FRANKFURT (Reuters) – Hannover Re beat expectations withnet profit rising five-fold to 261.3 million euros ($344 million)in the first quarter, helped by surging investment income and theabsence of big damage claims.

The result was above the highest forecast of 235 million eurosin a Reuters poll of banks and brokerages, and well above the pollaverage of 200 million euros.

The world's third-biggest reinsurer had been expected to see astrong recovery compared with the same period last year, which washit by heavy claims from an earthquake and tsunami in Japan.

Chief Executive Officer Ulrich Wallin said the first quarterresults laid the foundations for a successful financial year,provided major losses from hurricanes or earthquakes did not exceeda projected 560 million euros in the full year and there were nodrastic downturns in the capital markets.

“Key drivers here were the highly satisfactory underwritingresults in non-life and life/health reinsurance as well as a verygood investment performance,” he said of first-quarterperformance.

The hit from major losses in the first three months was just60.6 million euros, compared with more than 570 million in theyear-earlier quarter.

Investment income rose more than 12 percent to nearly 441million euros but Hannover Re said unrealised gains in comingquarters could not be expected to be as positive as in the firstquarter.

Rival Munich Re has already said it expected the drop in damageclaims and financial market tensions in the first quarter to havepushed it strongly into profit, from a loss in the year-earlierquarter.

Hannover Re, in which insurer Talanx has a 50.2 percent stake,trades at 7.6 times 12-month forward earnings, a premium to MunichRe at 7.3 times, but a discount to Swiss Re , which trades at amultiple of 9.0, according to Thomson Reuters StarMine, whichweights analysts' forecasts according to their track record.