Hannover Re ups 2017 profit, sets 2018 target

Hannover Re has raised its group net income estimates for 2017 to €950 million from €800 million and set a new target for the current financial year.

The new 2017 profit estimate still falls short of the initially targeted €1 billion.

The reinsurer incurred €765 million in large losses in the third quarter driven by hurricane Irma, Harvey and Maria, as well as two earthquakes in Mexico, chief financial officer Roland Vogel said in November.

Commenting on the 2017 performance, Hannover Re CEO Ulrich Wallin said: "Even though this result falls short of the previous year's figure, it can nevertheless be considered satisfactory if we bear in mind that 2017 was dominated by natural catastrophe events which caused insured losses substantially in excess of $100 billion.”

The 2017 increase in gross premium is in the order of 9 percent and in line with expectations. The return on investment is coming in higher than expected. While the company had targeted a figure in excess of 3.0 percent it now expects 3.8 percent. The dividend for 2017 should be on a par with the previous year at €5.00 per share.

The company will publish its annual financial statement on March 13, 2018.

For 2018, Hannover Re is targeting a group net income in excess of €1 billion. The company expects a return on investment at around 2.7 percent and currency-adjusted growth in gross premium in the single-digit percentage range for 2018.

Hannover Re is very well placed to act on opportunities in the course of the current year, according to the Feb. 7 statement. Further price increases should be attainable in subsequent rounds of renewals within the year in view of the elevated claims activity in 2017.

The 2018 targets remain subject to the proviso that large loss expenditure does not exceed the budgeted level of €825 million and that there are no unforeseen distortions on capital markets. Hannover Re envisages a payout ratio for the dividend in the range of 35 percent to 40 percent of its IFRS group net income.

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