Hannover Re can lean on P&C Re to hit tightened growth & profit targets
Hannover RE can lean on growth and margin in its P&C segment to up its game in 2024 and over its coming three-year strategy where it targets 5% EBIT growth and a "substantial improvement" in combined ratios, top officials have argued.
“We want to show an industry-leading performance,” CEO Jean-Jacques Henchoz told his company's investor day festivities of the path to RO in excess of 14% and the EBIT growth target. “And we will work to beat these targets.”
For 2024, reinsurance revenues should grow in excess of 5% while the combined ratio is held to less than 89% which, together with L&H and investment results, could render a group net profit in excess of EUR 2.1 billion, up 23% from the 2023 target.
Growth is primarily a P&C Re story. Growth will be “certainly more pronounced on the P&C side,” CFO Clemens Jungsthöfel told analysts at the event in Berlin. He expects "strong increases from where we are today.”
“We believe there is very good growth potential, organic growth potential, in this business,” CEO Henchoz said. His once-stated concerns about a “glass ceiling” on the business is not nearly as close as once feared.
“We see good upside in the current market,” Henchoz said. “Clearly the momentum is very good.”
The P&C reinsurance business needs no boost from ancillary services or other fee-based drivers, Henchoz added. Hannover Re is a pure-play reinsurer that won't compete with its clients.
Margins will also run higher. With a boost from a normalization of the pace of reserving plus a positive discount effect, Hannover RE will enjoy what Jungsthöfel considers a "substantial improvement" in the combined ratio to below the 89% mark.
CEO Henchoz puts that margin gain to improved cycle management and portfolio steering, without any palpable jump from relationship business to some form of opportunistic transactional dealings.
“We add a dimension by strengthening portfolio steering” for “a few pots of profitability,” Henchoz told analysts. Cycle timing and allocation should get “more granular.”
Investments are plotted, chiefly in data and analytics, with an eye to capturing those cycle management and allocation opportunities, to being ahead of the curve on pricing, to scaling growth on a talent-tied market, to creating cost efficiencies and to remaining nimble globally, Henchoz said.
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