Hannover Re profit plummets 39% in H1 as COVID-19 loss provisions jump

Hannover Re, the third-largest reinsurer in the world, saw its results plummet 39 percent for the half year as the pandemic unsurprisingly weighed on overall improvements, leading to an increase in the reserves in the property & casualty reinsurance business.

The result in P&C reinsurance was adversely affected by COVID-19 with the reserves for estimated losses increasing to €600 million, from the earlier estimate of €380 million, covering business interruption, trade credit or event cancellation.

The group's net profit fell by 39.3 percent to €402.4 million, compared with €662.5 million in the first half of 2019.

Hannover Re's gross written premium rose by 12.4 percent to €13.1 billion, compared with €11.7 billion in the prior-year period.

The property/casualty reinsurance combined ratio climbed to 102.3 percent. In the same period of 2019, the combined ratio was 96.7 percent.

The reinsurer highlighted an increase in demand for reinsurance coverage in the treaty renewal negotiations at 1 April, 1 June and 1 July, with partly significant improvements in prices and conditions running into double-digit percentages.

Jean-Jacques Henchoz, chief executive officer of Hannover Re, said: "We have come through the crisis relatively well so far. This enables us to make appropriate provision for the anticipated Covid-19 losses and take account of the still considerable uncertainty surrounding the scale of the pandemic. Our business model is geared to managing such extreme events. We offer our clients and business partners our unqualified support."

Commenting on the outlook, Henchoz said: "There are still too many uncertainties associated with providing profit guidance for the full year. The development of the pandemic and its implications for economic growth as well as the measures taken by various governments will play a defining role in shaping our loss experience. In view of their global nature and the immense costs that can be incurred worldwide, the coverage of systemic risks is dependent now more than ever on partnership-based approaches. We stand ready to contribute our global expertise in supporting the development of innovative coverage solutions for large risks."