15 November 2007
Profitability up 92% at Euler Hermes in Q3 2007.
Third quarter (30 September) turnover levels were lower by 0.7% at €510.4m and, with claims in the year to date down 7.5% by number and 6.5% by value, produced a net consolidated result of €128.6m which is up 91.8% thereby allowing the board to express confidence that profitability targets for 2007 will be met.
Flat premium growth was attributed to lower growth from Germany due to pressure on rates and the transfer of Prisma (Austria) inward premium to EH Re, the group reinsurance arm. Strong competition in the Netherlands caused lower growth there and the stronger €/$ exchange rate also contributed.
Year to date figures show premium is up 3% at €1,285.6m and overall turnover at €1,562m, also up 3%. While net profit is up 52% at €360m. Combined ratios are running at 63.8% down almost 6% on a year earlier.
Premiums ceded to reinsurers to date are down by 20% on last year at €346m. Retained premium levels are running at 73%, which is in line with the stated target of reaching 75% retention by end 2007.
The lower levels of ceded premiums have made a significant contribution to the increase in profitability this year with claims attaching to the current year premiums down by more than 10%. Despite the higher levels of retention, net claims costs are still going lower, due to higher claims markets having higher reinsurance levels.
Predictions for 2008 include commodity prices that remain high (good for premium levels based on whole turnover policies) and world trade volume growth to slow from 8.8% in 2007 to 5.9%. Global GDP is expected to decelerate to 3.3%, with the US and the EU resynchronizing their economies at 2.2% and 3.1% respectively. Emerging markets could be the main drivers of world growth, with Asia (excluding Japan) predicted to see an average growth of 8.4%.
Euler Hermes Press Release (PDF)
Euler Hermes Results Presentation (PDF)
Euler Hermes audio of results discussion (WAV)