Hannover Re P&C combined ratio deteriorates to 93.9% as large losses bite

By Ryan Hewlett

May 13 - (The Insurer) - Hannover Re has reiterated its full-year guidance despite group net income falling by 13.9% year on year to 480 million euros ($532.9 million) in the first quarter, driven by higher natural catastrophe losses.

Large losses of 765 million euros in the reinsurer’s property and casualty unit exceeded the large loss budget of 435 million euros for the first quarter, Hannover Re said in a trading update on Tuesday.

Hannover Re said the largest net individual loss was the California wildfires at 631 million euros. Further large losses included the mid-air collision of a passenger plane and a helicopter above Washington, D.C., the Myanmar earthquake, and a fire at a refinery in southern Germany.

The higher-than-anticipated large losses saw the carrier’s reinsurance service result decrease by 46.6% to 272 million euros.

The combined ratio deteriorated by 5.9 percentage points year on year to 93.9%, above the full-year target of less than 88% and the company-compiled consensus of 93%.

Operating profit in property and casualty reinsurance contracted by 29% to 444 million euros while the net reinsurance service result, which reflects the profitability of underwriting, fell by 28.5% to 515 million euros.

Gross reinsurance revenue in P&C reinsurance rose by 7.2% to 5.1 billion euros in the first quarter, or 5.1% at constant exchange rates.

Despite the impact of large losses on its first-quarter results, Hannover Re said it continues to expect group net income of around 2.4 billion euros for the full year.

Gross revenue in P&C reinsurance is set to grow by more than 7% at constant exchange rates, while the combined ratio is projected to come in below 88%.