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Press Release on Interim Report 3/2001

  • Excluding the effect of the terrorist attacks of 11 September the results for the first nine months of 2001 fulfilled Hannover Re's expectations
  • Good prospects for 2002

Hannover, 31 January 2002:

Hannover Re's results for the first nine months of 2001 would have been positive, had it not been for the terrorist attacks in the United States on 11 September 2001. Excluding this extraordinary impact, Hannover Re would have achieved a profit after tax of EUR 30 million, or EUR 1.04 per share, in the third quarter of 2001. Because of these events, however, the third quarter profit after tax decreased by EUR 234 million, or EUR -7.92 per share, to EUR -204 million, or EUR -6.88 per share.

The profit after tax of the first nine months 2001, excluding the losses of 11 September, fulfilled Hannover Re's expectations. It amounted to EUR 149 million, or EUR 5.04 per share. Including the losses from the terrorist attacks the after-tax result amounts to EUR -85 million, or EUR -2.87 per share.

The impact of 11 September affected only property and casualty reinsurance. On the basis of information available to date, the net loss from this event remains unchanged at approximately EUR 400 million before and EUR 234 million after tax. These losses have been fully accounted for in the third quarter. Based on our current assessment we do not foresee any further charges due to this catastrophe, emphasised Wilhelm Zeller, Chairman of the Executive Board. The losses from the terrorist attacks resulted, however, in a negative profit contribution of this business unit in the amount of EUR 156 million. Leaving aside these extraordinary influences, property and casualty reinsurance would have fulfilled our expectations for the first nine months with a profit contribution of EUR 78 million, explained Mr. Zeller. The combined ratio for this time period was 125%. Excluding the losses from the terrorist attacks it would have been 104%.

Business in life and health reinsurance continued to develop as planned. We will be able again to achieve our growth and profit targets for this year, stated Mr. Zeller.

Due to the successfully initiated expansion of program business to Europe and the excellent competitive positioning of Hannover Re's US subsidiaries, the gross premium income in this business unit continued to rise sharply. Furthermore, the new business, generated at markedly higher rates, enabled Hannover Re to increase the retention ratio. Both of these factors resulted in a favourable development of the profit contribution.

Additionally, positive developments can be reported about financial reinsurance. The demand for alternative reinsurance products has been rising steadily, so that premium volume and investment income are after only nine months already above the total figure for the previous year, emphasised Mr. Zeller.

Total investments at EUR 11 billion are 11% higher than the previous year. The net investment income (EUR 711 million) is a reflection of the difficult market environment. The ordinary income rose largely due to an increased investment volume, although the lower interest rate level led to a reduction in the average yield. The declining profits from the disposal of investments are a reflection of the state of the capital markets in the reporting period.

Overall, therefore, the pre-tax result before minority interests was EUR -124 million and the after-tax result was EUR -85 million, or EUR -2.87 per share. Even though the net result for the first nine months is negative as a result of the September 11 losses, we are anticipating a break-even result for the whole business year 2001, stated Mr. Zeller.

The Company describes the prospects for the coming year as very positive. The 2002 renewal season has brought about substantial rate increases and improvements in terms and conditions on numerous reinsurance markets. We are currently in one of the hardest reinsurance markets since decades. Following the successful capital increase in December last year, we are strongly positioned in the market. We were able to disproportionately exploit the opportunities presented by the market and to significantly expand our market share according to Mr. Zeller. Assuming normal conditions in regard to major loss incidence and conditions of the capital market, Hannover Re therefore anticipates a very good result for the year 2002.

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