DGAP-News: Hannover Rück SE
/ Key word(s): Quarter Results
Hannover Re posts further double-digit growth and confirms profit target
Hannover, 5 May 2021: Hannover Re again posted double-digit growth in premium income in the first quarter and at the same time delivered modestly improved Group net income.
"We are off to a good start in the current financial year," said Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. "Hannover Re is superbly placed to benefit from the sustained improvements in prices and conditions in our market. Even though the pandemic has now been with us for more than a year, our robust capital resources remain unchanged thanks to our outstanding risk management."
Hannover Re's capital adequacy ratio at the end of March was 252% and hence continues to be comfortably above the limit of 180% and threshold of 200%.
Group gross premium shows further double-digit growth
The operating profit (EBIT) contracted by 5.3% to EUR 403.8 million (EUR 426.6 million). Group net income increased by 1.7% to EUR 305.9 million (EUR 300.9 million). Earnings per share amounted to EUR 2.54 (EUR 2.49).
Sharply improved profitability in property and casualty reinsurance
Gross written premium grew by 14.2% as at the end of March to EUR 5.7 billion (EUR 5.0 billion); the increase would have been 20.1% adjusted for exchange rate effects. Net premium earned was up by 15.7% at EUR 3.9 billion (EUR 3.3 billion); at constant exchange rates, it would have risen by 21.5% .
Net expenditure on major losses was lower than in the previous year at EUR 193.2 million (EUR 283.6 million). No further net strains were incurred here in relation to Covid-19. The largest individual losses included the outbreak of extreme winter weather in the US state of Texas with net expenditure of EUR 75.4 million, an industrial loss in Germany at a cost of EUR 34.8 million as well as flooding in Australia amounting to EUR 19.5 million. Overall, the combined ratio improved substantially to 96.2% (99.8%).
The underwriting result for property and casualty reinsurance including interest on funds withheld and contract deposits came in well above the previous year's level at EUR 147.3 million (EUR 7.2 million). The operating profit (EBIT) in property and casualty reinsurance climbed by 6.3% to EUR 324.0 million (EUR 304.7 million). Net income in property and casualty reinsurance amounted to EUR 269.2 million (EUR 207.3 million) as at 31 March 2021 despite appreciable exchange rate losses.
Pandemic-related losses in life and health reinsurance largely offset by special effect
Gross written premium grew by 6.1% to EUR 2.1 billion (EUR 2.0 billion), corresponding to an increase of 8.6% adjusted for exchange rate effects. Net premium earned was up by 4.0% at EUR 1.8 billion (EUR 1.8 billion); it would have risen by 6.7% at constant exchange rates.
Very pleasing investment income despite protracted low interest rate environment
Impairments totalled EUR 21.1 million (EUR 28.6 million). Altogether, income of EUR 313.5 million (EUR 386.1 million) was generated from assets under own management. This produced an annualised return of 2.5%, slightly higher than the full-year target of 2.4%.
Interest on funds withheld and contract deposits surged appreciably to EUR 130.5 million (EUR 85.6 million). Total net investment income including interest on funds withheld and contract deposits contracted as expected by 5.9% to EUR 444.0 million (EUR 471.7 million).
On the Group level Hannover Re continues to expect net income in the range of EUR 1.15 billion to EUR 1.25 billion for the 2021 financial year. The return on investment is anticipated to be roughly 2.4% and Group gross premium is forecast to show growth in the upper single-digit percentages adjusted for exchange rate effects. The net major loss budget for 2021 is set at EUR 1.1 billion (EUR 975 million). This adjustment was prompted primarily by the growth in the underlying business.
Hannover Re renews business in Japan and to a lesser extent in Australia, New Zealand, Asian markets and North America as at 1 April. Building on the 1 January 2021 renewals, these negotiations concluded favourably. The premium volume grew by altogether 7.4%. The price increase for the renewed business amounted to 5.0%.
Hannover Re envisages 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 bounds of expectations.
Going forward, sustainability considerations will exert an even greater influence on the selection and composition of Hannover Re's investments. In conformity with the Paris Agreement on climate change, Hannover Re is actively reducing the carbon intensity of its investments. What is more, Hannover Re is increasingly investing in - among other things - sustainable infrastructure investments and impact investment funds, the goal of which is to generate not only a favourable financial return but also and above all measurably positive effects on the environment and society.
The virtual Annual General Meeting of Hannover Rück SE is also being held on today's date. The Executive Board and Supervisory Board have proposed an ordinary dividend of EUR 4.50 per share for the 2020 financial year.
Please note the disclaimer:
Key figures of the Hannover Re Group (IFRS basis)
05.05.2021 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:||1192421|
|End of News||DGAP News Service|