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Reinsurers Swiss Re Profit Declines, Hannover Re Profit Edges Up

May 7, 2014

ZURICH (Alliance News) - Reinsurer Swiss Re Ltd posted Wednesday a decline in first-quarter profit, despite higher premium and fee income, while its German peer Hannover Re AG reported a slight increase in profit, despite lower premium. Both companies, however, backed its forecast.

Swiss Re also announced the appointment of Patrick Raaflaub as member of the Group Executive Committee and new Group Chief Risk Officer, effective September 1. Raaflaub was the CEO of Switzerland's financial market supervisory authority, FINMA, between 2009 and 2014. Before FINMA, Raaflaub was with Swiss Re, and held many roles.

Raaflaub succeeds David Cole, who took over as Chief Financial Officer on May 1. Cole replaced then Group Chief Financial Officer George Quinn, who decided to pursue other opportunities from May 2014.

For the first quarter, Swiss Re's net income declined 11% to USD1.23 billion from last year's USD1.38 billion. Earnings per share were USD3.58. The decline mainly reflected a plunge in Life & Health Re segment's net income, impacted by a loss on an interest rate hedge.

In the quarter, premium and fee income increased 11% to USD7.55 billion from USD6.78 billion a year ago, through organic growth and the expiry of a major quota share agreement at the end of 2012.

The company noted that all business units contributed to the result. Property & Casualty Reinsurance segment's premium grew 7.9% mainly driven by the expiry of a major quota share agreement. L&H Re premium and fee grew 15.5%, largely due to significant new business in Asia and Europe as well as recaptured business.

The April treaty renewals concluded for Swiss Re with a volume increase of 14%, while year-to-date risk-adjusted price quality remains at attractive levels, the company said.

Looking ahead, Swiss Re said it remains on track to reach its 2011-2015 financial targets, with contributions from all segments.

For 2011-2015, the company projects a 10% average annual growth rate in earnings per share, adjusted for special dividends, and a 10% average annual growth rate in economic net worth per share growth plus dividend over a 5-year period.

For Hannover Re, first-quarter net income edged up 0.7% to 233 million euros from 231.2 million euros in the previous year. Earnings per share rose to 1.93 euros from 1.92 euros.

Non-life reinsurance segment's Group net income climbed 13.1% year-over-year to 197.9 million euros, partly offset by weak results at life and health reinsurance hurt by increasingly intense competition.

The company's gross written premium dropped 3.6% to 3.624 billion euros from 3.758 billion euros. At constant exchange rates, the decrease would have been just 0.7%. Total gross premium for non-life reinsurance contracted 4.1%.

Net premium earned was 2.913 billion euros, down 5.5% from 3.081 billion euros last year. The decrease was 2.6% after adjustment for exchange rate effects.

Citing its successful start to 2014, Hannover Re reaffirmed its net income guidance in the order of 850 million euros for the full financial year. The company continues to expect stable to slightly higher gross premium based on constant exchange rates.

Swiss Re shares are currently trading at 76.90 Swiss francs, down 0.10 francs or 0.13%. In Germany, Hannover Re are currently at 66.95 euros, up 0.28 euros or 0.42%.

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Source: Alliance News

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