Hannover Re expects to write more business in Australia as insurers add cover to meet the new life and general insurance capital requirements.

It made the prediction last week when reporting a half-year profit of €407.72 million ($604.87 million), a marginal increase on the corresponding period last year.

“We see further attractive prospects for our business in Australia and New Zealand [because] our ceding companies are actively purchasing additional natural catastrophe covers to satisfy the modified capital requirements… that came into force on January 1; these will increase again effective [next] January 1.”

The German reinsurer is “highly satisfied” with Australia and New Zealand July renewals after AIR Worldwide adjusted its catastrophe models, which increased prices.

“Faced with historically low interest rates in Australia, market players displayed comparatively strong underwriting disciplines,” it said.

While last year’s prices were attractive following the 2010 and 2011 disasters, the absence of losses in the year and pressure from new and established players have put prices under pressure in Australia and New Zealand.

Hannover Re forecasts a full-year profit of €800 million ($1.19 billion).

Non-life insurance income grew 19% to €362 million ($537.04 million) in the six months to June 30, while the life and health result dropped 34% to €84 million ($124.52 million) on higher mortality rates.

Gross written premium (GWP) increased 5% to €7.23 billion ($10.65 billion), with Australia contributing €400.58 million ($594.27 million), up 9%.

Hannover Re expects to maintain a 5% increase in GWP for the full year, although growth in non-life GWP has slowed, rising marginally to €4.1 billion ($6.08 billion).

The combined ratio improved to 94.4% from 96.8%.

The company says reinsurance margins are adequate following the July renewals, despite competitive pressure for US property catastrophe, where prices fell 10-15%.

“Key factors here are the sustained good results posted by insurers, as well as additional capacities made available by the non-traditional reinsurance market.”

Hannover reported €137 million ($203 million) in losses from the European floods in the second quarter.