German reinsurer Hannover Re has reported that it achieved an inflation and risk-adjusted price increase on renewed business of 2.3% in the 1 January 2024 treaty renewals in traditional property and casualty (P&C) reinsurance.
Hannover Re suggests that the market environment for the renewals proved to be more stable than in the previous year. At the same time, demand for reinsurance capacity, which was limited primarily to covers from existing market players, grew.
Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re, said,”We are satisfied with the outcome of the renewals. Against the backdrop of the loss experience in 2023, continuing high levels of inflation and geopolitical uncertainties, we were able to secure further necessary rate improvements in many lines and regions.”
“Building on the previous year’s sustained improvement in the quality of our book of business, we are thus well placed to tackle future challenges.”
Treaties with a premium volume of €9,552 million were up for renewal on 1 January 2024. This corresponds to 62% of business in traditional property and casualty reinsurance (excluding facultative reinsurance, ILS business and structured reinsurance).
Hannover Re renewed a premium volume of €8,671 million, while treaties worth €881 million were either cancelled or renewed in modified form.
Including increases of €1,541 million from new treaties and from changes in prices and treaty shares, the total renewed premium volume grew by 6.9% to €10,212 million.
As in the previous year, Hannover Re grew its book of non-proportional reinsurance more strongly in the renewals.
The premium volume here rose by 10.6% to €3,178 million, with a risk-adjusted price increase of 4.4%. Proportional reinsurance grew by 5.3% to €7,034 million. The price increase after risk adjustment came to 1.3%.
“Demand for our high-quality reinsurance protection was again very strong,” said Sven Althoff, the member of Hannover Re’s Executive Board responsible for property and casualty reinsurance.
“This enabled us to generate further profitable growth in our diversified portfolio, especially on the non-proportional side. At the same time, attractive growth opportunities opened up in structured reinsurance and in the area of insurance-linked securities. All in all, we further improved the quality of our book of business,” Althoff said.
In the region Europe, Middle East and Africa the premium volume booked by Hannover Re rose 6.5%, despite a year of heavy losses in the region.
The premium volume generated by Hannover Re in the renewals in the Americas region grew by 2.2%. Though further large parts of the business in this region are not renegotiated until the 1 June and 1 July renewals.
In the Asia-Pacific region, Hannover Re reduced its premium volume by 10.1%. Asia-Pacific markets were stable, particularly in Southeast Asia, Korea and the “Greater China” region, the main round of renewals took place on 1 January.
Meanwhile, in the natural catastrophe business, the premium volume booked by Hannover Re recorded high single-digit percentage growth in the renewals as at 1 January 2024.
Following the above-average rate increases in the previous year, significantly higher prices and improvements in coverage structures were again obtained in this round of renewals, especially for loss-impacted programmes.
Based on preliminary, unaudited financial figures, Hannover Re reported an operating result for P&C reinsurance for full year 2023 of €1.10 billion, compared with €0.87 billion a year earlier.
It reached an operating result (EBIT) of €1.97 billion in the financial year 2023, compared to €1.52 billion a year earlier.
Group net income increased to €1.8 billion and Hannover Re thus achieved its annual profit target of at least €1.7 billion. Reinsurance revenue rose to €24.4 billion from €24.1 billion.
“The significantly improved profitability of our reinsurance business assures our resilience in a volatile environment,” Henchoz said.
“I am therefore convinced that we shall achieve our goals for the 2024 financial year.”
Hannover Re will publish its audited annual financial statement on 18 March 2024.
