Results of operations
The 2014 financial year was a very pleasing one for Hannover Rück SE. The gross premium of Hannover Rück SE in total business contracted by a modest 1.7% to EUR 10.9 billion (previous year: EUR 11.1 billion). The level of retained premium increased from 75.2% to 79.3%. Net premium earned grew by 3.3% to EUR 8.5 billion (EUR 8.2 billion).
The underwriting result for total business (before changes in the equalisation reserve) declined in the year under review from -EUR 4.7 million to -EUR 15.0 million. An amount of EUR 277.6 million (EUR 267.7 million) was allocated to the equalisation reserve and similar provisions.
| Condensed profit and loss account of Hannover Rück SE | ||
| in EUR thousand | 2014 | 2013 |
|---|---|---|
| Earned premiums, net of retrocession | 8,481,296 | 8,209,507 |
| Allocated investment return transferred from the non-technical account, net of retrocession | 442,194 | 194,599 |
| Other technical income, net of retrocession | 23 | 425 |
| Claims incurred, net of retrocession | 6,801,306 | 6,254,293 |
| Changes in other technical provisions, net of retrocession | 166,116 | 21,669 |
| Bonuses and rebates, net of retrocession | 48 | 1,963 |
| Operating expenses, net of retrocession | 2,301,759 | 2,171,507 |
| Other technical charges, net of retrocession | 1,533 | 3,121 |
| Subtotal | (15,017) | (4,684) |
| Change in the equalisation reserve and similar provisions | (277,646) | (267,717) |
| Net technical result | (292,663) | (272,401) |
| Investment income | 1,739,563 | 1,385,550 |
| Investment charges | 158,722 | 268,993 |
| Allocated investment return transferred to the technical account | (567,810) | (247,895) |
| Other income | 161,566 | 109,866 |
| Other charges | 284,151 | 325,993 |
| Profit or loss on ordinary activities before tax | 597,783 | 380,134 |
| Taxes on profit and income and other taxes | 176,546 | 12,973 |
| Profit for the financial year | 421,237 | 367,161 |
| Profit brought forward from previous year | 94,208 | 89,209 |
| Withdrawals from other retained earnings | – | – |
| Allocations to other retained earnings | 445 | 370 |
| Disposable profit | 515,000 | 456,000 |
Major loss expenditure in the year under review was lower than in 2013. Although the hurricane season once again passed off unremarkably, a number of natural catastrophe events were recorded. In Western Europe, for example, the low pressure area Ela caused extensive damage. The resulting net strain for Hannover Re’s account was EUR 15.9 million. For the aviation line the year under review was a particularly costly one. The largest single loss derived from attacks on Tripoli airport, for which we have set aside net reserves of EUR 47.9 million. The total net expenditure incurred by Hannover Rück SE from major losses was EUR 257.0 million (EUR 283.2 million).
Ordinary investment income including deposit interest comfortably exceeded the previous year’s level to reach EUR 1,589.6 million (EUR 1,304.8 million). This was due principally to increased income from the similarly enlarged volume of deposits with ceding companies and higher distributions from our investment holding companies. Net gains of EUR 104.0 million (EUR 43.5 million) were realised on disposals. Write-downs of EUR 92.9 million (EUR 186.7 million) were taken on investments. The decrease is for the most part attributable to extraordinary income booked in the previous year on shares in affiliated companies and fixed-income securities. The write-downs contrasted with write-ups of EUR 30.5 million (EUR 14.4 million) that were made on assets written down in previous periods in order to reflect increased fair values. Provisions for contingent losses of EUR 19.9 million (EUR 21.7 million) were established due to lower fair values of some of our inflation swaps. They were opposed by reversals of provisions for contingent losses constituted for technical derivatives in an amount of EUR 1.9 million (EUR 6.1 million).
All in all, our net investment result improved to EUR 1,580.8 million (EUR 1,116.6 million).
The profit on ordinary activities increased to EUR 597.8 million (EUR 380.1 million). The year under review closed with a profit for the year of EUR 421.2 million (EUR 367.2 million).
