===
EQS-News: Hannover Rück SE / Key word(s): Quarter Results
Hannover Re increases quarterly profit to EUR 558 million
2024-05-14 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.
Hannover Re increases quarterly profit to EUR 558 million
. Group net income up by 15% to EUR 558 million
. Reinsurance revenue rises to EUR 6.7 billion
. Large losses in property and casualty reinsurance comfortably within budgeted and booked expectation

. Result in life and health reinsurance in line with expectations
. Return on investment ahead of target at 3.3%
. Return on equity reaches 21.3%
. Guidance for 2024 confirmed
Hannover, 14 May 2024: Hannover Re increased Group net income by 15% in the first quarter to EUR 558 million and
confirms its guidance for the full 2024 financial year.
"We can look back on a rather benign quarter as regards large losses. We had a good start into the year, putting us on
track to achieve our full-year profit target," said Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. "At
the same time, with the recent treaty renewals we have put in place a solid foundation for further profitable growth
given the continued demand for high-quality and reliable risk protection in what is a challenging landscape."
Group net income up by 15% to EUR 558 million
Reinsurance revenue (gross) grew by 1.6% to EUR 6.7 billion (previous year: EUR 6.6 billion). Growth of 3.0% would have
been booked at unchanged exchange rates.
The reinsurance service result, reflecting the profitability of underwriting activity less business ceded (primarily
retrocessions and insurance-linked securities), increased by 27% to EUR 720 million (EUR 568 million). Adjusted for
exchange rate effects, the reinsurance finance result - which includes in particular the interest accretion on
technical reserves discounted in previous years - amounted to EUR -261 million (EUR -167 million).
The operating profit (EBIT) climbed by 13% to EUR 811 million (EUR 720 million). Group net income improved by 15% to
EUR 558 million (EUR 484 million). Earnings per share thus came in at EUR 4.63 (EUR 4.02).
Return on equity reaches 21.3%; capital adequacy ratio under Solvency II remains robust
The shareholders' equity of Hannover Re amounted to EUR 10.9 billion as at 31 March 2024 (31 December 2023: EUR 10.1
billion). The annualised return on equity reached 21.3% (previous year: 20.8%). The book value per share stood at EUR
89.97 (31 December 2023: EUR 83.97).
The contractual service margin (net) rose sharply by 15% to EUR 8.9 billion (31 December 2023: EUR 7.7 billion). The
increase reflects above all the business growth in the first quarter and the continued favourable earnings prospects.
The risk adjustment for non-financial risk similarly increased accordingly by 4.9% to EUR 3.9 billion (31 December
2023: EUR 3.7 billion).
The capital adequacy ratio under Solvency II, which measures the risk-carrying capacity of Hannover Re, amounted to
266.8% at the end of March and was thus still clearly in excess of the long-term target of more than 200%.
Large losses in property and casualty reinsurance within the budgeted expectation
Expenditures for catastrophe losses in property and casualty reinsurance came in below expectations in the first
quarter and were thus comfortably within the envisaged and reserved budget. At the same time, the main renewal season
in property and casualty reinsurance as at 1 January 2024 brought further improvements in risk-adjusted prices and
conditions for Hannover Re.
Reinsurance revenue (gross) in property and casualty reinsurance rose by 3.1% to EUR 4.7 billion (EUR 4.6 billion).
Growth of 5.0% would have been recorded at unchanged exchange rates.
In accordance with its usual practice, Hannover Re booked the entire large loss budget for the first quarter of EUR 378
million and took this as a basis for calculating the quarterly result. Losses were caused by the earthquake in Japan at
the turn of the year in an amount of EUR 25 million, wildfires in Chile costing EUR 16 million and the collision
between two aircraft at a Japanese airport amounting to EUR 12 million. At the time of the quarterly closing, it was
not yet possible to put a number on what will probably be the largest individual loss resulting from the bridge
collapse in Baltimore harbour. In total, however, the large loss expenditures incurred in the first quarter, including
the Baltimore bridge collapse, will remain comfortably within the booked large loss budget.
The reinsurance service result increased by 61% to EUR 509 million (EUR 315 million). The combined ratio in property
and casualty reinsurance improved to 88.0% (92.3%) and was thus within the expected level of less than 89%. The
reinsurance finance result (net) excluding exchange rate effects amounted to EUR -228 million (EUR -129 million).
Investment income in property and casualty reinsurance surged by 41% to EUR 421 million (EUR 298 million).
The operating profit (EBIT) consequently increased by 35% to EUR 629 million (EUR 466 million).
Result in life and health reinsurance in line with expectations
In the first quarter Hannover Re generated a result in line with expectations in life and health reinsurance. This was
attributable above all to sustained strong demand in financial solutions business and for solutions designed to protect
against longevity risks. Traditional reinsurance of mortality and morbidity risks also saw business develop favourably.
The new business CSM (net) amounted to EUR 97 million (EUR 84 million). In addition, contract renewals and amendments
in the in-force portfolio resulted in a significant increase in the contractual service margin (net) to EUR 6.1
billion. The new business LC (net) amounted to EUR 7.9 million (EUR 6.7 million).
Reinsurance revenue (gross) retreated by a modest 2.1% in the first quarter to EUR 1.9 billion (EUR 2.0 billion). A
decline of 1.7% would have been booked at unchanged exchange rates.
The reinsurance service result (net) contracted as expected to EUR 211 million (EUR 253 million) and thus reached a
satisfactory level for achieving the year-end target of more than EUR 850 million. Adjusted for exchange rate effects,
the reinsurance finance result (net) came to EUR -33 million (EUR -38 million).
Investment income in life and health reinsurance totalled EUR 76 million (EUR 83 million).
The operating result (EBIT) in life and health reinsurance reached EUR 181 million (EUR 253 million).
Investment income: Return on investment of 3.3% generated
"Our investments delivered a pleasing performance in the first three months, despite ongoing volatility associated with
numerous geopolitical and economic headwinds," said Clemens Jungsthöfel, Chief Financial Officer of Hannover Re.
"Furthermore, our continued prudent positioning positively impacted our investments."
The volume of investments again surpassed the previous year's level to reach EUR 61.4 billion at the end of March
(31 December 2023: EUR 60.1 billion). The portfolio was favourably affected by a pleasingly strong operating cash flow,
dividend income received from participating interests as well as by currency effects. Interest rate increases made
themselves felt as an opposing factor.
Investment income was substantially higher overall than the corresponding figure for the previous year, coming in at
EUR 498 million (EUR 381 million). This was driven primarily by strong earnings from the fixed-income portfolio, which
clearly offset the somewhat lower income from investments recognised at fair value through profit or loss. The return
on investment reached 3.3%, beating the full-year target of at least 2.8%.
Guidance for 2024 confirmed
Hannover Re expects reinsurance revenue in total business to grow by more than 5% in 2024 based on constant exchange
rates. The currency-adjusted growth in reinsurance revenue will be disproportionately stronger in property and casualty
reinsurance than in life and health reinsurance.
Group net income should reach at least EUR 2.1 billion for the full year. This assumes that there are no unforeseen
distortions on capital markets and that large loss expenditure remains within the budgeted expectation of EUR 1.825
billion. Business in the Asia-Pacific region and North America as well as in some specialty lines traditionally comes
up for renewal on 1 April. Hannover Re obtained slightly improved risk-adjusted prices and conditions here overall. The
renewed volume grew by 7.1%. The inflation- and risk-adjusted price increase for the renewed business amounted to 1.5%.
"The 1 April renewals provided further confirmation that the market environment has stabilised on a high level after
the substantial improvements in prices and conditions recorded in prior years," said Henchoz. "We are optimistic that
this level can be sustained in the coming renewals as well. It remains the case that our clients value our quality as a
strong partner and our focus on our core expertise, namely reinsurance."
In view of the improved market environment, Hannover Re anticipates a combined ratio under 89% for property and
casualty reinsurance in 2024. Life and health reinsurance should generate a reinsurance service result of more than EUR
850 million in the current financial year.
The asset portfolios should continue to show moderate growth - assuming stable exchange rates and interest rate levels.
The return on investment from assets under own management should be at least 2.8%.
The ordinary dividend is expected to increase year-on-year over the 2024-2026 strategy cycle. The ordinary dividend
will be supplemented by a special dividend provided the capitalisation exceeds the capital required for future growth
and the profit target is achieved.

Hannover Re is one of the world's leading reinsurers. It transacts all lines of property & casualty and life & health
===
(MORE TO FOLLOW) Dow Jones Newswires

May 14, 2024 01:30 ET (05:30 GMT)