German reinsurer Hannover Re (HVRRF.PK) Friday reported a marginal increase in second-quarter operating profit that missed analysts' consensus estimates. Net profit declined from last year, reflecting a sharp increase in income taxes and lower investment income. The company's net earned premiums improved and claims were lower. The shares are down about 5 percent on Frankfurt's Xetra.
In view of the continuing attractive market opportunities in non-life and life/health reinsurance and its performance in the first half, Hannover looks forward to a promising second half and anticipates a good result for the full 2012 financial year. At unchanged exchange rates, the company expects gross premium to grow by 5 to 7 percent.
Quarterly operating profit, or EBIT, slightly increased to 204.01 million euros from 201.52 million euros a year ago. Income tax expenses surged to 32.41 million euros from 4.34 million euros in the preceding year.
Net investment income was down 4.3 percent to 268.84 million euros and was below analysts' expectations.
Gross written premium was 3.38 billion euros, compared to 2.9 billion euros last year, which exceeded analysts' estimates. Quarterly net premiums earned grew to 3.01 billion euros from 2.66 billion euros in the previous year. In non-life reinsurance, net premiums earned grew 18.8 percent, life and health reinsurance net premiums earned were up 6.5 percent from last year.
Net burden of major losses in the quarter was 132.4 million euros, compared to 625.2 million euros a year ago.
In the second quarter, Group net income declined to 143.98 million euros or 1.19 euros per share from 166.17 million euros or 1.38 euros per share reported last year. Total revenues grew to 3.28 billion euros from 2.94 billion euros in the prior-year quarter.
For the first half, Group net income was 405.27 million euros, higher than 218.46 million euros in the previous year. On a per share basis, earnings increased to 3.36 per share from 1.81 per share a year earlier. Total revenues increased to 6.54 billion euros from 5.83 billion euros in the preceding year. Net premiums earned grew 13.1 percent to 5.82 billion euros.
Ulrich Wallin, chairman of the Executive Board stated, "For the first half of 2012 I can report on a pleasing overall development of Hannover Re's business...This was due principally to a considerably lighter burden of major losses from non-life business in the period under review than in the first six months of 2011, hence giving rise to a sharply improved underwriting result in non-life reinsurance."
Combined ratio was 96.8 percent, which was slightly up from analysts' estimates. As at the end of June, assets under own management grew to 30.3 billion euros from 28.3 billion euros at the end of December 2011.
As for the dividend, Hannover Re continues to aim for a payout in the range of 35 percent - 40 percent of IFRS Group net income after tax.
On Frankfurt's Xetra, Hannover shares are currently trading at 47.3 euros, down 4.44 percent, on a volume of 255 thousand shares.
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by RTT Staff Writer
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