Hannover Re Group Net Income up 42.6% to $1.144 Billion

March 13, 2008

Germany’s Hannover Re reported excellent result for 2007 with the Group’s net income up 42.6 percent to €733.7 million ($1.144 billion. “We surpassed our profit targets and reported the highest Group net income in our company’s history”, stated an elated CEO Wilhelm Zeller at the press briefing on the annual results held in Hannover.

Other fianncial highlights included the following :
Operating profit (EBIT) + 14.6 percent to €940 ($1.465 billion).
Return on equity 23.5 percent
Major loss burden in line with expectations
Book value per share + 15.6 percent
Proposed dividend: €1.80 [$2.81]+ 50 cent bonus

Hannover Re’s bulletin noted that the operating profit (EBIT) does not include the profit of around €22 million [$34.3 million] booked by the Praetorian Financial Group, Inc.

It also indicated that “even without the special effect of corporate tax reform amounting to €164.7 million [$256.7 million] (after minority interests), Hannover Re would have achieved a record result of €568.9 million [$886.6 million]. The earnings per share climbed from €4.27 to €6.08 [$6.65 to $9.475] (of which €1.37 [$2.135] derived from the special effect associated with tax reform).

“The gross written premium of the Hannover Re Group contracted as expected by 11.1 percent to €8.3 billion [$12.93 billion],” compared to €9.3 billion ($14.49 billion). “This was attributable to the sale of Praetorian and the associated withdrawal from US specialty business,” said the bulletin. “The vigorous growth generated in life and health reinsurance failed to offset these influencing factors. At constant exchange rates the decrease in gross premium would have been 8.0 percent. The level of premium retained within the Group climbed 11.1 percentage points year-on-year to reach 87.4 percent.”

Hannover Re said its non-life reinsurance remained favorable despite the soft market, “and – with a few exceptions – held stable. In areas that saw more appreciable rate reductions, for example in aviation business, prices were still coming from a thoroughly adequate level.” Zeller noted that the Group was “especially satisfied with the development of our business in Germany and in the credit and surety lines.”

Due to the sale of US specialty business, lower premium income in the area of structured products and a reduction in peak exposures, the gross written premium in non-life reinsurance contracted by 20.1 percent to €5.2 billion ($8.1 billion).

The burden of catastrophe losses and major claims was considerably heavier than in the previous year. Winter storm “Kyrill” was particularly notable in this regard. For Hannover Re this event produced a net loss burden of €115.6 million ($180.1 million). A number of less substantial natural catastrophe losses as well as several major claims were also incurred.

Hannover Re’s “combined ratio stood at 99.7 percent (100.8 percent), a figure that reflects the current portfolio mix,” the bulletin stated. “Hannover Re continues to set aside prudent levels of reserves, especially for more recent years in long-tail casualty business. The underwriting result nevertheless improved to -€26.7 million [-$41.6 million] from -€71.0 million [$110.6 million] in the previous year.”

For 2008 Hannover Re stated: “Based on its strategic orientation, the available market opportunities in non-life reinsurance and especially life/health reinsurance as well as the current state of the capital markets, Hannover Re anticipates another good result in 2008. Both gross and net premium should grow by around 5 percent in original currencies.”

The full report may be obtained on the Group’s web site at: www.hannoverre.com.

Source: Hannover Re

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