German reinsurance giant Hannover Re will continue to manage growth within US wind very carefully in order to improve diversification, and despite a rise in frequency outside of the US, is happy with the experience year-to-date, according to Sven Althoff, Member of the Executive Board, Property & Casualty (P&C).
This morning, Hannover Re announced its results for the first nine months of 2023, posting an improved P&C reinsurance combined ratio as large loss expenditure fell €300 million year-on-year to €1.2 billion.
Importantly, the level of losses booked for 9M 2023 is within the budgeted expectation of €1.328 billion for the period.
Speaking recently during the reinsurer’s earnings call, Althoff explained that after nine months, the standalone cat budget within the firm’s major loss budget was utilised by 85%.
The earthquake in Turkey and Syria was the largest individual loss for Hannover Re in the first nine months of the year at a cost of €273 million. Other notable events included severe storms that affected northern Italy in the summer, wildfires in Hawaii, and the major earthquake in Morocco.
According to Althoff, the fact 15% of the cat budget remains, tells Hannover Re that “our risk assumptions, our pricing assumptions are sound.”
From that point of view, “we are happy with the experience year-to-date,” said Althoff.
To the end of September 2023, Hannover Re’s large losses do appear higher than its peers, which Althoff explained is driven by the fact it’s less US heavy in its catastrophe writings when compared to its average peer.
“We have a strong focus on global diversification and given the fact that we had significant frequency also outside of the US this year, you see a normal cat experience on our side, but you are not seeing the big loss in the US. And so, from that point of view, you may have the perception that our nat cat experience is different compared to our peers,” said Althoff.
“You know that particularly on the US wind side, over the last four to five years, we have managed the growth on that side very carefully in order to improve the diversification, and we will continue with that trend,” he added.