Hannover Re is anticipating a roughly EUR 230 million recovery from its retrocessional reinsurance to support its losses from the Los Angeles wildfires, with the majority of that expected to come from the proportional K-Cessions quota share sidecar, Sven Althoff, Member of the Executive Board for Property & Casualty (P&C) said this morning.Speaking during an analyst call, Althoff explained that with the , Hannover Re’s gross loss for its own book is reduced to EUR 868 million.Out of that gross loss, Hannover Re also anticipates meaningful support from its retrocessional reinsurance arrangements, with roughly EUR 230 million expected to be recovered, Althoff said.Speaking to the analysts, he explained, “On the wildfires, out of the EUR 1.3 billion of gross loss EUR 438 million is coming from our fronting activities on the ILS side.

So the gross loss we have written for our own account without the fronting activities, is EUR 868 million.Out of the EUR 868 million, we have calculated that we will recover roughly EUR 230 million on the retrocessional side, as the US is a covered peril under our proportional K-Cession.“Most of the recoveries will come from the K facility with only a minor collection calculated from our whole account event tower.” The retrocession recovery for Q1 losses appears to be almost completely for the impact of the California wildfire event in January.

At the January renewals this year, , with growth in the aggregate excess of loss and whole account excess of loss retro covers more than offsetting a slightly smaller K-Cessions sidecar for the year.However that retro tower still remains smaller than it had prior to 2023, as Hannover Re sought to retain more of the economics from its underwriting.Despite being a little smaller in 2025, the K-Cessions proportional structure, which has backing from institutional investors and insurance-linked securities (ILS) investment managers, has demonstrated the core support this long-standing retro structure provides for the reinsurance company once again.

The K-Cession sidecar securitisation for 2025 was renewed to provide US $735 million of quota share protection to Hannover Re.That coverage, of course, remains available for any loss creep for major events, including the wildfires from January.Althoff continued to explain, “This also gives you an idea of how this is impacting our retrocessional programme for the rest of the year.

There’s hardly any impact on the non-proportional cover, so there’s still considerable limit left.“It also means that if the gross loss should deteriorate, we will be able to collect from both our K facility and from the whole account protection, which would mean that the increase of our net loss would happen on a slower basis compared to the increase on the gross side.“So we feel well positioned with the reserve position.

A, because we started with a robust assumption for the Q1 exercise and B, even if we should have some deterioration, we have good retro protection in place.” It’s worth noting that with EUR 438 million of major losses shared with ILS investors through the collateralized fronting arrangements that Hannover Re facilitates and around EUR 230 million to be shared with retro partners, a reasonable proportion of which will be capital markets investors, third-party capital has delivered significant support to Hannover Re in the first-quarter of the year and as a result shared a meaningful amount of its gross catastrophe losses...All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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