Some highlights from the latest financials update from Hannover Re;
Hannover Re increased its Group net income by 14.2% in the 2022 financial year to the record level of EUR 1.41 billion (previous year: EUR 1.23 billion) and thereby achieved the guidance that had been detailed more closely in November 2022.
In view of the good business development it is envisaged that the dividend will continue to rise at the same time. The Executive Board and Supervisory Board will propose to the Annual General Meeting a dividend distribution of altogether EUR 6.00 (EUR 5.75). This is composed of an increased ordinary dividend of EUR 5.00 (EUR 4.50) per share and a special dividend of EUR 1.00 (EUR 1.25) per share.
Group gross premium posts further double-digit growth
The Group gross premium booked by Hannover Re grew by 19.9% to EUR 33.3 billion (EUR 27.8 billion); adjusted for exchange rate effects, the increase would have been 12.7%. Net premium earned climbed by 22.9% to EUR 29.7 billion (EUR 24.1 billion). Growth would have reached 15.7% at constant exchange rates.
The operating profit (EBIT) improved by 20.3% to EUR 2.1 billion (EUR 1.7 billion). Group net income rose by 14.2% to EUR 1.41 billion (EUR 1.23 billion). Hannover Re thus achieved the more detailed profit guidance provided in November, under which it had anticipated Group net income at the lower end of the range from EUR 1.4 billion to EUR 1.5 billion. Earnings per share reached EUR 11.66 (EUR 10.21).
Return on equity of 14.1% clearly beats minimum target
The shareholders’ equity of Hannover Rück SE amounted to EUR 8.1 billion (EUR 11.9 billion) as at 31 December 2022. The decrease was driven by the rise in interest rates, which substantially reduced the prices of fixed-income securities in the investment portfolio.
The return on equity increased to 14.1% (10.8%) on account of the higher profit and lower shareholders’ equity. It thus clearly beat the minimum target of 900 basis points above the risk-free interest rate, which would have been 9.4% for 2022.
The book value per share reached EUR 67.09 (EUR 98.55). The total policyholders’ surplus (including non-controlling interests and hybrid capital) stood at EUR 12.5 billion (EUR 15.7 billion).
The capital adequacy ratio under Solvency II, which measures Hannover Re’s risk-carrying capacity, amounted to 251.9% as at 31 December 2022 (31 December 2021: 243.1%) and thus remained comfortably above the limit of 180% and the internal threshold of 200%.
Property and casualty reinsurance: Gross premium shows significant growth
The various rounds of treaty renewals in property and casualty reinsurance during 2022 passed off favourably for Hannover Re. Business showed gratifying growth, with significantly improved prices and conditions in some areas. The clear improvement in prices and conditions was also sustained in the renewals as at 1 January 2023.
The gross written premium in property and casualty reinsurance increased by 26.1% in the 2022 financial year to EUR 24.2 billion (EUR 19.2 billion). Growth would have reached 17.9% at constant exchange rates. Net premium earned was up by 30.2% at EUR 21.6 billion (EUR 16.6 billion). Growth of 22.0% would have been booked at unchanged exchange rates.
The net expenditures from large losses in the 2022 financial year surpassed expectations for the sixth year in succession. They added up to EUR 1.7 billion (EUR 1.3 billion) and thus clearly exceeded the budgeted level of EUR 1.4 billion. The largest individual losses were Hurricane Ian with a net strain of EUR 322 million, the severe flooding in Australia at a cost of EUR 233 million as well as winter storm Ylenia in Central Europe in an amount of EUR 107 million. Furthermore, Hannover Re constituted an IBNR reserve of EUR 331 million for possible losses from the war in Ukraine.
Life and health reinsurance: Result reaches record level
In life and health reinsurance the expenditures connected to the Covid-19 pandemic were halved in the 2022 financial year to EUR 276 million (EUR 582 million). The bulk of this amount was attributable to mortality covers in the United States, the largest market for mortality insurance products.
The pandemic-related strains contrasted with positive income of EUR 87 million. This derived from an extreme mortality cover that Hannover Re has placed on the capital market in regular tranches since 2013. (More background on Extreme Mortality Bonds and how they work for insurers here by the way.)
Hannover Re further expanded its portfolio of financial solutions business in numerous markets. In this segment Hannover Re offers its worldwide clients covers that vary widely in structure and are designed to deliver capital and solvency relief and assist with prefinancing.
Be the first to comment