Hannover Re ekes out third-quarter profit despite catastrophesReprints
Hannover Re S.E. bucked the trend of large reinsurers and insurers reporting big losses for the third quarter of 2017 and reported a small profit for the catastrophe-hit period as it sold a portion of its equity portfolio.
The Hanover, Germany-based reinsurer on Wednesday reported a profit of €13.9 million ($16.1 million) for the 2017 period, a 95.4% decrease from the third quarter of 2016.
The fall in profit was “above all due to heavy loss expenditure from hurricane and earthquake events,” a Hannover Re statement said. Hurricanes Harvey, Irma and Maria hit the U.S. and Caribbean during August and September, and two earthquakes struck Mexico in September.
“Partly in response to the large loss expenditure but also prompted by tactical considerations, the portfolio of listed equities in an amount of €953.2 million was liquidated, thereby realizing extraordinary income of €223.3 million,” the statement said.
The catastrophe losses should prompt increases in reinsurance pricing, the reinsurer said. “Rates for catastrophe risks, in particular, are now likely to move higher and should generally prompt positive movements in other lines as well.”
The profit announcement contrasts with rival insurers and reinsurers, such as Swiss Re Ltd., Scor S.E. and XL Group Ltd., who all reported large losses for the quarter.
Still, Hannover Re’s catastrophe losses exceeded its loss expectations for the first nine months, the reinsurer said the statement.
“The total expenditure incurred by the company from large losses as (of) September 30, 2017, added up to €894.3 million. The large loss budget of €623 million envisaged for the first nine months was thus exceeded by around €270 million,” the statement said.
Hannover Re reported gross written premium of $4.49 billion for the third quarter, a 7.6% increase over the same period last year, and a property/casualty combined ratio of 118.3%, compared with 94.4% in the same period last year.
For the first nine months of 2017, Hannover Re reported a profit of €548.9 million, a 30.7% drop from the year-earlier period; gross written premium of €13.48 billion, an 8.3% increase; and a property/casualty combined ratio of 104.4%, compared with 95% in the year-earlier period.