04.11.2015
Hannover Rück SE DE0008402215
DGAP-News: Hannover Rück SE: Hannover Re well on track for a very pleasing year-end result
DGAP-News: Hannover Rück SE / Key word(s): Quarter Results
Hannover Rück SE: Hannover Re well on track for a very pleasing
year-end result
04.11.2015 / 07:30
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Press release
Hannover Re well on track for a very pleasing year-end result
- Group net income +13.0%: EUR 786.0 million
(EUR 695.4 million)
- Gross premium growth (currency-adjusted): +10.0%
- Return on equity: 13.7%
- Net major loss expenditure climbs to EUR 436.4 million (EUR 242.2
million), but remains within budget
- Combined ratio in property and casualty reinsurance: 95.5% (95.3%)
- Pleasing income from assets under own management: EUR 931.8 million
(EUR 836.0 million)
- Return on investment: 3.5%
- Book value per share: EUR 64.15
- Outlook for the 2016 financial year: Group net income guidance EUR 950
million
Hannover, 4 November 2015: Hannover Re is thoroughly satisfied with the
development of its business as at 30 September 2015. The already good Group
net income of the previous year's period was boosted by a further 13.0% to
EUR 786.0 million (EUR 695.4 million). "This result is all the more
pleasing for us given that the general climate in reinsurance business and
the low interest rate environment continue to prove challenging", Chief
Executive Officer Ulrich Wallin noted. "We are confident of achieving our
ambitious profit target of around EUR 950 million for the full financial
year."
Gross premium sharply higher
The increased profitability as at 30 September 2015 was a basis for
remarkable growth in premium income. The gross written premium booked by
the Hannover Re Group surged by 20.9% to EUR 12.9 billion (EUR 10.7
billion). At constant exchange rates growth would still have reached 10.0%.
The company is therefore ahead of its expectations going into the year. The
level of retained premium rose to 87.9% (87.0%). Net premium earned climbed
by 20.8% to EUR 10.8 billion (EUR 9.0 billion); adjusted for exchange rate
effects, growth would have come in at 10.0%.
Group net income further boosted
The operating profit (EBIT) as at 30 September 2015 stood at a very
pleasing EUR 1,190.3 million (EUR 1,090.8 million) on the back of good
results in reinsurance business and considerably higher investment income.
Group net income also improved again by a substantial 13.0% on the
comparable period to reach EUR 786.0 million (EUR 695.4 million). Earnings
per share amounted to EUR 6.52 (EUR 5.77).
Property and casualty reinsurance delivers another very good performance
The supply of reinsurance coverage continues to exceed demand, keeping
prices and conditions under sustained pressure. A slowing trend in the
premium erosion can nevertheless be observed in certain lines and markets.
This was also evident in the treaty renewals as at 1 July 2015, when parts
of the portfolio in North America as well as most agricultural risks,
business from Latin America and Australia came up for renewal. In the
agricultural risks segment Hannover Re was able to write attractive new
business and the company also achieved good outcomes in North American
business.
All in all, Hannover Re is very satisfied with the premium growth booked in
property and casualty reinsurance as at 30 September 2015. Despite its
disciplined underwriting practice, total gross premium climbed sharply by
20.8% to EUR 7.3 billion (EUR 6.1 billion). Growth of 9.8% would have been
recorded at constant exchange rates. The level of retained premium moved
slightly lower to 88.8% (89.6%). Net premium earned rose by 16.9% to EUR
6.0 billion (EUR 5.1 billion); adjusted for exchange rate effects, growth
would have amounted to 6.7%.
Property and casualty reinsurance continues to be notable for an absence of
market-changing major losses. Nevertheless, an increased number of smaller
natural disasters as well as, most significantly, fire and marine losses
have been incurred in the current year. Against this backdrop, net
expenditure on major losses increased appreciably as at 30 September 2015
to EUR 436.4 million (EUR 242.2 million); it was, however, still well
within the budgeted amount for this period. The remaining major loss budget
for the full 2015 financial year stands at EUR 253.6 million. The largest
single loss for Hannover Re was the devastating series of explosions in the
port of the Chinese city of Tianjin in August. Based on current
information, the resulting loss amounts to EUR 95.9 million for net
account. The combined ratio nevertheless remained broadly stable at 95.5%
(95.3%) and is well within the target figure of 96% for the full year. The
underwriting result reached a very satisfactory EUR 251.4 million (EUR
225.3 million). The operating profit (EBIT) as at 30 September 2015 came in
at EUR 936.3 million (EUR 846.8 million), an increase of 10.6% compared to
the previous year's period. Group net income rose by 16.1% to EUR 651.0
million (EUR 560.8 million). Earnings per share reached EUR 5.40 (EUR
4.65).
Life and health reinsurance with attractive growth
Life and health reinsurance developed satisfactorily. Gross premium in life
and health reinsurance grew by a substantial 21.1% to EUR 5.6 billion (EUR
4.6 billion). The increase would have been 10.1% at constant exchange
rates. Hannover Re anticipates further growth opportunities going forward.
This is true on the one hand of mature insurance markets, where supervisory
and regulatory changes are driving demand for tailored reinsurance
solutions. On the other hand, the reinsurance of so-called lifestyle
insurance products is also likely to generate appreciable growth. With the
retention rising to 86.8% (83.7%), net premium earned climbed even more
sharply by 26.0% to EUR 4.9 billion (EUR 3.9 billion). At constant exchange
rates the increase would still have reached 14.3%.
The operating profit (EBIT) in life and health reinsurance totalled EUR
246.3 million (EUR 233.9 million) as at 30 September 2015. Group net income
improved by 6.9% to EUR 177.8 million (EUR 166.2 million). Earnings per
share reached EUR 1.47 (EUR 1.38).
Investment income once again very favourable
The portfolio of assets under own management grew to EUR 37.7 billion as at
30 September 2015 (31 December 2014: EUR 36.2 billion). This was
principally due to effects associated with the appreciation of various
currencies - especially the US dollar - against the euro. A continued
healthy positive cash flow was also a factor here.
Despite the protracted low interest rate environment, ordinary investment
income excluding interest on funds withheld and contract deposits came in
significantly higher than the level of the comparable period (EUR 791.8
million) at EUR 912.5 million. This was due in part to a special effect in
life reinsurance business as well as to sharply increased earnings from
fixed-income securities and real estate. The exposure to high-yield
investment funds also played a very pleasing role here. In addition,
interest on funds withheld and contract deposits increased modestly to EUR
292.9 million (EUR 285.3 million). Impairments of just EUR 24.1 million
(EUR 16.1 million) were taken. The bulk of these write-downs were
attributable to scheduled depreciation on directly held real estate, a
reflection of the further increase in the company's exposure to this asset
class. Net realised gains on disposals as at 30 September 2015 amounted to
EUR 124.2 million (EUR 137.4 million).
Investment income from assets under own management climbed by a very
gratifying 11.5% as at 30 September 2015 to EUR 931.8 million (EUR 836.0
million). The resulting annualised return on investment (excluding ModCo
derivatives and inflation swaps) stood at 3.5%. Hannover Re is thus much on
course to achieve its full-year target of 3.0%. Net investment income
including interest on funds withheld and contract deposits improved by 9.2%
to EUR 1,224.7 million (EUR 1,121.3 million).
Strong equity base
Hannover Re's shareholders' equity remained on a strong level as at 30
September 2015 despite the dividend payment of EUR 512.5 million. It rose
to EUR 7.7 billion (31 December 2014: EUR 7.6 billion). The annualised
return on equity stood at a good 13.7% (31 December 2014: 14.7%). The book
value per share reached EUR 64.15 (31 December 2014: EUR 62.61).
Outlook for 2015
In view of its results for the first nine months Hannover Re is well on
track to achieve its year-end targets for 2015. Based on constant exchange
rates the company anticipates growth of 5% to 10% in gross premium volume.
The company expects to generate Group net income in the order of EUR 950
million for the full 2015 financial year. This is conditional upon major
loss expenditure not significantly exceeding the anticipated level of EUR
690 million and also assumes that there are no unforeseen adverse
developments on capital markets.
For the upcoming round of treaty renewals in property and casualty
reinsurance on 1 January 2016 Hannover Re expects to see some easing in the
pressure on prices and conditions. Rising demand for high-quality
reinsurance protection in mature markets as a consequence of the economic
upturn in the United States should have favourable implications for the
market development. Reinsurers with an excellent rating are set to benefit
from this tendency. Reinsurance prices are likely to stabilise in some
areas and room for rate increases will probably open up in some lines and
markets.
While life and health reinsurance has experienced volatility in some areas
in the year to date, its development has been satisfactory overall.
Hannover Re expects to post good growth in premium income for the full year
and an increased year-end profit.
Hannover Re's targets a return on investment for the full 2015 financial
year of 3.0%. In the area of fixed-income securities the company will
maintain its emphasis on the high quality and diversification of its
portfolio. The focus is primarily on stability while ensuring an adequate
risk/return profile. The company will also explore further expansion of its
investments in real estate and equities.
As for the dividend, Hannover Re continues to aim for a payout ratio in the
range of 35% to 40% of its IFRS Group net income after tax. This ratio may
increase in light of capital management considerations if the company's
comfortable level of capitalisation remains unchanged.
Outlook for 2016
For the 2016 financial year Hannover Re expects a stable to slightly
reduced gross premium adjusted for currency translation effects. The return
on investment will likely be around 2.9%, while Group net income should be
in the order of EUR 950 million. As usual, all statements are subject to
the proviso that major losses remain within the expected bounds of EUR 825
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 14.4 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
2,500 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:
https://www.hannover-re.com/535917
Key figures of the Hannover Re Group (IFRS basis)
in EUR million Q1-3/2015 +/- previous Q1-3/2014 2014 year Hannover Re Group Gross written premium 12,945.9 +20.9% 10,704.5 Net premium earned 10,830.1 +20.8% 8,966.1 Net underwriting result (72.8) (11.8) Net investment income 1,224.7 +9.2% 1,121.3 Operating profit (EBIT) 1,190.3 +9.1% 1,090.8 Group net income 786.0 +13.0% 695.4 Earnings per share in EUR 6.52 +13.0% 5.77 Retention 87.9% 87.0% Tax ratio 26.5% 25.5% EBIT margin1) 11.0% 12.2% Return on equity 13.7% 14.4% in EUR million Q1-3/2015 +/- previous Q1-3/2014 2014 year Policyholders' surplus 9,917.9 -3.1% 10,239.5 Investments (excl. funds held 37,703.0 +4.1% 36,228.0 by ceding companies) Total assets 63,749.8 +5.4% 60,457.6 Book value per share in EUR 64.15 +2.5% 62.61 Property & Casualty reinsurance in EUR million Q1-3/2015 +/- previous Q1-3/2014 2014 year Gross written premium 7,319.4 +20.8% 6,060.0 Net premium earned 5,965.4 +16.9% 5,104.5 Net underwriting result 251.4 +11.6% 225.3 Operating profit (EBIT) 936.3 +10.6% 846.8 Group net income 651.0 +16.1% 560.8 Retention 88.8% 89.6% Combined Ratio2) 95.5% 95.3% EBIT margin1) 15.7% 16.6% Life & Health reinsurance in EUR million Q1-3/2015 +/- previous Q1-3/2014 2014 year Gross written premium 5,626.6 +21.1% 4,644.6 Net premium earned 4,864.1 +26.0% 3,861.4 Operating profit (EBIT) 246.3 +5.3% 233.9 Group net income 177.8 +6.9% 166.2 Retention 86.8% 83.7% EBIT margin1) 5.1% 6.1% 1) Operating result (EBIT)/net premium earned 2) Including funds withheldKey figures of the Hannover Re Group (IFRS basis) in EUR million Q3/2015 +/- previous year Q3/2014 Hannover Re Group Gross written premium 4,359.4 +19.8% 3,639.6 Net premium earned 3,810.7 +21.9% 3,126.8 Net underwriting result (32.9) (26.3) Net investment income 426.0 +2.9% 413.8 Operating profit (EBIT) 400.9 -1.5% 407.1 Group net income 254.1 +1.2% 251.0 Earnings per share in EUR 2.11 +1.2% 2.08 Retention 87.3% 85.7% Tax ratio 29.7% 27.1% EBIT margin1) 10.5% 13.0% Return on equity 13.2% 15.0% Property & Casualty reinsurance in EUR million Q3/2015 +/- previous year Q3/2014 Gross written premium 2,347.1 +18.4% 1,981.9 Net premium earned 2,071.2 +19.4% 1,734.2 Net underwriting result 80.5 +20.2% 66.9 Operating profit (EBIT) 352.6 +8.2% 325.8 Group net income 232.6 +9.3% 212.9 Retention 87.3% 86.6% Combined Ratio2) 95.8% 95.8% EBIT margin1) 17.0% 18.8% Life & Health reinsurance in EUR million Q3/2015 +/- previous year Q3/2014 Gross written premium 2,012.1 +21.4% 1,657.7 Net premium earned 1,739.3 +24.9% 1,392.4 Operating profit (EBIT) 46.2 -41.6% 79.1 Group net income 32.1 -36.7% 50.8 Retention 87.2% 84.7% EBIT margin1) 2.7% 5.7% 1) Operating result (EBIT)/net premium earned 2) Including funds withheld--------------------------------------------------------------------- 04.11.2015 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: Regulated Market in Frankfurt (Prime Standard), Hanover; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart; Terminbörse EUREX End of News DGAP News Service --------------------------------------------------------------------- 408021 04.11.2015
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