Stable P&C market conditions set to continue into 2025: Hannover Re CEO

Jean-Jacques Henchoz, CEO of global reinsurer Hannover Re, has suggested that the stable outlook for the P&C market is set to continue, given there are no significant new entrants in the space.

Henchoz’s comments stem from Hannover Re’s opening quarter earnings call, in which he noted that the environment is currently stable and the firm is very happy with rate adequacies.

He continued, “We will see that programmes are being filled but there is more of an equilibrium in supply and demand at this stage.

“No significant new entrants in the P&C reinsurance space. So, the outlook is for more of the same with a stable perspective in the P&C market.

“My sense is that the same is true at this stage for the outlook for 2025.”

Sven Althoff a member of the Executive Board for P&C at Hannover Re, also observed that there is still no new capital entering the market with “maybe the exception of the cat bond space.”

Althoff continued, “The increase in capacity we are observing in the market is coming from net retained earnings, or collateral that becomes un-trapped.

“From the existing market players, all the macro drivers are still there, with climate change, geopolitical uncertainty, and still above the long-term average inflationary environment.

“That would imply that the existing market players will continue to look for similar levels of profitability compared to where we are today from a pricing point of view. And then, of course, a lot will depend on what 2024 will produce as far as losses.

“And I would expect that the markets will continue to react to significant loss development, wherever it may arise.”

In its first quarter 2024 results, Hannover Re announced a 15% rise in net income to €558 million, with a reinsurance underwriting result of €720 million, up 27% year-on-year.

Group-wide, the firm’s operating profit rose 13% to €811 million from €720 million in Q1 2023, as the return on equity increased to 21.3%, and the contractual service margin increased by 15% to €8.9 billion.

Hannover Re attributes the increase in the service margin to all the business growth in the first quarter and the continued favourable earnings prospects.

Within its property and casualty (P&C) reinsurance business, catastrophe losses came in below budget in the quarter at €378 million, driven by the earthquake in Japan at a cost of €25 million, wildfires in Chile at a cost of €16 million, and the collision between two aircraft at a Japanese airport at a cost of €12 million.

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