Hannover Re has reported its full-year 2025 results this morning, with a meaningful increase to net income and clear growth in property and casualty risks, while on the large loss side insurance-linked securities (ILS) capital sources ended up supporting roughly 20% of the large losses it experienced.
Over 2025, Hannover Re’s group net income increased by 13.4% to EUR 2.6 billion, reinsurance revenues were up by 4.7% at constant exchange rates and return on equity for the year was an impressive 21.4%.
The reinsurance service result (net) rose by 15.8% to EUR 3.5 billion, up from EUR 3.0 billion in the prior year and growth was strong in P&C reinsurance, as Hannover Re reported its new business CSM (net) increased by 12.1% in 2025 to EUR 3.1 billion, up from the prior year’s EUR 2.7 billion.
As a result, Hannover Re has set a target of group net income of at least EUR 2.7 billion for the 2026 financial year, with mid-single-digit revenue growth anticipated in property and casualty reinsurance and a combined ratio of 87%.
For 2025, large losses caused by natural and man-made catastrophe events were below budget, at EUR 1.725 billion, up slightly on 2024’s EUR 1.629 billion, but below budget. For 2026, the net large loss budget has been set at EUR 2.3 billion.
The P&C reinsurance net service result rose meaningfully to EUR 2.6 billion, from EUR 2.1 billion in the prior year, while the P&C combined ratio was just 84% (better than 2024’s 86.6%).
As ever, perhaps the most notable aspect of Hannover Re’s initial results statement for the insurance-linked securities (ILS) community is the fact around 20% of the gross large losses experienced during the year were shared with ILS capital sources.
Given Hannover Re’s extensive work with ILS capital partners, the company has benefited from these sources of capital in its P&C business again it seems, as they help the company grow while managing risks and exposures at the same time.
Recall that, in the first-quarter of 2025, Hannover Re ceded EUR 438 million of its large natural catastrophe losses with insurance-linked securities (ILS) capital sources, with the California wildfires the main natural event that drove cessions to capital partners it seemed.
After the second-quarter, the amount of losses ceded to insurance-linked securities (ILS) investors by Hannover Re had only risen to EUR 459 million for the first-half, and then after the third-quarter of 2025 the ILS investor share of its gross losses had declined slightly to EUR 448 million, suggesting some improvement or reduction in the amount of losses to be ceded for prior events.
Now, the full-year 2025 data shows that of gross natural and man-made losses of EUR 2.563 billion, ILS investors took EUR 524 million, so just slightly over 20%.
That compares to under 15% of large losses shared with ILS investors in 2024, only 3% in 2023, and 34% in 2022, while prior years never got above 22% of large losses shared with ILS capital.
The 2025 ratio was running at around 24% after the third-quarter, with the decline to 20% likely reflecting a more moderate level of large losses in the fourth-quarter of last year.
The data reflects the important role insurance-linked securities relationships play for the reinsurance company, in its role as a key facilitator and front for ILS capital as well as its growing capital partner activities, while also likely reflecting their increasing scale in capital terms within the organisation as well.
In natural catastrophe losses, the gross to net difference also presumably reflects some support from its retrocession program for Hannover Re.
Total gross nat cat losses for 2025 came out at EUR 2.11 billion for Hannover Re in 2025, but the net nat cat loss burden was only EUR 1.314 billion.
The main driver of that differential was the Los Angeles wildfires at the beginning of last year, which saw gross losses of EUR 1.343 billion reduced to a net loss of just EUR 595 million due to cessions, likely to ILS capital partners and certain retrocessional support.
There are some other events where ILS and retro partners may have taken far smaller amounts of the gross nat cat loss, such as severe storms in May in the US (gross of EUR 56 million and net of EUR 44 million), and November’s wind and hail events in Australia (gross of EUR 130 million and net of EUR 102 million).
Overall, there is evidence of Hannover Re’s sophisticated partnership with third-party capital and retro sources helping the company moderate its gross loss exposure. In a year with more meaningful nat cat or man-made losses, the benefits will show far more meaningfully for the reinsurer, in helping it to manage the impacts to its business.
Recall that, Hannover Re expanded its retrocession protections by around 17%, or EUR 200 million to EUR 1.4 billion at the January 1st, 2026, reinsurance renewals, with increased capacity for its capital markets backed K-Cessions quota share sidecar facility, and a new parametric earthquake cover.
In addition, the reinsurer recently launched its Bermuda-based insurance-linked securities (ILS) platform, Hannover Re Capital Partners, and started writing business at the January 1st, 2026, reinsurance renewals.
As a result, the role of third-party capital providers, with ILS activities such as facilitation and fronting, within its new Capital Partners unit and in its retrocession arrangements, will provide increasing support as the capital base grows for Hannover Re.
Of course, these activities are also driving another form of income in terms of fees as well, which by this stage and given the significant limits fronted for capital market investors, must already be meaningful and likely set to grow further.
Clemens Jungsthöfel, Chief Executive Officer of Hannover Re, commented on the 2025 results, “Hannover Re stands for reliability and financial strength. We achieved our increased earnings guidance in 2025 and at the same time made the most of another successful financial year to take strategic actions aimed at significantly reinforcing our future profitability. With a further substantial increase in the proposed dividend and the higher payout ratio, our shareholders are also participating more than ever in Hannover Re’s success.”
Through systematic realisation of hidden losses in our investments and by further expanding our resilience in the loss reserves, we have continued to significantly reinforce our financial soundness. In an increasingly challenging market landscape, Hannover Re is thus equipped with the strongest balance sheet in its history,” added Christian Hermelingmeier, Chief Financial Officer of Hannover Re. “Our commitment to supporting our clients with stability and reliability is further underscored by our extremely robust solvency ratio.”
Looking ahead to the rest of 2026, CEO Jungsthöfel added, “With our solution-driven and pragmatic ‘somewhat different’ approach, we continue to be a strong and reliable partner for our clients. Thanks to our proven strengths and robust balance sheet, and with the additional steps taken to increase our resilience, we are optimally placed to deliver attractive earnings growth even in a challenging market – in 2026 and beyond.”
Read more on Hannover Re’s annual results over at our sister publication Reinsurance News.
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