Hannover Re’s portfolio quality remains good despite some unexpected factors during the recent renewal season that challenged initial expectations, property and casualty executive committee member Sven Althoff said on the company’s latest analyst call.
Altov emphasized that increased price pressure was one of the main surprises of this period. He explained: “When we talk about surprises, I think we expect there to be a little bit less pressure on non-proportional pricing, and at the same time, we expect a little more demand from our cedants, either through slightly lower retention levels or through additional purchases of other real estate products.
“In short, pricing or pricing pressure was a little stronger than expected. But it didn’t translate into additional buying, which would be the main surprise.”
The executive also noted that while the portfolio quality was high, sequential price cuts in non-proportional product lines compressed excess margins.
He commented: “When it comes to the issue of excess profits, as we have highlighted, there are only a few areas where we have to start reducing positions. So from that point of view, the quality of the updated portfolio is still very good. There are no areas that are particularly worth highlighting, and this is on a forward-looking basis. But, of course, with another round of price cuts on non-proportional sites, the level of excess profits has reduced.”
Despite a 10% to 20% decline in natural catastrophe rates, Hannover Re remains committed to viewing the industry as an area of ​​”structural growth”.
“On the Nat Cat side, we have a very diversified outlook, which is pleasing. So overall, despite the pressure and pricing, we can still find good excess profitability in quite a few segments. We’re willing to leverage those product lines and are willing to give us more constraints,” Althoff explained.
Adding: “On the other hand, I use Asia as an example, we also think there are certain regions where we should reduce our positions. But overall, the growth we are talking about comes from a globally diversified basis, and no one region has a very high proportion of this. From a forward-looking perspective, our attitude towards the Nat Cat business and our view on profitability has not changed.”
He concluded: “So from that perspective, as explained during the investor day, we have identified the Nat Cat business as a structural growth area because we believe we are still underweight from a market share perspective. But when we find profitability, we will grow, and if not, we will be happy to consolidate.”
Asked about the remainder of the year, Althoff said Hannover Re expected the trend to continue at renewals on January 1.
“If pricing quality remains good, as we found in 1.1, we are optimistic that we will be able to at least maintain our position on the project, if not improve it,” Althoff commented.
Although Japan’s renewal rates fell more than the global average last year, Hannover Re expects upcoming negotiations to take this lower base into account.
“Especially when we talk about Japan, the Japanese who renewed last year in early April saw their rates come down more compared to a one-year renewal,” the executive said. “So from that perspective, we do expect that to be factored into pricing this year because it’s off a slightly lower base in relative terms, but outside of Japan or overall, we expect the rest of the year to be pretty similar compared to January 1 renewals.”
Despite the lack of “additional demand” and expectations for more demand – which Altov sees as evidence that reinsurance is still being priced at reasonable rather than cheap levels – the company remains optimistic.
He added: “So as the capital position improves, that means maintaining a steady program and sometimes even tapering off a little bit. But overall, as we said here today, with a starting point of 3.3%, we remain positive that our guidance for mid-single-digit premium growth for the full year is certainly achievable.”
Hannover Re recently announced its financial results for the first quarter of 2026, with net profit of 710.6 million euros, an increase of 47.9% over the previous year, of which reinsurance service performance increased significantly by 72.9% to 890.2 million euros.
As part of its strong results for the quarter, the European reinsurer also reported total reinsurance revenue of €6.5 billion, reflecting growth of 0.6% after adjusting for currency effects.
