Both in property & casualty and in life & health reinsurance Hannover Re can look back on a successful first half-year. The investments, too, continued to deliver a pleasing performance despite the unchanged challenging interest rate environment. The return on equity increased significantly, while at the same time considerable growth was recorded in the underlying equity.
In property and casualty reinsurance we are satisfied with the treaty renewals in the course of the year to date, putting us in a more optimistic frame of mind for the future. We boosted our gross premium volume by an appreciable 18.4% adjusted for exchange rate effects and at the same time maintained the healthy contribution to Group net income on a virtually stable level – despite a higher burden of large losses and the necessary increases in reserves associated with past loss events.
In life and health reinsurance the most notable positive effects on the first half-year were extraordinary income booked from the required restructuring of our shareholding in Viridium and pleasing demand coming out of Asia. While the premium income – adjusted for exchange rate effects – grew by 7.4% to EUR 3.8 billion (previous year: EUR 3.5 billion), the contribution to Group net income improved by 75.5% to EUR 257.7 million (EUR 146.8 million).
Against the backdrop of sometimes sharp declines in interest rates, investment income showed a pleasing development, above all because we nevertheless succeeded in appreciably boosting the earnings from fixed-income securities. Income from our assets under own management rose by a substantial 22.5% to EUR 771.8 million (EUR 629.8 million). Even without the aforementioned one-off effect from our participation in Viridium Group, we thus increased our investment income relative to the previous year’s corresponding period. The annualised average return amounted to 3.5% as at the end of the first half-year.
On a Group level gross written premium grew by 17.1% as at 30 June 2019 to EUR 11.7 billion (EUR 10.0 billion). At constant exchange rates the increase would have been 14.5%. The first six months of 2019 thus put us well ahead of our guidance for the full year, in which we anticipate currency-adjusted growth in the single-digit percentage range. Our retention decreased to 90.6% (91.3%). Net premium earned climbed 12.1% to EUR 9.4 billion (EUR 8.3 billion). The growth in net premium earned would have been 10.0% at constant exchange rates.
The Group’s operating profit (EBIT) for the first half-year 2019 rose by 3.8% to EUR 942.1 million (EUR 907.3 million), while Group net income surged by 19.3% to EUR 662.5 million (EUR 555.3 million). Earnings per share thus stood at EUR 5.49 (EUR 4.60).
Hannover Re’s equity base remained robust as at 30 June
2019 on a level of EUR 9.7 billion (31 December 2018:
EUR 8.8 billion) despite the dividend payment of EUR 633.1 million. The book value per share amounted to EUR 80.70
(31 December 2018: EUR 72.78). The annualised return on equity stood at 14.3% as at 30 June 2019 (31 December 2018: 12.2%) and continues to exceed our minimum target of 9.4%. We define this target as 900 basis points above the five-year average return on ten-year German government bonds.