EQS-News: Hannover Re significantly increases dividend after a highly successful 2024 financial year

Hannover Re significantly increases dividend after a highly successful 2024 financial year

• Group net income rises by 28% to EUR 2.3 billion and reaches guidance, which had been revised higher in autumn 2024
• Return on equity increases to 21.2% and clearly exceeds strategic target
• Reinsurance revenue increases by 7.9% to EUR 26.4 billion
• Operating profit (EBIT) in property and casualty reinsurance improves substantially to EUR 2.4 billion
• Life and health reinsurance boosts operating result (EBIT) to EUR 934 million
• Return on investment of 3.2% beats target
• Proposed dividend of EUR 9.00 per share including special dividend
• Guidance for 2025 confirmed: Group net income of around EUR 2.4 billion

Hannover, 13 March 2025: Hannover Re substantially increased its Group net income in the 2024 financial year and intends to enable its shareholders to participate in the favourable business performance with a 25% higher total dividend.

The Executive Board and Supervisory Board will propose to the Annual General Meeting a dividend distribution of altogether EUR 9.00 (previous year: EUR 7.20) per share. This is comprised of an ordinary dividend of EUR 7.00 (EUR 6.00) per share and a special dividend of EUR 2.00 (EUR 1.20) per share.

"We can look back on a very successful 2024 financial year, in which we grew steadily and generated a very pleasing Group profit," said Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. "With the planned dividend increase, we are living up to our commitment to continuously grow the ordinary dividend over our current strategy cycle and underscoring our positioning as an attractive dividend stock."

Group profit: Group net income increases substantially to EUR 2.3 billion

Reinsurance revenue (gross) rose by 7.9% to EUR 26.4 billion (EUR 24.5 billion). Growth would have reached 7.8% at constant exchange rates, surpassing the target of more than 5%.

The reinsurance service result (net), reflecting the profitability of underwriting activity less business ceded (primarily retrocessions and insurance-linked securities), rose significantly to EUR 3.0 billion (EUR 1.7 billion). The reinsurance finance result (net) adjusted for exchange rate effects, which is structurally negative and includes in particular the interest accretion on technical reserves discounted in prior years, decreased to EUR -1,115 million (EUR -880 million).

The operating profit (EBIT) grew by 68% to EUR 3.3 billion (EUR 2.0 billion). Tax expenditure amounted to EUR 817 million, compared to the previous year's figure of EUR 26 million owing to a one-time effect.

Group net income increased by 28% to EUR 2.3 billion (EUR 1.8 billion). Earnings per share thus reached EUR 19.31 (EUR 15.13).

Return on equity of 21.2 % clearly beats strategic target of more than 14%

Shareholders' equity amounted to EUR 11.8 billion (EUR 10.1 billion). The increase in shareholders' equity is primarily a reflection of the retained earnings in the financial year. The book value per share reached EUR 97.80 (EUR 83.97). The return on equity came to 21.2% (19.0%) and thus clearly exceeded the minimum 14% target set for the 2024-2026 strategy cycle.

"In the past financial year we further increased our shareholders' equity. We thereby boosted Hannover Re's resilience and strengthened what clients consider to be a crucial factor in Hannover Re's reliability," said Clemens Jungsthöfel, Chief Financial Officer of Hannover Re. "At the same time, we continue to set the pace with our return on equity, which is significantly higher than our strategic target."

The contractual service margin (net), which quantifies the unearned profit expected from the business written, rose by 6.0% to EUR 8.2 billion (EUR 7.7 billion). The increase was driven mainly by the profitable new business written in the financial year. The risk adjustment for non-financial risk was also further boosted to EUR 4.0 billion (EUR 3.7 billion).

The capital adequacy ratio under Solvency II, which measures Hannover Re's risk-carrying capacity, stood at 261.2% (269.5%) as at 31 December 2024 and thus remained comfortably above the threshold of more than 200%.

Property and casualty reinsurance: Combined ratio and operating profit significantly improved

In the various rounds of property and casualty reinsurance treaty renewals held during the year, risk-adjusted prices and conditions improved in some areas, while in others they stabilised on a high level. This was evident from the new business CSM (net), which reflects the earnings expectations from the business written in 2024. Thanks to a quality-focused underwriting-approach, the new business CSM (net) increased by an appreciable 15.4% to EUR 2.7 billion (EUR 2.4 billion). The new business LC (net) amounted to EUR 42 million (EUR 40 million).

Reinsurance revenue (gross) in property and casualty reinsurance increased by 10.9% to EUR 18.7 billion (EUR 16.8 billion). Growth would have reached 11.1% at unchanged exchange rates.

The 2024 financial year was notable for a high frequency of mid-sized catastrophe losses. Net expenditures from large losses totalled EUR 1.6 billion (EUR 1.6 billion) in the financial year and were thus within the budgeted expectation of EUR 1.825 billion.

The largest net individual losses for Hannover Re were Hurricane Milton at EUR 230 million, followed by floods caused by heavy rain in parts of Central and Eastern Europe at a cost of EUR 194 million. Losses due to flooding after intense rainfall in Dubai and in other parts of the United Arab Emirates were booked in an amount of EUR 138 million, and the unrest in the French overseas territory of New Caledonia led to expenditures of EUR 117 million. The net loss caused by Hurricane Helene totalled EUR 116 million, while payments associated with the bridge collapse in Baltimore came to EUR 103 million. In addition, the provision made for the group of claims connected with Russia's war of aggression on Ukraine was substantially increased.

The reinsurance service result (net) increased significantly to EUR 2,136 million (EUR 848 million). The combined ratio improved to 86.6% (94.0%) and was thus better than the target of less than 89%. The further improvement in the profitability of the business written was a major factor here. In addition, the previous year's result had been influenced by more vigorous strengthening of the resilience in the loss reserves. Adjusted for exchange rate effects, the reinsurance finance result (net) amounted to EUR -945 million (EUR -722 million).

The operating profit (EBIT) increased to EUR 2.4 billion (EUR 1.1 billion) on the back of the improved reinsurance service result and stronger income from investments.

Life and health reinsurance: Reinsurance service result (net) beats target

Sustained strong customer demand was recorded across all segments in life and health reinsurance. The United States remains a key market for financial solutions business, although Hannover Re was also able to write new business in Europe and Asia. Demand for longevity covers similarly continued to increase worldwide. Traditional reinsurance business with mortality risks developed in line with expectations in the year under review, with positive contributions from Latin America and France.

The new business CSM (net) amounted to EUR 317 million (EUR 359 million). The new business LC (net) came to EUR 6.3 million (EUR 14.4 million). In addition, treaty renewals and changes in the in-force portfolio led to a significant increase in the contractual service margin (net) to EUR 6.5 billion (EUR 6.0 billion).

Reinsurance revenue (gross) climbed modestly to EUR 7.7 billion (EUR 7.6 billion). Growth of 0.6% would have been booked at unchanged exchange rates.

The reinsurance service result (net) improved to EUR 883 million (EUR 810 million) and thus exceeded the target of more than EUR 850 million. Adjusted for exchange rate effects, the reinsurance finance result (net) decreased to EUR -170 million (EUR -158 million). The operating result (EBIT) for the life and health reinsurance business group increased by 7.2% to EUR 934 million (EUR 871 million).

Investment result: Return on investment beats target at 3.2%

The portfolio of investments increased to EUR 65.9 billion (EUR 60.1 billion). The main positive factors here were strong inflows from operational business, lower risk premiums on corporate bonds and interest rate declines in short maturities in the euro segment as well as exchange rate effects.

The investment result totalled EUR 2.0 billion (EUR 1.6 billion). Higher interest rates as well as earnings from inflation-linked bonds and alternative investments played a major part here. The annualised return on investment reached 3.2% and thus surpassed the minimum full-year target of 2.8%.

Guidance for 2025 confirmed: Group net income of around EUR 2.4 billion

"The figures published today show that Hannover Re is optimally positioned for the future. In a market environment currently impacted by climate change and geopolitical tensions, we have succeeded in sustainably securing our profitability, further expanding our resilience and remaining a financially robust and reliable partner for our clients," said Jean-Jacques Henchoz. "In just a few weeks, as announced, I will be handing over the reins of Chief Executive Officer to Clemens Jungsthöfel, who will write the next chapter of Hannover Re's success story as one of the world's leading reinsurers."

As already stated in November, Hannover Re expects Group net income of around EUR 2.4 billion for the 2025 financial year.

Reinsurance revenue (gross) in property and casualty reinsurance is expected to grow by more than 7% at constant exchange rates, while the combined ratio is projected to come in less than 88%.

In the life and health reinsurance business group, Hannover Re anticipates a reinsurance service result (net) of more than EUR 875 million. The contractual service margin (net) should grow by around 2%.

The return on investment is expected to reach at least 3.2%.

As usual, achievement of the profit target for 2025 is based on the assumption that large loss expenditure does not significantly exceed the budgeted level of EUR 2.1 billion (EUR 1.825 billion) and assumes that there are no unforeseen distortions on capital markets.

The ordinary dividend is expected to increase year-on-year over the 2024-2026 strategy cycle. The ordinary dividend will be supplemented by a special dividend provided the capital resources exceed the level required for future growth and the profit target is achieved.

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 3,900 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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