Volatile performance of the Hannover Re share

The Hannover Re share stood at EUR 102.80 going into the year. Despite the continued intensely competitive climate in the reinsurance industry, the company was able to raise its guidance for the 2017 financial year at the beginning of February. This was prompted by a renewal season as at 1 January 2017 that surpassed expectations in terms of premium volume. Boosted by the unveiling of a fifth consecutive record profit for the year, the share price rose steadily during the spring and reached its highest point of the year – and at the same time a new alltime high – of EUR 115.65 one day before the Annual General Meeting on 9 May 2017. Following payment of the dividend the share went on to list at a correspondingly lower level and in the ensuing months until late summer it moved in a volatile sideways direction. In the third quarter the impacts of three hurricanes within the space of just four weeks on the US coast and the Caribbean as well as two severe earthquakes in Mexico caused the share price to retreat sharply in the face of the expected losses. On 7 September 2017, following the announcement that Hurricane “Irma” would make landfall on the Florida coast, the share price fell to its lowest level of the year at EUR 95.95. It was indeed the case that the natural disasters in the third quarter led to a volume of losses in excess of the multi-year average. Against this backdrop, Hannover Re adjusted its profit guidance for the year under review on 21 September by publishing an ad hoc notification. At the same time, the losses prompted a turnaround in market sentiment after five years of large loss expenditures below the anticipated levels and rates were expected to move higher in the upcoming renewals. The share price consequently experienced a trend reversal. At the end of the financial year the Hannover Re share closed with a gain of 2.0% at EUR 104.90, delivering a performance of 6.8% including reinvested dividends. Looked at over the year as a whole, the Hannover Re share thus fared somewhat more poorly than its benchmark indices, namely the DAX (+12.5%) and MDAX (+18.1%); it nevertheless beat the Global Reinsurance (Performance) Index (-8.9%), although this was significantly impacted by the softening of the US dollar against the euro owing to its heavy USD weighting. The Global Reinsurance Index tracks the share performance including dividend payments of the world’s 15 largest reinsurers. Hannover Re measures its performance by this benchmark index.

In a three-year comparison the Hannover Re share delivered a performance (including reinvested dividends) of 61.0%. It therefore once again clearly outperformed the DAX (31.7%), MDAX (54.7%) and Global Reinsurance Index (30.5%) benchmarks.

Based on the year-end closing price of EUR 104.90, Hannover Re’s market capitalisation totalled EUR 12.7 billion at the end of the 2017 financial year, an increase of EUR 0.3 billion or roughly 2% compared to the previous year’s figure of EUR 12.4 billion. According to the rankings drawn up by Deutsche Börse AG, the company placed ninth in the MDAX at the end of December with a free float market capitalisation of EUR 6,450.6 million and nineteenth with a trading volume of EUR 3,850.2 million over the past twelve months.

With a book value per share of EUR 70.72 the Hannover Re share showed a price-to-book (P / B) ratio of 1.48 at the end of the year under review; compared to the average MDAX P / B ratio of 2.10 as at year-end, the share thus continues to be very moderately valued.