DGAP-News: Hannover Rück SE
/ Key word(s): Annual Results
Hannover Re delivers double-digit earnings and premium growth and increases dividend
- Group net income rises by 21.2% to EUR 1.28 billion
- Gross premium grows by 15.2% adjusted for exchange rate effects
- Proposed dividend of EUR 5.50 (previous year: EUR 5.25) per share
- Book value per share increases to EUR 87.30
- Return on equity climbs to 13.3% (12.2%)
- Major loss expenditure higher than anticipated
- Guidance for 2020 confirmed - Group net income of around EUR 1.2 billion
Hannover, 11 March 2020: Hannover Re boosted its Group net income by 21.2% in the 2019 financial year and is proposing another dividend increase. In addition, a special dividend is to be paid for the sixth year in succession.
"We have achieved a record result and thereby once again demonstrated our profitability, even though 2019 was another year of relatively high losses," Hannover Re Chief Executive Officer Jean-Jacques Henchoz said. "We are again able to offer our shareholders the prospect of an attractive dividend including a special distribution, but we are also retaining the necessary flexibility to invest further in our profitable growth."
Profit growth outpaces increase in premium
The operating profit (EBIT) improved by 16.1% to EUR 1,853.2 million (EUR 1,596.6 million). This was supported by further improvement in the investment income as well as the good underlying quality of the portfolio in both property & casualty and life & health reinsurance. Group net income increased by 21.2% year-on-year to reach EUR 1,284.2 million (EUR 1,059.5 million). Hannover Re thus once again slightly outperformed its guided Group net income, which it had raised in the third quarter from the originally anticipated level of around EUR 1.1 billion to more than EUR 1.25 billion. Earnings per share amounted to EUR 10.65 (EUR 8.79).
Property and casualty reinsurance: Result reduced by large losses
In the various rounds of treaty renewals held during the year Hannover Re was able to discern a more broad-based improvement in prices and conditions for reinsurance protection and the company acted on profitable business opportunities.
The gross premium volume in property and casualty reinsurance rose by 23.4% to EUR 14.8 billion (EUR 12.0 billion). At constant exchange rates the increase would have been 20.4%. This growth was significantly above expectations. Net premium earned climbed by
Following the heavy losses of 2017 and 2018, Hannover Re incurred further significant major losses in the 2019 financial year. The largest loss was hurricane "Dorian" at a net cost of EUR 194.7 million. Typhoons "Hagibis" and "Faxai" caused further expenditure of EUR 183.8 million and EUR 83.8 million respectively. An amount of EUR 85.7 million was set aside for the insolvency of UK travel operator Thomas Cook. Total net major loss expenditure in 2019 came to EUR 956.1 million (EUR 849.8 million) and hence exceeded the large loss budget of EUR 875 million for the full year. The underwriting result including interest on funds withheld and contract deposits fell to EUR 235.4 million (EUR 372.8 million).
The combined ratio deteriorated to 98.2% (96.5%) and was thus higher than the targeted level of no more than 97%. The primary factors here were the high losses incurred in the financial year and delayed claim notifications for prior-year losses, especially for Typhoon "Jebi". The operating profit (EBIT) declined by 2.8% to EUR 1,285.8 million (EUR 1,322.6 million). The net profit in property and casualty reinsurance contracted by 6.2% to EUR 871.7 million (EUR 929.1 million).
Life and health reinsurance: Very pleasing profit increase
The gross premium volume in life and health reinsurance was 8.6% higher than in the previous year at EUR 7.8 billion (EUR 7.2 billion). The increase would have been 6.7% at constant exchange rates. Net premium earned rose by 6.9% to EUR 6.9 billion (EUR 6.5 billion); growth would have reached 5.1% at constant exchange rates.
Boosted by non-recurring income from investments and the elimination of one-time charges in the in-force US mortality portfolio, the operating result (EBIT) improved to EUR 569.9 million (EUR 275.9 million). The net profit in life and health reinsurance more than doubled to reach EUR 471.6 million (EUR 185.9 million).
Investments: Return targets outperformed
Supported by the release of hidden reserves in connection with the restructuring of a participating interest and the sale of two individual properties, income from investments under own management grew by 17.3% to EUR 1,550.6 million (EUR 1,322.0 million). The resulting average return (excluding effects from ModCo derivatives) was 3.4%. This exceeded the target return on investment, which had been raised in November from the original level of at least 2.8% to at least 3.2%. Investment income including interest on funds withheld and contract deposits improved by 14.8% to EUR 1,757.1 million (EUR 1,530.0 million).
Shareholders' equity: Return climbs to 13.3 %
For 2020 Hannover Re expects to grow its gross premium in total business by around 5% based on constant exchange rates. Group net income should reach a level of around EUR 1.2 billion. This is conditional on major loss expenditure not significantly exceeding the budgeted level of EUR 975 million and assumes that there are no exceptional distortions on capital markets.
The asset portfolios should grow - assuming constant exchange rates - in view of the anticipated positive cash flow and the return on investment should reach around 2.7%.
In terms of the ordinary dividend for the current financial year, Hannover Re envisages an unchanged payout ratio in the range of
Hannover Re, with gross premium of more than EUR 22 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 more than 3,000 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 outstanding financial strength ratings: Standard & Poor's AA- "Very Strong" and A.M. Best A+ "Superior".
Please note the disclaimer:
Key figures of the Hannover Re Group (IFRS basis)
11.03.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
|Company:||Hannover Rück SE|
|Listed:||Regulated Market in Frankfurt (Prime Standard), Hanover; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange; Luxembourg Stock Exchange|
|EQS News ID:||993755|
|End of News||DGAP News Service|