Reinsurance giant Hannover Re has reported net income of €1.06 billion for 2018, up 10.5% year-on-year as the firm achieved solid results in spite of challenging conditions and high levels of catastrophe losses.
During 2018, the reinsurer increased its gross premiums by 7.8% to €19.2 billion, with growth occurring in both its property and casualty reinsurance unit and its life and health reinsurance division.
Net premiums earned reached €1.73 billion in 2018, which is growth of 10.6% when compared with the previous year.
Overall, Hannover Re’s combined ratio hit 96.5% in 2018, which is an improvement on 2017 and also only slightly above its target of 96%.
The reinsurer’s Chief Executive Officer (CEO), Ulrich Wallin, said: “The 2018 financial year once again bears witness to the profitability of Hannover Re. I am particularly pleased that we achieved a double-digit return on equity for the tenth consecutive year. Despite another significant burden of large losses and a substantial one-time charge in life and health reinsurance, we are again able to hold out the prospect of an attractive dividend for our shareholders.”
Both P&C and L&H business performed well for the firm in 2018 despite challenges. The P&C segment was hit by substantial losses, with major losses in the fourth-quarter of 2018 being over budget. Total net major loss expenditure in 2018 came to €849.8 million, above the €825 million budget.
Hannover Re explains that the underwriting result including interest on funds withheld, and contract deposits surged appreciably to €372.8 million.
Commenting on its L&H division, Wallin said: “Thanks to a good underlying business experience we were able to increase the profit in life and health reinsurance, despite having to absorb considerable one-time charges. Given that a comparable strain is not expected in the future, the result in this business group should improve significantly in the coming years.”
Discussing the outlook for the remainder of the year, Wallin said: “We enjoyed a very satisfactory round of treaty renewals as at 1 January 2019 in which we continued to focus on profitable growth. In view of Hannover Re’s good financial strength and our efficient capital management, I am optimistic that the targets set for the current financial year will be achieved and I have confidence in the company’s sustained profitability.”
