Latest results from Hannover Re – we extracted some highlights for you;
Hannover Re achieved an inflation- and risk-adjusted price increase on renewed business of 4.1% in the treaty renewals as at 1 January 2022 in traditional property and casualty reinsurance. The pricing trend was driven primarily by considerable losses from natural catastrophes, especially in Europe and North America, as well as the low interest rate environment and sharply higher inflation.
Of the total premium volume booked in the previous year on an underwriting-year basis in traditional property and casualty reinsurance amounting to EUR 13,801 million (excluding facultative reinsurance, ILS business and structured reinsurance), treaties with a volume of altogether EUR 7,808 million – or 62% of the business – were up for renewal as at 1 January 2022.
The premium volume due for renewal has been adjusted for a reinsurance cession of EUR 1,107 million received by Hannover Re from HDI Global Specialty. Following the sale of the participation this was reduced as planned to EUR 576 million.
Disregarding this effect, a premium volume of EUR 7,284 million was renewed, while treaties worth EUR 524 million were either cancelled or renewed in modified form. Including increases of EUR 1,176 million from new treaties and from changes in prices and treaty shares, the total renewed premium volume came in at EUR 8,460 million and was thus 8.3% higher than the previous year’s level.
Proportional reinsurance posted growth of 6.3% in the renewals, generating a premium volume of EUR 5,929 million. Prices here were up by 3.4%. The renewed premium volume in non-proportional reinsurance grew by 13.5% to EUR 2,530 million. The price increase amounted to 6.1%.
Regional markets: Appreciable increases in premium volume and prices in Europe
In the region Europe, Middle East and Africa the premium volume booked by Hannover Re grew by 9.8%. Losses caused by catastrophic flooding in some European countries overshadowed the pandemic as a defining issue.
Impacted by disastrous flooding caused by the low-pressure area “Bernd” and following other bad weather events such as hailstorms, Germany recorded its highest-ever losses from natural catastrophes in 2021.
Price increases were secured for business in the United Kingdom, Ireland and the London Market across all major lines of reinsurance. Along with liability business, this was also true of non-proportional motor treaties and the reinsurance of natural catastrophe risks.
In the Americas region, encompassing North and Latin America, the premium volume booked by Hannover Re in the renewals grew by 7.0%.
In Latin America demand for coverage of natural catastrophes and political risks remains strong, although large parts of the business are not renewed until later in the year.
Hannover Re boosted its premium volume by 8.2% in the Asia-Pacific region. Reinsurance conditions and rates were stable or trended in a positive direction in the 1 January renewals. A considerable part of business written in the APAC region, including Australia, New Zealand and Japan, comes up for renewal on 1 April or 1 July.
Global markets: Significant increases, especially for natural catastrophe covers
No appreciable strains from pandemic-related insolvencies have been recorded to date in the credit, surety and political risks line. The premium volume surged 11.2% higher, largely as a consequence of the economic rebound in 2021 and the phasing out of government support packages. Given that a further gradual economic recovery is anticipated for 2022 and parallel to this a progressive elimination of government supports and hence rising loss ratios, prices remained broadly stable on both the insurance and reinsurance side.
The premium volume in aviation and marine reinsurance grew by 0.8% against a backdrop of continued low flight activity.
In agricultural lines Hannover Re was able to grow its premium volume by 2.6% and looks forward with confidence to further business opportunities in this area.
Prices and conditions in natural catastrophe business improved, sometimes markedly so. The rate increases averaged 6.6%. In US catastrophe business and in Europe double-digit rate gains were achieved, especially for loss-impacted programmes. The premium volume grew by around 25% in the 1 January renewals.Guidance for 2022 confirmed As already announced in November, Hannover Re anticipates Group net income of EUR 1.4 billion to EUR 1.5 billion for the 2022 financial year. Based on constant exchange rates, growth in Group gross premium should be at least 5% and the return on investment should reach at least 2.3%.
In order to take account of a higher retention and the increased loss expectation from natural catastrophes Hannover Re has raised its net major-loss budget for 2022 to EUR 1.4 billion from EUR 1.3 billion. That compares to a budget of EUR 1.1 billion in 2021.