PROFITS AT Hannover Reinsurance (Ireland) Limited, the largest reinsurance company at the International Financial Services Centre (IFSC), fell by 74.2 per cent in 2007, following a €28 million writedown caused by a restructuring of the firm’s Irish operations.
Profits plunged to €9.2 million, down from €35.7 million in 2006.
However, business remained strong at the reinsurer, which is part of the Hannover Re Group, one of the world’s largest reinsurers, with gross premium income growing by 8.7 per cent during 2007 to €503.5 million, up from €463.3 in 2006, according to the firm’s 2007 annual report.
Hannover Re’s Irish based non-life reinsurance operations were consolidated during 2007 for administrative reasons, and the business assets and liabilities of Hannover Reinsurance (Dublin) and ES Reinsurance (Ireland) were transferred to Hannover Reinsurance (Ireland).
This incurred a €22.2 million writedown in the company’s investment in Hannover Reinsurance (Dublin) and a €5.3 million write-down in ES Reinsurance (Ireland).
Employees from the two firms transferred to Hannover Reinsurance (Ireland), bringing total employment up to 19 people, up from eight in 2006. The group also has a life reinsurance operation in Dublin, Hannover Life Reassurance (Ireland), which was not involved in the consolidation.
The firm suffered in 2007 from the fallout following former New York attorney general Eliot Spitzer’s investigations into finite reinsurance contracts in 2005.
These investigations led to the collapse of Dublin-based reinsurer, Cologne Re and a reluctance among insurance clients to use such contracts.
As Hannover Reinsurance (Ireland) focuses on finite reinsurance business – or structured reinsurance as it is now referred to – the firm saw business, particularly in the US, fall off during the year, according to a company spokesman. But he added that “people are coming to terms again” with finite reinsurance products, and so far this year the firm has begun to see growing demand for its products in the US.
The firm has changed its strategic direction by deciding to concentrate on business in North America and the UK going forward, with new business emanating predominantly from there.
“This gives the company more focus and will enable us to fully deploy our expertise in those areas,” said the company.
