Hannover Re profits rise as reinsurer backs full-year guidance

(Sharecast News) - German reinsurer Hannover Re reported a 7% increase in profits over the first three quarters on Monday, supported by an improved underwriting performance and higher investment income, as it reaffirmed its full-year earnings guidance.

Group net income rose 6.9% to �2.1bn in the nine months to September, up from �2.0bn a year earlier, while operating profit increased 16.5% to �2.9bn.

Gross reinsurance revenues edged down to �19.5bn from �19.7bn, although they increased 1.1% on a constant-currency basis.

Hannover Re maintained its forecast for full-year net income of at least �2.7bn, assuming large loss expenditure does not significantly exceed its �2.3bn budget and there are no unexpected capital market disruptions, it said.

Chief executive Clemens Jungsthöfel said he was "thoroughly satisfied" with the company's results for the year to date.

"Our consistent focus on disciplined underwriting and our lean operating model enable us to grow profitably across all market phases, particularly in property and casualty reinsurance," he said.

In property and casualty reinsurance, operating profit jumped 20.2% to �2.2bn, despite gross revenues falling 4.9% to �13.2bn, as the combined ratio improved to 83.7% from 86.0%.

Large loss payments totalled �1.32bn, below the �1.79bn budgeted for the period.

Meanwhile, life and health reinsurance operating profit rose 3.5% to �668.2m, with gross revenues increasing to �6.3bn from �5.8bn.

Net investment income surged 40.4% to �1.9bn, supported by higher income from fixed-income securities and the effect of losses realised in the previous year. The annualised investment return reached 3.7%, ahead of the full-year target of around 3.5%.

Hannover Re also maintained its expectation for a property and casualty combined ratio below 87% and mid-single-digit revenue growth in traditional reinsurance business.

Hannover Re shares were down 1.6% at �288.40 by 1407 GMT.