Hannover Re’s Impressive 2024 Financial Performance
In 2024, Hannover Re, a leading European reinsurance company, reported a remarkable 28% increase in net income, reaching €2.3 billion. This achievement aligns with the firm’s revised guidance, highlighting a notable enhancement in the property and casualty (P&C) operating profit alongside a robust life and health (L&H) sector performance.
For the year, Hannover Re’s Group net income surged from €1.8 billion in 2023, with the fourth quarter alone contributing €504 million, an increase from the previous year’s €425 million in the same period. The operating profit reached €3.3 billion, up by 68% compared to €2 billion in 2023. In Q4 2024, operating profit escalated significantly to €869 million from €134 million in Q4 2023.
Revenue and Profitability Highlights
Across the group, gross reinsurance revenue rose by 8% year over year to €26.4 billion, while the reinsurance service result saw an impressive 82% increase to €3 billion. During Q4 2024, reinsurance revenue climbed to €6.7 billion from €5.9 billion, and the reinsurance service result improved to €889 million from just €97 million in Q4 2023.
The reinsurance finance result, typically negative due to interest accretion on discounted technical reserves, deteriorated to -€1.115 billion from -€880 million in 2023. For the fourth quarter, this figure moved to -€331 million from -€278 million. Investment income increased by 26% to €2 billion for the year, with Q4 2024 contributing €560 million, up from €323 million in the previous year’s quarter.
Strategic Achievements and Future Outlook
Hannover Re achieved a 21.2% return on equity, surpassing both the prior year’s 19% and the minimum 14% target set for the 2024-2026 strategy cycle. The net contractual service margin, reflecting the unearned profit from business written, rose by 6% to €8.2 billion from €7.7 billion in 2023.
The P&C reinsurance sector performed robustly in 2024, with risk-adjusted prices and conditions improving or stabilizing at high levels. New business CSM in this segment grew by 15% to €2.7 billion, as reinsurance revenue increased by 11% to €18.7 billion.
Large loss expenditures for 2024 amounted to €1.6 billion, matching the 2023 levels and remaining within the budgeted €1.825 billion. Major losses stemmed from events like Hurricane Milton (€230m), Hurricane Helene (€116m), and the Baltimore bridge collapse (€103m).
Life and Health Reinsurance Success
The L&H reinsurance division’s service result improved to €883 million, surpassing the 2023 result of €810 million and exceeding the €850 million target for 2024. Despite a slight decrease in new business CSM from €359 million to €317 million, treaty renewals and portfolio changes led to a significant rise in the contractual service margin to €6.5 billion.
Investment portfolios increased to €65.9 billion, driven by operational business inflows, reduced risk premiums, and favorable exchange rate effects.
Executive Insights and Future Guidance
CEO Jean-Jacques Henchoz expressed satisfaction with the year’s achievements, highlighting steady growth and a promising group profit. The company’s commitment to increasing dividends underscores its attractiveness as a dividend stock.
CFO Clemens Jungsthöfel noted the increased shareholders’ equity, boosting Hannover Re’s resilience and reliability. The return on equity surpassed strategic targets, underscoring the company’s leading market position.
Looking ahead, Hannover Re confirmed a Group net income target of approximately €2.4 billion for 2025, with P&C revenue growth expected to exceed 7% and a combined ratio below 88%. L&H reinsurance aims for a service result above €875 million, while return on investment is projected to reach at least 3.2%.
These projections assume large loss expenditures remain within the budgeted €2.1 billion for 2025 and no unexpected capital market disruptions occur.
Despite recent challenges, such as the Los Angeles wildfires resulting in losses between €500 million and €700 million, Hannover Re remains confident in its guidance, demonstrating resilience and strategic foresight.
As the company prepares for a leadership transition, Henchoz expressed confidence in his successor, Clemens Jungsthöfel, to continue Hannover Re’s success as a global reinsurance leader.
