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Hannover Re raises 2017 profit guidance after January renewals

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(Reuters) — German reinsurer Hannover Re raised its 2017 net profit guidance to more than €1 billion ($1.1 billion) from more than €950 million ($1.07 billion) on Thursday after what it said was a strong round of treaty renewals at the start of the year.

The world’s third-largest reinsurer declared its satisfaction with the outcome of talks to renew contracts with its insurance company clients in January, saying that premium volume had grown by about 7%, including its structured reinsurance business, despite continued price pressure.

The company added that it now expects gross premiums to rise by a low single-digit percentage this year.

About two-thirds of Hannover Re’s property/casualty reinsurance premiums were up for renewal at the start of the year, with the renewed volume falling by 1.4%.

Prices in the reinsurance market have been falling for several years, driven down by a lack of demand from insurance companies as well as oversupply fuelled by new entrants to the market and an accumulation of surplus capital because of unusually low claims from natural catastrophes.

Among the hardest hit business areas were aviation reinsurance, where prices fell by as much as 10%, as well as marine and energy.

Overall supply continues to exceed demand and Hannover Re said that higher claims in 2016 had a favorable effect on prices on a local level only.