Hannover Re reports net income of 895.5 million euros for 2013

Hannover Re has reported a group net income of 895.5 million euros for 2013, up 5.4% over the prior year, despite expensive natural catastrophe events in Canada and Germany.

The group’s combined ratio also improved to 94.9% from 95.8% in 2012, Hannover Re said Tuesday.

“This performance was driven by a very good underwriting result in non-life reinsurance, which improved again on the previous year by EUR 63 million,” CEO Ulrich Wallin said in a press release. “Group net income additionally benefited from a positive tax effect,” he added.

Gross written premium rose to 14.0 billion euros, from 13.8 billion euros in 2012, while net premium earned remained essentially the same, at 12.2 billion euros from 12.3 billion euros in 2012.

“In non-life reinsurance competition intensified clearly in the year under review, prompting sizeable rate reductions in some areas,” the group’s statement noted. “Hannover Re responded by maintaining a highly disciplined focus on business that satisfied its margin requirements.”

The gross premium volume in non-life reinsurance grew to 7.8 billion euros from 7.7 billion euros in 2012, an increase within the expected range of 3% to 5%, Hannover Re said.

“While the major loss expenditure incurred by Hannover Re in the year under review was lower than anticipated, especially Germany and Canada were impacted disproportionately heavily by losses from natural catastrophes,” its statement noted.

“Hailstorm Andreas was the most expensive event for the insurance industry worldwide and also for Hannover Re, with a net cost of 99.3 million euros. The floods in Germany and other European countries left their mark to the tune of 92.5 million euros. These and other major losses resulted in total net expenditure for Hannover Re of 577.6 million euros (477.8 million euros in 2012).”

Hannover Re is expecting stable to slightly higher gross premium income in 2014 and is aiming for a return on investment of 3.2%. If the major loss expenditure stays within the estimated 670 million euros, and there are “no unexpectedly adverse movements on capital markets,” it expects group net income for this year to be 850 million euros.

“In view of the prolonged period of low interest rates and increasing competition, especially in non-life reinsurance, the general environment remains challenging,” Wallin said.

“Thanks to our low cost of capital and administrative expenses, we nevertheless enjoy a tangible competitive advantage that will enable us to generate consistent results even in a softening market.”