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Hannover Re posts 4Q net profit of euro16 million

Hannover Re posts 4Q net profit of euro16 million

German reinsurance company Hannover Re AG reported a fourth quarter net profit of euro16 million ($20.2 million) Wednesday but a loss for the full year as the global financial crisis hurt its investment portfolio. The company said it expects better profits in 2009, causing the shares to rally.
The Hanover-based company recorded fourth quarter gross premiums of euro2 billion, in line with previous quarters in 2008, but the company didn't provide comparable figures for 2007.
For the full year, Hannover Re posted a net loss of euro127 million ($160 million), compared with a net profit of euro722 million in 2007.
Reinsurers sell backup coverage to insurance companies to spread the loss in the event of large catastrophes.
Despite the poor results for 2008, the company gave a more optimistic outlook on the current year, indicating that its equity market losses have passed.
Given its strategic orientation and the available market opportunities in non-life and life-health reinsurance, Hannover Re anticipates a good result for the full 2009 financial year, the company said in its statement.
"For our company, the crisis on financial markets is at once a curse and a blessing", Chief Executive Officer Wilhelm Zeller said. "Now that the negative repercussions are behind us, we can profit from the positive effects."
Hannover Re's solid outlook sent the shares up more than 18 percent to euro26 in Frankfurt afternoon trading. The stock was the German market's biggest gainer.
Hannover Re said its gross written premiums for the year fell 1.7 percent to euro8.1 billion in 2008 from euro8.3 billion in 2007.
Operating profit in 2008 fell 84 percent to euro148 million, while investment income fell 75 percent to euro279 million.
The company recorded a combined ratio in non-life reinsurance of 95.4 percent in 2008, compared with 99.7 percent in 2007. Combined ratio reflects the level of claims paid out and costs versus premiums paid in; a level under 100 indicates an underwriting business is profitable.
Hannover Re said its losses on equity markets were also compounded by tax effects, as the losses are not deductible in Germany.
Non-life reinsurance business saw 2008 gross premiums written fall 4 percent, Hannover Re said, blaming the poor result on exchange rates.
The company said the earnings before interest and taxes on the non-life reinsurance business fell sharply to euro2.3 million from euro657 million in 2007 because of losses on equity markets.
Hannover Re non-life reinsurance business saw euro458 million in catastrophic loss net burden charges in 2008 compared with euro285 million in 2007. The company said the 2008 figure amounted to 10.7 percent of net premiums in non-life reinsurance, slightly above the expected level for the year.
The company said it had "significant" claims resulting from the severe earthquake in the Chinese province of Sichuan; snow and ice storms in China; European winter storms; and two hurricanes, "Gustav" and "Ike," which affected the U.S. The hurricanes produced a claim net burden of euro222 million for Hannover Re alone.
Hannover Re said gross premiums written in life and health reinsurance climbed by nearly 2 percent in 2008, while earnings before interest and taxes for the segment fell 48 percent.
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On the Net:
http://www.hannover-re.com


Updated : 2021-08-02 01:47 GMT+08:00