German reinsurer Hannover Re slashed its full-year net profit outlook after heavy claims from earthquakes in Japan and New Zealand took their toll in the first quarter.

The world's third biggest reinsurer said on Tuesday it aimed to earn about 500 million euros ($740 million) net profit this year, provided big loss claims in the rest of the year -- including the North Atlantic hurricane season -- were not higher than about 410 million.

The group had previously targeted net profit of 650 million euros in 2011 but like major rivals Munich Re and Swiss Re got slammed by the Japan and New Zealand quakes as well as floods in Australia in the first three months of the year.

Hannover Re said claims from major losses totaled 572 million euros in the first quarter but the payouts were forcing the industry to raise insurance prices, which should help underpin results going forward.

We've seen at least double-digit price increases in the April renewals round, Chief Financial Officer Roland Vogel told a conference call with journalists, referring to talks to renew contracts between reinsurers and their insurance company clients.

Group net premiums are now expected to rise by 7-8 percent this year, compared with 5 percent previously.

The company posted unexpected net and operating profit in the first quarter that was boosted by one-off factors such as reserve releases and tax refunds, which analysts said tarnished the quality of the earnings.

Quarterly net profit was 52.3 million euros, whereas analysts on average had expected a loss of 11.3 million euros, a Reuters poll showed.

The beat of our and consensus expectations is mainly due to one-off items, DZ Bank analyst Thorsten Wenzel said in a research note.

Hannover Re shares fell 4.2 percent to 39.33 euros by 0740 GMT, lagging a flat STOXX Europe 600 insurance index.

Hannover Re trades at 8.8 times 12-month forward earnings, a discount to the world's top two reinsurers, Munich Re and Swiss Re, which trade at multiples of 13.5 and 14.2 times, respectively, according to Thomson Reuters StarMine, which weights analysts' forecasts according to their track record.

($1=.6753 Euro)

(Reporting by Jonathan Gould. Editing by Jane Merriman)

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