Hannover, 12 December 2023: Hannover Re marked today's Investors' Day by announcing its guidance for the coming 2024 financial year as well as its financial ambition under the new strategy for the next three years through to 2026.
"Our strong position in the reinsurance market combined with successful cycle management will result in material earnings growth in 2024," said Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re. "Thanks to the improved underlying profitability of our reinsurance business, Hannover Re is superbly placed to continue on its successful course and generate further strong results in the coming financial year."
For the 2024 financial year Hannover Re anticipates Group net income of at least EUR 2.1 billion and hence an increase of 24% compared to the earnings guidance for 2023. Reinsurance revenue is expected to grow by more than 5% on the Group level, with revenue growth in property and casualty reinsurance growing more strongly than in life and health reinsurance. The return on investment should reach at least 2.8%.
Hannover Re anticipates a combined ratio below 89% in the Property & Casualty reinsurance business group in 2024 owing to the improved market environment.
In the Life & Health reinsurance business group Hannover Re expects a reinsurance service result of more than EUR 850 million.
Achievement of the profit guidance for 2024 is conditional on large loss expenditure not significantly exceeding the budgeted amount of EUR 1.825 billion (previous year: EUR 1.725 billion) and assumes that there are no unforeseen distortions on capital markets.
The currently ongoing three-year strategy cycle will come to a successful close at the end of 2023. Despite a challenging economic and geopolitical landscape, Hannover Re delivered strong results over this period and hence achieved its strategic objective: striving for sustainable outperformance.
In this strategy cycle Hannover Re again generated returns on equity that outperformed the minimum target of 9.7%: 15% (annualised average from 2021 to 30 September 2023). Similarly, the increase in the operating result (EBIT) will likely exceed the targeted average growth rate of at least 5% per year by the end of 2023, with growth of 6% per year in property and casualty reinsurance and growth of 16% per year in life and health reinsurance – both based on EBIT targets for 2023.
Hannover Re also unveiled today its programme for the upcoming strategy cycle through to 2026.
"The new strategy cycle puts the focus squarely on what Hannover Re stands for: we are pragmatic, client-centric and have a business model geared to the utmost efficiency. Our financial ambition thus builds on our robust foundation to ensure Hannover Re's lasting stability and resilience," said Jean-Jacques Henchoz. "We shall actively engage with the major trends affecting our business, the increasing global competition for talent, digitalisation and not least climate change, and develop tangible solutions to tackle our clients’ current and future challenges."
The new strategy is guided by three beacons: Focus, Grow and Accelerate. Hannover Re remains true to its "somewhat different" approach, the basis of which is a lean and capital-efficient business model with an unchanged clear focus on reinsurance.
Drawing on tailored and innovative reinsurance solutions in combination with continued successful collaboration with its clients, Hannover Re will ensure profitable growth going forward. This will be supported by further strengthening of its cycle management and portfolio steering.
Accelerating operational efficiency and automation is another key factor in blazing a trail as one of the global industry leaders. What is more, the analysis and use of data can improve risk assessment and decision-making. At the same time, Hannover Re will continue to embed diversity, equity and inclusion in its strategy and invest in its most important asset: its employees.
These points of strategic emphasis give rise to a concrete financial ambition on the Group level: Hannover Re wants to achieve a return on equity of more than 14% annually on average over the upcoming strategy cycle and growth of more than 5% in the operating result (EBIT). The contractual service margin (net) is planned to grow by more than 2% on average per year over the cycle. Furthermore, a capital adequacy ratio under Solvency II of more than 200% is targeted.
The dividend policy remains unchanged in principle. The increasing earnings expected over the next strategy cycle will support a continued increase of the ordinary dividend. In the years 2024-2026 the ordinary dividend is expected to increase year-on-year. The ordinary dividend will be supplemented by a special dividend provided the capitalisation exceeds the capital required for future growth.
An overview of the terminology used in IFRS 17 accounting can be found online here
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 more than 3,500 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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