Hannover Re said GWP declined primarily due to movements in exchange rates. "Had it not been for the appreciation of the euro, especially against the U.S. dollar, growth of 10.1 percent would have been recorded," the company said.

Net premiums earned for the half came to 3.6 billion euros ($3.9 billion), compared with 3.3 billion euros ($3.6 billion) for the first half 2002, a 9.3 percent increase, the company said.

Net investment income came to 486 million euros ($528.5 million), a 27.9 percent increase over the 380 million euros ($413.2 million) reported during the first half of 2002. The company said net investment income improved since no further appreciable write-offs were required in the second quarter.

"The claims situation remained highly satisfactory for Hannover Re in the first half, the company said, with just three catastrophe losses recorded (in the second quarter only), producing total net expenditure of 14.5 million euros ($15.8 million). As a result, the company reported a combined ratio of 98.6 for the half year, compared with 95.6 in last year's first half.

The outcome of the Jan. 1 treaty renewals in property and casualty reinsurance, when more than two-thirds of the company's treaties were renewed, was highly satisfactory, the company said.

The development of the market and the treaty renewal season in p-c reinsurance demonstrated the hard market is holding up, said Hannover Re.

"?[W]e are willing to accept that gross premium income will decline as a consequence of active cycle management and negative currency effects," said Wilhelm Zeller, chairman of the executive board, for Hannover Re.