Some highlights from the latest financials from Hannover Re;
Hannover Re reports higher revenue and earnings
- Group net income increases by 21% to EUR 1.2 billion
- Reinsurance revenue grows by 5.2% to EUR 12.9 billion
- Large losses in property and casualty reinsurance within budget
- Result for life and health reinsurance in line with expectations
- Return on investment of 3.3% generated
- Return on equity reaches 22.3%
- Full-year guidance for 2024 confirmed
Hannover, 12 August 2024: Hannover Re increased its Group net income by 21% to EUR 1.2 billion in the first half-year and confirms its full-year guidance for 2024.
“We have a successful first six months behind us, with significant growth in property and casualty reinsurance and satisfactory Group net income. At the same time, we saw a continued trend towards increasing frequency losses and losses from secondary perils such as flooding,” said Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. “Thanks to our selective underwriting approach and our retrocession strategy, we feel well prepared for the upcoming second half of the year – which tends to be more loss-intensive.”
Group net income increases by 21% to EUR 1.2 billion
Reinsurance revenue (gross) was up by 5.2% to EUR 12.9 billion (previous year: EUR 12.3 billion). Growth would have reached 6.1% at unchanged exchange rates.
The reinsurance service result, reflecting the profitability of underwriting activity less business ceded (primarily retrocessions and insurance-linked securities), rose by 31% to EUR 1.4 billion (EUR 1.1 billion). The reinsurance finance result adjusted for exchange rate effects, which is structurally negative, amounted to EUR -500 million (EUR -342 million).
The operating profit (EBIT) increased by 23% to EUR 1.7 billion (EUR 1.4 billion). Group net income improved by 21% to EUR 1.2 billion (EUR 960 million). Earnings per share thus came in at EUR 9.63 (EUR 7.96).
Return on equity reaches 22.3%; capital adequacy ratio of 275.8%
The shareholders’ equity of Hannover Re amounted to EUR 10.7 billion as at 30 June 2024 (31 December 2023: EUR 10.1 billion). The annualised return on equity reached 22.3% (previous year: 21.0%). The book value per share came to EUR 88.45 (31 December 2023: EUR 83.97).
The contractual service margin (net) grew by 20% to EUR 9.3 billion (31 December 2023: EUR 7.7 billion) and reflects the sustained growth as well as the profitability of the business written in the past six months. The risk adjustment for non-financial risk similarly increased accordingly by 6.4% to EUR 4.0 billion (31 December 2023: EUR 3.7 billion).
The capital adequacy ratio under Solvency II, which measures Hannover Re’s risk-carrying capacity, stood at 275.8% at the end of June and thus remained significantly above the long-term target of more than 200%.
Large losses in property and casualty reinsurance within budget
The renewals in property and casualty reinsurance as at 1 April 2024 brought further modest improvements in risk-adjusted prices and conditions for Hannover Re. The new business CSM (net) increased by 1.9% to EUR 1.9 billion (EUR 1.8 billion). The new business LC (net) decreased to EUR 16 million (EUR 35 million).
Reinsurance revenue (gross) in property and casualty reinsurance increased significantly by 8.8% to EUR 9.1 billion (EUR 8.4 billion). Growth of 10.1% would have been recorded at unchanged exchange rates.
Expenditures for large losses amounted to around EUR 566 million in the first half-year, a figure within the allocated and booked budget of EUR 801 million. The largest net individual losses in the first six months were the flooding caused by heavy rainfall in southern Germany at a cost of EUR 120 million, civil unrest in the French overseas territory of New Caledonia amounting to EUR 82 million, flooding following intense downpours in Dubai and other parts of the United Arab Emirates in the order of EUR 82 million as well as floods after heavy rainfall in Brazil with expenditures of EUR 47 million. In addition, losses anticipated in connection with the bridge collapse in Baltimore are still comfortably covered by the remaining large loss budget, even though it is still not possible to put a concrete number on them.
The reinsurance service result increased by 61% to EUR 963 million (EUR 598 million), reflecting the healthy profitability of underwriting activity. The combined ratio in property and casualty reinsurance improved to 87.8% (91.7%) and thus came in within the target range of less than 89%. The reinsurance finance result (net) excluding exchange rate effects amounted to EUR -420 million (EUR -285 million).
The investment result in property and casualty reinsurance rose by 28% to EUR 797 million (EUR 625 million).
The operating profit (EBIT) was thus boosted by 40% to EUR 1.2 billion (EUR 829 million).
Result for life and health reinsurance in line with expectations
In the first half of the year Hannover Re generated a result in line with expectations in life and health reinsurance. The main driver here was sustained demand for financial solutions. Growth in business with longevity covers proved to be moderate as anticipated, with increasing interest observed in markets outside the United Kingdom such as the United States, Australia, Europe and Asia. Developments in traditional reinsurance involving mortality and morbidity risks were in line with expectations, with health insurance business in Latin America and low-volume new business in Europe and the Middle East delivering good contributions.
The new business CSM (net) amounted to EUR 185 million (EUR 152 million). In addition, contract renewals and amendments in the in-force portfolio resulted in a sharp increase in the contractual service margin (net) to EUR 6.4 billion. The new business LC (net) stood at EUR 10 million.
Reinsurance revenue (gross) contracted by 2.3% in the first six months to EUR 3.8 billion (EUR 3.9 billion). A decline of 2.5% would have been reported at unchanged exchange rates.
The reinsurance service result (net) totalled EUR 448 million (EUR 481 million) and came in ahead of the pro-rata level for the full-year target of more than EUR 850 million. The reinsurance finance result (net) adjusted for exchange rate effects amounted to EUR -80 million (EUR -58 million).
The investment result in life and health reinsurance totalled EUR 211 million (EUR 225 million).
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