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Hannover Re's profit improves on investments, life/health reinsurance

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Hannover Re S.E. reported net income of €211.5 million ($284.0 million) for the second quarter of 2014, up 10% from the comparable period last year despite falling reinsurance rates.

Hannover Re said the second-quarter result was boosted, in part, by investment income of €346.4 million, ($465.2 million) which improved 3.6% from the second quarter of 2013. The reinsurer said its profit also was boosted by increased income from its life and health reinsurance arm, which posted a profit of €72.0 million, up 193.5% compared with the second quarter of 2013.

The Hanover, Germany-based reinsurer said Wednesday that in the second quarter of 2014, its gross written premium was €3.44 billion, ($4.62 billion) down 0.9% from the second quarter of 2013.

For the first six months of 2014, Hannover Re posted net income of €444.4 million, ($596.8 million) up 4.9% from the first half of 2013.

Gross written premium for the first half of 2014 was €7.06 billion, ($9.48 billion) down 2.3% compared with the same period last year.

Hannover Re said investment income for the first half of 2014 was €707.5 million,($950.2 million) up 2.7% from the first six months of 2013.

For non-life reinsurance, Hannover Re’s combined ratio for the first six months of 2014 was 95.0%, compared with 94.4% for the comparable period in 2013.

Ulrich Wallin, CEO of Hannover RE, said in a conference call that the combined ratio had been affected, in part, by the addition of €33 million ($44.3 million) to the company’s reserves for losses associated with the removal of the wreck of the Costa Concordia which sank in 2012.

Mr. Wallin said that at the June and July reinsurance treaty renewals, soft market conditions continued in many areas with double-digit rate reductions in some cases.

Some areas will see rate increases, he noted, notably aviation war risk coverage in the wake of several significant losses.

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