Hannover Re reported a 21% increase in group net income, reaching €1.2 billion for the first half of 2024, and confirmed its full-year guidance.
The company’s reinsurance revenue grew by 5.2% to €12.9 billion, compared to €12.3 billion in the previous year. Adjusted for exchange rates, growth would have been 6.1%. The reinsurance service result, which reflects the profitability of underwriting after accounting for ceded business, increased by 31% to €1.4 billion, up from €1.1 billion.
The reinsurance finance result, which is structurally negative and adjusted for exchange rate effects, amounted to -€500 million, compared to -€342 million in the previous year.
Operating profit (EBIT) rose by 23% to €1.7 billion, from €1.4 billion, while Group net income increased by 21% to €1.2 billion, up from €960 million. Earnings per share for the first half of the year were €9.63, compared to €7.96 in the previous year.
Hannover Re's return on equity for the period reached 22.3%, with a capital adequacy ratio under Solvency II of 275.8%. Shareholders' equity totaled €10.7 billion as of June 30, 2024, up from €10.1 billion at the end of 2023. The company’s book value per share was €88.45, compared to €83.97 as of December 31, 2023.
The contractual service margin (net) saw a 20% increase to €9.3 billion, reflecting ongoing growth and profitability over the past six months. The risk adjustment for non-financial risk also rose by 6.4%, reaching €4.0 billion by the end of June.
In the property and casualty reinsurance segment, reinsurance revenue grew by 8.8% to €9.1 billion, up from €8.4 billion. At constant exchange rates, growth would have been 10.1%. Large loss expenditures totaled €566 million in the first half of the year, remaining within the budgeted €801 million.
Major losses included €120 million from flooding in southern Germany, €82 million from civil unrest in New Caledonia, and €82 million from floods in Dubai and other parts of the United Arab Emirates. The flooding in Brazil accounted for €47 million in losses.
The reinsurance service result in this segment increased by 61% to €963 million, up from €598 million, while the combined ratio improved to 87.8% from 91.7%. The reinsurance finance result, excluding exchange rate effects, was -€420 million, compared to -€285 million previously.
The investment result in this segment rose by 28% to €797 million, up from €625 million, leading to a 40% increase in EBIT to €1.2 billion, compared to €829 million.
In the life and health reinsurance segment, Hannover Re’s performance was in line with expectations. Reinsurance revenue decreased by 2.3% to €3.8 billion, down from €3.9 billion. Adjusted for exchange rates, the decline would have been 2.5%.
The reinsurance service result (net) was €448 million, down from €481 million, but still ahead of the full-year target. The reinsurance finance result (net), adjusted for exchange rate effects, was -€80 million, compared to -€58 million in the previous year.
The investment result in this segment totaled €211 million, compared to €225 million, and EBIT declined by 4.4% to €501 million, down from €525 million.
Hannover Re's investment portfolio reached €62 billion at the end of June, up from €60 billion at the end of 2023. The investment result increased to €1.0 billion, up from €851 million, driven by higher earnings from the fixed-income portfolio. The return on investment was 3.3%, exceeding the full-year target of 2.8%.
Hannover Re has confirmed its guidance for 2024, expecting group net income to reach at least €2.1 billion, assuming no major disruptions in capital markets and that large loss expenditures remain within the expected €1.825 billion.
The company said that it also anticipates growth of more than 5% in reinsurance revenue for the full year, with stronger growth expected in property and casualty reinsurance compared to life and health reinsurance.
The combined ratio for property and casualty reinsurance is expected to be below 89% for the full year, and the reinsurance service result in life and health reinsurance is projected to exceed €850 million.
The company expects moderate growth in its investment portfolio and a return on investments of at least 2.8%. Hannover Re also anticipates an increase in its ordinary dividend during the 2024-2026 strategy cycle, with the possibility of a special dividend if capital requirements for future growth and profit targets are met.
“Thanks to our selective underwriting approach and our retrocession strategy, we feel well prepared for the upcoming second half of the year – which tends to be more loss-intensive,” Hannover Re CEO Jean-Jacques Henchoz (pictured above) said.
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