Hannover Re increases XoL protection as retro program grows by €100mn at 1.1

By Scott Vincent

Feb 6 - (The Insurer) - Hannover Re increased the upper limit on its retrocession program by €100mn ($104mn) at 1 January, with the reinsurer reducing the ceded ratio on its K-Cession sidecar in line with previously disclosed plans.

The overall size of the program increased to €1.2bn, compared with €1.1bn last year and €1.34bn in 2023.

The program’s structure remained largely unchanged year on year, with a modest reduction in the limit of the group’s K-Cession securitisation to $735mn. This compared with a limit of $757mn in 2024, which itself was down from $831mn in 2023.

Hannover Re said the covered regions and limits of the K-Cession had been expanded to take advantage of abundant capital supply. The securitisation previously covered peak perils in North America, Europe, Japan, Australia and Chile.

The reinsurer had previously flagged the plans to reduce its K-Cession cover during the group’s 2024 investor day, when it said it would be looking to reduce its ceded ratio from the high 40s to mid-30s, which was expected to boost the company’s earned premiums by €150mn.

During a media call this morning, Sven Althoff, Hannover Re’s executive board member responsible for P&C business, confirmed the cession rate for the sidecar had been reduced to around 33 percent.

Hannover Re’s retro cover also includes a whole account excess of loss (XoL) layer which sits above the K-Cession, with a further aggregate XoL above that at the top of program.

Both of these were renewed with increased limits at 1.1. The limit on the whole account XoL increased to €434mn from €287mn in 2023, while the aggregate XoL renewed with a €100mn limit, up from €71mn.

“We increased the amount of protection here due to the underlying growth in our portfolio, and also because we found the pricing on the non-proportional side was more attractive, very much in line with the incoming business,” Althoff said.

“So while we reduced on the proportional side, we increased on the non-proportional side. Overall, we did place slightly more dollars compared to the previous year.”