Hannover Re has posted a record net profit for the year to December 31, thanks to strengthened rates, improved investment conditions and fewer natural catastrophes.

Price increases following the catastrophes of 2011 made Asia and Australia “particularly important drivers of growth”, the company says.

Net profit was up 42% on 2011 to €858.3 million ($1.1 billion), while gross written premium (GWP) increased 14% to €13.8 billion ($17.62 billion).

Investment income grew by €300 million ($383.01 million) and net major loss expenses fell by almost half to €477.8 million ($610.07 million).

The fall in major losses helped Hannover Re record a combined operating ratio of 95.8%, compared with 104.3% in 2011.

Superstorm Sandy cost the reinsurer €257.5 million ($328.79 million) net, with the Costa Concordia shipwreck coming in at €53.3 million ($68.06 million) and the US drought at €43.3 million ($55.29 million).

“The most important keys to this success were solid growth, a good underwriting result in non-life reinsurance and exceptionally pleasing investment income,” CEO Ulrich Wallin said.

The company is optimistic for the year ahead, Mr Wallin says, but he has hinted that increased competition drove rating pressure at the January 1 renewals.

Hannover Re predicts GWP growth of 5% this year and net profit of about €800 million ($1.02 billion), so long as major losses do not significantly exceed its budget of €625 million ($798.04 million) and there are no “unexpectedly adverse movements on capital markets”.