DGAP-News: Hannover Rückversicherung AG / Key word(s): Final Results
Hannover Re beats return-on-equity target
14.03.2012 / 07:45
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Hannover Re beats return-on-equity target
- Pleasing Group net income despite considerable major losses: EUR 606.0
million (EUR 748.9 million)
- Overall premium growth + 5.8% (currency-adjusted + 7.5%)
- Book value per share + 10.2%
- Return on equity: 12.8%
- Strong cash flow of EUR 2.5 billion (EUR 1.7 billion)
- Investments under own management + EUR 2.9 billion to EUR 28.3 billion
- Investment income improves to EUR 1.4 billion (EUR 1.3 billion)
- Net expenditure on major losses: EUR 980.7 million (EUR 661.9 million)
- Operating profit (EBIT): EUR 841.4 million (EUR 1.2 billion)
- Dividend proposal for 2011: EUR 2.10 (EUR 2.30)
Hannover, 14 March 2012: For the international reinsurance industry the
most striking feature of the 2011 financial year was an exceptionally heavy
burden of losses from natural disasters. In the case of Hannover Re, the
resulting major loss expenditure of EUR 980.7 million for net account was
the second-highest in the company's history. 'The fact that we were still
able to generate a pleasing profit shows that we are moving forward towards
our goal of reducing the volatility of results', Chief Executive Officer
Ulrich Wallin noted. The return on equity of 12.8% surpassed the targeted
level of 750 basis points above the risk-free interest rate.
2011 financial year
Gross written premium in total business increased by 5.8% to EUR 12.1
billion (EUR 11.4 billion). At constant exchange rates - especially against
the US dollar - growth would have come in at 7.5%. The level of retained
premium climbed slightly to 91.2% (90.1%). Net premium earned rose 7.0% to
EUR 10.8 billion (EUR 10.0 billion).
As anticipated, the operating profit (EBIT) of EUR 841.4 million as at 31
December 2011 fell short of the previous year's figure (EUR 1.2 billion).
Group net income amounted to EUR 606.0 million (EUR 748.9 million),
comfortably beating the company's guidance of EUR 500 million. That the
result was so positive can be attributed both to the quality of the
underlying business and to very good investment income. The Group's profit
also benefited from the refund of excess taxes and interest paid thereon in
an amount of EUR 128 million. Earnings per share stood at EUR 5.02 (EUR
6.21).
Non-life reinsurance delivers very healthy profit contribution despite
heavy major loss expenditure
'In non-life reinsurance we were able to sustain the growth trajectory of
recent years', Mr. Wallin stated. 'Our selective growth derived in
particular from our business in the specialty lines and in emerging
markets; it was, however, also boosted by appreciably improved reinsurance
conditions as a consequence of the significant major losses.'
Gross written premium in the non-life reinsurance business group increased
by 7.7% to EUR 6.8 billion (EUR 6.3 billion). At constant exchange rates
growth would have come in at 9.4%. The level of retained premium rose to
91.3% (88.9%). Net premium earned climbed 10.5% to EUR 6.0 billion (EUR 5.4
billion).
In terms of major losses, the 2011 financial year was an extraordinary one:
the total net burden of major losses for Hannover Re amounted to EUR 980.7
million (EUR 661.9 million), a figure EUR 450.7 million higher than the
expected level. The largest single loss event for the insurance industry -
and also for Hannover Re - in the year under review was the devastating
earthquake and subsequent tsunami in Japan. This alone resulted in a net
strain of EUR 228.7 million for the company.
Against this backdrop the combined ratio deteriorated to 104.3% (98.2%).
The underwriting result fell to EUR
-268.7 million (EUR 82.4 million). The operating profit (EBIT) contracted
to EUR 599.3 million (EUR 879.6 million) on account of the major loss
expenditure. The result was favourably influenced by the refund of taxes
and interest paid thereon in an amount of altogether EUR 128 million. Group
net income in non-life reinsurance totalled EUR 455.6 million (EUR 581.0
million). This is a gratifying performance in light of the exceptional
burden of major losses. Earnings per share stood at EUR 3.78 (EUR 4.82).
Further growth in life and health reinsurance
Even though the development of life and health reinsurance was less
vigorous in 2011 than in prior years, a good result of EUR 182.3 million
was still achieved. Profitability was supported by pleasing business
conditions in the United Kingdom - especially in the area of longevity
risks - as well as in Germany, Scandinavia, France and Asian markets. It
was thus possible to largely offset negative effects from the performance
of deposits held by US cedants on behalf of Hannover Re (ModCo) as well as
adverse impacts in Australian disability business.
Gross written premium in life and health reinsurance climbed 3.5% in the
year under review to EUR 5.3 billion (EUR 5.1 billion). At constant
exchange rates growth would have come in at 5.2%. Net premium earned
increased by 2.9% to EUR 4.8 billion (EUR 4.7 billion).
The operating profit (EBIT) in the life and health reinsurance business
group contracted to EUR 217.6 million (EUR 284.4 million). The EBIT margin
amounted to 4.5%. Group net income in life and health reinsurance retreated
from EUR 219.6 million to EUR 182.3 million. In the previous year the
result had profited from exchange rate effects. Earnings per share stood at
EUR 1.51 (EUR 1.82).
Investment income reaches all-time high
Given the difficult capital market climate, Hannover Re is thoroughly
satisfied with the performance of its investment portfolio. The return on
investment for assets under own management - at 3.9% - surpassed the target
level of 3.5%. Positive operating cash flows of EUR 2.5 billion and a
favourable movement in fair values boosted the portfolio of assets under
own management by 11.5% to EUR 28.3 billion (EUR 25.4 billion). Including
funds withheld by ceding companies, the total volume of assets grew to EUR
41.7 billion (EUR 38.0 billion).
Thanks to the enlarged asset volume, it was possible to boost ordinary
investment income - despite the low level of interest rates - by 9.7% to
EUR 966.2 million (EUR 880.5 million). In addition, in the context of
portfolio reallocations from government into corporate bonds Hannover Re
realised profits that accounted for a significant portion of the total
realised net gains. Inflows from the operating cash flow were invested
primarily in corporate bonds, asset-backed securities and real estate. The
balance of net realised gains and losses improved by 10.8% to EUR 179.6
million (EUR 162.0 million).
The unrealised losses recognised in the statement of income amounted to EUR
38.8 million (EUR 39.9 million). The bulk of this amount (EUR 55.4 million)
derived from the performance of securities deposits held by US life
insurers on behalf of Hannover Re. The inflation swaps taken out to hedge
part of the inflation risks associated with the loss reserves in the
technical account gave rise to unrealised gains of EUR 11.6 million, as
against unrealised losses of EUR 31.2 million in the previous year.
Net investment income reached EUR 1,384.0 million (EUR 1,258.9 million),
the highest figure in the history of Hannover Re - also in part because no
write-downs had to be taken on government bonds.
Pleasing growth in shareholders' equity
Despite the considerable strains from major losses, shareholders' equity
showed very positive growth. It increased by 10.2% relative to the level as
at 31 December 2010 to reach EUR 5.0 billion (EUR 4.5 billion). The total
policyholders' surplus (including non-controlling interests and hybrid
capital) grew by 5.0% to EUR 7.3 billion (EUR 7.0 billion).
Dividend proposal: EUR 2.10 per share
'Particularly thanks to the further increase in our shareholders' equity,
we are able to pay a dividend for 2011 that is somewhat higher than our
strategic dividend target of 35% to 40% of Group net income. The Executive
Board and the Supervisory Board will therefore propose to the Annual
General Meeting that a dividend of EUR 2.10 per share should be paid', Mr.
Wallin stated.
Outlook for 2012
Hannover Re is looking to the current financial year with optimism. The
treaty renewals as at 1 January 2012 in non-life reinsurance passed off
satisfactorily for Hannover Re. For the current financial year the company
anticipates - at unchanged exchange rates - gross premium growth in the
range of 5% to 7%. Potential for growth stimuli is expected to come from
modifications made to natural perils models for risks in the United States
and Europe as well as from the more exacting risk capital requirements
imposed by Solvency II on insurance undertakings, for whom the transfer of
risk to reinsurers with good ratings offers an economically attractive
alternative. Hannover Re has budgeted an amount of EUR 560 million for
major losses.
In life and health reinsurance the company sees good prospects for further
profitable growth. Hannover Re expects organic growth of 5% to 7% in the
gross premium volume. Established markets such as the United States, United
Kingdom, Germany, France and Scandinavia will continue to play a major role
for the company. Additional growth impetus is to be anticipated from Asia,
Eastern Europe and India.
Hannover Re expects gross premium in total business to grow by 5% to 7%.
In 2012 a net return on investment in the order of 3.5% should be
attainable. Hannover Re is looking forward to a good 2012 financial year.
For the current financial year the company is targeting a dividend payout
ratio in the range of 35% to 40% of its post-tax IFRS Group net income.
For further information please contact:
Corporate Communications:
Karl Steinle (tel. +49 511 5604-1500,
e-mail: karl.steinle@hannover-re.com)
Media Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: gabriele.handrick@hannover-re.com)
Investor Relations:
Klaus Paesler (tel. +49 511 5604-1736,
e-mail: klaus.paesler@hannover-re.com)
Please visit: www.hannover-re.com
Hannover Re, with a gross premium of around EUR 12 billion, is the
third-largest reinsurer in the world. It transacts all lines of non-life
and life and health reinsurance and is present on all continents with
around 2,200 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 'Excellent').
Please note the disclaimer:
www.hannover-re.com/misc/disclaimer-pr-050811
Key figures of the Hannover Re Group (IFRS basis)
|[![CDATA[|[pre|]]]|]
in EUR million 2011 +/- previous 2010
year
Hannover Re Group
Gross written premium 12,096 5.8% 11,428
.1 .7
Net premium earned 10,751 7.0% 10,047
.5 .0
Net underwriting result (535.8) (185.1)
Net investment income1) 1,384.0 9.9% 1,258.9
Operating profit / loss (EBIT) 841.4 (28.6%) 1,177.9
Group net income (loss) 606.0 (19.1%) 748.9
Earnings per share in EUR 5.02 (19.1%) 6.21
Retention 91.2% 90.1%
EBIT margin2) 7.8% 11.7%
Return on equity (after tax)3) 12.8% 18.2%
in EUR million 2011 +/- previous 2010
year
Policyholders' surplus4) 7,338.2 5.0% 6,987.0
Investments (excl. funds held by 28,341 11.5% 25,411
ceding companies) .2 .1
Total assets 49,867 6.7% 46,725
.0 .3
Book value per share in EUR 41.22 10.2% 37.39
Non-life reinsurance
in EUR million 2011 +/- previous 2010
year
Gross written premium 6,825.5 7.7% 6,339.3
Net premium earned 5,960.8 10.5% 5,393.9
Net underwriting result (268.7) 82.4
Operating profit / loss (EBIT) 599.3 (31.9%) 879.6
Group net income (loss) 455.6 (21.6%) 581.0
Retention 91.3% 88.9%
Combined Ratio5) 104.3% 98.2%
EBIT margin2) 10.1% 16.3%
Life and health reinsurance
in EUR million 2011 +/- previous 2010
year
Gross written premium 5,270.1 3.5% 5,090.1
Net premium earned 4,788.9 2.9% 4,653.9
Operating profit / loss (EBIT) 217.6 (23.5%) 284.4
Group net income (loss) 182.3 (17.0%) 219.6
Retention 91.0% 91.7%
EBIT margin2) 4.5% 6.1%
|[![CDATA[|[/pre|]]]|]
|[![CDATA[|[pre|]]]|]
1) Including income/expense on funds withheld and contract deposits
2) Operating profit / loss (EBIT) / net premium earned
3) Annualised
4) Equity attributable to shareholders of Hannover Re + non-controlling
interests + hybrid capital
5) Including interest income on contract deposits and funds withheld
|[![CDATA[|[/pre|]]]|]
Key figures of the Hannover Re Group (IFRS basis)
|[![CDATA[|[pre|]]]|]
in EUR million Q4/2011 +/- previous year Q4/2010
Hannover Re Group
Gross written premium 3,031.4 5.5% 2,874.1
Net premium earned 2,871.6 11.5% 2,575.8
Net underwriting result (122.5) (32.1)
Net investment income1) 433.3 12.0% 386.7
Operating profit / loss 350.6 11.0% 315.9
(EBIT)
Group net income (loss) 224.3 34.4% 166.9
Earnings per share in EUR 1.86 34.4% 1.38
Retention 92.6% 87.6%
EBIT margin2) 12.2% 12.3%
Return on equity (after 18.6% 14.9%
tax)3)
Non-life reinsurance
in EUR million Q4/2011 +/- previous year Q4/2010
Gross written premium 1,605.0 6.0% 1,514.4
Net premium earned 1,569.6 18.3% 1,327.1
Net underwriting result (39.6) (179.2%) 50.0
Operating profit / loss 266.3 8.2% 246.2
(EBIT)
Group net income (loss) 160.6 12.0% 143.3
Retention 94.3% 83.6%
Combined Ratio4) 102.3% 95.9%
EBIT margin2) 17.0% 18.5%
Life and health reinsurance
in EUR million Q4/2011 +/- previous year Q4/2010
Gross written premium 1,426.5 4.9% 1,359.8
Net premium earned 1,302.0 4.2% 1,249.0
Operating profit / loss 79.0 11.7% 70.7
(EBIT)
Group net income (loss) 69.1 39.9% 49.4
Retention 90.8% 92.1%
EBIT margin2) 6.1% 5.7%
|[![CDATA[|[/pre|]]]|]
|[![CDATA[|[pre|]]]|]
1) Including income/expense on funds withheld and contract deposits
2) Operating profit / loss (EBIT) / net premium earned
3) Annualised
4) Including interest income on contract deposits and funds withheld
|[![CDATA[|[/pre|]]]|]
End of Corporate News
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14.03.2012 Dissemination of a Corporate News, transmitted by DGAP - a
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Language: English
Company: Hannover Rückversicherung AG
Karl-Wiechert-Allee 50
30625 Hannover
Germany
Phone: +49-(0)511-5604-1500
Fax: +49-(0)511-5604-1648
E-mail: info@hannover-re.com
Internet: www.hannover-re.com
ISIN: DE0008402215
WKN: 840 221
Listed: Regulierter Markt in Frankfurt (Prime Standard), Hannover;
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart; Terminbörse EUREX
End of News DGAP News-Service
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160385 14.03.2012
DGAP-News: Hannover Re beats return-on-equity target
| Source: EQS Group AG