DGAP-News: Hannover Rück SE / Key word(s): Half Year Results/Quarter
Results
Hannover Re increases Group net income by around 20 percent
05.08.2015 / 07:30
---------------------------------------------------------------------
Press release
Hannover Re increases Group net income by around 20 percent
- Group net income +19.7%: EUR 531.9 million (EUR 444.4 million)
- Profit guidance for 2015 raised to a figure in the order of EUR 950
million
- Gross premium income climbs by 21.5%
- Return on equity: 14.0%
- Net major loss expenditure rises to EUR 197.4 million (EUR 104.7
million)
- Combined ratio: 95.4% (95.0%)
- Net income from investments under own management +12.9%: EUR 601.3
million (EUR 532.6 million)
Hannover, 5 August 2015: The first half of 2015 closed on a very pleasing
note for Hannover Re. The company had generated significantly more than
half of its full-year profit target after the first six months. In view of
this performance, the expectation for the full 2015 financial year has been
raised from the original level of EUR 875 million to a figure in the order
of EUR 950 million. "Both business groups - namely Property & Casualty and
Life & Health reinsurance - and also the investment portfolio played a
successful part in this positive result", Chief Executive Officer Ulrich
Wallin stated. "The sustained strong profitability of property and casualty
reinsurance shows that with our systematically pursued policy of selective
underwriting we are well placed to tackle the conditions associated with
challenging market phases."
Gross premium sharply higher
Gross written premium for the Hannover Re Group increased by a substantial
21.5% as at 30 June 2015 to EUR 8.6 billion (EUR 7.1 billion). This can be
attributed in part to the strength of the US dollar. At constant exchange
rates growth would still have come in at a pleasing 9.5%. This figure was
better than expected. Key contributory factors here were sizeable
individual transactions in various regions and lines including Asia, North
America, agricultural risks and in the specialty field of Insurance-Linked
Securities. The level of retained premium rose to 88.3% (87.7%). Net
premium earned climbed 20.2% to EUR 7.0 billion (EUR 5.8 billion); at
constant exchange rates growth would have amounted to 8.3%.
Half-year result substantially higher
The operating profit (EBIT) as at 30 June 2015 came in comfortably above
the level of the previous year's period at EUR 789.4 million (EUR 683.7
million), driven by good business results and considerably higher ordinary
investment income. Group net income for the first half-year increased by
19.7% to EUR 531.9 million (EUR 444.4 million). Earnings per share amounted
to EUR 4.41 (EUR 3.69).
Property and casualty reinsurance posts very good result
While supply still outstripped demand in worldwide property and casualty
reinsurance, the first signs of bottoming out began to emerge here on the
rates side. This was also true to some extent of the treaty renewals as at
1 April 2015, which from an overall perspective passed off satisfactorily
for Hannover Re.
Gross premium for property and casualty reinsurance increased by 21.9% as
at 30 June 2015 relative to the previous year's period to reach EUR 5.0
billion (EUR 4.1 billion). This was due in part to the strong US dollar. At
constant exchange rates growth of 10.0% would have been booked. The level
of retained premium edged lower to 89.6% (91.1%). Net premium earned
climbed by 15.5% to EUR 3.9 billion (EUR 3.4 billion); adjusted for
exchange rate effects, a gain of 4.4% would have been recorded.
Major loss expenditure in the first half of 2015 stayed below the budgeted
level of EUR 294 million for the period at EUR 197.4 million (EUR 104.7
million). The largest individual losses for Hannover Re were the storm
"Niklas" at EUR 35.4 million and an explosion on an oil platform in the
Gulf of Mexico, which cost the company EUR 32.9 million. In keeping with
past practice, the unused portion of the budget was allocated to the IBNR
reserves, thereby building an additional cushion for any large losses that
may occur in the second half of 2015. The already very good underwriting
result of the comparable period was boosted by a further 7.9% to EUR 170.9
million (EUR 158.3 million). The combined ratio was positive at 95.4%
(95.0%). Against this backdrop, the operating profit (EBIT) for property
and casualty reinsurance reached a very pleasing EUR 583.7 million (EUR
521.0 million) as at 30 June 2015. Group net income surged 20.3% to EUR
418.4 million (EUR 347.9 million). Earnings per share stood at EUR 3.47
(EUR 2.89).
Life and health reinsurance generates premium growth
Hannover Re achieved the targeted improvement in profitability for life and
health reinsurance relative to the previous year's period, although the
result in the second quarter of 2015 fell short of expectations owing to
higher mortality and lapse rates in part of the US mortality portfolio.
Gross premium in life and health reinsurance increased by a substantial
21.0% as at 30 June 2015 to EUR 3.6 billion (EUR 3.0 billion); adjusted for
exchange rate effects, growth would have come in at 8.9%. Here, too, the
strength of the US dollar and pound sterling made itself felt. Hannover Re
booked particularly strong growth in its longevity portfolio and was also
able to act on opportunities in South America, Australia and Asia. Net
premium earned rose by 26.6% to EUR 3.1 billion (EUR 2.5 billion); this is
equivalent to a gain of 13.8% at constant exchange rates. The retention
increased to 86.5% (83.1%).
The operating profit (EBIT) in life and health reinsurance grew by a
pleasing 29.2% as at 30 June 2015 to EUR 200.0 million (EUR 154.8 million);
this included a special effect from the first quarter in an amount of
around EUR 40 million. Group net income improved appreciably by 26.2% to
EUR 145.6 million (EUR 115.4 million). Earnings per share reached EUR 1.21
(EUR 0.96).
Very positive investment income
The portfolio of investments under own management improved on the level as
at year-end 2014 to reach EUR 37.4 billion (EUR 36.2 billion). The modest
increase derived principally from favourable exchange rate effects,
especially the movement of the euro against the US dollar.
Ordinary investment income excluding interest on funds withheld and
contract deposits was comfortably higher than in the comparable period
despite the continued low level of interest rates, standing at EUR 598.7
million (EUR 490.1 million). This can be attributed in part to the special
effect in life and health reinsurance along with sharply higher earnings
from fixed-income securities and real estate as well as exchange rate
effects. Interest on funds withheld and contract deposits rose slightly to
EUR 197.4 million (EUR 174.9 million). Net gains on disposals amounted to
EUR 66.6 million (EUR 88.5 million). Changes in the fair values of
financial assets measured at profit or loss totalled EUR -1.6 million (EUR
10.0 million) as at 30 June 2015. Impairments - for the most part scheduled
depreciation - of just EUR 14.7 million (EUR 10.3 million) were taken in
the reporting period.
Income from assets under own management came in at a very pleasing EUR
601.3 million (EUR 532.6 million) as at 30 June 2015. The resulting
annualised average return on investment (excluding ModCo effects and
inflation swaps) amounted to 3.4%. The inflation swaps taken out by
Hannover Re to partially hedge inflation risks associated with the loss
reserves matured in the second quarter of 2015. In future, this protection
will be maintained by means of bonds already included in the portfolio
whose coupon payments are inflation-linked. Net investment income including
interest on funds withheld and contract deposits totalled EUR 798.8 million
(EUR 707.5 million), an increase of 12.9% compared to the previous year's
period.
Shareholders' equity remains on a strong level
Hannover Re's shareholders' equity increased slightly as at 30 June 2015 to
EUR 7.7 billion (31 December 2014: EUR 7.6 billion). The annualised return
on equity stood at a pleasing 14.0% (31 December 2014: 14.7%). The book
value per share closed at EUR 63.62 (31 December 2014: EUR 62.61).
Outlook for 2015
With the results presented today Hannover Re is very well on track to
achieve its year-end targets. The company now expects to be able to
generate net income after tax in the order of EUR 950 million for the full
2015 financial year rather than the previous guidance of EUR 875 million.
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. Based on constant
exchange rates, the company is looking to grow its gross premium volume by
a figure in the range of 5% to 10%.
The treaty renewals as at 1 June and 1 July 2015, the dates on which parts
of the North American portfolio, agricultural risks and business in Latin
America traditionally come up for renewal, once again demonstrated that the
general environment in property and casualty reinsurance remains
challenging. All in all, the company was able to grow its book of business
at adequate rates. This was also the main renewal season for business in
Australia; the outcome here proved very successful for Hannover Re as it
secured an increased market share with long-standing clients.
In North America the pressure on rates and conditions remains undiminished
due to the very good results booked in both the primary and reinsurance
sectors in the absence of large losses; the rate reductions were, however,
smaller than anticipated and offer early hints of a bottom being reached.
Stronger demand driven by the improved state of the economy is the key
factor here.
In US property business rates for programmes in non-proportional
reinsurance that had been spared losses declined by around 5%. For
loss-impacted treaties, on the other hand, rate increases running into
double-digit percentages were obtained in some cases. The pressure on
prices in US property catastrophe business eased compared to the previous
year's renewals. Casualty business in the United States offered some
attractive business prospects, including for example covers for
cyber-risks. In the Canadian market, too, the company was able to act on
promising opportunities. Against this backdrop, Hannover Re was able to
selectively grow its portfolio in the US. The company was similarly
satisfied overall with the renewal season in Latin America and the
Caribbean. The treaty renewals for agricultural risks, in which the volume
of business written was also enlarged, gave further grounds for
satisfaction.
In life and health reinsurance Hannover Re similarly anticipates promising
business opportunities in the second half of the year. The impending
implementation of solvency-based prudential regimes not only in Europe but
also in other parts of the world should boost demand for reinsurance
solutions. In addition, the company expects to see further growth in the
area of longevity risks as well as attractive opportunities in the
Asia-Pacific region. In terms of results, continued improvement is
anticipated for life and health reinsurance in the second half of 2015.
Hannover Re's targeted return on investment for the full 2015 financial
year remains unchanged at 3.0 %. The company is not currently planning to
make any significant adjustments to the allocation of its investments to
individual asset classes.
As for the dividend, the company 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.
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:
Julia Hartmann (tel. +49 511 5604-1529,
e-mail: julia.hartmann@hannover-re.com)
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)
<pre>
in EUR million H1/2015 +/- previous H1/2014 2014
year
Hannover Re Group
Gross written premium 8,586.5 +21.5% 7,064.9
Net premium earned 7,019.4 +20.2% 5,839.4
Net underwriting result (39.9) 14.5
Net investment income 798.8 +12.9% 707.5
Operating profit (EBIT) 789.4 +15.5% 683.7
Group net income 531.9 +19.7% 444.4
Earnings per share in EUR 4.41 +19.7% 3.69
Retention 88.3% 87.7%
Tax ratio 24.9% 24.5%
EBIT margin1) 11.2% 11.7%
Return on equity 14.0% 14.5%
in EUR million H1/2015 +/- previous H1/2014 2014
year
Policyholders' surplus 9,839.5 -3.9% 10,239.5
Investments (excl. funds held 37,399.6 +3.2% 36,228.0
by ceding companies)
Total assets 64,962.7 +7.5% 60,457.6
Book value per share in EUR 63.62 +1.6% 62.61
Property & Casualty reinsurance
in EUR million H1/2015 +/- previous H1/2014 2014
year
Gross written premium 4,972.2 +21.9% 4,078.1
Net premium earned 3,894.2 +15.5% 3,370.2
Net underwriting result 170.9 +7.9% 158.3
Operating profit (EBIT) 583.7 +12.0% 521.0
Group net income 418.4 +20.3% 347.9
Retention 89.6% 91.1%
Combined Ratio2) 95.4% 95.0%
EBIT margin1) 15.0% 15.5%
Life & Health reinsurance
in EUR million H1/2015 +/- previous H1/2014 2014
year
Gross written premium 3,614.5 +21.0% 2,986.9
Net premium earned 3,124.8 +26.6% 2,469.0
Operating profit (EBIT) 200.0 +29.2% 154.8
Group net income 145.6 +26.2% 115.4
Retention 86.5% 83.1%
EBIT margin1) 6.4% 6.3%
</pre>
<pre>
1) Operating result (EBIT)/net premium earned
2) Including funds withheld
</pre>
Key figures of the Hannover Re Group (IFRS basis)
<pre>
in EUR million Q2/2015 +/- previous year Q2/2014 2014
Hannover Re Group
Gross written premium 4,186.3 +21.7% 3,440.5
Net premium earned 3,587.5 +22.6% 2,926.6
Net underwriting result (33.7) 12.0
Net investment income 383.1 +10.6% 346.4
Operating profit (EBIT) 360.4 +7.9% 334.1
Group net income 252.2 +19.3% 211.5
Earnings per share in EUR 2.09 +19.3% 1.75
Retention 88.0% 87.1%
Tax ratio 17.4% 29.8%
EBIT margin1) 10.0% 11.4%
Return on equity 12.5% 13.3%
Property & Casualty reinsurance
in EUR million Q2/2015 +/- previous year Q2/2014 2014
Gross written premium 2,355.1 +19.5% 1,970.4
Net premium earned 2,011.9 +15.7% 1,738.6
Net underwriting result 94.3 +33.3% 70.7
Operating profit (EBIT) 328.5 +36.6% 240.5
Group net income 247.0 +64.6% 150.1
Retention 90.3% 91.1%
Combined Ratio2) 95.0% 95.6%
EBIT margin1) 16.3% 13.8%
Life & Health reinsurance
in EUR million Q2/2015 +/- previous year Q2/2014 2014
Gross written premium 1,831.2 +24.6% 1,470.2
Net premium earned 1,575.2 +32.6% 1,187.9
Operating profit (EBIT) 26.7 -70.1% 89.2
Group net income 18.1 -74.9% 72.0
Retention 85.0% 81.7%
EBIT margin1) 1.7% 7.5%
</pre>
<pre>
1) Operating result (EBIT)/net premium earned
2) Including funds withheld
</pre>
---------------------------------------------------------------------
05.08.2015 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: info@hannover-re.com
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; Luxemburg
End of News DGAP News-Service
---------------------------------------------------------------------
383563 05.08.2015
DGAP-News: Hannover Re increases Group net income by around 20 percent
| Source: EQS Group AG