Business development

• Profitable premium growth in a market shaped by surplus capacities
• Underwriting result in property and casualty reinsurance significantly boosted
• Return on investment ahead of full-year expectations at 3.1%

Hannover Re can look back on a positive business development in both its business groups of Property & Casualty and Life & Health reinsurance. The first half of 2018 was notable for minimal large losses and sustained demand for innovative reinsurance solutions.

In a market environment still characterised by surplus capacities Hannover Re was able to assert its position in property and casualty as well as life and health reinsurance. Against a backdrop of continued low interest rates, investment income also played a robust and important part in the Group’s success. This is borne out by the fact that our Group net income rose to EUR 555.3 million (EUR 535.0 million), an increase of 3.8% compared to the first half of 2017 which had similarly been extensively free of large losses.

Gross premium written by the Group climbed by 11% as at 30 June 2018 to just under EUR 10.0 billion (EUR 9.0 billion). At constant exchange rates the increase would have been 18.1%. The first half of 2018 thus puts us very much on track to achieve our full-year guidance, which we had raised in the first quarter to currency-adjusted growth of more than 10%. The level of retained premium rose slightly to 91.3% (90.3%). Net premium earned increased by 10.8% to EUR 8.3 billion (EUR 7.5 billion). Growth of 17.9% would have been booked at constant exchange rates.

Bearing in mind the ongoing challenging market climate, the performance of our investments in the first six months was highly satisfactory. The portfolio of assets under own management grew to EUR 40.9 billion (31 December 2017: EUR 40.1 billion). It is gratifying to note that ordinary investment income remained stable year-on-year at EUR 632.5 million (EUR 635.1 million). This is especially true of the income generated from our fixed-income securities, although earnings booked from real estate and private equity were also on a par with or – in the latter case – even slightly above the level of the previous year.

Interest on funds withheld and contract deposits fell to EUR 113.8 million (EUR 123.4 million). Net realised gains stood at EUR 53.4 million (EUR 83.4 million). Our financial assets measured at fair value through profit or loss gave rise to net gains of EUR 19.6 million (EUR 10.6 million) in the period under review. The impairments taken in the reporting period were once again only very minimal. Income from investments under own management contracted to EUR 629.8 million (EUR 656.0 million) as at 30 June 2018.

A bond issued by our company in April with a volume of EUR 750 million gives us access to additional liquidity, inter alia for longer-term prefinancing business in life and health reinsurance. This issue, which has a coupon of 1.125% and a maturity of 10 years, enables us to leverage the continued low interest rate level in Europe and benefit from increased flexibility in the management of our investments.

The operating profit (EBIT) for the first half-year 2018 grew by 13.5% to EUR 907.3 million (EUR 799.4 million). Earnings per share amounted to EUR 4.60 (EUR 4.44).

Hannover Re’s equity base remained robust as at 30 June 2018 on a level of EUR 8.3 billion (31 December 2017: EUR 8.5 billion) despite the dividend payment of EUR 603.0 million. The book value per share stood at EUR 69.00 (31 December 2017: EUR 70.72). The annualised return on equity amounted to 13.2% as at 30 June 2018 (31 December 2017: 10.9%).