Global reinsurer Hannover Re today announced a 39% increase in net profit to €1.23 billion for 2021, despite significant losses in its P&C business exceeding expectations, and a significant impact from COVID-19 on his life and health (L&H) reinsurance activities.
Group-wide, net income increased from the 883 million euros recorded in 2020, with operating profit up nearly 43%, year-on-year, to 1. 73 billion euros.
During the year, the reinsurer increased its portfolio by more than 12% with gross written premiums (GWP) reaching 27.8 billion euros, while net premiums earned jumped 13% to 24.1 billion euros in 2021.
While premiums and revenues increased, Hannover Re’s technical performance was affected by significant losses and the pandemic in 2021, resulting in a Group technical loss of €211 million, compared to a loss of €691 million. euros in 2020.
Within property and casualty reinsurance, Hannover Re reported that major losses once again exceeded expectations, exceeding budget by €200m to reach €1.3bn in 2021, from €1.6bn. euros in 2020. Hannover Re says the biggest losses were Hurricane Ida at a cost of 305 million euros; floods in Europe at a cost of 208 million euros; the winter storm Uri for a cost of 156 million euros; and unrest in South Africa at a cost of 100 million euros.
But despite the high nat cat burden, Hannover Re’s P&C arm produced a combined ratio of 97.7% for 2021 versus 101.6% in 2020, helped by lower costs from large, year-on-year losses. the other. In addition, the technical result including interest on funds withheld and contract deposits of €384 million in property and casualty reinsurance.
The property and casualty reinsurance unit saw its operating profit jump by 84% to 1.5 billion euros, while the branch’s contribution to the Group’s net profit improved significantly by 76% to 1.1 billion euros. euros.
Also in P&C reinsurance, Hannover Re recorded GWP growth of nearly 15% to €19.2 billion, with net earned premiums increasing by 17% to €16.6 billion.
In its L&H reinsurance business, Hannover Re suffered losses of €582 million directly related to the COVID-19 pandemic, compared to €261 million in 2020, driven mainly by South Africa and the United States. United. The reinsurer notes that this contrasts with a positive one-off income of €132 million from a mortality portfolio restructuring measure in the United States as well as a positive special effect of €122 million in business with hedges. of longevity.
In addition, the reinsurer recognized a positive income of 44 million euros on its extreme mortality guarantee in investments linked to L&H reinsurance.
The L&H segment generated gross premium volume growth of over 6% to €8.5 billion in 2021, while net premiums earned increased by over 5% to €7.5 billion. However, the unit’s operating profit contracted by 43% to 223 million euros, compared to 393 million euros in 2020.
Jean-Jacques Henchoz, Chief Executive Officer (CEO) of Hannover Re, said: “In 2021, we once again demonstrated the profitability and risk-taking capacity of Hannover Re. natural disasters in property and casualty reinsurance as well as huge pandemic-related losses in life and health reinsurance were difficult. That said, thanks in part to our exceptionally good investment income, we have been able to significantly increase our Group net profit and are able to offer our shareholders the prospect of an attractive dividend.
On the asset side of the balance sheet, Hannover Re announced that its portfolio of assets under own management increased to 56.2 billion euros in 2021 from 49 billion euros in 2020.
Going forward, Hannover Re expects to increase its GWP by at least 5% in 2022 and expects the net profit of the whole group to be between 1.4 and 1.5 billion euros. However, this is based on significant loss expenses not significantly exceeding the €1.4 billion budget, and the COVID-19 pandemic having no substantial effect on L&H’s result.
“With our very strong capital base, profitable growth and successful risk and asset management, we are ideally placed to meet the challenges of 2022. The sustained positive pricing momentum in P&C reinsurance and the improving state of the pandemic give me confidence that we will achieve our goals for the current fiscal year,” Henchoz said.