| Key figures for property and casualty reinsurance | |||||||
|---|---|---|---|---|---|---|---|
| in EUR million | 2015 | 2014 | |||||
| 1.1. – 31.3. |
1.4. – 30.6. | +/– previous year | 1.1. – 30.6. | +/– previous year |
1.4. – 30.6. | 1.1. – 30.6. |
|
| Gross written premium | 2,617.1 | 2,355.1 | +19.5% | 4,972.2 | +21.9% | 1,970.4 | 4,078.1 |
| Net premium earned | 1,882.3 | 2,011.9 | +15.7% | 3,894.2 | +15.5% | 1,738.6 | 3,370.2 |
| Underwriting result | 76.6 | 94.3 | +33.3% | 170.9 | +7.9% | 70.7 | 158.3 |
| Net investment income | 195.1 | 230.1 | +18.6% | 425.2 | +6.6% | 194.0 | 398.8 |
| Operating result (EBIT) | 255.2 | 328.5 | +36.6% | 583.7 | +12.0% | 240.5 | 521.0 |
| Group net income | 171.4 | 247.0 | +64.6% | 418.4 | +20.3% | 150.1 | 347.9 |
| Earnings per share in EUR | 1.42 | 2.05 | +64.6% | 3.47 | +20.3% | 1.24 | 2.89 |
| EBIT margin1 | 13.6% | 16.3% | 15.0% | 13.8% | 15.5% | ||
| Combined ratio2 | 95.7% | 95.0% | 95.4% | 95.6% | 95.0% | ||
| Retention | 88.9% | 90.3% | 89.6% | 91.1% | 91.1% | ||
| 1 Operating result (EBIT) / net premium earned 2 Including funds withheld |
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Property and casualty reinsurance continues to be fiercely competitive, with the supply of reinsurance coverage still outstripping demand. The most important drivers here are the absence of market-changing large losses, the tendency among ceding companies to retain more risks for own account thanks to their healthy capital resources and the availability of additional capacities from the ILS market, especially in US natural catastrophe business. Taken together, these factors are putting prices and conditions under sustained pressure. A trend towards some easing of the premium erosion can nevertheless be observed in certain lines and markets.
The outcome of the round of treaty renewals as at 1 April 2015 proved satisfactory for Hannover Re. Business in Japan is traditionally renegotiated on this date, along with further treaty renewals – albeit smaller in volume – in the markets of Australia, New Zealand and South Korea. Although the pressure on rates for natural catastrophe covers in Japan continued to grow as expected, we nevertheless obtained prices that were broadly commensurate with the risks. Price declines in personal accident insurance and in the area of per risk property covers were very minimal. In casualty business, on the other hand, rates again moved slightly higher. By improving our position with specific core customers we were even able to book modest growth in the total gross premium volume of our Japanese portfolio in the original currency. We successfully maintained our market position thanks to our good, long-term relationships with our ceding companies.
In Korea, where just a small part of our business was up for renewal, market conditions remain challenging – prompting us to further consolidate our portfolio. In India the treaty renewals proved to be more difficult than anticipated. Prices for traditional property and casualty reinsurance covers fell while at the same time exposures increased. With this in mind, we scaled back our involvement in this market.
A small portion of US property catastrophe business was also up for renewal as at 1 April. We saw continued premium erosion here of between 5% and 10% as expected, although no further softening in conditions was observed. Our premium volume rose slightly owing to the fact that we wrote more business with our main clients.
All in all, we are highly satisfied with the premium growth in property and casualty reinsurance as at 30 June 2015: gross premium climbed by 21.9% to EUR 5.0 billion (EUR 4.1 billion). At constant exchange rates an increase of 10.0% would have been booked. The level of retained premium contracted year-on-year to 89.6% (91.1%). Net premium earned rose by 15.5% to EUR 3.9 billion (EUR 3.4 billion); adjusted for exchange rate effects, growth would have amounted to 4.4%.
Expenditure on major losses in the first half of 2015 was below the expected level of EUR 294 million at EUR 197.4 million (EUR 104.7 million). The most costly individual losses for Hannover Re were the storm “Niklas” at EUR 35.4 million and the explosion on an oil platform in the Gulf of Mexico, which resulted in expenditure of EUR 32.9 million.
The underwriting result for total property and casualty reinsurance improved by 7.9% to EUR 170.9 million (EUR 158.3 million) and thus closed on a very good level. The combined ratio of 95.4% (95.0%) was positive and hence in line with our goal of staying below 96% for the full year.
Income from assets under own management in property and casualty reinsurance grew by a pleasing 6.6% to EUR 415.0 million (EUR 389.4 million). Significantly higher ordinary income was the key driver here.
The operating profit (EBIT) in property and casualty reinsurance increased by 12.0% to EUR 583.7 million (EUR 521.0 million) as at 30 June 2015. The EBIT margin of 15.0% (15.5%) comfortably surpassed the minimum target of 10%. Group net income surged by a pleasing 20.3% to EUR 418.4 million (EUR 347.9 million). Earnings per share stood at EUR 3.47 (EUR 2.89).
