Hannover Re SE saw net income for the first nine months of 2018 jump to €725.3 million ($826.4 million), a 32.1% increase over the same period last year, and expects profits to top €1 billion for the year, the reinsurer said in its earnings statement Thursday.

Large third-quarter losses were in line with company expectations, according to Ulrich Wallin, chief executive officer of Hannover Re, commenting in the statement.

Gross written premiums rose 11.2% for the nine months to €15.0 billion, driven by “substantial expansion of structured reinsurance solutions in property and casualty reinsurance business,” the statement said.

Net premiums earned increased 10.7% to €12.8 billion.

Gross written premiums in property/casualty reinsurance were up 17.8% to €9.7 billion on rate increases and “substantial growth in structured reinsurance,” the statement said. 

“Treaty renewals in property and casualty reinsurance as at 1 June and 1 July 2018 saw sustained intense competition,” the statement said. “Rate increases – in some instances on a significant level – were obtained under programmes that had suffered losses in the previous year.”

Net premiums earned rose by 18.7% to €8.0 billion.

Nine-month net income for property/casualty reinsurance jumped 49.8% to €672.4 million.

The nine-month combined ratio improved to 96.8% from 104.4% a year ago “but was still slightly higher than the full-year target of 96% or better,” the statement said.

The third-quarter combined ratio improved to 98.7% from 118.3% a year ago.

The company did almost fully realize its third-quarter loss budget.

“After the very moderate large loss experience recorded in the first half-year, the third quarter was dominated by typhoons in Japan and hurricanes in the United States,” the statement said. “The quarterly budget of €279 million set aside for major losses was opposed by net expenditure on large losses of €271 million.”

For the nine months, however, “net expenditure on major losses…stands at €364.6 million,” compared with €894.3 million a year ago, “and is thus still well below the envisaged pro-rata budget of €630 million.”

Investment income rose 5.2% to €991.4 million on “higher ordinary income from fixed-income securities as well as stronger earnings from private equity and real estate,” the statement said.

Hannover Re was bullish on the results and the future.

"Hannover Re is confirming its targets for the current financial year" of more than €1 billion, Mr. Wallin said in the statement, adding, "The good results for the first half year and a successful third quarter with large losses in line with our expectations should enable us to absorb the aforementioned strains from our US mortality business."

For 2019, Hannover Re expects “group net income in the order of €1.1 billion.”

"In the coming year, the result from US mortality business should improve substantially," Mr. Wallin said in the statement. "We also anticipate a stable profit contribution from property and casualty reinsurance and therefore expect Group net income in the order of EUR 1.1 billion."

The reinsurer also expects gross premium growth for 2019 to be in the single-digit percentages, the statement said.