HANNOVER, Germany, May 24, 2002 (PRIMEZONE) -- At today's Annual General Meeting of Hannover Re in Hannover, Wilhelm Zeller, Chairman of the Executive Board, presented the Group's figures for the first quarter 2002. Net income of EUR 90 million (previous year: EUR 41 million) was generated. This corresponds to earnings per share of EUR 2.78, double the figure for the same quarter in the previous year. Provided that there are no extraordinary developments either in claims or on capital markets, Mr. Zeller expects 2002 to be an outstanding year. He forecasts an operating profit (EBIT) of more than EUR 600 million and net income of EUR 300 million. Not taking special effects into account, this would be the best result in Hannover Re's history.
The Annual General Meeting approved all proposed resolutions by a large majority including the implementation of a 1:3 stock split. This will serve to significantly reduce the stock market price of the Hannover Re share, thereby rendering it even more attractive to private investors and improving its liquidity.
In his presentation, Mr. Zeller explained to the Annual General Meeting - which was well attended with more than 1,000 participants - that Hannover Re Group's business had developed exceedingly well in the first quarter of 2002. Gross written premiums across all four business groups totalled EUR 3.2 billion, an increase of 34% on the first quarter of the previous year. Despite difficult capital market conditions, EBIT was boosted by 140% to EUR 174 million. Net income for the quarter was 118% higher at EUR 90 million, and earnings per share rose by 99% to EUR 2.78. Mr. Zeller emphasised: "We have thus comfortably achieved our goal of increasing by a double-digit margin not only EBIT and net income after taxes, but also earnings per share".
Gross written premiums in property and casualty reinsurance grew by 58% compared to the first quarter of the previous year to reach EUR 1.7 billion. Net premiums earned climbed by 48% to EUR 1.0 billion. Not least, these positive figures are a result of Hannover Re responding more quickly than many of its competitors to the market upswing in the wake of 11 September 2001 and thus succeeded in significantly enlarging its market share. The strong profitability of the new business and the favourable loss experience produced a technical profit and a remarkably low combined ratio of 93% (Q1/01: 106%). EBIT in property and casualty reinsurance improved from EUR 48 million to EUR 146 million despite markedly lower net investment income. Overall, the business group almost tripled its net income to reach EUR 76 million (earnings per share of EUR 2.34). Mr Zeller observed: "We expect the favourable trend in this business group to be sustained in the coming quarters and anticipate - subject to a normal loss experience - a highly satisfactory result for the year 2002."
In life and health reinsurance, gross written premiums increased by a mere 6% compared to the first quarter of the previous year, although net premiums earned rose by 16% due to the lower proportion of business retroceded. The EBIT of EUR 7 million was on a par with the first quarter of the previous year. The pre-tax profit grew by 19%. Net income for the quarter declined by 16% to EUR 3 million (EUR 0.08 per share) owing to an increased minority interest in the result. Neither the premium growth nor the weak profit contribution provide any indication of the likely year-end result. However, Hannover Re anticipates the accustomed business upturn in this business group - especially during the second half of the year - and still expects net income for 2002 as a whole to show further year-on-year improvement.
Now that the reorientation implemented in the last financial year has begun to bear fruit, program business is on the road to success - both in the USA and Europe. Compared with the same period of the previous year, gross written premium grew by 23%, while net premiums earned increased by as much as 86% due to the higher level of premiums retained. EBIT rose from EUR 5 million to EUR 13 million and net income for the quarter almost doubled to more than EUR 5 million (EUR 0.17 per share). In Mr. Zeller's assessment, the program business transacted by the Hannover Re Group will evolve into a satisfactorily performing business group.
Demand for financial reinsurance products tends to grow towards year-end. As expected, the premium income and result in this business group showed a rather modest development in the first quarter. Gross written premiums rose by 13%, while EBIT fell from EUR 13 million to EUR 8 million. Net income for the quarter decreased to EUR 6 million (EUR 0.19 per share). Following the vigorous growth of financial reinsurance in the previous year, the company expects a significantly more modest increase in premium income for 2002 as a whole. The profitability outlook nevertheless continues to be assessed highly favourably.
Net investment income declined by 4% compared to the first quarter of the previous year to EUR 188 million. This decrease was due to the unsatisfactory state of the capital markets and especially the equity markets. Hannover Re again anticipates fairly modest movement on the capital markets for the current year. Net investment income as at year-end will probably be somewhat lower than in the previous year.
"Subject to a major loss experience in line with the multi-year average and provided that capital markets at least show no further deterioration, 2002 promises to follow on from earlier record years," concluded Mr. Zeller. "We expect EBIT of more than EUR 600 million, net income of EUR 300 million and earnings per share well in excess of EUR 9." Disregarding the special tax effects in the year 2000, this would be the best result in Hannover Re's history.
Hannover Re, with gross premiums of approx. EUR 12 bn., is the fifth-largest reinsurance group in the world. It transacts all lines of property/casualty, life/health and financial/finite-risk reinsurance as well as program business. It maintains business relations with more than 2,000 insurance companies in over 100 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices in 19 countries. The American rating agencies Standard & Poor's and A.M. Best have awarded Hannover Re a rating of AA ("Very Strong") and A+ ("Superior"), respectively