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Hannover Re posts YOY rise in Q2 profit, confirms profit target for FY'19

Hannover Re confirmed its profit target for the full year as it reported a year-over-year rise in group net income for the second quarter.

The German reinsurance group reported second-quarter group net income of €368.9 million, up from €281.9 million a year earlier. EPS for the quarter was €3.06, compared to the year-ago €2.34.

Group net income at the property and casualty reinsurance division stood at €212.3 million in the period, up from €199.6 million a year earlier. After-tax net income at the life and health reinsurance business rose to €169.2 million from the year-ago €95.7 million. The company largely attributed the increase in profitability in the life and health reinsurance business to the one-time effect associated with its participation in German run-off specialist Viridium Group GmbH & Co. KG.

Hannover Re said a €99.5 million extraordinary income was booked in the second quarter from the group's participation in Viridium, in connection with a reorganization of the shareholding structure prompted by Viridium's acquisition of Generali Lebensversicherung AG. In relation to this, Hannover Re noted that it sold its indirectly held participation in Viridium, resulting in a positive one-off effect. Hannover Re said the interest it held in Viridium remained largely unchanged in this context.

Gross written premium increased on a yearly basis to €5.32 billion from €4.64 billion. Net premium earned also rose year over year, to €4.74 billion from €4.35 billion.

Claims and claims expenses amounted to €3.50 billion in the quarter, up from €3.06 billion a year earlier.

The reinsurer also booked net income from investments under own management of €443.5 million in the period, up year over year from €297.0 million. Net investment income increased year over year to €466.7 million from €352.1 million.

Return on investment, excluding funds withheld by ceding companies, stood at 3.9% in the quarter, compared to 2.9% a year earlier. The company aims to achieve a minimum return on investment of 2.8% for the full year.

The company's after-tax return on equity was 15.1% in the quarter, compared to 13.5% a year ago.

The combined ratio at the property and casualty reinsurance division, including funds withheld, stood at 97.7% in the quarter, compared to the year-ago 95.6%.

For the first half, Hannover Re's group net income rose on a yearly basis to €662.5 million from €555.3 million. EPS for the period was €5.49, up year over year from €4.60.

For the full year, Hannover Re expects gross premium growth on the group level, based on constant exchange rate, to be in the single-digit percentage range.

The company said excluding the positive one-off effect associated with the group's participation in Viridium, it remains "well on track" to generate group net income of €1.1 billion for 2019.

The group also envisages a dividend payout ratio in the range of 35% to 45% of its group net income under International Financial Reporting Standards.