By Patience Saghana
German reinsurer, Hannover Re, which is 50.1%-owned byÂ Â Â Talanx, said Friday that it still expects â‚¬5 ($7) earnings per share this year, a 20% rise in gross premium income and an after-tax return on equity of at least 18%.
The dividend payout ratio is affirmed at between 35% and 40% of net profit. Ulrich Wallin takes over as CEO from July 1. Mr Wallin said that the reinsurer was considering a significant level of reinvestment in the stock market from the end of this year, which could entail a â€œnotable involvement in 2010 and 2011â€.
He anticipated a return on investment (RoI) of between 3% and 4% over the next two to three years, increasing to about 4% in 2013. Earlier, chief financial officer Roland Vogel had estimated RoI for 2009 at between 3.4% and 3.8%, down from a February 2009 full-year estimate of 4%.
Mr Vogel said that the company had revised its investment portfolio to make it less sensitive to interest rate changes. He added that the reinsurer had no plans to increase its holdings of non-investment grade corporate bonds, but that it would slightly increase its investment levels in corporate bonds of defensive sectors.
Hannover Re expected a combined ratio averaging 97.5% in the mid-term. Mr Wallin said that the reinsurer would reduce the volatility of the non-life business by reducing the underwriting of natural disaster reinsurance business. The company does not plan any acquisitions in the non-life sector in the near-term, Mr Wallin revealed, but in life/health reinsurance the company would continue to look for suitable acquisitions.