Profits shrink at Hannover Re as COVID-19 dents P&C result; major losses top €1.1bn

Hannover Re, the third-largest reinsurer in the world, saw its profits plummet 33.4 percent as the impacts of COVID-19 dented the firm's performance in property and casualty (P&C) reinsurance, as well as life and health. But its chief executive pointed to strengthening reinsurance pricing trends as cause for optimism going forward.

The group also confirmed that it anticipates a profit of more than €800 million for the 2020 financial year. For the renewals as at 1 January 2021 in property and casualty reinsurance, Hannover Re expects to book increased premium income and higher prices.

For the first nine months of the year, Hannover Re's group net profit contracted by 33.4 percent to €667.8 million, compared with €1 billion a year earlier.

The contribution made by P&C reinsurance to group net profit fell by 34.7 percent to €418.2 million from €640.1 million, while the contribution made by life and health reinsurance fell by 26.4 percent to €296.6 million from €402.9 million in the same period of 2019.

The reinsurer noted that its net major loss expenditure in the first nine months came to €1.1 billion, exceeding the budgeted amount.

The company increased its reserves for COVID-19-related losses in P&C reinsurance by €100 million to a total amount of €700 million as at the end of September. In life and health, the burden from COVID-19 currently stands at €160 million.

Its overall gross written premium for the period increased to €19.3 billion, up 10.9 percent on the €17.4 billion in the same period a year earlier. The P&C segment of the business grew its GWP by 14.5 percent to €13.3 billion. Life and health GWP rose by 3.6 percent to €5.9 billion.

However, the combined ratio in P&C reinsurance jumped to 101.4 percent from 98.6 percent in the prior-year period.

For 2021, Hannover Re anticipates its net profit to be in the range of €1.15 billion to €1.25 billion.

Hannover Re's chief executive officer Jean-Jacques Henchoz said: "The impacts associated with the Covid-19 pandemic can be better estimated following the close of the third quarter, and we therefore believe that we are now in a position again to provide profit guidance for 2020 and 2021.

"While we feel very comfortable with our 2020 guidance based on our prudent reserving, the outlook for the coming year is dependent on the further course of the pandemic. Movements in reinsurance prices nevertheless give us grounds for optimism."