Hannover Re targets €600m-plus profit for 2012

Mar 14, 2012 by Adrian Hönig in  Baden-Baden Meeting

Reinsurer Hannover Re expects another profit clearly above €600m ($781.49m) for 2012, although chief executive, Ulrich Wallin, avoided mentioning a concrete figure.

“I have been asked by Talanx not to make forward-looking statements,“ said Wallin, who is himself a management board member of Talanx. The German insurance heavyweight controls 50.2% of the world’s third-largest reinsurer.

Hannover Re is already listed on the stock exchange, but parent Talanx is just preparing an IPO, and wants to avoid clashes with the tight regulations surrounding this event. Analysts who spoke of a profit of more than €650m ”clearly understand their trade,“ Wallin said.

In 2011, nat cat losses amounted to €981m compared with €662m in 2010. Together with the strains of adverse capital market trends, this led to a 19% drop in profits to €606m. Hannover Re had already released key figures on February 14.

Premium income rose in 2011 by 5.8% to €12.1bn. “Clearly improved rates“ and a focus on specialty business and emerging markets led to growth, Wallin said. “The market is showing a tendency towards hardening.“

For 2012, the company expects premium income to grow by 5% to 7%, both from non-life and life reinsurance. ”In North America, we see room for improvement in casualty lines, but the trend has changed,“ Wallin said. ”In property, however, the development is very positive.“

In Germany, primary rates in motor were going up, helping proportional reinsurance business. “We also achieved higher rates in excess of loss“, Wallin said. The loss frequency was declining, so there were good chances of higher profits.

In marine, the market’s largest loss so far, the grounding of the Costa Concordia should lead to further improvements. Hannover Re expects a €50m loss from the accident, both in property and protection and indemnity.

“Aviation has seen a very good 2011 in terms of losses, and rates are not going up,“ Wallin said. “But especially in emerging markets, there was a lot of growth, which we have seem already on January 1, 2012“.

The UK market would see higher rates, especially in motor, which Wallin said was “badly needed“. Hannover Re expects growth with good profitability.

The company expects reduced volume from Argentina, where it is one of the market leaders and wrote €200m in 2011. ”The country has introduced new rules forbidding primary companies from placing reinsurance outside Argentina,“ Wallin said. “We will not lose the premiums altogether, but keep some as retro business.“ The management had pondered whether to set up its own subsidiary in the Latin American country, but decided against it “for a number of reasons“.

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