Global reinsurance company Hannover Re has continued its strong growth through the first-half of 2022, with the firms gross premiums written growing by almost 20% across the group and 26% in the P&C reinsurance business.
At the same time, Hannover Re reported higher than anticipated major losses, while ceding a portion of its catastrophe losses to retrocession during the six month period.
Group net income is reported at EUR 649 million for H1 2022, down slightly on the prior years EUR 671 million.
Effects denting the result included natural catastrophe loss activity around the world, mortality exposure to COVID and other life side effects, as well as the addition of more precautionary reserves to cover potential losses related to Russia’s war in the Ukraine.
The growth is the main story though, as Hannover Re, like its reinsurance peers, continues to expand the business in the improved pricing environment.
The company underwrote EUR 17.3 billion of premiums across the business, up from EUR 14.5 billion in the prior year period.
In property and casualty reinsurance, Hannover Re said that “the demand for coverage from financially robust reinsurers remained high.”
As a result of which, “Hannover Re was again able to significantly increase its premium income and secure improved prices and conditions in the various rounds of renewals during the year.”
Gross written premium increased by almost 26% in P&C reinsurance to EUR 12.9 billion, up from EUR 10.3 billion in the prior year.
“Our consistently strong and profitable growth shows how highly sought-after Hannover Re’s reinsurance protection is among our clients during difficult times,” explained Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. “We delivered a satisfactory result in the first half-year, not least thanks to our superlative risk and capital management. We were able to do this despite setting aside reserves for impacts of the war launched against Ukraine in contravention of international law, despite considerable large loss expenditures and despite further pandemic-related payments.”
Gross large losses came out at EUR 971 million, which includes now Russia/Ukraine loss reserves of EUR 316.2 million.
Those war related reserves remain unconfirmed by actual claims, so no retrocessional benefit has been attributed to them yet.
In natural catastrophes, Hannover Re reported EUR 625.6 million of gross losses for H1 2022, which were reduced to EUR 507.2 million on a net basis, suggesting at least a portion of these have been ceded to retrocessionaires.
Flooding and rain in Australia was the biggest loss driver of the quarter, at EUR 245.5 million gross, but this also saw the biggest reduction to net, at EUR 186.1 million.
European windstorms were the next biggest gross catastrophe loss at EUR 144.1 million, which dropped to EUR 126.1 million net.
Hannover Re also suffered some loss creep related to last year’s drought in Brazil, for which it put up additional IBNR reserves of EUR 130 million due to late claims reporting.
At the July reinsurance renewals, Hannover Re cited “significant price increases” in some instances, that have helped to affirm its growth expectations for the year.
Hannover Re anticipates gross premium will grow by more than 7.5% adjusted for exchange rate effects, and still targets net income of EUR 1.4 billion to EUR 1.5 billion across the group.
“Our success is grounded on our considerable underwriting discipline, the cost efficiency of our business model and our agile capital management,” CEO Henchoz said. “On this basis we are ideally placed to tackle the numerous challenges in our market. Against this backdrop, and thanks to our strong customer relationships, I am confident that we will achieve our ambitious goals for 2022. With the result for the first six months we have laid vital groundwork to this end.”