Hannover Re’s business again developed very favourably in the first quarter of 2016. Factoring out a positive special effect of EUR 39 million in the previous year in life and health reinsurance, a pleasing increase in Group net income was generated.
Both business groups – namely Property & Casualty and Life & Health reinsurance – continued to develop well in spite of the competitive environment. We consistently adhered to our selective underwriting policy in view of the protracted rate erosion in property and casualty reinsurance. Premium income consequently contracted slightly. Gross written premium in total business declined by a modest 3.1% as at 31 March 2016 to EUR 4.3 billion (EUR 4.4 billion). At constant exchange rates the decrease would have been 2.1%. This figure puts us within the range of our forecast for the full financial year. The level of retained premium, on the other hand, climbed slightly relative to the corresponding period of the previous year to reach 89.0% (88.6%). Reflecting this increase and also the change in unearned premium, net premium earned rose by 3.2% to EUR 3.5 billion (EUR 3.4 billion).
Bearing in mind the challenging climate, we are also highly satisfied with the development of our investments. Following the marked increase recorded in 2015, our portfolio of assets under own management remained relatively stable at EUR 39.1 billion (31 December 2015: EUR 39.3 billion). The primary factor here was the slight fall in the value of the US dollar against the euro.
Ordinary investment income amounted to EUR 268.5 million as at 31 March 2016. This figure is EUR 43.8 million lower than the level of the previous year (EUR 312.2 million), principally due to the elimination of the aforementioned special effect recognised in the previous year (roughly EUR 39 million) and the sustained low interest rate environment. Interest on funds withheld and contract deposits decreased slightly to EUR 83.5 million (EUR 99.0 million). Net realised gains were somewhat lower than in the previous year’s period at EUR 43.6 million (EUR 45.0 million). Our financial assets measured at fair value through profit or loss gave rise to net gains of EUR 10.5 million (loss of EUR 10.6 million) in the period under review. The impairments taken in the reporting period were once again only very minimal. Income from investments under own management totalled EUR 282.7 million.
The operating profit (EBIT) for the Hannover Re Group contracted slightly to EUR 406.7 million (EUR 429.0 million). Group net income retreated by 3.1% to EUR 271.2 million (EUR 279.7 million). Factoring out the aforementioned special effect recorded in life and health reinsurance in the first quarter of 2015, Group net income would have come in higher as at 31 March 2016. Earnings per share amounted to EUR 2.25 (EUR 2.32).
Shareholders’ equity climbed by 3.8% as at 31 March 2016 to reach EUR 8.4 billion (31 December 2015: EUR 8.1 billion). The annualised return on equity remained on an attractive level at 13.2% (31 December 2015: 14.7%). The book value per share stood at EUR 69.42 (EUR 66.90).
The capital adequacy ratio of the Hannover Re Group calculated in accordance with the requirements of Solvency II was published at the same time as the release of the results for the first quarter of 2016. Amounting to 221% as at 31 December 2015, it was exactly on a par with the previous quarter.