Net income down 15% in Q1 for Hannover Re

Hannover Re released Tuesday its financial results for the three months ending March 31, reporting a 15.3% drop in net income but a 3.8% increase in gross written premiums in non-life reinsurance when compared to the first quarter of 2012.

The Hannover, Germany-based firm, which describes itself as the third-largest reinsurer in the world, reported total revenue of about €3.44 billion for the first quarter of this year, up from about €3.26 billion in the first quarter of 2012.

Group net income dropped from €261.3 million in the first quarter of 2012 to €221.4 million in the same period this year.  At print time one euro was equal to $1.32 Canadian.

“In non-life reinsurance, our largest business group, the generally good results posted by reinsurers in 2012 led to a more competitive market environment,” chairman of the executive board Ulrich Wallin wrote in the interim financial report. “The supply of reinsurance protection exceeds demand in many areas. The situation has been exacerbated by the fact that some large insurance groups have raised their retentions and hence ceded fewer risks to the reinsurance market.”

Hannover Re offers treaty reinsurance in North America, Germany, Switzerland, Austria and Italy. Its Toronto-based Canadian subsidiary, Hannover Rück SE, offers coverage in commercial property and excess casualty as well as a variety of liability risks including motor, directors and officers, general third-party and medical malpractice.

Worldwide, Hannover Re’s gross written premiums in non-life reinsurance were about €2.2 billion in the first quarter of 2013, up 3.8% from €2.12 billion in the first quarter of last year. The combined ratio in non-life was 94% in the first quarter of this year, down from 96.9% in the first quarter of 2012.

“Rate increases were attainable in areas where programmes had been affected by losses,” the firm noted. “They were particularly marked in marine business. In view of the historically high major loss expenditure caused by the wreck of the ‘Costa Concordia’ cruise ship and Hurricane Sandy, rates climbed by between 25% and 40% under loss-impacted treaties. Even under programmes that had been spared losses premium increases averaging 10% were obtained.”

Gross written premiums for the entire company (including life and health) were €3.76 billion in the quarter ending March 31, up 7% from €3.51 billion in Q1 2012. Net premiums earned for Hannover Re were €3.08 billion in the latest quarter, up 9.4% year-to-year from €2.82 billion in Q1 2012.

The company noted that in the marine business, it has been able to get “substantial rate increases in non-proportional business” due to losses in 2012.

“In North America, too, the renewals have so far passed off satisfactorily, with price increases observed in both the property and casualty sectors for commercial and industrial risks.”