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HANOVER, Germany (Reuters)—German reinsurer Hannover Re Group slashed its full-year net profit outlook after heavy claims from earthquakes in Japan and New Zealand took their toll in the first quarter.
The world's third biggest reinsurer said on Tuesday it aimed to earn about €500 million ($702 million) net profit this year, provided big loss claims in the rest of the year —including the North Atlantic hurricane season—were not higher than about €410 million ($575 million).
The group had previously targeted net profit of €650 million ($912 million) in 2011 but like major rivals Munich Reinsurance Co. and Swiss Reinsurance Co. got slammed by the Japan and New Zealand quakes as well as floods in Australia in the first three months of the year.
Hannover Re said claims from major losses totaled €572 million ($802 million) in the first quarter but the payouts were forcing the industry to raise insurance prices, which should help underpin results going forward.
"We've seen at least double-digit price increases in the April renewals round," Chief Financial Officer Roland Vogel told a conference call with journalists, referring to talks to renew contracts between reinsurers and their insurance company clients.
Group net premiums are now expected to rise by 7% to 8% this year, compared with 5% previously.
The company posted unexpected net and operating profit in the first quarter that was boosted by one-off factors such as reserve releases and tax refunds, which analysts said tarnished the quality of the earnings.
Quarterly net profit was €52.3 million ($73.4 million), whereas analysts on average had expected a loss of €11.3 million ($15.9 million), a Reuters poll showed.
"The beat of our and consensus expectations is mainly due to one-off items," DZ Bank analyst Thorsten Wenzel said in a research note.
HANOVER, Germany—Hannover Reinsurance Co. on Wednesday said the volume of premium it underwrote at the Jan. 1 treaty renewals increased by 2%, adding that the market generally was stable.