Hannover Re unconcerned by Sandy payouts

GERMAN reinsurer Hannover Re said yesterday that it expects to post a substantial rise in profits this year, despite the possibility of payouts following Hurricane Sandy.

The company, which offers secondary cover for some of the world’s biggest insurers, predicted that net profit for 2012 will pass €800m (£641m). This represents increase of a third on last year and is well above analysts’ expectations.

Hannover Re’s optimism is borne out by yesterday’s announcement that income jumped 63 per cent to €265.5m in the third quarter.

“The group net income reported for the first nine months puts in place a good platform for achieving a very pleasing result for the full 2012 financial year,” said chief executive Ulrich Wallin.

A large part of the improvement can be attributed to an increase in gross premiums, which were up 13.6 per cent in the first nine months of 2012.

Although it is too early to give an estimate for damage claims from Hurricane Sandy, Hannover Re said it expected to be able to absorb any losses, including those from business interruption claims, within its projected budget for the year. The firm has used up only €193m in the first nine months of the €560m it had pencilled in for big damage claims in 2012.

Tom Carstairs, an analyst at Berenberg bank, reiterated his “buy” rating with a target price of €56.50. Yesterday the shares closed up 4.5 per cent in Frankfurt at €55.90.