Reinsurance giant Hannover Re has announced first-quarter 2019 profit of €293.7 million, underpinned by strong performance in its property and casualty (P&C) and life and health (L&H) reinsurance segments.
Quarterly profit increased by roughly €20 million year-on-year, while gross premiums expanded by more than 16% to €6.4 billion.
The reinsurer was able to significantly grow its P&C reinsurance portfolio in the period despite a competitive landscape. Gross premiums increased 22.8% to €4.4 billion, while the retention increased to 91.9%. Net premium earned jumped to €2.9 billion.
The impact of large losses totalled €59 million in the quarter, compared with €73.4 million a year earlier, and which is substantially lower than the firm’s envisaged quarterly budget of €175 million.
The P&C reinsurance segment recorded an underwriting result of €124.8 million, compared with €99.6 million a year earlier. The combined ratio improved slightly to 95.7%, while the unit’s operating profit remained relatively unchanged at €334.4 million.
The firm’s L&H reinsurance segment recorded improved profitability in the first-quarter, with an operating result of €116.3 million and group net income of €88.5 million. Gross premiums increased to €2 billion, and with a lower retention of 87%, net premiums jumped to €1.7 billion.
“Following the exceptional strains associated with the termination of loss-making treaties in US mortality business in the previous year, earnings improved.
“We made the most of opportunities on the property and casualty reinsurance markets and have grown our portfolio by a double-digit percentage so far. We are pleased with the result in life and health reinsurance, where the healthy underlying profitability is now becoming evident after the strains associated with treaty recaptures in 2018. The return on investment is roughly stable at 3.0%. All in all, with Group net income of EUR 293.7 million we are well on track to achieving our year-end target in the order of EUR 1.1 billion,” said Ulrich Wallin, Hannover Re’s Chief Executive Officer (CEO).
Discussing the April 1st renewals, the reinsurer said that these passed off “very favourably”, with the total premium volume booked from this renewal season increasing for Hannover Re by 6.6%.
The reinsurer notes considerable rate movements in certain loss-affected Japanese lines, adding that it grew its premium volume in the region, while maintaining broadly stable exposure. The firm also witnessed rate improvements in parts of its North American portfolio.
“In total property and casualty reinsurance business Hannover Re expects significant currency-adjusted premium growth at largely stable conditions based on the outcome of this year’s various rounds of treaty renewals. The company is targeting a combined ratio of no more than 97%. The EBIT margin should reach at least 10%,” explains the reinsurer.
Hannover Re expects further good opportunities to expand and improve the profitability of its L&H reinsurance business, stating that it is looking to record moderate growth in premiums.