Hannover Re’s reinsurance business developed satisfactorily in the first half of 2016.

Both business groups – namely Property & Casualty and Life & Health reinsurance – largely lived up to our expectations despite the ongoing intensely competitive environment. In view of the sustained rate erosion in property and casualty reinsurance we consistently adhered to our margin-oriented underwriting policy with respect to inadequately priced treaties. Against this backdrop, gross premium income contracted slightly.

Gross written premium in total business declined by 3.5% as at 30 June 2016 to EUR 8.3 billion (EUR 8.6 billion). Significant growth had been booked in the comparable period, although this was driven in part by a strong US dollar. At constant exchange rates a decrease of 1.5% would have been recorded. For the first half of the year we are thus in line with our expectations for the full financial year. The level of retained premium rose to 89.8% (88.3%). Net premium earned climbed slightly by 2.1% to EUR 7.2 billion (EUR 7.0 billion). At constant exchange rates growth would have come in at 4.3%.

In view of the volatile environment we are thoroughly satisfied with the development of our investments. Building on the already appreciable rise in 2015, our portfolio of assets under own management increased again to reach EUR 39.8 billion (31 December 2015: EUR 39.3 billion). Factoring out a positive special effect recorded in life and health reinsurance in the previous year, ordinary investment income would have remained stable at EUR 568.0 million (EUR 598.7 million). This performance is also gratifying because we successfully offset the inhibiting effect of the protracted low interest rate environment on potential returns through higher income from dividends, private equity investments and real estate.

Interest on funds withheld and contract deposits retreated to EUR 175.6 million (EUR 197.4 million). Net realised gains rose to EUR 79.5 million (EUR 66.6 million). Our financial assets measured at fair value through profit or loss gave rise to net gains of EUR 20.5 million (-EUR 1.6 million) in the period under review. In addition to scheduled depreciation on real estate, somewhat higher impairments were taken due to appreciable price losses on equity markets – especially following the Brexit referendum. They amounted to EUR 48.1 million (EUR 14.7 million) in the period under review. Income from investments under own management totalled EUR 569.2 million (EUR 601.3 million) as at 30 June 2016. We are highly satisfied with this figure in light of the low interest rate level, increased impairment losses and the elimination of the special effect.

Despite the absence of the aforementioned special effect in life and health reinsurance, the operating profit (EBIT) for the first half-year 2016 was also positive at EUR 745.2 million (EUR 789.4 million). Group net income contracted by 8.6% to EUR 486.1 million (EUR 531.9 million). We are nevertheless satisfied with this result since we remain on course to achieve our full-year target. Earnings per share stood at EUR 4.03 (EUR 4.41).

Hannover Re’s equity base remained robust as at 30 June 2016 on a level of EUR 8.4 billion (31 December 2015: EUR 8.1 billion) in spite of the dividend payment of EUR 572.8 million. The book value per share amounted to EUR 69.83 (31 December 2015: EUR 66.90). The annualised return on equity decreased to 11.8% (31 December 2015: 14.7%) owing to the further rise in shareholders' equity in the first half of the year.



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