* 2008 net loss 127 million eur, in line with expectations
* Future DAX member expects brightening 2009 price prospects
* Shares up as much as a fifth, top midcap gainers
(Adds CEO, analyst comment, background)
By Jonathan Gould
HANOVER, Germany, March 11 (Reuters) - Reinsurer Hannover Re , set to join the ranks of German blue-chip companies, predicted rising revenue this year, sending its share up after it posted a 2008 loss in line with expectations.
The world's fourth-biggest reinsurer, due to join the DAX index on March 23, said its 127 million euro ($161 million) 2008 net loss -- its first ever -- was wholly due to the financial crisis crushing investment income.
"The fact that 2008 was a lost year for our company can be attributed entirely to the problems on the investment side," Chief Executive Wilhelm Zeller said on Wednesday. "The development of our underwriting business, on the other hand, was satisfactory".
It said it was sticking to its targets for 2009 and repeated its prediction that the capital hit to its insurance company customers, to whom it sells risk cover, would allow it to raise premiums and prices this year.
Hannover Re shares were up 14.5 percent at 25.23 euros by 1407 GMT, the biggest gainers in the midcap MDAX index which rose just 0.5 percent. The stock rose by a fifth at one stage, bouncing from a six-week low set early this week.
"Investors are applauding the 2009 outlook and are also seeking the safe haven of reinsurers," said NordLB analyst Constantin Rohrbach.
The 2008 net loss was broadly in line with the average forecast in a Reuters poll of analysts and compared with a record net profit of 722 million euros in 2007. Operating profit of 148.1 million was nearly double what was expected.
"The reported result is clearly better than we had forecast," said DZ Bank analyst Thorsten Wenzel, who has a "buy" recommendation on the stock, in a note to clients.
DAX BOOST
Speculation that Hannover Re would join the DAX had underpinned its share of late, but Zeller said the company felt no euphoria over the move and preferred to think of itself as a mid-cap given the market capitalisation of its free-float shares was only about 1.5 billion euros ($1.9 billion).
German insurance group Talanx holds a 50.2 percent stake in Hannover Re.
"There's a risk that when the stranded boats finally get water under their keels, they could be at a level that would put us back into mid-cap league," Zeller said, referring to the low valuation of other leading stocks, but added he did not expect to be relegated as soon as the next DAX review in June.
Hannover Re is targeting a return on equity of more than 15 percent this year and earnings per share of 4.75 to 5.25 euros, excluding larger-than-average negative effects from capital markets or natural catastrophes such as hurricanes.
It plans to pay out 35 to 40 percent of net profit as a dividend for this year, after no dividend planned for 2008.
According to StarMine, which weights analysts' forecasts according to their track record, Hannover Re trades at 5.1 times 12-month forward earnings, a premium to Swiss Re's multiple of 3.2 but less than Munich Re's 7.5.
Hannover Re's shares are up 15 percent so far this year, while Munich Re's have fallen by more than a fifth and the DJ Stoxx index of European insurance shares has fallen by more than a third. (Editing by David Holmes)