Business development
Business development
The first quarter of 2014 passed off well for Hannover Re. The pleasing start to the year was driven especially by non-life reinsurance, which closed with a highly satisfactory result. As in the previous year, major loss expenditure was well below our expected level.
Gross written premium in total business contracted by 3.6% as at 31 March 2014 to EUR 3.6 billion (previous year: EUR 3.8 billion). At constant exchange rates, however, the decrease would have been just 0.7%. For the first quarter we are therefore somewhat below our target corridor of stable to slightly higher gross premium for the full financial year. The level of retained premium retreated compared to the corresponding quarter of the previous year to stand at 88.4% (89.9%). Net premium earned fell by 5.5% to EUR 2.9 billion (EUR 3.1 billion). A decrease of 2.6% would have been booked for net premium at constant exchange rates.
The development of our investments was thoroughly satisfactory. Although the portfolio of assets under own management contracted somewhat to EUR 31.7 billion (31 December 2013: EUR 31.9 billion), this reflects the repayment of the bond that we issued in 2004 in an amount of EUR 750 million. Had it not been for this effect, the assets under own management would have grown as a consequence of the continued clearly positive operating cash flow and rising valuation reserves due to interest rate reductions. Despite the sustained low interest rate level, ordinary investment income excluding interest on deposits was on a par with the previous year at EUR 241.4 million (EUR 246.1 million). Net realised gains on investments were higher than in the corresponding quarter of the previous year at EUR 54.1 million (EUR 34.8 million), while interest on deposits decreased slightly to EUR 88.6 million (EUR 93.8 million). Income from investments under own management totalled EUR 272.5 million (EUR 260.9 million) as at 31 March 2014; despite the reduced average investment portfolio, it therefore surpassed the previous year’s figure even though conditions on capital markets remained difficult. The resulting annualised return (excluding ModCo derivatives and inflation swaps) stood at 3.4% (3.2%).
The operating profit (EBIT) reached EUR 349.6 million as at 31 March 2014 and was thus on a similarly high level to the previous year (EUR 366.5 million). Group net income was once again highly satisfactory at EUR 233.0 million; the figure for the corresponding period was EUR 231.2 million. Earnings per share came in at EUR 1.93 (EUR 1.92).
The equity base showed a very pleasing increase to EUR 6.3 billion as at 31 March 2014 (31 December 2013: EUR 5.9 billion). The book value per share amounted to EUR 52.26 (31 December 2013: EUR 48.83). The annualised return on equity reached 15.3% (15.0%).