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Provisional result for 1997

  • Third record result in succession
  • Fifth consecutive dividend increase

Frankfurt, 4 June 1998:

With a 12.9% increase in the profit for the year to DM 122 million, the Hannover Re Group anticipates its third successive record result. The news was announced by Wilhelm Zeller, Chairman of the Executive Board, at a press conference in Frankfurt.

The figures - which are still provisional - indicate that the Group's gross premium income rose by almost 25% to around DM 8 billion. Mr. Zeller added that the company's strategic priority segments had been particularly key factors in this extraordinary growth. Life and health reinsurance posted growth of almost 90%, while the volume of financial reinsurance increased by more than 18%. Mr. Zeller observed that the acquisition of cherry-picked business segments from Skandia International Insurance Company, Stockholm, had been crucial to the expansion of these business fields, adding that roughly DM 570 million (almost 9%) of the Group's gross premium growth was attributable to this acquisition. Growth was also favourably influenced by the strength of a number of major currencies against the German mark.

Currency factors accounted for approximately 6.5% of the total growth. As in the previous year, the claims experience was exceptionally favourable. Mr. Zeller asserted that the losses for the international insurance industry from natural catastrophes would probably be halved, and he added that the information currently available pointed to a favourable loss incidence in virtually all other sectors too.

While the technical result will deteriorate by DM 174 million, Mr. Zeller explained that this decrease corresponded almost exactly to the debit resulting from the purchase price of the Skandia portfolio. Once allowance has been made for this factor, the Group was thus able - despite the intensification of competition which particularly affected the property/casualty reinsurance classes - to achieve a stable technical result.

Due to the generally positive developments in the international capital markets - and in the wake of the record result of the previous year -, the investment result was again outstanding. It surpassed the DM 1 billion threshold for the first time (+21%). Mr. Zeller added that the actual volume of investments rose by almost DM 2.7 billion or roughly 17% to a good DM 18 billion. Current figures indicate that Hannover Re's profit for the year will be in the region of DM 83 million, almost 11% higher than in the previous year. In accordance with the very advantageous dividend policy for shareholders - on tax and other grounds -, the entire profit for the year will be distributed. The company will therefore increase its dividend for the fifth successive year. In view of the likely gross distribution (i. e. including the corporation-tax credit) of almost DM 95 million for 1997, Mr. Zeller noted that the company was already very close to attaining its stated objective of distributing a gross dividend of DM 100 million in the year 2000.

Furthermore, against the backdrop of a generally bright mood on the stock markets, the move towards a clearly defined and communicated shareholder-oriented growth policy had, in the words of Mr. Zeller, brought about an extremely gratifying development in the price of the Hannover Re share. In 1997 alone, the share price climbed by 139%, thereby comfortably outperforming all relevant indices. In an analysis of the performance of the most significant insurance stocks throughout Europe compiled by the US investment bank Salomon Smith Barney, Hannover Re shares took the number one spot by a wide margin. The respectable UK trade journal "Reactions" assessed Hannover Re in 1997 as the best performing reinsurance stock in the world. The market capitalization of the company stood at almost DM 5 billion as at the end of 1997, compared to DM 2.05 billion as at year-end 1996. In the first five months of the current year the share price - and hence the market capitalization - had already further increased by more than 20 %.