Annual Report 2003 - Hannover Re

Management report
business development
Consequences of the "as-if-pooling" accounting method for the Hannover Re Group's statement of
income and stockholders' equity
1.1.–31.12.2003
Figures in EUR million
Commercial
treatment
US GAAP
"As-if-pooling"
method
Difference
Statement of income
Gross written premiums 11 342.9 11 588.1 245.2
Net premiums earned 8 155.6 8 256.4 100.8
Operating profit (EBIT) 732.1 803.2 71.1
Net income 354.8 418.3 63.5
Earnings per share in EUR 3.24 3.60 0.36
Stockholders' equity
Common stock 120.6 120.6 –
Additional paid-in capital 764.2 724.6 (39.6)
Other comprehensive income (217.6) (202.8) 14.8
Retained earnings 1 737.5 1 762.3 24.8
Total stockholders' equity 2 404.7 2 404.7 –
Business development
Best operating profit
in company history
We can look back on a highly successful
2003 financial year: with EBIT of EUR 732.1 million
we generated the best operating profit in
the company's history (previous year: EUR 470.9
million). The net income of EUR 354.8 million
also improved substantially on the previous year
(EUR 267.2 million), producing earnings of EUR
3.24 (EUR 2.75) a share. All four of Hannover
Re's business groups made a positive contribution
to this highly gratifying performance.
Gross premium income contracted by 9.0%
year on year to EUR 11.3 billion (EUR 12.5 billion).
Yet at constant exchange rates, i.e. without
the euro's rise against the US dollar, gross premiums
would have grown by 1.9%.
The "hard market" in property and casualty
reinsurance was again sustained across virtually
all lines of business and regions in the year under
review. Although the gross premium volume contracted
by 20.5% (adjusted for exchange-rate
effects: -13.9%) compared to the previous year –
owing to the restructuring of the relationship
with the HDI companies and the strength of the
euro – net premiums remained stable. Net income
after tax was boosted by 8.3% over the
previous year.
Gross premiums in life and health reinsurance
contracted by 7.9%, although adjusted for
exchange-rate effects they would have grown
by 2.2%; net premiums declined by 9.6%. Life
and health reinsurance also generated gratifying
income: with a ratio of EBIT to net premiums
earned of 3.2% (2.3%) we moved another step
closer to our medium-term target of 5.0%.
Financial reinsurance was a driver of growth
within the Hannover Re Group in the year under
review, with gross premium income rising by
31.4% or as much as 48.5% adjusted for exchange-rate
effects. It should be borne in mind,
however, that this growth was to some extent
promoted by the first-time consolidation of HDI
Reinsurance (Ireland) Ltd. Net premiums earned
climbed by 29.1% and net income for the year
surged by 149.6%.
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