Hannover Re used 1.1 for ‘portfolio steering’; leaves 14% unrenewed

Global reinsurance group  Hannover Re took an 8% risk-and inflation-adjusted price gain from the 1.1 reinsurance renewals, having used the market’s move towards heady price gains and tighter terms to steer its portfolio towards inflation-protected quality.

Management cited “far-reaching and significant improvements in prices and conditions with insurers carrying higher retentions.” Price increases were “particularly marked” for natural catastrophe covers and in aviation and marine reinsurance versus “moderate” gains in casualty.

Amid the overall dislocation between supply and demand, Hannover Re “had to take some conscious decisions on portfolio steering,” CEO Jean-Jacques Henchoz said.

“As a result, we have achieved a durable improvement of the quality of our portfolio from which we will benefit in the long run.”

Of the €9.87 billion up for renewal - 63% of Hannover Re's business - Hannover renewed €8.49 billion and left €1.38 billion or 14% either cancelled or altered.

Hannover Re steered chiefly towards excess of loss treaties over the inflation-stricken quota share deals.

Hannover Re responded with 21.4% growth in its non-proportional book to a premium volume of €3.16 billion and achieved a risk-adjusted price increase of 20.7%. Proportional treaties contracted by 8.7% to €6.64 billion and delivered a 3.4% risk adjusted price increase.

In natural catastrophe lines, Hannover Re grew premium volume by around 30% at 1.1 while taking an average 30% risk-adjusted price increases, what management called "sharp" improvement "to an extent not seen in decades."

“Further growth is expected in the renewals during the year,” management said.

Premium volume contraction in the low single digits were reported in global credit, surety and political risk lines where price growth was moderate at 3.7%. Aviation and marine reinsurance were likewise down 2.1% despite a 17.2% pricing gain. Agricultural lines also slipped in the book.

Premium volume from the EMEA region rose 2.5% “despite share reductions or cancellation of some large proportional treaties,” Hannover Re said, claiming “significantly higher prices” in continental Europe, especially for loss-affected covers in Germany and France. Prices for EMEA rose 7.2% year on year. The macro region accounts for 42.4% of 1.1 renewed premium.

The premium volume booked by Hannover Re in the Americas region rose 6.7% on a 12.9% price increase plus improved terms with gains on cat-exposed and other covers. The macro region accounts for 25% of 1.1 renewed premium.

In the Asia-Pacific region, where the bulk of business waits for an April 1 or later deadline, Hannover Re reduced its premium volume by 21.6%, citing a long list of large losses. Prices on renewed business in the region were up an average 4.5%.

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