NU Online News Service, March 11, 2:49 p.m. EST

Hannover Re Group reported net income rose substantially for 2009, up EUR858 million ($1.17 billion at the current exchange rate) compared to a loss for 2008 on the strength of a moderate catastrophe loss year and its acquisition of ING life reinsurance portfolio.

The Hannover, Germany-based company reported net income of EUR731 million ($1 billion), or EUR6.06 ($8.29) a share for 2009 compared to net loss of EUR127 million ($174 million), or negative EUR1.05 ($1.44) a share, for 2008.

The results were helped by a 26.5 percent increase in gross written premiums, rising EUR2.15 billion ($2.95 billion) to EUR10.3 billion ($14.1 billion).

Hannover Re's property and casualty business net income rose from a net loss in 2008 of EUR161 million ($220 million) to net income of EUR473 million ($646 million) in 2009.

Gross written premium for P&C rose 15 percent, or EUR759 million ($1.04 billion), to EUR5.75 billion ($7.86 billion).

The company's combined ratio rose 1.2 points to 96.6 on the year.

The insurer said catastrophe losses of EUR240 million ($328 million) for 2009 were below the expected level. The largest single loss event for Hannover Re was the severe bush fires in Australia, which cost the company EUR35 million ($48 million). Winter Storm "Klaus" and the crash of an Airbus each produced loss expenditure of EUR34 million ($46 million).

The insurer added that the slightly higher combined ratio reflected a prudent reserving policy and that it further increased the safety level of its loss reserves.

Hannover went on to say that non-life reinsurance delivered substantial profit contribution in the wake of the heavy loss expenditures incurred in 2008.

It also saw stable prices and obtained price increases in 2009. In some segments, such as credit and surety insurance or catastrophe business, the price rises even ran into double-digit percentages, the company said.

"In view of the very favorable market conditions we stepped up our involvement, especially in attractive segments," said Ulrich Wallin, chief executive officer.

In the life and health segment, net income rose EUR217 million ($297 million) to EUR296 million ($404 million). Gross written premium in the segment rose EUR1.4 billion ($1.9 billion) to EUR4.5 billion ($6.2 billion).

Hannover Re said it is optimistic in its outlook for this year adding that January renewals for property and casualty business "passed off in line with expectations."

"Given our very good ratings we are able to profit from market opportunities and consequently expect business to develop favorably," Mr. Wallin said.

For 2010 Hannover Re said it would maintain underwriting discipline to maintain adequate rate or underwrite in segments where prices are rising. This would be particularly true of worldwide credit and surety reinsurance as well as aviation business.

"In non-life reinsurance we anticipate growth of around 4 percent in net premium and a healthy profit contribution," Mr. Wallin noted.

Regarding catastrophe losses the company suffered from the earthquake in Chile and winter storm Xynthia, which struck Europe, losses stand at EUR185 million ($253 million) for the earthquake and EUR40 million ($55 million) from the winter storm.

Despite these early, unexpected losses, the company's assumption that its return on equity of at least 15 percent remains unchanged. However, obtaining that number is "conditional upon there being no further exceeding of the major loss expectancy and no drastic downturn [in the] capital markets."