Hannover Re embraces growth at April renewals, after snubbing it at 1/1

Global reinsurance group  Hannover Re may have set itself on track for 2023 revenue growth during the April renewals after a cautious approach to renewals at January 1 left the group with first quarter revenues flat from the prior year reading, top company officials suggested Thursday (May 11).

Hannover Re increased its book at the April 1 renewals by over 7%, including a 6% boost from just risk-adjusted rate increases, management indicated for analysts following publication of the Q1 earnings report. Sums cited included all deals done after the January 1 renewals and running through the April renewal deadline.

The net on new business versus cancelled or restructured deals proved positive, albeit fractional. On renewals, volume was up a mere 0.4%, leaving rising rates to do the work.

“We still expect to see growth in our P&C reinsurance revenue and April renewals are the first step,” CFO Clemens Jungsthöfel told analysts at his company’s first quarter earnings call.

Hannover Re captured its “most significant” price increases in non-proportional property cat “and accordingly we continue to shift our portfolio to non-proportional business and reduce some our share in proportional.,” CEO Jean-Jacques Henchoz told the call.

Markets will be looking for some of that business to start feeding through to the group’s reinsurance revenue, the new IFRS17 measure for top line revenue. Hannover Re has promised investors growth in excess of 5% in 2023, but delivered a fractional decline in Q1 even after a similarly hard market renewal at 1/1.

“Business development in Q1 supports our expectations for the full-year,” Henchoz added. “We continue to expect growth in revenue of 5%.”

Hannover Re had taken it the other way at the January 1 renewals, speaking more to "portfolio steering" than growth at the time. Of the €9.87 billion up for renewal - 63% of Hannover Re's business going in - Hannover renewed €8.49 billion and left €1.38 billion or 14% either cancelled or altered.

For the April 1 renewals, price gains proved stronger in the US market than in Asia, but Henchoz expressed satisfaction with the breadth of the hard market developments.

April 1 renewals were “characterised by a market environment similar to the January renewal” with continually "constrained" capacity as reinsurers held a work on both prices and structures “in a disciplined way.”

In the Americas, Hannover Re cited “substantial price improvements”, especially for property business, with some risk-adjusted nat cat rate increases of up to 40%.

The APAC region saw terms continue to harden, especially in property, including rate increases of up to 20% for Japanese nat cat.

Henchoz called out marine lines for strong conditions and a continuing reinsurer focus on terms and conditions above and beyond price. Hannover Re claimed “healthy risk-adjusted rate increases” had proven achievable in all marine segments across all geographies.

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