SOURCE: Hannover Re

February 03, 2010 08:25 ET

Hannover Re satisfied with 1 January treaty renewals in non-life reinsurance

HANNOVER, GERMANY--(Marketwire - February 3, 2010) - Hannover Re / Hannover Re satisfied with 1 January treaty renewals in non-life reinsurance processed and transmitted by Hugin AS. The issuer is solely responsible for the content of this announcement.

Hannover Re satisfied with 1 January treaty renewals in non-life reinsurance

-- Steady demand for reinsurance

-- Modest premium growth for 2010

-- US property business satisfactory

-- Rate increases in aviation and credit/surety

-- Expected rate reductions in catastrophe business owing to reduced major loss expenditure in 2009

-- Return on equity target for 2010: at least15%

Hannover, 3 February 2010: The treaty renewals in non-life reinsurance effective 1 January 2010 passed off in line with Hannover Re's expectations. "Rates and conditions broadly held stable, and we are therefore not dissatisfied with the achieved results. Slight pressure on prices was to be expected after the particularly good 2009 financial year", Chief Executive Officer Ulrich Wallin explained.

While modest rate erosion was recorded in some property lines, price increases were pushed through in other segments. The latter was true of aviation business, and was again the case in credit and surety reinsurance. The treaty renewals in Germany proved more favourable than anticipated.

Of the total premium volume of EUR 4,377 million written in non-life reinsurance in 2009 (excluding facultative business and structured covers), a good two-thirds of the treaties worth altogether EUR 2,976 million (68%) were up for renewal as at 1 January 2010. Of this, a premium volume of EUR 2,714 million was renewed, while treaties worth EUR 263 million were either cancelled or renewed in modified form.

Including increases of EUR 394 million from new or modified treaties and thanks to improved prices in some areas, the total renewed premium volume thus came in at EUR 3,108 million. Making allowance for treaties with a later renewal date, gross premium in non-life reinsurance is likely to surpass the previous year's level at EUR 4,530 million (+3.5%).

Renewals in non-life reinsurance in North America were gratifying overall. Property business saw satisfactory prices, with rates for proportional treaties remaining on a good level. In non-proportional business rates for the most part held stable, and in the casualty sector further premium erosion was averted.

Business in Germany fared better than expected. In motor liability, an important sector for Hannover Re, rate increases averaging 5% were secured under non-proportional treaties. "This year we were again able to expand our large market share in Germany through new client relationships and hence consolidate our position as one of the leading reinsurers in the profitable German market", Mr. Wallin noted.

The renewals in aviation business were satisfactory, with rate increases in the lower double digits obtained virtually across the board. Hannover Re stepped up its acceptances with the major airlines. Rates in the general aviation sector were stable on a low level, whereas in space business -- following on the heels of a profitable experience in 2009 -- they came under pressure. For the current financial year Hannover Re expects to see rising premium income for the entire aviation portfolio.

Hannover Re is also satisfied with the outcome of the renewals in credit and surety business. Despite the growing availability of capacity on the market, the company achieved rate increases sometimes running into double digit percentages and extended its market position. Increases were booked primarily in credit reinsurance.

The global reinsurance picture was a mixed one. In France rates were largely stable, while in the Scandinavian markets Hannover Re scaled back its acceptances in light of insufficient rates. The renewal season in Central and Eastern Europe gave grounds for satisfaction on account of stronger demand. The retakaful segment, in which the premium volume was further boosted, similarly delivered a gratifying development. All in all, Hannover Re is satisfied with the renewals in worldwide treaty business.

In worldwide catastrophe business prices for reinsurance covers slipped back as expected owing to the relatively unremarkable catastrophe loss experience and the improved capital resources of primary insurers. Rate reductions were especially marked in the United States, although it was possible to achieve price increases for loss-making programmes in some regions. Owing to the moderate strains incurred in Europe in 2009, rates here remained for the most part stable.

The treaty renewals again demonstrated that the financial strength of reinsurers continues to be of great importance to ceding companies. A top rating is a prerequisite for a reinsurer if it is to be offered and awarded the entire spectrum of business. With its excellent ratings ("AA-" from Standard & Poor's and "A" from A.M. Best) Hannover Re is one of the reinsurers that meets this requirement.

Outlook for 2010

In view of the satisfactory treaty renewals as at 1 January and the predominantly favourable state of the market, Hannover Re is looking to a good financial year in non-life reinsurance -- despite the pressure on rates in property business. Modest increases in premium income coupled with healthy profitability are anticipated for 2010.

Assuming that the burden of major claims and catastrophe losses remains within the expected bounds and as long as there are no sharp downturns on capital markets, a return on equity of at least 15% is targeted for the current year. As to the dividend, Hannover Re still anticipates a payout in the range of 35% to 40% of its IFRS consolidated net income after tax.

For further information please contact:

Press and Public Relations / Investor Relations:
Karl Steinle (tel. +49 511 5604-1500,
e-mail: karl.steinle@hannover-re.com)

Press and Public Relations:
Gabriele Handrick (tel. +49 511 5604-1502,
e-mail: gabriele.handrick@hannover-re.com)

Investor Relations:
Klaus Paesler (tel. +49 511 5604-1736,
e-mail:klaus.paesler@hannover-re.com)

Please visit: www.hannover-re.com

Hannover Re, with a gross premium of around EUR 9 billion, is one of the leading reinsurance groups in the world. It transacts all lines of non-life and life and health reinsurance. It maintains business relations with more than 5,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices on all five continents with a total staff of roughly 2,000. The rating agencies most relevant to the insurance industry have awarded Hannover Re very strong insurer financial strength ratings (Standard & Poor's AA- "Very Strong" and A.M. Best A "Excellent").

Disclaimer:

Some of the statements in this press release may be forward-looking statements or statements of future expectations based on currently available information. Such statements are naturally subject to risks and uncertainties. Factors such as the development of general economic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. Hannover Re does not make any representation or warranty, express or implied, as to the accuracy, completeness or updated status of such statements. Therefore, in no case whatsoever will Hannover Re and its affiliate companies be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this press release or for any related damages.

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Hannover Re

Karl-Wiechert-Allee 50 Hannover Germany

WKN: 840221;ISIN: DE0008402215;Index:CDAX,MIDCAP,HDAX,CLASSIC All Share,Prime All Share;MDAX;

Contact Information

  • For further information please contact:

    Press and Public Relations / Investor Relations:
    Karl Steinle (tel. +49 511 5604-1500,
    e-mail: Email Contact)

    Press and Public Relations:
    Gabriele Handrick (tel. +49 511 5604-1502,
    e-mail: Email Contact)

    Investor Relations:
    Klaus Paesler (tel. +49 511 5604-1736,
    e-mail:klaus.paesler@hannover-re.com)

    Please visit: www.hannover-re.com