HANOVER (Bloomberg) — Hannover Re said 2009 may become the second-most profitable year in the company's history as insurers hurt by financial market losses turn to reinsurers to help them shoulder risk.

Earnings per share at Germany's second-biggest reinsurer will probably reach 4.75 euros to 5.25 euros, which would translate into net income of "about" 600 million euros ($771 million), chief executive officer Wilhelm Zeller said at a press conference in Hanover, Germany.

"The capital lost by insurers as a consequence of the financial market crisis has prompted the expected stronger demand for reinsurance," Zeller said.

Rates for catastrophe reinsurance protecting insurers from losses over a predefined limit rose by about 10 percent in January, when Hannover Re renews about two-thirds of its property and casualty business. The company said in November it can no longer be affected by stock market volatility after scaling back its equity portfolio.

Hannover has offices in Bermuda, on Front Street, Hamilton and in St. David's.

Write-downs on the investments resulted in the company's first quarterly loss since 2005 in the third quarter of 2008, and left it headed for its first annual loss since it was founded in 1966. The company reported record net income of 734 million euros for 2007.

The earnings per share target for this year doesn't include earnings from a portfolio of US life-reinsurance policies written by ING Groep NV which the reinsurer took over in January. That deal will add about 20 cents per share to earnings this year, Zeller said.

"Net income of 700 million euros this year including the ING portfolio's profit contribution isn't unrealistic," chief financial officer Elke Koenig said.

Hannover Re aims for a return on equity of more than 15 percent in 2009, Zeller said, adding that the measure of profitability should be in the range of 15 percent to 20 percent when earnings from the recent acquisition are included. Hannover Re is sticking to a target to pay out 35 percent to 40 percent of profit as dividend, said the CEO, who will be replaced by Ulrich Wallin in July when he retires.

In the January round of renewals, catastrophe reinsurance rates for loss-affected nationwide programmes in the US rose more than 20 percent, Hannover Re said. Rates also increased in worldwide credit and surety reinsurance. Prices in Europe remained "mostly stable with some increases around five percent", the reinsurer said.

"The impact of the financial crisis will continue to push reinsurance rates up and this trend will persist even if 2009 turns out to be a quiet year in terms of natural disaster claims," Hannover Re management board member Michael Pickel said.

Hannover Re is scheduled to report full-year and fourth-quarter earnings on March 11.