| Key figures for property and casualty reinsurance | |||||||
|---|---|---|---|---|---|---|---|
| in EUR million | 2015 | 2014 | |||||
| 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 | 4,972.2 | 2,347.1 | +18.4% | 7,319.4 | +20.8% | 1,981.9 | 6,060.0 |
| Net premium earned | 3,894.2 | 2,071.2 | +19.4% | 5,965.4 | +16.9% | 1,734.2 | 5,104.5 |
| Underwriting result | 170.9 | 80.5 | +20.2% | 251.4 | +11.6% | 66.9 | 225.3 |
| Net investment income | 425.2 | 247.7 | -0.5% | 672.8 | +3.9% | 248.8 | 647.6 |
| Operating result (EBIT) | 583.7 | 352.6 | +8.2% | 936.3 | +10.6% | 325.8 | 846.8 |
| Group net income | 418.4 | 232.6 | +9.3% | 651.0 | +16.1% | 212.9 | 560.8 |
| Earnings per share in EUR | 3.47 | 1.93 | +9.3% | 5.40 | +16.1% | 1.77 | 4.65 |
| EBIT margin1 | 15.0% | 17.0% | 15.7% | 18.8% | 16.6% | ||
| Combined ratio2 | 95.4% | 95.8% | 95.5% | 95.8% | 95.3% | ||
| Retention | 89.6% | 87.3% | 88.8% | 86.6% | 89.6% | ||
| 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 fact that ceding companies are retaining 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.
This was also evident in the treaty renewals as at 1 June and 1 July 2015. Parts of the portfolio in North America, most agricultural risks and business from Latin America traditionally come up for renewal on these dates. Australian business is also renegotiated at this time of the year. We enjoyed considerable success here in view of the increased market share secured by our company. Yet in the other markets, too, we achieved satisfactory outcomes. In Latin America and the Caribbean, despite significant capacities in the natural catastrophe market for proportional and non-proportional covers, we were able to act on new business opportunities thanks to our extensive product range. In the highly competitive segment of agricultural risks we were similarly able to write attractive new business and expand our already good position. The rate reductions in North America were more modest than we had anticipated. This can be attributed to stronger demand driven by the improved state of the economy. Although we continued to practise our selective underwriting policy, our premium volume for North America increased as at 1 July 2015: we booked growth of altogether 8% for the portfolio renewed on 1 June/1 July 2015.
All in all, we are highly satisfied with the premium growth in property and casualty reinsurance as at 30 September 2015. Gross premium climbed sharply by 20.8% to EUR 7.3 billion (EUR 6.1 billion). At constant exchange rates an increase of 9.8% would have been booked. The level of retained premium contracted to 88.8% (89.6%). Net premium earned rose by 16.9% to EUR 6.0 billion (EUR 5.1 billion); adjusted for exchange rate effects, growth would have amounted to 6.7%.
Although net expenditure on major losses – at EUR 436.4 million – was well within the budgeted figure of EUR 519 million for the first nine months, it was substantially higher than in the corresponding period of the previous year (EUR 242.2 million). What is striking here is an elevated frequency of smaller natural disasters and man-made losses, especially in fire and marine insurance. The third quarter, in particular, brought a number of costly loss events. The largest single loss for our company was the devastating series of explosions in the port of the Chinese city of Tianjin in August. This resulted in net expenditure of EUR 95.9 million for Hannover Re. The severe earthquake in Chile in September gave rise to a loss of EUR 43.6 million. Even against this backdrop, the combined ratio was very favourable at 95.5% (95.3%) – it is also comfortably within our target of staying below 96% for the full year. The underwriting result for property and casualty reinsurance as at 30 September 2015 closed at a very pleasing EUR 251.4 million (EUR 225.3 million).
Income from assets under own management in property and casualty reinsurance climbed to EUR 656.5 million (EUR 632.1 million). The operating profit (EBIT) for property and casualty reinsurance reached EUR 936.3 million (EUR 846.8 million) as at 30 September 2015, an increase of 10.6% relative to the figure for the comparable period. The EBIT margin of 15.7% (16.6%) thus comfortably surpassed our minimum target of 10%. Group net income grew by 16.1% to EUR 651.0 million (EUR 560.8 million). Earnings per share rose to EUR 5.40 (EUR 4.65).
