Results of operations

The 2017 financial year passed off satisfactorily for Hannover Rück SE. The gross premium of Hannover Rück SE in total business grew by 11.5% to EUR 13.3 billion (previous year: EUR 11.9 billion). The level of retained premium rose from 72.4% to 78.4%. Net premium earned also increased, climbing by 19.6% to EUR 10.2 billion (EUR 8.5 billion).

The underwriting result (before changes in the equalisation reserve) contracted in the reporting period from EUR 336.8 million to EUR -12.7 million. Following a withdrawal of EUR 8.7 million in the previous year, an amount of EUR 165.9 million was withdrawn from the equalisation reserve and similar provisions in the year under review.

Unlike in the previous years, the level of large losses in 2017 was significantly higher than anticipated. After a moderate loss experience in the first six months of the year, the second half was impacted by severe natural catastrophe events. The (re)insurance industry had to cope with its most costly hurricane season to date, as three storms followed in quick succession. Several other natural disasters also occurred, including the destructive earthquakes in Mexico and devastating forest fires in California. The total net expenditure from large losses for Hannover Rück SE was EUR 689.8 million (EUR 340.1 million).

Ordinary investment income including deposit interest fell clearly short of the previous year’s level at EUR 1,002.9 million (EUR 1,197.9 million), principally due to lower distributions from our investment holding companies and reduced income from funds withheld and contract deposits. The ordinary income from fixed-income securities nevertheless remained relatively stable despite the persistently very low interest rate level, declining only slightly to EUR 419.0 million (EUR 430.0 million). Net gains of EUR 247.9 million (EUR 132.9 million) were realised on disposals. The sharp increase can be attributed in part to regrouping measures in connection with regular portfolio maintenance, but primarily to the liquidation of our portfolio of non-strategic listed equities at the end of the third quarter. Write-downs of just EUR 20.7 million (EUR 34.9 million) were taken on investments. They were attributable mainly to bearer debt securities held as current assets. The write-downs contrasted with write-ups of EUR 13.7 million (EUR 25.9 million) that were made on assets written down in previous periods in order to reflect increased fair values.

All in all, the net investment result retreated to EUR 1,197.5 million (EUR 1,287.0 million). The balance of other income and charges changed from EUR -113.2 million to EUR -196.3 million. The profit on ordinary activities decreased to EUR 968.0 million (EUR 1,241.8 million). The year under review closed with a profit for the year of EUR 843.4 million (EUR 949.2 million).