Reinsurance giant Hannover Re has raised its profit guidance for 2017 from over €950 million to more than €1 billion ($1.1bn), after a strong round of treaty renewals at the key January 1st 2017 renewal season.
The German domiciled reinsurer noted a continuation of the challenging operating landscape at the recent renewal period in property and casualty reinsurance, but despite the difficult landscape has increased its profit guidance for 2017.
The reinsurer underlined continued competition and a tough operating landscape, which, meant that the much anticipated price stabilisation has not yet been seen across the board.
“Thanks to gross written premiums that came in above expectations, we were able to raise our premium target for 2017 and now expect an increase in the low single-digit percentage range. Furthermore, bearing in mind the successful closing of several financial solutions contracts in life and health reinsurance as well, we are raising our guidance for Group net income in 2017 from more than €950 million to more than €1 billion,” said Ulrich Wallin, Chief Executive Officer (CEO), Hannover Re.
Two thirds of the reinsurer’s treaties were up for renewal at 1/1 2017, amounting to roughly €4.7 billion, of which approximately €4.06 billion was renewed. The reinsurer explains that €679 million worth of treaties were either cancelled or renewed in a modified form. The overall figure also includes €459 million of new treaties and from changes in prices and treaty shares, says Hannover Re.
The total renewed premium volume amounted to €4.621 billion, and at a constant exchange rate this translates to a reduction in traditional reinsurance of 1.4%, explains Hannover Re. Overall, the reinsurer says it recorded growth of around 7% at January 1st 2017.
A lack of market changing losses were again evident, despite hurricane Matthew providing “necessary price impetus on a localised basis.”
The reinsurer increased its natural catastrophe premium business by 2.9% at the renewal, and maintained prices on a stable level.
Hannover Re also said that it continues to target a combined ratio of below 96%.