Hannover Re 4Q Net Income Up 22% Despite Losses

NU Online News Service, March 9, 3:04 p.m. EST

Hannover Re said its fourth-quarter net income rose 22 percent despite a year plagued by natural catastrophe losses that were above the company's loss estimate.

The Hannover, Germany-based company reported net income for the fourth quarter increased €30 million (U.S. $42 million at the current exchange rate), rising to €167 million ($232 million). Gross written premium during the period rose 10 percent, or €271 million ($377 million), to €2.9 billion ($4 billion).

On the property and casualty side of the business, the company reported net income for the quarter of €143 million ($200 million), an increase of 2 percent, or €2 million (close to $3 million). The combined ratio remained flat at 95.9.

For the year, the carrier reported net income of €749 million ($1.04 billion), an increase of more than 2 percent, or €15 million ($21 million). Gross written premium increased 11 percent, or €1.15 billion ($1.6 billion), to €11.4 billion ($15.9 billion).

The company increased its policyholder surplus for the year by 24 percent, or €1.37 billion ($1.9 billion), to €6.99 billion ($9.73 billion).

For P&C business on the year, net income rose 23 percent, or €108 million ($151 million), to €581 million ($809 million). Gross written premium rose 10 percent, or €593 million ($826 million), to €6.34 billion ($8.8 billion). The combined ratio increased 1.6 points to 98.2.

In a statement, Ulrich Wallin, Hannover Re's chief executive officer, said despite the impact of heavy major losses, the company still managed to beat 2009 results and beat forecasts.

The figures include a €69 million ($96 million) charge for the sale of the company's U.S. subsidiary Clarendon and benefit of €112 million ($156 million) from a court decision over taxes.

“Even though the competitive pressure in non-life reinsurance intensified, we are still satisfied with the development of our operational business,” said Mr. Wallin. “Prices and conditions were for the most part preserved on a stable level thanks to the largely disciplined underwriting practice among reinsurers.”

The company said it expected to spend €500 million ($696 million) on major claims in 2010. The figure was slightly more at €662 million ($922 million).

Hannover Re's losses were impacted by three severe earthquakes last year:

• The earthquake in Chile cost the company €182 million ($253 million).
• The earthquake in New Zealand caused net loss of €114 million ($159 million).
• Haiti accounted for more than €27 million ($38 million).

Winter storm Xynthia in Europe, flood events throughout the world and the loss of the Deepwater Horizon drilling rig in the Gulf of Mexico also contributed to losses for the company.