(Bloomberg) -- Hannover Re, the world’s third-biggest reinsurer,rose the most in more than two years after saying it will pay aspecial dividend and fourth-quarter profit climbed more thananalysts estimated.

The shares increased as much as 5.6% in Frankfurt trading, thebiggest intraday gain since November 2012. They climbed 5.2% to91.65 euros at 11:44 a.m., extending this year’s advance to 22% andvaluing the company at about 11 billion euros. The Bloomberg Europe500 Insurance Index rose 16% over the same period.

Net income climbed 9.4% to 290 million euros ($312 million) froma year earlier, the company said Tuesday. That beat the 244million-euro average estimate of eight analysts surveyed byBloomberg. The reinsurer will pay a regular dividend of 3 euros ashare plus an additional 1.25 euros. Hannover Re was expected tokeep the amount unchanged from the 3 euros it paid in 2013,according to a Bloomberg Dividend Forecast.

Hannover Re’s annual net income rose 10% to 986 million euros,beating the average analyst estimate of 931 million euros andHannover Re’s target of 850 million euros.

Successful Year

Chief Executive Officer Ulrich Wallin, 60, said the company’starget for full-year profit of about 875 million euros this yearremained unchanged, provided large damage claims don’t“significantly exceed” 690 million euros.

“The successful financial year was based on a 25% rise in netincome in life and health reinsurance and the continued goodunderwriting result in property and casualty,” Wallin said. “Wewere able to slightly improve our investment income despite thechallenging market environment.”

Costs for major losses declined to 426 million euros last year.That compares to a budget of 670 million euros set aside byHannover Re and to 578 million euros of major claims paid in 2013.Income from the company’s investments rose 4.3% to 1.47 billioneuros last year, helped by higher returns from real estate andalternative assets.

Prices that Hannover Re charges customers for coverage fell fora second year in January, the company said last month. A continuinginflow of capital from alternative markets, especially in naturalcatastrophe reinsurance, is putting prices under pressure, itsaid.

Reinsurers help primary insurers shoulder risks. The rates theycharge to backstop claims from catastrophes such as hurricanes andearthquakes, typically the most costly disasters, declined in sevenof the last 10 years, according to the Guy Carpenter World PropertyCatastrophe Rate on Line Index.

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