February 7, 2018 / 7:33 AM / 2 years ago

UPDATE 1-Hannover Re sees 2018 net profit of more than 1 bln euros

* Stabilization in prices behind Hannover Re’s optimism

* 2017 net profit above previous guidance

* Storms weigh on parent Talanx’s bottom line in 2017 (Adds details, background, wraps in Talanx)

FRANKFURT, Feb 7 (Reuters) - Hannover Re said on Wednesday that it was optimistic for 2018 after treaty renewals at the start of the year showed a stabilization in prices and forecast full-year net profit of more than 1 billion euros ($1.24 billion).

For 2017, the German reinsurer anticipates net profit of 950 million euros, down from the previous year after a spate of natural disasters but better than the 800 million it had predicted in November.

“Even though this result falls short of the previous year’s figure, it can nevertheless be considered satisfactory if we bear in mind that 2017 was dominated by natural catastrophe events which caused insured losses substantially in excess of $100 billion,” said Chief Executive Officer Ulrich Wallin.

The sector, already struggling with thin margins, stiff competition and falling prices, came under additional pressure after a series of severe hurricanes, wildfires and earthquakes struck North America.

Those disasters also weighed on Hannover Re’s parent company Talanx, which reported on Wednesday its net profit had declined to 670 million euros in 2017 from 907 million in 2016.

A big question for the industry has been whether the run of catastrophes would allow reinsurers to achieve higher prices for their coverage, which have been in decline for years.

Hannover Re said prices stabilized in the annual round of contract renewals at the start of the year. “It was generally possible to obtain a premium at least on a par with the previous year,” the company said.

The company said it expected further price increases amid “elevated claims activity,” supporting its optimism for 2018 and profit guidance of more than 1 billion euros.

Reinsurers such as Hannover Re, Munich Re and Swiss Re act as a financial backstop for insurance companies, helping them to pay for large damage claims from hurricanes or earthquakes in exchange for part of the premiums.

Munich Re’s fourth-quarter earnings and 2018 guidance fell short of analyst expectations on Tuesday and underscored a sluggish turnaround in reinsurance prices. ($1 = 0.8074 euros) (Reporting by Tom Sims; Editing by Maria Sheahan)

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