Hannover Re expects Group net income of more than EUR 800 million for the 2020 financial year
DGAP-News: Hannover Rück SE
/ Key word(s): Interim Report/Results Forecast
Corporate news Hannover Re expects Group net income of more than EUR 800 million for the 2020 financial year
Hannover, 4 November 2020: Hannover Re expects Group net income of more than EUR 800 million for the 2020 financial year. The company increased its reserves for Covid-19-related losses in property and casualty reinsurance by EUR 100 million to a total amount of EUR 700 million as at the end of September. In life and health reinsurance the burden from Covid-19 currently stands at EUR 160 million. "The impacts associated with the Covid-19 pandemic can be better estimated following the close of the third quarter, and we therefore believe that we are now in a position again to provide profit guidance for 2020 and 2021," Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re, said. "While we feel very comfortable with our 2020 guidance based on our prudent reserving, the outlook for the coming year is dependent on the further course of the pandemic. Movements in reinsurance prices nevertheless give us grounds for optimism." Group net income after nine months reaches EUR 667.8 million The operating profit (EBIT) was down 35.3% from the previous year's level at EUR 902.9 million (EUR 1,395.4 million). Group net income contracted by 33.4% to EUR 667.8 million (EUR 1,003.2 million). Earnings per share reached EUR 5.54 (EUR 8.32). The capital adequacy ratio, which measures Hannover Re's risk-carrying capacity, stood at 222% as at the end of September. This level is comfortably above the internal limit of 180% and the threshold of 200%. Gross written premium in property and casualty reinsurance grew by 14.5% to EUR 13.3 billion (EUR 11.7 billion). At constant exchange rates, the increase would have been 15.9%. Net premium earned climbed by 13.2% to EUR 10.5 billion (EUR 9.3 billion); growth would have reached 14.7% adjusted for exchange rates. Net major loss expenditure in the first nine months came to EUR 1.1 billion. Of this total amount, EUR 700 million was attributable to Covid-19-related impacts. The largest net losses in the third quarter - aside from the pandemic - included a derecho storm in the United States costing EUR 83.9 million, Hurricane Laura in the US at EUR 64.4 million and the explosion at the Port of Beirut in an amount of EUR 67.4 million. The combined ratio in property and casualty reinsurance consequently came in at 101.4% (98.6%). Stripping out the loss reserves relating to Covid-19 and making allowance for large loss expenditure in line with expectations, the combined ratio would have amounted to 97.6%. The operating profit (EBIT) in property and casualty reinsurance declined by 36.0% to EUR 588.5 million (EUR 919.0 million). The contribution made by property and casualty reinsurance to Group net income fell by 34.7% to EUR 418.2 million (EUR 640.1 million). Life and health reinsurance: "The increase in the reserves set aside for Covid-19 in life and health reinsurance reflects our conservative reserving policy in response to the global spread of infection," explained Jean-Jacques Henchoz. "Thanks to the successful remediation of our legacy US mortality book in the previous year, we can be highly satisfied with the performance of the business group despite the sharply increased risk provision." Gross written premium in life and health reinsurance rose by 3.6% as at the end of September to EUR 5.9 billion (EUR 5.7 billion); growth would have reached 5.0% adjusted for exchange rate effects. The main driver here was sustained vigorous growth in Asia and Australia. Net premium earned climbed to EUR 5.3 billion (EUR 5.1 billion). Growth of 4.4% would have been recorded at constant exchange rates. Investments: Shareholders' equity: Guidance 2020: In recent rounds of renewals held in property and casualty reinsurance Hannover Re was able to benefit from stronger demand for high-quality reinsurance protection at improved prices and conditions. Coming on the back of a protracted soft market phase, this trend reversal is likely to continue both in primary business and on the reinsurance side. For the renewals as at 1 January 2021 in property and casualty reinsurance Hannover Re therefore expects to book increased premium income and higher prices. Regarding the dividend for the 2020 financial year, Hannover Re anticipates an ordinary dividend on the previous year's level of EUR 4.00 per share. Payment of a special dividend is dependent on the business opportunities emerging in the short-term and corresponding capital requirements, especially those arising out of the expected improvements in rates and conditions in the property and casualty reinsurance renewals as at 1 January 2021. Outlook for 2021: In addition, Hannover Re expects to generate a return on investment of roughly 2.4% and growth in Group gross premium - adjusted for exchange rate effects - of around 5% in the coming year. The expectations for 2021 also reflect an increased net major loss budget of EUR 1.1 billion (EUR 975 million). The adjustment is prompted first and foremost by further growth in the underlying business. As usual, all statements regarding future targets are subject to the premise that major loss expenditure remains within the budgeted level and that there are no unforeseen distortions on capital markets. Hannover Re's dividend policy remains unchanged for the coming financial year. The company envisages a payout ratio for the ordinary dividend in the range of 35% to 45% of its IFRS Group net income. The ordinary dividend will be supplemented by payment of a special dividend subject to a comfortable level of capitalisation and Group net income in line with expectations. Hannover Re, with gross premium of more than EUR 22 billion, is the third-largest reinsurer in the world. It transacts all lines of property & casualty and life & health reinsurance and is present on all continents with more than 3,000 staff. Established in 1966, the Hannover Re Group today has a network of more than 150 subsidiaries, branches and representative offices worldwide. The Group's German business is written by the subsidiary E+S Rück. The rating agencies most relevant to the insurance industry have awarded both Hannover Re and E+S Rück outstanding financial strength ratings: Standard & Poor's AA- "Very Strong" and A.M. Best A+ "Superior". Please note the disclaimer: Key figures of the Hannover Re Group (IFRS basis)
Key figures of the Hannover Re Group (IFRS basis)
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04.11.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
Language: | English |
Company: | Hannover Rück SE |
Karl-Wiechert-Allee 50 | |
30625 Hannover | |
Germany | |
Phone: | +49-(0)511-5604-1500 |
Fax: | +49-(0)511-5604-1648 |
Internet: | www.hannover-re.com |
ISIN: | DE0008402215 |
WKN: | 840 221 |
Indices: | MDAX |
Listed: | Regulated Market in Frankfurt (Prime Standard), Hanover; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange; Luxembourg Stock Exchange |
EQS News ID: | 1145195 |
End of News | DGAP News Service |
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1145195 04.11.2020