% 20.1% EBIT margin(2) 13.0% 10.0% Return on equity 15.0% 14.6% Property & Casualty reinsurance in EUR million Q3/2014 +/- previous year Q3/2013 Gross written premium 1,981.9 +6.6% 1,859.4 Net premium earned 1,734.2 +2.7% 1,689.3 Net underwriting result 66.9 +11.8% 59.9 Operating profit (EBIT) 325.8 +27.5% 255.5 Group net income 212.9 +23.6% 172.3 Retention 86.6% 86.7% Combined Ratio(3) 95.8% 96.3% EBIT margin(2) 18.8% 15.1% Life & Health reinsurance in EUR million Q3/2014 +/- previous year Q3/2013(1) Gross written premium 1,657.7 +14.2% 1,451.9 Net premium earned 1,392.4 +12.6% 1,236.3 Operating profit (EBIT) 79.1 +134.2% 33.8 Group net income 50.8 (4.9%) 53.4 Retention 84.7% 86.1% EBIT margin(2) 5.7% 2.7% (1) Adjusted on the basis of IAS 8 (2) Operating result (EBIT)/net premium earned (3) Including funds withheld --------------------------------------------------------------------- 05.11.2014 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. Media archive at www.dgap-medientreff.de and 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: Regulierter Markt in Frankfurt (Prime Standard), Hannover; Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart; Terminbörse EUREX End of News DGAP News-Service --------------------------------------------------------------------- 294985 05.11.2014
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