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Results of operations
The 2016 financial year passed off highly satisfactorily for Hannover Rück SE. The gross premium of Hannover Rück SE in total business decreased as anticipated by 15.7% to EUR 11.9 billion (previous year: EUR 14.1 billion). The level of retained premium contracted from 73.0% to 72.4%. Net premium earned also fell, declining by 16.1% to EUR 8.5 billion (EUR 10.2 billion).
The underwriting result (before changes in the equalisation reserve) improved in the year under review from EUR 158.4 million to EUR 336.8 million. Following an allocation of EUR 136.1 million in the previous year, an amount of EUR 8.7 million was withdrawn from the equalisation reserve and similar provisions.
| Condensed profit and loss account of Hannover Rück SE | ||
| in EUR thousand | 2016 | 2015 |
|---|---|---|
| Earned premiums, net of retrocession | 8,534,768 | 10,178,602 |
| Allocated investment return transferred from the non-technical account, net of retrocession | 237,271 | 328,840 |
| Other technical income, net of retrocession | – | 15 |
| Claims incurred, net of retrocession | 6,905,906 | 7,222,016 |
| Changes in other technical provisions, net of retrocession | 331,795 | (1,020,247) |
| Bonuses and rebates, net of retrocession | 30 | (12) |
| Operating expenses, net of retrocession | 1,860,197 | 2,105,799 |
| Other technical charges, net of retrocession | 902 | 1,056 |
| Subtotal | 336,799 | 158,351 |
| Change in the equalisation reserve and similar provisions | 8,724 | (136,129) |
| Net technical result | 345,523 | 22,222 |
| Investment income | 1,385,001 | 1,862,593 |
| Investment charges | 98,049 | 166,675 |
| Allocated investment return transferred to the technical account | (277,463) | (532,949) |
| Other income | 171,464 | 160,761 |
| Other charges | 284,704 | 281,979 |
| Profit or loss on ordinary activities before tax | 1,241,772 | 1,063,973 |
| Taxes on profit and income and other taxes | 292,540 | 158,172 |
| Profit for the financial year | 949,232 | 905,801 |
| Profit brought forward from previous year | 85,163 | 2,462 |
| Allocations to other retained earnings | 395 | 250,263 |
| Disposable profit | 1,034,000 | 658,000 |
Major loss expenditure in the year under review was notable for several severe earthquakes as well as windstorm events. Man-made losses were also recorded. Altogether, the burden of large losses for Hannover Rück SE was in line with expectations, despite coming in higher than in the previous year. The largest single loss for our account was the earthquake in Ecuador with a net strain of EUR 46.3 million. In addition, after several years of moderate storm seasons in the United States and the Caribbean, a costly event was incurred in the shape of Hurricane Matthew. The resulting loss for our company amounted to EUR 39.8 million. The total net expenditure from large losses for Hannover Rück SE was EUR 340.1 million (EUR 330.6 million).
Ordinary investment income including deposit interest fell clearly short of the previous year’s level at EUR 1,197.9 million (EUR 1,737.8 million). This was due principally to the non-recurrence of special distributions made by our investment holding companies in the previous year as well as to reduced income from funds withheld and contract deposits owing to expiring contracts at our branch in China. This decrease is offset by the corresponding non-recurrence of interest expenses on funds withheld and contract deposits associated with the very same contracts, as reflected under other income and charges. Net gains of EUR 132.9 million (EUR 94.0 million) were realised on disposals. Write-downs of just EUR 34.9 million (EUR 83.2 million) were taken on investments. They were attributable principally to bearer debt securities held as current assets. The write-downs contrasted with write-ups of EUR 25.9 million (EUR 5.1 million) that were made on assets written down in previous periods in order to reflect increased fair values.
All in all, our net investment result retreated to EUR 1,287.0 million (EUR 1,695.9 million).
The profit on ordinary activities increased to EUR 1,241.8 million (EUR 1,064.0 million). The year under review closed with a profit for the year of EUR 949.2 million (EUR 905.8 million).