Hannover Rück (HNR1) Q2 2024 earnings summary

Executive summary

• Group net income rose 20.9% year-over-year to €1,161 million for H1 2024, with return on equity at 22.3% and strong performance in property & casualty reinsurance.

• Reinsurance revenue increased by 5.2% to €12,916 million, with P&C reinsurance revenue up 8.8%-10% and life & health revenue down moderately.

• Investment performance exceeded targets, with return on investment at 3.3% and investment result up 18.7% year-over-year.

• Combined ratio in P&C improved to 87.8%, reflecting disciplined underwriting and manageable large loss expenditures.

• The company remains on track to achieve full-year targets despite ongoing climate and geopolitical risks.

Financial highlights

• Operating profit (EBIT) increased 22.5%-40% year-over-year to €1,657 million, with earnings per share rising to €9.63.

• Shareholders' equity rose 5.3% to €10.7 billion, and solvency ratio stood at 276%.

• Investment result up 18.7% to €1,009 million, driven by higher yields and alternative assets.

• CSM (contractual service margin) increased by 20.5% to €9.3 billion, strengthening future earnings outlook.

• Large losses of €566 million in H1 2024 were below the budgeted €801 million, with a positive run-off result of €364 million.

Outlook and guidance

• 2024 guidance reaffirmed: group net income ≥€2.1 billion, P&C combined ratio <89%, reinsurance revenue growth >5%, and return on investment ≥2.8%.

• Life & health reinsurance service result expected to exceed €850 million for 2024.

• Confidence in achieving or exceeding targets has increased, but caution remains due to hurricane season and capital market risks.

• Ordinary dividend expected to increase over the 2024–2026 strategy cycle, with potential for special dividends.

• Mid-year P&C renewals saw premium growth of 11.5% and risk-adjusted price increase of 1.3%.