Hannover Re’s 2023 net income improves as reinsurance revenue climbs to €24.5bn

Hannover Re has disclosed that it generated net income of €1.8 billion for the 2023 financial year, up from €800 million in 2022 and beating its guidance of at least €1.7 billion.

As a result of this, the firm’s earnings per share reached €15.13, up from €6.47 in 2022.

Hannover Re explained that an exceptionally low tax expenditure of €26 million was also incurred in 2023, primarily due to a one-time tax effect connected with the implementation of global minimum taxation.

Clemens Jungsthöfel, Chief Financial Officer of Hannover Re, commented, “This special tax effect provided additional room to further increase our resilience.

“We used this opportunity to additionally strengthen our loss reserves in property and casualty reinsurance, thereby significantly increasing the confidence level of our reserves.”

As mentioned, the firm’s reinsurance revenue (gross) increased by 1.8% to €24.5 billion. Hannover Re said that growth of 4.9% would have been booked at unchanged exchange rates, almost reaching the set target of at least 5%.

Looking at its property and casualty reinsurance segment, Hannover Re noted that the renewals in 2023 brought “substantial improvements” in risk-adjusted prices and conditions.

“This was evident in the new business CSM (net), which reflects the earnings expectations from the business written in 2023. Thanks to a quality-focused underwriting approach, the new business CSM (net) increased by a substantial 30% to €2.4 billion. The new business LC (net) decreased to €40 million,” the firm said.

Reinsurance revenue (gross) in property and casualty reinsurance in 2023 was up by 3.4% to €16.8 billion, while payments to customers for large losses in the year totalled €1.6 billion, down slightly compared to 2022’s €1.7 billion, and within the budgeted expectation of €1.725 billion.

The largest individual losses incurred by Hannover Re included the severe July storms in Italy with a net expenditure of €313 million.

The reinsurance service result in this segment improved by 5.9% to €849 million, and, despite the significantly strengthened confidence level of the loss reserves in 2023, the combined ratio improved to 94.0%.

Looking at Hannover Re’s life and health reinsurance segment, the new business CSM (net) decreased to €359 million. In addition, treaty renewals and changes in the in-force portfolio caused the contractual service margin (net) to increase sharply to €6 billion, while the new business LC (net) amounted to €14.4 million.

Reinsurance revenue (gross) in this segment contracted slightly to €7.6 billion, though the reinsurance service result (net) improved to €810 million.

Elsewhere, Hannover Re also revealed that its group-wide portfolio of investments grew to €60.1 billion at the end of December, while the investment result came in at €1.6 billion, up from €965 million in 2022.

Meanwhile, the firm’s operating result (EBIT) in 2023 amounted to €2 billion, up from €1.5 billion in 2022.

Commenting on the results, Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re, said, “We achieved a great deal in 2023: Our two business groups and our investments performed very well.

“We were able to beat our earnings target and significantly increase the dividend. At the same time, we further strengthened Hannover Re’s resilience.

“Despite the continued challenging environment, we have further improved the profitability of our business and cemented our role as a reliable partner and robustly capitalised reinsurer.”

Looking to 2024, Hannover Re expects reinsurance revenue in total business to grow by more than 5% based on constant exchange rates, with growth in property and casualty reinsurance “likely to be disproportionately stronger than in life and health reinsurance.”

Hannover Re continued, “In view of the improved market environment, property and casualty reinsurance should achieve a combined ratio of below 89%. Life and health reinsurance is expected to generate a reinsurance service result of more than €850 million in the current financial year.

“Group net income for the full year should reach at least €2.1 billion, equivalent to an increase of around 15% compared to the previous year.”

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