Release Date: November 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hannover Rueck SE (HVRRY, Financial) recorded a net positive one-off tax effect of EUR120 million in Q3, contributing to a nine-month group net income of over EUR1.8 billion.
- The company updated its guidance for the group net income 2024 to around EUR2.3 billion, surpassing the initial target of EUR2.1 billion.
- The combined ratio of 87.9% is well in line with the target of below 89%, reflecting strong underlying profitability in the P&C portfolio.
- The return on investment of 3.1% is above the target, highlighting strong ordinary income and limited impact from impairments.
- Shareholder equity increased by 10%, driven by group net income and limited impact from interest rate and currency movements.
Negative Points
- The solvency ratio decreased by 15% compared to the end of Q2, largely due to foreseeable dividends and planned growth for the coming year.
- The life and health reinsurance revenue was stable year-on-year but included non-recurring effects and an accelerated runoff of US mortality business.
- The reinsurance service result of EUR668 million is only slightly above the pro-rata share of the full-year target, indicating limited growth.
- The company recorded a moderate impact of EUR44 million from impairments on real estate, affecting the investment performance.
- The large loss budget for the year increased, reflecting a higher frequency of natural catastrophe losses and reduced retrocession coverage.
Q & A Highlights
Q: Can you provide insights on capital deployment and growth expectations in P&C?
A: We expect growth across all regions and product lines, with a focus on property catastrophe opportunities. We plan to reduce retrocession, particularly in our K transaction, which will support growth. (Respondent: Unidentified_6)
Q: How is the combined ratio expected to evolve, and what factors are influencing it?
A: The combined ratio for the first nine months is 87.9%, reflecting cautious reserving and some runoff impacts. For 2025, we anticipate a reduction due to positive profitability outlook, maintaining prudency in reserving. (Respondent: Unidentified_3)
Q: What is driving the 2025 guidance for the combined ratio and large loss budget?
A: The guidance reflects a stable risk-adjusted rate environment and less retrocession, contributing to a better combined ratio outlook. The large loss budget increase is due to business growth and reduced retrocession. (Respondent: Unidentified_6)
Q: Can you elaborate on the life and health reinsurance service result and assumption changes?
A: The reinsurance service result was impacted by a one-off insolvency. Assumption changes in the UK involved conservative lapse assumptions for whole life policies, reflecting prudent reserving. (Respondent: Unidentified_8)
Q: How does the company view the market environment and potential for a softer cycle?
A: We expect stable terms in 2025, driven by strong demand, market discipline, and a significant large loss burden on the industry. There are no signs of a softer cycle starting next year. (Respondent: Unidentified_2)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
