Hannover Re grows book 6.9% at 1.1, leans XoL to help 2.3% price gain

Hannover Re increased its January renewals book by 6.9% at the 1.1, leaning into the XoL book once again to capture a stronger rate momentum and avoid select proportional business in the Americas, including cyber. 

“We are satisfied with the outcome of our renewals, both in terms of the further improved quality .. and the growth we captured in attractive market environment,” CEO Jean-Jacques Henchoz told equity market analysts in a call presenting 1.1 renewal results.

The reinsurance market should “remain at attractive levels” and provide “profitable growth opportunities” throughout 2024, he said. 

Hannover Re called prices “generally stable or slightly higher,” claiming an inflation- and risk-adjusted price increase on renewed business of 2.3% for traditional P&C reinsurance. 

A lean towards XoL helped on those average prices. Hannover got price changes of 4.4% on the non-proportional book where it grew 10.6%. Prices rose by a smaller 1.3% on the proportional book on average and increased its estimated premium take by 5.3%. That tilt added one percentage point to the XoL weighting in the Hannover Re 1.1 treaty book to 31.1%. 

Hannover Re walked into the January 1, 2024 renewals with a €9.6 billion book up for renewal, but found €881 million it could cancel outright or send for restructuring, a 9.2% reduction in estimated premium off the top.

Of renewed treaties, Hannover Re managed to grow estimated premium by 7.7%, with volume growth of 6.0% above and beyond the 2.3% adjusted price gain.

Hannover Re went on to find €803 million in new or restructured business to add another 8.4% to the book. Hannover Re did not single out pure new business volumes from the restructured sums which had contributed to the 9.2% decline in cancelled/restructured deals. 

Of total treaty premium - renewed and new - Hannover Re laid claim to double digit growth in select specialty lines and said regional growth had been strongest at 10.1% in APAC, ahead of 6.5% growth in EMEA and a mere 2.2% in the Americas. 

Estimated treaty premium on EMEA rose 6.5% on an average price increase of 2.4%. Growth on the biggest 1.1 portfolio was heavily tipped towards the smaller XoL book, up 9.4% on a 4.9% price impact, versus a 5.4% gain in the proportional book on milder price moves. 

Management claimed a focus on adjusting the risk profile and profitability of the portfolio following a year of heavy losses. Rates were up in Germany across the board. German motor and Italian nat cat were major issues. 

The Americas book grew a mere 2.2% on a 2.9% price gain as Hannover Re pulled away from proportional treaty, where estimated premium is down 7.4%. The XoL book provided all the growth, up 11.5% year on year, on a 3.9% price gain. A pullback from cyber proved crucial for that decline with Hannover Re citing “competitive market conditions.”

North American property business renewed at “an attractive level” and casualty saw “positive developments,” with ceding commissions down and reinsurance rates up. 

Asia Pacific saw Hannover Re make the rare focus on proportional treaty. A nearly 11% increase in estimated premium for proportional treaty on a mere 0.5% price gain more than doubled the 5% gain in XoL treaty where prices rose by a faster 2.0%.  Officials on the morning call noted deals with strategic partners in China. 

In the specialty books, mark double-digit growth in agriculture at 16.4% on a mere 3.1% pricing gain with growth exclusively in the 18.6% gain in the proportional covers despite a much lower price boost versus non-proportional where Hannover reduced by a heady 12.3%.  That number could yet change, officials noted, as that particular segment of the market doesn’t often meet the 1.1 deadline so precisely. 

Aviation and marine estimated premium rose 11.5% with growth tipped nearly 2:1 towards XoL where Hannover could secure nearly 10% price increase versus a 1% price gain in proportional. "Hannover Re maintained its robust market position in the marine sector despite the available reinsurance capacity," management said. 

Credit, surety and political risks brought a 10.7% gain in estimated premium, with the proportional book up 8.1% on flat prices but growth focused on the XoL segment, where Hannover RE took a mere 2.9% gain in price and got a nearly 24% rise in estimated premium.

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