DGAP-News: Hannover Rück SE
/ Key word(s): Annual Report
Corporate news Hannover Re beats earnings guidance for 2020 and raises ordinary dividend - Gross premium grows by 12.0% adjusted for exchange rate effects - Major loss expenditure higher than anticipated for fourth year in succession - Group net income amounts to EUR 883 million (previous year: EUR 1.3 billion) - Return on equity reaches 8.2% (13.3%) - Proposed ordinary dividend of EUR 4.50 (EUR 4.00) per share - Payment of a special dividend omitted in light of currently available market opportunities - Guidance for 2021 confirmed - Group net income in the range of EUR 1.15 billion to EUR 1.25 billion
"The coronavirus has had an enormous impact on all our lives and I would like to express our sympathies to those who have endured personal suffering as a result of the virus," Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re, said. "We are playing our part in overcoming the consequences of this pandemic and are contributing our expertise to the development of coverage concepts for future extreme events. As one of the largest and most financially robust reinsurers, we continue to be a reliable partner at our customers' side. In the pandemic year 2020 Hannover Re achieved a very good result, thereby again demonstrating its superb risk-carrying capacity and its broad diversification. We are benefiting particularly strongly from the sustained improvement in prices and conditions on our market. With a view to maximising the available business opportunities, we have decided to omit payment of a special dividend for 2020 and instead to slightly raise the ordinary dividend." The operating profit (EBIT) contracted by 34.5% to EUR 1,214.1 million (EUR 1,853.2 million). Group net income was down 31.2% on the previous year at EUR 883.1 million (EUR 1,284.2 million). Hannover Re thus outperformed the Group profit guidance of more than EUR 800 million issued in November. Earnings per share amounted to EUR 7.32 (EUR 10.65). The capital adequacy ratio, which measures Hannover Re's risk-carrying capacity, stood at 235.2% as at 31 December 2020. This figure is comfortably above the limit of 180% and the internal threshold of 200%. Property and casualty reinsurance: Prices and conditions for reinsurance protection steadily improved in the various rounds of treaty renewals during 2020. The gross premium volume in property and casualty reinsurance grew by 13.3% to EUR 16.7 billion (EUR 14.8 billion). At constant exchange rates the increase would have reached 15.8%. Net premium earned climbed by 11.0% to EUR 14.2 billion (EUR 12.8 billion). Growth would have been 13.5% at unchanged exchange rates. Large losses in 2020 surpassed expectations for the fourth year in succession. Purely for Covid-19-related losses, Hannover Re paid out or reserved an amount of EUR 950.1 million for its customers in property and casualty reinsurance. Of this, EUR 330.9 million was attributable to reported claims and EUR 619.2 million to claims that have been incurred but not yet reported (IBNR). "We substantially reduced the risk of additional reserving in property and casualty reinsurance by further strengthening our IBNR reserves for Covid-19-related losses at the end of the year," Henchoz said. "Provided large losses remain within our expectations, this should be reflected in sharply improved profitability in 2021." Along with the pandemic-related losses, the most severe major claims for the year included a storm that swept across eastern parts of the United States at a net cost of EUR 111.0 million, Hurricane Laura with expenditure of EUR 87.5 million and the explosion at the Port of Beirut in an amount of EUR 86.6 million. Total net major loss expenditure in 2020 came to EUR 1,594.9 million (EUR 956.1 million) and was thus substantially above the large loss budget of EUR 975 million for the full year. The underwriting result including interest on funds withheld and contract deposits fell to EUR -223.5 million (EUR 235.4 million). The combined ratio stood at 101.6% (98.2%). The most notable factor here was the aforementioned expenditures incurred in connection with Covid-19. The operating profit (EBIT) decreased by 35.3% to EUR 831.3 million (EUR 1,285.8 million). In addition to the pandemic, the further exacerbation of the low interest rate environment was another of the challenges facing life and health reinsurance. Against this backdrop, demand for financial solutions continues to surge. In this segment Hannover Re offers its customers individual reinsurance solutions designed to improve their solvency, liquidity and capital position. The gross premium volume in life and health reinsurance increased by 2.6% year-on-year to EUR 8.0 billion (EUR 7.8 billion). Growth would have reached 4.7% at constant exchange rates. Net premium earned rose by 3.2% to EUR 7.2 billion (EUR 6.9 billion); the growth would have been 5.3% adjusted for exchange rate effects. The operating result (EBIT) declined to EUR 384.8 million (EUR 569.9 million). Investments: Hannover Re's portfolio of assets under own management grew by 3.3% to EUR 49.2 billion (EUR 47.6 billion). Ordinary investment income excluding interest on funds withheld and contract deposits proved pleasingly robust at EUR 1,243.1 million (EUR 1,380.8 million) and hence came in within the bounds of expectations. Income from investments under own management fell short of the previous year at EUR 1,466.4 million (EUR 1,550.6 million). The resulting net return was 3.0%, beating the target return of around 2.7%. Net investment income including interest on funds withheld and contract deposits contracted by 3.9% to EUR 1,688.1 million (EUR 1,757.1 million). Guidance 2021: "Even though the pandemic remains an element of uncertainty, I am confident that we shall achieve all our targets for the 2021 financial year and return to the very good level of profitability recorded in 2019," Henchoz said. "This will be supported by the sustained improvement in prices and conditions seen in property and casualty reinsurance." For 2021 Hannover Re expects to grow its gross premium in total business by around 5% based on constant exchange rates. Group net income should be in the range of EUR 1.15 billion to EUR 1.25 billion. This is conditional on major loss expenditure not significantly exceeding the budgeted level of EUR 1.1 billion and assumes that there are no exceptional distortions on capital markets. The asset portfolios should continue to grow - assuming constant exchange and interest rates - in view of the anticipated positive cash flow. The return on investment should reach a level of around 2.4%. In terms of the ordinary dividend for the current financial year, Hannover Re envisages an unchanged payout ratio in the range of 35% to 45% of its IFRS Group net income. The ordinary dividend will be supplemented by payment of a special dividend subject to a consistently comfortable level of capitalisation and Group net income within the expected bounds. Please note the disclaimer: Contact
Key figures of the Hannover Re Group (IFRS basis)
Key figures of the Hannover Re Group (IFRS basis)
11.03.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
Language: | English |
Company: | Hannover Rück SE |
Karl-Wiechert-Allee 50 | |
30625 Hannover | |
Germany | |
Phone: | +49-(0)511-5604-1500 |
Fax: | +49-(0)511-5604-1648 |
Internet: | www.hannover-re.com |
ISIN: | DE0008402215 |
WKN: | 840 221 |
Indices: | MDAX |
Listed: | Regulated Market in Frankfurt (Prime Standard), Hanover; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange; Luxembourg Stock Exchange |
EQS News ID: | 1174662 |
End of News | DGAP News Service |
|
1174662 11.03.2021