Font size


In view of Hannover Re’s strong positioning and the development of its business to date, we anticipate a good result for the full 2013 financial year. Based on constant exchange rates we continue to expect gross premium to increase by around 5%.

Against the backdrop of increased competitive pressure in some segments of non-life reinsurance, the relevance of our strategy of systematic cycle management combined with strict underwriting discipline remains undiminished. With this in mind, our underwriters only accept business that satisfies our required margins.

Treaties for some North American business as well as in the Australian and New Zealand markets traditionally come up for renewal on 1 July 2013. Although appreciable competitive pressure could be felt in the US property catastrophe sector, the margins are still adequate from a technical standpoint. The most marked rate reductions were recorded in natural catastrophe business in Florida. Overall, prices for US property catastrophe business retreated by 10% to 15% on average. Key factors here are the sustained good results posted by insurers as well as additional capacities made available by the non-traditional reinsurance market. Even though appreciable competitive pressure could be felt in US catastrophe business due to additional capacities from the catastrophe bond market, margins here are for the most part still adequate. However, given that Hannover Re has scaled back the proportion of US property catastrophe business in its non-life reinsurance portfolio to 8%, the implications of this softening market trend for the company are limited.

Similarly, some other areas of US property business proved more competitive than in this year’s previous renewal phases. Nevertheless, we are broadly satisfied with the rate development. Rate hikes in retail property business were sustained, putting this sector well on track to greater profitability. In commercial property business, too, we booked moderate rate increases. The trend in primary insurance shows, however, that it is still difficult to push through rate increases for larger industrial enterprises because experience shows that competition here is the most intense. Our premium volume in US property business grew slightly overall and has now reached a historic high.

Rates in casualty business improved on the primary side in all lines, a trend which has not been carried over to the same extent on the reinsurance side. Good results are prompting clients to run more business in their retention. Our premium volume in casualty business contracted slightly relative to the previous year.

We are thoroughly satisfied with what is known as our “signing”, i.e. the percentage of the signed line relative to the written line. As a financially strong reinsurer we are offered the opportunity to participate in virtually the entire spectrum of business, hence enabling us to write lines as we desired.

Altogether, around 17% of our total North American business was up for renewal on 1 July 2013; some 15% of the treaties in our portfolio are renegotiated in the second half of the year. Just how prices move will depend particularly on how heavy the losses are from this year’s hurricane season.

We are highly satisfied with the outcome of the treaty renewals as at 1 July 2013 in Australia and New Zealand. The model adjustment made by the catastrophe modelling firm AIR for allied perils that had previously not been adequately factored into the pricing was integrated into the underwriting process and resulted in price mark-ups. Faced with historically low interest rates in Australia, market players displayed comparatively strong underwriting discipline. In the aftermath of the heavy major losses recorded in 2010 and 2011, the price level last year was attractive. Now, however, prices have come under pressure from both new and also established market players, and also owing to the extensive absence of losses in the previous year. In natural catastrophe XL business rates declined by around 5% on a risk-adjusted basis, although they were still on a level that enabled us to generate technically adequate margins. Casualty lines came under stronger competitive pressure than property lines, prompting rate reductions in the single digits. We were able to obtain our targeted pricing requirements under most reinsurance programmes. In areas where this was not possible, we scaled back our shares accordingly. Despite adhering to a selective underwriting policy we were able to enlarge our premium volume.

We see further attractive prospects for our business in Australia and New Zealand on account of the fact that our ceding companies are actively purchasing additional natural catastrophe covers in order to satisfy the modified capital requirements imposed by regulators that came into force on 1 January 2013; these will increase again effective 1 January 2014.

For the full 2013 financial year we are looking to grow our gross premium in non-life reinsurance by 3% to 5% at constant exchange rates; the EBIT margin should be at least 10%.

In international life and health reinsurance we expect to see a sustained positive trend with promising business potential as the year progresses. In emerging markets, especially China and India, the insurance density will continue to rise – driven among other things by increasing risk awareness among the population as well as an expanding middle class. As a soughtafter business partner, we cater to the resulting growing need for reinsurance protection. It is our expectation that the brisk demand for reinsurance solutions designed to deliver solvency relief to our primary insurance clients and/or optimise their capital structure will also be sustained. What is more, supervisory requirements and regulatory changes will generally take on considerably greater importance going forward. Reinsurance solutions enable primary insurers to reduce the capital required for their assumed risks. In this regard we stand shoulder-to-shoulder with our clients as a long-term, reliable and expert partner and we offer the support needed in this complex business sector with individually tailored product solutions and know-how. Long-term relationships and mutual trust form the basis for successful cooperation with our clients that often spans many years. Even as we are cultivating new business relationships, we set great store by the long-term orientation of our partnership in order to optimally respond to a client’s needs.

Our growth forecast for organic gross premium in the current financial year remains unchanged in the range of 5% to 7% after adjustment for exchange rate effects. In terms of the EBIT margin, we expect to at least meet our targets of 2% in the areas of Financial Solutions and Longevity and 6% in Mortality and Morbidity business.

The expected positive cash flow that we generate from the technical account and our investments should – subject to stable exchange rates and yield levels – lead to further growth in our asset portfolio. In the area of fixed-income securities we continue to stress the high quality and diversification of our portfolio. We are targeting a return on investment of 3.4% for 2013.

In view of the good overall business conditions in non-life and life and health reinsurance and bearing in mind our strategic orientation, we anticipate Group net income in the order of EUR 800 million. This is subject to the premise that major losses do not significantly exceed the expected level of EUR 625 million for the full year and also assumes that there are no drastic downturns on capital markets. For 2013, as in recent years, we are again aiming for a dividend payout in the range of 35% to 40% of IFRS Group net income.


Your last visited pages:

More Information

Topic related links within the report:

Topic related links outside the report:

Topic Navigation

Build your own individual report according to the topics you are interested in. Choose the topics which are essential for you.

show all

My Interim Report

Your page has been added successfully. Please click on "My Interim Report" in the service section to see your selection.

Link für Popup