The reinsurer is maintaining its profit guidance after generating group net income of €649 million in the first six months
Hannover Re is maintaining its earnings guidance for 2022 after generating group net income of €649 million in the first six months.
“Our consistently strong and profitable growth shows how highly sought-after Hannover Re’s reinsurance protection is among our clients during difficult times,” said Jean-Jacques Henchoz, chief executive of Hannover Re.
“We delivered a satisfactory result in the first half-year, not least thanks to our superlative risk and capital management.
”We were able to do this despite setting aside reserves for impacts of the war launched against Ukraine in contravention of international law, despite considerable large loss expenditures and despite further pandemic-related payments.”
Hard market offsets cat losses
In property and casualty reinsurance, gross written premium surged by 25.9% to €12.9 billion (up from €10.3 billion in the same period a year ago).
Net expenditure for large losses in the first half-year came to €850 million (up from €326 million), a figure in excess of the previous year’s comparatively modest level and higher than the expectation of €611 million for the first six months.
This was due to the reserve established for possible losses in connection with the war in Ukraine in the amount of €316 million.
The largest individual losses were the floods in Australia caused by heavy rainfall with net expenditure of 186 million and w€inter storm Ylenia, which impacted Central Europe in February at a cost of €126 million.
Additional IBNR reserves of €130 million were also established for last year’s drought in Brazil due to late claims reporting.
On the investment side, global political and economic tensions led to sometimes sharp price declines on equity markets in the first six months of the year.
Following a partial disposal at the beginning of the year, Hannover Re sold its remaining equity holdings as the second quarter got underway and thereby realised a positive profit contribution overall of €95 million.
Outlook for 2022: Full-year profit guidance confirmed
The treaty renewals in property and casualty reinsurance as of 1 June and 1 July 2022 passed off successfully for Hannover Re with in some instances significant price increases.
At this time of year parts of the North American portfolio are traditionally renewed, especially natural catastrophe risks, as well as business from Australia and New Zealand and in the credit and surety lines.
For the 2022 financial year Hannover Re expects gross premium for the Group to grow by more than 7.5% adjusted for exchange rate effects, a return on investment of more than 2.5% and Group net income of €1.4 billion to €1.5 billion.
This is conditional on large loss expenditure not significantly exceeding the budgeted level of €1.4 billion and assumes that the Covid-19 pandemic does not have a major unexpected influence on the result in life and health reinsurance and that there are no unforeseen downturns on capital markets.
Hannover Re also continues to aim for an ordinary dividend at least on the level of the previous year or higher. This will be supplemented by a special dividend, provided the capitalisation exceeds the capital required for future growth and the profit target is achieved.
“Our success is grounded on our considerable underwriting discipline, the cost efficiency of our business model and our agile capital management,” added Henchoz.
“On this basis we are ideally placed to tackle the numerous challenges in our market. Against this backdrop, and thanks to our strong customer relationships, I am confident that we will achieve our ambitious goals for 2022. With the result for the first six months we have laid vital groundwork to this end.”