(Bloomberg) — Hannover Re, the world's third-biggest reinsurer, said second-quarter profit rose 10%, helped by a lower level of large claims and higher life reinsurance earnings.
Net income climbed to 211.5 million euros ($282.7 million) from 192.3 million euros a year ago, the reinsurer said in a statement today. Profit compared with the 223.8 million-euro average estimate of 11 analysts surveyed by Bloomberg.
Reinsurers help primary insurers such as Allianz SE and Axa SA shoulder risks for clients. They are facing pressure on their earnings as reinsurance rates decline amid lower-than-average disaster claims and record capital available for their coverage. Funds available in the reinsurance market grew to a record $555 billion by the end the first quarter, according to reinsurance broker Aon Benfield.
The Hanover, Germany-based reinsurer, led by Chief Executive Officer Ulrich Wallin, confirmed its full-year profit target of about 850 million euros for this year. That compares with 895.5 million euros reported for 2013.
Earnings at the life reinsurance unit more than doubled to 72 million euros, while the non-life unit reported a decline of 20% to 150 million euros. The quarter's major losses were “again slight,” lowering costs for major claims this year to 104.7 million euros from 259.5 million euros a year ago, Hannover Re said.
While the first-half's lower-than-average catastrophe claims help reduce claims costs, they also limit pricing power for the industry. Reinsurance rates declined in the main renewals of annual treaties in January, April and July. They fell in seven of the last 10 years, according to the Guy Carpenter World Property Catastrophe Rate on Line Index.
Hannover Re shares rose 1.4% this year, valuing the company at 7.6 billion euros. The Bloomberg Europe 500 Insurance Index fell 0.3%.
Germany's third-biggest insurer, Talanx AG, owns 50.2% of Hannover Re.
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