Hannover Re reported an increase in earnings for the first half of 2025 and said it has reinforced its loss reserves, despite significant catastrophe-related claims earlier in the year. The reinsurer reaffirmed its full-year earnings projection.
Group net income rose 13.2% to €1.3 billion, compared with €1.2 billion in the prior year. Operating profit increased 6.3% to €1.8 billion, and earnings per share stood at €10.90, up from €9.63. Gross reinsurance revenue grew 3.3% to €13.3 billion, or 4.3% when adjusted for exchange rates.
First-quarter results had been weighed down by large catastrophe events totaling €765 million, with €631 million from California wildfires alone. These events pushed the property and casualty combined ratio to 93.9 %.
Despite the losses, Hannover Re has noted that the Los Angeles wildfires were not expected to trigger a global rise in reinsurance prices, though they may temper the pace of rate declines in certain business lines.
"Based on the numbers for the first six months, I am confident of our ability to generate further profitable growth in the second half of the year and achieve our full-year targets,” CEO Clemens Jungsthöfel (pictured above) said.
The reinsurance service result (net) held steady in the first half at €1.4 billion. The finance result (net) declined to a €-667.6 million loss from €-499.7 million, reflecting interest accretion on previously discounted technical reserves.
Currency gains improved to €236.1 million from a €-56.7 million loss. Other income and expenses amounted to €-272.1 million, compared with €-207.2 million.
In the Jan. 1 treaty renewals, Hannover Re increased premium volume by 7.6% despite a 2.1% decline in inflation- and risk-adjusted pricing. The company attributed the growth to strong demand, stable terms and conditions, and a healthy level of client retention, including in structured reinsurance lines.
Equity stood at €11.1 billion at midyear, down from €11.8 billion at year-end 2024, and book value per share was €92, down from €97.80. Return on equity climbed to 23%, surpassing the firm’s target of more than 14%. The contractual service margin increased 3.8% to €8.5 billion, while the non-financial risk adjustment declined to €3.6 billion from €4 billion.
The Solvency II capital adequacy ratio remained at 261%, unchanged from December 2024, and reflected provisions for the ordinary 2025 dividend and planned growth. The company also redeemed a hybrid bond in the second quarter without refinancing.
Management reiterated its full-year net income forecast of about €2.4 billion. Clemens Jungsthöfel said the firm’s business model, corporate culture and resiliency remain integral to sustainable reinsurance protection. Based on current results, he expressed confidence in achieving full-year targets.
The company noted that midyear treaty renewals in property and casualty produced modest price declines and a 2.1% volume contraction due to a large contract reduction – without which growth would have been 4.5%. Inflation- and risk-adjusted pricing for renewed business fell 2.9%.
Full-year expectations include more than 7% growth in gross property and casualty revenue (constant currency) and a combined ratio under 88%. Life and health reinsurance is projected to yield a net service result of over €875 million, with contractual service margin growth of around 2% and return on investment of at least 3.2%.
The outlook assumes stable capital markets and large-loss expenditures that do not exceed the anticipated €2.1 billion for the year.
What are your thoughts on this story? Please feel free to share your comments below.
