HANNOVER, Germany, Sept. 2, 2005 (PRIMEZONE) -- Hurricane "Katrina" is presumably set to become the most expensive ever natural disaster suffered by insurers in industry history. Estimates of the total insured losses currently amount up to USD 30 billion.
With this in mind Hannover Re anticipates a net loss burden resulting from this hurricane of EUR 250 million before tax. It should also be noted that the financial year had already witnessed an above-average intensity of major claims prior to Hurricane "Katrina".
As has been explained on previous occasions, Hannover Re bases its profit expectation on a number of factors -- including projected major loss expenditure in the order of 6% of net premiums earned in property and casualty reinsurance; this figure reflects the multi-year average burden of major losses. As at 30 June 2005 actual expenditure on major losses - at EUR 112.3 million or 6.1% of net premiums -- was still roughly on a par with this level. The third quarter then saw numerous additional major loss events: Hurricane "Dennis" in the United States, damage to an oil platform in the Indian Ocean, several aviation claims, flooding in Mumbai, India, and most recently the floods in German-speaking parts of the Alpine region. All in all, the major loss expenditure incurred to date in 2005 is nearly EUR 500 million. The proportion of major losses relative to the total net premiums that the company expects to earn in the financial year is consequently already at least double the multi-year average.
As a result the profit expectation, which among other things is always under the provision that the burden of major losses remains within the multi-year average, can not be achieved anymore for this year. The company now expects an overall result that is at least at the level of the previous year (EUR 309.1 million), thus also in 2005 generating a return on equity in the double-digit percentage range. "In view of the extraordinarily heavy burden of losses this is a very good performance," CEO Wilhelm Zeller emphasised.
Unscathed by Hurricane "Katrina", the rest of Hannover Re's property and casualty reinsurance portfolio continues to perform very well. "It is our assumption that 'Katrina' -- just like last year's hurricanes -- will have further favourable implications for the treaty negotiations as at 1 January 2006 and we expect to see additional significant hardening of prices and conditions in natural catastrophe and marine reinsurance", Mr. Zeller stressed.
Hannover Re will be providing more detailed insights into its expectations for the treaty renewal season on 12 September 2005 at its press breakfast to be held as part of the Reinsurance Rendez-Vous in Monte Carlo.
Hannover Re, with gross premiums of approximately EUR 10 billion, is one of the largest reinsurance groups in the world. It transacts all lines of property/casualty, life/health and financial/finite-risk reinsurance as well as specialty insurance. It maintains business relations with more than 5,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices in 18 countries. The rating agencies most relevant to the insurance industry have awarded Hannover Re very strong insurer financial strength ratings (Standard & Poor's AA- "Very Strong" and A.M. Best A "Excellent").
Disclaimer: Some of the statements in this press release may be forward-looking statements or statements of future expectations based on currently available information. Such statements naturally are subject to risks and uncertainties. Factors such as the development of general economic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. Hannover Re does not make any representation or warranty, express or implied, as to the accuracy, completeness or updated status of such statements. Therefore, in no case whatsoever will Hannover Re and its affiliate companies be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this press release or for any related damages.