Hannover Re Reports Significant Profit Increase

Shares of Hannover Re (ETR:HNRGn) rose over 2% on Monday after the company reported a 30% jump in net income for the first three quarters of 2024, with a revised full-year profit target now raised to €2.3 billion.

Financial Overview

For the first nine months of the year, Hannover Re reported Group net income of €1.8 billion, reflecting a 30.4% increase compared to the same period in 2023.

This strong result was boosted by a 6.4% increase in reinsurance revenue, which reached €19.7 billion, with a 7.0% growth adjusted for exchange rate effects.

The reinsurance service result also saw an impressive rise of 36.4%, reaching €2.1 billion, demonstrating strong underwriting profitability.

Challenges and Response

Although the company faced a structurally negative reinsurance finance result of €784 million, this did not overshadow the overall positive business trajectory.

The company’s operating profit climbed 33.3% to €2.4 billion, while net income rose to €1.8 billion, up from €1.4 billion in the previous year. This improvement was further assisted by a one-off tax benefit of €120 million.

As a result, earnings per share reached €15.13, a jump from €11.60 in 2023. The company’s return on equity also saw a healthy uptick, standing at 22.9% as of September 30, 2024, compared to 20.0% a year earlier.

Updated Forecasts

In its statement, Hannover Re said that it expects the positive momentum to continue, adjusting its full-year profit guidance for 2024 to around €2.3 billion, up from the earlier target of at least €2.1 billion.

The company is confident that large loss expenditures will stay within expectations, which were set at €1.825 billion for the year. Reinsurance revenue is forecast to grow by more than 5%, assuming stable exchange rates, and the company anticipates maintaining a combined ratio of under 89% in property and casualty reinsurance.

Life and health reinsurance is also expected to deliver strong results, with a projected reinsurance service result of over €850 million.

Hannover Re said its guidance for 2025 forecasts Group net income of around €2.4 billion. The company is optimistic about the continued demand for its high-quality reinsurance protection and expects reinsurance revenue in property and casualty to grow by more than 7%. A combined ratio of under 88% is also anticipated, reflecting the favorable market environment.

Additionally, the company projects a 2% increase in its contractual service margin in life and health reinsurance and expects a reinsurance service result exceeding €875 million in this segment.

Investment Returns

Investment returns were another bright spot for Hannover Re, with the investment portfolio reaching €63 billion by the end of September. The company reported a 14.2% increase in the investment result, which amounted to €1,445 million.

The annualized return on investment was 3.1%, surpassing the targeted return, due to the company’s diversified portfolio, including resilient alternative investments in private equity, real estate, and infrastructure.