Crisis over for Hannover Re

Hannover Re said the world financial crisis was effectively over for the reinsurer when it posted Q1 figures showing 17% growth in premiums and 27% growth in pre-tax profits.

Financial highlights (2008 Q1 in brackets)

• Gross written premium €2,662m (€2,275) up 17%
• Net premium earned €2,091 (€1,679m)
• Net underwriting result -€2m (-€29m)
• Net investment income €198m (€263m)
• Operating profit €306m (€246m) up 25%
• Net income before taxes €287 (€226) up 27%
• Net income €219m (€158m) up 43%

Figures for non-life reinsurance (2008 Q1 in brackets)

• GWP €1,656m (€1,507m) up 10%
• Net premium earned €1,181m (€997m)
• Net underwriting result €54m (-€3m)
• Operating profit €188m (€181m)
• Net income before taxes €188 (€181m)
• Net income €129m (€120m)
• Combined ratio 95.0% (99.5%)

Chief executive officer Wilhelm Zeller said: "For our company the adverse effects of the financial market crisis are largely behind us. We are now in a position to profit from the positive developments in both non-life reinsurance and life/health reinsurance. Our quarterly result puts in place a good platform for achieving our ambitious profit target for 2009 – namely a return on equity of at least 18% after tax.”

The positive one-off effect of EUR 80.2 million resulting from the acquisition of the US ING life reinsurance portfolio is included in the forecast.

The company said: “Hannover Re was thoroughly satisfied with the development of non-life reinsurance. The situation on the international reinsurance markets is broadly favourable since the soft market has come to an end sooner than expected. The capital shortage triggered throughout the global insurance industry by the financial market crisis has stimulated appreciable additional demand for reinsurance, hence prompting rates to rise – sometimes by double-digit percentages, such as in credit and surety reinsurance. In catastrophe business, too, and especially in regions that had suffered losses, price increases were obtained.”

But Zeller said: "We still consider the rate increases in US catastrophe business to be far from sufficient.” The company has scaled back its involvement in the US.

Catastrophe losses:

• Winter storm Klaus (France and Spain) cost €63.3m
• Australia bushfires cost €12.5m for Hannover Re.
• Minimal strains from the collapse of the Cologne City Archive as well as a satellite failure and plane crash.
• Total €98.8m (8.4% of net premium)