Nat cat events in US and Japan bring substantial losses for Hannover Re
Hannover Re CEO Jean-Jean Henchoz described the reinsurer’s January 2020 renewals as “satisfying” but looked ahead to a future with upcoming renewals taking place in the US and Japan.
Of Hannover Re’s €10.5 billion traditional treaty business, €7 billion came up for renewal in January 2020 which Sven Althoff, member of the executive board, labelled a “well diversified portfolio from a both a regional and product perspective”. The remaining €3.5 billion is up for renewal later in the year in areas such as North America, Japan, Korea and Australia. And, with significant loss activity in these regions, Althoff expects a substantial rate increase.
“With significant loss activity in the US and Japan, I expect the average rate increase on later renewals to be significantly more than those observed in the January 1 renewals,” he said.
Henchoz noted some areas that presented a substantial impact on results. “The loss burden if you take Dorian in particular or the credit insurity loss incurred with Thomas Cook were large events that were not fully covered by our retrocession programmes, so that had an impact on the results,” he said. Hechoz highlighted that, with adequate protection on the retrocessional side of business, these events do not change the companies positive outlook on 2020.
In relation to last year's Thomas Cook collapse, Althoff noted a decrease in losses compared to Q3 2019. “In some scandinavian countries, business was purchased by third parties, therefore losses were reduced. You can expect us to report Thomas Cook in our year end closing figures at around the €85 million mark,” he said.
Both Hannover Re leaders noted the impact of natural catastrophe in Japan and the impact this had on the company’s results. “We had losses from the previous years as Typhoon Jebi in Japan led to unexpected increases in the loss estimates,” Henchoz said. Althoff added that Typhoon Hagibis in Japan caused a net loss close to €200 million, €40 million less than the losses caused by Typhoon Jebi. “Like the rest of the market we had a negative experience from Typhoon Jebi,” said Althoff.
Another area of interest was the potential for losses from the ongoing Coronavirus outbreak. “On the life and health side of business we have a limited exposure to pandemic covers in the Asia region, so I don’t expect anything material on that front,” said Henchoz. Adding that in relation to mortality, the virus would have to have to exceed the losses caused by the 2003 SARS outbreak.
