Business development
Even though the insurance industry continues to face numerous challenges in the current financial year, the situation in international property and casualty reinsurance has nevertheless improved overall. After four years of declining reinsurance rates, the large losses of the past year ushered in the first broad-ranging price increases or at least stable prices. Yet the supply of reinsurance capacity still exceeds demand – both in traditional reinsurance and through alternative sources of capital.
All in all, we are satisfied with our total business for the first quarter of 2018. Both business groups, namely Property & Casualty and Life & Health reinsurance, as well as our investments performed well and delivered a good profit contribution that puts us on track to achieve our goals for the current financial year.
Gross written premium in total business climbed by 17.6% to EUR 5.3 billion (previous year: EUR 4.5 billion) as at 31 March 2018; at constant exchange rates growth would have come in at 27.5%. The level of retained premium was higher than in the previous year’s comparable period (89.6%) at 91.3%. Net premium earned increased by 7.0% to EUR 4.0 billion (EUR 3.7 billion); adjusted for exchange rate effects, growth of 16.1% would have been booked.
Given that the general climate remains challenging, we are satisfied with the development of our investments: the portfolio of assets under own management grew to EUR 40.4 billion (31 December 2017: EUR 40.1 billion). It is pleasing to note that ordinary investment income remained virtually stable year-on-year at EUR 315.8 million (EUR 319.1 million). This is especially true of the return on our fixed-income securities, although the income booked from private equity and real estate is also on the level of the previous year.
Interest on funds withheld and contract deposits contracted to EUR 58.7 million (EUR 72.9 million). Net realised gains amounted to EUR 48.8 million (EUR 24.1 million). Our financial assets measured at fair value through profit or loss gave rise to net gains of EUR 6.1 million (EUR 10.9 million) in the period under review. The impairments taken in the reporting period were again only very minimal. Income from investments under own management increased by 4.0% to EUR 332.8 million (EUR 320.0 million) as at 31 March 2018.
The operating profit (EBIT) for the Hannover Re Group climbed by 8.5% to EUR 433.9 million (EUR 399.9 million) and thus grew at a somewhat stronger pace than net premium earned. Group net income rose by 3.3% to EUR 273.4 million (EUR 264.8 million). Earnings per share reached EUR 2.27 (EUR 2.20).
Shareholders’ equity decreased by 2.1% to EUR 8.4 billion (31 December 2017: EUR 8.5 billion) as at 31 March 2018 due to reduced valuation reserves. The annualised return on equity amounted to 13.0% (31 December 2017: 10.9%) and continues to exceed our minimum target of 900 basis points above the risk-free interest rate. The book value per share stood at EUR 69.27 (31 December 2017: EUR 70.72).