Life and health reinsurance
Life and health reinsurance
| Key figures for life and health reinsurance | ||||||||
|---|---|---|---|---|---|---|---|---|
| in EUR million | 2014 | 20131 | ||||||
| 1.1. – 30.6. | 1.7. – 30.9. | +/- previous year | 1.1. – 30.9. | +/- previous year | 1.7. – 30.9. | 1.1. – 30.9. | ||
| Gross written premium | 2,986.9 | 1,657.7 | +14.2 % | 4,644.6 | +1.4 % | 1,451.9 | 4,581.6 | |
| Net premium earned | 2,469.0 | 1,392.4 | +12.6 % | 3,861.4 | -4.0 % | 1,236.3 | 4,023.7 | |
| Investment income | 299.5 | 162.2 | +12.0 % | 461.8 | +0.3 % | 144.9 | 460.5 | |
| Operating result (EBIT) | 154.8 | 79.1 | +134.2 % | 233.9 | +39.6 % | 33.8 | 167.6 | |
| Net income after tax | 115.4 | 50.8 | -4.9 % | 166.2 | +8.6 % | 53.4 | 153.0 | |
| Earnings per share in EUR | 0.96 | 0.42 | -4.9 % | 1.38 | +8.6 % | 0.44 | 1.27 | |
| Retention | 83.1 % | 84.7 % | 83.7 % | 86.1 % | 88.5 % | |||
| EBIT margin2 | 6.3 % | 5.7 % | 6.1 % | 2.7 % | 4.2 % | |||
| 1 Adjusted pursuant to IAS 8 (cf. Section 2 of the notes) 2 Operating result (EBIT)/net premium earned | ||||||||
Our life and health reinsurance portfolio developed in line with our expectations in the course of the third quarter. In Germany the continued very low level of interest rates has served to ratchet up the pressure on life insurers to find solutions for the long term that will enable them to meet their benefit obligations under existing policies despite such low rates. The adoption of new – and in most instances also more rigorous – regulatory requirements around the world is another dominant topic on the international life insurance market.
In Australia the result for the third quarter just ended improved on the comparable period, despite in some cases slightly negative effects from group business. US business was shaped by opposing developments: while the experience in seniors markets did not entirely live up to our expectations, the development of new business as a whole was exceptionally pleasing. Overall, our expectations were surpassed, even though somewhat reduced profitability was also observed in mortality business in the third quarter.
In the period under review we successfully completed the first regular premium annuity treaty in France. Bearing in mind that the evolution of the longevity market in Europe outside the United Kingdom is still in an early phase, it is all the more gratifying that we were able to reinsure an annuity portfolio with a leading French life insurer covering more than 22,000 insureds with associated pension liabilities representing almost EUR 750 million. Under the arrangement we assume solely the biometric risk and receive in return a premium of around EUR 47.5 million for 2014.
Total gross premium in life and health reinsurance amounted to EUR 4.6 billion (EUR 4.6 billion) as at 30 September 2014. This is equivalent to growth of 1.4% relative to the previous year’s period; the increase would have been 2.6% on a currency-adjusted basis. The retention retreated to 83.7% after 88.5% in the comparable period. Net premium earned consequently contracted by 4.0% to EUR 3.9 billion (EUR 4.0 billion); adjusted for currency translation effects, the decrease would have been 2.9%.
Investment income including interest on deposits was on a par with the previous year at EUR 461.8 million (EUR 460.5 million). The performance of the embedded ModCo derivatives deteriorated from EUR 5.2 million to -EUR 1.6 million.
The operating result (EBIT) in life and health reinsurance was boosted by steps taken to improve profitability, with EBIT rising sharply by 39.6% as at 30 September 2014 to EUR 233.9 million (EUR 167.6 million). In the areas of Financial Solutions and Longevity this is reflected in an EBIT margin of 5.6% (4.6%). The target mark of 2% was thus surpassed.
The EBIT margin of 6.3% (2.8%) for our Mortality and Morbidity business beat the 6% target. Group net income rose by 8.6% to EUR 166.2 million (EUR 153.0 million). This increase was significantly less than the EBIT growth on account of lower tax expenditure in the comparable period. Earnings per share amounted to EUR 1.38 (EUR 1.27).