Sven Althoff, Member of the Executive Board for Property & Casualty (P&C) of large European reinsurer Hannover Re said this morning that catastrophe bonds have been the main area of expansion for the company within the insurance-linked securities (ILS) space, noting that it is a “nicely growing part” of the firm’s business.
Earlier this morning, Hannover Re published its full-year 2024 results, revealing a 28% increase in group net income, return on equity of 21.2% for the year, strong growth as reinsurance revenue rose by 7.6% across the business to EUR 26.4 billion.At the same time, reinsurance revenue within P&C almost grew by 11% to EUR 18.7 billion, which according to Hannover Re, was driven by structured reinsurance and ILS.
Addressing journalists earlier this morning, Althoff provided some colour on the ILS growth seen within Hannover Re’s P&C reinsurance business.
“ILS was certainly a healthy part of the growth story when it comes to that part of our P&C business.
“The main area of growth within the ILS space for us has been on the cat bond side, where we are helping and transforming quite a number of the cat bonds into the capital market, together with the original sponsors,” Althoff said.
“That is a nicely growing part of our business. The more traditional ILS collateralized fronting space was more stable, but the cat bond side was clearly growing for us,” he added.
In fact, Althoff recently stated that the catastrophe bond market is expected to remain active throughout 2025, as it continues to attract additional capacity across the insurance-linked securities (ILS) market.
Hannover Re acted as a facilitator for around US $4 billion of catastrophe bond transactions, over 13 deals, which was up on its 2023 activity and sets a new record for the company.
At the January renewals, Hannover Re renewed its retrocession arrangements for 2025, increasing its natural catastrophe retrocessional protections by EUR 100 million to a little more than EUR 1.2 billion, with growth in the aggregate excess of loss and whole account excess of loss covers more than offsetting a reduced K-Cessions sidecar for the year.
Addressing retro market conditions for 2025, Althoff said: “From a retro point of view, we saw a rather similar situation compared to what we experienced on the incoming business. So, there was certainly more supply of capacity available compared to 12 months ago.
“From that point of view, we decided to use that opportunity to buy a little more limit, both on the event and on the aggregate side. But also, that market continues to be disciplined, so our retention levels stayed at the same level compared to the previous year.”
“And from that point of view, I would say that the retro market and the property cat market are very much in sync right now when it comes to general conditions and supply and demand,” he concluded.
