Large European reinsurer Hannover Re’s net income increased by 28% in 2024 to €2.3 billion, reaching the revised higher guidance, with a substantial improvement in property and casualty (P&C) operating profit and a solid life and health (L&H) performance.
Hannover Re has today reported a very strong set of results for 2024, as Group net income rose from €1.8 billion in 2023, with Q4 2024 net income of €504 million, up on Q4 2023’s €425 million.
Operating profit totalled €3.3 billion in 2024, an increase of 68% on 2023’s €2 billion, with a significant increase to €869 million in Q4 2024 from €134 million in Q4 2023.
Group-wide, gross reinsurance revenue rose 8% year on year to €26.4 billion, while the reinsurance service result increased by a significant 82% to €3 billion. For Q4’24 reinsurance revenue increased to €6.7 billion from €5.9 billion, and the reinsurance service result increased to €889 million from €97 million in Q4’23.
For 2024, the reinsurance finance result, which is structurally negative and includes in particular the interest accretion on technical reserves discounted in prior years, decreased to -€1.115 billion from -€880 million in 2023, and for the quarter moved to -€331 million from -€278 million.
Net income from investments increased by 26% to €2 billion for 2024, and rose to €560 million from €323 million in Q4 2024.
The return on equity came to 21.2%, so up on 2023’s 19% and above the minimum 14% target set for the 2024-2026 strategy cycle.
At the same time, the net contractual service margin, which quantifies the unearned profit expected from the business written, rose by 6% to €8.2 billion from €7.7 billion in 2023.
Hannover Re’s P&C reinsurance business had a strong 2024, with the firm highlighting that during the year’s renewal rounds, risk-adjusted prices and conditions improved in some areas, while in others they stabilised on a high level.
The P&C reinsurance new business CSM increased by 15% to €2.7 billion in 2024, as reinsurance revenue in the segment rose 11% to €18.7 billion.
During 2024, Hannover Re booked net expenditures from large losses of €1.6 billion, in line with 2023, and within the annual budget of €1.825 billion for these types of events. In 2024, losses were driven by Hurricane Milton (€230m), Hurricane Helene (€116m), the Baltimore bridge collapse (€103m), heavy rains and floods in Central and Eastern Europe (€194m), flooding in Dubai and other parts of the UAE (€138m), and unrest in New Caledonia (€117m). Additionally, Hannover Re substantially increased its provision made for the group of claims connected with Russia’s invasion of Ukraine.
The P&C reinsurance service result increased to €2.1 billion from €848 million, as the combined ratio strengthened to 86.6% from 94%, which is better than the target of less than 89%, driven by further improvement in the profitability of the business written.
P&C reinsurance operating profit increased to €2.4 billion from €2.1 billion, driven by the improved reinsurance service result and stronger income from investments.
Within the company’s L&H reinsurance operations, the service result of €883 million improved on 2023’s €810 million and beat the target of more than €850 million for 2024.
Hannover Re says that it witnessed sustained strong customer demand across all segments in L&H reinsurance, reporting a new business CSM of €317 million, down slightly on the prior year’s €359 million. However, treaty renewals and changes in the in-force portfolio led to a significant increase in the contractual service margin to €6.5 billion in 2024 from €6 billion in 2023. L&H reinsurance revenue rose from €7.6 billion to €7.7 billion in 2024.
Hannover Re’s portfolio of investments increased to €65.9 billion in 2024 from €60.1 billion in the prior year, driven mostly by strong inflows from operational business, lower risk premiums on corporate bonds and interest rate declines in short maturities in the euro segment as well as exchange rate effects.
Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re, commented: “We can look back on a very successful 2024 financial year, in which we grew steadily and generated a very pleasing Group profit. With the planned dividend increase, we are living up to our commitment to continuously grow the ordinary dividend over our current strategy cycle and underscoring our positioning as an attractive dividend stock.”
Clemens Jungsthöfel, Chief Financial Officer of Hannover Re, added: “In the past financial year we further increased our shareholders’ equity. We thereby boosted Hannover Re’s resilience and strengthened what clients consider to be a crucial factor in Hannover Re’s reliability. At the same time, we continue to set the pace with our return on equity, which is significantly higher than our strategic target.”
Today, Hannover Re has again confirmed its Group net income guidance of roughly €2.4 billion for 2025, with P&C revenue growth of more than 7% expected with a combined ratio of less than 88%. In L&H reinsurance, the company expects to generate a service result of above €875 million. One the asset side, Hannover Re expects the return on investment to reach at least 3.2% in 2025.
Of course, the 2025 profit targets are based on the assumption that large loss expenditure does not significantly exceed the budgeted level of €2.1 billion for 2025, and that there are no unforeseen distortions on capital markets.
It’s worth noting that Hannover Re recently pegged its losses from the Los Angeles wildfires at between €500 million and €700 million, which is above its large loss budget of €435 million for the first quarter. Despite this, executives at the firm confirmed that although a meaningful loss, it’s not enough to increase its guidance.
“The figures published today show that Hannover Re is optimally positioned for the future. In a market environment currently impacted by climate change and geopolitical tensions, we have succeeded in sustainably securing our profitability, further expanding our resilience and remaining a financially robust and reliable partner for our clients.
“In just a few weeks, as announced, I will be handing over the reins of Chief Executive Officer to Clemens Jungsthöfel, who will write the next chapter of Hannover Re’s success story as one of the world’s leading reinsurers,” said Henchoz.
