Hannover Has Strong Operating Profit

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By Lisa S. Howard, Reinsurance Editor

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NU Online News Service, Nov. 26, 3:35 p.m.EST?Citing the positive effects of cycle management,Hannover Re Group posted a 213.5 percent increase in operatingprofit during the third quarter of 2003 and a 41.5 percent increaseduring the nine-month period.

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"Thanks to our consistent cycle management, we have been able tooptimally exploit the continuing very favorable situation on thereinsurance markets," said Wilhelm Zeller, chairman of the HannoverRe executive board.

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As a result of this third quarter result, Hannover projects anet income forecast for the year of approximately 350 million euros($412.6 million).

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For the third quarter, the company reported an operating profitof 213.0 million euros ($251.1 million), a 213.5 percent increasefrom the 67.9 million euros ($80.0 million) reported during thesame period last year.

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Net income (after tax) during the quarter was 94.2 million euros($111.0 million), a 53.2 percent increase from the 61.5 millioneuros ($72.5 million) reported during the third quarter of2002.

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Gross written premiums during the 2003 third quarter came to 2.9billion euros ($3.4 billion), a drop of 2.7 percent from 3.0billion euros ($3.5 billion) reported during the same period in2002.

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As for its nine-month figures, Hannover Re Group posted anoperating profit of 498.2 million euros ($587.3 million), a 41.5percent increase from the 352.2 million euros ($415.2 million)reported last year.

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Net income (after tax) during the nine months was 256.6 millioneuros ($302.5 million), a 23.5 percent increase from the 207.8million euros ($245.0 million) in net income reported for thenine-month period in 2002.

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Gross written premiums came to 8.9 billion euros ($10.5 billion)for the nine months, a drop of 2.8 percent from the 9.1 billioneuros ($10.7 billion) reported for the same period last year.

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Hannover Re attributed the decrease to movements in exchangerates. As a result, at constant exchange rates, gross premiumswould have risen by 8.7 percent.

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During the quarter, the company's property-casualty reinsurancebusiness generated an operating profit of 121.4 million euros($143.1 million), a 191.4 percent increase from the 41.7 millioneuros ($49.2 million) reported during the third quarter lastyear.

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During the nine-month period, the company's p-c reinsurancebusiness reported an operating profit of 304.0 million euros($358.4 million) during the nine month period, a 27.8 percent dropfrom the 237.9 million euros ($280.4 million) reported foroperating profit during the same period in 2002.

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Net income (after tax) reported for the company's p-creinsurance business came to 36.1 million euros ($42.6 million)during the third quarter, a drop of 17.8 percent from the 43.8million euros ($51.6 million) reported for the same period lastyear. Net income (after tax) came to 137.4 million euros ($162.0million) during the nine months, a 2.2 percent increase from the134.5 million euros ($158.5 million) reported for the same periodin 2002.

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Gross written premiums for reinsurance during the quarter cameto 1.4 billion euros ($1.7 billion), a 4.6 percent drop from the1.5 billion euros ($1.8 billion) reported during the same 2002period. During the nine-month period, gross written premiums in itsreinsurance business decreased by 15.5 percent to 4.0 billion euros($4.7 billion) from 4.8 billion euros ($5.7 billion) reportedduring the same 2002 period.

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Roughly half this decline was attributable to the relativeappreciation of the euro, especially against the U.S. dollar.

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Two additional factors contributed to this reduction in premiumvolume, the company said.

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"Firstly, Hannover Re is no longer accepting the entirereinsurance volume of its HDI affiliates, but merely the portionthat it retains," Hannover said. Secondly, the company added,"Hannover Re is focusing even more closely on profitable marketsegments."

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The combined ratio for p-c reinsurance came to 94.9 during thethird quarter, compared to 94.3 in the third quarter of 2002. Thecombined ratio for Hannover Re's reinsurance business during thenine-month period was 97.2, compared with 95.1 for the same periodlast year.

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For its program business during the third quarter, the companyreported an operating profit of 13.7 million euros ($16.2 million),a 19.1 percent increase from the 11.5 million euros ($13.6 million)reported during the same period in 2002. For the nine-month period,Hannover Re's program business reported an operating profit of 54.9million euros ($64.7 million), a 13.7 percent increase from the48.3 million euros ($56.9 million) reported for the nine-monthperiod in 2002.

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During the quarter, net income (after tax) of 15.9 million euros($18.7 million) was reported for its program business, a 156.5percent increase from the 6.2 million euros ($7.3 million) reportedfor the third quarter 2002. Net income for the company's programbusiness during the nine-month period was 40.0 million euros (47.2million), a 56.9 percent increase from 25.5 million euros ($30.1million) reported for the same period in 2002.

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Hannover Re's program business had a combined ratio of 99.9during the third quarter, compared to 97.3 for the same period lastyear. For the nine months, the combined ratio was 96.3, comparedwith 92.9 for the same period in 2002.

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