Hannover Re takes US$1.2 billion hit from hurricanes

Hannover Re says “an unparalleled burden” of natural catastrophe losses in 2005 produced “historically unprecedented major loss expenditures in excess of EUR1 billion (US$1.2 billion).”
Hurricanes Katrina, Rita and Wilma alone inflicted a net loss on the company of almost EUR800 million (US$958.3 million), the company reported. The total strain is line with the amount Hannover Re estimated at the end of the third quarter.
“The fact that we were able to close this difficult financial year without depletion of our capital unlike most of our competitors is a testament to our strong profitability and good portfolio diversification,” Hannover Re CEO Wilhelm Zeller observed at the press briefing on the annual results held in Hannover.
“We achieved good results in business with no catastrophe exposure,” Zeller said. “This is one of the reasons why our combined ratio of 112.8% did not come in significantly higher despite the hurricanes.”
Against the backdrop of exceptionally heavy expenditure on catastrophe losses, Hannover Re generated Group net income that was the equivalent to earnings of 41 cents (2.32 euro) a share.
The gross premium income generated by the Hannover Re Group grew by 1.1% year-on-year to EUR9.7 billion (US$11.6 billion). The drivers of growth in the year under review included property and casualty reinsurance segment, as well as life and health reinsurance.
“Outside the catastrophe-exposed lines of business, the development of property and casualty reinsurance was highly favorable,” the company reported in a release. “Almost all segments offered attractive opportunities to write profitable business.
“Rates and conditions remained on a high level. Most notably, the property catastrophe and marine (including offshore) lines that were impacted by the 2004 hurricanes rates had already improved as the year under review got underway.”
All in all, the company reported, the net burden of catastrophe losses stood at the equivalent to 26.3% of net premium, compared to 8.3% in the previous year.