Business development
Business development
We are thoroughly satisfied with the development of business in the first half of 2014. Developments in both business groups were pleasing. The burden of major losses in non-life reinsurance was again below our expected level in the second quarter. Significantly improved results were achieved in life and health reinsurance.
Gross written premium in total business contracted by 2.2% as at 30 June 2014 to EUR 7.1 billion (EUR 7.2 billion). At constant exchange rates, growth of 0.4% would have been recorded. The first half-year thus puts us within our target corridor of generating stable to slightly higher gross premium for the full financial year. The level of retained premium retreated to 87.7% (90.0%). Net premium earned consequently fell more sharply by 5.7% to EUR 5.8 billion (EUR 6.2 billion). A decrease of 3.1% would have been booked at constant exchange rates.
Bearing in mind the continuing low interest rate environment, we are highly satisfied with the development of our investments. The portfolio of assets under own management stood at EUR 32.4 billion, a level slightly higher than at the end of the previous year (31 December 2013: EUR 31.9 billion). Stronger growth in assets under own management was curtailed by repayment of the bond that we had issued in 2004 in an amount of EUR 750 million as well as by the dividend distribution of roughly EUR 360 million. Had it not been for these special effects, the investment portfolio would have shown a more appreciable increase on the back of declining yields, especially in the Eurozone, and narrowing risk premiums on US corporate bonds. Due to the sustained low interest rate level, ordinary investment income excluding interest on deposits came in slightly lower than in the previous year’s period at EUR 490.1 million (EUR 503.6 million), but was still within the bounds of our expectations. Interest on deposits decreased slightly to EUR 174.9 million (EUR 187.5 million).
Net realised gains on investments as at 30 June 2014 were roughly on the level of the previous year’s period at EUR 88.5 million (EUR 84.5 million), while changes in the fair value of our assets recognised at fair value through profit or loss were positive at EUR 10.0 million (-EUR 37.5 million). The impairments taken in the period under review were once again only very minimal. Although conditions on the financial markets remained challenging, income from investments under own management surpassed the level of the comparable period (EUR 501.4 million) to reach a pleasing EUR 532.6 million against the backdrop of a stable average portfolio.
We consider the operating profit (EBIT) of EUR 683.7 million (EUR 693.0 million) as at 30 June 2014 to be satisfactory. Group net income improved by a further 4.9% on the already good figure for the previous year’s corresponding period to reach EUR 444.4 million (EUR 423.5 million). This puts us very well on track to achieve our full-year target. Earnings per share stood at EUR 3.69 (EUR 3.51).
Hannover Re’s equity base was further strengthened to EUR 6.4 billion as at 30 June 2014 (31 December 2013: EUR 5.9 billion). The book value per share amounted to EUR 53.17 (31 December 2013: EUR 48.83). The annualised return on equity for the first half-year was 14.5% (31 December 2013: 15.0%).