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Lower investment income dents Hannover Re Q1 result

HannoverRe reported first-quarter group net income of €271.2 million, down3.1% from the year-ago quarter. EPS fell to €2.25 from €2.32.

The group's gross written premiums fell year over year to€4.26 billion from €4.40 billion, while net premium earned increased to €3.54billion from €3.43 billion. Net income from investments under own managementreduced to €282.7 million from €316.6 million in the first quarter of 2015,leading net investment income to fall to €366.2 million from €415.7 million.The return on investment was 2.9%, compared to 3.5% a year ago.

For the three months ended March 31, claims and claimsexpenses stood at €2.68 billion, compared to €2.71 billion in the same periodin 2015.

In the life and health reinsurance business, net income fellon a yearly basis to €77.9 million from €127.5 million, with gross writtenpremiums dropping to €1.76 billion from €1.78 billion in the year-ago quarter.For 2016, in the life and health reinsurance business, the company expects newbusiness of more than €220 million, although the EBIT margin is expected toremain unchanged at 2% for the financial solutions and longevity business and6% for the mortality and morbidity business.

The property and casualty reinsurance business recorded arise in first-quarter group net income to €204.3 million from the year-ago€171.4 million. Gross written premiums fell to €2.50 billion from €2.62billion. The combined ratio was 94.7% in the first quarter, compared to 95.7%in the year-ago quarter. The reinsurer said it is targeting a P&C combinedratio of less than 96% for the full year and an EBIT margin of at least 10%.

The group's ROE after tax for the period reached 13.2%,compared to 13.9% in the first quarter of 2015.

For the 2016 full year, subject to constant exchange rates,Hannover Re anticipates stable or slightly lower gross premiums and net incomeafter tax of at least €950 million, provided the company's major lossexpenditure does not significantly exceed the budgeted level of €825 millionand there are no unforeseen distortions on capital markets.

The company said it is looking at a dividend payout ratio ofbetween 35% and 40% of group net income.