Hannover Re warns on large loss: Q1 budget largely wiped out

Global reinsurer  Hannover Re has warned that natural catastrophes in the first quarter, including the earthquake in Turkey and storms and flooding in New Zealand may have already filled the group's Q1 large loss budget.

"As of today, we would expect the combined impact from both would reach our large loss budget for Q1," CFO Clemens Jungsthöfel told his company's Q4 investor call. He made a quick caveat that it remains "too early to make a reliable estimate."

The Q1 2023 large loss budget was written at €365 million, Hannover Re's media office noted separately.

"We are still inside that budget, but it is mostly exhausted," P&C Reinsurance leader Sven Althoff said of his own read.

The sum includes a rough estimate for a €200 million impact from the earthquake, a figure Althoff said had been based on an industry loss estimate neighbourhood €3.5 to €4 billion.

Hannover Re is not a participant in the Turkish earthquake pool, but does reinsure "a number" of Turkish primary insurers and further expects claims via western European insurers, Althoff said.

Hannover Re overshot its large loss budget in 2022 for the sixth year running. The 2022 tally of €1.7 billion, 7.9% of net earned premium, went well above a budgeted sum of €1.4 billion. Gross large loss approached the $3 billion mark.

While Hurricane Ian led the list at a net €322 million and Australian floods and winter storm Ylenia added nine-digit figures, management laid the blame for the overshoot more on Russia’s war in Ukraine. Prior year reserve adjustments and net adjustments on Covid claims also dragged.

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