Despite several unexpected factors that challenged initial expectations during the latest renewal season, Hannover Re’s portfolio quality remained sound, according to Sven Althoff, a Member of the Executive Board for Property & Casualty, during the company’s recent analysts’ call.
Althoff highlighted stronger pricing pressure as one of the main surprises during this period. He explained: “When we talk about surprises, I guess we were expecting a little less pressure on the non-proportional pricing and at the same time, we were expecting some more demand coming from our ceding companies, either through slightly reduced retention levels or additional buying on other property products.
“In a nutshell, the pricing or the pricing pressure was a little stronger than expected. But it didn’t translate into additional buying, that would be the main surprise.”
The executive also noted that while portfolio quality is high, consecutive price reductions in non-proportional lines have compressed excess profit margins.
He commented: “When it comes to the question of excess profitability, as we have highlighted, there were only a few areas where we had to start reducing our positions. So, from that point of view, the quality of the portfolio after the renewal is still very sound. No particular area to highlight, which is on a forward-looking basis. But of course, with another round of reduced prices on the non-proportional site, the level of excess margins is a reduced one.”
Despite a 10% to 20% decline in natural catastrophe rates, Hannover Re remains committed to the sector as an area of “structured growth.”
“On the Nat Cat side, we have a very diversified picture, which is pleasing. So, overall, despite the pressure and pricing, we could still find good excess profitability in quite a number of areas. And we were willing to take advantage of those lines, and were willing to give us more limits,” Althoff explained.
Adding: “On the other hand, I mentioned Asia as an example, there were also pockets where we felt that we should reduce our positions. But overall, the growth we are talking about comes from a globally diversified basis with no particular region being very overweight in this. And on the forward-looking basis, our approach to Nat Cat business and how we look at profitability has not changed.”
He concluded: “So, from that point of view, as explained, during the investors day, we have identified the Nat Cat business as an area of structured growth, given that we feel that we are still underweight from a market share point of view. But we will grow when we find the profitability, and if we don’t, we’re also happy to consolidate.”
When asked about the remainder of the year, Althoff said that Hannover Re expects a continuation of the trends seen at the January 1 renewals.
“If the quality of the pricing remains sound, as we have found at 1.1, we are optimistic that we will be able to at least keep our position on programs, if not grow that,” Althoff commented.
While Japanese renewals last year saw sharper rate reductions than the global average, Hannover Re expects this lower base to be factored into the upcoming negotiations.
The executive said: “When talking about Japan in particular, the Japanese renewed at first of April last year, saw more of a reduction in rates compared to the one-year renewals. So from that point of view, we do expect that this will be taken into account when it comes to the pricing for this year because in relative terms, it comes from a slightly lower base, but outside Japan or just in general, we would expect a rather similar picture compared to the January 1 renewals, also for the rest of the year.”
Despite the lack of “additional demands”, where more were expected – which Althoff views as evidence that reinsurance is still priced at a sound rather than a cheap level – the firm remains optimistic.
He added: “So with that improved capital position, this translates into keeping a stable program or even a little less at times. But overall, as we said here today, with the starting point of 3.3%, we still feel positively that our guidance for a mid single-digit premium growth for the entirety of the year is definitely in reach.
Hannover Re recently announced its financial results for the first quarter of 2026, reporting a net income of €710.6 million, an increase of 47.9% on the prior year, as the reinsurance service result for the period jumped by a significant 72.9% to €890.2 million.
As part of its strong results for the quarter, the European reinsurer also reported gross reinsurance revenue of €6.5 billion, reflecting growth of 0.6% adjusted for exchange rate effects.
