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George Stobbart

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German insurance giant Allianz on Tuesday said its net profits soared by 60 per cent in the first quarter of 2012 and confirmed its full-year targets.

Net profits rose to 1.37 billion euros ($1.76 billion) in the first three months of the year on flat turnover of just over 30 billion euros, the group said, slightly better than analysts had expected.

The sharp increase in profits was based in part on a particularly weak first quarter of 2011, during which natural catastrophes including the devastating earthquake and tsunami in Japan weighed heavily on results.

“Allianz has put in a very good performance this quarter, following 2011 that was tough for the entire insurance industry,” said Oliver Baete, the firm’s chief financial officer.

“Despite the on-going sovereign debt crisis, volatile markets and low interest rates, we continue to expect an operating profit for 2012 of 8.2 billion euros, plus or minus 0.5 billion euros,” added Baete.

Allianz shares were up by 0.7 per cent at the opening bell on the German stock market, slightly outperforming the wider DAX.

Frankfurt, May 15, 2012 (AFP)

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Insurance software provider Transactor Global Solutions has added a ‘Sub Agent Broker Portal’ as part of its standard Transactor offering. This will enable brokers to set up selected partners on their Transactor systems who they want to distribute through in a controlled environment.

Each broker partner will be issued a username and password allowing them to enter a web based portal from any location with internet access.

The broker can decide on how much control is given to their partners, options include:

– Risk capture only. The partners enter risk information for new quotes. The data is updated seamlessly to the broker’s database and allows the insurer’s underwriters to assess the risk. The quote is then returned online, allowing the broker to buy through their partner.

– Quote and buy. Using Transactor’s own rating engine online quotes can either be returned instantly or any risk dependent on certain criteria can be referred to the underwriters to assess the risk before returning a quote to the broker.

– MTAs (mid-term adjustments). Broker partners can make MTAs, including automatic premium adjustments.

– Renewal Amendments. There are various options around renewal amendments including re-quoting the renewal and returning an instant renewal premium.

– Renewal Acceptance. Partners can accept renewals.

All policy documents can also automatically be sent via email either directly to the client, or to the broker, or both.

Ian Blakesley, Chief Technology Officer, TGSL said, “Our new ‘Sub Agent Broker Portal’ is another example of how modern and progressive technology is utilised for the benefit of brokers, their sub agents and ultimately the customer. Having an effective route to market will always be a high priority for brokers and we have endeavoured to provide them with a business tool which will help make cost effective options when working with their sub agents.”

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Commercial insurer NIG is continuing to strengthen its regional offices with the appointment of Gill Moakes as Senior Business Development Manager covering the East Anglia region.

Gill joins NIG from Colchester and Diss-based insurance broker Scrutton Bland, where she had been responsible for new business development since November 2008. Prior to this, Gill worked at AXA Insurance for 16 years, latterly in an Account Manager position.

In her role at NIG, Gill will have responsibility for expanding NIG’s business across the key East Anglia region. She will report to Alistair Body, NIG’s Area Business Development Manager (ABDM) based in the Watford office.

Forming part of a major investment programme by NIG in its local offices and regional capability, Gill’s appointment comes on the back of several other high profile business development appointments across the UK in the past six months. Warren Bainbridge joined as ABDM for NIG’s Manchester office in February, for instance, while in December last year ABDMs were also appointed in Bristol, Watford and Maidstone.

Gill Moakes, Senior Business Development Manager – East Anglia, NIG, said: “East Anglia has a very strong SME commercial business sector covering both the rural and urban areas and there is a huge opportunity to work with brokers across the region to help them and their SME clients. NIG can offer a fantastic service to the brokers in the region and I am looking forward to doing just that.

“In terms of the business we are targeting it will be primarily about bringing back local experience to the market and providing tailored insurance solutions to policyholders on both individual cases and via scheme solutions. There is so much opportunity, from the more rural businesses to the demands of clients in key cities such as Norwich, Cambridge and Ipswich.”

Dave Parry, Director of Sales and Distribution at NIG, said: “We are delighted to welcome Gill to the role. With over 25 years’ experience in both insurer and broking environments, she brings a unique understanding of the East Anglia market to NIG. As our Senior Business Development Manager for the area, Gill will use her experience on both sides of the fence to provide an unprecedented service to our brokers, and she is a welcome and extremely strong addition to the team.”

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Even in a watered-down form the potential application of Solvency II to European occupational pensions could have a significant negative impact on corporate cash flows. This initiative’s insurance-style funding requirements could negate the progress made by European companies in managing pension liabilities in recent years. EIOPA’s first Quantitative Impact Study (QIS) should provide more clarity, but not until later this year.

While it is hard to see the change not having a material negative effect on corporates, the limited detail on how Solvency II might be applied to pensions has led to widely varying estimates. Coming up with a workable methodology is no simple task because of the sheer variety of private pension arrangements in place in different European countries. EIOPA’s solution is a “holistic balance sheet” that takes into account intangible factors such as pension protection insurance schemes like the UK’s state-sponsored Pension Protection Fund and – where the ultimate responsibility to fund a scheme falls on an employer – the strength of that employer’s covenant.

These intangibles appear on the asset side of the balance sheet along with financial assets held at market value and, potentially, an asset representing payments to be made into the scheme as part of a recovery plan. Giving pension schemes credit for all potential sources of funds is a clever way around the problem of how to deal with different scheme arrangements – although valuing the non-financial assets will be tricky, to say the least.

There is less of a silver lining where liabilities are concerned. The aim of putting occupational pensions on a level playing field with insurance companies makes it very hard to avoid making pension schemes compute liabilities in the same way as an insurance company, in which case liabilities will rise considerably.

One significant change under Solvency II is that insurers discount liabilities using a risk-free interest rate, rather than the rate based on expected return on assets currently used by many schemes in countries such as the UK. However, there is an ongoing debate about adjustments to the liability discount rate under Solvency II and how the impact of spread volatility can best be contained, and this may have a significant impact on liabilities.

A challenge may also arise from the need for additional assets as a capital reserve buffer to ensure the scheme remains fully funded in the face of asset price volatility. Under current proposals for insurance companies under Solvency II, this requires schemes to remain fully funded to deal with all possible outcomes to a conservative one-in-200 probability. Depending on the mix of assets this buffer could equate to a significant proportion of liabilities.

A further key consideration is how assets and liabilities will interact. EIOPA tentatively sets out that a best estimate of liabilities should at least be covered by financial assets, although the latter may include a recovery plan. But it also says that current plans may be subject to revision following the QIS.

So we are left waiting for the QIS. In the meantime, the approach taken by most lobbyists – assume the worst and lobby on that basis – may be prudent.

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AXA Real Estate Investment Managers is pleased to announce the publication of its 2011-2012 Sustainable Development Report.

The report explores AXA Real Estate’s three key drivers to action – Engage, Measure and Explore – that form the basis of its ongoing active commitment to sustainable development. It demonstrates how the adoption of sustainability into every day working and investment practices has created tangible value on behalf of clients.

In adherence to its commitment to sustainability, 100% of buildings acquired by AXA Real Estate in 2011 were subject to a Green Rating audit as part of the due diligence process.  The audit looks to rate the environmental performance of the building; if the building does not meet AXA Real Estate’s minimum technical requirement, it will look to provide solutions to bring the building up to the required high standard. In those buildings where this cannot be achieved, the investment cannot go ahead.

Alongside AXA Real Estate’s own efforts to improve its commitment to sustainable development, sustainability has moved on from a more theoretical discussion topic for investors, to one which helps them form their investment criteria and make their investment decisions. During 2011, AXA Real Estate received a significant number of requests for proposals from institutional investors that included a detailed Environmental, Social and Governance (“ESG”) questionnaire, representing up to 15% of the total investor’s assessment grid. AXA Real Estate now foresees a time in the near future when these will be included as standard.

Tenants are also increasingly looking at sustainability issues when deciding on which space they wish to occupy.  In its efforts to ingrain sustainability into its everyday actions with tenants, AXA Real Estate introduced green leases during the year to all its new commercial lettings in Germany and maintained its effort to include similar clauses in lettings in France.  As a part of these green leases, regular meetings with tenants are arranged which focus on sustainability, specific sustainability action plans are drawn up and energy performance data is shared between tenants and landlord.

Furthermore, during 2011, AXA Real Estate committed to installing automated meter reading (“AMR”) and energy management into an additional 250 key properties. This goal was surpassed and, as of February 2012, 90% of retail assets under management in the UK and 64% of AXA Real Estate’s French office portfolio are installed with smart meters and put under energy monitoring.

The effect of accurate and real time consumption data alongside the tailored advice of energy managers has had tangible and value creating results.  51 key properties in the UK, across the retail, office and industrial sectors, were installed with smart readers in 2010 which has led to a reduction in overall gas and electricity consumption of 21% in 2011, virtually without any additional capital expenditure.

AXA Real Estate believes that a collaborative approach is essential progressing sustainability throughout the real estate industry; as such it contributed to establish the Green Rating Alliance (“GRA”) in 2011.  Under the chairmanship of Pierre Vaquier, CEO of AXA Real Estate, solid foundations for the GRA have been cast and the association now contains 19 members.  The aim of the GRA is to work collaboratively to exchange best practices and bring concrete solutions on sustainability to the property industry. Central to the scheme is the Green RatingTM, a decision-making tool for assessing, benchmarking and, importantly, improving the environmental performance of existing buildings and portfolios through practical recommendations.

The full Sustainable Development Report is available on the Company’s website at www.axa-realestate.com.

Jean-Francois Le Teno, Global Head of Sustainable Development at AXA Real Estate, commented: “2011 has been an excellent year of progress in our commitment to sustainability and our efforts to shape progress on this important issue with all participants in the sector. Over the year, sustainability has come to increasingly influence not only our investment decisions but also our day-to-day asset management activities.  We have been especially pleased with the encouraging results from the implementation of AMR’s and energy managers. We hope that by communicating the tangible benefits that a focus on sustainability can bring, we can advance it from a speciality subject to the ‘new normal’ for the industry.”

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Sterling Insurance has been named the 2012 Outstanding Insurer Claims Team of the Year at the Insurance Times Claims Excellence Awards. The industry ceremony highlighted the hard work and commitment of those individuals, teams and companies who have delivered at the highest level in 2012.

Sterling entered the award for its claims transformation program which came about as a direct result of broker feedback.  The winning program involved a wholesale restructure of Sterling’s internal claims team, improvements to philosophies, service performance, supply chain and product development. Likewise, external loss adjusters were educated to the new philosophy, leading to stronger relationships with suppliers and an improved service to clients. John Blundell, MD and Garry Simmons, Head of Property and Liability Claims presented the new claims model to the judging panel this March.

The judges voted unanimously for Sterling, beating some very strong competition to the award.

Garry Simmons, Head of Property and Liability Claims Sterling comments:

“We are extremely grateful for the recognition the industry has afforded us. Our Claims Transformation Program makes a real difference to our brokers and their clients, and this award proves even further that we are providing an innovative service that is better than anything else available in the market today.”

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Providers of consumer data intelligence, Tracesmart has announced a long-term cooperation agreement with CRIF Decision Solutions, a company specialising in the provision of decision support, fraud detection and fraud prevention solutions. Based in the UK, it is part of the CRIF Group, which operates across Europe, America, Asia and Africa. CRIF Decision Solutions has been supporting the UK insurance industry for over 15 years and is a provider of the Claims and Underwriting Exchange Register (CUE).

The partnership will see Tracesmart provide CRIF with their UK identity verification and consumer profiling solutions, which will enable CRIF to enhance their current product offerings and complement their existing portfolio. The integration of Tracesmart’s IDU service into the CRIF platforms will provide the company’s customers with a broader set of tools to support the “know your customer” cycle, including quotation, underwriting, claims, and fraud prevention stages, as well as supplying powerful subject verification and anti-money laundering applications to a wide range of users, including insurance companies.

Sara Costantini, Director at CRIF Decision Solutions Ltd, explained the rationale behind the partnership with Tracesmart. “On identifying the need for a provider of United Kingdom identity checks it became apparent that Tracesmart would be able to provide us with a well rounded suite of products in a technological environment that met our criteria. In addition to providing products that are in the vanguard of identity verification, their service, support, commercial proposition and ease of establishing a good working relationship made them the ideal partner.”

The IDU service is a robust identity verification and due diligence solution which calls upon an extensive collection of consumer information, including public data, to verify identity and analyse the risk associated with an individual. Mike Trezise, Managing Director at Tracesmart, believes IDU’s wealth of data helped propel it into the winning position, “At Tracesmart we’ve long believed that the more reliable data our identity solution can interrogate, the more robust the identity check, and have therefore invested heavily in a continual data procurement program. This commitment has helped us secure the contract, as both breadth and integrity of data were key concerns for CRIF.”

Tracesmart has a long history of partnering with companies who exhibit synergies and these types of relationships continue to help nurture the company’s success. This developmental process has been driven by senior management at the Cardiff based business, and one of the key members, Chris Rothwell, Tracesmart Sales Director, believes the partnership is a positive reflection of IDU.

“We are delighted that CRIF have signed an exclusive agreement to use our IDU service. It is a testament to the product and team behind it that we have been able secure this contract, and we are very much looking forward to working with CRIF over the coming years.”

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Specialist Lloyd’s insurer Jubilee has appointed David O’Sullivan as Head of Life in a strategic move to grow its specialty life business.

O’Sullivan, who will be joining from Swiss Re where he is currently head of global life & health underwriting, will focus on the long-term development of a specialty life business across both underwriting and distribution.

The appointment follows a six month strategic review of the business and represents a key element in the long-term development of Jubilee’s specialty life proposition, across individual, group and affinity markets. O’Sullivan will work with both Jon Clarke, Active Underwriter for Jubilee’s Life Syndicate 779, and Nigel Hartley, Managing Director of Lutine Assurance Services.

Johnny Rowell, Chief Executive of Jubilee said: “David’s appointment represents an important strategic commitment for us as we look to build on our existing specialty expertise in both the underwriting and distribution of term life products.

“David brings considerable experience in the specialty life arena and will play a crucial role in enabling us to achieve our future aspirations.”

Commenting on his appointment, O’Sullivan said:” This class has experienced resurgence in recent years with Jubilee remaining at the forefront of underwriting and servicing in what continues to be a key growth area for Lloyd’s.

“Jubilee’s life underwriting and retail operations have established strong lead positions in their markets. But the business recognises the further opportunities exist to build a specialty proposition that reflects the changing demands of this market and to be part of this next phase of growth is an exciting challenge.”

O’Sullivan has held several senior Life & Health roles in underwriting, business development and strategy for Swiss Re over the last 24 years. He has worked in over 25 countries and was Head of Life & Health Strategy for Europe and Asia, based in Zurich, before becoming the CEO of Swiss Re’s African operations based in South Africa. He returned to the UK in 2006 to take up his current role as Global Head of Life & Health Underwriting.

Jubilee Syndicate 779 underwrites term assurance products both within the UK and globally for private individuals, employees, corporate and affinity business. It has a stamp capacity of £27 million for the 2012 year of account.

Lutine Assurance Services is the retail underwriting and distribution arm of the Jubilee Group providing specialist life assurance solutions in the life and health market. Core products include group life benefits and individual keyman assurance.

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A partnership between pay-how-you-drive insurer Coverbox and vehicle tracking & movement monitoring technology market leader Ctrack looks set to drive vehicle insurance telematics forward two generations.

A clear demonstration that Ctrack is able to comply with Coverbox’s 18-point device strategy means that Ctrack’s massively-advanced interactive devices will soon be establishing new levels of data provision from vehicles to which they are fitted as part of pay-how-you-drive insurance products.

 “We’re developing and progressing our soon-to-be-launched behavioural insurance product at an exciting rate, and it’s all hot in the wheeltracks of a resounding report which looks set to change the way car insurance premiums are set. This moves vehicle insurance telematics two or three generations beyond current equipment capabilities,” said Johan van der Merwe, deputy chairman of Coverbox, at Insurance Telematics 2012 in London.

 “We have a clearly-defined device strategy – built around financial and supply security of the device company, as well as installation standards and control of tamper and removal security – and Ctrack meets and even exceeds our requirements.

 “We know we shook a lot of people in the insurance industry by commissioning a report which reveals that there’s an overwhelming case for changing the way the insurance industry sets premiums – but the re-insurance industry simply cannot ignore the level of information and quantities of data the Coverbox-Ctrack combination will make available through a highly-advanced interactive device and supporting monitoring and analytics.

 “The Holy Grail of the vehicle insurance industry is analysing and concluding the cause, process and effect of a vehicle accident or event – without giving the game away, we’re currently piloting absolutely tamper-proof interactive devices which provide previously unheard-of levels of data, but which also monitor and record driving behaviour and vehicle movement for a significant period before any sort of harsh or severe event.

 “There is also the potential – even now – of incorporating overt or covert video recording into the system.

 “We have also carried out tests to assess various on-board telematics devices’ response to being swapped in and out of vehicles, and we’re actually quite surprised at some of the results and responses.”

Saleem Miyan, managing director of Ctrack Europe Holdings Limited, said: “Pardon the pun, but we’ve been looking for a vehicle for our two-generations-on insurance telematics technology, and it is pretty clear that Johan van der Merwe and his Coverbox team have a vision and understanding which provides that vehicle.

 “Coverbox’s team are not ‘make-do’ guys – we’ve walked into an environment in which not only do they recognise Ctrack’s potential impact, they’ve embraced it and catapulted it forward even further.”

Coverbox’s report into the vehicle insurance sector will be presented to a select panel of leading insurance companies in due course.

“What it reveals is that there’s an overwhelming case for changing the way the insurance industry sets premiums: we can record, analyse and compare driving behaviour as against applying insurance ‘proxy ratings’ – we get factual driving information, and base rates on driving style and location rather than lifestyle and home address,” said Johan van der Merwe.

“Ctrack’s technology is simply jaw-dropping in the context of pay-how-you-drive as Coverbox sees it.

“The report illustrates that both insurers and drivers will be better off if insurance is rated on driving style rather than lifestyle, and that good drivers don’t suffer from the behaviour of bad drivers – and Ctrack’s product and technology takes monitoring and recording to an utterly higher plane.”

Coverbox pay-how-you-drive insurance allows drivers to take out comprehensive cover paid for by the mile, with the price per mile varying according to the time of the day or night: off-peak, peak or “super-peak” times, and how the driver drives.

All Coverbox policyholders have a personal website enabling them to see precisely how many miles they are driving, and what the cost is. The technology behind Coverbox is based on proven equipment and technology.

Ctrack in the UK and Ireland are divisions of DigiCore Holdings, a global company listed on the Johannesburg Stock Exchange. Founded in the 1990s, DigiCore specialises in the research, development, manufacturing, sales and support of technologically advanced tracking and resource management solutions.

Under the Ctrack brand, DigiCore offers a wide range of vehicle location, personal and lone worker tracking, fleet and work flow management, satellite navigation and security tools – with cost effective and scalable solutions that offer a unique combination of flexibility, reliability and functionality. As a result, more than 600,000 systems have been fitted in 50 countries across five continents, making DigiCore the most comprehensive industry service provider worldwide.

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Munich Re announced it had returned to first-quarter profit after a difficult start to 2011 hit by the devastating earthquake and tsunami in Japan. 

The group, which posted a consolidated profit of 780 million euros ($1.0 billion) in the first three months compared to a loss of 947 million euros a year earlier, also slightly raised its full-year outlook.

“Despite the still difficult economic situation, we are optimistic for 2012 and are aiming for a profit for the year of around 2.5 billion euros,” Joerg Schneider, chief financial officer, said in a written statement.

The group said that operating profit came to 1.2 billion euros for January to March — slightly below the 1.26 billion euros expected by analysts polled by Dow Jones Newswires.

In morning trading, stocks in Munich Re were down 1.39 per cent to 106.30 euros, with the Dax blue-chip index down 0.72 per cent.  Munich Re said at the end of April that it expected first-quarter profits to be “gratifying” amid a calmer situation on the financial markets and fewer losses than last year.

Berlin, May 8, 2012 (AFP)

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The chief executive of Britain’s second-biggest insurance group Aviva stepped down on Tuesday, becoming the latest victim of a growing shareholder revolt over pay for top managers. 

Top British companies, and some firms abroad, are facing a wave of investor activism as shareholders rebel over high boardroom pay amid under-performance in the poor economic climate and state moves to clamp down on corporate greed.

“Aviva plc announces that Andrew Moss, chief executive officer (CEO), will be leaving the group and will cease to be chief executive with immediate effect,” the insurer said in a shock announcement on Tuesday.

Aviva said its incoming chairman John McFarlane would assume executive duties with immediate effect, tasked with helping to find a new chief executive.

“My first priorities are to regain the respect of our shareholders by eliminating the discount in our share price and to find internally or externally the very best leader to be our future CEO,” McFarlane said in a statement.

“I will meet all of the major investors over the coming days and weeks.”   Investors saluted the boardroom shake-up, with Aviva’s share price soaring 5.19 per cent to 318 pence and shooting to the top of London’s benchmark FTSE 100 index, which was flat at 5,655.96 points.

Last week saw 54 per cent of its shareholders vote against Aviva’s remuneration report.

Including abstentions, almost 59 per cent of investors refused to endorse the group’s executive pay policy, in a result announced at Aviva’s annual general meeting in London on Thursday.

The rejection vote was non-binding but nevertheless a major embarrassment for Aviva, which is Britain’s second-biggest insurance company after Prudential.

Aviva’s defeat came despite Moss bowing to investor pressure and waiving a pay rise that would have taken his salary above £1.0 million (1.24 million euros, $1.61 million).

Moss was last month awarded a 4.6-percent increase on his annual salary of £960,000 but decided to decline it.  Aviva added on Tuesday that Moss “felt it was in the best interests of the company that he step aside to make way for new leadership.”

Aviva’s outgoing chairman Colin Sharman however said the group “should acknowledge the progress that has been achieved under Andrew Moss’s leadership.

“Through the global financial crisis he led the consolidation of our international presence and the integration of 40 brands into the very powerful single Aviva brand.”

Sharman apologised to investors last week for ignoring their views when setting pay.

“We recognise that a number of shareholders feel that we have not reflected their views, and overall shareholder value, in the judgments we made on remuneration and for this the board and I apologise,” he said.

“We also recognise that companies need to engage with shareholders on a more proactive basis around the sensitive area of executive remuneration and Aviva will continue to consult and engage with shareholders in this regard.”

Last week’s annual general meeting took place with Aviva’s share price, which has been hit by its exposure to debt-plagued Eurozone economies, standing almost 30 per cent lower compared with one year earlier.

Moss’s departure meanwhile comes after British newspaper publisher Trinity Mirror last week said that its chief executive Sly Bailey would step down amid a looming shareholder revolt over her pay package. And the chief executive of Anglo-Swedish pharmaceutical group AstraZeneca, David Brennan, recently announced his retirement amid investor concern over his stewardship of the group.

At Barclays bank, meanwhile, almost one third of its shareholders chose not to back its executive pay awards late last month amid controversy over chief executive Bob Diamond’s hefty wage package.

In April, Citigroup shareholders rejected the board’s compensation plan for the US bank’s top five executives.

London, May 8, 2012 (AFP)

 

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In the first quarter of 2012, Munich Re achieved a consolidated profit of €782m (same period last year: -€948m). Underwriting business performed well in the first quarter and the investment result showed a marked improvement. For 2012 as a whole, Munich Re is continuing to aim for a profit of around €2.5bn.

CFO Jörg Schneider summed up the business performance for first three months: “A good start to 2012. With few major losses and more favourably disposed capital markets, we have posted a healthy profit.” Key features in the result of €782m are much lower claims costs from natural catastrophes and higher investment income than in the same quarter last year.

With regard to Munich Re’s expected business performance for 2012 as whole, Schneider emphasised: “Despite the still difficult economic situation, we are optimistic for 2012 and are aiming for a profit for the year of around €2.5bn.”

Summary of the figures for the first three months

From January to March, the Group recorded an operating result of €1,202m ( 1,384m). Compared with year-end 2011, equity rose by 4.8% to €24.4bn. The annualised return on risk-adjusted capital (RORAC) amounted to 12.8% and the return on equity (RoE) to 13.1%. Gross premiums written increased by 2.2% to €13.3bn (13.0bn). If exchange rates had remained the same, premium volume would have increased by 0.3% compared with the same period last year.

As part of its active capital management, Munich Re issued two new subordinated bonds on 29 March with volumes of €900m and £450m. With a term of 30 years, the bonds are first callable on 26 May 2022. Up to then, they have a coupon rate of 6.25% and 6.625% p.a. respectively. The bonds are designed to be compliant with the existing (Solvency I) and anticipated future (Solvency II) supervisory regime, and to meet current rating agency requirements.

In the first quarter of 2012, Munich Re modified its segment reporting with the aim of providing for even greater transparency. The segments are now presented after elimination of intra-Group transactions across segments. The previous year’s figures have been adjusted accordingly.

Primary insurance: Result situation improved at €145m

In the primary insurance segment, the operating result totalled €257m (167m) for the first three months of the year, while the consolidated result climbed to €145m (53m). The ERGO Insurance Group, in which Munich Re concentrates its primary insurance business, showed a profit significantly above the previous year’s level: €97m (15m). The difference between this result and the figure for the primary insurance segment is mainly attributable to interest expenses for intra-Group financing and to reinsurance deposits which are shown in the ERGO subgroup’s figures but eliminated at Group level.

Overall premium income across all lines of business decreased by 0.5% to €5,016m (5,040m). Gross premiums written also remained virtually stable in the first quarter at €4,741m (4,766m).

The combined ratio for the property-casualty segment (including legal protection insurance) amounted to 95.3% (96.9%). A slightly higher combined ratio of 91.3% (88.4%) in Germany contrasted with a reduction to 101.3% (109.2%) in international business.

ERGO CEO Torsten Oletzky commented: “We can be satisfied with the result for the first quarter. Particularly pleasing is the development of the combined ratio in international business. The turnaround in international business is gathering momentum.”

Reinsurance: Quarterly result of €634m

Whereas in the first quarter last year reinsurance business had been affected by extremely heavy burdens from major losses, claims costs in the first quarter of 2012 were substantially lower. The operating result amounted to €906m ( 1,590m). Altogether, the reinsurance segment accounted for around €634m (1,010m) of the Group consolidated result.

Munich Re posted premium income of €6,844m (6,727m) in reinsurance, an increase of 1.7% compared with the same period last year. Whilst gross premiums written rose by 9.9% to €2,599m (2,364m) in the life reinsurance segment, they fell by 2.7% to €4,245m (4,363m) in property-casualty insurance. This decrease was attributable to a technical adjustment in posting logic for gross premiums written. The effect, which amounts to approximately €300m, will be balanced out over the following quarters of 2012.

In the property-casualty segment, the development of major losses in the first quarter can be described as moderate, with total expenditure amounting to €264m after retrocession and before tax. The combined ratio was 94.6% of net earned premiums (first quarter last year: 161.3% after risk transfer). Around two percentage points of this was attributable to major losses from the years before 2012.

With a volume of approximately €1.2bn, the renewals at 1 April 2012 in Japan, Korea and the USA, as well as with some global clients, involved around 10% of the total business in property-casualty reinsurance. Altogether, Munich Re’s premium volume in these renewals decreased to €1,118m or by 2.9% (around €30m) compared with the previous year. Rates, i.e. the price level, rose by 5% year on year. Torsten Jeworrek, Munich Re’s Reinsurance CEO: “We did reduce proportional earthquake covers in Japan in cases where we found the conditions inadequate. But generally we were able to achieve distinctly improved prices and substantially better conditions in Japan.”

In the renewals at 1 July 2012 (mainly for parts of the US market, and in Australia and Latin America), Munich Re also expects rising prices in loss-affected segments, especially for natural catastrophe covers.

Munich Health: Result of €5m

In the first quarter, Munich Health posted an operating result of €32m (37m) and contributed €5m (17m) to the Group’s overall result.

Gross premium income grew appreciably to €1,680m (1,487m) in the first quarter, or by 13.0% compared with the same period last year. International health primary insurance business showed a strong increase of 16% to €587m (506m), with premium growth particularly in the UK and the USA. The growth in reinsurance premium income to €1,093m (981m) is due to large treaties concluded by clients for capital relief.

The combined ratio for the period from January to March 2012 improved to 99.5% (99.9%).

Investments: Investment result rises to €2.2bn

At €205.4bn (211.8bn at market values), total investments at 31 March 2012 increased by €3.7bn or 1.9% compared with year-end 2011.

For the period January to March 2012, the Group’s investment result showed a year-on-year improvement of 14.7% to €2.2bn (2.0bn). Annualised, the result represents a return of 4.3% in relation to the average market value of the portfolio. Fixed-interest securities, loans and short-term fixed-interest investments continued to form the greater part of Munich Re’s investments, and totalled €183.4bn – equivalent to 86.6% of the Group’s total investments at market value. Equities make up 3.1% (31 December 2011: 3.2%) and real estate 2.5% (31 December 2011: 2.6%).

At €1.9bn in the first quarter of 2012, regular income remained almost unchanged against the same quarter of the previous year; following portfolio growth, the running yield sank from 3.9% to 3.6%. The overall balance of write-ups and write-downs plus net gains on disposals amounted to €193m (263m) for the first quarter. The Greek debt restructuring and bond exchange led to relatively low additional expenses of €9.0m. On balance, the more favourable, less volatile capital markets meant that write-downs were restricted chiefly to derivative financial instruments used by the Group to hedge against falling interest rates, inflation and declines in share prices. Net gains on the disposal of investments were high at €372m (400m). A large portion of these came from realised gains on the restructuring of fixed-interest investments and derivatives.

CFO Jörg Schneider was satisfied with the investment result: “Our prudent and balanced investment policy continues to pay off. We have posted a strong return of 4.3%, and are well equipped to cope with all likely capital market scenarios.”

The Group’s asset manager is MEAG which in addition to Group investments had segregated and retail funds totalling €10.6bn (10.4bn) under management as at 31 March 2012.

Outlook for 2012: Profit guidance of around €2.5bn continues to stand

The outlook has altered somewhat owing to the changes in segment reporting. Based on exchange rates remaining stable, the Group now anticipates that for the financial year 2012 its gross premiums written will range between €49bn and €51bn. Gross premium income of between €26bn and €27bn is expected in the reinsurance segment, and a figure of between €17bn and €18bn for primary insurance. Total premium income in primary insurance (including the savings premiums of unit-linked life insurance and capitalisation products) should be slightly under €19bn. Gross premiums written of around €6.5bn are expected for Munich Health.

For property-casualty reinsurance, Munich Re’s target is a combined ratio of around 96% of net earned premiums over the market cycle as a whole. In property-casualty primary insurance, the target remains a combined ratio of under 95%.

Munich Re still does not anticipate any rapid or significant rise in capital market interest rates in 2012, so there is no change in its forecast that regular income from investments will fall. The investment return is likely to be approx. 3.5%.

The consolidated result in reinsurance should now total between €1.9bn and €2.1bn in 2012. For the primary insurance segment, Munich Re is targeting a consolidated result of around €450m, and expects around €400m for the ERGO Group. Munich Re’s projection for the consolidated result of the Munich Health business field lies at around €50m.

Given average claims experience and in expectation of a rising price trend overall in reinsurance, Munich Re anticipates a significantly improved underwriting result for 2012. CFO Schneider: “We are still aiming at a consolidated result in the region of €2.5bn.” This is subject to claims experience with regard to major losses and the impact of severe currency or capital market developments.

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The Insurance Fraud Bureau (IFB) has announced the appointment of four new members of staff, further bolstering the industry’s fight against organised motor insurance fraud.

– Mick Conneely has been appointed as Operations Coordinator. Mick will work closely with IFB customers, stakeholders and law enforcement agencies across the UK to identify and disrupt criminal gangs that pose the greatest risk to the insurance industry;

– Karla Freel and Nick Timms join the Bureau as Intelligence Researchers, working on new intelligence submissions made by the public through the industry’s Cheatline, as well as regulators, the police and other sources;

– Russell Phillips joined the IFB in March as an Intelligence Database Analyst, supporting the development of the IFB’s new intelligence repository.

The IFB also welcomed Luke Brennand from 1st Central on a six month secondment from 1 May. Luke has joined the IFB’s Operations Team to gather experience of analysing cross-industry intelligence and developing police operations. Alisdair McLaughlin has also been promoted from within the IFB ranks to the position of Operations Coordinator.

Phil Bird, Director of the IFB, said: “The IFB’s major recruitment drive represents a significant commitment, on behalf of the industry, to step-up the fight against organised motor insurance fraud – a problem valued in excess of £350 million every year. By bolstering IFB expertise and resources, we will uncover more criminal networks targeting our industry and coordinate police action, which ultimately translates to cost savings for our customers.”

 “As part of the IFB’s three-year strategy, the industry has also tasked us with developing new analytics and data-sharing products to help tackle fraud at point of application, and rolling-out the Insurance Fraud Register (IFR). Our new recruits will play a pivotal role in the development of these new services in 2012.”

To find out more about current IFB vacancies, visit www.insurancefraudbureau.org.uk.

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Forty-two percent of the US population could be obese by 2030, up from about one-third currently, and the associated rise in health woes would likely cost $550 billion over two decades, said a study on Monday.

In real numbers, the increase would mean about 32 million more obese people, said the forecast led by researchers at Duke University in North Carolina and published in the American Journal of Preventive Medicine.

An adult with a body mass index of 30 or higher is considered obese, such as a person who is 5’9″ (1.75 meters tall) and weighs over 203 pounds (92 kilograms), according to the US Centers for Disease Control and Prevention.

“Keeping obesity rates level could yield a savings of nearly $550 billion in medical expenditures over the next two decades,” said lead author Eric Finkelstein in a statement ahead of the study’s release at the CDC’s Weight of the Nation conference in the US capital, Washington.

The study was based on data collected as part of a major US telephone survey on health by the CDC as well as figures from the Bureau of Labor Statistics and other organizations.

The number of people with severe obesity, who are an estimated 100 pounds (45 kg) overweight, or whose BMI is 40 or higher, are expected to rise to a rate of 11 per cent in the United States by 2030, the study added.

This group is of particular concern because risks are highest for poor health conditions related to excess weight and absenteeism from work.

“Should these forecasts prove accurate, the adverse health and cost consequences of obesity are likely to continue to escalate without a significant intervention,” said senior author Justin Trogdon of the non-profit research group RTI International.

According to CDC figures, 35.7 per cent of the US population is obese, and medical costs linked to obesity in 2008 were $147 billion.  Top obesity-related conditions include heart disease, stroke, type 2 diabetes and some kinds of cancer.

Washington, May 7, 2012 (AFP)

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Swiss Re reports very strong first-quarter net income of USD 1.1 billion in comparison to a loss of USD -665 million in the year-earlier period. This result was driven by strong underwriting, good investment performance and lower-than-expected major natural catastrophe claims in the period. The three Business Units – Reinsurance, Corporate Solutions and Admin Re® – each positively contributed to the Group result.

Michel M. Liès, Group CEO, says: “We had a good start to the year with a very strong result in the first quarter. This reflects our ability to perform and grow as prices rise and an excellent asset management result. But we also benefited from an absence of major claims from natural catastrophes. All Business Units contributed to this result. Going forward, we will now seek to reap the benefits of our cycle management, with a focus on profitable growth.”

Strong Group combined ratio; shareholders’ equity rises by USD 1.6 billion

Premiums earned increased by 21.7% to USD 6.2 billion (vs. USD 5.1 billion) as a result of the recent strong renewals. Swiss Re reports a return on investment of 4.0% for the Group as a whole (vs. 3.9%) despite a market environment that continued to be volatile. The return on equity for the first quarter was 15.3%, with a positive contribution from all Business Units. The Group combined ratio was a strong 84.9% (vs. 163.7%) in the first three months of the year. Earnings per share increased to USD 3.33 (CHF 3.08) from a loss of USD -1.94 (CHF -1.84).

At the end of March 2012, shareholders’ equity was USD 31.2 billion (vs. USD 29.6 billion at end 2011), following the issuance of two innovative contingent capital instruments that are accounted for as part of shareholders’ equity. Book value per common share was USD 87.59 (CHF 79.17) vs. USD 86.35 (CHF 80.74) at 31 December 2011.

Strong Reinsurance results

Net income in P&C Reinsurance was an excellent USD 660 million (vs. USD -632 million), partly due to benign natural catastrophe experience. Net premiums earned increased by a very substantial 38.2% to USD 3.1 billion in the first quarter of 2012 (vs. USD 2.2 billion). This strong growth was driven by the successful January 2012 renewals, which included a substantial contribution from large solvency relief transactions. The combined ratio was a very strong 85.0% (vs. 171.0%).

L&H Reinsurance delivered solid results: net income was USD 209 million (vs. USD 14 million). The business benefited from an increase in premiums and fee income, as well as a favourable mortality and morbidity experience compared to expectations.
Given the current challenging market environment, Swiss Re sees opportunities in both P&C and L&H Reinsurance to offer capacity for capital relief, adverse development, structured life and large natural catastrophe covers.

Very good performance from Corporate Solutions with strong premium growth

Net income in Corporate Solutions was USD 84 million (vs. USD -42 million). Net premiums earned increased 28.3% to USD 531 million in the first quarter of 2012 (vs. USD 414 million). This increase was driven by a successful writing of new business. The combined ratio was a very strong 84.7% (vs. 123.9%). The result benefited from an absence of claims from large natural catastrophes. Corporate Solutions continues to grow in line with its strategy to focus on large commercial business as a lean global player, based on the same costing, underwriting quality and portfolio steering for which the Group is well known.

Positive Admin Re® results

Admin Re® reported an exceptional net income of USD 174 million (vs. USD 47 million). The result was supported by a number of one-off items in the quarter, including realised gains of USD 61 million and a one-time tax benefit. Swiss Re will continue to steer the Admin Re® portfolio to optimise capital and returns. In addition, gross cash generation remains an area of focus.
Annualised return on equity significantly above financial targets

Swiss Re has achieved an annualised return on equity of 15.3% in the first quarter, which is significantly above its five-year financial targets 2011-2015. George Quinn, Group CFO, says: “With the new Business Unit structure in place, we will move the Group’s capital towards areas where we see the opportunities are the most attractive. This will better position us to both capture strong growth and deliver the sustained improvements in returns necessary to achieve our five-year targets.”

Successful April renewals

Swiss Re experienced very successful April renewals, which are mainly focused on Asian business. Renewals in Japan were excellent, with Swiss Re benefiting from very strong rate increases in natural catastrophe-related business. The Group was able to build on its strong client franchise and benefit from the clear commitment it had given to the Japanese market last year immediately after the Tohoku earthquake and tsunami. Also other markets in Asia, such as Korea, saw strong and profitable growth. Overall, volumes went up by 14% for the April renewals and the fully economic price quality of the renewed portfolio improved by 17 percentage points.

Swiss Re is well positioned

Michel M. Liès, Group CEO, says: “The excellent performance of our businesses in the first three months demonstrates that we continue to make the progress necessary to achieve our financial targets. We will manage risks prudently while supporting existing and new clients with our capacity and our expertise. We aim to capture the opportunities we see arising from the hardening of the P&C reinsurance market, strong economic growth in the emerging markets and the challenge of regulatory changes such as Solvency II.”

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Legal & General Investment Management delivered another set of healthy new business results during the first quarter of 2012.

Net new business inflows were up 29% to £2.6bn (Q1 2011 £2.0bn) and total assets under management grew to £383bn (FY 2011: £371bn).

Legal & General Investment Management’s Active Fixed Income and Liability Driven Investment (LDI) solutions capabilities continue to be in demand. Combined gross new business flows in to Active Fixed Income and LDI increased to £3.0bn (Q1 2011: £2.4bn).

Legal & General Investment Management’s international diversification continues at pace, with assets under management from international clients increasing to £20.3bn (FY 2011: £18.3bn).

Mark Zinkula, Chief Executive Officer (LGIM) said “We have enjoyed an impressive quarter of growth. Our Fixed Income proposition continues to be popular with clients, and our LDI solutions capabilities are increasingly recognised and sought after – it is particularly pleasing to see these areas attract gross inflows of £3.0bn from new clients this quarter. Our international diversification remains a focus and we continue to see positive growth there.

Markets and the economic situation remain challenging but I am extremely confident that LGIM is well positioned to capitalise on the opportunities these conditions will present.”

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The Lloyd’s market will this month vote for four new members of the Lloyd’s Market Association’s governing body in what has become the most competitive election in the LMA’s 11-year history.

Eight candidates are standing for four seats on the LMA board, with the result due to be announced at the LMA’s annual general meeting on 30 May. Voting has begun and the ballot closes on Friday 18 May.

The eight candidates are:

–   Ian Beaton, Ark Syndicate Management Limited

– Andrew Brooks, Ascot Underwriting Limited

– Charles Franks, R. J. Kiln & Company Limited

– Martin Hudson, Mitsui Sumitomo Insurance Underwriting at Lloyd’s

– Andrew Kendrick, ACE Underwriting Agencies Limited

– David Reeves, Barbican Managing Agency Limited

– Nicholas Sinfield, Catlin Underwriting Agencies Limited

–    Michael Watson, Canopius Managing Agents Limited

David Gittings, the LMA’s Chief Executive, said: “It’s extremely pleasing to see so much interest from the market in serving on the LMA board. With eight candidates for four seats, this is the first time we’ve had such a high degree of competition in our Board election, which I believe reflects the increasingly important role the LMA is playing in the market’s life.”

The LMA board has 12 elected members. Elections take place each year when one third of the elected members stand down.

Voting is weighted based on the managing agency’s capacity, giving each managing agency 1–4 votes.

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XL Group insurance operations has launched a new product, XL Commercial Advance, for companies in the United Kingdom with a turnover of up to £250 million.  This policy for the first time combines XL Group’s  property and liability coverages, providing a comprehensive risk transfer solution for businesses.

XL Commercial Advance combines core coverages for Property, Business Interruption, Money, Employers, Public and Products Liability together with a host of key extensions. The product is aimed at a wide range of industries from manufacturing and engineering through to retail, leisure and real estate, and will be written using XL Group’s recently launched Upper Middle Market Property & Casualty platform.

The policy incorporates the launch of XL Group’s “Back to Business” clause. XL Group have identified the need for businesses to get back on their feet as soon as possible following any loss as a priority.  To assist with this, “Back to Business” promises to pay up to a maximum of £5m shortly after the loss, consisting of a payment of 50% of XL Group’s best estimate of  a valid property damage claim within 14 days of notification of the loss and a defined amount towards any Business Interruption claim within 14 days of details being provided. The remainder of the claim will be adjusted and paid as quickly as possible.

Denis Burniston, Chief Underwriting Officer UK Middle Markets, said “In today’s economic climate, the need for businesses to recommence trading quickly following a loss is particularly relevant. We have developed our Back to Business clause to ensure that our customers are able to do this, minimising the disruption to their businesses.”

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MMA Insurance has announced its 2011 annual results: the final numbers that will be issued before the business is merged with Provident Insurance to form a new entity, Covéa Insurance, in the final quarter of 2012. 

The strong set of results included strategic and financial highlights, as follows:

– Pre-tax Operating Profit rose to £12.1m from £0.3m in 2011

– Combined Operating Ratio fell to 99.6% (2010 – 105.9%)

– GWP was selectively increased to £230m (2010 – £220m) reflecting tough rating action on the MMA private car account (where volume reduced), balanced by growth elsewhere.

– Successful turnaround of the private car account (COR 96.7%) contributed circa 50% of the profit.

– The planned development of Commercial Lines made good progress, particularly bespoke SME business written in the regional network, where growth of 40% was achieved.

– Improvement in the Home COR to 97.9%.

CEO of MMA Garry Fearn commented:  “2011 was a very successful year for MMA Insurance and we were delighted to see our determined action on the Private Car and Commercial Vehicle accounts in 2010 translate into a strong positive return.

 “For MMA as a broker insurer, the development of Commercial Lines is strategically important and with a maturing regional office network substantial growth was achieved in a depressed market without compromising our underwriting discipline.  Particularly pleasing was our progress with Schemes and MGA arrangements which represent a true insurer and broker partnership.

“Home is also a major account for us and against market trends we achieved rating increases in this area, whilst continuing to grow the business mainly through our affinity relationships.

“We look forward to 2012 and our transition into Covéa Insurance with great confidence.  We attribute our success to not just working closely with our selected distribution partners but listening to their needs and those of their customers.  I believe this focus is quite unique in the market.”

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Hannover Re expressed considerable satisfaction with its results for the first quarter of 2012. “We generated exceptionally good Group net income of EUR 261 million in the first three months of the year and have thus put in place a solid platform for a successful 2012 financial year”, Chief Executive Officer Ulrich Wallin commented. “Key drivers here were the highly satisfactory underwriting results in non-life and life/health reinsurance as well as a very good investment performance.”

Vigorous organic growth

Gross written premium for the Hannover Re Group surged by an appreciable 11.7% to EUR 3.5 billion (EUR 3.1 billion) as at 31 March 2012. At constant exchange rates growth would have amounted to 9.5%. The level of retained premium moved slightly higher to 91.0% (89.3%). Net premium earned consequently rose even more strongly by 13.1% to EUR 2.8 billion (EUR 2.5 billion). Growth of 10.8% would have been recorded at constant exchange rates.

Exceptionally good quarterly Group net income

The operating profit (EBIT) as at 31 March 2012 climbed appreciably to EUR 393.2 million on the back of a moderate major loss incidence and very good investment income. The EBIT of EUR 47.4 million booked in the corresponding quarter of the previous year had been impacted by heavy losses from natural catastrophes. Group net income came in around five times higher at EUR 261.3 million (EUR 52.3 million). Earnings per share stood at EUR 2.17 (EUR 0.43).

Non-life reinsurance delivers very pleasing profit contribution

The treaty renewals in non-life reinsurance as at 1 January 2012 passed off favourably for Hannover Re, enabling the company to make the most of opportunities to write profitable business. As anticipated, rate increases were especially marked for property catastrophe business owing to the heavy losses incurred in 2011. The renewals in Germany also produced a pleasing outcome. Developments in specialty lines were similarly satisfactory.

Gross premium in non-life reinsurance increased by a substantial 10.0% relative to the comparable quarter to reach EUR 2.1 billion (EUR 1.9 billion). At constant exchange rates, especially against the US dollar, growth would have come in at 8.1%. The level of retained premium rose to 91.2% (87.8%). Net premium earned climbed 13.0% to EUR 1.6 billion (EUR 1.4 billion), equivalent to growth of 11.0% after adjustment for exchange rate effects.

In the first quarter of 2012 Hannover Re incurred only a few major losses, leaving the net burden of major losses well below the expected level at EUR 60.6 million (EUR 572.1 million). The largest single event was the partial sinking of the Costa Concordia cruise ship in the Mediterranean, which resulted in a net strain of EUR 45.0 million.

In view of the favourable major loss experience, the underwriting result in total non-life reinsurance closed at an extremely pleasing EUR 46.8 million (-EUR 330.9 million), after the comparable quarter had been affected by an extraordinarily large burden of major losses. The combined ratio improved substantially to 96.8% (123.8%).

The operating result (EBIT) for non-life reinsurance improved to a very good EUR 263.2 million (-EUR 24.5 million) as at 31 March 2012 thanks to the positive influencing factors. Group net income soared to EUR 173.2 million (EUR 17.3 million). Earnings per share stood at EUR 1.44 (EUR 0.14).

Very good underwriting result in life and health reinsurance

Hannover Re is thoroughly satisfied with its life and health reinsurance portfolio. “Our risk-oriented life reinsurance business in the United States fared especially well”, Mr. Wallin emphasised. “Building on the platform acquired three years ago with the ING transaction, we have been increasingly successful in writing attractive new business that assures us a growing profit stream over the long term.”

Gross premium income for life and health reinsurance showed a very pleasing increase of 14.3% to reach EUR 1.4 billion (EUR 1.2 billion) as at 31 March 2012. At constant exchange rates growth would amounted to 11.6%. Net premium earned climbed 13.2% to EUR 1.3 billion (EUR 1.1 billion), equivalent to growth of 10.5% on a currency-adjusted basis.

The increased Group net income in life and health reinsurance relative to the previous year was crucially driven by an improved biometric risk experience, especially in the United States and United Kingdom. As a further factor, the narrowing in credit spreads on bond markets favourably affected the derivative recognised for securities deposits held for the account of Hannover Re by US cedants (ModCo). This gave rise to unrealised gains of EUR 36.8 million.

The operating result (EBIT) increased appreciably as at 31 March 2012 to EUR 122.2 million (EUR 58.4 million). The EBIT margin of 9.7% comfortably surpassed the strategic target of 6%. Group net income for life and health reinsurance as at 31 March 2012 climbed to EUR 100.1 million (EUR 41.5 million). Earnings per share amounted to EUR 0.83 (EUR 0.34).

As in previous years, Hannover Re is also reporting on the Market Consistent Embedded Value (MCEV) in the context of its first interim report. This consists of a valuation of the entire life and health reinsurance portfolio. It also encompasses the discounted expected future profits as well as the allocated capital, and hence provides a good basis for assessing long-term profitability. The development of the MCEV was again very pleasing in 2011. As at 31 December 2011 it stood at EUR 3.1 billion (EUR 2.6 billion). This corresponds to growth of 19.4%. The value of new business (excluding non-controlling interests) showed another sharp increase of 61.2% and totalled EUR 240.6 million (EUR 149.3 million).

Very pleasing investment income

Investments developed highly satisfactorily even though market conditions were still difficult. The portfolio of investments under own management showed further growth relative to the level as at 31 December 2011 to reach EUR 29.0 billion (EUR 28.3 billion). Ordinary income from assets under own management improved on the corresponding period of the previous year, climbing by 15.9% to EUR 258.2 million (EUR 222.7 million) despite the prevailing very low level of interest rates; the resulting annualised return of 3.6% was on a par with the previous year. Interest on funds withheld and contract deposits increased to EUR 83.7 million (EUR 75.9 million). The unrealised gains on assets recognised at fair value through profit or loss totalled EUR 84.6 million (EUR 69.0 million). This figure was influenced chiefly by the positive development of the inflation swaps at EUR 42.6 million (EUR 60.2 million) as well as of the ModCo derivatives at EUR 36.8 million (-EUR 1.9 million). Investment income from assets under own management rose to EUR 356.9 million (EUR 316.1 million) as at 31 March 2012, corresponding to an annualised average return of around 5%. Including interest on funds withheld and contract deposits, Hannover Re generated net investment income of EUR 440.6 million (EUR 392.0 million).

Shareholders’ equity reaches new record high

Hannover Re’s equity base was further strengthened. Shareholders’ equity increased by EUR 390.0 million relative to the level as at 31 December 2011 to stand at EUR 5.4 billion (EUR 5.0 billion). The total policyholders’ surplus (including non-controlling interests and hybrid capital) grew by 5.0% to EUR 7.7 billion (EUR 7.3 billion). The book value per share amounted to EUR 44.45 (EUR 41.22). The annualised return on equity reached 20.2% (4.7%).

Outlook

In light of the attractive market opportunities in non-life and life/health reinsurance, Hannover Re anticipates a good 2012 financial year. With this in mind, gross premium should show growth of 5% to 7%.

Market conditions in non-life reinsurance are highly advantageous. The favourable outcome of the 1 January treaty renewals was reinforced by the 1 April renewals and in some areas even surpassed. Particularly in Japan, the rate increases – following on from the rises in the previous year – were again appreciable. Korea similarly saw substantial rate increases. US catastrophe business was also notable for rate rises, which were particularly sizeable for programmes that had been impacted by the series of tornadoes.

Hannover Re also expects the upcoming renewal rounds within the year to pass off favourably overall, with the resulting price increases set to hold firm over the medium term too. For 2012 the company anticipates growth of 5% to 7% in gross premium income from total non-life reinsurance.

The prospects in life and health reinsurance are also very good. In light of attractive business opportunities Hannover Re is looking to grow its gross premium organically by 5% to 7% in the 2012 financial year.

A return on investment of 3.5% is targeted for the asset portfolio in 2012. This is well below the return on investment in the first quarter in view of the fact that the unrealised gains in subsequent quarters cannot be expected to be as positive as in the first quarter.

Based on the good business prospects overall as well as its strategic orientation, Hannover Re is looking forward to a good 2012 financial year. This is conditional on the burden of major losses not significantly exceeding the expected level of EUR 560 million for the full year and assumes that there are no drastic downturns on capital markets.

As for the dividend, Hannover Re continues to aim for a payout ratio in the range of 35% to 40% of its IFRS Group net income after tax.

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