Hannover Re advances due to favorable conditions

Hannover Re beat market expectations with a nearly 60 percent rise in first-quarter operating profit, helped by a drop in damage claims, and it affirmed its full-year earnings target.

Photo: Hannover Re advances due to favorable conditions

Hannover Re advances due to favorable conditions

The German reinsurer reported quarterly operating profit of 245.6 million euros ($380 million), above the average of 224 million euros expected by analysts.

"We expect to generate a return on equity of more than 15 percent and earnings per share of around 5 euro in the 2008 financial year," Hannover Re Chief Executive Wilhelm Zeller said in a statement on Tuesday.

Its underlying earnings per share were 4.71 euros in 2007, or 6.08 euros including a one-off tax gain.

The group's gross premium income fell by 5.5 percent in the first quarter mainly due to weakness in the dollar <EUR=>, which also weighed on investment results, the company said.

Zeller said he was satisfied with prices and conditions in Hannover Re's non-life reinsurance business despite "unmistakable softening tendencies" in the market.

Big damage claims were below average in the first quarter, including 26.3 million euros due to European winter storm Emma. In the year-earlier quarter, Hannover Re and other reinsurers had been hit hard by winter storm Kyrill.

Hannover Re said it expected to gain a licence to do reinsurance business in Brazil, Latin America's largest insurance market, in the coming weeks.

Rival Munich Re said this week it had received a licence for Brazil earlier this month.

Hannover Re has had few of the subprime-linked writedowns that have worried investors at banks and other insurers, and its shares have risen more than 13 percent so far this year, compared with a 7 percent decline among European insurance peers.

Hannover Re is one of the five largest reinsurance groups in the world. Its headquarters are in Hanover, Germany. It transacts all lines of non-life and life & health reinsurance. It maintains business relations with more than 3,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices in 19 countries.