DGAP-News: Hannover Rück SE
/ Key word(s): Quarter Results
Hannover Re posts solid result in the first quarter
Hannover, 6 May 2020: Hannover Re boosted its result by 2.5% in the first quarter. Key drivers here were double-digit increases in earnings from life and health reinsurance as well as from the investment portfolio.
"In the first quarter we achieved a result that on the whole lived up to our expectations," said Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. "Nevertheless, we too will not escape the effects of the coronavirus crisis unscathed. Even though it is currently impossible to quantify the concrete impacts on reinsurance and financial markets, our capital resources are geared to managing such extreme events."
Hannover Re models pandemic risks as part of its risk management, which focuses on sustained preservation of the company's robust financial strength and is continuously reviewed using stress tests. According to preliminary estimates, the capital adequacy ratio at the end of March remained between 220% and 230% and thereby comfortably above the limit of 180% and the threshold of 200%. The considerable volatility in interest rates and credit spreads is included here. As at year-end 2019 the ratio had stood at 251%.
Solid result in the first quarter
Property and casualty reinsurance generates growth
Gross written premium grew by 13.5% to EUR 5.0 billion (EUR 4.4 billion); the increase would have been 12.2% adjusted for exchange rate effects. Net premium earned was up 13.9% at EUR 3.3 billion (EUR 2.9 billion); it would have risen by 12.9% at constant exchange rates.
Net expenditure on major losses was considerably higher than in the previous year at EUR 283.6 million (EUR 59.0 million). This was due to an amount of roughly EUR 220 million reserved for anticipated losses related to the coronavirus. Other than this, the largest individual losses were - amongst others - the bushfires in Australia at EUR 22.4 million, storm Sabine (also known as Ciara) in Europe at EUR 17.6 million and a hailstorm in Australia costing EUR 15.1 million. The combined ratio consequently deteriorated to 99.8% (95.7%), exceeding the anticipated maximum level of 97%.
The underwriting result for property and casualty reinsurance including interest on funds withheld and contract deposits came in sharply lower than the previous year at EUR 7.2 million (EUR 124.8 million). The operating profit (EBIT) retreated to EUR 304.7 million (EUR 334.4 million). Net income in property and casualty reinsurance amounted to EUR 207.3 million (EUR 219.0 million).
Improved result in life and health reinsurance
Gross written premium was stable at EUR 2.0 billion (EUR 2.0 billion). Adjusted for exchange rate effects, it would have increased by 0.4%. Net premium earned rose by 4.3% to EUR 1.8 billion (EUR 1.7 billion); growth would have reached 4.2% at constant exchange rates.
Good income from investments
Impairments totalled EUR 28.6 million (EUR 17.4 million). Altogether, income of EUR 386.1 million (EUR 328.3 million) was generated from assets under own management. The annualised return (including effects from ModCo) stood at 3.2%. In view of the volatile state of the market at the current point in time, however, the return generated at the end of March is not particularly meaningful for the remainder of the year.
Interest on funds withheld and contract deposits increased to EUR 85.6 million (EUR 70.6 million), boosting the net investment income including interest on funds withheld and contract deposits to EUR 471.7 million (EUR 398.9 million).
Building on the 1 January treaty renewals, the round of renewals as at 1 April 2020 passed off favourably for Hannover Re. Business in Japan is traditionally renegotiated at this time of year and treaties also come up for renewal - albeit on a lesser scale - in the markets of Australia, New Zealand, Asia and North America. The total premium volume booked from this round of treaty renewals increased by 25.1%.
The net major loss budget for 2020 is set at EUR 975 million (EUR 875 million). This adjustment is primarily a reflection of the growth in the underlying business.
Hannover Re anticipates an unchanged payout ratio for the ordinary dividend in the range of 35% to 45% of its IFRS Group net income. The ordinary dividend will be supplemented by payment of a special dividend subject to a continued comfortable level of capitalisation and Group net income within the expected bounds.
The virtual Annual General Meeting of Hannover Rück SE will also be held today. The Executive Board and Supervisory Board have submitted a dividend proposal of EUR 5.50 per share for the past 2019 financial year.
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 150 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)
06.05.2020 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:||1036339|
|End of News||DGAP News Service|