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Solid January renewals keeps Hannover Re on track for 2019 targets

5th February 2019 - Author: Luke Gallin

Reinsurance giant Hannover Re has announced Group net income of €1.05 billion for the 2018 financial year and is expecting higher net income for 2019. The reinsurer has also revealed that it grew its premium volume in traditional property and casualty reinsurance by more than 15% at the January 1st  renewals.

Hannover Re logoThe improved Group net income is based on preliminary key figures, and of the €1.05 billion result, 83% was attributable to its P&C reinsurance business, and 17% attributable to its life and health reinsurance business.

The firm announced previously that it expects Group net income for 2019 of €1.1 billion, and, the outcome of the most recent renewals for the reinsurer supports this.

Hannover Re notes a backdrop of improving market conditions, and says that on a currency-adjusted basis, it increased its P&C reinsurance premium volume to €6.4 billion (US$5.6 billion) in the January 1st 2019 renewals.

Hannover Re’s Chief Executive Officer (CEO), Ulrich Wallin, said: “In the face of another burden of heavy losses, demand from both existing and new clients was solid. Thanks to our good market positioning we were thus able to generate pleasing growth in the renewed portfolio at adequate conditions.

“In view of the favourable outcome of our main renewal season, we take an optimistic view of movements in prices and conditions in the current year and see good prospects for profitable growth in our property and casualty reinsurance portfolio.

“We have put in place a solid foundation for achieving the targets for the 2019 financial year.”

Around two-thirds of the reinsurer’s book of traditional P&C business was up for renewal in January, which excludes facultative reinsurance, insurance-linked securities (ILS) business and also structured reinsurance.

In line with market commentary, the reinsurer highlights a more restrained approach from alternative capital at the January renewals, although it’s important to remember that the volume of alternative, third-party or ILS capital still accounts for a sizeable portion of the overall reinsurance market pie.

Overall, €8.4 billion in traditional P&C reinsurance premium volume was booked in 2018, and treaties with a volume of more than €5.5 billion were up for renewal at 1/1 2019. Of this total, €4.9 billion was renewed, while €1.3 billion were either cancelled or renewed in a modified form, says Hannover Re.

By region and business line, North American treaty renewals “passed off satisfactory” for the firm with an increase of 21.5% in premium volume. Premium volume in Continental Europe increased by 15.1%.

The marine reinsurance business was extremely competitive at 1/1 says Hannover Re, with the premium volume contracting by 7.7%. Aviation renewals were also mostly satisfactory, and the reinsurer grew its premium volume here by 0.9% at the January 1st renewals.

At the same time, Hannover Re grew the premium volume of its credit and surety reinsurance and political risks portfolio by 6.5% at 1/1.

The firm states that overall, it was satisfied with business renewed in the UK and on the London Market, while it was able to significantly expand its market position in Asia-Pacific.

For nat cat business, the reinsurer notes faded rate momentum from 2017 events, and says that greater rate increases are expected in the months ahead. Hannover Re grew the premium volume for its non-proportional nat cat business by 32.3%.

For the first time in three years, the firm has also increased its large loss budget to €875 million, up from the previous €825 million. The firm says this reflects underlying growth in this business, while the risk appetite remains unchanged.

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