Hannover Re Q1 net profit beats expectations

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

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

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

Chief Executive Officer Ulrich Wallin said the first quarter results laid the foundations for a successful financial year, provided major losses from hurricanes or earthquakes did not exceed a projected 560 million euros in the full year and there were no drastic downturns in the capital markets.

“Key drivers here were the highly satisfactory underwriting results in non-life and life/health reinsurance as well as a very good investment performance,” he said of first-quarter performance.

The hit from major losses in the first three months was just 60.6 million euros, compared with more than 570 million in the year-earlier quarter.

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

Rival Munich Re has already said it expected the drop in damage claims and financial market tensions in the first quarter to have pushed it strongly into profit, from a loss in the year-earlier quarter.

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