said 1996 pre-tax profit rose 36 percent amid rising premiums and capital investments.

The company said 1996 pre-tax profit rose to 158 million German marks ($91 million) from 116 million marks in the previous year. A January forecast that pre-tax profit would rise to 130 million marks was "too conservative,'' Chief Executive Wilhelm Zeller said.

Premiums last year rose seven percent to 6.4 billion marks, from 6.0 billion marks. Insurance companies buy reinsurance to spread their risks. The world's top ten list of reinsurers has narrowed in the past year with the mega-mergers of Munich Re and American Re, and Swiss Re and Mercantile & General. Even though Hannover Re is just one-third the size of number one Munich Re, it is not a takeover candidate, Zeller said.

"There is hardly anyone left to buy anymore,'' he told the Bloomberg Forum.

Hannover Re, known in full as Hannover Rueckverischerungs-AG, is protected by its majority owner, mutual insurer Haftpflichtverband der Deutschen Industrie V.a.G., or HDI, which would have to distribute gains from the sale to its shareholders.

Zeller said Hannover Re would consider buying a company that focused on life or facultative reinsurance, which is sold on a specific risk rather than a company's overall business.

The company declined to bid on Societe Anonyme Francaise de Reassurances, a French reinsurer which Swiss Re bought and then sold to PartnerRe Ltd. of Bermuda for $950 million. "It did not take us three minutes to decide,'' Zeller said. "It offered us more of the same.'' Zeller said Hannover Re considered more seriously a bid for Unione Italiana di Riassicurazione, which Swiss Re later bought for about 500 million Swiss francs ($346 million).

Hannover Re repeated its goal of increasing its dividend by more than ten percent per year. It paid three marks per share for 1995.

The reinsurer pays out its entire net profit out to shareholders and then offers them shares. Last year almost 80 percent of the dividend it paid was reinvested in the company, Zeller said.

Shares rose 25 pfennig to 90.2 marks. The company's shares have risen 27 percent in value since the beginning of the year. In March, Hannover Re was added to the MDAX Index of 70 medium-capitalised companies.

Hannover Re plans to sell American depositary receipts later this year, Zeller said. In addition to courting investment funds, Hannover Re will also pitch ADRs to the insurance companies that buy its reinsurance.

"The biggest potential is from our customers,'' Zeller said. "They are all institutional investors and they know us already.'' Hannover Re will report according to US GAAP accounting standards by the third quarter of 1998 at the latest. "We haven't decide whether we will seek a full New York Stock Exchange Listing. We are doing it to make us more transparent.'' The company will announce its net profit and earnings per share at a press conference in early August. EPS calculated according to the DVFA standards set out by the German Financial Analysts Association will be "less than six marks,'' Zeller said. Fourteen analysts surveyed by IBES International Inc.

estimated an average of 5.7 marks per share, up from 4.9 marks per share in 1995.

Hannover Re had a loss of 197 million marks from insurance operations in 1996, almost ten times the 20 million mark loss in 1995. That was because it sold more reinsurance for life and health insurance, for which it must make immediate reserves, Zeller said.

Capital investments rose 33.4 percent to 865 million marks, buoyed by sales of units and the dollar's increase against the mark. Almost 40 percent of Hannover Re's investments are in dollars, Zeller said.

"When the dollar climbs one pfennig against the mark, it adds one million marks to our profits,'' he said.