Analysts at Jefferies have asserted that Hannover Re is set to benefit from opportunities in areas of change that it has embraced to a greater extent than many peers, including the hard market environment, ILS markets, Asian growth and even IFRS 17.
In terms of innovation, Jefferies notes that Hannover Re has proactively embraced the ongoing, structural changes present in the reinsurance industry, for example by growing its structured reinsurance gross premiums at a 30% compound annual growth rate (CAGR) over the past 5-years.
Similarly, in insurance-linked securities (ILS), Hannover Re now fronts for more than 1,500 participations, growing premiums at a 21% rate over the past 5-years.
The same momentum applies to structuring of catastrophe bonds, with the group only structuring 3 in 2017, steadily rising to 11 p.a. in 2021, while even in the life segment Hannover Re has been especially proactive, transferring more than $1bn of life risk to capital markets.
Geographically, Jefferies asserts that Hannover Re has also embraced the long-term opportunity in Asia, with non-life reinsurance premiums growing 23% over the past 5 years.
“Crucially, such growth has been selectively targeted, avoiding inadequately priced motor quota share deals, instead growing the casualty premiums by +350%,” analysts observed,
Additionally, Hannover Re is seen as having adapted itself well to the new IFRS 17 regime, differentiating itself from most re/insurers who have only sought to mitigate the inevitable volatility caused by the introduction of IFRS 17, much as they did for Solvency II before, Jefferies says.
Finally, analysts pointed to favourable impact of the hard market for non-life reinsurance pricing on Hannover Re’s performance.
“At a time when reinsurance prices inflated +29%, Hannover Re grew its gross written premiums (GWP) +70%, far in excess of peers at +44%,” Jefferies reported. “Moreover, such growth has not come at the expense of prudent cycle management, as demonstrated by the restraint shown in specialty lines, where volumes were cut over 2016-2018 when pricing was inadequate.”