Hannover Re sees silver lining amid storm clouds
Hannover Re remains upbeat despite a sharp earnings hit from recent hurricanes and earthquakes.
The catastrophes, estimated by some analysts to have cost the industry about $US100 billion ($131 billion), may provide the catalyst for rate rises after years of sluggish growth.
“While Hannover Re’s result has been adversely impacted by the losses from natural disasters in the third quarter, they will not have any lasting effect on the company’s profitability or capital position,” the German reinsurer says. “On the contrary, the recent loss events should cause market conditions to improve again for reinsurers.
“Rates for catastrophe risks, in particular, are now likely to move higher and should generally prompt positive movements in other lines as well.”
Net income for the quarter to September 30 fell to €13.9 million ($21 million) from €303.9 million ($459 million) in the corresponding period last year, despite a 7.6% rise in gross written premium (GWP) to €4.49 billion ($6.7 billion).
The business made a net underwriting loss of €589.8 million ($890.2 million), down from a €47.2 million ($71.2 million) gain.
Its property and casualty reinsurance arm’s net income fell 98% to €4.8 million ($7.2 million) and the combined operating ratio blew out to 118.3% from 94.4%.