EQS-News: Hannover Re raises profit target for 2024 and expects Group net income of around EUR 2.4 billion for 2025

Hannover Re raises profit target for 2024 and expects Group net income of around EUR 2.4 billion for 2025

• Group net income after three quarters increases by 30.4% to EUR 1.8 billion
• Reinsurance revenue grows by 7.0% adjusted for exchange rate effects to EUR 19.7 billion
• Large losses in property and casualty reinsurance within the budgeted expectation
• Result in life and health reinsurance in line with expectations
• Return on investment reaches 3.1%
• Return on equity stands at 22.9%
• Full-year profit target for 2024 raised to around EUR 2.3 billion
• Guidance 2025: Group net income of around EUR 2.4 billion expected

Hannover, 11 November 2024: Hannover Re generated Group net income of EUR 1.8 billion in the first nine months of the year. Against the backdrop of the favourable business development and a positive tax effect in the third quarter, Hannover Re is raising its full-year profit target to around EUR 2.3 billion. Guidance for Group net income of around EUR 2.4 billion for the 2025 financial year is announced for the first time.

“In the first nine months of the year Hannover Re continued to chart its successful course. Thanks to the adequate pricing level in property and casualty reinsurance, we are able to achieve a satisfactory level of earnings that puts us in a position to offer reliable reinsurance protection going forward, as we have in the past,” said Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. “The destruction left behind by Hurricanes Helene and Milton serves as a reminder that hurricane season is not yet over. Nevertheless, we are still very much on the right track and feel optimally positioned for the remaining months, and we are therefore raising our full-year profit target.”

Group net income up by 30.4% to EUR 1.8 billion

Reinsurance revenue (gross) grew by 6.4% to EUR 19.7 billion (previous year: EUR 18.5 billion). Growth of 7.0% would have been booked at unchanged exchange rates.

The reinsurance service result (net), reflecting the profitability of underwriting activity less business ceded (primarily retrocessions and insurance-linked securities), increased by 36.4% to EUR 2.1 billion (EUR 1.6 billion). The reinsurance finance result adjusted for exchange rate effects, which is structurally negative, amounted to EUR -784 million (EUR -602 million).

The operating profit (EBIT) was boosted by 33.3% to EUR 2.4 billion (EUR 1.8 billion). Group net income rose to EUR 1.8 billion (EUR 1.4 billion). This increase was additionally influenced by a positive one-off tax effect of EUR 120 million. Earnings per share came in at EUR 15.13 (EUR 11.60).

Return on equity reaches 22.9%

The shareholders’ equity of Hannover Re amounted to EUR 11.1 billion as at 30 September 2024 (31 December 2023: EUR 10.1 billion). The annualised return on equity stood at 22.9% (previous year: 20.0%). The book value per share came to EUR 92.39 (31 December 2023: EUR 83.97).

The contractual service margin (net) grew by 9.2% to EUR 8.4 billion (31 December 2023: EUR 7.7 billion). The increase reflects the business growth and brighter earnings prospects, especially on the back of improved treaty conditions in property and casualty reinsurance. The risk adjustment for non-financial risk increased to EUR 4.0 billion (31 December 2023: EUR 3.7 billion).

The capital adequacy ratio under Solvency II, which measures Hannover Re's risk-carrying capacity, stood at 260% at the end of September, factoring in foreseeable dividends paid for the 2024 financial year and planned growth in 2025. The capital adequacy ratio thus remained comfortable above the threshold of more than 200%.

Large losses in property and casualty reinsurance within the budgeted expectation

Prices and conditions continued to improve in some segments of property and casualty reinsurance throughout the various rounds of renewals during the year, while in other areas they stabilised on the level of the previous year. In view of the sustained good state of the market, Hannover Re made the most of growth opportunities to expand its portfolio and write new business. The new business CSM (net) increased by 14.1% to EUR 2.5 billion (EUR 2.2 billion). The new business LC (net) amounted to EUR 30 million (EUR 39 million).

Reinsurance revenue (gross) in property and casualty reinsurance was up by 9.4% to EUR 13.9 billion (EUR 12.7 billion). Growth would have come in at 10.4% at unchanged exchange rates.

The expenditures for large losses of EUR 1.3 billion in the first nine months remained within the booked budget of EUR 1.4 billion. The largest net individual losses in the first nine months included the flooding caused by heavy rain in parts of Central and Eastern Europe at a cost of EUR 225 million, followed by Hurricane Helene in an amount of EUR 130 million as well as losses due to flooding after intense rainfall in Dubai and other parts of the United Arab Emirates totalling EUR 121 million. In addition, allowance has now been made for potential payments for losses associated with the Baltimore bridge collapse in the first quarter to the tune of roughly EUR 100 million. 

The reinsurance service result increased by 65.2% to EUR 1,461 million (EUR 885 million). The combined ratio improved to 87.9% (91.9%). The reinsurance finance result (net) before currency effects amounted to EUR -666 million (EUR -473 million).

The investment result in property and casualty reinsurance climbed by 20.8% to EUR 1,146 million (EUR 949 million).

The operating profit (EBIT) increased by 56.8% to EUR 1,737 million (EUR 1,108 million).

Result in life and health reinsurance in line with expectations

The Life & Health reinsurance business group developed in line with expectations in the first nine months. New business in the financial solutions segment fared as expected, with sustained strong demand in the United States. Clients also remain focused on solutions for retirement provision, with longevity covers similarly enjoying brisk demand. Hannover Re wrote new business in this segment in the United Kingdom and Australia. Traditional reinsurance business involving mortality and morbidity risks also developed as expected overall.

The new business CSM (net) amounted to EUR 223 million (EUR 228 million). In addition, contract renewals and amendments in the in-force portfolio increased the contractual service margin (net) by EUR 293 million. The new business LC (net) amounted to EUR 18 million (EUR 8.6 million).

Reinsurance revenue (gross) totalled EUR 5.8 billion (EUR 5.8 billion). A slight decrease of 0.4% would have been recorded at unchanged exchange rates.

The reinsurance service result (net) reached EUR 668 million (EUR 677 million). This includes a precautionary value adjustment taken due to a client’s insolvency. The reinsurance finance result (net) before exchange rate effects amounted to EUR -118 million (EUR -130 million).

The investment result in life and health reinsurance contracted to EUR 298 million (EUR 315 million), primarily on account of a negative valuation effect associated with a participating interest measured at equity.

The operating result (EBIT) in life and health reinsurance fell by 1.9% to EUR 716 million (EUR 730 million).

Return on investment reaches 3.1%

The investment portfolio amounted to EUR 63.0 billion at the end of September (31 December 2023: EUR 60.1 billion).

The investment result climbed by 14.2% to EUR 1,445 million (EUR 1,266 million). The annualised return on investment reached 3.1%, beating the pro-rata target return.

“With our prudent investment strategy, we were able to generate a strong investment result despite volatile interest rate markets and macroeconomic uncertainties,” said Clemens Jungsthöfel, Chief Financial Officer of Hannover Re. “Particularly significant factors here were our fixed-income bonds and our highly resilient alternative investments, like private equity, real estate and infrastructure investments.”

Full-year profit target for 2024 raised to around EUR 2.3 billion

For 2024, Hannover Re expects to grow the reinsurance revenue in total business by more than 5% based on constant exchange rates.

Against the backdrop of the good business development and positive tax effect in the third quarter, Hannover Re is raising its full-year profit target to around EUR 2.3 billion from the original guidance level of at least EUR 2.1 billion. Achievement of this target assumes that there are no unforeseen distortions on capital markets and that large loss expenditure remains within the expectation of EUR 1.825 billion.

Hannover Re anticipates a combined ratio of less than 89% in property and casualty reinsurance owing to the sustained positive market climate. Life and health reinsurance should generate a reinsurance service result of more than EUR 850 million in the current financial year.

The investment portfolio should continue to show moderate growth – assuming roughly stable exchange rates and interest rate levels. The return on investments under own management should reach at least 2.8%.

Hannover Re’s dividend strategy remains unchanged. The ordinary dividend is expected to increase year-on-year over the 2024-2026 strategy cycle. The ordinary dividend will be supplemented by a special dividend provided the capitalisation exceeds the capital required for future growth and the profit target is achieved.

Guidance 2025: Group net income of around EUR 2.4 billion expected

Hannover Re anticipates Group net income of around EUR 2.4 billion for the 2025 financial year.

“Demand for the kind of high-quality reinsurance protection offered by Hannover Re will be sustained,” said Henchoz. “In this attractive market environment, we see profitable growth opportunities in both business groups. For the 2025 financial year we are looking to increase earnings and revenue. Hannover Re’s long-term earnings stability and resilience remain our focus.”

Reinsurance revenue (gross) in property and casualty reinsurance is projected to grow by more than 7%. Furthermore, Hannover Re anticipates a combined ratio of less than 88% in the Property & Casualty reinsurance business group based on the improved market environment.

The CSM (net) in life and health reinsurance is projected to grow by around 2%. In addition, Hannover Re anticipates a reinsurance service result of more than EUR 875 million.

The return on investment is expected to reach at least 3.2%.

Achievement of the profit target for 2025 is based on the assumption that large loss expenditure does not significantly exceed the budgeted level of EUR 2.1 billion and there are no unforeseen distortions on capital markets.
 

Hannover Re is one of the world’s leading reinsurers. It transacts all lines of property & casualty and life & health reinsurance and is present worldwide with more than 3,500 staff. German business of the Hannover Re Group is written by the subsidiary E+S Rück. Established in 1966, Hannover Re is recognised as a reliable partner for innovative risk solutions, exceptional customer intimacy and financial soundness. The rating agencies most relevant to the insurance industry have awarded both Hannover Re and E+S Rück outstanding financial strength ratings: Standard & Poor's AA- "Very Strong" and A.M. Best A+ "Superior".

Please note the disclaimer: https://www.hannover-re.com/535917Contact

External Communications:
Oliver Suess
Tel. +49 511 5604-1502
oliver.suess@hannover-re.com

Jessica Locker
Tel. +49 511 5604-1599
jessica.locker@hannover-re.com

Investor Relations:
Karl Steinle
Tel. +49 511 5604-1500
karl.steinle@hannover-re.com

Axel Bock
Tel. +49 511 5604-1736
axel.bock@hannover-re.com

www.hannover-re.com

 

	2023		2024
in EUR million	Q3	YTD	Q3	YTD	+/- previous year
Hannover Re Group
Results
Reinsurance revenue (gross)	6,242	18,514	6,785	19,701	6.4%
Reinsurance service result (net)	483	1,561	718	2,130	36.4%
Reinsurance finance result (net) ¹	-260	-602	-284	-784
Net income from investments	415	1,266	436	1,445	14.2%
Operating profit / loss (EBIT)	484	1,837	791	2,448	33.3%
Group net income	439	1,399	663	1,824	30.4%
Balance sheet
Policyholders' surplus	13,721		15,249
Equity attributable to shareholders of Hannover Rück SE	9,574		11,142
Non-controlling interests	918		875
Hybrid capital	3,229		3,232
Contractual service margin	8,270		8,405
Risk-Adjustment	3,546		4,021
Investments	57,574		62,950
Total assets	64,598		70,299
Ratios
Combined ratio (property and casualty reinsurance) ²	92.2%	91.9%	88.0%	87.9%
EBIT margin ³	9.0%	11.4%	13.5%	14.3%
Return on investment	2.9%	3.0%	2.8%	3.1%
Return on equity	18.7%	20.0%	24.3%	22.9%
Share
Earnings per share (basic and diluted) in EUR	3.64	11.60	5.50	15.13	30.4%
Book value per share in EUR	79.39		92.39
Share price at the end of the period in EUR	207.90		256.10
Market capitalisation at the end of the period	25,072		30,885
Property & Casualty reinsurance
Reinsurance revenue (gross)	4,371	12,736	4,840	13,939	9.4%
Reinsurance revenue (net)	3,701	10,885	4,146	12,041	10.6%
Reinsurance service result (net)	287	885	498	1,461	65.2%
Reinsurance finance result (net) ¹	-188	-473	-246	-666
Net income from investments	324	949	349	1,146	20.8%
Operating profit / loss (EBIT)	279	1,108	576	1,737	56.8%
EBIT margin ³	7.5%	10.2%	13.9%	14.4%
Combined ratio ²	92.2%	91.9%	88.0%	87.9%
New business CSM incl. Loss Component	331	2,125	589	2,438	14.7%
Life & Health reinsurance
Reinsurance revenue (gross)	1,870	5,778	1,945	5,762	-0.3%
Reinsurance revenue (net)	1,690	5,233	1,722	5,085	-2.8%
Reinsurance service result (net)	196	677	220	668	-1.2%
Reinsurance finance result (net) ¹	-72	-130	-38	-118
Net income from investments	91	315	87	298	-5.5%
Operating profit / loss (EBIT)	206	730	215	716	-1.9%
EBIT margin ³	12.2%	14.0%	12.5%	14.1%
New business CSM incl. Loss Component	72	219	30	205	-6.3%
¹ Excluding exchange rate effects
² Reinsurance service result / reinsurance revenue (net)
³ EBIT / reinsurance revenue (net)