Earlier today, the reinsurance giant Hannover Re announced its full-year 2024 results, revealing a group profit of €2.3 billion.
Touching on the 1/1 renewal period in a media results call, Hannover Re CEO Jean-Jacques Henchoz (pictured) said that the firm saw premium growth of 7.6% in the treaty renewals as of Jan. 1, 2025. In a press release, the business said that the good quality of the renewed business was maintained, while an average inflation- and risk-adjusted price decline of 2.1% was recorded.
Commenting on the market environment, Henchoz said that the January renewals were characterized by an increase in insurance supply, mainly driven by retained earnings of incumbent reinsurers, exceeding growth in demand which was less pronounced than anticipated. As a result, reinsurance prices in January slightly decreased, particularly in the nat-cat business.
“However, reinsurance structures, as well as retention levels and terms and conditions remained broadly stable during this renewal,” Henchoz said. “So, all in all, the market continues to be attractive, and we expect the current environment to prevail. The recent loss experience for the industry, particularly the LA wildfires, will likely stabilize terms and conditions in 2025.”
There’s moderate pressure for other property and specialty business, while the casualty business is stable or improving. With no significant inflow of reinsurance capacity from new markets, the increased demand for reinsurance is largely driven by exposure growth while the market is experiencing less inflationary pressures compared to recent years. Reinsurance capacity remains subject to adequate profitability requirements. Hannover Re also highlighted that there is sufficient retrocession capacity available.
Focusing on Hannover Re’s January renewals, Henchoz noted that the group is generally looking back at a successful January renewal.
“While the price competition in this round of renewals was a bit more notable in some areas than we had anticipated, we can look back on successful renewals in a market that remains attractive,” he said.
“This enabled us to generate further profitable growth, and thanks to our very healthy capitalization, we were able to offer our clients more reinsurance protection at appropriate terms and conditions. Overall, we saw a moderate decrease in reinsurance pricing with broadly stable terms and conditions. And considering our targets for 2025, the successful renewals in January give me grounds for confidence with respect to our expected performance for this year.”
The reinsurer has seen growth in its traditional business, Henchoz said, as well as a double digit increase in structured reinsurance premiums which will be pivotal to achieving its growth targets for 2025.
Sven Althoff, member of the executive board for Property & Casualty, said that overall, the business has increased the premium income in its traditional property and casualty business by 7.6%.
“During the January renewals, we were able to maintain the good quality of our renewal business… with regards to retention levels and terms and conditions, which were largely unchanged,” Altoff said. “There was some pressure on the pricing, but the average inflation and risk adjusted price decline across the entire renewal book was a modest 2.1%. With that reinsurance pricing is still on a risk adequate level, although we saw some price reductions in particularly loss-free areas. On the other hand, we also still saw increases where we had experienced losses during the year 2024.”
The quality of Hannover Re’s diversity portfolio, coupled with sustained increased demand, gives it confidence as it looks ahead to further renewals during the year.
“We were pleased with the allocation of shares from our ceding companies despite the increased levels of competition, which is testament to our long-term partnership approach and us being treated as a preferred reinsurer for our clients,” Althoff said.
“The wildfires in Los Angeles have highlighted that the adequate pricing of the business and adequate terms and conditions continue to be indispensable for sustained reinsurance protection. This is all the more true given the difficult environment from a climate change and also geopolitical situation.”
