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Hannover Re Q3 P&C profit falls 5.2% on heavy cat losses

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Hannover Re has reported a Q3 P&C re operating profit of EUR283mn ($327.5mn), down 5.2% year-on-year, as it exceeded its nine-month budget for both natural catastrophes and man-made disasters.

The carrier reported earnings per share (EPS) for the P&C unit of EUR1.22 for the quarter, down 15.3% on the prior-year period. The P&C segment’s 101.5% combined ratio was slightly worse than a consensus of 100.7%, according to Berenberg.

Despite heavy losses, Hannover Re maintained its full-year net profit guidance of EUR1.15bn-EUR1.25bn.

Underwriting: The P&C re division reported a combined ratio of 101.5%, a 1.9-point deterioration on the prior year period. Its net underwriting result for the quarter was a loss of EUR64mn compared to a profit of EUR15mn in the same period last year.

Catastrophes/large losses: During the third quarter, the P&C segment booked EUR620.8mn in net large losses. These included EUR214.2mn from the European flooding caused by Bernd and EUR305.7mn from Hurricane Ida. On a gross basis, cat losses during the quarter amounted to EUR1.3bn. For the nine-month period, the large loss load of EUR1.85bn exceeded a budget of EUR849mn.

Investment income: The P&C unit recorded investment income of EUR387mn for the quarter, up 65.4% on the prior-year period, which Hannover Re said was due to favourable ordinary investment income as well as higher realised gains and lower impairments.

Top line: The P&C re segment expanded GWP by 19.9% in Q3 to just over EUR5bn.

Group profit: At group level, Hannover Re reported operating income of EUR325mn, down 18.6% year-on-year.

Outlook: For 2022, Hannover Re said it expects group net income of EUR1.4bn-EUR1.5bn, with investment returns of 2.3% and group GWP growth of at least 5%.

Hannover Re CEO Jean-Jacques Henchoz said: “In recent months insurers and reinsurers were faced with unusually heavy losses from hurricanes, flooding and other catastrophic events. Our solid nine-month result again demonstrates Hannover Re's resilience in a volatile environment."

“The third quarter has shown us once again how quickly an unexpectedly benign loss experience during the year can completely turn around. Despite this, we believe we are in a position to achieve our guidance for 2021.

“The profitable growth and our successful cycle management in recent years will lead to a sharp rise in earnings in the 2022 financial year.”

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