Hannover Re sticks to bullish outlook for upcoming renewals

Hannover Re gave further details about its expectations for rate increase at the upcoming April and summer renewals.

Sven Althoff, who leads Hannover Re’s property/casualty reinsurance business, said he expects further rate increases on Japanese business at the April renewals, but the rate of increases is expected to slow.

“Those renewals will be done on the back of two or three renewal seasons already with very significant increases of pricing, so we have to expect a slowdown of those price increases,” Althoff said. “This time it will be more in single-digit territory rather than double-digit.”

However, renewals on US and Australian business, which are due in the summer, should maintain strong upward tendencies, he said, with similar rate increases as seen at the summer 2021 renewals, with no slowdown in particular on US wind risks.

Althoff explained: “We had significant losses in the US in 2021. Unfortunately in the first quarter we also had very significant flood events in Australia. So pricing is now bound to go up on a risk-adjusted basis.”

He added: There was also tightness in the retro market at the January 1 renewal. The main peak exposure in the industry is US wind so from that retro development I expect spillover effects for the reinsurance market.”

Hannover Re earlier reported risk-adjusted rate increases of 4.1% at the January 1 renewals, driven by catastrophe and cyber covers. It has since said it expects to grow business in almost all lines within P&C Re, and all lines are expected to earn at or above the cost of capital.

Following Russia’s invasion of Ukraine, Hannover Re has put on hold the writing of new risks and the renewal of contracts with customers in Russia and Belarus.

Jean-Jacques Henchoz, said it is too early to assess the full detailed impact of the war on Hannover Re, but he emphasised the exposure of Hannover Re to Russia and Belarus is low in terms of both premiums and assets.