Hannover Re eyes growth in 1/1 renewal

Against a backdrop of reinsurers expressing concerns about the European property market, and often arguing for more rate and tighter terms as a result, Hannover Re is different. Instead, solutions are on hand, its senior executives told a press briefing in Baden-Baden on October 21. Problems can be worked through.

“We expect to grow,” Thorsten Steinmann, Hannover Re board member and chief executive officer of German unit E+S Rück from January 1, has said. “The current market environment is attractive for reinsurers. We will aim for continued profitable growth in 2025,” he said, citing a group ambition to grow 7 to 8 percent through the cycle.

It was an uncommon conclusion to a press briefing in Baden-Baden that started by highlighting the challenges of more volatile risks. Steinmann noted the “significant flood losses” across geographies, rising hail damage and the ongoing challenge that so-called secondary perils long since ceased being secondary. High loss years and earnings volatility for cedants are the new norm.

“The market environment for the nat cat business in general is attractive,” Steinmann said. “We need to look country by country as rate adequacy in markets in Europe and the US and Australia or Japan varies. But in general, we want to grow.” 

He noted the trend of loss creep, which he admitted is “severely increasing” in Hannover Re’s eyes, something that is “not very satisfying for the industry or for us”. 

Steinmann did not demand compensatory rate increases. Instead, his solution is “working with clients” and applying “more data” in a quest “to get back to a level that we are used to in more accurate initial loss estimates”.

Structured solutions

Steinmann commented on the higher retentions achieved in the 2022/23 market reset, something that many reinsurers now feel the need to defend. Instead, he encouraged cedants to look at structured reinsurance solutions, a growing unit for Hannover Re, offering earnings and frequency protection. 

“Hannover Re is not going into the market and demanding exclusions.”

He noted an insurance-linked securities offering to help cedants fill some gaps, structuring cat bonds for cedants to take business direct to investors, plus collateralised fronting for a more mediated offer.

Steinmann did cite concerns elsewhere: strikes, riots and civil commotion (SRCC) shows signs of slipping out of control. He calls the unrest in New Caledonia “a surprise for the industry, but not a one-off”, especially given the election calendar around the world. 

“Hannover Re is not going into the market and demanding exclusions. We just try to get our arms around the exposure we have in our own book; transparency is key,” he said. 

“Signs of slippage and softening in primary cyber rates concern us,” Steinmann added. His response is to shift portions of the market from the quota share model into non-proportional covers. “Our clients, as far as we can tell, are open to this discussion,” he said.

“I’m glad if I sound relaxed,” Steinmann said when asked why his litany of rising risks hadn’t become a banging of the rate drum.  

One might not expect such coolness. Steinman is just starting his eighth week in the Hannover Re group following a 20-year career at Swiss Re. That put him in Monte Carlo during his second week on the job representing Hannover Re. 

“We should not and we won’t hide from that business,” he said. “We think we understand the exposure.”

For more news from Baden-Baden Today, click here.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.