"Despite a disproportionately heavy burden of major losses in the first half-year we generated net income after taxes in excess of EUR 300 million. This offers a good platform for achieving our 2010 profit target – namely Group net income of around EUR 600 million", Chief Executive Officer Ulrich Wallin explained.
- Net premium rises by 7.9%
- Major loss burden still higher than the expected level
- Combined ratio in non-life reinsurance: 99.5%
- Double-digit premium growth in life and health reinsurance and EBIT margin within the target corridor
- Investment income of EUR 551.4 million in line with expectations
- Satisfactory Group net income: EUR 310.6 million
- Shareholders' equity grows by 14.1%
- Return on equity: 15.6%
- Profit forecast for the full financial year confirmed: Group net income of around EUR 600 million expected
Pleasing development of non-life reinsurance despite exceptional burden of major losses
Prices on non-life reinsurance markets were for the most part adequate. In keeping with its policy of active cycle management, Hannover Re enlarges its portfolio only in markets and segments that promise a return in line with its margin requirements.
The premium volume in the non-life reinsurance business group at 30 June 2010 improved on the comparable period by 6.2% to reach EUR 3.3 billion (EUR 3.1 billion). At constant exchange rates, especially against the US dollar, growth would have been 4.6%. Net premium earned climbed 6.3% to EUR 2.6 billion (EUR 2.5 billion).
While the burden of major losses in the second quarter of 2010 was lower than in the first quarter, it again exceeded the expected level for the second quarter. The loss of the "Deepwater Horizon" drilling rig in the Gulf of Mexico in April resulted in substantial environmental damage as well as corresponding strains for the insurance industry. Given the considerable uncertainty surrounding possible liability claims, the total loss expenditures are still difficult to forecast at the present time.
"The loss reserves that we have established – giving rise to a net strain of EUR 89 million – reflect all concrete and potential exposures of our portfolio from this loss complex that are currently known to us", Wallin emphasised. Altogether, the net burden of major losses in the first half-year stood at EUR 407.6 million (EUR 163.3 million), a figure appreciably higher than the expected level. The combined ratio amounted to 99.5% (97.1%).