Hannover Re posted Group net income of €480 million for the first quarter of 2025, down 13.9% year-over-year, reflecting the financial impact of several major natural catastrophe events.
Despite the decline, the reinsurer said its core business performance remains in line with full-year guidance.
Gross reinsurance revenue for the quarter rose by 4.5% to €7 billion, compared to €6.7 billion in the same period last year. Adjusted for currency effects, growth would have been 2.4%. The net reinsurance service result declined by 28.5% to €515 million, down from €720 million, primarily due to losses stemming from the California wildfires.
The net reinsurance finance result, which accounts for interest accretion on discounted technical reserves, was negative €333 million, compared to negative €261 million a year earlier. This figure excludes currency fluctuations.
A stronger euro against the US dollar contributed to an improved currency result. Other income and expenses stood at negative €128 million, compared to negative €109 million in the previous year.
Previously, Hannover Re reported a 28% increase in group net income for 2024, reaching €2.3 billion and meeting the higher guidance set in autumn 2024.
The company’s return on equity (ROE) rose to 21.2%, exceeding its strategic target. Reinsurance revenue grew by 7.9% to €26.4 billion for the year.
Operating profit for the first quarter fell by 14.1% to €696 million, down from €811 million. Earnings per share were €3.98, compared to €4.63 in Q1 2024.
Shareholders' equity increased to €12.1 billion as of 31 March 2025, up from €11.8 billion at year-end 2024. The annualized return on equity reached 16.1%, compared to 21.3% a year ago. Book value per share rose to €100.19 from €97.80.
The net contractual service margin (CSM) increased to €8.8 billion, while the risk adjustment for non-financial risk rose by 3.3% to €4.1 billion. Hannover Re’s Solvency II capital adequacy ratio stood at 273% at the end of March, well above its long-term minimum target of 200%.
Chief executive officer Clemens Jungsthöfel (pictured above) said the California wildfires pushed the company above its first-quarter large loss budget.
“At the same time, our underlying business has continued to develop favorably, and we are therefore confident of achieving our full-year targets,” Jungsthöfel said.
In property and casualty reinsurance, gross reinsurance revenue grew by 7.2% to €5.1 billion. At constant exchange rates, growth would have been 5.1%. However, large loss expenditures for the quarter totaled €765 million, exceeding the allocated quarterly budget of €435 million.
The largest single event loss was from the California wildfires, which cost Hannover Re €631 million.
Other notable losses included a mid-air collision in Washington, D.C. (€29 million), an earthquake in Myanmar (€25 million), a refinery fire in southern Germany (€20 million), and Cyclone Alfred in Australia (€17 million).
These losses contributed to a 46.6% decline in the net reinsurance service result for property and casualty to €272 million. The combined ratio rose to 93.9%, surpassing the company’s full-year target of below 88%. The segment’s operating profit fell 29% to €444 million.
Despite the elevated catastrophe losses, Hannover Re confirmed its full-year Group net income target of approximately €2.4 billion. The reinsurer said it expects gross reinsurance revenue in property and casualty to grow by more than 7% at constant exchange rates and projects a combined ratio below 88%.
In its life and health business, Hannover Re anticipates a net reinsurance service result exceeding €875 million and net CSM growth of around 2%. The return on investment is projected to reach at least 3.2%.
April renewal negotiations, covering business in the Asia-Pacific region, North America, and select specialty lines, led to volume growth of 10.4%. However, there was a 2.4% decline in inflation- and risk-adjusted pricing for the renewed portfolio.
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