Hannover Re praised for ‘embracing change’ to get leg up in hard market

Hannover Re is “positively differentiating itself” among reinsurers by “embracing change” to get ahead of peers on hard market growth, ILS, emerging markets and more, analysts at the Jeffries brokerage have declared.

“A recurring theme appeared to be the extent to which the group was embracing change,” Jeffries analysts said of their key takeaway from a recent Hannover Re Investor Day gathering.

Hannover Re leaned into the hard market, but remained discriminating, analysts noted in their opening round of praise. They see 70% GPW growth over a six-year period in which rates grew 29% and rivals grew GPW 44%.

“It's clear that Hannover Re has embraced the benefits of the hard market for non-life reinsurance pricing.” Pickiness around select specialty lines has proven the Hannover Re story is not one of blind growth, they said.

In ILS, Hannover Re also jumped ahead in a growth segment. Jeffries likes the 21% 5Y compound annual growth rate in ILS premiums in fronting and a steady ramp up in structuring of catastrophe bonds.

For higher-speed emerging market growth, Jeffries praised Hannover Re's press into Asia. “Hannover Re has also embraced the long-term opportunity in Asia” with “selectively targeted” expansion (read: excluding motor quota share) rendering 23% CAGR over five years.

On inflation, Hannover Re addressed investor concerns with a parade of indexation clauses and inflation monitors “to keep prices ahead of the problem,” Jeffries analysts noted of their takeaways.

Analysts at Jeffries have a record of being impressed with the reinsurer. Jeffries has issued eight consecutive ‘Buy’ recommendations for shares of Hannover Re in a string first dating back to mid-2020. Analysts currently argue there is 20% upside to their 12 month price target.

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