Hannover Re’s P&C result hit by fourth year of above budget large losses

Hannover Re’s P&C result hit by fourth year of above budget large losses

Global reinsurer Hannover Re fell to a loss in its property and casualty reinsurance department in 2020, as effects from the COVID-19 pandemic drove a 4th year in succession of above budget plan large losses for the company.Overall large losses, consisting of those from the COVID-19 pandemic and global disaster activity, came out at practically EUR 1.6 billion for Hannover Re in 2020, up significantly from the prior years EUR 956.1 million and well above the big loss budget plan of EUR 975 million.
As an outcome, Hannover Res P&C reinsurance underwriting result fell dramatically to EUR -223.5 million (down from EUR 235.4 million), while the reinsurers combined ratio increased to 101.6% (up from 2019s 98.2%).
Showing the effectiveness of large and globally diverse reinsurance platforms, Hannover Re still reported a P&C reinsurance operating revenue, although year-on-year this too fell significantly by 35.3% to EUR 831.3 million (down from EUR 1,285.8 million).
Total Hannover Re reported that its totally year gross premiums underwritten rose by 12% in 2020, while group net income was still a very favorable EUR 883 million, albeit below 2019s EUR 1.3 billion.
The business grew its P&C reinsurance underwriting book considerably in 2020 and continued to do so at the January 2021 renewals.
Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re, commented on the results, “We are playing our part in getting rid of the consequences of this pandemic and are contributing our knowledge to the development of coverage ideas for future extreme occasions. As one of the largest and most financially robust reinsurers, we continue to be a dependable partner at our consumers side.
” In the pandemic year 2020 Hannover Re attained an excellent result, therefore once again showing its exceptional risk-carrying capability and its broad diversification. We are benefiting especially strongly from the sustained enhancement in prices and conditions on our market. With a view to maximising the offered business chances, we have actually chosen to leave out payment of a special dividend for 2020 and rather to somewhat raise the regular dividend.”
Overall development in Hannover Res book saw gross premiums written reach EUR 24.8 billion (up from EUR 22.6 billion), a growth rate of 12.0% changed for exchange rate results.
The P&C reinsurance company saw costs and conditions steadily enhance at the various rounds of treaty renewals throughout 2020, the reinsurer stated.
P&C reinsurance gross premiums written increased 13.3% to EUR 16.7 billion (EUR 14.8 billion), which would have been 15.8% growth at continuous currency exchange rate.
The nearly EUR 1.6 billion of significant losses suffered in 2020 break down as 950.1 million from the COVID-19 pandemic.
Of this, the bulk stays IBNR, with only EUR 330.9 million attributable to reported claims up until now.
” We considerably decreased the risk of extra reserving in home and casualty reinsurance by further strengthening our IBNR reserves for Covid-19-related losses at the end of the year,” Henchoz explained. “Provided big losses remain within our expectations, this should be shown in greatly improved success in 2021.”
The largest natural catastrophe losses of the year for Hannover Re consisted of a storm that struck eastern parts of the United States at a net expense of EUR 111 million, Hurricane Laura costing EUR 87.5 million and the surge at the Port of Beirut costing it EUR 86.6 million.
The life and health reinsurance division experienced another EUR 261.1 million of pandemic related losses, most of which was attributable to illness and survivor benefit in the United States.
This, along with rates of interest impacts, drove the operating outcome for life and health reinsurance to EUR 384.8 million (from 2019s EUR 569.9 million) for Hannover Re.
Hannover Re anticipates extra pandemic associated loss costs to emerge in the United States for its life and health reinsurance book, however anticipates actions taken to restructure its US mortality book ought to balance out much of this.
” Even though the pandemic stays a component of uncertainty, I am positive that we shall accomplish all our targets for the 2021 monetary year and return to the excellent level of success taped in 2019,” stated Henchoz. “This will be supported by the sustained improvement in conditions and rates seen in property and casualty reinsurance.”
Hannover Re targets additional development in 2021, to make the most of enhanced underwriting market conditions.
The reinsurer anticipates to grow its gross premiums composed by around 5%, at continuous currency exchange rate, while its target for group net earnings is in between EUR 1.15 billion to EUR 1.25 billion.
The company has actually boosted its large loss budget plan for 2021 to a higher level of EUR 1.1 billion, which is likely to buffer versus extra pandemic impacts.
Hannover Re is the last of the huge reinsurers to report its 2020 outcomes and they appear in-line with expectations.
They likewise portray development over the last year and an expectation of more development ahead, as these big, internationally diverse reinsurance companies turn into the firmer market.
Read about the fully-year 2020 results of rivals Munich Re, Swiss Re and SCOR.

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