04.08.2016
Hannover Rück SE DE0008402215
DGAP-News: Hannover Re well on track to achieve its full-year targets
DGAP-News: Hannover Rück SE / Key word(s): Half Year Results
Hannover Re well on track to achieve its full-year targets
04.08.2016 / 07:30
The issuer is solely responsible for the content of this announcement.
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Press release
Hannover Re well on track to achieve its full-year targets
- Net income for first half-year: EUR 486.1 million (EUR 531.9 million)
- Gross premium in line with expectations, currency-adjusted -1.5%
- Net major loss expenditure sharply higher at EUR 352.7 million
(EUR 197.4 million)
- Combined ratio: 95.4% (95.4%)
- Return on equity of 11.8% beats target despite rising average
shareholders' equity
- Income from assets under own management: EUR 569.2 million (EUR 601.3
million)
- Return on investment as planned at 2.9%
Hannover, 4 August 2016: Hannover Re is satisfied with the result for the
first half of 2016. By mid-year it generated somewhat more than half of the
targeted net income - which the company expects to reach at least EUR 950
million. "The half-yearly profit benefited overall from pleasing investment
income, solid results in life and health reinsurance and an acceptable
result in property and casualty reinsurance", Chief Executive Officer
Ulrich Wallin stated. "Nevertheless, increased loss expenditure in the
second quarter and diminished return opportunities in the investment
portfolio did lead to a smaller profit."
Gross premium lower as expected
The gross written premium for the Hannover Re Group contracted by a modest
3.5% as at 30 June 2016 to EUR 8.3 billion (EUR 8.6 billion). At constant
exchange rates the decrease would have been 1.5%. This figure is in line
with expectations, especially bearing in mind the intense competition in
property and casualty reinsurance. The retention climbed to 89.8% (88.3%).
Net premium earned rose by 2.1% to EUR 7.2 billion (EUR 7.0 billion);
adjusted for exchange rate effects, the increase would have been 4.3%.
Half-yearly result within target corridor for full-year 2016
The operating profit (EBIT) as at 30 June 2016 totalled EUR 745.2 million.
The figure for the comparable period (EUR 789.4 million) had been assisted
by a special effect in life and health reinsurance amounting to EUR 39
million. Against this backdrop, Group net income for the first six months
fell by 8.6% to EUR 486.1 million (EUR 531.9 million). Earnings per share
stood at EUR 4.03 (EUR 4.41).
Property and casualty delivers acceptable result
Supply continued to far exceed demand in worldwide property and casualty
reinsurance, although further indications of a bottoming out in prices
could be discerned. In some areas this was also true of the treaty renewals
as at 1 April 2016, which passed off satisfactorily on the whole for
Hannover Re.
Gross written premium in property and casualty reinsurance contracted by
6.9% relative to the previous year's period to stand at EUR 4.6 billion
(EUR 5.0 billion) as at 30 June 2016; adjusted for exchange rate effects,
it would have fallen by 5.6%. "For us, it is more important to preserve the
profitability of the business than to boost premium income", Mr. Wallin
emphasised. The retention was slightly lower at 88.2% (89.6%). Net premium
earned was down 1.4% at EUR 3.8 billion (EUR 3.9 billion); it would have
been unchanged at constant exchange rates.
The incidence of major losses in the first half-year was considerably in
excess of the comparable period. The losses incurred by Hannover Re in the
second quarter were significantly higher than expected. Nevertheless, in
view of the fact that the amount budgeted for the first quarter of 2016 had
not been fully utilised, the net burden for the company at EUR 352.7
million (EUR 197.4 million) was still within the overall bounds of
expectations for the first six months. The most expensive single loss event
for Hannover Re was the devastating wildfires in the Canadian province of
Alberta at EUR 131.6 million for net account, followed by the severe
earthquake in Ecuador with a net strain of EUR 56.9 million. There were
also a number of smaller losses due to natural perils, including for
example those caused by the series of storms that impacted Germany in May
and June, as well as some man-made losses.
Against this backdrop, the underwriting result slipped by 2.6% to EUR 166.4
million (EUR 170.9 million); it nevertheless remains on a good level. The
combined ratio is still positive at 95.4% (95.4%) and in line with our
target of staying below 96%. The operating profit (EBIT) for property and
casualty reinsurance totalled EUR 560.9 million (EUR 583.7 million) as at
30 June 2016. Group net income contracted to EUR 376.2 million (EUR 418.4
million). Earnings per share consequently stood at EUR 3.12 (EUR 3.47).
Solid result in life and health reinsurance
Gross written premium in life and health reinsurance rose slightly by 1.2%
as at 30 June 2016 to reach EUR 3.7 billion (EUR 3.6 billion); it would
have grown by 4.2% at constant exchange rates. Net premium earned climbed
by 6.5% to EUR 3.3 billion (EUR 3.1 billion); adjusted for exchange rate
effects, growth of 9.7% would have been booked. The retention increased to
91.8% (86.5%).
All in all, life and health reinsurance delivered a satisfactory
performance, even though the very favourable development was to some extent
masked by negative risk experiences from older underwriting years in US
mortality business. The operating result (EBIT) as at 30 June 2016 totalled
EUR 179.1 million (EUR 200.0 million). Group net income closed 10.3% lower
at EUR 130.6 million (EUR 145.6 million). Earnings per share therefore
amounted to EUR 1.08 (EUR 1.21).
Pleasing investment income despite market volatility
The investment climate was once again challenging in the period under
review and overshadowed by various uncertainties on the capital and credit
markets, including those triggered by the UK referendum on leaving the
European Union ("Brexit").
The portfolio of assets under own management grew again in the first six
months relative to year-end 2015 - building on the already considerable
increase in the previous year - to reach EUR 39.8 billion (EUR 39.3
billion). Ordinary investment income excluding interest on funds withheld
and contract deposits also developed favourably despite the low interest
rate environment: factoring out a one-time special effect of EUR 39 million
in life and health reinsurance in the previous year, it remained on the
level of the comparable period at EUR 568.0 million (EUR 598.7 million).
Realised gains amounted to EUR 79.5 million (EUR 66.6 million) and were
attributable in large measure to regrouping activities as part of regular
portfolio maintenance as well as to the sale of older private equity
investments. Impairments of EUR 48.1 million (EUR 14.7 million) had to be
taken in the reporting period. They consisted largely of write-downs on
equities and scheduled depreciation on real estate.
Income from assets under own management totalled EUR 569.2 million (EUR
601.3 million) as at 30 June 2016. The resulting annualised average return
on investment came in exactly within the anticipated range at 2.9%.
Interest on funds withheld and contract deposits fell to EUR 175.6 million
(EUR 197.4 million). Net investment income including interest on funds
withheld and contract deposits amounted to EUR 744.8 million (EUR 798.8
million). Although this figure is lower than in the previous year's period,
it is pleasing in light of the historically low interest rates.
Shareholders' equity continues to grow
Hannover Re's shareholders' equity grew to EUR 8.4 billion as at 30 June
2016 (31 December 2015: EUR 8.1 billion). Standing at 11.8%, the annualised
return on equity consequently fell short of the level as at year-end 2015
(14.7%). The book value per share closed at EUR 69.83 (31 December 2015:
EUR 66.90).
Outlook for 2016
The half-yearly results presented today put Hannover Re well on track to
achieve its targets. It remains the company's expectation that net income
after tax will reach at least EUR 950 million for the full 2016 financial
year. This is conditional on major loss expenditure not significantly
exceeding the budgeted level of EUR 825 million and assumes that there are
no unforeseen distortions on capital markets. Based on constant exchange
rates, the company anticipates a stable or slightly lower gross premium
volume.
The general climate in property and casualty reinsurance remains
challenging; this was demonstrated again by the treaty renewals as at 1
June and 1 July 2016, when parts of the North American portfolio,
agricultural risks and business from Latin America traditionally come up
for renewal. This was also the main renewal season for business in
Australia.
In North America rates and conditions are still under pressure owing to the
absence of market-changing large losses; however, increasing indications of
a bottoming out can be discerned in both the property and casualty lines.
Hannover Re boosted its premium, principally owing to the expansion of
existing customer relationships. The pressure on prices for US and European
property catastrophe business eased in comparison with the previous year's
renewals. In Canada the destructive forest fires led to the anticipated
rate increases in property business, an area in which the company offered
additional capacities.
In life and health reinsurance Hannover Re anticipates good opportunities
to generate further profitable new business in the second half of the year.
Hannover Re's targeted return on investment for the full 2016 financial
year remains unchanged at 2.9%. The company is not currently planning any
significant changes to its allocation of investments to the individual
asset classes.
Hannover Re still envisages a payout ratio for the dividend in the range of
35% to 40% of its IFRS Group net income. This figure is likely to increase
in light of capital management considerations if the company's comfortable
level of capitalisation remains unchanged.
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 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". In 2016 Hannover Re celebrates its fiftieth anniversary.
Please note the disclaimer:
https://www.hannover-re.com/535917
Key figures of the Hannover Re Group (IFRS basis)
in EUR million H1/2016 /- previous H1/2015 2015 year Hannover Re Group Gross written 8,283.8 -3.5% 8,586.5 premium Net premium earned 7,166.7 +2.1% 7,019.4 Net underwriting (2.7) (39.9) result Net investment 744.8 -6.8% 798.8 income Operating profit 745.2 -5.6% 789.4 (EBIT) Group net income 486.1 -8.6% 531.9 Earnings per share 4.03 -8.6% 4.41 in EUR Retention 89.8% 88.3% Tax ratio 27.5% 24.9% EBIT margin 1) 10.4% 11.2% Return on equity 11.8% 14.0% in EUR million H1/2016 +/- previous H1/2015 2015 year Policyholders' 10,627.0 +3.5% 10,267.3 surplus Investments (excl. 39,754.0 +1.0% 39,346.9 funds held by ceding companies) Total assets 62,317.7 -1.4% 63,214.9 Book value per 69.83 +4.4% 66.90 share in EUR Property & Casualty reinsurance in EUR million H1/2016 +/- previous H1/2015 2015 year Gross written 4,627.4 -6.9% 4,972.2 premium Net premium earned 3,838.4 -1.4% 3,894.2 Net underwriting 166.4 -2.6% 170.9 result Operating profit 560.9 -3.9% 583.7 (EBIT) Group net income 376.2 -10.1% 418.4 Retention 88.2% 89.6% Combined Ratio 2) 95.4% 95.4% EBIT margin 1) 14.6% 15.0% Life & Health reinsurance in EUR million H1/2016 +/- previous H1/2015 2015 year Gross written 3,656.4 +1.2% 3,614.5 premium Net premium earned 3,328.1 +6.5% 3,124.8 Operating profit 179.1 -10.5% 200.0 (EBIT) Group net income 130.6 -10.3% 145.6 Retention 91.8% 86.5% EBIT margin 1) 5.4% 6.4% 1) Operating result (EBIT)/net premium earned 2) Including funds withheldKey figures of the Hannover Re Group (IFRS basis) in EUR million Q2/2016 +/- previous Q2/2015 2015 year Hannover Re Group Gross written 4,020.2 -4.0% 4,186.3 premium Net premium earned 3,624.6 +1.0% 3,587.5 Net underwriting (38.7) (33.7) result Net investment 378.5 -1.2% 383.1 income Operating profit 338.5 -6.1% 360.4 (EBIT) Group net income 214.9 -14.8% 252.2 Earnings per share 1.78 -14.8% 2.09 in EUR Retention 90.6% 88.0% Tax ratio 29.0% 17.4% EBIT margin 1) 9.3% 10.0% Return on equity 10.2% 12.5% Property & Casualty reinsurance in EUR million Q2/2016 +/- previous Q2/2015 2015 year Gross written 2,125.2 -9.8% 2,355.1 premium Net premium earned 1,877.1 -6.7% 2,011.9 Net underwriting 66.1 -29.9% 94.3 result Operating profit 261.3 -20.5% 328.5 (EBIT) Group net income 171.9 -30.4% 247.0 Retention 88.5% 90.3% Combined Ratio 2) 96.1% 95.0% EBIT margin 1) 13.9% 16.3% Life & Health reinsurance in EUR million Q2/2016 +/- previous Q2/2015 2015 year Gross written 1,895.0 +3.5% 1,831.2 premium Net premium earned 1,747.5 +10.9% 1,575.2 Operating profit 73.6 +175.5% 26.7 (EBIT) Group net income 52.7 +191.5% 18.1 Retention 93.0% 85.0% EBIT margin 1) 4.2% 1.7% 1) Operating result (EBIT)/net premium earned 2) Including funds withheld--------------------------------------------------------------------------- 04.08.2016 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 --------------------------------------------------------------------------- 489061 04.08.2016
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