Hannover Re profit surges almost 40% in 2021; CEO bullish on P&C business

Hannover Re, the third-largest reinsurer in the world, increased its profits by almost 40% in financial year 2021, defying the burden of considerable losses in both property/casualty and life & health reinsurance, thanks to its “exceptionally good investment” results and improved pricing conditions.

The Germany-based reinsurer grew its net profit to €1.23 billion for 2021, compared with €883 million the year before.

Its gross written premium increased by 12.1% to reach €27.8 billion, from €24.8 billion in 2020.

For property and casualty reinsurance its combined ratio improved to 97.7%, as compared to 101.6% for 2020. The P&C unit delivered double-digit growth at “markedly better prices and conditions”, with GWP rising by 14.8% in the 2021 to €19.2 billion from €16.7 billion as year ago.

Hannover Re said its major losses in the year once again surpassed expectations by reaching €1.3 billion, much above the budgeted level of €1.1 billion.

The largest single losses were hurricane Ida with net expenditure of €305 million, the flood damage caused in Europe by the low-pressure system Bernd amounting to €208 million, the extreme cold snap in the US in February at a cost of €156 million as well as the unrest in South Africa in an amount of €100 million.

In its life and health reinsurance business, Hannover Re incurred pandemic-related losses of €582 million, mainly attributable to the US and South Africa.

For 2022, Hannover Re expects to grow its gross premium in total business by at least 5% based on constant exchange rates. Group net profit is anticipated to be in the range of €1.4 billion to €1.5 billion, conditional on major loss expenditure not significantly exceeding the budgeted level of €1.4 billion and on the Covid-19 pandemic having no substantial effect on the result in life and health reinsurance, and assuming that there are no exceptional distortions on capital markets.

Jean-Jacques Henchoz (pictured), chief executive officer of Hannover Re, said: "In 2021 we once again demonstrated Hannover Re's profitability and risk-carrying capacity. The above-average expenditure for natural catastrophe events in property and casualty reinsurance as well as considerable pandemic-related losses in life and health reinsurance were challenging."

Commenting on the outlook, he said: "With our very solid capital base, our profitable growth and our successful risk and asset management, we are optimally placed to master the challenges of 2022.

"The sustained positive pricing momentum in property and casualty reinsurance and the improving state of the pandemic give me confidence that we will achieve our goals for the current financial year."

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