Reinsurance giant Hannover Re has reported a successful start towards achieving its full-year net income target in Q1, after kicking off the year with an optimistic move to raise the guidance for group net income from €950 million to over €1 billion.
In Q1, Hannover Re’s gross written premium rose by 6.6% to €4.5 billion, while net premium earned rose by 5.4% to €3.7 billion.
The firm’s operating profit came to €399.9 million in Q1, although Group net income contracted by 2.4% to €264.8 million – just slightly lower than last year’s Q1 profit of €271.2 million.
“At the beginning of the year we raised our guidance for 2017 Group net income from more than EUR 950 million to more than EUR 1 billion. With our pleasing quarterly result we have put in place a good basis for achieving our targets. Both business groups, namely Property & Casualty and Life & Health reinsurance, as well as highly satisfactory investment income played a part here”, Chief Executive Officer (CEO), Ulrich Wallin noted.
The firm said it achieved especially satisfactory results in property and casualty reinsurance, despite intense international competition, investment income was a further area to surpass the firm’s Q1 expectations; “Our portfolio of assets under own management continued to perform very favourably, growing to €42.0 billion (31 December 2016: €41.8 billion) in the first quarter of 2017.
“It is highly gratifying to note the increase in our ordinary investment income, which rose by 18.9% to €319.1 million (€268.5 million) despite the diminished return on fixed-income securities.”
Within its property and and casualty reinsurance unit the underwriting result did deteriorate from Q1 2016 to €90.7 million, and the combined ratio weakened from 94.7% to 95.6%. Within this segment the company is targeting a full-year combined ratio of below 96%.
The firm did report higher major losses in the quarter of €133.7 million, compared with €55.5 million a year earlier, although this still came in lower than the estimated quarterly budget.
After a successful start to the year, Hannover Re has maintained a positive outlook for the remainder of 2017, saying it expects continued steady profitability despite the low-interest rate environment.