Global reinsurance firm Hannover Re has reported strong growth in premiums written of almost 17% on an adjusted basis for the first-quarter of 2021, with growth also continuing at the April renewals when a further 7.4% has been reported.
At the same time, Hannover Re has reported benefits from rising reinsurance prices throughout the renewals so far in 2021, all of which has helped to drive profitability higher despite catastrophe activity and pandemic impacts on the life side.
Which has allowed the company to report Q1 net income of EUR 305.9 million for Q1 2021, which is 1.7% higher than a year ago.
“We are off to a good start in the current financial year,” Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re explained. “Hannover Re is superbly placed to benefit from the sustained improvements in prices and conditions in our market. Even though the pandemic has now been with us for more than a year, our robust capital resources remain unchanged thanks to our outstanding risk management.”
Hannover Re reports “sharply improved profitability in property and casualty reinsurance” as rising pricing drove revenues and said that it was “thoroughly satisfied” with its January 1st 2021 P&C reinsurance renewal outcome.
The reinsurer reported average price increase of 5.5%, which it says reflect improvements in both terms and pricing across risks and regions underwritten.
Premiums rose by 14.2% unadjusted, but if adjusted for exchange and other effects, the premium growth rate of Hannover Re’s P&C reinsurance business was more than 20% for Q1.
Major loss expenditure was lower than the prior year, at EUR 193.2 million net of retrocession.
Here, Hannover Re’s retrocession partners and capital providers assisted, with gross major losses having amounted to EUR 253.1 million.
The Texas winter storms and freezing weather was the largest single loss event, at EUR 135.4 million gross, but this was reduced to EUR 75.4 million net as retrocession once again assisted the company.
In fact, all of Hannover Re’s retro recoveries for Q1 2021 were related to the Texas storms and freezing weather it appears.
Hannover Re’s underwriting result for Q1 was much higher than last year, at EUR 147.3 million (compared to Q1 2020’s EUR 7.2 million).
No new P&C reinsurance pandemic losses from COVID-19 were reported by the reinsurer, but the effects of the pandemic continued to hit its life reinsurance book.
Hannover Re reported EUR 151 million of pandemic related claims in its life and health reinsurance book, which we would imagine are largely due to mortality claims.
As a result, the life and health reinsurance EBIT result contracted by 35.6% to EUR 80.1 million for Q1 2021.
Hannover Re continues to target its profit goals, with net income of EUR 1.15 to 1.25 billion anticipated for 2021.
“The first quarter puts in place a solid basis for achieving the goals that we have set ourselves for the full 2021 financial year,” Henchoz commented. “Hannover Re already dealt with the bulk of the expected pandemic-related strains in the 2020 financial year. With increasingly widespread vaccinations we will be able to progressively return to a more normal life. For us, as a reinsurer, this means that we only need to anticipate further losses from the pandemic on a manageable scale. As an additional factor, prices and conditions in property and casualty reinsurance are continuing to improve. All this gives me confidence that we will achieve our full-year targets.”
On the April reinsurance renewals, Hannover Re has reported continued strong growth and price increases, with premiums up 7.4% and prices rising by 5% across the renewed book.