Outlook for the full 2011 financial year
We expect another very good overall result for the Hannover Re Group in the current year. The non-life reinsurance business group is expected to deliver stable or slightly higher net premium income, with an increase of up to 3%. Despite the continued trend towards softening markets, we anticipate a very good result for 2011. The life and health reinsurance business group is forecast to generate net premium growth of 10% to 12% and an EBIT margin in excess of 6%.
The expected positive cash flow that we generate from the technical account and our investments should – subject to stable exchange rates – lead to further growth in our asset portfolio. In the area of fixed-income securities we continue to stress the high quality and diversification of our portfolio. We are targeting a return on investment of 3.5% for 2011.
Bearing in mind the satisfactory to good market conditions described above in non-life and life/health reinsurance as well as our strategic orientation, we are looking forward to another good financial year in 2011. We expect our gross premium volume in total business to grow by about 5%. If no allowance is made for the special effects that favourably influenced the result in 2010, the net income generated by the Hannover Re Group will inevitably fall short of the previous year’s level. As things currently stand, based on our positioning and our financial strength as well as the business prospects described above, we expect Group net income to come in at around EUR 650 million. This is subject to the premise that the burden of catastrophe losses does not significantly exceed the expected level of around EUR 530 million and that there are no drastically adverse movements on capital markets. For 2011, as in recent years, we are therefore aiming for a dividend in the range of 35% to 40% of Group net income.
Matters of special significance arising after the closing date for the consolidated financial statements are discussed in Section 7.11 of the notes “Events after the balance sheet date”.
| Profit and growth targets for 2011 | |||
|---|---|---|---|
| Business group | Key data | Strategic targets | |
1 IVC/net premium earned |
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2 MCEV increase on the basis of the adjusted MCEV of the previous year after elimination of capital changes and changes from currency effects |
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3 Risk-free interest rate + cost of capital |
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4 750 basis points above the risk-free return |
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| Non-life reinsurance | Combined ratio | ≤ 100% | |
| Net catastrophe loss expectancy in EUR million | ≤ 530 | ||
| EBIT margin | ≥ 10% | ||
| IVC margin1 | ≥ 2% | ||
| Life and health reinsurance | Gross premium growth | 10 - 12% | |
| EBIT margin | ≥ 6% | ||
| MCEV increase2 | ≥ 10% | ||
| Increase in the value of new business | ≥ 10% | ||
| Group | Investment return | ≥ 3.5%3 | |
| Minimum return on equity | ≥ 11.1%4 | ||
 Triple-10 targets |
EBIT growth | ≥ 10% | |
| Growth in earnings per share | ≥ 10% | ||
| Growth in book value per share | ≥ 10% | ||