Hannover Re share generates annual return of 11%

Hannover Re share generates annual return of 11%

The Hannover Re share opened 2013 at EUR 58.96, having significantly outperformed its sector in the prior year with a price gain of 53.8%. Assisted by expectations of another very good result for the financial year, the share fared well in the first quarter to reach its highest point of the year – and at the same time a new record high – of EUR 64.34 on 14 March. The information that came out of the treaty renewals in non-life reinsurance during the year gave indications of growing competitive pressure, especially for coverage of US natural catastrophe risks. These insights prompted uncertainty among investors as to the implications for reinsurers’ growth and earnings prospects going forward. Furthermore, heavy overall losses were caused by weather events in Hannover Re’s domestic German market towards the middle of the year, while at the same time discussions were ongoing in relation to the effects of the low interest rate environment on the investment return generated by insurers and reinsurers. Against this backdrop the share ultimately sank to its lowest point of the year of EUR 52.42 on 6 September. The price recovery that subsequently set in was driven inter alia by a loss experience that remained within expectations overall as well as by a more intensive dialogue initiated with investors in view of the concerns mentioned above. At the end of the financial year the Hannover Re share was listed 5.8% higher at EUR 62.38, thereby delivering a performance of 11.1% including reinvested dividends.

Following on the heels of a stellar performance in the previous year, the share thus fared considerably more poorly over the year than its benchmark indices – the DAX (+25.5%), MDAX (+39.1%) and Global Reinsurance Index (+26.4%).

In a three-year comparison (see chart on the following page) the Hannover Re share delivered a performance (including reinvested dividends) of 81.3%, thereby again clearly beating the DAX (38.2%), MDAX (64.6%) and Global Reinsurance Index (55.7%).

Based on the year-end closing price of EUR 62.38, the market capitalisation of the Hannover Re Group totalled EUR 7.5 billion at the end of the 2013 financial year, an increase of EUR 0.4 billion or 5.8% compared to the previous year’s figure of EUR 7.1 billion. According to the rankings drawn up by Deutsche Börse AG, the company placed eighth in the MDAX at the end of December with a free float market capitalisation of EUR 3,659.4 million. Measured by trading volume over the past twelve months, the share came in at number 9 in the MDAX with a volume of EUR 3,039.9 million. The Hannover Re Group thus continues to rank among the 40 largest listed companies in Germany.

With a book value per share of EUR 48.83 the Hannover Re share showed a price-to-book (P/B) ratio of 1.3 at the end of the year under review; compared to the average MDAX P/B ratio of 2.4 as at year-end the share thus continues to be very moderately valued.

Highs and lows of the Hannover Re share

Highs and lows of the Hannover Re share (chart) enlarge zoom

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