First-quarter net profits surge at Hannover Re

Hannover Re, the world's third largest reinsurer, said that it might raise its profit target later this year, after earnings jumped by a fifth in the first quarter.

In the three months to the end of March, the German group's net earnings came in at €279.7m - or €2.32 per share - up from €233m in the same period a year earlier. Analysts had expected €237m, according to a Reuters poll.

Hannover Re had been targeting a net profit of €875m this year, and said on Wednesday that it was confident of hitting this target. Roland Vogel, chief financial officer, told reporters that the goal could be adjusted if the group's financial buffer to cover claims were not fully used.

Gross written premiums rose 21.4 per cent to €4.4bn, as the strength of the dollar boosted Hannover Re's fortunes. However, even stripping out the effect of currency moves, premiums rose 10.3 per cent.

The strongest performance came from Hannover Re's life and health reinsurance business, where net income almost tripled to €127.5m, thanks to one-off effects as well as measures to improve profitability. Premiums rose 17.6 per cent.

Premiums at Hannover Re's property and casualty division, which helps insurers cover the risks of catastrophic events, such as hurricanes and plane crashes, rose 23.8 per cent to €2.5bn.

The reinsurer said that the storm "Niklas", a winter storm in the US, and the Germanwings disaster, where a pilot allegedly crashed an aircraft on purpose, had cost it €62m - less than the group had expected. However, the division's net profit fell 13 per cent, because of less profitable underwriting and lower reserve releases.

Despite the low interest rates that have made it harder for reinsurance groups to earn money on their traditional investments, such as sovereign and corporate bonds, the group's net investment income rose 15.1 per cent to €415.7m.

This meant that Hannover Re's annualised return on investment stood at 3.5 per cent at the end of the quarter, ahead of its full-year target of 3 per cent. The reinsurer said that it stood by its full-year target and that it did not plan to adjust its asset allocation.

Shares were up 0.33 per cent at €89.96 in morning trading in Frankfurt.

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