Executive Summary of 2009 Business Results
Development of Premium Income
The gross premium income booked in the year under review totalled EUR 4.5 billion (EUR 3.1 billion), an increase of 44.5% year-on-year.
A milestone for the year under review was the assumption of a large portfolio of US life insurance risks containing more than four million reinsured policies and generating annual premium income in excess of USD 1.0 billion.
While the assumption of the US portfolio accounted for EUR 0.8 billion in premium volume, organic growth in the year under review was also on a double-digit percentage level. At constant exchange rates the gross premium would have grown by 46.2%. Net premium earned came in at EUR 4.1 billion, while the retention stood at 90.7%.
We strengthened our market position in the focus markets of the United States, United Kingdom, Germany, France and Australia. We also made progress in the key emerging markets of Greater China and India.
Our acceptances continue to be concentrated on the life and annuity lines (i.e. assumption of mortality and longevity risks), which contributed 86.6% of total premium income booked worldwide.
Morbidity risks covered by Hannover Life Re encompasses above all the US senior health Medicare Supplement products, long-term care covers in German-speaking countries and in some Asian markets as well as disability annuities in Australia and accounted for 11.5% of premium volume in the year under review. 1.9% of premium volume was attributable to individual accident business from various countries.
Results
The operating profit (EBIT) climbed to EUR 372.2 million, generating an EBIT margin of 9.1%. This high is attributable to the non-recurring special effects associated with assumption of the ING life reinsurance portfolio as well as with the fair value adjustments taken on reinsurance deposits furnished to cedants in the United States and United Kingdom.
However if these effects are factored out the ordinary operating profit stands at EUR 230.0 million, in line with our expectations.
With a tax ratio of 19.7% and after allowance for minority interests, consolidated net income after tax came in at EUR 295.5 million (EUR 78.3 million), an all-time record for Hannover Life Re. This was equivalent to earnings of EUR 2.45 per share.
Internal administrative expenses totalled EUR 98.3 million in the year under review, corresponding to 2.2% of gross written premium. Our administrative expense ratio is thus significantly lower than that of our major competitors.
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