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Risk report
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- Internal risk assessment
- Underwriting risks in property and casualty reinsurance
- Underwriting risks in life and health reinsurance
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Business development
The first half-year passed off highly satisfactorily for Hannover Re. Despite the ongoing intensely competitive climate, we are broadly satisfied with the development of our two business groups, namely Property & Casualty and Life & Health reinsurance. Investment income is thoroughly pleasing in spite of the low interest rate environment. Bearing in mind the challenging business landscape, we are highly satisfied with our Group net income of EUR 535.0 million.
Gross written premium in total business climbed by 8.6% as at 30 June 2017 to EUR 9.0 billion (EUR 8.3 billion). At constant exchange rates the increase would have amounted to 8.7%. For the first half of 2017 we are thus very comfortably on pace with our full-year guidance. The level of retained premium rose slightly to 90.3% (89.8%). Net premium earned increased by 5.0% to EUR 7.5 billion (EUR 7.2 billion). Growth of 4.9% would have been booked at constant exchange rates.
As mentioned, the performance of our investments in the first six months was unreservedly positive. While the portfolio of assets under own management contracted in this period to EUR 40.4 billion (31 December 2016: EUR 41.8 billion) on account of exchange rate effects and the dividend payout, ordinary investment income nevertheless showed a pleasing increase of 11.8% year-on-year to reach EUR 635.1 million (EUR 568.0 million). This reflects, in particular, income from private equity and real estate that was rather high for a first half-year.
Interest on funds withheld and contract deposits fell to EUR 123.4 million (EUR 175.6 million). Net realised gains were on the level of the previous year’s period at EUR 83.4 million (EUR 79.5 million). Our financial assets measured at fair value through profit or loss gave rise to net gains of EUR 10.6 million (EUR 20.5 million) in the period under review.
The impairments taken in the reporting period were once again only minimal. Income from investments under own management increased by 15.3% to EUR 656.0 million (EUR 569.2 million) as at 30 June 2017. We were thus able to more than make up for the challenging interest rate environment, primarily through increased income from alternative asset classes.
The operating profit (EBIT) for the first half-year 2017 grew by 7.0% to EUR 799.4 million (EUR 747.2 million). Group net income increased by 9.6% to EUR 535.0 million (EUR 488.0 million). Earnings per share amounted to EUR 4.44 (EUR 4.05).
Hannover Re’s equity base remained robust as at 30 June 2017 on a level of EUR 8.6 billion despite the dividend payment of EUR 603.0 million and exchange rate effects (31 December 2016: EUR 9.0 billion). The book value per share stood at EUR 71.00 (31 December 2016: EUR 74.61). The annualised return on equity amounted to 12.2% as at 30 June 2017 (31 December 2016: 13.7%).