EQS-News: Hannover Re raises earnings guidance for 2025 after very good business performance

Hannover Re raises earnings guidance for 2025 after very good business performance

• Group net income up by +7.7% to EUR 2.0 billion
• Reinsurance revenue (gross) adjusted for exchange rate effects and without a base effect from the previous year grows by around 7%
• Large losses in property and casualty reinsurance comfortably within budgeted
  expectation
• Life and health reinsurance continues to develop in line with expectations
• Return on investment of 2.8% due to active realisation of losses
• Return on equity clearly above strategic target at 22.0%
• Earnings guidance for full-year 2025 raised to around EUR 2.6 billion
• Guidance 2026: Group net income of at least EUR 2.7 billion anticipated

Hannover, 10 November 2025: Hannover Re generated a very good Group profit in the first nine months and is revising its full-year guidance. Among other things, the company is raising its projected Group net income to around EUR 2.6 billion. Group net income for the 2026 financial year is expected to reach at least EUR 2.7 billion.

"We generated a very good Group profit in the first nine months. Both business groups as well as the investments and our lean operating model contributed to this," said Clemens Jungsthöfel, Chief Executive Officer of Hannover Re. "In view of this favourable business performance we are raising our earnings guidance for the current year."

Group net income up by +7.7% to EUR 2.0 billion

Reinsurance revenue (gross) was virtually unchanged at EUR 19.7 billion (previous year: EUR 19.7 billion). Growth of 2.1% would have been booked at unchanged exchange rates; excluding a base effect from the previous year, growth would have reached around 7% adjusted for exchange rate effects.

The reinsurance service result (net), reflecting the profitability of underwriting activity less business ceded (primarily retrocessions and insurance-linked securities), increased to EUR 2.4 billion (EUR 2.1 billion). Adjusted for exchange rate effects, the reinsurance finance result (net) – which is structurally negative and reflects the interest accretion on technical reserves discounted in previous years – amounted to EUR -1,007.8 million (EUR -783.6 million).

The currency result improved significantly to EUR 216.5 million (EUR 32.3 million), driven largely by the appreciation of the euro against the US dollar. Other income and expenses amounted to EUR -442.2 million (EUR -375.7 million).

The operating profit (EBIT) grew by +2.1% to EUR 2.5 billion (EUR 2.4 billion). Group net income increased by +7.7% to EUR 2.0 billion (EUR 1.8 billion). Earnings per share reached EUR 16.29 (EUR 15.13).

Return on equity clearly above strategic target at 22.0%

Shareholders' equity as at 30 September 2025 totalled EUR 12.0 billion (31 December 2024: EUR 11.8 billion). The book value per share reached EUR 99.51 (31 December 2024: EUR 97.80). The annualised return on equity stood at 22.0% (22.9%) and thus came in clearly above the strategic target of more than 14%.

The contractual service margin (net), which quantifies the unearned profit expected from the business written, grew by 2.1% to EUR 8.3 billion (31 December 2024: EUR 8.2 billion). The risk adjustment for non-financial risk amounted to EUR 3.7 billion (31 December 2024: EUR 4.0 billion).

The capital adequacy ratio under Solvency II, which measures Hannover Re's risk-carrying capacity, stood at 259% as at the end of September (31 December 2024: 261%). It allows for the foreseeable dividend for 2025 on a pro-rata basis as well as the planned business growth in 2026 and remains comfortably above the threshold of more than 200%.

Good business development in property and casualty reinsurance and large losses comfortably within budgeted expectation

The various rounds of renewals held during the year in property and casualty reinsurance resulted in broadly stable conditions and prices that were still commensurate with the risks. In view of the continued good state of the market, Hannover Re acted on growth opportunities to profitably expand its business.

The favourable outcome of the treaty renewals in the course of 2025 and the profitability-focused underwriting approach are reflected in the positive development of the new business CSM (net), which improved by 6.9% in the first nine months to EUR 2.6 billion (previous year: EUR 2.5 billion). The new business LC (net) amounted to EUR 27.7 million (EUR 30.0 million).

Reinsurance revenue (gross) in property and casualty reinsurance remained stable at EUR 13.9 billion (EUR 13.9 billion). Growth of 2.0% would have been booked at unchanged exchange rates; excluding a base effect from the previous year, growth would have reached around 9.5% adjusted for exchange rate effects.

Net expenditures for large losses totalled EUR 1,177 million (EUR 1,304 million) for the first nine months of the year and thus came in comfortably within the budgeted expectation of EUR 1,636 million for this period. In accordance with its usual practice, Hannover Re booked the entire large loss budget for the first nine months and used it as the basis for calculating the nine-month result. The large loss budget for the full 2025 financial year is EUR 2.1 billion.

The largest net individual losses in the first nine months included the California wildfires at EUR 615 million, the earthquake in Myanmar at EUR 91 million, the fire at an oil refinery in Texas, United States, at EUR 76 million, the fire at an oil refinery in California, United States, at EUR 72 million as well as an extensive series of tornadoes in the US Midwest at a cost of EUR 51 million. Hannover Re also made provision for additional risks by further increasing its loss reserves.

The resilience in the loss reserves, which an external study put at EUR 2.5 billion effective 31 December 2024, was further boosted in the first half of the year through continued adherence to a prudent reserving policy.

The reinsurance service result (net) increased to EUR 1.7 billion (EUR 1.5 billion). The combined ratio came in at 86.0% (87.9%). The reinsurance finance result (net) adjusted for exchange rate effects amounted to EUR -863.1 million (EUR -665.7 million).

The operating profit (EBIT) in property and casualty reinsurance grew by 7.6% to EUR 1.9 billion (EUR 1.7 billion).

Life and health reinsurance continues to develop in line with expectations

The Life & Health reinsurance business group continued to develop robustly in the first nine months, especially in the area of longevity covers.

The new business CSM (net) amounted to EUR 373.0 million (EUR 223.1 million), while the loss component (net) stood at EUR 10.0 million (EUR 17.8 million). In addition, contract renewals and amendments in the in-force portfolio came to EUR 211.9 million (EUR 293.3 million). The contractual service margin (net) changed by altogether -2.3% to EUR 6.4 billion (31 December 2024: EUR 6.5 billion), primarily due to currency effects.

Reinsurance revenue (gross) nudged modestly higher to EUR 5.8 billion (EUR 5.8 billion). Growth would have reached 2.2% at unchanged exchange rates.

The reinsurance service result (net) increased slightly to EUR 671.3 million (EUR 668.4 million) and was thus still on a good level for achieving the full-year target of more than EUR 875 million. Adjusted for exchange rate effects, the reinsurance finance result (net) amounted to EUR -144.7 million (EUR -117.9 million).

The operating result (EBIT) in life and health reinsurance changed by -9.9% to EUR 645.3 million (EUR 716.2 million).

Return on investment of 2.8% due to active realisation of losses

The portfolio of investments contracted to EUR 64.6 billion (31 December 2024: EUR 65.9 billion), principally due to revaluation effects associated with investments held in US dollars.

"We took advantage of the favourable development in reinsurance business and systematically boosted the resilience of our investment portfolio by active loss realisation in our fixed income portfolio," said Christian Hermelingmeier, Chief Financial Officer of Hannover Re. "This will improve our future investment income through reinvestment at prevailing higher interest rates."

The net investment income of EUR 1.3 billion (EUR 1.4 billion) came in only slightly below the level of the previous year's period despite active realisation of losses. The resulting annualised average return on investments under own management amounted to 2.8%.

Earnings guidance for full-year 2025 raised to around EUR 2.6 billion

In view of the favourable business performance, additional positive one-time effects in the currency result and the lower tax burden in the first nine months, Hannover Re is raising its Group net income guidance for the full 2025 financial year from around EUR 2.4 billion to around EUR 2.6 billion. Achievement of the earnings target for 2025 is based on the premise that large loss expenditure does not significantly exceed the anticipated level of EUR 2.1 billion and there are no unforeseen distortions on capital markets.

The outlook for the 2025 financial year assumes full utilisation of the large loss budget by year-end and does not take into account the possibility of further realisation of losses on fixed-income securities to strengthen future investment income and increase flexibility in the investment portfolio.

Reinsurance revenue (gross) in property and casualty reinsurance is projected to grow by more than 7% based on constant exchange rates and excluding a base effect from the previous year. The combined ratio expected in this business group was also revised to less than 87% (previously: less than 88%).

Hannover Re anticipates a reinsurance service result (net) of more than EUR 875 million in the Life & Health reinsurance business group. The contractual service margin (net) is expected to grow by around 2%.

The target return on investments under own management was revised to around 2.9% (previously: at least 3.2%) due to active realisation of losses in the third quarter.

In October the Executive Board approved a realignment of the dividend policy. The new dividend policy is to be applied for the first time with effect from the 2025 financial year. The payout ratio for the regular dividend was raised to around 55% of IFRS Group net income. Furthermore, the goal is to distribute a dividend per share at least on the level of the previous year and to increase it over the long term. The special dividend, a tool which had been routinely used in the past, becomes part of the regular dividend. Going forward, it is envisaged that an additional special dividend will only be paid out in exceptional circumstances.

Guidance 2026: Group net income of at least EUR 2.7 billion anticipated

Hannover Re anticipates Group net income of at least EUR 2.7 billion for the 2026 financial year.

"For the coming year we are looking at a market environment with broadly adequate prices and conditions," said Clemens Jungsthöfel. "In a landscape still clouded by uncertainties, demand for reliable and high-quality reinsurance protection remains strong – which is why we expect further profitable growth side-by-side with our clients wherever conditions are commensurate with the risks."

In property and casualty reinsurance, reinsurance revenue (gross) in traditional business (excluding structured reinsurance) is expected to show growth in the mid-single digit percentage range based on constant exchange rates. Hannover Re also expects a combined ratio of less than 87%.

In life and health reinsurance, Hannover Re anticipates a reinsurance service result of around EUR 925 million.

The return on investment is expected to reach around 3.5%.

Achievement of the profit target for 2026 is based on the assumption that large loss expenditure does not significantly exceed the budgeted level of EUR 2.3 billion and there are no unforeseen distortions on capital markets.

Hannover Re is one of the world’s leading reinsurers. It transacts all lines of property & casualty and life & health reinsurance and is present worldwide with around 4,000 staff. German business of the Hannover Re Group is written by the subsidiary E+S Rück. Established in 1966, Hannover Re is recognised as a reliable partner for innovative risk solutions, exceptional customer intimacy and financial soundness. The rating agencies most relevant to the insurance industry have awarded both Hannover Re and E+S Rück outstanding financial strength ratings: Standard & Poor's AA- "Very Strong" and A.M. Best A+ "Superior".

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