Life and health reinsurance
| Key figures for life and health reinsurance | |||||||
|---|---|---|---|---|---|---|---|
| in EUR million | 2017 | 2016 | |||||
| 1.1.–30.6. | 1.7.–30.9. | +/– previous year |
1.1.–30.9. | +/– previous year |
1.7.–30.9. | 1.1.–30.9. | |
| Gross written premium | 3,570.1 | 1,714.1 | +2.2% | 5,284.2 | -0.9% | 1,677.1 | 5,333.5 |
| Net premium earned | 3,209.9 | 1,578.0 | +4.3% | 4,787.9 | -1.1% | 1,513.0 | 4,841.1 |
| Investment income | 301.7 | 131.0 | -24.1% | 432.7 | -12.5% | 172.5 | 494.7 |
| Operating result (EBIT) | 165.2 | 40.7 | -63.4% | 205.9 | -29.1% | 111.3 | 290.4 |
| Net income after tax | 114.2 | 21.5 | -72.5% | 135.7 | -35.0% | 78.3 | 208.9 |
| Earnings per share in EUR | 0.95 | 0.18 | -72.5% | 1.13 | -35.0% | 0.65 | 1.73 |
| Retention | 91.6% | 91.2% | 91.5% | 90.8% | 91.5% | ||
| EBIT margin1 | 5.1% | 2.6% | 4.3% | 7.4% | 6.0% | ||
| 1 Operating result (EBIT) / net premium earned | |||||||
Compared with the first two quarters, the picture in life and health reinsurance was a mixed one in the third quarter. Positive and negative effects influenced the development of business and hence also the result.
In many European markets our business fared as expected. In Germany very strong interest was evident in reinsurance solutions designed to optimise an insurer’s capital position in the context of Solvency II. Drawing on the international expertise of our network, we engage in an intensive dialogue with our clients in order to provide individually tailored solutions that offer solvency relief.
We are also satisfied with the development of business in Latin American markets, including Mexico. Along with expanding our existing portfolio, we were able to write promising new business. Most notably, the opening up of the reinsurance market in Argentina effective 1 July 2017 already prompted appreciable movement in the reporting period just ended. This market liberalisation now enables local insurers to cede up to 50% of their business to admitted reinsurers. In the period until 2019 this share is to be progressively increased to up to 75%.
Our financial solutions business in the United States continued to develop favourably and delivered another good profit contribution. We are, however, less satisfied with the development of our US mortality portfolio, where most notably the block of business assumed in 2009 still showed a higher-than-expected mortality. An additional non-recurring negative effect of around USD 50 million was attributable to the recapture of a reinsurance treaty, which took place by mutual agreement with our client as part of our portfolio management activities. While this resulted in a charge to our business result for the quarter, it enables us to avoid higher losses over the long term.
The gross premium volume booked for our life and health reinsurance business as at 30 September 2017 amounted to EUR 5.3 billion; this figure is on the level of the previous year’s period (EUR 5.3 billion). Adjusted for exchange rate effects, modest growth of 0.7% would have been recorded. Net premium earned totalled EUR 4.8 billion (EUR 4.8 billion). At constant exchange rates the increase would have been 0.3%. The retention stood at 91.5% and was thus on a par with the previous year (91.5%).
The investment income for the reporting period just ended came in at EUR 432.7 million (EUR 494.7 million). In view of the unchanged low level of interest rates we had expected this decline. Of the total amount, income from assets under own management accounted for EUR 266.0 million (EUR 263.4 million). Income from securities deposited with our ceding companies therefore totalled EUR 166.7 million (EUR 231.2 million).
Based on these developments, life and health reinsurance generated an operating result (EBIT) of EUR 205.9 million (EUR 290.4 million). The EBIT margins for the individual reporting categories are as follows: mortality and morbidity business fell short of the 6% target at 0.3%. On the other hand, the target of 2% in financial solutions business was comfortably exceeded with an EBIT margin of 27.4%. In the longevity reporting category the targeted margin of 2% was only barely missed with an EBIT margin of 1.9%. Altogether, Group net income amounted to EUR 135.7 million (EUR 208.9 million). Earnings per share stood at EUR 1.13 (EUR 1.73).