Largest single loss for Hannover Re in 2016 was the Fort McMurray wildfire, with net cost of 127.9 million euros

The largest single loss for Hannover Re last year was the Fort McMurray wildfire, with a “net strain” of 127.9 million euros, the reinsurer reported on Thursday.

Hannover Re released its financial results on Thursday, reporting a Group net income of 1.17 billion euros for the 2016 financial year and a Property & Casualty reinsurance combined ratio of 93.7%, an improvement of 1.8% from 1.15 billion euros in net income in 2015 and a combined ratio of 94.4% that year.

The reinsurer also said it had a “strong result” in P&C Re, where the underwriting result in 2016 was 479.1 million euros, up 10.8% from 432.2 million euros in 2015. P&C Re gross written premiums were down 1.4% to 9.20 billion euros from 9.34 billion euros in 2015, Hannover Re said in a statement. Net premiums earned were also down 1.4% last year from 8.1 billion euros to 7.99 billion euros last year. Group net income in P&C Re was up 3.8% last year to 949.9 million euros from 914.7 million euros in 2015.

“Another strong underwriting result in property and casualty reinsurance combined with pleasing investment income laid the foundation,” chief executive officer Ulrich Wallin noted in the statement.

“Despite the intensely competitive state of the market, Hannover Re is thoroughly satisfied with the performance of its property and casualty reinsurance portfolio – even though developments varied widely in the individual lines and geographical regions,” the reinsurer said. The North American market was stable overall, with a growing demand for cyber covers. Most notably, however, it was the rise in demand for reinsurance solutions offering solvency relief – both in Europe and in Asia – that had favourable implications for Hannover Re.

As in previous years, expenditures from large losses were again moderate, although they were higher in 2016 than in the comparable period. In addition to the 127.9 million euro loss from the Fort McMurray wildfire, Hurricane Matthew caused a net loss of 70.3 million euros. In addition, a number of severe earthquakes and other natural catastrophe events as well as man-made losses were recorded. The total net loss expenditure for the company amounted to 626.6 million euros last year, up from 572.9 million euros in 2015, the statement said.

Overall, gross premium volume contracted by 4.2% to 16.4 billion euros from 17.1 billion euros in 2015. Net premium earned fell by 1.2% to 14.4 billion euros from 14.6 billion euros two year ago. The Hannover Re Group net underwriting result was 115.9 million euros, up 23.6% from 93.8 million euros in 2015.

For life and health reinsurance, gross premium volume for 2016 contracted slightly to 7.1 billion euros from 7.7 billion euros in 2015, “due to the discontinuation of a number of large treaties,” Hannover Re said in the statement. Net premium earned came in 0.9% lower last year at 6.4 billion euros from 6.5 billion euros.

Gross premium for total business is now expected to grow by a low single-digit percentage in 2017, Hannover Re said in its outlook for 2017. The company also anticipates Group net income of more than 1 billion euros, based on the premise that “major loss expenditure does not significantly exceed the budgeted level of 825 million euros and that there are no exceptional distortions on capital markets.”