Hannover Re (HVRRF.PK) reported Thursday a decline in fourth-quarter profit, even as premiums improved from last year on strong segmental performances. For fiscal 2012, earnings surged, while the company lifted its dividend and announced a bonus. Going ahead, the German re-insurer expects lower profit in fiscal 2013.
Noting that the state of the market in non-life reinsurance was favourable, Chief Executive Officer Ulrich Wallin said, "Not least owing to the major losses in 2011, we were able to push through price increases for most business segments. As a result, the rate level for our company in 2012 was significantly better than in the previous year.'
The major loss situation in the latest year was comparatively moderate, in contrast to the previous year that had suffered huge losses in markets in Asia and Australia. In addition, gratifying growth rates were recorded in North America and in global facultative reinsurance, the company said.
In 2012, the largest loss for the international insurance industry was due to Hurricane Sandy, which caused losses of 257.5 million euros for Hannover Re.
Regarding its life and health reinsurance business, the company said it generated above-average growth in the United States, and recorded appreciable gains in Australia, but first and foremost in the emerging markets of China and Latin America.
In its recently concluded fourth quarter, Group net income declined 16.4 percent to 187.5 million euros from the prior year's 224.3 million euros. Earnings per share dropped to 1.56 euros from 1.86 euros last year.
Operating profit, however, grew 11.2 percent from last year to 389.7 million euros, as a sharp decline in life and health reinsurance segment's profit was more than offset by double-digit profit growth in non-life reinsurance business.
The company's gross written premium grew 14.7 percent to 3.48 billion euros and net premium earned increased 15.6 percent to 3.32 billion euros. Net investment income rose 3.1 percent.
In its fiscal year 2012, Hannover Re said it has posted the best result in its history, with net income of 858.3 million euros or 7.12 euros per share, a 41.6 percent increase from 606 million euros last year.
Annual gross written premium increased 13.9 percent to 13.77 billion euros and net premium earned climbed 14.2 percent.
Further, the company said its Executive and Supervisory Boards would propose to pay a dividend of 2.60 euros per share, higher than last year's 2.10 euros, along with a bonus of 0.40 euros per share.
Looking ahead, Hannover Re anticipates that the Group net income for 2013 would be in the order of 800 million euros, assuming that major loss expenditure does not significantly exceed the anticipated level of 625 million euros.
The company continues to expect an increase of around 5 percent in its gross premium volume for 2013, on constant exchange rates.
Hannover Re added that it looks to the current financial year with optimism.
On Frankfurt's Xetra, Hannover Re shares are currently trading at 62.58 euros, up 1.34 euros or 2.19 percent.
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