German reinsurer Hannover Re has today reported an inflation and risk-adjusted price decline on renewed business of 2.1% at the January 1st 2025 renewals, while the firm took advantage of greater demand for protection, growing its portfolio by 7.6% to more than EUR 11.03 billion.
Hannover Re explained that prices at the 1/1/2025 renewal were stable or slightly down compared to last year.The reinsurer had treaties with premium volume of EUR 10.3 billion up for renewal on January 1st 2025, which accounts for 59% of business in traditional property and casualty reinsurance (excluding facultative reinsurance, insurance-linked securities business and structured reinsurance).
All in all, Hannover Re renewed a premium volume of EUR 9.304 billion, while treaties worth EUR 950 million were cancelled. Together with EUR 1.734 billion from new treaties and from changes in prices and treaty shares, Hannover Re reports that renewed premium volume grew by 7.6% to EUR 11.038 billion.
“Reinsurance prices are still on a level commensurate with the risks, although loss-free treaties, in particular, saw increased competition, leading to price reductions in especially competitive lines. At the same time, however, conditions and retentions remained extensively unchanged. Most notably, the good quality of our portfolio coupled with sustained strong demand gives us confidence as we look ahead to further renewals during the year,” commented Sven Althoff, the member of Hannover Re’s Executive Board responsible for property and casualty reinsurance.
Adding: “Adequate prices and conditions continue to be indispensable for sustainable reinsurance protection. This is all the more true given that climate change and associated extreme weather events remain one of our greatest challenges. The wildfires around Los Angeles have underscored this once again.”
In the natural catastrophe business, Hannover Re slightly extended its strong market position on the back of a continued adequate price level and stable conditions.
The reinsurer states that the risk-adjusted price decline in this segment amounted to 5.4%, with erosion most striking in US business.
The retentions carried by ceding companies nevertheless remained on a stable level and were in some cases further increased under loss-impacted business, Hannover Re added.
Outside of nat cat, in the credit, surety and political risks lines premium volume grew by 4.5% in a favourable market environment, while aviation and marine reinsurance saw premium volume contract by 6.2%.
Additionally, while the German reinsurer was able to further enlarge its market share in the aviation sector, surplus capacities in marine business resulted in moderate price declines despite significant large loss expenditure.
Overall, the premium volume booked by Hannover Re in agricultural lines declined by 9.2%, which according to the firm was driven by, among other things, a planned reduction of the business volume in China on profitability grounds.
By region, the reinsurer has today reported premium volume growth of 9.7% in the Europe, Middle East and Africa region.
In Germany specifically, Hannover Re reportedly increased its premium volume on the back of “attractive risk-adjusted prices and thereby maintained its strong market position.” The Middle East and Türkiye also recorded significant rate improvements for loss-affected business.
In the Americas, premium volume grew by 13.5% year-on-year at 1/1/2025. Hannover Re stated that the property insurance market in the United States remains attractive despite appreciable pricing pressure, while in the liability segment risk-adjusted price improvements were possible.
“Particularly substantial premium growth was booked in business with insurtechs, although volume was also boosted elsewhere in the property and casualty portfolio. The wildfires in and around Los Angeles will likely have a significant impact on property insurance renewals during the year,” the firm noted.
Meanwhile, in the Asia-Pacific region, premium volume grew by a modest 0.8%, as competition amongst the region remained intense overall, particularly in Southeast Asia and China.
Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re, commented: “We can look back on successful renewals in a market that remains attractive. This enabled us to generate further profitable growth in our book of business. Demand for high-quality reinsurance capacities was once again higher than in the previous year. Thanks to our very healthy capitalisation, we were able to offer our clients more reinsurance protection at appropriate conditions.”
As well as an update on its renewal outcome, Hannover Re has released preliminary, unaudited financial figures for 2024, including an operating profit of EUR 3.3 billion.
Earlier today, the firm also announced that it increased its natural catastrophe retrocession protections at the January 1st, 2025, reinsurance renewals by EUR 100 million to a little more than EUR 1.2 billion, although its K-Cessions sidecar shrank as anticipated.
Furthermore, Hannover Re also today confirmed its guidance for 2025.
“Looking ahead to our targets for 2025, the successful renewals in January give me grounds for optimism. Growth in traditional business as well as the double-digit increase in structured reinsurance will be pivotal to achieving our growth target for 2025,” said Jean-Jacques Henchoz.
Concluding: “We already recorded the first significant large loss event shortly after the start of the year with the California wildfires. We therefore continue to place considerable emphasis on our prudent underwriting policy and our risk management.”
